C-113/80

APPLICATION for a declaration that by maintaining in force the Mer- chandise Marks (Restriction on Sale of Imported Jewellery) Order 1971, S.I. No 306 of 1971 (Iris Oifigiúil of 26 November 1971) and the Merchandise Marks (Restriction on Importation of Jewellery) Order 1971, S.I. No 307 of 1971 (Iris Oifigiúil of 26 November 1971), which are contrary to Article 30 of the EEC Treaty, Ireland has failed to fulfil its obligations under the Treaty,

THE COURT

composed of: P. Pescatore, President of the Second Chamber, Acting as President, Lord Mackenzie Stuart and T. Koopmans (Presidents of Chambers), A. O'Keeffe, G. Bosco, A. Touffait, O. Due, U. Everling and A. Chloros, Judges,

Advocate General: F. Capotorti Registrar: A. Van Houtte

gives the following

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1. The relevant legislation At the end of the list describing the various motifs covered by the orders there is to be found, in paragraph (xii), a general description worded thus: "Any other feature suggesting that the article is The two orders in question prohibit both a souvenir of Ireland". the sale in Ireland (S.I. N o 306, here- inafter referred to as "the Sale Order") and the importation into Ireland (S.I. No 307, hereinafter referred to as "the The only exceptions, provided for in Importation Order") of certain cate- both orders, authorizing the sale and gories of products, referred to as importation of jewellery without an jewellery, bearing or consisting of certain indication of origin concern goods to motifs, unless they have stamped on which section 18 of the Finance Act 1938 them an indication of origin comprising (No 25 of 1938) or section 18 of the the name, in English, of their country of Finance Act 1946 (No 15 of 1946) manufacture, or the word "foreign", or applies. The first of those provisions any other word or words clearly refers to imported articles constructed indicating that they were manufactured and intended specifically or primarily for outside the State of Ireland. the use of blind persons, which have been imported by an institution or a society which "has for its primary object the amelioration of the lot of blind persons". The second provision permits Both orders refer to the same products the importation, without payment of any and the same motifs. Although the duty of customs or of excise, of any products are referred to as jewellery they article required for or in connexion with :

2. Procedure (a) the goods; By a letter dated 9 December 1975 the Commission requested Ireland for infor- (b) a label, tag or ticket attached to the mation about the orders in question. goods; or

N o reply was forthcoming from the Irish (c) any container (including a box, card Government but the matter was or pad) in or on which the goods are discussed at a meeting which took place sold or offered for sale." in Dublin. Following that meeting the Director General for Internal Market and Industrialized Affairs sent the Irish In the Importation Order that paragraph Permanent Representative a second letter provides as follows: dated 9 March 1977 stating categorically

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JUDGMENT OF 17. 6. 1981 — CASE 113/80

III — Summary of the sub- conspicuous size," especially as the mark m i s s i o n s a n d a r g u m e n t s of will normally have to be made on metal. the parties Next, the obligation also has the effect of reducing the intrinsic value of such goods because marking them disfigures them, in particular when they are small and delicate, and because drawing the purchaser's attention to the country of The Commission submits that the Irish origin reduces the likelihood of his Sale Order and Importation Order choosing to buy a souvenir bearing an prohibiting the importation, sale or indication of non-Irish origin. In those exposure for sale in Ireland of articles of circumstances the value of such goods is jewellery with Irish motifs or charac- reduced in relation to that of national teristics unless such articles bear an goods. The orders are in addition indication of origin, constitute measures discriminatory, and therefore contrary to having an effect equivalent to the provisions of Article 30, because they quantitative restrictions contrary to require the marking of an indication of Article 30 of the EEC Treaty and not origin only on imported articles whilst justified under the provisions of Article such goods if Irish are not subject to 36, being applicable exclusively to such a requirement. imported products.

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that they are of Irish origin, especially as Hence these measures are not necessary not all the motifs in question — and in order to protect consumers, and this is certainly not fairies — have Irish all the more apparent in view of the associations. exceptions that have been made in relation to blind persons and airports, exceptions which are both curious and illuminating inasmuch as they are Furthermore the effect of the judgment inconsistent with the Irish Government's of 20 February 1975 (Commission v claim that the purpose and effect of the Federal Republic of Germany, Case 12/74 orders is merely to protect the consumer. [1975] ECR 181), which admittedly deals with circumstances different from the present ones, is "that it is unnecessary for the purchaser to know Finally, it would not be enough to whether a product is or is not of a require national goods to bear the particular origin, unless such origin indication of origin, for that would not implies a certain quality, basic materials prevent the value of the imported goods or process of manufacture or a particular from being diminished as a result of the place in the folklore or tradition of the fact that the buyer's attention was region in question"; the goods covered directed to the origin of the latter. On by the orders, however, do not in the the other hand, there would be "no opinion of the Commission have such objection . . . to Irish manufacturers' characteristics, and the fact that they marking their goods with an indication bear or refer to Irish motifs is not of Irish origin if they so wish" and "to sufficient to justify the measures that obligation being removed in the case adopted, for if it were otherwise, all of imported articles," in which case the trade between Member States in tourist object of the measures in question would souvenirs and postcards could be stopped equally well be served. by requiring indications of origin.

"Any other feature suggesting that the On the question of discrimination, article is a souvenir of Ireland." Ireland contends that if — as it maintains — the articles of jewellery bear in themselves an implied statement that they are of Irish origin, it is not necessary to require that home-produced The orders are thus concerned with products carry an express statement to items which would normally be sold as that effect. However, the application of souvenirs of Ireland. The application of such measures to imported products is the orders is restricted to articles which both justified and necessary. Therefore include the motifs or features set out in the solution suggested by the the schedules to the orders and they are Commission — to apply the requirement all features which appear on souvenirs of of indication of origin solely to home- Ireland. Any unreasonable application of produced products — would expose the the orders is effectively ruled out by the consumer, and especially the tourist, to provision in paragraph (xii) of each of the risk of being misled by the imported the schedules. product because he would not know its true origin: the Commission's suggestion therefore confuses the issue. The Irish Government reiterates that the crux of the issue is whether measures for the A proper construction of that provision protection of the consumer or the leads to the conclusion that the producer are justified in this case under legislation affects only articles of a Article 36 of the Treaty. "souvenir" type; hence buttons and buckles depicting fairies do not come within the application of the orders.

Ireland maintains that the measures in question are justified within the meaning It is submitted that this presents a of Article 36 and are necessary both to contradiction which undermines the protect the consumer and to protect the Commission's whole case, for it follows producer against unfair competition. from the second argument that "if the consumer will be 'loath to b u / the goods when their origin is brought to his notice, then he must be 'interested to know' their origin." But it is reasonable to suppose in fact that the consumer is As far as protection of the consumer is entitled to presume, and does presume, concerned, Ireland notes that the unless he is informed to the contrary, definition of the word "souvenir" which that souvenirs of Ireland are of Irish is applicable here is "a token of origin. remembrance, a keepsake," and observes that it follows as a matter of common sense from the very nature of a souvenir that an article which is held out to be a souvenir of a particular country is also As to protecting producers against unfair held out as having its origin in that competition, Ireland contends that the country and "a purchaser will naturally absence of an indication of origin on an make that assumption unless he is article which is believed by the consumer informed to the contrary." to be from Ireland when in fact it comes from another Member State is prejudicial to Irish producers in so far as the true origin of the article is, "as the Commission admits, of such importance Ireland declares, moreover, that it is to the consumer that he will not unable to understand the arguments purchase it if he is made aware that it submitted by the Commission on this originates" in another country. Irish subject, as follows: producers are entitled to be protected by law from the damage thus caused them. The Paris Convention for the Protection of Industrial Property of 20 March 1883 (last revised in Stockholm on 14 July (a) The goods considered in the orders 1967) and the Madrid Agreement for the to be "souvenirs" of Ireland but Repression of False or Deceptive which are not expressly marked to Indications of Source on Goods of that effect, "do not hold themselves 14 April 1891 (last revised in Lisbon in out as being of Irish origin" to the 1958: Additional Act of Stockholm on average purchaser and he will not 14 July 1967) constitute international

It also challenges the Irish submission that articles intimately connected with the tourist trade "hold themselves out as being of national origin" and thus In its reply the Commission's main require a specific statement of origin if concern is to refute the Irish submissions they are imported. The consequences for concerning the "justification for the trade between Member States of such a restrictions" imposed by the two orders. view would be alarming: a State could then require indications of origin on imported postcards depicting sites within their borders. Consequently the Com- mission reiterates its main submission as to the proper test to be applied in order First, it challenges the argument to justify the need to give an indication advanced by Ireland that the orders of origin, namely that the goods are of a apply exclusively to "souvenirs," an given quality, are made or certain basic argument based on paragraph (xii) in the materials or by a specific process of list of motifs. Ireland suggests that this manufacture, or play a special rôle in the "catch-all" phrase appearing at the end folklore or tradition of the region. The of the list of motifs is to apply to Commission concludes that "neither everything on the list and has the effect articles made wholly of or containing, of depriving clear words of their otherwise than as a minor constituent, meaning. The Commission finds the precious metal or rolled precious metal submission all the more remarkable in nor articles made wholly or partly of that at no point until the very end, to wit base metal hold themselves out as parti- in paragraph (xii), supra, does the word cularly Irish." "souvenir" appear in either order. And the Commission points out that in the orders themselves the products in question are referred to as "goods" whilst at the beginning of each schedule they are referred to as "articles". Finally, As to the contradiction which Ireland the Commission knows of no rule of perceives between those tests and the Irish law which states that a "catch-all" applicant's statement that a buyer would phrase at the end of a list may be used to be reluctant to purchase goods bearing a interpret the terms appearing before it in statement of origin showing that they are the list. Rather, it submits that a phrase not Irish, the Commission repeats its such as that must be understood in the statement that "no such contradiction light of what precedes it: thus, while the exists in fact," for the purchaser is not

As to the two Conventions to which Ireland refers in support of its case, they were entered into before the Treaty The Commission also repeats its came into force and do not apply as submission that the orders constitute between Member States of the "arbitrary discrimination" under Article Community in so far as they conflict 36 of the Treaty and strike at the very with the Treaty and in particular with root of the principle of the unity of the the principle of the free movement of common market. It gives two examples goods. to support its submission. First, some of the motifs on the list are not connected with Ireland as a whole but merely with a particular Irish locality, such as, for instance, maps of Donegal; that means that in the logic of the Irish measures in question articles which bear such a motif would have to be manufactured in the In the rejoinder, after reviewing its region or town which they are supposed "fundamental propositions," Ireland first to represent, and if they had been made clarifies a point concerning the descrip- in another Irish locality, they, too, would tion of the articles. Whilst accepting that have to be marked with an indication of some of the motifs in the list have a less origin, for Wicklow is no more entitled evident, but none the less genuine, to offer specialities of Donegal than connexion with Ireland, it considers that Wimbledon or Wiesbaden. Second, some the motifs are commonly associated with of the motifs concerned, such as those the souvenir trade; consequently the relating to the Irish language, literature goods concerned are "very much the and folklore, will often be common both stuff of trade in souvenirs." As to the to Ireland and Northern Ireland; "catch-all" formula — as the applicant nevertheless the provisions in question calls it — it does, of course, appear at require an indication of origin to be the end of the list of motifs but it is inscribed on goods from Northern confirmed by the Explanatory Note to Ireland in the same way as on those each order which "expressly states that imported from other Member States: the articles affected are those incor- that provision is equally arbitrary porating features suggesting that they are discrimination contrary to Article 36. souvenirs of Ireland;" although that note

Ireland again rejects the Commission's submission that an article bearing an Irish motif "cannot itself constitute an indication of origin." It considers that As to the Commission's argument that view, for which the Commission gives no Wicklow is no more entitled to offer reason, to be untenable, for "it is plain specialities from Donegal than are common sense that a motif or emblem Wimbledon or Wiesbaden, the defendant may give rise to as strong an inference as observes that should the possibility arise to the origin of an article as a statement of a consumer's being misled as to the of origin written or stamped on the place in Ireland where an Irish article has article." The test advanced by the been made, the question would be dealt Commission to justify measures such as with on the basis of the Consumer Infor- those adopted by Ireland is unacceptable, mation Act 1978, one of the aims of because although it is stated that a which is to protect consumers from false reference to Irish folklore or tradition is or misleading information in the sale of capable of giving rise to an indication of goods. By contrast, should articles made origin, it excludes motifs depicting cities, abroad but "falsely holding themselves personalities and such like. Ireland adds out as true souvenirs of Ireland" succeed that the test is even more difficult to in penetrating the Irish market, that accept in view of the contradiction would constitue, in the view of the Irish between it and the Commission's Government, a real threat requiring the statement, set out above, a contradiction adoption of measures such as those which can be explained only by the fact envisaged by the orders in question, from that "tourists presume, in the absence of which it may be concluded, not that they an indication to the contrary, that the should be revoked, but that legislation to articles are of Irish origin, and . . . they protect the consumer on a domestic front consider this to be important." should be strengthened still further.

2 According to the explanatory notes thereto, Statutory Instrument N o 306 (hereinafter referred to as "the Sale Order") prohibits the sale or exposure for sale of imported articles of jewellery depicting motifs or possessing characteristics which suggest that they are souvenirs of Ireland, for example an Irish character, event or scene, wolfhound, round tower, shamrock etc. and Statutory Instrument No 307 (hereinafter referred to as "the Impor- tation Order") prohibits the importation of such articles unless, in either case, they bear an indication of their country of origin or the word "foreign".

3 The articles concerned are listed in a schedule to each order. However, in order to come within the scope of the orders the article must be made of precious metal or rolled precious metal or of base metal, including polished or plated articles suitable for setting.

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4 In the Commission's opinion, the restrictions on the free movement of the goods covered by the two orders constitute measures having an effect equivalent to quantitative restrictions on imports, contrary to the provisions of Article 30 of the EEC Treaty; it also observes that according to Article 2 (3) (f) of Directive 70/50/EEC of 22 December 1969, based on the provisions of Article 33 (7) of the Treaty, on the abolition of measures which have an effect equivalent to quantitative restrictions on imports and are not covered by other provisions adopted in pursuance of the EEC Treaty (Official Journal, English Special Edition 1970 (I), p. 17) "measures which lower the value of an imported product, in particular by causing a reduction in its intrinsic value, or increase its costs" must be regarded as measures having an effect equivalent to quantitative restrictions, contrary to Article 30 of the EEC Treaty.

1 0 In this respect, the Court has repeatedly affirmed (in the judgments of 20 February 1979 in Case 120/78 REWE [1979] ECR 649, 26 June 1980 in Case 788/79 Gilli and Andres [1980] ECR 2071, 19 February 1981 in Case 130/80 Kelderman [1981] ECR) that "in the absence of common rules relating to the production and marketing of the product in question it is for Member States to regulate all matters relating to its production, distribution and consumption on their own territory subject, however, to the condition that those rules do not present an obstacle . . . to intra-Community trade" and that "it is only where national rules, which apply without discrimination to both domestic and imported products, may be justified as being necessary in order to satisfy imperative requirements relating in particular to . . . the fairness of commercial transactions and the defence of the consumer that they may constitute an exception to the requirements arising under Article 30".

11 The orders concerned in the present case are not measures which are applicable to domestic products and to imported products without distinction but rather a set of rules which apply only to imported products and are therefore discriminatory in nature, with the result that the measures in issue are not covered by the decisions cited above which relate exclusively to provisions that regulate in a uniform manner the marketing of domestic products and imported products.

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1 4 It is therefore necessary to consider whether the contested measures are indeed discriminatory or whether they constitute discrimination in appearance only.

15 The souvenirs referred to in the Sale Order and in the Importation Order are generally articles of ornamentation of little commercial value representing or incorporating a motif or emblem which is reminiscent of an Irish place, object, character or historical event or suggestive of an Irish symbol and their value stems from the fact that the purchaser, more often than not a tourist, buys them on the spot. The essential characteristic of the souvenirs in

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question is that they constitute a pictorial reminder of the place visited, which does not by itself mean that a souvenir, as defined in the orders, must necessarily be manufactured in the country of origin.

16 Furthermore, leaving aside the point argued by the Commission — with regard to the articles covered by the contested orders — that it would not be enough to require a statement of origin to be affixed to domestic products also, it is important to note that the interests of consumers and fair trading would be adequately safeguarded if it were left to domestic manufacturers to take appropriate steps such as affixing, if they so wished, their mark of origin to their own products or packaging.

17 Thus by granting souvenirs imported from other Member States access to the domestic market solely on condition that they bear a statement of origin, whilst no such statement is required in the case of domestic products, the provisions contained in the Sale Order and the Importation Order indisputably constitute a discriminatory measure.

THE COURT

hereby:

1. Declares that by requiring all articles imported from other Member States which are covered by the Merchandise Marks (Restriction on Sale of Imported Jewellery) Order 1971 and by the Merchandise Marks (Restriction on Importation of Jewellery) Order 1971 to bear an indication of origin or the word "foreign", Ireland has failed to fulfil its obligations under Article 30 of the EEC Treaty;

2. Orders the defendant to pay the costs.

Pescatore Mackenzie Stuart Koopmans O'Keeffe Bosco

Touffait Due Everling Chloros