C-193/80

T H E COURT

composed of: J. Mertens de Wilmars, President, G. Bosco, A. Touffait and O. Due (Presidents of Chambers), P. Pescatore, A. O'Keeffe, T. Koopmans, U. Everling and A. Chloros, Judges,

Advocate General: Sir Gordon Slynn Registrar: A. Van Houtte

gives the following

JUDGMENT OF 9. 12. 1981 — CASE 193/80

JUDGMENT

"It shall be prohibited to transport, hold As a result of these rules it is therefore for sale, market or deal with in any not possible to import into Italy and manner whatsoever for use, directly or market in that country vinegar which is indirectly, for human consumption not derived from the acetic fermentation synthetic ethyl alcohol and products of wine or food preparations containing containing acetic acid not originating in any other kind of vinegar. the acetic fermentation of wine or piquette and products derived from the acetic fermentation of wine or piquette which cannot be classified as vinegar in That situation has already given rise to a accordance with Article 41". judgment of the Court of Justice given on 26 June 1980 in Case 788/79 Criminal proceedings against Herbert Gilli and Paul Andres in which the Court held: Article 41 of Decree No 162 restricts use of the designation "vinegar" to "products obtained from the acetic fermentation of wine or piquette". "The concept of 'measures having equivalent effect' to 'quantitative restrictions on imports', occurring in Articles 41 and 51 of Decree No 162 Article 30 of the EEC Treaty, is to be were amended by Law No 739 of understood as meaning that a prohibition 9 October 1970 (Gazzetta Ufficiale No imposed by a Member State on import- 270 of 24 October 1970) which ing or marketing vinegar containing suppressed the words "or piquette". acetic acid not derived from the acetic

COMMISSION v ITALY

3. The procedure Following that letter, on 28 July 1980 the Commission sent a second reasoned opinion to the Italian Government supplementing the first. It reiterated the By letter of 14 December 1978 the main complaint formulated in its first Commission stated that the Italian rules reasoned opinion and expressed its belief prohibiting the marketing of vinegar not that its assessment of the situation had obtained from the acetic fermentation of been "confirmed" by the Court's wine "is a form of measure having judgment in the Gilli case. It added that

JUDGMENT OF 9. 12. 1981 — CASE 193/80

the restriction of the use of the reject the conclusions of the Com- designation "vinegar" to wine-vinegar mission". also constituted a failure to fulfil an obligation under the Treaty.

The Italian rules have no justification The Commission claims that the Court under the Treaty because they are not should: "necessary in order to satisfy mandatory requirements relating in particular to the . . . protection of public health, fair "1. Declare that the Italian Republic, by trading and consumer protection" prohibiting the importation and (judgment of 20 February 1979 in Case marketing under the designation of 120/78 Rewe [1979] ECR 649 at p. 662). 'vinegar' of vinegar which is not It is common knowledge that vinegars based on wine, has failed to fulfil its which are not based on wine are not obligations under Article 30 et seq. of harmful to human health. Moreover, the EEC Treaty; consumer protection is not in question as that requirement is satisfied if consumers 2. Order the Italian Republic to pay are provided with sufficient information the costs". about the composition of the product which they buy, for example by means of a suitable label. That view is confirmed The Italian Government "expresses the by the judgment in Case 788/79, cited hope that in its judgment the Court will above.

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In the Commission's view the only Therefore, although it is a rule of possible explanation for the Italian rules, national law which has given rise to the which moreover the Italian Government question of Community law raised acknowledges, at least implicitly, is that pursuant to Article 177 of the Treaty, the they were adopted to provide an outlet national rule is in no way the subject of for excess production of Italian wine. that procedure. However, under no circumstances may such a reason justify the prohibition imposed on vinegar other than wine- vinegar.

Such an analysis is moreover borne out by the case-law of the Court on Article In the view of the Italian Government, 36 of the EEC Treaty. It follows from the judgment given by the Court in Case Cases 788/79 and 120/78 that "certain 788/79 in the context of Article 177 of values of a social nature which are the the EEC Treaty may not decide in inalienable heritage of the civilization of advance on content and conclusions Member States must prevail over strictly appropriate to proceedings under Article commercial interests" and that the 169 to establish a failure to fulfil an fulfilment of those fundamental require- obligation under the Treaty. Under the ments is still entrusted to the Member legal system of the Community these two States which are thus responsible for spheres of action of the Court are protecting the needs arising from the different and separate, each having its specific situation of each State. Those own specific and different functions. The needs, which reflect different traditions, function of the procedure under Article customs and morals, are not necessarily 177 of the Treaty is confined to the the same in each region of the EEC and interpretation of rules of Community they form "incontrovertible historical law. On the other hand the correct and facts which, moreover, the process of uniform application of those rules is a European integration is not meant to matter for national courts alone. ignore or eliminate".

JUDGMENT OF 9. 12. 1981 — CASE 193/80

Consequently, according to the Italian Government, the objectives of the Community are not therefore to be As a result, it may not be said that the achieved through "the stringent and provisions at issue constitute a "means of formal application of rigid rules like arbitrary discrimination" or a "disguised Article 30 of the Treaty prohibiting restriction on trade between Member national rules" but they should be States" simply because "the trade rules, achieved in the more appropriate and as so defined, have been found to be apt flexible context of-Article 100 of the to create a situation favourable to agri- Treaty. Moreover, Community action cultural producers in the same socio- fits into that perspective as in its economic area from which consumer resolution of 28 May 1969 (Journal practices originate". Officiel No C 76 of 17 June 1969) and of 17 December 1973 (Official Journal C 117) the Council included vinegar among the food products on which the Commission was to submit harmo- Still dwelling on the subject of Article 36 nization proposals but the Commission of the EEC Treaty, the Italian has not submitted a harmonization Government emphasizes that, contrary to proposal on vinegar. what the Commission says, its obser-

COMMISSION v ITALY

vations of 8 November 1979 do not gave rise to Case 788/79 occurred "in a constitute an admission that the province inhabited by an ethnic minority provisions of Decree No 162 were whose traditions and customs distinguish inspired by a protectionist motive of any them from the national situation as a kind. whole".

Turning next to the prohibitions imposed The Italian Government then states that by Article 51 of Decree No 162, the whereas it was not possible for Article 36 Italian Government maintains that they to apply in Case 120/78 Rewe the have their origin in and draw their jus- situation in this case is different since the tification from the same factors. These Italian provision complained of finds its prohibitions constitute an indispensable justification solely in a problem of complement for the protection of designation and of how to ensure that consumers against "abusive or at any the designation is correctly used. As for rate harmful forms of marketing vinegar the Commission's argument that the use not derived from the acetic fermentation of the term "vinegar' might be accepted of wine". The Italian Government further states that freedom of trade in Italy, even for vinegars not derived is not seriously affected since from wine, provided that, for the "consideration and regard for consumer purpose of protecting consumers, a confidence and the rules governing them requirement is imposed whereby suitable are not really liable to restrict the volume labels indicating the origin of the of trade" because, even before Decree product are to be used, the Italian No 162 was adopted, the sale of vinegar Government believes that the Com- not derived from wine was virtually mission "does not escape the charge of unknown in Italy. seeking to create at Community level, by distorting the real situations which differ from one Member State to another, a commercial terminology for vinegar The Italian Government points out that common to and exactly the same in all the importation of apple-vinegar which the Member States, in other words

After receiving the documents on the case the French Government, finding After a brief adjournment the President that the Commission is permitting Italy made a statement on behalf of the Court to continue lawfully to prohibit the indicating that if the Court were to marketing of vinegar made from decide that the extension of the synthetic acetic acid, considers that, in application to so-called synthetic vinegar that case, it can withdraw its intervention were admissible it would give the parties since such a view accords with its own. to the proceedings a fresh opportunity to

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submit any observations which they tation if the Court thought that ap- might have on that point. propriate. The Court took note of that statement. The representative of the Commission then stated that, alternatively, the The Advocate General delivered his Commission was prepared to restrict the opinion at the sitting on 15 December application to vinegar made by fermen- 1981.

Decision

1 By application lodged at the Court Registry on 29 September 1980 the Commission of the European Communities brought an action before the Court under Article 169 of the EEC Treaty for a declaration that "by prohibiting the importation and marketing under the designation of 'vinegar' of vinegar not based on wine" the Italian Republic had failed to fulfil its obligations under Articles 30 and 36 of the EEC Treaty.

2 Under Article 51 of Decree No 162 of the President of the Italian Republic of 12 February 1965 (Gazzetta Ufficiale No 73 of 23 March 1975), amongst other products, those containing acetic acid not originating in the acetic fermentation of wine may not be transported, held for sale, marketed or utilized, directly or indirectly, for human consumption upon penalty of a fine or imprisonment. Under Article 41 of the same decree the designation "vinegar" may be used only for the product obtained from the acetic fer- mentation of wine. Those provisions also apply to products imported from abroad.

6 The Commission did not receive any reply within the prescribed period of two months and on 19 November 1979 it sent the Italian Republic a reasoned opinion on the prohibition of the use of vinegar made from alcohol other than wine. In that opinion it referred to its letter of 14 December 1978 and found that "pursuant to the first paragraph of Article 169 of the EEC Treaty the Italian Republic, by prohibiting the use of fermented vinegar obtained from a product other than wine and piquette, has failed to fulfil its obligations under the Treaty". The reasons which it gave for its opinion were these: "vinegar, other than wine-vinegar, obtained from fermentation, and particularly vinegar made from alcohol, cider or malt, is produced and consumed in large quantities in several Member States and such consumption demonstrably represents no danger to health. To prohibit the use for food purposes of fermented vinegar other than wine-vinegar therefore amounts to erecting trade barriers between Italy and the other Member States".

7 In the meantime, however, the Italian Government had submitted its obser- vations by letter of 8 November 1979 in which, while maintaining its view that as a whole its national laws were compatible with Community law, it concentrated on the respective designations "vinegar" and "wine-vinegar".

COMMISSION v ITALY

8 In view of those observations on 28 July 1980 the Commission sent the Italian Government a second reasoned opinion "on the prohibition of the use of the designation 'vinegar' for any product other than that obtained from the acetic fermentation of wine". It indicated therein that it was continuing the procedure which it had initiated and after twice referring to the letter of 14 December 1978 it found that, by prohibiting the use of the designation "vinegar" in respect of any product other than that obtained from the acetic fermentation of wine, the Italian Republic had failed to fulfil its obligations under the Treaty. In the same opinion the Commission referred to the judgment which had been given in the meantime on 26 June 1980 in Case 788/79 Gilli and Andres [1980] ECR 2071 concerning the importation into Italy of apple-vinegar.

1 2 Having regard to that background the Court considers that the description and marketing of synthetic vinegar is not at issue in this case. The Commission had clearly excluded that type of vinegar in its formal letter of 14 December 1978, which was expressly mentioned in the first as well as in the second reasoned opinion, and had only examined the question of the designation and importation of various types of vinegar derived from agri- cultural products. It therefore appears that the uncertainty pointed out by the French Government is the result of the ambiguous wording of the application which does not reflect the limited scope of the formal letter and the two reasoned opinions. In those circumstances the Commission cannot be permitted to widen the scope of this action to include an issue which was expressly excluded from the very beginning of the procedure instituted under Article 169 and which was not considered by the parties, either before or during the written procedure before the Court.

1 3 It must therefore be held that this dispute concerns only the importation, marketing and designation in Italy of vinegar derived from agricultural products, to the exclusion of synthetic vinegar.

1 4 According to the Commission's originating application, as just defined as to its subject-matter, the Italian rules give rise to two distinct infringements of Article 30 of the Treaty in so far as they prohibit, first, the importation ?.nd marketing of vinegars of agricultural origin other than those deriving from the fermentation of wine and, secondly, the use of the designation "vinegar" for vinegars of agricultural origin other than wine-vinegar.

17 That argument must be rejected. The fundamental principle of a unified market and its corollary, the free movement of goods, may not under any circumstances be made subject to the condition that there should first be an approximation of national laws for if that condition had to be fulfilled the principle would be reduced to a mere cipher. Moreover, it is apparent that the purposes of Articles 30 and 100 are different. The purpose of Article 30 is, save for certain specific exceptions, to abolish in the immediate future all quantitative restrictions on the imports of goods and all measures having an equivalent effect, whereas the general purpose of Article 100 is, by approxi- mating the laws, regulations and administrative provisions of the Member States, to enable obstacles of whatever kind arising from disparities between them to be reduced. The elimination of quantitative restrictions and measures having an equivalent effect, which is unreservedly affirmed in Article 3 (a) of the Treaty and carried into effect by Article 30, may not therefore be made dependent on measures which, although capable of promoting the free movement of goods, cannot be considered to be a necessary condition for the application of that fundamental principle.

JUDGMENT OF 9. 12. 1981 — CASE 193/80

18 It follows that the fact that there are no common rules or harmonization directives on the production and marketing of specific goods is not sufficient to remove those goods from the scope of the prohibition enacted in Article 30 of the Treaty. The prohibition of measures having an effect equivalent to quantitative restrictions covers all trading rules of the Member States which are capable, directly or indirectly, actually or potentially, of impeding intra- Community trade.

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22 The argument based on the protection of public health used by the Italian Government as justification for its national legislation is not acceptable because it has no justification in the case of vinegars of agricultural origin which it is not denied contain no harmful substances and are normally consumed in other Member States and which must therefore be regarded as harmless to health, as the Court moreover held in the specific case of apple- vinegar in the Gilli judgment cited above.

23 As far as fair trading and consumer protection are concerned, those needs, as is observed below with regard to the question of designations, may be fulfilled by means less restrictive to free movement than a prohibition of the marketing of all kinds of natural vinegars other than wine-vinegar.

(b) The restriction of the designation "vinegar" to wine- vinegar

24 The Commission contends that the second way in which the Italian rules infringe the EEC Treaty is that the designation "vinegar" is restricted to wine-vinegar. It points out that in the eyes of Italian consumers that requirement lowers the value of natural vinegars produced from the fermen- tation of substances other than wine which may be offered to prospective buyers only under a brand name which lowers their value and as a result makes them "virtually unsaleable". The measure is therefore likely directly or indirectly to impede intra-Community trade.

25 As justification for its rules on this matter the Italian Government claims that it is necessary to protect consumers who in Italy "by time-honoured tradition" treat all "vinegars" as wine-vinegar owing to the semantic value of the word "aceto" (vinegar). Consumers thus run the risk of being misled as to the essential nature of the raw material used and of the end-product.

27 However, it is not to be ruled out that following the implementation of the rules at issue Italian consumers have become accustomed to the term "aceto" being used in commerce for wine-vinegar alone. If that is the case then the concern of the Italian Government to protect consumers may be justified. Such protection may however be provided by other means enabling national and imported products to be treated alike, in particular by the compulsory affixing of suitable labels giving the nature of the product sold and containing a description or additional information specifying the type of vinegar offered for sale, provided that such a requirement applies to all vinegars including wine-vinegar. Such a course would enable the consumer to make his choice in full knowledge of the facts and would guarantee transparency in trading and in offers to the public by providing an indication of the raw material used to make the vinegar.

28 It must therefore be concluded that by prohibiting the marketing and im- portation of vinegars of agricultural origin other than those originating in the acetic fermentation of wine and by restricting the designation "vinegar" to wine-vinegar, the Italian Republic has failed to fulfil its obligations under Article 30 et seq. of the EEC Treaty.

Costs

29 U n d e r Article 69 (2) of the Rules of Procedure the unsuccessful party is to be ordered to pay the costs. Since the defendant has failed in its submissions it must be ordered to pay the costs. T h e French Government, which made n o submissions on costs, must bear its own costs.

3. Orders the French Government to bear its own costs.

Mertens de Wilmars Bosco Touffait Due Pescatore

O'Keeffe Koopmans Everling Chloros

Delivered in open court in Luxembourg on 9 December 1981.

A. Van Houtte J. Mertens de Wilmars Registrar President