C-247/81

composed of: J. Mertens de Wilmars, President, T. Koopmans and K. Bahlmann (Presidents of Chambers), P. Pescatore, Lord Mackenzie Stuart, G. Bosco and O. Due, Judges,

Advocate General : G. F. Mancini Registrar: H. A. Rühi, Principal Administrator

gives the following

JUDGMENT

Facts and Issues

I — Facts and written procedure on medicinal preparations] of 24 August 1976 (BGBl. I, p. 2445) carried out in 1. The Gesetz zur Neuordnung des the Federal Republic of Germany a Arzneimittelrechts [Law revising the law "radical and systematic transformation

of the law in order to achieve an is necessary in order to ensure that, if optimum level of security in the area need be, the person responsible for of medicinal preparations" (explanatory placing a medicinal preparation on the memorandum to the draft Federal Law, market can be made amenable to civil or Document 7/3060 of 7. 1. 1975 of the criminal proceedings in the area in which 7th Bundestag). this Law is applicable. This provision is modelled on Paragraph 11 of the Law on Article 1 of that Law contains the Law medical advertising. Furthermore, where on the marketing of medicinal prep­ several different persons are involved in arations (Gesetz über den Verkehr mit the placing of a given product on the Arzneimitteln, known as the Arznei- market, it requires that responsibilities be mittelgesetz and hereinafter referred to clearly defined and ascertainable. For as "the AMG"). Under the heading these reasons, all medicinal preparations "The person responsible for placing on must carry the name of the person the market", Paragraph 9 of the latter responsible for placing them on the market, Law provides that: whether or not they arc proprietary medicinal products." "(1) Medicinal preparations placed on the market in the area in which this Law is applicable must bear the Considering that the rules contained in style or name and the address of Paragraph 9 (2) of the AMG were the pharmaceutical undertaking. contrary to Article 30 of the EEC Treaty and not covered by Article 36, the (2) In the area in which this Law is Commission, by letter of 28 February applicable, medicinal preparations 1979, initiated the procedure under may be placed on the market only Article 169 of the EEC Treaty. It by a pharmaceutical undertaking received no reply to that letter and, by having its headquarters in the said letter of 11 February 1980, addressed a area." reasoned opinion to the Federal Republic of Germany. "Placing on the market" means "keeping in stock with a view to disposal by sale After an exchange of correspondence, in or otherwise, putting up or offering for which the Federal Government pointed sale or the disposal by sale or otherwise out that the Länder responsible for to third parties" (legal definition in applying Paragraph 9 (2) of the AMG, Paragraph 4 (17) of the AMG). had been asked to cease to apply it, and that, on the occasion of the next revision "Pharmaceutical undertaking" means of the AMG, the Bundestag would be "any person who places medicinal asked to modify the provision in preparations on the market under his question so that it did not apply to own name" (legal definition in medicinal preparations imported into the Paragraph 4 (18) of the AMG). Federal Republic of Germany from a Member State, the Commission initiated 2. The objective of this Law is defined the present proceedings by application as follows in the above-mentioned dated 31 August 1981 which was Explanatory Memorandum of the registered at the Court Registry on Federal Government: 10 September 1981.

II — C o n c l u s i o n s of t h e p a r t i e s It was for this reason that Directive 70/50/EEC of 22 December 1969 provided that measures which "make The Commission claims that the Court access of imported products to the should: domestic market conditional on having an agent or representative in the territory 1. Declare that the Federal Republic has of the importing Member State" (Article infringed Article 30 et seq. of the 2 (2) (g)) must be considered as having EEC Treaty by reserving the placing an effect equivalent to a quantitative of medicinal preparations on the restriction. market to such pharmaceutical under- takings as have their headquarters in The Commission examines the question the area in which the Law is whether the disputed provision, which in applicable; its view is contrary to Article 30, may be justified by Article 36, in particular 2. Order the Federal Republic of because of the protection it affords to Germany to pay the costs. the life and health of persons and animals. The Government of the Federal Republic of Germany contends that the Court The Commission concludes that no should: requirement relating to the protection of health would be affected if a foreign 1. Dismiss the application; pharmaceutical undertaking marketed in the Federal Republic of Germany, from its headquarters situated in one of the 2. Order the applicant to pay the costs. Member States of the EEC, a medicinal preparation manufactured by it. Ad- equate possibilities also exist for bringing civil or criminal proceedings against III — Submissions and argu- undertakings established in other m e n t s of t h e p a r t i e s Member States.

fault on the part of the pharmaceutical diction and the Enforcement of undertaking and increases preventive Judgments, it is applied only by six protection by making breaches of the Member States and in any event obligations imposed by the Law pun­ requires a complicated procedure. The ishable by penal sanctions or ad­ enforcement of a judgment in a ministrative fines. In the opinion of foreign country also gives rise to the German Government, it is very uncertainty about public policy reser­ important for the purposes of permanent vations and an appreciable risk as surveillance, and to ensure respect for regards insolvency. the provisions of the Law, to have a person responsible for marketing in the geographical area in which the Law is applicable. 3. The German Government also considers that the presence of a representative of the pharmaceutical undertaking is necessary in order to The German Government sees the ensure the preventive effect of the necessity for a responsible representative provisions of the Law relating to in three respects: penal and administrative sanctions. At present, there is no adequate means of applying those provisions to pharma­ 1. In the context of continuous surveil­ ceutical undertakings that place on lance, it was provided that the phar­ the market in the Federal Republic maceutical undertaking would par­ of Germany medicinal preparations ticipate in a system of recording coming from another Member State. the risks caused by medicinal preparations. In certain cases, it is necessary to withdraw a medicinal The German Government endorses the preparation from the market im­ opinion of the Bundestag, which rejected mediately and, in that case, it must be the draft amendment to the Law on the possible to identify as quickly as ground that the provision in question possible all the purchasers and users adversely affected the pattern of trade in of defective consignments. Experience medicinal preparations between States has shown that making contact with only to a slight extent and moreover was manufacturers established in certain justified under Article 36 of the EEC Member States far from Germany is Treaty. not easy, leaving aside the problem of language. The only way to ensure effective protection of health is to be able to contact quickly and informally The German Government also refers to someone responsible for placing the the case-law of the Court according to medicinal preparation in question on which it is in principle for the Member the market. States, in areas not harmonized, to decide on the degree of rigour in the matter of health protection and to set up the corresponding system of supervision, 2. Furthermore, if there is no such as long as the national measures do not person in the Federal Republic of result in a disguised discrimination Germany, individuals harmed by against imported goods and as long as medicinal preparations will have much the restrictive effects upon trade are not greater difficulty in bringing civil disproportionate to the health policy- actions for damages. Although there objective which is sought to be achieved. is a European Convention on Juris­ The German Government refers to the

The rules in dispute do not require the The Commission, in its reply, points out setting up of additional headquarters, but that it is aware that the provision in only that someone — either a subsidiary question does not include a formal or a branch of the foreign undertaking, obligation to set up an additional or a third party (other manufacturers of headquarters in the Federal Republic of pharmaceutical products, wholesalers or Germany, but claims that it is none the pharmacists) having headquarters in the less undeniable that, in practice, the Federal Republic of Germany — is provision has that effect. In any event, prepared to undertake responsibility anyone who declares his willingness to for the distribution of the medicinal undertake the responsibility for the preparations. Those conditions do not distribution of a medicinal preparation presuppose any major or costly re­ throughout the entire territory of the structuring of the system of distribution. Federal Republic of Germany will be The Federal Government is unaware of paid accordingly. any case in which these questions ever gave rise to problems. In practice, all pharmaceutical undertakings of other The Commission considers that the Member States either have branches or existence of a person responsible for subsidiaries or close commençai links marketing may be a practical advantage with German pharmaceutical under- in the context of the permanent sur- takings, if only for commercial reasons. veillance of medicinal preparations, but it is not a necessity.

In its first directive on pharmaceutical products (65/65, Official Journal, The Commission takes the view that the English Special Edition 1965-1966, p. defendant is unnecessarily dramatizing 20) the Council considered that the the situation by claiming, when speaking manufacturer of medicinal preparations of the need to withdraw certain and the person responsible for the medicinal preparations, that such with- marketing of them should not be one drawals are not rare. If a medicinal

The Government of the Federal Republic "In _ the area in which this Law is of Germany, in its rejoinder, does not applicable, pharmaceutical products may dispute that the contested provision be placed on the market only by a could theoretically, in exceptional cases, pharmaceutical undertaking having its make the sale of medicinal preparations headquarters in a Member State of the imported into the Federal Republic of European Community." Germany more difficult. None the less, in practice, all respectable pharma­ ceutical undertakings have at least one representative in the Federal Republic of However, the competent committee of Germany. The cost of this is not greater the Bundestag was unable to decide to than that incurred by a foreign producer recommend the adoption of that version who wishes to maintain relations with to the plenary assembly of the the German authorities and his Bundestag. The German Government customers from a base situated abroad. refers to that committee's report. Accordingly there can be no question of an appreciable adverse effect on trade between Member States. The German Government considers that the provision is necessary and that its Even if the free movement of goods had repeal would once again represent been adversely affected, this was justified harmonization at the lowest level. Fur­ by the need to protect the health of thermore the repeal would injure and

JUDGMENT OF 28. 2. 1984 — CASE 247/81

2 By virtue of Article 1, Paragraph 9 (2) of the Law of 24 August 1976 revising the law on medicinal preparations ( B G B l .I, p. 2445) pharmaceutical products may be placed on the market only by a pharmaceutical undertaking having its headquarters in the area in which that Law is applicable. By so limiting the opportunities for marketing medicinal preparations, that condition is undeniably, according to the Commission, a restriction on imports which entails for foreign undertakings an increase in their costs and which constitutes a serious interference with their freedom of action. According to Directive 70/50 of 22 December 1969, measures which make access of imported products to the domestic market conditional upon having an agent or representative in the territory of the importing Member State are to be considered as having an effect equivalent to a quantitative restriction (Article 2 (3) (g)).

COMMISSION ν GERMANY

3 According to the German Government, the provisions in question do not constitute an obstacle to imports, since in practice all pharmaceutical under­ takings established in another Member State and wishing to export to the Federal Republic of Germany will have recourse to a subsidiary, a branch οί­ a representative body already established in the territory of the Federal Republic. The obligation to have a representative resident in Germany corresponds therefore to a choice which the undertakings would in any event have to make for commercial reasons.

5 T h e German Government considers that the disputed measure can be justified on the basis of Article 36 of the EEC Treaty because it is the only one which makes it possible to protect public health in a sure and efficient way. In its view, the obligation to be represented by a pharmaceutical under­ taking within its territory corresponds to the need for continuous surveillance of the risks peculiar to medicinal preparations. The competent authorities need to be able to contact a responsible person who has all the necessary documents, in particular so as to be able to identify consignments of defective medicinal preparations, when it is necessary to withdraw those consignments. Experience also shows that there are difficulties in communi­ cating with undertakings established in the most distant parts of the Community. In particular, postal and telecommunication services are subject to interruption due to strikes and the competent authorities of the Länder cannot employ qualified staff speaking all the languages of the Community.

JUDGMENT OF 28. 2. 1984 — CASE 247/81

6 The German Government also insists on the need to ensure, through the presence of a responsible person in the territory of the Federal Republic, the effectiveness of the measures adopted in relation to the civil and criminal liability of pharmaceutical undertakings.

7 The principle behind the arguments put forward by the German Government cannot be disputed, inasmuch as, in the absence of adequate harmonization at Community level, each Member State is entitled to take appropriate measures in order to ensure the protection of public health in its territory. However, such measures are justified only if it is established that they are necessary in order to attain the objective of the protection of public health referred to in Article 36 of the Treaty and that that objective cannot be attained by means which are less restrictive of trade within the Community.

COMMISSION ν GERMANY

10 It should also be noted that the directive applies only to proprietary medicinal products, that is to say, products prepared in advance, and marketed under a special name and in special packaging. As regards the place in which the person responsible for placing the product on the market is established, the parties have not, however, put forward any reason, in the course of the proceedings, for making a distinction between the supervision which may be required in the case of proprietary medicinal products, on the one hand, and that which may be required in the case of other medicinal preparations, on the other.

1 3 With regard to the German Government's arguments concerning linguistic problems and possible communications difficulties, it should be pointed out that these difficulties can be resolved by the undertakings and by the

JUDGMENT OF 28. 2. 1984 — CASE 247/81

administrations in the same way as in every other field of trade. The possibility that such difficulties may arise cannot therefore justify the restrictive character of the German legislation.

1 4 As regards civil and criminal liability, these are matters which are relevant, for the purposes of the protection of human health, only in so far as application of penal provisions may have a preventive effect. It is clear that, as far as effective prevention is concerned, the preliminary formalities connected with the authorization to place products on the market as well as the checks carried out at that stage and possible subsequent checks can provide an adequate safeguard from the point of view of human health. Even though criminal penalties and damages may have a deterrent effect as regards the conduct which they sanction, that effect is not guaranteed and, in any event, is not strengthened, in the case of a manufacturer in another Member State, solely by the presence on national territory of a person who may legally represent that manufacturer.

15 In the light of the foregoing, it must be concluded that the Federal Republic of Germany, by reserving the placing of medicinal preparations on the market to pharmaceutical undertakings whose headquarters are situated in the area in which the Law on medicinal preparations is applicable, has infringed Article 30 et seq. of the EEC Treaty.

1. Declares that, by reserving the marketing of medicinal preparations to pharmaceutical undertakings having their headquarters in the area in which the German Law on Medicinal Preparations is applicable, the Federal Republic of Germany has failed to fulfil its obligations under Article 30 et seq. of the EEC Treaty;

2. Orders the defendant to pay the costs.

Mertens de Wilmars Koopmans Bahlmann Pescatore Mackenzie Stuart Bosco Due

Delivered in open court in Luxembourg on 28 February 1984.

P. Heim J. Mertens de Wilmars Registrar President

OPINION OF MR ADVOCATE GENERAL MANCINI DELIVERED ON 17 JANUARY 1984 1