C-177/82

T H E C O U R T (First C h a m b e r ) ,

composed of: T . Koopmans, President of Chamber, A. O'Keeffe and G. Bosco, J u d g e s ,

A d v o c a t e G e n e r a l : G. Reischl Registrar: P . H e i m

gives the following

VAN DE HAAR AND KAVEKA DE MEERN

JUDGMENT

The customers of Kaveka, which is engaged in particular in the wholesale of I — Facts and written p r o c e d u r e tobacco products (cigars, cigarettes and pipe tobacco), are resellers and persons who use the products which they buy from Kaveka for business or trade purposes. The last category of persons The main proceedings before the includes bulk buyers who are not national court are criminal proceedings resellers. It appears that Kaveka's which were brought before the Arron- business practice is not to check at the dissementsrechtbank, Utrecht, by the cash-desk whether the customer is a Public Prosecutor of that town against reseller of the tobacco products which Kaveka de Meern BV, a company whose he has in his trolley. The company business is the wholesale of foodstuffs, consciously takes the risk that the buyer and its former general manager, Jan van will not use the goods purchased by him de Haar. The accused are charged with for business or trade purposes. Kaveka infringing the prohibition contained in operates a system of entrance cards and Article 30 of the Wet op de Accijns van these may be obtained by businesses and Tabaksfabrikaten [Law on the Excise institutions such as old people's homes. Duty on Tobacco Products, hereinafter referred to as "the Tobacco Excise Law"] 1964. The defence advanced by the accused is that the alleged offences are not pun- ishable since Article 30 of the Tobacco The part of that article relevant in this Excise Law is contrary to Articles 5, 30 case is the first sentence, which reads as and 85 of the EEC Treaty. They contend follows : that the abuse of a dominant position entailed by the compulsory price system may affect trade between Member States and impede imports. In addition, the fact that the excise duty is subject to an "It shall be an offence to sell, offer for absolute minimum leads to the formation sale or supply tobacco products to per- of an absolute minimum sale price, sons other than resellers at a price lower which is contrary to Article 30 of the than that appearing on the excise label." Treaty.

Considering that the issue before it which it is clear that the criteria concerned the interpretation of Com­ bringing the case within the munity law, the Arrondissementsrecht­ prohibition of Article 85 (1) are bank decided, by judgments of 1 June satisfied if it is established that a 1982, to stay the proceedings and to commercial provision is likely to refer the following questions to the deflect trade from its natural course, Court of Justice for a preliminary ruling or must the national court give a under Article 177 of the EEC Treaty: more independent meaning to Ar­ ticle 30 of the EEC Treaty to the effect that such a legal provision only constitutes a restriction on trade and thus a measure having equivalent effect within the meaning " 1 . In several decisions on Article 30 of of Article 30 if the court is able to the EEC Treaty the Court of Justice find on the basis of the factual has declared that any commercial circumstances that the importation provision adopted by the Member of goods from other Member States States which is capable of hindering may be restricted by that legal intra-Community trade, directly or provision? indirectly, actually or potentially, is to be considered a measure having an effect equivalent to quantitative restrictions. This formulation ap­ pears to come very close to what the Court has said with regard to the 2. Must a legal provision of a Member concept of 'agreements . . . which State which applies without dis­ may affect trade between Member tinction to domestic and imported States within the meaning of Article products also be regarded as a 85 (1) of the EEC Treaty in Cases measure having equivalent effect 56 and 58/64 (Consten and Grundig within the meaning of Article 30 of ν Commission [1966] ECR 299) and the EEC Treaty where it is clear that in Case 56/65 (Société Technique that provision restricts imports into a Minière ν Maschinenbau Ulm [1966] Member State only to a very small ECR 235), although the term used in degree and other possibilities remain those cases is 'may affect' trade for the marketing of products from between Member States whereas, for other Member States? example, in the Dassonville judgment the term 'hinder' is used. In a case where the national court has to judge whether a legal provision of a Member State which applies without distinction to imported and domestic 3. Must the national court in its inquiry products is a measure having into the restrictive effects on trade of equivalent effect within the meaning a legal provision which applies of Article 30 of the EEC Treaty, without distinction to the import­ must it in its judgment take into ation of products from other account the case-law of the Court of Member States and the marketing of Justice concerning Article 85 of the domestic products have regard solely EEC Treaty and more particularly to the effects of that legal provision the interpretation given by the Court or must it also take account of the to the expression 'may affect trade fact that other restraints on trade between Member States', from exist on the relevant market as a

The accused in the main proceedings The judgments referring the questions to contend that in a related case (Case the Court were received at the Registry 13/77, INNO ν ATAB, [1977] ECR on 14 July 1982. The written procedure 2115, at paragraph 28) the Court used followed the normal course. the Dassonville criterion, including the term "hinder", when dealing with Article In accordance with Article 20 of the 86. The Court has always given the same Protocol on the Statute of the Court of meaning to the term "affect" trade Justice of the European Economic between Member States in Articles 85 Community written observations were and 86. Therefore there is no justi­ submitted on 18 October 1982 by the fication for assuming, as the national accused in the main proceedings, re­ court does, that different approaches presented by A. F. de Savornin Lohman, may be adopted towards the term of the Rotterdam Bar, and on 24 "affect" trade between Member States, September 1982 by the Commission of depending on whether Articles 85 and 86 the European Communities, represented or Article 30 are in issue. There is no by its Legal Adviser, Bastian van der reason for drawing any fundamental Esch, acting as Agent. distinction, either in general or specifically in this case. Upon hearing the report of the Judge- Rapporteur and the views of the In this context it is relevant that the Advocate General, the Court decided to Court has held that agreements and open the oral procedure without any concerted practices between under­ preparatory inquiry. After establishing takings belonging, as parent company that no Member State or institution and subsidiaries, to the same concern are involved in the proceedings had re­ not caught by Article 85. It is common

"The restrictions of competition are appreciable because they are carried out This question is related to the first in so by almost all the undertakings in this far as an affirmative reply to the first sector of the economy." question would tend to indicate that the requirement of an appreciable effect on trade may also exist when Article 30 is applied. A number of judgments of the Court concern what is called the In fact Article 30 of the Tobacco Excise requirement of an appreciable effect on Law applies not to "almost all" but to all trade for the purposes of Article 85. undertakings and at all relevant levels of Reference may be made to the judgment trade. in Case 58/80 (Dansk Supermarked ν Merco [1981] ECR 181), in which the Court held that a commercial ar­ rangement directed against an odd lot Third question of only 1 000 dinner services is quite sufficient to render Article 30 applicable. That shows that if the Court intends here to apply the test of appreciable The accused argued that in the Court's effect the threshold has in fact been set view, as expressed in paragraph 38 of the very low. judgment in INNO v ATAB, the national court must assess the restrictive effect on trade of the national measure in question by reference to the entire fiscal ar­ In the past the Commission has rangements applying to tobacco products repeatedly shown that it Considers rules and by reference to the obstacles to such as those contained in Article 30 of trade which may result from those the Tobacco Excise Law to be contrary arrangements per se. Two points should to Article 30 of the Treaty. As regards therefore be taken into account. First, the Netherlands provision in question, the restrictive effect on trade of a reference may be made to the Com­ particular national measure may, though mission's comment in paragraph 107 (a) relevant in itself, be temporarily over­ of its SSI decision of 15 July 1982 shadowed by the restrictive effect on (Official Journal 1982, L 232, p. 1): trade of Other existing rules. In this

regard it is relevant that, as appears from Fourth question the SSI decision, the Commission is at present intent upon eliminating the greater part of those other measures having a restrictive effect on trade. The purpose of this question is not Secondly, where existing obstacles al­ immediately clear to Kaveka, which ready inhibit the free play of competition reminds the Court of the test of ap­ at one level, additional obstacles at preciable effect as defined by the another level are felt even more sharply. Commission in the proceedings against van Landewyck. Furthermore, in order to determine whether a restrictive effect is appreciable it may be necessary to take into consideration the fact that identical prosecutions have been brought against 17 other comparable undertakings. Lastly, the national court must examine the situation on the market in tobacco products in the absence of the re­ Fifth question strictions on competition which will be prohibited under the SSI decision or the Court's judgment in this case. It may be that, in view of the technical aspects of In Kaveka's view, it is this question attaching excise labels, parallel imports at which essentially determines the im­ the retail level are very difficult at the portance of this reference and dis­ moment pending the final phase of tinguishes it from Case 13/77 (INNO ν harmonization. It is a different matter as A TAB). In that case it was established regards competition within a brand, inter alia that Member States may not however. It is not clear why this should enact measures enabling private under­ be made impossible from the outset at takings to escape the constraints of the level of trade at which Kaveka Articles 85 to 94 (paragraph 33). operates. However, in its first question the national court focused its attention on Article 86 on the assumption that a dominant position was created or encouraged by similar Belgian rules. Consequently, paragraph 1 of the operative part of the Court of Justice's It appears from its comments that the judgment in that case contemplates national court is inclined to think that Article 86 only. since elasticity of demand for cigarettes is low (which is its supposition, but by no A national legislative provision which means proved) price competition is made compulsorily fixes the retail price at the difficult. That view does not accord with price quoted by the manufacturer or the Commission's findings in, for ex­ importer technically amounts to col­ ample, paragraph 96 of its SSI decision, lective vertical price-fixing. One way in particularly the passage dealing with which an affirmative answer to the SSI's argument that a drastic increase in question might be important is that — tax would sharply reduce sales. That assuming this to be a case of a quasi- proves the existence of price elasticity on agreement between undertakings im­ the cigarette market, even at consumer posed by the State — the judgments of level. the Court and the decisions of the

By introducing and enforcing the pro­ hibition contained in Article 30 of the Tobacco Excise Law the Netherlands has 2. Observations submitted by the Com­ instituted a compulsory price system mission which would be automatically prohibited if it were set up by undertakings. It would not be eligible for exemption. There seems to be no doubt that, although the second paragraph of Article 5 of the Treaty, considered in isolation, is not sufficiently specific to be directly First question applicable, it may none the less become specific when considered in direct relation with another provision of the Treaty. That was made clear by the Court in paragraphs 30 and 31 of its decision in INNO ν ATAB. There is little doubt either that the same holds true of The Commission contends that both Article 5 when considered together with Article 30 and Articles 85 and 86 are part Article 85. That relationship has already of the fundamental rules of the Treaty, been pointed out by the Commission. their aim being to achieve and maintain free movement of goods, that is to say a unified market. They complement one another and combine together towards achieving the objectives set out in Article 2 of the Treaty. This requires an exhaustive interpretation of those rules If that argument is not adopted a lacuna which leaves no lacunae as to the result is likely to be created. At the end of the to be achieved, as would happen, for introduction to paragraph 100 of the SSI example, if measures or practices of the decision the Commission expresses the persons addressed by those provisions view that the undertakings cannot rely which have a comparable negative effect on, inter alia, the Netherlands legislation in every respect on the unity of the "since the agreements are private in market were examined in the light of

The specific cases now before the Utrecht court concern a statutory pro­ The Commission therefore believes that hibition preventing the entire retail trade the terms, purpose and context of the from selling certain products at a price provisions in question militate against the lower than the retail price chosen by the application of different criteria for de­ manufacturers or importers having termining whether it is a question of regard to the excise duty which they a measure having equivalent effect have to pay. The special feature of that hindering intra-Community trade or a system is not so much the price level measure affecting trade between Member which it thus brings about but the fact States within the meaning of Article 85 that it completely removes a whole of the Treaty. In its judgment in INNO marketing stage, namely the retail trade, ν ATAB the Court has already expressed from the influence of market forces. To its views on rules comparable to Article put it another way, this case does not 30 of the Tobacco Excise Law. involve temporary control of the market According to paragraph 53 of the but a permanent restriction on the decision in that case, such a system number of traders on that market. The "generally" has exclusively internal Court has not left the slightest doubt effect. Paragraph 54 qualifies that view about the fact that trade and the by stating that the possibility cannot be freedom essential to it are vital to the excluded that in certain cases such a proper functioning of the common system may be capable of affecting intra- market (cf. judgment in Joined Cases 56 Community trade. That approach is and 58/64, Consten and Grundig ν wholly in accordance with the numerous Commission, [1966] ECR 299). A retailer decisions of the Court on the question who is permanently prohibited from

According to generally accepted laws of economics, the volume of demand for products from other Member States largely determines the volume of inter- State trade in those products. A per­ manent freezing of demand by a Finally, still on this point, the Com­ prohibition against selling at a price mission refers in particular to the lower than the price fixed by the manu­ judgment of the Court in Joined Cases facturer or importer permanently freezes 16 to 20/79 {Openbaar Ministerie ν the volume of imports as well; in other Danis and Others [1979] ECR 3327, at words it deflects trade from its natural p. 3339) where it was held that, if as a course. Put in yet another way, when the result of' a measure to control prices retail trade is totally deprived of the traders wishing to import products could most important and most natural weapon do so only at a loss, such a situation available to it in a market economy, constituted a measure having an effect namely its own price policy, an artificial equivalent to quantitative restrictions on level of demand is created, which in turn imports. In other words an economic affects the volume of imports. Even if measure by which the national auth­ these factors are difficult to quantify, orities restrict the normal supply of there is generally little doubt about the imported products must be examined to certainty and predictability of that re­ see if it is compatible with Article 30. In lationship of cause and effect. There is the Danis case the restriction consisted in little doubt either that the sale of new the risk of loss run by importers. In this products, and thus quite often the sale of case the restriction is applied at the retail imported products, is impeded sooner level so that the final consumer has no and to a greater extent than the sale of incentive to increase demand for im­ established products. Those aspects of ported products. The phenomenon is the system in question should not be more diffuse, but of the same nature overlooked when the question is an­ nevertheless. A similar argument may be swered whether or not intra-Community advanced with reference to the case trade is in fact affected, which in concerning restrictions on production paragraph 54 of the decision in INNO ν which the Court decided in its judgment ATAB the Court considered possible "in in Case 190/73 (Officier van Justitie ν certain cases". Seen in that light, the fact van Haaster[1974] ECR 1123).

Second question decision in INNO ν A TAB in which the Court first of all states that intra- Community trade in tobacco products is subject to obstacles inherent in the methods of fiscal control applied (ob­ The Commission observes that, as re­ stacles which do not fall within Article gards measures having an effect 30; cf. paragraph 49 of the decision) and equivalent to customs duties on imports, describes the national court's role in the Court has already stated in its ascertaining whether a system of judgment in Joined Cases 52 and 55/65 compulsory retail prices is compatible (Germany ν Commission [1966] ECR with the Treaty: that role is to ascertain 159) that, however small its discrimi­ whether such a system may "in itself" natory effect, such a measure is still hinder imports, directly or indirectly, caught by Article 13 (2). As far as actually or potentially, "taking into measures having an effect equivalent to account", however, fiscal obstacles. The quantitative restrictions are concerned, Commission believes that consideration the Commission refers to the fact that must be confined to obstacles which are the Court has repeatedly emphasized the compatible with the Treaty. The fact that wide scope of Article 30 and to the wide a legislative measure which is potentially definition of a measure having equivalent contrary to the Treaty coincides with effect given in the judgment in Case similar practices of the administration 2/73 (Riseria Luigi Geddo ν Ente and undertakings does not by itself Nazionale Risi [1973] ECR 865, at p. remedy the incompatibility but poses an 879). administrative problem, for it is necessary to decide at which point the The Commission believes that in such a incompatibility begins. system there is no place for a de minimis rule whereby Article 30 would not be applied to an existing and ascertainable restrictive effect on imports because it was so slight. It must also be re­ membered that to define a slight effect is extremely difficult. Finally, the Com­ mission points out that a total pro­ hibition on retailers' practising any form of price competition can, by its very nature, rarely if ever have only a very To avoid any misunderstanding the slight effect on intra-Community trade, Commission stresses the point that an especially in the case of a consumer examination of systems of compulsory article which is widely distributed and on retail prices in the light of Article 30 sale at thousands of outlets. should not be limited to their inhibitory effect on parallel imports but should also take account of any resultant deflection of trade from its normal course. In this connection the Commission recalls the Third question van Landewyck judgment ([1980] ECR 3125), which also deals with the question of the combined effect of different restrictive measures. In paragraph 133 of that decision the Court held that in spite The Commission's reply to this question of the other restrictions there remained adopts paragraphs 55 and 56 of the for the manufacturer or importer a

At the sitting on 5 May 1983 the Netherlands Government, represented by Fifth question A. Bos, acting as Agent, the accused in the main proceedings, represented by A. F. de Savornin Lohman, of the Rotterdam Bar, and the Commission, represented by B. Van der Esch, acting This question is very similar to the sixth as Agent, presented oral argument. question submitted by the Cour d'Appel, Rouen, in Case 5/79 (Procureur General ν Buys [1979] ECR 3203), the only difference being that in that case the question concerned agricultural products The Advocate General delivered his governed by Community rules. Mutatis opinion at the sitting on 30 June 1983.

VAN DE HAAR AND KAVEKA DE MEERN

Decision

1 By judgments of 1 June 1982, which were received at the Court on 14 July 1982, the Arrondissementsrechtbank, Utrecht, referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty a series of questions on the interpretation of Articles 5, 30 and 85 of the EEC Treaty.

2 Those questions arose in the context of criminal proceedings brought by the Officier van Justitie, Utrecht, against Kaveka de Meern BV, a company whose business is, in particular, the wholesale of tobacco products, and against its former general manager, Jan van de Haar.

3 The first sentence of Article 30 of the "Wet op de Accijns van Tabaks- fabrikaten [Law on the excise duty on tobacco products, hereinafter referred to as "the Tobacco Excise Law"] 1964 provides as follows:

7 The questions submitted by the Arrondissementsrechtbank, Utrecht, are as follows :

" 1 . In several decisions on Article 30 of the EEC Treaty the Court of Justice has declared that any commercial provision adopted by the Member States which is capable of hindering intra-Community trade, directly or indirectly, actually or potentially, is to be considered a measure having an effect equivalent to quantitative restrictions. This formulation appears to come very close to what the Court has said with regard to the concept of 'agreements . . . which may affect trade between Member States' within the meaning of Article 85 (1) of the EEC Treaty in Cases 56 and 58/64 {Consten and Grundig ν Commission [1966] ECR 299) and in Case 56/65 (Société Technique Minière v Maschinenbau Ulm [1966] ECR 235), although the term used in those cases is 'may affect' trade between Member States whereas, for example, in the Dassonville judgment the term 'hinder' is used. In a case where the national court has to judge whether a legal provision of a Member State which applies without distinction to imported and domestic products is a measure having equivalent effect within the meaning of Article 30 of the EEC Treaty, must it in its judgment take into acccount the case-law of the Court of Justice concerning Article 85 of the EEC Treaty and more particularly the interpretation given by the Court to the expression 'may affect trade between Member States', from which it is clear that the criteria bringing the case within the prohibition of Article 85 (1) are satisfied if it. is established that a commercial provision is likely to deflect trade from its natural course, or must the national court give a more independent meaning to Article 30 of the EEC Treaty to the effect that such a legal provision only constitutes a restriction on trade and thus a measure having equivalent effect within the meaning of Article 30 if the court is able to find on the basis of the factual circumstances that the importation of goods from other Member States may be restricted by that legal provision?

8 In the first question the national court asks whether, for the purpose of assessing, in the light of Article 30 of the Treaty, rules applicable both to imported and to domestic products, the criteria developed by the Court of Justice regarding Article 85, in particular with regard to the concept of effect on trade between Member States, should also be taken into account, or whether Article 30 is to be interpreted independently, only coming into consideration when it is established that the rules in question are of such a nature as to restrict imports. The second question seeks to ascertain, more particularly, whether such rules are even to be considered a measure having equivalent effect within the meaning of Article 30 of the Treaty where it is

JUDGMENT OF 5. 4. 1984 — JOINED CASES 177 AND 178/82

clear that they restrict imports only to a very small degree and other possibilities remain for the marketing of imported products.

9 The accused in the main proceedings and, to a certain extent, the Commission contend that Articles 30 and 85 of the Treaty cannot be interpreted differently with regard to the concept of effect on trade between Member States. The Netherlands Government, on the other hand, argues that Articles 30 and 85 should be interpreted independently of each other.

10 At the hearing, however, the Commission qualified the view it had expressed in its written observations, and pointed out that, while the effects of national measures or agreements between undertakings which relate to the same economic facts must be analysed in the same way, the legal consequences may be different because the provisions at issue have their own internal logic and must be interpreted independently of each other.

T h i r d and fourth questions

1 5 T h e s e questions concern the compatibility with Article 30 of the Treaty of a national legislative provision such as Article 30 of the Netherlands Tobacco Excise Law, in so far as it imposes, in the case of sales to the consumer, a selling price fixed by the manufacturers or importers. The national court wishes to ascertain, in particular, whether the issue of compatibility must be resolved in the light of the effects of such a provision taken in isolation or whether account should be taken of the existence of other hindrances to trade caused by the differing fiscal legislation of the Member States, even though the provision at issue is not in itself deemed to have any restrictive effect on trade.

16 The national court states that in order to ensure the levying of excise duties on tobacco products a system of excise labels is operated. Retail sales of tobacco products must be made at the price appearing on the excise label. The price is freely determined by the importer or by the domestic manu- facturer. The importer is free to determine his prices without reference to the foreign manufacturer. The assortment of excise labels offers many possibilities and in practice permission to alter the price on the label is always

JUDGMENT OF 5. 4. 1984 — JOINED CASES 177 AND 178/82

granted on request. Excise labels are obtainable by any person, subject to the conditions laid down by revenue law, the principal requirement being one of registration.

17 The Tobacco Excise Law permits a foreign producer to market the same tobacco product in the Netherlands at different prices. However, it does not appear that in practice the same brand has been imported by more than one firm.

VAN DE HAAR AND KAVEKA DE MEERN

are freely chosen by the manufacturer or the importer as the case may be and imposed on the consumer by a national legislative measure, and whereby no distinction is made between domestic products and imported products, generally has exclusively internal effects.

21 However, as the Court pointed out in the same judgment, the possibility cannot be excluded that in certain cases such a system may be capable of affecting intra-Community trade. If therefore imports and exports of tobacco products are subject to obstacles due to the different methods of fiscal control used by the Member States to ensure collection of the taxes on those products, it is necessary to decide whether such a system of fixed prices imposed on the consumer for reasons of fiscal control is or is not of itself of such a nature as to allow imported products to be profitably marketed or to allow a possible competitive advantage to be obtained as a result of the lower production costs of imported products compared to domestic products.

22 Consequently, in order to decide whether legislation of a Member State which, as regards the sale of tobacco products to the consumer, imposes a fixed price freely chosen by the manufacturer or importer constitutes a measure haying an effect equivalent to a quantitative restriction, the national court must investigate whether, having regard to the fiscal restraints on trade in the products concerned, such a system of imposed prices is in itself likely to hinder, directly or indirectly, actually or potentially, trade between Member States.

25 The costs incurred by the Commission of the European Communities, which submitted observations to the Court, are not recoverable. As these proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the prosecutions pending before the national court, the decision as to costs is a matter for that court.

On those grounds,

T H E C O U R T (First Chamber),

in answer to the questions referred to it by the Arrondissementsrechtbank, Utrecht, by judgments of 1 June 1982, hereby rules:

1. Article 30 of the EEC Treaty, which seeks to eliminate national measures capable of hindering trade between Member States, pursues an aim different from that of Article 85, which seeks to maintain effective competition between undertakings. A court called upon to consider whether national legislation is compatible with Article 30 of the Treaty must decide whether the measure in question is capable of hindering, directly or indirectly, actually or potentially, intra- Community trade. That may be the case even though the hindrance is slight and even though it is possible for imported products to be marketed in other ways.

2. In order to decide whether legislation of a Member State which, as regards the sale of tobacco products to the consumer, imposes a fixed price freely chosen by the manufacturer or importer constitutes a measure having an effect equivalent to a quantitative restriction, the

O P I N I O N OF MR ADVOCATE GENERAL REISCHL D E L I V E R E D O N 30 J U N E 1983 1

Mr President, any deviation from the minimum prices Members of the Court, from affecting conditions of competition in the retail trade, in other words to protect specialized retailers. Article 30 of the Netherlands Wet op de Accijns van Tabaksfabrikaten [Law on the Excise Duty on Tobacco Products] The accused in the main proceedings, of 1964 provides that it shall be an Kaveka de Meern BV, a self-service offence to sell, offer for sale or supply wholesale business, and its general tobacco products to persons other than manager are charged with contravening resellers at prices lower than those that provision. It was found that in appearing on the excise label. According November 1977 Kaveka offered for sale to the official explanatory statement, the cigars, cigarettes and pipe tobacco at purpose of that provisions is to prevent prices lower than those marked on the 1 — Translated from the German.