C-298/86

2. In Belgium, as in other Member States, the taxes in question are collected by means of a system of tax stamps. The stamps are purchased by the manufacturer or importer 6. The Commission ascertained that the and affixed to the manufactured tobacco Belgian tax authorities were interpreting this products. They state the retail selling price legislation as entitling them to fix a uniform and vary according to the type of product retail selling price applicable to each concerned. product of the same category and the same trade mark. This price, which was used to calculate VAT and excise duty, was the highest of the prices submitted by the manu­ facturers or importers. Consequently, 3. In order to facilitate the collection of the traders who wished to fix a retail selling taxes, a scale of retail selling prices and thus price lower than that of their competitors a scale of tax stamps is provided for each were none the less obliged to pay the taxes category of products: each scale is valid for on the basis of the higher uniform price. all the products belonging to the group concerned, without distinction on the basis of quality, presentation, the origin of the products or of any other criterion. 7. Since the Commission considered that * Translated from the Portuguese. the Kingdom of Belgium was thereby failing 1 — Official Journal, English Special Edition [1972] (31 to comply with Community law, it initiated December), L 303, p. 1 ). the procedure laid down in Article 169 of

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(c) The refusal to issue tax stamps corre­ sponding to retail selling prices lower 8. Article 5 (1) provides as follows: than those provided for in the fixed 'Manufacturers and importers shall be free scale. to determine the maximum retail selling price for each of their products', without prejudice to the national legislation regarding the control of price levels or the 11. The Commission stated that it observance of imposed prices. considered that the Belgian legislation was also in breach of Community law in so far as it did not inform the persons concerned that Directive 72 / 464 / EEC , and in particular Article 5 (1) thereof, entitled domestic manufacturers and importers to determine the maximum retail selling prices 9. However, the subject-matter of the of each of their manufactured tobacco action was not entirely clear from the products. position adopted by the Commission in the written procedure; consequently, the Court requested the applicant to clarify the complaints contained in the application. 12. As the defendant contested the admissi­ bility of some of these complaints, I shall begin by examining this issue.

10. In its reply to the Court, as referred to I — Admissibility in the Report for the Hearing, the Commission stated that its main complaint was that the Belgian authorities would not allow manufacturers and importers of 13. In its defence, the Kingdom of Belgium manufactured tobacco freely to determine objected to the admissibility of the last of the maximum retail selling prices of each of the complaints set out above, concerning the their products, as was shown by the failure to provide information on the following actions on their part: provisions of the directive.

23. Throughout the text of the application 18. In my view, the aforesaid complaint it would only be possible by showing should therefore be regarded as manifestly considerable good faith to discover an inadmissible. implicit reference to that complaint in the allegation mentioned, on page 2 (a), for example, since, as became clear at a later 19. The Court has held that 'even if the stage (in the reply), that allegation referred Member State concerned does not consider to a case of refusal to supply a tax stamp it necessary to avail itself of the opportunity below the prescribed scale to an under­ to submit its observations, such an oppor­ taking importing tobacco into Belgium tunity constitutes an essential guarantee required by the Treaty and amounts to an 3 — Judgment of 17 February 1970 in Case 31/69 Commission v Italy [1970] ECR 25, at p. 33. See, also, judgments of II July 1984 in Case 51/83 Commission v Italy [1984] ECR 2 — See, for example, judgment of 9 December 1981 in Case 2793, and of 28 March 1985 in Case 274/83 Commission v 193/80 Commission v Italy[1981] ECR 3019, at p. 3032. Italy[1985]ECR 1077.

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which was a subsidiary of a manufacturer that is at issue, but the fact that the level established in the Netherlands, Cigaretten­ must be fixed within the limits of the scale, en Tabakfabriek Bene BV (hereinafter which would apparently be too restrictive, referred to as 'the Bene case'). in breach of Article 5 (2) of the directive. In other words, according to the Commission, Belgium would be excluding under Article 5 (2) what had been admitted under Article 24. But, even so, that would be too great a 5 (1). concession to good faith.

26. It is therefore hardly surprising that the 30. But even if a different conclusion were Belgian Government only objected to the drawn, it is also necessary, as is clear from admissibility of this complaint in its the aforesaid judgments of the Court, for rejoinder. The reason is the same as that for the complaint to have been raised in the which, in spite of its excellent attempt to course of the administrative procedure. arrange the arguments methodically in its When questioned on this point at the defence, this was not included among hearing, the Commission stated that the the complaints into which the Belgian complaint was included, regard being had to Government subdivided the position the system of tax stamps, in the complaint adopted by the Commission: because, at concerning 'the refusal of the Belgian auth­ that time, the complaint purely and simply orities to issue to parallel importers tax did not exist. stamps corresponding to retail selling prices lower than those fixed by the exclusive importer of the product in question', which appeared on page 4 of the letter of formal notice and in point 5, in fine, of the 27. The complaint first appears in the reply, reasoned opinion. in response to 'spontaneous' references made by Belgium to the scope of the scale. In particular, the Commission has therefore apparently reformulated its main original complaint: it is no longer the freedom to fix 31. However, the reference on page 2 (a) prices at a level below that of competitors of the application concerns the fixing of the

OPINION OF MR CRUZ VILAÇA — CASE 298/86

33. It therefore seems to me that such a complaint did not merely provide a further 36. Since it is possible as regards the latter explanation or further details of a complaint complaint that the Court will take a view which had already been set out in general or different from that which I have adopted collective terms in the administrative and will therefore consider that complaint procedure. Consequently, the Kingdom of admissible on the basis that it is included in Belgium could not have obtained any idea the other issues raised by the Commission at of the content of the complaint in question the appropriate time, it is necessary to from the complaints expressly referred to in decide on the substance of the complaint. the course of the administrative procedure, and was deprived of an essential guarantee provided for by the Treaty. As regards that complaint, the pre-litigation procedure did 37. The question which then arises is not fulfil its purpose, which is to give the whether in that case there is sufficient Member State concerned an opportunity, on evidence before the Court to enable the the one hand, of remedying the position complaint to be considered well founded. before the matter is brought before the Court and, on the other hand, of putting forward its defence to the Commission's complaints. 4 The lack of precision of the 38. In that regard, it is clear that the application cannot be permitted to widen documentary evidence submitted by the the scope of the action to include an issue which was not considered during the 6 — See judgment of 15 December 1982 in Case 211/81 Commission v Denmark [1982] ECR 4547. An explanation administrative procedure. 5 of the Court's strict interpretation of the requirement that the scope of the administrative procedure and the contentious procedure must be identical is provided in the 4 — Judgment of 31 January 1984 in Case 74/82 Commission v judgment of 20 February 1986 in Case 309/84 Commission Ireland[1984] ECR 317. v Italy [1986] ECR 599 (see the opposite view adopted by 5 — See judgment of 9 December 1981 in Case 193/80 Mr Advocate General Verloren van Themaat in his Commissionv Italy[1981] ECR 3019, at p. 3032. Opinion).

Commission in annex to the reply show that disadvantage by accentuating price in the Bene case, referred to above, the differences; on the other hand, an increase Belgian authorities were requested to supply in excise duty would be inconsistent with tax stamps corresponding to prices below the legislature's objective (Article 4 (3) of those fixed in the scale, and that request Directive 72 / 464 / EEC ), which was that, at was refused. the final stage of harmonization, the range of retail selling prices should reflect fairly the difference in the manufacturers' prices, which could only be achieved by taxation 39. At that time, before the application was which was essentially payable ad valorem. finally refused, the Belgian Government asked the undertaking concerned for certain information on its cost structure and had that information examined to determine whether it complied with the legislation on 44. In the general context of its first commercial practices. complaint (the 'main complaint', as it is called), the Commission cited the judgment in Tasca, 7 in which the Court stated that although price control systems applicable to 40. Ultimately, the Belgian Government domestic products and imported products rejected the application on the ground that alike did not in themselves constitute the scale of tax stamps was sufficiently wide measures having an effect equivalent to a to permit proper competition among manu­ quantitative restriction, they might have facturers and importers. such an effect, however, when the prices were fixed at a level such that the sale of imported products became either impossible or more difficult than that of domestic 41. It has reiterated that contention in the products. course of these proceedings, and has also alleged that the scale of tax stamps had posed no other problem up to that time, as is confirmed by the very low demand for stamps for cigarettes in the lower price 45. In the same context the Commission groups. also cited the judgment in Van Tiggele, 8in which the Court stated that a minimum price, fixed 'at a specific amount which, although applicable without distinction to 42. In that context, the Bene case is in its domestic products and imported products, is contention wholly exceptional, since it capable of having an adverse affect on the concerned a price significantly lower than marketing of the latter in so far as it the lowest price group in the scale. prevents the lower cost price from being reflected in the retail selling price', constituted a measure having an effect equi­ valent to a quantitative restriction on 43. The Belgian Government also stated that to reduce the lower limit of the scale 7 — Judgment of 26 February 1976 in Case 65/75 Tasca [1976] would, in order to maintain the level of tax ECR 291, at p. 309. See, more recently, judgment of 29 November 1983 in Case 181/82 Roussel Laboratoria v revenue, necessitate increasing the Netherlands [1983] ECR 3849, at p. 3869, paragraph 17. proportionate amount of excise duty, and 8 — Judgment of 24 January 1978 in Case 82/77 Openbaar Ministerie of the Netherlands'/ Van Tiggele [1978] ECR 25, that would place better quality products at a at p. 39, paragraph 18.

47. At the hearing reference was made to 51. It was precisely on the basis of those the existence of similar cases, in which the articles that the Council adopted Directive refusal to supply stamps for prices below the 72 / 464 / EEC , considering that it was in the scale had been raised before the domestic interest of the common market that the Belgian courts. rules for taxes affecting manufactured tobacco should be harmonized, in order progressively to eliminate from the national systems those factors which were likely to hinder free movement and distort the 48. The Commission has invited the conditions of competition (Inno v ATAB, Court — albeit in the context of another paragraph 51). complaint (concerning the fixing of prices by parallel importers) — to interpret Article 5 of the directive in the framework of Article 30 of the Treaty. 52. It is therefore in the context of Article 5 (2) of the directive that the Commission's complaint concerning the scope of the scale of tax stamps must be assessed. 49. In that connection, it should be recalled that, according to the well-established case-law of the Court, 9 'any measures which are capable of hindering either directly or indirectly, actually or potentially, 53. In that regard, account should be taken trade between Member States' are to be of the fact that the Commission has regarded as measures having an effect equi­ throughout the proceedings failed to valent to quantitative restrictions in trade examine the scale in force in Belgium and between Member States, prohibited by its relationship both with the prices and real Article 30 of the Treaty. costs of products and with the 'variety of

59. It is therefore the practice of the 56. Finally, I shall consider the substance of Belgian authorities that is challenged by the the two complaints whose admissibility was Commission. not challenged.

60. As regards the legislation, the 57. I would begin by emphasizing that the Commission has not stated clearly in what Commission itself acknowledges, in the respect it is incompatible with Community reply to the questions put by the Court, that law and, as we have seen, has even neither Article 58 of the Belgian Law of 3 recognized that the text does not infringe July 1969 on VAT nor Article 12 of the Community law; ultimately, the only regulation annexed to the Ministerial criticism made is its alleged lack of clarity in Decree of 22 January 1948 excludes the so far as it does not properly inform the application of the provisions of Directive persons concerned of the rights conferred 72 / 464 / EEC . Moreover, the Court has upon them by Directive 72 / 464 / EEC . But, already had an opportunity of stating, with as has already been seen, that complaint regard to Article 58 (1) of the Law of 3 must be regarded as inadmissible.

OPINION OF MR CRUZ VILAÇA — CASE 298/86

66. Once again, the Commission has not established either in the written procedure or at the hearing that the practice adopted by the Belgian authorities was contrary to 64. Furthermore, the only requirement laid that alleged by them. down in Directive 72 / 464 / EEC is that manufacturers and importers should be free to fix the maximum retail selling price for each of their products, and these proceedings do not concern any effects on 67. Under those circumstances, it would intra-Community trade of a national legis­ seem that the last two complaints should not lative measure which turns a system be regarded as well founded. whereby prices are freely chosen by the manufacturer or the importer into a system 11 — See judement in Inno v ATAB paragraphs 53 to 56; see whereby prices are imposed on the also judgment of 5 April 1984 in Joined Cases 177 and 178/82 Van de Haar and Kaveka de Meern [1984] ECR consumer, on the basis that such a system 1797, at p. 1814, paragraphs 20 to 22. generally has exclusively internal effects 12 — Inno vA TAB paragraph 64. See, also, judgment of 21 June 1983 in Case 90/82 Commission v France [1983] ECR since it does not distinguish between 2011, at p. 2030, paragraphs 23 to 25.

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III — Conclusion

68. In the light of the foregoing, I propose that the Court should:

(1) Declare inadmissible the complaints referred to in the Report for the Hearing under 1 (c) and 2;

(2) Declare unfounded the complaints referred to under 1 (a) and (b);