C-249/88

O P I N I O N OF MR TESAURO — CASE C-249/88

OPINION OF MR ADVOCATE GENERAL TESAURO delivered on 30 January 1991 *

Mr President, for pharmaceutical products, as provided for Members of the Court, under the Belgian legislation, may concern both products in general and procuts 'in particular', that is to say products considered individually. It is in fact the latter technique which is principally used by 1. In these proceedings the Commission the Minster for Economic Affairs whose seeks a declaration that the Kingdom of task it is to fix maximum prices after prior Belgium has failed to fulfil its obligations consultation wiht the committee on prices under Article 30 of the Treaty as regards for proprietary pharmaceuticals. legislation on pharmaceutical products. Three aspects of the national legislation are contested by the Commission: the rules for fixing maximum prices, 1 the rules governing approval for reimbursement by social security 2 and finally the system of In its reply, the Commission has argued that 'programme contracts' established in the the technique of fixing the price of each sector in question. 3 individual product makes it possible to intervene according to the origin of the products themselves and is therefore in itself capable of restricting the possibilities of importation. Those rules are described in detail in the Report for the Hearing to which reference is made; they will be referred to in this Opinion only in so far as is necessary in order to analyse the specific allegations In that regard I would point out at once made by the Commission. that, since the Commission, neither during the pre-litigation stage nor during the proceedings themselves, has challenged the compatibility per se of such a system of A — Rules on the fixing of maximum prices fixing prices with Article 30 of the Treaty, this is a new plea in law raised in the course of the proceedings and is therefore inad- missible, as the Belgian Government has in fact argued. 2. As a preliminary matter I would point out that the determination maximum prices

3. Having said that, I would first of all It follows from that decision that a national recall the words of Commission Directive system of maximum prices infringes Article 70/50/EEC, 4 Article 2(3)(d)(e) of which 30 of the Treaty whenever it does not deems to be incompatible with Article 30 of enable a producer or an importer to include the Treaty measures which 'preclude any in the selling price the various elements of increase in the price of the imported the cost of the product in question, product corresponding to the supplementary including additional amounts inherent in costs and charges inherent in importation'; importing. or 'fix the prices of products solely on the basis of the cost price or the quality of domestic products at such a level as to create a hindrance to importation'. In the light of the foregoing, I now turn to an examination of the individual allegations made by the Commission in regard to the system in question, namely:

of which include consideration of factors is attached to criteria which relate exclu- relating also or solely to imported products sively to factors specific to the Belgian (for example ex-producer or ex-importer market and that therefore that situation is price components, the impact of sales and likely to impede imports. In essence, the delivery margins, the impact of value added Commission merely sets out the quid demon- tax, the comparison with prices charged for strandum (namely that the prices do not take like products in the other countries having a account of the costs relating to imported similar standard of living), whilst others products) but does not explain the reasons relate to factors peculiar to the national on which that conclusion is based except by market (for example, investment and way of illustrations which cannot be employment, market and competitive regarded as convincing. conditions and the effect on exports, comparison with prices charged in Belgium for pharmaceutical products or medicinal products comparable from a therapeutic point of view and to be found on the market). The abovementioned criteria in The proposition that the criterion mainly principle permit the specific components of used in price-fixing decisions is the the cost of imported products to be taken comparison with prices charged in Belgium into account. for therapeutically comparable proprietary pharmaceuticals is not in fact proved; on the contrary, it is merely an inference, especially since the Commission itself admits that 'it does not necessarily follow from the reasons indicated in the letters addressed by the However, as the Court held in its judgment Minister to the undertakings' (p. 10 of the in Cullet, 7'in order to avoid any disadvant- reply). ageous effect on the distribution of imported products on the market, those criteria (for fixing prices) must take due account of the ex-refinery prices of all traders, regardless of the origin of the goods', I would also point out that the Nor does the mere inference drawn by the existence of criteria relating solely to Commission (point II of the reply) to the national products is not in itself of such a effect that in many cases costs are not nature as to entail incompatibility with covered and that this is borne out by the Article 30 of the Treaty. 8 Once again, what fact that certain undertakings have given up matters is the actual application of the importing their products into Belgium criteria in question. because the prices are too low prove that the criteria relating to the costs of the imported products were not taken into consideration, even where the price-fixing decisions expressly refer to those criteria.

Fixing of prices at an unremunerative level With regard to products already on the market, the Commission challenges the Belgian rules by arguing that since prices already fixed may not be increased without 5. The Commission itself acknowledges that the prior agreement of the Minister, those to demonstrate the unremunerative nature rules have the effect of freezing prices at of certain prices involves a 'detailed analysis such a low level that the marketing of of the cost of the product in question' (p. 8 imported products becomes impossible. of the application). Yet it carries out no analysis of the costs of the products but infers the lack of profitability from the mere fact that the prices of pharmaceutical products are higher in other countries and from the fact that certain undertakings have The Commission in fact maintains that the abandoned the marketing of their products abovementioned criteria, laid down in in Belgium because the prices imposed were Article 3 of the Royal Decree of 11 so low as to be unremunerative. November 1975, preclude increases in the costs of imported products from being taken into account in granting price increases. That is particularly so in the case of In that connection it is not disputed that the increases due to monetary fluctuations. market share of imported pharmaceutical products has reached 60% (the same percentage as in 1975) and that the share of imports from Member States has increased. Moreover the Commission acknowledges The Belgian Government disputes that the that the average price of imported products pricing system in question has the effect of is higher than the average price of domestic freezing prices since provision is made for products. regular adjustments, and an undertaking may request an increase in the price of the product in question on economic grounds.

adapted in good time to variations in costs analysis of price levels carried out by the occurring on the market. Commission for the purpose of demon- strating that the system in question impedes imports and in particular that the prices so fixed are not remunerative for importers. As was held in the judgment in Danis, 9a system of that kind is not incompatible with Community law when prices are frozen at a level which does not place imported Essentially, the Commission took as its basis products at a disadvantage and price a 'basket' of 50 of the products most sold in increases are granted where justified. Belgium in 1975 and compared them with the same products 10 years later. That analysis shows that the total price of the products in question fell by 7.5%, or by 11% if one takes only reimbursable As regards, in particular, the case of products. monetary fluctuations, it should be said that a change in exchange rates does not neces- sarily in itself have to entail an increase in prices. It will always be necessary to establish, in each particular case, that the The Belgian Government vigorously level of prices imposed, regard being had to contests that method of analysis and by the additional costs inherent in importing, comparing instead the prices of the 50 most render the sale of the products impossible, sold products in 1975 with those of the 50 or in any event less advantageous, than that products most sold in 1986, it demonstrates of domestic products. that those prices have increased by 54.1%.

The other analyses and the other statistical method employed by the Commission, and The Belgian Government maintains that that sharply contested by the Belgian practice was abandoned following a series Government, are those relating to the of judgments of the Conseil d'État. 10 The comparison of prices on the Belgian market Minister has therefore changed the manner with those on the markets in other Member of giving the reasons for his decisions, in States, in order to demonstrate that prices which the criteria taken into account are on the latter markets are substantially higher now explicitly stated. I should point out in than in Belgium. this respect that the Commission, whilst acknowledging that the contested practice is today less frequent than in the past, observes that it is still in use. However, the only example given by the Commission in support of its arguments predates the I do not think it even necessary to examine abovementioned judgments of the Conseil the method and the results of that d'État. comparison since this would in no way alter the conclusions which I have reached; the Commission itself has honestly and expressly acknowledged that it draws no inferences in law from the data relating to The Belgian Government further maintains the compared level prices of pharmaceutical that the fact the committee on prices of products in the Member States of the proprietary pharmaceuticals includes a Community. representative of the pharmaceutical industry means that the undertakings are aware of the reasons which led to the fixing of the price for the individual product under consideration. Lack of transparency in the application of the criteria

In the Commission's view that requirement the importer must clearly explain the is also essential with regard to pricing grounds on which it is based. decisions. 12 In that regard, the opportunity for the traders in the sector, in particular importers, to ascertain which criteria were applied cannot be considered to have been afforded by a mere enumeration of the criteria applied or by the presence of a On the basis that there is a lack of trans- representative of the industry or the parency in the application of the criteria in committee on prices. In that respect, the question, a fact which, moreover, is not Belgian practice, although amended really contested by the Belgian Government following the abovementioned judgments of so far as notification of the reasons to the the Conseil d'État, is not, according to the undertakings is concerned, it should be Commission, capable of enabling importers determined whether that lack of trans- to ascertain the manner in which the criteria parency is such as to constitute in itself an were applied, and in particular the impact of infringement of Article 30. each of those criteria on the determination of the price of the relevant product.

The existence of such a discretionary power, albeit in the presence of criteria which are Furthermore, the Court has on several objective in the sense that, taken as a whole, occasions affirmed that the competent they take account of the specific costs of the national authorities are obliged to give imported products, in my view requires that reasons for an individual measure where the decision not to permit the marketing of that measure has an impact on the effective a specific product at the price proposed by protection of rights directly conferred on individuals by the Treaty. 13 That obligation 12 — This is a requirement which is moreover now codified in Council Directive 89/105/EEC of 21 December 1988 relating to the transparency of measures regulating the 13 — See in this connection the judgment in Case 222/86 pricing of medicinal products for human use and their UNECTEF vHeylens[1987] ECR 4097, paragraphs 15 and inclusion in the scope of national health insurance systems 16, in which the principle in question was upheld in (OJ L 40, p. 8). relation to freedom of movement for workers.

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COMMISSION v BELGIUM

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OPINION OF MR TESAURO — CASE C-249/88

situation existing on the expiry of the period statement of the reasons on which they are allowed to the Kingdom of Belgium to based and thus do not permit the under- comply with the reasoned opinion must be takings to make known their point of view. taken into consideration for the purposes of the present action.

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COMMISSION v BELGIUM

regarded as constituting a restriction on the applicable as those relating to the lack of freedom to import guaranteed by Article 30 transparency in the application of the of the Treaty if certain conditions are criteria for fixing prices. satisfied'. 17 And it added that 'for such legislation to be in conformity with the Treaty the choice of the medicinal prep- arations to be excluded must be free of any discrimination to the detriment of imported In view of the foregoing considerations and medicinal preparations. To that end, the in the light of the Duphar judgment, I exclusionary lists must be drawn up in consider that the criteria for approval for accordance with objective criteria, without reimbursement are not verifiable by the reference to the origin of the products, and must be verifiable by any importer'. 18 undertakings and that, accordingly, in that respect, the legislation in question is such as to impede imports and thus infringes Article 30.

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OPINION OF MR TESAURO —CASE C-249/88

Such an argument, which is contested by Secondly, with regard to approval for reim- the Belgian Government (which maintains bursement, domestic products enjoy a inter alia that the problem of the profit- further advantage, inasmuch as they ability of prices forms no part of the dispute continue to be eligible for reimbursement concerning approval for reimbursement), even if they increase in price and no longer cannot however be accepted, since the satisfy the conditions laid down by the rules Commission has not demonstrated that the governing approval for reimbursement. At prices in question are unremunerative. the same time, however, prices of imported products continue to be frozen. Moreover, medicinal products which are subject to a programme contract cannot be used as a reference for determining the basis of reim- bursement for products whose price is fixed The Commission does not analyse the costs in accordance with the general rules. That of the products in question, which alone factor makes the system in question even could show the prices of those products to more discriminatory in practice. be unremunerative by reason of subsequent reduction imposed on the undertakings in order for them to be eligible for the reim- bursement in question. This is a manifest case of discrimination which, moreover, is not disputed by the Belgian Government. That Government merely states that the legislation in question was repealed by a framework law of 30 December 1988 19 following the reasoned I therefore consider that the allegation in opinion of 30 November 1987 and that, question should be rejected. consequently, in this respect the application to the Court has been deprived of its purpose. Indeed the Belgian Government has undertaken no longer to enter into programme contracts and not to renew C — The system of programme contracts existing ones. Nevertheless, the contracts still in force continue to produce their effects.

(iii) order the defendant to pay the costs.

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