C-267/91

OPINION OF MR VAN GERVEN — JOINED CASES C-267/91 AND C-268/91

O P I N I O N OF ADVOCATE GENERAL VAN GERVEN delivered on 18 N o v e m b e r 1992

Mr President, in the Common Market and non- Members of the Court, discrimination on grounds of nationality laid down in the Treaty of 25 March 1957 estab- lishing the EEC, and more particularly in Article 3 and 7 thereof, since the French leg- 1. The central question in these cases con- islation is liable to distort competition: cerns the compatibility with Community law of national legislation prohibiting resale at a loss. This question was raised in criminal proceedings brought against Mr Keck and (a) firstly, because it makes only resale at a Mr Mithouard, in charge of supermarkets loss an offence and exempts from the situated at Mundelsheim and Geispolsheim scope of the prohibition the manufac- respectively, for selling certain products at a turer, who is free to sell on the market loss. Before the Seventh Criminal Chamber the product which he manufactures, pro- of the Tribunal de Grande Instance (Regional cesses or improves, even very slightly, at Court), Strasbourg (hereinafter 'the national a price lower than his cost price; court') they claim that the statutory prohibi- tion in question, laid down in Article 1 of Finance Law No 63-628 of 2 July 1963, as amended by Article 32 of Order No 86-1243 of 1 December 1986, ' is incompati- (b) secondly, in that it distorts competition, ble with Community law and, in particular, especially in frontier zones, between the with the provisions of the Treaty on the free various traders on the basis of their movement of goods, persons, services and nationality and place of establishment?' capital, free competition and non- discrimination. That submission led the national court to submit the following ques- tion to the Court in both cases:

cases involve two supermarkets established sures of the Member States. 4 It is true that in France (very close to the German border, the Court has also held that the Member it is true) and neither the case-file nor the States may not adopt or maintain in force observations submitted by the parties to the measures which might render ineffective the main proceedings indicate any real factors competition rules applicable to undertakings, from which it must be deduced that the the situation which it has in view here being aforementioned provisions are applicable. one in which a Member State, by legislation or regulation, imposes or promotes the con- clusion of agreements contrary to Article 85 or reinforces their effects, or deprives its own rules of the character of State rules by transferring decision-making powers to pri- I can also be brief with regard to Article 7 of vate companies. 5 However, in the present the Treaty, which is also expressly referred to case, such a situation does not arise. by the national court: that provision only prohibits discrimination based on the nation- ality of traders. 2 Since the French legislation in question docs not make any direct or indi- rect distinction according to nationality or The only aspect of Community law with ref- place of establishment of the undertakings to erence to which the French legislation in which it is applicable, Article 7 does not question must be examined would appear to apply. It should be added that the Court has be that of the free movement of goods: the repeatedly held that Article 7 is not contra- case here concerns national rules relating to vened merely because other Member States the sale of products. Although Article 30 of apply less strict rules and that the competi- the Treaty is not actually mentioned by the tivity of other traders established in the national court, it would follow from the Member State concerned is affected in rela- questions submitted that the Court must tion to that of traders established in other take that provision into consideration in Member States. 3 order to enable the national court to assess the compatibility of the French legislation with Community law.

Article 30 of the Treaty. The French Govern- loss is a sales promotional method and that, ment maintains that this is not the case, since since the judgment in Oosthoek (a case con- the prohibition applies without distinction to cerning a national measure prohibiting the national products and imported products. offering of certain gifts in kind when a pur- The French Government further maintains chase is made) the Court has consistently that the prohibition does not deprive a for- held that: eign product of the competitive advantage of having a lower cost price than a national product and does not lay down maximum prices making it impossible to market in France an imported product (the price of which is higher in any case, if only because 'Legislation which restricts or prohibits cer- of the costs of transport and packaging). The tain forms of advertising and certain means French Government considers that this view of sales promotion may, although it does not is confirmed by the judgment delivered in directly affect imports, be such as to restrict 1978 in van Tiggele, in which the Court held their volume because it affects marketing that: opportunities for the imported products. The possibility cannot be ruled out that to com- pel a producer either to adopt advertising or sales promotion schemes which differ from one Member State to another or to discon- tinue a scheme which he considers to be par- '... a national provision which prohibits ticularly effective may constitute an obstacle without distinction the retail sale of domestic to imports even if the legislation in question products and imported products at prices applies to domestic products and imported below the purchase price paid by the retailer products without distinction.' 7 cannot produce effects detrimental to the marketing of imported goods alone and con- sequently cannot constitute a measure having an effect equivalent to a quantitative restric- tion.' 6

5. In order for Article 30, as interpreted in 'directly or indirectly, actually or potentially' the case-law of the Court, to be applicable to impede intra-Community trade. 9 national legislation, it must certainly have a definite link with intra-Community trade. I do not think that this can be denied in the present case. It is true that the legislation in question does not contain any prohibition of 6. Since it is to be assumed that the rules in sale at a loss at producer level. That means question are in principle covered by Article that a producer from another Member State 30, the question which must now be exam- still has the possibility — if he wishes to ined is whether the obstacles (actual or launch his product on the French market — potential) to intra-Community trade which to sell his product at a loss to a retailer in they entail must nevertheless be accepted France or elsewhere, whereupon the retailer upon application of the 'Cassis de Dijon' can resell the product in France at a greatly test: for the practice of sale at a loss is not reduced price (but above his own cost price). regulated by the Community and is regu- Nevertheless, even such a limited prohibition lated differently in the Member States; fur- of sale at a loss may still have an impeding thermore, the French legislation applies effect on intra-Community trade if the without distinction to national products and retailer himself, without support from the foreign products. foreign producer (in the form of a much reduced price or even a loss price) wishes to conduct a campaign to launch the product on the French market at a loss. A similar (potential) impeding effect exists where an importer of a product originating from According to the 'Cassis de Dijon' test, another Member State must compete in obstacles to free movement are to be France with a national producer who is able accepted only in so far as the aim of the to sell his product at a loss whilst this is not national legislation concerned is to satisfy possible for the importer/retailer. mandatory requirements justified in Com- munity law and is also necessary to attain, and is proportionate to, the aim in view. 10 It is primarily for the national court (and, before this Court, for the government of the Member State concerned) to make clear the aims which the national legislation

concerned is designed to achieve and on two of the mandatory requirements rec- whether, having regard to the case-law of ognized by the Court, namely fair trading this Court, they are justified in Community and protection of consumers. 12 The question law. In case of doubt, it can obtain guidance is, then, whether the national rules at issue from this Court on the last point. are necessary in order to achieve the aim sought after and whether, having regard to the obstacles to intra-Community trade which they entail, there is no alternative solution involving less restriction of that trade. 7. As regards the aim pursued by the national legislation concerned, the national court points out in both cases that 'at first sight the prohibition of resale at a loss laid down by the national legislation may appear quite justified by the double aim of protect- ing consumers and regulating healthy and fair competition'. In written submissions submitted to the Court the French Govern- ment further explains this point. It associates the ban on resale at a loss primarily with fair trading and only indirectly — via the safe- guarding of fair competition — with protec- As regards the aim of ensuring fair trading, tion of the consumer. n According to the the French Government mainly has in view French Government, the national rules are the case of a trader who, whether or not pur- meant to combat unfair trading. In its view, suant to a collusive agreement with another resale at a loss may allow a trader to corner a trader, tries to eliminate a competitor by pur- market as well as artificially capture custom- suing the practice of selling goods at a loss. ers, and, once this purpose is achieved, the At the hearing, that view led Counsel for the trader may then sell the products in question at the normal price or even at a higher price. French Government to distinguish resale at a The French Government maintains that such loss, as a technique, from other sales promo- a practice is also detrimental to the interests tion methods or sales methods considered in of consumers, since the losses incurred by other judgments of the Court, such as joint the trader on individual products are neces- offer {Oosthoek), doorstep selling {Buet), sarily made up by higher profit margins on publicising in a special offer the offer's dura- other products. tion and the price previously charged {GB- Inno-BM) and sale by mail order {Delattre). In so far as national rules governing sale at a loss are aimed at such practices, I consider that they are appropriate and necessary to achieve the aim in view, which is to ensure 8. It would appear from the foregoing that fair trading. They may also be apt to prevent the national rules under consideration rely competition from being distorted, which is

Here, too, the ban must however be suffi- ciently precise so as to affect only those practices. 10. Consequently, my conclusion is that a general prohibition of resale at a loss does not satisfy the necessity test and that a less restrictive alternative is available, which is to define the prohibition in such a way that it better accords with the aforementioned man- datory requirements accepted in Community 9. It cannot therefore be excluded that a ban law. on sale at a loss, where it is framed in a sufficiently precise way, may be necessary in order to achieve the objectives, justified 13 — It is not certain that this case is completely covered by the under Community law, of ensuring fair trad- exceptions provided for by the French prohibition, in par- ing and, in combination with that objective, ticular, paragraph II of Article 1 of the Law of 2 July 1963, such as sales of perishable products, sales carried out on of maintaining undistorted competition cessation or change of a business, and sales of products which arc out of season, out of fashion or technically obso- and/or protecting consumers. lete.

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OPINION OF MR VAN GERVEN — JOINED CASES C-267/91 AND C-268/9I

Conclusion

11. In view of the foregoing, I propose that the Court should reply as follows to the questions submitted by the national court:

A statutory prohibition of resale at a loss also embracing in its generality situations which do not fall within the scope of one (or more) of the mandatory requirements recognized in Community law is not compatible with Article 30 of the EEC Treaty.