C-166/98

2. The national court, which held that in practice the French provisions adopted in — whereas they authorise taxation of accordance with the two directives result in wine by reference solely to the volume, a rate of tax on beer which is considerably with a minimum rate of zero, higher than that applied to wine, found that the validity of the two directives was open to doubt having regard to the fact that

* Original language: French. thus requiring Member States to raise the 1 — OJ 1992 L 316, p. 21. tax on beer to the said minimum rate and 2 —OJ 1992 L 316, p. 29. so bringing about the creation of tax

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differentials liable to give rise to discrimi- whilst Article 3 provides that: nation as between wine and beer?'

'1. The excise duty levied by Member States on beer shall be fixed by refer- 4. It is necessary first to recall the provi- ence either: sions of the two directives underlying the Community scheme that gives rise to the uncertainty expressed by the national court.

SOCRIDIS V RECEVEUR PRINCIPAL DES DOUANES

7. Article 7 in the section relating to wine 8. Article 5 of the rates directive provides provides that: that:

'As from 1 January 1993, the minimum rate of excise duty on wine shall be fixed: ' 1 . Member States shall apply an excise duty to wine in accordance with this Directive. — for still wine at ECU 0,

and 2. Member States shall fix their rates in accordance with Directive 92/84/EEC',

— for sparkling wine at ECU 0

whilst Article 9 provides that: per hectolitre of product',

The grounds to be examined 12. However, Socridis challenges the valid­ ity of the two directives on other grounds. It considers that they infringe the Treaty in 9. Having regard to the observations that four respects: have been submitted to the Court, it is necessary first to define carefully the sub­ ject-matter of the question referred for a preliminary ruling. In the grounds of the judgment making the reference the national (i) they adopt a harmonisation technique court specifically states that 'the dispute and courses of action in respect of wine does not concern the transposition into and beer that infringe Article 95 of the French law' of the two directives. There­ Treaty and, more precisely, the second fore, it does not expect the Court to give paragraph thereof; judgment on the compatibility with Com­ munity law of the detailed rules on the respective taxation of beer and wine in France viewed in relation to each other, or, in other words, to state whether or not (ii) they are contrary to the general princi­ those detailed rules are contrary to the ple of proportionality in that they provisions contained in the second para­ impose and legitimise tax differentials graph of Article 95 of the Treaty. between wine and beer which are disproportionate to the dissimilarity which may objectively be acknowl­ edged to exist between those two competing types of fermented bever­ age; 10. The questions it raises concern only the validity of the structures directive and the rates directive which, by fixing a minimum 3 — Case C-408/95 Eurotunnel and Others ν SeaFrance [1997] rate of tax on beer of ECU 1.87 per degree ECR I-6315, paragraphs 33 and 34.

(iv) the reasons stated for them are flawed and consequently they do not satisfy 16. That leaves the fourth ground, the the requirements of Article 190 of the alleged failure to state reasons, to which EC Treaty. the referring court makes no reference at all. Need we consider it? We certainly should if the settled case-law of the Court, as summarised by Advocate General Tesauro in his Opinion in Eurotunnel, is 13. Whereas the first ground corresponds to be followed. According to that case-law, very closely to that mentioned by the which the Advocate General did not sug- referring court, the connection between gest should be changed, although in refer- the other three and the doubts raised by ences for a preliminary ruling the Court the national court appears to be less must consider the validity of acts of sec- obvious. Nevertheless, as regards the sec- ondary law solely in the light of the ond ground the connection seems to me to grounds mentioned by the national court, be possible since the introduction of differ- there is an exception based on the existence ential taxation is normally a matter for of grounds for invalidity which the Court Article 95 of the Treaty, the provision in may raise of its own motion, including the light of which the national court has infringements of essential procedural raised doubts. requirements such as failure to state reasons.

Infringement of the second paragraph of 20. Thirdly, it is apparent from the case- Article 95 of the Treaty law of the Court that

'the second paragraph of Article 95 of the 18. As regards the validity of the two EEC Treaty does not preclude the applica­ directives in respect of the requirements tion of a system of taxation which differ­ laid down in Article 95 of the Treaty, I entiates between certain beverages on the consider that the case-law of the Court basis of objective criteria. Such a system regarding the implications of that article does not favour domestic producers if a for the detailed rules on the taxation of significant proportion of domestic produc­ beer and of wine respectively should be tion of alcoholic beverages falls within each taken as the starting point for the relevant of the relevant tax categories'. 5 reasoning. It follows from that case-law firstly that beer and wine are not similar products for the purposes of the first paragraph of Article 95 of the Treaty and consequently the requirements laid down in 21. Finally, it cannot be emphasised too that provision are not applicable to differ­ strongly that the limits which Article 95 of ential taxation between those two bev­ the Treaty imposes on the Member States erages. On the other hand, wine and beer as regards the structuring of their tax are competing products for the purposes of systems exist only in so far as they relate the second paragraph of Article 95 and to the taxation of products imported from therefore the Member States may not, in their respective tax systems, favour one, which is produced domestically, to the 4 —Case 365/85 Commission ν Belgium [1987] ECR 3299, detriment of the other, which is imported paragraph 11. 5 — Case 243/84 John Walker & Sons v Ministeriet for Skatter from other Member States. og Afgifter [1986] ECR 875, paragraph 23.

25. However, even if a Member State has to consider carefully the manner in which it is to implement the two directives, so as not to give rise to suspicion that it is favouring 22. N o w that that has been made clear, I domestic production, having regard to the can compare the rules laid down in the two fact that its domestic production is con- directives with those laid down in the siderable as regards one of the beverages second paragraph of Article 95, because but non-existent or negligible as regards the the fact that they were adopted on the basis other, it is impossible to see how the fact of Article 99 of the Treaty cannot make that it has to impose a minimum rate of them immune to the rules contained in excise duty on beer which varies according Article 95 since all primary law prevails to alcoholic strength would prevent it from over all secondary law. With regard to tax establishing a relationship between the harmonisation those principles were reiter- taxation of wine and that of beer which ated unambiguously in Schul. 7 precluded any protection of domestic pro- duction.

28. However, Socridis has claimed that and purposes, a wine producer. The Court even if it must be acknowledged that the actually ruled as follows: two directives do not make it impossible for the Member States to comply with the second paragraph of Article 95, they are nevertheless invalid because they 'legiti­ mise' possible infringements of that provi­ 'It is clear, therefore, following the detailed sion. inquiry conducted by the Court — what­ ever criterion for comparison is used, there being no need to express a preference for one or the other — that the United King­ dom's tax system has the effect of subject­ ing wine imported from other Member 29. That is because it considers that 'since States to an additional tax burden so as to the minimum rates of ECU 0 for wine and afford protection to domestic beer produc­ ECU 1.87 per degree per hectolitre [for tion.'' 9 beer] are fixed by the Council, the resultant minimum differential between wine and beer of 4° (748%) will seem legitimate. The Member States will not consider that such a minimum differential can, in itself, be 31. In that judgment the Court did not, incompatible with the Treaty as it has been therefore, lay down the requirement that accepted unanimously by the Council. there be an objective differential, to be Consequently, any lower differential will maintained by all Member States and in all be regarded as legitimate. It goes without circumstances, between the two products in saying that similar differences will, by the question, but addressed the specific ques­ same token, be deemed to be compatible tion of the additional tax burden on with the Treaty where they concern rates of imported wine where no domestic produc­ taxation above the minimum rates. It is tion existed. clear that such differentials double, treble or even quadruple the maximum differen­ tial permitted by the Court in Case 170/78'.

37. In my view there is no possibility at all that the improper use which a Member 33. On the other hand, by 'leaving open' a State makes of the latitude left to it by a facility for the Member States to tax the directive might rebound on that directive so two products at a higher level the Council as to undermine its validity. neither intended, nor was able, to tell the Member States that henceforth they were free to apply any rate, in particular to wine, if they were not wine producers. 38. Moreover, it should be noted in that respect that when the Member States implement directives they do so under the supervision of the Commission, which, in 34. Furthermore, for even more general accordance with the task conferred on it by reasons, I cannot agree that the two Article 155 of the EC Treaty, may bring directives have the effects which Socridis proceedings for failure to fulfil obligations alleges. under the Treaty if it considers that such implementation has led to the infringement of an obligation or a rule of Community law with which the Member States are required to comply in any event. 35. It effectively claims that wherever a directive leaves the Member States a large degree of latitude as regards implementa- tion, as is the case here, the simple fact that they might infringe, by using that latitude improperly, a provision or a principle of 39. It is difficult to imagine the Court Community law which they are required to accepting in such proceedings a ground of observe in all circumstances invalidates defence whereby the Member State against that directive. which proceedings had been brought sought refuge in the freedom granted to it by the directive. It is wrong, therefore, to claim that the structures directive and the rates directive authorise infringement of the 36. The particular feature of the directive second paragraph of Article 95 by a Mem- as a legislative device is precisely that it ber State. leaves the Member States a certain discre- tion, that is to say the option for each to adopt, to the extent to which it is con- cerned and in the light of the situation in its country and the constraints, in particular 40. The relationship between the two the legal constraints, with which it is directives and the second paragraph of

45. When examined in the light of that case-law, tax arrangements which differ­ entiate between beer and wine by favouring the latter are perfectly justifiable. Not only 42. In point of fact, as the proceedings are the raw materials used (grapes for one brought before the Court have demonstra­ ted, the real risk of an additional protective and hops and cereals for the other) and the tax burden applies to wine, in the case of production processes employed (craft pro­ States that produce only beer. cesses in one case and industrial processes in general in the other) radically different, but the place of wine production and

10 — Joined Cases 142/80 and 143/80 Amministrazione delle Finanze dello Stato ν Essevi and Salengo [1981] ECR 1413. 43. As regards the permissibility of differ­ 11—Case 196/85 Commission ν France [1987] ECR 1597, ential tax arrangements note should be paragraph 6.

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brewing respectively in the economies of 48. It should not be forgotten either that the Member States is not comparable. Even excise duty is not the only tax levied on in the Member States where wine is not wine and beer and that in order to assess produced it is difficult to attach to the the competition between those two bev- brewing industry the same socio-economic erages as far as consumers are concerned it importance as is attached to wine produc- is certainly necessary to take into account tion in certain other Member States. the burden of VAT on wine which, having regard to the higher price of the latter, places it at a disadvantage and reduces the advantage that it may enjoy in terms of excise duty.

47. I do not, of course, conclude from that 50. However, Socridis maintains that there that an additional tax burden must neces- is an infringement of the principle of sarily be placed on beer in comparison with proportionality at another level — that of wine — simply that the additional tax the exercise by the Council of its powers burden may be based on sound reasons under Article 99 of the Treaty. After reiter- and, furthermore, that the statistical evi- ating that observance of the principle of dence that has been adduced demonstrates proportionality is determined by ascertain- that the requirements relating to the taxa- ing whether or not the measures implemen- tion of beer in the two contested directives ted are appropriate for the purpose of are certainly not such as to compromise the achieving the intended aim or go beyond competitive position thereof even if a what is necessary to attain it, it states that Member State makes use of the option to the two directives have not gone far enough refrain from levying excise duty on wine. towards bringing about harmonisation

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because they 'fall far short of what was taxation considerably. It is otiose to list necessary to bring about the minimum them and would take us too far from the harmonisation of taxation between wine question put to the Court. However, to see and beer necessary to be compatible with the progress that those directives have the second paragraph of Article 95 and the permitted it is sufficient to refer to the very principle of proportionality'. detailed provisions that they lay down as regards the various reductions in duty which certain products may enjoy.

52. The aim in adopting the two directives was not to resolve problems relating to competition between different types of 54. However, that constraint does not pre- beverage or to put an end to tax discrimi- clude the existence of a discretionary nation in certain Member States, but to power, which the Council exercised when ensure, in the best manner possible, the free it considered that the proposals which the circulation of various types of beverage Commission had put to it in, first in 1987 between the Member States in view of the and then in 1989, went beyond what was establishment of the internal market. More- required for the establishment of the inter- over, that was precisely what was done, as nal market. That was generally true, if the two directives do not comprise solely credence is to be given to the relevant the provisions contested before the Court. report drawn up in 1995 by the Commis- They impose with regard to many problems sion, as it is required to do, to review the raised by excise duties on alcoholic bev- first two years of the application of the erages rules which simplify that area of harmonised system.

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The duty to state reasons

58. Finally, it must be acknowledged that the use of expressions such as 'whereas... 57. That leaves the final point raised by should' or 'whereas it is appropriate' is Socridis, which I will examine briefly, more frequent than is imagined in the relating to the statement of reasons for statement of reasons for Community legis- the two directives as regards the provisions lative acts and that the validity of many of they lay down on the structure and rate of such acts could be called into question excise duty on beer and on wine. It is under Article 190 of the Treaty if such a difficult to deny that the statement of statement of reasons were regarded as reasons is elliptical. However, an elliptical insufficient. statement of reasons is not necessarily an inadequate one, still less an absent one. It should be borne in mind that it is the 12 — See, for example, Case 819/79 Germany v Commission reasons stated for directives adopted by the [1981] ECR 21. Council and which are addressed solely to 13 — See, for example, Case C-84/94 United Kingdom v Council [1996] ECR I-5755. the Member States that are at issue here 14 —OJ 1992 L 76, p. 1.

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59. When the Community legislature 60. The statement of reasons for a harmo- adopts provisions of a general nature nisation directive and that for a decision pursuant to a power to harmonise coupled declaring State aid incompatible with the with a broad discretion it would be unrea- Treaty or imposing a fine on an under- sonable, to my mind, to require it to taking for infringing competition rules accompany each measure it adopts with a cannot be assessed by the same standard. statement of reasons comprising both a justification of the contents thereof and a refutation, in advance, of criticism from all 61. Therefore, I propose that the complaint those whom that measure does not suit of failure to state reasons in the two because it fails to promote their interests. directives should not be upheld.