C-398/98

COMMISSION v GREECE

OPINION OF ADVOCATE GENERAL RUIZ-JARABO COLOMER delivered on 15 February 2001 1

I — Introduction 4. Article 36 of the EC Treaty (now, after amendment, Article 30 EC) provides:

1. By application lodged on 6 November 1998 under Article 169 of the EC Treaty (now Article 226 EC), the Commission is requesting the Court to declare that the Hellenic Republic has infringed Article 30 of the EC Treaty (now, after amendment, Article 28 EC). 'The provisions of Articles 30 to 34 shall not preclude prohibitions or restrictions on imports, exports or goods in transit justi- fied on grounds of public morality, public 2. The Commission contends that the sys- policy or public security; the protection of tem which that Member State applies in health and life of humans, animals or order to maintain the minimum level of plants; the protection of national treasures emergency stocks of petroleum products possessing artistic, historic or archaeologi- constitutes a measure having equivalent cal value; or the protection of industrial effect to a quantitative restriction on and commercial property. Such prohibi- imports. tions or restrictions shall not, however, constitute a means of arbitrary discrimina- tion or a disguised restriction on trade between Member States.'

II — Community legislation

3. Article 30 of the EC Treaty provides:

6. It is apparent from the Commission's application that in Greece the storage of the minimum stocks is regulated by Arti- cle 8(2) of Law No 1571/85, Article 482 of the Regulation on the control of goods, 5 Article 10 of Presidential Decree No 1224/1981 and Article 15(3) of Law No 2289/95, amending Article 10 of Law No 1571/85. According to the preamble to Directive 68/414, a crisis in obtaining supplies could occur unexpectedly and it was therefore considered essential to establish the neces- sary means to make good a possible short- age. To that end, it was necessary to increase the security of supply for crude oil and petroleum products in Member States by establishing and maintaining 7. Under those rules, the minimum stocks minimum reserves of the most important of petroleum products are to be kept in petroleum products. 4According to Arti- Greece and to be stored by the undertak- cle 6 of Directive 68/414, only those quan- ings concerned in tanks owned or leased by tities which would be fully at the disposal them outside the refineries. Until the end of of a Member State should difficulties arise 1995 the undertakings were entitled to in obtaining oil supplies were to be taken transfer that obligation, in whole or in into consideration, and they were required part, to refineries in Greece while the to be located within the territory of the contracts for the purchase of petroleum State concerned. Those stocks could also be products which they had concluded with established, under individual agreements those refineries remained in force. The between Governments, within the territory obligation to maintain the emergency of a Member State for the account of stocks in their installations reverted to the undertakings established in another Mem- undertakings concerned upon expiry of the ber State. The Directive left it to Member contracts with the refineries. States to decide on the undertakings or bodies obliged to store those reserves. 5 — In paragraph 34 of the defence, the Greek Government states that that Regulation has no Article 482, without giving any further explanation. The Commission does not appear to have corrected that information in its reply. I see, 3 — Council Directive 72/425/EEC of 19 December 1972 however, that that provision was already cited as part of the amending the Council Directive of 20 December 1968 Greek legislation incompatible with Article 30, both in the imposing an obligation on Member States of the EEC to final paragraph of page 5 of the formal notice and in maintain minimum stocks of crude oil and/or petroleum paragraph 8 of the reasoned opinion which the Commission products (OJ 1972 L 291, p. 154). It was repealed by sent to the Greek Government, and that the latter also failed Directive 98/93/EEC. to inform the Commission of its error in the documents 4 — Second and third recitals of the preamble. which it submitted throughout the pre-litigation procedure.

9. The Greek market in petroleum products is structured on three levels: on the first level, the refineries sell refined products to marketing undertakings. Under Article 8(2) 11. Following a lengthy exchange of corre- of Law No 1571/85, the refineries operat- spondence and a series of bilateral meet- ing in Greece are not entitled to sell ings, the Greek authorities informed the petroleum products directly, without hav- Commission in May 1994 of the works ing recourse to those undertakings, except undertaken for the purpose of amending as provided for in Article 6(3) of that Law, the legislation on the storage and distribu- which refers to supplies to the armed tion of petroleum products. In December forces. 1994 they notified the Commission of a Bill designed to amend Article 10 of Law No 1571/85, as amended by Law No 1769/88 and Law No 2008/92; that Bill became Law No 2289/95 at the begin- ning of 1995. On the second level, the marketing under- takings, which in turn are responsible for storing the emergency stocks, may acquire products from the refineries or import them and are responsible for supplying the petrol 12. In September 1995, the Commission stations. sent the Greek authorities a formal notice stating that, despite the amendments, the abovementioned legislation still appeared to be contrary to Article 30 and requesting that they submit their observations on various aspects of the system in question.

On the third level are the petrol stations, which can neither import petroleum pro- ducts nor acquire them directly from the refineries, but must purchase them from the The Government replied in December 1995 marketing undertakings. and stated that the system applicable to

13. That disagreement was discussed at a bilateral meeting held in Athens in June 1996, following which, in July 1996, the Greek authorities sent the Commission a letter to which was annexed a draft amend- ment of Article 15(3) of Law No 2289/95. 16. The hearing on 21 September 2000 The amendment appeared to consist solely was adjourned by the President of the in the deletion of the second subparagraph Chamber on the ground that the represen- of that provision, which had no longer been tative of the Greek Government was unable in force since 31 December 1995. to provide specific answers to the questions put to him. The Court requested details of the petroleum marketing companies' sto- rage capacity and of the extent to which those companies were structurally depen- dent on the refineries. 14. The Commission was not convinced by the reasons put forward by the Greek authorities and in June 1997 it sent them a reasoned opinion requesting them to submit their observations within two months. The Government replied through its Permanent Representation to the Eur- opean Union and maintained its previous argument. The secretariat of the Court of Justice sent the questions to the Greek Government on 5 October 2000 and requested a reply in writing within 10 days. A copy of the reply was given to the Commission, which was requested to submit its observations within similar period. In the light of the informa- V — Procedure before the Court tion provided, the Court considered that there was no need to resume the hearing, the parties having given their consent, and on 10 January 2001 the President of the 15. As I said originally, the Commission Chamber adopted the decision to continue lodged its application for a declaration that the oral procedure.

The Commission does not criticise the fact that the emergency stocks are stored in the refineries. However, it considers that the obligation which the undertakings are It contends that that constitutes a measure required to assume in return, namely to having equivalent effect to a quantitative acquire products from those refineries, restriction on imports, which in the present constitutes an obstacle to the free move- case is aggravated by the fact that petrol ment of goods. In practice, a manifest stations are unable to obtain supplies discrimination is established in favour of directly from the refineries or to import domestic products and against foreign them from abroad. products, since imports of petroleum pro- ducts, although not prohibited, are strongly discouraged: if a marketing undertaking obtains supplies in other Member States, it loses the advantage of being able to leave it to the refineries to maintain those stocks.

18. I shall first consider whether the Greek system for maintaining emergency stocks of petroleum products constitutes a measure having equivalent effect to a quantitative restriction on imports and, if so, then Last, the Commission claims that the examine the grounds on which it might be restrictive effect on imports is intensified justified and proportionate. because the marketing undertakings are in

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COMMISSION v GREECE

imports and also measures having equiva- 24. As regards the legal position, if the lent effect are prohibited between Member undertakings choose to maintain the emer- States. The Court of Justice held in Das- gency stocks in their own tanks or in leased sonville 6that all trading rules enacted by tanks, they own the products and are Member States which are capable of hin- responsible for their quality and quantity. dering, directly or indirectly, actually or If, on the other hand, they decided to potentially, intra-Community trade are to transfer the obligation to do so, the refi- be considered as measures having an effect neries will own the products in question equivalent to quantitative restrictions. and will be responsible for keeping them in good condition.

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the marketing undertakings, which, in turn, lack sufficient space to cope with the pass them on to the consumer. 8 stocks.9 However, it is demonstrated that they by no means use the available capa- city. In answer to the written question put by the Court after the hearing had been adjourned, the Greek Government stated that in 1997 the 34 marketing companies 26. However, under the Greek system operating in Greece had a total storage which the Commission considers to be capacity of 1 257 000 m3, equivalent to incompatible with Article 30 of the Treaty approximately 1 070 000 tonnes. The the marketing undertakings are able to emergency stocks which they were required transfer the obligation to maintain the to store in 1997 came to a total of emergency stocks to the national refineries 2 165 000 tonnes, which in practice means only on condition that they obtain supplies that in order to comply with their obliga- from those refineries, in a quantity equal to tion, if they had used their own capacity, the volume of products of each category they would have needed to have recourse to which the refineries have supplied to them the refineries so that the latter could store, over a 90-day period in the previous year. on their behalf, something over half that quantity, or approximately 1 095 000 tonnes. However, it is apparent from the Greek Government's written answer that between April 1997 and March 1998 those Since, on the one hand, economic logic undertakings actually stored an average of encourages the marketing undertakings to 227 000 [tonnes],10 representing a little transfer storage to the refineries and, on the over 10% of their amount they were other hand, the transfer is subject to the required to store, while the three refineries obligation to obtain supplies from the same operating in Greece stored the remainder, a refineries, there arises a situation in which total of 2 028 000 tonnes. those undertakings are required to obtain supplies from the refineries in Greece. That amounts, in short, to a clear and unequi- vocal incitement to buy domestic products.

tional upon their acquiring petroleum pro­ basis of a number of factors, one of which ducts from those refineries. That obligation is the cost of storage. The Greek under­ to purchase from the refineries constitutes takings would import petroleum products discriminatory treatment of products from and use all the available storage facilities at refineries in the remaining Member States, their own premises before acquiring petro­ since it makes it difficult to market such leum products from the Greek refineries products. If the marketing undertakings only where the difference between the wish to obtain petroleum products in other prices of domestic products and imported Member States, the Greek regulations products made up for the loss of the effectively deprive them of all the advan­ advantages conferred by transferring the tages conferred by the transfer of the storage of the emergency stocks in the storage. conditions indicated. 12

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As the Court of Justice has held, a measure whether the restrictive effects of the legisla- having equivalent effect to a quantitative tion in issue on the free movement of goods restriction may consist in: national legisla- are intensified because the petrol stations tion which treats domestic products differ- are unable to purchase directly from the ently from imported products; 15 a provi- refineries or import from another Member sion which renders imports more difficult State. or burdensome than internal transac- tions; 16 or even a measure whereby the State merely encourages the purchase of domestic products and which, while not binding, is capable of influencing the conduct of traders and consumers in a Member State and thus of frustrating the 36. For the reasons stated, I agree with the aims of the Treaty. 17 Commission that the Greek legislation establishing the system for the storage of the minimum level of stocks of petroleum products constitutes a measure having equivalent effect to a quantitative restric- tion on imports within the meaning of Article 30 of the Treaty.

34. However, irrespective of the situation as regards prices, the system in question, conferring as it does advantages when the emergency stocks are stored in the refiner- ies, is susceptible of encouraging the mar- B. Justification for the restriction on the keting undertakings to acquire domestic free movement of goods petroleum products and of dissuading them from importing those products from other Member States.

38. The Court of Justice has consistently may justify an exception to the principle of held that national rules which are contrary free movement of goods applies. In its view, to Article 30 of the EC Treaty can be the objective pursued by the Greek autho- justified only if they satisfy one of the rities, namely to ensure continuity in the grounds of general interest set out in supply of petroleum products, can be Article 36 19 or, where appropriate, when, achieved by less restrictive means. It pro- applied to domestic and imported products poses that Article 10 of Law No 1571/85, without distinction, they may be recognised as amended by Article 15 of Law as being necessary in order to satisfy No 2289/95, be deleted, so that the com- mandatory requirements relating in parti- mitment given by the purchasing under- cular to the effectiveness of fiscal super- taking to purchase supplies from the refin- vision, the protection of public health, ery is not linked with the transfer of the consumer protection and the fairness of obligation to store the emergency stocks. commercial transactions. 20 That provision could be replaced by a different provision allowing the undertak- ings to lease the installations which they need for storage from the refineries without being obliged to purchase their products. The Court of Justice has held, moreover, Since a means which would provide less of that national rules or practices adopted in an obstacle to the free movement of goods order to achieve one of the objectives and which would enable the general inter- referred to in Article 36 of the EC Treaty est pursued to be protected exists, the are compatible with that Treaty only in so Commission contends that the Greek legis- far as they do not exceed the limits of what lation is disproportionate. is appropriate and necessary in order to achieve the desired objective. 21 If a Mem- ber State is able to choose between various means, each of which is an appropriate means of achieving the same end, it will have to choose the one that least hinders 40. The Greek Government, on the other freedom of trade. hand, claims that the legislation in issue is not discriminatory. By way of justification, it contends, first, that the refineries' funda- mental right to economic freedom would be excessively restricted if they were required to store the minimum stocks, thus 39. The Commission proceeds on the basis assuming the marketing undertakings's that the legislation in issue affects domestic obligation, if the latter were not required and imported products differently, and in return to purchase the products which contends that in the present case none of the refineries sell. the grounds which according to Article 36

41. I agree with the Commission that the Greek system for the storage of minimum levels of stocks of petroleum products does not affect domestic and imported products 42. The defendant Government submits as in the same way, since, as has been grounds for the application of the present demonstrated throughout the proceedings, arrangement the economic freedom of the the marketing undertakings may be refineries and the risk for their operating released from the obligation to store when capacity, since it is apparent that if the they obtain supplies from the refineries in marketing undertakings were no longer Greece, whereas that option is not available required to obtain supplies from the refi- when they acquire petroleum products neries in order to be able to transfer the from refineries in other Member States. obligation to store the emergency stocks, that would jeopardise the distribution sys- tem of an industrial unit vital which is vital for national security and the continuous supply of petroleum products could not therefore be guaranteed.

46. Last, the defendant Government asserts that without the production of the Greek refineries, it would be impossible to supply 44. As regards the risk for the distribution the armed forces with the special fuels system of an industrial unit which is vital which they use and which the marketing for national security, I am of the view that undertakings would be unable to sell to the defendant Government has not shown them. However, I am unable to see that the that, in order to protect national security, it Commission is attempting to make the is essential to link the transfer of the Greek refineries would cease to operate. storage to the obligation to acquire the In any event, to my mind it is not essential products. I myself see no reason why, if in order to preserve the public security of a under the present system the refineries can Member State that the fuels used by its store their own products, they cannot, armed forces must necessarily be produced under a system governed by the laws of or supplied by the national refineries. the market and of free competition, store the products which the marketing under- takings acquire from other Member States.

imports for its supplies of petroleum pro- 48. To my mind, the arguments which the ducts might rely on grounds of public Hellenic Republic puts forward in the security within the meaning of Article 36 present proceedings in order to justify its of the Treaty for the purpose of requiring legislation on grounds of national security importers to cover a certain proportion of lack the force of those put forward at the their needs by purchases from a refinery material time by the Irish Government in situated in its territory at prices fixed by the order to justify national legislation which competent minister on the basis of the costs adversely affected imports of petroleum incurred in the operation of that refinery, if products into Ireland and which convinced the production of the refinery could not be the Court of Justice that one of the freely disposed of at competitive prices on justifying grounds set out in Article 36 of the market in question. 27 the Treaty was present.

49. Accordingly, I also agree with the Commission that in the present case none of the grounds of general interest set out in Article 36 as justifying reasons are present. The Commission's action is therefore well founded.

None the less, the quantities of petroleum products covered by such a system must not exceed the minimum supply requirements without which the public security of the State concerned would be affected or the level of production necessary to keep the refinery's production capacity available in the event of a crisis and to enable it to V I I— Costs continue to refine at all times the crude oil for the supply of which the State had entered into long-term contracts. 28

— order the Hellenic Republic to pay the costs.

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