C-53/00

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adequate supply of medicines in France. of the relevant order. They must manage Until February 1998, those obligations their stock of medicines so as to ensure were governed by a Decree of 3 October availability at all times. 1962, 3 which provided:

'Article 1 Every pharmaceuticals whole- saler covered by the fourth subparagraph of Article R. 5115-6 of the Public Health Code and any branches it may have must Article 3 The distribution area referred to keep a permanent stock of medicinal prod- in Article 2 shall comprise the geographical ucts sufficient to ensure a month's supply to area in which the pharmacist responsible the pharmacies in its distribution area for the pharmaceuticals wholesaler or which it regularly serves as customers. branch thereof declares that he conducts business. That declaration must be made to the central pharmacies office of the Minis- try of Public Health and the Population within two months of the opening of the pharmaceuticals wholesaler or branch thereof. The distribution areas shall be supplemented, where necessary, by areas The stock of medicines must amount to a designated by the Minister for Public "range" of medicines, including at least Health and the Population which are not two thirds of all forms of medicines cur- supplied by any other wholesaler.' rently sold, and must represent in value the equivalent of the average monthly turnover for the preceding year.

Article 2 Every pharmaceuticals wholesaler and any branches it may have must be able 5. Those rules were amended by two sub- to guarantee delivery of every medicine sequent decrees (No 98-79 of 11 February sold on the market to the pharmacies in its 1998 4 and No 99-144 of 4 March 1999 5 ) distribution area which it regularly serves following the adoption of Council Direc- as customers and, in the case of medicines tive 92/25/EEC of 31 March 1992 on the in their "range", within 24 hours of receipt

(c) to deliver any medicine or any other product, item or article referred to in Every municipality in which the establish- Article L. 512 which it distributes in ment ordinarily serves at least one phar- the circumstances set out in Article R. macy shall form part of its distribution 5108-1, or any split pharmaceutical area. product referred to in the fourth sub- paragraph of Article L. 511-1 that is sold in France to any p h a r m a c y requesting it. These provisions d o not prevent any establishment from sup- plying a pharmacy outside its distribu- The establishment shall, within its distribu- tion area, exceptionally, in an emer- tion area, discharge the following public gency. service obligations:

By way of exception and in the absence of 1. It must keep in stock a range of medi- any other source of supply, the Director- cines comprising at least nine tenths of all General of the French agency responsible forms of medicines currently sold in France; for the safety of health products may, of his own motion or at the request of the State representative in the département con- 6 — OJ 1992 L 113, p. 1. cerned and after hearing the views of the

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Regional Director of Health and Social cle L. 601-6 of the Public Health Code, Affairs, require an establishment to supply shall be payable by undertakings dealing in a pharmacy located outside its distribution one or more medicinal products within the area.' meaning of Article L. 596 of the Public Health Code.

6. It should be emphasised that the above- mentioned public service obligations are The rate of that contribution shall be imposed only on wholesale distributors and 2.5%.' do not apply to pharmaceutical labora- tories that decide to market their own products by way of direct sales made either autonomously (by an internal division or by a branch) 7 or through appointed agents. 8 8. The tax in question, introduced to finance the National Sickness Insurance Fund, was purposely designed to apply only to direct sales by pharmaceutical laboratories (thereby excluding sales made by wholesale distributors), with the aim of restoring the balance of competition between the different medicine distribution Law of 19 December 1997 channels.

The aim of the present provision is to restore equivalence of treatment between — 'it is apparent from the preparatory distribution channels permitting an a pos- documents that the tax at issue is teriori recovery of part of the wholesaler's intended not only to help finance the margin from pharmacies. The rate is set at National Sickness Insurance Fund for 6.63%, 9 which corresponds to roughly Employees, but also to restore the two-thirds of the wholesaler's margin, the balance of competition between the remaining third being attributable to dis- distribution channels for medicines tribution costs which pharmaceutical since wholesale distributors of medi- undertakings must, in any event, bear. cines are under a duty of public service which is not imposed on pharmaceuti- cal laboratories';

— 'the difference in treatment which arises by law is based on criteria which are objective and rational in relation to The tax, paid quarterly, is calculated by the aim of the legislature', and reference to turnover in the preceding quarter and is collected and controlled by the Central Agency for Social Security

9 — As noted, the rate subsequently laid down by the Law of — 'the complaint that the rate is excessive 19 December 1997 is 2.5%. must be rejected'.

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Council Directive 92/25/EEC 12. Next, as regards the definition of 'public service obligation', Article 1 of the directive clarifies that what is meant by this is 'the obligation placed on wholesalers to guarantee permanently an adequate range 11. As noted above, the wholesale distribu- of medicinal products to meet the require- tion of medicines for human use is partially ments of a specific geographical area and to governed, at Community level, by Directive deliver the supplies requested within a very 92/95. The introductory part of that direc- short time over the whole of the area in tive contains the following recitals in question'. particular:

FERRING

pharmaceutical laboratories amounted to a '1. Can the contribution introduced by grant of State aid to wholesale distributors Article L. 245-6-1 of the Social Security and infringed the obligation to give Code be regarded as public aid within advance notice laid down in Article 93(3) the meaning of Article 87 EC (ex of the EC Treaty (now Article 88(3) EC) Article 92 of the EC Treaty)? and that the tax restricted the freedom to provide services, in breach of Article 59 of the Treaty.

If so, is it justified by the character and structure of the system?

I I I— Legal analysis

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ing to settled case-law, it is solely for the grant of State aid. Above all, the illegality national court before which the dispute has of the aid would lead to the illegality of any been brought, and which must assume national measures putting it into effect, responsibility for the subsequent judicial such as receiving payment of the tax from decision, to determine in the light of the Ferring. 12 Moreover, reimbursement of the particular circumstances of the case both sums paid by way of the tax at issue could the need for a preliminary ruling in order to be an effective way of re-establishing the enable it to deliver judgment and the status quo ante, thereby eliminating the relevance of the questions which it submits distortions of competition allegedly arising to the Court'. Only exceptionally may the from asymmetrical imposition of the tax. 1 3 Court decline jurisdiction, namely 'where it Furthermore, the fact that the national is quite obvious that the ruling sought [by court may classify the contested measure the national court] on the interpretation or as State aid also seems to follow from the validity of Community law bears no rela- ruling of the Social Security Court, Lyon, tion to the actual facts of the main action or which, on the very basis of such classifica- its purpose'. 11 tion, ordered money paid by a pharmaceu- tical laboratory by way of the tax intro- duced by the Law of 19 December 1997 to be reimbursed.

22. In the instant case, however, it does not appear to me quite obvious that the first two questions referred bear no relation to 24. In light of the foregoing considerations, the actual facts of the main action or its I take the view that the Court does have purpose. On the contrary, it seems clear to jurisdiction to consider all the questions me that the ruling of the national court will raised by the national court. turn on precisely the questions which it has raised, that is to say, whether the tax at issue amounts to State aid and whether the measure can be justified on the basis of the exemption laid down in Article 90(2) of the Treaty. The questions: introduction

26. The first question actually falls into two parts: first, it asks whether the tax introduced by the Law of 19 December 1997 constitutes State aid to wholesale 29. This approach should, in my view, be distributors; if so, it then asks whether the corrected in part. As noted by the Commis- tax is justified by the nature and structure sion, if the measure in question can be of the French system for the distribution of justified on the basis of the character and medicines, which is characterised by the structure of the system, it cannot be imposition of particular public service classified as State aid; the difference in obligations intended to guarantee effective treatment of the two distribution channels coverage of the national territory. would be objectively justified and could not be considered as granting a selective advan- tage to wholesale distributors. 14 If that is the case, as I believe it is, then the assessment which the national court is asking the Court of Justice to make by the second part of its first question is not really 27. By the second question, the national concerned with examining possible justifi- court asks whether wholesale distributors cations for a measure taken as aid, but with are entrusted with the operation of a whether there actually is State aid in the service of general economic interest within present case; that is to say, whether the tax the meaning of Article 90(2) of the EC benefits reserved to wholesale distributors Treaty and whether the additional burden in order to compensate the additional of pubic service borne by them justifies burden of public service imposed on them application of the exemption laid down in by the French system can be classified as that article. State aid.

laid down by French law, exempting whole- considering whether it might be compatible sale distributors from the tax at issue may, with Article 90(2) of the Treaty. in principle, amount to State aid for the purposes of Article 92(1) of the Treaty [first part of the question; infra sub (a)]. If I may, I shall consider whether the specific public service obligations imposed on 32. However, if it is considered that that wholesale distributors in France precludes solution is — at least in cases like the one the tax from being State aid [second part of at hand — too simplistic and the Court of the question; infra sub (b)]. If they do not, I Justice does not wish to answer the Social shall proceed to examine (second question) Security Court, Créteil, in the same terms, whether the aid thus granted may be given that it evidently referred the ques- regarded as compatible with the common tions now under consideration precisely market by virtue of the exemption laid because it rejected that short cut, the matter down in Article 90(2) of the Treaty for must be gone into further, as the Commis- undertakings entrusted with the operation sion itself recognises. For that reason, after of services of general economic interest. examining the first two questions in the manner just mentioned, I shall make some observations about the consequences which, from the point of view of the legality of a State measure that has not been notified, may result from its being classified as 'not aid', as 'aid not covered by the exemption laid down in Article 90(2) of the Treaty' or as 'aid compatible with Article 90(2)'.

wholesale distributors — exempting such it introduces a new tax that affects other operators from the tax at issue may be economic operators, namely pharmaceuti- regarded as a State aid within the meaning cal laboratories that distribute their prod- of Article 92(1) of the Treaty. ucts by means of a system of direct sales. However, in view of the competitive rela- tionship between the two distribution channels, the national court asks whether the imposition — or rather the non-impo- 34. As we know, Article 92(1) provides in sition — of a tax on one of them indirectly principle (save for the application of spe- confers a selective advantage on the other. cific exemptions laid down in the Treaty) that any aid granted by a Member State or through State resources in any form what- soever which distorts or threatens to distort competition by favouring certain undertak- ings or the production of certain goods and affects trade between Member States is incompatible with the common market. Consequently, in order to determine whe- 36. The difficulty and subtlety of the ques- ther a public measure constitutes State aid tion arise from the fact that any new tax it is necessary, in accordance with settled imposed on a given category of economic Community case-law, to ascertain: (i) whe- operators may be viewed in theory as an ther the measure confers a selective advan- advantage conferred upon all operators tage on certain undertakings or the produc- who are not subject to that tax but are in tion of certain goods; (ii) whether such more or less close competition with the first advantage is provided through public category. To give just a few examples, a tax resources; (iii) whether it can distort com- that affects beer producers could be regar- petition, and (iv) whether the measure in ded as indirect aid to wine producers; a tax question can affect trade between Member imposed on road hauliers could be seen as States. I shall now examine those aspects aid to rail freight undertakings; a tax with reference to the case at hand. on cinema operators could imply aid to theatres, and so on.

from different tax regimes being applied to 39. My view, in short, is that it can neither economic activities that are only partly be accepted nor excluded a priori that comparable, rather than from State inter- failure to levy a tax on certain parties is vention designed to alter significantly the tantamount to conferring a selective advan- conditions of competition. That does not tage within the meaning of Article 92 of the take into account the fact — which would Treaty. The solution must be sought on a be of no little consequence — that such an case by case basis, with regard being had to interpretation would entail a risk of unjus- the particular circumstances of the case tified interference in the fiscal policy of and, above all, to the competitive relation- Member States by means of the improper ship between the operators concerned, the use of Community instruments designed for reason for the tax and its effects. quite different purposes.

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— the parties to the present proceedings non-imposition of the tax introduced by the also agree that the asymmetrical levy- Law of 19 December 1997 had the prac- ing of the tax at issue (which, I would tical effect of granting tax relief to whole- repeat, is designed to finance the sale distributors. National Sickness Insurance Fund) is intended to restore the balance of competition between the two medicine distribution channels, which, according to the French legislature, had been distorted by the imposition of a duty of public service solely on wholesale 42. Moreover, I do not think that that distributors. As is also clear from the conclusion is affected by the point made by preparatory work for the Law of the French government and ACOSS that 19 December 1997 and from the ruling wholesale distributors have not in fact been of the Conseil constitutionnel, levying exempted from a tax which they would the tax solely on direct sales is there- normally have had to bear, because the sole fore intended to eliminate that compe- aim of not levying the tax at issue on them titive disadvantage by introducing a tax was to compensate the additional burden of regime that benefits wholesale distri- their duty of public service. That argument butors; confirms, if anything, that it was purely and simply with that objective in mind that the tax at issue, albeit intended to finance the National Sickness Insurance Fund, was imposed on only one of the two distribu- tion channels for medicines, otherwise, it would have been imposed equally on both — Ferring and ACOSS are, in the end, distribution channels. It is therefore clear agreed that the tax at issue has pro- that, leaving aside the need to compensate duced the effects sought by the French wholesale distributors, the non-imposition legislature. In fact, both note that, of the tax confers on them a selective following the adoption of the Law of advantage similar to actual tax relief. 19 December 1997, the growth in direct sales recorded in the immediately preceding years not only ceased, but the trend even reversed, with wholesale distributors recovering market share. (ii) Is the advantage granted through State resources?

directly through public resources are to be Insurance Fund. That means that the regarded as aid within the meaning of French authorities have in practice Article 92(1) of the Treaty. 16 refrained from collecting taxes entirely for the benefit of wholesale distributors and have thereby given them an obvious eco- nomic advantage. It must therefore be inferred that that advantage was granted through State resources. 44. The case at issue is somewhat perplex- ing on this point also. As we have seen, the Law of 19 December 1997 did not provide for any direct transfer of funds to wholesale distributors, but introduced a tax (levied on pharmaceutical laboratories) designed to (iii) Can the tax advantage conferred on generate new resources for the State. wholesale distributors distort competition? Accordingly, the advantage conferred on the wholesale distributors seems not to have been financed through public resources. 17

46. As regards the criterion of possible distortion of competition, the case at hand, in my view, allows no room for doubt. 45. However, like Ferring and the Commis- Leaving aside the alleged need to compen- sion, I do not think that that conclusion is sate the additional burden on public ser- correct. As I observed under heading (i), in vice, which I will consider later, it is clear the present case the non-imposition of the from the foregoing that the unequal impo- tax at issue is tantamount to granting tax sition of the tax at issue was bound to relief to wholesale distributors, who have affect, and in fact did affect, the competi- essentially been exempted from paying the tive position of the two distribution chan- tax introduced by the Law of 19 December nels. 1997 to help finance the National Sickness

— second, it may affect the distribution strategies of large multinationals who could be dissuaded from establishing sales offices in France, leading to possible repercussions also on the volume of pharmaceutical products 48. In the case of the measure under sold in that country. consideration, I note that, although it is concerned solely with the distribution of medicines in France, it may nevertheless have a certain effect on intra-Community trade. Indeed, it is well-known that phar- maceutical markets are characterised by (v) Conclusion intense international competition and a high volume of trade between Member States, which is carried on, for the most part, by large multinationals (such as Ferring) which distribute their products throughout numerous European coun- 49. In light of the foregoing considerations, tries. 2 0 In those circumstances, the con- I take the view that the first part of the first tested measure may, in my view, affect question may be answered by saying that, leaving aside the public service obligations provided for by French law, the non- 18 —Case T-214/95 Vlaams Gewest [1998] ECR II-717, paragraph 49. See, to the same effect, Case C-142/87 imposition of the tax at issue on wholesale Belgium v Commission [1990] ECR I-959, paragraph 43; distributors should be regarded as a State Joined Cases C-278/92, C-279/92 and C-280/92 Spain v Commission [1994] ECR I-4103, paragraph 42, and aid within the meaning of Article 92(1) of Joined Cases T-298/97, T-312/97, T-313/97, T-315/97, T-600/97 to T-607/97, T-1/98, T-3/98 to T-6/98 and the Treaty. T-23/98 Alzetta [2000] ECR II-2319, paragraph 84. 19 — Alzetta, cited above, paragraphs 76-80. 20 — See, on this point, the opinion of Advocate General Saggio in Case C-254/97 Baxter [1999] ECR I-4809, paragraph 21 — The so-called 'dépositaires' referred to in Article R. 5106 22. of the CSP.

50. Turning now to the second part of the first question, it falls to be considered whether the tax at issue is justified by the fact that it is intended to compensate the burden of public service borne by wholesale 52. In the present case, as we have seen, by distributors and whether, despite the pre- Decree of 3 October 1962 the French ceding argument, it may consequently be legislature imposed specific public service precluded from being aid. constraints on wholesale distributors con- sisting essentially in an obligation to keep a permanent and adequate stock of medicinal products and to guarantee delivery of those products at short notice in a given territory. Those obligations were subsequently fur- ther defined in Decree No 98-79 of 11 Feb- ruary 1998 and Decree No 99-144 of 4 March 1999, which placed even stricter constraints on wholesale distributors. 51. In that regard, I must state at the outset Those constraints are justified by the fun- that, in principle, it is for the Member damental need to guarantee at all times an States to define the services of general adequate supply of medicines for the popu- economic interest that they intend to lation as a whole and there is therefore no entrust to certain public or private under- reason to call into question the legitimacy takings. In fact, it is clear from case-law of the choice made by the French autho- that, in the absence of any harmonised rities. The reason for not doing so is all the rules governing the matter, the Community stronger because Directive 92/25 itself institutions are not entitled 'to rule on the acknowledges that the Member States have basis of the public service tasks assigned to the power to impose on wholesalers within the public operator [in the case in point, the their territory the obligation 'to guarantee national postal service], such as the level of permanently an adequate range of medic- costs linked to that service, or the expe- inal products to meet the requirements of a diency of the political choices made in this specific geographical area and to deliver the regard by the national authorities or... [the] economic efficiency' of the undertaking. 22 As also pointed out in the recent commu- 23 —OJ2001 C 17, p. 4. 24 — Paragraph 22 of the Commission's communication, in particular, states that 'Member States are primarily responsible for defining what they regard as services of general economic interest on the basis of the specific 22 — Case T-106/95 FFSA and Others [1997] ECR II-229, features of the activities. This definition can only be subject paragraph 108. to control for manifest error'.

56. I will begin by pointing out that the Commission has long held the view that financial benefits granted by Member States to compensate the additional burden of extra public service duties do not constitute State aid. That follows, to give 54. Whether the tax is proportionate to the just one example, from the 'Community stated purpose or, conversely, is too gener- guidelines on State aid to maritime trans- ous towards wholesale distributors is port', 26 where it is stated that 'the Com- clearly not a question for the Court of mission's practice in assessing contracts Justice to decide. In fact, the Court does not relating to PSOs [public service obligations] have the necessary information to do so, as is generally to consider the reimbursement it is aware of neither the exact economic of operating losses incurred as a direct benefit which wholesale distributors derive result of fulfilling certain public service from exemption from the tax nor precisely obligations is not State aid within the what additional burden they bear as a meaning of Article 92(1) of the Treaty'. 27 result of their public service obligations. The appraisal is clearly a matter for the national court, which, to that end, may 26 — OJ 1997 C 205, p. 5. employ all the procedural instruments at its 27 — See point 9 of the guidelines, which consequently provides disposal and, if necessary, call for expert that it is not necessary to notify under Article 93(3) of the Treaty measures whereby reimbursements are made to evidence. selected undertakings — for an appropriate period of time — on the basis of open, transparent and non- discriminatory competition; that is so, it would seem, because such a procedure is apt to exclude the over- compensation of undertakings entrusted with the opera- 25 — See the recitals of the directive and Article 1, cited above. tion of services of general economic interest.

57. However, the Commission's practice an advantage on one or more particular has been undermined by recent rulings of undertakings'. 31 According to that case- the Court of First Instance, starting with law, therefore, the fact that certain finan- the judgment in FFSA, which concerned a cial advantages are granted to offset extra Commission decision that certain tax con- public service obligations merely represents cessions granted to the French postal ser- the purpose or aim of the measure in vice in order to offset its public service question, but does not impinge on its obligations were not State aid. In that effects and, for that reason, has no bearing decision the Court of First Instance took on its objective status as aid. the opposite approach to the Commission and concluded that the measures in ques- tion did constitute State aid, even though they could be deemed compatible with the common market under Article 90(2) of the Treaty. 28 The Court of First Instance adopted the same position in its subsequent judgment in SIC, 29 which concerned the financing of public television in Portugal. There the Court held that 'the fact that a financial advantage is granted to an under- taking by the public authorities in order to offset the cost of public service obligations which that undertaking is claimed to have 59. However, albeit without understating assumed has no bearing on the classifica- the relevance of that case-law, the French tion of that measure as aid within the Government and ACOSS point out that it meaning of Article 92(1) of the Treaty'. 30 has not been expressly confirmed by the Court of Justice. 32 On the other hand, the two parties refer to an earlier ruling of the Court of Justice, that in ADBHU, 33 in which it held that compensating public service obligations does not constitute State aid. In that case the Court was asked to rule on the compatibility with Article 92 et seq. of the Treaty of a directive authorising Member States to pay indemnities to under- 58. The ruling by the Court of First takings entrusted with the collection and/or Instance was based, in particular, on the disposal of waste oils 34 and held that 'the consideration that 'Article 92(1) of the Commission and the Council, in their Treaty does not distinguish between mea- observations, rightly argue that the indem- sures of State intervention by reference to nities do not constitute aid within the their causes or aims but defines them in meaning of Articles 92 et seq. of the EEC relation to their effects' with the result that 'the concept of aid is an objective one, the test being whether a State measure confers 31 — SIC, cited above, paragraph 8 3 . 32 — France and ACOSS point out that the appeal against the judgment in FFSA was dismissed by order of 25 March 1998 (Case C-174/97 P ECR I-1303) without the Court having ruled expressly on the point. 28 — FFSA, paragraph 172. 33 — Case 240/83 ADBHU [19851 ECR 5 3 1 . 29 — Case T-46/97 SIC [2000] ECR II-2125. 34 — Council Directive 75/439/EEC of 16 June 1975 (OJ L 194, 30 — Paragraph 84. p. 31).

Treaty, but rather consideration for the fied. If that is the correct analysis, the services performed by the collection or conclusion that must be drawn in the disposal undertakings'. 35 France and situation under consideration is that the ACOSS take that to mean that financial measure taken by the public authorities compensation for public service obligations ends up having an economically neutral is not State aid, but is simply consideration effect on the undertaking concerned, which for services provided to the public. derives from it neither advantage nor disadvantage. Thus, despite the divergent views on the judgment in SIC, the require- ment of compensating the additional bur- dens of public service is not limited to the purpose or aim of a measure, but is 60. Clearly, this is a fine point. However, necessarily reflected in its effects, because without wishing to treat the judgment in it must keep public intervention economic- ADBHU as decisive, I have the impression ally neutral and preclude such intervention that it contains valid arguments for not distorting competition unjustifiably. classifying as aid public measures intended exclusively to offset the additional net cost arising from the performance of a service of general economic interest. In particular, the fact that such measures do not confer any real advantage on an undertaking entrusted with a service of general interest and 62. Accordingly, normal conditions of therefore are not likely to alter the condi- competition will only be altered where tions of competition appears a decisive any compensation exceeds the additional argument to me. net costs attributable to the performance of public service obligations. In such a case, State intervention will contain an element of aid equal to the surplus over and above the additional cost of the public service obligations, in so far as it confers an 61. It seems obvious to me that if the State unwarranted advantage on the undertaking imposes certain public service obligations concerned and may thus distort competi- on an undertaking, then covering the tion in the market where the public service additional costs arising from the perfor- constraints apply or, where there are cross- mance of those obligations confers no subsidies, in other markets in which the advantage on the undertaking in question, undertaking operates. but serves, if anything, to ensure that it is not unjustly disadvantaged vis-à-vis its competitors. In other words the imposition of the obligation and the provision of compensation cannot be considered as separate matters as they are two sides of the same public measure which is intended, 63. In conclusion, I take the view that as a whole, to guarantee that public public measures which are strictly neces- interests of primary importance are satis- sary to offset the additional net costs arising from the performance of public service obligations do not constitute State 35 — Paragraph 18. aid within the meaning of Article 92(1) of

64. In the event that the contested measure is classified as State aid, on the other hand, the national court asks, by its second question, whether wholesale distributors may be regarded as having been entrusted 67. Moreover, I have already noted that the with the operation of a service of general performance of such public service obliga- economic interest within the meaning of tions entails for wholesale distributors a Article 90(2) of the Treaty and whether, in burden that they would not have to bear order to benefit from the exemption laid were it not for these public law constraints. down by Article 90(2), the aid granted to I have also stated that, according to the them must be limited to offsetting the recent judgment in FFSA, State measures additional expenditure resulting from their intended to offset such public service obli- public service obligations. gations, although classifiable as aid, may be exempted under Article 90(2) of the Treaty. In fact, according to the Court of First Instance 'the grant of State aid may, under Article 90(2) of the Treaty, escape the prohibition laid down in Article 92 of the 65. Having previously stated that the mea- Treaty provided that the sole purpose of the sure in question does not constitute aid, aid in question is to offset the additional inasmuch as it is intended to offset the costs incurred in performing the particular additional costs of public service, I will task assigned to the undertaking entrusted examine the second question only in the with the operation of a service of general alternative and refer back, where possible, economic interest and that the grant of the

69. Having clarified the terms of and possible solutions to the first two questions referred for a preliminary ruling, I now turn to the question to which I alluded earlier concerning the alleged illegality of the contested measure on the ground that, in breach of Article 93(3) of the Treaty, it 71. I will start with the observation that if was not notified to the Commission. one accepts the argument, which is a plausible argument advanced by the national court, that the measure at issue is 36 — Paragraph 178. not State aid, the problem of its legality

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would obviously not arise as there would confirmed that the French authorities in be no obligation to give prior notification fact limited themselves to offsetting the in such case. additional net costs incurred by wholesale distributors in performing the public ser- vice obligations imposed on them.

75. On this point, the Commission refers to the recent judgment in CELF, 38 wherein the Court held that even aid covered by the 73. However, uncertainty would arise if the exemption laid down in Article 90(2) must Court were to conclude that the measure in be the subject of prior notification. Accord- question does in fact constitute aid, but ing to the Commission, that would entail may be justified on the basis of the application to the present case of the law derogation provided for in Article 90(2) expounded in the Salmon case, according of the Treaty and, of course if it were to be to which 'the validity of measures giving

37 — The Salmon case, cited above, paragraphs 12 and 16. 38 — Case C-332/98 France v Commission [2000] ECR I-4833.

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77. I would observe at the outset that the Salmon case concerned provisions which do not have direct effect in the Member States (namely the exemptions laid down in Article 92 of the Treaty) and which, as such, do not confer on the national court Jurisdiction to establish directly whether aid is compatible with the common market. The conclusion which the Court reached in that case was based specifically on that aspect and consequently on the fact that application of the exemptions laid down in Article 92 of the Treaty is at the exclusive discrétion of the Commission, while the

approach, it disregards the diversity of ruling in the Salmon case is to be found in possible situations and ends up by lumping together, without any real or justifiable need to do so, consequences which are too 40 — The Court in fact pointed out 'that the principle and often excessive in comparison with the exclusive role conferred on the Commission by Articles 92 and 93 of the Treaty, which is to hold aid to be incompatible with the common market where this is appropriate, is fundamentally different from the role of national courts in safeguarding rights which individuals 39 — See paragraph 12 of the judgment. See also, to the same enjoy as a result of the direct effect of the prohibition laid effect, Case C-39/94 SFEI [1996] ECR I-3547, paragraph down in the last sentence of Article 93(3) of the Treaty.

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44 — See Corsica Ferries France, cited above, paragraph 59, and Deutsche Post, cited above, paragraphs 54 and 5 5 . 45 — This is, of course, without prejudice to the Commission's 41 — Paragraph 16. power to rule out application of the exemption in 42 — On that point, see the opinion of Advocate General particular cases on the basis of the last sentence of Tesauro in Case C-19/93 P Rendo [1995] ECR I-3319, Article 90(2), which provides: 'The development of trade paragraph 38 of which states that 'on several occasions the must not be affected to such an extent as would be Court has ruled that national courts are competent to contrary to the interests of the Community'. However, that assess whether instances of anti-competitive conduct by an power exists also in cases where the exemption is invoked undertaking entrusted with the operation of a service of to justify a breach of Articles 86 and 90(1) of the Treaty general economic interest may be justified by the specific although, as we have seen, this has not prevented the Court tasks entrusted to the undertaking'. from confirming the direct effect of the exemption.

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OPINION OF MR TIZZANO — CASE C-53/00

82. I think it also appropriate to point out that this solution would not lead to any weakening of Community control in the area. Indeed, aid ought to be found to be lawful only where it is proved before the national court that it has been granted to undertakings entrusted with a service of 81. Thus, according to the approach out- general economic interest within the mean- lined here, the purpose of notifying the aid ing of Article 90(2) and does not exceed under discussion in this case, pursuant to what is strictly necessary to offset the Article 93(3), is not to enable the Commis- additional costs arising from the perfor- sion to exercise any exclusive discretionary mance of that service. Conversely, if there is any overcompensation, the portion of aid in excess of the additional net costs incur- 46 — See paragraph 178 of the judgment. red in performing the public service should

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FERRING

obviously be declared illegal, since such to the additional net costs incurred by portion is not covered by the exemption wholesale distributors in performing the under Article 90(2) of the Treaty. public service obligations imposed on them, the aid in question cannot be treated as illegal solely because it was not first notified to the Commission under Arti- cle 93(3) of the Treaty.

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O P I N I O N OF MR T I Z Z A N O — CASE C-53/00

87. However, Ferring's argument is dispu- cines produced in Germany. As regards the ted by ACOSS, which objects that in reality freedom to provide services, that fact does pharmaceutical laboratories established in not alter the conclusion I reached earlier other Member States are — like those in since, being established in France, Ferring is France — solely obliged to pay the tax at not subject to the public service obligations issue, without having to perform the public that it says would be imposed, in addition service obligations imposed on wholesale to the direct sales tax, on pharmaceutical distributors. laboratories established in other Member States.

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FERRING

Conclusion

In light of the foregoing considerations, I therefore suggest that the questions referred by the Social Security Court, Créteil, for a preliminary ruling be answered as follows:

(1) Levying the tax referred to in Article L. 245-6-1 of the Social Security Code solely on direct sales by pharmaceutical laboratories must be regarded as State aid to wholesale distributors where the benefit to them in not being assessed to that tax exceeds what is strictly necessary to offset the additional net costs incurred by them in discharging the public service obligations imposed on them.

In the alternative, should the Court find that that measure in any case constitutes State aid, it would nevertheless be compatible with the common market under Article 90(2) of the EC Treaty, provided that it is strictly necessary to compensate the additional net costs incurred by wholesale distributors in performing the public service obligations imposed on them.