OPINION OF MR REISCHL — CASE 13/77 INNO v ATAB

Mr President,

Members of the Court,

The present proceedings for a preliminary ruling referred by the Belgian Hof van Cassatie (Court of Cassation) concern the interpretation of Article 3 (f), the second paragraph of Article 5, Article 86, Article 90, Articles 30, 31 and 32 of the EEC Treaty and certain provisions of Council Directive No 72/464/EEC (OJ, English Special Edition 1972 (31 December), p. 3) on taxes other than turnover taxes which affect the consumption of manufactured tobacco which entered into force on 1 July 1973.

The following preliminary observations may be made.

In Belgium excise duty and value added tax are imposed on manufactured tobacco. For goods produced in Belgium the producers are liable for the tax whereas for imported products the importers are liable. The tax is levied by means of tax labels which may be obtained from the tax authorities. They may be affixed either by the manufacturer or by the importer; however as they must be affixed under the cellophane cover where such cover exists (and that appears to be the rule for cigarettes) even in the case of imported goods the affixation is usually carried out in practice by the (foreign) manufacturers. The basis of assessment for the tax is the retail price stated on the tax label. In principle it is freely determined by the manufacturers and importers. However it must be noted that because there is State control over maximum trade margins in Belgium price increases must be authorized by the Minister for Economic Affairs. Similarly price reductions must evidently be notified and certain periods must elapse before they can take effect.

For the present proceedings it is of primary importance that the retail trader is obliged to comply with the prices stated on the tax labels. This follows from Article 58 of the Law of 3 July 1969 on the introduction of the value added tax code which reads as follows:

Accordingly the Order on excise duty of 22 January 1948 was amended by a Ministerial Order of 9 April 1974 with the result that the order on the taxation of tobacco provides that henceforth the products in question must be sold to the consumer at the prices stated on the tax labels.

The predecessor in law of the appellant in the main proceedings which operates department stores in Belgium did not comply with the provisions of the said Article 58 when in 1972 it sold cigarettes at a price below that stated on the tax label. Consequently the respondent in the main proceedings, the Association of Tobacco Retailers (ATAB) made application to the Rechtbank van Koophandel (Commercial Court), Brussels, for an interlocutory injunction. That application was granted by the President of the said court. Because INNO's conduct was regarded as unfair competition and an infringement of Article 58 of the above-mentioned law that undertaking was ordered to desist from offering for sale or selling cigarettes at a price lower than that stated on the tax label.

INNO appealed against that order on the grounds that the said Article 58 was incompatible with the provisions relating to competition in the EEC Treaty and the Treaty provisions on the free movement of goods and also conflicted with the above-mentioned Council directive under which only maximum prices may be determined. As the Hof van Beroep (Court of Appeal) did not accept INNO's submissions that undertaking subsequently appealed to the Hof van Cassatie (Court of Cassation). It argued that the judgment of the Hof van Beroep infringed Article 3 (f), the second paragraph of Article 5, Articles 85, 86 and 90 and also Articles 30, 31, 32 and 36 of the EEC Treaty and finally the provisions of Council Directive No 72/464/EEC because it assumed the compatibility of Article 58 of the Belgian Law with the EEC Treaty.

Pursuant to that argument by judgment of 7 January 1977 the Hof van Cassatie stayed proceedings and referred the following comprehensive series of questions for a preliminary ruling in accordance with Article 177 of the EEC Treaty:

Before we can examine these questions it should be mentioned that in 1974 INNO lodged a complaint with the Commission for the initiation of competition proceedings against Fedetab, an association of most of the Belgian and Luxembourg tobacco manufacturers which are in part also importers, against NFGT, an association of all the main Belgian tobacco wholesalers and against ATAB, the association of tobacco retailers in Belgium. In so doing INNO was concerned with a number of agreements between 1967 and 1969 which Fedetab had concluded with the association of wholesalers and with Belgian wholesalers and retailers and which covered compliance with the prices stated on the tax label, a ban on price reductions and a refusal to supply traders who did not comply with these price provisions. Consequently in July 1974 the Commission instituted proceedings under Regulation No 17 of 6 February 1962 (OJ, English Special Edition 1959-1962, p. 87) and in July 1975 it notified Fedetab of a number of complaints. Apparently those proceedings are still pending with the Commission. It is also of importance that INNO submitted an application to the Commission to have proceedings brought against the Belgian State under Article 169 of the EEC Treaty because of the incompatibility of the aforementioned Article 58 with the provisions of the EEC Treaty and Council Directive No 72/464/EEC of 19 December 1972. The Commission accordingly undertook an examination of the Belgian provisions in the light of Article 30 of the EEC Treaty but evidently reached the conclusion that the bringing of an action was not justified.

As we have seen the court making the order for reference is faced with the question whether Article 58 of the Belgian Law of 3 July 1969 which prescribes compliance with the prices stated on the tax labels is compatible with Community law. In my examination of the individual questions I shall take the liberty of departing from the order in which the Hof van Cassatie has chosen to put them. Because they appear to me to be the simplest I shall begin with the considerations relating to the 1972 Council directive. Afterwards I shall turn to the problems in connexion with Articles 30 et seq. of the EEC Treaty concerning measures having an effect equivalent to quantitative restrictions on imports. Finally I shall also turn to the Community law on competition and examine the solution of the present case in the light of Article 3 (f), the second paragraph of Article 5 and Article 86 on the one hand and of Article 90 of the EEC Treaty on the other.

1. The Hof van Cassatie has referred a question in two parts concerning the Council Directive of 19 December 1972 on taxes other than turnover taxes which affect the consumption of manufactured tobacco. On the one hand it asks whether the directive, and in particular Article 5, has direct effect in the sense of the direct applicability of Community law because only if that is the case can a national court use it as a standard for the examination of national law. On the other hand the Court is asked to examine whether there may be derived from the aforementioned Article 5 the prohibition on Member States against introducing legislative provisions whereby a selling price to the consumer, namely the price stated on the tax label, is imposed.

2. Before I turn to the further questions relating to the interpretation of Article 30 and the provisions of the EEC Treaty relating to competition it would be useful in my opinion to examine the view put forward by ATAB that the provisions in question cannot be taken into consideration at all in the examination of the fixing of prices in Belgium.

3. Accordingly although the interpretation of the other provisions of the Treaty referred to by the Hof van Cassatie is certainly not rendered unnecessary, as I stated, I should first like to examine the problems relating to Article 33 et seq. of the Treaty in the light of which it is necessary to clarify whether a national rule under which fixed prices determined by manufacturers or importers for the sale of tobacco products to the consumer are laid down can be regarded as a measure having an equivalent effect. I regard it appropriate to give a certain priority to this matter in my examination because it is clearly of fundamental importance to the case and also because it was the subject of the most detailed arguments.

4. The next question to which I shall turn relates to Article 3 (f), the second paragraph of Article 5 and Article 86 of the EEC Treaty. I shall not here repeat its extensive wording although it would be useful in order to show that with its various subdivisions the question is not easy to understand and that certain difficulties arise in grasping its sense. That also explains why in the course of the proceedings the parties submitted the most varied arguments in this respect which it is difficult if not impossible to arrange logically.

5. There remains only to interpret Article 90 of the EEC Treaty that is to examine the question whether undertakings to which the State grants special or exclusive rights may be said to exist if the way is opened for manufacturers or importers of certain products to fix compulsory prices to the consumer and to examine the problem whether the retention of those rights conflicts with Article 7 and Articles 85 to 94 of the Treaty.

6. In view of the foregoing I propose that the following answers should be given to the questions referred for a preliminary ruling by the Belgian Court of Cassation:

1 Translated from the German.