JUDGMENT OF 13. 3. 1979 — CASE 91/78 HANSEN v HAUPTZOLLAMT FLENSBURG
In Case 91/78 REFERENCE to the Court under Article 177 of the EEC Treaty by the Finanzgericht [Finance Court] Hamburg for a preliminary ruling in the action pending before that court between
THE COURT composed of: H. Kutscher, President, J. Mertens de Wilmars and Lord Mackenzie Stuart (Presidents of Chambers), A. M. Donner, P. Pescatore, M. Sørensen, A. O'Keeffe, G. Bosco and A. Touffait, Judges, Advocate General: F. Capotorti Registrar: A. Van Houtte
gives the following
JUDGMENT
Facts and Issues
I — Facts and written procedure
II — Written observations submitted to the Court
(a) Question 1
(b) Question 2 (a)
(c) Question 2 (b)
(d) Question 2 (c)
(e) Question 2 (d)
(f) Question 3
(a) Question 1
(b) Question 2 (a) and (b)
(c) Question 2 (c)
(d) Question 2 (d)
(e) Question 3
(a) Questions 1 and 2
(b) Question 3
III — Oral procedure
Decision
Question 1
Question 2
Question 3
Costs
I —. Facts and written procedure
1. Is Article 37 of the EEC Treaty a lex specialis in relation to Articles 92 and 93 of the EEC Treaty in the sense that State measures which affect the movement of goods between Member States and, where applicable, between Member States and third countries must be judged in the light of Article 37 of the EEC Treaty even if the State measures contain inter alia an aid?
2. If Question 1 is answered in the affirmative:
3. If the imposition of the tax on consumption is a charge having an effect equivalent to a customs duty and if the sphere of application of Article 37 of the EEC Treaty does not extend to imports from third countries: does Article 2 (1) of the Decision of the Council of 29 September 1970 on the Association of the Overseas Countries and Territories with the European Economic Community (Official Journal, English Special Edition, Second Series I, External Relations (2), p. 164) create direct rights which must be protected by the national courts?
II —. Written observations submitted to the Court
(a). Question 1
(b). Question 2 (a)
(c). Question 2 (b)
(d). Question 2 (c)
(e). Question 2 (d)
(f). Question 3
(a). Question 1
(b). Question 2 (a) and (b)
(c). Question 2 (c)
(d). Question 2 (d)
(e). Question 3
(a). Questions 1 and 2
(b). Question 3
III —. Oral procedure
1. By an order of 22 March 1978 which was received at the Court on 12 April 1978 the Finanzgericht Hamburg referred, pursuant to Article 177 of the EEC Treaty, a number of questions on the interpretation of Article 37 of the Treaty concerning State monopolies of a commercial character in relation to Articles 92 and 93 concerning the system of aids and of Article 2 (1) of Council Decision No 70/549/EEC of 29 September 1970 on the Association of the Overseas Countries and Territories with the European Economic Community (Official Journal, English Special Edition, Second Series I, External Relations (2), p. 164) in order to establish whether the treatment in matters of taxation accorded by the Federal Republic of Germany to imported spirits following the entry into force of the Gesetz zur Änderung des Gesetzes über das Branntweinmonopol [Law for the Amendment of the Law on the Monopoly in Spirits] of 2 May 1976 (Bundesgesetzblatt I No 50 of 7 May 1976, p. 1145) is compatible with Community law.
2. The plaintiff in the main action is an undertaking which manufactures and distributes spirits and which marketed in the Federal Republic of Germany at the time in question imported spirits coming from various sources, of both Community and non-Community origin, either unprocessed or in the form of coupages.
3. The plaintiff, however, maintains that that equality of treatment is merely apparent, since it is clear from the preparatory stages of the Law of 2 May 1976 that the increase in the rate of taxation from DM 1500 to DM 1650 per hectolitre had the sole objective of enabling the Monopoly Administration to make good its losses stemming from the marked difference which had arisen between, on the one hand, the purchase price which it is bound by law to pay to producers of spirits to which the monopoly applies and, on the other, the selling price of such spirits to consumers, as determined by market forces following the judgments of the Court of 17 February 1976 in Cases 45/75 Rewe ([1976] 1 ECR 181) and 91/75 Miritz ([1976] 1 ECR 217).
4. The German tax administration, the defendant in the main action, claims for its part that the monopoly in spirits was adjusted in such a way that its only function at present is that of a national organization of the market and that it no longer supervises or directs the importation of spirits.
5. In order to settle the points at issue the Finanzgericht submitted the following questions:
6. The first question asks in essence whether a State measure which is related to the operation of a State monopoly of a commercial character and affects the free movement of goods may be exempted from the prohibition on discrimination contained in Article 37 of the Treaty because it comprises inter alia an aid within the meaning of Articles 92 and 93.
7. Both the Government of the Federal Republic of Germany and the Commission have called in question the applicability of Article 37 in the context of the dispute brought before the Finanzgericht.
8. Article 37 does not require the total abolition of State monopolies of a commercial character but only that they be so adjusted as to ensure that no discrimination regarding the conditions under which goods are procured and marketed exists between nationals of Member States.
9. A comparison between Article 37 on the one hand and Articles 92 and 93 on the other shows that those provisions pursue the same objective, which is to ensure that the two categories of intervention on the part of a Member State, namely action by a State monopoly and the granting of aids, do not distort the conditions of competition within the common market or create discrimination against the products or trade of other Member States.
10. The answer to the first question must therefore be that Article 37 of the Treaty constitutes in relation to Articles 92 and 93 of that Treaty a lex specialis in the sense that State measures, inherent in the exercise by a State monopoly of a commercial character of its exclusive right must, even where they are linked to the grant of an aid to producers subject to the monopoly, be considered in the light of the requirements of Article 37.
11. In view of that answer it is unnecessary to consider the extent to which the provisions of Articles 92 and 93 are applicable to the production and marketing of agricultural products, such as spirits, which are not yet subject to a common organization of the market.
12. Question 2 (a) and (b) concerns the point whether Article 37 (1) and (2) prohibits an increase in a tax on consumption where such increase, which in itself is not discriminatory, is organized in such a way that the additional revenue thereby obtained is intended to make good the losses incurred by a State monopoly as a result of the fact that it is obliged to pay producers a guaranteed purchase price in excess of the market resale price.
13. That question is in fact intended to establish whether a system of aid in conjunction with the operations of a State monopoly which together constitute a guarantee to producers of a purchase price which is higher than the selling price prevailing on the market may constitute an infringement of the provisions of Article 37.
14. The answer to Question 2 (a) and (b) must therefore be that any practice by a State monopoly which consists in marketing a product such as spirits with the aid of public funds at an abnormally low resale price compared to the price, before tax, of spirits of comparable quality imponed from another Member State is incompatible with Article 37 (1) of the EEC Treaty.
15. In accordance with the foregoing, Question 2 (c) must be understood as being intended to establish whether Article 37 has the effect of conferring rights directly on all persons adversely affected by the price policy which a State monopoly operates on the market under the conditions described by the national court.
16. Article 37 is based on the principle of the prohibition of all discrimination between nationals of the Member States regarding the conditions under which goods subject to a State monopoly in a Member State are procured and marketed.
17. The answer to Question 2 (c) must therefore be that Article 37 of the Treaty confers rights, which the national courts must protect, on persons who suffer the financial consequences of discrimination resulting from an abnormal reduction of the resale price charged by a public monopoly through the use of State funds.
18. Question 2 (d) asks whether the sphere of application of Article 37 of the Treaty extends to measures which affect the importation of goods from third countries.
19. Article 37 forms part of Chapter 2 of Title I of the Treaty, relating to the elimination of quantitative restrictions between Member States.
20. The answer to Question 2 (d) must therefore be that the sphere of application of Article 37 of the Treaty does not extend to measures which affect the importation of goods from third countries.
21. This question is asked by the Finanzgericht in order to clarify the scope of Article 2 of Council Decision No 70/549/EEC of 29 September 1970 on the Association of the Overseas Countries and Territories with the European Economic Community, according to which products originating in the countries and territories in question must, on importation into the Community, be admitted free of customs duties and charges having equivalent effect.
22. Decision No 70/549/EEC — assuming that it was applicable to the importations in question — is intended inter alia to extend to the countries and territories associated with the Community and to the products of such countries the rules relating to the free movement of goods within the Community.
23. The answer to Question 3 must therefore be that Council Decision No 70/549/EEC of 29 September 1970 on the Association of the Overseas Countries and Territories with the European Economic Community — subject to the reservation that its applicability to the facts of the case is verified by the national court — is intended to place goods originating in the countries and territories concerned on an equal footing with Community products so far as concerns any discriminatory practices on the part of a State monopoly of a commercial character.
24. The costs incurred by the Government of the French Republic, the Government of the Federal Republic of Germany and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable.
On those grounds, THE COURT in answer to the questions referred to it by the Finanzgericht Hamburg by an order of that court of 22 March 1978, hereby rules:
1 Article 37 of the EEC Treaty constitutes in relation to Articles 92 and 93 if that Treaty a lex specialis in the sense that State measures, inherent in the exercise by a State monopoly of a commercial character of its exclusive right must, even where they are linked to the grant of an aid to producers subject to the monopoly, be considered in the light of the requirements of Article 37.
2 Any practice by a State monopoly which consists in marketing a product such as spirits with the aid of public funds at an abnormally low resale price compared to the price, before tax, of spirits of comparable quality imported from another Member State is incompatible with Article 37 (1) of the EEC Treaty.
3 Article 37 of the EEC Treaty confers rights, which the national courts must protect, on persons who surfer the financial consequences of discrimination resulting from an abnormal reduction of the resale price charged by a public monopoly through the use of State funds.
4 The sphere of application of Article 37 of the EEC Treaty does not extend to measures which affect the importation of goods from third countries.
5 Council Decision No 70/549/EEC of 29 September 1970 on the Association of the Overseas Countries and Territories with the European Economic Community — subject to the reservation that its applicability to the facts of the case is verified by the national court — is intended to place goods originating in the countries and territories concerned on an equal footing with Community products so far as concerns any discriminatory practices on the part of a State monopoly of a commercial character.