JUDGMENT OF 10. 7. 1980 — CASE 152/78 COMMISSION v FRANCE

In Case 152/78

THE COURT composed of: H. Kutscher, President, A. O'Keeffe and A. Touffait (Presidents of Chambers), J. Mertens de Wilmars, P. Pescatore, Lord Mackenzie Stuart, G. Bosco, T. Koopmans and O. Due, Judges, Advocate General: G. Reischl Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts

I — Summary of the facts

II — Written procedure

III — Conclusions of the parties

IV — Submissions and arguments of the parties in the course of the written procedure

V — Oral procedure

Decision

The application of Article 30 of the Treaty

The application of Article 36 of the Treaty

Costs

I —. Summary of the facts

II —. Written procedure

III —. Conclusions of the parties

IV —. Submissions and arguments of the parties in the course of the written procedure

(a). The classification of drinks into different groups is dependent, first, on their pure-alcohol content and, secondly, on consumer habits. The first criterion for classification is unexceptionable; the second one is not and, in any event, the application of those criteria to the different products concerned gives rise to arbitrary discrimination and to disguised protection within the meaning of the second sentence of Article 36 since, in trade between Member States, beverages of a comparable degree of harmfulness, or even less, are treated more stringently.

(b). Thus, liqueurs of more than 18o which are sweetened with sugar, glucose or honey, such as Cointreau, Grand Marnier or Grande Chartreuse, which are national products, belong to the fourth group on which there is no specific advertising restriction, whilst strawberry, raspberry, blackcurrant and cherry liqueurs, the alcohol content of which may not exceed 18o, are classified in the third group on which there are advertising restrictions. Those two liqueur categories contain sugar in equivalent quantities and are both subject to the same habits of consumption; however, without any apparent justification liqueurs of less than 18o are treated more stringently than liqueurs of more than 18o.

(c). In this context it should particularly be observed that the fact that fruit liqueurs are mainly produced by French companies may be explained by the fact that having regard to their classification those products are subject to advertising restrictions the effect of which is nothing more or less than a lack of penetration of the French market by similar products originating in or coming from other Member States. National products, on the other hand, whilst being subject to the same advertising restrictions, are still well known to consumers owing to the fact that they are most frequently marketed by manufacturers whose name is known because of the advertising of the other products classified in the second and fourth categories which those manufacturers are able to effect — which is rarely the case in regard to producers in other Member States.

(d). In particular regard to rum and alcoholic beverages obtained from the distillation of wines, the statement that their classification is justified by different consumer habits is untenable. It is true that it has been scientifically proved that alcoholic beverages consumed on an empty stomach are more harmful to health than when taken after meals. However, rum is generally consumed on an empty stomach, either neat or mixed with other ingredients; cognac and armagnac are often consumed on an empty stomach and advertising campaigns exist to persuade people to drink them as aperitifs like whisky; in certain parts of France it is customary to consume spirits obtained from fruit or sugarcane as aperitifs; liqueurs of a strength of more than 18o are frequently consumed on an empty stomach; in the case of many beverages taken as an aperitif, such as whisky, consumers tend to dilute them with water which considerably reduces their harmfulness; single malt whiskies, like Glenfiddich, are drunk only after meals.

(e). It might be objected against the scientific arguments put forward by the French Government on the different levels of harmfulness of the products concerned that in certain Member States the time at which alcohol is taken and the sugar content are not as crucial as the quantity of alcohol absorbed.

(f). The fact that per head France is the largest consumer of alcohol in the world may be due in particular to the glaring ineffectiveness of its rules on the advertising of alcoholic beverages; of all alcoholic beverages consumed in France in 1975 those beverages on which there are no advertising restrictions at all totalled more than 90% the great majority of which is made up of domestic products; on the other hand, those beverages for which advertising is prohibited account for only 8% of national consumption and include grain spirits, like whisky, virtually all of which are imported.

(g). The distinctions made by the French rules, which cannot be justified by the degree of harmfulness of the drinks concerned, may moreover tend to promote certain trade patterns to the detriment of others, whilst putting products which are typically French at an advantage. All that matters, in this respect, are the effects which the rules in question have; motives are not on trial.

(h). The growing number of imports into France of certain products from other Member States does not alter the Commission's views on the matter.

(i). In the final analysis, however attractive the approach adopted by the rules in question my appear in theory, by referring to national, often conflicting, customs which necessarily help to promote the consumption of national products, that approach takes the form in practice of a pattern of discriminatory treatment between national products and imported products which is not objectively justified and which thereby constitutes arbitrary discrimination within the meaning of the second sentence of Article 36 of the EEC Treaty.

(a). The classification of drinks into five categories does not entail treating foreign products more stringently.

(b). The actual fact that there is a classification of different alcoholic beverages is not at issue in this case; the difference of opinion between the Commission and the French Republic arises from the concept of harmfulness, which is the only criterion related to objectives of public health which is capable of justifying the splitting-up of the various beverages into different categories.

(c). When presented in this way the French legislation is consistent throughout. As they correspond to different habits of consumption, the drinks in the third and fourth groups have different effects from the point of view of public health and are therefore logically classified in different categories.

(d). In regard to the special cases of rum and cognac the statements of the Commission contain serious factual errors. It is statistically established that rum is largely consumed in culinary dishes and that its consumption neat, on an empty stomach, is of small proportions. Likewise, more than 90% of cognac and armagnac are not taken on an empty stomach but used for digestive or culinary purposes; despite the advertising campaign to which the Commission refers the consumption of cognac as an aperitif has remained insignificant. In contrast, spirits obtained from tubers or grain which also have a high alcoholic strength, are most often drunk on an empty stomach or at the beginning of meals. It is for that reason that such spirits, French or foreign, are classified in the same category (fifth group) as aniseed-flavoured aperitifs.

(e). Therefore, the French legislation on the advertising of alcoholic beverages does not have an arbitrary discriminatory effect in regard to foreign products. It is furthermore striking to see that of recent years this legislation has not had any restrictive effect on the patterns of trade, as a study of the statistics on the consumption of alcoholic beverages in France will show. In particular, the statistics make it apparent that the alcoholic beverages which, according to the Commission, benefit from the French legislation, are at a standstill while the products in the fifth group are, in contrast, making increasing headway. This actual state of affairs cannot be ignored in any objective assessment of whether or not the French legislation is capable of affecting trade patterns.

(f). In point of fact it should be remembered in particular that although it is correct that 90% of alcoholic beverages consumed in France enjoy unrestricted advertising that figure merely represents the preponderance of wines of which France is one of the largest producers in the world; on the other hand the greater part of the 8% of the products to which the prohibition on advertising applies, is made up of French products (aniseed-flavoured) or products manufactured in France. It is not therefore possible to draw from these statistics the conclusions put forward by the Commission.

V —. Oral procedure

1. By an application of 6 July 1978 the Commission brought an action under Article 169 of the EEC Treaty for a declaration that the French Republic, by subjecting advertising in respect of alcoholic beverages to discriminatory rules and thereby maintaining obstacles to the freedom of intra-Community trade, has failed to fulfil its obligations under Article 30 of the EEC Treaty.

2. The action is directed more specifically against Articles L 17 and L 18 of the Code des Débits de Boissons et des Mesures contre l'Alcoolisme [Code on the retail sale of beverages and on measures against alcoholism], hereinafter referred to as the Code, which are intended to regulate advertising in respect of alcoholic drinks. The Commission contends that those rules have been so formulated that advertising in respect of certain imported alcoholic products is prohibited or subject to restrictions whilst it is completely unrestricted in regard to competing national products. This discriminatory effect is the result of the division of alcoholic beverages into categories in Article L 1 of the Code and the different way in which those provisions regulating advertising are made to apply to those categories. Those restrictions on the marketing of the products in question originating from other Member States are, it is claimed, to be regarded as measures having an effect equivalent to quantitative restrictions and as such are prohibited by Article 30 of the EEC Treaty.

3. Article L 1 on the Code divides beverages into five groups for the purpose of regulating their manufacture, sale and consumption; the first of those groups covers nonalcoholic beverages and the others alcoholic beverages. The latter groups are defined in these terms by Article L 1 :

4. As regards the system of regulating advertising, under Article L 17 of the Code it is prohibited to advertise drinks in the fifth group in any form whatsoever. By virtue of the system set up by Article L 1 all the alcoholic products which are not expressly stated to come under Groups 2, 3 or 4 may not therefore be advertised.

5. Under the terms of Article L 18 advertising in respect of drinks in Group 3 is permitted if it indicates exclusively the name and composition of the product and the name and address of the manufacturer, his agents and stockists. The type of bottling and labelling may be reproduced only if it gives no other information than that just mentioned. The result of Article L 1 is that those rules restricting advertising affect natural sweet wines other than those classified in Group 2, liqueur wines, wine-based aperitifs and strawberry, raspberry, blackcurrant or cherry liqueurs not exceeding 18o of pure alcohol.

6. Since there are no restrictions on them, the alcoholic beverages in Groups 2 and 4, that is to say, first, wine, beer, cider, natural sweet wines coming under the tax arrangements applying to wine, as well as blackcurrant liqueurs and fermented fruit juices and, secondly, rums, tafias, spirits obtained from the distillation of wines, ciders, perries or fruits, and sweetened liqueurs, may be freely advertised.

7. The Commission thinks that the classification contained in Article L 1 together with Articles L 17 and L 18 causes many imported products to be put at a disadvantage, as far as advertising is concerned, compared to the competing national products.

8. It points out, in particular, that under this system natural sweet wines coming under the tax arrangements applying to wine — a benefit given only to national sweet wines — also enjoy the benefit of completely unrestricted advertising whilst imported natural sweet wines and liqueur wines are subjected to a system of advertising restrictions.

9. It further contends that rums and spirits obtained from the distillation of wines, ciders, perries or fruits, as well as sweetened liqueurs, enjoy unrestricted advertising whilst numerous competing products, notably grain spirits like whisky and geneva, nearly all of which are imported, are covered by a prohibition on advertising.

10. In its defence the French Government advances two kinds of arguments; first, that, taken as a whole, the advertising rules are not more favourable to French products than to imported products and therefore do not infringe Article 30 of the Treaty; secondly, the aim of the rules is to protect public health and to curb alcoholism and that they therefore come under Article 36 of the Treaty.

11. As a preliminary point it should be observed that there is no dispute between the parties on whether a restriction on freedom of advertising for certain products may constitute a measure having an effect equivalent to a quantitative restriction within the meaning of Article 30 of the Treaty. Although such a restriction does not directly affect imports it is however capable of restricting their volume owing to the fact that it affects the marketing prospects for the imported products. The issue in point is therefore whether the prohibitions and restrictions on advertising laid down by the French legislation place a handicap on the importation of alcoholic products from other Member States.

12. In this respect the French Government contends that significant categories of French drinks are also covered by the prohibitions and restrictions on advertising criticized by the Commission. For example, aniseed-flavoured alcoholic beverages, consumed in particularly large quantities in France, may not be advertised in any way, as is the case with the other beverages falling into the fifth category. As regards the advertising restrictions imposed on drinks in the third category the French Government maintains that many wine-based aperitifs are in fact French products although they may bear trade names which appear to be foreign. There can therefore be no question of discrimination here when the categories laid down by the Code are applicable in an objective manner according to the properties of the various products and the prohibitions and restrictions on advertising apply to an appreciable number of French products as well as to imported products.

13. That defence of the French Government cannot be accepted. Even though it is true that the system adopted by the Code has the effect of subjecting some national products to prohibitions or restrictions on advertising, including widely-consumed products, nevertheless the fact remains that it still has undeniably discriminatory features. It should be emphasized in particular that as a result of their coming under the tax arrangements applying to wine, French natural sweet wines enjoy unrestricted advertising whilst imported natural sweet wines and liqueur wines are subjected to a system of restricted advertising. Similarly, whilst distilled spirits typical of national produce, such as rums and spirits obtained from the distillation of wines, ciders or fruits, enjoy completely unrestricted advertising, it is prohibited in regard to similar products which are mainly imported products, notably grain spirits such as whisky and geneva. As regards the similarity and competition existing between the products just mentioned, reference need only be made to the judgment which the Court gave between the same parties on 27 February 1980 in Case 168/78 on the tax system for spirits.

14. It is apparent from the foregoing that even though it is conceded that an appreciable number of national products are subject to the prohibitions and restrictions on advertising laid down by Articles L 17 and L 18 of the Code, nevertheless the fact remains that the classifications which determine the application of those provisions put products imported from other Member States at a disadvantage compared to national products and consequently constitute a measure having an effect equivalent to a quantitative restriction prohibited by Article 30 of the Treaty.

15. Secondly, the French Government draws attention to the part which the prohibitions and restrictions on advertising play in the campaign against alcoholism and in the protection of public health. The French Government is of the opinion that the disputed legislation is thereby covered by Article 36 of the EEC Treaty by which the provisions on the free movement of goods do not preclude prohibitions or restrictions on imports justified on grounds of the protection of health and life of humans. The French Government explains on this point that the legislation contested by the Commission is based on the distinction between drinks which are habitually consumed for aperitif purposes and drinks consumed for digestive purposes as it is accepted that it is the former which are more of a danger to public health owing to the fact that they are taken on an empty stomach. The scheme of the Code is so arranged, it is claimed, that the prohibitions and restrictions on advertising apply first and foremost to the category of aperitif drinks, such as aperitifs based on enriched wine, pastis and whisky. As regards the distilled spirits comprised in the fourth category, which may be freely advertised, they are spirits consumed as digestive beverages and as such are less harmful to health.

16. A preliminary observation is necessary in regard to the distinction between aperitif drinks and digestive drinks. As the Court has had the occasion to observe in the judgment of 27 February 1980, cited above, that distinction does not represent an effective criterion for the purpose of assessing the competitive relationship existing between the different categories of alcoholic drinks. Those observations, made in the context of a dispute on the tax arrangements applying to the drinks in question, apply for identical reasons to the assessment of obstacles of a commercial nature covered by Articles 30 and 36 of the Treaty.

17. On the other hand, it must be recognized that the connexion made by the French Government between the control of advertising in respect of alcoholic drinks and the campaign against alcoholism does exist. It is in fact undeniable that advertising acts as an encouragement to consumption and that the disputed rules are not therefore a matter of indifference from the point of view of the requirements of public health recognized by Article 36 of the Treaty. However, it should be pointed out that it is expressly specified in the same article that such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States.

18. The fact cannot be disputed that several alcoholic beverages on which there are no advertising restrictions under the French legislation, have, from the point of view of public health, the same harmful effects in the event of excessive consumption as similar imported products which, as such, are subjected to prohibitions or restrictions on advertising. Even though it is true that grounds relating to the protection of public health are not wanting in the disputed legislation, none the less its effect is to transfer the effort to restrict excessive alcohol consumption above all to imported products. It is therefore apparent that although the disputed legislation is in principle justified by concern relating to the protection of public health, none the less it constitutes arbitrary discrimination in trade between Member States to the extent to which it authorizes advertising in respect of certain national products whilst advertising in respect of products having comparable characteristics but originating in other Member States is restricted or entirely prohibited. Legislation restricting advertising in respect of alcoholic drinks complies with the requirements of Article 36 only if it applies in identical manner to all the drinks concerned whatever their origin.

19. Therefore that defence by the French Government must also be dismissed.

20. It follows that the French Republic must be found to have failed to fulfil its obligations having regard to the fact that the rules on advertising in respect of alcoholic beverages laid down by Article L 17 and L 18 of the French Code on the retail sale of beverages together with Article L 1 of the same Code are contrary to Article 30 of the EEC Treaty inasmuch as they constitute an indirect restriction on the import of alcoholic products originating in other Member States to the extent to which the marketing of those products is subject, in law or in fact, to more stringent provisions than those which apply to national or competing products.

21. Under the terms of Article 69 (2) of the Rules of Procedure the unsuccessful party shall be ordered to pay the costs. As the defendant has failed in its submissions, it must be ordered to pay the costs.

On those grounds, THE COURT hereby:

1 Declares that by subjecting advertising in respect of alcoholic beverages to discriminatory rules and thereby maintaining obstacles to the freedom of intra-Community trade, the French Republic has failed to fulfil its obligations under Article 30 of the EEC Treaty;

2 Orders the French Republic to pay the costs.