Opinion of Mrs Advocate General Rozès

Mr President,

Members of the Court

This reference for a preliminary ruling comes to the Court by way of a judgment given by the President of the Arondissementsrechtbank [District Court], The Hague, on 4 July 1982 in interlocutory proceedings between Roussel Laboratoria BV and Others, on the one hand, and the Netherlands, on the other.

I — I think it would be useful to begin by giving a brief outline of the rules in the Netherlands relating to pharmaceutical products.

Such products may not be marketed in the Netherlands until they have been registered by the College ter Beoordeling van Geneesmiddelen [Board responsible for the approval of medicines], a body established by the Wet op de Geneesmidelen-Voorziening [Law on the Supply of Medicines].

As in the case of other goods and services and irrespective of their origin (whether domestic or imported), their prices are determined by a decree of 29 December 1981 adopted pursuant to Article 2 (1) of the Prijzenwet [Prices Law] of 24 March 1961. Article 2 (1) authorizes the competent ministers to fix maximum prices — if necessary — each year by decree.

A decree of 8 June 1982 which entered into force on 18 June 1982 and introduced a dual pricing system applies exclusively to the prices of imported registered medicines, whilst the prices of medicines manufactured in the Netherlands continue to be governed by the general decree of 29 December 1981, mentioned earlier.

I should point out at this juncture that the expression manufactured in the Netherlands includes not only medicines which are produced in that country but also proprietary medicinal products imported from abroad provided that they are packed or wrapped in the Netherlands.

Thus, in the case of medicines produced in the Netherlands, the general decree fixes the maximum price for traders as the purchase price of the goods increased by 105% of the profit margin applied before 28 November 1981 for identical goods, in a similar case, increased by value-add tax.

In the case of imported medicines, however, the maximum price is the manufacturer's basic price last applicable in a similar case before 15 May 1982, increased by any direct costs (transport and so on), by the profit margin and by value added tax.

Thus, where for an imported proprietary medicinal product which is already packed there is an equivalent, original product in a so-called cheap foreign country, the selling price of the former product excluding value added tax in the Netherlands may not exceed the selling price, also excluding value-added tax, charged by the producer in the country of origin of that product. A Netherlands wholesaler who sells a product of that kind retains his profit margin in absolute terms, although he is bound by the purchase price of the proprietary medicinal product before 15 May 1982. Finally, the application of the contested Prices Decree entails either the alignment of the export price with the level of domestic prices in the exporting State or a reduction in the importer's profit margin.

A number of pharmaceutical undertakings, which are all subsidiaries or exclusive representatives of multinational groups or are licensed to use patents belonging to the latter, instituted interlocutory proceedings against the Netherlands for an order suspending the operation of the decree of 8 June 1982.

The President of the Arrondissementsrechtbank, The Hague, has referred the following five questions to the Court for a preliminary ruling:

II — Before the substantive issues which have been raised are considered, some preliminary remarks are called for.

1. The first question

(a) First part

By requesting the Court to determine whether the Netherlands decree constitutes a measure having an effect equivalent to a quantitative restriction on imports under Article 30 of the EEC Treaty, the national court seeks to ascertain whether the Netherlands legislation is consistent with the provisions of the Treaty.

The Court does not have jurisdiction under Article 177 of the Treaty to resolve questions which come within the scope of the proceedings under Article 169 for failure to fulfil an obligation under the Treaty. Moreover, it should be observed, as emphasized by the various plaintiff undertakings, that the facts on which the Netherlands relies to justify the measures adopted have not been established objectively and supported by reasons following a proper adversary procedure which would have enabled the trade circles concerned to express their views.

It will, however, be relatively easy to identify the issues concerning the interpretation of Community law stricto sensu in order to provide the national court with the information it requires to decide the case before it.

(b) Second part

Article 7 of the EEC Treaty, which prohibits discrimination on grounds of nationality, refers to the special provisions contained in the Treaty. The interpretation of that article therefore merges with that of Article 30 and it is unnecessary to consider it separately.

2. Third question

Article 3 (f) of the Treaty mentions, amongst the measures which are appropriate for the attainment of the objectives of the EEC Treaty set out in Article 2, the institution of a system ensuring that competition in the common market is not distorted.

That provision is given concrete expression by Articles 85 and 86 of the EEC Treaty. Accordingly, it has no independent significance and may be relied upon only in conjunction with other articles of the Treaty, in which connection I would refer to the opinion of Mr Advocate General Reischl in the Sacchi case.

According to the second paragraph of Article 5 of the EEC Treaty, the Member States shall abstain from any measure which could jeopardize the attainment of the objectives of this Treaty. According to the case-law of the Court, that provision lays down a general duty for the Member States, the actual tenor of which depends in each individual case on the provisions of the Treaty or on the rules derived from its general scheme.

The national court may be assumed to be referring, in the first place, to contractual or financial relations between the Netherlands importer, buyer or wholesaler on the one hand and his foreign supplier on the other, or to the fact that part of the sum resulting from the resale of the goods accrues, either directly or indirectly, to the seller or to any other natural or legal person associated with him. In that case, the situation would come within the scope of Article 85 of the EEC Treaty.

In a previous judgment, the Court held as follows:

Furthermore, the abuse of a dominant position in the pharmaceutical sector may well come within Article 86 of the EEC Treaty. However, like Article 85, that provision refers to the conduct of undertakings. In the words of the Court, with a view to safeguarding the principles and attaining the objectives set out in Articles 2 and 3 of the Treaty, Articles 85 to 90 have laid down general rules applicable to undertakings.

However, measures adopted by the Member States come within Article 30 et seq. The contested decree does not constitute an agreement between undertakings, nor has it come into being as a result of a concerted practice within the meaning of Article 85.

The national court may have had in mind the dominant position occupied by sickness insurance schemes responsible for the reimbursement of sums paid for pharmaceutical products. However, those schemes are entrusted with the operation of a service of general economic interest. The sole restriction on the performance, in law or in fact, of the task assigned to them is that the development of trade must not be affected to such an extent as would be contrary to the interests of the Community; that would bring them within the scope of Article 90 of the EEC Treaty.

It is quite clear that the Member States may not adopt any measures encouraging or requiring undertakings to circumvent the prohibitions laid down by Articles 85 to 94 of the EEC Treaty but the fact that a deterioration in normal competition is brought about or given impetus by national legislation does not have the effect of bringing such legislation within the scope of those provisions where there is neither an agreement, decision or concerted practice nor an abuse of a dominant position.

In any event, even if the provisions of Articles 3 (f) and 5 (in particular, the second paragraph thereof) in conjunction with those of Articles 85 and 86 may be relied upon before the national court, it is first and foremost for the Commission to adopt any general or specific measure for their implementation and to ascertain whether the conduct of undertakings is not to be traced to the provisions of national laws or regulations.

3. Fourth and fifth questions

These questions are concerned with the direct effect of certain general legal principles, in particular, the principle of proper and careful preparation. Since the Court has already recognized the direct effect of certain general principles of Community law, the plaintiff undertakings considered it normal to apply them where the national legislation of a Member State comes into conflict with the principles of Community law.

It must be pointed out that such principles are applicable only if they are embodied in a Treaty provision which needs to be interpreted or if they come within the scope of a provision of secondary Community legislation. Article 30 does not contain any direct or indirect reference to the principles mentioned by the national court and no provision of secondary Community legislation is at issue.

III — Those observations bring me to the fundamental issue raised by this case: does the concept of a measure having an effect equivalent to quantitative restrictions, contained in Article 30 — or rather in Article 31 — of the Treaty, apply to the legislation on prices which was adopted in this case?

1. The Treaty does not provide for the establishment of a common organization of markets accompanied by a common system of prices in the sector of proprietary medicinal products and, without prejudice to Articles 85 to 90, it does not prohibit the charging, in respect of a single product, of different prices on different markets. Therefore, whilst under an obligation to comply with existing provisions of Community law, the Member States retain the power to regulate the prices of such products.

2. In its judgment of 24 January 1978 in the Van Tiggele case, the Court clarified the position further still by pointing out that

3. The Netherlands Government states that approximately 80% of the medicines consumed in the Netherlands are imported from abroad, for the most part from the other Member States. Consequently, the general decree of 1981 affects no more that approximately 20% of domestic consumption.

4. Those arguments call for the following observations:

5. In that area, however, account must be taken, in particular, of the protection of health and life of humans (Article 36 of the EEC Treaty).

6. The problem of controlling the cost of health care must, moreover, be seen in the wider context of economic policy. The explanatory memorandum to the legislation in question, which formed part of the measures adopted to combat inflation, refers to the increase in prices and to the concern expressed by the Netherlands Government regarding the need to contain national health expenditure within certain limits. Thus, a measure of that kind, which is applicable for a limited period, is undeniably a short-term economic measure.

7. The question which arises is who is to set the limit beyond which what can reasonably be required is clearly exceeded.

IV — Although none of the interveners in this case has proposed a specific answer to the questions submitted by the national court, I am of the opinion that the Court should rule as follows:

Article 31 of the EEC Treaty must be interpreted as meaning that the establishment by the public authorities of a Member State of a system of maximum prices specifically for the retail sale of proprietary medicinal products registered in that State and imported from another Member State or a group of Member States constitutes a measure having an effect equivalent to a quantitative restriction.

However, the provisions of Article 36 in conjunction with those of Article 103 of the EEC Treaty may justify the adoption of national legislation containing restrictions which are explained primarily by the objective of reducing public health expenditure, where, in the absence of such legislation, that expenditure would exceed the limits of what may reasonably bê required.

It is for the Commission to determine whether, in the light of all the conditions governing the application of the provisions of Community law to which reference has been made, such an objective clearly exists.

1 Translated from the French.

2 Article 2 (3) of the Prices Decree.

3 Article 3 of the Prices Decree.

4 Case 155/73 [1974] ECR 409 at pp. 435-436.

5 Judgment of 8 June 1971 in Case 78/70 Deutsche Grammophon [1971] ECR 487 at p. 499, paragraph 5 of the decision.

6 Judgment of 31 October 1974 in Case 16/74 Centrafarm [1974] ECR 1183 at pp. 1199-1200.

7 Judgment of 21 February 1973 in case 6/72 Europemhailage [1973] ECR 215 at p. 244, paragraph 25 of the decision

8 Case 82/77 [1978] ECR 25 at p. 39.

9 Opinion of Mr Advocate General Mayras in Case 104/75 De Peijper [1976] ECR 613 at p. 650.

10 [1976] ECR 613 at pp. 636 and 637.

11 De Peijper judgment, paragraph 25 of the decision.

12 De Peijper judgment, paragraph 18 of the decision.

13 Judgment of 29 June 1978 in Case 154/77 Decbmann [1978] ECR 1573 at p. 1584, paragraph 22 of the decision.

14 Officiai Journal, C 116 of 29. 12. 1973, p. 22.

15 Official Journal, L 63 of 5. 3. 1974, p. 19.

16 Official Journal, L 199 of 22. 7. 1974, p. 1

17 Mr Advocate General Warner in Case 31/74 Culli [1975] ECR 47 at p. 70 et seq. and Mr Advocate General Mayras in Joined Cases 16 to 20/79 Danis [1979] ECR 3327 at pp. 3346-3348.