Report for the Hearing in Case C-347/88

I — Facts and procedure

1. Legislation

Law No 1571/85 of 21 October 1985 on the organization of petroleum policy and the marketing of petroleum products (Greek Official Gazette No 192 of 14.11.1985, part A) and the measures for its implementation contain several provisions on importation, exportation and marketing and on the system of prices for petroleum products.

(a) State monopoly over importation and marketing

Article 7(2) of Law No 1571/85 provides as follows:

Article 1(2) of Law No 1571/85 initially provided that the State shall be exclusively entitled to refine and consequently to import crude oil. That provision was amended by Article 3(1) of Law No 1769/88 of 7 April 1988 ratifying the Agreement concluded on 9 December 1987 amending the Agreement between Greece and certain oil companies, and Annexes 1, 2, 3 and 4 thereto, and regulating certain matters relating to hydrocarbons (Greek Official Gazette No 66 of 7.4.1988, part A). Article 1(2) of Law No 1571/85 now provides that the State shall be exclusively entitled to refine crude oil.

Article 4 of Law No 1571/85 concerns the adjustment of the State monopoly over the marketing of petroleum products in Greece. According to that provision, distribution companies are entitled to obtain supplies from the supplier of their choice up to a given percentage of the requirements of the Greek market. That percentage was increased from 25 to 35% as from 1 July 1987 (Decision No 163 of the Council of Ministers of 28 November 1986, Greek Official Gazette No 193 of 2.12.1986, part A). Subsequently, it was gradually raised to 75% (Decision No 132 of the Council of Ministers of 8 December 1988, Greek Official Gazette No 275 of 12.12.1988, part A), and then to 100% as from 1 January 1990 (Decision No 57 of the Council of Ministers of 12 May 1989, Greek Official Gazette No 128 of 22.5.1989, part A).

However, Article 4(3) of Law No 1571/85 authorizes the Council of Ministers to restore the State's marketing rights, either wholly or in part, in order to obviate possible repercussions of any national or international crises on public security and national defence.

(b) Import and export procedure

A ministerial decree adopted pursuant to Article 5 of Law No 1571/85 requires companies wishing to import petroleum products to submit to the Ministry of Industry, Energy and Technology, prior to importation, a declaration in respect of each shipment specifying, in particular, the country of origin and the import price certified by the Ministry's competent department (Article 3 of Decree No 3663 of 17 February 1987, Greek Official Gazette No 121 of 16.3.1987, part B). A ministerial circular of 20 January 1989 states that Decree No 3663 provides for the submission... of a simple import declaration for finished petroleum products and repeals the import authorization procedure previously in force.

Furthermore, pursuant to Article 12 of Law No 1571/85, the Ministers for Finance, Industry, Energy and Technology, and Trade issued a decree according to which companies engaged in the distribution of petroleum products may export finished petroleum products... subject to prior notification of the competent department (of the Ministry of Industry, Energy and Technology) (Decree No 5414 of 12 March 1987, Greek Official Gazette No 115 of 16.3.1987, part B). Such notification must, in particular, attest that the exportation does not affect the company's obligation to meet the requirements of the Greek market in accordance with a specific procurement programme (see Section (c) below). The competent department subsequently certifies to the Bank of Greece that it has been notified, so that the statutory export procedure can continue.

(c) Marketing

Article 15(1) of Law No 1571/85 provides that special authorization must be obtained in advance from the Minister for Industry, Energy and Technology in order to trade in petroleum products. In order to obtain such authorization, the undertaking concerned must, in particular, demonstrate that it has tankers at its disposal for the transportation of petroleum products, the minimum and maximum number of tankers being fixed by ministerial decision (Article 15(3)(d) of Law No 1571/85, as amended by Article 5(3)(d) of Law No 1769/88).

In addition, distribution companies are required to submit annually to the Ministry of Industry, Energy and Technology a programme setting forth projected sales for the following year on the Greek market and the supplies corresponding thereto (Article 9(2) of Law No 1571/85 and Decree No 3662 of 17 February 1987 concerning the submission of programmes by companies engaged in the distribution of petroleum products, Greek Official Gazette No 121 of 16.3.1987, part B). In support of those programmes, distribution companies must produce copies of contracts establishing that they will obtain from public-sector refineries supplies corresponding to the unadjusted part of the State marketing monopoly. They are also required to demonstrate that they will obtain from refineries established within the Community supplies equal to 70% of the quantity corresponding to the adjusted part of the monopoly (Article 9(4) of Law No 1571/85). Decree No 3662 provides that companies may apply for their procurement programmes to be reviewed in the course of the year (Article 7). In addition, they are authorized to depart from those programmes by a margin not exceeding 5% of the sales forecasts set forth therein (Article 6).

In order to apportion the adjusted percentage of the marketing monopoly amongst distribution companies and to enable the procurement programmes to be implemented, a ministerial decree was adopted laying down detailed rules for calculating the annual marketing quotas applicable to distribution companies (Decree No 3663 of 17 February 1987, Greek Official Gazette No 121 of 16.3.1987, part B). Article 4 of that decree authorizes each company to transfer part of its quota to another company. If the other factors taken into account in calculating the quotas remain constant, the fact that a company has transferred its quota to another results in a reduced quota being allocated to the first company in the following year.

(d) System of prices

Article 11 of Law No 1571/85 provides for the fixing of maximum selling prices to consumers for petroleum products refined in Greece or imported from abroad. Those prices are established by reference to a basic price fixed by taking various factors into account. The basic price is augmented by certain items in order to obtain the price at which the products are marketed in Greece. The consumer price is obtained by increasing the marketing price by the State taxes.

Article 11 initially provided that the factors to be taken into account in fixing the basic price were to be determined by the authorities but had to relate to national or international economic data taking account of market trends, such as the price fob Italy of finished petroleum products and the ratio between the cost of finished products refined in Greece and the average production cost of the same products refined in the other Member States (Article 11(1)). The prices, initially calculated in United States dollars and subsequently converted into drachmas, were to be fixed for periods of three months (Article 11(2)). However, Article 60 of Law No 1642/86 of 18 March 1986 allowed the prices to be altered before the expiry of a quarter where a fluctuation in international prices may have extraordinary and unforeseeable financial consequences.

Article 11 of Law No 1571/85 was amended by Article 4(1) of Law No 1769/88. The power to determine the factors to be taken into account in fixing the basic price and their weighting is still vested in the authorities. However, Article 11 of Law No 1571/85, as amended, provides that those factors must relate to duly substantiated national and international economic data such as, purely by way of illustration, the cif prices in Greek ports of finished products loaded in the ports of Community Member States situated in the Mediterranean or in Northern Europe, and to market trends concerning petroleum products.

In accordance with that provision, a presidential decree was adopted on 12 January 1989 (Presidential Decree No 27, Greek Official Gazette No 15 of 17.1.1989, part A) specifying the factors which are to be taken into account in fixing the basic price of petroleum products. Those factors are as follows :

The market trend factor reflects the rise or fall in the price of each product on the market, which is anticipated for the period in respect of which the prices are to be fixed (Article 2(5) of Presidential Decree No 27). According to that provision, the value of that factor is determined on the basis of statistics reflecting the seasonal nature of the products, the alteration in their price over a period of time and certain data which may influence international prices and procurement agreements on the Greek market. It may be + 20% of the international price of the corresponding product.

Moreover, the storage cost factor relates to the cost of storing the average stock held by distribution companies during the month preceding the application of the new price. It is calculated on the basis of the international cif price of the product in question and the London inter-bank offered rate (Libor) for three-month deposits in dollars (Article 2(6) of Presidential Decree No 27).

According to the provisions of Presidential Decree No 27, the manner in which those factors are taken into account in the formation of the basic price is as follows:

The basic price is equal to A + B + D + C + E + F. It cannot be lower than the price corresponding to G + B + D + C, where G designates the current international prices of products based on fob Italy prices (Article 3 of Presidential Decree No 27).

The basic price is determined every fortnight (Article 4(1) of Law No 1769/88).

The factors taken into account in calculating the marketing price include, in addition to the basic price, the cost of supplying border and tourist areas, the wholesalers' and retailers' profit margin and the storage cost (Article 4(1) of Law No 1769/88).

2. Pre-litigation procedure

On 2 June 1986 the Commission gave Greece formal notice pursuant to Article 169 of the EEC Treaty. In its letter the Commission maintained that the provisions of Law No 1571/85 and the measures implementing it, which are referred to above, in the version in force at the time, and several other provisions of that law were contrary to Articles 30, 34 and 37(1) of the EEC Treaty.

Greece replied on 1 October 1986.

Taking the view that the explanations provided by Greece were insufficient, the Commission issued a reasoned opinion under Article 169 of the EEC Treaty on 26 May 1987. In its reasoned opinion the Commission did not examine the provisions of Law No 1571/85, other than those described above, except for a provision with regard to which it waived the infringement procedure. Furthermore, in the light of the explanations given by Greece concerning the possibility of readjusting the marketing monopoly provided for in Article 4(3) of Law No 1571/85, the Commission stated that it was unnecessary to pursue the infringement procedure on that point whilst reserving its position in the event that Greece should apply that provision subsequently. In its reasoned opinion the Commission maintained that all the other national provisions referred to above, in the version in force at the time, were contrary to Articles 30, 34 and 37(1) of the EEC Treaty. In particular, with regard to the monopoly over the importation of crude oil for refining, provided for in Article 7(2) of Law No 1571/85, the Commission claimed that the maintenance of the monopoly over refining — which it does not call in question — did not justify the parallel maintenance of the exclusive import right. In its view, Greek refineries could obtain supplies from private importers. With regard to the system of maximum consumer prices, as laid down by Article 11 of Law No 1571/85, the Commission stated that it considered it to be contrary to Article 30 of the EEC Treaty on the ground that it did not take sufficient account of the specific costs borne by imported products (forwarding costs) and that the periods for which both the prices and the exchange rate between the US dollar and the drachma were fixed might make it impossible to market imported products in Greece. The Commission gave Greece a period of two months in which to comply with the terms of its opinion.

In its reply of 11 September 1987 Greece stated, in particular, that its policy concerning the adjustment of the petroleum monopoly was dictated by considerations of public security, the particular features of Greece's geopolitical situation and the specific structure of its oil market. As for the system of maximum consumer prices, Greece stated that it would be altered fundamentally in the near future.

3. Procedure

The Commission's application was received at the Court Registry on 29 November 1988.

On hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory inquiry. The parties were asked to reply in writing to certain questions.

II — Conclusions of the parties

The Commission, the applicant, claims that the Court should:

The Hellenic Republic, the defendant, contends that the Court should:

III — Submissions and arguments of the parties

1. Admissibility

Greece raises an objection of inadmissibility with regard to the following complaints.

(a) The complaint concerning the possibility retained by the Greek Government of readjusting the State monopoly over marketing (Article 4(3) of Law No 1571/85)

Greece points out that in its reasoned opinion the Commission stated that it was waiving the infringement procedure on that point.

The Commission states that although it considers the provision in question to be contrary to Articles 30 and 37 of the EEC Treaty, it is not asking for a declaration against Greece on that point.

(b) The complaint concerning the obligation for undertakings to obtain authorization to trade in petroleum products (Article 15(1) of Law No 1571/85)

Greece points out that this complaint is not made either in the letter of formal notice or in the reasoned opinion, whilst another provision of the same article (Article 15(3)(d)) forms the subject of a complaint expressly set out in the reasoned opinion. Referring to the Court's judgments in Case 211/81 Commissions Denmark [1982] ECR 4547 and in Case 124/81 Commission v United Kingdom [1983] ECR 203, Greece considers that in those circumstances the complaint is inadmissible.

The Commission acknowledges that the complaint is not expressly set out either in the letter of formal notice or in the reasoned opinion. However, it states that Article 15 of Law No 1571/85 is mentioned in the reasoned opinion, whilst the letter of formal notice refers to the conditions which must be fulfilled by undertakings wishing to trade in petroleum products in Greece. The requirement of prior authorization, which constitutes one of those conditions, should therefore be regarded as having formed the subject of the pre-litigation procedure.

(c) The complaint concerning the grant to the Greek authorities of the power to determine the factors to be taken into account in order to fix the basic prices and their weighting (Article 11(1) of Law No 1571/85, as amended), and the complaints concerning the storage cost and market trend factors (Article 2(5) and (6) of Presidential Decree No 27)

Greece contends that those complaints are not referred to either in the letter of formal notice or in the reasoned opinion, although, in its view, both the letter and the opinion should state the precise reasons why the national provision in question is contrary to Community law. It also emphasizes that the storage cost and market trend factors had already been taken into account under the provisions in force during the pre-litigation procedure.

The Commission considers that the reference to Article 11 of Law No 1571/85 contained in the letter of formal notice and in the reasoned opinion shows that the Commission is generally opposed to the system of fixing maximum prices for imported petroleum products. The complaints in question therefore enlarge upon an argument put forward during the pre-litigation procedure.

(d) The complaints not set out in the application

Greece considers that the complaints mentioned in the letter of formal notice and/or the reasoned opinion, which the Commission referred to in its application stating that it was seeking a declaration against Greece for, amongst other things, all the reasons set out in the letter of formal notice and in the reasoned opinion, which form an integral part of the application, are inadmissible in so far as they are not expressly set out in the application. Greece refers to the Court's aforesaid judgment of 8 February 1983 according to which, in order to be admissible, the complaints must be set out in the application, at least in substance. It considers that a mere reference to the documents relating to the pre-litigation procedure renders the application quite pointless and gives rise to confusion. It emphasizes that, in this case, such confusion is increased by the lack of consistency between the letter of formal notice and the reasoned opinion.

The Commission refuses to waive the complaints and allegations set out solely in the letter of formal notice and the reasoned opinion.

2. Substance

(a) State monopoly over importation and marketing

The Commission points out that Greece was under an obligation to adjust its petroleum monopoly as from 1 January 1981 (Article 40(1) of the Act concerning the conditions of accession of the Hellenic Republic and the adjustments to the Treaties, Official Journal 1979 L 291, p. 17).

It emphasizes that, pursuant to Article 7(2) of Law No 1571/85, Greece reserved the exclusive right to import crude oil and petroleum products. In its view, that exclusive right is contrary to Articles 30 and 37(1) of the EEC Treaty because it precludes any possibility of importation by a trader other than Greece.

Furthermore, Article 4(1) of Law No 1571/85 on the progressive adjustment of the State monopoly over the marketing of petroleum products is contrary to Articles 30 and 37 of the EEC Treaty in so far as, according to the Commission, it confers an exclusive marketing right on Greece and deprives the distribution companies of the right to procure from undertakings established in other Member States a quantity of supplies corresponding to the unadjusted part of the monopoly (25% before 1 January 1990).

Furthermore, the Commission considers that those restrictions cannot be justified either on grounds of public security or by Greece's geopolitical situation. It claims, in the first place, that the right to resort to Articles 224 and 225 of the EEC Treaty is sufficient to deal with crises which, according to Greece, justify the maintenance of the restrictions in question. Next, it states that the level of Greece's dependence on imports of crude oil does not differ from that of other Member States to such an extent as to justify the maintenance of the monopoly. Moreover, Greece has the advantage of geographical proximity to the producer countries from whom it obtains its supplies. With regard to petroleum products, the Commission states that the refining capacity of Greek undertakings exceeds the requirements of the domestic market, hence the supply of the latter is assured. Finally, referring to the reasoned opinion, the Commission points out that several directives and decisions of the Council and the Commission impose on the Member States an obligation to keep emergency stocks and thereby ensure availability of supplies in the Community.

With regard to imports of crude oil, Greece emphasizes that Article 7(2) of Law No 1571/85 refers to Article 1 of that law. That reference means that the exclusive import right is connected with the exclusive right to refine oil provided for in Article 1(2). Article 7(2) does not prohibit the importation of crude oil by third parties for distribution. Greece also points out that Article 1(2) of Law No 1571/85 was amended in order to dispel any uncertainty regarding the scope of Article 7(2). In those circumstances, there is no need to repeal the latter provision.

As regards imports of petroleum products, Greece emphasizes that under Article 7(2) of Law No 1571/85 the State exercises its exclusive right subject to the provisions of Article 4 concerning the adjustment of the State monopoly over the marketing of petroleum products. Greece considers that the State's right to import and market petroleum products is not in the nature of a monopoly within the meaning of Article 37 of the EEC Treaty, inasmuch as it relates to a quantity limited to 25% of the requirements of the domestic market. Furthermore, it emphasizes that the right is to be abolished as from 1 January 1990.

Greece also considers that the State's right to market petroleum products does not constitute a quantitative restriction on imports within the meaning of Article 30 of the EEC Treaty because the products marketed by the State may be imported products. In any event, the progressive adjustment of the State's exclusive right and its provisional maintenance limited to 25% of the requirements of the Greek market are justified by the country's geopolitical situation and on grounds of public security.

In that regard Greece considers that, notwithstanding the obligation imposed on the Member States to keep emergency stocks, the extent of its dependence on imports of crude oil and its specific geographical conditions (lack of a common frontier with other Member States, large number of islands using petroleum products) would make the regular supply of the Greek market by the other Member States exceptionally uncertain in times of crisis.

Furthermore, referring to the Court's judgment in Case 72/83 Campus Oil Ltd [1984] ECR 2727, Greece contends that the tension between itself and Turkey constitutes a real threat to public security and makes it necessary to adopt measures which ensure that Greece is supplied on a regular basis with crude oil and petroleum products. That aim cannot be achieved except by keeping public-sector refineries in operation and by requiring distribution companies to obtain part of their supplies from those refineries.

According to Greece, the risk of crude oil supplies being cut off would then be reduced in view of the possibility for public-sector refineries to conclude long-term supply contracts. Similarly, the risk of Greece's supplies of petroleum products being cut off would be smaller. In that regard, Greece considers that public-sector refineries alone are capable of ensuring that the country's requirements for petroleum products are met in times of crisis, for organic reasons (giving precedence to the public interest over trade interests), structural reasons (only those refineries are connected to the sole oil pipeline which crosses the country and serves the needs of the armed forces) and technical reasons (the volume of production of private-sector refineries is insufficient to meet requirements in times of crisis, which amount to at least 3.554 million tonnes). The obligation imposed on distribution companies to obtain from those refineries supplies corresponding to 25% of the requirements of the domestic market (namely 2.385 million tonnes) does not exceed what is strictly necessary to maintain public refineries in operation until such time as they can market their production freely at competitive prices. According to Greece, public-sector refineries must produce 5.692 million tonnes annually in order to ensure their technical survival.

(b) Import and export procedure

The Commission considers that Articles 5 and 12 of Law No 1571/85, Article 3 of Decree No 3663 and Decree No 5414 do not impose an obligation as to notification but require authorization to be obtained as a precondition for the importation and exportation of petroleum products. That requirement is contrary to Articles 30, 34 and 37(1) of the EEC Treaty.

The Commission also considers that even if the national provisions in question imposed only an obligation as to notification, such an obligation would be contrary to Articles 30 and 37 of the EEC Treaty for the duration of the system of import quotas, inasmuch as the obligation as to notification is designed to ensure the maintenance of that system.

Greece contends that the national provisions in force impose a mere obligation to notify import and export operations. That obligation is not contrary to Articles 30, 34 and 37 of the EEC Treaty because it has no effect on the exercise of the import/export right. Furthermore, it pursues legitimate objectives, namely monitoring trade flows in petroleum products for statistical purposes and supervizing the implementation of the State's petroleum policy plans and the procurement programmes submitted by distribution companies.

(c) Marketing

The Commission considers that the obligation imposed on distribution companies by Article 9 of Law No 1571/85 to submit annual procurement programmes for petroleum products and the system of marketing quotas for petroleum products which is applicable to those companies, as laid down by Decree No 3662, are contrary to Article 30 of the EEC Treaty because they restrict the marketing of imported products and deprive importers of the possibility of exploiting the market share which they would be able to acquire if there were freedom of competition. The Commission emphasizes that the procurement programmes are binding and that the possibility reserved to the companies concerned of transferring part of their quota to other companies does not alter that fact because such a transfer leads to a reduction of the quota granted the following year. Moreover, the fact that the procurement programmes and the system of marketing quotas are necessary for the State to be able to exercise its right to market petroleum products cannot justify those measures since, according to the Commission, the maintenance of that right constitutes an infringement of Community law.

The Commission also considers that the requirement of prior authorization for the marketing of petroleum products, and the obligation to keep a number of tankers in order to obtain such authorization, which are imposed on distribution companies by Article 15(1) and (3)(d) of Law No 1571/85, as amended by Article 5(3)(d) of Law No 1769/88, may also restrict imports of petroleum products and are therefore contrary to Article 30 of the EEC Treaty.

Greece considers that the obligation to submit annual procurement programmes and the system of marketing quotas have no effect either on imports or on freedom of competition. It contends that the procurement programmes constitute merely an inventory of each company's objective requirements, drawn up by the company itself, and that neither those programmes nor the marketing quotas are inflexible. It also points out that although the transfer of part of a quota is taken into consideration when the quotas are fixed the following year, that transfer is decided upon freely by the company concerned and its effect on the calculation of the quota allocated the following year can be completely neutralized by an increase in the other weightings, such as the quantity of petroleum products which the company concerned expects to sell.

Furthermore, Greece emphasizes that the obligation to submit procurement programmes and the system of marketing quotas are essential for the apportionment amongst the distribution companies of the quantity of petroleum products corresponding to the unadjusted part of the State marketing monopoly. In addition, it is only through the system of procurement programmes that the State can obtain information on the extent of the country's requirements for petroleum products and the assurance that those requirements will be met. That system is therefore an essential instrument for the determination and the application of the country's petroleum policy which, in Greece, is the State's responsibility. A similar system is also applied in France in connection with the adjustment of the State monopoly over petroleum products.

With regard to the obligation imposed on distribution companies to keep tankers, the maximum and minimum number of tankers being fixed by ministerial decree, Greece considers that this is unlikely to restrict imports because it relates only to the marketing of petroleum products and applies to imported products and domestic products alike. Greece also contends that the purpose of the obligation is to ensure that the country is supplied with petroleum products. In that regard it emphasizes that on several occasions, in 1985, 1988 and 1989, owners of tankers refused to hire them out to distribution companies, which led to interruptions in supplies of petroleum products in Greece. The fact that the rules in question specify a maximum number of tankers shows that the obligation to keep such vehicles is not excessive for the attainment of the objective pursued by those rules and is designed to prevent distribution companies from engaging in transportation to the detriment of their primary activity.

(d) System of prices

The Commission considers that the system of maximum selling prices for petroleum products introduced by Article 11 of Law No 1571/85, as amended by Article 4(1) of Law No 1769/88 and by Presidential Decree No 27, has the effect of restricting imports for three reasons. In the first place, that system does not take sufficient account of the costs associated with imported products. Secondly, it attaches excessive weight to national criteria. Thirdly, it confers on the authorities the power to determine what factors are involved in fixing prices. According to the Commission, the grant of that power constitutes in this case a restriction on imports in view of the nature of the factors adopted by the authorities, in particular the storage cost and the market trend.

The Commission considers that to take the market trend factor into account in fixing prices makes the determination of prices uncertain and has the effect of discouraging imports. According to the Commission, that is a factor which may have a significant impact on the level of prices and the calculation of which is based on a subjective assessment of the market, as well as partly on domestic factors. In the Commission's view, as a result of that factor the basic price may be fixed at a level which is below the cif price of the imported products, which would preclude any imports. Furthermore, if that factor were taken into consideration, it would render the machinery for fixing the minimum price threshold provided for in Article 3 of Presidential Decree No 27 devoid of purpose.

In addition, the Commission claims that the storage cost factor does not cover the actual costs incurred by companies which import petroleum products. That cost is calculated on the basis of the average stocks held by distribution companies and not on the basis of each company's actual expenses. Further, the cost of financing capital which is tied up as a result of the obligation to keep stocks is calculated on the basis of the London inter-bank offered rate, not on the basis of the distinctly higher interest rate applied by the Greek banks. Distribution companies cannot borrow on the international dollar market. In addition, the cost of keeping stocks does not include certain expenses incurred by distribution companies which are required to keep emergency stocks. According to the Commission, the detailed rules for calculating the storage cost are advantageous to companies which conclude two-year purchasing contracts with Greek refineries and which for that reason are exempt, at least in part, from the obligation to keep emergency stocks (Article 10(3) of Law No 1571/85, as amended by Article 3(3) of Law No 1769/88).

Finally, the Commission points out that the price (net of tax) of petroleum products in Greece is the lowest within the Community. In its view, that is attributable to the method of fixing the basic price which leads systematically to price levels lower than those at which petroleum products can be imported into Greece.

With regard to the complaint that insufficient account was taken of the costs associated with imported products, Greece emphasizes in the first place that the Commission has not specified the criterion for determining whether or not sufficient weight is given to such costs. Next, it contends that three of the six factors involved in fixing the basic prices relate exclusively to imported products (cost of transport, insurance premiums and losses incurred in connection with transport), two relate to imported and domestic products alike (market trend and storage cost) and the last factor is the international price of the products. The costs associated with imported products are therefore taken into account in full, according to Greece, in fixing the basic price. Moreover, the additional economic weightings taken into account in calculating the marketing prices relate to imported and domestic products alike.

With regard to the second complaint concerning the weight attached to national criteria in fixing prices, Greece contends that this complaint, as formulated by the Commission, is nebulous. Furthermore, it considers that as a result of the amendment of Article 11 of Law No 1571/85 by Article 4 of Law No 1769/88 and the adoption of Presidential Decree No 27, the complaint is devoid of purpose and of substance. The Greek rules, as amended, give paramount importance to the criteria relating to imported products in fixing the basic prices.

It is implicit in the fact that the price to be determined is to be applied on the Greek market that certain costs associated with domestic products are taken into account.

With regard to the complaint concerning the grant to the authorities of the power to determine the factors to be taken into account in fixing the basic price, Greece contends that the grant of that power derives from the division of tasks between the legislature and the executive. The former may establish only the general framework and the broad lines of the system of fixing prices, and that is what the Greek legislature did when it adopted Article 11 of Law No 1571/85. Such a division of tasks is in no way contrary to the provisions of the EEC Treaty.

As for the complaint concerning the market trend factor, Greece emphasizes that both the adoption of that factor and the grant to the administration of a discretion with regard to its application are justified by the concern to ensure a correlation between basic prices and international prices. Greece also contends that only the application of that factor by the authorities in specific and precise circumstances is capable of having a restrictive effect on imports of petroleum products. It adds that, in any event, recourse to the market trend factor does not give rise to uncertainty and that its application cannot lead to a restriction on imports because Article 3 of Presidential Decree No 27 provides that the basic price cannot be lower than a given threshold which is calculated without reference to the market trend factor.

With regard to the storage cost factor, Greece considers that the Commission's complaint is devoid of substance.

It emphasizes that although the calculation of that cost on the basis of the average stock held by distribution companies does not permit the total expenses actually incurred by all the companies concerned to be covered, it leads to the creation of a profit margin for companies whose actual costs are below the average cost. The Greek Government also contends that the difference between the average cost and the higher expenses actually incurred is taken into account in calculating the marketing price, which is fixed by reference to the storage cost. Moreover, the storage costs incurred after importation by importing companies can be offset by the purchase of petroleum products at prices lower than the Italian prices.

Furthermore, recourse to the London inter-bank offered rate in calculating the storage cost has no effect whatever either on importing companies or on the level of the basic price. According to Greece, distribution companies can borrow from abroad. In addition, the basic price is calculated in dollars and subsequently converted into drachmas in accordance with the dollardrachma exchange rate which theoretically takes account of the difference in the interest rates offered on the market by the London banks and the Greek banks.

Furthermore, the detailed rules for calculating the storage cost are not advantageous to companies which obtain their supplies from Greek refineries and are exempt from the obligation to keep emergency stocks. In that regard Greece contends that if such an advantage exists, it would continue to exist even if the cost of storage were calculated on the basis of the highest or lowest cost actually incurred by a distribution company. Further, that advantage diminishes as imports increase and as the number and relative size of the companies obtaining their supplies from Greek refineries diminish. However, Greece emphasizes that the additional expenses borne by importing companies are taken into consideration, as part of the storage cost, in calculating the marketing price. In addition, the price charged by Greek refineries to companies which they supply takes account of the cost which the refineries incur for keeping emergency stocks themselves. Accordingly, distribution companies which obtain their supplies from Greek refineries bear the cost of storage to the same extent as companies which import petroleum products.

IV — Answers to questions from the Court

A — The Court asked Greece to explain how imports of crude oil intended for refining by private-sector refineries are carried out.

By letter received at the Court Registry on 27 February 1990, Greece stated that private-sector refineries are free to obtain supplies of crude oil from a supplier of their choice. The oil is imported by the refineries directly, without any intervention on the part of a public body, in accordance with the following procedure: The refinery notifies the Minister for Energy of its intention to import a given quantity of crude oil specifying the country of origin. On the basis of that notification, the Minister for Energy informs the Bank of Greece and the customs offices through which the oil is to be imported. Payment of the purchase price is made through commercial banks acting on the importer's instructions, in accordance with commercial practice, and on the basis of pro-forma invoices drawn up by the supplier. Once the oil has been imported, the Minister for Energy sends the Bank of Greece and the customs offices a document specifying the unit price of the imported products. That document is drafted on the basis of the notification submitted to the Minister for Energy by the refinery which imported the oil, together with the invoice drawn up by its supplier and a list of international crude oil prices.

B — The Court asked the Commission to state whether, following the adoption of Decision No 57 of the Greek Council of Ministers, it intended to maintain its action in so far as it seeks a declaration that Greece has failed to fulfil its obligations under Articles 30 and 37(1) of the EEC Treaty by maintaining in force the State's marketing rights for petroleum products (Article 7(2) and Article 4(1) of Law No 1571/85).

By letter received at the Court Registry on 21 February 1990, the Commission stated that it was maintaining all the conclusions in its application. It considers that the possible abolition, as from 1 January 1990, of the exclusive import and marketing rights for petroleum products in Greece pursuant to Decision No 57 is a purely formal measure and will probably not permit genuine liberalization of the market in petroleum products. The Commission claims that, notwithstanding the adoption of Decision No 57, the Greek rules are still contrary to Articles 30, 34 and 37 of the EEC Treaty on account of the obligations imposed on distribution companies intending to market petroleum products in Greece, the maintenance in force of administrative procedures for the importation and exportation of petroleum products and the characteristics of the system of maximum consumer prices. The Commission claims, moreover, that the Greek rules are also contrary to the aforesaid provisions of the EEC Treaty inasmuch as they require distribution companies to keep emergency stocks but authorize them to assign that obligation to Greek refineries provided that the products stocked are manufactured by those refineries and form the subject of two-year supply contracts.

1 Language of the case: Greek.

2 Council Decision 68/416/EEC of 20 December 1968 on che conclusion and implementation of individual agreements between governments relating to the obligation of Member States to maintain minimum stocks of crude oil and/or petroleum products (OJ, English Special Edition 1968 (II), p. 591) —Council Directive 68/414/EEC of 20 December 1968 imposing an obligation on Member Sutes of the EEC to maintain minimum stocks of crude oil and/or petroleum products (OJ, English Special Edition 1968 (II), p. 586) —Council Directive 73/238/EEC of 24 July 1973 on measures to mitigate the effects of difficulties in the supply of crude oil and petroleum products (OJ 1973 L 228, p. 1) —Council Decision 77/706/EEC of 7 November 1977 on the setting of a Community target for a reduction in the consumption of primary sources of energy in the event of difficulties in the supply of crude oil and petroleum products (OJ 1977 L 292, p. 9) —Council Decision 77/186/EEC of 14 February 1977 on the exporting of crude oil and petroleum products from one Member State to another in the event of supply difficulties (OJ 1977 L 61, p. 23) — Commission Decision 78/890/EEC of 28 September 1978 applying Council Decision 77/186/EEC (OJ 1978 L 311, p. 13).