Opinion of Advocate General
Mr President,
Members of the Court,
1. This case has been referred to the Court of Justice by the Tribunal de Commerce de Bruxelles pursuant to Article 177 of the EEC Treaty and concerns the interpretation of the prohibition in Article 34 of the EEC Treaty on measures having equivalent effect to a quantitative restriction on exports in an area subject to the organization of the market in wine.
2. Wine producers have traditionally had a choice between bottling wine at the place of production or having the wine transported in bulk for bottling at the place of consumption.
3. The background to the present case, however, is that the authorities of the wine-producing Member States have begun to lay down rules regarding the place where wine is botded.
4. However this is not a case brought by the Commission against Spain or others of those countries mentioned pursuant to Article 169 of the EEC Treaty. As stated above it is a case referred by a Belgian court — the Tribunal de Commerce de Bruxelles — which is called on to decide a dispute between two Belgian undertakings and a Spanish undertaking which has been joined as a third party.
5. The written and oral observations show that the question of compulsory bottling within the winegrowing area is of practical and economic interest. Observations have been submitted not just by the two Belgian undertakings and by the Commission but also by a number of States — Belgium, the Netherlands and the United Kingdom — which themselves produce only very little wine or none at all but by contrast have a significant bottling industry. Of the wine-producing countries, on the other hand, it is only Spain, which is directly concerned, that has submitted observations.
6. An account of the facts of the case and the legal points raised is set out in the Report for the Hearing. I shall here merely summarize the facts and review the legal points which I consider central to an answer to the two questions.
The answer to Question 1
The Spanish rules on the compulsory bottling in the Rioja district of wine of designated origin
7. Pursuant to the Spanish Wine Law of 1970, a special Governing Council has been set up for the Rioja district which has the power, with the approval of the Minister of Agriculture, to lay down rules for wine of designated origin and also has the task of ensuring that the applicable rules for the recognition of designation of origin in Rioja are
8. The 1970 Spanish Wine Law and the rules adopted in implementation thereof lay down inter alia conditions for wine to be able to bear denominación de origen. Furthermore Article 86 of the Wine Law provides that wine can be given a denominación de origen calificada if further special conditions are satisfied. One of those conditions was originally that the product could be sold on the national market only if it had been bottled within the area of production. In 1988 new rules on designation of origin were adopted by Royal Decree No 157/88 of 22 February 1988 referred to in the Belgian court's first question. That decree sets out the conditions that must be fulfilled in order to qualify for the designations denominación de origen (Chapter 2) and denominación de origen calificada (Chapter 3) respectively.
9. After the adoption of the new rules in the Decree the Governing Council for the Rioja district repeated a request that had already been made for the recognition of the designation denominación de origen calificada.
10. It is important for a proper understanding of the Spanish rules that the requirement in Article 19(l)(b) of the Decree that the bottling is to take place in the wineries of origin (bodegas de origen) is to be interpreted as meaning that the bottling can take place in any undertaking within the Rioja district which is entered in the register kept by the Governing Council. The bottling may therefore lawfully be carried out within registered undertakings anywhere in the whole Rioja district. There is no requirement that the bottling should be carried out on the premises of the wine producer himself.
11. Examination of the relevant Spanish rules reveals that at the material time for the action pending in Belgium there still existed a limited possibility of exporting Rioja wine in bulk whereas it could no longer be sole! in bulk on the Spanish market.
The proceedings before the Tribunal du Commerce de Bruxelles
12. In short the two questions referred to the Court for a preliminary ruling arose in the following circumstances and stem from the following considerations.
13. The Belgian undertaking Établissements Delhaize Frères et Compagnie le Lion SA (hereinafter Delhaize le Lion) sells considerable quantities of wine and has its own bottling undertaking. In July 1989 Delhaize le Lion accepted an offer from its usual intermediary Promalvin SA for the purchase for 3000 hectolitres of Rioja wine in bulk. Promalvin had apparently made its offer without first making sure that it could have the required quantity delivered by its Spanish supplier A. G. E. Bodegas Unidàs SA (hereinafter A. G. E. Bodegas). It transpired that A. G. E. Bodegas could not supply such a large quantity in bulk since that undertaking informed Promalvin that such a supply would be incompatible with the rules laid down in Royal Decree No 157/88 of 22 February 1988.
14. On 11 August 1989 Delhaize le Lion brought proceedings against Promalvin before the Tribunal de Commerce de Bruxelles. Delhaize le Lion sought an order against Promalvin for the specific performance of the agreement they had entered into or in the alternative for damages, provisionally assessed at BFR 1. Promalvin then sought an order to have A. G. E. Bodegas joined as a third party, claiming that A. G. E. Bodegas should be obliged to satisfy the purchase order. A. G. E. Bodegas applied to have the case against it dismissed on the grounds that the abovementioned Spanish rules made such a supply impossible; it also claimed that the Spanish rules were not incompatible with Article 34 of the EEC Treaty.
15. In its order for reference the Tribunal de Commerce de Bruxelles has expounded its provisional view of the case. The court considers that Promalvin is liable for the failure to supply since it has acted imprudently by not making sure that A. G. E. Bodegas could supply the wine. Accordingly Delhaize le Lion can demand specific performance unless such performance is impossible. Specific performance can be demanded only if A. G. E. Bodegas can be obliged to sell the wine to Promalvin.
The Uwfulness of the mandatory requirement for quality wine to be bottled in the Rioja district and the ensuing ban on bulk sales outside that district
16. It is, in my view, appropriate in assessing the compatibility with Community law of national rules such as those at issue to start by considering the consequences which undeniably flow from those rules.
17. The observations submitted in this case — apart from those of the Spanish Government — also state that the Spanish rules are incompatible with Article 34 and that they cannot be regarded as justified.
18. I shall first examine the significance of the rules in the organization of the market as regards an assessment of the lawfulness of the Spanish rules. I shall then go on to examine whether the Spanish rules infringe Article 34 as interpreted by the Court of Justice in the Groenveld judgment and in later similar cases. Finally I shall consider whether the rules may be regarded as justified on the grounds cited by the Spanish Government.
The organization of the market in wine
19. The organization of the market contains comprehensive rules for the wine sector. The fundamental rules on the organization of the market are laid down in Council Regulation (EEC) No 822/87 of 16 March 1987. Article 11 provides:
20. I shall first examine whether the organization of the market, as claimed by the Spanish Government, contains rules which justify or in some other way render lawful a national requirement for wine to be bottled in the area of production. I shall further examine whether the organization of the market contains express rules with which a bottling requirement would be incompatible. Finally I shall consider whether there is anything in the organization of the market showing that the bottling requirement is contrary to the regulation of the market in wine as envisaged under the organization of the market.
21. It is clear from Council Regulation No 823/87 that the Council has confined itself to laying down certain fundamental common rules for quality wines produced in specified regions and that the Member States have autonomous powers to lay down rules supplementing those in the regulation. The Spanish Government has laid particular stress on the provisions of Article 18. Article 18 provides:
22. Even though the Spanish Government has rightly pointed out that the additional or more stringent rules which the Member States may adopt pursuant to Article 18 may also extend to trade in quality wines, it appears to me plain that Article 18 does not entail any autonomous authority for national rules concerning a requirement for wine to be bottled in the area of production. There are at least two good reasons. First, Article 18 expressly provides that the rules are to be adopted taking into account fair and traditional practices. It is not disputed in this case that for many years there have been substantial exports of Rioja wine in bulk and that such exports continued until the time when they were restricted by the Spanish rules. The Spanish Government has stated in these proceedings that until the implementation of the bottling requirement exports of wine in bulk accounted for around 20% of total exports of Rioja wine.
23. It is first necessary to consider whether, as is claimed in some of the observations, the organization of the market contains rules which preclude, directly or implicitly, Member States from requiring quality wine to be bottled in the area of production itself That question gives rise to certain difficulties.
24. It is clear that the objective which, according to the Spanish Government, underlies the bottling requirement, namely to safeguard the quality of the wine and to combat fraudulent practices, is also an aim pursued by the rules of the organization of the market. The objectives thus coincide.
25. It must also be recognized that the organization of the market regarding the matter at issue here is not exhaustive. That must be the case even if the organization of the market contains rules which presuppose trade in wine in bulk between the Member States. Such rules are laid down for example in Commission Regulation (EEC) No 986/89 of 10 April 1989 on the accompanying documents for carriage of wine products and the relevant records to be kept which also regulates the transport of wine products in bulk. There is a similar presupposition of the existence of trade in wine in bulk in Council Regulation (EEC) No 2392/89 of 24 July 1989 laying down general rules for the description and presentation of wine and grape musts. Those rules hardly signify anything other than that the Community found it necessary to lay down rules for trade in wine in bulk because such trade does exist simply as a matter of fact. The rules do not proceed on any assumption that such trade is always to be possible.
26. There are, however, judgments which show that the existence of organizations of the markets entails restrictions on the possibilities open to the Member States for regulating the economic activity which is covered by the organizations of the market, even if the national rules do not conflict with express provisions in the organizations of the market. According to that case-law, particular restrictions apply to the Member States' powers to regulate matters of significance to trade between the Member States in the products covered by the organizations of the market. It is established that the provisions in the EEC Treaty on the removal of customs and trade restrictions on intra-Community trade, in particular Articles 30 and 34, are an integral part of the common organization of the market in wine.
27. I shall, however, not rule out the possibility that such a national requirement can be justified on the grounds put forward for it by the Spanish Government. As mentioned above, the factors concerned are ones which the organization of the market also purports to take into account and the market organization does not preclude their also being taken into account with the assistance of national rules.
Article 34 of the EEC Treaty
28. It must further be examined whether a national requirement for quality wine to be bottled in the area of production is incompatible with Article 34 of the Treaty as interpreted by the Court of Justice in fields not covered by one of the common organizations of the market in agricultural products.
29. On the face of it it might perhaps seem that the Spanish rules at issue do not have the specific object or effect of restricting exports and that there thus cannot arise differences in treatment between domestic trade in a Member State and its export trade. In my view, however, such a view is not tenable in the present situation. The national rules concerned do not treat goods uniformly irrespective of whether they are sold on the domestic market or for export. Differences in treatment arise in so far as it is possible for wine producers within the area of production to sell wine that has not yet been bottled while such wine cannot be sold outside that area. The Spanish rules place undertakings in the Rioja district in a preferential position. That preferential position reflects a difference in the treatment accorded to undertakings in other Member States. That result is not altered by the fact that the preferential rules similarly afford differential treatment to Spanish undertakings which are outside the Rioja district. AU of those favoured by the preferential rules are within the area of production in question and the fact that the restrictive effects of those rules on exports do not favour all undertakings in the Member State in question cannot signify that the rules fall outside the prohibition under Article 34. It will be seen that I have here followed the line of reasoning which underlay the judgment of the Court of Justice in the Du Pont de Nemours Italiana case concerning Italian regional preferential rules which restricted imports of goods from other Member States and which was therefore held to be incompatible with Article 30 of the Treaty. In my opinion that precedent can also be applied in connection with the interpretation of Article 34.
30. That conclusion is borne out, moreover, by the Court's case-law concerning the application of Article 34 to national rules on the disposal or recycling of various kinds of waste. The national rules in question laid down mandatory obligations to hand over waste within certain areas in the Member States concerned. The Court held that prohibited indirect obstacles to exports existed in so far as the rules prevented waste from being exported to other Member States in order to be recycled or disposed of in undertakings approved in those States.
31. I therefore consider it legitimate to conclude that the requirement for quality wine to be bottled within the area of production in a Member State does constitute a barrier to exports of the product — wine in bulk — that could have taken place if the bottling requirement had not applied and that such a requirement is therefore covered by the prohibition under Article 34 of the Treaty.
The question whether the national requirement for quality wine to he bottled in the area of production can be regarded as justified
32. Since I have reached the conclusion that the Spanish rules at issue have such restrictive effects on the free movement of goods between Member States that they are incompatible with Article 34 of the EEC Treaty, I must consider whether they none the less can be regarded as justified on the ground that they are essential in order to take account of factors of sufficient importance to justify their restrictive effects on trade.
33. As mentioned above the Spanish Government has claimed that the rules in question are essential in order to protect wine of designated origin against deterioration in quality and against fraudulent practices. In that connection the Spanish Government has stated inter alia that it follows from Article 36 of the Treaty that restrictions affecting exports may be lawful if they are justified on grounds of the protection of industrial and commercial property and the Spanish Government considers that designations of origin are covered by the concept of industrial and commercial property.
34. It is in principle a key question in this case whether the consideration which underlies the Spanish rules is one that is covered by the concept of industrial and commercial property rights in Article 36. The basic premiss is that it is only considerations covered by Article 36 that can justify national rules which fall under the prohibition in Article 34 because of their discriminatory effects.
35. The Spanish Government is of course right in saying that it is important for the quality of wine covered by a designation of origin to be strictly protected and for all reasonable steps to be taken to prevent fraudulent practices affecting such wine.
36. There are many grounds showing, in my view, that it is not essential to lay down a bottling requirement in order to attain the objective which is allegedly the background to the obligation.
37. It is important in this connection that, as mentioned above, the Spanish rules do not prevent the transport of wine in bulk within the Rioja district. There still exists the risk of deterioration in quality and fraudulent practices in connection with transport to other undertakings and bottling of the wine other than at the wine producer's undertaking. The Spanish Government's observation that the Governing Council has supervisory powers only within the Rioja district itself is not sufficient in this connection to justify the rules at issue. Checks are also carried out outside the district and there has been no evidence in this case that the alleged risks are indeed greater outside the district than within it.
38. A bottling requirement such as that applying in the Rioja district can, therefore, not be regarded as essential in order to attain the object envisaged. That can be achieved by other means which are less restrictive of trade.
Question 2
39. The second question put by the Tribunal de Commerce de Bruxelles is as follows: ... may an individual rely on an infringement of Article 34 as against another individual? According to the order for reference the background to that question is that in support of its argument that its refusal to sell was lawful, A. G. E. Bodegas claimed inter alia that Article 34 is directed only against measures of Member States which restrict trade and that it is not applicable in respect of private undertakings.
40. The premiss underlying that view is correct in so far as it follows from the Court's case-law that Article 34 is directed only against public measures and not against the acts of private undertakings themselves.
41. But it does not follow that the prohibition under Article 34 cannot otherwise be of significance in litigation between individuals.
42. In the light of the Court's case-law there can be no doubt that in such circumstances Article 34 can be relied on by an individual in proceedings before a national court. Article 34 has direct effect and confers rights on individuals which must be protected by the courts of the Member States. That signifies that individuals may invoke Article 34 also in cases against other individuals in order to seek an assessment of the lawfulness of measures adopted by public authorities which are material to the decision of the legal dispute between the individuals.
43. It may accordingly be concluded that the Tribunal de Commerce de Bruxelles must apply Article 34 if it finds that the Spanish bottling obligation which A. G. E. Bodegas has cited as grounds for its refusal to sell is lawful.
44. It may however also be appropriate to point out that if the bottling requirement is incompatible with Community law it does not necessarily follow that the refusal of A. G. E. Bodegas to sell wine to Promalvin is also unlawful. That is a question which must be determined pursuant to Spanish law and it is possible that the refusal to sell may be lawful under Spanish law even if the bottling requirement conflicts with Community law. As has also been pointed out by the Commission in its written observations, there may exist grounds under Spanish law which, independently of the unlawfulness of the bottling requirement, mean that the refusal to sell is lawful.
The answers to be given to the national court's questions
45. For the foregoing reasons I would suggest that the Court of Justice give the following answer to the questions asked by the Tribunal de Commerce de Bruxelles:
1 Original language: Danish.
2 According to the Commission's observations a statutory obligation was thus introduced in France in 1972 to bottle vin d'origine contrôlé from Alsace within the département where it was produced. In Italy there is an obligation to bottle Marsala within the winegrowing area. Also in Italy a draft law has been submitted providing for rules to be adopted by presidential decree on the bottling of wine of designated origin within certain regions. In Luxembourg rules apply, subject to certain exceptions, under which the marque nańonale may only be used for wine that is sold ready bottled. In Germany rules apply whereby wine may not be described as quality wine produced in a specified region before it has been given a Kontrolnummer which is only assigned to wine that has been bottled. At the hearing it was further stated that with effect from 1992 Spain intends to introduce similar rules concerning the place of bottling as regards wine produced in the Jerez district and that Portugal has introduced analogous rules.
3 According to the Spanish Government's written observations, the background to that transitional rule was as follows: That rule was laid down taking account of the fact that although the zones applying for recognition as denominación de origen calificada (Rioja and Jerez) were progressively increasing the proportions of the protected wines tncy marketed that were bottled in the wineries of origin, they still kept up a residual trade in bulk for export (in 1988 the proportion of Rioja exports in bulk was 21% of the total destined for foreign marketj).
4 From Delhaize le Lion's written observations it is apparent that in 1989 it sold around 23.4 million bottles of table wine and quality wine, 85% of which, or some 20 million bottles, were of wine it horded itself.
5 Immediately before this agreement the two parties had effected a deal for a quantity of 250 hectolitres of Rioja wine. After the first order had been dispatched by Promalvin on the terms agreed with Delhaize le Lion for supply by A. G. E. Bodegas, Delhaize le Lion gave Promalvin a second order, which is at issue in this case, for 3000 hectolitres.
6 United National Treaty series, Vol. 720-11, No 10346.
7 In its written observations the Belgian Government stated that a general obligation to bottle quality wine within the area of its production would mean the loss of 300 jobs in the Belgian bottling industry and 600 jobs in associated undertakings; the economic loss is estimated to be BFR 1120 million.
8 In addition it will become more difficult for the importing countries to administer their existing rules on reuse of botdes.
9 Case 15/79 Groenveld v Produktschap voor Vee en Vlees [1979] ECR 3409.
10 OJ 1987 L 84, p. 1.
11 OJ 1987 L 84, p. 59, as amended by Council Regulation (EEC) No 2043/89 of 19 June 1989 (OJ 1989 L 202, p. 1) and Council Regulation (EEC) No 3577/90 of 17 December 1990 (OJ 1990 L 383, p. 23).
12 That is apparent inter alia from the following provisions of the regulation: Article 5 provides that Each Member State concerned shall lay down the provisions regarding winegrowing methods which are required in order to ensure the best possible quality for quality wines psr. Article 8 provides that the specific winemaking ana preparation methods used for obtaining quality wines psr and quality sparkling wines psr shall be laid down for each of those wines by each producer Member Sute concerned. Article 11(1) provides that a yield per hectare expressed in quantities of grapes, of grape must or of wine shall be fixed for each quality wine psr by the Member State concerned.
13 As set out in Council Regulation (EEC) No 2043/89 of 19 July 1989 amending Regulation No 823/87 (OJ 1989 L 202, p. 1). Article 18 in its original version provided: In addition to the provisions laid down in this Regulation, producer Member States may, taking into account fair and traditional practices, lay down any additional or more stringent characteristics or conditions of production and movement in respect of the quality wines produced in specified regions within their territory. It should be noteci that it was the original version that applied at the material time for the resolution of the dispute before the Tribunal de Commerce de Bruxelles. However I do not consider that the amendments, which were presumably primarily made for reasons of legislative technique, are of any significance for the questions to be answered by the Court of Justice.
14 OJ 1989 L 106, p. 1.
15 OJ 1989 L 232, p. 13. See Article ll(l)(d) under which special labelling requirements apply for containers of quality wine with a nominal volume or over 60 litres and Article ll(2)(r) envisaging the option of supplementing the information on the labelling by information in respect of bottling in a specified region.
16 See Case 83/78 Pigs Marketing Board v Redmond [1978] ECR 2347, paragraph 53 et seq.
17 See the judgment in Redmond cited in the preceding footnote, paragraphs 57-58. In a number of judgments concerning national rules restricting production of goods covered by organizations of the market the Court has held that the relevant organization of the market excludes any national system of regulations which could impede directly or indirecdy, actually or potentially, trade within the Community, see Case 190/73 Officier van Justitie v Van Haaster [1974] ECR 1123, paragraph 16. Similarly see Case 111/76 Officier van Justitie v Van den Haze! [1977] ECR 901.
18 There are perhaps more recent judgments showing that the Court does not consider that it is appropriate to interpret Article 34 differently according to whether or not it is to apply to a sector covered by an organization of the market. Such a view is possibly expressed in Case 118/86 Openbaar Ministeńe v Nertsvoederfabriek [1987] ECR 3883 concerning Netherlands rules on the compulsory collection of poultry offal; in paragraph 9 the Court referred to provisions in two organizations of the market and stated: Since those provisions reproduce the prohibitions laid down by Articles 30 and 34 of the Treaty, the rules described by the national court must be appraised exclusively in the light of those articles, which prohibit quantitative restrictions on imports and exports and any measures having equivalent effect, and which are regarded as forming an integral part of the common organization of the markets. It is also possible that the same view is expressed in the judgment in Case 148/85 Direction Générale des Impôts v Forest [1986] ECR 3449 concerning French rules on quotas for the milling of wheat in which the Court considered the questions of the meaning of Article 30 and Article 34 independently of the existing organization of the market. A more restrictive approach to the question of the significance of an organization of the market for the application of the EEC Treaty rules on the free movement of goods may also possibly be found in Case 237/82 Jongeneel Kaas v Netherlands State [1984] ECR 483 concerning Netherlands rules in the cheese sector. It is in my view also an open question whether within a sector covered by an organization of the market but without any particular indications in the market organization itself there are grounds for giving better protection to the free movement of goods than is given to the movement of goods in sectors not covered by market organizations. It is however not sufficiendy certain that the old case-law which in itself is clear has been abandoned and I shall therefore base my opinion on that case-law.
19 See for example Case 155/80 Oehel [1981] ECR 1993, Joined Cases 141, 142 and 143/81 Holdijk [1982] ECR 1299, Case 286/81 Oostboek's Uitgeversmaatschappij [1982] ECR 4575 and Case 237/82 /ongeneel Kaas v Netherhnds [1984] ECR 483. Its most recent judgment is that of 28 February 1991 in Case C-332/89 André Marchandise [1991] ECR I-1027.
20 Case C-21/88 [1990] ECR I— 1889, see p. 920.
21 Sec Case 172/82 Fabricants Rafţineurs d'Huile de Graissage v Inter-Huiles [1983] ECR 555, Case 173/83 Commission v France [1985] ECR 491 and Case 118/86 Openbaar Ministerie v Nertsvoederfabriek Nederland [1987] ECR 3883. The first two cases concerned the lawfulness of French rules concerning the disposal of waste oils and the last case concerned Netherlands rules on the disposal of offal.
22 The present case has led me to wonder whether the interpretation of Article 34 which has been laid down by the Court of Justice may prove to be too narrow. The basis for my view that Article 34 is applicable to the Spanish botding requirement is, as mentioned above, that wine may continue to be sold in bulk within the area of production in question. Such a basis could not be used in respect of national rules requiring wine to be botded by the wine producers themselves. Nor could that basis be used in other situations where national rules might require further processing of an otherwise saleable product to be carried out in the undertaking where it is first processed. It may well occur that a State finds it appropriate to lay down rules obliging undertakings which hitherto had produced semifinished products wnich they had sold to undertakings in other States to produce the final finished product themselves. Such national rules, which according to the Court's interpretation would hardly be covered by Article 34, could well in my view constitute unlawful obstacles to the free movement of goods.
23 See in this connection inter alia the judgment in Du Pont de Nemours Italiana referred to in footnote 19.
24 I may point out in this connection that the approach I have taken is not without precedent. In a case in which it was also claimed that designations of origin were covered by Article 36 the Court of Justice refrained from taking a position on that question holding that the national rules in äuesüon could not be held to be justified simply because ley failed to satisfy the other conditions for Article 36 to apply. See Case 16/83 Franti [1984] ECR 1299, paragraph 35.
25 See Commission Regulation (EEC) No 986/89 of 10 April 1989 on the accompanying documents for carriage of wine products and the relevant records to be kept (OJ 1989 L 106, p. 1). The regulation contains special rules on the accompanying documents for the transport of unpackaged products. Moreover, under Council Regulation (EEC) No 2392/89 of 24 July 1989 laying down general rules for the description and presentation of wines and grape musts (OJ 1989 L 232, p. 13) wine producers are under an obligation to state on the labelling where the wine is produced.
26 See inter alia Case 311/85 Vereniging van Vlaamse Reisbureaus [1987] ECR 3801.
27 See inter alia Case 83/78 Pigs Marketing Board v Redmond [1978] ECR 2347.
28 Case 262/81 Walter Rau Lebensmittelwerke v De Smeät [1982] ECR 3961.
29 That is confirmed by the Court's judgment in Case 172/82 Inter-Huiles [1983] ECR 555, in which Article 34 had been relied on in a dispute between individuals in connection with the question of the lawfulness of the French rules on waste oils referred to above.