CJEC, January 24, 1978, No 82-77

THE COURT OF JUSTICE OF THE EUROPEAN COMMUNITIES

1. By an order of 30 June 1977 which was received at the court on 5 July 1977 the Gerechtshof, Amsterdam, submitted, pursuant to Article 177 of the EEC Treaty, two questions on the interpretation, first, of Articles 30 to 37 of the Treaty concerning the elimination of quantitative restrictions on trade between Member states and, secondly, of Articles 92 to 94 of the Treaty concerning aids granted by states.

2.those questions were submitted in connexion with criminal proceedings instituted against a licensed Victualler who was accused of selling alcoholic beverages at prices below the minimum prices fixed by the Produktschap voor Gedistilleerde Dranken pursuant to the royal decree of 18 December 1975 (staatsblad no 746).

3. The regulation of the produktschap of 17 December 1975 concerning the price of spirits, approved by the minister for economic affairs on 19 December 1975, established within the country a system of minimum retail prices which varied according to each category of spirits.

4. The minimum price for spirits of the kind known as 'new Holland's gin' and 'vieux' is calculated on the basis of the manufacturer ' s catalogue price per unit increased by Hfl 0.60 and by value added tax, the total of which must in no case be lower than a specific amount, namely Hfl 11.25 per litre.

5. The minimum prices of spirits of the type known as 'old Holland's gin' is fixed at Hfl 11.25 per litre.

6. The minimum price for all other spirits is the actual purchase price increased by value added tax.

7. Pursuant to Article 7 of the regulation the minimum price, which had at first been fixed at hfl 11.25, was increased to Hfl 11.70 because of the rise in costs.

8. Article 8 authorizes the president of the Produktschap to grant exemption from the provisions of the regulation in certain cases or categories of cases.

9. It is clear from the statement of reasons on which the royal decree of 18 December 1975 is based that the power conferred upon the Produktschap to issue such rules was intended to promote the adaptation of the wine and spirit trade to normal competitive conditions and that such power was to be limited to a period of three years.

The first question

10. The first question asks in substance whether Articles 30 to 37 of the Treaty must be interpreted as meaning that the prohibition which they set out covers price-control rules such as those concerned in the present proceedings.

11. Article 30 of the Treaty prohibits in trade between Member states all measures having an effect equivalent to quantitative restrictions.

12. For the purposes of this prohibition it is sufficient that the measures in question are likely to hinder, directly or indirectly, actually or potentially, imports between Member states.

13. Whilst national price-control rules applicable without distinction to domestic products and imported products cannot in general produce such an effect they may do so in certain specific cases.

14. Thus imports may be impeded in particular when a national authority fixes prices or profit margins at such a level that imported products are placed at a disadvantage in relation to identical domestic products either because they cannot profitably be marketed in the conditions laid down or because the competitive advantage conferred by lower cost prices is cancelled out.

15. These are the considerations in the light of which the question submitted must be settled since the present case concerns a product for which there is no common organization of the market.

16. First a national provision which prohibits without distinction the retail sale of domestic products and imported products at prices below the purchase price paid by the retailer cannot produce effects detrimental to the marketing of imported products alone and consequently cannot constitute a measure having an effect equivalent to a quantitative restriction on imports.

17. Furthermore the fixing of the minimum profit margin at a specific amount, and not as a percentage of the cost price, applicable without distinction to domestic products and imported products is likewise incapable of producing an adverse effect on imported products which may be cheaper, as in the present case where the amount of the profit margin constitutes a relatively insignificant part of the final retail price.

18. On the other hand this is not so in the case of a minimum price fixed at a specific amount which, although applicable without distinction to domestic products and imported products, is capable of having an adverse effect on the marketing of the latter in so far as it prevents their lower cost price from being reflected in the retail selling price.

19. This is the conclusion which must be drawn even though the competent authority is empowered to grant exemptions from the fixed minimum price and though this power is freely applied to imported products, since the requirement that importers and traders must comply with the administrative formalities inherent in such a system may in itself constitute a measure having an effect equivalent to a quantitative restriction.

20. The temporary nature of the application of the fixed minimum prices is not a factor capable of justifying such a measure since it is incompatible on other grounds with Article 30 of the Treaty.

21. The answer to the first question must therefore be that Article 30 of the EEC Treaty must be interpreted to mean that the establishment by a national authority of a minimum retail price fixed at a specific amount and applicable without distinction to domestic products and imported products constitutes, in conditions such as those laid down in the regulation made by the Produktschap voor Gedistilleerde Dranken on 17 December 1975, a measure having an effect equivalent to a quantitative restriction on imports which is prohibited under the said Article 30.

The second question

22. The second question asks in substance whether Articles 92 to 94 of the Treaty must be interpreted as meaning that price-control rules such as those in the present case constitute an aid granted by the state.

23. Article 92 states that any aid granted by a member state or through state resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member states, be incompatible with the common market.

24. Whatever definition must be placed upon the concept of an ' aid ' within the meaning of that Article it is clear from the wording thereof that a measure characterized by the fixing of minimum retail prices with the objective of favouring distributors of a product at the exclusive expense of consumers cannot constitute an aid within the meaning of Article 92.

25. The advantages which such an intervention in the formation of prices entails for the distributors of the product are not granted, directly or indirectly, through state resources within the meaning of Article 92.

26. The answer to the second question must therefore be that Article 92 of the eec Treaty must be interpreted as meaning that the fixing by a public authority of minimum retail prices for a product at the exclusive expense of consumers does not constitute an aid granted by a state within the meaning of that Article.

Costs

27. The costs incurred by the government of the kingdom of the Netherlands and the Commission of the European Communities which have submitted observations to the court are not recoverable.

28as these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the national court, the Decision on costs is a matter for that court.

On those grounds,

THE COURT,

In answer to the questions submitted to it by the Gerechtshof, Amsterdam, by an order of 30 June 1977, hereby rules:

1. Article 30 of the EEC Treaty must be interpreted to mean that the establishment by a national authority of a minimum retail price fixed at a specific amount and applicable without distinction to domestic products and imported products constitutes, in conditions such as those laid down in the regulation made by the Produktschap voor Gestilleerde Dranken on 17 December 1975, a measure having an effect equivalent to a quantitative restriction on imports which is prohibited under the said Article 30.

2. Article 92 of the EEC Treaty must be interpreted as meaning that the fixing by a public authority of minimum retail prices for a product at the exclusive expense of consumers does not constitute an aid granted by a state within the meaning of that Article.