CJEC, June 17, 1981, No 113-80

THE COURT

1 By an application lodged at the court registry on 28 april 1980, the commission instituted proceedings under article 169 of the eec treaty, for a declaration that Ireland had failed to fulfil its obligations under article 30 of the eec treaty by requiring that the imported goods falling within the scope of the merchandise marks ( restriction on sale of imported jewellery ) order 1971 ( s. I. No 306, iris oifigiuil of 21 november 1971 ) and the merchandise marks ( restriction on importation of jewellery ) order 1971 ( s. I. No 307, iris oifigiuil of 21 november 1971 ) bear an indication of origin or the word ' ' foreign ' '.

2 According to the explanatory notes thereto, statutory instrument no 306 ( hereinafter referred to as ' ' the sale order ' ' ) prohibits the sale or exposure for sale of imported articles of jewellery depicting motifs or possessing characteristics which suggest that they are souvenirs of Ireland, for example an irish character, event or scene, wolfhound, round tower, shamrock etc. And statutory instrument no 307 ( hereinafter referred to as ' ' the importation order ' ' ) prohibits the importation of such articles unless, in either case, they bear an indication of their country of origin or the word ' ' foreign ' '.

3 The articles concerned are listed in a schedule to each order. However, in order to come within the scope of the orders the article must be made of precious metal or rolled precious metal or of base metal, including polished or plated articles suitable for setting.

4 In the commission ' s opinion, the restrictions on the free movement of the goods covered by the two orders constitute measures having an effect equivalent to quantitative restrictions on imports, contrary to the provisions of article 30 of the eec treaty; it also observes that according to article 2 ( 3 ) ( f ) of directive 70-50-eec of 22 december 1969, based on the provisions of article 33 ( 7 ) of the treaty, on the abolition of measures which have an effect equivalent to quantitative restrictions on imports and are not covered by other provisions adopted in pursuance of the eec treaty ( official journal, english special edition 1970 ( i ), p. 17 ) ' ' measures which lower the value of an imported product, in particular by causing a reduction in its intrinsic value, or increase its costs ' ' must be regarded as measures having an effect equivalent to quantitative restrictions, contrary to article 30 of the eec treaty.

5 The irish government does not dispute the restrictive effects of these orders on the free movement of goods. However, it contends that the disputed measures are justified in the interests of consumer protection and of fairness in commercial transactions between producers. In this regard, it relies upon article 36 of the treaty which provides that articles 30 to 34 shall not preclude prohibitions or restrictions on imports justified on grounds of public policy or the protection of industrial and commercial property.

6 The defendant is, however, mistaken in placing reliance on article 36 of the treaty as the legal basis for its contention.

7 In fact, since the court stated in its judgment of 25 january 1977 in case 46-76 bauhuis ( 1977 ) ecr 5 that article 36 of the treaty ' ' constitutes a derogation from the basic rule that all obstacles to the free movement of goods between member states shall be eliminated and must be interpreted strictly ' ', the exceptions listed therein cannot be extended to cases other than those specifically laid down.

8 In view of the fact that neither the protection of consumers nor the fairness of commercial transactions is included amongst the exceptions set out in article 36, those grounds cannot be relied upon as such in connexion with that article.

9 However, since the irish government describes its recourse to these concepts as ' ' the central issue in the case ' ', it is necessary to study this argument in connexion with article 30 and to consider whether it is possible, in reliance on those concepts, to say that the irish orders are not measures having an effect equivalent to quantitative restrictions on imports within the meaning of that article, bearing in mind that, according to the established case-law of the court, such measures include ' ' all trading rules enacted by member states which are capable of hindering, directly or indirectly, actually or potentially, intra-community trade ' ' ( judgment of 11 july 1974 in case 8-74 dassonville ( 1974 ) ecr 837 ).

10 In this respect, the court has repeatedly affirmed ( in the judgments of 20 february 1979 in case 120-78 rewe ( 1979 ) ecr 649, 26 june 1980 in case 788-79 gilli and andres ( 1980 ) ecr 2071, 19 february 1981 in case 130-80 kelderman ( 1981 ) ecr ) that ' ' in the absence of common rules relating to the production and marketing of the product in question it is for member states to regulate all matters relating to its production, distribution and consumption on their own territory subject, however, to the condition that those rules do not present an obstacle... To intra-community trade ' ' and that ' ' it is only where national rules, which apply without discrimination to both domestic and imported products, may be justified as being necessary in order to satisfy imperative requirements relating in particular to... The fairness of commercial transactions and the defence of the consumer that they may constitute an exception to the requirements arising under article 30 ' '.

11 The orders concerned in the present case are not measures which are applicable to domestic products and to imported products without distinction but rather a set of rules which apply only to imported products and are therefore discriminatory in nature, with the result that the measures in issue are not covered by the decisions cited above which relate exclusively to provisions that regulate in a uniform manner the marketing of domestic products and imported products.

12 The irish government recognizes that the contested measures apply solely to imported articles and render their importation and sale more difficult than the sale of domestic products. However, it maintains that this difference in the treatment awarded to home-produced articles and to imported articles does not constitute discrimination on the ground that the articles referred to in the contested orders consist mainly of souvenirs; the appeal of such articles lies essentially in the fact of their being manufactured in the place where they are purchased and they bear in themselves an implied indication of their irish origin, with the result that the purchaser would be misled if the souvenir bought in Ireland was manufactured elsewhere. Consequently, the requirement that all imported ' ' souvenirs ' ' covered by the two orders must bear an indication of origin is justified and in no way constitutes discrimination because the articles concerned are different on account of the differences between their essential characteristics.

13 The commission rejects this reasoning. In reliance on the judgment of 20 february 1975 in case 12-74 commission v federal republic of germany ( 1975 ) ecr 191, it submits that it is unnecessary for a purchaser to know whether or not a product is of a particular origin, unless such origin implies a certain quality, basic materials or process of manufacture or a particular place in the folklore or tradition of the region in question; since none of the articles referred to in the orders display these features, the measures in question cannot be justified and are therefore ' ' overtly discriminatory ' '.

14 It is therefore necessary to consider whether the contested measures are indeed discriminatory or whether they constitute discrimination in appearance only.

15 The souvenirs referred to in the sale order and in the importation order are generally articles of ornamentation of little commercial value representing or incorporating a motif or emblem which is reminiscent of an irish place, object, character or historical event or suggestive of an irish symbol and their value stems from the fact that the purchaser, more often than not a tourist, buys them on the spot. The essential characteristic of the souvenirs in question is that they constitute a pictorial reminder of the place visited, which does not by itself mean that a souvenir, as defined in the orders, must necessarily be manufactured in the country of origin.

16 Furthermore, leaving aside the point argued by the commission - with regard to the articles covered by the contested orders - that it would not be enough to require a statement of origin to be affixed to domestic products also, it is important to note that the interests of consumers and fair trading would be adequately safeguarded if it were left to domestic manufacturers to take appropriate steps such as affixing, if they so wished, their mark of origin to their own products or packaging.

17 Thus by granting souvenirs imported from other member states access to the domestic market solely on condition that they bear a statement of origin, whilst no such statement is required in the case of domestic products, the provisions contained in the sale order and the importation order indisputably constitute a discriminatory measure.

18 The conclusion to be drawn therefore is that by requiring all souvenirs and articles of jewellery imported from other member states which are covered by the sale order and the importation order to bear an indication of origin or the word ' ' foreign ' ', the irish rules constitute a measure having equivalent effect within the meaning of article 30 of the eec treaty. Ireland has consequently failed to fulfil its obligations under the article.

19 Under article 69 ( 2 ) of the rules of procedure, the unsuccessful party is to be ordered to pay the costs if they have been asked for in the successful party ' s pleading.

20 In this case, since the defendant has failed in its submissions, it must be ordered to pay the costs.

On those grounds,

The court

Hereby:

1 Declares that by requiring all articles imported from other member states which are covered by the merchandise marks ( restriction on sale of imported jewellery ) order 1971 and by the merchandise marks ( restriction on importation of jewellery ) order 1971 to bear an indication of origin or the word ' ' foreign ' ', Ireland has failed to fulfil its obligations under article 30 of the eec treaty;

2 Orders the defendant to pay the costs.