CJEC, December 15, 1982, No 286-81

THE COURT,

1. By judgment of 9 October 1981 which was received at the court on 3 November 1981 the Gerechtshof (regional court of appeal), Amsterdam, referred to the court of justice for a preliminary ruling under Article 177 of the EEC Treaty a question on the interpretation of Articles 30 and 34 of the EEC Treaty in order to enable it to determine whether Netherlands legislation intended to restrict the freedom to offer or give free gifts within the framework of a commercial activity was compatible with Community law.

2. The question was raised in proceedings brought by the Netherlands company Oosthoek's Uitgeversmaatschappij BV (hereinafter referred to as "Oosthoek") against a judgment of the Arrondissementsrechtbank (district court), Utrecht, imposing three fines of HFL 85 each on Oosthoek for infringement of the wet Beperking Cadeaustelsel 1977 (law on the restriction of free gift schemes).

3. Article 2(1) of that law prohibits the offering or giving of products as free gifts within the framework of a commercial activity. There are, however, several exceptions to that prohibition, in particular that provided for in Article 4(3) of the law which permits a free gift to be offered or given provided that it is usually used or consumed at the same time as all the products in respect of the purchase of which it is offered or given (a criterion usually described as related consumption or use - in Dutch "consumptieverwantschap"), if it bears a mark which is indelible and clearly visible when it is used in the normal way and which clearly shows that it is intended for advertising purposes, and if its value does not exceed 4% of the sale price of all the products in respect of the purchase of which it is offered or given.

4. Oosthoek markets in the Netherlands, in Belgium and in a small part of northern France, various encyclopaedias in the Dutch language, which are typeset and manufactured partly by Oosthoek in the Netherlands and partly by a company affiliated to Oosthoek in Belgium. Since 1974, in its newspaper and magazine advertisements and advertising brochures, Oosthoek has offered a dictionary, a universal atlas or a small encyclopaedia as a free gift to all subscribers to an encyclopaedia. Following the entry into force of the Wet Beperking Cadeaustelsel 1977 and in the light of that practice, proceedings were instituted against Oosthoek in the Netherlands for infringement of that law.

5. According to Oosthoek, that practice is compatible with the provisions of the relevant Belgian legislation which, whilst it also prohibits the offering of free gifts for sales promotion purposes and provides for an exception similar to that contained in Article 4(3) of the Wet Beperking Cadeaustelsel 1977, does not make the application of that exception subject to compliance with the criterion of related consumption or use.

6. The Gerechtshof, Amsterdam, taking the same view as that taken by the Arrondissementsrechtbank, Utrecht, in the judgment contested in the main proceedings, considered that there was no related consumption or use, as required by Article 4(3) of the Wet Beperking Cadeaustelsel, in the case of encyclopaedias sold and the books offered as free gifts and that the sales promotion scheme operated by Oosthoek therefore constituted an infringement of that law. However, since Oosthoek claimed that the Wet Beperking Cadeaustelsel 1977 was incompatible with Articles 30 and 34 of the EEC Treaty, the Gerechtshof, Amsterdam, considered it necessary to request the Court to give a preliminary ruling on the following question:

"Is it compatible with Community law (especially with the principle of the free movement of goods) for a publisher who, by offering free goods in the form of books, seeks to promote sales of various reference works, which are intended for the entire dutch-speaking area and originate partly in the Netherlands and partly in Belgium, to have to discontinue in the Netherlands that method of promoting sales, which is allowed in Belgium, owing to the Netherlands Wet Beperking Cadeaustelsel solely because that law requires a relationship to exist between the consumption or use of the free gift and the product which constitutes the basis for the offering of the free gift?"

7. In its question, the national court seeks in substance to ascertain whether Articles 30 and 34 of the EEC Treaty preclude the application by a Member State to products from, or intended for, another Member State of national legislation which prohibits the offering or giving, for sales promotion purposes, of free gifts in the form of books to purchasers of an encyclopaedia and requires, for the application of an exception to that prohibition, the existence of a relationship between the consumption or use of the free gift and the product sold.

8. In their observations, the Netherlands, German and Danish governments express the view, in limine, that national legislation such as that at issue has no particular impact on intra-Community trade and does not fall within the scope of Articles 30 and 34 of the EEC Treaty.

9. In that regard, it must be stated that the application of the Netherlands legislation to the sale in the Netherlands of encyclopaedias produced in that country is in no way linked to the importation or exportation of goods and does not therefore fall within the scope of Articles 30 and 34 of the EEC Treaty. However, the sale in the Netherlands of encyclopaedias produced in Belgium and the sale in other Member States of encyclopaedias produced in the Netherlands are transactions forming part of intra-Community trade. In the view of the question raised by the national court, it is therefore necessary to determine whether provisions of the type contained in the Netherlands legislation are compatible with both Article 30 and Article 34 of the EEC Treaty.

10. Oosthoek maintains that the Netherlands legislation obliges it to adopt different sales promotion schemes in the various Member States which constitute a single market, involves it in additional costs and further difficulties and thus hinders the importation and exportation of the encyclopaedias in question. The requirement of related consumption or use is not justified by the need either to protect consumers or to safeguard competition.

11. The Commission considers that although the possibility that such a measure may indirectly hinder the importation of encyclopaedias cannot be ruled out, it is not contrary to Article 30 since it applies to all products without distinction and is justified by the objectives of consumer protection and organization of the economy.

12. In order to answer the question raised by the national court, it is necessary to consider the question relating to exportation separately from that relating to importation.

13. As regards exportation, Article 34 is concerned with national measures the aim or effect of which is specifically to restrict the flow of exports and thus establish a difference in treatment between the domestic trade of a Member State and its export trade, in such a way as to confer a particular advantage on domestic production or on the domestic market of the state in question. That is evidently not the position in the case of legislation such as that at issue as regards the sale in other Member States of the Community of encyclopaedias produced in the Netherlands. That legislation merely imposes certain restrictions on marketing conditions within the Netherlands without affecting the sale of goods intended for exportation.

14. As regards the restrictions on imports referred to in Article 30 of the EEC Treaty, it must be remembered that the Court has repeatedly held, since its judgment of 20 February 1979 in Case 120/78 Rewe (1979) ECR 649, that in the absence of common rules relating to marketing, obstacles to movement within the Community resulting from disparities between national rules must be accepted in so far as those rules, being applicable to domestic products and imported products without distinction, are justifiable as being necessary in order to satisfy mandatory requirements relating, inter alia, to consumer protection and fair trading.

15. Legislation which restricts or prohibits certain forms of advertising and certain means of sales promotion may, although it does not directly affect imports, be such as to restrict their volume because it affects marketing opportunities for the imported products. The possibility cannot be ruled out that to compel a producer either to adopt advertising or sales promotion schemes which differ from one Member State to another or to discontinue a scheme which he considers to be particularly effective may constitute an obstacle to imports even if the legislation in question applies to domestic products and imported products without distinction.

16. It is therefore necessary to consider whether a prohibition of a free gift scheme, such as that contained in the Netherlands legislation, may be justified by requirements relating to consumer protection and fair trading.

17. In that regard, it is clear from the evidence before the Court that the Wet Beperking Cadeaustelsel 1977 pursues a twofold objective which is, in the first place, to prevent the disruption of normal competition by undertakings which offer products as free gifts or at very low prices with a view to promoting the sale of their own range of goods and, secondly, to protect consumers by the attainment of greater market transparency.

18. It is undeniable that the offering of free gifts as a means of sales promotion may mislead consumers as to the real prices of certain products and distort the conditions on which genuine competition is based. Legislation which restricts or even prohibits such commercial practices for that reason is therefore capable of contributing to consumer protection and fair trading.

19. The question raised by the national court with regard to legislation of that kind concerns, in particular, the criterion of related consumption or use the purpose of which, in the present case, is to define the scope of one of the exceptions relaxing the rule which in principle prohibits the offering of free gifts.

20. Even though no such criterion has been incorporated in the laws of other Member States, and in particular that of Belgium, it does not appear to be unrelated to the above-mentioned objectives of the Netherlands legislation or, in particular, to the desire to achieve market transparency to the extent considered necessary for the protection of consumers and to ensure fair trading. Accordingly, the incorporation of such a criterion in national legislation in order to define the scope of an exception to a rule which prohibits the offering of free gifts does not exceed what is necessary for the attainment of the objectives in question.

21. The answer to the question raised must therefore be that Articles 30 and 34 of the EEC Treaty do not preclude the application by a Member State to products from, or intended for, another Member State of national legislation which prohibits the offering or giving, for sales promotion purposes, of free gifts in the form of books to purchasers of an encyclopaedia and requires, for the application of an exception to that prohibition, the existence of a relationship between the consumption or use of the free gift and the product constituting the basis for the offering of the gift.

Costs

22. The costs incurred by the Netherlands government, the government of the Federal Republic of Germany, the Danish government and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. As these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the proceedings pending before the national court, the decision on costs is a matter for that court.

On those grounds,

THE COURT,

In answer to the question referred to it by the Gerechtshof, Amsterdam, by judgment of 9 October 1981, hereby rules :

Articles 30 and 34 of the EEC Treaty do not preclude the application by a Member State to products from, or intended for, another Member State of national legislation which prohibits the offering or giving, for sales promotion purposes, of free gifts in the form of books to purchasers of an encyclopaedia and requires, for the application of an exception to that prohibition, the existence of a relationship between the consumption or use of the free gift and the product constituting the basis for the offering of the gift.