CJEC, November 24, 1982, No 249-81

THE COURT

1 By an application lodged at the court registry on 15 september 1981 the Commission of the European Communities brought an action before the court under article 169 of the eec treaty for a declaration that by organizing a campaign to promote the sale and purchase of irish products in its territory Ireland has failed to fulfil its obligations under the treaty.

I - The subject-matter of the application

2 In a reasoned opinion addressed to Ireland on 25 february 1981 concerning the ' ' buy irish ' ' campaign, the commission noted that in january 1978 the irish government had introduced a three-year programme to help to promote irish products. The campaign was launched on 18 january 1978 in a speech delivered by the irish minister for industry, commerce and energy. The minister declared on that occasion that the aim of the campaign was to achieve ' ' a switch from imports to irish products equivalent to 3% of total consumer spending ' ' and that the campaign was ' ' a carefully thought out set of initiatives that add up to an integrated programme for promoting irish goods, with specific proposals to involve the producer, distributor and consumer ' '.

3 The irish government, it was said, had taken and was continuing to take a series of measures designed to promote irish products in accordance with the terms of that speech. The reasoned opinion cited the following measures:

(a) The organization of a free information service for consumers wishing to know which products in a particular category of goods are made in Ireland and where they may be obtained (the shoplink service);

(b) The provision of exhibition facilities, exclusively for exhibiting irish products, in a large exhibition centre in dublin run by the irish goods council, which is, it is claimed, a public authority;

(c) The encouragement of the use of the ' ' guaranteed irish ' ' symbol for products made in Ireland together with the organization by the irish goods council of a special system for investigating complaints about products bearing that symbol;

(d) The organization of a big publicity campaign by the irish goods council in favour of irish products, involving in particular the publication and distribution by that institution of literature encouraging consumers to buy only domestic products.

4 The commission notes in the application that the activities connected with the shoplink service and the exhibition facilities in dublin have now been abandoned by the irish government. However, the other two activities have continued, even after the expiry of the three-year period for which the campaign was to last. Moreover, the publicity campaign has been gradually extended, in particular by means of widespread advertising in favour of irish products in the press and on television.

5 The irish government admits that there was a three-year programme in favour of buying irish products in Ireland. It says that since the shoplink service and the exhibition facilities in dublin were abandoned at the request of the commission the programme consists merely of an advertising campaign, by means of the press and television, the publication of posters and pamphlets and the use of the ' ' guaranteed irish ' ' symbol, designed to make irish consumers better acquainted with products made in Ireland and to stimulate awareness in the irish public of the link between the marketing of such products in Ireland and the unemployment problem in that country.

6 As far as the advertising campaign is concerned, the irish government confirms that it forms part of the activities of the irish goods council. However, that institution cannot be regarded as a public authority; it is merely an arrangement whereby the various industries in Ireland may cooperate for their common good. The activities of the irish goods council are not based on any official enactment and the involvement of the government consists exclusively of financial aid and moral support.

7 The commission maintains that the actions of the irish goods council are unquestionably attributable to the irish government. It points out, in particular, that the members of the management committee of the council are appointed, under the articles of association of that body, by the minister for industry, commerce and energy.

8 The commission is of the opinion that the campaign to promote the sale and purchase of irish products in Ireland must be regarded as a measure having an effect equivalent to a quantitative restriction on imports. Ireland contends, first, that the irish government has never adopted ' ' measures ' ' within the meaning of article 30 of the treaty and, secondly, that the financial aid given to the irish goods council must be judged in the light of articles 92 and 93 of the treaty, and not article 30.

9 Before assessing the merits of those arguments the position of the irish goods council must be considered.

II - The irish goods council

10 The irish goods council was created on 25 august 1978, a few months after the disputed campaign was launched, in the form of a company limited by guarantee and not having a share capital; it was registered in accordance with irish company law (companies act 1963). The council is in fact the result of the amalgamation of two bodies, the national development council, a company limited by guarantee and registered under the companies act, and the working group on the promotion and sale of irish goods.

11 The irish government maintains that the irish goods council was created under the sponsorship of the government in order to encourage irish industry to overcome its own difficulties. The council was established for the purpose of creating a framework within which the various industries could come together in order to cooperate for their common good.

12 The management committee of the irish goods council consists, according to the articles of association of that institution, of 10 persons appointed in their individual capacities by the minister for industry, commerce and energy; the same minister appoints the chairman from among the members of the management committee. The members and the chairman are appointed for a period of three years, and their appointments may be renewed. In practice, the members of the management committee are selected by the minister in such a manner as to represent the appropriate sectors of the irish economy.

13 It appears from the information supplied by the irish government at the request of the court that the activities of the irish goods council are financed by subsidies paid by the irish government and by private industry. The subsidies from the state and from the private sector amounted, respectively to irl 1 005 000 and irl 175 000 for the period between august 1978 and december 1979; irl 940 000 and irl 194 000 for 1980; and irl 922 000 and irl 238 000 for 1981.

14 The irish government has not denied that the activities of the irish goods council consist in particular, after the abandonment of the shoplink service and the exhibition facilities offered to irish manufacturers in dublin, in the organization of an advertising campaign in favour of the sale and purchase of irish products, and in promoting the use of the ' ' guaranteed irish ' ' symbol.

15 It is thus apparent that the irish government appoints the members of the management committee of the irish goods council, grants it public subsidies which cover the greater part of its expenses and, finally, defines the aims and the broad outline of the campaign conducted by that institution to promote the sale and purchase of irish products. In the circumstances the irish government cannot rely on the fact that the campaign was conducted by a private company in order to escape any liability it may have under the provisions of the treaty.

III - The applicability of articles 92 and 93 of the treaty

16 The irish government maintains that, even if the purpose or the effect of the campaign was to discourage imports from other member states, it must be judged on the basis of articles 92 and 93 of the treaty, which deal with state aids. The applicability of those provisions excludes the applicability of article 30 of the treaty, upon which the commission has based its case.

17 The irish government states that the campaign has in fact been conducted by the irish goods council and that the role of the government has been restricted to moral support and financial assistance. If, as the commission maintains, the campaign was liable to hinder the free movement of goods within the community by promoting domestic products at the expense of imported ones that circumstance is attributable solely to a single government decision, namely the decision to subsidize the irish goods council.

18 It must be observed, however, that the fact that a substantial part of the campaign is financed by the irish government, and that articles 92 and 93 of the treaty may be applicable to financing of that kind, does not mean that the campaign itself may escape the prohibitions laid down in article 30.

19 In any case, if the irish government considered that such financing amounted to aid within the meaning of articles 92 and 93 it ought to have notified the aid to the commission in accordance with article 93 (3).

IV - The application of article 30 of the treaty

20 The commission maintains that the ' ' buy irish ' ' campaign and the measures taken to prosecute the campaign must be regarded, as a whole, as measures encouraging the purchase of domestic products only. Such measures are said to be contrary to the obligations imposed on the member states by article 30. The commission refers to article 2 (3) (k) of commission directive n°70-50-eec of 22 december 1969, based on the provisions of article 33 (7), 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). According to article 2 (3) (k), measures which encourage the purchase of domestic products only must be regarded as contrary to the prohibitions contained in the treaty.

21 The irish government maintains that the prohibition against measures having an effect equivalent to quantitative restrictions in article 30 is concerned only with ' ' measures ' ', that is to say, binding provisions emanating from a public authority. However, no such provision has been adopted by the irish government, which has confined itself to giving moral support and financial aid to the activities pursued by the irish industries.

22 The irish government goes on to emphasize that the campaign has had no restrictive effect on imports since the proportion of irish goods to all goods sold on the irish market fell from 49.2% in 1977 to 43.4% in 1980.

23 The first observation to be made is that the campaign cannot be likened to advertising by private or public undertakings, or by a group of undertakings, to encourage people to buy goods produced by those undertakings. Regardless of the means used to implement it, the campaign is a reflection of the irish government ' s considered intention to substitute domestic products for imported products on the irish market and thereby to check the flow of imports from other member states.

24 It must be remembered here that a representative of the irish government stated when the campaign was launched that it was a carefully thought-out set of initiatives constituting an integrated programme for promoting domestic products; that the irish goods council was set up at the initiative of the irish government a few months later; and that the task of implementing the integrated programme as it was envisaged by the government was entrusted, or left, to that council.

25 Whilst it may be true that the two elements of the programme which have continued in effect, namely the advertising campaign and the use of the ' ' guaranteed irish ' ' symbol, have not had any significant success in winning over the irish market to domestic products, it is not possible to overlook the fact that, regardless of their efficacity, those two activities form part of a government programme which is designed to achieve the substitution of domestic products for imported products and is liable to affect the volume of trade between member states.

26 The advertising campaign to encourage the sale and purchase of irish products cannot be divorced from its origin as part of the government programme, or from its connection with the introduction of the ' ' guaranteed irish ' ' symbol and with the organization of a special system for investigating complaints about products bearing that symbol. The establishment of the system for investigating complaints about irish products provides adequate confirmation of the degree of organization surrounding the ' ' buy irish ' ' campaign and of the discriminatory nature of the campaign.

27 In the circumstances the two activities in question amount to the establishment of a national practice, introduced by the irish government and prosecuted with its assistance, the potential effect of which on imports from other member states is comparable to that resulting from government measures of a binding nature.

28 Such a practice cannot escape the prohibition laid down by article 30 of the treaty solely because it is not based on decisions which are binding upon undertakings. Even measures adopted by the government of a member state which do not have binding effect may be capable of influencing the conduct of traders and consumers in that state and thus of frustrating the aims of the community as set out in article 2 and enlarged upon in article 3 of the treaty.

29 That is the case where, as in this instance, such a restrictive practice represents the implementation of a programme defined by the government which affects the national economy as a whole and which is intended to check the flow of trade between member states by encouraging the purchase of domestic products, by means of an advertising campaign on a national scale and the organization of special procedures applicable solely to domestic products, and where those activities are attributable as a whole to the government and are pursued in an organized fashion throughout the national territory.

30 Ireland has therefore failed to fulfil its obligations under the treaty by organizing a campaign to promote the sale and purchase of irish goods within its territory.

Costs

31 Under article 69 (2) of the rules of procedure the unsuccessful party is to be ordered to pay the costs. 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 organizing a campaign to promote the sale and purchase of irish products within its territory Ireland has failed to fulfil its obligations under the treaty;

2. Orders the defendant to pay the costs.