CJEC, May 21, 1987, No 249-85

The court

1 By order of 7 august 1985, which was received at the court of justice on 12 august 1985, the landgericht (regional court) frankfurt am main referred to the court for a preliminary ruling under article 177 of the eec treaty a question concerning the interpretation of the fourth paragraph of article 189 of the eec treaty, and in particular the effects of a decision such as that addressed by the commission on 25 february 1985 to the federal republic of germany on measures for the promotion of sales of butter on the west berlin market.

2 That question was raised in a dispute between albako, a margarine producer having its registered office in west berlin, and the Bundesanstalt für landwirtschaftliche Marktordnung (federal office for the organization of agricultural markets, hereinafter referred to as "the federal office "), the competent agricultural intervention agency for milk and milk products. On the basis of article 1 of the gesetz gegen den unlauteren wettbewerb (law on unfair competition) of 7 june 1909 (as amended on 21 july 1965, bgbl i, p. 625) and article 1 of the zugabeverordnung (regulation on bonus offers) of 9 march 1932 (as amended on 15 november 1955, bgbl i, p. 719), albako brought an action against the federal office seeking to have the defendant restrained from disposing of butter free of charge in the future by the same methods as those prescribed by the commission' s decision of 25 february 1985.

3 Article 1 of the german law on unfair competition provides that any person who in commercial transactions acts, for competitive purposes, in a manner which is contrary to fair trading may be the subject of an action for an injunction and damages.

4 Article 1*(1) of the zugabeverordnung prohibits, in commercial transactions, offering, announcing or granting, concomitantly with goods or services, a bonus consisting in goods and services. Article 1*(2) of the zugabeverordnung provides that the prohibition is inapplicable in particular where the bonus accompanying the goods consists of a given quantity, or a quantity to be calculated in a given manner, of identical goods. In the case of a bonus authorized under article 1*(2), article 1*(3) of the zugabeverordnung provides that the offer or announcement may not describe that benefit as free (free bonus, gift, and so on) or in any other way convey the impression that it is free of charge.

5 In order to study the manner in which consumers react to a fall in the price of butter, the commission provided in the aforesaid decision for the organization, on the west berlin market and for the period from 15 april to 30 june 1985, of an operation to promote sales of butter, the marginal cost and effectiveness of which were to be assessed by an independent research institute. Nine hundred tonnes of butter from public stocks were to be packaged in packets of 250 grams, each stamped with the words "free eec butter ". Those packets were subsequently to be marketed in a package also containing one packet of open-market butter of the same weight, and the price of the packets thus sold together was not to exceed the price chargeable for 250 grams of open-market butter during the marketing period. To that end, the federal office was to make available free of charge 900 tonnes of butter from public stocks to certain commercial undertakings which it was to select and which were to pledge themselves by contract to package the butter covered by the operation and to sell it through retail outlets.

6 Albako instituted interlocutory proceedings before the landgericht frankfurt am main in which it sought an injunction restraining the defendant from carrying out the operation, on the ground that it was contrary to national legislation on unfair competition and on bonus offers. On 11 march 1985 the landgericht dismissed albako' s application on the ground that the federal office was not seeking to influence competition. On 28 march 1985 the oberlandesgericht (higher regional court) frankfurt am main upheld the landgericht' s judgment dismissing the application. It held that the contested operation was contrary in several respects to national legislation on unfair competition and on bonus offers but considered that the application of that legislation was overriden by the primacy of community law.

7 On 11 june 1985, after the operation had already taken place, albako brought an action before the landgericht frankfurt am main. The national court considered that, as it had employed methods governed by private law in order to accomplish its task, the federal office came within the scope of the applicable provisions of private law. In that regard, the landgericht took the view that the disposal free of charge of 900 tonnes of intervention butter by the federal office in west berlin was contrary to fair trading and that the effect of the operation had been to saturate the market and exaggerate the appeal of butter. It also came to the conclusion that the intervention butter offered with the open-market butter constituted a bonus within the meaning of article 1 of the zugabeverordnung, that that bonus did not come within the exception provided in article 1*(2)*(c) of the zugabeverordnung with regard to the offering of identical goods since open-market butter and intervention butter are not identical goods, and that, in any event, to describe intervention butter as free of charge was contrary to article 1*(3) of the zugabeverordnung.

8 According to the landgericht, albako' s application for an injunction against the federal office could be rejected only on the ground that the measures adopted by the federal office were based on a commission decision. In that regard, the landgericht considered that the commission' s decision could not take precedence over national legislation on unfair competition and on bonus offers unless it had direct effect. In those circumstances, it asked the court to give a preliminary ruling on the question whether the fourth paragraph of article 189 of the eec treaty was to be interpreted as meaning that a decision such as that addressed by the commission on 25 february 1985 to the federal republic of germany on measures for the promotion of sales of butter on the west berlin market precluded a court or tribunal of that state from restraining conduct on the part of the competent intervention agency for agriculture - itself not a direct addressee of the decision - which was contrary to national legislation on unfair competition and on bonus offers but which that agency adopted in implementation of the decision.

9 Reference is made to the report for the hearing for the written observations submitted to the court by albako and the commission.

10 It must be pointed out at once that the problem facing the national court arises in a different form from that which it took in case 9-70 grad ((1970)) ecr 825, case 20-70 lesage ((1970)) ecr 861 and case 23-70 haselhorst ((1970)) ecr 881 where the court recognized, in its judgments of 6 and 21 october 1970 ecr 825, 861 and 881, that in certain circumstances a decision addressed to all the member states could produce direct effect in the sense that an individual could rely on it in a dispute with a public authority.

11 The decision at issue in those cases entailed the amendment of legal provisions or rules and was relied upon in order to prevent the application of certain provisions of national law which had allegedly not been brought into line with the decision. It is not disputed that the commission' s decision of 25 february 1985 did not entail the adoption of any general rule conflicting with the national legislation on unfair competition and on bonus offers. Furthermore, the federal republic of germany has, through its intervention agency, carried out the required operation and has therefore duly implemented the decision addressed to it. Nor, therefore, is there any question of enabling an individual to protect himself against the adverse effects of a member state' s failure to fulfil its obligations under community law, as might have been the case in the aforesaid instances.

12 Next, it must be pointed out that the conduct of the federal office, which was held by the national court to constitute an unfair competitive measure under the relevant national provisions, was required of the federal republic of germany, acting through its intervention agency, by the commission' s decision of 25 february 1985. That decision did not leave it any discretionary margin. The decision required the butter to be marketed in packages containing 250 grams of open-market butter and 250 grams of intervention butter, it specified that the packets of intervention butter contained in those packages were to be stamped with the words "free eec butter", it fixed the selling price of those two packets sold as one, it determined the total quantity of the butter to be covered by the operation, it specified the duration of the latter and it indicated the market on which the operation was to take place. To prohibit operations of that kind from being carried out as unfair competitive measures, when they have been prescribed by the commission, would be tantamount to preventing the implementation of a commission decision.

13 The question is in fact whether a national court is required by community law and in particular by the fourth paragraph of article 189 of the eec treaty to refrain from applying national legislation providing for protection against unfair competition or regulating bonus offers, where the application of that legislation would have the effect of preventing the state from implementing, through its intervention agency for agriculture, a decision of the commission, such as that of 25 february 1985.

14 In that regard, it must be pointed out, in the first place, that if an operation prescribed by a community institution, such as that which was carried out in west berlin in may 1985, were to be governed by rules of national law, that would in practice subordinate the validity of the community measure itself to compliance with national law. That result would be contrary to the consistent case-law of the court, according to which the validity of community measures can be judged only in the light of community law. As the court held in its judgment of 17 december 1970 in case 11-70 internationale handelsgesellschaft ((1970)) ecr 1125, "the law stemming from the treaty, an independent source of law, cannot because of its very nature be overridden by rules of national law, however framed, without being deprived of its character as community law and without the legal basis of the community itself being called in question ".

15 As regards, in particular, the validity of the measure at issue in these proceedings, the court has held, in its judgment of this day in joined cases 133 to 136-85 rau and others v balm ((1987)) ecr, that the measure in question was covered by the authorization which the council conferred on the commission in article 4 of council regulation (eec) n°1079-77 of 17 may 1977 on a co-responsibility levy and on measures for expanding the markets in milk and milk products (official journal l*131, p. 6) and that article 4 itself satisfied the requirements of the principle of legality.

16 In that regard, it must also be pointed out that the validity of measures adopted by the community institutions may be affected by their incompatibility with the principles laid down by community law in the field of competition. The community institutions must take into account, in particular, the requirement of fair trading. However, under the common organization of the agricultural markets, they must reconcile that requirement with the aims set out in article 39 of the eec treaty. In this case the competent community institutions would not appear to have exceeded the discretion which they must have in order to reconcile that requirement with the aims in question.

17 Secondly, it must be emphasized that, according to the fourth paragraph of article 189 of the eec treaty, decisions are to be binding in their entirety upon those to whom they are addressed. In the case of decisions addressed to the member states, they are binding on all the organs of the state to which they are addressed, including the courts of that state. It follows that, by virtue of the principle of the precedence of community law, which was laid down by the court in its judgment of 15 july 1964 in case 6-64 costa v enel ((1964)) ecr 585 and explained in the judgment of 9 march 1978 in case 106-77 simmenthal ((1978)) ecr 629, the national courts must refrain from applying any national provisions, and in particular, as in this case, those concerning unfair competition or bonus offers, the implementation of which would be likely to hinder the implementation of a community decision.

18 In the light of the foregoing considerations, the answer to the question submitted must be that the fourth paragraph of article 189 of the eec treaty must be interpreted as meaning that a decision such as that addressed by the commission on 25 february 1985 to the federal republic of germany on measures for the promotion of sales of butter on the west berlin market precludes a court of that state from restraining conduct on the part of the competent intervention agency for agriculture which is contrary to national legislation on unfair competition and on bonus sales but which that agency adopted in implementation of the decision.

Costs

19 The costs incurred by the commission of the european communities, which has submitted observations to the court, are not recoverable. As these proceedings are, in so far as albako is 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 submitted to it by the landgericht frankfurt am main, by order of 7 august 1985, hereby rules:

The fourth paragraph of article 189 of the eec treaty must be interpreted as meaning that a decision such as that addressed by the commission on 25 february 1985 to the federal republic of germany on measures for the promotion of sales of butter on the west berlin market precludes a court of that state from restraining conduct on the part of the competent intervention agency for agriculture which is contrary to national legislation on unfair competition and on bonus offers but which that agency adopted in implementation of the decision.