CJEC, February 17, 1976, No 91-75

1 By order of 18 June 1975, which reached the court of justice on 11 August 1975, the bundesfinanzhof has referred to the court under article 177 of the EEC treaty three questions concerning the interpretation of articles 12 and 37 of the EEC treaty.

The questions referred arose out of a dispute between a German importer of citrus peel distillates from italy and the customs authorities of the Federal Republic of Germany in which the issue was raised whether the special equalization charge on imports of alcoholic products, called the ' preisausgleichsabgabe ' was compatible with the provisions cited above.

2 The charge forms part of the adjustment of the state monopoly in alcohol embarked upon by the Federal Republic of Germany as a result of the recommendation of the Commission of 22 December 1969 (jo l 31, 1970, p.20) adopted pursuant to article 37 (6) of the treaty. In an endeavour to ensure equivalent safeguards for the employment and standard of living of the producers concerned whilst abolishing the monopoly's exclusive right to import, the Federal Republic of Germany introduced the charge, which is calculated on the basis of the difference between the basic price used to fix the price which the monopoly pays to the domestic alcohol producer and the lowest price at which it is possible to obtain pure alcohol in the exporting member state.

3 It is clear from the file and the information supplied by the German government and the Commission that, as neither the object nor the effect of the equalization charge is to offset an internal due levied on the domestic product it does not, in consequence, form part of a general system of internal dues.

4 The court is asked whether the introduction of a charge which is imposed only on imports from other member states of spirits and products containing alcohol and the amount of which corresponds to the total amount of charges falling, as a result of the alcohol monopoly, upon similar domestic products, without such products ' being expressly subjected to the same equalization charge, amounts to an infringement of article 12 of the EEC treaty. If the answer to this question is in the negative, the court is asked whether the imposition of the charge infringes article 37 (2) of the treaty. If one of these two first questions is answered in the affirmative, the court is asked whether the imposition of the charge referred to is justified by article 37 (4) of the treaty.

5 Since the structure and character of the equalization charge link it to the system of the German alcohol monopoly, the answer to the first question must be ascertained from the text of article 37, which deals specifically with the adjustment of state monopolies.

6 The second and third questions are connected in the sense that it is first necessary to interpret article 37 in its entirety and in the context of the treaty.

7 Under article 37 (1), member states shall progressively adjust their state monopolies of a commercial character so as to ensure that No discrimination regarding the conditions under which goods are procured and marketed exists between nationals of member states. Without requiring the abolition of the said monopolies, this provision prescribes in mandatory terms that they must be adjusted in such a way as to ensure that when the transitional period has ended such discrimination shall cease to exist. Paragraph (2) refers to the obligation on all member states to refrain, as from the beginning of the transitional period, from introducing any new measures likely to restrict the scope of the articles dealing with the abolition of customs duties and quantitative restrictions between member states. Paragraph (3), moreover, provides that the time-table for adjustment provided for in paragraph (1) of the article must be harmonized with the abolition of quantitative restrictions on the same products provided for in articles 30 to 34.

8 Article 37 (1) is not concerned exclusively with quantitative restrictions but prohibits any discrimination, when the transitional period has ended, regarding the conditions under which goods are procured and marketed between nationals of member states. It follows that its application is not limited to imports or exports which are directly subject to the monopoly but covers all measures which are connected with its existence and affect trade between member states in certain products, whether or not subject to the monopoly, and thus covers charges which result in discrimination against imported products as compared with national products coming under the monopoly. It follows from these provisions and their structure that the obligation laid down in paragraph (1) aims at ensuring compliance with the fundamental rule of the free movement of goods throughout the common market, in particular by the abolition, in trade between member states, of customs duties and charges having equivalent effect. A charge of the type at issue introduced after the entry into force of the EEC treaty is, accordingly, contrary to article 37 (2).

9 Nevertheless, the German government takes the view, which accords with the recommendation of the Commission, that article 37 (4) constitutes justification for a charge having equivalent effect which is designed to ensure safeguards for the employment and standard of living of German producers, of agricultural alcohol because it is the equivalent of the safeguards which they enjoyed by virtue of the monopoly's exclusive right to import, which was abolished by the German government in order to comply with the obligations arising under paragraph (1) of the article.

10 If a monopoly has rules which are designed to make it easier to dispose of an agricultural product, article 37 (4) provides that steps should be taken in applying the rules contained in article 37 to ensure equivalent safeguards for the employment and standard of living of the producers concerned, account being taken of the adjustments that will be possible and the specialization that will be needed with the passage of time.

11 Article 37 (1) lays down a specific and unconditional obligation to achieve results by the end of the transitional period. Far from providing for an exception in the case of certain rules of a monopoly, article 37 (4) is intended to have effect ' in applying the rules ' contained in the article. Its purpose is to enable the national authorities, if necessary in cooperation with the community institutions, to promulgate various measures designed to compensate for the effects which the abolition of the discrimination which a monopoly specifically implies may have on the employment and standard of living of the producers concerned. Nevertheless these equivalent safeguards must themselves be compatible with the provisions of article 37 (1) and (2).

12 The answer to the second and third questions of the national court must, accordingly, be that, after the end of the transitional period, article 37 of the EEC treaty prevents a member state from levying a charge imposed only on products imported from another member state for the purpose of compensating for the difference between the selling price of the product in the country from which it comes and the higher price paid by the state monopoly to domestic producers of the same product. The provisions of article 37 (4) do not derogate from the other provisions of the article

Costs

13 The costs incurred by the Federal Republic of Germany and by 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, 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 referred to it by the bundesfinanzhof by order of 18 June 1975, hereby rules:

1. After the end of the transitional period, article 37 of the EEC treaty prevents a member state from levying a charge imposed only on products imported from another member state for the purpose of compensating for the difference between the selling price of the product in the country from which it comes and the higher price paid by the state monopoly to national producers of the same product;

2. The provisions of article 37 (4) do not derogate from the other provisions of the article.