CJEC, January 28, 1981, No 32-80

1 By a judgment of 4 December 1979, which was received at the Court on 24 January 1980, the arrondissementsrechtbank (district Court), roermond, referred to the Court for a preliminary ruling under article 177 of the EEC treaty a question which relates to the interpretation of article 36 of that treaty and which is worded as follows:

''Given that:

(a) certain pharmaceutical products are lawfully in free circulation in one or more member states in the sense that the permits required under national law for those pharmaceutical products have been issued to the manufacturers or, where appropriate, to those who are responsible for putting the pharmaceutical products into circulation in each of the member states ; and

(b)third parties may be aware that such permits have been granted in each of the member states because the fact has been officially published or has become generally known by some other means ; and

(c)a (parallel) importer of medicinal products established in one of the member states imports into the member state in which he is established the pharmaceutical products which are in circulation as described above,

Do the exceptions to the rules relating to the free movement of goods within the EEC, particularly article 36 of the EEC treaty in so far as it relates to the protection of health and life of humans, justify the authorities of the importing member state permitting imports of those pharmaceutical products only on payment of a registration charge, and if so, what standards should be applied to the amount and frequency of the payments and the system governing payments?''

2 That question has been raised in the context of criminal proceedings instituted against a Netherlands trader who is a ''parallel importer'' of pharmaceutical products in the Netherlands and who has been charged with having held for sale, or having sold, delivered or dealt in, a certain number of proprietary medicinal products within the meaning of article 1 (1) (h) of the Netherlands law relating to the supply of medicinal products (wet op de geneesmiddelenvoorziening) which had not first been registered as required by article 3 of that law. It is apparent from both the considerations set out in the judgment making the reference and the wording of the question that the accused did not comply with that requirement because two fees, one single and the other annual, are payable on registration, and because he considers that the requirement of registration in conjunction with the requirement to pay the said fees, which he considers excessive, constitutes a measure having an effect equivalent to a quantitative restriction on imports which is incompatible with article 30 of the treaty and which does not qualify for the exception laid down in article 36 of the treaty.

3 The arrondissementsrechtbank has submitted the question set forth above in order to be in a position to decide whether the national rules, in so far as they require payment of these fees, are in accordance with community law.

4 In order to provide a reply which may be of assistance to the national Court it is necessary to take into account the fact that the provisions in question were enacted by the Netherlands authorities following the judgment delivered by the Court on 20 may 1976 in case 104-75 de peijper (1976) ecr 613.

5 That judgment also concerned parallel imports of pharmaceutical products and it found that such imports were rendered impossible in practice by the fact that the Netherlands authorities made the authorization to place such products on the market conditional upon the production of documents, intended to enable medical checks to be carried out, which were identical with the documents already lodged by the manufacturer or his duly appointed importer. The judgment found that if the manufacturer or his duly appointed importer refused to provide the parallel importer with a copy of those documents, which they alone held, the parallel importer could not meet the requirements of the national authorities and his request for registration was accordingly refused.

6 On the basis of those findings of fact the Court declared that national rules or practices which make it possible for a manufacturer and his duly appointed representatives to enjoy a monopoly of the importation and marketing of a pharmaceutical product simply by refusing to produce the documents relating to the pharmaceutical product in general or to a particular consignment thereof must be regarded as being unnecessarily restrictive and cannot therefore come within the exception specified in article 36 of the treaty, unless it can be proved that any other rules or practices would obviously be beyond the means which can be reasonably expected of an administration operating in a normal manner.

7 The Court added that if a number of variants of a medicinal preparation exist which differ from one member state to another and if those differences have a therapeutic effect there is justification for treating those variants as different medicinal preparations for the purposes of authorizing them to be placed on the market and as regards the requirement of producing the relevant documents enabling medical checks to be carried out, it being understood that for each of the authorization procedures the answer provided above remains valid if there is only a single version of the medicinal preparation.

8 After that judgment the Netherlands authorities enacted rules, namely article 23 of the besluit registratie geneesmiddelen of 8 September 1977 (staatsblad 1977, No 537), which provided the parallel importer of a proprietary medicinal product previously registered at the request of the manufacturer or his appointed representative with a simplified procedure for registration intended solely to ascertain whether the composition of the product which the parallel importer proposes to import is ''the same'' or ''practically the same'' as that of the product which has already been registered.

9 In view of the simplified nature of that second registration the parallel importer is required to pay a single fee amounting to 25% of that charged when the medicinal product was first registered at the request of the manufacturer or his duly appointed representative. The second registration also entails payment of an annual fee amounting to hfl 687 which is intended to cover the costs of inspecting the products in question after they are placed on the market. The amount of this annual fee is the same for domestic products and imported products alike and in the case of imported products no distinction is made depending on whether they were imported in parallel or directly by the foreign manufacturer or his duly appointed representative.

The interpretation of article 36

10 As the Court held in the above-mentioned de peijper judgment, in the case of imported pharmaceutical products which have already been registered at the request of the manufacturer or the duly appointed importer, article 36 does not prevent national authorities from checking whether the products imported in parallel are identical to those which have already been registered or, where variants of the same medicinal products are placed on the market, whether the differences between those variants have no therapeutic effect. That check must however extend only to verifying whether the products so conform and the member state in question must have required the manufacturer or authorized importer to provide full information regarding the different forms in which the medicinal products in question are manufactured or marketed in the various member states by either the manufacturer himself, subsidiary or related undertakings, or undertakings manufacturing such products under licence.

11 A monitoring procedure which is in accordance with the requirements of article 36 is not deprived of its justification, within the meaning of that provision, by virtue of the fact that it gives rise to the collection of fees of the kind described by the national Court. On the other hand such fees may not be considered compatible with the treaty on the sole ground that they are charged in consequence of a measure adopted by a state which is justified within the meaning of article 36. The exemption provided for in article 36 in fact relates exclusively to quantitative restrictions on imports or exports or measures having equivalent effect. It may not be extended to customs duties or to charges having equivalent effect which, as such, fall outside the compass of article 36.

12 It follows that the question whether such fees are permissible must be appraised in relation to articles 9 and 13 or, where appropriate, article 95 of the treaty.

13 It thus appears that, in order to provide the national Court with a reply which is of assistance to it, it is necessary to consider whether fees of the kind in question fall under the prohibitions laid down in those provisions.

The interpretation of article 13 of the treaty

14 According to the settled case-law of the Court of justice the prohibition, in trade between member states, of all customs duties and of all charges having equivalent effect refers to all charges demanded on the occasion of or by reason of importation and which are imposed specifically on imported products and not on similar domestic products.

15 Since this prohibition does not admit of any distinction according to the aim in view in levying the pecuniary charges for the abolition of which it provides, it also includes fees demanded for public health inspections carried out by reason of the importation of goods.

16 The position would be different only if the pecuniary charges related to a general system of internal dues applied systematically to categories of products in accordance with objective criteria without regard to the origin of the products.

17 It is apparent from the foregoing considerations that fees of the type referred to by the national Court do not display the essential features of charges having an effect equivalent to a customs duty. In fact fees demanded of a parallel importer of pharmaceutical products either in the form of a single fee on the occasion of the registration of the pharmaceutical products which he proposes to import or in the form of an annual fee charged in order to meet the costs of procedures intended to check whether the products subsequently marketed are identical to the registered product do not constitute such charges where those fees form part of a general system of internal fees charged both on the occasion of the registration of medicinal products produced in the member state in question and on the occasion of the registration of medicinal products imported either directly by the manufacturer or his appointed importer or as so-called ''parallel imports'' and where such fees are charged, in the case of parallel imports, in accordance with criteria identical or comparable to the criteria employed in determining the fees on domestic products.

18 Contrary to the views of the Commission, it is not the case that ''each occasion on which a sufficient degree of similarity cannot be established constitutes a breach of the principle of non-discrimination laid down by article 95 and the charge in question has an effect equivalent to a customs duty''. A discriminatory internal tax does not automatically constitute a charge having an effect equivalent to a customs duty. A charge in the form of an internal tax may not be considered as a charge having an effect equivalent to a customs duty unless the detailed rules governing the levying of the charge, or its use if the charge in question is allocated to a particular use, are such that in fact it is imposed solely on imported products to the exclusion of domestic products.

Article 95 of the treaty

19 The national Court observes that the accused maintains that the system of fees only appears to accord equal treatment to producers and authorized importers on the one hand and parallel importers on the other and that in reality it discriminates against the latter and in fact re-establishes for the benefit of the former the monopoly in imports of which the Court disapproved in its judgment of 20 may 1976.

20 The issue which has thus been raised prompts the Court to point out first of all that for the proper application of article 95 of the treaty it is the treatment of the imported product as opposed to the domestic product which must be compared and not the treatment of two imported products, identical or similar, depending on whether they are imported by means of one form of trading rather than another. However, so far as the disposal of the case submitted to the national Court is concerned, the result is the same since, in order to satisfy the requirements of article 95, it is necessary that domestic products on the one hand and imported products in general on the other hand should be subject to a system of internal taxation which is imposed on them in accordance with criteria which do not discriminate against imported products.

21 The papers in the case and the statements in the judgments making the reference show that both the single fee and the annual fee required for registration apply to both domestic pharmaceutical products and products from other member states, whether imported in parallel or not. The detailed rules which are laid down for parallel imports are, however, different.

22 It is therefore necessary to consider whether those rules are compatible with the prohibition of discrimination contained in article 95.

23 With regard to the single fee two rules have been mentioned by the national Court. The first is that the fee is reduced to 25% of the amount of the fee charged on the occasion of the first registration of the product by the national or foreign manufacturer or the appointed importer having regard to the fact that the registration in question is simplified.

24 A national system of fees which, for pharmaceutical products as a whole, draws a distinction between the amount of the fees charged on the occasion of a first registration and the amount charged on the occasion of a second registration by reason of the simplified nature of the latter is not incompatible with article 95 of the treaty. That provision does not require the abolition of all fees in the second case provided that, having regard to the difference in the two registrations, a reasonable proportion is maintained in fixing the amount of such fees.

25 The second rule mentioned by the national Court consists in the fact that the competent authority may reduce the amount of the single fee at the request of domestic or foreign manufacturers or appointed importers but that is not possible in the case of products imported in parallel.

26 The netherlands government disputes that the national legislation in question in fact draws such a distinction whilst the Commission appears to accept that this is the case. It is for the national Court to settle this matter. If the reduction granted in respect of the first registration is so large that it in fact eliminates the difference between the fees charged for the two registrations, it is necessary, if article 95 is to be correctly applied, that the reduction be taken into account, where the importer in question so requests, in fixing the fee charged in respect of a second registration.

27 With regard to the annual fees, whose amount is recognized to be the same for all products, the alleged discrimination against parallel importers consists in the circumstance that, whilst national manufacturers, manufacturers in other member states and appointed importers are able to market a small number of types of registered products since each type is marketed in a large number of units which gives a large turnover, the parallel importer must import a very much wider variety of types of different products in order to attain a reasonable turnover and each type is liable to a reduced single fee but to an annual fee at the full rate. In the case of the parallel importer the burden of such fees is thus shared by a very much smaller number of units so that importation is no longer profitable.

28 Article 95 is complied with where a tax of the same amount affects the cost prices of different undertakings unequally by reason of particular features of their economic structure. It is sufficient that the internal tax applies in accordance with the same criteria, objectively justified by the purpose for which the tax was introduced, to domestic products and imported products so that it does not result in the imported product ' s bearing a heavier charge than that borne by the similar domestic product.

29 The reply to the question submitted should therefore be:

1. A monitoring procedure which is in accordance with the requirements of article 36 is not as such deprived of its justification within the meaning of that provision by virtue of the fact that it gives rise to the collection of fees of the kind described by the national Court.

2. Such fees are not justified on the sole ground that they are charged in consequence of a measure adopted by a state which is justified within the meaning of article 36.

3. Fees demanded of a parallel importer of pharmaceutical products either in the form of a single fee on the occasion of the registration of the pharmaceutical products which he proposes to import or in the form of an annual fee charged in order to meet the costs of procedures intended to check whether the products subsequently marketed are identical to the registered product do not constitute charges having an effect equivalent to customs duties where those fees form part of a general system of internal fees charged both on the occasion of the registration of medicinal products produced in the member state in question and on the occasion of the registration of medicinal products imported either directly by the manufacturer or his appointed importer or as what are known as parallel imports and where such fees are charged, in the case of parallel imports, in accordance with criteria identical or comparable to the criteria employed in determining the fees on domestic products.

4. Article 95 is complied with where an internal tax applies in accordance with the same criteria, objectively justified by the purpose for which the tax was introduced, to domestic products and imported products so that it does not result in the imported product ' s bearing a heavier charge than that borne by the similar domestic product. The fact that a charge which meets those criteria has different effects on the cost prices of the various undertakings by reason of particular features of the economic structure of such undertakings which manufacture or market such products is irrelevant to the application of that provision.

30 The costs incurred by the government of the Netherlands 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 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 question submitted to it by the arrondissementsrechtbank, roermond, by judgment of 4 December 1979, hereby rules:

1. A monitoring procedure which is in accordance with the requirements of article 36 of the EEC treaty is not as such deprived of its justification within the meaning of that provision by virtue of the fact that it gives rise to the collection of fees of the kind described by the national Court.

2. Such fees are not justified on the sole ground that they are charged in consequence of a measure adopted by the state which is justified within the meaning of article 36 of the EEC treaty.

3. Fees demanded of a parallel importer of pharmaceutical products either in the form of a single fee on the occasion of the registration of the pharmaceutical products which he proposes to import or in the form of an annual fee charged in order to meet the costs of procedures intended to check whether the products subsequently marketed are identical to the registered product do not constitute charges having an effect equivalent to customs duties where those fees form part of a general system of internal fees charged both on the occasion of the registration of medicinal products produced in the member state in question and on the occasion of the registration of medicinal products imported either directly by the manufacturer or his appointed importer or as what are known as parallel imports and where such fees are charged, in the case of parallel imports, in accordance with criteria identical or comparable to the criteria employed in determining the fees on domestic products.