CJEC, May 11, 1989, No 76-86

THE COURT

1 By an application lodged at the Court Registry on 12 March 1986, the Commission of the European Communities brought an action before the Court under Article 169 of the EEC Treaty for a declaration that, by prohibiting the marketing in the Federal Republic of Germany of milk substitutes lawfully manufactured and marketed in other Member States, the Federal Republic of Germany has failed to fulfil its obligations under Article 30 of the EEC Treaty.

2 Under Paragraph 36(1) of the Milchgesetz (Milk Law) of 31 July 1930 (Reichsgesetzblatt I, p. 421), it is prohibited in the Federal Republic to imitate milk and milk products for use as foodstuffs or to offer or display for sale, to sell or otherwise put into circulation such imitation foodstuffs. As a result of the combined provisions of Paragraph 36(2) of the Milchgesetz and Paragraph 12(2) of the Margarinegesetz (Margarine Law), in the version of 1 July 1975 (Bundesgesetzblatt I, p. 1841), that prohibition applies neither to margarine nor to low-fat margarine.

3 Since it considered that the prohibition on importing and marketing milk substitutes lawfully manufactured and marketed in another Member State was a measure having an effect equivalent to a quantitative restriction on imports within the meaning of Article 30 of the EEC Treaty which was not justified by Article 36 of the EEC Treaty, by any other grounds relating to the public interest or by mandatory requirements, the Commission initiated proceedings under Article 169 of the EEC Treaty.

4 During the proceedings before the Court, the Council adopted Regulation No 1898-87 of 2 July 1987 on the protection of designations used in marketing of milk and milk products (Official Journal 1987, L 182, p. 36), Article 2 of which lays down the conditions which milk and milk products must fulfil in order to be designated "milk" or to be known by one of a series of reserved designations contained in an annex. Under Article 5 of the said regulation, Member States may, until the end of the fifth period of application of Article 5c of Regulation No 804-68 of the Council of 27 June 1968 on the common organization of the market in milk and milk products (Official Journal, English Special Edition 1968 (I), p. 176), that is to say, until 31 March 1989, and in compliance with the general provisions of the Treaty, maintain their national regulations which restrict the manufacture and marketing in their territory of products not fulfilling the conditions referred to in Article 2.

5 Reference is made to the Report for the Hearing for a fuller account of the facts, the course of the procedure and the submissions and arguments of the parties, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court.

Admissibility

6 The German Government argues that the application is inadmissible on the ground that Regulation No 1898-87 has considerably modified the relevant legal situation. It considers that, in those circumstances, it should have been permitted to express its views on that subject during the pre-litigation procedure required by the first paragraph of Article 169 of the Treaty. Since the Commission did not reopen that procedure, the application is now inadmissible.

7 The Commission points out that the elements of fact and law on which it relies were described in the course of the pre-litigation procedure and that it does not claim that the new regulation has been infringed. Therefore, the Federal Republic of Germany' s right to a fair hearing has not been infringed.

8 Reference should be made in that regard to the established case-law of the Court, set out most recently in the judgments of 7 May 1987 in Case 186-85 Commission v Belgium ((1987)) ECR 2029, paragraph 13 and of 14 July 1988 in Case 298-86 Commission v Belgium ((1988)) ECR 4343, paragraph 10, according to which the scope of an action brought under Article 169 of the Treaty is delimited by the preliminary administrative procedure provided for by that article. The Commission' s reasoned opinion and its application must be founded on the same grounds and submissions and it follows that the Court cannot consider a complaint that was not formulated in the reasoned opinion.

9 It should be pointed out that in this case the Commission has put forward no new complaint following the adoption of Regulation No 1898-87 and that the entry into force of that regulation in no way places the defendant in a worse situation. On the contrary, the defendant draws new arguments from it in support of its contention that the contested national prohibition does not constitute an infringement of Community law. Thus, the right to a fair hearing has not been infringed and the application is admissible.

Substance of the case

10 The German Government argues in limine that the prohibition contained in Paragraph 36 of the Milchgesetz applies only to products which, as a result of their physical characteristics, constitute imitations of milk or milk products. On the other hand, there is no prohibition on the marketing in the Federal Republic of Germany of substitute products having different characteristics.

11 In that regard, it should be observed that although the Commission has referred throughout the proceedings to milk substitutes in general, it is not contested that the only products covered by the national measure at issue are substitute products which, because they physically resemble milk, are likely to be mistaken for it. In those circumstances, there can be no doubt as to the subject-matter of these proceedings and there is no reason why the Court should not consider whether the national prohibition thus defined is compatible with Article 30 of the EEC Treaty.

12 In its judgment of 23 February 1988 in Case 216-84 Commission v French Republic ((1988)) ECR 793 the Court held that, in the absence of common or harmonized rules relating to the manufacture and marketing of milk substitutes, it was for each Member State to regulate all matters relating to the composition, the manufacture and the marketing of those products on its own territory (paragraph 6).

13 However, according to the established case-law of the Court it follows from Article 30 et seq. of the EEC Treaty that the application of national legislation to products imported from other Member States, where they are lawfully manufactured and marketed, is compatible with the Treaty only in so far as it is necessary on grounds of public interest listed in Article 36 or in order to satisfy mandatory requirements relating inter alia to fair trading and consumer protection. It also follows therefrom that a Member State may not invoke those grounds of public interest or mandatory requirements in order to justify a measure restricting imports unless the same objective cannot be achieved by any other measure which restricts the free movement of goods less.

14 Consequently it is appropriate to consider in turn, in the light of this case-law, the various submissions put forward by the German Government in order to justify the prohibition of any commercial transaction relating to the products in question.

Fair trading and consumer protection

15 The German Government, supported by the French Government, considers that the contested measure is necessary in order to satisfy mandatory requirements relating to fair trading and consumer protection. The fact that provisions of the Milchgesetz apply only to products likely to be mistaken for milk shows that that is indeed their purpose and objective. The resultant prohibition is also in conformity with the principle of proportionality, because no other less radical measure would be sufficient to protect consumers against the risks of being misled as a result, in particular, of the marketing of products constituting slavish imitations.

16 In its judgment of 23 February 1988, cited above, the Court ruled on a prohibition under a French legislative provision similar to Paragraph 36 of the Milchgesetz. It considered that consumer information might be provided in particular in the form of adequate labelling and that such information might also be provided where the products were sold by drink-vending machines and in principle in catering establishments. Although there might be some difficulties in providing consumers with full and detailed information in the latter case, the problem arose in regard to all foodstuffs provided in such establishments. There was no particular reason for stricter consumer information where milk substitutes were involved (paragraph 10). It must be added that similar considerations apply to the need to prevent unfair competition.

17 It also appears from the case-law of the Court (judgment of 16 December 1980 in Case 27-80 Fietje ((1980)) ECR 3839, paragraph 11) that national measures which are necessary in order to ensure that products are accurately described, avoid any confusion on the part of consumers and ensure fair trading do not infringe the principle of the free movement of goods as laid down in Article 30 et seq. of the EEC Treaty. Hence Community law does not preclude a national measure securing accurate consumer information and thereby avoiding any confusion. However, the measure in question in this case goes beyond that.

18 It follows that an absolute prohibition on the marketing of milk substitutes is not necessary in order to ensure fair trading and protect consumers and hence the first submission put forward by the German Government in its defence must be rejected.

The necessity for the measure at issue in order to achieve the objectives of the common agricultural policy

19 With regard to the German Government' s argument to the effect that the prohibition on the marketing of the products at issue is necessary in order to achieve the objectives of the common agricultural policy, the Court has already held in the judgments of 23 February 1988 in Case 216-84 Commission v France, cited above, paragraphs 18 and 19, of 14 July 1988 in Case 407-85 Drei Glocken v USL Centro-Sud ((1988)) ECR 4233, paragraph 26 and of 2 February 1989 in Case 274-87 Commission v Germany ((1989)) ECR 0000, paragraphs 21 and 22 that once the Community has established a common market organization in a particular sector, the Member States must refrain from taking any unilateral measure which consequently falls within the competence of the Community. It is therefore for the Community and not for a Member State to seek a solution to any problem in the context of the common agricultural policy.

20 In that connection it must be added that even if they support a common policy of the Community, national measures may not conflict with one of the fundamental principles of the Community - in this case, that of the free movement of goods - unless they are justified by reasons recognized by Community law.

21 It appears from the foregoing that the measure at issue cannot be justified by the requirements of the common agricultural policy. It must therefore be concluded that it infringes the prohibition laid down in Article 30 of the EEC Treaty.

Justification of the contested measure on the basis of Article 5 of Regulation No 1898-87

22 The German Government, supported by the French Government, interprets Article 5 of Regulation No 1898-87, which provides that the Member States, may, for a certain period "and in compliance with the general provisions of the Treaty, maintain their national regulations which restrict the manufacture and marketing in their territory of products not fulfilling the conditions referred to in Article 2 of this regulation", as meaning that the German legislation in question may in any event continue to apply.

23 That argument cannot be upheld. Without its even being necessary to rule on whether Article 5 of Regulation No 1898-87 is retroactive it is sufficient to observe that that article provides that national regulations may be maintained only on condition that the general provisions of the EEC Treaty are complied with. However, as the Court has held above, the provision at issue in this case is contrary to Article 30 of the EEC Treaty and therefore does not satisfy the conditions laid down by Article 5 of Regulation No 1898-87.

24 It follows from all of the foregoing that it is established that there has been a failure to fulfil obligations. It must therefore be held that, by prohibiting the marketing in the Federal Republic of Germany of milk substitutes lawfully manufactured and marketed in other Member States, the Federal Republic of Germany has failed to fulfil its obligations under Article 30 of the EEC Treaty.

Costs

25 Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been asked for in the successful party' s pleading. Since the defendant has failed in its submissions it must be ordered to pay the costs. The intervener must bear its own costs.

On those grounds,

THE COURT

hereby:

(1) Declares that, by prohibiting the marketing in the Federal Republic of Germany of milk substitutes lawfully manufactured and marketed in other Member States, the Federal Republic of Germany has failed to fulfil its obligations under Article 30 of the EEC Treaty;

(2) Orders the Federal Republic of Germany to pay the costs. The French Republic shall bear its own costs.