Avis juridique important

Judgment of the Court of 19 January 1993. - Commission of the European Communities v Portuguese Republic. - Failure to fulfil obligations - Progressive adjustment of monopolies - Conditions of accession of the Portuguese Republic - Transitional measures. - Case C-361/90. European Court reports 1993 Page I-00095

Summary Parties Grounds Decision on costs Operative part

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Accession of new Member States to the Communities ° Portugal ° State monopolies of a commercial character ° Obligation to make progressive adjustments during the transitional period ° Scope ° Adoption of specific and appropriate measures determined by the national authorities

(Act of Accession 1985, Art. 208(1); Commission Recommendation 87/525)

Article 208(1) of the Act of Accession 1985, concerning the progressive adjustment of Portuguese State monopolies of a commercial character, leaves Portugal a wide discretion in the choice of methods suitable for the progressive adjustment of the monopolies in question so as to ensure the elimination of all discrimination, as laid down by that provision, by the end of the transitional period at the latest. Article 208(1) does, however, require that State, during the transitional period, actually to begin the process of adjustment so as to enable it fully to discharge its obligation at the end of the prescribed period. In that connection, it is sufficient for Portugal to have adopted specific measures such as to further the objective prescribed, without its being obliged to open free importation quotas in accordance with the time-table referred to in a recommendation issued by the Commission pursuant to that provision.

In Case C-361/90,

Commission of the European Communities, represented by Blanca Rodríguez Galindo, of its Legal Service, and Helena Varandas, an official of the Portuguese Republic seconded to the Legal Service, acting as Agents, with an address for service in Luxembourg at the office of Roberto Hayder, of its Legal Service, Wagner Centre, Kirchberg,

applicants,

v

Portuguese Republic, represented by Professor João Mota de Campos, Luis Inez Fernandes, Director of the Legal Service, Maria João Abecassis, a lawyer in the Agriculture Secretariat of State and Teresa Moreira, a lawyer in the Directorate-General for Competition and Prices in the Ministry of Trade, acting as Agents, with an address for service in Luxembourg at the Portuguese Embassy, 33 Allée Scheffer,

defendants,

APPLICATION for a declaration that, by failing to undertake the progressive adjustment of the monopoly in ethyl alcohols of agricultural and non-agricultural origin and of the monopoly in the acquisition and supply of spirits distilled from wine for use in the production of port wine, the Portuguese Republic has failed to fulfil its obligations under Article 208(1) of the Act concerning the conditions of accession of the Kingdom of Spain and the Portuguese Republic and the adjustments to the Treaties,

THE COURT,

composed of: O. Due, President, C.N. Kakouris, M. Zuleeg and J.L. Murray, (Presidents of Chambers), G.F. Mancini, J.C. Moitinho de Almeida, F. Grévisse, M. Diez de Velasco and P.J.G. Kapteyn, Judges,

Advocate General: M.G. Tesauro,

Registrar: L. Hewlett, Administrator,

having regard to the Report for the Hearing,

after hearing oral argument from the parties at the hearing on 24 June 1992 at which the Commission was represented by Antonio Caeiro, Legal Adviser, assisted by Anders Christian Jessen, of its Legal Service, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 22 September 1992,

gives the following

Judgment

1 By application lodged at the Court Registry on 10 December 1990, the Commission of the European Communities brought an action under Article 169 of the EEC Treaty for a declaration that, by failing to undertake the progressive adjustment of the monopoly in ethyl alcohol of agricultural and non-agricultural origin and of the monopoly in the acquisition and supply of spirits distilled from wine for use in the production of port wine, the Portuguese Republic has failed to fulfil its obligations under Article 208(1) of the Act concerning the conditions of accession of the Kingdom of Spain and the Portuguese Republic and the adjustments to the Treaties (OJ 1985 L 302, p. 23, hereinafter "the Act of Accession").

2 Article 208(1) of the Act of Accession provides that:

"Without prejudice to paragraph 2 of this Article, the Portuguese Republic shall, from 1 January 1986, progressively adjust State monopolies of a commercial character within the meaning of Article 37(1) of the EEC Treaty so as to ensure that by 1 January 1993 no discrimination regarding the conditions under which goods are procured and marketed exists between nationals of the Member States.

The present Member States shall have equivalent obligations in relation to the Portuguese Republic.

The Commission shall make recommendations as to the manner in which and the timetable according to which the adjustment provided for in the first paragraph must be carried out, it being understood that the manner and timetable must be the same for the Portuguese Republic and the present Member States."

3 On 8 October 1987, the Commission addressed a recommendation, under Article 208 of the Act of Accession, to the Portuguese Republic concerning the adjustment of the State monopoly of a commercial character in alcohols with respect to the other Member States (OJ 1987 L 306, p. 32, hereinafter "the Recommendation"). It thus recommended to the Portuguese Republic that the latter should open quotas for ethyl alcohol of agricultural origin, for ethyl alcohol of non-agricultural origin and for spirits distilled from wine for use in the production of port wine. The Recommendation also contains very precise provisions with respect to percentages and the increase of those quotas up to 31 December 1992.

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

5 In support of its application, the Commission claims that the Portuguese Government had not, by the date set in the reasoned opinion, taken any of the measures contained in the Recommendation and had not adjusted the monopolies on ethyl alcohol and spirits distilled from wine so as to bring them into conformity with Article 208(1) of the Act of Accession.

6 In order to determine whether that complaint is justified, the scope of the Portuguese Republic' s obligations under Article 208(1) of the Act of Accession concerning the progressive adjustment of those monopolies during the period between 1 January 1986 and 1 January 19933 (hereinafter "the transitional period") must be first be determined.

7 It should be noted, in that respect, that the elimination, at the end of the transitional period, of all discrimination constitutes a precise obligation the performance of which is to be made easier by, but is not to be conditional upon, the progressive character of the adjustment provided for. The Court had occasion to make that clear in its judgment in Case 45/75 Rewe v Hauptzollamt Landau [1976] ECR 181, paragraph 24, concerning Article 37(1) of the Treaty which contains obligations identical in scope to those referred to in Article 208(1) of the Act of Accession.

8 According to that same decision, the period allowed for Member States progressively to adjust the national monopolies referred to is meant to make it easier to create new circumstances compatible with the elimination, by the end of the transitional period, of all discrimination.

9 The task assigned to the Commission by the third subparagraph of Article 208(1), of addressing to the Member States concerned, in the form of recommendations, instruments of a non-binding nature respecting the time-table and manner according to which the progressive adjustment provided for in that article is to be carried out, must be understood in the light of that same objective.

10 Having regard to those considerations, it must be held that under Article 208(1) of the Act of Accession, the Portuguese Republic enjoys a wide discretion in the choice of methods suitable for the progressive adjustment of the monopolies in question so as to ensure the elimination of all discrimination, as laid down by that provision, by the end of the transitional period at the latest.

11 While it is true that it is, therefore, for the Portuguese Government to determine the measures suited to that purpose and to establish the time-table for them, the progressive character of the adjustment prescribed by Article 208(1) of the Act of Accession requires it, during the transitional period, actually to begin the process of adjustment so as to enable it to discharge the obligation to eliminate all discrimination at the end of that period.

12 It must now be considered, without there being any need to analyse in detail the exchange of argument between the parties, whether the Commission has adduced evidence that, on the date set by the reasoned opinion, the Portuguese Government had not adopted measures designed to eliminate, before the end of the transitional period, all discrimination between nationals of the Member States regarding the conditions under which goods are procured and marketed.

13 According to the Commission, the measures adopted by the Portuguese Government before that date cannot be regarded as an adjustment of the monopolies in question in conformity with the first subparagraph of Article 208(1) of the Act of Accession. They are merely steps preparatory to a future adjustment of those monopolies.

14 On that point, it should be noted that the Commission has wholly failed to clarify the criterion for distinguishing between adjustment measures and measures preparatory to future adjustment. Nor has it succeeded in establishing that the measures taken by the Portuguese Government belong to the second category rather than to the first.

15 As far as both the monopoly in ethyl alcohol or agricultural and non-agricultural origin and the monopoly in the acquisition and supply of spirits distilled from wine for use in the production of port wine are concerned, the Portuguese Government had, as the Advocate General observed in paragraph 4 of his Opinion, by the date set by the reasoned opinion, taken specific measures, the existence of which is not in any way questioned by the Commission and which the Commission has failed to show to be not such as to further the aim of eliminating all discrimination before the end of the transitional period.

16 It must, therefore, be found that the Portuguese Government had, at the date set by the reasoned opinion, actually begun the process of progressively adjusting the monopolies in question in accordance with the obligation imposed on it by Article 208(1) of the Act of Accession.

17 That finding cannot be invalidated by the fact that the Portuguese Government had not, at that date, opened quotas in respect of ethyl alcohol and also spirits distilled from wine for the importation and free marketing of the imported products according to the time-table referred to in the Recommendation addressed to it by the Commission on 8 October 1987.

18 As distinct from the case of the monopoly in petroleum products, for which detailed rules concerning market liberalization are laid down by Article 208(2) of the Act of Accession, subparagraph (1) of that article does not specify the methods by which the monopolies at issue are to be progressively adjusted. Consequently, and as already stated above in paragraph 10, the choice of those methods is left to the Portuguese Republic.

19 Having regard to all the foregoing considerations, it must be held that the action for failure to fulfil obligations is unfounded and must, therefore, be dismissed.

Costs

20 Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs. Since the Commission has been unsuccessful, it must be ordered to pay the costs.

On those grounds,

THE COURT

hereby:

1. Dismisses the application;

2. Orders the Commission to pay the costs.