No 10 (December 97/Décembre 97/Dezember 97)

The Court of Justice ruled on 23 October 1997 in case C-189/95 "Franzén" on the compatibility of a state retail monopoly with Articles 30 to 37 of the Treaty. The case concerned certain aspects of the Swedish system for imports and sales of alcoholic drinks. The questions referred to the Court of Justice were whether a statutory monopoly such as the state retail monopoly for alcoholic drinks infringes Article 30 of the Treaty (free movement of goods), infringes Article 37 (adjustment of state monopolies) and is subject to any period of adjustment or should have been abolished or adjusted by 1 January 1995.

A legal state monopoly

The Court considered the application of Article 37 of the Treaty to the rules relating to the existence and operation of the State retail monopoly for alcoholic drinks. It stated that such rules shall be examined under Article 37 which is specifically applicable to the exercise, by a domestic commercial monopoly, of its exclusive rights.

The Court stated that Article 37 requires that the organisation and operation of the monopoly be arranged so as to exclude any discrimination between nationals of Member States as regards conditions of supply and outlets, so that trade in goods from other Member States is not put at a disadvantage, in law and in fact, in relation to trade in domestic goods and that competition between Member States is not distorted.

In determining whether a monopoly of this kind is organised in a way which meets these conditions, the Court examined the Swedish rules relating to the product selection system, the monopoly's sales network and the promotion of alcoholic beverages. The Court considered that the conditions were fulfilled in the Swedish case. Consequently, the existence and operation of the state retail monopoly was compatible with Article 37.

Obstacle to importation

The Court considered the application of Article 30 of the Treaty to such national rules which are not directly linked with the functioning of the monopoly but nevertheless have a bearing upon it.

Under the relevant Swedish rules a permit was required for the production, importation and wholesales of alcoholic beverages. The permit was granted only if the applicant demonstrated that he fulfilled certain restrictive conditions as regards his personal and economic circumstances. In addition, high application and supervision fees were charged from traders.

The Court concluded that a system of permits constitutes an obstacle to the importation of alcoholic beverages from other Member States in that it imposes additional costs on such beverages. Moreover, the Court emphasised that the number of permits was low (223) and almost all of these licences have been issued to traders established in Sweden.

Consequently, the Court hold that legislation such as that in question is therefore contrary to Article 30 of the Treaty and cannot be justified under Article 36 on grounds relating to the protection of human health.

Having regard to the answer given to the first two questions, the Court found it not necessary to reply to the third question.

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