Brussels, 22 July 2004 1 EFTA SURVEILLANCE Case No: 55742 AUTHORITY, Event No: 287996

TO THE PRESIDENT AND MEMBERS OF THE

COURT OF JUSTICE OF THE EUROPEAN COMMUNITIES

WRITTEN OBSERVATIONS

submitted pursuant to Article 23 of the Statute of the Court of Justice of the European Communities by the

EFTA Surveillance Authority

represented by Niels Fenger, Director, and Arne Torsten Andersen, Officer, in the Department of Legal & Executive Affairs, acting as Agents, assisted by Mia Sahlborn Hodgson, Officer in the Internal Market Affairs Directorate in

Case C-170/04 Klas Rosengren and Others v. Riksaklagaren (The Public Prosecutor) in which the Hogsta Domstolen, Sweden, has requested the Court of Justice of the European Communities to give a preliminary ruling under Article 234 EC on the interpretation of Articles 28, 30 and 31 EC.

The EFTA Surveillance Authority (hereinafter referred to as "the Authority") has the honour to submit the following written observations to the Court.

I. Introduction

1. In the present case, the Hogsta Domstolen (Swedish Supreme Court) asks four questions concerning the compatibility with Community law of a rule in Swedish law regulating private import of alcohol on to its territory. According to this rule, private import of alcohol is only permitted when the individual importing the alcohol is travelling into Sweden, physically bringing the alcohol with him (or in a few other narrowly defined situations not relevant to the case pending before the Hogsta Domstolen). This prohibition is combined with another provision in Swedish law, according to which the holder of the retail monopoly in Sweden, namely Systembolaget, upon request from a private individual, can import alcohol from foreign producers that Systembolaget does not hold in stock.

2. The questions relate to the fact that the EFTA Court and the Court of Justice of the European Communities (hereinafter referred to as "the Court of Justice") has already held: 1) that statutory monopolies such as Systembolaget may not enjoy the right to be an import monopoly;1 2) that the existence and operation of Systembolaget's retail monopoly should be assessed under the rules on State monopolies contained in Article 31 EC and is, as such, compatible with that provision, whereas; 3) the rights for commercial traders to import alcohol into Sweden should be assessed according to the general provision in Article 28 EC.2

3. In light of the situation before it, the Hogsta Domstolen decided to refer the following questions to the Court of Justice:

i. Can it be held that the above mentioned ban on imports constitutes part of the retail monopoly's manner of operation and that on that basis it is not precluded by Article 28 and is to be examined only in the light of Article 31?

ii. If the answer to Question 1 is yes, is the ban on imports in such a case compatible with the conditions laid down for State monopolies in Article 31?

iii. If the answer to Question 1 is no, is Article 28 of the EC Treaty to be interpreted as meaning that it in principle precludes the current ban on

1 Case E-l/94 Ravintoloitsijain Liiton Kustannus Oy Restamark, [1994-1995] EFTA Court Report, p. 15, 2 Case C-189/95 Criminal Proceedings against Harry Franzen, [1997] ECRI-5909. imports despite the obligation of the Systembolaget to obtain, upon request, alcoholic beverages which it does not hold in stock?

iv. If the answer to Question 3 is yes, can such a ban on imports be considered justified and proportional in order to protect health and life of humans?

4. The Authority will begin its submission by giving a brief account of the relevant Swedish legislation (Section II). Thereafter, it will summarize the facts in the main proceedings in Section III. The Authority's assessment of the questions raised by Hogsta Domstolen is given in Section IV hereto.

II. Relevant national legislation

The rules on importation

5. The import of alcoholic beverages into Sweden is governed by Chapter 4, paragraph 2 of Alkohollagen (Law on alcohol) (1994:1738). The main rule is set out in the first sentence of this paragraph, according to which only persons who have a bonded warehouse approval for alcohol or are registered as warehouse keepers are permitted to import strong beer,3 wine and spirits (hereinafter referred to as "alcohol" or "alcoholic beverages") into Sweden.

6. hi contrast, the retail monopoly may not, as a general rule, itself import alcoholic beverages, cf. the provision in Chapter 5, paragraph 1, second phrase. The reason behind this prohibition is explained in some detail in the preparatory works to Alkohollagen, where it is stated that the Government, in order to ensure the legality of Systembolaget's retail monopoly under Community law, found it necessary to prohibit Systembolaget from being able to import directly from abroad. Otherwise a risk of abuse of the monopoly's dominant position on the retail market would arise.4

7. However, pursuant to Chapter 4, paragraph 2 of Alkohollagen, Systembolaget has been granted the limited right to import alcoholic beverages in order to provide the service laid down in Chapter 5, paragraph 5.5

8. It follows a contrario from Chapter 4, paragraph 2 of Alkohollagen that, subject to the particular exceptions listed below, private individuals may not import alcoholic beverages to Sweden. It is the understanding of the Authority that this ban applies regardless of whether the individual has bought the alcohol by distance selling while himself remaining in Sweden or whether the individual has purchased the beverages while in another Member State. Only to the extent that the individual

3 To the Authority's understanding there are no similar restrictions as to weaker sorts of beer, defined in Chapter 1, paragraph 6 as beer with an alcoholic content between 2,26 and 3,49 per cent alcohol by volume. 4 Regeringens proposition 1998/99:134, p. 104-105. 5 Described below under paragraph 11. physically carries the alcohol over the border, will he be able to import the beverages into Sweden. A consumer is then entitled to import into Sweden the goods without any special limits regarding quantities and without having to pay excise duties, as long as it is for personal use and the age-limit is respected.

9. Some limited possibilities for private individuals to import alcoholic beverages are listed in the second sentence of Chapter 4, paragraph 2 of Alkohollagen. These include the possibility for travellers over the age of 20 years purchasing alcohol for their own or their family's personal use or as a gift to their "narstaende"6 for their or their family's personal use. It also includes the right to import alcohol as part of a private persons removal goods when moving into Sweden or when received as a specific gift from a private individual living abroad.

The rules pertaining to sale of alcohol to consumers in Sweden

10. The operation of the retail monopoly is regulated by Chapter 5 of Alkohollagen. According to paragraph 1 of that Chapter, a monopoly, owned by the state, shall exist for the purpose of retailing alcoholic beverages. Paragraph 2 provides that the monopoly shall be the sole operator as to retail of alcohol in Sweden. For this purpose, Systembolaget operates 420 outlets throughout Sweden. Alcohol is, however, not only handed out at Systembolaget's own sales point. Pursuant to the Agreement concluded between Systembolaget and the Swedish Government, the consumer can have alcoholic products delivered via a local agent in places where Systembolaget does not have an outlet it self. According to information available on Systembolaget's webpage,7 there are approximately 590 local agents spread over Sweden. Such local agents might be, inter alia, a country shop, a petrol station or a tobacco shop. Where it is not possible to engage a local agent, the products may be sent via ordinary mail or other communication system to a suitable bus stop or station.

11. As already indicated, the possibility for private individuals to ask Systembolaget to import alcohol for them is regulated in Chapter 5, paragraph 5 of Alkohollagen. According to that provision, the retail monopoly shall, upon request, procure alcoholic beverages not held in stock by the monopoly, unless the monopoly finds grounds for not doing so. Chapter 5, paragraph 5 does not list what consideration Systembolaget may take into account when so deciding. Indeed, in Prop 2003/04:1618 it is stated that it is unclear which criteria are relevant for deciding whether to import on behalf of the consumer or not.

6 In the English version of the reference from Hogsta Domstolen, this term has been translated into "close circle of friends". However, as far as the Authority is aware of, the Swedish term comprises a more limited group of people, typically close relatives and co-habitants. http://www.systembolaget.se/Apphkationer/Knappar/InEnglish/ 8 In that document, the Swedish Government has suggested to the Parliament to abolish the right of Systembolaget to refuse the request of the consumer, cf. Prop. 2003/04:161 page 69. However, to the Authority's knowledge this bill has not yet come into force and was, at any rate, not applicable at the time where the relevant facts in the main proceedings took place. III. The factual background of the case before Hogsta Domstolen

12. hi the case before the referring court, the Appellants had visited a Swedish- language Danish webpage which invites customers to order wine from Spain. In addition to placing an order through this webpage, the Appellants ordered wine directly from the producer. Carriage of the wine was taken care of by an independent carrier and arranged through another webpage. Payment for the order and carriage was made to two Swedish postal giro account numbers. The total order encompassed an unspecified quantity of boxes, each holding 6 bottles of wine. After having been brought into Sweden without being declared at customs in Malmo, the wine was confiscated in Goteborg.

13. On 3 January 2003, Goteborg's Tingsratt (District Court) found that the wine was unlawfully imported into Sweden and declared the confiscated wine forfeit. The District Court based its' decision on Chapter 4, paragraph 2 of Alkohollagen. As the limited exceptions to the ban on private import enounced in that provision were not applicable, the District Court concluded that it followed from paragraph 16 of the Smugglingslagen (Law on Smuggling) (2000:1225) that the wine, being the object of unlawful import, was to be declared forfeit unless such action were manifestly unreasonable. The Appellants appealed this decision to the Hovratten for Vastra Sverige (Court of Appeal for Western Sweden). That Court, however, dismissed the appeal. This decision was then appealed to the Hogsta Domstolen that, on the 26 March 2004, decided to refer the above cited questions to the Court of Justice.

IV. The view of the Authority

The first question

14. By its first question, the Hogsta Domstolen seeks to clarify whether the ban on private import found in the Swedish alcohol legislation is to be regulated by the basic provisions on the free movement of goods laid down in Articles 28 and 30 EC or, alternatively, if the import ban must be examined in relation to the special rules pertaining to state monopolies in Article 31 EC.

15. It is the view of the Authority that the answer to this question is to be found by applying the test applied by the Court of Justice in Franzen? In that case, which concerned a trader in Sweden who had been engaged in the retail of alcoholic beverages outside the retail monopoly, the Court of Justice was faced with the question on whether the Swedish alcohol retail monopoly was in conformity with Article 30 of the EC Treaty (now Article 28 EC) and Article 37 of the EC Treaty (now, after amendment, Article 31 EC).

16. hi order to address this question, the Court of Justice distinguished between the domestic provisions relating to the existence and operation of the monopoly itself and the provisions which, although not governing the operation of the monopoly,

1 Case C-l 89/95 Harry Franzen, cited above. nevertheless had a direct bearing upon it. The Court of Justice concluded that the former set of provisions was to be considered under Article 37 of the EC Treaty whereas the latter set of provisions was to be examined with reference to Article 30 of the EC Treaty.10 The Court thereby confirmed its earlier ruling in Cassis de Dijon in which it had concluded that Article 37 of the EC Treaty is "irrelevant with regard to national provisions which do not concern the exercise by a public monopoly of its specific function - namely, its exclusive right".11

17. Following this line of demarcation, the Court of Justice went on to examine Systembolaget's product selection system, its sales network and its rules concerning the promotion of alcoholic beverages under Article 37 of the EC Treaty. In contrast, the license requirements laid down in the Swedish alcohol legislation concerning import rights for wholesalers and producers of alcoholic beverages were scrutinized with reference to the general trade provisions in Article 30 of the EC Treaty.

18. The crux of the first question thus seems to be whether the Swedish ban on private import is a provision relating to the operation or existence of the monopoly. This question was neither put to, nor answered by, the Court of Justice in Franzen as that question was not relevant for the solution of that case.

19. It is true that the Court of Justice, in paragraph 50 of the Franzen judgment, briefly referred to Systembolaget's task of importing alcoholic beverages at the request and cost of the consumer. However, that reference was made in the context of a discussion as to whether the selection criteria and the selection methods used by Systembolaget was discriminatory and thereby as a part of the Court's broader discussion of whether Systembolaget's retail monopoly as such was compatible with Article 37 of the EC Treaty. The fact that the Court made reference to the rule contained in Chapter 5, paragraph 5 as a part of its a complete review of how the retail monopoly functioned, cannot mean that the Court should thereby also have taken a stand on the classification and legality of a different legal provision, namely Chapter 4, paragraph 2, concerning the different, although partially related, legal question of the rights of private individuals to import alcoholic beverages themselves.12

20. In the Authority's opinion, the ban on private import in Chapter 4, paragraph 2 of Alkohollagen cannot be classified as a provision relating to the operation or the existence of the monopoly of Systembolaget. This is so because this monopoly only relates to the retail sale inside the borders of Sweden and does not stretch as far as the right to import alcohol into Sweden.

10 Cf. paragraphs 35-36 and 67 of Franzen, cited above. 11 Cf. Case 120/78 Rewe-Zentral AG v Bundesmonopolverwaltung Jur Branntwein, [1979] ECR 649, paragraph 7. 12 In any event, as will be explained below in relation to the answer to the third question from Hogsta Domstolen, does the monopoly's import right, when procuring products upon the consumers request, not substitute a right of import for private individuals. 21. Admittedly, if one approaches the question from the point of view of the political reasons behind the Swedish retail monopoly, one might at first sight have some sympathy for the suggestion by the Swedish authorities that a rule which, with a few exceptions, makes it impossible for a resident in Sweden to purchase alcohol without having to go through one of the outlets of the retail monopoly, does indeed relate to the very existence of that monopoly. This is so, since the aim of that retail monopoly, slightly simplified, can be said to be to ensure that alcohol in Sweden, not consumed on the spot, should only be accessible through the sales network of the retail monopoly thereby guaranteeing the control and information about alcohol that the Swedish state wants to provide its citizens. The same connection flows from the publicly stated aim behind the retail monopoly of curbing the national consumption of alcohol by restricting the availability of alcoholic beverages to the public.1 Seen from that perspective, the private import ban is merely a natural extension of having a retail monopoly.

22. Indeed, the practical link between the retail monopoly and the import ban is especially clear in a situation like the one pertaining to the main proceedings before Hogsta Domstolen. As already stated, the Appellants in this case have ordered, acquired and paid for the goods without leaving Swedish territory, thus, geographically speaking, still finding themselves within the realm of the monopoly during the whole purchase process.

23. In the Authority's view such reasoning is, however, not compatible with the distinction in Franzen between, on the one hand, provisions concerning the existence and operation of the monopoly itself and, on the other hand, provisions which, although they have a direct bearing upon it, are separable from the operation of the monopoly.

24. First, the rules on import are functionally different from the rules concerning the retail monopoly: The former regulate the extent to which and under what circumstances, alcoholic beverages, freely circulating on the EEA market, are allowed to be brought into Sweden by a private individual. In contrast, the latter regulate the circumstances under which alcoholic beverages are to be purchased when already on the Swedish market.

25. This distinction is important to bear in mind, as the monopoly in question is indeed a retail monopoly, as opposed to an import monopoly. The latter was a feature of the Swedish market which was removed after Sweden's accession to the European Union on 1 January 1995. Until then, the company AB Vin & Spritcentralen had operated a monopoly on all import, production and wholesale trading in alcoholic beverages. Following these events, the import of alcohol into Sweden was taken

13 According to Systembolaget's Annual Report for 2003 page 9, it follows from "the State's owner's directive, [that] Systembolaget's monopoly on the retailing of alcoholic beverages serves a socio-political purpose and this monopoly is intended to limit the availability of alcohol through control of the establishment of stores and their opening hours, and through rules on selling." See http://www.systembolaget.se/NR/rdonlyres/96E95BC8-84AA-4A64-AA96- 644EFA5B4238/0/arsredovisning_03_eng.pdf. over by a new level of wholesalers, of which the former import monopolist acted as only one among several private operators.

26. In other words, the exclusive right of Systembolaget's retail monopoly does not, and may not, extend to importation as such. Moreover, as stated in the above cited passage of the decision in Cassis de Dijon, Article 31 EC is "irrelevant with regard to national provisions which do not concern the exercise by a public monopoly of its specific function - namely, its exclusive right". Thus, it cannot be argued that it is a non-separable part of the monopoly to prohibit private import and control such import via Systembolaget. 5

27. Swedish law itself illustrates this, as it does not prohibit private purchase of alcohol outside Sweden but subject private import to a particular mode of transport, i.e. by permitting the private individual to physically carry the goods over the border. Such a regulation has nothing to do with the existence and organisation of the retail monopoly.

28. Second, the fundamental difference between the ban on private alcohol import and the rules pertaining to the retail monopoly's existence and organization becomes obvious when one considers the broad field of application of the rule in Chapter 4, paragraph 2 of Alkohollagen. This rule also regulates situations where a Swedish consumer has looked up a producer or a retailer of alcoholic beverages when being abroad, concluded the purchase abroad, but for practical purposes would like to get the alcoholic products home to Sweden without having to transport them himself. It can hardly be said to be a part of Systembolaget's retail monopoly in Sweden to ban the importation of the private individuals own belongings where no retail sale has ever taken place within the Swedish borders.

29. Also in situations as the one that has given rise to the present dispute before Hogsta Domstolen, the import ban should be separated from the provisions governing the retail monopoly. A private individual living in Sweden who orders alcoholic products from an undertaking established in another Member State, by mail, phone or Internet and himself arranges for the transport of the goods from that other Member State to Sweden cannot be said to have bought the goods in Sweden.16 It

14 This structural change has also to be seen in light of the judgment of the EFTA Court in Case E-l/94 Restamark, cited above, in which it was held that such an import monopoly was contrary to Articles 11 and 16 of the EEA Agreement (corresponding to Articles 28 and 31 EC.) The judgment in Restamark thereby followed the similar logic of the Court of Justice in Case 59/75 Pubblico Ministero v Flavia Manghera and others, [1976] ECR 91, in which the Court held that an exclusive right to import products inherently involved discrimination prohibited by article 37 of the EC Treaty and that Member States therefore were obliged to abolish such rights. 15 Indeed, in Franze"n, cited above, the Court assessed the rights of other than Systembolaget itself to import under the general trade rules in Article 30 of the EC Treaty, cf. paragraphs 67-73 of the judgment. 16 The Authority appreciates that it might be difficult to draw the precise line as to when a given private purchase should be classified as a purchase in Sweden or as a purchase in another Member State. However, the present case does not necessitate an abstract evaluation of whether another rule giving another demarcation could be classified under Article 31 EC, but merely whether the present import ban in the Swedish legislation should be assessed under that provision. would therefore also in the present situation be tantamount to give Systembolaget's retail monopoly extraterritorial effect if one were to apply Article 31 EC to the rule in Chapter 4, paragraph 2 of Alkohollagen

30. Third, and finally, the ban on private import could be lifted without interfering with the provisions governing the retail monopoly. In such a situation Sweden would, according to Chapter 5, paragraph 2 of Alkohollagen, still be able to restrict the retail sale of alcoholic products in Sweden, not consumed on the spot, to the monopoly's sales network. That this is feasible is illustrated by the fact that Finland, also operating a retail monopoly on alcohol, has allowed private individuals to import alcohol under certain conditions. Hence, legally speaking, a retail monopoly on the one side and a possibility for private individuals to import alcoholic beverages on the other side can easily co-exist.

31. In conclusion, the Authority invites the Court of Justice to answer the first question by stating that a ban on private import such as the one found in Chapter 4, paragraph 2 of the Swedish Alkohollagen is to be examined under the general provisions on the free movement of goods found in Article 28 EC.

32. As a consequence, the Authority invites the Court of Justice to hold that there is no need to answer the second question raised by Hogsta Domstolen.

The third question

33. In contrast, the approach suggested by the Authority implies that an answer should be given to the third question, by which the Hogsta Domstolen essentially asks whether the ban on private import is caught by Article 28 EC.

34. In this respect, it should be pointed out that that the Court of Justice has constantly held that Article 28 EC applies to all trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, intra- Community trade.17

35. It is common ground that an outright ban on private import of a product freely in circulation within the EEA is to be considered as a measure having an effect equivalent to a quantitative restriction, as it by its very nature places restrictions on the import of products originating in other Member States.18

36. In the view of the Authority, the fact that the ban is combined with a possibility to ask Systembolaget to purchase and deliver alcohol not already accessible via the retail monopoly cannot imply that the rule in Chapter 4, paragraph 2 of Alkohollagen do not constitute a restriction in the sense of Article 28 EC.

17 Case 8/74 Procureur du Roi v. Benoit and Gustave Dassonvitle, [1974] ECR 837. 18 See inter alia Case 215/87 Heinz Schumacher v. Hauptzollamt Frankfurt am Main-Ost, [1989] ECR 617 at paragraph 14 and Case C-62/90 Commission of the European Communities v Federal Republic of Germany, [1992] ECR 1-2575 at paragraph 8. 37. First, it is important to stress that Systembolaget's import service only covers those products not held in stock by the monopoly. This means that any private individual who seeks to parallel import an alcoholic beverage also offered by the retail monopoly, is barred from doing so, unless he carries the beverages over the border himself. This is so even if the private individual approaches the Swedish authorities in order to pay the Swedish tax levied on the beverages hi consistent case law, however, the Court of Justice has held that Article 28 EC applies where an individual resident in one Member State seeks to import into it goods which he has bought in another Member States.1

38. Second, even where the alcoholic beverages are not held in stock by Systembolaget, Swedish law prohibits the individual from importing alcoholic beverages that he has already lawfully procured from another Member State, by other means than physically carrying the beverages over the border.

39. In none of these situations does Chapter 5, paragraph 5 alter the fact that Chapter 4, paragraph 2 prevents a Swedish resident who e.g. on vacation in another Member States has acquired some alcoholic beverages, and either cannot or prefers not to personally transport the bottles back to his home in Sweden, from ever importing these alcoholic beverages into Sweden.

40. Third, the import through the monopoly for private individuals is left to the discretion of the monopoly. Even though it might be the case, at least according to the preparatory documents20, that Systembolaget does not make use of this veto right, this cannot alter the fact that its discretion in itself constitutes a measure having equivalent effect to a quantitative restriction on the free movement of goods.21

41. It is the view of the Authority, that the so-called import service prescribed by Chapter 5, paragraph 5 of Alkohollagen does not constitute a true import right for the consumer. It must be born in mind that any import on behalf of a private individual through the retail monopoly can only take place in accordance with the specific procedures set up by the monopoly. It is for example up to the monopoly to choose the means and provider of transportation as well as calculating and charging the fees for the import to the consumer, hi this respect, it is the understanding of the

19 Cf. Advocate General Warner in Case 34/79 Regina v. Henn and Darby, [1980] ECR 3795 at 3827, as well as the Case 215/87 Heinz Schumacher v. Hauptzollamt Frankfurt am Main-Ost, cited above, and Case C-62/90 Commission of the European Communities v Federal Republic of Germany, cited above, at paragraph 8. In Case C-362/88 GB-Inno-BM v Confederation du Commerce Luxembourgeois, [1990] ECR 1-667, the Court held in paragraph 8, that "[f]ree movement of goods concerns not only traders but also individuals. It requires, particularly in frontier areas, that consumers resident in one Member State may travel freely to the territory of another Member State to shop under the same conditions as the local population." It should, furthermore, be added that also a prohibition on parallel import constitutes a mea- sure having equivalent effect under Article 28, cf. Case 104/75 De Peijper, [1976] ECR 613, paragraph 13. 20 Regeringens proposition 2003/04:161. 21 Cf. joined cases 51-54/71 International Fruit Company v Produktschap voor Groenten en Fruit, [1971] ECR 1107, paragraph 9.

10 Authority that Systembolaget, in addition to recouping its transport and handling costs, charges a profit in line with its normal profit margin to any import made through this arrangement. This practice underlines, in the view of the Authority, that the import service has to be seen as merely an extension of the product range of the monopoly, enabling the monopoly to offer for sale, subject to its ordinary sales conditions, products which are not hold in stock.

42. Neither can the specific exceptions for private import contained in the second sentence of Chapter 4, paragraph 2 alter the classification of the main rule as being an import ban. The exceptions concerning removal goods and gifts are very limited in scope whereas the exception for travellers requires the consumer to leave Sweden and accompany the alcoholic products over the border.

43. Hence, the Authority respectfully submits that the answer to the third question should be that Article 28 EC is to be interpreted as meaning that it in principle precludes a ban on private import such as the one found in Chapter 4, paragraph 2 of the Swedish Alkohollagen and that this is so despite the obligation of Systembolaget to obtain, upon request, alcoholic beverages which it does not hold in stock.

The fourth question

44. By its fourth question, the referring court queries whether the ban on private import of alcohol in Sweden can be justified in order to protect health and life of humans.

45. Before attempting to answer that question, it should initially be pointed out that the reference for a preliminary ruling is rather limited as to giving accounts of the claims for justification from the side of the Swedish Government. The reference, furthermore, does not refer to any arguments advanced by the appellants as to any potentially less restrictive measures, nor does the referring court itself discuss whether it agrees with the Government's observations.

46. It is the view of the Authority that a complete assessment of the grounds for justifications advanced by the Swedish Government, calls for a deeper analysis of the circumstances of law and of fact which characterise the particular situation in Sweden. In the present case, the sparse information as to alternative, less restrictive, measures implies that the national court might be the organ which is in the best position to perform the proportionality test.22 However, as will be shown below, the Authority has been able to detect elements of Swedish law that in any event should be declared disproportionate.

47. According to the preparatory documents, private import is banned in order to restrict the direct access to alcoholic products abroad for Swedish citizens. The

22 Cf. Case C-405/98 Konsumentombudsmannen (KO) mod Gourmet International Products AB, [2001] ECR 1-1795, at paragraph 33, and see similarly Case C-510/99 Xavier Tridon, [2001] ECR 1-7777, at paragraph 58.

11 Swedish Government is concerned that such a possibility would open up for the establishment of a new marketing channel for alcohol, undermine the position of the retail monopoly and lead to tax evasion as well as to sale of alcoholic beverages to minors.23

48. With regard to the argument that a lifting of the ban will lead to alternative channels for the sale of alcohol, the Authority cannot see that it is, as such, legitimate to restrict such alternative channels. Nor can it be an independent aim to ensure that the retail monopoly is not undermined. Article 30 EC cannot be advanced to shelter a given undertaking or sales form from competition.24

49. The question is therefore whether the two other justification grounds - the protection of human health against the harmful effects of alcohol, including notably the enforcement of the age requirement, and the risk for tax evasion - can only be ensured via a system whereby private import is banned but similar beverages can be obtained from the retail monopoly. It must be borne in mind that it follows from case law that the fact that a certain sector is regulated in a particular way within a given Member State, cannot in itself serve as a justification for blocking the private import of the regulated goods from other Member States.25

50. Turning first to the justification relating to human health, it follows from Article 30 EC itself that the health and life of humans are considered among the legitimate grounds justifying measures falling foul of Article 28 EC. As held by the Court of Justice in Franzen, "the protection of human health against the harmful effects of alcohol ... is indisputably one of the grounds which may justify derogation from" Article 28 EC. 26 hi the Authority's opinion a wish to ensure the respect for a minimum age limit for drinking alcohol clearly represents a legitimate aim. It can therefore, in principle, necessitate a restriction to the unhindered trade.

51. However, such a measure still has to be proportionate to the aim pursued and not equally attainable by measures less restrictive of intra-Community trade.27 This is especially so since an import ban is a severe measure as to the restriction of intra- Community trade. Indeed, in the preparatory works to the Swedish Alkohollagen, the Swedish Government itself states that such import would lead to improved competition on the Swedish alcohol market, something which is not considered as preferable.28 The referring court should therefore scrutinise with detail whether the

23 Regeringens proposition 1998/99:134, Vissa alkoholfragor, m.m. of 3 June 1999, pages 105-106. 24 Cf. Case C-324/93 The Queen v Secretary of State for Home Department, exparte Evans Medical Ltd and Macfarlan Smith Ltd., [1995] ECR1-563, at paragraph 36, and see similarly with regard to Article 49 EC, Case C-l 64/99 Portugaia Construcoes Ld", [2002] ECR 1-787, at paragraph 26. 25 Cf. Case C-217/87 Schumacher, cited above, and Case C-62/90 Commission v. Germany, cited above. 26 Case C-189/95 Harry Franzen, cited above, at paragraph 76. 27 Case C-189/95 Harry Franzen, cited above, at paragraph 76, Case C-429/02 Bacardi France SAS, judgment of 13 July 2004, at paragraph 32-40, Case C-322/01 Deutscher Apotekerverband, judgment of 11 December 2003, at paragraph 104, Case C-405/98 Gourmet International Products AB, cited above, at paragraph 28, as well as Joined Cases C-l/90 and C-176/90 Aragonesa de Publicidad Exterior SA, [1991] ECR4151 at paragraph 15. 28 Regeringens proposition 1998/99:134, Vissa alkoholfragor, m.m. of 3 June 1999.

12 aim pursued could not be attained by measures less restrictive. In this respect, it should be guided by the general principle under Article 30 EC that the onus is on the Swedish Government to prove that the measure is indeed proportionate to its aim.29

52. With regard to the proportionality of the advanced justification concerning the control that the minimum age for consuming alcohol is respected, the referring court should in the opinion of the Authority, consider the present accessibility to alcoholic beverages for Swedish citizens. As explained above, alcoholic beverages may, in addition to the ordinary monopoly outlets, also be ordered and delivered through 590 private agents or, alternatively, by ordinary mail. In these cases, the agents or postal offices are given full responsibility for controlling that the age requirements are fulfilled by the purchasers. The Authority questions why a similar arrangement could not be established as to private import, inter alia by extending the control functions of the postal offices to comprise private import or by conferring these control tasks on the customs offices, depending on where the imported alcohol is going to be collected.

53. Turning to the risk of tax evasion, the legality of the aim of an effective fiscal control cannot be questioned.30 Moreover, considering the particularly high taxes on alcohol in Sweden compared with several other Member States, the risk for attempts of tax evasion should not be neglected.

54. However, also with regard to this aim it is doubtful whether the proportionality requirement is met. In the rest of the Member States the need to ensure the payment of taxes has not necessitated such a drastic measure as a ban on private import. Moreover, according to Chapter 4, paragraph 2 of Alkohollagen, any person who has a bonded warehouse approval for alcohol or is registered as a warehouse keeper with the tax authorities is permitted to engage in the import of alcohol.

55. As already indicated, the Authority would suggest that the following elements of the Swedish regime, in any event should be declared disproportionate under Article 30 EC:

56. According to the Swedish authorities themselves, the aims behind the provision on private import are only attained if all import on behalf of private consumers remaining in Sweden is channelled through the sales network of the monopoly. As explained above, however, the current arrangement requires that the monopoly and not the private individual enters into the sales agreement with the foreign producer or retailer, and is furthermore limited to products not held in stock by Systembolaget. The arrangement is accordingly not able to take care of the situation where the private individual already has a title to the goods. In the Authority's

29 See inter alia Case 251/78 Firma Denkavit Futtermittel, [1979] ECR 3369 at paragraph 24, Case C-14/02 ATRAL SA, [2003] ECR 1-4431, paragraphs 67-69, and Case C-192/01 Commission of the European Communities v Kingdom of Denmark, judgment of 23 September 2003, at paragraph 46. 30 Cf. Case 120/78 Rewe-Zentral AG, cited above, paragraph 8,

13 opinion, the reasons advanced by the Swedish Government cannot justify that the Swedish law neither accepts that the individual in such a situation arranges for the import himself nor obliges Systembolaget to arrange the import on behalf of the individual. Both the wish to avoid tax evasion and the desire to avoid sale to minors could be perfectly ensured by measures which allowed that such beverages could legally be brought into Sweden without having to be carried physically over the border by the consumer.

57. Moreover, it is the opinion of the Authority that the lack of precision in Chapter 5, paragraph 5, with regard to Systembolaget's possibility to refuse to arrange for importation of beverages not in stock in itself constitutes an unjustified restriction. The principles of legal certainty and the protection of individuals require, in areas covered by Community law, that the Member States' legal rules should be worded unequivocally so as to give the persons concerned a clear and precise understanding of their rights and obligations and enable national courts to ensure that those rights and obligations are observed.31 A national provision allowing the competent administrative authority considerable latitude could be applied in a discriminatory way and for that reason alone raises concern under Community law. Therefore, if a measure is to be justified even though it derogates from a fundamental freedom it must, in any event, be based on objective, non-discriminatory criteria which are known in advance to the undertakings concerned, in such a way as to circumscribe the exercise of the national authorities' discretion, so that it is not used arbitrarily.33

58. These conditions are not met in the case of Chapter 5, paragraph 5 of the Swedish Alkohollagen. The total the lack of circumscription of the retail monopoly's powers in both the act itself and the preparatory works leave consumers in great uncertainty as to the circumstances under which it is possible to import alcoholic beverages through Systembolaget. This uncertainty cannot be deemed to be necessary in order for Systembolaget to carry out its tasks.

59. In conclusion, the Authority submits that the answer to the fourth question should be that the private import ban can only be justified if it can be shown that the aims of preventing sale of alcoholic beverages to minors as well as tax evasion cannot be achieved by less restrictive measures. It is in any event incompatible with Article 30 EC only to allow import of alcoholic beverages procured by the individual himself if he physically carries the beverages over the border and neither accept that the individual in such a situation arranges for the import through other means nor oblige Systembolaget to arrange the import on behalf of the individual

31 Cf. Case C-478/01 Commission of the European Communities v Grand Duchy of Luxemburg, [2003] ECR1-2351, at paragraph 20, and Case C-280/00 Altmark Trans GmbH, [2003] ECR1-7747, at paragraphs 59-66. 32 Cf. Case C-300/01 Doris Salzmann, [2003] ECR 1-4899, at paragraph 46-47, and Case C-463/00 Commission of the European Communities v Kingdom of Spain, [2003] ECR 1-1335, at paragraphs 75-76. 33 Cf. Case C-390/99 Canal Satelite Digital, [2002] ECR 1-607, at paragraph 35, and Case C-138/02 Brian Francis Coffins, judgment of 23 March 2004, at paragraph 72.

14 V Conclusion

For the reasons stated above, the EFTA Surveillance Authority proposes that the questions referred to European Court of Justice should be answered as follows:

1. A ban on private import such as the one found in Chapter 4, paragraph 2 of the Swedish Alkohollagen is to be examined under the general provisions on the free movement of goods found in Article 28 EC.

2. In light of the answer given to the first question, there is no need to answer the second question.

3. Article 28 EC is to be interpreted as meaning that it in principle precludes a ban on private import such as the one found in Chapter 4, paragraph 2 of the Swedish Alkohollagen and that this is so despite the obligation of Systembolaget to obtain, upon request, alcoholic beverages which it does not hold in stock.

4. The private import ban can only be justified if it can be shown that the aims of preventing sale of alcoholic beverages to minors as well as tax evasion cannot be achieved by less restrictive measures. It is in any event incompatible with Article 30 EC only to allow import of alcoholic beverages procured by the individual himself if he physically carries the beverages over the border and neither accept that the individual in such a situation arranges for the import through other means nor oblige Systembolaget to arrange the import on behalf of the individual

On behalf of the EFTA Surveillance Authority,

Niels Fenger Arne Torsten Andersen Director Officer Legal & Executive Affairs Legal & Executive Affairs

15