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Franzen (Case C-189/95) (Before the Court of Justice of the European Franzen (Case C-189/95) (Before the Court of Justice of the European Communities) ECJ (Presiding, RodrÍguez Iglesias, P.; Gulmann, Ragnemalm, Wathelet, Mancini, Moitinho de Almeida, Kapteyn, Murray, Edward, Puissochet ( Rapporteur), Hirsch, Jann and Sevón, JJ.) Mr Michael Elmer, Advocate General 23 October 1997 Reference from Sweden by the Landskrona Tingsratt under Article 177 E.C. Free movement of goods--existence of statutory monopoly over sale of alcohol not contrary to Article 37 E.C. because no discrimination between domestic products and those of other Member States--but constituted obstacle to trade contrary to Article 30 E.C.--and not justified under Article 36 E.C. because not proportional to aim of protecting human health. Franzén was prosecuted for selling without a licence wine imported from Denmark or purchased from Systembolaget. The Swedish Law on Alcohol gave Systembolaget a statutory monopoly over the sale of alcoholic beverages and also subjected the production and importation of alcoholic beverages to the possession of a production or wholesale licence. Such licences were issued, at the discretion of the Alcohol Inspectorate, upon the making of an application with supporting documentation and a fee. The fee was not reimbursed if the application was rejected. An annual payment was also required of all licence holders. Franzén alleged that the Law on Alcohol was contrary to Article 30 and 37 E.C. and therefore that he could not be convicted of any offence. The national court referred to the Court of Justice a number of questions concerning the compatibility with Community law of a statutory monopoly such as Systembolaget. Held: (1) The compatibility of a statutory monopoly with Article 30 and 37 E.C. (a) The purpose of Article 37 was to reconcile the maintenance of certain commercial monopolies which were in the public interest, with the requirements of the Common Market. Thus Article 37 required that a domestic monopoly over the retail of alcoholic beverages, conferred in order to protect public health, be organised so as to *1232 exclude any discrimination between nationals of Member States in conditions of supply and outlets, so that trade in goods from other Member States was not disadvantaged in relation to domestic goods, and competition between Member States was not distorted. [34]-[42] Pubblico Ministero v. Manghera and Others (59/75): [1976] E.C.R. 91; [1976] 1 C.M.L.R. 557; Hansen v. Hauptzollamt Flensburg(91/78): [1979] E.C.R. 935; [1980] 1 C.M.L.R. 162; E.C. Commission v. Italy(78/82): [1983] E.C.R. 1955; E.C. Commission v. Greece(C-347/88): [1990] E.C.R. I-4747; Banchero(C-387/93): [1995] E.C.R. I-4663; [1996] 1 C.M.L.R. 829, followed. (b) On the facts, the agreement between the Swedish State and Systembolaget required the latter to select products on the basis of objective criteria, such as quality, independently of their origin. This agreement was implemented by decisions on the basis of purely commercial and non-discriminatory criteria, and traders were entitled to be told the reasons for the non-selection of their products, and given the chance to appeal to an independent body. Traders could also require Systembolaget to market rejected products on a trial basis, and consumers could require it to import any alcoholic beverage at their request. The criteria and selection methods used by Systembolaget were therefore not discriminatory or apt to put imports at a disadvantage. [43]-[52] (c) As to the marketing of the products, although Systembolaget had only a limited number of shops, these were situated according to demand and all areas were covered at least by dispatch deliveries. Even if the retail network was imperfect, this did not adversely affect the sale of alcoholic beverages from other Member States more than the sale of domestic products. Similarly, the promotion of the products was not discriminatory. Restrictions on promotion were inherent where there was only one retailer but promotion possibilities existed equally for domestic products and those from other Member States. A retail monopoly such as Systembolaget was therefore compatible with Article 37 E.C. [58]-[66] (2) The compatibility of the operation of a statutory monopoly with Articles 30 and 36 E.C. (a) The Law on Alcohol provided that the Systembolaget could obtain supplies only from holders of licences whose grant was subject to restrictive conditions and the payment of both an initial and annual fee. This licence system constituted an obstacle to the import of alcoholic beverages from other Member States and the system was therefore contrary to Article 30 E.C. [67]-[73] Procureur du Roi v. Dassonville (8/74): [1974] E.C.R. 837; [1974] 2 C.M.L.R. 436, followed. (b) The licensing system was not justified on the basis of Article 36 E.C. Although it was designed to protect human health against the harmful effects of alcohol, it had not been proved that the system was *1233 proportional to this aim, or that this aim could not have been achieved by less restrictive means. [74]-[77] Rewe-Zentral AG v. Bundesmonopolverwaltung für Branntwein ("Cassis de Dijon") (120/78): [1979] E.C.R. 649; [1979] 3 C.M.L.R. 494; Verein gegen Unwesen In Handel und Gewebe Köln v. Mars(C-470/93): [1995] E.C.R. I-1923; Familiapress(C-368/95), not yet reported; De Agostini and TV-Shop(C-36/95), not yet reported, followed. Representation Per Löfqvist, Lennart Lindström and Carl Michael von Quitzow, Advocates, Stockholm, for Harry Franzén. Lotty Nordling, Under-Secretary for Legal Affairs in the Department for Foreign Trade of the Ministry of Foreign Affairs, acting as Agent, and in oral argument Erik Brattgård, Assistant Under-Secretary at the same Department, for the Swedish Government. Catherine de Salins, Deputy Director in the Legal Affairs Directorate of the Ministry of Foreign Affairs, and, Jean-Marc Belorgey, Special Adviser in that Ministry, acting as Agents, for the French Government. Esa Paasivirta, Legal Adviser at the Ministry of Foreign Affairs and in oral argument Holger Rotkirch, Ambassador, Head of the Legal Affairs Department of the same Ministry, and Tuula Pynnä, Legal Adviser at the same Ministry, for the Finnish Government. Didrik Tonseth, Advocate at the Ministry of Foreign Affairs, acting as Agent, for the Norwegian Government. Richard Wainwright, Principal Legal Adviser to the E.C. Commission, Jean- Francis Pasquier, on secondment to the Legal Service and in oral argument Knut Simonsson, of the Legal Service of the Commission, acting as Agents, for the Commission. Cases referred to in the judgment: 1. Keck and Mithouard (C 267-268/91), 24 November 1993: [1993] E.C.R. I- 6097; [1995] 1 C.M.L.R. 101. 2. E.C. Commission v. Greece (C-391/92), 29 June 1995: [1995] E.C.R. I-1621; [1996] 1 C.M.L.R. 359. 3. Hauptzollamt Göttingen v. Miritz (91/75), 17 February 1976: [1976] E.C.R. 217. 4. Rewe-Zentral AG v. Bundesmonopolverwaltung für Branntwein (120/78), 20 February 1979: [1979] E.C.R. 649; [1979] 3 C.M.L.R. 494. 5. Hansen v. Hauptzollamt Flensburg (91/78), 13 March 1979: [1979] E.C.R. 935; [1980] 1 C.M.L.R. 162. 6. Peureux v. Services Fiscaux de la Haute-Saône et du Territoire de Belfort (86/78), 13 March 1979: [1979] E.C.R. 897; [1980] 3 C.M.L.R. 337. 7. Pubblico Ministero v. Manghera and Others (59/75), 3 February 1976: [1976] E.C.R. 91; [1976] 1 C.M.L.R. 557. 8. E.C. Commission v. Italy (78/82): [1983] E.C.R. 1955. 9. E.C. Commission v. Greece (C-347/88), 13 December 1990: [1990] E.C.R. I- 4747 *1234 . 10. Banchero (C-387/93), 14 December 1995: [1995] E.C.R. I-4663; [1996] 1 C.M.L.R. 829. 11. Procureur du Roi v. Dassonville (8/74), 11 July 1974: [1974] E.C.R. 837; [1974] 2 C.M.L.R. 436. 12. Verein gegen Unwesen In Handel und Gewebe Köln v. Mars (C-470/93), 6 July 1995: [1995] E.C.R. I-1923. 13. Familiapresse (C-368/95), 26 June 1997: Not yet reported. 14. De Agostini (C 34-36/95), 9 July 1997: Not yet reported. 15. Aragonesa de Publicidad Exterior and PublivÍa v. Departamento de Sanidad Y Seguridad Social de la Generalitat de Cataluña (C 1 & 176/90), 25 July 1991: [1991] E.C.R. I-4151; [1994] 1 C.M.L.R. 887. 16. CBEM v. CLT and IPB (311/84), 3 October 1985: [1985] E.C.R. 3261; [1986] 2 C.M.L.R. 558. 17. SAFA v. Amministrazione della Finanze dello Stato (C-337/88), 9 January 1990: [1990] E.C.R. I-1. 18. Nespoli and Crippa (C-196/89), 11 October 1990: [1990] E.C.R. I-3647; [1992] 2 C.M.L.R. 1. Further cases referred to by the Advocate General: 19. Ianelli v. Meroni (74/76), 22 March 1997: [1997] E.C.R. 557; [1977] 2 C.M.L.R. 688. 20. Rewe v. Hauptzollamt Landau (45/75), 17 February 1976: [1976] E.C.R. 181; [1976] 2 C.M.L.R. 1. 21. Graffione v. Ditta Fransa (C-313/94), 26 November 1996: [1996] E.C.R. I- 6039. 22. Verband Sozialer Wettbewerb v. Clinique (C-315/92), 2 February 1994: [1994] E.C.R. I-317. 23. Semeraro Casa Uno v. Sindaco del Comune di Erbusco (C 418-421, 460- 462, 464/93, C 9-11, 14-15, 23-24 and 332/94), 20 June 1996: [1996] E.C.R.
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