OPINION OF MR VERLOREN VAN THEMAAT — CASE 170/78 
the taxation arrangements of the United 
Kingdom. Furthermore, in relation both 
to wine and to beer there is not always a 
fixed ratio between the alcoholic content 
of those beverages and their price. 
Those considerations in my view show 
that the relatively heavier taxation of 
wine as opposed to that on beer, which 
has been described, does not in itself 
justify with sufficient certainty the 
assumption that those tax arrangements 
are of such a nature as to afford indirect 
protection to domestic beer production. 
In this regard it should not be 
overlooked that, until the taxation of 
beer and wine is harmonized throughout 
the common market, the requirement 
that there should be an "appropriate tax 
ratio" offers the Member States in the 
framework of autonomy with regard to 
taxation a discretion limited only by the 
fact that the tax arrangements in 
question may not be discriminatory or 
protective in nature in relation to 
imported interchangeable products. The 
limits of that discretion are naturally 
wider, the smaller or more partial the 
possible degree of interchangeability 
between the two products. 
In view of the fact that beer and wine 
are only partly interchangeable and of 
the considerable differences described 
between those two beverages, it therefore 
seems to me in this case that it has still 
not been proved that those limits have 
been exceeded. There is in my view 
support for the opposite opinion above 
all, in the fact that, both according to the 
criterion for comparison used by the 
Commission and on the basis of other 
methods of comparison, substantial 
grounds emerge which are still capable 
of justifying tax arrangements of that 
kind and that the Commission has not 
succeeded in proving that the tax 
arrangements in question lead with a 
certain degree of probability to indirect 
protection of British beer production 
against wine imported from other 
Member States. 
7. I therefore conclude once again that the application must be dismissed as 
unfounded and that the Commission must be ordered to pay the costs. 
OPINION OF MR ADVOCATE GENERAL 
VERLOREN VAN THEMAAT 
DELIVERED ON 10 MAY 1983 ' 
Mr President, 
Members of the Court, 
1. State of the procedure 
1.1. Today the Court is once again 
concerned with the question whether the 
Commission correctly concluded in its 
application of 7 August 1978 that the 
excise duty on still light wine levied by 
the United Kingdom at that time 
conflicted with the second paragraph of 
Article 95 of the EEC Treaty. At that 
time the excise duty was UKL 3.250 per 
gallon, compared with UKL 0.6084 per 
gallon of beer of standard quality. 
1 — Translated from the Dutch. 
2300
COMMISSION v UNITED KINGDOM 
1.2. The material time for purposes of the 
decision 
The relevant situation, according to the 
judgment of the Court in inter alia Case 
7/61 (Commission v Italy [1961] ECR 
317, paragraphs 1 to 7, relating to pigs) 
and the commentaries thereon, is the 
situation at the time at which the appli­
cation is lodged (see H.G. Schermers, 
Judicial Protection in the European 
Communities, Second Edition, p. 227, 
and H. A. H. Audretsch, Supervision in 
European Community Law, pp. 29, 36, 38 
and 40 to 46). That judgment shows that 
even if the Member State concerned has 
fulfilled its obligations during the 
procedure the Commission may have an 
interest "in obtaining a decision on the 
issue whether the failure occurred." 
Mr Advocate General Lagrange, at page 
334 of his Opinion in Case 7/61, cited 
above, reached the same conclusion as 
the Commission, inter alia on the basis 
of the text of Article 171 of the Treaty, 
namely that the Court must decide 
"whether the failure to fulfil obligations 
under the Treaty has occurred, without 
taking into account what has happened 
since" and that the Commission may still 
have an interest in a decision even after 
the infringement has ended, if only 
because the Member State concerned 
would otherwise be free "to carry on 
with its improper conduct in the absence 
of any judgment finding that it was in 
breach of its obligations." 
I consider the foregoing reference to the 
earlier case-law of the Court to be of 
particular importance in this case for two 
reasons. First, certain passages of the 
written and oral submissions of the 
parties since the Court's interlocutory 
judgment of 27 February 1980 give the 
impression that they regard the situation 
between 1980 and 1983 as relevant for 
the purpose of determining whether the 
Treaty was infringed. However, such a 
view would conflict with the interpret­
ation of Articles 169 and 171 of the 
Treaty contained in the judgment cited. 
In that regard, developments in the 
United Kingdom after the application 
was lodged are of importance solely in 
so far as they may be helpful in throwing 
new light on the position at the time at 
which the application was lodged. 
Secondly, the reference to the earlier 
case-law of the Court is important in this 
case because the Commission clearly 
takes the view that even since its 
application was lodged the infringement 
of the Treaty which it set out has still 
not been wholly brought to an end. On 
that ground alone the Commission 
retains a specific and obvious interest in 
a decision of the Court of Justice which 
states sufficiently clearly the measures to 
be taken by the United Kingdom under 
Article 171 of the Treaty in order to put 
an end to the alleged infringement of the 
Treaty. 
1.3. The relevant facts according to the 
application 
In its reasoned opinion of 8 November 
1977, the Commission stated that the 
excise duty on still light wine had been 
increased with effect from 1 January 
1977 from UKL 2.955 per gallon to UKL 
3.250 per gallon, whilst the excise duty 
2301
OPINION OF MR VERLOREN VAN THEMAAT — CASE 170/78 
on the relevant beer was UKL 0.6084 per 
gallon. Per degree of alcohol, an excise 
duty of UKL 0.2955 and UKL 0.2708 
per gallon was levied on still light wines 
of 11° and 12° respectively, in 
comparison with UKL 0.2028 per gallon 
of beer. In relation to price, the excise 
duty on beer represented on average 
25% and the excise duty on wine at least 
38% of the sale price to the consumer. 
According to the reasoned opinion, the 
excise duty on the relevant wines was, 
according to the criteria used, approxi­
mately 50% (on the basis of the criterion 
of alcoholic strength or price to the 
consumer) or even more than 400% (on 
the basis of the criterion of volume used 
in the United Kingdom legislation on 
excise duty) higher than the excise duty 
on beer. 
There was a competitive relationship 
between beer and wine so that the 
differential taxation described afforded 
indirect protection to the production of 
beer, such as is prohibited by the second 
paragraph of Article 95 of the EEC 
Treaty. 
1.4. Judgment of 27 February 1980 
In its interlocutory judgment of 27 
February 1980, [1980] ECR 417, the 
Court stated first that the United 
Kingdom had essentially admitted (had 
not called in question) the facts put 
forward by the Commission, especially as 
regards the evolution in the rates of 
excise duty. The United Kingdom did 
deny the existence of a competitive 
relationship between wine and beer, with 
the result that there was no possibility of 
substitution, which was the condition for 
the application of the second paragraph 
of Article 95. Moreover, according to the 
United Kingdom, even if such a possi­
bility of substitution were recognized, 
the tax system applied to wine was not 
protective in nature within the meaning 
of that provision. 
In paragraph 6 the Court stated that, in 
order to determine whether there was 
a competitive relationship within the 
meaning of the second paragraph of 
Article 95, it was necessary to look not 
only at the present state of the market 
but also at possible developments within 
the context of free movement of goods 
within the Community and at further 
possibilities for the substitution of 
products for one another which might be 
revealed by intensification of trade, so as 
fully to develop the complementary 
features of the economies of the Member 
States in accordance with the objectives 
laid down by Article 2 of the Treaty. 
In paragraph 10 of the judgment, the 
Court emphasized that the second 
paragraph of Article 95 (in relation to 
determining whether there was a 
protective effect) was linked to the 
"nature" of the tax system in question so 
that it was not possible to require in each 
case that the protective effect should be 
shown statistically. The Court stated: "It 
is sufficient for the purposes of the 
application of the second paragraph of 
Article 95 for it to be shown that a given 
tax mechanism is likely, in view of its 
inherent characteristics, to bring about 
the protective effect referred to by the 
Treaty." 
In paragraph 14 of the judgment, the 
Court stated: "It is impossible to deny 
that to a certain extent the two beverages 
in question are capable of meeting 
identical needs, so that it must be 
acknowledged that there is a certain 
degree of substitution for one another." 
2302
COMMISSION v UNITED KINGDOM 
In his first Opinion Mr Advocate 
General Reischl further confirmed that 
the products were interchangeable by 
stating at page 442 that, from the point 
of view of consumers, beer and wine 
were put to the same use and had the 
same characteristics. Both were produced 
by fermentation and differed from the 
other thirst-quenching beverages listed in 
Chapter 22 of the Common Customs 
Tariff in that they contained alcohol. 
According to his Opinion, the relatively 
small alcoholic content also distinguished 
both drinks from spirits covered by tariff 
heading 22.09 C of the Common Cus­
toms Tariff and obtained by distillation. I 
regard paragraph 14 of the judgment, as 
amplified by Mr Advocate General 
Reischl in his first Opinion on this case, 
as an important starting-point for-my 
own Opinion. 
With regard to the basis of calculation to 
be used, in relation to the established 
competitive relationship, for comparing 
the total tax burdens imposed on the two 
products, the Court stated in paragraph 
18: "The explanations supplied show 
that neither simply taking into consider­
ation the volume of the two beverages 
nor a comparison between the typical 
units of consumption can provide a 
suitable basis for comparison. The same 
applies to a comparison based on the 
effect of the tax burden on the selling 
price of the two types of beverages in 
view of the fact that although it is 
relatively easy to ascertain an average 
price in the case of beer it is difficult 
to determine a representative basis for 
comparison in the case of wine, a 
characteristic of which is the wide range 
of prices." 
In paragraph 19 of its judgment the 
Court added: "Of the criteria put 
forward by the parties, the only factor 
which may enable an appropriate and 
somewhat objective comparison to be 
made consists therefore in the appraisal 
of the incidence of the tax burden in 
relation to the alcoholic strength of the 
beverages in question." By taking into 
consideration that criterion, the Court 
then ascertained inter alia that wine was 
at that time subject in the United 
Kingdom to a tax which was approxi­
mately 50% higher than that on beer, 
assuming that the alcoholic strength of 
the beverages was respectively 11° to 12° 
and 3° to 3.7°. As appears from the same 
paragraph, the Italian Government 
argued that in the case of normal table 
wines with an alcoholic strength of 9° to 
10° the margin of discrimination was 
approximately 100% to 125%. 
In paragraph 20 the Court stated in 
conclusion and subject to the obser­
vations made in paragraph 16 on the 
need first to determine an appropriate 
tax ratio between wine and beer that, 
according to the only criterion whereby 
an objective, although imperfect, com­
parison could be made between the rates 
of tax applied to wine and beer, it 
seemed that wine was subject in the 
United Kingdom to a tax burden which 
was heavier than that imposed on beer. 
I shall take paragraphs 18 to 20 inclusive 
in relation to the criteria to be used for 
comparison as the second starting-point 
for my own analysis. In that regard, I 
infer from the words which I have 
italicized on the one hand that the Court 
considers alcoholic strength to be an 
appropriate, although imperfect, cri­
terion for comparison. On the other 
hand, I infer that the Court did not 
intend also to exclude the supplementary 
use of the criteria of volume and price. 
At least in relation to the supplementary 
importance of the criterion of price, that 
2303
OPINION OF MR VERLOREN VAN THEMAAT — CASE 170/78 
also seems to be the logical inference to 
be drawn from the questions put to the 
parties in the Court's subsequent order 
of 15 July 1982. 
A third important starting-point for my 
own analysis is in my opinion to be 
found in the view expressed in paragraph 
24 "that a comparison of the develop­
ment of the two tax systems in question 
shows a protective trend as regards 
imports of wine in the United 
Kingdom." 
1.5. The further course of the procedure 
For a summary of the supplementary 
observations of the parties on the basis of 
the Court's interlocutory judgment, I 
will at this stage simply refer to the 
second Report for the Hearing. With 
reference to those supplementary obser­
vations, the Court in the letter of 
summons to the re-opened oral pro­
cedure expressly asked the Commission 
to explain at the hearing its views 
concerning the appropriate tax ratio 
between wine and beer and also for an 
explanation of the influence of the 
manufacturing processes for wine and 
beer on their price structures. At the 
sitting on 19 May 1982, the Commission 
confirmed that in its view a ceiling 
should be established by the Community 
for the taxation of wine but there should 
be no fixed reciprocal relationship be­
tween rates of taxation applicable to 
wine and beer. That point of view, to 
which I shall return in my analysis, is 
based on the twofold consideration that 
there are Member States which produce 
beer exclusively or almost exclusively but 
that in the remaining Member States 
both beer and wine are produced 
without its appearing that the heavier 
taxation of beer in those countries affects 
the healthy development of breweries. 
There is virtually no importation of beer 
in that group of countries, whilst in the 
first-mentioned group of countries there 
is in fact significant importation of wine. 
The Commission added that,' as appears 
from the judgments of the Court in Case 
127/75 Bobie v Hauptzollamt Aachen-
Nord [1976] ECR 1079, Case 148/77 
Hansen v Hauptzollamt Flensburg [1978J 
ECR 1787, Case 21/79 Commission v 
Italy [1980] ECR 1, and Case 46/80 
Vinal v Orbat [1981] ECR 77, a Member 
State may lay down differing tax 
arrangements even for identical products 
on the basis of objective criteria provided 
that such arrangements pursue objectives 
of economic policy which are themselves 
compatible with Community law and 
that they are not discriminatory or 
protective in nature. The establishment 
of a reciprocal relationship between the 
rates for beer and wine, like the har­
monization of the rates of taxation, 
constitutes an essential aim only in the 
context of the harmonization of 
legislation and cannot be achieved by 
means of the application of Article 95. 
For a summary of the remaining 
submissions of the parties at the second 
hearing I refer to the third Report for 
the Hearing. 
In his Further Opinion of 16 June 1982, 
Mr Advocate General Reischl, in 
connection with determining whether 
products may be substituted for one 
another, refers to the judgments in Cases 
45/75 REWE v Hauptzollamt Landau 
[1976] ECR 181, and 27/67 Fink-Frucht 
v Hauptzollamt München-Landsberger-
straße [1968] ECR 223, as well as to the 
interlocutory judgment of the Court. 
With regard to the proper tax ratio 
between wine and beer he considers on 
the basis of the judgments of the Court 
of 27 February 1980 on the tax 
arrangements applicable to spirits in 
Cases 168/78, 169/78, 171/78, 55/79 
and 68/79, [1980] ECR 347, 385, 447, 
2304
COMMISSION v UNITED KINGDOM 
481 and 501 respectively, that differential 
taxation — which he also regards as 
permissible in principle on the basis of 
the judgment of the Court cited by the 
Commission — should not dicriminate 
or afford protection against imported 
products. In his detailed examination of 
the excise duty applied to wine in 
relation to the various criteria for 
comparison, he questions inter alia 
"whether and how far alcoholic content 
has a decisive effect on consumer 
behaviour, in view of the other 
considerable differences between wine 
and beer, and whether that is not 
ultimately influenced only by the selling 
price of the beverages in question." 
Finally, he concludes "that the relatively 
heavier tax burden on wine in relation to 
that on beer .. . does not in itself justify 
with sufficient certainty the assumption 
that those tax arrangements are of such a 
nature as to afford indirect protection to 
domestic beer production." I should 
probably have reached the same 
conclusion on the basis of the infor­
mation available at that time. In my own 
examination I shall therefore concentrate 
on examining the new facts which have 
since become available as a result of the 
questions put by the Court in its order of 
15 July 1982. As the Court is aware, 
those questions related in particular to 
the consumer prices and the fiscal 
element therein in the various Member 
States since 1977 and also to the trend in 
the consumption of wine and beer in the 
various Member States since 1972. 
2. Supplementary remarks 
2.1. Summary of the starting-points for my 
own analysis 
I now pass to my own analysis of the 
problems raised by this case. For that 
purpose I have chosen as the starting-
points for the definition of my view the 
following points, already referred to, in 
the Court's interlocutory judgment: 
(a) The interchangeability of wine and 
beer; 
(b) The comments on the various criteria 
for comparison, in the light, 
however, of the statements contained 
in the Court's decision of 15 July 
1982 and also in the light of the 
parties' replies to that decision; 
(c) The protective trend identified in 
paragraph 24. 
2.2. The interchangeability of wine and 
beer 
With regard to the interchangeability of 
wine and beer, I have nothing to add at 
this stage to the remarks contained in the 
Court's judgment and the two Opinions 
of Mr Advocate General Reischl. If it is 
accepted that there is a competitive 
relationship, it is at the same time 
recognized that the second paragraph of 
Article 95 may be applicable. In my 
closing remarks, however, I shall return 
to a number of characteristics of the 
competitive relationship between wine 
and beer. 
2.3. The criteria for comparison for the 
determination of the tax burden 
The Court concluded in paragraphs 19 
and 20 of its interlocutory judgment that 
2305
OPINION OF MR VERLOREN VAN THEMAAT — CASE 170/78 
on the basis of the alcoholic strength, 
which was regarded by the Court as the 
most objective, although imperfect, 
criterion, the wines considered to be 
relevant for puposes of comparison were 
subject to a tax which was approximately 
50°/o higher than that on the relevant 
beer. I shall later return to the question 
of the proper tax ratio, which was left 
open. According to the Commission and 
the Italian Government (which take into 
account lower percentages of alcohol), 
the tax advantage on the basis of that 
criterion is substantially higher. Precisely 
because the Court itself regarded the 
criterion of alcoholic strength as 
imperfect I consider it desirable to make 
also a few remarks on the other criteria 
applied by the Commission. 
First of all, as the Italian Government 
has rightly observed in its various obser­
vations, the use of the criterion of 
volume is logical, inasmuch as the United 
Kingdom's tax arrangements are them­
selves based on the criterion of volume. 
Moreover, Mr Advocate General Reischl 
rightly observed in his first Opinion that 
the interchangeability of wine and beer 
results in particular from the fact that 
both are thirst-quenching drinks of low 
alcoholic content and, as is well-known, 
the volume of a drink is one of the 
decisive factors in the quenching of 
thirst. The Italian Government admits 
that a corrective factor of 1.5 must be 
applied here, that is to say that 1 litre of 
wine must be compared with 1.5 litres of 
beer. It rightly remarked in its obser­
vations on the replies given by the 
Commission and the United Kingdom 
that the information provided on the 
consumption of wine and beer in the 
most important wine- and beer-
consuming countries justifies even a 
somewhat lower corrective factor of 
1.35. On the basis of that criterion, 
taxation on wine would be more than 
three times as high as that on beer. The 
margin of discrimination would therefore 
amount to at least 200%. 
So far as the criterion of the comparison 
of prices is concerned, I agree with the 
United Kingdom and Mr Advocate 
General Reischl that it is xertainly 
relevant in principle. First," I agree with 
the United Kingdom that the Neumark 
Committee's view, which it cites at page 
3 of it report of 1 December 1981, is in 
fact still authoritative. That is in spite 
of the fact that, as the Commission 
somewhat disparagingly remarked, 20 
years have now passed since the pub­
lication of that report. Secondly, with 
reference to the Further Opinion of Mr 
Advocate General Reischl, I take the 
view that differences in production costs, 
alcoholic strength and other differences 
in. cost and quality, together with 
consumers' preferences, ultimately find 
expression in the price of the various 
products. It is not without reason that 
the terms "competitive mechanism" and 
"price mechanism" are often regarded as 
synonymous. The competive relationship 
between wine and beer is in fact 
expressed in their price ratio. If the 
United Kingdom had imposed upon beer 
and wine taxation calculated on the basis 
of the same percentage of their 
respective prices to the consumer net of 
tax, there could in my view be no 
question of an infringement of the 
second paragraph of Article 95. 
2306
COMMISSION v UNITED KINGDOM 
The difficulties in applying the criterion 
of price in this case, however, arise out 
of the fact that in its tax system the 
United Kingdom applies the criterion of 
volume as the basis for the taxation of 
wine and beer, rather than that of price. 
The comparison of price is further 
hampered by the very divergent 
structures of the sales markets for wine 
and beer and by the very different prices 
which are charged for different types of 
wine as a result of inter alia differences 
in quality. 
The difficulty relating to the structures 
of the sales markets may be overcome by 
comparing prices on one market in 
which both products are sold, that is to 
say supermarkets and other retail traders 
which sell both beer and wine to the 
consumer. In its reply to the Court's 
order of 15 July 1982, the Commission 
in my view rightly adopted that basis for 
its comparison of prices. 
The difficulty arising out of the wide 
range of wine prices may in my view be 
overcome either by comparing taxation 
on the cheapest table wines with taxation 
on beer (as the Italian Government 
recommended in its observations on 
the information furnished by the 
Commission) or by calculating the 
maximum price of the cheapest table 
wines which together have a share of the 
market considered to be sufficient (as the 
Commission in fact suggests). The 
relevant price of table wines, according 
to which of the two solutions is chosen 
amounts to UKL 2 pr UKL 3 per litre. ' 
The margin of discrimination against 
wine thus amounts to between 30 and 
120% of the price net of tax (± 70 to 
300% of the excise duty on beer). 
The Italian Government argues, in 
defence of the comparison which it 
favours between the tax burden on beer 
and the tax burden on the cheapest table 
wine, that Article 95 prohibits protective 
tax discrimination affecting any im­
ported product. However, I consider 
that as in cartel law for the purpose of 
determining whether fair competitive 
relationships exist particular products 
with a negligible share of the market 
may be disregarded and that the calcu­
lation by the Commission of a maximum 
price for cheap table wine therefore 
offers a more secure basis for the 
comparison of prices. According to the 
United Kingdom's own explanation at 
the most recent sitting, the relatively 
cheap Italian table wines have a 20% 
share of the British market, which 
certainly represents a sufficiently 
important share of the market to apply 
the comparison of taxation. In that 
1 — It should naturally be borne in mind that this calcu­
lation of the margin of discrimination related to 1982. 
The tax ratio between wine and beer at that time was 
substantially less unfavourable to wine than at the 
material time for the purposes of the judgment, namely 
the time at which the application was lodged. On the 
basis of the criterion of price, at the material time the 
tax mechanism applied in the United Kingdom was, on 
account of the characteristics already referred to, 
protective in nature with regard to beer production, as 
defined in paragraph 10 of the Court's interlocutory 
judgment, in relation to all wines with a consumer 
pnce (net of tax) which was less than five times the 
consumer price (net of tax) of beer. The margin of 
discrimination could then, on the basis of the more 
unfavourable tax ratio, certainly rise to far above the 
highest margin of protection for 1982, calculated at 
120% of the price net of tax. 
2307
OPINION OF MR VERLOREN VAN THEMAAT — CASE 170/78 
connection I recall that in the Com­
mission Notice on agreements of minor 
importance in the field of cartel policy 
(Official Journal 1977, C 313, p. 3) 
restrictions on competition in relation to 
market shares of only 5% are regarded 
as relevant from the point of view 
of maintaining fair competitive 
relationships. On the other hand, I again 
agree with the Italian Government that 
the average import price for wine 
imported into the United Kingdom 
indicated by the United Kingdom itself 
in Annex E to its reply of 30 September 
1982 makes it unlikely that the two types 
of German wine referred to by the 
United Kingdom for the purposes of the 
comparison of prices may in fact be 
regarded as representative. Certainly that 
applies to supermarket chains which 
import their own wine. 
The information set out by the Italian 
Government is also of importance 
inasmuch as it appears from it that the 
most relevant Italian wines for purposes 
of assessing appreciable restrictions on 
competition have an alcoholic strength of 
only 9 to 10°. As appears from the infor­
mation provided by the Commission at 
pages 16 and 17 of its report of 1 
December 1981, the margin of discrimi­
nation against the most relevant wines at 
the material time for the determination 
of an infringement of the Treaty 
amounts to at least 90% for those wines 
by application of the criterion of 
alcoholic strength. Moreover, there is a 
clear connection between the criteria for 
comparison of alcoholic strength and 
price in so far as, by virtue of the regu­
lation relevant to this case, Regulation 
(EEC) No 816/70 of the Council 
(Official Journal, English Special Edition 
1970 (I), p. 234), replaced only in 1979 
by Council Regulation (EEC) No 
337/79 (Official Journal, L 54, p. 1), the 
guide price is laid down per degree of 
alcohol per hectolitre. For table wines 
with a lower alcoholic strength pro­
portionately lower guide prices apply as 
compared with table wines with a higher 
alcoholic strength. 
At the most recent sitting of the Court in 
this case, the United Kingdom put 
forward another legal argument which 
may not remain unchallenged in this 
connection. From Article 97 of the EEC 
Treaty it inferred that a Member State 
may establish average rates of taxation 
for wine and that for the purpose of the 
application of Article 95 the taxation 
burden on average wine prices must be 
compared with the taxation burden on 
average beer prices. That argument is 
untenable, Article 97 is clearly a dero­
gative provision which, like all such 
provisions, must be interpreted 
restrictively. Article 97 applies exclusively 
in relation to turnover taxes calculated 
on a cumulative multi-stage tax system. 
The discrimination, in particular in 
favour of integrated domestic under­
takings, which resulted from Article 97 
was in fact, together with the oppor­
tunities of manipulating trade offered by 
that provision and the other distortions 
of competition arising out of the old 
turnover tax system, one of the main 
reasons for replacing turnover tax 
calculated on a cumulative multi-stage 
tax system by value-added tax. As a 
derogative provision, Article 97 cannot in 
any event be extended to cover excise 
duties. Indeed, that article underlines the 
fact that in principle Article 95 must be 
interpreted as meaning that taxation on 
specific imported products (thus in this 
case, for example, on cheap table wines) 
must be compared with taxation on 
similar domestic products (by application 
of the first taxation on similar domestic 
products (by application of the first 
paragraph of Article 95) or with 
competing substitute products (by 
2308
COMMISSION v UNITED KINGDOM 
application of the second paragraph of 
Article 95). Thus that argument may in 
fact be used against the view of the 
United Kingdom and tends to provide 
support for the view of the Italian 
Government that the cheapest types of 
wine must serve as the criterion for 
comparison, although I, on the grounds 
of general competition policy which I 
have set out, would not wish to go so 
far. 
2.4. Conclusions based on the application 
of the various criteria for comparison 
In short, it is clear from an analysis of 
the documents received after the Court's 
decision of 15 June 1982 that the tax 
burden on the wines most relevant from 
the point of view of competition, was at 
the material time for the purpose of 
determining a possible infringement of 
the Treaty, at least 70 to 100% higher 
than that on beer on the basis of all the 
defensible criteria. I, like Mr Advocate 
General Reisçhl (who did not possess 
sufficient information on this point at the 
time when he delivered his Further 
Opinion), consider that the criterion of 
the influence on prices is the most 
relevant criterion from the point of view 
of competition. However, I have at the 
same time pointed out that under the 
common organization of the market in 
wine there is a direct relationship 
between wine prices and alcoholic 
strength, which also confirms the 
relevance of the criterion of alcoholic 
strength, for which the Court expressed 
a preference in its interlocutory judg­
ment. A difference of 70 to 100% in the 
tax burden is in my opinion, without 
prejudice to the question of the proper 
tax ratio to be discussed next, itself a 
clear indication that the excise duty 
levied by the United Kingdom on wine 
affords indirect protection to the 
production of beer in that country, since 
the burden thereof may, as appears from 
the information provided, increase the 
retail price net of tax to as much as 
160% of that price. 
2.5. The question of the proper tax ratio 
I agree with the Commission that a 
proper tax ratio between wine and beer 
can be established only by means of 
harmonization of legislation on excise 
duty under Articles 99 and 100 of the 
Treaty. It will then be possible, if the 
harmonizing directive is also based on 
Article 43 of the Treaty, also to take 
account of considerations relating to the 
common agricultural policy. Because of 
the vagueness of the very term "indirect 
protection" in the second paragraph of 
Article 95 no precise limit can be 
established on the basis of that provision 
of the Treaty. However, in the case of a 
tax burden as high in absolute terms as 
that concerned in this case, a difference 
in the tax burden of at least 70 to 100% 
compared with the substitute product, 
beer, is on the basis of all elementary 
experience concerning the competitive 
mechanism bound to result in a very 
appreciable restriction of competition to 
the detriment of wine. Even in the case 
of a difference in tax burden of 50%, as 
was accepted by the Court in its interlo­
cutory judgment, I would still consider 
that to be the case, if, as in this case, 
other factors indicate that there is an 
even greater difference. Thus in my 
opinion an appreciable restriction on 
competition to the detriment of wine ipso 
facto means that there is indirect 
protection of the competing product, 
beer, within the meaning of the second 
paragraph of Article 95. 
2309
OPINION OF MR VERLOREN VAN THEMAAT — CASE 170/78 
Although the question is of course not 
an issue in these proceedings and there­
fore cannot be answered definitively, I 
understand, however, that the Court is 
also concerned that its judgment in this 
case may establish a precedent in the 
determination of tax ratios in Member 
States which produce both wine and 
beer. I agree with Mr Advocate General 
Reischl that the Commission's arguments 
in favour of allowing taxation on beer to 
be higher than that on wine in those 
countries are strong, partly in the light of 
the case-law of the Court of Justice cited 
by the Commission. From the point of 
view of the competition in prices, which 
as I have stated earlier I consider 
essential for the application of the 
second paragraph of Article 95, I would 
add that wine production is not in my 
opinion afforded indirect protection by 
higher taxation on beer provided that the 
price of beer including tax is no higher 
than the price of the competing wines. 
Once the price of beer becomes 
appreciably higher than the price of 
comparable wines as a result of the 
taxation levied upon it, I would not a 
priori exclude the possibility that there is 
an infringement of the second paragraph 
of Article 95. However, I consider that 
for reaching a final decision the 
development of the volume of domestic 
beer production and beer importation in 
the countries concerned should also play 
a part. The legal uncertainty naturally 
increases the desirability of determining 
once and for all the tax ratio between 
wine and beer for all Member States by 
means of harmonization of legislation. 
Especially by use of price as the relevant 
criterion, it seems to me in principle that 
the symmetrical application of the 
second paragraph of Article 95 with 
regard to countries producing mainly 
beer and those producing mainly wine 
does not, on the grounds given, lead to 
consequences which are unacceptable for 
the Community. I therefore consider that 
the problem of the proper tax ratio 
between wine and beer does not call 
for a conclusion on the basis of a 
comparison of the tax burden different 
from that reached above. 
2.6. The protective trend 
The information which became available 
after Mr Advocate General Reischl 
delivered his Further Opinion also 
clearly confirms the protective trend 
identified in paragraph 24 of the Court's 
interlocutory judgment. On the basis of 
Articles 169 and 171 of the Treaty, as 
interpreted in the case-law of the Court 
cited above, for the application of that 
criterion the way in which the tax ratio 
between beer and wine has developed in 
the United Kingdom between the date of 
accession and the date on which the 
application was lodged is decisive. 
As appears from the information 
provided by the Commission and not 
contested by the United Kingdom in 
relation to the trend during the relevant 
period of 1973 to 1978, the tax ratio 
between beer and wine rose from 1 : 3.2 
on 1 January 1974 to 1 :4.2 on 27 
March 1974 and to 1 : 5.6 on 16 April 
1975. On 1 July 1977 the tax ratio began 
to fall slightly to 1 : 5.3, which is the 
decisive tax ratio for purposes of these 
proceedings. From the information on 
consumption provided by the provided 
by the Commission it is clear that the 
2310
COMMISSION v UNITED KINGDOM 
increase in excise duty in 1975 was 
coupled with a fall in the consumption of 
wine per head of the population. The 
connection between a rise in the excise 
duty and consumption per head of the 
population is, however, even more 
clearly demonstrated by the information 
on developments after 1978. In 1980 the 
tax ratio between beer and wine fell to 
1 :4.9 and in 1981 to the 1974 level 
of 1 :4.2. At the same time the 
consumption of wine per head of the 
population rose substantially (from 5.41 
litres per head in 1977 to 7.8 litres per 
head in 1981), while the consumption of 
beer fell between 1979 and 1981 for the 
first time since 1972, from 122.1 litres to 
111.5 litres per head of the population. 
The United Kingdom confirms those 
developments by means of its own 
figures. It also recognizes the relation­
ship which exists between the tax burden 
and consumption and in its report of 1 
December 1981 and during the most 
recent sitting of the Court in this case it 
concluded from the developments after 
1978 that the protective trend identified 
in the Court's interlocutory judgment 
had now been wholly eliminated. Apart 
from the fact that that conclusion is 
incorrect in comparison with the tax 
ratio on 1 January 1974, I have already 
observed that in these proceedings the 
developments between 1973 and 1978 
alone are relevant for the purpose of 
determining a protective trend. In 
relation to that period, the existence of a 
protective trend is also confirmed by the 
said report of the United Kingdom. 
To those remarks I would further add 
that the establishment of a protective 
trend over a material period of time may 
indeed constitute important evidence in 
relation to an infringement of the second 
paragraph of Article 95, but none the 
less such evidence cannot in itself be 
decisive for purposes of the application 
of that provision. Instead it is ultimately 
a question of deciding whether, at the 
material time for the purpose of 
determining an infringement of the 
Treaty, the tax burden on imported 
products is so much higher than the tax 
burden on domestic substitute products 
that it must be assumed that domestic 
production of the substitute products is 
indirectly protected by the taxation on 
the imported products. Conclusions on 
the latter point may certainly be 
supported by a simultaneous increase 
over that time in the difference in tax 
burden. 
3. Final remarks and conclusion 
3.1. Characteristics of the competitive 
relationship between wine and beer 
In relation to the cheap types of wine 
which are relevant from the point of 
view of competition, I agree with the 
Commission and Mr Advocate General 
Reischl that differences in the manufac­
turing structures of wine and beer are 
ultimately of no great importance. First, 
differences in production costs will, as 
stated above, be expressed in differences 
in price, so that in the use of the 
criterion of price they are automatically 
taken into account in the comparison of 
the tax burden. Secondly, the most 
relevant cheap wines and beer are both 
usually produced by large-scale 
production processes, as the Commission 
and Mr Advocate General Reischl have 
already observed. 
The great differences in the structures of 
the markets in wine and beer I also 
consider ultimately to be no impediment 
to a clear comparison of the tax burdens. 
From the very fact that Article 97 is 
not applicable it follows that in the 
2311
OPINION OF MR VERLOREN VAN THEMAAT — CASE 170/78 
application of the second paragraph of 
Article 95 average rates of taxation may 
not be applied to all imported wine. 
From the objective of the second 
paragraph of Article 95 together with the 
general scheme of the Treaty it in fact 
follows that proof of a clear restriction 
of competition with regard to imported 
products which separately or collectively 
have an appreciable share of the market 
in those products is of itself sufficient 
to establish an infringement of that 
provision. Such an appreciable share of 
the market is, as appears from the infor­
mation provided by the United Kingdom 
itself, already constituted by the fact that 
wine is sold in supermarkets and by 
other retailers who sell wine and beer, 
whereas the market share of the relevant 
cheap wines in the total supply of wine 
may, as appears from the information 
provided by the two parties during 
the proceedings and by the Italian 
Government, be assessed at at least 20%. 
A market share of only 5 to 10% would, 
as has already been stated, in my view 
have been sufficient. 
Finally, the information provided on 
prices and consumption of wine and 
beer confirms that in the competitive 
relationship between wine and beer price 
ratios and the tax included therein for 
the consumer play a part which may be 
clearly demonstrated and which has also 
been acknowledged by the United 
Kingdom. 
I therefore consider that the uncertainties 
regarding the competitive relationship 
between wine and beer referred to in 
paragraph 24 of the Court's interlo­
cutory judgment may now be regarded 
as having been satisfactorily removed. 
3.2. The legal consequences of a finding 
that the United Kingdom has 
infringed the Treaty 
As, for example, is also frequently the 
case with the judgments of the Court on 
infringements of Article 30 of the EEC 
Treaty, the precise legal consequences 
which judgment against the United 
Kingdom in this case entails under 
Article 171 of the Treaty cannot be 
ascertained. In that regard there is 
certainly a much wider area of uncer­
tainty in relation to a judgment on the 
second paragraph of Article 95 than a 
judgment on the first paragraph thereof. 
In this case it is in any event in my view 
certain that the United Kingdom may 
not after judgment has been . given 
against it return to a protective trend in 
the development of the tax relationship. I 
consider that that that conclusion in 
itself makes it clear that the Commission 
retains a legitimate interest in continuing 
its action even after the reversal of the 
trend in the United Kingdom between 
1977 and 1981. In that connection I also 
refer to the detailed consideration given 
to the question of legitimate interest in 
the Opinion of Mr Advocate General 
Lagrange in Case 7/61, already cited. 
However, it must also in my opinion be 
concluded from general experience with 
regard to the competitive mechanism and 
from the information provided by the 
parties that there is still indirect 
protection of the production of beer at 
least as long as the tax burden on the 
relevant cheap wines, as measured by 
reference to the price net of taxation, 
remains at least 30% higher than the tax 
2312
COMMISSION v UNITED KINGDOM 
burden on beer. Indeed it cannot in my 
opinion be ruled out that even in the 
case of a lesser difference in tax burdens 
there may still be indirect protection of 
beer, but that would nevertheless have to 
be demonstrated by means of more 
evidence than has been produced up to 
now. 
Inasmuch as the excess taxation will in 
fact be passed on to the consumer, the 
reclaiming of such tax feared by the 
United Kingdom seems in this case to be 
ruled out by the exclusion of that 
possibility in the Court's judgment in 
Case 68/79 Just v Danish Ministry for 
Fiscal Affairs [1980] ECR 501. 
3.3. Conclusion 
In conclusion I propose that the Court should declare, in accordance with 
the Commission's application, that the United Kingdom of Great Britain and 
Northern Ireland has failed on the grounds stated to fulfil its obligations 
under the second paragraph of Article 95 of the Treaty. So far as the costs of 
the action are concerned, the fact that the Commission furnished all the 
information necessary for the determination of its application only after 
repeated action on the part of the Court in my view constitutes an 
exceptional circumstance, as provided for in the first paragraph of Article 
69 (3) of the Rules of Procedure, so that the United Kingdom should be 
ordered to bear only its own costs. 
2313