Judgment of the Court of 16 December 1986. - Commission of the European Communities v Hellenic Republic. - Failure of a Member State to fulfil its obligations - Free movement of goods - Fresh meat. - Case 124/85.



European Court reports 1986 Page 03935



Summary

Parties

Subject of the case

Grounds

Decision on costs

Operative part



Keywords

1 . FREE MOVEMENT OF GOODS - QUANTITATIVE RESTRICTIONS - MEASURES HAVING EQUIVALENT EFFECT - CONCEPT - ACTUAL RESTRICTION OF IMPORTS - NOT A NECESSARY CONDITION

( EEC TREATY , ART . 30 )

2 . FREE MOVEMENT OF GOODS - DEROGATIONS - CONDITIONS - RECOURSE TO LESS RESTRICTIVE MEASURES

( EEC TREATY , ART . 36 )

3 . BALANCE OF PAYMENTS - LIBERALIZATION OF PAYMENTS - TRANSFERS OF FOREIGN CURRENCY IN CONNECTION WITH TRADE IN GOODS - RESTRICTIONS - ABOLITION - MEMBER STATES ' CONTROL MEASURES - PERMISSIBILITY - LIMITS

( EEC TREATY , ART . 106 )

Summary

1 . FOR THE PURPOSES OF THE PROHIBITION ON MEASURES HAVING AN EQUIVALENT EFFECT TO QUANTITATIVE RESTRICTIONS IT IS NOT NECESSARY TO PROVE THAT THE MEASURES IN QUESTION ACTUALLY RESTRICT IMPORTS OF THE PRODUCTS IN QUESTION ; IT IS ENOUGH THAT THE MEASURES HAVE A POTENTIAL EFFECT ON IMPORTS , WHICH MIGHT OTHERWISE TAKE PLACE .

2 . A DEPARTURE FROM THE PRINCIPLE OF THE FREE MOVEMENT OF GOODS CANNOT BE MADE IN RESPECT OF NATIONAL RULES WHERE THE OBJECTIVES OF THOSE RULES CAN BE ATTAINED AS EFFECTIVELY BY LESS RESTRICTIVE MEASURES .

3 . THE LIBERALIZATION OF PAYMENTS PROVIDED FOR IN ARTICLE 106 OF THE TREATY OBLIGES THE MEMBER STATES TO AUTHORIZE THE PAYMENTS COVERED BY THAT PROVISION , INCLUDING PAYMENTS RELATING TO TRADE IN GOODS . HOWEVER , THE MEMBER STATES RETAIN THE POWER TO VERIFY THAT TRANSFERS OF FOREIGN CURRENCY ARE NOT IN REALITY USED FOR NON-LIBERALIZED MOVEMENTS OF CAPITAL , IN PARTICULAR FOR A TRANSACTION OUTSIDE THE SPHERE OF TRADE IN GOODS OR SERVICES . HOWEVER , SUCH CONTROLS MAY NOT HAVE THE EFFECT OF RENDERING ILLUSORY THE FREEDOMS RECOGNIZED BY THE TREATY .

Parties

IN CASE 124/85

COMMISSION OF THE EUROPEAN COMMUNITIES , REPRESENTED BY XENOPHON YATAGANAS , A MEMBER OF ITS LEGAL DEPARTMENT , ACTING AS AGENT , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICE OF G . KREMLIS , ALSO A MEMBER OF ITS LEGAL DEPARTMENT , JEAN MONNET BUILDING , KIRCHBERG ,

APPLICANT ,

V

HELLENIC REPUBLIC , REPRESENTED BY LOUKAS STEPHANOU , SPECIAL ADVISER AT THE MINISTRY OF FOREIGN AFFAIRS , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE RESIDENCE OF THE GREEK AMBASSADOR , D . YANNOPOULOS , 177 VAL STAINTE-CROIX ,

DEFENDANT ,

Subject of the case

APPLICATION FOR A DECLARATION THAT , BY ALLOWING ONLY CERTAIN CUTS OF FRESH BEEF AND VEAL TO BE IMPORTED , THE HELLENIC REPUBLIC HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER ARTICLE 22 ( 1 ) OF REGULATION ( EEC ) NO 805/68 OF THE COUNCIL OF 27 JUNE 1968 ON THE COMMON ORGANIZATION OF THE MARKET IN BEEF AND VEAL AND UNDER ARTICLE 30 ET SEQ . OF THE EEC TREATY ,

Grounds

1 BY APPLICATION LODGED AT THE COURT REGISTRY ON 30 APRIL 1985 THE COMMISSION OF THE EUROPEAN COMMUNITIES BROUGHT AN ACTION UNDER ARTICLE 169 OF THE EEC TREATY FOR A DECLARATION THAT , BY ALLOWING ONLY CERTAIN CUTS OF FRESH BEEF AND VEAL TO BE IMPORTED , THE HELLENIC REPUBLIC HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER ARTICLE 22 ( 1 ) OF REGULATION ( EEC ) NO 805/68 OF THE COUNCIL OF 27 JUNE 1968 ON THE COMMON ORGANIZATION OF THE MARKET IN BEEF AND VEAL ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1968 ( I ), P . 187 ) AND UNDER ARTICLE 30 ET SEQ . OF THE EEC TREATY .

2 REFERENCE IS MADE TO THE REPORT FOR THE HEARING FOR THE PROVISIONS OF THE GREEK LEGISLATION IN QUESTION AND THE SUBMISSIONS AND ARGUMENTS OF THE PARTIES WHICH ARE MENTIONED OR DISCUSSED HEREINAFTER ONLY IN SO FAR AS IS NECESSARY FOR THE REASONING OF THE COURT .

3 AS REGARDS THE APPLICATION OF THE RULES AT ISSUE TO DOMESTIC AND IMPORTED MEAT , IT MUST BE NOTED THAT DECREES NOS E6/1264 AND E6/1478 OF THE MINISTER FOR TRADE RELATE EXCLUSIVELY TO IMPORTS OF FRESH BEEF AND VEAL . ALTHOUGH THE WORDING OF ARTICLE 1 OF ORDER NO 56/83 OF THE COMMERCIAL POLICE REFERS TO BOTH IMPORTED AND DOMESTIC BEEF AND VEAL , IT IS CLEAR FROM THE EXPLANATIONS GIVEN BY THE GREEK GOVERNMENT DURING THE WRITTEN AND ORAL PROCEDURES THAT THE SAID ORDER IS CONCERNED ONLY WITH THE SUPERVISION OF GREEK IMPORTERS , THE TRANSFER OF FOREIGN CURRENCY BY THEM AND THE ELIMINATION OF FRAUDULENT PRACTICES ON THEIR PART . IT FOLLOWS THAT THE CONTESTED RULES AS A WHOLE ARE SPECIFICALLY AIMED AT IMPORTED PRODUCTS AND APPLY TO IMPORTED PRODUCTS AND DOMESTIC PRODUCTS ON DIFFERENT TERMS .

4 AS REGARDS INTRA-COMMUNITY TRADE IN THE BEEF AND VEAL SECTOR , ARTICLE 1 OF REGULATION NO 805/68 ESTABLISHES THE COMMON ORGANIZATION OF THE MARKET IN BEEF AND VEAL AND ARTICLE 22 ( 1 ) PROHIBITS IN THE INTERNAL TRADE OF THE COMMUNITY ANY QUAN TITATIVE RESTRICTION OR MEASURE HAVING EQUIVALENT EFFECT . MOREOVER , THE COURT HAS CONSISTENTLY HELD THAT ONCE THE COMMUNITY HAS ADOPTED REGULATIONS ESTABLISHING A COMMON ORGANIZATION OF THE MARKET IN A GIVEN SECTOR , MEMBER STATES ARE UNDER AN OBLIGATION TO REFRAIN FROM TAKING ANY MEASURE WHICH MIGHT UNDERMINE OR CREATE EXCEPTIONS TO IT . LASTLY , UNDER ARTICLE 65 ( 1 ) OF THE ACT CONCERNING THE CONDITIONS OF ACCESSION OF THE HELLENIC REPUBLIC AND THE ADJUSTMENTS TO THE TREATIES ( OFFICIAL JOURNAL L 291 OF 19 . 11 . 1979 , P . 17 ), ' THE SYSTEM APPLICABLE IN THE COMMUNITY . . . IN RESPECT OF . . . QUANTITATIVE RESTRICTIONS AND MEASURES HAVING EQUIVALENT EFFECT SHALL . . . APPLY IN GREECE AS FROM 1 JANUARY 1981 ' .

5 ACCORDINGLY , IT MUST BE HELD THAT THE RULES AT ISSUE ARE NOT COMPATIBLE WITH THE PRINCIPLE OF FREE MOVEMENT OF GOODS WITHIN THE COMMUNITY IF THEY IMPEDE INTRA-COMMUNITY TRADE , UNLESS THEY ARE JUSTIFIED ON ANY OF THE GROUNDS MENTIONED IN ARTICLE 36 OF THE TREATY .

6 AS REGARDS THE EFFECT OF THE CONTESTED MEASURES ON INTRA-COMMUNITY TRADE , THE GREEK GOVERNMENT CONSIDERS THAT THEY DO NOT IMPEDE THE PATTERNS OF TRADE BETWEEN MEMBER STATES . IT MAINTAINS THAT SINCE THE MEASURES HAVE BEEN IN FORCE THE VOLUME OF FRESH BEEF AND VEAL IMPORTED FROM OTHER MEMBER STATES IN FACT HAS INCREASED .

7 IN THAT CONNECTION , HOWEVER , IT MUST BE BORNE IN MIND THAT , AS THE COURT HAS CONSISTENTLY HELD , IT IS NOT NECESSARY TO PROVE THAT THE MEASURES IN QUESTION ACTUALLY RESTRICT IMPORTS OF THE PRODUCTS IN QUESTION ; IT IS ENOUGH THAT THE MEASURES HAVE A POTENTIAL EFFECT ON IMPORTS WHICH MIGHT OTHERWISE TAKE PLACE ( JUDGMENT OF 20 FEBRUARY 1975 IN CASE 12/74 COMMISSION V GERMANY ( 1975 ) ECR 181 , AND JUDGMENT OF 24 NOVEMBER 1982 IN CASE 249/81 COMMISSION V IRELAND ( 1982 ) ECR 4005 ). IT IS CLEAR FROM THE NUMEROUS COMPLAINTS BY GREEK TRADERS TO WHICH THE COMMISSION REFERS THAT WITHOUT THE MEASURES IN QUESTION TRADE BETWEEN GREECE AND THE OTHER MEMBER STATES WOULD BE FACILITATED AND MIGHT EVEN INCREASE .

8 CONSEQUENTLY , THAT ARGUMENT OF THE GREEK GOVERNMENT MUST BE REJECTED .

9 THE GREEK GOVERNMENT ALSO JUSTIFIES THE RULES AT ISSUE IN TERMS OF THE NEED TO CONTROL TRANSFERS OF FOREIGN CURRENCY AND TO COMBAT FRAUDULENT PRACTICES ON THE PART OF GREEK IMPORTERS . IT MAINTAINS THAT GREEK IMPORTERS HAVE OFTEN MIXED INFERIOR-QUALITY CUTS OF MEAT WITH GOOD-QUALITY CUTS AND DECLARED AND INVOICED THE RESULTING CONSIGNMENTS AS CONSISTING ENTIRELY OF SUPERIOR-QUALITY MEAT . THESE PRACTICES HAVE ENABLED IMPORTERS BOTH TO TRANSFER ABROAD MORE FOREIGN CURRENCY THAN WAS NECESSARY TO PURCHASE THE MEAT AND ALSO TO SELL MEAT IN GREECE AT EXCESSIVE PRICES TO THE DETRIMENT OF CONSUMERS .

10 MORE SPECIFICALLY , THE GREEK GOVERNMENT PUTS FORWARD THE FOLLOWING ARGUMENTS . FIRSTLY , IN THE ABSENCE OF THE MEASURES IN QUESTION THE GREEK AUTHORITIES WOULD HAVE ADMINISTRATIVE DIFFICULTIES IN OBSERVING PRICE FORMATION IN RESPECT OF THE VARIOUS CUTS OF MEAT AND IN CHECKING THE VARIOUS CONSIGNMENTS OF MEAT . SECONDLY , THE MEASURES ARE NECESSARY AND APPROPRIATE IN ORDER TO COMBAT ILLEGAL CURRENCY FLIGHT . THIRDLY , IT ARGUES MORE GENERALLY AND BY REFERENCE TO THE COURT ' S JUDGMENT OF 31 JANUARY 1984 IN JOINED CASES 286/82 AND 26/83 LUISI AND CARBONE V MINISTERO DEL TESORO , ( 1984 ) ECR 377 , THAT SINCE THE MEASURES HAVE THE SOLE OBJECTIVE OF VERIFYING THAT FOREIGN EXCHANGE TRANSACTIONS ARE NOT USED FOR A PURPOSE OTHER THAN THAT FOR WHICH THEY WERE AUTHORIZED , THEY DO NOT FALL WITHIN THE SPHERE OF THE FREE MOVEMENT OF GOODS . IT ALSO ARGUES THAT THE MEASURES IN QUESTION ARE NECESSARY TO PROTECT GREEK CONSUMERS .

11 NONE OF THOSE ARGUMENTS CAN BE ACCEPTED .

12 AS FAR AS THE FIRST ARGUMENT IS CONCERNED IT MUST BE STATED THAT ADMINISTRATIVE DIFFICULTIES CANNOT JUSTIFY A RESTRICTION ON THE FREE MOVEMENT OF GOODS .

13 AS FOR THE SECOND ARGUMENT IT MUST BE POINTED OUT IN THE FIRST PLACE THAT , AS THE COURT HAS CONSISTENTLY HELD , A DEPARTURE FROM THE PRINCIPLE OF THE FREE MOVEMENT OF GOODS CANNOT BE MADE IN RESPECT OF NATIONAL RULES WHERE THE OBJECTIVES OF THOSE RULES CAN BE ATTAINED AS EFFECTIVELY BY LESS RESTRICTIVE MEASURES SUCH AS SPOT CHECKS AND APPROPRIATE SANCTIONS .

14 AS FAR AS THE THIRD ARGUMENT IS CONCERNED IT MUST BE OBSERVED THAT THE JUDGMENT OF 31 JANUARY 1984 , CITED ABOVE , HOLDS , IN THE FIRST PLACE , THAT THE LIBERALIZATION OF PAYMENTS PROVIDED FOR IN ARTICLE 106 OF THE TREATY OBLIGES THE MEMBER STATES TO AUTHORIZE THE PAYMENTS COVERED BY THAT PROVISION AND , SECONDLY , THAT THE MEMBER STATES RETAIN THE POWER TO VERIFY THAT TRANSFERS OF FOREIGN CURRENCY ARE NOT IN REALITY USED FOR NON-LIBERALIZED MOVEMENTS OF CAPITAL , IN PARTICULAR FOR A TRANSACTION OUTSIDE THE SPHERE OF TRADE IN GOODS OR SERVICES . HOWEVER , IT IS STATED IN THE SAME JUDGMENT THAT SUCH CONTROLS MAY NOT HAVE THE EFFECT OF RENDERING ILLUSORY THE FREEDOMS RECOGNIZED BY THE TREATY . CONSEQUENTLY , MEASURES WHICH , AS IN THIS CASE , IMPEDE INTRA-COMMUNITY TRADE MORE THAN IS NECESSARY CANNOT COME WITHIN THE SCOPE OF THE POWER WHICH THE MEMBER STATES CONTINUE TO HAVE WITH REGARD TO THE CONTROL OF TRANSFERS OF FOREIGN CURRENCY .

15 IT FOLLOWS FROM THE FOREGOING THAT , BY ALLOWING ONLY CERTAIN CUTS OF FRESH BEEF AND VEAL TO BE IMPORTED , THE HELLENIC REPUBLIC HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER ARTICLE 22 ( 1 ) OF REGULATION ( EEC ) NO 805/68 OF THE COUNCIL OF 27 JUNE 1968 AND UNDER ARTICLE 30 OF THE TREATY .

Decision on costs

COSTS

16 UNDER ARTICLE 69 ( 2 ) OF THE RULES OF PROCEDURE THE UNSUCCESSFUL PARTY IS TO BE ORDERED TO PAY THE COSTS . SINCE THE DEFENDANT HAS BEEN UNSUCCESSFUL , IT MUST BE ORDERED TO PAY THE COSTS .

Operative part

ON THOSE GROUNDS ,

THE COURT

HEREBY :

( 1 ) DECLARES THAT , BY ALLOWING ONLY CERTAIN CUTS OF FRESH BEEF AND VEAL TO BE IMPORTED , THE HELLENIC REPUBLIC HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER ARTICLE 22 ( 1 ) OF REGULATION NO 805/68 OF THE COUNCIL OF 27 JUNE 1968 AND UNDER ARTICLE 30 OF THE TREATY ;

( 2)ORDERS THE HELLENIC REPUBLIC TO PAY THE COSTS .