Judgment of the Court of 19 January 1993. - Caves Neto Costa SA v Ministro do Comércio e Turismo and Secretário de Estado do Comércio externo. - Reference for a preliminary ruling: Supremo Tribunal Administrativo - Portugal. - National monopoly of a commercial character in alcohol in Portugal - Act of Accession of the Portuguese Republic to the European Communities - Recommendation of the Commission. - Case C-76/91.



European Court reports 1993 Page I-00117



Summary

Parties

Grounds

Decision on costs

Operative part



Keywords

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1. Accession of new Member States to the Communities ° Portugal ° State monopolies of a commercial character ° Article 208(1) of the Act of Accession 1985 ° Obligation to make progressive adjustments during the transitional period ° No direct effect before the end of the transitional period

(Act of Accession 1985, Art. 208(1))

2. Accession of new Member States to the Communities ° Portugal ° State monopolies of a commercial character ° Obligation to make progressive adjustments during the transitional period ° Detailed rules ° National authorities' discretion ° No obligation to open quotas for free importation

(EEC Treaty, Art. 37(1); Act of Accession 1985, Art. 208(1))

Summary

1. Article 208(1) of the Act of Accession 1985, concerning the progressive adjustment of Portuguese national monopolies of a commercial character, does not create for Portugal, during the transitional period for which it provides, an unconditional and sufficiently precise obligation which can be relied on by an individual before a national court. It is not until the expiry of the transitional period that the elimination of all discrimination becomes unconditional and cannot be made subject, as far as its execution or effect is concerned, to the intervention of any act, either of the Community or of the Member States.

2. Article 37(1) of the Treaty and Article 208(1) of the Act of Accession are to be interpreted as meaning that the obligation imposed on Portugal progressively to adjust the monopoly in ethyl alcohol does not necessarily require the opening, during the transitional period, of quotas for free importation of the products forming the subject of the monopoly from the other Member States. By virtue of those provisions, Portugal enjoys a wide discretion in the choice of methods suitable for the required adjustment and may, in order to fulfil its obligations during the transitional period, apply measures other than those involving the opening of quotas.

Parties

In Case C-76/91,

REFERENCE to the Court under Article 177 of the EEC Treaty by the Supremo Tribunal Administrativo of Portugal for a preliminary ruling in the proceedings pending before that court between

Caves Neto Costa SA

and

Ministro do Comércio e Turismo and Secretário de Estado do Comércio Externo

on the interpretation of Article 37(1) of the EEC Treaty and of Article 208(1) of the Act concerning the conditions of accession of the Kingdom of Spain and the Portuguese Republic and the adjustments to the Treaties,

THE COURT,

composed of: O. Due, President, C.N. Kakouris, M. Zuleeg and J.L. Murray, (Presidents of Chambers), G.F. Mancini, J.C. Moitinho de Almeida, F. Grévisse, M. Diez de Velasco and P.J.G. Kapteyn, Judges,

Advocate General: G. Tesauro,

Registrar: L. Hewlett, Administrator,

after considering the written observations submitted on behalf of:

Caves Neto Costa SA, by Isabel Jalles, of the Lisbon Bar,

the Portuguese Government, by Professor João Mota de Campos and Luis Inez Fernandes, Director of the Legal Service of the Directorate-General of the European Communities in the Ministry of Foreign Affairs, acting as Agents,

the Commission of the European Communities, by Blanca Rodríguez Galindo, of its Legal Service, and Helena Varandas, an official of the Portuguese Republic seconded to its Legal Service, acting as Agents,

having regard to the Report for the Hearing,

after hearing the oral observations of Caves Neto Costa SA, the Portuguese Government and the Commission, represented by António Caeiro, Legal Adviser, assisted by Christian Jessen, of its Legal Service, acting as Agents, at the hearing on 24 June 1992,

after hearing the Opinion of the Advocate General at the sitting on 22 September 1992,

gives the following

Judgment

Grounds

1 By order of 14 February 1991, received at the Court on 25 February 1991, the Supremo Tribunal Administrativo referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty three questions on the interpretation of Article 37 of the EEC Treaty and Article 208(1) of the Act concerning the conditions of accession of the Kingdom of Spain and the Portuguese Republic and the adjustments to the Treaties (OJ 1985 L 302, p. 23, hereinafter "the Act of Accession").

2 Those questions were raised in proceedings brought by Caves Neto Costa (hereinafter "CNC") against the Ministro do Comércio e Turismo and Secretário de Estado do Comércio Externo (Minister for Commerce and Tourism and the Secretary of State for Foreign Trade).

3 CNC claims that, since it had not opened quotas for the import of ethyl alcohol at the date of the decisions implicitly rejecting CNC' s request to import 28 tonnes of pure alcohol from France, the Portuguese State had failed to fulfil its obligations under Article 5 of the Treaty, Article 208(1) of the Act of Accession, Paragraph 2 of the Joint Declaration concerning the elimination of monopolies in the field of agriculture (OJ 1985 L 302, p. 480) and the Commission' s Recommendation 87/525/EEC of 8 October 1987, addressed to the Portuguese Republic regarding the adjustment of the national monopoly of a commercial character in alcohol in relation to the other Member States (OJ 1987 L 306, p. 32, hereinafter "the Recommendation").

4 The Supremo Tribunal Administrativo considered that the action raised problems of interpretation of Community law and decided to ask the Court for a preliminary ruling on the following questions:

"(1) Does the progressive adjustment by the Portuguese Republic, as from 1 January 1986, of monopolies of a commercial nature so as to ensure that by 1 January 1993 all discrimination regarding the conditions under which goods are procured and marketed is eliminated between nationals of the Member States require the Portuguese Republic, with respect to the monopoly in importation of pure alcohol by a public undertaking, the Administração do Açúcar e do Alcool, to establish quotas for free importation from the other Member States for each of the years of the transitional period, or does it on the contrary allow such quotas to be established after the early years of the period in question have elapsed?

(2) If the second hypothesis were correct, as from what date during the transitional period is it reasonable to expect the Portuguese Republic to open up the exclusive right to import pure alcohol and to set quotas for free importation?

(3) Are the quotas set by the Commission in its Recommendation of 8 October 1987 and which are expressly provided for by Article 208(1) of the abovementioned Act of Accession to be regarded as being accurate in relation to ethyl alcohol?"

5 Reference is made to the Report for the Hearing for a fuller account of the facts of the principal proceedings, the procedure and the written observations submitted to the Court, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court.

6 Article 208(1) of the Act of Accession imposes on the Portuguese Republic the obligation progressively to adjust national monopolies of a commercial character within the meaning of Article 37(1) of the Treaty during the period between 1 January 1986 and 1 January 1993 (hereinafter "the transitional period"), so as to ensure that by 1 January 1993 all discrimination regarding the conditions under which goods are procured and marketed is eliminated between nationals of the Member States.

7 Before answering the questions asked by the national court, and in order to provide it with all such guidance by way of interpretation as may be of use to it, it must be pointed out that the Court has consistently held that, in order for a provision of Community law to have direct effect in the relations between Member States and their citizens, it must be clear and unconditional.

8 Neither Article 37 of the Treaty nor the corresponding Article 208(1) of the Act of Accession imposes on the Member States concerned, during the transitional period laid down by those provisions, an unconditional and sufficiently precise obligation which can be relied on by an individual before a national court.

9 As the Court has held with respect to Article 37 of the Treaty, in a judgment (Case 45/75 Rewe v Hauptzollamt Landau [1976] ECR 181, paragraph 24), it is not until the expiration of the transitional period that the elimination of all discrimination provided for at the end of that period becomes unconditional and cannot be made subject, as far as its execution or effect is concerned, to the intervention of any act, either of the Community or of the Member States.

The first and second questions

10 In the first and second questions, the national court seeks essentially to ascertain whether Article 37(1) of the Treaty and Article 208(1) of the Act of Accession are to be interpreted as meaning that the obligation imposed on the Portuguese Republic to adjust the monopoly in ethyl alcohol necessarily involves the opening, during the transitional period, of quotas for the free importation of the products forming the subject of the monopoly and coming from the other Member States and, if this is the case, as from what date those quotas must be introduced.

11 It must be noted, in limine, that a monopoly such as that in question constitutes a national monopoly of a commercial character within the meaning of Article 37(1) of the Treaty and falls, therefore, within the scope of Article 208(1) of the Act of Accession.

12 In order to answer the questions asked by the national court, the scope of the obligation imposed under Article 208(1) of the Act of Accession on the Portuguese Republic with respect to the progressive adjustment of those monopolies during the transitional period must therefore be determined.

13 In that regard, it must be observed that the elimination of all discrimination by the end of the transitional period constitutes a precise obligation the performance of which is to be made easier by, but is not to be conditional upon, the progressive character of the adjustment provided for. The Court had occasion to hold that this was so in its judgment in Rewe, cited above, at paragraph 24, concerning Article 37(1) of the Treaty, which contains obligations having the same scope as those contained in Article 208(1) of the Act of Accession.

14 According to that decision, the period allowed for the Member States progressively to adjust the national monopolies referred to is intended to make it easier to create new circumstances compatible with the elimination, by the end of the transitional period, of all discrimination.

15 The task assigned to the Commission by the third subparagraph of Article 208(1) of the Act of Accession, of addressing to the Member States concerned, in the form of recommendations, instruments of a non-binding nature with respect to the manner and time-table in accordance with which the adjustment provided for in that article is to be carried out, must be understood in the light of that same objective.

16 It must next be observed that, as distinct from the monopoly in petroleum products, for which detailed rules concerning market liberalization are laid down by Article 208(1) of the Act of Accession, subparagraph (1) of that article does not specify the means by which a monopoly, such as the one in question, is to be progressively adjusted.

17 It follows from those considerations that, under the terms of Article 208(1) of the Act of Accession, the Portuguese Republic enjoys a wide discretion in the choice of methods suitable for the progressive adjustment of the monopolies in question so as to ensure that by the end of the transitional period at the latest all discrimination has been eliminated as required by that provision. In order to fulfil its obligations during the transitional period, it may, therefore, apply measures other than those involving the opening of quotas for free importation from other Member States.

18 Consequently, the answer to the first and second questions must be that Article 37(1) of the Treaty and Article 208(1) of the Act of Accession are to be interpreted as meaning that the obligation imposed on the Portuguese Republic progressively to adjust the monopoly in ethyl alcohol does not necessarily require the opening, during the transitional period, of quotas for free importation of the products subject to that monopoly from other Member States.

19 Having regard to the answer set out above, it is not necessary to give a ruling on the third question.

Decision on costs

Costs

20 The costs incurred by the Portuguese Government and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court.

Operative part

On those grounds,

THE COURT

in answer to the questions referred to it by the Supremo Tribunal Administrativo, by order of 14 February 1991, hereby rules:

Article 37(1) of the Treaty and Article 208(1) of the Act of Accession are to be interpreted as meaning that the obligation imposed on the Portuguese Republic progressively to adjust the monopoly in ethyl alcohol does not necessarily require the opening, during the transitional period, of quotas for free importation of the products forming the subject of the monopoly from the other Member States.