Case C-198/08: Action brought on 14 May 2008 — Commission of the European Communities v Republic of Austria
Date: 2008-05-14
Institutions: Court of Justice
Subjects: Austria, European Commission, action for failure to fulfil an obligation, excise duty, minimum price, selling price, tobacco

C 197/10

EN

Official Journal of the European Union

2.8.2008

Action brought on 14 May 2008 — Commission of the
European Communities v Republic of Austria

(Case C-198/08)

(2008/C 197/15)

Language of the case: German

Parties

Applicant: Commission of the European Communities (repre-
sented by: W. Mölls, Agent)

Defendant: Republic of Austria

Form of order sought

— Declare that the Republic of Austria has infringed its obliga-
tions under Article 9(1) of Council Directive 95/59/EC of
27 November 1995 (1) by adopting and maintaining legal
provisions according to which minimum selling prices for
cigarettes and fine-cut tobacco for the rolling of cigarettes
are fixed by the State;

— Order the Republic of Austria to bear the costs.

Pleas in law and main arguments

Manufactured tobacco products are one of the three groups of
products which are subject to harmonised Community rules on
excise duties. Directive 95/59/EC contains a number of general
provisions applicable to all manufactured tobacco products and
also regulates
the structure of excise duty on cigarettes.
Article 9(1) enshrines the principle that both the manufacturer
and the importer are free to determine the maximum prices for
manufactured tobacco products. That provision guarantees not
only that the tax base is subject in all Member States to the
same principles; it also prevents the achievement of the goals of
the directive from being frustrated by State price rules which
harm competition and the internal market.

The rule introduced in Austria in 2006, according to which
minimum prices for cigarettes and fine-cut
tobacco for the
rolling of cigarettes are laid down by State bodies, infringes the
abovementioned provision of Directive 95/59/EC. The fixing of
minimum prices eliminates
the price differences between
various products which can exist owing to the different factors
influencing price formation, by immediately raising the retail
prices in the lower price range to a minimum level. Such a
mechanism leads unquestionably to distortions in the flow of
goods between the Member States, even if the minimum price,
as in Austria, is derived from the average market prices.

Among the interests which the Member States can pursue by
means of their trade and taxation policies is of course also the
protection of public health. That also includes the aim of

keeping the price of tobacco products at a high level. As the
Member States can however use taxation mechanisms in order
take this objective fully into account, it is not possible for them
to rely on such interests in order to depart from the provision
of the directive in question, since they would thereby harm the
functioning of the internal market.

According to the Commission, taxation is an effective and suffi-
cient mechanism of price regulation. Examples from other
the price of manufactured
Member States also show that
tobacco products can be raised by the pressure of
taxation
alone, since the tax level can be increased as much as desired in
order to push up the final price, regardless of the exact profit
margin of the manufacturers concerned and/or the extent to
which they are prepared to sell without making a profit or even
at a loss. That approach, according to which taxation functions
as an objective cost factor, not only avoids the negative conse-
quences of minimum prices on competition and the internal
market but
associated with
minimum prices, namely the protection of the margins of the
manufacturers of
is a result which
tobacco products. That
makes no contribution whatsoever to health protection but is in
fact counter-productive. The Commission is therefore convinced
that the desired protection of public health can be guaranteed
by means of a dynamic and successful State taxation policy,
without it being necessary to resort to minimum prices which
are incompatible with Article 9 of Directive 95/59/EC.

further disadvantage

also a

(1) OJ 1995 L 291, p. 40.

Reference for a preliminary ruling from the Oberster
lodged on 15 May 2008 —
Gerichtshof

(Austria)

Dr. Erhard Eschig v UNIQA Sachversicherung AG

(Case C-199/08)

(2008/C 197/16)

Language of the case: German

Referring court

Oberster Gerichtshof

Parties to the main proceedings

Applicant: Dr. Erhard Eschig

Defendant: UNIQA Sachversicherung AG