Kingdom of Belgium v Kingdom of Spain.
Date: 2000-05-16
1 By application lodged at the Registry of the Court on 13 December 1995, the Kingdom of Belgium brought an action under Article 170 of the EC Treaty (now Article 227 EC) for a declaration that, by maintaining in force Real Decreto 157/1988, por el que se establece la normativa a que deben ajustarse las denominaciones de origen y las denominaciones de origen calificadas de vinos y sus respectivos Reglamentos (Royal Decree No 157/88 laying down the rules governing designations of origin and controlled designations of origin for wines and regulations implementing it, BOE No 47 of 24 February 1988, p. 5864, hereinafter Decree No 157/88) and in particular Article 19(1)(b) thereof, the Kingdom of Spain has failed to fulfil its obligations under Article 34 of the EC Treaty (now, after amendment, Article 29 EC), as interpreted by the Court of Justice of the European Communities in its judgment of 9 June 1992 in Case C-47/90 Delhaize v Promalvin [1992] ECR I-3669, and Article 5 of the EC Treaty (now Article 10 EC).
The Spanish legislation in question
20 In Delhaize, the Court, in response to a request from the Tribunal de Commerce (Commercial Court), Brussels, for a ruling on the compatibility with Article 34 of the Treaty of national legislation such as Decree No 157/88 and the Rioja Rules adopted under it, held that national provisions applicable to wine of designated origin which limited the quantity of wine that might be exported in bulk but otherwise permitted sales of wine in bulk within the region of production constituted measures having equivalent effect to a quantitative restriction on exports which were prohibited by Article 34 of the Treaty.
21 The Court found, first (paragraphs 12 to 14 of the judgment), that national rules which limited the quantity of wine available for export in bulk to other Member States but imposed no quantitative restriction on sales of wine in bulk between undertakings situated within the region of production had the specific effect of restricting patterns of exports of wine in bulk and, in particular, of procuring a special advantage for bottling undertakings situated in the region of production.
22 As regards the Spanish Government's contention that the obligation to bottle the wine in the region of production, as a condition for the grant of the designation of denominación de origen calificada to that wine, constituted protection of industrial and commercial property within the meaning of Article 36 of the Treaty, the Court stated (paragraph 16) that, as Community law then stood, it was for each Member State to define, within the terms of Council Regulation (EEC) No 823/87, the conditions applicable to the use of a name of a geographical area within its territory as a registered designation of origin for a wine from that area. However, it stressed that, in so far as those conditions constituted one of the measures referred to by Article 34 of the Treaty, they were not justified on grounds of the protection of industrial and commercial property within the meaning of Article 36 of the Treaty unless they were needed in order to ensure that the registered designation of origin fulfilled its specific function.
23 The Court observed (paragraphs 17 and 18) that the specific function of a registered designation of origin was to guarantee that the product bearing it came from a specified geographical area and displayed certain particular characteristics and that, consequently, an obligation like that at issue would be justified by a concern to ensure that the designation of origin fulfilled its specific function only if bottling in the region of production endowed the wine originating in that region with particular characteristics, of such a kind as to give it individual character, or if bottling in the region of production were essential in order to preserve essential characteristics acquired by that wine. The Court then found (paragraph 19) that it had not been shown that the bottling of the wine in question in the region of production was an operation which endowed it with particular characteristics or was essential in order to maintain the specific characteristics acquired by it.
24 The Spanish Government's argument that the supervisory powers vested in the Rioja Governing Council were limited to the region of production, making it necessary for the wine to be bottled in the region of production, was rejected by the Court on the ground that Regulation (EEC) No 986/89 had established a system for verifying that the authenticity of the wine was not affected during transport (paragraph 21).
25 The Court then held (paragraphs 22 and 23) that the justification claimed by the Spanish Government that the rules at issue formed part of a policy to improve the quality of wine could not be upheld since it had not been established that the confinement of bottling to a specified area was, in itself, capable of affecting the quality of the wine.
26 Finally, it held (paragraphs 25 and 26) that, even though under Article 18 of Regulation No 823/87 the Member States might, taking into account fair and traditional practices, lay down additional or more stringent conditions of movement than those laid down in Regulation No 823/87, that article could not be interpreted as authorising the Member States to impose conditions contrary to the Treaty rules on the movement of goods.
The present proceedings
38 It is important to bear in mind that a consequence of the requirement at issue is that wine produced in the region, which fulfils the other conditions laid down for eligibility for the Rioja denominación de origen calificada, can no longer be bottled outside the region without being deprived of that designation.
40 That requirement means, in any event, that wine transported in bulk within the region retains entitlement to the denominación de origen calificada when it is bottled in authorised cellars.
41 It is thus a national measure which has the effect of specifically restricting patterns of exports of wine eligible to bear the denominación de origen calificada and thereby of establishing a difference of treatment between trade within a Member State and its export trade, within the meaning of Article 34 of the Treaty.
44 The Belgian Government states that, in Delhaize, the Court rejected the argument based on Article 18 of Regulation No 823/87. It also maintains that the contested requirement is contrary to fair and traditional bottling practice in the Member States which import wine.
50 As far as those reasons are concerned, the Spanish Government refers to the specific nature of the product and the need to protect the good reputation attaching to the Rioja denominación de origen calificada by preserving, by means of the requirement at issue, the quality and guarantee of the origin of Rioja wine. That requirement is therefore justified by virtue of the protection of industrial and commercial property with which Article 36 of the Treaty is concerned.
53 Community legislation displays a general tendency to enhance the quality of products within the framework of the common agricultural policy, in order to promote the reputation of those products through, inter alia, the use of designations of origin which enjoy special protection. That general tendency has become apparent in the quality wines sector, as has been pointed out in paragraphs 14 and 17 of this judgment. It has also emerged in relation to other agricultural products, in respect of which the Council adopted Regulation (EEC) No 2081/92 of 14 July 1992 on the protection of geographical indications and designations of origin for agricultural products and foodstuffs (OJ 1992 L 208, p. 1). The eighth recital in the preamble to that regulation makes it clear that the latter is to apply without prejudice to existing Community legislation on wines and spirits, which provide for a higher level of protection.
54 Designations of origin fall within the scope of industrial and commercial property rights. The applicable rules protect those entitled to use them against improper use of those designations by third parties seeking to profit from the reputation which they have acquired. They are intended to guarantee that the product bearing them comes from a specified geographical area and displays certain particular characteristics (Delhaize, paragraph 17).
55 They may enjoy a high reputation amongst consumers and constitute for producers who fulfil the conditions for using them an essential means of attracting custom (see to that effect, in relation to indications of provenance, Case C-3/91 Exportur [1992] ECR I-5529, paragraph 28).
56 The reputation of designations of origin depends on their image in the minds of consumers. That image in turn depends essentially on particular characteristics and more generally on the quality of the product. It is on the latter, ultimately, that the product's reputation is based.
58 The rules governing the Rioja denominación de origen calificada are designed to uphold those qualities and characteristics. By ensuring that operators in the wine growing sector of the Rioja region, at whose request the designation of origin was granted, control bottling as well, they pursue the aim of better safeguarding the quality of the product and, consequently, the reputation of the designation, for which they now assume full and collective responsibility.
59 Against that background, the requirement at issue must be regarded as compatible with Community law despite its restrictive effects on trade if it is shown that it is necessary and proportionate and capable of upholding the considerable reputation incontestably enjoyed by the Rioja denominación de origen calificada.
67 Moreover, as the Advocate General has stressed in points 28 to 31 of his Opinion, controls undertaken outside the region of production in accordance with the Community rules provide fewer guarantees as to the quality and authenticity of the wine than those carried out in the region in compliance with the monitoring procedure referred to in paragraph 5 of this judgment.
72 In addition, under the Rioja Rules:
- every bulk despatch of Rioja wine within the region must first be authorised by the Rioja Governing Council (Article 31);
- bottling may be undertaken only by bottling undertakings authorised by the Rioja Governing Council (Article 32);
- the installations in such undertakings must be quite separate from those in which wines not entitled to bear the denominación de origen calificada are produced and stored (Article 24).
74 It can be inferred from the foregoing that the risk to which the quality of the product finally offered to consumers is exposed is greater where it has been transported and bottled outside the region of production than when those operations have taken place within the region.
75 Accordingly, it must be accepted that the requirement at issue, whose aim is to preserve the considerable reputation of Rioja wine by strengthening control over its particular characteristics and its quality, is justified as a measure protecting the denominación de origen calificada which may be used by all the producers concerned and is of decisive importance to them.
76 Finally, it must be recognised that the measure is necessary for attainment of the objective pursued, in that there are no less restrictive alternative measures capable of attaining it.
77 In that regard, the denominación de origen calificada would not enjoy comparable protection if operators established outside the region of production were placed under an obligation to inform consumers by means of appropriate labelling that the wine had been bottled outside that region. Any deterioration in the quality of a wine bottled outside the region of production, resulting from materialisation of the risks associated with transport in bulk or subsequent bottling operations, might harm the reputation of all wines marketed under the Rioja denominación de origen calificada, including those bottled in the region of production under the control of the group of producers entitled to use that designation. More generally, the very coexistence of two different bottling processes, inside or outside the region of production, with or without systematic monitoring by that group, might reduce the degree of consumer confidence in the designation based on the conviction that the production of quality wines psr must at every stage be carried out under the control and responsibility of the relevant group of producers.