According to the settled case-law of the Court any measure of such a kind as to hinder, directly or indirectly, actually or potentially, trade between Member States falls under the prohibition contained in Article 30 of the EEC Treaty. To prohibit the marketing of a product from one Member State in another Member State hinders the importation of that product in a direct and immediate manner; it is therefore a measure having an effect equivalent to a quantitative restriction on imports prohibited by Article 30 of the EEC Treaty, subject to the exceptions laid down by Community law.

The protection of the health of humans, within the meaning of the first sentence of Article 36 of the Treaty, can certainly not justify the fixing of a minimum winespirit content for potable spirits.

Nor is there any conviction in the argument to the effect that it is necessary to fix certain lower limits to the winespirit content by law in order to satisfy both general commercial practice within the Federal Republic and the wishes of consumers. That question can remain unanswered; commercial practice and the wishes of consumers are not in any event factors relating to public policy justifying recourse to Article 36.

Article 3 of Commission Directive No 70/50 of 22 December 1969 (Official Journal, English Special Edition 1970 (I), p. 17) considers as being measures having an effect equivalent to quantitative restrictions on imports, which must be abolished between the Member States, measures governing the marketing of products which deal, in particular, with shape, size, weight, composition, presentation, identification or putting up and which are equally applicable to domestic and imponed products, where the restrictive effect of such measures on the free movement of goods exceeds the effects intrinsic to trade rules. According to the tenth recital in the preamble to that directive, such is the case where imports are either precluded or made more difficult or costly than the disposal of domestic production and where such effect is not necessary for the attainment of an objective within the scope of the powers for the regulation of trade left to Member States by the Treaty. The regulation on the minimum wine-spirit content of potable spirits in force in Germany renders it impossible, in that country, to market and therefore to import from other Member States certain liqueurs which are known and marketed there in that form, including Cassis de Dijon. The manufacture of those liqueurs in a form specifically designed for the German market would make their importation more difficult and more costly in relation to the disposal of national products.

According to the second sentence of Article 36 of the EEC Treaty prohibitions on imports shall not constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States; the Court has ruled that there is a disguised restriction within the meaning of that provision where it is established that the exercise of trademark rights by the holder of the trademark, having regard to the marketing system operated by him, contributes to the artificial partitioning of the markets between Member States. The German regulation on the minimum wine-spirit content of potable spirits and Article 100 (3) of the Branntweinmonopolgesetz create precisely such an artificial partition between the market of the Federal Republic of Germany and the market of the other Member States; they are therefore also contrary to the second sentence of Article 36.

The first question put by the Hessisches Finanzgericht should therefore be answered as follows:

The concept of quantitative restrictions on imports and all measures having equivalent effect within the meaning of Article 30 of the EEC Treaty must be interpreted as meaning that the fixing at national level of a minimum wine-spirit content for potable spirits as a condition for authorization to market within the Member State concerned, where its result is that traditional products of other Member States whose wine-spirit content is below the fixed limit cannot be put into circulation in the Federal Republic of Germany, constitutes such a measure.

The second question for a preliminary ruling is put in the alternative and not as a subsidiary matter.

It raises a preliminary question as to whether, at the time when the request for authorization to import which gave rise to the main action was made, there still existed, in the Federal Republic of Germany, for potable spirits, a State monopoly of a commercial character. The view supported in this matter by the Commission in various proceedings before the Court, according to which such is no longer the case following the judgments of the Court of 17 February 1976 in Cases 45/75 Rewe and 91/75 Miritz ([1976] ECR 181 and 217), is erroneous.

According to Article 1 (3) of the Branntweinmonopolgesetz, as last amended by the Law of 14 December 1976, the monopoly includes, subject to the exceptions laid down in the law, the importation of spirits; according to Article 3, the federal monopoly administration alone is empowered to import spirits, save for certain exceptions, onto the territory covered by the monopoly; under Article 106 trade in spirits is conditional upon authorization by the monopoly administration.

It is true that following the Notice of 8 April 1976 a licence is no longer required for imports of spirits in free circulation in a Member State of the Community; however, that notice might be withdrawn at any moment. According to the spirit of the case-law of the Court, a State monopoly of a commercial character cannot be held to be adjusted, within the meaning of Article 37 of the Treaty, so long as provisions laying down an import monopoly are maintained, albeit only in a formal way.

According to the second subparagraph of Article 37 (1) which contains a legal definition of the concept State monopoly of a commercial character, it is sufficient for there to be a monopoly that imports are supervised, determined or appreciably influenced in law. It cannot be said that Article 3 of the Branntweinmonopolgesetz gives the monopoly administration the exclusive right to import liqueurs; however, as a result of the prohibition on marketing arising from the rule's relating to the minimum wine-spirit content the importation of certain liqueurs is totally prohibited.

Indeed, the present activities of the German spirits monopoly appreciably influence the importation of spirits and alcoholic beverages from other Member States. That is the effect of the special tax arrangements applied to alcohol which is exempt from the obligation of sale to the monopoly (Articles 58, 76, 79 (2), 79a and 151 (1) of the Branntweinmonopolgesetz) and, in essence, of the fact that the Bundesmonopolverwaltung sells alcohol which is subject to that obligation well below its cost price, which varies according to the supply situation in the other Member States, and of the fact that the monopoly's considerable deficit is covered by federal resources. This gives rise to discrimination regarding the conditions under which goods are procured and marketed between nationals of the Member States, that is to say discrimination between sellers from other Member States and the Bundesmonopolverwaltung.

The second question should be answered as follows:

The concept discrimination regarding the conditions under which goods are procured and marketed … between nationals of Member States within the meaning of Article 37 (1) of the EEC Treaty must be interpreted as referring to the fixing of a minimum wine-spirit content for liqueurs, as well as any other measure adopted by a State monopoly of a commercial character, in so far as they constitute an obstacle in the Member State concerned to the sale of liqueurs coming from other Member States, where the minimum wine-spirit content of those liqueurs is below that authorized by the system in force in the State concerned for the purposes of admission onto the market.

The Government of the Federal Republic of Germany recalls the content, context, antecedents and purpose of the national provisions on the minimum wine-spirit content of potable spirits. Those provisions were prompted, in particular, by the wish to protect the consumer against adverse effects on his health: a limitless authorization for all varieties of potable spirits, whatever their alcohol content, would be likely to lead to an increase in the consumption of alcohol as a whole and therefore to increase the specific dangers of alcoholism; the provisions are also intended to protect the consumer against abuses and unfair practices during the manufacture and sale of spirits. Settled commercial practices concerning all the essential requirements relating to manufacture, composition and appellation of spirits have developed pragmatically within the Federal Republic and these find their expression in the Begriffsbestimmungen für Spirituosen (definitions of spirits).

The scope of the questions of interpretation referred to the Court goes well beyond the subject-matter of the main action: in most Member States there exist provisions, very diverse in nature, relating to the minimum wine-spirit content of potable spirits and those provisions constitute merely a small pan of the complex problem raised by the existence of a considerable number of divergent national technical standards for numerous goods. Pursuant to Articles 3 (h) and 100 of the Treaty, the resulting obstacles to trade must be reduced by recourse to the procedure for the approximation of such provisions laid down by law, regulation or administrative action in Member States as they directly affect the establishment or functioning of the common market. Until such time as the national rules relating to manufacture and marketing have been harmonized, Article 30 of the EEC Treaty is to be applied only in so far as those provisions lead to discrimination against imported goods in relation to domestic goods.

Measures which are applicable without distinction to domestic products and imported products do not, according to Directive No 70/50, have effects equivalent to those of quantitative restrictions and do not therefore, in principle, fall within the scope of Article 30.

The conditions regarding minimum quantities in force in the Federal Republic quite clearly do not involve different treatment for imported goods and there can therefore be no question of the application of Article 30.

Quite apart from formal equality of treatment, it should be noted that the provisions relating to the minimum alcohol content do not give national producers any material advantage. Any obstacles to trade are due solely to the fact that the legal orders of the two Member States have traditionally laid down different minimum requirements in relation to the alcohol content of various spirits. The mere fact that German law contains stricter minimum requirements, which, when viewed objectively, give no advantage to national producers, cannot constitute a material discrimination within the meaning of Article 30 of the Treaty.

The arguments adduced by the plaintiff from the proceedings commenced in respect of failure to fulfil an obligation against the Federal Republic of Germany do not carry conviction in this context: that case, which was essentially concerned with aniseed liqueurs, differed fundamentally from the main action in this case, in particular in that the German rules required a minimum alcohol content which was higher for foreign aniseed liqueurs than for similar national liqueurs.

In view of the fundamental importance to an assessment of the technical specifications of all other sectors of production of the line of argument adopted by the plaintiff in the main action, it should be noted that its consequence would be that the minimum alcohol content of a given product in the Federal Republic of Germany would no longer be governed by German law but by French law; in consequence, the lower minimum alcohol content fixed by French law should also be extended to the whole of German national production. In the final analysis, the rules of the least exigent Member State would be authoritative in all the others; this legal effect, supposedly the result of Article 30, which is a directly applicable provision, should have been attained as from 1 January 1970 at the latest. By reason of the automatic effect of Article 30 other amendments to national legal provisions could take place continually in the future, whenever a single Member State tempered the requirements laid down by its rules; in an extreme case, a single Member State could enact legislation for the whole Community, without the collaboration or even the knowledge of the other Member States. The result would be to lower minimal requirements to the lowest level set in any given national rules, in the absence of the authorization required by Article 100 of the Treaty, which presupposes the consent of the Member States.

In this connexion it should be borne in mind that the abolition of minimal requirements in force in a Member State cannot be limited to imported products; on the contrary, it must also be mandatory in respect of national production, otherwise fresh discrimination would be created. Nor would it be possible to limit the requirements of Article 30 as so defined to so-called traditional products; from the point of view of Article 30, there is no convincing reason for treating new products differently from traditional products.

Those consequences are incompatible with the principle of legal certainty.

They are excluded above all by the functional separation of powers between the national authorities and the Community authorities. In relation to the interpretation of Article 30, that fundamental principle of the Treaty implies that the application of that provision reaches its limit at the point where the functional exercise of the powers retained by the Member States would be jeopardized. The Member States must continue to be able effectively to exercise those powers, until the achievement of harmonization transfers their freedom of action to the Community. This respect for the separation of functions is particularly important in the field of technical specifications.

In accordance with the case-law of the Court concerning the interpretation of Article 95 of the EEC Treaty it must be accepted that the general framework of the national legislative system must remain the determining factor, even as regards products which do not normally exist within the importing country, in those fields requiring harmonization which still come under the control of the Member States.

The solution sought by the plaintiff in the main action, which amounts to the adoption of the lowest national minimum requirements, is further to be discounted on the basis that the provisions in question serve purposes which are legitimate in relation to Community law and fall within the ambit of social, consumer or fiscal law, in which there is a wide margin of discretion. Pending harmonization at the Community level, that margin of discretion can of necessity belong only to the Member States.

For all those reasons national rules relating to the minimum percentage of components which determine the value of certain products, the purpose of which is legitimate with regard to Community law and the restrictive effects of which on trade arise solely because of their traditional differences, cannot be covered by Article 30 of the EEC Treaty merely because of the division of powers between the Member States and the Community which results from the system of the Treaty.

Article 3 of Directive No 70/50 does not alter this conclusion.

The protection of the consumer against fraud and against dangers to his health and the maintenance of fair competition are legitimate aims which are in conformity with Community law. The means chosen in order to attain that end are not subject to any condition under Community law, which itself contains numerous provisions relating to minimum contents in the foodstuffs sector. The restrictive effect on trade of such provisions does not exceed the normal limits of the effects intrinsic to mere trade rules. The principle of proportionality is not threatened: a mere requirement as to labelling cannot replace the fixing of a minimum alcohol content; the fact that manufacturers must adapt their products intended for export to the specifications of the importing country pending harmonization is merely the necessary consequence of the differences between national specifications.

The first question referred to the Court should be answered as follows:

The concept of measures having an effect equivalent to quantitative restrictions on imports within the meaning of Article 30 of the EEC Treaty does not cover differences existing between the rules in force within various legal orders of the Member States relating to the minimum wine-spirit content of potable spirits, which lead to the consequence that products which are traditionally suitable for marketing in Member States where the minimum requirements are lower may be marketed in other Member States only with a higher wine-spirit content.

Article 37 of the Treaty cannot be applied to the fixing of a minimum alcohol content: the provision at issue does not relate to monopoly law, in the sense that its existence or maintenance in force depends upon the existence or development of the commercial alcohol monopoly; it is, on the contrary, a provision of the law relating to foodstuffs, which appears in the Branntweinmonopolgesetz for purely historical reasons.

The application of Article 37 of the Treaty is also to be discounted on the ground that there is no discrimination, whether formal or factual, to the disadvantage of foreign products in relation to domestic products.

The Government of the Kingdom of Denmark wishes to draw the Court's attention to the fact that fruit-based wines, such as the Danish cherry wine, are also affected by the marketing prohibition under the German rules in relation to the minimum wine-spirit content of potable spirits.

The German rules are neither rules relating to the quality of products nor a technical obstacle to trade which may be eliminated by the adoption of harmonization directives pursuant to Article 100 of the Treaty. Nor do they appear to belong to the category of measures referred to by the Court in its judgment of 16 November 1977 (Case 13/77 INNO [1977] ECR 2115) which, although forming an obstacle to inter-State trade, do not fall within the ambit of Article 30 because they are specifically referred to in the Treaty, in particular as fiscal measures, or are per se permitted as being the visible or hidden expression of powers retained by the Member States. Nor can Article 36 be relied upon in order to justify the prohibition on the marketing of certain potable spirits.

In those circumstances an affirmative answer should be given to the first question referred to the Court.

The Commission outlines the state of German law relating to the fixing of the minimum wine-spirit content of potable spirits, to the definitions of spirits and to foodstuffs; it recalls the procedure for failure to fulfil an obligation initiated against the Federal Republic of Germany in 1974 and the fact that following the various complaints referred to it it decided to undertake a general study relating to the compatibility with Article 30 of the EEC Treaty of national rules relating to the composition, quality and designation of foodstuffs and, more particularly, alcoholic beverages.

The Commission's present attitude on the problem as a whole may be summarized as follows:

In so far as provisions relating to the composition or nature of the components of certain beverages or foodstuffs are not designed to ensure protection of health, restrictions on trade may be justified, in accordance with Article 36 of the Treaty, only on the basis of the principle of the protection of the consumer (consumer information and protection against fraud) and that of fair competition between producers.

The question arises here of the extent to which such objectives may be attained by provisions relating to designations and by information indicating the properties and composition of the product in question rather than by a total prohibition on sale.

In view of the very high sensitivity of prices of the products in question and of the fact that the consumer can only with difficulty compare the various alcohol contents of similar products, mandatory rules concerning the minimum winespirit content such as those at issue in the main action may contribute to ensuring fair competition and consumer protection.

Where suitable designation or labelling of the product is not sufficient to avoid any error on the part of the consumer or where it is wholly or largely impossible to supply the requisite information, a prohibition on sale may be justified.

In the final analysis, the essential question is whether rules which are applicable without distinction concerning the composition of products, in conjunction with the designation of those products, must be considered to be out of proportion. Where that is not the case restrictions on trade between Member States resulting from disparities between those rules can be abolished only by means of the approximation of laws or the creation of a Community law.

The first question should be answered as follows:

The fixing of a minimum wine-spirit content for potable spirits, which is applicable to domestic products and imported products without distinction, may be justified in the interests of consumer protection and fair competition between producers of potable spirits.

However, such rules are excessive and therefore constitute a prohibited measure having an effect equivalent to quantitative restrictions on imports where their consequence is that, notwithstanding a suitable indication, typical products from other Member States, manufactured according to a particular process and characterized traditionally by an alcohol content which is lower than the limit fixed may not be put into circulation in the Member State concerned or may be put into circulation there only if they conform to unreasonable requirements.

The second question is devoid of purpose: Article 100 (3) of the Branntweinmonopolgesetz forms part of the law relating to foodstuffs. In any event, following the abolition of the German spirits monopoly, any discrimination regarding the conditions under which goods are procured and marketed is no longer linked to the existence of the monopoly and must therefore be assessed according to the general provisions of the Treaty, in this case Articles 30 and 36.