Walter Rau Lebensmittelwerke v De Smedt PVBA (261/81)

I —Facts and written procedure

The dispute which gave rise to this reference for a preliminary ruling concerns a contract of sale between Walter Rau Lebensmittelwerke [hereinafter referred to as “Rau”], a German undertaking, and De Smedt PvbA [hereinafter referred to as “De Smedt”], a company incorporated under Belgian law. Rau undertook to supply 15000 kg of margarine packed in containers having the shape of a truncated cone. As a term of the contract Rau warranted that the margarine which it supplied could be marketed by virtue of the applicable provisions of the EEC Treaty on the free movement of goods.At the time when the contract was concluded, the parties were in agreement that the goods in question were to be imported into Belgium and thus accepted and paid for only if the relevant provisions of Belgian law relating to margarine permitted the importation and marketing of margarine in containers having the shape of a truncated one.At the time when the contract was concluded, the relevant Belgian provision on the packaging of margarine was Article 15 of the Law of 8 July 1935, which provided as follows:“Margarine and prepared fats may be imponed, held in stock or transponed for the purpose of sale or delivery, exhibited for sale, consigned or delivered only in the form of cube-shaped blocks having a net weight of 250 g, 500 g, 1 kg or 2 kg and in sealed containers.”According to the Landgericht Hamburg, at the time when the contract was signed both parties asumed that the abovementioned provision would be repealed or would no longer be applied following the judgment of the Court of Justice in the “Cassis de Dijon” case (judgment of 20 February 1979 in Case 120/78 REWE-Zentral AG v Bundesmonopolverwaltung für Branntwein [1979] ECR 649). The provision in question was in fact replaced by Article 8 of the Royal Decree of 2 October 1980 on the manufacture and marketing of margarine and edible fats, which provides as follows:“It shall be prohibited to sell by retail composite margarine and edible fats which are not completely liquid at 20^o C where each block or its external packaging is not cube-shaped. This provision shall not apply to products having a net weight of less than 50 g or more than 2 kg.”De Smedt, the defendant in the main proceedings, inquired of the Belgian Ministry of Health whether it could impon the margarine which it had purchased.By letter of 6 November 1980, the Belgian Ministry informed De Smedt that legislative provisions still existed which prohibited the sale of margarine where its external packaging was not cube-shaped. Following the receipt of that letter, De Smedt informed Rau that it no longer wished to accept the goods. Rau therefore brought an action for performance of the contract before the Landgericht Hamburg. In its view, De Smedt should have accepted the goods since the Belgian provision is contrary to the provisions of Article 30 of the EEC Treaty. De Smedt contests that view.In the opinion of the Landgericht, the intention of the parties was that the defendant was bound to fulfil its obligations only if margarine packed in containers having the shape of a truncated cone could be marketed in Belgium because the Belgian provision to the contrary contravened the law of the European Communities.The Landgericht considered that even though the Belgian provision did not prevent the importation of margarine whose packaging was not cube-shaped, it might make more difficult the marketing of margarine lawfully packed in such containers in another Member State, in particular in the case of parallel imports. However, it was possible that such a provision might fall within the exceptions contained in Article 36 of the EEC Treaty.The marketing of margarine in tubs is permitted in the Federal Republic of Germany by Article 2 (1) of the Gesetz über Margarine, Halbfettmargarine and Kunstspeisefett [Law on margarine, half-fat margarine and artificial edible fats] of 1 July 1975 (Bundesgesetzblatt I, p. 1841), which provides as follows:“Packs or containers must have a square base or be in the form of a truncated cone. Packs or containers having a weight of at least 1000 g may also take the form of a parallelepiped.”Consequently, the Landgericht decided to refer to the Court the following question:“Is there a prohibited measure having an effect equivalent to a quantitative restriction on imports within the meaning of Article 30 of the Treaty establishing the European Economic Community if it is prohibited, as in Article 8 of the Belgian Royal Decree of 2 October 1980 on the manufacture and marketing of margarine and edible fats, to market margarine or edible fats if each block or its external packaging is not cube-shaped and because of that prohibition margarine packaged in a different shape in another Member State in accordance with the provisions of that State has to be specially packaged in cube-form in order for it to be imported into the Kingdom of Belgium?”The order making the reference was received at the Court Registry on 25 September 1981.Pursuant to Article 20 of the Protocol on the Sutute of the Court of Justice of the EEC, written observations were submitted by Rau, represented by J. Gündisch, Rechtsanwalt, Hamburg, De Smedt, represented by D. C. Ohlgart, Rechtsanwalt, Hamburg, the Commission, represented by its Legal Adviser, Rolf Wägenbaur, and by the Belgian Government, represented by Pierre Legros of the Brussels Bar.Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory inquiry.

II —Summary of the observations submitted to the Court

(a) The plaintiff in the main proceedings, observes that the German law permits the packaging of margarine in tubs and that that form of packaging has been in general use in Germany for the last twenty-five years since it offers certain advantages by comparison with grease-proof paper. Margarine manufacturers have brought their production into line with that development. In particular, they have adapted their expensive packaging and filling machines to the manufacture and filling of tubs.Moreover, in most of the other Member States the cubic form is not prescribed. In Ireland, the United Kingdom and Italy there is no restriction on the form of packaging. In Denmark square, round or oval containers are permitted as well as the rectangular brick-shaped form and in the Netherlands rectangular, cylindrical or boat-shaped forms are permitted. In France the cubic form is prescribed but exceptions are permitted in the case of supplies to the processing industries and of exports.The Belgian provision in question forms an appreciable obstacle to the importation of margarine into Belgium from nearly all the Member States of the European Community, in particular from the Federal Republic of Germany. If a German manufacturer wished to export margarine to Belgium in conformity with the requirement as to the cubic form contained in Article 8 of the Royal Decree of 2 October 1980, he would need to buy completely new packaging and filling machines in order to comply with the Belgian provisions, which would be extremely costly. That is why there is virtually no Community trade in margarine between the Federal Republic of Germany and Belgium in spite of the fact that prices of margarine in Belgium are appreciably higher than in neighbouring States in which margarine is also produced and consumed in substantial quantities.In Annex 3 to its observations, Rau produces a table comparing the prices of margarine in the Netherlands and in Belgium.Rau maintains that in 1975 it developed a new form of packaging. Two tubs of margarine were packed in a box exactly cubic in shape. Even that form of packaging was not accepted by the Belgian Ministry of Public Health and two Belgian undertakings which imported small quantities of margarine packed in that manner were prosecuted.Rau also recalls that the Commission, upon receipt of a complaint lodged by Rau, instituted proceedings for a declaration that Belgium had failed to fulfil its obligation under the EEC Treaty. The Commission withdrew its action and the case (Case 177/80) was removed from the Court's register.In Rau's view, the obstacle to the free movement of goods created by the Belgian provisions on the packaging and form of blocks of margarine is not justified by the need to safeguard one of the objectives granted legal protection by Article 36 of the EEC Treaty. The argument relating to consumer protection to the effect that the cubic form is intended to avoid confusion between butter and margarine cannot be accepted since that objective could just as easily be attained by means of appropriate labelling. In support of that view the plaintiff cites the judgments of the Court of Justice in the “Cassis de Dijon ” case cited above, in Case 130/80 Criminal Proceedings against Fabriek voor Hoogwaardige Voedingsprodukten Kelderman [1981] ECR 527 and in Case 788/79 Criminal Proceedings against Herben Gilli and Paul Andres [1980] ECR 2071 and refers to the communication from the Commission concerning the consequences of the judgment in the “Cassis de Dijon ” case (Official Journal 1980, C 256, p. 2).Rau proposes that the following answer be given:“The concept of measures having an effect equivalent to quantitative restrictions within the meaning of Article 30 of the EEC Treaty must be interpreted as covering the prohibition by the legislation of a Member State of the marketing of margarine where each block or its external packaging is not cube-shaped, if the legislation also applies to the importation of margarine which has been lawfully manufactured and marketed in another Member State and has been labelled as margarine in a sufficiently clear manner.”(b) The defendant in the main proceedings, De Smedt, maintains first that the Belgian Royal Decree of 2 October 1980 cannot be considered as a measure having an effect equivalent to a quantitative restriction on imports since it merely prohibits the retail sale of margarine packed in tubs.The decision in the “Cassis de Dijon” case is not applicable. That case was concerned with the exclusion of a product from the market on account of its intrinsic characteristics by means of prohibiting the product from crossing the frontier.In this case, there is no question of such a prohibition; the rules relate only to packaging. Case 8/74 Procureur du Roi v Benoît and Gustave Dassonville [1974] ECR 837 was also concerned with a prohibition of importation.Even if Article 8 of the Royal Decree were to be considered as equivalent to an indirect quantitative restriction on imports, it would nevertheless be justified by requirements relating to consumer protection and fair trading.In so far as no common rules exist at Community level in this area, it is in principle for the Member States to adopt any relevant provisions.The Commission, in withdrawing its action against Belgium, was clearly of the opinion that the new provisions were justified. In virtually all the Member States there are provisions relating to the form of packaging in which margarine is to be marketed. Even if certain Member States do not prescribe a cubic form, the other Member States retain the right to decide themselves how to prevent the consumer from confusing butter and margarine.The Belgian rules do not constitute a means of arbitrary discrimination. Domestic products and foreign products are not treated differently. In its judgment of 16 December 1980 in Case 27/80 Criminal Proceedings against Anton Adriaan Fietje [1980] ECR 3839, the Court of Justice rightly observed that an obligation to use a precise description in order to prevent the consumer from being misled was compatible with the provisions of the Treaty on the free movement of goods, even if as a result it were necessary to alter the original labels of the imported products. Only if the alteration or original labels containing equivalent information were required, might it be considered that there was an infringement of Article 30 of the EEC Treaty.In this case, the description “margarine”, which the consumer may easily fail to notice, cannot be considered as equivalent, in terms of information, as the distinctive cubic form of packaging.De Smedt proposes that the reply which should be given is that Article 8 of the Belgian Royal Decree of 2 October 1980 on the manufacture and marketing of margarine and edible fats is not contrary to Article 30 of the EEC Treaty.(c) In the Commission's view, the Royal Decree clearly constitutes an impediment to trade. Its effect is that margarine packaged in the Federal Republic of Germany in accordance with its legislative provisions cannot be disposed of in Belgium by way of reuil sale. For that purpose the margarine would have to be the subject of special treatment. It is immaterial that the Belgian Government has in view not importation as such but disposal by way of retail sale; it is hampering intra-Community trade “directly or indirectly, actually or potentially”.The provisions are not necessary in order to satisfy imperative requirements relating in particular to consumer protection. The cubic form may have been prescribed for margarine in order to avoid the risk of confusion with butter. It is undeniable that it may be in the legitimate interests of States to remove this risk of confusion. However, it is possible fully to attain this aim by other means. It would be sufficient to require that it must be stated clearly, that is to say in sufficiently large letters, on the external packaging of the margarine that the product is margarine. That information would be sufficient to inform the consumer of the contents of the pack. It is therefore unnecessary to have recourse to a prohibition of certain forms of packaging.Paragraph 2 (4) of the German Law expressly provides that the packs or containers in which the goods are marketed must bear the word “margarine” in a conspicuous position in clearly visible and easily readable letters.Moreover, the Commission, after examining the provisions in force, decided to institute proceedings against Belgium pursuant to Article 169 of the EEC Treaty for a declaration that it had failed to fulfil its obligations under the Treaty.The Commission proposes that the following reply be given to the question raised by the Landgericht:“The concept of measures having an effect equivalent to quantitative restrictions on imports contained in Article 30 of the EEC Treaty must be interpreted as meaning that it also covers the prohibition by a Member State of the marketing of margarine where each block or its external packaging is not cube-shaped, if this has the effect of prohibiting the marketing of margarine lawfully packed in another Member State even though proper account is uken of the need to protect the consumer from any risk of confusion.”(d) The Belgian Government considers that it should be pointed out that the question referred to the Court for a preliminary ruling does not call in question the right of a Member State to lay down a specific form for margarine sold on national territory. The question is limited to the differences which may exist between Member States in the shape in which margarine is sold and has no bearing on the prescribing of a particular shape, whatever that may be. Since the actual principle of a compulsory shape is not called in question, it should be observed that, according to the case-law of the Court, in the absence of the harmonization of the laws of the various States on this matter, it is for each Member State to lay down, in respect of its own territory, the most appropriate shape for the sale of the products.The Belgian Government explains the history of the Belgian legislation on margarine since the Law of 4 May 1900.The cubic form is “rooted” in the habits of Belgian consumers to such an extent that only minor privisions were laid down by the Royal Decree of 2 October 1980 with regard to the size of the description “margarine” on the packaging. The cubic form of packaging corresponding better to the habits of the population was considered sufficient in itself as a means of distinguishing margarine from other edible fats.Following those explanatory remarks, the Belgian Government raises an objection of inadmissibility. De Smedt and its directors were summoned to appear before the Tribunal Correctionnel [Criminal Court], Courtrai, on a charge of having contravened the legal provisions on trade in butter, margarines and fats. An appeal lodged by the Ministère Public [Public Prosecutor's Office] is pending before the Cour d'Appel [Court of Appeal], Ghent. In view of the similarity of the interests at issue, the Court should consider whether the dispute which gave rise to the reference for a preliminary ruling is genuine or fictitious and whether, in the circumstances, it has jurisdiction to give a reply.In the alternative, the Belgian Government maintains that Article 8 of the Royal Decree does not constitute a measure having an equivalent effect within the meaning of Article 30 of the Treaty. In contrast to the “Cassis de Dijon” case and Case 148/78 Pubblico Ministero v Tullio Ratti [1979] ECR 1629, it is not completely impossible to market products which do not comply with the legal provisions, in so far as it is merely necessary to adopt the external presentation of the product in order to market it.In the above-mentioned cases the Court was confronted with national rules which had no counterpart in the legislation of the other Member States. In this case, the Belgian rules are to an appreciable extent identical to the German rules. The principle of equivalent requirements therefore applies since the obligation concerning the cubic form in the case of reuil sale is also a rule of German national law. The Belgian Government again emphasizes that the Royal Decree does not in any way prohibit the importation of the product but merely lays down detailed rules concerning its release for sale by reuil.The Belgian Government refers to the “nisin” case (Case 53/80 Officier van Justitie v Koninklijke Kaasfabriek Eyssen BV [1981] ECR 409) in support of its view that a Member State which relies upon one of the derogations from Article 30 of the Treaty is not required to show that the derogation is justified.The requirement in question was introduced into national legislation at the beginning of the century with a view to protecting the consumer from the risk of deception or confusion with butter.The public has grown accustomed to distinguishing the two products when offered for retail sale solely by visual means, in the sense that anything which does not appear cubic in shape must be butter. The repeal of the requirement in question would give certain unscrupulous manufacturers the opportunity to place a margarine on the market in non-cubic form in the speculative hope of taking unfair advantage of the conditioned reflex of the consumer who, mistakenly believing that he was getting butter, would in fact be getting margarine.In the absence of harmonization at European level, since the Belgian legislation has relaxed the provisions relating to labelling, it is important to maintain the visual distinction and in particular the cubic shape, which for consumers has been synonymous with margarine for 80 years.In reply to a written question put to it by the Court, the Belgian Government informed the Court that the proportion of butter sold in Belgium in plastic containers was in the order of 8 %. In the vast majority of cases, this butter is presented to consumers in a plastic packaging in parallelepipedal form.The Belgian Government proposes primarily that the Court should declare the reference for a preliminary ruling to be inadmissible.In the alternative, it should give the following reply to the question raised:“Article 8 of the Royal Decree of 2 October 1980 on the manufacture and marketing of margarine and edible fats, which prohibits the marketing of margarine or edible fats where each block or its external packaging is not cube-shaped, does not constitute a measure having an effect equivalent to a quantitative restriction prohibited by Article 30 of the Treaty establishing the European Economic Community.”

III —Oral procedure

At the hearing on 15 June 1982 oral argument was presented by the following: Dr Jürgen Gündisch, for Rau: Dr Dietrich Ohlgart, for De Smedt; Pierre Legros, for the Belgian Government; and R. Wägenbaur, for the Commission of the European Communities.The Belgian Government produced a photograph of a truncated-cone-shaped packaging for butter and Rau produced a selection of forms of packaging for butter and margarine.The Advocate General delivered his opinion on 21 September 1982.

The jurisdiction of the Court

The substance of the case

Costs