JUDGMENT OF 18. 6. 1975 -CASE 94/74 IGAV v ENCC

In Case 94/74 Reference to the Court under Article 177 of the EEC Treaty by the Pretore of Abbiategrasso (Italy) for a preliminary ruling in the action pending before that court between

THE COURT composed of: R. Lecourt, President, J. Mertens de Wilmars and A. J. Mackenzie Stuart, Presidents of Chambers, A. M. Donner, R. Monaco, P. Pescatore (Rapporteur), H. Kutscher, M. Sørensen and A. O'Keeffe, Judges, Advocate-General: A. Trabucchi Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts

The facts, the procedure and the observations submitted under Article 20 of the Protocol on the Statute of the Court of Justice of the EEC may be summarized as follows:

I — Facts and written procedure

Industria Gomma Articoli Vari (IGAV), having its registered office in Abbiategrasso (Milan), imported from 1970 to 1973 paper products for processing from Member States of the Community in particular.

On 17 May 1974 a claim was made against IGAV by Ente Nationale per la Cellulosa er per la Carta (ENCC) for payment of the sum of 23334538 lire, due as at 16 October 1973 by way of levy on paper and cardboard under the provisions of law No 868 of 13 June 1940 (Gazzetta Ufficiale No 170 of 22 July 1940) and Law No 168 of 28 March 1956 (Gazzetta Ufficiale No 79 of 3 April 1956).

On 14 June 1974 IGAV paid to ENCC by bank transfer the sum of 2047031 lire in respect of duties relating to imports from third countries; on the other hand, it disputed the correctness of the ENCC's claim to be entitled to collect the balance of 21287507 lire relating to imports from Member States.

On the same date, IGAV, applying Article 700 of the Italian Code of Civil Procedure, requested the Pretura of Abbiategrasso to find by way of emergency measure that the duty in question was incompatible with Article 13 of the EEC Treaty as interpreted by the Court of Justice, in particular in its judgment of 19 June 1973 in Case 77/72 (Carmine Capolongo v Azienda Agricola Maya, a request for a preliminary ruling by the Pretore di Conegliano, [1973] ECR 611).

By order of 28 June 1974 the Pretore of Abbiategrasso granted this application and ordered the ENCC not to enter the sum of Lit. 21287507 in the list of duties as being due from IGAV or, in the event of such entry having already been made, not to remit the same to the Intendenza di Finanza of Milan.

At the hearing on 8 November 1974, the ENCC requested the Pretore of Abbiategrasso that his order for an injunction of 28 June 1974 should stand.

By order of 14 November 1974 the Pretore of Abbiategrasso decided to stay the proceedings and to refer the following preliminary questions to the Court under Article 177 of the EEC Treaty:

Taking into account the principle of the free movement of goods embodied in the EEC Treaty, the object of which is to enable the various national markets to be merged into a single market within the European Community in such a way as to exclude, as between the producers of a given product, differences of treatment on the basis of differences in the origin of the product, and, in the light of the judgment of the Court delivered on 19 June 1973 in Case 77/72 and also of Articles 85 and 86 of the Treaty:

I) Does a duty which must be paid on certain products, such as paper, cardboard and cellulose, constitute a charge having an effect equivalent to a customs duty, which is prohibited under Article 13 (2) of the Treaty when it possesses the following characteristics:

1) it is collected by a public authority other than the State also on products coming from the other Member States;

2) the revenue therefrom is, by law and statutory regulation, intended to be used for the following purposes:

a) the financing of various activities within the territory of the State for the purpose of increasing domestic agricultural production of cellulose;

b) the financing of research activity for the benefit of national undertakings which are producers of cellulose and paper;

c) the subsidizing exclusively of newsprint produced by the national paper-mills in order to make it available to the publishers of the country at below the market price. The subsidy is not granted in respect of newsprint and similar paper coming from paper-mills situated in the other Common Market countries.

II) If the above-described duty must be considered to be a charge having equivalent effect:

1) Is Article 13 (2) of the Treaty directly applicable and does it confer on private individuals a subjective right of immunity from charges prohibited by this provision?

2) Does this individual right date from 31 December 1969 (the date when the transitional period came to an end) or from 1 July 1968, the date when customs duties within the EEC were abolished?

III) With regard to Question 1 (2) (c) above, and bearing in mind that the ENCC duty ultimately subsidizes the national production of newsprint, does not the said duty conflict with the Community rules in that, as only the paper-mills in the country concerned are entitled to benefit from the duty, they are placed in the position of being able, to the exclusion of Community competitors, to share out among themselves almost the whole of the Italian newsprint market, thus creating an agreement which is contrary to Articles 85 and 86 of the Treaty (cf. the balance sheets of the ENCC for the years 1971, 1972 and 1973)? The order of the Pretore of Abbiategrasso was received at the Court Registry on 16 December 1974. Pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the EEC, written observations were submitted on 20 February 1975 by the Commission of the European Communities, on 4 March 1975 by the Government of the Italian Republic, on the same date by the Ente Nazionale per la Cellulosa e per la Carta (ENCC), the defendant in the main action, and on 10 March 1975 by IGAV, the plaintiff in the main action. 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 — Observations submitted to the Court

IGAV, the plaintiff in the main action, analyses at length the Court's case-law on charges having an effect equivalent to customs duties and internal taxation, arguing that it follows thereform that a national law can in itself prove compatible with Community law but be incompatible by reason of the effects which it produces and the ends which it pursues.

a) As regards more particularly the nature and effect of the charge levied by the ENCC, it must be remembered that it has in effect the characteristics hinted at in the first question referred to the Court: it is levied by a public body other than the State; payment thereof is compulsory; although applicable to both domestic products and imported Community products, it is to a certain extent discriminatory; its purpose is to finance the various activities of the ENCC, in particular interventions in favour of domestic production of raw materials for the paper industry, to undertake research solely for the benefit of Italian undertakings in the agricultural and forestry sector and in the field of paper, of print and of stationery as well as support measures in favour of the printing trade and of aid to the press in the form of general or specific subsidies, in particular for the utilization of paper produced in Italy or imported by the ENCC, to the exclusion of paper imported directly from abroad.

b) The incompatibility of the charge in question with Community law follows in the first place from the Commission's decision of 15 September 1972 in this connexion to initiate against the Italian Republic the procedure under Article 93 (2) of the EEC Treaty; the letter which on 20 November 1974 was sent by the Commission to the Italian Government in accordance with this procedure confirms that only several amendments made by the Italian authorities with effect from 1 January 1974 rendered the system of aid granted through the ENCC compatible with the provisions of the Treaty in matters of aid. The tax levied by the ENCC, which has the purpose of financing aid incompatible with Community law, cannot by reason of the abovementioned fact alone be considered as internal taxation allowed under Article 95. Added to this there is the fact that the aid in question, financed by a tax of a fiscal nature, lacks any ‘clarity’, is of a permanent nature instead of only amounting to essentially temporary measures with the purpose of strengthening or supporting temporarily a particular sector and has a ‘multiplying effect’ since it is connected with the financial charge imposed on imported goods and, by reason of the fact that the manner in which the funds at the ENCC's disposal are used, is not clear. Amounting as it does to a method of financing activities the purpose of which is exclusively to favour domestic products, the charge in question has the characteristics of a charge having an effect equivalent to a customs duty on imports and for this reason is prohibited by Article 13 (2) of the EEC Treaty. It is claimed that the Court must therefore give an affirmative answer to the first two questions, whilst emphasizing that Article 13 (2) must as from 1 January 1970 be considered directly applicable within Member States, that is, as from the date when the transitional period came to an end. The various interventions of the ENCC financed by means of the revenue from the tax in question also have the effect of seriously distorting competition within the Common Market. Thus the free interplay of competition is adversely affected as between Community paper manufacturers and those from Italy, by reason of the fact that it does away with any competition between Italian and the ENCC producers on the Italian newsprint market; the Italian producers of newsprint are favoured as compared with foreign paper manufacturers particularly as regards marketing their production and, as regards newsprint for daily papers or periodicals, Italian undertakings are also in a more favourable position than foreign undertakings. There is also distortion of competition in the relationships between publishers of Italian newspapers and periodicals and publishers in other Member States: the guaranteed supply of paper, the differentiated aids granted by the ENCC and the agreements as to the sale price and purchases of paper eliminate competition as between Italian publishing houses; the same factors alter competition — which exists, notwithstanding the statements to the contrary by both the ENCC and the Commission — as between publishers of daily papers and periodicals in Italy and the rest of the Community. These serious adverse effects on competition are accompanied by a series of cartels, which are contrary to Article 85 and 3 (f) of the Treaty and in which the ENCC participated. Owing to a mechanism of ‘monthly assignment quotas’ and the fixing of the sale-price of paper to Italian newspaper publishers, agreements between the ENCC and the Italian paper manufacturers resulted in a partitioning of the national market in newsprint; further, agreements as regards the purchase price of paper were entered into between the ENCC, the paper manufacturers and the Italian publishers. Paper manufacturers and publishers and associations of paper manufacturers and publishers were also parties to those agreements; the ENCC may be considered as a public undertaking to the extent to which it carries on activities of purchasing, stock-piling and distributing or as an association of undertakings to the extent to which it constitutes a ‘compulsory consortium’ of undertakings. Depending on the circumstances, the cartels in question took the shape of agreements, of concerted practices or of decisions by associations of undertakings and consist in fixing purchase and sale-prices and partitioning the markets. They gravely affect intra-Community trade, as is shown by the figures relating to imports by Italy of newsprint from Member States. Such cartels are prohibited by Article 85 (1) of the Treaty; their illegality extends to the ENCC's participation. This conclusion is not weakened by the fact that the ENCC is a public undertaking: under the provisions of Article 90 (1) the prohibitions laid down by Article 85 extend to such undertakings and Article 90 (2) does not apply to the ENCC.

d) In conclusion, it is alleged that the Court ought to reply to the questions referred to it by holding the charge levied by the ENCC upon imports from Member States of the Community to be illegal, with effect from 1 January 1970 until the date of total and effective discontinuance of breaches of Community law resulting from its operation.

Having emphasized the special features of the injunction proceedings within the framework of which the reference to the Court was decided upon the Ente Nazionale per la Cellulosa e per la Carta, the defendant in the main action, sets out in detail the intervention system operated by the ENCC, in particular in the field of the press, in the forestry sector and in matters of documentation and statistics; the financing of the activities of the ENCC and the covering of its administrative expenses are largely ensured by a contribution on paper and cardboard and on cellulose.

a) As regards the legality of the system of aids granted through the ENCC, it is reasonable to deduce from its letter of 20 November 1974 addressed to the Italian Government that the Commission recognized its compatibility not only with Article 92 but also with Article 13 (2) of the EEC Treaty. This finding is all the more justified since it corresponds to the case-law of the Court.

b) The first question put to the Court is merely a repetition of that previously referred in Case 77/72; it is not permissible to the extent to which it results in a different interpretation of the same texts or inadmissible to the extent to which it has as its object an interpretation of the judgment of 19 June 1973 in line with the specific case which is the subject of the main action. Moreover, the purely descriptive factors put forward in order to confer an appearance of novelty or usefulness on the question put are either erroneous or tendentious. Thus it is unimportant that the duty in question is levied by a public undertaking other than the State since it is levied under a law of the State; the duty on cellulose is in no way in question in the main action and in any event it would have an unfavourable effect on the domestic product which is taxed twice in the course of the manufacturing process; newsprint is exempted from the ENCC contribution so that the addition to the price of newsprint which is paid to publishers could not, in the absence of a charge, amount to a charge having an effect equivalent to a customs duty; the previous situation could at the most have fallen under Article 92 but not under Article 13 (2). As regards the substance of the problem, it must be placed on record that none of the conditions to which the Court pointed in its judgment of 19 June 1973 in Case 77/72 recognizing the existence of a charge having an effect equivalent to a customs duty is fulfilled in the present case: the domestic product taxed and the domestic product benefiting from the aid are not the same; the proceeds of the charge are not exclusively granted to the national paper industry; at any rate the aid does not benefit domestic products specifically. The Court cannot at any rate proceed to a de facto verification in this respect within the framework of the present proceedings.

c) The case-law of the Court already supplies a reply to the question as to the direct effect of Article 13 (2). By its very nature this provision lends itself perfectly to producing direct effects in legal relationships between Member States and their citizens and, in the absence of a directive having the specific purpose of abolishing a particular charge having equivalent effect before the end of the transitional period, the relevant date can only be 1 January 1970.

d) As regards Articles 85 and 86 of the Treaty, it must be said that, apart from the confused wording of the question referred, Article 85 turns out to be inapplicable to the present case: there were not and there are not now agreements or concerted practices between national paper manufacturers with a view to exclusively acquiring the Italian market in newsprint; importation has never been impeded or made subject to particular formalities or taxes; importation effected through the agency of the ENCC allows the publishers to benefit from aids; the price of newsprint cannot be influenced by competitive practices, since it is laid down authoritatively for the whole of the territory; the limitation of aids can at the most be blamed against public authorities. Article 90 also does not apply in this case. As regards Article 86 it must be said that the Court has already dismissed it in Case 77/72. In any event the three specific conditions which in the Court's view must be present for it to apply, that is to say, the existence of a dominant position, the abuse thereof and the damage caused to trade between Member States, are not present in this case.

e) To summarize, the questions referred to the Court might be answered as follows:

the prohibition in Article 13 (2) refers to a duty which, whilst part of a general system of taxes applied according to the same criteria on domestic as well as imported products, is intended exclusively to support activities which specifically benefit the taxed domestic product;

Article 13 (2) is a provision having direct effect in the legal systems of the Member States, with the consequence that it creates subjective rights for the parties which the courts must as from 1 January 1970 protect in the case of all charges having an effect equivalent to customs duties, the abolition of which was not imposed at an earlier date by means of directives on the part of the Commission;

Articles 85 and 86 do not apply to a situation in which domestic industrial products or imported products of foreign origin imported through a public body have, on the basis of official regulations, resulted in advantages to consumers belonging to another sector of the economy.

The Government of the Italian Republic emphasizes that the question of principle involved in this case is strictly analogous to that which the Court examined and dealt with in its judgment in Case 77/72. There the Court found that a duty within a general system of internal taxation applying to both domestic and imported products can constitute a charge having an effect equivalent to a customs duty on imports subject to the twofold condition that is intended exclusively to support activities which specifically benefit the taxed domestic product; the duty for ENCC's benefit has neither of these characteristics. It is true that the Court cannot arrive at this finding within the framework of the procedure under Article 177 of the EEC Treaty; on the other hand, it is significant that the Italian provisions in question have not been the subject of either a procedure initiated by the Commission on the basis of Article 169 or an action by another Member State with a view to a finding that they might be incompatible with Article 13 of the Treaty.

The fact that the order referring the matter added certain factors defining the national rule in question cannot affect the judgment previously given by the Court; the factual assessment of the legality of the charge in dispute, from the point of view of Community law, does not come within the procedure under Article 177.

Furthermore, the pointers contained in the order referring the matter as to the nature and character of the charge in question in no way correspond to the real scope of the Italian legislation in the matter; in particular, contrary to the assertions in point (c) in the first question, newsprint and paper for printing purposes coming from paper manufacturers establishing in the other Member States benefit from treatment identical to that reserved to paper coming from national paper manufacturers, subject only to the condition that the paper manufactured in the other Member States be purchased by the ENCC.

As for the third question, it suffices to point out that the ENCC is a non-profit making institution in public law which does not influence the free availability of supplies to users and consumers.

As regards Articles 92 et seq. of the EEC Treaty, it must be said that in its letter of 20 November 1974 to the Italian Government the Commission stated that it had not found any factor which would allow it to institute the procedure under Article 93.

The Commission wishes to point out certain facts concerning the system of aids administered by the ENCC; thus what is subsidized is not the manufacture of paper but its utilization for publishing purposes, since only publishers of dailies and periodicals benefit from aids; further, since 1 January 1974, consequent upon the procedure instituted by the Commission under Article 93 (2) of the EEC Treaty, aids apply without distinction to direct imports by publishers and to indirect imports effected from Member States through the ENCC.

(a) As regards the first question

The duty levied by the ENCC, which is normally considered to be of a quasi-fiscal nature, affects both domestic and imported products; the revenue arising thereform is intended to finance activities undertaken by the ENCC, in particular subsidies to daily newspapers, subsidies to periodicals and assistance in agricultural and forestry research and in reafforestation.

As regards the compatibility of this mechanism with Articles 9 and 13 (2) of the EEC Treaty, one ought to take into account the criteria enunciated by the Court's judgment in Case 77/72; a charge of a quasi-fiscal nature, applying systematically to domestic and imported products can nevertheless constitute a charge having an effect equivalent to a customs duty on imports where it is intended exclusively to support activities which specifically benefit the taxed domestic product. In the present case it should be noted that the taxed domestic product (paper and cardboard) and the domestic product benefiting from the aid (daily and periodic publications) are not the same; this finding is in itself sufficient to avoid the application of Article 13 (2).

In any event, even if it were to be considered that the aid benefits not the publications but the raw material utilized by the publisher, it cannot be held that the duty levied on the paper used in periodicals has the sole purpose of financing aid to this kind of paper.

As regards Question I (2) (c), the conditions required for identifying a charge having equivalent effect are not therefore present.

As regards Question 1 (2) (a), it should be pointed out that the condition of ‘specific’ advantage is completely absent, in view of the tenuous and indirect relationship between taxed products and subsidized products: forestry research and reafforestation in general allows the development of the forestry sector and the supply of timber; these activities sometimes extend over very long periods and do not necessarily relate to the production of paper pulp, since this product is only one of several commercial uses for timber.

As regards Question 1 (2) (b), the condition that the proceeds of the duty be ‘exclusively’ allocated to the financing of research in the paper sector is not present; equally the condition of ‘specific’ advantage has not been fulfilled.

These findings certainly do not allow of the conclusion that the system of aid to paper research is compatible with the Treaty; in the course of the period to which the main action refers it contravened Article 92 and the necessary amendments did not come into effect until 1 January 1974. Nevertheless, as regards Article 13 (2) the duty on paper and cardboard does not seem open to criticism from the point of view of its being allocated to the financing of paper research; the situation is no different if looked at in conjunction with the intervention on behalf of periodicals and the research in the forestry sector: the sum total of the three charges in question does not even approach a sufficient level to enable one to treat the condition of ‘exclusive’ purpose as having been fulfilled.

(b) As regards the second question

Article 13 (2) undoubtedly has direct effect.

The date to be taken as the end of the transitional period is 31 December 1969, subject to cases in which directives within the meaning of Article 13 (2) were adopted. This conclusion follows from Article 8 of the Treaty; amendments to the time-table which this provision lays down were expressly indicated in the measures adopted by the Council.. The reference in the order referring the matter to 1 July 1968 reminds one of the ‘Acceleration Decision’ of the Council of 26 July 1966 (Official Journal p. 2971). This allowed the implementation of the customs union as from 1 July 1968; nevertheless it cannot be argued that the implementation of the customs union put an end to the transitional period for the establishment of the Common Market.

(c) As regards the third question

Since the aid was intended for and granted in favour of the press and not of national paper manufacturers, the system of aid previously in force involved an element of protection in favour of domestic production of newsprint and discouraged direct importations; it was amended on this point so as to ensure its conformity with Article 92 of the Treaty.

Although the system involves a distortion of competition, it must be stated that, in so far as Articles 85 and 86 are concerned, neither the essential condition of illegal conduct which can be imputed to an undertaking or group of undertakings nor the conditions necessary for a finding of a cartel or of a dominant position are met in this case.

III — Oral procedure

The oral observations of IGAV, the plaintiff in the main action, represented by Giovanni Maria Ubertazzi and Fausto Capelli, Advocates of Milan, of Ente Nazionale per la Cellulosa e per la Carta, the defendant in the main action, represented by Giuseppe Marchesini and Antonio Sorrentino, Advocates of Rome, of the Government of the Italian Republic, represented by Giorgio Zagari, Sostituto Avvocato dello Stato, and of the Commission of the European Communities, represented by its Legal Adviser, Antonio Abate, were presented at the hearing on 23 April 1975.

The Advocate-General delivered his opinion at the hearing on 15 May 1975.

Law

1/2. By order of 14 November 1974 received at the Court Registry on 16 December 1974 the Pretore of Abbiategrasso, referred several questions under Article 177 of the Treaty. These questions were raised in the course of proceedings brought by the plaintiff in the main action against Ente Nazionale per la Cellulosa e per la Carta, (ENCC), in relation to duties claimed by that institution at the marketing stage of paper products coming from other Member States of the Community, under the provisions of Law No 868 of 13 June 1940 (Gazzetta Ufficiale No 170 of 22 July 1940) and Law No 168 of 28 March 1956 (Gazzetta Ufficiale No 79 of 3 April 1956).

3. In order to enable it to judge whether the fiscal mechanism instituted by these legislative measures is compatible with the provisions of the Treaty, the national court has asked this Court to define the concept of 'charges having an effect equivalent to customs duties as defined in the judgment of 19 June 1973 in Case 77/72 (Capolongo v Maya [1973] ECR 611), to state whether Article 13 (2), dealing with the abolition of such charges, has direct effect, to indicate the date from which such effect may be invoked and, finally, to determine in certain respects the scope of the rules on competition laid down by Article 85 and 86.

4/7. It must be remembered in this context that by notice published in the Official Journal of 26 September 1972 (C 98, p. 1) the Commission initiated a procedure under Article 93 (2) of the Treaty in relation to the Italian system of aid, administered by the ENCC and financed by a charge of a quasi-fiscal nature on certain types of paper and cardboard as well as on pulp. Following an inquiry which it had undertaken, the Commission required certain modifications in relation to this system of aid, which were accepted by the Italian Republic as is shown by a memorandum of 20 November 1974 from the Commission to the Government of that Member State. In that memorandum the Commission found that ‘the modifications made by the Italian authorities to the system in question render it compatible with the provisions of the Treaty with regard to aid’. In relation to the foregoing it must be pointed out that the proceedings before the Pretore of Abbiategrasso relate to the period prior to the modification of the system in question.

The concept of charges having an effect equivalent to customs duties

8. The first question asks for an interpretation of the concept in Article 13 (2) of ‘charges having an effect equivalent to customs dusties’ in relation to dues such as the duty levied by the ENCC at the marketing stage of imported paper, cardboard and pulp, taking into account both the manner of collecting these dues and the purpose to which the revenue derived therefrom is applied.

9. In order to interpret this concept the following three factors must be remembered in connexion with the duty in dispute: (a) the duty is levied by an autonomous institution governed by public law, devoid of any commercial character, (b) it is applied without distinction to domestic products and to products from other Member States, (c) the proceeds are allocated to certain development and research activities of interest to the cellulose and paper industry, the major part however being reserved for the payment of subsidies to newsprint, which is itself exempt from the duty.

10. As was ruled in the judgment of 19 June 1973 to which the national court refers, the prohibition contained in Article 13 (2) is aimed at any tax demanded at the time of or by reason of importation and which, being imposed specifically on an imported product to the exclusion of a similar domestic product, results in the same restrictive consequences on the free movement of goods as a customs duty by altering the cost price of that product.

11. The fact that a duty is levied by an independent institution governed by public law rather than levied by the State itself and is used by that institution for purposes intended by the relevant legislation involves no difference with regard to the possible definition of that fiscal charge as a charge having an effect equivalent to customs duties, since the prohibition under Article 13 (2) attaches solely to the effect of such charges and not to the manner in which they are imposed.

12/13. On the other hand, the fact that a charge applied without distinction to domestic products as well as to products from other Member States gives rise to the question whether the taxation at issue falls within the prohibition of Article 13 (2) or the rule against discrimination in matters of internal taxation laid down by Article 95. One and the same scheme of taxation cannot, under the system of the Treaty, belong simultaneously to both the categories mentioned, having regard to the fact that the charges referred to in Article 13 (2) must be purely and simply abolished whilst, for the purpose of applying intern'al taxation, Article 95 provides solely for the elimination of any form of discrimination, direct or indirect, in the treatment of the domestic products of the Member States and of products originating in other Member States.

14. Financial charges within a general system of internal taxation applying systematically to domestic and imported products according to the same criteria are not to be considered as charges having equivalent effect.

15/17. The situation would be different, however, if such a duty, which is limited to particular products, had the sole purpose of financing activities for the specific advantage of the taxed domestic products, so as to make good, wholly or in part, the fiscal charge imposed upon them. Such a fiscal device would in fact only appear to be a system of internal taxation and accordingly could by reason of its protective character be termed a charge having an effect equivalent to customs duties, so as to bring Article 13 (2) into operation. Such a definition would nevertheless imply a clearly established likeness between, on the one hand, the collection of a fiscal duty levied without distinction on the products in question, whether domestic or imported and, on the other hand, the advantage which ensures only for the benefit of the domestic products by reason of the proceeds of that same duty.

18. Accordingly the answer to the first question must be that a duty falling within a general system of internal taxation applying systematically to domestic and imported products according to the same criteria can nevertheless constitute a charge having an effect equivalent to a customs duty on imports when such duty is intended exclusively to support activities which specifically benefit the taxed domestic product.

19/20. The second question asks whether Article 13 (2) is directly applicable and if it confers on private individuals a subjective right of immunity to charges prohibited by this provision. It further asks whether this subjective right dates from 31 December 1969 (the date when the transitional period came to an end) or from 1 July 1968, the date when customs duties within the Community were abolished. These questions have been put in the event that the duty in question be considered as a charge having an effect equivalent to a customs duty.

21. It is a matter for the national court to define the duty in question, either as a charge having an effect equivalent to a customs duty or, on the basis of the legal criteria outlined above, as internal taxation within the meaning of Article 95. Accordingly, in order to provide for the possibility of this being relevant, an answer must be given to the question put.

22/25. As the Court has already indicated in its judgment of 19 June 1973 to which reference has been made, Article 13 (2) lends itself, by its very nature, to producing direct effects in the legal relations between Member States and their subjects. Subject to any specific provisions, such effect occurred as from the end of the transitional period, namely 1 January 1970. In fact the Council's decision of 26 July 1966 on the abolition of customs duties in line with the implementation of the Common Customs Tariff on 1 July 1968 (OJ p. 2971) is based on the concept of a selective acceleration of actions which as a whole were to be completed by the end of the transitional period at the latest. In these circumstances that decision only applies to measures to which it specifically refers, that is to say, to customs duties as such and to quantitative restrictions.

26. In principle the reply must therefore be that the direct effect of Article 13 (2) can only be invoked as from 1 January 1970.

27/28. The applicant in the main action put forward in addition a wide range of criticisms in relation to the system of importation of paper, cardboard and pulp into Italy. It considers that the fiscal system applied under the Italian legislation is discriminatory with regard to products imported from other Member States and that the interposition of the ENCC has so restrictive an effect on trade as practically to eliminate the possibilities of intra-Community trade on the Italian market. In particular it points out that the changes made in the Italian legislation following the steps taken by the Commission are a recognition of the fact that, at any rate up to the time of the elimination of the incompatibilities found to have existed, this system was contrary to the provisions of the Treaty relating to public aid. From this it draws the conclusion that a duty intended to finance the functioning of such a system must be considered a charge prohibited by the Treaty.

29/31. The fact that a due imposed by a Member State is utilized for the purpose of financing a system of aid which is recognized as incompatible with the Treaty does not attach to such due the character of a charge having an effect equivalent to a customs duty. Moreover, whatever doubts may be felt as regards the compatibility with the Treaty of the system in question and as regards the ENCC's intervention in the field of intra-Community trade, especially from the point of view of the prohibition of measures having an effect equivalent to quantitative restrictions, the fact remains that the national court did not ask this Court to rule on these aspects. Despite the reference made by the national court in its order referring the matter to the principle of the free movement of goods, to the objective of merger of the different national markets into a single market and to the elimination of any form of discrimination by the Treaty, there are no questions before the Court of sufficiently precise a nature to enable it to consider the objections raised by the applicant in the main action. Accordingly these arguments must be disregarded in the framework of the present proceedings.

The system of competition

32. The third question asks in substance whether or not the redistribution of charges and benefits between importers of paper cardboard and pulp, on the one hand, and of national producers and consumers of these goods, on the other, as well as the ENCC's intervention within the framework of this redistribution, infringe the rules on competition laid down in Articles 85 and 86 of the Treaty.

33/34. Apart from the rules on competition applicable to undertakings, including Articles 85 and 86, to which the reference was made by the national court, the Treaty includes various provisions relating to infringements of the normal functioning of the competition system by actions on the part of the States. This in particular is the purpose of Article 90 to the extent to which it lays down a particular system in favour of undertakings entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly, of Articles 92 to 94, on the system of public aid, of Articles 101 and 102 on distortions resulting from provisions of public law capable of distorting competitive conditions on the Common Market, as well as Article 37 on State monopolies of a commercial character.

35. The activities of an institution of a public nature, even if autonomous, fall under the provisions referred to and not under Articles 85 and 86, even if its interventions take place in the public interest and are devoid of a commercial character.

36. It is a matter for the individual and the national courts to take the appropriate measures in so far as the interventions of the State or of its decentralized agencies might infringe such rules as might be directly invoked in legal proceedings. It is, moreover, for the Commission to see to it that the relevant provisions of the Treaty are respected by the authorities of the Member States.

37. Accordingly, the answer to the question must be that according to the system of the Treaty the provisions of Articles 85 and 86 are not applicable to activities of the kind covered by the question.

Costs

38. The costs incurred by the Government of the Italian Republic and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable and as these proceedings are, in so far as the parties to the main action are concerned, a step in the action pending before the Pretore of Abbiategrasso, the decision on costs is a matter for that court.

On those grounds THE COURT in answer to the questions referred to it by the Pretore of Abbiategrasso by order of that court of 14 November 1974, hereby rules:

1 A duty falling within a general system of internal taxation applying systematically to domestic and imported products according to the same criteria can nevertheless constitute a charge having an effect equivalent to a customs duty on imports, when such duty is intended exclusively to support activities which specifically benefit the taxed domestic product;

2 As from 1 January 1970 Article 13 (2) produces, by its very nature, direct effects in the legal relations between the Member States and their subjects;

3 The provisions of Articles 85 and 86 do not apply to activities of the kind referred to by the national court.