Report for the Hearing delivered in Case 18/87

I — Facts

In the Federal Republic of Germany, the administrations of the Länder Bremen, Hessen, Niedersachsen, Nordrhein-Westfalen and Rheinland-Pfalz charge a fee on the importation or transit, even in the course of intra-Community trade, of live animals, which is intended to cover the costs of official veterinary inspections carried out in accordance with Article 2 (1) of Council Directive 81/389 of 12 May 1981 establishing measures necessary for the implementation of Directive 77/489/EEC on the protection of animals during international transport (Official Journal 1981, L 150, p. 1).

Those fees are laid down in the implementing provisions of the Länder. Neither the directive nor the regulation issued by the Bundesminister für Ernährung, Landwirtschaft und Forsten (Federal Minister for Food, Agriculture and Forestry) of 29 March 1983 on the protection of animals during international transport {Bundesgesetzblatt I, p. 409) transposing the directive into national law contain express provisions in this respect.

Considering the fees in question to be incompatible with Articles 9 and 12 of the EEC Treaty, in so far as they are charged in intra-Community trade, the Commission communicated that view to the German Government in a letter of 19 February 1985, requesting it, in accordance with the first paragraph of Article 169 of the EEC Treaty, to submit its observations within a period of one month from the date on which the letter was received. The German Government set forth its point of view in its reply of 14 May 1985.

On 4 June 1986 the Commission delivered a reasoned opinion in accordance with the first paragraph of Article 169 of the EEC Treaty, calling upon the Federal Republic of Germany to adopt the measures needed to comply with that opinion within a period of 30 days from its notification.

In its reply, dated 5 August 1986, the Government of the Federal Republic of Germany maintained its point of view which conflicted with that or the Commission, whereupon the Commission brought these proceedings.

II — Written procedure and conclusions of the parties

The Commission brought proceedings by application lodged at the Court Registry on 26 January 1987.

The written procedure followed the normal course.

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. The defendant was asked to reply in writing to one question, which it did within the period prescribed.

The Commission claims that the Court should:

1) declare that the Federal Republic of Germany has failed to fulfil its obligations under Articles 9 and 12 of the EEC Treaty in so far as some Länder charge a fee on the importation of live animals from other Member States to cover the costs of veterinary inspections carried out under Council Directive 81/389/EECof 12 May 1981;

2) order the defendant to pay costs.

The defendant contends that the Court should:

1) dismiss the application;

2) order the applicant to pay the costs.

III — Submissions and arguments of the parties

1. The Commission considers that, in so far as they are charged in intra-Community trade, the fees at issue constitute charges having an effect equivalent to customs duties and are therefore contrary to Articles 9 and 12 of the EEC Treaty. The Commission begins by examining those fees in the light of the Court's case-law O'udgment of 14 December 1972 in Case 29/72 Marimex SpA v Italian Finance Administration [1972] ECR 1309; of 5 February 1976 in Case 87/75 Conceria Daniele Bresciani v Amministrazione Italiana delle Finanze [1976] ECR 129; of 15 December 1976 in Case 35/76 Simmenthal SpA v Italian Minister for Finance [1976] ECR 1871; of 28 June 1978 in Case 70/77 Simmenthal SpA v Amministrazione delle Finanze delle Stato [1978] ECR 1453; and of 7 April 1981 in Case 132/80 United Foods NV and Another v Belgian State [1981] ECR 995), according to which, even if Member States, in the absence of Community harmonization, are permitted to retain certain veterinary and public health inspections in intra-Community trade, they may not charge fees for those inspections unless they form part of a general system of internal dues applied systematically in accordance with the same criteria to domestic products and imported products alike and they amount to consideration for a benefit provided to the importer or transport undertaking. As those criteria are not fulfilled in this case, the contested fees can only be justified on the basis of the judgment of 25 January 1977 in Case 46/76 (Bauhuis v Netherlands [1977] ECR 5): The Commission first requests the Court to reconsider the point whether, from the point of view of the further development of Community law and bearing in mind in particular the objective of achieving the internal market, the principles set out in that judgment, as confirmed in the judgment of 12 July 1977 in Case 89/76 (Commission v Netherlands [1977] ECR 1355) and the judgment of 31 January 1984 in Case 1/83 ( Intercontinentale Fleischhandelsgesellchafi mbH & Co. KG v Freistaat Bayern [1984] ECR 349), should be strictly adhered to. In any case, the Commission considers that the reasoning of that judgment should not be extended to other categories of cases, such as that before the Court. (a) In its criticism of the Bauhuis judgment, the Commission draws a comparison with the cases concerning monetary compensatory amounts in the agricultural sector. Those amounts, although strictly contrary to the fundamental rules of the common market, constitute a necessary evil for the maintenance of the agricultural common market for as long as the economic and monetary policies of the Member States are not sufficiently in line. For that reason the Court considered them to be justified. However, the Commission considers that that is not the case as regards fees charged for health inspections. The Commission contends, first, that Community law only regulates the inspections but does not require them. As a result, objectively identical situations may result in different national rules liable to cause distortion of competition. The harmonization of fees suggested by the Court in the Bauhuis case is practically impossible, given that the Commission and many Member States regard such fees as undesirable. In the Commission's view, an even greater difference in comparison with monetary compensatory amounts is the fact that the fees in question are not essential for the free movement of the goods concerned. On the contrary, an undeniable benefit (the harmonization of inspections) would be reduced by an undeniable disadvantage (the fees). The Bauhuis judgment will lead to the ‘absurd result’ that with Community harmonization of inspections national authorities will be able to introduce new charges affecting intra-Community trade. In the initial stages of the common market when Bauhuis was decided such a result might have been justifiable as a ‘financial incentive’ to harmonize inspections. Now, however, particularly with the prospect of the single internal market in 1992, the disadvantages mentioned (extra charges, distortion of competition) outweigh that advantage. Moreover, at the present stage of Community integration, there is no question of placing additional burdens on certain Member States acting in the general interest, since the burdens and relief which result for national authorities from Community provisions tend to balance themselves out. Financial compensation is therefore no longer necessary. Even if additional burdens remained, they would not be inequitable for the State concerned since it would benefit from the economic advantage of an increase in the volume of trade. The Commission also emphasizes the problems which the Bauhuis judgment entails as regards the principle of Community preference. Community preference requires that, where fees are charged in intra-Community trade, those same fees should be charged on goods imported from nonmember countries. The different fees charged in intra-Community trade and the different agreements concluded on the subject with nonmember countries render the calculation of fees on imports into the Community highly complicated in practice. (b) Even if the Bauhuis judgment remained intact, it is not relevant in the present case in the Commission's view. As it was a special case, that decision should not be applied to other cases. Unlike the situation in the Bauhuis case, when a Member State carries out inspections under Directives 77/489 and 81/389 it does not act in the (concurrent) interests of another Member State, but in the general interest of the Community in protecting animals, which takes the place of the exclusive interest of that State's own legal and social system. There is therefore no additional burden assumed by a Member State for the benefit of another Member State. Therefore, in the present case, there is no rationalizing effect. The inspections carried out by one State do not take the place of those carried out by another; they do not result in any substantial simplification of procedure or otherwise facilitate intra-Community trade. Although the introduction of uniform and systematic inspections would certainly benefit the free movement of goods, that positive aspect cannot justify the ‘price’ of charging fees. Whilst the Commission would not wish to overemphasize the fact that, unlike the Bauhuis case, the present case concerns fees charged on imports and not on exports, it points out that charges on imports call for particularly close examination. In addition, inspections such as those at issue are carried out only in the context of international transport so that domestic products are not subject to a comparable charge. The Commission's attitude in this case is not inconsistent with the proposals it put forward for a directive. As regards Council Directive 85/73 of 29 January 1985 on the financing of health inspections and controls of fresh meat and poultrymeat (Official Journal 1985, L 32, p. 14), the Commission's proposals provided for a compromise solution which, without subjecting trade to the full cost of inspections, would have avoided distortions of competition. Since the directive, as adopted, did not eliminate the risk of such distortions, the Commission was obliged to propose the harmonization of authorized fees in Directive 85/73 (Official Journal 1986, C 180, p. 5). That unsatisfactory situation will remain virtually unaltered unless a decision of principle amending the Bauhuis judgment is taken.

‘Fees charged for veterinary and public health inspections, which are prescribed by a Community provision, which are uniform and are required to be carried out before despatch within the exporting country, do not constitute charges having an effect equivalent to customs duties on exports, provided that they do not exceed the actual cost of the inspection for which they were charged.’

2. The defendant disagrees with the Commission on both points. (a) As regards the case-law established in Bauhuis, the defendant declares that it is in favour of its retention. It is questionable, simply from a logical point of view, to link together, as the Commission does, two distinct categories which are not comparable, that is to say, compensatory amounts and fees, in order to appraise the legality of the latter against the justification for the former. As far as the details of the Commission's arguments are concerned, the defendant submits, first, that the fact that the relevant Community legislation does not provide for fees is irrelevant (judgment of 22 January 1980 in Case 30/79 Land of Berlin v Wigei [1980] ECR 151). The Bauhuis judgment cannot be explained by saying it was given in the context of the initial stage of a common market. The judgment was delivered in 1977 and took into account previous developments; it has been upheld, most recently in 1984, without reservation. Its clear reasoning should not be viewed in a different light because of the completion of the internal market planned for 1992, which is likely to give a strong impetus to harmonization measures. In asserting that the fees are unlawful because they are not essential for the free movement of goods, the Commission is applying a misplaced criterion. Instead of referring to a condition sine qua non, the Court rightly based its decision on two criteria: inspections for which fees are charged must be carried out in the general interest of the Community and must be mandatory and uniform. It is in the general interest of the Community to protect animals and facilitate the free movement of goods by harmonizing inspections. Fees are a fair way of distributing the burden between those benefiting from the free movement of goods and the State. Without such financial recompense the Member States would become less inclined to accept further harmonization of inspections. The Community system of inspections also entails a justification for sharing the burden between the Community, the Member State and the trade which benefits. When the Community imposes on the Member States obligations which are in the Community interest and for which no compensation is provided in the Community budget, they should be entitled to charge fees to cover their costs. The allegedly absurd consequence that Community harmonization of inspections results in the introduction of new charges on intra-Community trade does not arise from the Bauhuis judgment, but from harmonization which is either incomplete or which itself provides for the charging of fees. (b) The defendant considers that the criteria laid down in the Bauhuis judgment are applicable in this case and justify the charging of the fees at issue. The fact that the Member State which carries out the inspections does not also act in the interests of another Member State is unimportant. What matters is that the Member State's inspections should pursue the general interest of the Community in protecting animals and facilitating the free movement of goods by means of uniform and mandatory inspections. The defendant does not dispute the fact that Directive 81/389 does not dispense with an inspection in the other Member State involved but submits that this is because of the specific nature of the inspections carried out for the protection of transported animals, which would render rules along the lines of those considered in the Bauhuis case impossible. In any case, the question whether the advantages of the Community rules are great enough to justify the ‘price’ of charging fees is not relevant. The Court did not make a quantitative assessment of the advantages and disadvantages. The appropriate criterion is thus not the rationalizing effect but rather the introduction of a uniform system of inspection bringing undeniable benefits for the free movement of goods for which compensation in the form of fees is justified. As regards the Commission's argument that this case concerns import inspections rather than export inspections and that domestic products are not subject to the fees, the defendant replies that the Bauhuis case also involved fees charged specifically in connection with the movement of goods across a frontier. Moreover, inspections for the protection of animals do not constitute, within the strict meaning of the term, inspections on imports but inspections in respect of transport which were laid down by the Community legislature not on account of the importation but of the international transport of animals, which in theory, therefore, extends over a longer period of time. The defendant adds that, whilst it may be possible and preferable to amend Directive 81/389 so that inspections are carried out not at the frontier but elsewhere, that possibility cannot lead to the conclusion that the charging of fees is illegal.

G. C. Rodríguez Iglesias

Judge-Rapporteur

1 Language of the Case: German.