Important legal notice
Opinion of Mr Advocate General Lenz delivered on 10 January 1990. - GB-INNO-BM v Confédération du commerce luxembourgeois. - Reference for a preliminary ruling: Cour de cassation - Grand-Duchy de Luxembourg. - Free movement of goods - National prohibition on publication of the duration of a special offer or the price previously charged. - Case C-362/88.
European Court reports 1990 Page I-00667
Swedish special edition Page 00349
Finnish special edition Page 00367
Opinion of the Advocate-General
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Mr President,
Members of the Court,
A -Facts
1 . A somewhat unusual problem, which may fall within the area governed by Article 30 et seq . of the EEC Treaty, has given rise to this reference for a preliminary ruling on which I am called to deliver an opinion today .
2 . In September 1986, the Belgian company GB-INNO-BM, which operates supermarkets in Belgium inter alia in the Arlon area, close to the Belgium-Luxembourg border, distributed in the Grand Duchy of Luxembourg advertising leaflets to promote the sale of its products . The leaflets referred to price reductions valid for a limited period of time and the reduced prices were advertised by reference to the previous prices . That advertising complied with the Belgian legislation ( 1 ) relating to unfair competition, but not with the Grand Duchy' s legislation in force at the time, which prohibits the offering of goods for retail sale at a temporarily reduced price, other than in special sales or clearance sales, when those offers state their duration or refer to previous prices .
3 . Objecting to this advertising, the Confédération du commerce luxembourgeois ( hereinafter referred to as "CCL ") applied to the competent Luxembourg court for an injunction against GB-INNO-BM ordering it to desist from the practice . After an unsuccessful appeal against the resulting injunction issued by the Chamber for Commercial Matters of the tribunal d' arrondissement, Luxembourg, GB-INNO-BM sought an order quashing the appeal judgment from the Cour supérieure de justice in its capacity as Cour de cassation .
4 . Pursuant to Article 177 of the EEC Treaty, the Cour de cassation referred the following question to the Court of Justice for a preliminary ruling :
"Is a legislative provision of a Member State whereby the offering of goods for retail sale at a temporarily reduced price, other than in special sales or clearance sales, is permitted only on condition that the offers may not state their duration and that there may be no reference to previous prices contrary to Article 30, the first paragraph of Article 31 and Article 36 of the EEC Treaty, properly construed?"
5 . I shall deal with any additional facts and the submissions of the parties as necessary in the course of my analysis . For the rest reference is made to the Report for the Hearing .
B -Analysis
6 . CCL, the Federal Republic of Germany and the Grand Duchy of Luxembourg take the view that the contested legislation should not be assessed in the light of Article 30 et seq . of the Treaty, because it relates not to cross-frontier movement of goods but only to advertising . The sale of goods by GB-INNO-BM takes place exclusively on Belgian territory, so that it is inconceivable that the legislation should hinder intra-Community trade .
7 . GB-INNO-BM, the Commission and the French Republic, on the other hand, regard the contested Luxembourg legislative provisions as measures having an effect equivalent to quantitative restrictions on imports within the meaning of Article 30 of the EEC Treaty, since legislation which restricts or prohibits certain forms of advertising could tend to restrict the volume of imports because it might affect marketing opportunities for the imported products .
1.The applicability of Article 30 et seq . of the EEC Treaty
8 . It must first of all be conceded that the contested national legislation does not directly govern the importation of goods from other Member States of the Community but solely the advertising of those goods . That, however, does not rule out an examination of such legislation in the light of the provisions of Article 30 et seq . of the EEC Treaty, because the admittedly far-reaching prohibition expressed in Article 30 of measures having an effect equivalent to quantitative restrictions applies, as the Court has consistently held, ( 2 ) to all trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade .
9 . Although a prohibition on advertising such as that in issue here does not preclude the importation of products originating in other Member States or in free circulation in those States, it may none the less make their marketing more difficult and is thus capable of impeding, at least indirectly, trade between Member States . ( 3 ) Legislation which restricts or prohibits certain forms of advertising and certain means of sales promotion may, although it does not directly affect imports, nevertheless be such as to restrict their volume because it affects marketing opportunities for the imported products . ( 4 )
10 . The fact that national provisions on advertising could have an effect on intra-Community trade only indirectly rather than directly does not mean that Articles 30 et seq . are inapplicable .
11 . Nor does the fact that the sales transactions advertised by GB-INNO-BM in Luxembourg take place in Belgium mean that Articles 30 et seq . are inapplicable . Those provisions of the EEC Treaty make no distinction between cross-frontier trade carried on by traders and transactions where private customers cross a frontier to shop and then import the goods they have purchased in their private capacity into the territory of their own Member State . These different aspects of sales transactions were, it would appear, first mentioned by the Court in its judgment of 31 January 1984 in Joined Cases 286/82 and 26/83, ( 5 ) where it stated as regards freedom to provide services that in order to enable services to be provided, the person providing the service may go to the Member State where the person for whom it is provided is established or else the latter may go to the State in which the person providing the service is established . In its judgment of 7 March 1989 in Case 250/87 ( 6 ) the Court seems to have taken a similar approach in respect of the importation of goods when it assessed an import transaction carried out by an individual in the light of the rules of Articles 30 and 36 and held it to be incompatible with those provisions .
12 . This case is similar . Here people from one Member State go to another Member State in order to shop at better prices . They can only do so, however, if they are given information about the conditions of sale which apply in the neighbouring country .
13 . How can the people of one Member State obtain information about the conditions of sale in another Member State if the necessary advertising can be prohibited by reference to the legislation in force in the former Member State? Such an interpretation would simply deprive the frontier population of the advantages of the common market and keep them in a marginal position marked by "dividing frontiers ". The elimination of those barriers is an objective to be pursued by common action undertaken by the Member States of the Community . ( 7 ) The continued existence of such a frontier for advertising is thus incompatible with the establishment of a common market, which is specified as a prime objective of the Treaty in Article 2 .
14 . In addition, such an interpretation would restrict the significance of the objective of Title I of Part Two of the Treaty, "Free movement of goods", because in a market economy the provision of information to market participants on market conditions is an essential pre-condition of its functioning . It has not been argued that the authors of the Treaty desired such a restriction . The general clause of the prohibition "all measures having equivalent effect (( to quantitative restrictions on imports ))" suggests the construction put forward above .
15 . There is thus a connection with cross-frontier movement of goods . That distinguishes the national legislation at issue in this case from other national legislation which falls solely within the area of domestic economic and social policy and has no effect on the external trade of the State in question, such as, for instance, legislation on night work in bakeries ( 8 ) or a ban on Sunday trading . ( 9 )
16 . As a preliminary conclusion, it is thus clear that provisions in the legislation of a Member State on advertising for goods may be assessed in the light of the principles of Article 30 et seq . even where the sales transaction is to take place in another Member State and the goods sold are then imported into the territory of the former Member State simply by a private individual .
2.The details of the advertising prohibition
17 . As has already been stated, legislation which restricts or prohibits certain forms of advertising and certain means of sales promotion may well be capable of restricting imports because it affects marketing opportunities for the imported products . The possibility cannot be ruled out that to compel a producer either to adopt advertising or sales promotion schemes which differ from one Member State to another or to discontinue a scheme which he considers to be particularly effective may constitute an obstacle to imports even if the legislation in question applies to domestic and imported products without distinction . ( 10 ) That is especially true if, as in this case, the advertising is for two countries with the same language and currency .
18 . As the Court has consistently held, ( 11 ) in the absence of common rules relating to the marketing of the products concerned, obstacles to free movement of goods within the Community resulting from disparities between the national laws must be accepted in so far as such rules, applicable to domestic and imported products without distinction, may be justified on one of the grounds of public interest mentioned in Article 36 of the EEC Treaty or by mandatory requirements relating to consumer protection and fairness of commercial transactions . Such legislation must also be reasonable in relation to the aim in view . If a Member State has a choice between various measures to attain the same objective, it is bound to choose the means which least restricts freedom of trade .
19 . In the light of the foregoing considerations it is clear that common or harmonized provisions on advertising are to be found only in the Council Directive of 10 September 1984 relating to the approximation of the laws, regulations and administrative provisions of the Member States concerning misleading advertising . ( 12 ) That directive, however, is concerned solely with misleading advertising, as its title indicates, and furthermore, according to Article 7 thereof, it is left to the Member States to adopt provisions to ensure more extensive protection for consumers, persons carrying on a business and the general public .
20 . Since, therefore, definitive Community rules on advertising do not exist, the question must be examined whether the national legislation at issue in this case may be justified by the mandatory requirements mentioned above . The two prohibitions regarding advertising must be discussed separately .
( a)The prohibition on publishing the duration of a sales offer
21 . The Luxembourg Government sought to justify the legislation by referring to the need to ensure price transparency in the interests of all market participants and to distinguish sales at reduced prices from the authorized clearance sales that take place twice a year . The Luxembourg legislature wished to regulate the market and restrict commercial practices likely to harm the consumer and disrupt normal competition . The proliferation of such commercial practices resulting in an increase of the profit margin in normal periods to compensate for the losses suffered on the occasion of special sales is not, it is said, in the consumer' s interest .
22 . At the hearing the Luxembourg Government shifted its emphasis somewhat and stated that the main purpose of the contested legislation was to protect the consumer, not to protect domestic trade .
23 . CCL points out in addition that special sales over a limited period of time whose duration is published disrupt normal competition between businesses to the detriment of the consumer .
24 . The Government of the Federal Republic of Germany shares that point of view . An individual business in competition with others should not be permitted, by organizing sales which take place outside the usual trading patterns, to place before the public special inducements in order to gain a lead on its competitors . Furthermore, there is the aspect of protection of the consumer against excessive and unobjective influence on his economic freedom of choice . In that connection protection against psychological pressure to buy caused by limiting the offer in time plays a major role .
25 . GB-INNO-BM, the French Government and the Commission consider that the prohibition on publishing the duration of the sales offer is not justified . Withholding that pertinent information from the consumer does not serve to protect him .
26 . In examining the question whether the prohibition against publishing the duration of the sales offer can be justified, reference should first be made to the Luxembourg Government' s explanation, since it must be in the best position to give information on the objectives of provisions in its legislation . The Luxembourg Government essentially justified the prohibition by explaining that special sales must, in the interest of the consumer, be clearly distinguishable from the permitted twice-yearly clearance sales .
27 . However, no explanation why such a decision must be regarded as a "mandatory requirement" for the protection of the consumer and fair competition was put forward by the Luxembourg Government . It would indeed be hard to explain, because the normal clearance sales take place twice yearly at fixed times, so that it must be quite clear to the consumer that special sales at other times cannot be clearance sales . Nor, moreover, was it shown how it can be in the consumer' s interest to distinguish between special sales and clearance sales .
28 . In addition no reason was given why the principle of price transparency should require the withholding of information, such as the duration of a special sale, which can be useful to the consumer when deciding whether to make purchases .
29 . All in all it is thus clear that the existence of mandatory requirements for ensuring consumer protection was not made out .
30 . The same applies with regard to protection of fair competition . If special sales offers are permitted - and they are under Luxembourg law, which only prohibits the publishing of their duration - it is not obvious how the giving of information to consumers on the duration of the offer can interfere with the interests of competitors . The interference in the competitive structure feared by some of the parties, even were it to exist, would in any case be unaffected by the fact that the duration of the special offer was made known .
( b ) The prohibition against comparing prices
31 . The Luxembourg Government justifies the prohibition against referring to the price previously applicable on the practical grounds, first, that traders should be prevented from using a special sale to disguise a clearance sale outside the periods laid down by law . Secondly, it wished to avoid the need to check previous prices .
32 . At the hearing the Luxembourg Government also referred to the danger that the purchaser might be misled . The consumer can never, after all, check whether the previous price given was genuine . The prohibition against comparing prices thus serves to protect the consumer .
33 . The Luxembourg Government' s view is supported by the Federal Republic of Germany and CCL, while the French Government, GB-INNO-BM and the Commission disagree .
34 . Information should only be withheld from the consumer for his own protection for convincing reasons . After all, it must be assumed that any accurate information can only be useful to the consumer . The point that where price comparisons are prohibited checks on the genuineness of the prices indicated are rendered unnecessary does not suffice to justify the prohibition . The interests of administrative simplicity cannot be accepted as a "mandatory requirement" which can restrict the principle of free movement of goods .
35 . Protection of the consumer from misleading advertising is not, on the other hand, to be rejected out of hand as a justification . It is true that misleading advertising may cause a consumer to take decisions prejudicial to him when acquiring goods or property or using services, as is stated in the preamble to the directive on misleading advertising .
36 . Nevertheless, an absolute prohibition against comparing prices appears to be disproportionate where consumer protection is concerned . If the interest of the consumer in obtaining comprehensive information on the one hand is weighed against that of protecting him from misrepresentation on the other, it would appear to be sufficient to prohibit price comparisons based on incorrect and thus misleading facts . That means that a price comparison may be prohibited where the price said to have applied previously is in fact not correct .
37 . Since under Article 8 of the Council directive on misleading advertising, to which frequent reference has been made, all the Member States of the Community have been bound since 1 October 1986 to take action against misleading advertising, a general prohibition against price comparison in the interest of consumer protection would appear disproportionate : the prohibition of incorrect price comparisons is sufficient .
38 . In that connection it should be pointed out that under Belgian law, to which GB-INNO-BM' s advertising conformed, a price comparison is only permissible if reference is made to the price normally applicable . Usually that will be the price charged in the month preceding the reduction . ( 13 )
39 . Effective control under such rules is ensured not only by the authorities and consumers, but also by competition . The plaintiff in the main proceedings was right to make that point .
40 . The Government of the Federal Republic of Germany takes the view that protection againt unfair competition forms part of the protection of industrial and commercial property referred to in Article 36 of the EEC Treaty . On that point it suffices to state that in my opinion there is no question here of unfair competition and the provisions of Article 36 cannot be relied on against lawful competition .
41 . It follows that the Luxembourg legislation at issue may not be applied to the advertising distributed in Luxembourg by the Belgian-registered plaintiff GB-INNO-BM, although it remains applicable to the Luxembourg business community . It is for the Luxembourg legislature, not the Court, to draw the necessary conclusions . The French Government was right to make that point .
( c ) The standstill clause in Article 31 of the EEC Treaty
42 . On the question of the extent to which the standstill clause in the first paragraph of Article 31 of the EEC Treaty may apply, nothing can be deduced from the conclusions of the parties or from the reference for a preliminary ruling itself . In particular, there are no grounds for concluding that the Grand Duchy' s legislation of 23 December 1974 introduced quantitative restrictions that did not previously exist . For that reason no comment can be made on the applicability of Article 31 of the EEC Treaty .
C - Conclusion
43 . In conclusion I propose that the Court answer the question referred to it as follows :
"Legislative provisions of a Member State whereby the offering of goods for retail sale in other Member States at a temporarily reduced price, other than in special sales or clearance sales, is permitted only on condition that the offers may not state their duration and that there may be no reference to previous prices is contrary to Articles 30 and 36 of the EEC Treaty, properly construed ."
(*) Original language : German .
( 1 ) At all events the Court has before it no indication that the Belgian authorities had raised any objection to the advertisements .
( 2 ) Since the judgment of 11 July 1974 in Case 8/74 Dassonville (( 1974 )) ECR 837, at p . 852 .
( 3 ) See in particular the judgments of 16 December 1980 in Case 27/80 Criminal proceedings against Fietje (( 1980 )) ECR 3839, at p . 3853, and of 14 July 1988 in Case 298/87 Smanor (( 1988 )) ECR 4489 .
( 4 ) See the judgment of 15 December 1982 in Case 286/81 Oosthoek' s Uitgeversmaatschappij (( 1982 )) ECR 4575, at p . 4587 .
( 5 ) Judgment of 31 January 1984 in Joined Cases 286/82 and 26/83 Luisi and Carbone v Ministero del Tesauro (( 1984 )) ECR 377, at p . 401 .
( 6 ) Judgment of 7 March 1989 in Case 215/87 Schumacher v Hauptzollamt Frankfurt am Main/Ost (( 1989 )) ECR 617 .
( 7 ) Second recital in the preamble to the EEC Treaty .
( 8 ) Judgment of 14 July 1981 in Case 155/80 Oebel (( 1981 )) ECR 1993 .
( 9 ) Judgment of 23 November 1989 in Case C-145/88 Torfaen Borough Council v B & Q plc (( 1989 )) ECR 3851 .
( 10 ) See the judgment of 15 December 1982 in Case 286/81 Oosthoek, supra in note 4, at p . 4587 .
( 11 ) See in particular the judgments of 20 February 1979 in Case 120/79 Rewe v Bundesmonopolverwaltung fuer Branntwein (( 1979 )) ECR 649, at p . 662, of 10 November 1982 in Case 261/81 Rau v Desmedt (( 1982 )) ECR 3961, at p . 3972, and of 12 March 1987 in Case 178/84 Commission v Germany (( 1987 )) ECR 1227, at p . 1270 .
( 12 ) OJ 1984, L 250, p . 17 .
( 13 ) Article 4(1 ) of the Law on commercial practices of 14 July 1981 .
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