Officier Van Justitie v. J. A. W. M. J. Kortmann. (Case 32/80) Before the Court of Justice of the European Communities ECJ

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1 Officier Van Justitie v. J. A. W. M. J. Kortmann. (Case 32/80) Before the Court of Justice of the European Communities ECJ ( The President, Mertens de Wilmars C.J., Pescatore, Lord Mackenzie Stuart, Koopmans PP.C.; O'Keeffe, Bosco and Touffait JJ.) Sig. Francesco Capotorti Advocate General. 28 January 1981 Reference from the Netherlands by the Arrondissementsrechtbank, Roermond, under Article 177 EEC. Parallel imports. Pharmaceuticals. Health inspection. Fees. Nondiscriminatory health controls on the marketing of pharmaceuticals, which are compatible with Article 36 EEC under the De Peijper rule as not unjustifiably hindering parallel imports, do not lose that character merely because fees are charged for the inspections. The question of whether the fees unduly hinder imports is to be determined under the rules applicable not to quantitative restrictions but to measures equivalent to customs duties. [11]-[12] Officier Van Justitie v. De Peijper (104/75), [1976] E.C.R. 613, [1976] 2 C.M.L.R. 271, explained. Parallel imports. Pharmaceuticals. Health inspection. Fees. Fees demanded of a parallel importer of pharmaceutical products, either in the form of a single fee on the occasion of the registration of the imported product or in the form of an annual fee charged to meet the costs of inspections to check whether the imported products conform to the registration, are not equivalent to customs duties so long as they form part of a general system of internal fees charged equally on registration of domestically produced products and on import of the products by the manufacturer or his appointed importer or parallel importers and the fees charged to the parallel importer are assessed on the same (or similar) basis as that for fees on domestic products. [17]

2 Taxation. Customs duties. Discrimination. A discriminatory internal tax does not automatically constitute a charge of equivalent effect to a customs duty. It will not be so unless the detailed rules governing the levying of the charge, or its use if the charge is allocated to a particular use, are such that in fact *47 it is imposed solely on imported products to the exclusion of domestic products. [18] Parallel imports. Discriminatory taxation. In establishing discrimination under Article 95 EEC it is necessary to compare the fiscal treatment of the domestic product with that of the imported product. So long as the charges levied on parallel imports pass that test, it is irrelevant that there may be discrimination between different forms of importation. [20] Parallel imports. Pharmaceuticals. Health inspection. Fees. Customs duties. Discrimination. A national system of fees imposed on registration of a product whereby a lower fee is charged on subsequent registrations, because the main burden of health control is borne by the first registration and second registrations are only concerned with monitoring compliance with the specifications contained in the first registration, are not incompatible with Article 95 EEC in so far as imported products are concerned. It is not necessary that fees for subsequent registrations should be totally abolished provided that, having regard to the difference in the two registrations, a reasonable proportion is maintained in fixing the amount of such fees. [24] & [26] Parallel imports. Pharmaceuticals. Health inspection. Fees. Customs duties. Discrimination. Article 95 EEC is complied with where a tax of the same amount affects the cost prices of different undertakings unequally by reason of particular features of their economic structure, e.g. where a tax per product affects differentially the manufacturer or authorised importer who is taxed on a few products marketed in large quantities and the parallel importer who is taxed on many products each marketed in small quantities. It is sufficient that the internal tax applies in accordance with the same criteria, objectively justified by the purpose for which the tax was introduced, to domestic products and imported products so that it does not result in the imported product's bearing a heavier charge than that borne by the similar domestic product. [28] The Court interpreted Articles 36, 13 and 95 EEC in the context of Dutch legislation imposing on all those putting pharmaceutical products on to the Dutch market for the first time (whether manufacturers, authorised importers or parallel importers) a registration charge and an annual fee for compliance inspections,

3 the charge--but not the fee--being higher for the first registration than for subsequent registrations of the same product by subsequent traders, to the effect that the levying of such charges and fees complied with the De Peijper rule and did not constitute a quantitative restriction under *48 Article 36, that the question whether it hindered imports was to be determined under the rules on customs duties, that the Dutch legislation applied equally to domestic products and imports and so was not caught by Article 13, that the lower level registration fee complied with Article 95 so long as the difference between it and the first registration fee was reasonable in the circumstances, and that the economic consequences of the uniform annual fee on parallel importers and on authorised importers respectively did not violate Article 95. Representation Mr. Italianer, for the Dutch Government as amicus curiae. Mr. Beschel, of the Legal Service of the E.C. Commission, and A. F. de Savornin Lohman, of the Rotterdam Bar, for the E.C. Commission as amicus curiae. The following case was referred to in the judgment: 1. Officier Van Justitie v. De Peijper (104/75), 20 May 1976: [1976] E.C.R. 613, [1976] 2 C.M.L.R The following further cases were referred to by the Advocate General: 2. Re Statistical Levy: E.C. Commission v. Italy (24/68), 1 July 1969: (1969) E.C.R. 193, [1971] C.M.L.R Rewe-Zentralfinanz Egmbh v. Director of the Landwirtschaftskammer Westfalen-Lippe (39/73), 11 October 1973: [1973] E.C.R. 1039, [1977] 1 C.M.L.R Conceria Daniele Bresciani v. Amministrazione delle Finanze (87/75), 5 February 1976: [1976] E.C.R. 129, [1976] 2 C.M.L.R Bauhuis v. the Netherlands (46/76), 25 January 1977: [1977] E.C.R Re Inspection Fees on Exported Plants: E.C. Commission v. the Netherlands (89/76), 12 July 1977: [1977] E.C.R. 1355, [1978] 3 C.M.L.R Marimex SpA v. Ministero delle Finanze (29/72), 14 December 1972: [1972] E.C.R. 1309, [1973] C.M.L.R Statens Kontrol Med aedle Metaller v. Preben Larsen (142/77), 29 June 1978: [1978] E.C.R. 1543, [1979] 2 C.M.L.R Denkavit Futtermittel GmbH v. Minister für Ernährung, Landwirtschaft und Forsten des Landes Nordrhein-Westfalen (251/78), 8 November 1979: [1979] E.C.R. 3369, [1980] 3 C.M.L.R Re Stamp Tax on Timber: E.C. Commission v. Belgium (77/69), 5 May 1970: [1970] E.C.R. 237, [1974] 1 C.M.L.R TABULAR OR GRAPHIC MATERIAL SET FORTH AT THIS POINT IS NOT DISPLAYABLE

4 Facts In this case a preliminary question has been referred to the Court of Justice by the Arrondissementsrechtbank Roermond, Netherlands, before which criminal proceedings were instituted against Mr. Kortmann, a Dutch trader, who was charged with infringing certain requirements of the rules on the manufacture and marketing of medicinal products. The basis of those rules is the law relating to the supply of medicinal products (Wet op de Geneesmiddelenvoorziening) of 28 July. [FN1] It lays down as a requirement for the production and supply of pharmaceutical preparations and proprietary medicinal products the prior registration of such products and preparations by a board which approves them and authorises their uses. FN1 St An order of 8 September 1977 [FN2] on the registration of medicinal products (Besluit Registratie Geneesmiddelen, hereinafter referred to as 'the Registration Order') governs the implementation of the required registration. The procedure for registration is the same whether it is requested by the manufacturer of the product or the manufacturer's appointed importer in the Netherlands. On the other hand different procedures are laid down where the registration is requested by a 'parallel importer'. These specific procedures are described in section 23 of the Registration Order, which was adopted following the judgment of the Court of Justice of 20 May 1976 (Case 104/75, De Peijper) [FN3] in order to comply with that judgment. FN2 St FN3 [1976] E.C.R. 613, [1976] 2 C.M.L.R That section provides that where an importer intends to effect parallel imports of pharmaceutical products from another member-state they must first be registered, albeit in a simplified form, since they have previously been registered and checked at the request either of the manufacturer or of the duly appointed importer. The essential provisions of the simplified system of monitoring thereby brought into force are formed by the said section 23 (2) and (3) of the Registration Order which reads as follows: Section 23 (2) 'Any person wishing to import from a member-state a pharmaceutical product as marketed in that member-state may, on application, and in accordance with the following provisions be entered by the Board in the register in question as the holder of the registration:

5 (a) Where the product in question: (1) either has the same qualitative and quantitative composition *50 as a pharmaceutical product registered in accordance with an application within the meaning of section 3 (1) of the Act or is practically the same and has the same effect as such registered pharmaceutical product; (2) is prepared either by the manufacturer of the registered product or by another manufacturer of the group to which the manufacturer of the registered product belongs or by a licensee of the manufacturer of the registered product; (3) is made up in the same pharmaceutical form as the registered products referred to in subparagraph (1); (b) where the product is a proprietary medicinal product which has been authorised both in the Netherlands and in the member-state concerned in accordance with Articles 9 and 11 of Directive 75/319/EEC. Section 23 (3) 'An application within the meaning of paragraph (2) submitted in respect of a product referred to in sub-paragraph (a) therefore must contain the following information: (a) the name and address of the applicant; (b) the name of the member-state from which the pharmaceutical product is to be imported; (c) the name under which the product to be imported is marketed in the member- State referred to in sub-paragraph (b); (d) the name and address of the person who is responsible for the marketing of the product in the member-state referred to in sub-paragraph (b); (e) a statement of the pharmaceutical form of the product to be imported; (f) the name of the registered pharmaceutical product referred to in paragraph (2) (a) (2) and the number under which that product is entered in the register; (g) the name under which the product to be imported is to be marketed.' Pursuant to section 4 (6) and section 5 (2) of the 1958 Act the Registration Order provides for the collection of various charges inter alia from traders who have requested and obtained a registration of medicinal products. The scale of these charges was fixed by an order (Vergoedingsbesluit), hereinafter referred to as 'the Charges Order', of the Secretary of State for Health and the Environment of 15 December [FN4] Two of these charges are at issue in the main action: (a) a single fee charged on the registration of a pharmaceutical product. It amounts in principle to fl 2,668 for the manufacturer or authorised importer; it is reduced to fl 667 in the case of the simplified registration by parallel importers (Charges Order, sections 6 and 7); (b) an annual fee of fl 890 (proprietary medicinal product) or fl (preparation) for each product registered, which is intended to cover the costs of monitoring and is imposed at *51 the same rate on manufacturers, authorised importers and parallel importers (Charges Order, section 9).

6 FN4 Staatscourant, 251. Mr. Kortmann is charged with marketing pharmaceutical products which he imported in parallel from other member-states without applying for or obtaining the simplified registration for them. In his defence he argues that the acts with which he is charged do not constitute offences because the provisions of the Registration Order, read together with those of the Charges Order, are incompatible with Article 30 et seq. of the EEC Treaty. The Arrondissementsrechtbank Roermond, to which the matter was referred on appeal, considered that the action raised questions on the interpretation of Community law and, by a judgment of 4 December 1979, submitted a request to the Court of Justice of the European Communities for a preliminary ruling on the following question: 'Given that: (a) certain pharmaceutical products are lawfully in free circulation in one or more member-states in the sense that the permits required under national law for those pharmaceutical products have been issued to the manufacturers or, where appropriate, to those who are responsible for putting the pharmaceutical products into circulation in each of the member-states; and (b) third parties may be aware that such permits have been granted in each of the member-states because the fact has been officially published or has become generally known by some other means; and (c) a (parallel) importer of medicinal products established in one of the member- States imports into the member-state in which he is established the pharmaceutical products which are in circulation as described above, do the exceptions to the rules relating to the free movement of goods within the EEC, particularly Article 36 of the EEC Treaty in so far as it relates to the protection of health and life of humans, justify the authorities of the importing member-state permitting imports of those pharmaceutical products only on payment of a registration charge, and if so, what standards should be applied to the amount and frequency of the payments and the system governing payments?' Opinion of the Advocate General (Sig. Francesco Capotorti) 1. This case again brings up for your consideration the issue of the conformity with Community law of national provisions which have or may have a restrictive effect on the importation of pharmaceutical products and in particular on what are known as parallel imports. I would recall that in the judgment delivered on 20 May 1976 in Case 104/75 De Peijper [FN5] the Court held that national rules which made permission to market pharmaceutical products dependent *52 on the production of documents not usually available to the national importer were unlawful. On that occasion the Court observed that national rules of that kind have effects equivalent to those of a quantitative restriction on imports since they enable a manufacturer and his exclusive dealers to enjoy a monopoly of importing and marketing the products simply by refusing to produce the documents in question.

7 FN5 [1976] E.C.R. 613, [1976] 2 C.M.L.R In this case it is necessary to consider another aspect of the problem, namely the pecuniary charges relating to a national system of registration of imported medicinal products, in order to establish whether such charges are compatible with the Treaty and, if so, whether they are subject to any restrictions having regard to the criteria governing their amount and payment. I shall now briefly summarise the facts of the case. Mr. Kortmann, a trader in medicinal products in the Netherlands, was charged with contravening the provisions in force in that country by having in his possession for sale and marketing in the course of 1978 pharmaceutical products which had been imported in parallel from other member-states of the EEC and which had not been registered. The court of first instance in Venlo acquitted him of that charge in a judgment of 8 March 1979 but the public prosecutor lodged an appeal and Mr. Kortmann became subject to further proceedings before the Arrondissementsrechtbank (District Court), Roermond. In the course of those proceedings the court referred the following question to the Court of Justice for a preliminary ruling: [The Advocate General repeated the question, and continued:] 2. Although the question is formulated in general terms and thus appears formally to accord with the requirements of Article 177 of the EEC Treaty, it is in fact concerned with whether or not that part of the Dutch legislation governing trade in medicinal products which deals with the fees payable on the registration of products which have been imported in parallel is in accordance with Community law. It follows that the Court is once again required to resolve within the framework of proceedings for a preliminary ruling a question which could have been considered in greater depth if the Commission had instituted a direct action under Article 169 of the EEC Treaty. There are thus grounds for fearing that it will not be easy to provide the national court, through the reply to a hypothetical question referred to the Court of Justice by the court seised of the main action, with the particular information which is requires and which relates to specific aspects of the relevant Dutch legislation. That said, it seems appropriate to give a broad outline of the provisions of that legislation. The Act of 28 July 1958 relating to the supply of medicinal products (Wet op de Geneesmiddelenvoorziening) lays down as a condition for the production and marketing of proprietary medicinal products and pharmaceutical preparations that they should first be *53 registered by a board of experts which is required to approve them and authorise their use. An Order of 8 September 1977 governs the procedure for such registration, establishing different legal arrangements for official importers and for parallel importers: the former receive the same treatment as domestic manufacturers whilst special provisions apply to the latter. According to section 23 of the Order of 8 September 1977, any person wishing to effect a parallel importation into the Netherlands of a pharmaceutical product which has already been registered (obviously by a person, who may, for

8 convenience, be referred to as the 'official importer') must also register the product so that it may be checked whether its characteristics conform to those recorded through the earlier registration. However the administrative procedure in question is simplified since regard is had to the fact that the product in question has already been examined at the request of the official importer (who will be the same manufacturer or an authorised distributor). Having regard to the way in which the question has been drafted by the court seised of the main action, the aspect of the Dutch legislation with which this case is concerned is that of payment of the fees relating to the registration procedure. In fact, according to the legislation, a parallel importer is required to pay two kinds of fee on each proprietary medicinal product imported, namely a single fee which is paid initially and another fee which is paid annually. The single fee is fixed at fl. 667 for a parallel importer and at fl. 2,668 for an official importer (see section 4 of the Order of 8 September 1977 as amended by section 6 of the Order of 15 April 1977). Nevertheless, whilst it is provided that in the case of an official importer the Minister for Health and the Environment may grant partial exemption from the fee in special circumstances (see section 4 (3) of the Order of 8 September 1977) no such power is given in the case of a parallel importer. The annual fee is fixed at a uniform rate (fl. 890 for each proprietary medicinal product) for both an official importer and a parallel importer (see section 15 (1) of the Order of 8 September 1977 and section 9 (1) of the Order of 15 December 1977). Nevertheless in certain special circumstances the competent minister may grant either importer a partial exemption. The scope of that exemption is classified in the recitals to the Order of 1977 in which it is stated that the exemption may be granted principally where a product has a limited market in view of the rarity of the illness which it is used to treat. 3. The first of the issues raised by the Dutch court is whether, having regard to Community rules on the free movement of goods, it is lawful for a member-state to require parallel importers of pharmaceutical products to pay a registration fee. It should be emphasised that the lawfulness of the system of mandatory registration of medicinal products which are imported *54 in parallel has not thereby been called in question. I have already had occasion to mention the judgment of the Court of 25 May 1976 in the De Peijper case which is concerned with a particular aspect of the national procedure designed to ensure the registration of products imported in parallel. I shall merely point out now that that judgment did not consider the lawfulness of registration as a form of precautionary check in the interests of health, its lawfulness being evidently taken for granted. Instead it considered a specific aspect of the authorisation procedure (whether the parallel importer may be obliged to produce documents concerning the imported product). In general terms the Court held in its interpretation of Articles 30 and 36 of the Treaty that 'national rules or practices which restrict imports of pharmaceutical products or are capable of doing so are only compatible with the Treaty to the extent to which they are necessary for the effective protection of health and life of humans'. If the system of mandatory registration of pharmaceutical products is viewed from that standpoint, it appears to me possible to state without hesitation that, whilst such a system constitutes

9 an obstacle to imports which may come under the prohibition in Article 30 of the EEC Treaty, it is lawful pursuant to Article 36 in that it is necessary for the purpose of the protection of health. I should add that there are no grounds for restricting such recognition to the registration of products which constitute 'official' importations. The objective need for registration, for the purposes indicated above, exists even when the medicinal products in question are imported in parallel and accordingly even in that case Article 36 justifies the conclusion that the system is lawful. In short, therefore, the Dutch court was correct not to raise doubts on that point even though it is worth observing that the express reference to Article 36 would have appeared truly relevant only if the question had been thus extended. In confirmation of the considerations which are based on the provisions of the Treaty on the free movement of goods I would observe that, with a view to harmonising national rules on the marketing of pharmaceutical products, secondary Community law itself provides that in the case of both proprietary medicinal products produced by domestic manufacturers and imported products the placing of such products on the market is conditional upon the issue of an administrative authorisation by the competent authority of the member-state where the products are to be marketed. The matter is governed essentially by Council Directive 65/65/EEC of 26 January 1965 [FN6] and by Council Directive 75/319/EEC of 20 May 1975 [FN7] which, in making provision for the grant of permission to place products on the market, do not distinguish between the principal importer and the parallel importer. In this connection it is also significant that the Proposal for a Council Directive amending Directives *55 65/65/EEC and 75/319/EEC submitted by the Commission to the Council on 2 June 1980 [FN8] is expressly concerned inter alia precisely with the registration of parallel imports, the procedures for which are laid down in Article 10 (a) of that proposal. It is worth recalling that in the third recital of the preamble to that proposal it is stated that '... it is consequently necessary to supplement the provisions of Directive 65/65/EEC to allow the registration of parallel importers as persons responsible for marketing, which is necessary for the proper supervision of the market by the competent authorities'. FN6 [ ] O.J.Spec.Ed. 20. FN7 [1975] O.J. L147/13. FN8 [1980] O.J. C143/8. 4. I shall now endeavour to establish whether the provisions of the Treaty on the free movement of goods permit member-states to require payment of fees from parallel importers as a condition of their placing pharmaceutical products on the market. In this action the Dutch Government has maintained in limine that this question is irrelevant in that under Dutch legislation failure to pay the fee does not prevent parallel importers from placing medicinal products on the market.

10 That argument must be rejected and first of all on grounds of principle. Whereas it is true that in exercising the jurisdiction conferred upon it by Article 177 of the EEC Treaty, the Court of Justice is required to interpret Community law and not a particular national law, there are even stronger grounds for holding that it may not infer from a given interpretation of the law of a member-state that a question submitted by a national court is irrelevant or superfluous. Furthermore, in the present case the court making the reference has worded the question itself in general terms and with reference to Community law. Accordingly, I do not see how the Court of Justice may escape its own duty to provide a reply by making reference to the content of the national law of that court. It must next be stated that, even if the objection on the basis of principle were to be disregarded, the argument of the Dutch Government is so weak that it is impossible to accept. The documents which have been produced in fact appear to give the lie to the view that the registration of medicinal products in the Netherlands is independent of the payment of the fee and to show on the contrary that, according to the prevailing administrative practice, requests for registration cannot be processed if the initial fee is not paid. Of importance in this connection is the letter dated 4 January 1979 from Dr. Reijgeler, the Dutch chief public health inspector of medicinal products, which is concerned precisely with the registration of pharmaceutical products which have been imported in parallel. 5. I have already noted that the question which has been submitted to the Court of Justice refers specifically to Article 36 of the EEC Treaty. This entails the notion that charging parallel importers fees *56 for the registration of medicinal products may be considered a measure having an effect equivalent to quantitative restrictions which is nevertheless capable of qualifying for the exemption referred to in Article 36 as a restriction intended to product health. In my view the Commission and the Dutch Government are correct in denying that the fees in question may be considered as measures having an effect equivalent to quantitative restrictions on imports. Classification in the category of the restrictions contemplated by Articles 30 to 36of the EEC Treaty would be appropriate if the concern were with checks applied to imported pharmaceutical products through the registered system. I have, however, stated that the court making the reference has properly considered it pointless to raise doubts under this head and that this case is accordingly concerned only with the lawfulness in Community law of the imposition of pecuniary charges on importers on occasion of the registration of medicinal products. In the question submitted by the national court there is a general reference to the compatibility of such pecuniary charges with the provisions of the Treaty on the free movement of goods. As is well known, the first of these provisions (in numerical order and also in order of importance) are those contained in Article 9 of the Treaty which lays down the prohibition between member-states of customs duties on imports and exports and of all charges having equivalent effect. Article 9 is to be taken in conjunction with the subsequent Article 12 which prohibits the introduction of 'any new customs duties on imports or exports or any charges having equivalent effect'. These are two provisions which in theory might apply to the situation described by the Dutch court. In the abstract

11 the requirement that an importer of pharmaceutical products pay sums of money as the registration fee for such products may come within the concept of a charge having an effect equivalent to a customs duty since it undoubtedly constitutes a pecuniary burden intended to have an incidence on the price of the imported products and thus to have the same restrictive effect on trade patterns as a customs duty. Classification of the fees in questions as measures prohibited by Articles 9 and 12 would have to be ruled out if such fees were regarded as the consideration for a service, the health inspection, rendered by the importing State to the importer. As is well known, according to the case law of the Court all pecuniary charges which constitute the consideration for a service rendered by the administration may not be classified as a charge having an effect equivalent to a custom duty. The Court has repeatedly pronounced to that effect; I would recall the judgments of 1 July 1969 in Case 24/68 E.C. Commission v. Italy, [FN9] of 11 October 1973 in Case 39/73 Rewe, [FN10] *57 of 5 February 1976 in Case 87/75 Bresciani, [FN11] of 25 January 1977 in Case 46/76, Bauhuis [FN12] and of 12 July 1976 in Case 89/76 E.C. Commission v. Netherlands. [FN13] However that case law may not be relied upon in this case for the simple reason that the activity of the administration of the State intended to set up a system of health inspection in the general interest may not be considered as a service rendered to the trader subject to the inspection which is such as to justify, as a consideration therefor, the imposition of a pecuniary charge (see in this connection the aforementioned judgments in Rewe and Bresciani). FN9 [1969] E.C.R. 193, [1971] C.M.L.R. 611, Particularly at Para. [11]. FN10 [1973] E.C.R. 1039, [1977] 1 C.M.L.R. 630, Particularly at Para. [4]. FN11 [1976] E.C.R. 129, [1976] 2 C.M.L.R. 62. FN12 [1977] E.C.R. 5, Particularly at Paras. [7] and [11]. FN13 [1977] E.C.R. 1355, [1978] 3 C.M.L.R Rather, it is on the basis of another and decisive circumstance that it is necessary to reject the classification of the fees in question as charges having an effect equivalent to customs duties. I have had occasion to recall that under the Dutch legislation the registration fees are payable by both manufacturers and importers of medicinal products and we know that in framing its question the national court had particular regard to the rules of its national law. It is impossible to consider as a charge specifically burdening imports--and therefore as a charge having an effect equivalent to a customs duty--a fee which forms part of a domestic system of charges applicable to all products, domestic and imported, belonging to a certain category of goods and which arises in connection with a formality prescribed equally for all products in that group. The Court of Justice has frequently upheld this principle; I would recall the judgments of 14 December

12 1972 in Case 29/72 Marimex [FN14] of 11 October 1973 in the case of Rewe, of 25 January 1977 in the case of Bauhuis, both cited above, of 29 June 1978 in Case 142/77 Statens Kontrol Med Aedle Metaller v. Preben Larsen [FN15] and of 8 November 1979 in Case 251/78 Denkavit. [FN16] The question which has given rise to the present proceedings relates, by implication at least, to a type of fee which is payable by parallel importers, official importers and also domestic producers. It follows in my view that the reply to the question must be sought within the application not of Articles 9 and 12 of the EEC Treaty but rather of Article 95 which prohibits the imposition upon the products of other member- States of taxation in excess of that applied to the domestic products. FN14 [1972] E.C.R. 1309, [1973] C.M.L.R. 486, Particularly at Para. [8]. FN15 [1978] E.C.R. 1543, [1979] 2 C.M.L.R FN16 [1979] E.C.R. 3369, [1980] 3 C.M.L.R. 513, Particularly at Para. [11]. 6. The conclusion which I have just reached remains valid even where certain differences exist between the treatment accorded to importers and that given to domestic producers provided that such differences are not so marked as to preclude their being regarded as features of substantially one single system. I shall now proceed to take as a point of departure the situation *58 created by the Dutch legislation. In that legislation the differences in system to which I have referred may be summarised in essentially two points: the differing amounts of the single fee, which is less in the case of parallel importers, and the possibility of obtaining partial exemption from that fee, which is not provided for in the case of parallel importers. With regard to the first matter I would observe that in fixing a lower fee for parallel importers the Dutch legislature probably intended to relate (albeit by means of flat-rate arrangements) the amount of the fee to estimated turnover and thereby to align the charge with that imposed on other traders. It is in fact known that parallel importers tend to obtain a large number of products from different markets and under the Dutch system, which calls for a fee for each imported proprietary medicinal product, such importers are thus required to pay very many single fees in relation to their total turnover. The situation is different in the case of official importers and domestic producers who market a smaller number of proprietary medicinal products, all in considerable quantities, and require in consequence to pay a smaller number of single fees in relation to their turnover. In these circumstances the fact that the Dutch rules prescribe a single fee which is appreciably lower in the case of parallel importers is not only related to the lower cost of the checks which the State is obliged to carry out on the product before registration but appears also to be prompted by the intention of effecting a certain equalisation in the tax burdens on parallel importers and other traders. I therefore consider that on that basis it may be accepted that the registration fee charged to parallel importers forms part of a general system of internal taxation which displays substantial homogeneity.

13 With regard then to the second point, that is, the possibility which is given only to domestic producers and official importers of obtaining a partial exemption from the single fee, the difference is of limited scope the more since the exemption does not take the form of a right enjoyed by the trader but is a power enjoyed by the administration in exceptional cases. 7. Once it has been established that the registration fee for medicinal products must be appraised in the light of Article 95 it remains to ascertain what deductions may be drawn from that provision with regard to the treatment of parallel importers. In seeking to do so, it is necessary also to broach the second issue raised by the national court, namely the standards which should be applied to the amount and frequency of the payments and the system governing the payments. Nevertheless in this connection I am bound to repeat what I pointed out at the outset: the reply to a question of this nature which is in abstract terms can only be general whilst taking into consideration the details of the specific case goes beyond the function of these proceedings. *59 Turning now to compare the taxation which the system in the Netherlands imposes upon parallel importers with that imposed upon official importers and national producers, it is easy to see that the single fee payable by a parallel importer is fixed at a flat rate for each imported pharmaceutical product and for each member-state from which it comes. If account is taken of the fact, which has already been emphasised, that parallel importers usually handle a large range of medicinal products than that marketed by official importers and national manufacturers it is also necessary to find that there is a risk that tax arrangements such as those provided for in the Dutch law may prove more burdensome for parallel importers than for national producers notwithstanding the correcting factor of the smaller amount of the fee payable by the former. The Court has already considered the case of a flat-rate tax in its judgment of 5 May 1970 in Case 77/69 E.C. Commission v. Belgium [FN17] and has held that a flatrate duty which has the effect, by reason of the different basis on which it is applied, of taxing imported products more heavily than national products is of a discriminatory nature and is contrary to the first paragraph of Article 95 of the EEC Treaty. In view of the fact that in the present case such inequality may, and probably does, occur and having regard to the special features of international trade in pharmaceutical products, national legislation which fixes a fee without having regard to the basis on which the tax is applied appears discriminatory and contrary to Article 95. It might be argued against that view that it is practically impossible to determine the basis on which the tax is applied, namely the amount of the turnover, at the time when the importer requests the registration of a given product; that difficulty could however be overcome by making provision for subsequent payment or, better still, by abolishing the single fee leaving only a periodic charge measured on turnover. FN17 [1970] E.C.R. 237, [1974] 1 C.M.L.R With regard, then, to the annual registration fee laid down by Dutch law, I have already stated that it is charged at the same rate for all manufactured or imported

14 products. However, here too there is no link with turnover, that is to say with the quantity of products imported and marketed. The fee is in fact paid annually at a fixed rate for each product registered and marketed irrespective of the volume of the imports. The same kind of inequality in taxation which I have noted in the case of the single fee therefore occurs, again as a consequence of the fact that parallel importers deal in a very much larger number of products than national manufacturers and official importers. Nor do I consider that the possibility of obtaining a partial exemption (which is available to all traders) may correct this inequality. It is sufficient to note that the exemption may be granted only 'if special circumstances (which are not specified) *60 justify it' and that it is for the competent minister to assess in individual cases whether such circumstances exist. It therefore does not appear to me that the difference between the single fee and the annual fees affects the criterion whereby the lawfulness of the charge in question must be appraised within the framework of Article 95 of the EEC Treaty. With regard to both forms of the charges relating to the registration of medicinal products which I have examined it may be said that Article 95 requires that the principle of the uniformity of the basis on which the charge is applied must be respected both where the medicinal products in question are manufactured in the member-state and where they are imported officially or in parallel. Shortly stated, that principle implies that the charge must have the same incidence on the price of national and imported products. 8. On the basis of all the considerations which have been set out above I propose that the reply to be given to the question submitted to the Court of Justice by the Arrondissementsrechtbank Roermond, Netherlands by judgment of 4 November 1979 should be as follows: 1. Article 36 of the EEC Treaty justifies the application to imported pharmaceutical products of a national system of inspection and registration provided that the system is necessary for the effective protection of health and life of humans. 2. If fees relating to the registration of pharmaceutical products imported both officially and in parallel are also applied to national manufacturers of such products they do not fall within the prohibition of all charges having an effect equivalent to customs duties (Articles 9 and 12 of the EEC Treaty) but must be appraised in terms of the principle of equality of taxation of domestic products and products from other member-states (Article 95). 3. By virtue of the first paragraph of Article 95 of the EEC Treaty national authorities may make the parallel importation of pharmaceutical products (that is to say the importation of medicinal products for which authorisation to place them on the market in the State of importation has already been granted at the request of another importer or producer) conditional on payment of a fee only if, by means of the criteria whereby its amount is calculated, the fee in question has the same incidence on the price of products imported in parallel and on that of products placed on the market by official importers and by domestic producers. JUDGMENT

15 [1] By a judgment of 4 December 1979, which was received at the Court on 24 January 1980, the Arrondissementsrechtbank *61 (District Court), Roermond, referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty a question which relates to the interpretation of Article 36 of that Treaty and which is worded as follows: 'Given that: (a) certain pharmaceutical products are lawfully in free circulation in one or more member-states in the sense that the permits required under national law for those pharmaceutical products have been issued to the manufacturers or, where appropriate, to those who are responsible for putting the pharmaceutical products into circulation in each of the member-states; and (b) third parties may be aware that such permits have been granted in each of the member-states because the fact has been officially published or has become generally known by some other means; and (c) a (parallel) importer of medicinal products established in one of the member- States imports into the member-state in which he is established the pharmaceutical products which are in circulation as described above, do the exceptions to the rules relating to the free movement of goods within the EEC, particularly Article 36 of the EEC Treaty in so far as it relates to the protection of health and life of humans, justify the authorities of the importing member-state permitting imports of those pharmaceutical products only on payment of a registration charge, and if so, what standards should be applied to the amount and frequency of the payments and the system governing payments?' [2] That question has been raised in the context of criminal proceedings instituted against a Dutch trader who is a 'parallel importer' of pharmaceutical products in the Netherlands and who has been charged with having held for sale, or having sold, delivered or dealt in, a certain number of proprietary medicinal products within the meaning of section 1 (1) (h) of the Dutch Act relating to the supply of medicinal products (Wet op de Geneesmiddelenvoorziening) which had not first been registered as required by section 3 of that Act. It is apparent from both the considerations set out in the judgment making the reference and the wording of the question that the accused did not comply with that requirement because two fees, one single and the other annual, are payable on registration, and because he considers that the requirement of registration in conjunction with the requirement to pay the said fees, which he considers excessive, constitutes a measure having an effect equivalent to a quantitative restriction on imports which is incompatible with Article 30 of the Treaty and which does not qualify for the exception laid down in Article 36 of the Treaty. [3] The Arrondissementsrechtbank has submitted the question set forth above in order to be in a position to decide whether the national rules, in so far as they require payment of these fees, are in accordance with Community law. [4] In order to provide a reply which may be of assistance to *62 the national court it is necessary to take into account the fact that the provisions in question were enacted by the Dutch authorities following the judgment delivered by the

16 Court on 20 May 1976 in Case 104/75 De Peijper v. Centrafarm. [FN18] FN18 [1976] E.C.R. 613, [1976] 2 C.M.L.R [5] That judgment also concerned parallel imports of pharmaceutical products and it found that such imports were rendered impossible in practice by the fact that the Dutch authorities made the authorisation to place such products on the market conditional upon the production of documents, intended to enable medical checks to be carried out, which were identical with the documents already lodged by the manufacturer or his duly appointed importer. The judgment found that if the manufacturer or his duly appointed importer refused to provide the parallel importer with a copy of those documents, which they alone held, the parallel importer could not meet the requirements of the national authorities and his request for registration was accordingly refused. [6] On the basis of those findings of fact the Court declared that national rules or practices which make it possible for a manufacturer and his duly appointed representatives to enjoy a monopoly of the importation and marketing of a pharmaceutical product simply by refusing to produce the documents relating to the pharmaceutical product in general or to a particular consignment thereof must be regarded as being unnecessarily restrictive and cannot therefore come within the exception specified in Article 36 of the Treaty, unless it can be proved that any other rules or practices would obviously be beyond the means which can be reasonably expected of an administration operating in a normal manner. [7] The Court added that if a number of variants of a medicinal preparation exist which differ from one member-state to another and if those differences have a therapeutic effect there is justification for treating those variants as different medicinal preparations for the purposes of authorising them to be placed on the market and as regards the requirement of producing the relevant documents enabling medical checks to be carried out, it being understood that for each of the authorisation procedures the answer provided above remains valid if there is only a single version of the medicinal preparation. [8] After that judgment the Dutch authorities enacted rules, namely section 23 of the Besluit Registratie Geneesmiddelen of 8 September 1977, [FN19] which provided the parallel importer of a proprietary medicinal product previously registered at the request of the manufacturer or his appointed representative with a simplified procedure for registration intended solely to ascertain whether the composition of the product which the parallel importer proposes to import is 'the same' or 'practically the same' as that of the product which has already been registered. FN19 St *63 [9] In view of the simplified nature of that second registration the parallel importer is required to pay a single fee amounting to 25 per cent. of that charged when the medicinal product was first registered at the request of the manufacturer or his duly appointed representative. The second registration also

17 entails payment of an annual fee amounting to fl. 687 which is intended to cover the costs of inspecting the products in question after they are placed on the market. The amount of this annual fee is the same for domestic products and imported products alike and in the case of imported products no distinction is made depending on whether they were imported in parallel or directly by the foreign manufacturer or his duly appointed representative. The interpretation of Article 36 [10] As the Court held in the above-mentioned De Peijper judgment, in the case of imported pharmaceutical products which have already been registered at the request of the manufacturer or the duly appointed importer, Article 36 does not prevent national authorities from checking whether the products imported in parallel are identical to those which have already been registered or, where variants of the same medicinal products are placed on the market, whether the differences between those variants have no therapeutic effect. That check must however extend only to verifying whether the products so conform and the member-state in question must have required the manufacturer or authorised importer to provide full information regarding the different forms in which the medicinal products in question are manufactured or marketed in the various member-states by either the manufacturer himself, subsidiary or related undertakings, or undertakings manufacturing such products under licence. [11] A monitoring procedure which is in accordance with the requirements of Article 36 is not deprived of its justification, within the meaning of that provision, by virtue of the fact that it gives rise to the collection of fees of the kind described by the national court. On the other hand such fees may not be considered compatible with the Treaty on the sole ground that they are charged in consequence of a measure adopted by a State which is justified within the meaning of Article 36. The exemption provided for in Article 36 in fact relates exclusively to quantitative restrictions on imports or exports or measures having equivalent effect. It may not be extended to customs duties or to charges having equivalent effect which, as such, fall outside the compass of Article 36. [12] It follows that the question whether such fees are permissible must be appraised in relation to Articles 9 and 13 or, where appropriate, Article 95 of the Treaty. [13] It thus appears that, in order to provide the national court with a reply which is of assistance to it, it is necessary to consider *64 whether fees of the kind in question fall under the prohibitions laid down in those provisions. The interpretation of Article 13 of the Treaty [14] According to the settled case law of the Court of Justice the prohibition, in trade between member-states, of all customs duties and of all charges having equivalent effect refers to all charges demanded on the occasion of or by reason of importation and which are imposed specifically on imported products and not on similar domestic products.