Wine and... European Law?!

At first glance wine and European Law don’t have to do much with each other. However, when one analyzes the relationship in depth, the legal aspects of wine have been (and still are) significantly important for the legal integration of the European Union and the creation of the common market. This blog focuses on these legal aspects in four judgments of the European Court of Justice and its predecessors.

Cassis de Dijon

One of the most famous cases in this regard is the Rewe-Zentral AG v. Bundesmonopolverwaltung für Branntwein-case also known as Cassis de Dijon (Hereafter: Cassis) which was decided by the Court of Justice of the European Communities in 1979. In fact Cassis is liquor with 15 % Alcohol By Volume (ABV), but it is often used as an ingredient to make Kir Royale (Cassis and champagne). Hence it is incorporated in this blog.

Rewe-Zentral AG wanted to import Cassis de Dijon into Germany from France. The question was raised before the Court of Justice of the European Communities whether a German law, implemented by the Bundesmonopolverwaltung für Branntwein, which obliged all liquors to have at least 25 % ABV in order to be entitled to use the label ‘liquor’, was an unlawful restriction on the free movement of goods. This was of particular importance because the imported Cassis contained only 15 % ABV.  

The Court of Justice of the European Communities ruled in favor of Rewe-Zentral AG stating that the German law had the effect equivalent to a quantitative restriction on trade within the European Union.

‘The concept of “measures having an effect equivalent to quantitative restrictions on imports” contained in art. 30 of the Treaty establishing the European Economic Community (hereafter: EEC Treaty) (now art. 34 TFEU), is to be understood to mean that the fixing of a minimum alcohol content for alcoholic beverages intended for human consumption by the legislation of a member state also falls within the prohibition laid down in that provision where the importation of alcoholic beverages lawfully produced and marketed in another member state is concerned.’[1]

Wine v. Beer-cases

A similar case was brought before the Court a couple of years later. In Commission v United Kingdom in 1983, it also dealt with restrictions of one member state, Great Britain, on the import from another member state. In this particular case the European Commission filed a case against the United Kingdom because it infringed on art. 95 EEC Treaty (now: art. 110 TFEU) by imposing taxation on imported ‘light’ wine which was twice higher than on domestic beer. The Court of Justice of the European Communities ruled in this case that:

(…) 3. In view of the substantial differences in the quality and, therefore, in the price of wines, the decisive competitive relationship, for the purposes of the application of the second paragraph of article 95 of the treaty, between beer, a popular and widely consumed beverage, and wine must be established by reference to those wines which are the most accessible to the public at large, that is to say, generally speaking, the lightest and cheapest varieties. Accordingly, that is the appropriate basis for making fiscal comparisons by reference to the alcoholic strength or to the price of the two beverages in question.

4. A national system of taxation under which excise duty on still light wines made from fresh grapes and imported from other member states is levied at a higher rate , in relative terms , than on domestic beer production , inasmuch as the latter constitutes the most relevant reference criterion from the point of view of competition between substitute products , is incompatible with the second paragraph of article 95 of the Treaty since it has the effect of subjecting imported wines to an additional tax burden so as to protect domestic beer production .

The effect of a system of that kind is to stamp such wines with the hallmarks of luxury products which, in view of the tax burden which they bear, can scarcely constitute in the eyes of the consumer a genuine alternative to the typical domestically produced beverage.[2]

This view was reiterated by the court in the case of the Commission of the European Communities v Kingdom of Belgium in 1987. The Court stated that:

(…) 2. In view of the substantial differences in the quality and, therefore, in the price of wines, the decisive competitive relationship between beer, a popular and widely consumed beverage, and wine must be established by reference to those wines which are the most accessible to the public at large, that is to say, generally speaking, the lightest and cheapest varieties, and that is accordingly the appropriate basis for making fiscal comparisons. Consequently, only commonly consumed wines, which in general are cheap wines, have enough characteristics in common with beer to constitute an alternative choice for consumers and may therefore be regarded as being in competition with beer for the purposes of the abovementioned provision.(…).[3]

In the cases mentioned above the European Commission tried to get rid of import restrictions which hindered the realization of a European single market. Wine (and its importation) proved to be an effective subject to foster internal trade and to achieve the goal of a common European market.

Codorníu SA

Seven years later, in 1994, another case was filed concerning sparkling wine. The case centered around the question whether Spanish winemaker Codorníu was allowed to use the trademark Gran Cremant de Codorníu. It had used this particular trademark since 1924, however; the European Commission issued a regulation (Council Regulation EEC No 2045/89) in 1989 stating that sparkling wines, which were manufactured under very strict circumstances in Luxembourg and France, could be called ‘crémant’. Codorníu filed for an action for annulment under article 173 of the European Economic Community Treaty (now art. 263 TFEU).

The Court of Justice of the European Union came to the conclusion that:

‘(…) Article 1(2)(c) of Council Regulation (EEC) No 2045/89, which inserts paragraph 5a(b) into Article 6 of Council Regulation (EEC) No 3309/85 laying down general rules for the description and presentation of sparkling wines and aerated sparkling wines, reserves the use of the term "crémant" to wines produced in two Member States and thus precludes the use of the said term to describe sparkling wines produced under the same conditions in a third Member State and sold under a graphic mark with the same term registered in that State, treats comparable situations differently. The reservation of the said term to wines produced in two Member States cannot validly be justified either on the basis of traditional use, since it disregards the traditional use of that mark in the third State for wines of the same kind, or by the indication of origin associated with the mark in question, since it is in essence attributed on the basis of the method of manufacture of the product and not its origin. It follows that the different treatment has not been objectively justified and the said provision must therefore be declared void.[4]

By its decision, the Court of Justice of the European Union opened the door to more appeals against any regulations which concerned individuals. This runs counter to the restrictive approach (Plaumann-criteria) the Court had taken on the subject of individual concern in the twenty years before the Codorníu-judgment.

Conclusion

In this blog four cases about wine are discussed which contributed greatly to the development of the European legal order. More cases can be expected before the European Court of Justice in the future, primarily because more and more agreements are concluded between the European Community and other countries specifically concerning wine, for example, the 2006 Wine Agreement between the United States of America and the European Community (link), and the Agreement on Trade in Wines and Spirit Drinks between Canada and the European Community, concluded in September 2003 (link). Moreover, growing Chinese interest in especially French wines may result in a lot of additional interesting cases about wine.[5]

 

[1] Judgment of the Court of Justice of the European Communities of February 20, 1979 - Rewe-Zentral AG v Bundesmonopolverwaltung für Branntwein, Case 120/78, http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?isOldUri=true&uri=CELEX:61978CJ0120 Last accessed July 17, 2015.

[2] Judgment of the Court of Justice of the European Communities of July 12, 1983 -  Commission of the European Communities v United Kingdom, Case 120/78, http://curia.europa.eu/juris/liste.jsf?language=en&jur=C,T,F&num=170/78&td=ALL# Last accessed July 14, 2015.

[3] Judgment of the Court of Justice of the European Communities of July 9, 1987 - Commission of the European Communities v Kingdom of Belgium, Case 356/85, http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:61985CJ0356, Last accessed July 14, 2015.

[4]Judgment of the Court of Justice of the European Union of 18 May 1994. - Codorníu SA v Council of the European Union, Case C-309/89, http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:61989CJ0309&from=NL.Last accessed July 17, 2015.

[5] Bordeaux wine gets Geographical Indication status in China, www.decanter.com/wine-news/bordeaux-wine-gets-geographical-indication-status-in-china-265413/, published July 2, 2015.  Last accessed July 17, 2015.