Court of Justice of the European Communities (including Court of First Instance Decisions)

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Approximation of laws ° Definition, description and presentation of spirit drinks ° Regulation No 1576/89 ° Prohibition of use of the term "brandy" to describe drinks not complying with the definition in the regulation ° Power conferred on the Commission to lay down derogations therefrom ° Scope
(Council Regulation No 1576/89, Arts 1(4)(e), 5(1) and 6; Commission Regulation No 1014/90, as amended by Regulation No 1781/91, Art. 7b; Council Directive 79/112)

Article 5(1) of Council Regulation No 1576/89 prohibits use of the term "brandy" to describe spirit drinks other than those defined in Article 1(4)(e) of that regulation, but only without prejudice to measures adopted by the Commission pursuant to Article 6 of that regulation. The power conferred on the Commission to provide for derogations is restricted only by Article 6(3), which requires that the provisions so adopted must prevent the creation of confusion, especially regarding products in existence at the time of the entry into force of the regulation. By authorizing under Article 7b of Regulation No 1014/90, as amended by Regulation No 1781/91, the use of the generic name "brandy" in certain compound terms describing "liqueurs", even though the alcohol used in those drinks does not come from "brandy", the Commission has neither, regard being had in particular to the conditions to which it has subjected that authorization, exceeded its powers nor, moreover, has it laid down rules contrary to Directive 79/112 on the approximation of the laws of the Member States relating to the labelling, presentation and advertising of foodstuffs nor has it breached the principle of equal treatment to the detriment of producers of "brandy", who are not in a situation comparable to that of producers of liqueurs.

In Case C-217/91,
Kingdom of Spain, represented by Alberto José Navarro González, Director General for Coordination in Matters involving Community law and Institutions, and by Rosario Silva de Lapuerta, Abogado del Estado, Head of the Legal Department responsible for representing the Spanish Government before the Court of Justice of the European Communities, acting as Agents, with an address for service in Luxembourg at the Spanish Embassy, 4-6 Boulevard E. Servais,
applicant,
v
Commission of the European Communities represented by José Luis Iglesias Buhigues, Legal Adviser, and Ulrich Woelker, of its Legal Service, acting as Agents, with an address for service in Luxembourg at the office of Nicola Annecchino, of its Legal Service, Wagner Centre, Kirchberg,
defendant,
supported by
Kingdom of Denmark, represented by Tyge Lehmann, Head of the Legal Department at the Ministry of Foreign Affairs, acting as Agent, with an address for service in Luxembourg at the Danish Embassy, 11 b Boulevard Joseph II,
intervener,
APPLICATION for annulment of the second subparagraph of Article 7b(3) of Commission Regulation (EEC) No 1014/90 of 24 April 1990 laying down detailed implementing rules on the definition, description and presentation of spirit drinks (OJ 1990 L 105, p. 9), as amended by Commission Regulation (EEC) No 1781/91 of 19 June 1991 (OJ 1991 L 160, p. 5),
THE COURT,
composed of: O. Due, President, G.C. Rodríguez Iglesias, M. Zuleeg and J.L. Murray (Presidents of Chambers), G.F. Mancini, F.A. Schockweiler, J.C. Moitinho de Almeida, F. Grévisse and P.J.G. Kapteyn, Judges,
Advocate General: C. Gulmann,
Registrar: H. Von Holstein, Assistant Registrar,
having regard to the Report for the Hearing,
after hearing oral argument from the parties at the hearing on 13 October 1992,
after hearing the Opinion of the Advocate General at the sitting on 10 November 1992,
gives the following
Judgment

1 By application lodged at the Court Registry on 19 August 1991, the Kingdom of Spain brought an action, pursuant to the first paragraph of Article 173 of the EEC Treaty, for the annulment of the second subparagraph of Article 7b(3) of Commission Regulation (EEC) No 1014/90 of 24 April 1990 laying down detailed implementation rules on the definition, description presentation of spirit drinks (OJ 1990 L 105, p. 9), as amended by Commission Regulation (EEC) No 1781/91 of 19 June 1991 (OJ 1991 L 160, p. 5).
2 Council Regulation (EEC) No 1576/89 of 29 May 1989 laying down general rules on the definition, description and presentation of spirit drinks (OJ 1989 L 160, p. 1, hereinafter "the basic regulation") defines in Article 1 thereof various categories of spirit drinks for the purposes of the said regulation. Among those drinks appear "Brandy or Weinbrand" (Article 1(4)(e)) and "Liqueur" (Article 1(4)(r)).
3 Article 5(1) of the basic regulation provides that without prejudice to measures adopted pursuant to Article 6, use of the names referred to in Article 1(4) is to be restricted to spirit drinks defined therein.
4 Article 6 in fact allows the Commission to adopt special provisions concerning the use of generic names defined in Article 1 in the compound terms. Those provisions are designed in particular to prevent confusion between those names and those of products in existence at the time of the entry into force of the basic regulation.
5 Finally, according to Article 9(1) of the basic regulation, the presentation of certain spirit drinks, including "brandy", may not bear the generic name reserved for the abovementioned drinks if they contain added ethyl alcohol of agricultural origin.
6 On the basis of the said Article 6 of the basic regulation, the Commission adopted Regulation No 1781/91 (hereinafter "the amending regulation"), amending Regulation No 1014/90 (hereinafter "the implementing regulation").
7 As it states in the second recital in the preamble thereto, the amending regulation seeks to permit certain compound terms, which include a generic name and are used to describe liqueurs, to be maintained even though the alcohol is not obtained from the spirit drink indicated. It also seeks to specify the conditions for the description of those "liqueurs" in order to avoid any risk of confusion with the spirit drinks defined in Article 1(4) of the basic regulation.
8 Those objectives are implemented by Article 1 of the amending regulation which inserted in the implementing regulation Article 7b, worded as follows:
"1. Pursuant to Article 6(1), second indent, of Regulation (EEC) No 1576/89, the use of a generic term in a compound term shall be prohibited in the presentation of a spirit drink unless the alcohol in that drink originates exclusively from the spirit drink cited.
2. However, in line with the situation at the time of entry into force of this regulation only the following compound terms may be used in the presentation of liqueurs produced in the Community:
prune brandy,
orange brandy,
apricot brandy,
cherry brandy,
solbaerrom, also called blackcurrant rum.
3. As regards the labelling and presentation of the liqueurs indicated in paragraph 2, the compound term must appear on the labelling in one line in type of a single fount and colour and the word 'liqueur' must appear in immediate proximity in characters no smaller than this fount.
If the alcohol does not come from the spirit drink indicated its origin must be shown on the labelling in the same visual field as the compound term and 'liqueur' either by stating the type of agricultural alcohol or as by the words 'agricultural alcohol' preceded on each occasion by 'made from' or 'made using' ."
9 Considering that provision to be unlawful, the Kingdom of Spain claimed the annulment of the second subparagraph of Article 7b(3) of the implementing regulation.
10 Reference is made to the Report for the Hearing for a fuller account of the facts, the procedure and the pleas in law and arguments of the parties, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court.
Admissibility
11 According to the Commission, the only provision against which proceedings may be brought is Article 7b(2) of the implementing regulation, which permits the use of compound terms including the generic name "brandy" to describe a "liqueur" which, according to the definition appearing in Article 1(4)(r) of the basic regulation, is produced from ethyl alcohol of agricultural origin. It is in fact that provision which provides for the possibility of using certain compound terms by way of derogation from the basic regulation. Article 7b(3) of the implementing regulation merely adds to that possibility certain obligations concerning labelling.
12 Consequently, the Commission considers that there are contradictions in the application between its subject-matter, the pleas in law and forms of order sought and that that is in conformity neither with Article 19 of the Statute of the Court of Justice of the EEC nor with Article 38(1)(c) and (d) of the Rules of Procedure, according to which an application must contain the subject-matter of the proceedings, the form of order sought and a summary of the pleas in law on which the application is based. The application must therefore, it is contended, be declared inadmissible.
13 That objection is unfounded.
14 First, this action relates only to the second subparagraph of Article 7b(3) of the implementing regulation, which is the only subparagraph of that article which refers to ethyl alcohol of agricultural origin. It is that subparagraph which gives specific significance to Article 7b(2) and (3) by clearly indicating that the drinks listed in paragraph 2 may include ethyl alcohol of agricultural origin.
15 Secondly, the application is directed against the possibility, opened by the abovementioned provisions, of producing one of the "liqueurs" under Article 7b(2) with ethyl alcohol of agricultural origin.
16 In those circumstances, this action is in reality directed against Article 7b(2) and (3) of the implementing regulation. The fact that it refers expressly only to the second subparagraph of paragraph 3 of that article does not make it inadmissible.
17 Accordingly, the objection of inadmissibility put forward by the Commission must be rejected.
Substance
18 In support of its application, the Kingdom of Spain puts forward four pleas in law for annulment based on lack of competence of the Commission to adopt Article 7b of the implementing regulation, lack of a statement of the reasons on which that regulation was based, failure to observe the obligation to protect consumers and breach of the principle of equal treatment.
Lack of competence of the Commission
19 The Kingdom of Spain first claims that Article 7b of the implementing regulation allows the use of the generic name "brandy" in the compound term for certain liqueurs produced from ethyl alcohol and not containing "brandy". That situation is contrary to Article 5(1) of the basic regulation which restricts the use of the generic name "brandy" to the spirit drink defined in Article 1(4)(e). It is true that Article 6 of the basic regulation permits the adoption of special rules as regards compound terms. However, that provision does not permit the adoption of special rules allowing the use of the generic name "brandy" in the compound term describing a "liqueur" unless the liqueur is actually produced from that spirit drink. Thus, that provision does not authorize the Commission to provide, by way of derogation from Article 5 of the basic regulation, that the generic name brandy may be used for designating liqueurs not containing that spirit drink.
20 In that regard, it should be pointed out that the prohibition, set out in Article 5(1) of the basic regulation, of the use of the term "brandy" to describe spirit drinks other than those referred to in Article 1(4) of that regulation, is laid down "without prejudice to measures adopted pursuant to Article 6". That reservation shows that the Council intended to permit the Commission to derogate from Article 5 in the context of the powers conferred on it by Article 6(1).
21 It should further be noted that the Commission' s competence in this matter is restricted only by Article 6(3) of the basic regulation according to which the provisions adopted in accordance with that article must prevent the creation of confusion, especially regarding products in existence at the time of the entry into force of the basic regulation.
22 In this case, the contested provision meets that requirement. The derogation provided for by Article 7b of the implementing regulation applies only to a limited number of compound terms, which moreover have been used, according to the second recital in the preamble to the implementing regulation, for a long time. Furthermore, the conditions laid down in Article 7b(3) of the implementing regulation concerning labelling and presentation are intended to ensure that consumers are not misled into thinking that they are buying a "liqueur" containing "brandy" whereas in fact they are buying a liqueur which does not contain any.
23 Consequently, the Kingdom of Spain' s plea in law alleging infringement of Article 5(1) of the basic regulation must be rejected.
24 The Kingdom of Spain claims, secondly, that Article 7b of the implementing regulation is contrary to Article 9(1) of the basic regulation, which prohibits the use of generic names for certain spirit drinks, including "brandy", in presenting a drink containing ethyl alcohol of agricultural origin.
25 In that regard, it should be pointed out that the spirit drinks referred to under Article 7b are "liqueurs" which, according to the definition contained in Article 1(4)(r) of the basic regulation, are produced from ethyl alcohol of agricultural origin, while the drinks referred to under Article 9 of the basic regulation are not.
26 Accordingly, there is no contradiction between Article 7b of the implementing legislation and Article 9(1) of the basic regulation.
27 In view of the foregoing considerations, the plea in law alleging lack of competence of the Commission must be rejected.
Absence of a statement of reasons
28 The Kingdom of Spain argues that the recitals in the preamble to the amending regulation offer an insufficient statement of reasons to serve as the basis for introducing a rule for labelling, such as Article 7b of the implementing regulation, which derogates from the principles laid down by the basic regulation.
29 In that regard, it should first be pointed out that the amending regulation was expressly adopted on the basis of Article 6(3) of the basic regulation, which is designed to prevent the creation of confusion by the names referred to, regarding products in existence at the time of the entry into force of that regulation. The intention to attain that objective is shown in the second recital to the amending regulation where it is stated that in order to take account of long-established practices existing when the basic regulation entered into force, certain composite names of liqueurs should be allowed to be maintained even though the alcohol is not obtained from the spirit drink indicated.
30 In those circumstances, the plea in law alleging the absence of a statement of the reasons on which the amending regulation was based cannot be upheld.
Failure to observe the obligation to protect consumers
31 According to the Kingdom of Spain, Article 7b of the implementing regulation permits the inclusion in the name of a spirit drink produced from ethyl alcohol of agricultural origin of an ingredient which is not in its composition, namely "brandy". That provision thus infringes Article 2(1)(a) of Council Directive 79/112/EEC of 18 December 1978 on the approximation of the laws of the Member States relating to the labelling, presentation and advertising of foodstuffs for sale to the ultimate consumer (OJ 1979 L 33, p. 1, hereinafter "Directive 79/112") under which the labelling used must not be such as might mislead the purchaser as to the characteristics of the foodstuff.
32 In that regard, it should first be pointed out that the fourth recital in the preamble to the basic regulation states that the labelling of spirit drinks is subject to the general rules laid down in Directive 79/112, but that, in view of the nature of the products in question, specific provisions additional to those general rules should be adopted so that the consumer might have fuller information.
33 Secondly, according to Article 7b(3) of the implementing regulation, the compound terms used in the labelling of the "liqueurs" indicated in paragraph 2 of that provision must appear on the labelling in one line in type of a single fount and colour and the word "liqueur" must appear in immediate proximity in characters no smaller than the fount used for the compound terms. Furthermore, if the alcohol does not come from the spirit drink indicated, its origin must be shown on the labelling in the same visual field as the compound term and "liqueur".
34 In those circumstances it must be held that Article 7b(3) of the implementing regulation constitutes a suitable means of preventing consumers from being misled as to the characteristics of a spirit drink and that, consequently, it does not infringe the provisions of Directive 79/112.
35 The complaint concerning the failure to observe the obligation to protect consumers must therefore be rejected.
Breach of the principle of equal treatment
36 The Kingdom of Spain claims that Article 7b of the implementing regulation puts producers of "brandy" at a disadvantage and, accordingly, infringes the principle of equal treatment which is a general principle of Community law. First, that provision permits the use of the generic name "brandy" in the presentation of drinks made from another type of alcohol, which might damage the reputation of brandy, whereas other spirit drinks are protected by prohibiting the use of their name where they contain ethyl alcohol of agricultural origin. Furthermore, the provision at issue runs counter to the interests of producers of "brandy" by closing a potential market to them in favour of producers of ethyl alcohol of agricultural origin. Finally, producers of "brandy" are put at a competitive disadvantage as compared with those who can produce a spirit drink, bearing a compound term including the word "brandy", from ethyl alcohol of agricultural origin.
37 Those arguments cannot be upheld. According to settled case-law, the principle of equal treatment, when considered as a general principle of Community law, requires that similar situations should not be treated differently and different situations should not be treated identically unless such a differentiation is objectively justified.
38 In this case, it must be noted that producers of "brandy" and those of "liqueur" make quite different products and that they are not therefore in a similar situation. In those circumstances, different treatment for each of those groups of producers can be justified.
39 The plea in law alleging breach of the principle of equal treatment must therefore be rejected.
40 Since none of the pleas in law put forward by the Kingdom of Spain has been upheld, the application must be dismissed in its entirety.

Costs
41 Under Article 69(2) of the Rules of Procedure the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party' s pleadings. Since the Kingdom of Spain has been unsuccessful, it must be ordered to pay the costs. Pursuant to Article 69(4) of those Rules, the Kingdom of Denmark, the intervener, should be ordered to bear its own costs.

On those grounds,
THE COURT
hereby:
1. Dismisses the application;
2. Orders the Kingdom of Spain to pay the costs;
3. Orders the Kingdom of Denmark to bear its own costs.