EU TFEU: Commercial state monopolies

’Politics makes strange bedfellows’, but not more than the free movement of goods and state monopolies of a commercial character within the European Community (European Union).

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Article 31 of the Treaty establishing the European Community (TEC) first becomes Article 31 of the Treaty on the Functioning of the European Union (TFEU) according to the original Treaty of Lisbon (ToL) numbering. When the amending treaty is consolidated, the provision is renumbered Article 37.

The wording for the unaltered provision is found in the latest consolidated version of the current treaties, Official Journal, OJ 29.12.2006 C 321 E/53, to which we add the Lisbon Treaty context (Tables of equivalence, OJ 17.12.2007 C 306/207):

Part Three Policies and internal actions of the Union

Title Ia (renumbered Title II) Free movement of goods

Chapter 2 (renumbered Chapter 3) Prohibition of quantitative restrictions between Member States

Article 31 TFEU (ToL), renumbered Article 37 TFEU

1. Member States shall adjust any State monopolies of a commercial character so as to ensure that no discrimination regarding the conditions under which goods are procured and marketed exists between nationals of Member States.

The provisions of this Article shall apply to any body through which a Member State, in law or in fact, either directly or indirectly supervises, determines or appreciably influences imports or exports between Member States. These provisions shall likewise apply to monopolies delegated by the State to others.

2. Member States shall refrain from introducing any new measure which is contrary to the principles laid down in paragraph 1 or which restricts the scope of the articles dealing with the prohibition of customs duties and quantitative restrictions between Member States.

3. If a State monopoly of a commercial character has rules which are designed to make it easier to dispose of agricultural products or obtain for them the best return, steps should be taken in applying the rules contained in this Article to ensure equivalent safeguards for the employment and standard of living of the producers concerned.

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Errata

I apologise for my mistake concerning the Title given as ‘Title I The internal market’ in the posts on Articles 27a to 30 according to the Lisbon Treaty numbering (renumbered Articles 33 to 36). The correct version is ‘Title Ia (renumbered Title II) Free movement of goods’.

I have served myself a generous helping of Easter humble pie.

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The European Convention took over the contents of the provision, with nearly identical wording in Article III-44 of the draft Treaty establishing a Constitution for Europe (OJ 18.7.2003 C 169/34).

The same applies to Article III-155 of the Treaty establishing a Constitution for Europe.

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State monopolies of a commercial character and the principle of free movement of goods are rather awkward companions, but the monopolies are not prohibited by Article 31 TFEU (ToL; renumbered Article 37 TFEU), only to be adjusted to ensure the abolition of discrimination.

The provision applies to goods and between member states (internal market), not regarding third countries.

Existing commercial monopolies have to be adjusted, and the introduction of new measures is forbidden (standstill clause).

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A few examples:

National monopolies on the sale of alcoholic beverages in Sweden and Finland have been adjusted, but the sale of medicinal preparations in Sweden did not ensure non-discrimination.

In a preliminary ruling the Court of Justice found (case C-438/02) that the way in which Apoteket is organised and operates, and more particularly its system of selecting medicinal preparations, is liable to place trade in medicinal preparations from other Member States at a disadvantage as compared with trade in Swedish medicinal preparations. Thus, that State monopoly is not arranged in such a way as to exclude any discrimination against medicinal preparations from other Member States. It thus infringes Article 31(1) EC.


Ralf Grahn