Luxembourg, 19/07/2007 (Agence Europe) - Advocate General Paolo Mengozzi presented his conclusions for Case C-167/05 at the European Court of Justice on 18 July. He took the view that Sweden, by taxing wine (most of which is imported) more heavily than beer (which is mainly produced in Sweden), infringes Article 90 of the EC Treaty which stipulates that domestic products and those from other member states should be treated on an equal footing when it comes to taxation. The Swedish government rejects this argument and stresses that this is not yet the Court's final ruling.
The Court considers that, in the case in hand, it is a matter of determining whether the wine and beer markets overlap to the point of providing products that are interchangeable from the consumers' point of view - failing which, there would be no competition likely to be distorted. As it has demonstrated in similar cases against Belgium and the United Kingdom - both of which not only have domestic breweries for beer but also wine importers - the Commission maintains that the consumer sees table wine and ordinary beer as highly interchangeable products, especially in the hotel and catering sector. Mr Mengozzi takes up this interpretation, declaring that the effect of the tax on the price of the respective products is likely to distort competition between goods and may strengthen domestic patterns of consumption, reduce potential consumption of wine and thus afford indirect protection to beer to the detriment of wine, which is mainly imported from other member states.
Although there is interchangeability between wine and beer in some cases, however, the influence of the taxation difference on consumer choice would be minimal, asserts Karin Wistrand, legal advisor to the Swedish Foreign Ministry. During the oral arguments in this case, she explained to EUROPE that alignment of the taxation, in accordance with the Commission's wishes, would involve a fall of only €0.50 in the retail price of a litre of wine, i.e. a fall that is much lower for a glass of wine in a restaurant (EUROPE 9423). “We do not believe consumers will drink beer instead of wine just because of this small price fall”, she said. The conclusions of the advocate general, however, run counter to this argument.
The relevant Swedish ministries' communications departments, however, did not wish to comment for now. One official did state that the conclusions reached by the advocate general do not prejudge the outcome, and that the Swedish authorities will take a stance after the final judgement, due after the summer. (cd)