OPINION OF ADVOCATE GENERAL

delivered on 18 May 1995 (*1)

1. By order of 17 January 1994, the French Court of Cassation referred the following question to the Court of Justice for a preliminary ruling:

‘Do Articles 9, 12, 13 and 16 of the Treaty establishing the European Economic Community apply to a “taxe de passage” (transit charge) which is designed to compensate a private undertaking for bearing costs arising from the performance by the customs and veterinary services of their tasks as providers of services in the public interest and has not been imposed by the State but arises from an agreement concluded by a private undertaking with its customers?’

2. The facts of the case which gave rise to that question may be briefly set out as follows. Garonor Exploitation SA (‘Garonor’), a company governed by private law, operates an international road station near Paris, within which the customs administration has its offices. Garonor rents offices and sanitary facilities at the station to the forwarding agents Édouard Dubois et Fils SA and General Cargo Services SA (‘Dubois’ and ‘Général Cargo’). The lessees are also entitled to use the road and rail transport facilities at the station. The whole area on which the station stands is owned by Garonor. The latter's business does not require any permit or licence from the public authorities. Dubois and Général Cargo pay Garonor, in addition to rent, a flat-rate transit charge for each vehicle in international transit which completes customs clearance formalities at the station. The main proceedings are concerned with the refusal of Dubois and Général Cargo to pay the transit charge, on the ground that, being originally intended to offset the costs incurred by Garonor in building and maintaining a TIR parking area used by the customs authorities, the charge is no longer justified since, in 1981, the customs authorities agreed to carry out clearance operations on the premises of the forwarding agents concerned.

3. In the order for reference it is stated that the transit charge provided for in Garonor's general contract conditions, which apply to all users of the road station, constitutes a pecuniary charge intended to offset the costs incurred by Garonor in arranging to have customs services available within the confines of the station. Details are also given of the costs concerned: they relate to the rental and maintenance of the premises made available free of charge by Garonor to the customs authorities, the canteen used by customs staff, the weighbridge used by them, the operation of the veterinary service within the station and a parking area for users of that service. With the sole exception of the costs relating to the parking area, the transit charge is, according to the national court, used to offset the expenses which are borne by Garonor but relate to the work done by the customs and veterinary services as providers of services in the public interest. The national court goes on to explain that the transit charge does not constitute consideration for services provided under contract by Garonor to the transport agents: even though the completion of customs formalities within the country is advantageous to commercial operators, they are, according to the case-law of the Court of Justice, (1) a service to which any person availing himself of the common market is entitled and for which, consequently, they cannot be asked to make any payment.

4. In their observations on the question submitted by the national court, the Commission, Dubois and General Cargo put forward the view that the transit charge is a charge having equivalent effect to a customs duty. They rely on an extensive interpretation of the provisions referred to in the judgment of the national court, which is supported by two arguments:

(a)the pecuniary charge in this case, although not levied by the State, nevertheless accrues to the State, which is thus the true beneficiary;

(b)the present case is governed by the principle laid down by the Court in *Bauhuis,* (2) according to which ‘the justification for the prohibition of charges having an effect equivalent to customs duties lies in the fact that any pecuniary charge, however small, imposed on goods by reason of the fact that they cross a frontier constitutes an obstacle to the movement of goods...’. The prohibition of charges having equivalent effect must be regarded as applicable to this case since, it is claimed, the transit charge gives rise to the very obstacle to the movement of goods which the Treaty provisions relied upon are intended to prevent.

5. I find neither of those arguments persuasive. The contention that the State benefits from the pecuniary charge at issue or that the charge impedes the free movement of goods does not amount to proof that the charge at issue in this case is a fiscal burden which, for the purposes of the Treaty, is equivalent in its effect to a customs duty. It is true that the provisions mentioned in the order for reference prohibit charges of that kind, and not others, because they seek to prohibit effects equivalent to those of customs duties. The problem here, however, is to establish whether or not the occurrence of the effect described in the abovementioned observations derives from a taxation measure falling within the category of charges prohibited by the Treaty.

Customs duties, and charges having equivalent effect, are regarded by Articles 9, 12, 13 and 16 of the Treaty as levies, deriving, as such, from the exercise of a power reserved to the State or, at least, to the public authorities. And the addressees of the provisions concerned are solely the Member States. However, the charge at issue in these proceedings, provided for in a private contract, does not display the features of a levy. Moreover, the party requiring payment of the transit charge is a commercial company which, as is apparent from the order for reference, does not form part of, and cannot be in any way associated with, the organizational structure of the State — not even according to the rather broad definition adopted by this Court, which includes any ‘body, whatever its legal form, which has been made responsible, pursuant to a measure adopted by the State, for providing a public service and has for that purpose special powers beyond those which result from the normal rules applicable in relations between individuals’. (3)

The transit charge does not stem from any power to impose taxation vested in any entity of the kind just described. However, it is only fiscal levies — those levied by the competent authorities — that are prohibited as charges having equivalent effect to customs duties. It must therefore, in my view, be concluded that a pecuniary charge of the kind at issue in these proceedings is not a charge having equivalent effect to a customs duty within the meaning of Articles 9, 12, 13 and 16 of the Treaty.

6. That said, I must nevertheless add that, in my opinion, the approach to the problem before the Court considered above is not the only one possible.

7. The national court seeks information on the interpretation of Articles 9, 12, 13 and 16 of the Treaty but does not merely (or indeed expressly) ask — a question which I have just answered in the negative — whether the transit charge in this case is a charge prohibited by those provisions. The order for reference may thus be regarded as raising a more general issue. The Court is in fact being asked how the abovementioned provisions may be applied to the new and particular case of a pecuniary charge associated with the passage of goods across a frontier which is imposed by an agreement between private individuals but is intended to cover costs specifically described by the national court as relating to the provision of a public service.

8. Adopting that approach, let us therefore consider how those provisions of the Treaty may be applied to the present case. Reference must of course be made to the terms, which we must treat as settled for the purposes of this case, used by the national court in identifying the specific purpose to which the transit charge is put. The costs which that pecuniary charge is intended to defray are, we are told, those specifically connected with the provision of customs and veterinary services. However, in this case they are borne by private individuals: the company operating the road station in fact bears those costs itself but then sets them off against the proceeds of the transit charge payable to it by importers and exporters at the stipulated flat rate for every vehicle used for the carriage of goods across the frontier. The imposition of the latter charge thus derives from the need to cover the expenses which the State has failed to take upon itself. The case-law of the Court of Justice, (4) which the national court took into account in formulating its question, is relied on to show that the costs in respect of maintaining the services at issue are necessarily to be borne exclusively by the State, which cannot therefore pass them on to users by levying a charge. Moreover, notwithstanding the advantage presumed to accrue to commercial operators as a result of their being able to complete customs clearance operations in their own country, within the confines of the road station, the customs service must — as this Court has consistently held (5) — be provided, regardless of where it is carried out, to any person availing himself of the common market, and no financial consideration can be called for in return for it.

9. Viewing the question in those terms, I consider that the national court essentially seeks a ruling as to the possible application of the provisions mentioned by it from two standpoints. The first, which I have already examined, concerns breach of the prohibition of charges having equivalent effect to customs duties. The other, yet to be considered, involves establishing whether the obstacle to the movement of goods represented by the transit charge derives from a failure by the State to observe, not so much the specific prohibition of fiscal measures of that kind, but rather the obligation to cover the costs associated with the provision of the public service at issue here: that obligation, of course, involves covering the cost of the service in its entirety, so as to eliminate any risk of its being borne by private operators wishing to transport goods.

From the substantive point of view, the following point must be considered first. Articles 9, 12, 13 and 16 of the Treaty explicitly prohibit customs duties and charges having equivalent effect but do not contain a similar express provision concerning the State's obligation regarding expenses. And it is that obligation which we must examine, in so far as non-compliance with it has resulted in the costs of the service being transferred to economic agents. As pointed out earlier, the full significance of the provisions referred to by the national court within the scheme of the Treaty must be borne in mind. Without doubt, they are the embodiment of a principle governing the establishment of the Community and represent an essential value to which there can be no exceptions: the cross-frontier movement of goods must be unhindered and is so unhindered when it gives rise to no pecuniary charges to be borne by the economic agents concerned. The prohibition of collecting customs duties and levying charges having equivalent effect is not therefore an end in itself. The inspiration of the provisions containing it, to which attention was drawn in Bauhuis, thus lies is the need to ensure, in accordance with Article 3(c) of the Treaty, the realization of an effective internal market, conferring on economic agents the right to see all obstacles to intra-Community trade removed. It is therefore a prohibition which pursues a primary aim of the Treaty: the establishment of a genuine common market and the absence of any obstacle of a pecuniary nature to the free cross-frontier movement of goods are interdependent. The provisions intended to ensure that the free movement of goods is fully guaranteed were also prompted by the wish to prohibit inaction by the State of the kind apparent in the present case: inaction which allows the costs of customs services to be borne by individuals and therefore ultimately frustrates that fundamental guarantee, even though no charge having equivalent effect to a customs duty is imposed. The prohibition of such sins of omission is, it may be said, only implied in the provisions under consideration, which do not impose it expressis verbis: however, it must be added immediately, it finds further, unequivocal support in the general principle expressly stated in the second paragraph of Article 5, according to which the Member States are to abstain from jeopardizing the attainment of the objectives of the Treaty. The provisions referred to in the order for reference must therefore be read in conjunction with those of Article 5, by reason of the link which, as I explain below, exists between those two sets of provisions as far as the rules applicable to this case are concerned.

10.If the approach which I advocate is adopted, it is clear that the principle of the free and unrestricted cross-frontier movement of goods may be infringed by the State as a result either of the conduct directly referred to and prohibited in Articles 9, 12, 13 and 16 or of other conduct which, although not displaying the characteristics of fiscal measures having equivalent effect to customs duties, is nevertheless liable to undermine the interest which those provisions protect. In such circumstances, Article 5 comes to the fore as a provision which makes the system watertight, guaranteeing in general that the values fundamental to the Community order are fully upheld where there is indirect non-observance of them, that is to say where a breach is not apparent from the literal wording of any specific provision of the Treaty. If that were not the case, it would have to be conceded that, in this and similar cases, the Community legal order is indifferent to conduct on the part of a State, whereby a prohibition is formally observed but in practice a prohibited result is arrived at. That is not the position. In this case, the State cannot in any way lawfully evade the limits to which, as a matter of interpretation, its conduct is subject by virtue of the absolute requirement that it guarantee pursuit of the essential objectives of the Treaty, such as the one at issue here which relates to a fundamental aspect of the free movement of goods.

11.Now, it is clear that, seen thus, the general obligation laid down in the second paragraph of Article 5 is to be regarded as merely residual. Where conduct by States that is detrimental to an interest legally protected by Community law is specifically and comprehensively governed by another provision of the Treaty, only the latter provision will apply. On the other hand, the second paragraph of Article 5 may be brought into play, as a fall-back provision, in order to deal with conduct or practices by a State which are not penalized by more specific provisions but nevertheless go against the aims of the Treaty (7) In this case, the obligation to ‘abstain from any measure which could jeopardize the attainment of the objectives of this Treaty’ was to be satisfied by observance not only of the express prohibition of imposing charges of equivalent effect but also — and this is where Article 5 comes into play, as a sweeping-up provision covering unlawful conduct not specifically provided for — of the requirement, implicit in that prohibition, of administering the customs service in such a way as to ensure that the free movement of goods across frontiers was not impeded.

12.To conclude, I should like to point out that this Court has already used the second paragraph of Article 5 in precisely the manner in which it should be applied to this case, as a provision dealing with indirect failure to observe tenets or principles implicit in the Treaty. An example is the judgment in Commission ν Belgium. (9) In that case the Commission complained that the Kingdom of Belgium had infringed Article 12(b) of the Protocol on the privileges and immunities of the European Communities, pursuant to which the employees of the Community are to be exempt from any requirement of registration in the population registers of the Member States where the Community institutions have their seats. In that case the provision in question had not been infringed directly, through an obligation of registration, but only indirectly: the defendant State attached adverse fiscal consequences to failure to register. Such conduct, according to the Court, thus amounted to a breach of the second paragraph of Article 5 of the Treaty in that it led to an indirect constraint to apply for entry in the population registers, contrary to the spirit of Article 12 of the Protocol. The second paragraph of Article 5 thus provides a sound legal basis for condemning as unlawful any conduct by a Member State which although, complying with the literal requirements of a provision of the Treaty, nevertheless runs counter to the aim pursued by that provision.

13.For the above reasons, I am of the opinion that Articles 9, 12, 13 and 16 of the Treaty, read in conjunction with the second paragraph of Article 5 and Article 3(c), not only lay down a prohibition of customs duties and charges of equivalent effect but also require Member States to defray in full the costs of customs and veterinary services. Only thus can it be ensured that such costs are not passed on to economic agents and that the pecuniary charges intended to cover them, even though stipulated in contacts between private individuals, do not in turn become an obstacle to the free movement of goods across frontiers.

14.On the basis of the foregoing considerations, I suggest the following answer to the question submitted by the French Court of Cassation by order of 17 January 1994: A transit charge not imposed by the State or any body operating under its auspices but provided for in a contract between private individuals is not a charge having an effect equivalent to a customs duty within the meaning of Articles 9, 12, 13 and 16 of the EC Treaty. However, the expenses relating to the operation of customs and veterinary services must be borne entirely by the State and may not therefore, on any basis, be borne by economic agents. It is therefore contrary to the combined provisions of Article 3(c) and the second paragraph of Article 5 and Articles 9, 12, 13 and 16 of the Treaty for a State to act in such a way that private individuals are required to defray such costs, even as a result of a pecuniary charge provided for in a contract, in connection with the carriage of goods across the frontier of a Member State.

*1 Original language: Italian.

1 Case 132/82 Commission ν Belgium [1983] ECR 1649, paragraphs 13, 14 and 15 and Case 133/83 Commission ν Luxembourg [1983] ECR 1669, paragraphs 14, 15 and 16.

2 Case 46/76 [1977] ECR 5, paragraph 9.

3 Case C-188/89 Foster ν British Gas [1990] ECR 3313, paragraph 20. It is also accepted by the Court that a company governed by private law may, theoretically, be conceptually associated with the State, on the basis of criteria such as de facto control by the public authorities, dominant influence and the possibility available to the public authorities of giving binding instructions, ownership or financial participation, subordination — cither administrative or by operatton of law — to the public authorities, or the appointment of members of the board of directors by public bodies. In such circumstances, it must be concluded that an entity, regardless of its form and nature, is associated with the State or else that, in any event, its acts arc attributable to the State. See, in that connection, Case 249/81 Commission ν Ireland [1982] ECR 4005, paragraph 15, Joined Cases 67, 68 and 70/85 Van der Kooy [1988] 219, paragraphs 36, 37 and 38, and Case C-416/16 Beentjes ν Netherlands [1988] ECR 4635, paragraphs 11 and 12.

4 I refer in that connection to the judgment in Case 340/87 Commission ν Italy [1989] ECR 1483, paragraph 17, in which the Court found that the Italian Republic had failed to fulfil its Treaty obligations ‘by charging traders in respect of... the cost of inspections and administrative formalities carried out during part of the normal business hours of the customs offices...’. See also Case 87/75 Bresciani [1976] ECR 129, paragraph 10, in which the Court considered that, in relation to the activity of the administration of the State intended to maintain a public health inspection system imposed in the general interest, ‘the costs which they occasion must by met by the general public which, as a whole, benefits from the free movement of Community goods’.

5 Commission ν Belgium and Commission ν Luxembourg, cited in note 1, in which the Court laid down the principle that the advantages deriving from the possibility of effecting customs clearance within the country arc ‘linked solely with the completion of customs formalities which, whatever the place, is always compulsory’. Such advantages are granted ‘in order to increase the fluidity of the movement of goods and to facilitate transport within the Community. There can therefore be no question of levying any charges for customs clearance facilities accorded in the interests of the Common Market’.

6 I refer to the judgment in Case 132/82 Commission ν Belgium [1983] ECR 1649, paragraphs 13, 14 and 15.

7 I refer to the judgment in Case 133/83 Commission ν Luxembourg [1983] ECR 1669, paragraphs 14, 15 and 16.

8 I refer to the judgment in Case 46/76 [1977] ECR 5, paragraph 9.

9 I refer to the judgment in Case C-188/89 Foster ν British Gas [1990] ECR 3313, paragraph 20.

10 I refer to the judgment in Case 249/81 Commission ν Ireland [1982] ECR 4005, paragraph 15.

11 I refer to the judgment in Case 67/75 Bresciani [1976] ECR 129, paragraph 10.

12 I refer to the judgment in Case 340/87 Commission ν Italy [1989] ECR 1483, paragraph 17.

13 I refer to the judgment in Case 133/83 Commission ν Luxembourg [1983] ECR 1669, paragraphs 14, 15 and 16.

14 I refer to the judgment in Case 46/76 [1977] ECR 5, paragraph 9.

15 I refer to the judgment in Case C-188/89 Foster ν British Gas [1990] ECR 3313, paragraph 20.

See footnotes 1 and 4.

7(This function of the second paragraph of Article 5 has already been outlined by Advocates General Mancini and Tesauro in their respective Opinions in Case Commission v France [1985] ECR 439, particular at p. 442, and in Joined Cases C-78/90 and C-83/90 Compagnie Commerciale de l'Ouest [1992] ECR I-1847, in particular at p. I-1864. Commission v France is particularly noteworthy. In that case, the Commission had advanced the view that the conduct of the French State was caught by the second paragraph of Article 5, since, although it could not formally be described as involving State aid, it was nevertheless equivalent in effect. The Advocate General and the Court rightly rejected that interpretation. In fact the wording of Article 92 (‘any aid granted by a Member State or through State resources in any form whatsoever... shall... be incompatible with the common market’) is sufficiently general to encompass any State conduct which leads to the result prohibited by that provision; it was therefore inappropriate in that case to have recourse to the general, and subsidiary, provisions of the second paragraph of Article 5.)

8Case 78/70 Deutsche Grammophon [1971] ECR 487, paragraph 5. That Article 5 must be read and applied in conjunction with other provisions of the Treaty is also clear from the case-law of the Court - which, on the basis of the combined provisions of Articles 5, 3(f), 85 and 86, has condemned State measures liable to undermine the useful effect of the competition rules. See for example Case 13/77 INNO v ATAB [1977] ECR 2115, paragraphs 29 to 31, Case 136/86 BNIC v Aubert [1987] ECR 4789, paragraphs 22 and 23, Case 66/86 Ahmed Saeed [1989] ECR 803, paragraphs 48 and 49, and Case C-2/91 Meng [1993] ECR I-5751, paragraph 14.

9Case 85/85 Commission v Belgium [1986] ECR 1149, paragraph 22.