‘1.

Does Article 4 of the Council Decision of 13 May 1965 on the harmonization of certain provisions affecting competition in transport by rail, road and inland waterway (65/271/EEC) in conjunction with Article 1 of the First Council Directive of 11 April 1967 on the harmonization of legislation of Member States concerning turnover taxes (67/227/EEC) produce direct effects as regards the legal relationships between Member States and individuals and do these provisions create individual rights which Member States must protect?

2.

Does Article 4 of the Council Decision of 31 May 1965 (56/227/EEC) in conjunction with the First Council Directive of 11 April 1967 (67/227/EEC) prohibit a Member State which has already put into force the common system of value-added tax and abolished specific taxes on the carriage of goods from reintroducing specific taxes which were imposed on the carriage of goods instead of turnover taxes before 1 January 1970, even if at that date not all the other Member States have implemented these measures?

3.

Must the German tax on the carriage of goods by road (Bundesgesetzblatt 1968, Volume I, p. 1461) which is imposed on an activity and not on an exchange of services (see Para 1. of the Law on the taxation of the carriage of goods by road) and the basis of assessment of which, moreover, is not the consideration for the performance of a contractual obligation but the product in terms of metric tonnes/kilometres of the performance of a contract (Leistungsprodukt), be considered as a specific tax within the meaning of Article 4 of the Council Decision of 13 May 1965 (65/227/EEC) to which the carriage of goods is subject instead of to the turnover tax?’

‘4.

Does the second paragraph of Article 5 of the EEC Treaty in conjunction with Article 74 of the EEC Treaty and Article 4 of Council Decision 65/271/EEC of 13 May 1965 and Article 1 of the First Council Directive of 11 April 1967 (56/227/EEC) produce direct effects in the legal relationships between Member States and individuals which individuals may invoke before the courts of these Member States?

5.

Must taxes which are specifically imposed on the carriage of goods also be held to come within the “conditions” mentioned in Article 80 (1) of the EEC Treaty?

6.

Does Article 80 (1) of the EEC Treaty also prohibit the protection of railway undertakings which are run by Member States as public services?

7.

Does Article 80 (1) of the EEC Treaty produce direct effects in the legal relationships between Member States and individuals which individuals may invoke before the courts of these States?

8.

Does the material scope of application of the prohibition on subsidies contained in Article 92 et seq. of the EEC Treaty also extend to the field of transport?

9.

Do Article 92 et seq. of the EEC Treaty also prohibit the protection of railway undertakings which are run by Member States as public services?

10.

Is it impossible to regard an aid as incompatible with the Common Market if the Commission has not taken a decision in accordance with Article 92 (2) of the EEC Treaty and if it was aware of the relevant facts?

11.

Does Article 92 of the EEC Treaty produce direct effects in the legal relationships between Member States and individuals which individuals may invoke before the courts of Member States?’

1.

As the plaintiffs seek to derive the inapplicability of the German Law on transport tax chiefly from Article 4 of the Council Decision referred to in conjunction with Article 1 of the First Council Directive, the question immediately arises whether measures of this kind addressed to Member States can at all create rights for individuals which the courts must protect or whether they can in principle displace conflicting national law. The German Government has firmly taken the view that there is no question of direct applicability. On the other hand, the Commission, after presenting all the reasons which might argue for or against direct applicability, reached the conclusion that there are no objections in principle to and no compelling argument against direct applicability, and that it is not impossible in general for certain provisions contained in decisions addressed to Member States to have this kind of effect. The viewpoint of the plaintiffs in the main actions is very similar.

It must be acknowledged immediately that the problem raised is of great and fundamental importance. The acceptance of the direct applicability of many decisions addressed to the Member States, that is, the direct implementation of this kind of Community law, is eminently suited to promote integration and to strengthen the legal protection of the citizens of the Market in the national courts (that is, to achieve an affect that has been stressed as important in Cases 26/62 [1963] ECR 1 and 28/67 [1968] ECR 143 which came before the Court for preliminary rulings). In the case of the opposite viewpoint, in the event of a failure to observe decisions made under Community law there only remains in fact the lengthy procedure under Article 169 of the EEC Treaty to establish that a Member State has failed to fulfil an obligation, over which private individuals cannot exercise any legal influence and as regards the consequences of which it may be doubted whether they are equally as valuable to citizens of the Market as the consequences of the direct implementation of Community law (in the event of a condemnation ol the Member States).

As all the parties concerned have correctly stressed, in the treatment of this important problem no direct assistance can be obtained from our previous case-law. Nevertheless, there seem to be some indications in this case-law which point in favour of the plaintiffs' theory and it seems appropriate to make use of them. Thus, firslty, it is illuminating to find that in the case-law on directly applicable provisions of the Treaty, secondary importance was attached to the wording of the articles in question in so far as it expressed that it was directed to the Member States. I refer here to the judgments on Articles 12, 31, the first paragraph of Article 32, Articles 37 (2), 53 and the first and second paragraphs of Article 95. All these cases concerned provisions merely containing obligations on the Member States to do something or to refrain from doing something. Nevertheless, the Court has not seen in this any obstacle to the acceptance of a direct reflex effect in favour of individuals, that is, direct applicability, provided that the rest of the content of the provisions in question seems calculated to produce such an effect. Accordingly, a similar conclusion might be indicated in the case of a secondary law which takes that form, that is, in the case of decisions addressed to Member States obliging them to do or to refrain from doing something. In other words, it might seem tenable in such cases similarly to let the formal aspects take second place and merely ask whether they are by their content and their nature capable of creating direct rights for individuals.

I must now refer to the case-law on Article 173 of the EEC Treaty, which as is well known makes the right of action for private individuals when challenging decisions directed to other persons dependent on such individuals' being directly affected by the decision. Such a right of action was also recognized in respect of decisions addressed to Member States. The fact that in this connexion (I refer to the judgment in Joined Cases 106 and 107/63 [1965] ECR 556) reference was made to ‘directly applicable’ decisions of the Commission is worthy of remark, although being directly concerned within the meaning of Article 173 and direct applicability cannot, of course, be equated. A third interesting feature which was mentioned by both the Commission and the second and third plaintiffs is the judgment in Case 38/69 ([1970] ECR). There the Court stated with reference to the so-called Acceleration Decision of the Council of 26 July 1966 : ‘Although formally addressed to the Member States alone this decision is intended to have repercussions on the Common Market as a whole and it conditions or prepares for the implementation of measures which are directly applicable within the Member States as a consequence of Article 9 (1) of the Treaty and, as regards relations with third countries in particular, of Regulation No 950/68/EEC of the Council of 28 June 1968 concerning the Common Customs Tariff’. It is true this statement was made in a case under Article 169 of the EEC Treaty and in respect of a decision made under Article 235 of the Treaty in order to supplement the Treaty. However since the case concerned secondary Community law in the wider sense it does not seem erroneous to conclude from this judgment that the Court is prepared to adopt a similar attitude also to decisions clearly taken under Article 189 of the Treaty and addressed to the Member States.

Finally this contention is also supported by the judgment of German courts on the direct applicability of decisions addressed to States which have been cited by the second and third plaintiffs and by the views of reputable writers also cited by these plaintiffs. (I do not wish to enumerate these views now; you will permit me merely to refer to the sources cited in the pleadings).

Nevertheless the weight of the objections that were put forward against the Commission's view must not be ignored. They are derived in particular from the system applicable to secondary law under the Treaty, as laid down in Article 189. This article distinguishes between regulations having general application which are binding in their entirety and directly applicable in each Member State, directives, which are binding, as to the result to be achieved, upon every Member State to which they are addressed, whilst leaving the choice of form and methods to the national authorities and finally, decisions which are binding in their entirety upon those to whom they are addressed. It might in fact be deduced from these definitions that direct legislation by the Community institutions is only possible in the form of regulations because in respect of them alone is it provided that they apply directly in the Member States. In all other cases, on the other hand, it is only a measure of integration into the national law or a national implementing measure which creates directly applicable law in accordance with the directives and decisions. However, like the Commission and the second and third plaintiffs, I cannot agree that this sharp distinction with regard to direct applicability is absolutely conclusive. If the Treaty makes a distinction between one-tier legislation by the Community institutions and two-tier legislation involving the interposition of national authorities, then in my opinion in the latter case (which, as is well known, is the only one for which provision is made in a number of articles of the Treaty) what is chiefly envisaged is action for which a measure of integration into the national law or a national implementing measure is indispensable for the creation of applicable law, that is, for example, obligations requiring action to be taken which leave a measure of discretion to the States. Often, perhaps usually, this is the case with decisions and directives. However in addition there are undoubtedly also decisions or parts of decisions which do not require such an integrating measure (one need only mention the'so-called ‘standstill’ or ‘forbearance’ provisions). At least in such cases, and possibly (which may be left open) also in the case of obligations requiring action to be taken which leave no margin of discretion to the States, it seems in fact justifiable to assume that despite the imposition of obligations exclusively on the Member States there are side effects in favour of the citizens of the Market which, just like the corresponding provisions of the Treaty, must be directly guaranteed by the national courts in the case of clear, unambiguous and unconditional directions. With the second and third plaintiffs one may in fact say that in such cases one is faced, strictly speaking, with measures analogous to legislation. It is above all recognition of this fact, that is, of the real legislative nature of these measures, which therefore makes it possible to equate them in their legal effect — so far as direct applicability is concerned — with the Community regulations. The fundamental differentiation of the various measures of secondary Community law as laid down in the Treaty is certainly not thereby obliterated. Nor in my opinion is legal certainty jeopardized. At least it could be said that this danger is offset by the strengthening of the legal protection of individuals, that is, through an effect which, as I have already mentioned, was of particular importance to the Court in establishing the criteria to be employed for directly applicable provisions of the Treaty. Finally, no importance should be attached to the objection that the publication of decisions is not prescribed by the Treaty but is, on the contrary, expressly ordered from case to case by the issuing institution. It is contended that where there is no publication but the direct applicability of decisions is nevertheless accepted, the equality of legal protection is not ensured, for it depends on when the individual concerned happens to acquire knowledge of the issue of the decision. As against this, it is rightly pointed out that, when it is not expressly provided for, publication is not a pre-condition of legal validity and that it has above all a protective function, that is, that when it is omitted the measure in question cannot be employed against an individual affected. But the situation is precisely the opposite where an individual relies on such a measure in defence of his rights, that is to say, seeks to derive benefits from it. Moreover, apart from the fact that where there is no publication all those affected are, as far as the opportunity of acquiring knowledge is concerned, in principle in the same situation, it must also be observed that particularly measures like those at now under consideration are in view of their importance usually published and that this circumstance may actually justify the confidence of the citizens of the Common Market in direct applicability. The fact that the publication of decisions which are addressed to Member States is not expressly prescribed should not therefore lead to the conclusion that such decisions are never directly applicable.

On the whole I would therefore finally support the view held by the Commission and the plaintiffs in the main actions that there are no compelling arguments in principle against the direct applicability of provisions of a decision addressed to a Member State if they are by virtue of their substantial content capable of creating rights for individuals.

2.

This finding of principle that the application by the national courts of Article 4 of the Council Decision mentioned at the outset cannot be excluded a priori, must be followed by an examination of the question as to whether this provision has direct effect by virtue of its content. In this examination we must keep two aspects apart.

3.

The conclusion thus obtained from our examination obviates the necessity of going into the third question by means of which, as you know, the Finanzgerichte wish to ascertain whether the German Law on the tax on the carriage of goods by road constitutes a specific tax law within the meaning of Article 4 of the Council Decision, that is, prescribes a tax which is levied on the carriage of goods instead of turnover tax and should be prohibited from being reintroduced. As I mentioned at the outset however I shall also incidentally deal with this problem briefly. First of all, it must be said in advance that the question cannot be answered in the form submitted because it demands an interpretation of the national law, that is, it would mean the application of Community law to a concrete case which, as is well known, the Court is not permitted to do in proceedings under Article 177 of the EEC Treaty. Applying a long established method we must on the contrary extract from the question put those elements relating to the interpretation of Community law. This means in the present case that we must solely concern ourselves with the criteria for defining ‘specific taxes’ within the meaning of Article 4 of the Council Decision of 13 May 1965.

Here too the parties differ. The German Government, the Commission and the Finanzamt, Düsseldorf-Altstadt, arrive at a definition which does not cover the tax on the carriage of goods. The plaintiffs in the main actions on the other hand consider a wider definition correct in particular to avoid possible evasions. In their opinion, it cannot be demanded that the requirements applicable to the turnover tax should be fulfilled; they claim rather that it must suffice that specific taxes are comparable with the previous transport tax. According to the meaning and purpose of the second paragraph of Article 4 of the Council Decision, the effects of the tax must be placed in the foreground and therefore an increase in the tax burden distorting the conditions of competition must be regarded as prohibited.

Let me say right away that the view held by the German Government and the Commission on this point too seems to me to be the correct one. In fact, the very wording of Article 4 makes it clear that it is only concerned with the entry into force of the common system of turnover tax and its extension to the carriage of goods. From this can be derived the prohibition on reintroducing specific taxes levied instead of turnover tax, that is, the prohibition on double taxation of this kind. This is why it is essential to concentrate on the decisive criteria and functions of the turnover tax system and leave aside any other taxation of transport. Seen in this light, the taxes in question can only be those which are levied on an exchange of services for which the basis of assessment is usually the consideration for a transport service and the purpose of which is solely to provide revenue for the State. On the other hand, Article 4 would be unjustifiably extended if one were to regard as sufficient a certain similarity or comparability with the turnover tax, particularly with regard to the effects and the burdens resulting from it, for its aim is obviously merely the harmonization of tax structures. Nor can it be deduced from the preparatory studies leading up to the decision mentioned by the plaintiffs that its purpose was a more extensive harmonization of the conditions of competition in the field of transport since the decision does not even attempt to make the rates of tax uniform. What is more, if these conclusions necessarily follow from the text of the decision, a broader definition of the concept ‘specific taxes’ cannot be justified, as the second and third plaintiffs contend, by invoking various provisions of the Treaty which, like Article 12, cover ‘charges having equivalent effect’ or which like Article 95 mention the indirect imposition of taxes or like Article 37 the indirect supervision or determination of or influence over exports. Comparisons of this kind can certainly not be considered since the provisions of the Treaty cited have essentially different situations in view, namely the elimination of obstacles to trade at the frontiers. In fact this is far more a comprehensive adjustment than is the case with the first step towards the harmonization of tax structures.

If, however, after all this one agrees with the German Government and the Commission on a narrower definition of ‘specific taxes’, then it follows at the same time that despite similarities that undoubtedly exist in the methods of taxation the newly introduced tax on the carriage of goods does not in essence correspond to the previous special transport tax, that is, to the turnover tax for the carriage of goods. It only applies to the carriage of goods by road and then in principle only to long-distance traffic; its purpose is to benefit the Federal Railways, that is, a form of traffic control. In addition there is a number of further factors (special provisions for the taxation of transport carried out by an undertaking on its own behalf, tax exemptions, tax reductions, tax remissions and many exceptional provisions) which as the Commission has shown prevent one from attributing to the new transport tax the characteristics of turnover tax and therefore of specific taxes within the meaning of Article 4 of the Council Decision. This also explains the fact that it is not imposed instead of but in addition to the value-added tax (although it must be conceded that this formal criterion is certainly not decisive).

To summarize, it may accordingly be stated that in answering the third question as to the definitive features of ‘specific taxes’ a result favourable to the plaintiffs cannot be achieved.

4.

Therefore it remains for me to deal with the questions that were put in Case 9/70 in the event of a negative answer to questions 1 to 3 and which were also partly raised in questions 1 and 2 in Case 23/70, namely as far as references are made in them to Articles 5,74 and 80 of the Treaty.

Firstly one must consider in this connexion whether rights for EEC citizens can be derived directly from the second paragraph of Article 5 in conjunction with Article 74 of the EEC Treaty and the Council measures that have already been mentioned and — this must be inferred in addition from the grounds of the order for reference to the Court — from the Commission's recommendation on the transport policy programme of the German Government mentioned in my preliminary observations. I need not consider this at length. Following the view held by the German Government, the Commission and the Finanzamt Traunstein I am obliged, here too, to give a negative answer. If the content of the obligation to refrain from acting in Article 5 is compared with the provisions which the Court has held to have direct applicability, one certainly cannot escape the conclusion that it is too general and indefinite and therefore not capable of direct application by the national courts without recourse to other provisions of the Treaty of substantive law with a more concrete and more precise content. Article 74 of the EEC Treaty is undoubtedly not such a substantive provision. It too is too uncertain, for it still does not fix the content of the common transport policy (the following article merely provides for a few rules of procedure for the determination of this policy). Thus there is certainly nothing to be obtained from Article 5 in conjunction with Article 74 towards establishing the existence of individual rights.

Since it has already been established in relation to the Council Decision and Directives regarding turnover tax which are at issue here that rights for individuals cannot be derived directly from them, at least before 1 January 1972, it further follows that rights for individuals cannot be derived from a combination of these measures with the articles of the Treaty that I have just mentioned.

Accordingly it merely remains in the present context to deal with the Commission's recommendation of 1968. However as the Commission itself states, this is merely an expression of the views of one of the Community institutions responsible for transport policy, that is to say, it is not a measure the failure to observe which would jeopardize the attainment of the aims of the Treaty. Since, moreover, according to Article 189 recommendations do not have binding force, a comprehensive appraisal of Articles 5 and 74 of the Treaty in conjunction with the recommendation of the Commission cannot accordingly under any circumstan-ces lead to the conclusion that individual rights can be established in this way.

Therefore, as already explained, the fourth question must as a whole be answered in the negative.

5.

Questions 5 to 8 in Case 9/70, like the references contained in question 1 in Case 23/70, concern the interpretation of Article 80 of the EEC Treaty. They may therefore, as the parties to the proceedings have also maintained, be treated together.

Firstly it ought to be examined in the abstract whether Article 80, in any case by the commencement of the second stage, is directly applicable in the sense discussed so far, for in the case of a negative answer to this question, we would not need to engage in a deeper interpretation of the content of this provision. With regard to this first consideration, the German Government emphatically proposes a negative answer and refers to the fact that the prohibition on support tariffs is furnished with a proviso for authorization, that is, it depends on a decision of the Commission connected with a considerable discretionary power, a decision, moreover, that need not be published, which is not always issued before the entry into force of the national measures and to which retrospective effect may be attributed. The Commission and the first plaintiff on the other hand, advocate an affirmative answer, that is, the recognition of the direct applicability of Article 80.

However this question may in fact remain open, since it can be shown that in the present case an examination of the problems of interpreting Article 80 seems superfluous because this provision (to adopt the expression used in Case 13/68 [1968] ECR 453) ‘has obviously been invoked in error’. In fact, both the German Government and the Commission are right in considering that although taxes on the carriage of goods may also be ‘conditions’ within the meaning of Article 80 (this was already decided in Case 18/58 Rec. 1960, p. 400), nevertheless Article 80 only comes into operation if the legal provisions applicable to transport services concern the relationship between transport undertakings and transport users or, more precisely, if the national measures favour the users (consignors, consignees or both), but not if they are intended to provide an advantage for other carriers. In this connexion the German Government referred to a terminological list of transport terms prepared by the European Parliament dated 11 December 1961 whereby the term ‘conditions’ means ‘in addition to prices, all the statutory and contractual provisions applicable between the transport undertaking and the transport user’. In addition, the German Government rightly pointed out that measures benefiting carriers, that is, measures affecting competition between carriers, would be covered by Article 77 of the EEC Treaty. However, since the German Law now at issue is, as I have already stated, intended to benefit a carrier (the Federal Railways) that is, not a user, it seems in fact erroneous to have recourse to Article 80 of the EEC Treaty for its appraisal. Consequently there is no need to go into the interpretation requested on this particular point.

6.

A further group of questions also put only in Case 9/70 relates to Article 72 et seq. of the EEC Treaty. These too must be examined collectively.

Once again, by virtue of the wording used by the Finanzgericht the question of direct applicability must first be answered since on it depends whether we need go into the interpretation of particular terms in the articles concerned. On this question, I would now merely indicate that in my view the German Government and the Commission have submitted convincing arguments against the direct applicability advocated by the first plaintiff. In fact, apart from the fact that incompatible aids are described in very wide terms, there is no question of an unrestricted prohibition. Aids are only incompatible to the extent that nothing is provided to the contrary. A number of systems of aid are declared permissible in the Treaty itself (Articles 92 and 77) or may be declared compatible with the Treaty in measures in the nature of secondary legislation. In the case of incompatibility, a decision is issued by the Commission in respect of which it has a discretionary power In addition, Article 94 enables the Council to make implementing provisions and the Council may also declare aids to be compatible under Article 93.

Essentially, however, the question of direct applicability does not need any deeper discussion, for in the present context also it may be stated, following the considerations at the basis of the judgment in Case 13/68 ([1968] ECR 453) that it would be wrong to apply the aid provisions of the Treaty to the German Law on transport tax. In fact there can be no question of aid within the meaning of Article 92, although the purpose of the Law is to benefit the Federal Railways. The concept of aid requires, as has already been stated in other cases, for example, in the judgment in Case 30/59 (Rec. 1961, pp. 38 and 39), a contribution at the expense of public funds or the reduction of charges which an undertaking normally has to bear. In the present case, on the other hand, it is a question of the State indirectly favouring one carrier by imposing tax charges on competing carriers. Tax measures of this kind, dirigiste in nature, certainly do not come, contrary to the view of the first plaintiff, within the scope of application of Article 92. In the present context, particularly in view of other provisions of the Treaty which would otherwise be deprived of their meaning, this must be the essential observation to be made. As it is based on an interpretation of Community law, it may be made without incurring the reproach that the Court is interfering improperly in questions of the relevance of the interpretation sought to the judgment to be delivered which are reserved to the court making the reference. However it also obviates the necessity of dealing with the question whether Articles 92 et seq. apply to the field of transport at all (which would in principle have to be answered in the affirmative on the basis of Articles 61 and 77 of the Treaty and the Council Decision of 13 May 1965). Furthermore it eliminates the necessity of examining whether these provisions are also relevant in relation to the protection of railway undertakings run as public enterprises (which would also have to be answered in the affirmative, subject to the application of Article 90 (2)) and it may be left open whether the existence of an aid incompatible with the Common Market cannot be presumed so long as the Commission, in spite of being aware of the facts, has not taken a decision in accordance with Article 93 (2) of the EEC Treaty.

Therefore, with regard to the last group of questions it merely remains to say that nothing can be derived from Articles 92 et seq. of the EEC Treaty which is of relevance to the evaluation of the facts by the Finanzgericht.

7.

Finally, to sum up, I would accordingly propose the following answers to the questions put: