ECJ broadly interprets notion of 'licence' under Directive 92/83/EEC
In Directeur général des douanes et droits indirects v Brasserie Bouquet SA (Case C-285/14, June 4 2015), the European Court of Justice (ECJ) has considered the interpretation of Article 4(2) of Directive 92/83/EEC on the harmonisation of the structures of excise duties on alcohol and alcoholic beverages.
Brasserie Bouquet runs a restaurant in which it sells beer that it brews itself. In order to do so, it has signed a membership contract for the 'Cercle des trois brasseurs' (the 'three-brewer club') according to which Brasserie Bouquet was transmitted know-how and was supplied with the yeast strains. This contract authorised Brasserie Bouquet to use the trademark and commercial designation LES 3 BRASSEURS.
Brasserie Bouquet considered itself to be a “small independent brewery” under Article 178-0bis A of Annex III to the French General Tax Code, which implemented Article 4 of Directive 92/83. Therefore, it declared the quantities of beer produced to the Customs Administration on the basis of the reduced rate of excise duty.
The Customs Administration contested these declarations, challenging the application of the reduce rate.
The French Supreme Court (Cour de Cassation) decided to refer the following question to the ECJ for a preliminary ruling:
"Must Article 4(2) of Directive 92/83 be interpreted as meaning that the term 'operate under licence' refers exclusively to operation under a licence to exploit a patent or trademark, or can that provision be interpreted as meaning that the term 'operate under licence' refers to operation in accordance with a production process of a third party and authorised by that party?"
First, the ECJ rephrased the question, since the membership contract at stake contained elements which might fall within both possible interpretations of the term 'operate under licence' given by the Cour de Cassation. The appropriate question was whether brewing beer under conditions such as those provided for in the membership contract constituted “operat[ing] under licence”.
The ECJ noted that the terms contained in Directive 92/83 must be interpreted independently in order to ensure that the directive is applied in a uniform fashion.
It pointed out that the reduced rate of excise provided for small independent breweries constitutes a derogation from the application of the normal rate, which implies that the conditions for the application of the derogation must be interpreted strictly.
Two conditions are required in order to benefit from a reduce rate of excise duty on beer. First, Article 4(1) of the directive provides for a quantitative condition: to be qualified as a small independent brewery, the annual production must not exceed 200,000 hectolitres. Second, Article 4(2) lays down a qualitative condition: the brewery must be legally and economically independent from any other brewery, it must use premises situated physically apart from those of any other brewery and it must not operate under licence.
The ECJ interpreted the notion of 'operate under licence' broadly: any form of authorisation which results in a small brewery not being completely independent of the third party which has given it that authorisation constitutes a 'licence' within the meaning of Article 4(2). In particular, an authorisation to exploit a patent, a trademark or even a production process belonging to a third party must be regarded as a 'licence'.
The ECJ concluded that Brasserie Bouquet was not a small independent brewery since it was authorised to exploit a trademark and a production process belonging to a third party. As a consequence, Brasserie Bouquet could not benefit from the reduce rate of excise duty on beer.
Richard Milchior, Granrut Avocats, Paris
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