Ferring v ACOSS (ECJ)

Court of Justice of the European Communities
Case C-53/00, Ferring SA v ACOSS
Reference for a preliminary ruling from the Tribunal des affaires de sécurité sociale de Créteil (France)
Judgment of 22 November 2001 (HTML)

State aid; Article 87(1); Article 86(2)

Ferring, a manufacturer of pharmaceutical products, was seeking recovery of amounts paid through a special French tax on direct sales of pharmaceuticals, from which full-line wholesalers were exempt. The argument was that this tax arrangement was an illegal State aid under Article 87.

There were two counter-arguments, both based on the fact that full-line wholesalers were subject to special obligations under French law to maintain a certain level of availability of pharmaceutical products:

It was argued that the tax exemption was merely compensation for the cost to wholesalers of complying with that obligation, and therefore did not constitute aid under Article 87(1).

In the alternative, it was argued that any aid would be justified under Article 86(2) on the grounds that the wholesalers were entrusted with the operation of a service of general economic interest through their obligation to maintain availability.

The court found that these two arguments were, in the circumstances of the case, equivalent. Thus, there were two possibilities:

Either the value of the tax exemption was no higher than the incremental costs of complying with the public service obligation, in which case it did not confer any advantage on wholesalers and was not aid under Article 87(1).

Alternatively, if the value of the tax exemption was greater than the costs of complying with the public service obligation then the tax exemption constituted aid and could not be justified under Article 86(2) as it was disproportionate.

Which of these alternatives applied for the particular tax on pharmaceutical sales at issue in the case was for the French tribunal to decide.

This case was decided whilst Altmark was being heard. In Altmark, the court found that, for financing provided through a public service concession contract, the Article 87(1) and Article 86(2) tests were different. Thus it was possible for aid to exist under Article 87(1), if the funding agency had not acted like a market purchaser of public services (for example by tendering for a well-defined contract), but for it to be justified under Article 86(2) if the aid was nevertheless necessary and proportionate to the public service purpose. Ferring tells us that there is no set of circumstances for a general tax measure that would correspond to this possible outcome for a concession contract. This reflects the fact that there is no concept of "market purchaser" or hypothetical tender process that could be applied to the design of a tax measure.

Ferring v ACOSS (ECJ)

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