spiritsEUROPE calls for “Zero Tolerance” against Member States breaching the Internal Market

We regularly face Member States’ decisions introducing national legislations to protect their own market.  Hence “the extreme importance of the Commission’s role as guardian of the treaties in tackling any attempts to restrict the flow of goods and services between Member States without justification” as said recently by Adam Szejnfeld, Polish MEP in a question to the European Commission.  Surely Mr Szejnfeld will be glad - as we are - to learn the Commission decided this week to launch infringement procedures against Hungary and Romania regarding retail trade of agricultural and food products.

In Hungary, a new law obliges retailers to apply the same profit margins to domestic and imported agricultural and food products, despite the fact that the cost of imported products is subject to currency and exchange rate fluctuations.  This may discourage sales of imported agricultural and food products in comparison to domestic ones.  

In Romania, large retailers are required to purchase at least 51% of food and agricultural products from local producers.  Restrictions to the internal market are only permitted when there is a justified need to protect an overriding public interest.  According to the Commission, neither Hungary nor Romania has provided evidence that their national measures are justified and proportionate.

We hope these two decisions will positively influence the final decision of Bulgaria not to proceed further with the idea to also reserve 75% of shelf space in large retailers for local wine and spirits.  Not only it will be illegal but it is hard to see what advantage might come from such a proposal, at least insofar as spirits are concerned.  Imported spirits will often be premium products and sold at higher prices, thereby providing higher revenues for retailers and VAT receipts for the government.