Swedish State Monopolies and their Compatibility with EC Law

The principal rule of the common market is that goods and services are able to move freely across the borders of Member States. State monopolies in control of supply and demand are, therefore, only under exceptional circumstances compatible with the conditions of the common market. The compatibility of Swedish State monopolies with EC law is a controversial matter. The case-law of the ECJ lets us know what the requirements are for maintaining such State monopolies. In the Franzén judgment, the ECJ clarified under what conditions a State monopoly on the retail of alcoholic beverages is acceptable. The Swedish rules relating to the existence and operation of the monopoly had, however, on the Commission's advice, already been adjusted to the conditions of the common market. In its judgment, the Court paid special notice to the fact that there was an objective product plan for the beverages offered by Systembolaget, that beverages were selected on foreseeable and objective criteria, and that traders whose products were rejected, had a right to be told the reasons for the decision taken by the monopoly as well as given an opportunity to challenge such a decision before an independent board. In view of these circumstances, the ECJ held that the criteria and selection methods used by Systembolaget were neither discriminatory nor apt to put imported products at a disadvantage. Having regard to the judgment in Franzén, one could expect that the monopoly on medicinal products, Apoteket, would also be adjusted to the conditions of the common market. Such measures had, however, not been taken prior to the assessment of the ECJ in Hanner. On the contrary, there was no purchasing plan and no system of 'calls for tenders' within the framework of which producers whose products were not selected would be entitled to be informed of the reasons for the selection decision, as there had been in Franzén. The economic operators were not given the opportunity to contest such a decision, as there was no independent supervisory authority to turn to. The judgment in Hanner is indeed a further development of Franzen. The ECJ compared Apoteket to Systembolaget and required the equivalent structural adjustments to be made. As regards gambling, the question of whether the Swedish State monopoly is compatible with EC law has not been referred to the ECJ, whereas the exclusive rights of other Member States have been examined by the ECJ. The requirements of the ECJ in these judgments are requirements which apply to the Swedish monopoly as well, which is why these judgments are of relevance in establishing whether the Swedish exclusive rights are compatible with EC law. There are no procedural and administrative requirements that are equivalent to those in Franzén and Hanner. The Court has, nonetheless, clarified that there are a few grounds which may not be relied upon to justify a restriction on the freedom to provide services. The Court has, for instance, held in Gambelli that in so far as the authorities of a Member State incite and encourage consumers to participate in lotteries, games of chance and betting to the financial benefit of the public pursue, the authorities of that State cannot invoke public order concerns relating to the need to reduce opportunities for betting in order to justify measures such as those at issue in the main proceedings. Following the judgment in Gambelli, numerous international private gambling companies got the courage to challenge various State monopolies on gambling, not least in Sweden. A number of judicial proceedings were initiated as a consequence of that judgment. The Swedish Supreme Administrative Court has in two judgments of October 26 2004, found that the Swedish State monopoly is compatible with EC law