EU court casts doubt on busy drinks sales on the German border
The court of the European Union called on the bloc’s executive branch to examine more closely the legality of the non-collection of deposit fees and a related tax on drinks bought in German border shops.
(CN) — For decades, Danes and Swedes have crossed the border into Germany to buy cheaper beer, spirits and soft drinks, and that has both created a bustling border trade for German businesses and left Danish and Swedish vendors on the other side of the road Borderline feeling annoyed.
On Wednesday the court of the European Union told the European Commission, the EU’s executive branch, to investigate more closely whether elements of this busy cross-border business violate EU laws designed to both facilitate open trade and protect against unfair competition.
Specifically, the court examined a complaint made by the Danish Chamber of Commerce on behalf of Danish companies alleging that Germany is helping its cross-border businesses unfairly by allowing Danish and Swedish customers to refrain from charging deposit fees for single-use bottles and cans sold at the Limit, which makes the drinks even cheaper and more desirable.
In 2018, the commission found that Germany is not violating the EU’s strict rules prohibiting so-called state aid and agreed with the German authorities, who argued that Scandinavian buyers should not be required to pay the refundable deposit fees for as long they explain this consume the drinks in their home countries. By not paying the fee, Scandinavian buyers are also exempt from the relevant VAT. Germany also exempts its border shops from paying fines for failing to collect the deposit fees.
German officials argue that cross-border consumers from Denmark and Sweden, two EU member states, shouldn’t be forced to pay a fee designed to encourage Germans to get a refund for returning used bottles and cans so they can be recycled can.
However, the Danish Chamber of Commerce filed an objection and brought an action in 2019 before the General Court, the second highest court in the EU.
In its judgment on Wednesday, the court found that the Commission had not properly examined EU state aid law and should conduct a more comprehensive study to determine whether German businesses were being granted an unfair advantage.
The court accused the commission of having made its decision – and found nothing wrong with the marginal selling system – by referring to German court judgments that had not gone through full appeal.
“It can be concluded that, at this preliminary stage, the Commission has not been able to overcome all the serious difficulties encountered in determining whether the failure to collect the deposit and the imposition of a fine constituted State aid”, Judgment said.
Border trade is important for the northern German states of Schleswig-Holstein and Mecklenburg-Western Pomerania. There are around 60 shops that specialize in this border trade and provide jobs for around 3,000 people. Typically, Danes and Swedes buy large quantities of beer, mineral water and soft drinks as well as wine, spirits, sweets and tobacco products at land crossings or in German cities with ferry connections.
If the deposit fee for drinks is not paid, the Danes and Swedes must declare that they are buying the goods for consumption outside Germany. According to Numbeo, an online database that tracks the cost of living in countries around the world, a small bottle of local beer in Denmark costs more than twice as much as it does in Germany, $ 2 compared to 80 cents.
The border trade is so robust that the German companies that specialize in border sales are represented by a trade association, the interest group of border traders.
The association says on its website that it would be unfair to charge Scandinavian customers the deposit fee as they would not be able to get a refund for the bottles and cans they bought.
The judgment of Wednesday can be appealed to the highest court in the EU, the European Court of Justice.
Courthouse News reporter Cain Burdeau is based in the European Union.