The story goes like this. According to the Swedish Law on alcohol, retail sales of booze in Sweden are carried out under a monopoly held by Systembolaget. Only Systembolaget and wholesalers authorised by the State may import alcoholic beverages. Private individuals are prohibited from importing booze. If a person wants to import alcohol from another member State, that person must do so exclusively through Systembolaget. Systembolaget is required to obtain any alcoholic beverage on request at the consumer’s expense, provided that it sees no objection to doing so.
Klas Rosengren and several other Swedes ordered cases of bottles of Spanish wine by correspondence. The wine was imported into Sweden, without being declared to customs, by a private transporter. The wine was then confiscated by the Swedish customs authorities. Mr Rosengren and the others were charged with the criminal offense of unlawful importation of alcoholic beverages.
The Swedish Supreme Court asked the Court of Justice whether the provisions of the Swedish legislation are compatible with Community law, in particular with the principle of free movement of goods guaranteed by the Treaty.
The Court cut straight to the chase and held that the Swedish rules on importation of booze must be assessed in the light of the EC provisions on the free movement of goods (Article 28 EC) and not in the light of the specific provisions relating to State monopolies (Article 31 EC), since the latter apply only to rules relating to the existence or operation of monopolies (see Case C-189/95 Franzén. The importation of alcoholic beverages is not the specific function assigned to the monopoly by the Law on alcohol, which rather confers on the monopoly the exclusive right to retail sales of alcoholic beverages in Sweden.
The Court held that the Swedish rules on importation constituted a clear quantitative restriction on the free movement of goods. Even though the Systembolaget could not in principle refuse to import on the request of individual, by forcing consumers to address themselves to the monopoly body, the law imposed on them a variety of inconveniences with which they would not be faced if they imported the beverages themselves. The Court also noted that the price charged by the Systembolaget to consumers included all manner of extras which would not have been charged in the event of a direct import.
The Court then went on to examine whether the restriction could be justified. It held that it could not be justified. In particular, it held that the prohibition of importation must be considered unsuitable for attaining the objective of protecting the health and life of persons and was clearly disproportionate to the goal of protecting young people because it applied to all, regardless of age.