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Pharmacies, Ownership, Freedom of Establishment and Public Health: Cases C-531/06, C-171/07 and C-172/07

By Bartolus

Can member States provide that only professionally qualified pharmacists may own and operate a pharmacy ?

Yes, answers the Court of Justice in its Grand Chamber formation in its judgments in Case C-531/06 Commission v. Italy and Joined Cases C-171/07 and C-172/07 Apothekerkammer des Saarlandes and Others.

In Case C-531/06, the Commission brought infringement proceedings against Italy seeking a declaration that Italian law which allowed only pharmacists to own and operate private pharmacies was in breach of Article 43 EC on the freedom of establishment and of Article 56 EC on the free movement of capital.

In Joined Cases C-171/07 and C-172/07, the Court answered a preliminary reference from a German court about the compatibility with Article 43 EC of German state legislation restricting the right to own and operate pharmacies to pharmacists.

In both cases, the Court disagreed with the Commission. It dismissed the action brought by the Commission in Case C-531/06.

The Court did state, however, that the national legislation in question constitute a restriction on the freedom of establishment and on the free movement of capital.

The Court recalls that Article 43 EC precludes any national measure which, even though it is applicable without discrimination on grounds of nationality, is liable to hinder or render less attractive the exercise by Community nationals of the freedom of establishment that is guaranteed by the Treaty (Case C-19/92 Kraus, paragraph 32, and Case C?299/02 Commission v Netherlands, paragraph 15). Also, legislation making the establishment in the host member State of an economic operator from another member State subject to the issue of a prior authorization and allows self-employed activity to be pursued only by certain economic operators who satisfy predetermined requirements, compliance with which is a condition for the issue of that authorization, constitutes a restriction within the meaning of Article 43 EC. Such legislation deters or even prevents economic operators from other member States from pursuing their activities in the host member State through a fixed place of business (Case C-169/07 Hartlauer paragraphs 34, 35 and 38).

In a similar vein, it recalls that national measures are restrictions within the meaning of Article 56(1) EC if they are liable to prevent or limit the acquisition of stakes in the undertakings concerned or to deter investors from other member States from investing in their capital (see Case C-112/05 Commission v Germany, paragraph 19, and Joined Cases C-463/04 and C-464/04 Federconsumatori and Others, paragraph 21).

But the Court went on to find that the restrictions were justified on grounds of the protection of human health. It stated that medicinal products are distinguishable from other goods because of their therapeutic value. Consequently, member States can legitimately seek ways to ensure the proper an correct consumption of medicines and can require that medicinal products be supplied by pharmacists enjoying genuine professional independence.

The Court also held that member States enjoy a discretion to decide that there is a risk that less restrictive rules designed to ensure the professional independence of pharmacists, such as a system of controls and penalties, would not be observed in practice, given that the interest of a non-pharmacist in making a profit would not be tempered in a manner equivalent to that of self-employed pharmacists and that the fact that pharmacists, when employees, work under the direction of an employer who could make it difficult for them to oppose instructions.

These cases are important as the illustrate the way the provisions on freedom of establishment and the free movement of capital work in practice.

Full post as published by EU Law Blog on May 24, 2009 (boomark / email).