EU: ECJ Condemns Swedish Monopoly

On 5 March the European Court of Justice (ECJ) gave a preliminary ruling in a seminal case concerning Sweden’s state-run retail alcohol monopoly (which generates six per cent of the national tax revenue). The case could have significant repercussions for Sweden’s state finances as well as for other European countries with similar monopolies. There are also significant implications for alcohol advertising, which has long been banned in most Swedish media.

The case was brought by the Swedish government against a small shop-keeper, Harry Franzen, who defied the government’s retail monopoly over the sales of spirits, wine and strong beer. The government justified its action on health and social grounds, claiming that the removal of the monopoly would lead to a serious increase in the consumption of alcoholic beverages. The Court’s Opinion categorically found against the Swedish government. The final adjudication is not expected for at least three months – but it is unusual for such a preliminary decision to be overruled. The Swedish government was shocked at losing the case, not least because when the country joined the EU in 1995 it had agreed to end its wholesale monopoly over the alcohol trade in exchange for being permitted to keep the retail version.

Outside Sweden, several other countries will be pondering the judgement, not least Finland, which is an EU member and runs a similar monopoly. Iceland and Norway also have such retail alcohol monopolies, and although they are not EU members they have to comply with EU rules on cross-border trade.