KKO:2018:49

Diary number: R2017/507
Issue date: 28.6.2018
ECLI:FI:KKO:2018:49

Between 24 June and 18 August 2009, A had, on behalf of an Estonian company and as the person exercising effective control of this company, sold a total of about 10,000 litres of alcoholic beverages to private individuals residing in Finland. The sales had been made through the company's website, after which A had imported the beverages from Estonia to Finland and delivered them in Finland to the buyers' homes.

The Supreme Court held that Finland’s retail alcohol monopoly, which was based on the legislation on alcohol, and the retail licensing system for certain alcoholic beverages, which required inter alia sales premises approved by the licensing authority, were not in conflict with European Union law. A was deemed to have sold alcoholic beverages in Finland in breach of the Alcohol Act and thus had committed an alcohol offense.

The issues to be decided

The issue before the Supreme Court was whether A had committed an alcohol offence. The first question to be assessed was whether his conduct fulfilled the essential elements of the offence of unlawful import or sale of alcohol. If his conduct was found to constitute a criminal offence under the national legislation of Finland, another question that had to be assessed was whether the Finnish legislation on alcohol was in conflict with European Union law to the extent that he could not be found criminally liable for his conduct.

Was A’s conduct in violation of the Alcohol Act?

At the time of the conduct in question, the Alcohol Act of 1994 was in force (1143/1994). According to section 8, subsection 1 of this Act (1/1999) alcoholic beverages may be imported without a special import licence, either for personal use or for commercial use. A person intending to import alcoholic beverages for commercial purposes would, in addition, need a separate licence for this, as specified by the Alcohol Act.

The Supreme Court held that, in view of said provision, the import of alcoholic beverages as such had not been contrary to the Alcohol Act. However, A had imported the alcoholic beverages for commercial purposes. For this, he would therefore have needed the separate licence required by the Alcohol Act. A had not had such a licence. Consequently, he had acted in violation of section 8, subsection 1 of the Alcohol Act.

Had A sold alcoholic beverages in Finland?

A had published advertisements on the Internet directed at consumers in Finland, offering alcoholic beverages for sale. The transactions had been agreed on an internet site maintained by the seller company. The Supreme Court held that neither the location of the headquarters of the company nor the location of A at the time the transactions had been made were of any significance when assessing whether the sale of alcoholic beverages was to be deemed to have taken place in Finland. In assessing this question, it was also not decisive whether or not the right of ownership of the alcoholic beverages sold had been transferred already at the time of the sale, or only after they had been transported to Finland.

The buyers had had the option of either going to Estonia to collect their alcoholic beverages, or having these delivered to them in Finland. If the buyer had selected home delivery, the alcoholic beverages had been under the factual control of the seller until the moment they had been delivered to the buyer. What had been at issue was a continuous chain of events consisting of the conclusion of the agreement over the internet, the transport of the beverages to the address indicated by the buyer, and delivery to the buyer. The agreement had not been fully completed until the seller had delivered the beverages to the buyer in Finland. On the basis of these considerations, the Supreme Court held that A’s conduct constituted the retail sale of alcoholic beverages in Finland. Thus, A’s conduct fulfilled the essential elements of an alcohol offence, the sale of alcohol beverages contrary to the provisions of the Alcohol Act.

Assessment of the restrictions on the sale of alcohol from the point of view of European Union law

According to the case law of the Court of Justice, national authorities may not impose punishment for failure to comply with a national provision that is not in accordance with Union law. The Supreme Court therefore assessed whether the Finnish legislation on alcohol, to the extent at issue here, was compatible with the requirements of European Union law.

The Court of Appeal had submitted a reference for a preliminary ruling to the Court of Justice. In the judgment of the Court of Justice issued on this basis (judgment of 12 November 2015, Visnapuu, C-198/14, EU:C:2015:751), the Court of Justice held that the monopoly system established by section 13 of the 1994 Alcohol Act had to be assessed in the light of the provisions of article 37 of the Treaty on the Functioning of the European Union (TFEU). The system of retail sales licences under section 14 of the Alcohol Act, in turn, had to be assessed in the light of Article 34 TFEU.

Alcoholic beverages covered by the retail monopoly

The Supreme Court held that the objective of alcohol legislation in Finland is to prevent alcohol from causing harm to its consumers, to other people and to society as a whole, by limiting the consumption of alcohol and by supervising commercial activities that are related to alcohol. The purpose of assigning a total monopoly over retail sales of alcohol to a State-owned company (Alko) was, similarly, to reduce the harm caused by the consumption of alcohol. The monopoly was thus used as a means of achieving objectives that were in the public interest.

Alko was required by law to conduct its business in a non-discriminatory manner. Compliance with this obligation had been monitored and regularly reported to the European Commission. In addition, suppliers who had sought to include their products in Alko's assortment had the legal right to appeal Alko's decisions, thus safeguarding the possibility of intervening in suspected discrimination. A had not established justifiable cause to question whether the arrangements referred to above guaranteed the non-discriminatory operations of Alko as required by Article 37 TFEU. The Supreme Court therefore held that European Union law did not bar finding A criminally liable for his conduct in so far as this concerned alcoholic beverages that were part of the monopoly that Alko held over retail sales.

The licencing systems for the retail sale of alcohol

According to section 14 (1) of the 1994 Alcohol Act (764/2002), the retail sale of fermented alcoholic beverages containing 4.7% or less (v/v) ethyl alcohol could be conducted not only by Alko but also by the holder of a retail licence granted by the licensing authority. Retail sales could be conducted only at a licensed sales outlet that was appropriate in respect of the location, sales premises and operation of the site, and where sales were arranged so that effective supervision was possible.

The Supreme Court held that, since the licensing system was essentially a matter of the protection of public health, the national legislator had discretion in respect of the level and manner in which this protection was implemented. Restrictions on the sale of alcohol were based on research data on the health impacts of high consumption of alcohol and on the wide extent of alcohol-related disease and alcohol poisoning in Finland, as well as on the disadvantages that alcohol abuse caused to other persons and to society.

The Supreme Court further held that the regulation in Finland which limited the time and place for the sale of alcohol, as well as sales to minors and intoxicated persons, in order to reduce the harm caused by the consumption of alcohol, was in fact conducive to guaranteeing that the objective of protecting human health and life was achieved and was within the discretion of the Member State. Oversight by the supervisory authorities had been continuous, and deficiencies found in the course of the supervision could have led to the withdrawal of the retail license. Consequently, also the supervision of the licensing scheme could therefore be regarded as substantively significant from the point of view of the protection of public health.

All forms of sales allowed under the Alcohol Act could be subject to effective supervision by the authorities. However, retail sales in which the alcoholic beverages that were sold would be delivered directly to the consumer's home or to another location indicated by the consumer could not be supervised in a comprehensive manner. Such a system would, therefore, not achieve the objectives of the protection of public health as effectively as does the current system.

In its preliminary ruling given in this case, the Court of Justice had held that, on the basis of the facts known to it, it had no cause to find that the primary purpose of the public health and public order grounds to which the Finnish authorities had referred had been ignored and that these grounds would have been used in a way that would discriminate against goods coming from other member states or that domestic production would have been indirectly protected. On the basis of the facts that had come to its attention, the Supreme Court had no reason to assess the matter differently.

In the light of the foregoing considerations, the Supreme Court held that the retail licensing scheme under section 14 (1) of the 1994 Alcohol Act was not in conflict with Articles 34 and 36 TFEU.

Section 14 (2) of the 1994 Alcohol Act (764/2002) provided for a retail licensing system for so-called estate wines. According to this provision, the retail sale of fermented alcoholic beverages containing not more than 13% (v/v) ethyl alcohol could be carried out not only by Alko but also by the producer of such a product, with the permission of the licencing authority.

The Supreme Court held that the licencing system for estate wines was proportionate on the same grounds as the licencing scheme provided for in Article 14(1) of the Alcohol Act. Given the small volume of the production of estate wine and the fact that it was sold directly from the estate in question, the Supreme Court held that it was clear that the licencing system for estate wines had not been used to discriminate against alcoholic beverages from other member states or to indirectly favour domestic production. On these grounds, also the retail licencing scheme provided in section 14 (2) of the 1994 Alcohol Act was not in conflict with Articles 34 and 36 TFEU.

Conclusion

A was found guilty of an alcohol offence, as he had, between 24 June and 18 August 2009, intentionally and in violation of the provisions of the Alcohol Act, sold:

- 1,525.4 litres of fermented alcoholic beverages containing not more than 4.7% (v/v) ethyl alcohol,

- 4,720 litres of fermented alcoholic beverages containing not more than 13% (v/v) ethyl alcohol and

- 3 450,3 litres of beverages other than fermented alcoholic beverages or beverages containing more than 13% (v/v) ethyl alcohol.

A was convicted of an alcohol offence and of another offence and sentenced to conditional imprisonment.