## Facts

- John Walker & Sons Ltd produced Scotch whisky (40% alcohol by volume) and marketed it in Denmark.
- Denmark imposed internal taxes on alcoholic beverages using different rates for Scotch whisky and “fruit wine of the liqueur type.”
- Fruit wine of the liqueur type was typically made from fruit by fermentation and generally had lower alcohol content than whisky; it was largely produced domestically.
- John Walker challenged the Danish tax scheme as violating Article 95 EEC (now Article 110 TFEU) by disadvantaging imported whisky and protecting domestic fruit wine.
- Denmark argued the beverages were not “similar products” because they differed in raw materials, manufacturing method, taste, and alcohol content.
- The Danish Østre Landsret referred questions to the Court of Justice for a preliminary ruling.

## Issues

1. Whether Scotch whisky and fruit wine of the liqueur type are “similar products” under Article 95(1) EEC, making higher taxation on whisky unlawful.
2. If not similar, whether the differential tax system nonetheless infringes Article 95(2) EEC by affording indirect protection to domestic competing products.

## Decision

- The Court ruled that Scotch whisky and fruit wine of the liqueur type are not “similar products” under Article 95(1).
- The Court held that differential internal taxation may be compatible with Article 95(2) when it is based on objective criteria and does not have discriminatory or protective effects.
- The Court provided governing criteria and left to the national court the application of those criteria to the Danish tax scheme’s operation and effects.

## Legal Principles

- “Similarity” under Article 95(1) depends on whether products have comparable characteristics and satisfy the same consumer needs; strict identity is not required.
- Similarity assessment considers objective characteristics (including origin, method of manufacture, and organoleptic properties such as taste and alcohol content) and whether the products can meet the same needs from the consumer’s point of view.
- Member States may differentiate taxation between product categories using objective criteria (including raw materials or production processes) if the policy objectives are compatible with the Treaty.
- Differential taxation violates Article 95(2) if its structure or effects discriminate directly or indirectly against imports or protect competing domestic production.

## Conclusion

The Court held that whisky and fruit wine of the liqueur type were not “similar” for purposes of Article 95(1), and clarified that tax differentiation is permissible under Article 95(2) when grounded in objective criteria and implemented without discriminatory or protective effect, leaving the final factual assessment to the national court.


John Walker & Sons Ltd. v. Ministeriet for Skatter og Afgifter, Case 243/84, [1986] E.C.R. 875 (ECJ 1986)