C-2/73

tax could only infringe the provisions Community. of Regulation No 359/67 relating to export refunds if it would appear to 5. The prohibition of quantitative

be a means of reducing the amount of restrictions and measures having such refunds. equivalent effect covers any total or

partial prohibition on imports, 4. The prohibition of all quantitative exports or goods in transit and any restrictions or measures having encumbrance having the same effect.

In case 2/73

Reference to the Court under Article 177 of the EEC Treaty by the Pretore of Milan, by dated 11 January 1973, for a preliminary ruling in order

proceedings pending before him for an injunction, between

composed of: R. Lecourt, President, R. Monaco and P. Pescatore, Presidents of Chambers, A. M. Donner, J. Mertens de Wilmars, C. Ó Dalaigh and A. J. Mackenzie Stuart (Rapporteur), Judges,

Advocate-General: A. Trabucchi Registrar: A. Van Houtte

gives the following

GEDDO v ENTE NAZIONALE RISI

JUDGMENT

Issues of fact and of law

Decree No 123 of 2 October 1931. There are a large number of fiscal and

Articles 8 and 9, as amended by Royal quasi-fiscal measures of this kind in the

Decree No 1183 of 11 August 1933, common market. They fall into two

provide, inter alia, that: groups: in the first, they are imposed on the grower without the slightest On every contract for the sale of Italian the purchaser must at the possibility of their being passed on direct paddy rice, to the consumer while, in the second time of declaration and in accordance

with Article 8, pay a 'contract duty' to group, they fall on the purchaser. In this case there is usually provision for the Ente at the rate laid down by the reimbursement on export. Ente with the approval of the Ministry

Agriculture In this case the firm of Riseria Luigi of and Forestry, the rate of duty' before Geddo the into 'contact being fixed 15 processed paddy rice an

2. Publicity campaigns to increase Justice of the European Communities, production and consumption of under Article 177 of the EEC Treaty, for Italian rice. a on questions preliminary ruling framework of designed to establish: 3. Intervention within the

the common organization of the 1. Whether Article 40 (3) second

market in rice. subparagraph, of the Treaty of Rome,

JUDGMENT OF 12.­ 7.1973 — CASE 2/73

taken together with Article 5 of the 359/67 of the Council (cf. especially

Treaty, constitutes a prohibition Articles 2, 4 and 14 and the twelfth

refered to under 1 above and (b) on recital in the Preamble to Regulation

exporting the rice referred to in (a) 359 and (b) of the first indent of above to Austria (a third country) he Article 20 (2) of the said Regulation receives the same refunds (cf. Article which prohibits the levying of charges

17 (2) of Regulation No 359/67/EEC) having equivalent effect to a customs as the Community grants his export duty. competitors German and Dutch, —

6. Whether the imposition of the duty for example — who imported the raw referred to under 1 constitutes an material (paddy rice) from third infringement of Articles 20 (2), countries without paying duty of any second indent and 23 (1), second kind. indent of Regulation No 359/67/EEC, 3. Whether in permitting the levying of which prohibit the introduction of

the duty referred to under 1 above, measures having equivalent effect to a on exports of rice produced and quantitative restriction on exports.

purchased in Italy without at the 7. Finally, whether imposition of the same time laying down a duty referred to under 1 constitutes corresponding obligation to reim­

After hearing the report of the agriculture sector; in its judgment Judge-Rapporteur and the opinion of the delivered in the Joined Cases 90 and

Advocate-General, the Court decided to 91/63 (EEC Commission v Grand Duchy open oral procedure without any of Luxembourg and the Kingdom of preparatory inquiry. Belgium, Rec. 1964, p. 1235) the Court declared that the prohibition against The oral observations of the applicant, obstruction of the free movement of the defendant, the Italian Republic and goods is one of the indispensable the Commission of the European conditions for the substitution 'not only Communities were made at the hearing of a common market for the different on 29 May 1973. national markets but also of a common The applicant in the main action was organization for the national organiza­

represented by Maître Ubertazzi and tions in agriculture'. Maître Cappelli. The common organization (set up in the The defendant in the main action was rice sector by Regulation No 359 of 25 represented by Maître Scapinelli, Maitre July 1967, OJ 31 July 1967, 1) p.

Lanza and Maitre Loesch. constitutes this 'single market'. From a

The Italian Republic was represented by reading of Article 43 (3) (b), this term

its agent, Maitre Maresca, who was means that an 'European organization of

The observations submitted to the Court called 'acts commonly capable of

may be summarized as follows: between Member States'

affecting trade (Judgment 43/69, Rec. 1970, p. 136, given on the subject of Article 85 (1); A — Observations of the firm of See, on the same lines, Judgment 5/69 Riseria Luigi Geddo (Rec. 1969, p. 302) in the case of an

agreement capable 'of exerting an 1. European organization of the market influence direct or indirect, actual or in rice and the free movement of potential on patterns of trade'. (See goods in the single market (questions Judgment 40/70, Rec. 1971, p. 82, No 1, 2, 5 b and 6) relating to trade marks).

(a) The EEC Treaty did not merely The judgments cited bring out the

extend the common market to difference between the common market

The contract duty payable to the Ente 1028/68 (cereals); Judgment 11/70, Rec. nazionale Risi constitutes an obstacle to 1970, p. 1136: the need to 'take

trade between Member States and is appropriate steps to avoid deflections of trade'). therefore prohibited. In fact, it entails

'distortions of trade'. (See the opinion of The free movement of goods should not

the Advocate-General in case 31/69, Rec. consist of 'free transit of goods solely 1970, p. 39). from one State to another, but also of

A German or Belgian operator might freedom of trade between producers and

tend to prefer rice from elsewhere, consumers within the single market'.

movement of goods is still of importance circulating within a State in such a

and obstacles to the free movement of manner as to ensure that competition is goods at any point in the market, even not distorted to the detriment of one of

within a Member State, acquire them'. 'If this were not so, each State 'corresponding importance'. could set up local enclaves within the

The free movement of goods is in fact, a single market'. The judgment in cases 32 general principle of Cummunity law, and 33/58 (Rec. 1959, p. 299) condems which does more than prohibit new interference which distorts competition customs duties or taxes having in the common market; this applies a

equivalent effect. Confirmation of this is fortiori in a single market. found in the first place in the sources of These considerations apply with equal Community law (See the fourth recital in force to the trade in rice. 'The fact that the Preamble to Regulation No 120/67 there is a single market means that which refers to the need to standardize transfer of the product, even if not from intervention measures on the market 'in one State to another, cannot be subject order not to hamper the free movement to payment of special pecuniary charges of cereals within the Community', as Italian State imposed by the outside well as the sixth recital in the Preamble Community provisions'. to Regulation No 359/67 in which it is stated that removal of obstacles to the In case 82/71, the Council, returning to free movement of rice 'must enable the problem of milk-production centres

surpluses in production areas to be offset in Italy and to European organization of against requirements in deficit areas'). this market, noted that 'the system in Confirmation is also found in decided question can be described as a group of

any reason, a State judged it expedient (See Article 8 of the Royal Decree of 2 October 1931, No 1237, referred to in I to comply with the Community system

only as far as the other nationals of the above). Community were concerned and not in respect of its own, it would be infringing (e) In conclusion, 'it is evident that, the prohibition on discrimination in the since 1 September 1967 (when same way as if it did the opposite'. Regulation No 359/67 entered into force), the Ente Nazionale Risi was not (d) The legislation relating to the in a position to impose the contract duty contract duty is in several respects an

on purchases of paddy rice produced infringement of the prohibition on and marketed within Italian territory'. discrimination. To begin with, it is solely 'Ever since 1 September 1967, the result concerned with the production and sale of this prohibition has been that of nationally produced paddy rice, to the individuals in the Community (including exclusion of rice imported from third those who deal in paddy rice) have Member it countries or Countries, and

possessed subjective rights which the entails an obligation to declare a

courts of every Member State must purchase within a given time, an

protect'. obligation to use a special certificate for transport and, finally, an obligation to duty'

The prohibition on discrimination (e) Proceeding to question 4, the firm implies that situations which are of Riseria Luigi Geddo submits that the

homogeneous in character must be answer to the first part, (a), should be in treated in a unifrom manner. the affirmative: the prohibition in

JUDGMENT OF 12. 7. 1973 — CASE 2/73

subparagraphs 2 and 3 of Article 40 (3) system 'that the forces of supply and

is quite clear and precise, is not subject demand may have free play'. to any conditions and lies outside the In Case 30/59 the Advocate-General said discretionary powers of Member States. that 'the rules of competition can only As for the date (question 4 (b), this must arise from adaptation of each national

be 1 September 1967, that is the date industry to natural conditions', (Rec. when a single market for rice entered 1961, p. 76). There can therefore be no into force (Regulation No 359/67). doubt about the necessity of prohibiting measures taken with a view to The contract duty has moreover a 'artificially'

example, food pastes. It seems logical tion could equally apply in the field of to maintain that Article 40 (3) also the free development of prices in the prohibits this kind of discrimination agricultural market'. (between two different sectors and not 'The contract duty introduces a cost solely in the same sector). factor into Italian rice production which The rice-growing industrialists or Italy causes the price of the product to vary have their own ricemills, which are from the price laid down for the situated in production areas very far Community'. The duty also infringes the from the seaports. On the other hand, provision in the third subparagraph of German and Dutch producers have Article 40 (3), that the common price industries which are near ports and they policy must be 'based on common can therefore import rice from third criteria and uniform methods of countries. This makes it necessary for calculation'. the Italian operator to confine his But the contract duty 'was never taken purchases almost to rice wholly into in account'

the calculation of the produced in Italy. But it is those very target price, the threshold price and people who use Italian rice who are hit consequently the amount of the levies. by the contract duty, although it does 'duty' in question constitutes the other who use Finally, the not affect operators, discrimination in the field of competition rice derived from another source. both within the Community and on the Even though the contract duty is an

world market. The principle of free indirect tax, it is not refunded at the

GEDDO v ENTE NAZIONALE RISI

the export refund shall be 'the same for 4. Submissions — the inapplicability of the whole Community'. When it is Italian law to the contract duty recalled that the great majority of

deliveries to third countries are effected (a) While, so long as the common

by public agencies and can be based on market is not yet completely integrated, an extremely small difference in price, it national rules can subsist in a single

brings home the seriousness of the market set up by a European discrimination which Italian exporters organization of the market, 'the stage of have to suffer in contrast to their mere coordination of the national

competitors in the Community. market organizations has long since

introduced into the law of the Italian State after setting up the Ente Nazionale 3. The prohibition of taxes and Risi'. It is not a question of

measures having equivalent effect in incompatibility of content but of an act the marketing of rice (questions 5 and ultra vires.

6) The Italian State seems itself to have realized the changed situation since 1968. Questions 5 and 6 concern the contract In fact the Italian Government placed a

duty as applied to exported goods. In draft law, No 4947 of 2 March 1968 Regulation No 16/64, the general levy before Parliament for restructuring the replaced all the various' national Ente Nazionale Risi, reducing its powers measures. It consequently prohibited the and (in Article 8) abolishing the contract collection of special taxes, such as the duty. contract duty, which fell exclusively on a given product.

When applied to exported rice, the 5. Article 86 of the Treaty and the contract duty constitutes a charge having contract duty (question 7) equivalent effect. It is moreover a

measure having equivalent effect to a According to the Treaty of Rome, quantitative restriction insofar as it occupation of a dominant position

The Ente points out that neither the regular flow of Italian rice exports

rules cited from the Treaty nor confirms.

Community regulations on the question On the other hand, the Commission of a common organization of the market believes that the Italian operator who

in rice contain any provisions relating to does not receive a repayment of contract purely internal taxes or charges; nor, a duty at the time of export can regard

fortiori, do they contain anything which himself as a victim of discrimination compels Member States to abolish them. compared with other Community Regulation No 359/67/EEC refers solely operators who are not subject to the

to the price of the product in the context duty. Discrimination can be found on

things connected with specific profes­ functioning of the EAGGF (European

sions or undertakings. Agricutural Guidance and Guarantee Fund). All the same, it accepts that The Ente recalls the judgment of the Article 96 allows Member States to make Court in Case 7 and 9/54 Groupement lower refunds, or none at all, and that des industries siderurgiques luxembourg­ this makes discrimination inevitable. It eoises v Haute Autorite Rec. 1956, p.

accordingly takes the view that, in the 100, which declared: 'The fixing of

maximum prices does not prevent present state of affairs, the collection of

products from being subjected to duties, a duty of this kind is not prohibited. taxes or any other general charge either

on consumption or at some stage of On the third question distribution'. Articles 95 and 96 of the Treaty The Ente points out that the twelfth

contract duty. Community refund; the recital therefore

GEDDO v ENTE NAZIONALE RISI

has no relevance to the contract duty. that the rights which they confer arose

The Ente comments that during the on the date when the Treaty entered into rice-growing seasons from 1967/1968 to force. 1971/1972, imports of paddy rice into The Commission takes the view that if Italy ranged from a minimum of 500 to the Community Institutions had 150 000 quintals, while exports varied infringed Article the provisions of 40, from about 11/2 to 51/2 million quintals, be this could the subject of actions by about a quarter of which were individuals before national courts. distributed within Member States of the

Community.

The Italian Government maintains that On the fifth and sixth questions duty' the 'contract corresponds to

region with a surplus, which price 2 and 3/62, Commission v Luxembourg includes the 'contract duty', it does not and Belgium, Rec. 1962, p. 827, and seem possible to establish an Cases 24/68 and 84/71. infringement of the principle of It cannot be an obstacle to exports

Community preference. because the target price was fixed by the The Commission if the Community on a basis which takes full adds that, even

account of charge imposed on the non-repayment of the contract duty at any

the time of export reduces competitive­ various operators in the two

ness, such reimbursement is not a legal rice-producing countries, Italy and

obligation on Member States. France.

regulations; it seems impossible therefore On the last question to regard those principles as directly applicable. The Ente, the Italian Government and

The Italian Government believes that the Commission express the same

the provisions of Article 40 are intended opinion: in the circumstances of this case for the Institutions of the Community. there is nothing in the case law of the

If, on the other hand, those provisions Court which calls for the application of

were directly applicable, it would follow Article 86 (5).

Grounds of judgment

These questions were put concerning a pecuniary charge, called a contract

duty, levied on the purchaser of paddy rice of domestic origin in order to finance the activities of a national rice authority.

On the first six questions

2 The first question asks whether the second subparagraph of Article 40 (3) of the Treaty, taken in conjunction with Article 5, prohibits a Member State from authorizing the imposition of a duty on the purchase of paddy rice produced in that State for the benefit of an organization other than the State.

The second question asks whether the fact that a levy of this kind is not repaid at the time of export to a Member country or a third country constitutes discrimination within the meaning of the same rule in Article 40, taken together with the provisions of Regulation No 359/67 and of Article 5

of the Treaty.

affirmative, whether these rights arose from the date of entry into force of

Regulation No 16/64 or of Regulation No 359/67.

The first part of the fifth question, asks whether the levying of such a duty infringes the principle of the preference to be granted to Community products, as laid down in the twelfth recital in the Preamble to Regulation No

359/67; the second part of the fifth question and also the sixth question asks whether a levy of this kind can constitute a charge having equivalent effect to a customs duty or a measure having equivalent effect to a quantitative restriction as prohibited by Regulation No 359/67.

GEDDO v ENTE NAZIONALE RISI

3 Before replying to these questions, it is necessary to consider the provisions

Article 40 (3) provides that the common organization established in

accordance with Article 40 (2) may include all measures required to attain

the objectives set out in Article 39, including regulation of prices, but specifies

that the common organization must exclude any discrimination between

producers or consumers within the Community, and that any common price policy shall be based on common criteria and uniform methods of calculation.

Under the terms of Article 43, the Commission is required to submit

market were the annual fixing of target prices and the fixing, on the basis of the target price, of an intervention price at which the competent agencies are

obliged to buy in the paddy rice offered to them; it also means the annual fixing of a common threshold price to be determined for the first year on the basis of the price recorded on the world market and to which the price of

imported products must be equated by means of a variable levy.

Regulation No 359/67 of 25 July 1967, which replaced this legislation, provides for a single target price for husked rice on which two intervention prices, one for Aries, the other for Vercelli, are fixed for rice in the husk.

JUDGMENT OF 12. 7. 1973 — CASE 2/73

Apart from this single price system, the Regulation provides for the charging of a standard levy on imports from third countries and for payment of a

liable to jeopardize the attainment of the objectives of the Treaty, Article 5 imposes a general obligation on Member States, the actual significance of

which depends, in each particular case, on the provisions of the Treaty or on the rules laid down within its general framework.

In the rice sector, the only provisions of the Regulation which prohibit

national measures are those contained in Articles 20 (2) and 23.

5 The prohibition on the levying of any customs duty or charge having equivalent effect, contained in Article 20 (2) of the said Regulation, covers

any charge levied at the time of or by reason of import or export to a third

build up a fund to promote national production.

GEDDO v ENTE NAZIONALE RISI

Nor, on the other hand, could such a tax be contrary to the provisions of the Regulation providing for export refunds unless it appeared to be a method of

reducing the amount of such refunds.

Finally, if such a tax can come simultaneously within the ambit of the

provisions concerning aids, internal taxes and Articles 5, 40 (3) and 98 of the Treaty, it is for the Commission to ensure, with a diligence which reflects the fact that individuals have no immediate redress, that those provisions are

a total or partial restraint of, according to the circumstances, imports, exports or goods in transit.

Measures having equivalent effect not only take the form of restraint

described; whatever the description or technique employed, they can also

consist of encumbrances having the same effect. This does not appear to apply in the case of a pecuniary charge such as that

referred to by the national court.

On the last question

JUDGMENT OF 12. 7. 1973 — CASE 2/73

to the Court, are not recoverable, and as, these proceedings are, insofar as the parties to the main action are concerned, a step in the action pending before the national court, the decision as to costs is a matter for that court.

On those grounds,

Upon reading the pleadings; Upon reading the report of the Judge-Rapporteur;

Upon hearing the oral observations of the applicant and the defendant in the main action, the Government of the Italian Republic and the Commission of

the European Communities; Upon hearing the opinion of the Advocate-General;

completion of contracts to which they are subject and which is designed to provide funds to aid national production does not

constitute a charge having equivalent effect to a customs export duty. 2. Such a tax can only be contrary to the provisions of Regulation No

359/67/EEC of the Council of 25 July 1967, concerning export

refunds if it appeared to be a method of reducing the amount of such refunds.

Lecourt Monaco Pescatore

Donner Mertens de Wilmars