C-11/74
ECLI:EU:C:1974:84
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JUDGMENT OF THE COURT OF 11 JULY 1974 1
L'Union des Minotiers de la Champagne v French Government
(preliminary ruling requested by the French Conseil d'État
'Derived intervention prices'
Case 11/74
In Case 11/74
Reference to the Court under Article 177 of the EEC Treaty by the French Conseil d'État for a preliminary ruling in the action pending before that court between
UNION DES MINOTIERS DE LA CHAMPAGNE , Reims,
and
THE FRENCH GOVERNMENT
on the validity of Regulation (EEC) No 1210/70 of the Council of 29 June 1970 establishing the principal marketing centres for cereals for the 1970/1971 marketing year and the derived intervention prices applicable at those centres (OJ L 141, p. 9),
THE COURT
composed of: R. Lecourt, President, A. M. Donner and M. Sørensen (Rap porteur), Presidents of Chambers, R. Monaco, J. Mertens de Wilmars, P. Pescatore, H. Kutscher, C. Ó Dálaigh and A. J. Mackenzie Stuart, Judges,
Advocate-General: A. Trabucchi Registrar: A. Van Houtte
gives the following
1 — Language of the Case: French
JUDGMENT OF 11. 7. 1974 — CASE 11/74
JUDGMENT
Facts
The order for reference and the written June 1967, p. 2269/67), provides that observations submitted under Article 20 for the Community each year a target of the EEC Statute of the Court may be price and a basic intervention price shall summarized as follows: be fixed for Duisburg, which is the centre having the largest deficit as regards cereals. I — Facts and procedure Article 4 of the same Regulation provides for the fixing of 'derived 1. The Union des Minotiers de la intervention prices'. The second Champagne applied to the Conseil d'État paragraph of Article 4 (1) provides: to annul as ultra vires 'Decree No 70-691 of 31 July 1970 fixing the prices 'The derived intervention prices shall be for cereals and the financial fixed for the same standard quality, at arrangements for the 1970/1971 the same stage and under the same marketing year'. The French Decree, conditions as the target price, for all which adopts the provisions of marketing centres in the Community Regulation No 1210/70, is invalid except Duisburg. The derived inter according to the applicant, inter alia, vention prices shall be calculated in such because it has no legal basis, since a way that the differences between them Regulation No 1210/70 is itself correspond to the price disparities in unlawful. prices to be expected in a normal harvest The Conseil d'État, taking the view that under natural conditions of price formation on the market and allow the the validity of the Decree challenged depended on the validity of Regulation free movement of cereals within the No 1210/70, decided to stay the community in accordance with the proceedings and referred to this Court in requirements of the market'. accordance with Article 177 of the EEC In accordance with Article 4 (5) of Treaty the question 'whether Regulation Regulation No 120/67, the Council No 1210/70 of the Council of the issued Regulation No 131/67/EEC of 13 European Communities fails to comply June 1967 laying down rules for deriving with the provisions of the second intervention prices and for determining paragraph of Article 40 (3) of the Treaty certain marketing centres for cereals (OJ establishing the European Economic No 120 of 21 June 1967, p. 2362/67). Community, with the second paragraph Article 1 of this Regulations provides: of Article 4 (1) of Regulation No 120/67 of the Council of the European 'For the purpose of fixing derived Economic Community, dated 13 June intervention prices, market prices shall 1967, and with Articles 1, 3 and 6 of be considered as being established under Regulation No 131/67 of the Council of natural conditions of price formation as the European Economic Community, follows: dated 13 June 1967'. — in deficit areas whose supplies 2. Article 2 of Regulation No depend to a certain extent on 120/67/EEC of the Council of 13 June imports, on the basis of the price at 1967 on the common organization of the which imported cereals are offered in market in cereals (OJ No 117 of 19 those areas;
UNION DES MINOTIERS DE LA CHAMPAGNE v FRANCE
— in production areas whose surpluses It states that the method of fixing contribute to a certain extent to the derived intervention prices provided-for supply of the abovementioned areas, in particular in Article 1 of Regulation on the basis of the abovementioned No 131/67 leads to the discrimination price and the cost of transport to condemned in Article 40 of the EEC those areas; Treaty, impedes the natural conditions of price formation on the market and — in ports of shipment, on the basis of leads to disturbances in the normal the price in the main production area pattern of trade contrary to the for exports and the cost of transport categorical requirements of Regulations to the main port of shipment for that Nos 120/67 and 131/67.
area; The result of the regionalization of — in other production areas whose intervention prices is that the derived surpluses are likely to be exported to intervention price, that is to say the floor a certain extent, on the basis of the price below which the miller cannot buy price ruling in the ports of shipment the wheat he needs for grinding, will be and the costs of transport to those fixed, for example, at FF 47 in the ports; Marne as compared to FF 45.13 in — in deficit. areas other than those Central France, for the marketing years mentioned above, on the basis of 1967/1968 to 1969/1970. prices in the surplus area best placed This difference would be tolerable if the from the freight point of view, and production of these areas was intended the cost of transport to the deficit for export to deficit areas of the
area'. Community, but it becomes arbitrary, Article 3 of the Regulation provides that unjust and contrary to the principles 'derived intervention prices shall be fixed mentioned above, when it is, in truth, a in such a way that there is no small percentage of the production which is so intended in each area. The discrimination between Community producers. . .'. applicant states that exports to Germany represent only 8 to 18 % of the whole Article 6 provides: wheat harvest. 'Derived intervention prices for the The applicant states that the following marketing centres .
. . shall be fixed in economic phenomenon takes place: such a way that they cannot disturb the In time of surplus the intervention price normal pattern of trade'. will necessarily become the market price. Each year under these Regulations the Whatever the destination 'of the wheat Council fixes the principal marketing the price will be FF 47 in the Marne and centres and the derived intervention FF 45.13 in Central France. All prices effective in these centres within consumers and in particular the millers the meaning of Article 4 (4) (b) of from the first area will be subject to this Regulation No 120/67. Regulation No disadvantage of FF 1.87 in relation to 1210/70 contains the rules for the their competitors from the Central marketing year 1970/1971. .The Regu region.
On the other hand it is the lation fixed these prices at 94.95 u.a. per producer from the latter region who will 1 000 kg of common wheat for be at a disadvantage in relation to the Compiègne and at 91.77 u.a. for producer from the north or east in Chartres. marketing his harvest. 3. It appears from the particulars In the applicant's opinion the forwarded by the Conseil d'État that discrimination condemned by the EEC the Union des Minotiers claims that Treaty is obvious. The disturbance in the Regulation No 1210/70 is invalid mainly normal pattern of trade is likewise ob on the basis of the following arguments. vious. As'regards'more than 80 % of the
JUDGMENT OF 11.7.1974 — CASE 11/74
production which does not go to the least difficulty in replying to the- Community, demand is attracted to the applicant. This leads the Council to a area where the derived intervention price preliminary observation: the lack of is the lowest. Thus the Paris region, particulars in the supplementary which traditionally obtained its supplies statement filed at the Conseil d'État in the Marne, a region having a large results from the fact that neither in production, now makes its purchases laying down the mechanisms for in the Central region.
It is no less ob regionalization under Regulation No vious that the natural conditions of price 131/67 nor in the application of these formation on the market are not mechanisms for the 1970/71 marketing respected. year by Regulation No 1210/70 did the 4. The order of the Conseil d'État Council of the Communities 'go beyond what could be regarded as necessary to dated 18 January 1974 was registered at attain the objectives' of the Community the Court on 20 February 1974. organization of the market in cereals. Written observations were submitted on The Council also states that the behalf of the Council by its Legal vagueness of the application arises from Adviser, Professor D. Vignes, and on the fact that the main proceedings only behalf of the Commission by its Legal involved a statement of claim and a Adviser, J. H. J. Bourgeois. statement of defence, without a reply or Upon hearing the report of the a rejoinder. Judge-Rapporteur and the opinion of the Advocate-General, the Court decided to The Council then replies to the open the oral procedure without any objections against Regulation No
131/67. preparatory inquiry. As regards the alleged disregard of the rule requiring consideration of the II — Written observations 'disparities in prices to be expected in a submitted" to the normal harvest under natural conditions Court of price formation', the Council states that it as an improper claim on principle The Council first of all considers the to claim that the criteria for fixing the system of regionalization of prices for derived intervention prices provided for cereals, its basic rules and how they were in Article 1 of Regulation No 131/67 applied in the 1970/1971 marketing year. may differ from the natural conditions of price formation. It states inter alia that in the Community the fact that surplus regions overlap As regards the alleged infringement of geographically with deficit regions, the Article 6 of Regulation No 131/67 which fact that the latter may partly obtain states that the derived intervention prices their supplies outside the Community must not disturb the normal pattern of together with the amount of excess in trade, the Council stresses the illogicality the surplus regions result in prices being of saying that a provision of a derived mainly in terms of transport Regulation infringes another of the same costs although they do not reflect solely a Regulation. mathematical computation.
Regionaliza The Council states further that the tion can therefore be defined according objective of Article 6 is not to condemn to both fixed and variable criteria. any provision which has the effect of The Council then considers the altering the 'traditional pattern'. The applicant's complaints and states that in only concept of which Article 6 speaks is fact it is the basic rule of regionalization the alteration of the 'normal pattern', which is being challenged. which is very different. This concept is In the Council's opinion the lack of contained in the idea of compensation specificity in the complaints is not the between surplus areas and deficit areas
UNION DES MINOTIERS DE LA CHAMPAGNE v FRANCE
on the Community level, in which Community Regulation, which is in Regulation No 120/67 sought to place truth the sole objective of the the single market in cereals. A certain proceedings, would in no way be development of French exports is to be affected. expected in the normal pattern of trade. The Commission takes the view that the As regards the third complaint with Decree which is challenged is a simple regard to Regulation No 131/67, the reproduction of Regulations Nos Council states that it would be difficult 1210/70 of the Council and 1248/70 of to say that Article 1 of the Regulation the Commission (OJ L 142, p. 20) and has a discriminatory effect with regard observes that the objections to which to producers and consumers contrary to such detailed rules for implementing Article 40 of the EEC Treaty, since the Community law give rise ought not to derived prices for each of the five areas be dealt with within the context of the is fixed on the basis of the 'natural present case. conditions of price formation'. It outlines the framework of Regulations The Council states further that market into which the provisions, the validity of prices in France in 1970/71 were which is challenged, fit. It states that a constantly at a higher level than the system of derived intervention prices highest derived intervention prices and meets the necessity of simultaneously that as regards the 1970/71 marketing pursuing two equally essential objectives, year the price situation was clearly the that is, that of ensuring a fair standard reverse of that which the supplementary of living for the agricultural population statement claimed as resulting from the in the Community and that of the free system. movement of cereals within the As regards the determination of the Community. A single intervention price different derived intervention prices would not allow this requirement to be under Regulation No 1210/70, the met. If the intervention price were fixed Council refers not only to the absence of at a high level in relation to the target proof regarding substantial errors in price, the intervention price would be their calculation, but also to the absence too high in surplus areas; save as regards of specific grounds of complaint. local needs, the whole of the production It states likewise that the price disparity would be sold on intervention and only in question does not seem to have cereals bought and transported by the harmed the applicant. During the intervention agencies would be calendar years 1967 and 1970 roughly transfered for sale from the production equal amounts of flour were milled in areas to the consumer areas.
the department of the Marne, and It states moreover that the criteria although sales in the department itself contained in Regulation No 131/67 went down slightly, those in the other should not be rigidly applied. The departments and especially those for wording itself of Article 1 shows this. export went up. Moreover their very objective, that is the The Commission is of the opinion that anticipation of 'the disparities in prices the request for a preliminary ruling is to be expected in a normal harvest under admissible although it queries the natural conditions of price formation on interest that an individual could have in the market', accords ill with criteria an application to annul a French decree. which are both strict and pre-estab Supposing that this Court declared that lished.
the Regulation is not valid and as a The Commission then examines the case result the Conseil d'État annulled the in the main proceedings. It believes it Decree, matters would remain as they possible to deduce from the file that the are between the parties to the dispute is not about the way in which proceedings: the directly applicable Regulation No 1210/70 applied the
JUDGMENT OF 11. 7. 1974 — CASE 11/74
system of derived intervention prices but The Commission states that the system about, the system itself as set out in does not disturb the 'normal pattern of Regulation No 131/67. Consequently it trade' either. This term refers to the is of the opinion that to establish the 'normal' and not the 'traditional' validity of Regulation No 1210/70 it pattern. . The normal pattern is that suffices to show that the system of which is established' in the single market. derived intervention prices ' is in The fact that regionalization leads to a accordance with the second paragraph of disparity between the intervention price Article 4 (1) of Regulation No 120/67 in the Marne and that in Central France, and does not disregard the provision , of whereas during the marketing year in the second paragraph of Article 40 (3) question more than 80 % of the French of the Treaty. production continued to be marketed in France, is not such as to undermine the It states that the system of derived intervention prices does not interfere validity of the regionalization of prices with regard to the criterion of the with the 'natural conditions of price formation'. It observes that this 'normal pattern'.
The character appropriate to the derived intervention requirement is not an objective in itself. price applicable in the Marne is to be It is only in so far as the two objectives assessed in terms of the production of of the system referred to above are not achieved that the question can arise the Marne which is disposed of in the deficit areas of Germany and should be whether the derived intervention prices able to be disposed of in these areas in a have been correctly established. In this respect the Commission notes that the free market, where the normal pattern of trade can develop without any figures relating to the proportion
hindrance. It is not assessed in relation represented by the rest of the Community in the sales outlets for the to the disposal of the French production French production has increased. In the in a Community market, in which the Commission's view these figures are in pattern of trade has not yet developed any case not decisive in assessing quite normally. whether the regionalization of prices has Finally the Commission states that the been properly applied. What matters in system of derived intervention prices short is the proportion which the market does not disregard Article 40 (3) of the of a deficit region of the Community Treaty. It observes that this rule is represents in the sales outlets of a intended to protect the interests of surplus region of the Community. agricultural producers and consumers The Commission observes further that and not those of processors and dealers the fact that during a period of plenty in agricultural products. Moreover, as the derived intervention prices become this Court has stated in its Judgment of the prices on the market in each region 24 October 1973 (Case 43/72, Merkur v is inherent in the very existence of the Commission, [1973] ECR, p. 1055), the intervention price; it does not show that disparity in treatment of the millers the differences between the prices in constitutes an infringement of this each region which arise in these principle only if it appears arbitrary.
It is circumstances do not correspond to the clear that this disparity cannot be disparities in prices which arise under regarded as arbitrary. The difference natural conditions of price formation. between the derived intervention prices Moreover, derived intervention prices is intended to reflect in those prices the are established on the assumption of a disparities which arise under natural normal harvest and not on the conditions of price formation on the assumption of a marked disequilibrium market. In the last analysis it depends on between supply and demand. the more or less advantageous position
UNION DES MINOTIERS DE LA CHAMPAGNE v FRANCE
of a given production area-in relation to increasing the purchase price for millers the deficit areas. in certain regions in relation to others, in The Commission points out that return it necessarily played a rôle in according to the figures which it has the opening frontiers.' sales of French flour in Germany The oral observations of the increased from 17 800 metric tons in Commission were presented on 13 June 1965/66 and 17 400 metric tons in 1974. 1966/67 to 32 700 metric tons in 1970/71. Although the difference in The Advocate-General delivered his intervention prices had the result of opinion on 10 July 1974.
Law
1 By an order dated 18 January 1974, filed at the Court on 20 February, the Conseil d'État of the French Republic referred the question, under Article 177 of the Treaty establishing the EEC, whether Regulation No 1210/70 of the Council of 29 June 1970, determining the principal marketing centres for cereals and the derived intervention prices applicable at those centres for the 1970/71 marketing year, fails to comply with the provisions of the second paragraph of Article 40 (3) of the EEC Treaty, of the second paragraph of Article 4 (1) of Regulation No 120/67 of the Council of 13 June 1967 and of Articles 1, 3 and 6 of Regulation No 131/67 of the Council of 13 June 1967.
2 This question has been raised in respect of an application in which the Union des Minotiers de la Champagne asked the Conseil d'État to annul Decree No 70-691 of 31 July 1970 fixing the prices for cereals and the financial arrangements for the 1970/71 marketing year.
3 The Conseil d'État considered that the legality of this Decree, which adopted the derived intervention prices as laid down in units of account by Regu lation No 1210/70 and converted them to French francs, depends on the validity of that Regulation.
4 It appears from the order for reference that the applicant has maintained before the Conseil d'État that the Regulation fails to comply with certain provisions of the Treaty and of the Regulations of the Council relating to
JUDGMENT OF 11. 7. 1974 — CASE 11/74
the common market in cereals in that it creates discrimination between pro ducers or consumers within the Community, alters the disparities in prices resulting from the natural conditions of price formation on the market and involves disturbance in the normal pattern of trade.
5 The second paragraph of Article 40 (3) of the Treaty provides that the common organization of agricultural markets 'shall exclude any discrimination between producers or consumers within the Community'.
6 The aim of Regulation No 120/67 of the Council on the common organiza tion of the market in cereals is to enable compensation to be effected be tween the surpluses of the producer areas and the needs of the deficit areas by providing, apart from the basic intervention price, for the establishment of derived intervention prices, in such a way 'that the differences between them correspond to the price disparities in prices to be expected in a normal harvest under natural conditions of price formation on the market and allow the free movement of cereals within the Community in accordance with the requirements of the market' (second paragraph of Article 4 (1)).
7 Rules for fixing derived intervention prices were laid down by Regulation No 131/67 of the Council, Article 1 of which specifies, in respect of five different classes of areas, the factors on the basis of which market prices shall be considered as being established under natural conditions of price formation.
8 Under Article 3 of the same Regulation 'in all cases, derived intervention prices shall be fixed in such a way that there is no discrimination between Community producers and in particular that cereals coming from one region cannot be offered in another region for less than the intervention price applicable therein'.
9 Article 6 provides that intervention prices for the marketing centres other than the principal centres shall be fixed 'in such a way that they cannot disturb the normal pattern of trade'.
UNION DES MINOTIERS DE LA CHAMPAGNE v FRANCE
10 Regulation No 1210/70 of the Council specified, in respect of the 1970/1971 marketing year, the principal marketing centres and the derived intervention prices applicable at those centres by fixing, inter alia, the price of common wheat at 94.95 u.a. per 1 000 kg for Compiègne (Marne) and 91.77 u.a. for Chartres (Central Frnace).
11 It appears from the documents supplied by the Conseil d'État that the applicant in the main proceedings, the members of which come from the region of the Marne, has stated that the disparity in prices as between this region and Central France is such as to cause them detriment in periods of plenty, in particular by putting them at a disadvantage in relation to the millers of Central France in disposing of their products on the market in the Paris region and that the fixing of derived intervention prices fails to meet the provisions of the Treaty and the basic regulations.
12 In this respect in particular the applicant in the main proceedings has criticized the system of regionalization of derived prices which does not respect 'the natural conditions of price formation on the market', on the basis of which, under the second paragraph of Article 4 (1) of Regulation No 120/67, the differences between the derived intervention prices for the different marketing centres has to be calculated.
13 The principle of regionalization of derived prices, as put into effect by Regu lation No 131/67, involves the establishment of five categories of area and the definition, in respect of each of them, of the criteria on the basis of which derived intervention prices must be fixed so as to have regard to the natural conditions of price formation.
14 Transport costs between the areas, in particular from the surplus areas to the deficit areas are a weighty component of these criteria, but other components likewise enter into account, such as the geographical situation of the surplus and deficit areas, the needs of other consumer areas, imports from third countries and the possibilities of export.
15 Although this system can give rise, in certain special circumstances, to the fixing of derived prices which differ slightly from prices which would arise in a free market, it must nevertheless be regarded as basically in accordance with the general requirements-of the" second paragraph of Article 4 (1) of
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Regulation No 120/67, especially as these requirements are such as to leave a certain margin of discretion to the Council.
16 It is right therefore to conclude that the derived intervention prices fixed by Regulation No 1210/70, within the framework of the system of regional ization provided for by Regulation No 131/67, accord with Regulation No 120/67.
17 The applicant in the main proceedings has further stated that the derived intervention prices fixed by Regulation No 1210/70 are of such a nature as to disturb the normal pattern of trade, thereby infringing Article 6 of Regulation No 131/67.
18 In this respect it appears from the statistics in the file that the common organization of the market has involved certain alterations in the traditional pattern of trade relating to cereal products, especially in northern France.
19 These alterations, however, far from constituting disturbances in the normal pattern of trade, must be regarded as resulting from the establishment of a single market and thus arising from the attainment of the objective of the provisions relating to the common organization of the market.
20 It follows that the derived intervention prices fixed by Regulation No 1210/ 70 are not incompatible with Article 6 of Regulation No 131/67.
21 Finally, the plaintiff in the main proceedings has referred to the prohibition on any discrimination between producers or consumers within the Community contained in the second paragraph of Article 40 (3) of the Treaty and mentioned again in Article 3 of Regulation No 131/67.
22 Difference in treatment cannot be regarded as constituting discrimination which is prohibited unless it appears arbitrary.
UNION DES MINOTIERS DE LA CHAMPAGNE v FRANCE
23 Price differences resulting from Regulation No 1210/70 for producers and consumers of wheat are determined on the basis of objective criteria proper to the common rules of the market and cannot therefore be regarded as discriminatory.
24 It .s therefore right to reply to the question raised by the Conseil d'État that the examination of this question has not revealed matters of a nature such as to affect the validity of Regulation No 1210/70 of the Council.
Costs
25 The costs incurred by the Council and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable.
26 Since these proceedings are, in so far as the parties to the main action are concerned, a step in the action pending before a national court, costs are a matter for that court.
On those grounds,
THE COURT
in answer to the question referred to it by the Conseil d'État of the French Republic, by order dated 20 February 1974, hereby rules:
The question raised has not revealed matters of a nature such as to affect the validity of Regulation No 1210/70 of the Council.
Lecourt Donner Sørensen Monaco Mertens de Wilmars
Pescatore Kutscher Ó Dálaigh Mackenzie Stuart
Delivered in open court in Luxembourg on 11 July 1974.
A. Van Houtte R. Lecourt
Registrar President