C-51/74

PRODUKTSCHAP VOOR SIERGEWASSEN (Ornamental Plant Authority) of The Hague

on the interpretation of

1. Article 16 of the EEC Treaty and Article 10 of Regulation (EEC) No 234/68 of the Council of 27 February 1968 on the establishment of a common organization of the market in live trees and other plants, bulbs, roots and the like, cut flowers and ornamental foliage (OJ L 55, p. 1)

2. Article 40 of the EEC Treaty and Article 1 of Regulation No 234/68

3. Article 93 (3) of the EEC Treaty

THE COURT

JUDGMENT

Facts

The judgment making the reference and ible with certain provisions of the written observations submitted under Community law. Article 20 of the Statute of the Court may be summarized as follows: 2. Before giving its decision, the College van Beroep stayed proceedings and referred to the Court of Justice for a preliminary ruling under Article 177 of I — Facts and procedure the EEC Treaty on the following questions:

1. P. J. Van der Hulst's Zonen (1) Are Article 16 of the Treaty and (hereinafter called Van der Hulst), a Article 10 of Regulation (EEC) No limited liability partnership, grows and 234/68 to be interpreted as meaning sells flower bulbs. It lodged an appeal that 'charges having equivalent before the College van Beroep voor het effect' as referred to in those Articles Bedrijfsleven against a decison of the also include levies such as those Produktschap voor Siergewassen (her­ pursuant to the 'Regulation — einafter: PVS), a trade body coming Surplus Levy' and the 'Regulation — under public law, which was claiming Trade Levy'? payment of a series of charges in respect of the 1972 crop on the basis of Dutch (2) Does it follow from Article 40 of the regulations as laid down in several Treaty and Article 1 of Regulation regulatory orders of the PVS. Van der (EEC) No 234/68, or from any other Hulst disputes the legality of two kinds provision or general legal principle of charge: the 'surplusheffing' (surplus of Community law that, as regards levy), imposed under the 'Verordening the sector defined in Article 1 of Surplusheffing' and the 'vakheffing' Regulation (EEC) No 234/68, Dutch (trade levy), imposed under the bodies having legislative capacity are 'Verordening Vakheffing'). 1 The plain­ no longer permitted to make any tiff contends that these charges are not market-regulatory provisions such as enforceable because they are incompat­ that contained in the 'Regulation — Surplus Levy' and in the 'Regulation 1 — Translator's Note: These are the names given by — Trade Levy', except for the the College van Beroep to the regulatory decrees purpose of carrying the provisions of issued by the PVS with the consent of the Minister of Agriculture. Regulation (EEC) No 234/68 or any

other provisions of Community law the trade levy, the College van Beroep into effect? notes that it also comprises a system of 3. (a) Must Article 93 (3) be under allowances and levies which, however, stood as meaning that the deviates in several respects from the procedure referred to in the regulations dealing with the surplus levy. second sentence of that On making a sale to a dealer in paragraph also includes the possession of a trade card, the bulb giving of notice, as defined in seller must grant him a reduction.

The levies to be paid national support measure must not be carried into effect for as and the reductions to be granted are not of the same amount and there are also long as the procedure previously referred to has not resulted in a differences in the amounts payable by final decision? the various parties subject to the levy. The revenue from the levy is, after (a) In the judgment of reference, the deduction of an amount to cover costs College van Beroep gives the following of the PVS, paid into a financing fund information about the surplus levy. for general trade purposes in the bulb A seller of bulbs, is, upon the sale growing sector, to pay for scientific thereof, obliged to grant dealers in research, advertising on behalf of the possession of a trade card a reduction in trade as a whole, and other general trade the sale price charged by him. A trade purposes. card is issued by the PVS to dealers (b) On the subject of the questions registered with them as bulb-dealers and referred, the College comments that the who fulfil the obligation upon them to first question means, amongst other pay the advance on the surplus levy. things, that the Dutch bulb grower who Every seller is obliged to pay a levy upon uses bulbs he has grown on his own the sale of bulbs to a purchaser not in premises as basic material for his flower possession of a trade card.

HULST v PRODUKTSCHAP VOOR SIERGEWASSEN

In by J. van der Plas, of The Hague, by its the first place, a selected group, viz. those Secretary, N. Luitse, on behalf of the in possession of a trade card based in the Produktschap voor Siergewassen; for the Netherlands, are entitled to reductions; Netherlands Government by W. P. L. G. in the second place, the rate applicable de Boer, acting Secretary-General of the in the country is 3 % whereas the rate Ministry of Foreign Affairs, and on for exports to EEC countries is 3-5 %. behalf of the Commission by its Legal Van der Hulst raises questions Adviser, J. J. J. Bourgeois. concerning the system of charges on After hearing the report of the imported bulbs. Judge-Rapporteur an d the opinion of the It refers to the Commission's letter of 9 Advocate-General, the Court decided to February 1972 to the Netherlands open the oral procedure without any Government and points out that the preparatory inquiry. burden of the letter is the abolition or revision before 1 April 1972 of the systems of aid specified and of, inter alia, the levy imposed by the PVS in favour of II — Written observations the Fund for financing general purposes

In its view,

Van der Hulst devotes attention to minimum prices fixed on the basis of these standards. Regulation No 234/68 and makes particular reference to Article 2, which According to Van der Hulst, it is authorizes the Community institutions to moreover beyond dispute that, in view take a number of measures designed to of their effect on trading, these two encourage activity by trade organiza­ levies must be regarded as 'charges tions. The powers conferred on the having equivalent effect' to customs Community are exclusive and withdraw duties. An important consideration is from Member States the freedom to take that the income from the levies is used in such measures at national level; it is left the pursuit of objectives from which entirely to the discretion of the purchasers based in other Member States Community institutions to decide on the derive no direct benefit. action to be taken and when to adopt Another consideration is that the trade the necessary measures. The regulatory levies differ in amount according to orders of the PVS which are the subject whether the sale takes place inside the of dispute deal with measures making it country or abroad. This difference possible to encourage more efficient justifies referring to the levy as a methods of production and marketing monetary charge unilaterally imposed on and. in connexion with the Surplus Member State purchasers because a Fund, with a measure making it easier to frontier has been crossed. follow price movements on the market. Van der Hulst believes that the second Only Community institutions can take question should be answered in the these measures. affirmative. It recalls the arguments For these reasons Van der Hulst already developed and adds that it has concludes that adoption of these provided numerous examples to regulatory decrees by the PVS infringes demonstrate that the disputed orders are Community law because they cover a in breach of the prohibition of any sphere of activity for which the discrimination between producers or Community institutions are alone consumers within the Community. competent. As regards the third question, Van. der Finally, Van der Hulst submits the Hulst recalls that the Netherlands following observations on the questions Government has been called upon to referred by the College van Beroep. adjust or remove the aids concerned. As regards the first question, the plaintiff Their effect is discriminatory and they emphasizes that it relies on the distort competition. According to Van provisions of Article 10 of Regulation der Hulst, that is another ground upon No 234/68 not merely because they which they cannot be implemented so prohibit the imposition of any customs long as the procedure referred to in

Article 93 of the EEC Treaty has not The 'wholesaler's contribution' to the produced a final decision. trade levy paid by exporters to the PVS The observations of the Produktschap is 3-5 % of the export value, less 3 % of voor Siergewassen are confined to the the purchase price. According to the first question. In view of the different PVS, exports are not subject to the trade character of the two levies concerned, it levy. Exporters do not bill their foreign regards it as desirable to supplement the clients with the levy and it is not true to information given about them by the say that the trade levy is 'in principle College van Beroep. included' by exporters in their export

The amount complied with the standards of to be paid would only be known at the measurement and quality laid down for end of the marketing year. In the case of re-purchase by the Surplus Fund. sales at a loss the amount of the Moreover, bulbs used for growing reduction applied would be higher than flowers on the premises constitute only a the amount of trade tax to be paid. In very small proporrion of total bulb the opposite case, it is clear that the production in the Netherlands (about selling price (produced by the interplay

There can be be no doubt producers sell to exporters or national about the fact that, by reason of the wholesalers, the exporters and wholesal competition between the wholesalers and ers deduct the 'producer's contribution' the producers who deliver direct to from the purchase price on production nurserymen and seedsmen situated in the of the trade card. The levy to be paid by Netherlands, it is impossible to go exporters and national wholesalers further and require the national therefore includes the producer's wholesale trade to pay a 'wholesaler's contribution. contribution' to the trade levy.

In the light of its observations, the PVS the levies was put were adjudged to be concludes that the trade levy on bulbs of importance, the measures financed cannot be regarded as incompatible with with the help of the two levies are not Article 16 of the Treaty or with Article incompatible with the Treaty or with 10 of Regulation No 234/68. Regulation No 234/68. The Netherlands Government contends It stresses that the object of the common that the disputed levies do not constitute market organization in the live plant 'charges having equivalent effect' within sector was of a provisional and limited the meaning of Article 16 of the EEC character. This is due not so much to the

It is important effect. that any interpretation of this provision The Government states that administra should take account of the fact that the tive considerations are responsible for Commission and the Council were, at the fact that bulbs cultivated by the the time when Regulation No 234/68 nurseryman himself and used for the was being drafted, familiar with the purposes of his own business are not measures in force in this sector in the subject to levy. The consequent Netherlands. In the Government's view, disadvantage at which this could place the Council had no intention wholly to the foreign grower applies equally in the substitute forthwith the Community case of the majority of Netherlands organization for the national market nurserymen. The Government empha organization in bulbs which was in force sizes that the different treatment applied in the most important production zone to these different cases arises from the in the Community. This does not mean objective fact that the levies are that any check on a national set of exclusively concerned with marketing. regulations, such as those governing the As regards the second question, the Surplus Bulb Fund, must be ruled out.

The exercise any influence on the national application of the national buying-in activities provided for. system is not, therefore, incompatible The Government maintains that if, in the with the technique of market control event, the use to which the revenue from provided for under Regulation No

February indicate that they referred to issue which was the subject of the cases measures proposed within the meaning in which the Court gave a ruling on the of Article 93 (1). It accordingly takes the relationship between national regulations view that this letter ought not to be and Common Market organizations. regarded as an act which can be the The Commission also points out that subject of proceedings before the Regulation No 234/68 was conceived as national court. a set of regulations which would need to The Commission first considers the be supplemented. Above all the absence Dutch regulations, among its comments of an intervention system has been being that, after an amendment applied regarded as lacuna which had to be with effect from 1 July 1973 to the tolerated for the time being on grounds orders, the two levies were not applied relating to the current policy on the to imported bulbs. subject. In this connexion the The Commission replies to the second Commission refers to Article 12 of the

question first because the answer given Regulation. This lacuna could be to it can be decisive for the other tolerated precisely because there was an questions. intervention system in the Netherlands which guaranteed a fair return to the In the Commission's view, the Dutch producer and which, because of the regulations in question are not in dominant position occupied by the themselves incompatible with Regulation Netherlands, at the same time set the No 234/68, and no other provision or pattern for the rest of the Community. general principle of Community law operates automatically to annul them. The Commission also maintains that the The Commission bases its view on a argument that the establishment of a number of indications to this effect Common Market organization means which it claims to have found in the that all power to issue regulations is

transferred to the Community and that advantages or aids received only for therefore there is none remaining with products sold on the domestic market Member States is not applicable in the and not for those exported. present case. It recalls that the Court reached the opposite conclusion only in The question referred really boils down cases where, in the exercise of its to this: does the fact that a levy, which powers, the Community promulgated prima facie forms part of a general rules and it was found that national system of national taxation, is not imposed in certain cases when the provisions had an impact on the scope of those rules. product in question is used for domestic processing, mean that the levy must be In The Commission's view it is not regarded as a charge having equivalent possible to ignore the difference between effect to an export duty? In the the existence of a Community power Commission's view, when only some and its exercise. This is abundantly clear sales on the national market are exempt from other judgements of the Court, e.g. from the domestic levy the levy cannot the Judgment, already mentioned, in be regarded as a charge having Geddo (Case 2/73). equivalent effect to an export duty. The Commission emphasizes that acceptance of the principle of automatic Nevertheless, the combination of a revocation of the powers of national domestic levy to which not all are authorities, in a number of cases where subject and an aid for national provisions have not yet been adopted at production could be described as a Community level, would, in terms of charge having equivalent effect to a legislation, produce a lack of continuity customs duty on exports if a clear and which it would be difficult to tolerate. calculable privilege arising out of the Again with respect to the second activities financed by the levy on the question, the Commission submits product put on sale on the domestic certain comments on the issue whether market in fact means that output placed there is discrimination between bulb on the domestic market is wholly growers who sell their products to third exempt. According to the information parties and those who use them in their available to the Commission, these own nurseries. If, in this context, it were circumstances do not obtain in the

and continue to be taken in accordance particular attention to the complexity of with Article 93 (1). the taxation system and the numerous If nevertheless the Court regarded the amendments which have supervened in question as relevant, the Commission recent years, especially in connexion points out that the proposal of with the trade levy. It pointed out the manifold opportunities for exemption appropriate measures within the meaning of Article 93 (1) cannot be provided for by the Dutch regulations. treated as equivalent to notice given Van der Hulst also pointed out that, within the meaning of Article 93 (2). The apart from differences in rates, there was discrimination due to differences in the 'appropriate measures' represent the outcome of the procedure provided for basis on which the levy was calculated under Article 93 (1) and are not because a levy on sales on the domestic market was calculated on the basis of mandatory; the giving of notice is the first step in the formal procedure under the production price and the levy on export sales calculated on the basis of Article 93 (2) which may result in a Decision placing a Member State under export value (less 3 % of the original a duty to abolish or amend an aid price). The company finally states that,

The Plas, the Produktschap voor Siergewas PVS maintains that, even if there is a sen, represented by Mr Heidinga, of the difference of a % between the rates of Haarlem Bar, the Netherlands Govern levy in the case of a domestic sale and in ment, represented by M. J. Kuipers, an the case of a sale to a foreign buyer, the Administrative Officer of the Ministry of sale on export is not in fact taxed more Agriculture, and the Commission, heavily than a domestic sale.

Thus, so far as concerning the differences between the the final product, flowers, is concerned levies applicable in the case of sale on the conditions of competition are once the domestic market and in the case of more fairly balanced. an export sale, Van der Hulst drew The PVS declares that the purchaser in

3 These levies are a so-called 'surplus' levy and a so-called 'trade' levy in the bulb sector;

4 The effect of the regulations governing the surplus levy is that every purchaser in possession of a trade card issued by the trade organization in the ornamental plants sector benefits from a reduction on the selling price and that every seller is obliged to pay the levy upon the sale of bulbs to a purchaser, including every foreign purchaser, not in possession of the card, the allowance and the levy being of the same amount;

5 The levy is not charged in cases where the bulb producer uses the bulbs for flower growing on his own premises and, for a certain time in 1973, this also applied in the case of a purchaser in possession of a trade card who used the bulbs himself for flower growing.

HULST v PRODUKTSCHAP VOOR SIERGEWASSEN

6 The revenue from the levy is paid into a fund whose main purpose is to finance the purchase of bulbs which are submitted for destruction because they have not fetched on the market the minimum price fixed by the fund.

7 The effect of the regulations governing the trade levy is that it is imposed and collected pursuant to rules which, generally speaking, are similar to the rules governing the surplus levy, though there are differences between them on several points of detail of considerable complexity.

12 The Court cannot, within the framework of proceedings brought under Article 177 of the Treaty, settle a difference of this kind which, like any other assessment of the facts involved, is within the province of the national court.

13 The prohibition on the levying of charges having equivalent effect to customs duties on export in trade within the Community covers any charge levied at the time of or by reason of export of the product in question which produces the same restrictive effect as a customs duty on the free movement of goods.

14 To the extent that it may be established that application of an internal levy falls more heavily on export sales than on sales within the country concerned the levy has an effect equivalent to a customs duty on export.

15 Moreover, if an internal levy is the same on domestic sales and on exports, it may be necessary to take into account the use to which the revenue from these charges is put.

16 If, in fact, a levy is designated to finance activities which serve to make marketing within the country more profitable than exportation or in any other way to give preferential treatment to the product intended for the internal market, to the detriment of that intended for export, it is liable to impede exports and thus to have an effect equivalent to a customs duty.

17 The answer to this question therefore must be that an internal levy may have an effect equivalent to a customs duty on export when its application falls more heavily on export sales than on sales within the country, or when the levy is intended to fund activities likely to make internal marketing more profitable than exportation or in any way to give preferential treatment to the product intended for marketing within the country, to the detriment of that intended for export.

21 Article 1 of Regulation No 234/68 provides that the common organization of the market established thereunder shall comprise common quality standards and a trading system in the sector concerned.

22 Article 12 of the Regulation provides that the Council shall add further provisions to the Regulation as may be required in the light of experience.

23 The second recital of the preamble to Regulation No 234/68 states that the production of live trees and other plants, bulbs, roots and the like, cut flowers and ornamental foliage is of particular importance to the agricultural economy of certain regions of the Community and declares the need to promote the rational marketing of such production and to ensure stable market conditions.

24 As regards bulbs in particular, it is not disputed that exports from the Netherlands represent more than 90 % of the total exports from Member States.

JUDGMENT OF 23. 1. 1975 — CASE 51/74

25 Once the Community has, pursuant to Article 40 of the Treaty, legislated for establishment of a common organization of the market in a given sector, Member States are under an obligation to refrain from taking any measure which might undermine or create exceptions to it.

HULST v PRODUKTSCHAP VOOR SIERGEWASSEN

32 If the extra cost which this imposes on the fund financing the intervention is covered by the levy and thus distributed among the marketed products, including exports, this militates against the aim pursued by the common organization of the market and the regulations are to that extent incompatible with it.

33 The plaintiff in the main action contends that the Netherlands regulations on the surplus levy and the trade levy embody elements of discrimination which are in breach of the principles enshrined in the Treaty.

34 In this context, the prohibitions against discrimination which require to be considered are the outcome, first, of the principle underlying Article 95 of the Treaty concerning internal taxation and, second, of the provision in the second paragraph of Article 40 (3) of the Treaty under which common organizations of the agricultural markets shall exclude any discrimination between producers or consumers within the Community.

35 Regulations such as those under consideration conflict with the prohibitions which are embodied in these provisions, if only by analogy, in circumstances where exported goods are subject to a heavier charge than those placed on the national market, or where the revenue from the charge is intended to place national products at an advantage.

36 The reply to the question referred must therefore be that

38 The third question asks the Court to declare whether Article 93 (3) must be understood as meaning that the procedure referred to in the second sentence of that paragraph also includes the giving of notice, as defined in Article 93 (2) and to which paragraph (3) refers; and, if the answer is in the affirmative, whether Article 93 (3) must be interpreted as meaning that such giving of notice on the part of the Commission has as a consequence that the relevant national support measure must not be carried into effect for as long as the procedure previously referred to has not resulted in a final decision.

39 It is clear from the judgment of reference that this question was put as a consequence of a document lodged by the plaintiff in the main action and quoting a letter addressed by the Commission on 9 February 1972 to the Netherlands Minister of Foreign Affairs.

40 It is, however, clear from the heading of the letter that its subject-matter was not the giving of notice within the meaning of paragraph (2) of the Article but that it arose in the course of an investigation of aid systems being undertaken by the Commission pursuant to paragraph (1) of the Article.

41 In fact, the letter contains proposals drawn up not under Article 93 (3) but under the second sentence of paragraph (1), as was confirmed by the Commission in the observations which it submitted before the Court during the present proceedings.

42 In the view of the Court, these circumstances rob the question of any point.

Costs

hereby rules:

(1) An internal levy may have equivalent effect to a customs duty on export if it falls more heavily on export sales than on sales inside the country, or where the levy is intended to fund activities tending to make the home market more profitable than exports or in any other way to place the product intended for the home market at an advantage compared with the product intended for export.

(2) (a) A national intervention measure is incompatible with Regulation No 234/68 on the establishment of a common organization of the market in live trees and other plants, bulbs, roots and the like, cut flowers and ornamental foliage in so far as products which do not meet Community quality standards as laid down under the Regulation qualify for the intervention;

(b) An internal levy, on sales of a product is incompatible with the prohibition of discrimination embodied in the EEC Treaty if it falls more heavily on export sales than on sales on the national market or if the income from the levy is intended to place the national product at an advantage.

Lecourt Mackenzie Stuart Donner

Monaco Pescatore Kutscher Sørensen