C-88/75

JUDGMENT OF 26. 2. 1976 — JOINED CASES 88 TO 90/75

sufficient that the measures in especially when it is fixed at such a question are likely to constitute an low. level that, having regard to the obstacle, directly or indirectly, actually general situation of imported products or potentially, to imports between compared to that of domestic Member States. products, dealers wishing to import 3. Although a maximum price applicable the product in question into the without distinction to domestic and Member State concerned can do so imported products does not in itself only at a loss. constitute a measure having an effect 4. In so far as a maximum price fixed equivalent to quantitative restrictions, unilaterally by a Member State is it may have such an effect, however, incompatible with Article 30 of the when it is fixed at a level such that Treaty or the provisions of the the sale of imported products agricultural law of the Community a becomes, if not impossible, more Member State concerned cannot base difficult than that of domestic its justification for this fixing either products. A maximum price, in any on Article 103 of the Treaty or on the event in so far as it applies to need to protect the economy from imported products, constitutes speculative operations or on a change therefore a measure having an effect occurring in the economic situation equivalent to a quantitative restriction, in the sugar sector.

Judgment in Joined Cases 88 to 90/75,

Reference to the Court under Article 177 of the EEC Treaty by the Tribunale Amministrativo Regionale del Lazio, for a preliminary ruling in the action before it between

on the interpretation of the EEC Treaty, in particular Articles 3, 5, 30, 34, 35 to 40 and 103 thereof and of Regulation No 1009/67/EEC of the Council of

SADAM v COMITATO INTERMINISTERIALE DEI PREZZI

18 December 1967 on the common organization of the market in sugar (OJ English Special Edition, 1967, p. 304),

THE COURT

composed of: R. Lecourt, President, H. Kutscher, President of Chamber, A. M. Donner, J. Mertens de Wilmars, M. Sørensen, Lord Mackenzie Stuart and A. O'Keeffe, Judges,

Advocate-General: G. Reischl

JUDGMENT OF 26. 2. 1976 — JOINED CASES 88 TO 90/75

distribution of sugar ('compensi massimi (a) the competence, exclusive or complessivi per la distribuzione dello otherwise, of the European Economic zucchero all'ingrosso e al dettaglio') at, Community to exercise legislative respectively, Lit. 25.70 per kg for the sale power to control the prices of sugar, of loose sugar and Lit. 26.70 per kg for and the use made of such power in the sale in cartons or in packets', stating Regulation No 1009/67/EEC and that these charges are included in the subsequent additions thereto; abovementioned prices. (b) the legality, in relation to a conjunctural policy and to Article Order No 39/1974 of the CIP, of 13 103 of the Treaty, of unilateral August 1974 (Gazzetta Ufficiale No 214 interventions by a Member State in of 16 August 1974, p. 5460), set out the the sector concerned, and of the type components, including certain duties and in question, which in substance taxes, making up the maximum prices determined the maximum price on laid down by Order No 28/91. It gave sale to the consumer within the the following figures: national territory alone; — Lit. 323.30 per kg as the maximum (c) the compatibility with the principle ex-factory price; referred to in Article 30 of the Treaty — Lit. 329.30 per kg as the maximum concerning the free movement of price free-at-wholesaler's warehouse goods within the common market, anywhere in the national territory; and with the prohibition against — Lit. 25.70 per kg as the maximum isolation of the national markets, of charge for wholesale or retail the system of selling the product and distribution. of the maximum price imposed, within the confines of the national The abovementioned orders have in the meantime been replaced by new orders. territory, the said system constituting a hindrance to the establishment of

SADAM v COMITATO INTERMINISTERIALE DEI PREZZI

Commission. The Government of the other countries, the Council had United Kingdom referred to the recognized 'the specific and changing observations which it submitted in Case nature of the inflation problem 65/75 (Tasca). throughout the Community'.

By order of 12 November 1975, the If no possibilities existed for Member Court joined the cases for the purposes States to intervene in price formation of the oral procedure. Member States would be prevented from fulfilling their obligations under Article After hearing the report of the 104 of the Treaty, that is, 'to ensure the Judge-Rapporteur, and the views of the equilibrium of [their] overall balance of Advocate-General, the Court decided to payments and to maintain confidence in open the oral procedure without any [their] currency, while taking care to preparatory inquiry. At the same time it ensure a high level of employment and decided to communicate to the the stable level of prices'. There would be aforementioned plaintiffs in the main the consequent danger to the financial actions the text of the questions which, stability of the Member States which in Case 65/75 (Tasca), it put to the Italian Article 6 (2) enjoins the institutions of Government and to the Commission, the Community not to prejudice. and the text of their replies. The Commission first of all describes the situation existing in the Member States as II — Observations submitted regards the fixing of maximum consumer under Article 20 of the prices for different agricultural products, Protocol on the Statute of pointing out that each Member State the Court of Justice of the with the exception of the Federal EEC Republic of Germany has engaged in such fixing in respect of one or more 1. General considerations products.

JUDGMENT OF 26. 2. 1976 — JOINED CASES 88 TO 90/75

But even apart from these guarantees that they shall not fall factors, the fixing of prices to the below the intervention price; consumer inevitably influences — provides, under Articles 21 and 39, production prices and, in consequence, is machinery which enables the incompatible with the Community rules. Community and Member States to deal with any disturbance. Nor can any justification for the orders in question be based on Article 103 of The Italian system of prices is obviously the Treaty, as is apparent from grounds incompatible with a legal system 23 and 24 of the judgment in Galli.

prices. The objective of the national rules The national measures under in question in the case of Galli was a consideration here are even more freezing of prices at the production and restrictive than those involved in Galli wholesale marketing stages, whereas the which, even though subject to prior present case is concerned with rules authorization, at least made it possible relating to prices to be applied at the for the list prices laid down by the retail and consumer stages, in respect of undertakings themselves, and notified to which the judgment in Galli confirmed

the principle of maintaining the power particular case must be compatible of Member States 'to take the appropriate with the Community objectives. measures relating to price formation'. A national measure comprising the The common organization of the market fixing of maximum selling prices could in sugar is in substance no different from well be in accordance with the objectives that of the market in cereals which was of Regulation No 1009/67, namely to the subject of the judgment in Galli. In achieve a stable market and to guarantee particular the price system which it to growers security of employment and a established also concerns only the fair standard of living whilst avoiding production and wholesale stages; its main over-production. This regulation merely objective is likewise ' to ensure that the prevents such prices from being fixed at necessary guarantees in respect of a level the object or effect of which employment and standards of living are would be to prevent these objectives maintained for Community growers' (2nd from being attained. recital to Regulation No 1009/67). According to the Commission the principle confirmed by the judgment in National rules on prices applicable to the Galli that Member States can no longer retail and consumer stages is therefore take action unilaterally affecting the incompatible with Regulation No machinery of price formation as 1009/67 only if it indirectly affects the established under the common prices fixed by the latter, for example by organization of the market in cereals and laying down a maximum consumer price the market in fats likewise applies to lower than the intervention price or, in a sugar. This arises from the nature and more general manner, by fixing a function of the price system of maximum price in such a way as to affect Regulation No 1009/67 which aims at the Community prices. This is not so in the complete liberalization of intra- the present case since the maximum Community trade and at the price fixed by Order No 28/1974 of the consequential regulation of trade with CIP, assumes a price ex-factory countries outside the Community. appreciably higher than the Community threshold price and therefore than the On the other hand the judgment in target and intervention prices. Galli recognized that national measures relating to prices at the retail and The United Kingdom Government gives consumption stages are compatible with a detailed analysis of the judgments of the Community rules 'on condition that the Court concerned with the they do not jeopardize the aims or compatibility or incompatibility with the functioning of the common organization Community system of national of the market in question'.

The provisions of the Treaty and in Commission proceeds to do this in tables particular Articles 38 to 40. annexed to its written observations. The — It seems that, according to the Court, outcome of the calculation is as follows: both the effects and the objectives of — The ex-factory price calculated on the the national rules relevant to a basis of the prices fixed by Order No

9/74 was higher than the target price, cannot be justified by 'the need to the same as the derived intervention protect the economy against speculators price, and lower than the threshold and to ensure that supply meets price. As, accordingly, the said order demand'. fixed consumer prices on the basis of an ex-factory price aligned on the The Italian Government states that the derived intervention price, it was question can be divided into two parts, incompatible with the aims and the namely (a) whether a national system functioning of the common such as that involved in this case is ipso organization of the market in sugar. facto incompatible with the Community Under the Community rules, sugar provisions governing the free movement prices on the internal market could of goods and (b) whether, if this is the have moved up to the level of the case, such a system can, exceptionally, be threshold price (beyond that point, justified by 'the need to protect the both the sugar imports from third economy against speculation and to countries and the Community provide the necessary guarantee to the measures adopted to deal with a consumer in view of the disturbance of situation of shortage would have the conditions on which the Community intervened and had a controlling rules depend'. influence on prices). On the other hand, the ex-factory The answer to the first part of the price calculated on the basis of the question is in the negative.

Such a conclusion would, however, be hasty since the If, as would appear to be indicated by the Community has never claimed an wording of the third question, the exclusive power in this field, a power the national court were to take the view that exercise of which would have serious the said rules were adopted in order to implications in the political and make good alleged defects in the economic spheres. Community system, it would be working from a false premise. On the contrary, 3. Third question the maximum prices fixed by the Italian authorities allow for the fact that there The argument, set out at (2) above, of the are Community prices relating only to plaintiffs in the main action is, wholly the production and wholesale stages and, or in part, intended to deal with the third so to speak, complement them in respect question too. In particular, they point out of the retail and consumer stages, which that the argument leads to the are not covered by Community conclusion that the contested measures regulations.

Certain agreements concluded between the Community and third countries In Case 65/75 (Tasca), the Court asked involved a prohibition similar to that in the Italian Government to reply in Article 30 of the Treaty. The Community writing, before the hearing, to four has never accepted, however, the questions, the fourth of which was at the same time addressed to the Commission. argument that pricing systems laid down under a common organization of the The replies, which have also been market have effects equivalent to communicated to the plaintiffs in the quantitative restrictions on imports. main action in the present cases, may be summarized as follows:

The Commission gives a similar opinion without however expressing itself 1. First and second questions put by the Court specifically on whether the rules in question are compatible with the Community rules. The questions were worded as follows:

What is meant by 'sale to the consumer' A national measure such as that in the in Order No 28/1974 of the CIP? In present case would be equivalent to a particular: Do prices laid down by this quantitative restriction only if, while order apply only to sales effected by the appearing formally to apply without retailer to the ultimate consumer or also distinction to national products and to other transactions (and if so, to imported products, it were drawn up in which)? such a way as to constitute a hindrance to imports which could be effected Can the sale of a large quantity of sugar without it, whereas the sale of national (for example 25 000 kg of caster sugar) products do not suffer the same degree of also constitute a sale to the consumer disadvantage. This is the case when, for within the meaning of the order?

This question requested the Italian 2. Third question put by the Court Government and the Commission: to state in more detail ... in what This question called upon the Italian circumstances in their opinion national Government: price rules of the kind presently in question may: to give more detailed reasons ... for its (1) alter the formation of prices as statements that Orders Nos 28/1974 and provided for under the common 39/1974 of the CIP are not concerned organization of the market in sugar: with the production and wholesale stages (2) in a more general way jeopardize the whereas Order No 39/1974 states that aims and functioning of this components of the maximum consumer common organization. prices include the maximum ex-factory price, the maximum price free-at- Whereas the Italian Government has warehouse and the maximum charge for not given an opinion on this matter the wholesale and retail distribution, and Commission has submitted the following fixes the amount of these components. observations, stating that it is not dealing with the question of the compatibility of The Italian Government replies that the measures in question with Article 30 Order No 39/1974, according to its first of the Treaty. recital, was adopted 'having regard to the need to show how the price of sugar The common organization of the market referred to in Order ... No 28/1974 was in sugar is orientated around three basic made up'. It does not therefore involve prices, the target price, the threshold either fixing maximum consumer prices price and the intervention price. The or a fortiori fixing ex-factory prices or target price is the 'policy' that is the free-at-wholesaler's warehouse prices but desired price, but is not imposed. In is limited to stating these factors, and the order to help this price to be obtained on maximum charges intended to cover the common market the Community has distribution costs, as components of the. had recourse to a series of indirect said maximum prices. methods: publication of the fixed target

maximum sale prices only in so far as — The case submitted to the Court is of this was not likely adversely to affect a special nature in that of all the functioning of the machinery of agricultural products sugar is the one the common organization of the which shows most clearly the market or at least to impede it or relationship between the selling make it more difficult. Thus to fix a prices at the production and maximum selling price at a lower wholesale stages on the one hand and level than the intervention price on the other the selling prices at the would have amounted to an retail and consumer stages. The infringement for it would have orders in question of the CIP show directly prevented the price level that in Italy, and as regards sugar, it is guaranteed by Community law from possible 'to control prices without being attained. It would have been distinction by regulation one or the the same if the prices had been fixed other stage'. at a level lower than the target price — Although in its written observations since in such a case the national the Commission stated that because measure would have prevented the the consumer price laid down by target price from being attained. Order No 28/1974 assumed an Finally if the maximum selling prices ex-factory price above the had been fixed at a level higher than Community threshold price it did the target price it would have been not jeopardize the objectives and necessary to examine each case to see functioning of the common whether or not the national measure organization of the markets in sugar, prevented this price from being it is aware that this opinion is open attained. to criticism. First the distinction

British Government, represented by 1009/67 is to guarantee the employment Gordon Slynn of the Treasury Solicitor's and standards of living of sugar Department, the Italian Government, producers, it attains this objective by represented by Ivo Maria Braguglia, means of fixing the intervention price, Vice-avvocato dello Stato, the Com­ the only binding Community price, and mission represented by its Legal Adviser, ensuring that producers are never forced Cesare Maestripieri, and the Council, to produce at a loss. In other words, the represented by its Legal Adviser, M. C. regulation guarantees producers a Giorgi, amplified the arguments set out minimum return but not the maximum in the written procedure. profit which producers could obtain if they were free to determine the The new factors put forward on that consumer prices. In reply, more occasion may be summarized as follows: particularly, to the fourth question put by the Court in Case 65/75 (Tasca) after the The plaintiffs in the main action written procedure was closed, the Italian contend that, contrary to the statements Government states that the fixing of of the Italian Government, the contested maximum consumer prices does not orders do not only fix the prices to the jeopardize the aims and the functioning consumer but also maximum production of the common organization unless it is prices. It cannot be accepted that the done in such a way as to make it CIP, which is responsible for fixing impossible, or more difficult, to achieve prices, described the factors making up the said minimum return.

and 39/1974 (Gazzetta Ufficiale No 52 of 23 February 1974, No 171 of 2 July 1974 and No 214 of 16 August 1975), the first two of which had successively fixed maximum consumer prices for sugar both of domestic and foreign origin whilst the third had set out the factors making up the maximum prices laid down by Order No 28/1974, which factors include inter alia the 'maximum ex-factory price', the 'maximum price free-at-wholesaler's warehouse' and the 'maximum charge for wholesale and retail distribution'.

2 In view of the common ground between them it is proper to join the present cases for the purposes of the judgment.

3 In the procedure before the Court disagreement was revealed on whether as a whole these orders fixed obligatory maximum prices only for the sales in which the immediate buyer is the ultimate consumer or whether they did so for sales made at previous marketing stages and in particular in respect of sales made by sugar growers. It is not for the Court to settle this dispute, and having regard to the fact that the questions raised by the national court make no distinction between the different marketing stages, it is proper to construe these questions as referring in a general manner to the fixing of maximum prices for the sale of sugar whether it be a question of sales made by growers, importers, wholesalers or retailers.

On the first and second questions

4 The first and second questions ask the Court to rule on the one hand on 'the competence, exclusive or otherwise, of the European Economic Community to exercise legislative power to control the prices of sugar, and the use made of such power in Regulation No 1009/67/EEC and subsequent additions thereto' and on the other hand on 'the legality, in relation to a conjunctural policy and to Article 103 of the Treaty, of unilateral interventions by a Member State in the sector concerned, and of the type in question'.

6 As the Court has already indicated (Case 31/74, Galli [1975] ECR 47) in respect of national rules freezing the prices of other products at the production and wholesale stages 'in sectors covered by a common organization of the market — even more so when this organization is based on a common price system — Member States can no langer interfere through national provisions taken unilaterally in the machinery of price formation as established under the common organization' so that 'a national system which by freezing prices ... has the effect of modifying the formation of prices as provided for in the context of the common organization of the market, is incompatible' with the Community rules. The same judgment stated that the provisions of a Community agricultural regulation involving a system of prices applying to the production and wholesale stages 'leave Member States free — without prejudice to other provisions of the Treaty — to take the appropriate measures relating to price formation at the retail and consumption stages, on condition that they do not jeopardize the aims or functioning of the common organization of the market in question'. These considerations which were put forward at the time in respect of Regulations Nos 120/67 and 136/66 on the common organization of the market in cereals and of that of oils and fats respectively are equally valid for the purposes of the interpretation of Regulation No 1009/67 on the common organization of the market in sugar in view of the similarity of the respective price systems established by Regulations Nos 120/67 and 1009/67.

9 According to Article 2 (1) of Regulation No 1009/67 'a target price for white sugar shall be fixed each year for the Community area having the largest surplus' — that is, certain departments in northern France. According to Article 3 (1) and (2) 'an intervention price for white sugar shall be fixed each year' for the said area whereas 'derived intervention prices shall be fixed for other areas, account being taken of the regional variations...' According to Article 9 (1) of Regulation No 1009/67 'intervention agencies designated by sugar-producing Member States shall be required ... to buy in ... sugar ... offered to them ... at the intervention price valid for the area in which the sugar is located at the time of purchase' while Article 10 provides that as a rule they 'may only sell sugar on the domestic market at a price which is higher than the intervention price'. According to the combined provisions of Article 4 (1) and (2) and Article 5 (1) of the regulation 'Each year, for each beet sugar producing area ... a minimum price for beet shall be fixed ... when the minimum price for beet is being established, the intervention price for white sugar in the area in question ... shall be taken into account ... sugar manufacturers buying beet for processing into sugar shall be required to pay at least the minimum price for sugar beet'.

10 During the period in question the derived intervention price for Italy was fixed at a higher level than that of the target price so that it suffices to consider the question raised by the national court with regard to this situation.

13 In so far as a maximum price unilaterally fixed by a Member State is incompatible with the provisions of the agricultural law of the Community, the State concerned cannot rely on the provisions of Article 103 of the Treaty on conjunctural policy in order to justify fixing the price, especially as Regulation No 1009/67 comprises a framework of organization designed in such a way as to enable the Community and Member States to meet all manner of disturbances. In this connexion, it must first be stressed that it is one of the objectives of Article 39 (1) of the Treaty that supplies reach consumers at reasonable prices. Article 21 (1) of Regulation No 1009/67 enables the Council to take all appropriate measures if the Community market is disturbed or threatened with disturbances by reason of imports or exports. The second paragraph of the same article indicates precisely the procedures for common action by the Council, the Commission and the Member States in the abovementioned event. In addition to the powers which the regulation reserves to the Council and the Commission, the Treaty itself entrusts the Commission with the general task of supervision and initiation of measures. It is also necessary to draw attention in this connexion to the role played by permanent consultation, in the management of the sector at issue, by means of the 'Management Committee' established by Article 39 of the regulation. Besides the tasks with which it is specifically entrusted, the Management Committee may, in fact, in the words of Article 41 of the regulation, consider any other question referred to it by its Chairman either on his own initiative or at the request of the representative of a Member State. It is therefore apparent that the framework of organization of Regulation No 1009/67 reserves to every Member State the power, in conjunction with the Community institutions, to take the necessary action, in the shortest possible time, where the normal operation of the price machinery established by the regulation is ineffective in the face of undesirable tendencies ascertained in the movement of prices in its territory.

15 Article 30 of the Treaty prohibits in trade between Member States all measures having an effect equivalent to quantitative restrictions and this prohibition is repeated in Article 35 of Regulation No 1009/67 as regards the market in sugar. For the purposes of this prohibition it is sufficient that the measures in question are likely to constitute an obstacle, directly or indirectly, actually or potentially, to imports between Member States. Although a maximum price applicable without distinction to domestic an imported products does not in itself constitute a measure having an effect equivalent to a quantitative restriction, it may have such an effect when it is fixed at a level such that the sale of imported products becomes, if not impossible, more difficult than that of domestic products. A maximum price, in any event in so far as it applies to imported products, constitutes therefore a measure having an effect equivalent to a quantitative restriction, especially when it is fixed at such a low level that, having regard to the general situation of imported products compared to that of domestic products, dealers wishing to import the product in question into the Member State concerned can do so only at a loss.

16 It is for the national court to decide whether this is so in the present case.

17 For the reasons given in reply to the first and second questions the Member State concerned cannot base its justification of a maximum consumer price producing the abovementioned effect either on Article 103 of the Treaty or on the need to protect the economy from speculative operations or on a change occurring in the economic situation in the sugar sector.

1. The unilateral fixing by a Member State of maximum prices for the sale of sugar, whatever the marketing stage in question, is incompatible with Regulation No 1009/67 once it jeopardizes the objectives and the functioning of this organization and in particular its system of prices.

2. A maximum price, in any event in so far as it applies to imported products, constitutes therefore a measure having an effect equivalent to a quantitative restriction, especially when it is fixed at such a low level that, having regard to the general situation of imported products compared to that of domestic products, dealers wishing to import the product in question into the Member State concerned can do so only at a loss.

3. In so far as a maximum price fixed unilaterally by a Member State is incompatible with Article 30 of the Treaty or the provisions of the agricultural law of the Community the Member State concerned cannot base its justification for this fixing either on Article 103 of the Treaty or on the need to protect the economy from speculative operations or on a change occurring in the economic situation in the sugar sector.

Lecourt Kutscher O'Keeffe

Donner Mertens de Wilmars Sørensen Mackenzie Stuart

Delivered in open court in Luxembourg on 26 February 1976.