C-52/76

on the interpretation of the provisions of Regulations No 120/67/EEC of the Council of 13 June 1967 on the common organization of the market in cereals (OJ English Special Edition 1967, p. 33), No 132/67/EEC of the Council of 13 June 1967 laying down general rules for intervention on the market in cereals (OJ English Special Edition 1967, p. 73) and No 376/70/EEC of the Commission of 27 February 1970 laying down the procedure and conditions for the disposal of cereals held by intervention agencies (OJ English Special Edition 1970 (I), p. 126).

THE COURT

composed of: H. Kutscher, President, A. M. Donner and P. Pescatore, Presidents of Chambers, J. Mertens de Wilmars, M. Sørensen, Lord Mackenzie Stuart, A. O'Keeffe, G. Bosco and A. Touffait, Judges,

Advocate-General: G. Reischl

Registrar: A. Van Houtte

gives the following

I — Facts and procedure for human consumption by denaturing. A — Regulation No 120/67/EEC of the They may also grant a denaturing Council of 13 June 1967 (OJ English premium for common wheat. Special Edition 1967, p. 33) established 4. The Council, acting in accordance the common organization of the market with the voting procedure laid down in cereals (See currently Regulation in Article 43 (2) of the Treaty on a (EEC) No 2727/75 of the Council, of 29 proposal from the Commission, shall October 1975, OJ L 281 of 1. 11. 1975, adopt general rules governing p. 1). Article 7 of that regulation intervention and denaturing. provides: 5. Detailed rules for the application of 1. Throughout the marketing year the this Article shall be adopted in intervention agencies designated by accordance with the procedure laid Member States shall be obliged to down in Article 26, in particular as buy in cereals mentioned in Article 4 regards: which are offered to them and have — the minimum quality and been harvested in the Community, quantity required for intervention provided that the offers comply with in respect of each cereal; conditions, in particular in respect of — the scales of price increases and quality and quantity, to be reductions applicable to determined in accordance with intervention; paragraph 5. — the procedures and conditions for 2. The intervention agencies shall buy taking-over by the intervention in at the intervention price ruling for agencies; the market centre at which the cereal — the procedures and conditions for is offered, under conditions disposal of produce by the determined in accordance with intervention agencies; paragraphs 4 and 5. If the quality of — the conditions for granting the cereal is different from the denaturing premiums and the standard quality for which the amount thereof.' intervention price had been fixed, the intervention price shall be adjusted in On the basis of the abovementioned accordance with scales of price paragraph 4, the Council adopted increases and reductions. These scales Regulation No 132/67/EEC of 13 June may also include special option price 1967 laying down general rules for increases in respect of barley of intervention on the market in cereals (OJ brewery quality and, in certain English Special Edition 1967, p. 73) regions, in respect of rye of (Currently Regulation (EEC) No 2738/75 bread-making quality. of the Council of 29 October 1975, OJ L 3. Under conditions to be laid down in 281 of 1. 11. 1975, p. 49) Article 3 of accordance with paragraphs 4 and 5, which states:

determined case by case After entering an appearance Munari did according to market trends and not dispute the facts alleged, but imputed requirements. all liability for any loss to the AIMA 2. The terms of the invitation to tender (Azienda di Stato per gli interventi sul shall ensure equality of access and mercato agricolo) (State Corporation for treatment to all persons concerned Intervention on the Agricultural Market) irrespective of the place of their on the ground that the AIMA sold establishment within the Com

126). This regulation was supplemented individual intervention agencies, and by Regulation (EEC) No 935/70 of the in particular the AIMA, to take a Commission which adds the following unilateral decision regarding the sale paragraph to Article 3 of Regulation No of the agricultural products and, in 376/70: particular, of the wheat which they hold, by methods other than the 'In exceptional cases and at the request system of tenders and invitations to of a Member State, it may be decided in tender provided for under Article 3 of accordance with the procedure laid down Regulation No 132/67/EEC and by in Article 26 of Regulation No Regulation No 376/70/EEC? 120/67/EEC that the intervention agency In any event, does such conduct of that Member State should be involve a breach of the prohibition of authorized to restrict the invitation to discrimination contained in the tender to use for specified purposes. second subparagraph of Article 40 (3) of the Treaty of Rome?

Article 3 of Regulation No B — Luigi Benedetti, the owner of a 376/70/EEC? flour mill, brought an action before the In any event, does such conduct Pretura di Cittadella against the involve a breach of the prohibition of undertaking Munari F.lli s.a.s. to obtain discrimination contained in the damages in respect of loss which he second subparagraph of Article 40 (3) claimed to have suffered as a result of of the Treaty of Rome? sales of certain quantities of flour, carried 3. Does the conduct of an interventiom out by the latter undertaking, at a price agency in availing itself of finance below the market price. from institutions of the State to

4. Does an undertaking endowed with Protocol on the Statute of the Court of substantial financial resources, which Justice of the EEC written observations enable it to operate on the market were submitted by the plaintiff and the without taking account of the actions interveners in the main action, and reactions of competitors, represented by Giovanni Maria Ubertazzi constitute an undertaking in a and Fausto Capelli, Advocates of Milan, dominant position within the by the Government of the Italian meaning of Articles 86 and 90 of the Republic, represented by Ambassador Treaty and of Regulation No Adolfo Maresca, assisted by Arturo 26/62/EEC, even when such Marzano, Avvocato dello Stato and by undertaking is an intervention agency the Commission of the European within the meaning of Regulation No Communities, represented by its Legal 120/67/EEC? Advisor Cesare Maestripieri, acting as 5. Again, within the meaning of Article Agent. 90 of the Treaty, does the conduct of an undertaking which infringes a Upon hearing the report of the Community rule designed to avoid Judge-Rapporteur and the views of the distortions of competition within the Advocate-General, the Court decided to territory of the Community constitute open the oral procedure without any abuse of a dominant position? preparatory enquiry. 6. If the reply to Questions 1 and 2 is in the negative, and to Questions 3, 4 However, the parties to the main action, and 5 is in the affirmative, is the the Italian Government and the

activities of the AIMA involving the In the present case, the effect of the purchase of cereals and the sale thereof intervention of the AIMA is to disturb to processing undertakings come within competition. That intervention is the framework of the Community rules contrary to the objectives of Community on agriculture. Article 38 of the Treaty economic policy and has negative effects indeed refers to trade in agricultural on the free movement of goods. products, and the basic Regulation No Furthermore, the operations under 120/67/EEC states that the common consideration are contrary to the organization of the market in cereals Community system of competition: shall comprise a trading system. considerable quantities of cereals are sold at prices which are not the result of The cereals sector was organized as a typical market factors, but which are the single market, subject in its entirety to result solely of a decision leaving those the economic policy measures and the factors aside and taking into account regulations adopted by the Community certain aims of a political nature.

institutions. Likewise, when Community institutions have authority to administer A simple examination of the rules in this the market under consideration, that fact area is enough to lead one to the in itself excludes any parallel power of conclusion that the intervention agency administering the market on the part of has not the least opportunity to evade the the Member States. This exclusive obligations imposed upon it by jurisdiction of the Community Community legislation. Furthermore, in institutions also extends to measures the judgment delivered in Case 34/70, concerning the conjunctural policy, as Syndicat National du Commerce emerges from the judgment delivered on Exterieur des Céréales and others v 24 October 1973 in Case 9/73 Schlüter v Office National Interprofessionel des Hauptzollamt Lörrach [1973] ECR 1135 Céréales and Minister for Agriculture in regard to compensatory amounts, as [1970] ECR 1233, the Court has already well as from the judgment of 23 January laid down the very narrow limits allowed 1975 in Case 31/74 Galli [1975] ECR 47. to the intervention agencies even where Even where the economy of a Member Community legislation grants a certain measure of discretion to the State is in special circumstances, administrative authorities of the Member anti-conjunctural interventions should be

Indeed, any unilateral decision or In the present case, the Community operation by a Member State disturbs the legislation applicable does not leave the delicate balance of interests set up by the least margin of discretion to the Community rules. intervention agencies. The fundamental

BENEDETTI v MUNARI

Community . . .', as well as Article 3 (2) of the lowest of the intervention prices for the same regulation). The disputed Italy was Lit 10 588 per 100 kg. It is disposals of common wheat were made patent that the AIMA infringed in toto exclusively to flour mills situated in the the Community legislation applicable; province of Padua, but operating on the and the same conclusions would be whole of the Italian market. The reached, if one sought to establish the disposals are unlawful for that reason exact prices at which the AIMA should alone. have sold the wheat (under the provisions of Regulation Nos 132/67/EEC and However, the AIMA could have reserved 376/70/EEC): at all events, the AIMA certain quantities of wheat for a definite could not have sold the wheat at the use, in favour of particular undertakings, price less than Lit 10 726 per 100 kg. by applying the Community provisions in a proper manner (see Regulation No The only answer which can be given to 935/70 quoted above). However, as the this question is that it is not open to the AIMA did not seek authorization intervention agency to put the cereals through the Community institutions, the which it holds on the market at a price Italian administration infringed the lower than the minimum price fixed by Community legislation. The Community legislation. discrimination perpetrated operates not only against Community competitors, As regards the second part of the but also and above all against Italian question, the answer is largely similar to undertakings in the same sector. that given to the first question.

intervention in dispute constitutes a The selling price must be not less than patent infringement of Community the market price and, according to legislation irrespective of the description

which may be applied to the agency AIMA must be considered as entirely which made that intervention: the same illegal. piece of conduct can constitute an infringement of Community provisions In this context as well, it is necessary to contained in different sets of rules see whether there is any incompatibility adopted to protect different interests. with the second subparagraph of Article 40 (3) of the Treaty: since the purpose of In the present case, not only the law on all the Community legislation is to enable trade to follow a normal course agriculture, but also the legislation on aid must be applied, since the agricultural within the framework of the agricultural legislation itself provides for the legislation, all provisions should comply application of the legislation on aid with the principle of non-discrimination. within the framework of the organization of the market (cf.

It has all the Markmann v Germany, 122/73 Nordsee characteristics of an undertaking, under v Germany and 141/73 Lohrey v both Community law and national law. Germany [1973] ECR 1471, 1495, 151 1 This observation is not contradicted by and 1527. In particular, the Commission the fact that the AIMA is also an must be notified immediately of every intervention agency, or by the fact that new system of aid.

Similarly in internal In consequence of the direct applicability law, it is enough for an organization to of these provisions, individuals are be described as an undertaking if it entitled to bring an action before the carries on an objectively commercial courts: (a) to obtain a declaration of the activity on a professional basis and illegality of aids granted in breach of the according to the criteria of profitability. rules referred to; (b) to seek the suspension of that grant; and (c) to obtain Finally, both the Community legislation compensation for damage suffered. on agriculture and the Italian legal order protect in many ways the principle of In the present case, since the profitability in management and the Commission was not previously notified AIMA's interest in making a profit in of the proposed aid, the operations of the carrying on its institutional activities.

The conduct of the AIMA in selling As regards this case, the State agricultural products by methods other undertaking is endowed with substantial than those provided for by Regulations financial resources. The special position No 132/67/EEC and No 376/70/EEC of the AIMA on the cereals market has constitutes an instance of abuse of a subsequently been reinforced and dominant position, especially if it is consolidated by Community regulations. borne in mind that that conduct was The facts stated are enough to enable the AIMA to determine its conduct on the made possible only by the dominant position and by the availability of Italian market in an absolutely practically unlimited financial resources independent way; therefore it can be derived from State financing. described as an undertaking having a dominant position. The intervention agencies should be classified as public undertakings within One example of infringement of the the meaning of Article 90 (1) of the EEC rules on competition can be based on Treaty. Therefore the rules on Article 86 (c) of the EEC Treaty which is competition apply and lay down aimed at protecting a definite standards for classifying the conduct of competition structure in the Community the AIMA. On the contrary, these economy. To use the terminology of the agencies cannot be described as national court a quo, this first instance of 'undertakings entrusted with the abuse therefore consists in infringing operation of services of general economic Community rules designed to avoid interest' within the meaning of Article 90 distortions of competition in the sector at (2) of the Treaty. This provision can issue. apply only when the State has 'entrusted'

individuals. Therefore the right to damages for infringement of Community The Government of the Italian Republic legislation is merely a corollary of the firstof all criticizes the procedure followed in the main action, and observes argument developed above. that proceedings for a preliminary ruling The seventh question were begun without giving a hearing to one of the parties to the action. There can be inferred from the EEC The questions referred by the national Treaty an answer to the effect that the court are outside the thema decidendum national court must apply Community of the action — which makes law as the Court of Justice has interlocutory proceedings in respect of interpreted it. To that end, the national them superfluous — and they start from court must, if necessary, refrain from a mistaken point of view. It is clear that applying any inconsistent internal the parties to the action intend to place measure. the questions referred in the framework of the approach adopted by the Court of First of all Article 177 of the Treaty and Justice in its judgments in Cases 31/74 its place in the system rule out any and 60/75 (cited above). The Italian possibility of the Court's assuming a Government disputes this way of consultative role. That article gives the approaching the problem in the present Court jurisdiction to 'give preliminary case, but it considers it expedient rulings'. In the absence of any explicit however to examine the said case-law. indication to the contrary, the activity of the Court should be understood solely as The absolutely negative statements of a jurisdictional activity. principle contained in the judgment in Case 31/74 seem to have been attenuated The authority of the Court's decision is to a certain extent in the judgment in confirmed in Article 5 of the EEC Case 60/75. In particular, the power of Treaty. When dealing with a Community Member States which was ruled out a rule which the Court of Justice declares priori in the first judgment was immediately applicable, the national practically accepted in the second in so court is obliged to abstain from applying far as it does not affect the objectives and inconsistent internal legislation. This the working of the common organization obligation is similar to the obligation of the agricultural market. Therefore any which would apply to the Italian court question on the substance of the case making the reference following a comes back to an examination of the judgment on final appeal laying down a lawfulness or unlawfulness of the manner 'point of law'. in which the State concerned exercised its power. The only case in which it would be possible not to follow the judgment of The Court's approach is based on an the Court of Justice would be where, assertion of the complete and after the judgment of the Court of self-sufficient nature of the common Justice, the national court finds that it organization of the market, on the

limited scope of these provisions is subparagraph of Article 40 (3) of the EEC confirmed by the measures laid down in Treaty is directed at the Community the Council regulations defining the legislature, and not at the Member States general rules applicable in the cereals or at the intervention agencies. However, sector in the event of disturbances. These an answer in these terms would not be measures apply in all of the territory of germane to the reaching of a decision in the Community and at all events are the main action. absolutely unsuited to relieving localized shortages and to guaranteeing the First of all, it must be pointed out that, supplies required by a single Member in addition to its work as an intervention

the wheat bought and sold in pursuit of similar measures taken by the these different objects. Thus the problem Community institutions. It would also in this case turns at the most on the follow from such a supposition that the question whether the functioning of the lawfulness of legal proceedings and common organization of the market is claims for damages against the liable to be affected by the measures Community institutions would have to which a non-profit making agency be acknowledged, in particular in respect governed by public law takes in order to of the disposals of common wheat carry out the allocation of batches of decided by the Council. The very wheat, within the limits, according to the absurdity of these consequences shows methods and in accordance with the that the interventions referred cannot be

BENEDETTI v MUNARI

question do not have the characteristics As to the first and second questions, the of possibly unlawful aid to flour mills. Commission observes first that the First, the limited amounts of the product ultimate destination of the cereals bought disposed of and the exceptional nature of in by intervention agencies (see Article 7 the disposals exclude a priori the (3) of Regulation No 120/67/EEC) is of possibility of their having any effect on great importance to the Community, competition, secondly the flour mills since the disposal of those cereals forms derive no advantage from the lower price part of the running of the market and of this wheat (fixed selling price for the since the financial consequences of such flour), and finally the disposals by the disposals are borne entirely by AIMA constitute a subsidy to the benefit Community finances. of the most under-privileged consumers and hence a form of aid expressly The Commission considers that a

JUDGMENT OF 3. 2. 1977 — CASE 52/76

Therefore it is not Community legislative authorities, but possible to pronounce a definitive also the Member States in the exercise of judgment on the extent to which the the powers which are entrusted to them Italian measures are compatible with in the context of the common Article 92 et seq. of the EEC Treaty. agricultural policy. If it is once established that the methods of disposal The fourth and fifth questions used by an intervention agency constitute an infringement of specific Community Article 90 (1) obviously cannot create provisions, the consideration that the obligations wider than those flowing same conduct likewise constitutes an from the Treaty provisions to which it infringement of the prohibition of refers. In particular that provision does discrimination (second subparagraph of not prohibit Member States from Article 40 (3) of the Treaty) is of little granting special or exclusive rights to importance. certain undertakings provided that in carrying out their task those undertakings The third question remain subject to the prohibitions of discrimination (see the judgment of the The Commission points out that it is not Court in Case 155/73 Sacchi [1974] ECR proved that the AIMA availed itself 'of 409). The same prohibitions apply in the finance from institutions of the State to case of an undertaking entrusted with the purchase cereals on conditions other operation of services of general economic than those provided for by Community interest regarding its conduct, in so far as agricultural legislation in the sector it is not proved that those prohibitions

aid. In assessing the extent to which the measures in dispute are compatible with AIMA is the largest of the intervention the provisions of Article 92 of the EEC agencies in Italy, established by Law No Treaty, account should be taken of the 303 of 13 May 1966. It is an autonomous objectives of those measures as they can State undertaking, having its own legal be deduced from the documents on the personality. Its first activity was to carry out interventions in the cereals sector,

If the fact of having granted certain flour As far as activities within the framework mills an advantage which was refused to of Community legislation are concerned,

BENEDETTI v MUNARI

. .] rulings . . .', The sixth question as from the opinion mentioned in the second subparagraph of Article 228 (1)). The issue raised in this question was Furthermore, the object of Article 177 is raised in relation to producers of durum to ensure the necessary uniform wheat in Case 60/75 (supra). In that case interpretation of Community law. This the Court dissociated the finding of an conclusion is confirmed by the case-law infringement of Community legislation of the Court (Case 29/68 Milch-, Fett from the compensation which und Eier-Kontor v Hauptzollamt individuals can claim from the defaulting Saarbrücken [1969] ECR 165), by the State for damage suffered. views expressed by the Advocates- General (for example Joined Cases The question now is to determine 28-30/62 Da Costa [1963] ECR 31) as whether a person carrying on business in well as by the text-book writers. the flour-milling sector can base a claim for compensation from the State for the Finally, the allusion made by the damage which he may have suffered national court to the judgment of the upon the finding of the infringement of Corte di Cassazione is an interesting Community law. suggestion but is not absolutely correct. On this point the Commission refers to Referring to its observations submitted in the report of Consigliere Saya 'Rapporti Case 60/75, the Commission states that fra Corte di Giustizia europea e Autorità the system of price formation resulting giudiziaria italiana in ordine alla from the common organization as a vincolatività dei principi di diritto whole by definition protects all traders stabiliti dalla Corte di Giustizia', in whether they be buyers or sellers of Consiglio Superiore della Magistratura,

JUDGMENT OF 3. 2. 1977 — CASE 52/76

The Commission proposes that the provisions of national law relating to questions referred be answered as the liability of the State. follows: (c) A preliminary ruling by the Court of (a) The action of a Member State in Justice is binding on national court reselling on the Community market as regards the interpretation of the common wheat bought at the Treaty or of any other Community intervention price, at a price lower measure and as regards the than the intervention price and by assessment of the validity of such methods other than those provided measure.

for by the relevant Community legislation, is incompatible with the common organization of the market. III — Oral procedure (b) The rules regarding the common organization of the market confer The plaintiff and the interveners in the upon individuals a right by virtue of main action, the Government of the which Member States must abstain Italian Republic and the Commission of from adopting measures of the kind the European Communities presented referred to above. Should the damage oral argument at the hearing on 24 caused to the trader be the result of November 1976. activity by the Member State contrary to Community law, that State, as The Advocate-General presented his regards the injured party, is liable to opinion at the hearing on 15 December answer for it in the context of the 1976.

Law

1 By an order of 27 April 1976, lodged at the Registry of the Court on 25 June 1976, the Pretura di Cittadella referred to the Court under Article 177 of the EEC Treaty a series of questions essentially concerning the conduct of the Azienda di Stato per gli interventi sul mercato agricolo (AIMA) (State Cooperative for Intervention on the Agricultural Market) in relation to various provisions of Community law.

7 The fourth and fifth questions ask whether an undertaking endowed with substantial financial resources, which enable it to operate on the market without taking account of the actions and reactions of competitors, constitutes an undertaking in a dominant position within the meaning of Articles 86 and 90 of the Treaty and of Regulation No 26/62/EEC, of 4 April 1962 (OJ English Special Edition 1959-1962, p. 129) — even if that undertaking is an intervention agency — and whether certain conduct on the part of such an undertaking constitutes abuse of a dominant position.

8 The sixth question is subject to questions one and two being answered in the negative and questions three, four and five in the affirmative and it asks whether the intervention agency is obliged to compensate for damage resulting from its conduct.

9 Finally, the seventh question concerns the force of the interpretation given by the Court of Justice.

10 In the absence of accurate information relating to the nature of the alleged activities of the AIMA and the way in which they were carried out, it must be

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stated that, having to limit itself in the exercise of the powers conferred by Article 177 to giving an interpretation of the provisions of Community law, the Court cannot itself assess or classify those activities or the provisions of national law relating thereto.

(b) Under Community rules an individual producer may claim that he should not be prevented from obtaining a price approximating to the target price and in any event not lower than the intervention price; (c) If an individual producer has suffered damage as a result of the intervention of a Member State in violation of Community law it will be for the State, as regards the injured party, to take the consequences upon itself in the context of the provisions of national law relating to the liability of the State.'

BENEDETTI v MUNARI

14 In connexion with recalling this decision, the attention of the national court should first of all be drawn to the fact that the order for reference and the

documents on the case do not provide details which enable the question to be decided whether the conduct of the AIMA which is in question must be classified as 'selling on the Community market'. In particular, the concept cited might not apply if it were proved that in the event what was concerned was the distribution of cereals, authorized in some way by the Community authorities, to a limited circle of flour millers.

15 Secondly, it should be recalled, as was stated in the judgment cited, that since Regulation No 120/67 was intended to shield the development of agricultural production (a concept which does not necessarily include subsequent stages, from bread-making to consumption) from fluctuations in world prices and thereby to ensure a fair standard of living for the agricultural community, interventions by a Member State to arrest the rise in prices of certain foodstuffs made from cereals (at consumer level) are not incompatible with the common organization of the market in so far as they do not jeopardize the objectives or the operation of that organization.

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upon the prohibition laid down by Article 92 (1) and the derogation from that prohibition provided in Article 92 (2).

The fourth and fifth questions

20 As to these questions, which are summarized above, neither the questions themselves nor the documents on the case enable it to be ascertained whether

the undertaking referred to in these questions is a public undertaking, within the meaning of Article 90 (1) of the Treaty, or an undertaking entrusted with the operation of services of general economic interest, within the meaning of Article 90 (2).

21 However, this distinction is essential for the purpose of assessing the extent to which the rules of the Treaty on competition are applicable.

BENEDETTI v MUNARI

26 Under Article 177 the Court of Justice has jurisdiction to 'give (...) rulings' concerning the interpretation 'of this Treaty' and that 'of acts of the institutions of the Community'. It follows that the purpose of a preliminary ruling is to decide a question of law and that that ruling is binding on the national court as to the interpretation of the Community provisions and acts in question.

27 Therefore the question referred should be answered in those terms.

Costs

28 The costs incurred by the Government of the Italian Republic and by the Commission of the European Communities, which have submitted observations to the Court, are not recoverable.

As these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the national court, costs are a matter for that court.

3. The purpose of a preliminary ruling by the Court is to decide a question of law, and that ruling is binding on the national court as to the interpretation of the Community provisions and acts in question.

Kutscher Donner Pescatore Mertens de Wilmars Sørensen

Mackenzie Stuart O'Keeffe Bosco Touffait

Delivered in open court in Luxembourg on 2 February 1977.

A. Van Houtte H. Kutscher

Registrar President