C-154/77

JUDGMENT OF 29. 6. 1978 — CASE 154/77

retail sale of pigmeat, calculated of such prices, provided that the

essentially on purchase prices as margin is fixed at a level which does charged at prior stages of marketing not impede intra-Community trade. and varying according to the trend

In Case 154/77,

REFERENCE to the Court under Article 177 of the EEC Treaty by the Tribunal de Première Instance (Chambre Correctionnelle) (Court of First Instance (Criminal Chamber), Neufchâteau, for a preliminary ruling in the proceedings pending before that court between

PROCUREUR DU ROI (Public Presecutor)

Chambers), A. M. Donner, J. Mertens de Wilmars, P. Pescatore and A.

O'Keeffe, Judges,

Advocate General: H. Mayras Registrar: A. Van Houtte

gives the following

PROCUREUR DU ROI v DECHMANN

JUDGMENT

1. Pursuant to the provisions of Article Article 3 (3):

2 (1) and (2) of the Belgian Law on 'The weighted average selling price shall economic regulation and prices, as be, by type of purchase, the product of stated in the Law of 30 July 1971 the multiplication of the price of selling (Moniteur Belge of 31 August 1971) each piece by the figure relating to the amending the Arrêté-Loi of 22 January cuts appearing:

1945, the minister responsible for (a) ...

economic affairs may fix maximum

prices for products, materials, (b) for pigmeat: foodstuffs, goods or animals, as well as — in Annex IV for purchases of the limit of the profit to be made by any carcases or half-carcases; vendor or intermediary. — in Annex V for purchases of The Belgian Government used this loins; power in particular as regards the retail — in Annex VI for purchases of sale of beef and veal and pigmeat, and hams; thus established a system essentially in limiting the profit margin — in Annex VII for purchases of consisting of retail butchers and pork-butchers. shoulders;

Within the framework of those rules the — in Annex VIII for purchases of bellies." Belgian Government adopted, in relation to pigmeat, the Arrêté Ministériel (Ministerial Order) of 27 Article 3 (4) provides that the "weighted March 1975, which provides inter alia as average purchase price"

JUDGMENT OF 29. 6. 1978 — CASE 154­ /77

judgment purchase price may be increased by Bfr June 1967). By a of 17 4 per kilogram on the hoof in order to November 1977, the Tribunal decided obtain the purchase price in carcases. to stay the proceedings and to request

the Court, in accordance with Article According to(3), Article 5 the prices 177 of the EEC Treaty, to give a prel­

thus calculated may not be increased for

four weeks following the date of their iminary ruling on the following question: application.

imposes "Did the Arrêté Ministériel of 27 March Article 5 also a duty on

before Chambre British Government, represented by prosecuted the

Correctionnel (Criminal Chamber) of the Treasury Solicitor's Office, and the

Tribunal de Première Instance Commission of the European the

(Court of First Instance), Neufchâteau, Communities, represented by its Legal for Adviser, Jean Amphoux, submitted having contravened the aforesaid written observations pursuant to Article legislation on 25 July and 18 September 1975. The charge contains two 20 of the Protocol on the Statute of the counts: Court of Justice of the EEC. — first, that he omitted to make the heard Judge- entries required by law in the pre­ Having the report of the

Rapporteur and the views of the scribed register; Advocate General, the Court decided to — secondly, that he failed to observe open the oral procedure after requesting the legal limit on the profit margin the defendant in the main action, as laid down in the Arrêté the Belgian Government and the Ministériel of 27 March 1975, and Commission of the European exceeded that limit by Bfr 6.28 per Communities to supply certain details in kilogram for the period from 25 July writting. to 21 August 1975, and by Bfr 6.60 per kilogram for the period from 22 August to 18 September 1975. II — Written observations sub­

mitted under Article 20 of

of 13 June 1967, fixes the price for prerogative, which they were expressly pigmeat at the "production or recognized as having in the aforesaid

judgment in Case 31/74, by wholesale"

stage. According to the taking case-law of the Court, in particular away from them an essential instrument Case 31/74 [1975] 1 ECR 47 which was of anti-inflation policy approved by decided by a judgment of 23 January both the Council and the Commission 1975, and also in the opinion of the (cf. Council Resolution of 5 December Commission, the existence of such a 1972 on measures to be taken against

common organization does not prevent inflation, Official Journal, English the introduction of national rules at a Special Edition 1972 (9-28 December), later stage — the retail stage — p.13).

provided that such rules do not In these circumstances, to call in jeopardize the aims and functioning of question the national legislation the common organization of the concerned is only prejudicial to the not market. anti-inflation policy of the Member The national rules called in question States, but also in contradiction to the in the present case satisfy those aims of the Community. requirements, because they take effect

at a stage later than that covered by the B — The British Government refers to

confines itself to fixing a maximum The argument of Mr Dechmann, who profit margin. The price to be paid by cites in his support a passage from the the consumer, inclusive of value-added judgment of the Court in Case 31/74 to tax, is a direct function of the purchase the effect that the legislation at issue has price to the butcher, and no pressure immediate and inevitable repercussions can be exerted on the latter price, the on the prices paid to the producer, does level of which comes under the not take into account that the Court has Community rules. The weighting rules held, inter alia in the aforesaid case, laid down in Arrêté are merely a the that the unilateral fixing by a Member method of calculation which enable it to State of maximum prices for goods be established on a flat-rate basis, on subject to a common organization of the basis of a typical cut as used in the the market is incompatible with the trade, whether the profit margin Community rules "once it jeopardizes allowed by the butcher is higher than the objectives and the functioning of that which is authorized (Bfr 22 per this organization and in particular its kilogram). Therefore those rules cannot system of prices". The Court also said have the slightest influence on the that nationally fixed maximum selling purchase price paid by the butcher. prices constitute an indirect obstruction

Moreover, to accept that such an to a common organization if the prices

intervention at the retail stage might call are fixed "at such a low level that the

in question the common organization of grower finds it practically impossible to

were for the interpretation of the regu­ more flexible, and place more reliance

lation referred to in Case 65/75. on the normal operation of market

In light forces within the Community. the of these observations, the

United Kingdom urges the Court to That organization has a conventional

hold that the unilateral fixing by a structure, primarily providing for an

Member State of a maximum price for intervention system as far as the internal products to which Regulation No market is concerned, and as regards

law market; validity of provisions of national or

on their compatibility with Community —

secondly, in both cases, the question

law, the question submitted should be whether or not a national system of

read as asking whether and to what maximum prices applied to the sale

extent Regulation No 121/67 on the of products coming under the

case, the answer to that question is to

be sought essentially in Community Being concerned to ensure fair remuner­

provisions on the price system, by ation for pig-farmers and stable prices

examining whether the national on Community markets, the common

measures on prices are compatible with organization of the market introduced those provisions, a problem moreover by Regulation No 121/67 is based

PROCUREUR DU ROI v DECHMANN

ensuring fair remuneration for which such a price system might in producers, if the level adopted is such certain cases present to the aims or

that the prices imposed will necessarily functioning of the common organi­

cause a significant reduction in prices zation of the market could at most

charged at earlier stages in the be only indirect.

marketing of meat. Thus, a rigid system — Secondly, the characteristic feature of maximum prices for consumption, of the said system is its flexibility. It fixed at a level apt to influence prices does freeze not the retail price at a charged at the slaughtering stage would "distort" specified level, applicable uniformly be such as to the establishment and but itself permanently, confines of the Community market price and in to imposing a maximum profit

extreme cases could lead to intervention margin on retailers. The limit which measures being put into operation "arti­ retailers must not exceed is variable ficially". Moreover, a system of fixed for each is one of them and variable prices for the sale of pigmeat could also in time. In fact the limit involves two be contrary to the common organi­ factors for each one of retailer, zation of the market or other provisions is fixed which and consists of the of the Treaty (in particular those of Bfr 22 maximum profit margin to free movement of by relating goods) per kilogram, and the other of

imported otherwise than at a loss, production or wholesale stage are

taken by this system as being a or factor resulting from the operation

— on exportation, where prices of market forces at that stage. imposed in a Member State are

be in­ Therefore from it considered by traders to so that point of view

adequate that they seek to export does not appear that the national system

their products to other Member in question affects the free formation of

adopted involves a flat-rate element, the retailers in other Member States, and

fact remains that that element, limited that therefore it can be described as

as it is, appears to be inherent in the reasonable. At all events it is for the

system for reasons of practicability. national court to determine, on the basis Thirdly, the level adopted for the profit of all the material facts, whether this margin in be assessment is correct. question should

considered, by examining, on the one In the light of these considerations, the

hand, whether that margin is not so Commission proposes that the Court small as to discourage deliveries to the should give the following answer to the Member State concerned to the question submitted:

themselves to include excessive profit margins in the prices which they charge their III — Oral procedure customers and thus from maintaining that situation the At Mr economic at expense the hearing on 9 May 1978 of the consumer. Dechmann, represented by J. M. Van The Commission does not have Hille, the Belgian Government, rep­

sufficiently precise details and figures to resented by E. M. Knops, and the determine whether the level of the gross Commission of the European

profit margin adopted in the Arrêté Communities submitted oral obser­

Ministériel of 27 March 1975 is suited vations.

to the situation of the trade concerned, During that hearing, Mr Dechmann having regard to the general and local pointed out inter alia that for there to

conditions in which that trade is carried be incompatibility between an internal on. However, on the basis of such rule of law such as the Belgian Arrêté experience as has been acquired, it Ministériel of 27 March 1975, fixing

equivalent to quantitative restrictions. is so limited, it does not allow the costs of the importation of pigmeat into The Advocate General delivered his Belgium to be taken into account. opinion at the hearing on 1 June 1978.

Decision

1 By a judgment of 17 November 1977, which was received at the Court on 19 December 1977, the Tribunal de Premiere Instance, Neufchâteau, submitted a question to the Court of Justice under Article 177 of the EEC Treaty on the interpretation of Regulation No 121/67/EEC of the Council of 13 June 1967 on the common organization of the market in pigmeat

(Official Journal, English Special Edition 1967, p. 46), in order in particular to define its scope in relation to national measures affecting prices.

2 The question was raised in the course of criminal proceedings against a

retail butcher and pork-butcher, who is charged with failing to observe the selling prices to the consumer of pigmeat as they result from the Belgian

purchase price.

JUDGMENT OF 29. 6. 1978 — CASE 154/77

5 Article 3 (4) provides that the weighted average purchase price shall be calculated by dividing the total of the invoices by type of purchase, not

inclusive of value-added tax, for the four preceding weeks, by the

corresponding number of kilograms less 2.5%.

6 The accused in the main action pleaded that the aforesaid provisions are

Treaty, it is not for the Court to give a ruling on the compatibility of rules of internal law with provisions of Community law.

9 On the other hand, the Court is competent to supply the national court with

any criteria coming within Community law enabling that court to determine whether such rules are compatible with the Community rule evoked.

10 Therefore the question submitted must be taken as asking whether and to

what extent Regulation No 121/67­ /EEC of the Council of 13 June 1967 on

the common organization of the market in pigmeat allows a power to

EEC Treaty.

PROCUREUR DU ROI v DECHMANN

12 This common organization of the market is intended, as is emphasized

repeatedly in the preamble to the regulation, to create for the Community a single market in pigmeat subject to common administration.

13 In order to bring about this single market, the regulation established a

system comprising a set of material rules and of powers, including a

16 As the Court held in its judgment of 23 January 1975 (Case 31/74 Galli

[1975] ECR 47) and in its judgments of 26 February 1976 (Case 65/75 1 Tasca and Joined Cases 88 to 90/75 Sadam [1976] ECR 291 and 323), in sectors covered by a common organization of the market, and a fortiori when this organization is based on a common price system, Member States can no longer take action, through national provisions adopted unilaterally,

affecting the machinery of price formation as established under the common

organization.

17 It was held in the same judgments that provisions of a Community agri­

cultural regulation which comprise a price system applicable at the

functioning of such an organization, so long as the profit margin is calculated essentially on purchase prices as charged at the production and

wholesale stages.

19 This is especially true where the profit margin takes sufficient account of

the marketing and importing costs which the retailer must bear both at the supply stage and at the stage of sale to consumers, and where it is fixed at a level suitable to ensure that the retailer obtains fair remuneration for his activity.

20 On the other hand a profit margin which does not fulfil these conditions

could freeze maximum retail selling prices, and this would be apt to affect

organi­ relate to those areas already subject to common rules, such as the

zation of agricultural markets.

For be that Regu­ 23 these reasons, the answer to the national court should

lation No 121/67 must be interpreted preventing fixing as not the unilateral

by a Member State of a maximum profit margin for retail sale of pigmeat, calculated on purchase prices as charged at prior stages of essentially marketing varying according to the trend of such prices, provided that and

the margin is fixed at a level which does not impede intra-Community trade.

concerned, in the nature of a step in the action pending before the national court, the decision on costs is a matter for that court.

On those grounds,

THE COURT

in answer to the question submitted to it by the Tribunal de Premiere Instance, Neufchâteau, pursuant to the judgment of that court of

17 November 1977, hereby rules:

Regulation No 121/67/EEC must be interpreted as not preventing the unilateral fixing by a Member State of a maximum profit margin for retail sale of pigmeat, calculated essentially on purchase prices as