C-31/78

Italian Ministry for Agriculture and Forestry

on the interpretation and the validity of regulations of the EEC on the common organization of the market in eggs or laying down detailed rules for the application of that organization, the consequences thereof or amendments thereto, that is Regulation (EEC) No 1619/68 of the Council of 15 October 1968 (Official Journal, English Special Edition 1968 (II), p. 489), Regulation (EEC) No 95/69 of the Commission of 17 January 1969 (Official Journal, English Special Edition 1969 (I), p. 7), Regulation (EEC) No 2771/75 of the Council of 29 October 1975 (Official Journal L 282 of 1 November 1975, p. 49) and Regulation (EEC) No 2772/75 of the Council of 29 October 1975 (Official Journal L 282 of 1 November 1975, p. 56),

THE COURT

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

Advocate General: G. Reischl

Registrar: A. Van Houtte

The order making the reference and the — and Regulation (EEC) No 95/69 of observations submitted pursuant to the Commission of 17 January 1969 — Article 20 of the Protocol on the Statute Official Journal, English Special Edition of the Court of Justice of the EEC may 1969 (I), p. 7). be summarized as follows: Those regulations provide, inter alia, that packs containing eggs are to be provided with a band or label which cannot be re­ I — Facts and procedure used after the pack has been opened and Mr Francesco Bussone, an Italian which are to bear indications relating to businessman, residing at Vanesca in the the name or business name of the under­ Province of Cuneo, runs an egg-packing taking, the quality and weight-grading, centre; on 11 October 1977 he had to the number of eggs contained in the pay Lit 180 000 to the Ministry for Agri­ pack and their freshness; the bands or culture and Forestry to obtain bands and labels are to be issued by or under the labels for affixing to egg packs. supervision of certain official agencies of Production and distribution of these the Member States; a model for the labels is in fact reserved to that Ministry labels is to be laid down by the auth­ by Italian Law No 419 of 3 May 1971 orities of the Member States and (Gazzetta Ufficiale No 167 of 5 July communicated to the other Member 1971) and by the Ministerial Decree kof States and the Commission. Finally, only 19 October 1971 (Gazzetta Ufficiale No undertakings authorized by the 280 of 6 November 1971) containing competent national authorities and called implementing provisions. Those "packing centres" may grade eggs by provisions are intended to incorporate quality and weight. into national law the rules contained in Regulation (EEC) No 2771/75 of the Thus Article 4 of the aforementioned Council of 29 October 1975 on the Italian Law No 419 of 3 May 1971 common organization of the market in provided that "the bands and labels shall eggs (Official Journal L 282 of 1 be prepared by the Ministry for Agri­ November 1975, p. 49), as amended by culture and Forestry and issued with a Regulation (EEC) No 368/76 of the serial number to the packing centres in Council of 16 February (Official Journal return for payment of a sum fixed in L 45 of 21 February 1976, p. 2), and in Article 9" which sum was fixed by the Regulation (EEC) No 2772/75 of the aforementioned Ministerial Decree of 19 Council of 29 October 1975 (Official October 1971 at a certain amount in Journal L 282 of 1 November 1975, p. Italian lire per band or label. 56), which regulations contained detailed rules for and amendments to the regu­ Such is the legal basis of the charge to be lations which had previously been paid by Mr Bussone to the Treasury of applicable in this connexion (Regulation the Province of Cuneo. Mr Bussone paid (EEC) No 1619/68 of the Council of 15 the amount charged by the Treasury but October 1968 — Official Journal, then commenced proceedings before the English Special Edition 1968 (II), p. 489 Pretura di Venasca against the Ministry

B. Must the said regulations be The procedure followed its normal interpreted to mean that the course. In accordance with Article 20 of

Member States may make the issue the Protocol on the Statute of the Court of bands and labels conditional on of Justice written observations were payment of a consideration far in submitted by Francesco Bussone, excess of the cost of such bands and represented by E. Cappelli, P. De labels? Caterini and M. Gay, by the Commission of the European Communities, C. Must the said regulations be represented by P. Kalbe, assisted by G. interpreted to mean that their direct Berardis, and by the Government of the applicability must not be Italian Republic, represented by A. jeopardized by the adoption of Maresca and M. Braguglia. national provisions which, whilst purporting to implement the regu­ Upon hearing the report of the Judge- lation in question, introduce Rapporteur and the views of the additional conditions, such as those Advocate General the Court decided to reserving to the public authorities open the oral procedure without any the right to prepare and distribute preparatory inquiry and the hearing was bands and labels and marking the fixed for 28 September 1978.

BUSSONE v ITALIAN MINISTRY FOR AGRICULTURE AND FORESTRY

main proceedings November 1971). Article 3 of the Ministerial Decree provides that: Mr Bussone first summarizes the state of the Community rules and the form "The price of the bands and labels referred to in Article 1 is laid down as chosen for the common organization of follows: the market in eggs; of the forms set out in Article 40 (2) of the Treaty that of — Lit 3 for each band for small packs "common rules on competition"was bearing the word 'extra'; chosen, which implies that normally no — Lit 36 for each label of any other price and intervention rules would be type. established for the internal market within the Community; in such an organization, The bands and labels shall be distributed in the absence of any guaranteed price to authorized packing centres submitting for the producer, the stabilization of the a written application in duplicate to the market is effected purely by compliance Ministry for Agriculture and Forestry. with "common rules on competition" The application must be accompanied by which take the form of common a receipt from the Treasury of the marketing standards (also called "quality province, certifying payment under standards").

of unsatisfactory quality, of encouraging bution shall indicate on the applications producers and traders to satisfy more the series and numbers of the bands and fully the requirements of consumers and labels distributed. There shall also be of facilitating commercial dealings on the affixed to the applications the date and basis of fair competition, thus serving to the department stamp and the signature improve the profitability of production. of the competent official. Of the two In Mr Bussone's view the regulations in copies of the application so completed, question define exhaustively the one shall be retained by the said marketing standards and the manner in department and the other shall be sent or which they are to be applied and returned to the applicant". constitute a complete and detailed body Mr Bussone then summarizes the of rules characterized by precise circumstances from which the dispute provisions intended to guarantee the between himself and the Ministry for uniform application of marketing Agriculture and Forestry arose and standards in the Community and leaving comments on the way in which the only mere organizational functions to questions asked by the Pretura di

JUDGMENT OF 30. 11. 1978 — CASE 31/78

Although five questions have been It is therefore necessary to establish formulated, closer examination reveals whether the Community regulations can that the Court has, in substance, been be interpreted as meaning that the bands asked two questions: the first (Question and labels can or must be prepared by A) asks whether the rules relating to the the public authorities and in particular by marketing of eggs permit Member States the bodies designated to supervise the to reserve to the public authorities the system. distribution of labels; the second — It can certainly not be stated that there clearly the main question — seeks to exists an obligation to this effect. It is establish whether, when labels are sufficient therefore to examine whether supplied, payment of a pecuniary the Member States are entitled to reserve consideration may be demanded the preparation of the labels to certain (Question B). bodies.

BUSSONE v ITALIAN MINISTRY FOR AGRICULTURE AND FORESTRY

case. or not the charge made in consideration for the issue of labels was lawful, is of Mr Bussone considers that the third greater importance. In Mr Bussone's question seeks to establish whether a view it must first be noted that the national provision which introduces Community rules contain no reference to conditions which were not laid down by such pecuniary consideration. In that the regulations should be regarded as respect therefore the Italian measures are capable of adversely affecting the direct unilateral; indeed in the terms of Article applicability of those regulations.

Even where whether a benefit has been provided the Member States are authorized to within the meaning of the term as used adopt additional measures (which is not by the Court of Justice with regard to the case in this instance) they have no charges having an effect equivalent to discretionary power (Case 32/72 customs duties. In Mr Bussone's opinion Wasakndcke v Einfuhr- und Vorratsstelle the answer must be in the negative as the für Getreide und Futtermittel [1972] 2 administration made use of the option ECR 1181; see also the opinion of Mr given it and made the service which it Advocate General Mayras).

JUDGMENT OF 30. 11. 1978 — CASE 31/78

the market. A Member State should endeavour to discriminate neither against "Regulations (EEC) Nos 2771/75 and nationals of other Member States nor 2772/75 of the Council of 29 October against its own nationals (Case 39/72 1975 and Regulation (EEC) No 95/69 Commision v Italy [1973] 1 ECR 101 at of the Commission of 17 January 1969 p. 116, 24th paragraph of the decision). must be interpreted as meaning that With regard to the second point, a national provisions laying down a proper application of Article 40 (3), pecuniary charge for the issue or use of which provides that the common organi bands and labels provided for by the zation of the market "shall exclude any Community regulations on marketing discrimination between producers or standards for eggs are incompatible with consumers within the Community", the common organization of the market should prevent any difference in in eggs". treatment to the detriment of the product wrapped and graded in Italy which at B — Observations of the Commission present is subject to a special charge imposed on an agricultural product and The Commission first summarizes the financing an administrative activity.

It should in particular of regulations, in the national legal system and the be possible to apply the case-law of the implications of that concept such as Court of Justice (Case 31/74 Galli they appear in particular from the [1975] 1 ECR 47) to common organiz numerous decided cases of the Court ations of the market which have not of Justice; established a system of prices, and it should therefore be possible to exclude (b) The concept of discrimination on any national rules which could impede, grounds of nationality which is directly or indirectly, actually or prohibited by the principle laid down potentially, trade within the Community in Article 7 of the Treaty of Rome.

These two points show that there exists a with the provisions of Regulation (EEC) presumption that Law No 419 of the No 2772/75 in that it allows the Italian Republic of 3 May 1971 which Member States a wide discretionary purports to implement Regulations power with regard to finance. It is true (EEC) Nos 1619/68 and 95/69 on that the price charged should not exceed marketing standards for eggs runs the limits for financing the operation and contrary to the principle of the direct should not bring a financial benefit to applicability of regulations in the the Member States.

label . . . which shall be issued by or Commission points out that the direct under the supervision of the official effect of Community law presupposes, as has been recalled in the decided cases of agencies mentioned in Article 26". It appears, furthermore, from the said the Court of Justice, that any contra Article 26 that it is for the Member dictory national rules are imcompatible States to determine and apply the with it and that any national practice of administrative measures and the checks repeating Community rules within the necessary for the practical application of internal system is unnecessary.

However, an the cost of manufacture and of distri excessive consideration would be bution and also the administrative costs contrary to that principle and therefore of the checks, the system is compatible unlawful.

In the Commission's view Question D compulsory supervisory procedures makes allusion to "inverted discrimi­ which are expressly required of the nation" working against nationals of the national bodies. That consideration Member State which adopted the does not constitute an infringement of contested measure, that is to say, in this the prohibition of discrimination on instance, Italian producers. However, grounds of nationality laid down in Italian Law No 419 is applicable on the Article 7 of the Treaty. basis of the place where the activities are 3. The pecuniary consideration must be carried on, whatever the nationality of in proportion to the real cost of the there producers. There therefore exists supervisory procedures. Any excessive no discrimination within the meaning of consideration would constitute an Article 7 of the Treaty. The application extraneous element which might of different charges imposed on egg disturb the proper functioning of the producers depending on the place of mechanisms of the common organ­ production is in fact a problem of ization of the market and the measure harmonization subject to limits which introducing it would be contrary to should be imposed on the amount of the principle of the direct effect of such charges. Community regulations. With regard to Question E the Commission recalls that the contested C — Observations of the Government of charges are an integral part of a system the Italian Republic which, while giving the Member States complete freedom with regard to the The Italian Government recalls the state organization of the requisite checks, of the Community and national rules. allows them by implication to obtain the With regard to the questions asked it necessary means to finance the system refers first in general terms to the but nothing more. Any other practice case-law of the Court of Justice would go beyond the objectives of the (judgment of 12 July 1973, Case 2/73 common organization and would upset Geddo v Ente Nazionale Risi [1973] 1 the balance of that organization. ECR 865; judgment of 2 February 1977, Case 50/76 Amsterdam Bulb v The Commission consequently proposes Produktschap voor Siergewassen [1977] that the following answers should be ECR 137 and the opinion of the given to the questions asked by the Pretura di Venasca: Advocate General at page 152; judgment of 3 February 1977, Case 52/76 1 . The exclusive right of the public auth­ Benedetti v Munari [1977] ECR 163), orities to prepare and distribute the which, with regard to the exercise of bands and labels to be affixed to mutual powers regarding common organ­ packs of eggs provided for by Regu­ izations of the market, sets aside any lations (EEC) Nos 2772/75 and "dogmatic approach" and prefers a 95/69 and to affix the official "pragmatic approach"; the Member marking laid down by the competent States have not only retained functions authority is not incompatible with of a purely executory nature and the those regulations. lawfulness of the national measures

or for intervention measures and is Government relating to Italian exports of primarily aimed at maintaining quality. fresh eggs in their shells. Moreover, the The adoption of such Community system in force in Italy has neither provisions "does not necessarily imply reduced the growth in exports nor that the implementing measures should affected their development. be in all respects identical throughout the The Italian Government states that the Community" (see judgment of 18 May 1977 in Case 111/76 Officier van Justitie pecuniary charge for the labels is made v Van den Hazel [1977] ECR 901) so up of the production cost (approximately Lit 5 compared with a total of Lit 36 for long as there is no barrier, either actual or potential, to the principle of the free large packs) and the cost of the movement of the product. supervisory service (from Lit 29 to 30) which leads to an improvement in quality There remains the question of the ensured by specialized staff for the consideration charged for the supply of the bands or labels. The Italian text of protection of consumers. The cost of providing that service is not even covered Article 17 of Regulation (EEC) No 2772/75 which refers to labels which are by the revenue from the sale of bands and labels, as is attested by the Italian to be "forniti", that is to say "supplied", in contrast to Article 17 of Regulation national budget. (EEC) No 1619/68 which refers to labels Finally, with regard to discrimination to be "rilasciati" that is to say "issued",' account should be taken of the fact that presupposes the possibility of a the nationality of the proprietor of the consideration. In the present case is that packing centre is not taken into consideration liable to interfere with the consideration. Furthermore, what objectives and functioning of the interest would a State have in discrim­ common organization of the market in inating against its own producers in eggs, including the marketing standards? comparison with others? In abstract terms and in agreement with the Court of Justice and its Advocate General (Case 2/73 the Geddo case loc. III — Oral procedure cit.) it must be accepted that local disparities — for example in production The hearing was held on 28 September costs — may be accompanied by various 1978. The applicant in the main levels of rates of fiscal or parafiscal proceedings, the Government of the charges. In practical terms the incidence Italian Republic and the Commission of of Lit 3 for small packs and Lit 36 for the European Communities presented other packs (which are more often used) oral argument, expanded the arguments is barely a fraction of a lira and is approx­ presented in their written pleadings and imately 0.2 % of the producer price. As replied to questions asked by the Court the consumer price is pratically double of Justice. the producer price the incidence on the competitive capacity of Italian producers The Advocate General delivered his is infinitesimal, as is moreover clear from opinion at the hearing on 26 October a table submitted by the Italian 1978.

"Must Regulation (EEC) No 1619/68 of the Council (as last amended by Regulation (EEC) No 2772/75 (Official Journal L 282 of 1 November 1975, page 56)) and Regulation (EEC) No 95/69 of the Commission be interpreted to mean that they empower the Member States to reserve exclusively to their public authorities the preparation and distribution of bands and labels and in particular must the provision in Article 5 of Regu­ lation (EEC) No 95/69 in accordance with which such bands and labels 'shall bear an official marking laid down by the competent authority' be interpreted to mean that this provision implies that the public authorities have an exclusive right to affix the official marking and to prepare and distribute the labels?"

4 In order to reply to that first question it is necessary to describe the system adopted by the Council for the common organization of the market in eggs and the marketing standards and the detailed rules laid down by the Commission to implement that organization.

5 In order to take due account simultaneously of the objectives laid down in Article 39 and in Article 110 of the Treaty, the stabilization of the market in eggs is to be implemented by complying with the "common rules on competition" which take the form of common quality standards and make no provision for a system of prices and intervention on the internal market of the Community.

BUSSONE v ITALIAN MINISTRY FOR AGRICULTURE AND FORESTRY

6 The marketing standards for eggs, which were deemed necessary to improve the quality of eggs and to facilitate their sale in the interests of producers, traders and consumers, lay down the criteria to be applied for the classi­ fication of eggs (Articles 1 to 13 to Regulation (EEC) No 2772/75), the common provisions relating to packaging (Articles 16 to 22) and the provisions relating to supervision by means of random sampling (Articles 26 to 28).

JUDGMENT OF 30. 11. 1978 — CASE 31/78

10 The discretionary power held by the Member States in this respect by virtue of the aforesaid provisions authorizes them to entrust exclusively to the public authorities the preparation and distribution of bands and labels.

11 The first question should be answered to that effect.

12 The following second question is asked:

"Must the said regulations be interpreted to mean that the Member States may make the issue of bands and labels conditional on payment of a consideration far in excess of the cost of such bands and labels?"

13 That question may be divided into two parts, the first asking whether the regulations authorize the Member States to make the issue of bands and labels conditional on payment of a consideration, the second, if that is the case, raising the problem of the validity of that consideration if the amount is far in excess of the cost of such bands and labels.

19 The sale of the labels is thus directly linked to the introduction of the Community system of supervision intended to improve the quality of eggs and, consequently, facilitate their sale and thus promote the interests of producers, traders and consumers.

20 The answer should therefore be given to the national court that in the absence of any provision in the Community rules relating to the means of financing the costs arising from the supervision the Member States may make the issue of bands and labels conditional on payment of a consideration in respect of that supervision.

21 With regard to the second part of the second question, that is to say the case where the amount of the consideration is far in excess of the cost of the system, the principle must be laid down that whilst the Community provisions leave the Member States free to choose the means of financing the supervision which they require, the choice of the Member States is confined to the strictly necessary objectives of the financing itself.

22 The consideration charged to the authorized packing centres must not exceed the real costs of the supervisory system in question.

23 An excessive financial consideration would be incompatible with the objectives of the common organization of the market as it would affect the competitiveness of Italian producers and would distort the "common rules on competition".

24 Whilst it is inevitable that the cost of undertaking the supervision and issuing labels will not be identical in all the Member States, the consideration charged to the authorized packing centres should not, on the other hand, exceed the costs of the operations in question in each of those States.

29 By reason of its nature and its function in the system of the sources of Community law, therefore, a regulation has direct effect.

30 The direct applicability of a regulation requires that its entry into force and its application in favour of or against those subject to it must be independent of any measure of reception into national law.

31 Proper compliance with that duty precludes the application of any legislative measure, even one adopted subsequently, which is incompatible with the provisions of that regulation.

32 That prohibition is, however, relaxed to the extent to which the regulation in question leaves it to the Member States themselves to adopt the necessary legislative, regulatory, administrative and financial measures to ensure the effective application of the provisions of that regulation.

BUSSONE v ITALIAN MINISTRY FOR AGRICULTURE AND FORESTRY

33 The position is that established by Regulations (EEC) Nos 1619/68 and 95/69, which provide inter alia that "large packs . . . shall be provided with a band or label . . . which shall be issued by or under the supervision of the official agencies ... appointed for the purpose in each Member State ... a list of [which] shall be forwarded to other Member States and to the Commission" (Articles 17 and 26 of Regulation (EEC) No 1619/68) and that the latter shall be provided with "one or more specimens of the band and label" . .. "which may be numbered [and] shall bear an official marking laid down by the competent authority" (Article 5 of Regulation (EEC) No 95/69).

JUDGMENT OF 30. 11. 1978 — CASE 31/78

38 In respect of this question, which raises the problem of whether the Italian legislation is in conflict with the principle of non-discrimination enshrined in Article 7 of the EEC Treaty, it should be observed that that legislation is not applicable on the basis of the nationality of the traders, but on the basis of the location of the authorized packing centres, whether the business is carried on by Italian or non-Italian traders.

39 It should be noted that according to the information contained in the file on the case, the majority of Member States have adopted systems according to which the price of the labels and the costs of the supervision — where such operations are not entrusted to the public authorities — are nevertheless charged to the operators of authorized packing centres.

4c From these factors it follows that a principle such as that on which the relevant Italian legislation is based does not constitute discrimination on grounds of nationality and therefore does not infringe Article 7 of the Treaty.

4i The following fifth question is asked:

"In any case must Regulation (EEC) No 2771/75 of the Council, in particular Article 2 thereof, and Regulations (EEC) Nos 2772/75 of the Council and 95/69 of the Commission be interpreted to mean that a national provision laying down additional and special conditions as compared with those conditions contained in the said regulations may disturb the proper functioning of the organization of the market in eggs and in particular the proper observance, and accordingly the correct application and operation, of marketing standards?"

47 Whilst such a scheme precludes the adoption of any national rules which may hinder, directly or indirectly, actually or potentially, trade within the Community it does not preclude the adoption of national rules where the practical application of the system itself and of its detailed rules has specifically been entrusted to the Member States, while making them responsible — as the Italian legislature has done, subject to the reservation that the amount of the consideration charged should be justified — for establishing a system which complies with the aims and objectives of the regu­ lations on the common organization of the market in eggs.

Costs

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

49 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, the decision as to costs is a matter for that court.

JUDGMENT OF 30 11. 1978 — CASE 31/78

On those grounds,

BUSSONE v ITALIAN MINISTRY FOR AGRICULTURE AND FORESTRY

5. Article 7 of the Treaty prohibiting discrimination on grounds of nationality does not apply to national rules which are not applicable on the basis of the nationality of the traders concerned and which take into consideration solely the location of the commercial activities.

Kutscher Mertens de Wilmars Mackenzie Stuart Donner Pescatore

Sørensen O'Keeffe Bosco Touffait

Delivered in open court in Luxembourg on 30 November 1978.

A. Van Houtte H. Kutscher