C-232/78

JUDGMENT OF 25. 9. 1979 — CASE 232/78

Accession, a national organization of The fact that after the expiration of the market must no longer operate in the periods referred to above the such a way as to prevent the Treaty Community has not yet adopted provisions relating to the elimination measures intended to regulate the of restrictions on intra-Community market in an agricultural product is trade from having full force and not a sufficient justification for the effect. The expiration of the time- maintenance by a Member State of a limits for the transition implies national organization of the market therefore that those matters and which includes features which are sectors specifically assigned to the incompatible with the requirements of Community are the responsibility of the Treaty relating to the free the Community so that, although it is movement of goods. still necessary to take special measures, a decision to adopt them can no longer be made unilaterally by 4. A Member State cannot under any the Member States concerned; they circumstances unilaterally adopt, on must be adopted within the its own authority, corrective measures Community system which is designed or measures to protect trade designed to guarantee that the general public to prevent any failure on the part of interest of the Community is another Member State to comply with protected. the rules laid down by the Treaty.

In Case 232/78

Commission of the European COMMUNITIES , represented by its Legal Advisers, R. Béraud and P. Kalbe, acting as Agents, with an address for service in Luxembourg at the office of Mario Cervino, Jean Monnet Building, Kirchberg, applicant, v

gives the following

JUDGMENT

Facts and Issues

I — Facts and procedure Trades Board] (hereinafter referred to as "the Board").

1. Since there is no common organ­ ization of the market in mutton and Complaints from British trade circles and two notes from the Permanent Rep­ lamb regulatory measures for this market resentative of the United Kingdom are adopted in France on a national level. accredited to the European Communities dated 10 January and 28 February 1978 addressed to the Commission (Annexes I In the first place a number of aids are and II to the application) indicate that granted to groups of sheep rearers as France has continued to apply these part of the "plan for the rationalization national import arrangements after the of sheep rearing". end of 1977 to the importation of mutton and lamb from the United In the second place, having regard to the Kingdom. appreciable influence exerted by imports on the formation of market prices in France, efforts are made to stabilize 2. The Commission, by a letter bearing domestic prices by means of a system of the reference SG(78) D/1245 dated restrictions on the importation of meat 2 February 1978, which the Permanent coming from non-member countries and Representation of France to the also from new Member States including European Communities received on the United Kingdom. This system is 3 February 1978, invited the French administered by the Office National Government to give its observations on Interprofessionnel du Bétail et des this matter within a period of one month Viandes [National Cattle and Meat from the date of receipt of that letter.

The Commission in its application 3. Since the Commission was of the describes the system set up by the French opinion that the measures retained in Republic to restrict the importation of force by the French Republic did not mutton and lamb in the following words: comply with the provisions of the EEC Treaty, it brought an action on 23 Oc­ "1. Imports of frozen mutton and lamb tober 1978 against the French Republic are in principle prohibited subject to in respect of its failure to fulfil its certain exceptions. obligations under Articles 12 and 30 of the EEC Treaty. 2. The system applied to imports of live animals and also to fresh and re­ frigerated mutton and lamb is based The application was lodged in the Court on a 'threshold' price protected by a Registry on 25 October 1978. system of bans on imports and of 'surcharges' ('reversements'). It is implemented by the grant or refusal Upon hearing the report of the Judge- of domestic import licences. Rapporteur and the views of the Although no maximum limit is Advocate General the Court decided to imposed the Board issue importers open the oral procedure without any only with 'allocation certificates' preparatory inquiry. ('certificats d'imputation') drawn on

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is incompatible with the provisions of the 3. In addition the Board imposes a EEC Treaty on the free movement of 'surcharge' ('reversement') on goods, namely with Articles 12 and 30 imports of live animals for slaughter thereof. and of fresh or refrigerated mutton and lamb carcases the amount of which varies according to the domestic quoted reference price of After the transitional period provided for sheep on the French market. The by the EEC Treaty the application of surcharge is fixed at six different flat national measures derogating from the rates according to the weekly level rules on the free movement of goods can of the quoted price. no longer be justified — in trade with any Member State — either by the absence of any common organization of the market (cf. Case 68/76, Commission 4. The level of the threshold price as of the European Communities v French well as the amounts of the sur­ Republic [1977] 1 ECR 515) or by their charges are periodically adjusted to incorporation in a national market the trend of rearers' production organization in the products in question costs. The increase in the level of the (cf. Case 48/74, Charmasson v Minister surcharges paid by importers has for Economic Affairs and Finance (Paris) been greater than that of the [1974] 2 ECR 1383). threshold prices, because it has taken into account part of the fall in the value of the currencies of the countries exporting sheep in relation According to the Commission, to the French franc so as to lessen restrictions on imports of mutton and the effects of the absence of any lamb from the United Kingdom could no specific system of monetary longer be justified under Article 60 (2) of compensation in the French organ­ the Act of Accession after the end of ization of the market." 1977.

The Government of the French Republic The fact that that is the proper inter submits in its defence that in relation to pretation to be given to Article 60 (2) of the United Kingdom the provisions of the Act of Accession is confirmed by a the Treaty of Rome must be construed in comparison between that provision and the light of the special wording of the Article 45 of the Treaty of Rome, which Act of Accession. is the corresponding provision. Unlike Article 45 of the Treaty of Rome, Article 60 (2) of the Act of Accession does not provide for any transitional arrangements and does not refer to any concept of Contrary to what the Treaty of Rome time-limits.

A "the dates, time-limits and special comparison between Article 60 (2), provisions" provided for in that Act which is a "special provision", and the (Article 9 (2)), but no transitional period. other special provisions provided for by Consequently the case-law of the Court the Act of Accession, especially Articles of Justice as laid down in the Char 54 and 64 and Protocol No 18 on the masson case cannot be applied to the very import of New Zealand butter and different situation resulting from the Act of Accession. cheese, confirm that what has just been said is well founded. This comparison in fact makes it clear that if the special provision is intended to continue without being subject to any condition other than Article 60 (2) of the Act of Accession is the one which it stipulates itself, there is an example of the application of the no mention of the period within which it concept of the "special provision" to is to be implemented.

They are continue until the Community should as follows: have replaced them with a common organization. This was not a waiver of the transitional nature of those provisions but an acknowledgement that (2) The home production of mutton and it was necessary to find .;pecific solutions lamb is not sufficient to meet home to exceptional situations. demand;

(d) The stable production of home­ provision allows Member States to reared mutton and lamb in France maintain, without any fixed temporal presents a contrast to the wide limitation, obstacles to the free seasonal variations found on the movement of certain agricultural markets of the other producers. products, which is the central issue in this case, is posed in exactly the same terms as in the two cases mentioned above. The system set up by the French auth­ orities, which is operated by reckoning from the threshold price, makes it The Government of the French Republic possible to avoid serious disturbances of decided not to deliver a rejoinder. the market by sudden seasonal fluc­ tuations adversely affecting producers' earnings and stable consumer prices. In all respects this system is comparable to the mechanisms provided for by the rules IV — Oral procedure in respect of agricultural products of which there is a shortage in the EEC. At the hearing on 14 June 1979 the Commission, represented by R. Béraud, Taking into account the mechanisms of and the Government of the French the organization of the market in mutton Republic, represented by N. Museux, and lamb in France the existing presented oral argument. provisions relating to imports form the principal part without which that organ­ ization would cease to serve any useful During the hearing the Commission purpose for maintaining the standard of amended its conclusions and, having living of producers who for the most part regard to the time-limits laid down in are located in less-favoured areas. The Articles 35, 36 and 42 of the Act of abrupt disappearance of this organization Accession, requested the Court to of the market without any safeguards declare that the French Republic had would inflict on them irreversible failed to fulfil its obligations under damage and many farmers would be Articles 12 and 30 of the EEC Treaty, forced out of business. first, since the date of accession, as far as concerns quantitative restrictions on imports as for example the closing of the The Commission in its reply decided not French frontier to mutton and lamb from to submit a detailed analysis of the the new Member States — secondly, as

2 The Commission, with reference to the judgment delivered by the Court on 29 March 1979 in Case 231/78, Commission of the European Communities v United Kingdom of Great Britain and Northern Ireland, [1979] ECR, during the proceedings in this case, amended its conclusions during the oral procedure and requested the Court, with due regard to the idea underlying the judgment, to declare that the national system for imports of mutton and lamb maintained by the French authorities was incompatible with Articles 12 and 30 of the Treaty, in certain respects as from 1 July 1977, in other respects as from 1 January 1975 and finally, in yet other respects, from the date of accession. In the opinion of the Commission it follows from the

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above-mentioned judgment that only the new Member States were entitled to rely on the provisions of Article 60 (2) of the Act of Accession and that consequently, as far as the original Member States are concerned, it is with reference to the dates laid down in Articles 35, 36 and 42 of the Act of Accession that the compliance with the Treaty of restrictions on imports applicable to products coming from a new Member State should be determined.

3 The amended conclusions submitted by the Commission during the hearing are inadmissible inasmuch as they do not comply with the provisions of Article 38 of the Rules of Procedure. As provided for in that provision the parties are to state the subject-matter of the dispute in the document instituting the proceedings. Even though Article 42 of the Rules of Procedure allows fresh issues to be raised in certain circumstances a party may not alter the actual subject-matter of the dispute during the proceedings. Consequently the substance of the application must be examined solely with reference to the conclusions contained in the application instituting the proceedings, that is to say to those claims relating to the period subsequent to 1 January 1978.

6 The French Government does not dispute the fact that this system is incompatible with the Treaty provisions relating to the elimination of obstacles to the free movement of goods within the Community. However, with a view to justifying the maintenance of this system and its application to imports of mutton and lamb from the United Kingdom it puts forward in substance three arguments. First it emphasizes the serious social and economic effects on the economy of certain economically less-favoured areas for which sheep-rearing is an important source of wealth, of discontinuing the national organization of the market. Secondly, it draws attention to the progress made in the work being carried out with a view to setting up a common organization of the market in mutton and lamb and stresses the harmful effects of interposing a phase of free trade between the discontinuance of the national organization and replacing it by a common organization. Finally it points to the inequality in the field of competition deriving from the fact that it would have to abolish its own organization of the market even though in the United Kingdom a national organization of the market based on the system of "deficiency payments", which results in subsidizing exports of mutton and lamb to France, would remain intact in the sector under consideration.

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8 Consequently it is for the competent institutions and for them alone to adopt within the appropriate periods the requisite measures with a view to finding, in a Community context, a comprehensive solution of the problem of the market in mutton and lamb and of the special difficulties which arise in this connexion in certain areas. Nevertheless, the fact that this work has not yet been successful is not a sufficient justification for the maintenance by a Member State of a national organization of the market which includes features which are incompatible with the requirements of the Treaty relating to the free movement of goods, such as bans on imports and levying dues on imported products, under any designation whatsoever.

9 The French Republic cannot justify the existence of such a system with the argument that the United Kingdom, for its part, has maintained a national organization of the market in the same sector. If the French Republic is of the opinion that that system contains features which are incompatible with Community law it has the opportunity to take action, either within the Council, or through the Commission, or finally by recourse to judicial remedies with a view to achieving the elimination of such incompatible features. A Member State cannot under any circumstances unilaterally adopt, on its own authority, corrective measures or measures to protect trade designed to prevent any failure on the part of another Member State to comply with the rules laid down by the Treaty.

10 The Court must therefore conclude that the national organization of the market in mutton and lamb maintained by the French authorities is incompatible with the Treaty inasmuch as it includes the fixing of a threshold price protected by a system of import bans and the levying of a due on imports of mutton and lamb coming from another Member State. It should be emphasized that this finding does not prevent the French authorities from adopting, until a common organization of the market is established, any measure granting aid for the benefit of the sector under consideration, of such a kind that it is compatible with the provisions of the Treaty.

hereby:

1. Declares that by continuing after 1 January 1978 to apply its restrictive national system to the importation of mutton and lamb from the United Kingdom the French Republic has failed to fulfil its obligations under Articles 12 and 30 of the EEC Treaty;

2. Orders the defendant to pay the costs.

Kutscher Mackenzie Stuart Pescatore

Sørensen O'Keeffe Bosco Touffait

Delivered in open court in Luxembourg on 25 September 1979.