C-95/79

JUDGMENT OF 17. 1. 1980 — JOINED CASES 95 AND 96/79

consumption stages, on condition that do not prohibit the unilateral fixing they do not jeopardize the aims or by a Member State of a maximum functioning of the common organi- gross profit margin for the retail of zation of the market in question, in pigmeat or beef and veal which is particular its price system. calculated essentially on the basis of the purchase prices charged at previous marketing stages and which 3. Regulation No 121/67/EEC of the varies according to those prices, Council and Regulation (EEC) No provided that the purchase prices used 805/68 of the Council, on the in the calculation of the profit margin common organizations of the markets are increased by the marketing and in pigmeat and in beef and veal, import costs actually borne by the respectively, both viewed in the light retailer at the supply stage and at the of Regulations Nos 2305/71, 1351/73 stage of sale to consumers and that and 1133/74 as regards pigmeat and the margin is fixed at a level which Regulations Nos 1652/72, 1192/73 does not impede intra-Community and 667/74 as regards beef and veal, trade.

In Joined Cases 95 and 96/79

REFERENCE to the Court under Article 177 of the EEC Treaty by the Tribunal de Première Instance [Court of First Instance], Namur, (Criminal Chamber), for a preliminary ruling in the actions pending before that court between

T H E PROCUREUR DU R O I [Public Prosecutor]

and

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

gives the following

JUDGMENT

Facts and Issues

I — Facts and written procedure (Moniteur Belge of 24 July 1976), providing inter alia as follows : 1. Under the provisions of Article 2(1) and (2) of the Belgian Law on economic Article 1: control and prices, resulting from the Law of 30 July 1971 (Moniteur Belge of 31 August 1971) amending the Decree "The selling prices to the consumer, Law of 22 January 1945 (Moniteur Belge including value-added tax, for beef and of 24 January 1945), the Minister for veal charged by retail butchers may not Economic Affairs may fix maximum exceed the amounts resulting from the prices for products, substances, weighted average purchase price as foodstuffs, goods or animals as well as increased by a maximum gross profit the limit of the profit to be made by any margin of Bfr 22 and value-added tax seller or middleman. calculated in accordance with Article 3".

The Belgian Government has exercised Article 2: that power, in particular as regards the retail of beef and veal and pigmeat. At the date of the facts which form the basis "The selling prices to the consumer, of the main actions, the rules applicable including value-added tax, for pigmeat resulted from the Ministerial Order of 27 charged by retail butchers may not March 1975 (Moniteur Belge of 29 exceed the amounts resulting from the March 1975), as last amended by the •weighted average purchase price as Ministerial Order of 14 July 1976 increased by a maximum gross profit

margin of Bfr 22 and value-added tax, preliminary ruling by the Tribunal de calculated in accordance with Article 3". Première Instance, Neufchâteau, which was required to give a ruling on the validity of the Ministerial Order of 27 2. Mr Charles Kefer, the accused in the March 1975 in relation to Community main action in Case 95/79, and Mr law, and in particular to the above- Louis Delmelle, the accused in the main mentioned Regulation N o 127/67/EEC. action in Case 96/79, are retail butchers in Andenne and Namur respectively. The Tribunal de Première Instance, Criminal proceedings have been brought Namur, called upon to give a ruling on against them before the Criminal the appeal lodged by the two accused Chamber of the Tribunal de Première against the judgment given by its Fifth Instance, Namur, on the charge that, on Chamber, decided in each case to stay 14 October 1976 and 13 April 1977 the proceedings and to refer to the Court respectively, they increased the selling of Justice under Article 177 of the EEC prices to the consumer for beef and veal Treaty a question on the interpretation and for pigmeat so as to exceed the of the Community regulations in maximum gross profit of Bfr 22 per question. kilogram provided for by the Ministerial Order of 27 March 1975. In Case 95/79, the above-mentioned court submitted to the Court of Justice The two accused have not contested the the following question by judgment of 7 facts of the cases and have explained the May 1979: increase in the selling prices by the fact that the gross profit margin of Bfr 22 per kilogram did not enable them to cover "Did the Ministerial Order of 27 March their running expenses and overheads. 1975, fixing the selling price to consumers of beef and veal or of pigmeat, contain an infringement of: Moreover, they claimed that that ministerial order was illegal in relation to Community law and in particular in 1. Regulation (EEC) N o 805/68 of the relation to the provisions of Regulation Council of 27 June 1968 on the (EEC) No 805/68 of the Council of 27 common organization of the market June 1968 on the common organization in beef and veal, in particular, Article of the market in beef and veal (Official 5.3.1; Article 6 (1) (a) and (b) and of Journal, English Special Edition 1968 (I), the regulations fixing the basic price p. 187) and of Regulation No of beef and veal, in particular the 121/67/EEC of the Council of 13 June regulations as implemented by Regu- 1967 on the common organization of the lations : market in pigmeat (Official Journal, English Special Edition 1967, p. 46). — No 1652/72 of 31 July 1972;

Article 5 (1), second indent, and of Emile M. Knops, on behalf of P. Legros, the regulations fixing the basic price acting as Agent, and by the Commission of pigmeat, in particular the regu- of the European Communities, lations as implemented by Regu- represented by Hans Peter Hartvig, lations : acting as Agent, assisted by Jacques Delmoly, members of the Legal Service. — No 2305/71 of 29 October 1971; After hearing the report of the Judge- — No 1351/73 of 15 May 1973; Rapporteur and the views of the Advocate General, the Court decided, by order of 3 October 1979, to join the two — N o 1133/74 of 29 April 1974?" cases for the purposes of the oral procedure and the final judgment and opened the oral procedure without any In Case 96/79, the same court, finding preparatory inquiry. that, as a result of the judgment of the Court of 29 June 1978 in Case 154/77, the Dechmann case, it was necessary to consider that the ministerial order was contrary to Regulation No 121/67/EEC II — W r i t t e n o b s e r v a t i o n s s u b - of the Council on the common organi- m i t t e d u n d e r A r t i c l e 20 of zation of the market in pigmeat, limited t h e P r o t o c o l on t h e S t a t u t e the subject-matter of the reference to the of t h e C o u r t of J u s t i c e Court to the interpretation of Regulation No 805/68 on the common organization of the market in beef and veal and, by The Belgian Government first of all judgment of 30 May 1979, referred to examines the structure of the the Court the following question : Community regulations on the common organization of the markets in beef and veal and pigmeat respectively. With " D o the provisions of the Ministerial regard to the latter common organi- Order of 27 March 1975 fixing the zation of the market, which is mentioned selling price to the consumer of beef and solely in Case 95/79 (Kefer), it observes veal and of pigmeat contain an that at the time when the facts took infringement of Regulation (EEC) No place the market in pigmeat was 805/68 of the Council of 27 June 1968 governed by Regulation (EEC) N o on the common organization of the 2759/75 of the Council of 29 October market in beef and veal?" 1975 and not by Regulation N o 121/67/EEC of the Council of 13 June 1967, as mentioned incorrectly in the 3. Copies of the orders for reference question referred to the Court for a pre- were received at the Court on 15 June in liminary ruling. This is however not of Case 95/79 and on 19 June 1979 in Case practical importance since Regulation 96/79. No 2759/75 is only the codified version of the previous regulation, so that the principles valid for one are also valid for In accordance with Article 20 of the the other. It then sets out the Belgian Protocol on the Statute of the Court of rules following from the Ministerial Justice of the EEC, written observations Order of 27 March 1975, as amended by were submitted in the two cases by the the Ministerial Order of 14 July 1976. Belgian Government, represented by The principal characteristic of the system

The observations lodged by the Belgian Government in Case 95/79 (Kefcr) differ from those lodged in Case 96/79 — concerns solely the sale of beef and (Delmelle) in that they also broach the veal by retailers to the consumer, and problems of the interpretation of the not the wholesale trade; regulation on the common organization of the market in pigmeat. In this respect, the Belgian Government states that the Court has already had occasion to give a — does not impose any retail price specific ruling on a similar question by freeze at a specific level independent means of the judgment of 29 June 1978 of. the market trend and of the in Case 154/77, the Dechmann case, and particular features of certain specific that it is therefore sufficient to refer the situations; national court to that judgment. As regards the question relating to the common organization of the market in beef and veal (which is common to both cases), the Belgian Government recalls — essentially varies in time and space on the development of Community case-law the basis of the sources of supply on the fixing of prices through the chosen by the retailer and of the judgment in the Galli case (Case 31/74), price trend on the markets - the Tasca case (Case 65/75), the SADAM concerned; case (Joined Cases 88 to 90/75) and the Dechmann case (Case 154/77). In paragraphs 18 to 20 of the decision in the latter judgment, the Court stated that — merely fixes a gross profit margin in principle the fixing of a maximum which covers running expenses and profit margin for retailers to charge selling costs and the retailer's profit when selling to the ultimate consumer is and which is adjusted, where not apt to jeopardize the aims or necessary, after consultation of the functioning of a common organization Belgian Commission for Price of the market, whilst specifying that such Control, which includes represen- a margin might nevertheless be tatives of the groups concerned.

The gross profit margin of Bfr 22 per the market in beef and veal and, in kilogram was moreover described as particular, Regulation N o 805/68. reasonable by the Commission in the statement lodged by the latter in the Deckmann case. The common organization of the market in beef and veal aims, by setting up a single market in that product, to stabilize It is therefore necessary to conclude that the markets and to ensure a fair standard national rules of the type in question of living for the agricultural community cannot be considered to be incompatible concerned. For this purpose, Regulation with Regulation (EEC) No 805/68 of No 805/68 contains rules on prices, the Council of 27 June 1968. which are however valid only for the production and wholesale stages, as well as rules intended to ensure the abolition of all obstacles to the free movement of The Commission of the European the products within the Community. Communities observes, first of all, that the only new factors in Joined Cases 95 and 96/79 by comparison with Case 154/77, the Dechmann case, are on the In order to tell whether a maximum one hand, the date of the facts in the gross profit margin fixed nationally for main actions (October 1976 and April the retail trade is compatible with the 1977 respectively in the present cases and rules of the common organization of the a period in 1975 in the Dechmann case) market in beef and veal, it is therefore and, on the other, in the fact that on this necessary to consider its effects on the occasion the questions referred to the free movement of the products. Court concern not only the common organization of the market in pigmeat but also the common organization in The determining factor to take into force in the market in beef and veal. In consideration is, as in the case of view of the fact that neither the national rules in question nor the common pigmeat, to what extent the margin in organization of the market in pigmeat question is fixed at a level calculated to have been fundamentally amended cover the marketing and importing costs between 1975 and 1977, the interpre- borne by the retailer and to ensure fair tation given by the Court in the remuneration for him. In fact, if that Dechmann case remains wholly valid with were not the case, the margin would regard to the market in pigmeat. It only have on the previous marketing stages remains therefore to consider whether the effect of a true maximum price and that interpretation is also applicable to would encourage in particular producers the common organization of the market to export instead of supplying the in beef and veal. national market or else would have the effect of handicapping the sale of imported products.

On the . basis of the preceding I l l — Oral procedure considerations, the Commission proposes that the question referred to the Court for a preliminary ruling should be answered as follows: ' The accused in the main action in Case 96/79, represented by J. M. Van Hille, "Regulations Nos 805/68 and 2759/75 must be interpreted as not prohibiting Advocate of the Ghent Bar, the Belgian the unilateral fixing by a Member State Government, represented by E. Knops, of a maximum gross profit margin for and the Commission of the European the retail of beef and veal or pigmeat Communities, represented by J. Delmoly, which is calculated essentially on the presented oral argument at the hearing basis of the purchase prices charged at on 21 November 1979. the previous marketing stages and which varies according to the trend in those prices, provided that the margin is fixed The Advocate General delivered his at a level which does not form an opinion at the hearing on 13 December obstacle to intra-Community trade". 1979.

Decision

1 By judgments of 7 and 30 May 1979, which were received at the Court on 15 and 19 June 1979 respectively, the Tribunal de Première Instance [Court of First Instance], Namur, (Criminal Chamber), referred to the Court of Justice under Article 177 of the EEC Treaty questions for a preliminary ruling on the interpretation of Regulation (EEC) N o 805/68 of the Council of 27 June 1968 on the common organization of the market in beef and veal (Official Journal, English Special Edition 1968 (I), p. 187) and of Regulation N o 121/67/EEC of the Council of 13 June 1967 on the common organ- ization of the market in pigmeat (Official Journal, English Special Edition 1967, p. 46).

1. Regulation (EEC) No 805/68 of the Council of 27 June 1968 on the common organization of the market in beef and veal, in particular, Article 5.3.1; Article 6 (1) (a) and (b) and of the regulations fixing the basic price of beef and veal, in particular the regulations as implemented by Regu- lations:

— No 1652/72 of 31 July 1972;

— No 1192/73 of 8 May 1973;

— No 667/74 of 28 March 1974;

2. Regulation No 121/67/EEC of the Council of 13 June 1967 on the common organization of the market in pigmeat, in particular, Article 3.4.1; Article 5 (1), second indent, and of the regulations fixing the basic price of pigmeat, in particular the regulations as implemented by Regu- lations :

— No 2305/71 of 29 October 1971;

s Although, within the framework of proceedings brought under Article 177 of the EEC Treaty, it is not for the Court to give a ruling on the compatibility of rules of internal law with provisions of Community law, the Court is competent to supply the national court with any criteria of interpretation coming within Community law enabling that court to determine whether such rules are compatible with the Community rule evoked. It is therefore appropriate to consider the questions which have been referred to this Court 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 and Regulation (EEC) No 805/68 of the Council of 27 June 1968 on the common organization of the market in beef and veal allow a power to continue to exist on the part of the Member States to regulate by means of internal rules selling prices to consumers in the above-mentioned sectors. In view of the fact that these questions are related it is. appropriate to consider them jointly.

6 In this instance, it follows from Articles 1 and 2 of the Ministerial Order of 27 March 1975 to which the national court refers that the national measures in question relate to price formation at the stage of sale to consumers. On the other hand, it is an established fact that the products whose prices are affected by the above-mentioned measures are governed by the common organization established by Regulation No 121/67/EEC in the market in pigmeat and by Regulation (EEC) No 805/68 in the market in beef and veal.

the Community subject to common administration. In order to bring about these single markets, those regulations established a system of rules and a framework for organization in which a central place is held by the "price system" applicable to the production and wholesale stages. These special features of the common organizations of the markets established by Regu- lation N o 121/67/EEC and Regulation (EEC) N o 805/68 are not affected either by the regulations adopted subsequently by the Council and referred to by the national court, which are solely intended to implement the above- mentioned basic regulations by fixing in respect of each period under consideration certain components of their price system or marketing conditions, nor, as regards more particularly Regulation N o 121/67/EEC, by Regulation (EEC) N o 2759/75 of the Council of 2 October 1975 (Official Journal 1975, L 282, p. 1) which merely presents a codified version of Regulation N o 121/67/EEC and of the subsequent amendments thereto.

JUDGMENT OF 17. 1. 1980 — JOINED CASES 95 AND 96/79

calculated essentially on purchase prices as charged at the production and wholesale stages, so as not to affect the functioning of the price system on which the common organization of the market concerned is based.

io This is not however the case where the purchase prices taken into consideration do not take into account marketing and importation costs which the retailer has in fact borne both at the supply stage and at that of sale to consumers or where the gross profit margin itself is fixed at a level which, taking into account the detailed rules for the calculation of purchase prices, is not capable of ensuring that the retailer obtains fair remuneration for his activity. A gross profit margin which does not fulfil these conditions could in fact freeze maximum retail selling prices, and this would be apt to affect at prior stages of marketing the price mechanism resulting from the common organization of the markets or to affect intra-Community trade by an appreciable reduction in imports.

THE COURT,

in answer to the questions submitted to it by the Tribunal de Première Instance, Namur, by judgment of 7 May 1979 in Case 95/79 and 30 May 1979 in Case 96/79, hereby rules:

Regulation No 121/67/EEC of the Council of 13 June 1967 on the common organization of the market in pigmeat and Regulation (EEC) No 805/68 of the Council of 27 June 1968 on the common organization of the market in beef and veal, both viewed in the light of the other regulations mentioned by the national court, do not prohibit the unilateral fixing by a Member State of a maximum gross profit margin for the retail of pigmeat or beef and veal which is calculated essentially on the basis of the purchase prices charged at the previous marketing stages and which varies according to those prices, provided that the purchase prices used in the calculation of the profit margin are increased by the marketing and import costs actually borne by the retailer at the supply stage and at the stage of sale to consumers and that the margin is fixed at a level which does not impede intra-Community trade.

Kutscher O'Keeffe Touffait Mertens de Wilmars Pescatore

Mackenzie Stuart Bosco Koopmans Due

Delivered in open court in Luxembourg on 17 January 1980.