C-237/82

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cheese a control stamp attesting 7. Regulation No 804/68 must be compliance with national rules on interpreted as meaning that it does quality, provided that such require­ not prevent a Member State from ment applies without distinction to requiring cheese producers to become domestic production marketed in the affiliated to an inspection agency Member State concerned and provided that the objectives pursued production intended for export. by that agency are consistent with Nor does Article 34 preclude the Community law and that the adoption of a national rule providing marketing, re-sale, import, export or for samples to be taken, by an offering for export of cheese products inspection agency which subsequently is not reserved exclusively to persons issues a document setting out the affiliated to that agency. results of that inspection, of all cheese products intended for domestic consumption or for export.

In Case 237/82

R E F E R E N C E to the C o u r t u n d e r Article 177 of the E E C T r e a t y by the A r r o n d i s s e m e n t s r e c h t b a n k [District C o u r t ] , T h e H a g u e , for a preliminary ruling in the proceedings p e n d i n g before that c o u r t between

JONGENEEL KAAS BV, Bodegraven, and 14 other plaintiffs,

and

JUDGMENT OF 7. 2. 1984 — CASE 237/82

JUDGMENT

Facts and Issues

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(c) The rules which apply only to (a) In the domestic market: cheese produced in the Netherlands are: the order, the Regulation on Inspections and the Regulation on Levies, adopted Intervention prices for Grana pursuant to the powers laid down in Padano and Parmigiano Reggiano the Decree. Their content is briefly cheeses and storage aids for those summarized below. cheeses and for Provolone and also for cheeses which keep for long periods. 1.2. Main characteristics of the rules Application of monetary compensa­ The production of cheeses other than tory amounts; those which are exhaustively listed in the order is prohibited. The list includes a Prohibition of measures having an number of traditional Dutch cheeses, effect equivalent to quantitative such as Gouda, Edam and Commiessie- restrictions; kaas in various packages, in addition to Cheddar and Feta. Prohibition of State aids (cf. Articles 92 to 94 of the EEC Treaty). There are specific provisions prescribing the fat and water content for each variety of cheese. It is forbidden to (b) In trade with non-member countries : produce cheese which does not comply with those rules. Threshold prices and levies, compensatory amounts; In addition, compliance with the rules is to be proved by the use of stamps and Compulsory use of import and the existence of inspection documents. export licences; All cheese is subject to a system of compulsory inspection. The marketing of products which do not carry a stamp is Payment of refunds on export to prohibited. The inspection documents certain countries at certain times in attest that cheese which has undergone relation to specified cheeses; inspection by sampling complies with the rules. Other measures and international agreements; The Central Agency, a body incorpor­ ated under private law to which all Prohibition of measures having an undertakings producing cheese must be effect equivalent to quantitative affiliated, is to ensure that the rules are restrictions. complied with.

the course of the interlocutory pro- cheese products, rules concerning ceedings that the President of the Arron- the quality of those products, such dissementsrechtbank considered that it as those contained in the legislation was necessary to obtain a preliminary listed in Part 1 of this order? ruling on the interpretation of certain concepts of Community law, in order to (c) If Question (b) is also answered in enable him to determine whether the the negative, must the regulation contested rules were contrary to : mentioned in Question (a) and the articles mentioned in Question (b) (a) Regulation (EEC) No 804/68 of the be interpreted as preventing a Council of 27 June 1968 (Official Member State such as the Journal, English Special Edition 1968 Netherlands from adopting rules (I), p. 176), either because the according to which only persons Member States were no longer affiliated to an inspection agency entitled to intervene in the operation are permitted to manufacture of the market in cheese, which is cheese products on a commercial governed exclusively by Community basis, as provided in Article 12 instruments in the framework of the of the Landbouwkwaliteitsbesluit common organization of the market, Kaasprodukten? or because the national rules interfered with the objectives of the (d) Do general legal principles, in common organization of the market; particular the principle of pro- portionality, to which the plaintiffs (b) Articles 30 and 34 of the EEC refer, have direct effect in a case Treaty and Article 22 of Regulation such as this?" No 804/68 on the free movement of goods; 1.5. Procedure before the Court (c) the principle of proportionality. In accordance with Article 20 of the As a result of those considerations, the Protocol on the Statute of the Court of President of the Arrondissementsrecht- Justice of the EEC, written observations bank referred to the Court of Justice by were submitted by the plaintiffs in the order of 14 September 1982 the main action, represented by B. H. ter following questions: Kuile and H . J . Bronkhorst, Advocates at the Hoge Raad der Nederlanden "(a) Must Regulation (EEC) No 804/68 [Supreme Court of the Netherlands], of be interpreted as preventing a Messrs De Brauw and Helbach, by Member State such as the the Government of the Netherlands, Netherlands from unilaterally represented by F. Italianer, Secretary adopting, with the purpose of General at the Ministry of Foreign promoting sales of cheese and Affairs, and by the Commission of the cheese products, rules concerning European Communities, represented by the quality of those products, such Jean-François Verstrynge, a member of as those contained in the legislation its Legal Department. listed in Part 1 of this order? (b) If Question (a) is answered in the Upon hearing the report of the Judge- negative, must Articles 30 and 34 of Rapporteur and the views of the the EEC Treaty be interpreted as Advocate General, the Court decided to preventing a Member State such as open the oral procedure without any the Netherlands from unilaterally preparatory inquiry. However, the adopting, with the purpose of parties were requested to answer several promoting sales of cheese and questions.

(b) The prohibition of the delivery of It is necessary to combat operations such cheese which has not yet reached the as those affecting the fat and water minimum level of maturity prescribed content, the basic products and by the rules results in serious descriptions. The restrictions remain obstacles to trade and widens the within the limits needed in order to definition of producers subject to maintain the special characteristics of the compulsory registration with the different varieties of cheese. Central Agency so as to include certain traders not previously The State of the Netherlands is also a affected; signatory of the Convention on the Use of Indications of Origin and (c) Certain good quality cheeses may no Designations of Cheese (Stresa Con­ longer be offered for sale or may be vention of 1951). It is also necessary to sold only to be sliced or melted, such take into account the Code of Principles as Emmental in which the holes arc concerning Milk and Milk Products larger than 10 mm, cheese flavoured prepared in the framework of the Food with mustard and diet cheese with a and Agriculture Organization. low salt content.

JUDGMENT OF 7. 2. 1984 — CASE 237/82

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2.4.3. According to the Commission, adopt measures to limit the production there is already a large number of and exportation of cheese products. existing measures or measures which may be adopted on the basis of specific powers delegated to the Community. Accordingly, a collection of rules and a 2.4.3.2. The same consideration applies basic organization exist by reference to to the prohibition of the production and which every foreseeable situation may be marketing of cheese not of the pre­ dealt with. scribed quality, which must in reality be regarded as a measure limiting production and having the same effect as The common organization of the market the withdrawal from the market of is based on the principle of an open certain products, so impinging upon the market to which any producer has free exclusive powers of the Community. access without being at an economic disadvantage. 2.4.3.3. The Commission also considers that the compulsory use of stamps, The diversity of cheese products plays an marks and inspection documents is important part in increasing oppor­ incompatible with the exclusive powers tunities for the disposal of surplus milk. of the Community to adopt the rules needed in order to ensure free access to the market. The prohibition of The promotion of sales could have production or marketing purely because appeared in the common organization of a cheese product does not carry the the market. national stamp also amounts to inter­ ference with free access to the market. The Commission provided further obser­ After analysing the case-law of the vations on that point in its written Court, the Commission concludes that, answers to the questions put by the where there is a common organization of Court. the market, there are two areas in which the Community has exclusive power and the Member States have no power to fill any remaining lacunae, namely: 2.4.3.4. The Community has already laid down rules in relation to licences for import from or export to non-member (a) The power to adopt intervention countries in Regulation No 804/68. measures;

2.4.3.5. Before the national court, the adopt at Community level rules on Netherlands Government referred to the designation; judgment in Case 120/78, REWE- Zentrale, [1979] ECR 649, in order to (b) where the Community has already prove the existence of national powers. exercised its powers in order to That argument is vitiated by fundamental incorporate in the Community errors, including the fact that that system national rules on designation. judgment relates exclusively to restric- tions applicable to imported products (c) where the Community has not and not restrictions on production, exercised its powers and national exports and disposal on the domestic rules on designation which are quite market, the fact that the judgment distinct from Community measures applies only if there are no Community remain in force. rules, the fact that the objectives of Article 39 of the EEC Treaty are not The Commission considers that in the among the mandatory requirements situation outlined in (a), above, the listed in that judgment and, finally, the Member States have relinquished their fact that account must be taken of the powers irrevocably.

The 2.4.3.6. On the basis of those con- Commission however takes the view that siderations, the Commission examines even in those circumstances the exercise whether the Member States have the of those powers may be subject to power to adopt rules on designation. It certain limitations. points out that the purpose of the contested rules is to promote the sale of 2.4.3.7. The Commission takes the view domestic products and not the protection that Article 5 and also Article 40 (3) of of public health, fair trading or the the EEC Treaty, and the need for close protection of consumers. cooperation between the Member States and the institutions of the Community in The Commission cites various spheres, order to ensure the proper functioning of such as the customs nomenclature and the common organization of the market, refunds, in which the Community has require that the Member States should exercised the power to lay down quality inform the competent Community in-

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2.5. Interference with the objectives of law, in particular by the restrictions the common organization of the arising from the need to protect the market proper functioning of the common organization, to respect the fundamental principles of the EEC Treaty such as free 2.5.1. According to the plaintiffs, the movement of goods, and to apply the common organization of the markets general principles of ¡aw. implies an open market, subject to Community intervention measures, to which every producer has free access and The Commission considers whether the with which the Member States may not main instruments of the Netherlands interfere (judgments of 28 November rules run the risk of obstructing the 1978 in Case 83/78, Pigs Marketing proper functioning of the common Board ν Redmond [1978] ECR 2347, of organization of the markets. 26 June 1979 in Case 177/78, Pigs and Bacon Commission ν McCarren, [1979] ECR 2161, and of 26 February 1980 in 2.5.3.1. The restriction of the list of Case 94/79, Vriend, [1980] ECR 327). cheeses

JUDGMENT OF 7. 2. 1984 — CASE 237/82

designed to widen the markets for milk [1975] ECR 181, and of 12 October products cannot work effectively, and 1978 in Case 13/78, Eggers ν Freie Han­ the possibility of increasing consumption sestadt Bremen, [1978] ECR 1935) and through the production of new cheeses is also to the judgment of 24 November also removed. 1982 in Case 249/81 (Commission ν Ireland, [1982] ECR 4005).

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2.6. Question (b) and Articles 22 (2) and difference in treatment between the 19 of Regulation No 804/68 (free domestic trade of a Member State and its movement of goods) export trade (judgments in Cases 15/79, Groenveld v Produktschap voor Vee en Vlees, [1979] ECR 3049, Case 155/80, 2.6.1. The plaintiffs refer to the Oebel, [1981] ECR 1993 and Joined judgment of the Court of 30 October Cases 141 to 143/81, Holdijk, [1982] 1974 in Case 190/73, Officier van Justitie ECR 1299). The Netherlands regulations v Van Haas ter, [1974] ECR 1123, as on quality contain a collection of authority for the premise that any objective rules applicable to exports and quantitative restriction on production domestic trade without distinction. constitutes a measure having an effect equivalent to a restriction on exports. The contested provisions limit pro­ Nor can there be any question of duction by means of rules on the impeding imports in the sense of the materials to be used, methods of judgment in REWE-Zentral. The only production, processing methods and also conditions applicable to imported cheese by the restriction of varieties. are those which relate to public health and fair trading.

The requirement of a minimum naturing period and the fact that products of good quality may not be exported to 2.6.3. The Commission considers that other Member States are also obstacles to exports. Q uestion (c) should be answered in the firmative on several grounds, in view of the considerations cited above.

2.7. Question (c): Compulsory affiliation The Netherlands Government thus considers that neither Regulation No 804/68 nor Articles 30 to 34 of the Treaty prevent a Member State from adopting rules by which the industrial 2.7.1. According to the plaintiffs, the preparation of cheese is to be undertaken Court held in Vriend that the only by producers affiliated to an requirement of affiliation to a body inspection agency. approved by an official authority in order to be able to market, re-sell, import, export or offer for export material for plant propagation was contrary to the principle of an open 2.7.3. The Commission observes that market on which the common organ- the Netherlands stated before the ization of the market in the sector in national court that compulsory affiliation question was based. The rules in this case also applies to traders, because the final are similar and compulsory affiliation by stage of preparation, namely maturing, the producer must also, like compulsory often takes place in their establishments, affiliation by the trader, be regarded as owing to the manufacturers' lack of incompatible with Community law. storage facilities.

The Commission considers that the Court's decision in Vriend must be 2.7.2. According to the Netherlands applied and that accordingly it is for Government, a distinction must be drawn the national court to decide whether between the requirement of affiliation at compulsory affiliation of producers may the marketing stage and the requirement make it impossible for cheese to be of affiliation at the stage of production. marketed, re-sold, imported or exported. The Netherlands legislature took ac- count of the Court's ruling in Vriend in limiting the scope of the rules to producers alone. 2.8. Question (d): General principles of law: direct effect

protect rights based on the Treaty and to unconditional obligations as defined by contest legislative or administrative the Court in its case-law on direct effect. measures of a Member State which encroach upon those rights. The same question was raised in Case 181/82, Roussel and Others [1983] ECR 3849, decided by the Court on 29 Even if the Court were to consider that November 1983. the Netherlands authorities still had the power to adopt provisions in order to promote the sale of cheese, the auth­ orities would be bound to respect the 2.8.3. The Commission considers that principle of proportionality in so far as this question may be interpreted in two free movement and the open market in different ways : those products, guaranteed by Regu­ lation No 804/68 and the Treaty itself, (a) If the purpose of the question is to may be limited by national measures only ascertain whether individuals may in so far as such measures are strictly rely upon general principles of law in necessary to attain the objectives which an action before a national court in the national authorities are still entitled which Community measures are to pursue. called in question, the Commission would answer in the affirmative.

JUDGMENT OF 7. 2. 1984 — CASE 237/82

Commission considers that it should be III — Oral p r o c e d u r e possible to rely on those general principles of law where national law acts At the sitting on 7 June 1983 oral as the secular arm of Community law. argument was presented by the That condition is fulfilled where national following: Mr Ter Kuile and Mr Bronk- measures are used in order to attain the horst, for the plaintiffs in the main objectives of the European Treaties. In action; Mr Keur, acting as Agent, and this case, it should be possible for the Mr Klomp, in his capacity as an expert, principle of proportionality to be relied for the Netherlands Government; and upon, since the national measure in Mr Verstrynge, for the Commission of question is intended to attain the the European Communities. objectives of Article 39 of the EEC The Advocate General delivered his Treaty. In that sense, the principle has opinion at the sitting on 25 October direct effect. 1983.

Decision

1 By o r d e r of 14 September 1982 which was received at the C o u r t o n 22 September 1982, the President of the Arrondissementsrechtbank [District C o u r t ] , T h e H a g u e , submitted for a preliminary ruling u n d e r Article 177 of the E E C T r e a t y four questions concerning the interpretation of Regulation (EEC) N o 8 0 4 / 6 8 of the Council of 27 J u n e 196.8 o n the c o m m o n o r g a n i z - ation of the m a r k e t in milk and milk products (Official J o u r n a l , English Special Edition 1968 (I), p. 176) and Articles 30 and 34 of the E E C T r e a t y in o r d e r to determine w h e t h e r N e t h e r l a n d s legislation on the p r o d u c t i o n of cheese is compatible with those provisions.

5 Those rules were contested by the plaintiffs in the main action, who are all wholesale dealers in cheese, on the ground that they infringe, in a number of ways, Regulation N o 804/68 on the common organization of the market in milk and milk products and Articles 30 and 34 of the EEC Treaty which are concerned with measures having an effect equivalent to quantitative restrictions on imports and exports. The plaintiffs applied for an interlo­ cutory order to the President of the Arrondissementsrechtbank who submitted a reference to the Court for a preliminary ruling on the interpret­ ation of those provisions. The questions contained in the reference are as follows :

(a) Must Regulation (EEC) N o 804/68 be interpreted as preventing a Member State such as the Netherlands from unilaterally adopting, with the purpose of promoting sales of cheese and cheese products, rules concerning the quality of those products, such as those contained in the legislation listed in Part 1 of this order?

(b) If Question (a) is answered in the negative, must Articles 30 and 34 of the EEC Treaty be interpreted as preventing a Member State such as the Netherlands from unilaterally adopting, with the purpose of promoting sales of cheese and cheese products, rules concerning the quality of those products, such as those contained in the legislation listed in Part 1 of this order?

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(c) If Question (b) is also answered in the negative, must the regulation mentioned in Question (a) and the articles mentioned in Question (b) be interpreted as preventing a Member State such as the Netherlands from adopting rules according to which only persons affiliated to an inspection agency are permitted to manufacture cheese products on a commercial basis, as provided in Article 12 of the Landbouwkwaliteitsbesluit Kaas- produkten?

9 In order to reply to that question it is necessary to examine the functioning of the common organization of the market in cheese as provided for by Regulation No 804/68. The common organization of the market does not in

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its present state contain any rule on the designation and quality of cheese. Nor does it establish an intervention system for cheese, except in the case of Grana-Padano and Parmigiano-Reggiano. However, Provolone and long- keeping cheese benefit from certain market-support measures which take the form of aids for private storage. Import levies and export refunds are collected in dealings with non-member countries. The system thus established therefore differs from other organizations of the market which have as their purpose to support the market by maintaining prices at a given level through intervention buying or, more indirectly, by the fixing of minimum quality criteria.

10 As far as the powers of the Member States are concerned, the plaintiffs in the main action contended that the Member States may not adopt measures which pursue the same objective as the common organization of the market, in particular as regards sales promotion. For its part, the Commission took the view that the restriction of the list of authorized cheeses encroaches upon the exclusive powers of the Community to lay down rules concerning freedom of access to the market. The prohibition of the production and marketing of cheese not exhibiting the prescribed characteristics amounts, it claims, to a measure limiting production which has the same effect as an intervention measure and therefore comes within the scope of the Community's powers.

13 However, the fact that the legislation in question makes no mention of the designation and quality of cheese does not mean that the Community has consciously and of necessity decided to impose on the Member States in that sector an obligation to adhere to a system of absolute freedom of. production. In the absence of any rule of Community law on the quality of cheese products the Court considers that the Member States retain the power to apply rules of that kind to cheese producers established within their territory. That power extends not only to rules considered necessary for the protection of the consumer or public health but also to rules which a Member State may wish to enact for the purpose of promoting the quality of domestic production. Such rules cannot however discriminate against imported products or hinder the importation of products from other Member States. Finally, it must be pointed out that national rules on quality make it possible, pending the adoption of Community rules, to achieve the objectives laid down by Article 39 of the EEC Treaty and by the common organization of the market and to give specific form to the measures already adopted by the Community.

16 Accordingly, in the light of all the foregoing considerations, the answer to the first question must be that Regulation No 804/68 is to be interpreted as meaning that, in the absence of Community rules, a Member State may unilaterally adopt, with the purpose of promoting sales of cheese and cheese products, rules concerning the quality of cheeses produced within its territory including a ban on the production of cheeses other than those exhaustively listed.

Second question relating to A r t i c l e s 30 and 34 of the EEC Treaty

(a) Measures designed to improve quality

17 The second question seeks in substance to ascertain whether Articles 30 and 34 of the EEC Treaty are to be interpreted as meaning that a Member State may unilaterally adopt, with the purpose of promoting sales of cheese and cheese products, rules intended to improve the quality of domestic production together with rules on the compulsory use of stamps, marks or inspection documents.

18 The plaintiffs in the main action and the Commission contended that a national measure designed to improve the quality of domestic production and thereby increase the sale of such products was capable of placing imports at a disadvantage and therefore constituted a measure having an effect equivalent to a quantitative restriction on imports.

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22 With regard to that argument, the Court must state that it has repeatedly held (in particular in its judgment of 1 April 1982 in Joined Cases 141 to 143/81 Holdijk [1982] ECR 1299) that Article 34 of the Treaty concerns national measures which have as their specific object or effect the restriction of patterns of exports and thereby the establishment of a difference in treatment between the domestic trade of a Member State and its export trade, in such a way as to provide a special advantage for national production or for the domestic market of the State in question. That is not the case, however, where certain provisions lay down minimum standards of

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quality for cheese production, without making any distinction as to whether the cheese is intended for the domestic market or for export.

23 It must also be emphasized that Article 34 does not have the effect of exempting producers from any rules which may, by affecting the conditions of production, have an impact on the volume or the cost of domestic production. A Member State may legitimately pursue a policy based on quality in order to promote sales even if that policy exposes its producers to the risk of price competition from the producers of other Member States who are not bound by the same standards of quality.

(b) Compulsory use of stamps, marks or inspection documents

24 In the Commission's view the compulsory use of stamps, marks or inspection documents may make exports to other Member States or to non-member countries more difficult or even impossible. The Netherlands Government, however, contends that no special inspection is prescribed and no inspection document is required on the exportation of cheese products. The products merely undergo an inspection by sampling and the results thereof are set out in a certificate.

29 The third question seeks in substance to ascertain whether Regulation No 804/68 is to be interpreted as prohibiting the Member States from requiring cheese producers to become members of an inspection agency.

30 The plaintiffs in the main action refer to the judgment, of the Court of 20 February 1980 in Case 94/79 Vriend [1980] ECR 327 in which the Court held that the requirement of affiliation to a body approved by official authority in order to be able to market, re-sell, import, export or offer for export material for plant propagation was contrary to the principle of an open market on which the common organization of the market in the sector in question was based. The relevant legislation in this case is, in the plaintiff's view, similar to that which was at issue in the Vriend case and compulsory registration by the producer must therefore be regarded as incompatible with Community law.

31 According to the Netherlands Government, a distinction must be drawn between the requirement of affiliation at the marketing stage and the requirement of affiliation at the production stage. In that regard, the Netherlands legislature took account of the Court's ruling in the Vriend case in limiting the scope of the rules to producers alone. It is essential to provide for adequate supervision of quality standards and, with that end in view, the Netherlands opted in favour of compulsory affiliation to a body incorporated under private law.

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32 The Commission observes that compulsory affiliation applies also to traders, because the final stage of preparation, namely maturation, often takes place in their establishments, owing to the manufacturers' lack of storage facilities. The Commission considers that it is for the national court to decide, in the light of the Vriend judgment, whether compulsory affiliation by producers may make it impossible for cheese to be marketed, re-sold, imported or exported.

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the production of cheese or in processes assimilated to production, such as maturation.

37 The answer to the third question must therefore be that Regulation No 804/68 is to be interpreted as meaning that it does not prevent a Member State from requiring cheese producers to become affiliated to an inspection agency provided that the objectives pursued by that agency are consistent with Community law and that the marketing, re-sale, import, export or offering for export of cheese products is not reserved exclusively to persons affiliated to that agency.

F o u r t h q u e s t i o n r e l a t i n g to t h e g e n e r a l p r i n c i p l e s of C o m m u n i t y law

38 The fourth question seeks in substance to ascertain whether the Member States, where they are empowered to lay down rules concerning the quality of cheese, are bound by the general principles of Community law and in particular by the principle of proportionality.

39 In view of the answers given to the preceding questions, and in particular to the third question, it is unnecessary t o give a separate answer to this question.

1. Regulation No 804/68 must be interpreted as meaning that, in the absence of Community rules, a Member State may unilaterally adopt, with the purpose of promoting sales of cheese and cheese products, rules concerning the quality of cheeses produced within its territory and including a ban on the production of cheeses other than those exhaustively listed.

2. Articles 30 and 34 of the EEC Treaty must be interpreted as meaning that a Member State may unilaterally adopt, with the purpose of promoting sales of cheese and cheese products, rules which, whilst leaving imported products unaffected, are intended to improve the quality of domestic production so as to make it more attractive to consumers, and rules on the compulsory use of stamps, marks or inspection documents, provided that no distinction is drawn according to whether the cheese is intended for the domestic market or for export.

3. Regulation No 804/68 must be interpreted as meaning that it does not prevent a Member State from requiring cheese producers to become affiliated to an inspection agency provided that the objectives pursued by that agency are consistent with Community law and that the marketing, re-sale, import, export or offering for export of cheese products is not reserved exclusively to persons affiliated to that agency.

Mertens de Wilmars Koopmans Bahlmann Galinot

Mackenzie Stuart O'Keeffe Bosco Due Everling

Delivered in open court in Luxembourg on 7 February 1984.