C-136/86

BNIC is an inter-trade organization concerned with cognac wines and spirits which was established pursuant to a Minis- The Court is told that this is not an isolated terial Order of 5 January 1941. That order case. 465 growers have refused to pay the was subsequently amended from time to levy. One district court in the Cognac area time. By Article 1 of Ministerial Order of 14 ruled in favour of BNIC; five such courts November 1960, as replaced by the accepted that the levy was not payable for provisions of Article 1 of an Order of 18 reasons similar to those advanced by Mr February 1975, BNIC is composed of Aubert. The tribunal d'instance de Saintes persons representing wine-growers and before which the claim against Mr Aubert dealers, delegates from wine-growers and came has referred two questions to the dealers and certain other allied trades. Court pursuant to Article 177 of the EEC Although the delegates are proposed by Treaty, namely: their respective trade organizations, all members of BNIC are appointed by the Minister for Agriculture. Certain government officials are required to attend meetings of BNIC and may participate in a consultative capacity. The proceedings of '(1) Are provisions establishing production BNIC are presided over by an appointee of quotas consisting of a marketing quota the Minister for Agriculture, who also and a storage quota compatible with appoints a government commissioner ('the the provisions of Article 85 of the Commissioner'). By Article 4 of the 1960 Treaty of Rome in so far as they are Order it is provided that the Commissioner intended to limit the production of a shall attend meetings of BNIC and its product in order to maintain its permanent committee. He may either give quality? his assent to decisions adopted or submit

them to the Minister for approval. There is The referring court finds that there was a no provision in this article for him to make general meeting of BNIC on 18 October any other form of order. 1979. The minutes of the ordinary general meeting show that the Production Committee of BNIC had discussed a draft document relating to the 1979/80 season, a draft which was finalized by the Director of BNIC (who is a salaried official of BNIC). Discussions had taken place with officials of By Law N o 75-600 of 10 July 1975, as the Ministry and, it seems, with the amended by Law N o 80-502 of 4 July 1980, Commissioner. A maximum yield of 10 agreements concluded by recognized hectolitres of pure alcohol per hectare, a inter-trade organizations such as BNIC can marketing quota of 4.5 hectolitres of pure (where they are designed to promote alcohol per hectare (adjusted for young or matters such as the quality of goods, the new growers), a storage quota for cognac, sale of products and the application, subject variable according to the product, and a to State control, of marketing rules, prices marketing ceiling of 8.5 hectolitres per and conditions of payment) be given hectare in Grande Champagne and 8 binding effect by the Minister with the hectolitres per hectare in other crus were result that they govern in the production proposed. For each hectolitre of pure zone in question all members of the trades alcohol over 4.5 hectolitres (adjusted for constituting the inter-trade organization. By young and new growers) a levy ('cotisation Article 3 of the law, such organizations may financière') of FF 300 per hectolitre up to charge all members of the trades consti- the marketing ceiling was fixed. Over the tuting them a levy resulting from the marketing ceiling there was to be a agreements as made binding. 'sanction' of FF 3 000 per hectolitre of pure alcohol sold and for any excess of production over the maximum yield a 'sanction' of FF 1 500 per hectolitre. The Commissioner expressed his approval of all the proposals save as to the maximum yield of 10 hectolitres per hectare, but the For the making of such an agreement ordinary general assembly adhered to this BNIC's Rules of Procedure, adopted on 19 figure. June 1978, contemplate the following procedures: (a) internal negotiations between members of each of the two 'families' of growers and dealers followed by a meeting of each of the groups; (b) the preparation of a draft agreement or proposal which is put before the ordinary general assembly of BNIC; (c) if three- quarters of the members of that assembly agree to do so, an extraordinary general assembly is convened which debates the The. matter then came before the extraor- draft agreement and hears reports from the dinary general assembly when the families two families as to their attitude; (d) if the reported their agreement with the proposal. two families are in agreement then the The Commissioner proposed that the word extraordinary general assembly asks for the 'sanction' should be replaced by ' l e v / agreement to be made binding by the ('cotisation'). It was decided that the Minister. agreement would be signed by the heads of

the families and the Director, after the On 23 November 1979, BNIC adopted an Commissioner had signed his decision for inter-trade agreement whereby it was the marketing year, so long as there were agreed 'in accordance with Article 9 of the no more than drafting changes to the terms government commissioner's decision' that a approved, which I have summarized. levy was to be charged for the same period, on the same basis of assessment, at the same rates and for the same purpose as the levy provided for in the decision. By Article 5 of that agreement, 'BNIC shall be responsible for assessing and recovering the sums due On 29 October 1979 the Commissioner and for keeping accounts in respect of the adopted the decision fixing the maximum operations to implement the above articles'. yield at 10 hectolitres of pure alcohol per hectare and the production quota as consisting of a marketing quota of 4.5 hectolitres of pure alcohol per hectare plus a storage quota of the same amounts as those proposed in the draft agreed by the assembly for the various kinds of cognac. The inter-trade agreement was made Article 9 of his decision provided that binding on all relevant traders in the area by 'exceptionally and solely for the marketing Ministerial Order of 2 January 1980 year 1979/80 a levy shall be introduced for pursuant to Law No 75-600 of 10 July the financing of measures for the organ- 1975. ization of the market in Cognac wines and spirits and in particular for the study and identification of markets (other than for cognac and Pineau des Charentes) for the musts and wines for the specialized white vineyards of the Cognac Delimited Region'. The levy was to be at the rate of FF 300 per Although Mr Aubert is principally hectolitre of pure alcohol for any quantity concerned to resist payment of the levy, it marketed in excess of 4.5 hectolitres of pure seems to me from the text of the order for alcohol per hectare, adjusted for young and reference that in the proceedings before the new growers, up to the maximum limit of 8 national court he is attacking the legality hectolitres per hectare or 8.5 hectolitres per both of the marketing and storage quotas hectare för Grande Champagne. Above this and the levy; the questions put by the a supplementary levy of FF 3 000 per tribunal cover both matters. hectolitre of pure alcohol was to apply.

The first question posed by the national it concerned wines and musts to be used for court is directed to whether the intention to distillation. These are agricultural products limit the production of a product in order to within Article 38 (1) of, and Annex II to, maintain its quality is enough to make the the Treaty. By virtue of Article 42 of the arrangements compatible with Article 85; Treaty, Article 85 is applicable to them only the second to whether the levy based on to the extent determined by the Council. provisions incompatible with the Treaty Anicie 2 of Council Regulation No 26 (that is on the footing that they are not (Official Journal, English Special Edition, outwith the prohibition in the article merely 1959-62, p. 129) (which applies certain because of the intention to maintain quality) competition rules to the production of and is itself incompatible with the Treaty. The trade in agricultural products) excludes such questions have, however, been treated as agreements, decisions and practices as form raising other issues which underlie the an integral part of a national market organ- questions posed. ization or are necessary for attainment of the objectives set out in Article 39 of the Treaty. The present inter-trade agreement, it is said, relates to an agricultural product (wine and must) within the framework of such a national market organization; the levy is intended to assist the organization to BNIC has explained the difficulties faced by attain the aims set out in Article 39 in that it growers and dealers in the Cognac region is intended to finance a programme of due to a considerable increase in the area research and study into new outlets. The under cultivation of white wine used for marketing quota is no more than a point of cognac between 1972 and 1977 and the reference for the assessment of the levy. falling or levelling off of sales and the over- production which led to the imposition of quotas for the 1975/76 marketing year and to the imposing of a levy for 1979/80. It was necessary, it is said, to diversify in order to protect the large number of persons involved in or in connection with the production and marketing of a product of great economic importance to the region. This argument cannot, in my view, be accepted. It is plain that the inter-trade agreement and the Commissioner's decision of 1979 were, as was the Commissioner's decision imposing quotas in 1976, concerned with spirits entitled to the These difficulties may explain what was registered designation of origin 'Cognac'. done; they cannot in themselves take The quotas and the levies were both conduct, otherwise within Article 85 of the directed to spirits which, in Annex II to the Treaty, outside it. Treaty, are expressly excluded from the category of agricultural products. The fact that the proceeds of the levy were to be used in part to study outlets for wine and must from the Cognac region cannot affect that conclusion. The subject matter of the It is then argued that Article 85 (1) does not agreement thus falls within Article 85 of the apply to the agreement reached in so far as Treaty.

An agreement to adopt quotas of the kind to be found here, supplemented by a levy BNIC contends that provisions of the kind 'based on' (as the reference states) and in question were not within Article 85 (1) payable for exceeding those quotas, would because there was no agreement between in my view plainly be within that article. undertakings or associations of undertakings T h e principal object seems to have been to or any concerted practice. The inter-trade limit quantities reaching the market and to agreement was made by a body of a semi- keep up prices. Whether its intention was administrative law nature and springs from also to maintain quality is less evident from the regulating power exercised by the the papers though this is a matter for the Commissioner. It does not, however, argue national court. However, even if the this matter in depth but leaves it to the Court. intention of the provisions is to limit production in order to maintain quality that does not of itself take the provisions out of Article 85 (1). It might be a reason for the Commission to grant an exemption under Article 85 (3) but in this case the The tribunal says: 'It should be noted that arrangements made were not notified and those quotas are fixed by decision of the the Commission was not asked to grant government commissioner and not, as in the such an exemption. It is perhaps, as the case of the fixing of a minimum purchase Commission contends, unlikely that an price for cognac spirits, by a mere agreement imposing production quotas and inžer-trade agreement extended by an inter- a levy would be exempted within Article 85 ministerial decree. The purpose of an

It is to be noted, however, that Article 4 of the Order of 1960 provides that the It may be that such agreement is to be Commissioner may give his assent to treated as conditional on the Commis- 'decisions' taken or submit them to the sioner's assent so that it is not finally Minister. That contemplates that the binding. The reality is, however, if the proceedings start with a 'decision' of BNIC. minutes are accurate, that the draft orig- If the Commissioner approves this (rather inated within BNIC. The proposals came than remitting it directly to the Minister) from its members. BNIC's Production the inter-trade agreement is signed and then Committee and its Director, respectively, 'extended' (with the effect that it binds all prepared and finalized the draft. The traders in the region) by the Minister. No meeting made it plain that if the Commis- other provisions of French law have been sioner made any changes other than produced to show that the Commissioner drafting changes to the relevant articles has other independent powers. their representatives would not sign it.

In this case, although the Commissioner's The Commissioner did give his assent to decision recites the 'deliberations' of the what had been agreed at the meeting in his General Meeting of 18 October 1979 'decision'. The inter-trade agreement was (rather than a 'decision' taken) it seems to then signed and dated 23 November

BNIC v AUBERT

1979 — its terms being essentially those decision. The only extra provision is one agreed at the meeting and approved in the relating to machinery — that BNIC shall 'decision'. assess and receive the sums due and keep accounts.

OPINION OF SIR GORDON SLYNN —CASE 136/86

BNIC v AUBERT

nor (b) an a a by the State requiring or rein- These matters all involve to some extent forcing the effects of an agreement falling questions of fact for the national court, but, within Article 85, but merely a decision by on the view I have come to that there was government binding on traders as a matter here an agreement prohibited by Article 85, of governmental policy which would fall they do not arise. The fixing of the quotas outside both Article 5 and Article 85. and the levy are prohibited in any event.

I consider, accordingly, that the questions referred should be answered on the lines that an inter-trade agreement imposing a levy for exceeding a marketing quota and a storage quota, even in so far as the quotas were intended to limit the production of a product in order to maintain its quality, is prohibited by Article 85 (1) of the EEC Treaty.

The costs of the parties to the main action fall to be dealt with by the national court. The costs of the Commission and the United Kingdom are not recoverable.