C-375/96

OPINION OF MR COSMAS — CASE C-375/96

OPINION OF ADVOCATE GENERAL COSMAS

delivered on 28 May 1998 *

Table of contents

I —Introduction I - 6634

II — Legal context I - 6634

(d) Commission Regulations Nos 465/94 and 610/94 I - 6645

(e) Commission Regulations Nos 1960/94 and 3151/94 I - 6647

B — National provisions I - 6648

III —Facts I - 6648

IV — The questions I - 6648

V — Admissibility of the questions I - 6649

* Original language: Greek.

I - 6632

ZANINOTTO v MINISTERO DELLE RISORSE AGRICOLE, ALIMENTARI E FORESTALI

(c) The quantity Italy was required to distil I - 6654

(i) Determination of the total quantity for distillation I - 6655

(ii) The criterion for determining the distillation requirement ... I - 6657

(2) Question 4: allocation of quantities to be distilled on the basis of the criterion of yield per hectare; contravention of the principle of pro­ portionality, in particular the manifestly inappropriate nature of the measure adopted I - 6668

(a) The case-law of the Court concerning the principle of proportion­ ality and the extent of the Court's power of review I - 6668

(b) The objective sought I - 6670

(c) Is the measure necessary and appropriate? I - 6671

(d) Weighing up the advantages and disadvantages I - 6672

C — Question 5: designation of Italy as a single region I - 6673

I — Introduction concerning the common organisation of the market in wine.

1. In this case the Court is requested by the Pretura Circondariale di Treviso, Sezione Dis­ taccata di Conegliano (District Magistrates' 3. The common organisation of that market Court, Treviso, Conegliano Section) to give a is a complex system which lays down rules ruling on the validity of a series of provisions governing production and control of the devel­ in regulations which relate to the scheme for opment of wine-growing potential (Title I, the compulsory distillation of table wines Articles 2 to 14) and rules governing oeno- introduced as part of the effort to improve logical practices and processes (Title II, Arti­ conditions in the wine market. cles 15 to 26). It also lays down a price system and rules governing intervention and other measures to improve market conditions (Title III, Articles 27 to 51), provisions relating to trade with third countries (Title IV, Articles 52 to 63), rules governing free circulation and II — Legal context release to the market (Title V, Articles 64 to 73) and, lastly, some general provisions (Title VI, Articles 74 to 87).

A — Community provisions

4. Under Article 1(6) of Regulation No 822/87, 2the wine year begins on 1 Septem­ ber each year and ends on 31 August of the (1) Council Regulation No 822/87 following year.

2. The Council, acting under Articles 42 and 43 of the Treaty, adopted Regulation (EEC) 5. Under Article 3(1) of Regulation No No 822/87 of 16 March 1987 on the common 822/87, harvest declarations must be sub­ organisation of the market in wine, 1which mitted by producers of grapes for wine- consolidated anew the basic provisions

3 — Under Article 82, that committee consists of representatives of the Member States and is chaired by a representative of the Commission, who does not vote. 4 — Article 83 reads: '1.Where the procedure laid down in this Article is to be fol- lowed, the Chairman shall refer the matter to the Committee, either on his own initiative or at the request of the representa- tive of a Member State. 2.The representative of the Commission shall submit to the Committee a draft of the measures to be adopted. The Com- 2. The forward estimate of the Community's mittee shall deliver its opinion on the draft within a time-limit wine resources and needs shall show the pro­ which the Chairman may lay down according to the urgency of the matter. The opinion shall be delivered by the majority portion of table wines and quality wines [psr], provided for in Article 148(2) of the Treaty. 3.The Commission shall adopt measures which shall apply respectively. immediately. However, if these measures are not in accor- dance with the opinion of the Committee, they shall forth- with be communicated by the Commission to the Council. In that event the Commission may defer application of the measures which it has adopted for not more than one month from the date of such communication. The Council, acting by a qualified majority, may take a dif- ferent decision within one month.' 5 — More specifically, Article 38(1) of Regulation No 822/87, which relates to measures for preventive distillation, provides that where necessary, having regard to harvest forecasts in order to improve the quality of products put on the market, preventive distillation of table wines and wines suitable for 3. For each wine year, the Commission shall yielding table wines may be decided on in each wine year, from 1 September until a date to be determined. In addition, provide the Council with a final statement of Article 38(2) provides that the buying-in price of wine deliv- Community resources and utilisation in the ered for preventive distillation is to be 65% of the guide price. Participation by producers in the preventive distilla- preceding wine year. tion procedure is voluntary.

A state of serious imbalance as referred to in 6 — Under Article 41(1) of Regulation No 822/87, in wine years during which compulsory distillation is decided on such dis- the first subparagraph shall be deemed to exist tillation is to start from the time the relevant measure is put where: into effect. If during such a wine year the situation on the market in table wine so requires any other appropriate mea- sure may be decided on. Moreover, under Article 41(1) and (2) support distillation may be carried out not only in parallel with compulsory distillation but also if compulsory distilla- tion has not been decided on. However, it may not exceed 6 200 000 hectolitres unless the Council decides otherwise. The price paid to wine producers is to be 82% of the guide price (Article 41(6) in conjunction with the first paragraph of Article 29 of Regulation No 822/87), that is to say it is a (a) availabilities recorded at the beginning of much better price than that paid in the case of compulsory the wine year exceed the level of normal distillation. utilisation by more than four months' 7 — Generally those are wines of inferior quality, although not necessarily so. supply, or

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(b) production exceeds the level of normal 3. The total quantity to be distilled, deter­ utilisation by more than 9%, or mined in accordance with paragraph 2, shall be shared between the various wine-growing regions of the Community, grouped together by Member State.

(c) the weighted average of representative prices for all types of table wine remains below 82% of the guide price from the beginning of a wine year for a period to be determined'. 8 The quantity for distillation for each wine­ growing region shall be proportional to the difference between:

8 — Under Article 27(2), (3) and (4) of Regulation No 822/87, a guide price is fixed for each type of table wine before 1 August for each marketing year. The guide price is fixed on the basis of the average of prices recorded for the type of wine in question during the two marketing years preceding the date of fixing and on the basis of price trends during the current marketing year. Finally, the guide price is fixed at the production stage and is expressed, according to the type of Until the end of the 1993/94 wine year: wine, either in ECU per % volume/hi or in ECU per hi. 9 — Article 39(3) as amended by Article 1(5) of Council Regula- tion (EEC) No 1566/93 of 14 June 1993 amending Regula- tion (EEC) No 822/87 on the common organisation of the market in wine (OJ 1993 L 154, p. 39). 10 — Article 39(4) as replaced by Article 1(1) of Council Regula- tion (EEC) No 1441/88 of 24 May 1988 amending Regula- tion (EEC) No 822/87 on the common organisation of the market in wine (OJ 1988 L 132, p. 1). — the uniform percentage shall be 85,

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OPINION OF MR COSMAS — CASE C-375/96

— the consecutive reference years shall be Except for the regions where yield is substan­ 1981/82, 1982/83 and 1983/84. tially lower than the average yield in the Community, this percentage:

— shall be zero for yields at least 70% below the average yield in the region in question for table wine,

— may not be lower than 75 % for yields higher than 200% of the average yield of 4. The quantity for distillation determined in the area in question for table wine. accordance with paragraph 3 shall be shared between table wine producers in each wine­ growing region.

These notifications shall serve as a basis for: 12 The second subparagraph of Article 39(11) establishes the limits of the power accorded in principle to the Commission for the adop­ tion of the measures necessary in order to ensure effective application of the compul­ (a) setting the total quantity for distillation sory distillation scheme. Specifically, it pro­ in the Community; vides:

(b) allocating this quantity among the wine­ 'Such measures: growing regions referred to in paragraph 3;

(a) may relate only to the provisions con­ tained in this Article to the exclusion of (c) determining, in cooperation with the those relating to: Member States concerned, the percentage to be applied to the production of each producer subject to the obligation to distil in order to attain the distillation volume laid down for each region. — the apportionment between the various regions of production,

11 — As replaced by Article 1(5) of Regulation No 1566/93. 12 — As replaced by Article 1(2)(b) of Council Regulation (EEC) No 1972/87 of 2 July 1987 amending Regulation (EEC) No 7 822/87 on the common organisation of the market in wine (OJ 1987 L 184, p. 26).

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15. Lastly, under Article 79(1) of Regulation No 822/87 the Member States are to take all — the decision to carry out distillation necessary measures to ensure compliance with referred to in paragraph 1, Community provisions in the wine sector.

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ZANINOTTO v MINISTERO DELLE RISORSE AGRICOLE, ALIMENTARI E FORESTALI

(2) Commission regulations 17. Article 1(2) 4 and (3) provides:

'2. For the purposes of the first indent of (a) Commission Regulations Nos 2396/84 paragraph 1, the Member States shall commu­ and 3929/87 nicate to the Commission, not later than 30 November of the wine-growing year, at least the information referred to in ... the Annex hereto.

16. Article 1(1) of Commission Regulation (EEC) No 2396/84 of 20 August 1984 laying down detailed rules for drawing up the for­ 13 ward estimate in the wine sector provides:

20. Those yield classes in hectolitres per hectare (hereinafter 'hl/ha') are defined in 1 Article 6(2) itself. 7

18. Article 2 of Regulation No 2396/84 states:

21. Article 8(3) of Regulation No 3929/87 provides that, before 15 February, Member States are to notify the Commission of the final results of the breakdown of production 'The information referred to in the second by class of yield as referred to in Article 6(2). indent of Article 1(1) shall be used only where a significant discrepancy likely to compro­ mise the efficient management of the wine market is found to exist between the figures provided by the Member States as referred to (b) Commission Regulation No 441/88 in Article 1(2) and the said information'.

22. Article 3 of Commission Regulation (EEC) No 441/88 of 17 February 1988 laying down detailed rules for applying compulsory 19. Article 6(2) of Commission Regulation distillation as referred to in Article 39 of 18 (EEC) No 3929/87 of 17 December 1987 on Council Regulation (EEC) No 822/87 pro­ harvest, production and stock declarations vides: 16 relating to wine-sector products provides:

'When the total quantity of table wine subject to compulsory distillation is being fixed,

'2. Member States shall estimate the yield per hectare in respect of the table wine produc­ 17 — The yield classes are as follows: tion obtained on their territory. — not more than 45 hl/ha; — more than 45 hl/ha but not more than 70 hl/ha; — more than 70 hl/ha but not more than 90 hl/ha; — more than 90 hl/ha but not more than 110 hl/ha; — more than 110 hl/ha but not more than 140 hl/ha; — more than 140 hl/ha but not more than 200 hl/ha; 15 — As replaced by the annex to Regulation No 3643/87. — more than 200 hl/ha. 16 — OJ 1987 L 369, p. 59. 18 — OJ 1988 L 45, p. 15.

The said regions must coincide with admin­ — Region 2: 57 300 hl istrative units larger than communes and com­ prise administrative units on which statistics are available for the reference wine years — Region 3: 40182 000 hl referred to in the second indent of the second subparagraph of Article 39(3) of Regulation No 822/87.' — Region 4: 64 163 000 hl

— Region 5: 4 632 000 hl

19 24. Article 4(2) defines the Community production regions as follows: Region 1 cor­ — Region 6: 27 500 000 hl

— Region 7: 7 250 000 hl.' 19 — As amended by Article 1(1) of Commission Regulation (EEC) No 3699/92 of 21 December 1992 amending Regula­ tion (EEC) No 441/88 laying down detailed rules for applying compulsory distillation as referred to in Article 39 of Council Regulation (EEC) No 822/87 (OJ 1992 L 374, p. 54). 20 — As amended by Article 1(2) of Regulation No 3699/92.

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aid fixed for the wine year in question. Both the aid and the price of the alcohol which is produced and delivered to the intervention 21 — The second paragraph of Article 23 states: 'After expiry of agency shall be reduced by the same amount.' the said time-limits, the purchase price for the quantities delivered and the price of the alcohol which is produced from those quantities and which is delivered to the interven- tion agency shall be reduced by an amount equal to the aid laid down for that distillation operation in respect of neutral spirits. No aid shall be paid for distillation products which are not delivered to the intervention agency.' 22 — OJ 1994 L 44, p. 9. 23 — The preventive distillation of certain quantities of wine for the 1993/94 wine year was decided on m Commission Regu- lation (EEC) No 2094/93 of 28 July 1993 introducing pre- ventive distillation as provided for in Article 38 of Regula- 27. The first subparagraph of Article 12(5) tion (EEC) No 822/87 for the 1993/94 wine year (OJ 1993 states that the distillation operations may not L 190, p. 23). Article 38(2) of Regulation No 822/87 pro- vides that the buying-in price for wine delivered for preven- be carried out after 31 August. tive distillation is to be 65% of the guide price.

I - 6644

ZANINOTTO v MINISTERO DELLE RISORSE AGRICOLE, ALIMENTARI E FORESTALI

30. Article 1 of Regulation No 343/94 pro­ ...'. vides:

(d) Commission Regulations Nos 465/94 and ' 1. Distillation as provided for in Article 39(1 ) 610/94 of Regulation (EEC) No 822/87 is hereby adopted for the 1993/94 wine year.

24 — The compulsory distillation price constitutes a deterrent for producers. It is 50% of the guide price and may even be less, — Region 6: 3 000 000 hectolitres, depending on the total quantity to be distilled; under Article 4 of Regulation No 343/94 the buying-in price for table wine to be delivered for compulsory distillation was set at ECU 0.83 per % vol alcohol per hectolitre (% vol/hl). — Region 7: — 25 — OJ 1994 L 58, p. 2.

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OPINION OF MR COSMAS — CASE C-375/96

32. Article 2 of Regulation No 465/94 states: (2) in Article 1(1), the following point (c) is inserted:

'The quantity that each producer shall be required to deliver for distillation shall be "(c) Region 4: determined by multiplying the quantity referred to in Article 6 of Regulation (EEC) No 441/88 by the percentage shown in the table in the Annex which corresponds to the yield determined in accordance with Article 7 Production obtained with a yield, expressed of the said Regulation ...'. in hectolitres per hectare:

33. Commission Regulation (EC) No 610/94 — not exceeding 45: of 18 March 1994 amending Regulation No 1 887 143 hectolitres 26 465/94 was adopted after Italy had notified the table wine production figures and the breakdown of that production by yield class, — of more than 45, but not more than 70: which made it necessary to set for Region 4 8 394 081 hectolitres the percentages of production which each liable producer had to deliver for distillation. — of more than 70, but not more than 90: 11 843 922 hectolitres

ZANINOTTO v MINISTERO DELLE RISORSE AGRICOLE, ALIMENTARI E FORESTALI

(3) in Article 1(2), the following subpara­ (e) Commission Regulations Nos 1960/94 graph is added: and 3151/94

36. By Regulation (EC) No 1960/94 of 27 "The average yield in Region 4 shall be 77 July 1994 derogating from the detailed rules hectolitres per hectare."; for the delivery by producers of the table wine they are required to deliver for compul­ sory distillation and support distillation in 30 respect of the 1993/94 wine year, the Com­ 31 mission extended until 27 August 1994 the time-limit for delivering table wine to a dis­ tillery and until 20 September 1994 the time- limit which had been laid down for distilla­ tion operations. (4) the Annex is replaced by the Annex hereto.'

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OPINION OF MR COSMAS — CASE C-375/96

B — National provisions failed to deliver 379.47 hl of wine for com­ pulsory distillation as he was required to do under the Community legislation.

38. Article 4(11) of the Italian Decree-Law of 7 September 1987, which was ratified, fol­ lowing amendment, by the Law of 4 40. By application lodged on 30 April 1996 November 1987, provides for the imposition Mr Zaninotto brought proceedings, in due of an administrative fine in the event of failure time and form, before the Pretore (Magis­ to comply with the obligation to distil con­ trate) of Conegliano, in which he contested tained in Article 39 of Regulation No 822/87 the order imposing the fine on him. The and in the other Community legislation imple­ defendant authority contended that the appli­ menting that provision. cation should be dismissed.

IV — The questions III — Facts

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ZANINOTTO v MINISTERO DELLE RISORSE AGRICOLE, ALIMENTARI E FORESTALI

1(1 )(c), the second subparagraph of Article (5) whether the fourth indent of Article 4(2) 1(2), and Article 1(3) (and the annex, to of Regulation No 441/88 is invalid; the extent that it concerns Region 4) of Regulation No 465/94, as amended by Regulation No 610/94 so far as concerns Region 4, are invalid because they con­ travene the prohibition against discrimi­ nation, laid down by Article 40(3) of the (6) whether Article 1(1) of Regulation No EC Treaty, and Article 23 of Regulation 3151/94 is invalid because it contravenes No 441/88; Article 39(1) of Regulation No 822/87 and because an essential precondition was not met;

(2) whether the fourth indent of Article 1(3) of Regulation No 343/94 and Article 1(1), (2) and (3) of Regulation No 465/94, as (7) whether Article 1(1) of Regulation No amended by Regulation No 610/94, are 3151/94 is invalid because it contravenes invalid because they contravene the prin­ the principle of proportionality with ciple of the protection of legitimate expec­ which Community policy should be con­ tations; sistent.

(3) whether the fourth indent of Article 1(3) V — Admissibility of the questions of Regulation No 343/94, and Article 1(1), (2) and (3) of Regulation No 465/94, as amended by Regulation No 610/94, are invalid because they infringe Article 31 of Regulation No 822/87 and their enactment is ultra vires because an essen­ tial precondition was not met; A — General

(4) whether Article 39(4) of Regulation No 822/87 is invalid because it contravenes the principle of proportionality in so far as it prescribes, in the case of each pro­ 42. First of all, as the Commission observes, ducer subject to the obligation, the volume the order for reference is very sparing with to be distilled and is a wholly inappro­ the facts which might establish whether the priate means of attaining the objective questions on the validity of the provisions sought; cited above may usefully be answered.

46. Despite all the reservations engendered by the condensed way in which the national court has set out the facts, the Court must 44. However, the Court has acknowledged examine those facts. First, the order for refer­ that, in the context of the cooperation between ence provides a sufficiently clear description itself and the national courts which is pro­ of the legal context of the case. Secondly, the vided for in Article 177 of the Treaty, 'the facts as presented by the national court have national court, which alone has direct knowl­ not been disputed. Lastly, the Court of Jus­ edge of the facts of the case, is in the best tice has held that it may refuse to give a pre­ position to assess, having regard to the par­ liminary ruling only in exceptional circum­ ticular features of the case, whether a prelimi­ stances where it is obvious that the provision nary ruling is necessary to enable it to give of Community law whose interpretation is 38 judgment'. sought or whose validity is to be reviewed bears no relation to the subject-matter of the 41 main action. However, I do not consider that to be the case here, nor is there a risk of giving an answer to a completely hypothetical question.

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ZANINOTTO v MINISTERO DELLE RISORSE AGRICOLE, ALIMENTARI E FORESTALI

B — Admissibility of Questions 6 and 7 in enable it to give judgment'. Moreover, the particuUr answers which the national court is seeking do not appear to be totally irrelevant as regards the outcome of the proceedings before it, even if annulment of Article 1(1) of Regulation No 3151/94 alone would ultimately make Mr Zaninotto's position worse, since he would still be bound by the obligation to deliver wine for distillation.

47. As regards the admissibility of the sixth and seventh questions in particular, the Com­ mission raises the issue of whether Regula­ tion No 3151/94, which extended until 29 January 1995 the time-limit for delivering wine for compulsory distillation in respect of VI — Answers to the questions the 1993/94 wine year, could have affected Mr Zaninotto. He was fined for failure to comply with the obligation to distil in respect of the 1993/94 wine year, although the exten­ sion of the time-limit gave the producers con­ cerned, including Mr Zaninotto, a further opportunity to carry out distillation and thus escape that penalty.

(1) Question 1: infringement of the prohibi­ 50. The first two questions referred by the tion of discrimination national court relate to the validity of the fourth indent of Article 1(3) of Regulation No 343/94, and of Article 1(1 )(c), the second subparagraph of Article 1(2), and Article 1(3) (and the annex to the extent that it concerns Region 4) of Regulation No 465/94, as amended by Regulation No 610/94 so far as concerns Region 4 (Italy). (a) Issues raised

53. The national court considers that the 51. Those provisions concern the determina­ abovementioned provisions contravene the tion of the total quantity of wine to be dis­ prohibition of discrimination laid down in tilled in Italy in the 1993/94 wine year, namely Article 40(3) of the Treaty and Article 23 of 12 150 000 hl, of the region's average yield Regulation No 441/88 for three reasons: (77 hl/ha), and of the quantity which each producer was required to deliver for distilla­ tion.

(a) In the 1993/94 wine year the disputed provisions meant that the obligation to distil was apportioned unequally among the Member States concerned, the burden on Italy ultimately being particularly 52. It should be noted from the very outset punitive. Out of a total 18 200 000 hl of that Article 1 of Regulation No 465/94, as wine to be distilled in the Community, amended by Regulation No 610/94, has no which comprises seven production third paragraph. The national court is per­ regions, two thirds (12 150 000 hl) were haps referring to Article 1(3) of Regulation allocated to Italy, whose production No 610/94, but that provision contains the was 40 800 000 hl. In Region 3 (France), second subparagraph of Article 1(2) of Regu­ whose production was 20 800 000 hl, the lation No 465/94. We are nevertheless not quantity for compulsory distillation was

(c) In the 1993/94 wine year the provisions in question gave rise to discrimination against Italian wine producers who were subject to the obligation to distil, by 55. Article 23 of Regulation No 441/88 may imposing on them the burden of quanti­ therefore usefully be relied on in order to ties of table wine which should have been answer the third part of the first question distilled, but were not, by other Italian referred by the national court inasmuch as it producers during the 1992/93 wine year. supports the obligation to distil; that is to say, That explains, moreover, why Regulation as the Commission rightly states (paragraph No 610/94 fixed the percentages of table 8 of its written observations), it is consistent and not incompatible with the obligation imposed in respect of the 1993/94 wine year to distil quantities which should have been 43 — The figure of 2 250 000 hl referred to by the national court is clearly a slip. distilled during the 1992/93 wine year.

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(b) Case-law of the Court (c) The quantity Italy was required to distil

57. On the basis of that case-law I will have to examine whether Italian wine producers 60. The Italian Government considers (para­ were discriminated against at the various stages graph 11 of its written observations) that, in in the procedure followed by the Commis­ view of the substantial quantities which the sion for fixing the quantities to be distilled. Commission required to be distilled in the Italian winegrowing areas, the progressive scale is different from that adopted by the Commission for the other Member States. 44 — See, for example, Case C-311/90 Hierl v Hauptzollamt Regensburg [1992] ECR I-2061, paragraph 18; see also Case According to the Italian Government the 203/86 Spain v Council [1988] ECR 4563, paragraph 10, Case 84/87 Erpelding v Secrétaire d'État à l'Agriculture et à effect is that, as is apparent from the scale' laid la Viticulture [1988] ECR 2647, paragraph 29, Joined Cases down in the annex to Regulation No 610/94, C-267/88 to C-285/88 Wuidart and Others v Laiterie Coop- érative Eupenoise [1990] ECR I-435, paragraph 13, and Case even if producers have the same yield per C-63/93 Duff and Others v Minister for Agriculture and Food, Ireland, and the Attorney General [1996] ECR I-569, hectare they are subject to different require­ paragraph 26. ments depending on their region of origin, 45 — See Joined Cases C-133/93, C-300/93 and C-362/93 Crispol- toni and Others v Fattoria Autonoma Tabacchi and Donatab contrary to the second subparagraph of Article [1994] ECR I-4863, paragraph 51, and Case 106/83 Sermide 40(3) and Article 6 (formerly Article 7) of the v Cassa Conguaglio Zucchero [1984] ECR 4209, paragraph 28. Treaty.

(i) Determination of the total quantity for distillation 64. Next, as regards Regulation No 465/94 and Regulation No 610/94 amending Regula­ tion No 465/94, the fourth recital in the pre­ 46 amble to the former states: 'Article 39(4) of Regulation (EEC) No 822/87 provides that, in the case of producers who are required to distil, the quantity to be distilled must equal a percentage to be fixed of their table wine 62. Firstly, as regards the validity of the fourth production, such percentage being obtained indent of Article 1 (3) of Regulation No 343/94 from a graduated scale based on yield per in so far as it lays down 12 150 000 hi as the hectare; ... the percentages of the production quantity to be distilled in Region 4, that is to of each such producer which must be deliv­ say in Italy, for the 1993/94 wine year, it ered for distillation should therefore be fixed; should be noted that the Commission adopted ... while being based on objective criteria, that regulation, implementing Council Regu­ those percentages must be adapted to the lation No 822/87, on the basis of a set of situation of each region ...; ... the scale used objective data. The first recital in the pre­ must allow a quantity of table wine corre­ amble to Regulation No 343/94 states: 'The sponding to the obligation provided for in data available at present to the Commission, Article 1(3) of Regulation (EC) No 343/94 to and in particular those in the forward esti­ be deducted from a region's quantity; ... the mate for the 1993/94 wine year, show that a yield classes should accordingly set out only feature of the current year is an imbalance on the quantities covered by the production dec­ the market for table wine and wine suitable larations, on which the scale is based'. for yielding table wine; ... the conditions laid down in Article 39(1) of Regulation (EEC) No 822/87 for initiating compulsory distilla­ 46 — See also the third and fourth recitals in the preamble to tion are therefore fulfilled'. Regulation No 610/94, whose content is similar.

66. It is clear from Regulation No 465/94 in conjunction with Regulation No 610/94, viewed in the light of the recitals in their pre­ ambles, that in determining, first, the volume of production on the basis of the yield in hec­ tolitres per hectare (hl/ha) for Region 4, that is to say Italy, and, secondly, the average yield 69. As regards determining the surplus quan­ per hectare of Region 4, the Commission tity of table wine, the Community's forward 47 relied on full and objective data notified to it estimate for the 1993/94 wine year shows by the authorities of that Member State con­ total production amounting to 98 610 000 hl, cerning the production of table wine and the of which 91 365 000 hi were intended for 48 breakdown of that production into the various winemaking. In addition, according to the yield classes. The figures were calculated on Commission: (a) the total production of table the basis, on the one hand, of all the Com­ wine, net of wine deliveries and losses, was munity data and, on the other, of all the data estimated to be 87 385 000 hi; (b) normal relating to Italy as a whole. utilisation (human consumption, industrial uses and import-export balance) was esti­ mated, in accordance with Article 1 of Regu­ lation No 441/88, to be 79 807 000 hi, that is to say the surplus for the wine year was 49 7 578 000 hl; (c) the stocks at the start of the wine year, as notified by Member States, were 46 886 000 hi; (d) the end-of-year stocks considered to be appropriate amounted to 67. More specifically, in its answer to a written 50 33 253 000 hi, corresponding to five months' question put to it by the Court, the Commis­ sion explained the procedure for fixing the quantity of table wine which Italy had to deliver for compulsory distillation. It stated 47 — O J1994 C 49, p. 12. that in the 1993/94 wine year it calculated the 48 — The other 7 245 000 hl were grape juice. 49 — 87 385 000 hi -79 807 000 hl = 7 578 000 hi. quantity which it considered to be surplus 50 — The forward estimate gives 54 464 000 hl as the quantity and allocated it between the two forms of before distillation but after wine deliveries.

70. The Commission explains that the uni­ form percentage of 85 % provided for in Article 39(3) of Regulation No 822/87 was laid down by the Council taking into account table wine consumption at that time. The 73. Specifically, in the 1993/94 wine year the regions whose annual production was below ratio had to be determined between normal 54 85% of their reference quantity were exempted utilisation amounting to 79 807 000 hl and from the obligation to distil because it was the total Community reference quantity in considered that, since their production was accordance with Article 4(3) of Regulation 5 below that quantity and they had contributed No 441/88 of 145 069 000 hl. 5The result 56 to the improvement of market conditions, was a percentage of 55.01%. they could not be held responsible for any surpluses. As a result, such surpluses were to be regarded as falling on the regions, that is 52 — The Commission points out that in 1996 human consump- to say the Member States, whose production tion of table wine in the Community was 70 000 000 hi compared with 90 000 000 hi in 1982. remained above 85% of the reference quan­ 53 — That power is conferred on the Commission under the tity. second subparagraph of Article 39(11) of Regulation No 822/87, as amended by Regulation No 1972/87. 54 — During the oral procedure the Italian Government main- tained that another figure (134 271 000 hi) should be taken as a basis, reached by adding table wine production in the 1993/94 wine year (87 385 000 hl) and the stocks at the start of that year (46 886 000 hl); those two figures added together give the total availabilities at the start of the 1993/94 mar- keting year. That contention is unfounded. Article 4 of 71. At the same time, the continuing decline Regulation No 441/88 refers to the 'average production' (emphasis added) of table wine and products upstream of in the consumption of table wine has, over table wine, not to stocks at the start or each wine year. Irre- spective of the above point, there is no proof of discrimina- tion against Italian producers since the assessment made by the Commission was in any case based on objective data. 55 — The quantity derives from adding together the production 51 — The volume corresponding to those five months of normal averages for each Member State which are set out in that utilisation was calculated as follows: (79 807 000 x 5) + 12 = provision. 33 253 000 hl. 56 — (79 807 000 hl x 100) + 145 069 000 hl = 55.01%.

77. The quantities actually allocated, which are set out in Regulation No 343/94, resulted, 57 — According to a table which the Commission attached to its written answer to the question put by the Court, the break- according to the Commission at least, from down of the surplus, in thousands of hectolitres (hl), among the Member States in accordance with the production fore- discussions within the Management Com­ casts of those States and on the basis of a reference per- mittee for Wine under Article 83 of Regula­ centage of 55.01% is as follows: 59 tion No 822/87. The Commission made that adjustment by exercising its power under Reference Article 39(11) of Regulation No 822 / 87 , as Member Reference quantity Production Difference amended. That procedure enabled Italy ulti­ Surplus State quantity 1993/94 1993 % mately to carry out a reduced amount of wine year compulsory distillation (12 150 000 hl instead of 14 070 420 hl) in exchange for a smaller I 64 163 35 296 45 025 9 729 77,31 share of support distillation (1 800 000 hl F 40182 22 104 23 500 1396 11,09

E 27 500 15 128 15 490 362 2,88

P 58 — Allocation of the quantities to be distilled, in hectolitres, 7 250 3 988 3 050 — — during the 1993/94 wine year.

EL 4 632 2 548 3 645 1 097 8,72 Distillation Compulsory Preventive Support Total

1 342 Surplus 18200000 10112000 3000000 21200000 D 738 630 — —

Total 145 069 79 802 91 365 12 584 100.00 59 — The Italian Government contested those assertions of the Commission at the hearing, unconvincingly in my view, because it failed to adduce evidence in that regard.

instead of the 2 319 300 hl envisaged by the the Italian Government pointed out its absence theoretical calculation). in paragraph 10 of its written observations — in order for the quantity to be distilled to be more easily determined by the reader of that regulation. I therefore consider, in the light also of the recitals in the preamble to Regula­ tion No 343/94 set out above, that no error is to be found in the statement of grounds for 78. The Commission concludes by stating the disputed regulation, since the detailed that the percentage of 85% envisaged by description of the Commission's reasoning Article 39(3) of Regulation No 822/87 was constitutes a choice of a technical nature which reduced to 55 % and implemented uniformly could have been omitted without prejudicing in all the production regions, not applying the grounds of the measure adopted. only to Italy. The successive adjustments were decided on under the procedure of the Man­ agement Committee for Wine, on the basis of objective criteria, such as the volume of pro­ duction of each region, trends in consump­ tion and existing stocks, criteria which were ultimately to Italy's advantage because they led to a reduction in the volume to be dis­ tilled, to 12 150 000 hl from the theoretical requirement of 14 070 420 hl. In other words, it is clear from the foregoing that the entire 80. The Court has, moreover, consistently 61 procedure did not entail any discrimination held that 'although the reasoning required against Italian producers and the Italian Gov­ by Article 190 of the EC Treaty must show ernment's assertions to the contrary must be clearly and unequivocally the reasoning of dismissed as unfounded. the Community authority which adopted the contested measure so as to enable the persons concerned to ascertain the reasons for the measure and to enable the Court to exercise its review ... it is not required to go into every relevant point of fact and law. The question whether a statement of reasons satisfies those requirements must be assessed with reference 79. While I consider, on the basis of the not only to its wording but also to its context explanations given by the Commission, that and the whole body of legal rules governing the statement of grounds for Regulation No the matter in question. Consequently, if the 343/94 is not vitiated by any defect, I would contested measure clearly discloses the essen­ also wish to point out that it was not neces­ tial objective pursued by the institution, it sary for the percentage (55%), which was would be excessive to require a specific state­ fixed in a perfectly legal manner, to be men­ ment of reasons for each of the technical tioned in the preamble to that regulation — choices made by the institution'.

(d) Allocation on the basis of data forwarded to the information referred to in the second by Italy indent of Article 1(1), use was to be made of all sources of information available, and 'in particular' (a) publications relating to produc­ tion and distribution in the Member States and (b) the trade organisations representing production and distribution in the Member 81. According to the national court and to States, especially those represented on the Mr Zaninotto, in the 1993/94 wine year the Advisory Committee on Wine. Commission fixed the quantity for compul­ sory distillation on the basis of a forward estimate prepared using manifestly inaccurate data supplied by the Italian authorities, despite the fact that the Community legislation (Regu­ lation No 2396/84) requires other sources of information to be resorted to in such cases, in 84. The combined interpretation of the rel­ particular information supplied by trade evant provisions of Regulation No 2396/84 organisations. shows, therefore, that the Commission is given the choice of simply using the information supplied to it by the Member States or of also resorting to other reliable sources. In addi­ tion, under Article 2 of Regulation No 2396/84 82. First of all, in my view, and as the Spanish the information referred to in the second Government rightly points out, it is sur­ indent of Article 1(1) is to be used only where prising that the national court and Mr Zani­ a significant discrepancy likely to compro­ notto seek essentially to ascribe his failure to mise the efficient management of the wine comply with his obligation to the Italian market is found to exist between the figures Government's failure to comply with its obli­ provided by the Member States as referred to gation to supply accurate data. The whole in Article 1(2) and the said information. How­ system under which the Community forward ever, nothing of that nature has been proved estimate is drawn up for each wine year is in this case. based on declarations made in turn by the parties involved in the wine sector (produc­ ers and administrative authorities of Member States).

86. The Commission observes that, on the Commission to verify the accuracy of the data one hand, a large number of factors are taken in question. into account when definitively fixing the quan tities to be distilled for each Member State, as I have already explained, and that, on the other, there may be disparities between the estimates and reality. However, the endeavour (e) Carrying over ('decanting') undistilled to improve conditions in the market and quantities from one wine year to the next restore its stability may lead to increases in the quantity to be distilled without that resulting in unlawful discrimination among producers who have already complied with 89. Mr Zaninotto maintains that the carrying their obligations or their legitimate expecta over ('decanting') of 1 250 000 hl which some tions being affected, as we shall see. producers had unlawfully failed to distil during the preceding wine year infringes Article 23 of Regulation No 441/88. In his opinion, the producers who complied with their obliga tions should not be punished as against those

62 correct. the validity of measures taken by national authorities before it takes its own decision, it is worth noting that in Case C-97/91 Oleificio Borelli v Commission [1992] ECR I-6313, which related to proceedings brought under Article 173 of the Treaty, the Court held as follows: 'It should be pointed out that in an action brought under Article 173 of the Treaty the Court has no jurisdiction to rule on the lawfulness of a measure adopted by a national authority' (paragraph 9).

That is distributors and trade organisations, acquire so where the competent national authority issues an unfavour- great importance for drawing up the forward able opinion on an application for aid from the [European Agricultural Guidance and Guarantee] Fund . . . a project estimate, the Commission and the Spanish may receive aid from the Fund only if it is approved by the Member State on whose territory it is to be carried out and Government conclude, rightly in my view, . . . consequently, where the opinion is unfavourable the that, in accordance with the division of powers Commission can neither follow the procedure for the exami- nation of the project in accordance with the rules laid down between Community and national authori in that regulation nor a fortiori review the lawfulness of the opinion thus issued. In those circumstances, any irregularity ties, it is for Member States and not the that might affect the opinion cannot affect the validity of the decision by which the Commission refused the aid applied for' (paragraphs 10, 11 and 12). The Court concluded: 'Accordingly, it is for the national courts, where appropriate after obtaining a preliminary ruling from the Court, to rule on the lawfulness of the national measure at issue on the 62 — Failure to distil may be due to various reasons: as the Com- same terms on which they review any definitive measure mission mentions, by way of example, it may be that indi- adopted by the same national authority which is capable of vidual producers decide not to comply with their obliga- adversely affecting third parties and, consequently, to regard tions, in which case they incur the penalties provided tor an action brought for that purpose as admissible even if the under national law, or it may be due to the fact that the domestic rules of procedure do not provide for this in such graduated tables (of yield per hectare) taken into account do a case' (paragraph 13). not correspond to reality.

some of their wine from the following wine 92. The Commission rightly observes that year or to purchase wine from other pro- the penalties imposed do not also automati­ ducers in order to hand it over for distilla­ cally lead to the removal from the market of tion, because their own production was the quantities of table wine which should have already sold. been distilled but ultimately were not dis­ tilled within the time-limits set. For example, where a producer who was required to distil a certain quantity of wine managed to sell it all during the 1993/94 wine year and thus no longer had any wine to deliver for compul­ sory distillation, the corresponding quantity remained on the market, thereby putting the 90. It is necessary to make a preliminary improvement of market conditions at risk. explanatory remark at this point. First, failure on the part of wine producers to comply with the obligation to distil may lead to imposi­ tion of the penalties provided for by national law, in accordance with Article 79 of Regula­ tion No 822/87. It was, moreover, on such a basis that the fine was imposed which Mr Zani- 93. Consequently, in the subsequent wine notto contested, bringing about the main pro­ year distillation of the wine which was not 6 ceedings. 4 Secondly, under Article 22 of distilled during the preceding wine year is Regulation No 441/88 the producers in ques­ justified by the overriding need finally to tion are not eligible for intervention mea­ remove that quantity from the market. As the sures. 65 Provision is made for similar penal­ Commission points out, if the wine remained ties to be imposed on producers who submit on the market that would jeopardise the objec­ incorrect declarations. tive of compulsory distillation and would ultimately harm all producers, in particular those who had duly complied with their obli­ gations, who would have done so in vain because others had failed to comply with theirs. Indeed the former, despite duly bearing the burden of delivering wine for distillation, would not have reaped the resulting benefits 91. In addition, it must not be overlooked in terms of improved market conditions. The that the quantity of wine which it is neces­ principle of solidarity and cohesion on the sary to distil in order to improve market con­ market in question justified such carrying ditions may ultimately not be achieved not over, in order for the objectives of the com­ only because producers fail to comply with pulsory distillation scheme to be achieved. their obligations but also because the data which the Member States notify to the Com­ mission are inaccurate.

in question are absorbed proportionally by 96. Support for that view may be found in the producers in every region. It concludes the case-law of the Court, which has consis­ that it is incorrect to state that the Italian sur­ tently held that 'the principle of non­ plus of 1 285 000 hl of table wine from the discrimination does not preclude a Commu­ 1992/93 wine year which was not distilled nity regulation which introduced a system of became the sole responsibility of Italian pro­ guarantee thresholds for the entire Commu­ ducers during the following wine year. That nity involving a reduction in the production surplus which, as the Commission acknowl­ aid of the relevant producers of all the Member States, even if exceeding those thresholds was edges (paragraph 14 of its written observa­ not due to an increase in production in all tions), was accounted for in the availabilities those States'. It has added that '... in a common of table wine in the 1993/94 wine year was in organisation of markets with no system of fact redistributed among all the Community national quotas all Community producers, producers in accordance with the principle of regardless of the Member State in which they Community solidarity. are based, must together, in an egalitarian manner, bear the consequences of the deci­ sions which the Community institutions are led to adopt, in the exercise of their powers, in order to respond to the risk of an imbal­ ance which may arise in the market between production and market outlets'.

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local conditions, cannot be regarded as dis­ 100. In the view of the national court, the crimination if the measure is adopted on the inequitable apportionment of the quantities basis of objective rules formulated to meet to be distilled, the obvious inaccuracies in the the needs of the general common organisa­ calculation of those quantities, and the car­ 68 tion of the market. rying over of 1 285 000 hl of table wine which was effected in a totally arbitrary fashion and with a completely different perspective prima facie thwart the legitimate expectations of Community citizens, that is to say the legiti­ mate expectations of winegrowers who believed that, having complied with the obli­ 98. In my view, given the wide discretion gation to distil during the 1992/93 wine year, which the Commission enjoys in pursuing they would not be subsequently burdened the objective of improving conditions in the with other liabilities which in fact related to wine market under the enabling provision that year and were imposed on them only contained in Article 39 of Council Regulation because others had not complied with their No 822/87, it has not, by acting as it did, own obligations. infringed the prohibition of discrimination laid down in Article 40(3) of the Treaty or Article 23 of implementing Regulation No 441/88.

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rules of market or structural policy'. It has the Community forward estimate for a wine pointed out that 'the principle of the protec­ year, in this case 1993/94, and the definitive tion of legitimate expectations may be invoked table for the same year. Lastly, I have analysed as against Community rules, only to the extent the reasons why it is necessary, in order for that the Community itself has previously cre­ conditions in the wine market to be improved, ated a situation which can give rise to a legiti­ to distil in the following year table wines not 72 mate expectation'. distilled during the immediately preceding reference year.

102. In view of that settled case-law and of 104. There can thus be no question of legiti­ the analysis given above when answering the mate expectations having been created in first question, and given that the Commission favour of those producers who were subject has a wide discretion in the adoption of the to the obligation to distil nor, therefore, of measures required to improve conditions in the disputed Community legislation infringing the market in table wine, I do not believe that that higher-ranking principle. the arguments put forward by the national court can be accepted.

B — Questions 3 and 4: the criterion of yield per hectare

103. More specifically, there are three reasons why they cannot be accepted. First, as I have already explained, the quantities of table wine to be distilled in respect of the 1993/94 wine year were allocated on the basis of objective data provided for under the Community leg­ (1) Question 3: impossibility of correctly islation in force at that time and of figures assessing the yield per hectare for the region supplied by the Member States. Secondly, as constituted by Italy; ultra vires action on the we have seen, there may be disparities between part of the Commission

108. Since the validity of the provisions con cerning the criterion of yield per hectare is the subject of the fourth question referred by 106. According to the national court, the deci the national court, I think that by the present sion introducing compulsory distillation for question it is expressing its doubts as to the 1993/94 wine year on the face of it appears, whether the yield per hectare was correctly as regards Region 4, that is to say Italy, not determined, given the absence of an accurate to be founded on an essential precondition means of doing so, namely the vineyard reg prescribed by law regarding the correct deter

According mined on the basis of inaccurate data. to the first two recitals in the preamble to that regulation, it laid down, for the purposes of uniform application of the wine provisions, rules designed to improve the control pro- cedures already in force at Community and national level and to strengthen cooperation between the authorities respon- sible for the controls in the wine sector. General rules were also laid down for the introduction and operation of a Com- munity structure comprising a body of officials specialised in control in the wine sector, responsible, at Community level, for ensuring uniform application of Community rules in the context of the market in wine. Furthermore, according

In addi- tion, the Council adopted Regulation (EEC) No 2392/86 of 24 July 1986 establisning a Community vineyard register 73 — The national court also raises the issue of the validity of (OJ 1986 L 208, p. 1), which has been amended on several Article 1(3) of Regulation No 465/94, which does not exist occasions, in particular by Council Regulation (EC) No See my comments thereon in point 52. 1549/95 of 29 June 1995 (OJ 1995 L 148, p. 37).

112. Nor has Mr Zaninotto adduced, with regard to the Commission acting ultra vires, and a fortiori with regard to it misusing its power, sufficient evidence to establish in rela­ 110. Consequently, as the Spanish Govern­ tion to the latter that, 'on the basis of objec- ment rightly points out, when the volume of table wine to be distilled in each Member State is determined account is not taken of 77 — In addition, as the Commission points out, the establishment the areas from which the wine comes but of a vineyard register has created objective difficulties for the Member States and, at the end of February 1997, only two solely of the production volume of each State. countries (Germany and Luxembourg) had working regis- ters. The other Member States, including Italy, had been Moreover, it is apparent from Article 39(3) of unable to establish one or to make it operational. In order Regulation No 822/87 that the yield per for those difficulties to be tackled, the Council adopted Regulation (EC) No 1596/96 of 30 July 1996 amending hectare is not taken into account when the Regulation No 2392/86 (OJ 1996 L 206, p. 38), which extended until 31 December 1998 the time-limit for estab- quantities to be distilled are allocated among lishing reference charts covering the entire area under vines. Those reference charts constitute one of the key elements of the Member States. It is taken into account, the vineyard register and should in the future serve as a ref- on the other hand, when the quantity already erence base for the management of Community measures in the wine sector.

(2) Question 4: allocation of quantities to be distilled on the basis of the criterion of yield per hectare; contravention of the principle of proportionality, in particular the manifestly inappropriate nature of the measure adopted 114. On the other hand, the Council, the Commission and the Spanish Government consider that the criterion of yield per hectare is a necessary and appropriate means of achieving the objective pursued and that its disadvantages do not outweigh its advantages. 113. The national court and Mr Zaninotto consider that Article 39(4) of Regulation No 822/87, which provides that the quantity to be compulsorily distilled by each producer is to be determined on the basis of the criterion of yield per hectare, is invalid because it offends against the principle of proportion­ (a) The case-law of the Court concerning the ality. They take the view that the measure principle of proportionality and the extent of adopted is a manifestly inappropriate means the Court's power of review of attaining the objectives pursued by com­ pulsory distillation, namely improving market conditions, guiding producers towards quality production and reducing the amount of medi­ ocre wine produced. They contend that the yield per hectare criterion is inadequate ^ and inappropriate for achieving the Community objectives because it does not prove either 115. The Court has consistently held that the that the wine is of mediocre quality or that it principle of proportionality, which is a supe­ is overproduced. It penalises excessively pro­ rior rule of law and one of the general prin­ ducers who make good quality wine which is ciples of Community law, requires that 'mea­ sures adopted by Community institutions do not exceed the limits of what is appropriate 78 — See, for example, Case C-323/88 Sermes v Directeur des Ser- and necessary in order to attain the objectives vices des Douanes de Strasbourg [1990] ECR I-3027, para­ legitimately pursued by the legislation in ques­ graph 33, Case C-69/89 Nakajima v Council [1991] ECR I-2069, paragraph 134, and Crispoltoni and Others, cited tion; when there is a choice between several above in footnote 45, paragraph 27. appropriate measures recourse must be had to 79 — Reliance is placed in that regard on a communication of the Commission of 22 July 1993, p. 10. the least onerous, and the disadvantages caused

117. In other words, the choice of a particular solution in order to deal with a problem within the framework of the common organi­ sation of a market in a product, such as the market in wine, constitutes an expression of the wide discretion available to the Council 120. In making that choice, the Council cer­ in that area under the Treaty. That is to say tainly could not determine precisely all the future effects of the legislation it adopted. In that regard, the Court has consistently held 83 that 'the legality of a Community act cannot 80 — See, for example, Crispoltoni and Others, cited in footnote 45 above, paragraph 41, Case 265/87 Schröder v Hauptzol- depend on retrospective considerations of its lamt Gronau [1989] ECR 2237, paragraph 21, Case C-331/88 84 The Queen v MAFF and Another ex parte Fedesa and Others efficacy'. It has stated: 'Where the Commu- [1990] ECR I-4023, paragraph 13, Case C-295/94 Hüpeden v HauptzoUamt Hamburg-Jonas [1996] ECR I-3375, para- graph 14, and Case C-296/94 Pietsch v HauptzoUamt Hamburg-Waltershof [1996] ECR I-3409, paragraph 15. 81 — See, for example, Schräder, cited above, paragraph 22, Fedesa 83 — See, for example, Case 40/72 Schroeder v Germany [1973] and Others, cited above, paragraph 14, and Case C-280/93 ECR 125, paragraph 14, and Crispoltoni and Others, cited Germany v Council [1994] ECR I-4973, paragraphs 89 and above, paragraph 43. 90. 84 — See, for example, Crispoltoni and Others, cited above, para- 82 — See, for example, Fedesa and Others, cited above, paragraph graph 43, and Wuidart and Others, cited above in footnote 14, and Crispoltoni and Others, cited above, paragraph 42. 44, paragraph 14.

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126. Those objectives — reducing the sur­ the market in wine, since the buying-in pluses of table wine on the wine market, price for table wines for compulsory distilla­ tackling the serious imbalance in that market tion was set at a low level and deters wine­ 89 by fixing specific criteria for assessing that growers from overproduction. instability, allocating the obligations fairly among producers on the basis of yield per hectare (hl/ha) and taking into account the differences between the production regions — are in my view encompassed within the objectives of the common agricultural policy, as set out in Article 39(1 )(b) and (c) of the Treaty. Indeed, with the distillation measure the Council tries to reconcile the various objectives of Article 39 of the Treaty, seeking 128. Consequently, the apportionment of 85 to create stability in the market in wine, obligations between producers according to while at the same time not neglecting the need the yield per hectare stems from a necessary 86 to safeguard producers' individual incomes. choice, based on an objective criterion which can easily be applied. That choice is not mani­ festly wrong, in my view, since it is designed to impose most of the burden of compulsory distillation on those producers who are mainly responsible for the overproduction in the table wine market.

(c) Is the measure necessary and appropriate?

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propriate, even less as manifestly inappro­ reduction in activity without necessarily also priate, for attaining the objective of compul­ reducing the yield per hectare. Similarly, a sory distillation. criterion based on the price of the wine might exclude producers of low-cost wine from the market, even though such wine is not neces­ sarily of poor quality and finds outlets in the market. Lastly, as the Council states, a crite­ rion based on stocks at the end of the wine year would be difficult to apply because such 91 130. The fact that that criterion is not mani­ stocks are difficult to monitor. festly inappropriate for attaining the objective pursued by compulsory distillation of improving conditions in the market in wine can also be seen from the absence, among the possible alternatives, of a criterion which appears on the basis of cogent evidence to be manifestly more suitable, that is to say prefer­ able as regards proportionality, equitable pro- gressivity and certainty.

(d) Weighing up the advantages and disad­ vantages

131. As the Commission and the Council point out, a criterion based on reducing each producer's area under vines would lead to a

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ZANINOTTO v MINISTERO DELLE RISORSE AGRICOLE, ALIMENTARI E FORESTALI

133. First of all, that criterion makes it pos­ 135. It accordingly follows from the above sible to achieve the objective of restoring analysis that the principle of proportionality market stability without imposing a dispro­ has not been infringed by the use of the cri­ portionate burden on producers since, as the terion of yield per hectare for determining Spanish Government rightly observes, they the quantity to be delivered for compulsory are able to choose what part of their harvest distillation in order to deal with serious imbal­ they will deliver for distillation and they ance in the market in wine. 92 secure a price for wine which they might find difficult to sell in the market.

C — Question 5: designation of Italy as a single region

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OPINION OF MR COSMAS — CASE C-375/96

Consequently, the limits of those powers must be determined by reference to 138. According to the national court, the the essential general aims of the market organi Commission exceeded the limits imposed by sation'. 9 the Court 4when it exercised its discretion and allocated the various quantities among the Member States in order to implement the common organisation of the market in an agricultural product, since that allocation does not reflect the structures existing within the Member State concerned. 141. According to the first subparagraph of Article 39(3) of Council Regulation No 822/87, the total quantity for compulsory distillation is to be shared between the various production regions of the Community, grouped together by Member State.

latter. Article 39 of Council Regulation No 96 ducer groups. 822/87 requires the Commission to adopt the provisions for applying that article and to lay down the conditions under which compul sory distillation is to be carried out. 95 — See, for example, Case 22/88 Vreugdenhil and Another v Minister van Landbouw en Visserij [1989] ECR 2049, para- graph 16, Case 167/88 Association Générale des Producteurs de Blé et Autres Céréales [1989] ECR 1653, paragraph 15, and Joined Cases 279/84, 280/84, 285/84 and 286/84 Rau and Others v Commission [1987] ECR 1069, paragraph 14. 93 — That division was made by Article 1(4) of Regulation No 96 — In the case of Italy, the Commission did not, as it did in the 343/94. During the 1993/94 wine year the quantity for com- case of Spain, make use of the freedom given to it by the pulsory distillation in Spain was 3 000 000 hl. second subparagraph of Article 4(1) of Regulation No 441/88, 94 — It refers for example to Wuidart and Others, cited above in which states that the production regions referred to in Article footnote 44, in which the issues raised included whether a 39(3) of Regulation No 822/87 are to coincide with admin- Member State may treat the whole of its territory as a single istrative units larger than communes and comprise admin- region within the meaning of a provision in a regulation istrative units on which statistics are available for the refer- concerning the common organisation of a market in an agri- ence wine years referred to in the second indent of the cultural product (in that case, the market in the milk and second subparagraph of Article 39(3) of Regulation No milk products sector). 822/87.

reason why, in respect of the 1993/94 wine year, the Commission had to adopt Regula­ tion No 610/94 specifically for Italy (Region 4), which, as can be seen from the sixth recital in the preamble to Regulation No 465/94, had not forwarded the required table wine production figures or the breakdown of pro­ duction among the various yield classes in 147. In the instant case, the Commission exer­ good time. It had thus not been possible to cised the wide power accorded it under Article determine the percentage to be applied to the 39(3) of Regulation No 822/87. Of course, production of each Italian producer so as to Region 4 (Italy), like any other region of a set the quantities of table wine which the Member State, includes wine-growing areas latter had to deliver for distillation. 98 with differing characteristics. However, within Region 4 the various smaller areas bal­ ance each other out. The Commission main­ tains that it took the view, with the agreement of the Member State concerned, that objec­ tively there were no grounds justifying a fur­ ther fine breakdown into production 'sub- 144. In addition, the reference periods which regions'. It cannot be considered to have were used to determine the extent to which it was necessary to carry out compulsory dis­ tillation in the 1993/94 wine year, in accor­ 97 — See Case 121/83 Zuckerfabrik Franken v Hauptzollamt dance with Article 39(3) of Regulation No Würzburg [1984] ECR 2039, paragraph 13. 98 — By way of example the Commission mentions that Apulia, 822/87, are laid down on the basis of data Emilia-Romagna and Venetia have a yield per hectare which collected by the Member States and are rep­ is the same, or even higher, than the average national yield and differs from the yield in Sicily, which is below the resentative of a country's whole territory. national average.

152. According to Mr Zaninotto, since there 149. The sixth and seventh questions concern was no table wine from the 1993/94 wine the validity of Article 1(1) of Commission year to deliver for compulsory distillation the Regulation No 3151/94, which extended until price of wine intended for distillation increased 29 January 1995 the time-limit by which wine abnormally. By extending the time-limit producers had to deliver table wine from the within which each producer had to deliver

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ZANINOTTO v MINISTERO DELLE RISORSE AGRICOLE, ALIMENTARI E FORESTALI

156. In addition, since producers from cer­ tain regions were not able to deliver their production for compulsory distillation in time, the time-limit was extended by Regulation No 3151/94 until 29 January 1995 so that they could deliver their required quantity of table wines later, subject however to a reduc­ tion in the price which they would be paid. That assistance was intended to preclude the 154. Specifically, the Commission states in risk of their being fined under national law. the fifth recital in the preamble to Regulation No 3151/94 that 'to take account of the Com­ munity provisions on concluding long-term storage contracts,... the time-limits have been extended by Commission Regulation (EC) No 1960/94; ... however, for reasons peculiar to certain wine-producing regions, it has not been possible to satisfy the delivery obliga­ 157. As the Commission rightly states, it was tions by the time-limit laid down; ... to avoid an exceptional measure, which it adopted penalising the wine producers concerned too under the powers conferred on it by Article heavily, they should still be permitted to dis­ 39(11) of Regulation No 822/87, with the charge their obligations as regards compul­ agreement of the Management Committee for sory distillation for the 1993/94 wine year, Wine, and one which is clearly favourable to with the appropriate penalty measures taken producers like Mr Zaninotto himself who into account ...' (emphasis added). were behind in complying with their obliga-

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OPINION OF MR COSMAS — CASE C-375/96

159. By its seventh question, the national court again casts doubt on the validity of 162. In my view, the extension of the time- Article 1(1) of Regulation No 3151/94, on the limit for delivering table wine for distillation ground that it offends against the principle of is a necessary and appropriate means of proportionality which must govern the actions improving conditions in the market in wine of the Community institutions. within a particular wine year and the corre­ sponding assessment by the Commission is not manifestly wrong. Quantities of wine which have not been distilled during one wine year must still be distilled even if the next year has already begun; otherwise there is a risk, as the Commission rightly points out, 160. Since the Commission imposed the dis­ that the whole system of compulsory distil­ tillation of a certain quantity of table wine lation, which seeks to restore stability to a after the wine year to which the stabilisation market suffering from a surplus of table wine, measures related (1993/94) had ended and a will be rendered pointless.

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ZANINOTTO v MINISTERO DELLE RISORSE AGRICOLE, ALIMENTARI E FORESTALI

VII — Conclusion

163. I therefore propose that the answer to the questions referred to the Court by the Pretura Circondariale di Treviso, Sezione Distaccata di Conegliano, should be as follows:

The above analysis has revealed no factor of such a kind to affect the validity of: