C-22/99

BERTINETTO

OPINION OF ADVOCATE GENERAL ALBER delivered on 11 May 2000 *

I — Introduction price was not negotiated between Biraghi and the individual suppliers and thus did not result from an offer accepted severally by them. It was determined by the market situation, the same price being paid to all suppliers. Between April 1991 and March 1. The question raised in this reference for 1992 the price per litre of milk paid to a preliminary ruling is whether the rules of Mr Bertinetto varied: sometimes it was the the common organisation of the market in same as the Community's target price, milk and milk products determining inter while at other times it was even below the alia how the target price for milk is to be price set by UNALAT (on behalf of the fixed preclude national legislation designed associations of milk producers) and ASSO- to promote the conclusion of inter-trade LATTE (on behalf of the milk-processing agreements between producers on the one industry, including Biraghi) in the inter- hand and processors and traders on the trade agreement concluded pursuant to other on a minimum price for milk — a Italian Law No 88 of 16 March 1988 price which might at times exceed the milk ('Law No 88/88'). 1 price fixed by the Community.

I I— Facts and question referred

3. Mr Bertinetti argued before the national court (the Pretura circondariale di Pinerolo 2. The following facts are apparent from (District Magistrates' Court, Pinerolo)) that the order for reference: the plaintiff, Cris- all ASSOLATTE's members were bound by toforo Bertinetto, is a cattle breeder and the price set in the agreement, and that it milk producer. He contracted with the was not open to them, under any circum- defendant, Biraghi SpA ('Biraghi'), which stances, to pay the producers less. Biraghi manufactures milk products, to supply milk should therefore be ordered to make good between April 1991 and March 1992. The the difference.

5. It is the Pretore's view that — subject to the rules of the common organisation of the 7. It pointed out that some provisions of market in milk and milk products should Law No 88/88 might contravene the reg- these apply — the action should succeed if ulation, depending on how the latter was to the inter-trade agreement did indeed be construed. Thus the Law stipulated that: require the processors to pay the price agreed by their trade association. Conver- sely, the action should fail if that agreement merely constituted guidance which indivi- dual association members were at liberty to disregard. In order to see which was the correct approach, the Pretore examined Law No 88/88, which had introduced and (a) the inter-trade agreements were bind- regulated the inter-trade agreements, and ing (Articles 2(d) and 8(2)); concluded that it contained a number of provisions suggesting that the agreements were indeed binding. Article 2(d), for example, provided that '... prices for the products [shall] be determined in advance by means of inter-trade agreements', while Article 8(3) stated that the other party was (b) the agreements were to establish the to undertake 'to pay the price resulting minimum price, or the criteria for from the agreements'. Consequently the determining that price (Article 5(b)); content of the agreement was binding on the members of the association without any further statement of intent on their part 2 — Council Regulation (EEC) No 804/68 of 27 June 1968 on the common organisation of the market in milk and milk being required. The fact that the agree- products (OJ, English Special Edition 1968 (I), p. 176).

9. Article 3 governs the fixing of the target (f) undertakings which entered into con- price for milk. It provides inter alia: tracts consistent with the inter-trade agreements would enjoy preferential treatment in respect of the award of financial assistance for the modernisa- tion and restructuring of the food and '1. Before 1 August of each year a target agriculture sector (Article 12). price for milk shall be fixed for the

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OPINION OF MR ALBER — CASE C-22/99

Community in respect of the milk year production, and to promote an organisa- beginning in the following calendar year. tion of the agricultural markets consistent with the objectives and guidelines of national plans in the food and agricultural sector.

2. The target price shall be that price which it is aimed to obtain for the aggregate of producers' milk sales, on the Community market and on external markets, during the milk year. Article 2

3. ...

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BERTINETTO

Article 5 (b) to pay the price resulting from the agreements.

1. In order to ensure that the aims of this Law are attained, the inter-trade agree- ments shall... determine inter alia:

Article 12

(b) the minimum price, or, in the case of an agreement extending over a number of years, the criteria for determining that price, particular regard being had to 1. When financial assistance is granted for changes in production costs, and to the the modernisation and restructuring of rules and time-limits for the settlement of processing and commercial undertakings amounts due and, where appropriate, pay- in the food and agriculture sector, under- ments on account; takings which have concluded cultivation and sales contracts in line with the inter- trade agreements shall enjoy preferential treatment.

IV — Submissions of the parties beyond which the intervention machinery of the common organisation of the market in question would be activated. By con- trast, market prices are determined by market trends. Studies have revealed con- siderable variations in trade prices among Member States. It follows that there is no conflict between Law No 88/88 and Reg- 1 1 . Biraghi argues that Regulation ulation No 804/68. No 804/68 precludes any provision of national law intended to fix a uniform price for milk, by any method. 4However, that is precisely what Articles 4 and 7 of Law No 88/88 seek to achieve: the reason provision was made for the parties to be convened by the Minister was so as to facilitate the conclusion of an inter-trade agreement. Article 12 of the Law should be viewed in the same context: the reason signatories to an inter-trade agreement are to receive preferential treatment in respect of the award of financial assistance for modernisation and restructuring is in order to encourage the parties concerned to conclude such an agreement and hence establish a uniform price.

V — Assessment system of intervention prices for a number of processed products listed in Article 5 of Regulation No 804/68. The purpose is to ensure that the target price for milk is achieved in the conditions set out in Article 3 — that is, in a manner which is 14. The compatibility of national provi- consistent with the laws of the market sions on the fixing of milk prices with the within the Community common organisation of the market in milk and milk products has already been con- sidered by the Court on a number of occasions; the relevant Italian legislation, in particular, has been examined by the Court several times. 5 17. In order to achieve that objective, the regulation also contains a system of rules for protection at the Community's fron- tiers, consisting of levies to offset the difference between the threshold and the free-at-frontier price of particular milk products; it also provides for export 15. In those cases the Court first considered refunds to be paid. The latter are calculated the fundamental characteristics of the on a uniform basis for the whole Commu- Community rules. Article 3(1) of Regula- nity, though they may be differentiated tion No 804/68 stipulates that a target according to the third country of destina- price for milk shall be fixed for the tion. Community each year. Article 3(2) defines the target price as that price which it is aimed to obtain for the aggregate of producers' milk sales, on the Community market and on external markets, during the milk year. 18. One of the principal objectives of that organisation is to ensure that milk produ- cers can obtain a price for such products in the region of the target price. The mechan- isms introduced by the regulation to achieve that end are under the exclusive jurisdiction of the Community. 6 16. There are no direct intervention mea- sures for milk; support for the price of milk is achieved primarily by means of the

No 306/75 — subsequently replaced by power to set the producer price for milk on Law No 88/88, the subject of these pro- its administrative authorities. ceedings — was compatible with Regula- tion No 804/68. The Court described the legal position at the time in the following terms: the relevant law, which included provisions governing the establishment of the producer price for milk, stipulated that the production and sale of milk by produ- cers' associations was to be subject to the 21. The Court proceeded from a considera- rules and procedures laid down by the tion of the objectives of the organisation of association; in addition, members of an the market; it held that 'in sectors covered association were obliged to sell their milk by a common organisation of the market, a through it. The producer price for milk, for fortiori when that organisation is based on whatever use the milk was intended, was a common price system, Member States can fixed for each agricultural year and for no longer take action, through national each region by means of collective negotia- provisions taken unilaterally, affecting the tion with the participation of the relevant machinery of price formation at the pro- trade parties. The agreements reached duction and marketing stages established between the parties were published and under the common market organisation. It were then binding on them. If no such follows that national legislation designed to agreement was reached within 30 days of promote and encourage, by any method, the start of the agricultural year the pro- the establishment of a uniform producer ducer price for milk was fixed by a price for milk, by agreement or by author- commission appointed by decree of the ity, at the national or regional level is, by its President of the region. That commission's nature, outside the bounds of the powers decision was likewise published and was given to Member States and runs contrary binding on the parties. to the principle established by Regulation No 804/68, in particular Article 3 thereof, of attaining a target producer price for the milk sold by Community producers during the milk year on the Community market and on external markets'. 8

23. That ruling was reaffirmed by the Court in its judgment of 7 February 1984 in proceedings against Italy for failure to fulfil obligations; once again, Law No 306/75 was at issue. The Court found that Community law had been infringed, since the Italian legislation provided for a uniform producer price for milk to be established by a committee appointed by decree of the President of the region in question. 9The Court went on to state that 26. In its order, the referring court has set Community law prohibits any legislative out a number of factors which in its view measure which provides for any interven- suggest that the public authorities may have tion whatsoever on the part of a public, promoted or encouraged the establishment national or regional authority with a view of a uniform producer price, at least to promoting and encouraging the estab- indirectly. Thus it refers to the fact that lishment by agreement of a uniform pro- the inter-trade agreements are binding, and ducer price for milk. 10 that they determine either the minimum price, or the criteria according to which it is to be established. Should they reach no agreement on their own initiative, there is provision for the parties, on application by either, to be convened by the Minister for Agriculture and Forestry. Similarly, the Minister for Agriculture in a regional government must, on application by either party, convene both in order to facilitate 24. Thus national legislation designed to the conclusion of inter-trade agreements. promote and encourage, by any method, The parties to those agreements must the establishment of a uniform producer promote the conclusion of contracts in price for milk, by agreement or by author- respect of the sale of the products con- ity, at the national or regional level, is cerned, and must check that the contracts incompatible with Regulation No 804/68. concluded are consistent with the agree- ments. Finally, undertakings which have concluded contracts in line with the agree- 9 — See Case 166/82 (cited in footnote 5 above), paragraph 24. ments are to receive preferential treatment 10 — See Case 166/82 (cited in footnote 5 above), paragraph 25. in respect of the award of financial assis-

28. However, since any establishment of the prices in question — by any method — runs counter to the principle set out in Regulation No 804/68, and more particu- larly in Article 3 thereof, that the producer target price is to be the price which it is aimed to obtain for the producers' milk sales on the Community market and on VI — Costs external markets, it must be concluded that national legislation to that effect is incom- patible with the common organisation of the market in question. 31. The costs incurred by the Italian Gov- ernment and the Commission, which have submitted observations to the Court, are not recoverable. As the proceedings are, in so far as the parties to the main action are 29. I should point out finally that it is for concerned, a step in the action pending the national court to establish the facts of before the referring court, the decision on the case, and to determine, and in particu- costs is a matter for the latter.

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VII — Conclusion

32. In the light of the foregoing, I propose that the Court answer the question referred as follows:

Article 3 of Regulation (EEC) No 804/68 of the Council of 27 June 1968 on the common organisation of the market in milk and milk products precludes legislative provisions such as those contained in (Italian) Law No 88 of 16 March 1988, which prescribe, in respect of the conclusion of inter-trade agreements, that it shall be the task of the parties to those agreements to establish milk prices according to a procedure laid down in the Law, and with the legal consequences ensuing therefrom.