C-99/99

ITALY V COMMISSION

OPINION OF ADVOCATE GENERAL ALBER delivered on 21 September 2000 *

I — Introduction I I — The legal framework, in particular Regulation No 2815/98

A — Preliminary observations on the manner of citation

1. By the present action the Italian Repub- lic is seeking the complete or partial 2. The legislation most frequently cited in annulment of Regulation No 2815/98. 1 the present case will be cited in the Italy is now pursuing only two of the following abbreviated forms: original four pleas in law. The first plea in law essentially consists in the complaint that under Regulation No 2815/98 the location of the mill in which the olive oil is extracted has been set as the criterion for determining the geographical area from — Regulation No 136/66/EEC of the which the oil originates. An incorrect Council of 22 September 1966 on the criterion has thus been selected, since that establishment of a common organisa- location does not give any indication as to tion of the market in oils and fats — the origin of the olives. In addition, because hereinafter: Regulation No 136/66; 2 of a reference to rules contained in the Customs Code, abusive use of designations of origin is possible. In the other plea in law, Italy complains that Regulation No 2815/98 made unlawful registration of protected designations of origin possible — Council Directive 79/112/EEC of during a transitional period between the 18 December 1978 on the approxima- publication of the regulation and the final deadline for registration. 2 — OJ, English Special Edition 1965-1966, p. 2 2 1 , last amended by Council Regulation (EC) No 2702/1999 of 14 December 1999 on measures to provide information on, * Original language: German. and to promote, agricultural products in third countries 1 — See point 2 below for the title of the regulation. (OJ 1999 L 327, p. 7).

3 — OJ 1979 L 33, p. 1, repealed and consolidated by Directive 2000/13/EC of the European Parliament and of the Council of 20 March 2000 on the approximation of the laws of the Member States relating to the labelling, presentation and advertising of foodstuffs (OJ 2000 L 109, p. 29). 3. Article 35a(1) of Regulation No 136/66 4 — OJ 1989 L 232, p. 13, repealed and consolidated by authorises the Commission to adopt mar- Council Regulation (EC) No 1493/1999 of 17 May 1999 on the common organisation of the market in wine (OJ 1999 L 179, p. 1). That regulation requires indications of the place where the processed grapes were harvested. 5 — OJ 1992 L 208, p. 1, last amended by Commission 6 —OJ 1992 L 302, p. 1, last amended by Regulation (EC) Regulation (EC) No 1068/97 of 12 June 1997 amending No 955/1999 of the European Parliament and of the Annex II to Council Regulation (EEC) No 2081/92 on the Council of 13 April 1999 amending Council Regulation protection of geographical indications and designations of (EEC) No 2913/92 with regard to the external transit origin for agricultural products and foodstuffs (OJ 1997 procedure (OJ 1999 L 119, p. 1). L 156, p. 10). 7 — OJ 1998 L 349, p. 56.

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7. The fifth recital states: trade marks, 10 as amended by Decision 92/10/EEC'. n

(2) The articles of Regulation No 2815/98 which are relevant to the present case '[W]hen the origin of a virgin olive oil relates to the European Community or to a geographical area covering the entire terri- tory of a Member State there can be no confusion in practice with PDOs or PGIs; ... extraction practices and techni- 9. The relevant provisions of Regulation ques, particularly in the olive oil produc- No 2815/98 state: tion sector, influence the quality and taste of virgin oils; ... transfers of olives from one country to another are extremely limited, mainly because of the substantial reduction in the quality of the oil obtained which they entail;... extraction of the oil should therefore be regarded as conferring origin, which will also take account of the 'Article 1 difficulties as regards control and changing the class of product which are involved for international trade'. The designation of the origin of extra virgin and virgin olive oil as defined in points 1(a) and (b) of the Annex to Regulation No 136/66/EEC on packagings intended for consumers in the Member States or on labels attached to those packagings shall be optional. If that option is taken up by an operator designation of the origin shall be 8. The seventh recital contains the follow- authorised solely in accordance with the ing passage: provisions of this Regulation.

The designation of the origin of other olive oils and olive-residue oils as referred to in '... however, existing trade marks may continue to be used if they have been officially registered in the past in accor- 10 — OJ 1989 L 40, p. 1. 11 — Council Decision of 19 December 1991 postponing the dance with First Council Directive 89/104/ date on which the national provisions applying Directive EEC of 21 December 1988 to approximate 89/104/EEC to approximate the laws of the Member States relating to trade marks are to be put into effect (OJ 1992 the laws of the Member States relating to L 6, p. 35).

(b) for the purposes of this Regulation:

— the names of brands or firms whose registration was applied for before — a Member State, 1 January 1999 in accordance with Directive 89/104/EEC,

— the European Community,

— designations granted pursuant to Regu- — a third country. lation (EEC) No 2081/92.

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— agrees to the checks laid down in C — Regulation No 2081/92 application of this Regulation.

10. Article 2(2) of Regulation No 2081/92 states:

3. The packaging or label attached to the packaging shall bear the alphanumeric identification of the approved packaging plant. 'For the purposes of this Regulation:

(a) designation of origin: means the name of a region, a specific place or, in exceptional cases, a country, used to describe an agricultural product or a Article 5 foodstuff:

13. The Italian Republic claims that the Court should:

— annul Regulation (EC) No 2815/98 of 22 December 1998 or at least Art- icle 1, Article 2(1) and the third sub- Article 24

12 — See the description in the Opinion of Advocate General Jacobs delivered on 27 January 2000 in Case C-443/98 Goods whose production involved more Unilever Italia v Central Food [2000] ECRI-7535,I-7537, paragraph 10 et seq.); that case concerns the claim that, in than one country shall be deemed to adopting those rules, the Italian Republic infringed Coun- cil Directive 83/189/EEC of 28 March 1983 laying down a originate in the country where they under- procedure for the provision of information in the field of went their last, substantial, economically technical standards and regulations (OJ 1983 L 109, p. 8).

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paragraph of Article 2(2), the third infringes its legal basis — Regulation subparagraph of Article 3(2), and Art- No 136/66 13 — which relates to the culti- icle 3(3); vation of olives, and not only to pressing, which may take place anywhere. Therefore, the entire production cycle for the produc- tion of olive oil — from olive-growing to pressing — must form the basis of a des- — order the Commission to pay the costs. ignation of origin. This is also clear from Directive 79/112 14 and from Regulation No 2081/92, 15 under which geographical designations of origin are connected to the region of production. Regulation 14. The Commission claims that the Court No 2392/89 adopts a similar approach for should: wine.

polyphenols in the olive oil. Pressing is promoting the interests of industrial oil certainly important, but cannot compen- mills to the detriment of olive farmers. sate for an absence of factors resulting from agricultural traditions.

20. The Commission first points out that the institutions possess a wide discretion in 17. Whilst transportation of olives over agricultural policy decisions. In reviewing long distances generally results in losses of the legitimacy of the exercise of that quality, technical developments which discretion, the Community Courts may would make it possible to produce virgin not substitute their own assessments for olive oil or extra virgin olive oil from those of the competent authorities, but imported olives cannot be ruled out. Regu- must restrict themselves to examining lation No 2815/98 encourages producers whether those assessments contain a man- to accept a loss of quality in order to be ifest error or constitute a misuse of able to use a special designation of origin. power. 16 Such encouragement is not consistent with the statement that transportation reduces quality. Moreover, because of that encour- agement, it is not possible to argue that the negligible imports before the entry into force of Regulation No 2815/98 rule out their increase in the future. 21. The Commission stresses that the cri- terion disputed by the applicant which is laid down in the third subparagraph of Article 3(2) of Regulation No 2815/98 — the location of the mill — concerns only the indication of a Member State or the European Community as the area of origin. 18. Furthermore, those rules may result in an increase in actual imports of olives from third countries into the Community, with the result that the oil extracted from those olives is regarded as being produced in the Community merely on the basis of the pressing. 22. Regulation No 136/66 does not con- tain any express or implicit rules regarding the origin of olive oils. Regulation No 2815/98 is not hierarchically subor- dinate to Directive 79/112 and Regulation

24. This plea in law is thus reduced to a criticism by Italy of the exercise of the scope which the Commission enjoys in exercising its law-making power. In this respect, however, Italy can succeed only if it can be shown that, in exercising its discre- tion, the Commission committed a serious error, a misuse of power in the narrow sense established in Community law, or 27. Differences in practice between the exceeded the bounds of its discretion. criteria of the location of the mill and the origin of the olives are conceivable only in the case of low-quality refined olive oil, which, however, under Regulation No 2815/98, may not be sold with an indication of origin. Olives have to be processed within a few days, otherwise the 25. The Commission does not dispute that extracted oil no longer achieves the quality the region where the olives are grown of virgin olive oil. Generally, the transpor- influences the characteristics of the olive tation of olives thus permits only the oil. However, detailed rules governing the production of refined olive oil which may indication of such a region in the case of not be given a designation of origin. On the olive oil — including the origin of the other hand, methods of transportation olives — are laid down in Regulation which preserve the quality of the olives No 2081/92. On the other hand, no parti- (presumably using refrigerated containers cular quality characteristics result from the or similar means) involve very high costs.

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28. Moreover, the weight of the oil 32. The objections raised by the applicant obtained is equivalent to only around could thus be significant at most at political 20% of the weight of the olives used. The level, but do not give grounds for an action transportation costs for the olives to be for annulment, since the Commission pressed would therefore also be higher, enjoys a wide discretion in agricultural based on weight, than the transportation policy. costs for the equivalent quantity of olive oil.

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authorises the Commission to adopt mar- and, on the other, the special rules for the keting standards inter alia for virgin olive indication of areas of origin for wines and oil in order to increase sales. It is not grape musts. As far as Regulation disputed that Regulation No 2815/98, No 2081/92 is concerned, the indication which is the subject of the present case, of certain regions as the area of origin is of lays down marketing standards. considerably greater importance for the quality of olive oil than the indication of a whole Member State. It is also much easier to verify the origin of olives from particular regions than the origin from an entire Member State. On account of the 35. An infringement of the legal basis is specific conditions of its production, olive therefore possible only if the Commission oil is not at all comparable with wines and has exceeded the limits of the lawful scope grape musts, which are the subject of which it enjoys — its discretion. There is, Regulation No 2392/89. however, no reason to suppose that the Commission has exceeded the limits of the legal basis and the discretion accorded to it therein.

38. The third piece of legislation referred to by the Italian Republic — Directive 36. The legal basis imposes no express 79/112 — does not contain any substant- restriction on the Commission's discretion. ive provisions at all regarding the manner Neither Article 35a of Regulation in which the area of origin of olive oil is to No 136/66 nor other provisions of that be determined. regulation contain indications as to the way in which the area of origin of olive oil is to be determined.

ary decisions, for example in Case misuse of power. According to the submis- C-285/94: sions of both parties, as technology and the market in olive oil stand at present, the entire production cycle for virgin olive oil always takes place in the Member State in which the mill extracting the olive oil is located. Both sides state that transportation 'In so far as an assessment of a complex of olives over longer distances for pressing economic situation is involved,... where... results in losses of quality. It is not disputed the Commission enjoys significant freedom that for that reason too transportation of of assessment, the Community judicature, olives between Member States or from when examining the lawfulness of the third countries into the Community for exercise of such freedom, cannot substitute the purpose of pressing can at present be its own assessment of the matter for that of disregarded. Furthermore, it is very much the competent authority but must restrict easier to monitor a mill than olive-growing. itself to examining whether the assessment Those considerations can be seen in the of the competent authority contains a explanatory statement for Regulation manifest error or constitutes a misuse of No 2815/98. The Italian Republic has not power.' 18 been able to demonstrate convincingly that there is a risk of increased cross-border transportation of olives in future if it is possible to obtain certain designations of origin on the basis of pressing. It therefore appears appropriate to adopt the location 41. In laying down marketing standards, of the mill as the criterion for claiming area the Commission is required to assess com- of origin in a Member State. plex economic situations. That assessment relates primarily to whether, on the basis of the facts relating to the market and to the product in question, it is necessary to introduce rules governing the indication of 43. There is even less evidence of the Member States as the area of origin of olive existence of a manifest error. This objection oil and how those rules should, where must therefore be rejected. necessary, be enforced. Judicial review, in the sense described, is thus restricted.

45. The Commission objects that Italy misinterprets Article 3(3) of Regulation Submissions of the parties No 2815/98. Under the third indent of Article 2(1)(b) of Regulation No 2815/98, in the case of olive oil from a third country only that third country can be indicated as the area of origin. Article 3(3) of Regu- lation No 2815/98 does not therefore establish any right to use an area of origin 47. The Italian Republic submits that the within the Community, but merely governs first indent of the third subparagraph of which place outside the Community is to be Article 2(2) of Regulation No 2815/98 regarded as the area of origin of olive oil provides, seemingly in accordance with from third countries. That can be clearly Directive 89/104/EEC, 21 for an exception seen from the third recital in Regulation for applications for registration of a brand No 2815/98. 20 By contrast, in order to be made before 1 January 1999. However, able to claim an area of origin within the Regulation No 2815/98, unlike the direct- Community, olive oil must meet the ive, not only contains no reference to good requirements laid down in Article 3(2) of faith, but has actually made it possible to Regulation No 2815/98. register applications between the date of publication of Regulation No 2815/98, 24 December 1998, and 1 January 1999, 19 — Cited in footnote 6. For the text of the provisions see point 11 above. 20 — For the text see point 6 above. 21 — Cited above, point 8.

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52. However, the Italian Government would also have to show, with regard to that objection, a manifest error or misuse 49. The first indent of the third subpara- of powers by the Commission in order for graph of Article 2(2) of Regulation its application to be successful. The risk of

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abusive registration of a trade mark within 53. That plea in law must therefore also be the period of slightly more than one week rejected. between the publication of Regulation No 2815/98 and the expiry of the pre- scribed period appears highly theoretical, particularly since that period included the Christmas holidays, with the result that only a few working days remained to make such a registration. In order for its action to V — Costs be successful in this respect, Italy would, in view of the time which has now passed, have had to prove that that risk in fact 54. Under the first sentence of Article 69(2) materialised. of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings.

VI — Conclusion

55. As a consequence of the foregoing considerations, I propose that the Court should: