CJEC, May 18, 1977, No 111-76

THE COURT

1 By a judgment of 28 october 1976, which was registered at the court registry on 24 november 1976, the gerechtshof, amsterdam under article 177 of the treaty referred the following question for a preliminary ruling: ' must the rules contained in the verordening produktie slachtpluimveesector 1974 of the produktschap voor pluimvee en eieren be regarded as being incompatible with regulation n°123-67-eec of the council of the european economic community of 13 june 1967 on the common organization of the market in poultrymeat or with articles 30 to 37 of the eec treaty?

2 The national rules referred to in the question restrict for the second half of 1974 the slaughter of poultry by fixing quotas calculated in terms of a reference period.

3 In connexion with criminal proceedings instituted against the operator of a poultry slaughter-house for having slaughtered more poultry than the quota permitted him by the produktschap, the institution governed by public law controlling the organization of the market in this sector, the question arose whether the rules which, it was charged, the accused had infringed were compatible with regulation n°123-67 of the council or with articles 30 to 37 of the treaty.

4 Whilst the court cannot, within the framework of article 177 of the treaty, give a ruling on the interpretation and validity of provisions of national legislation or regulations it may nevertheless provide the national court with an interpretation on the issues coming within community law which will enable that court to resolve the legal problem before it.

5 What is really at issue is whether regulation n°123-67 of the council and articles 30 to 37 of the treaty must be interpreted as prohibiting within the poultrymeat sector measures restricting production or marketing like those implemented through the national provisions referred to.

6 The organization of the market in poultrymeat established by regulation n°123-67 of the council prohibits, with regard to the internal market, state aids, any customs duty or charge having equivalent effect and any quantitative restriction or measure having equivalent effect and covers rules for marketing but it does not establish an intervention system in any form whatsoever.

7 Article 2 of the regulation however provides that a certain number of community measures may be taken by the council, ' in order to encourage action by trade and joint-trade organizations to facilitate the adjustment of supply to market requirements, with the exception of action relating to withdrawal from the market '.

8 At the time of the dispute, the council had not and, up to the present time, has not exercised the powers conferred upon it for this purpose.

9 In order to remedy the surplus on the poultrymeat market and the appreciable fall in prices which were recorded in 1974 the council granted a financial aid for publicity campaigns to promote the consumption of poultrymeat products whilst the commission encouraged export by increasing refunds and also suggested that the producers in the various member states should take action to limit voluntarily the production of poultry for slaughter.

10 According to the statements of the commission in the course of the oral procedure concerted action amongst undertakings, which in certain cases, moreover, was encouraged by state aids led by methods which varied from one state to another to a fall in production of approximately 10 % in relation to 1973 which, according to the report of the commission on the agricultural situation for 1974, was in accordance with the aim in view.

11 Since it had apparently not been possible to arrange this voluntary action amongst producers in the netherlands, the produktschap, the trade organization in this sector, with the concurrence of the netherlands minister of agriculture, adopted a measure limiting the slaughter of poultry by fixing for the second half of 1974 quotas calculated on the amount of poultry slaughtered during a reference period.

12 The question submitted calls for a decision whether, taking account of the encouragement by the community authorities to reduce production in order to counter the fall in prices, the national measure in dispute must be considered as incompatible with the provisions of community law cited by the national court.

13 Once the community has, pursuant to article 40 of the treaty, legislated for the establishment of the common organization of the market in a given sector, member states are under an obligation to refrain from taking any measure which might undermine or create exceptions to it.

14 In its communication of 23 january 1967 to the council ( doc.-cee-sec ( 67 ) 115 final ) the commission justified the absence of all measures of intervention from its proposal for a regulation on the organization of the market in poultrymeat by the consideration that, because of the nature of the production in this sector and of the structure and marketing of such production, together with the large part played by variable elements in the production costs, ' intervention on the market in eggs and poultrymeat is not desirable '.

15 In the same document the commission also observed that the rapid adaptation of the volume of production to demand which, it maintained, is characteristic of the market in poultrymeat means that ' before the intervention machinery intended to withdraw from the market a certain quantity of goods can bring about positive results, forces pertaining to the production process itself are already in operation to adjust prices to a normal level '.

16 It may be inferred from those considerations that the absence of measures concerning the withdrawal, where necessary, of products from the market does not stem from an omission or from an intention to leave measures of this nature to the appraisal of the member states but is rather the consequence of a considered choice of economic policy of relying essentially on market forces to attain the desired balance.

17 This conclusion is confirmed not only by article 13 of the regulation in accordance with which any quantitative restriction or measure having equivalent effect is prohibited in the internal trade of the community but further by article 2 of the same regulation whereby measures may be taken in order to encourage action by trade and joint-trade organizations to facilitate the adjustment of supply to market requirements, with ' the exception of action relating to withdrawal from the market '.

18 It thus follows from the general tenor of the regulation that, as regards the internal trade of the community, the organization of the market in the product in question is based upon freedom of commercial transactions under conditions of genuine competition.

19 Even if the national restrictions on slaughter must be regarded as referring to the production and not to the marketing of the products they are also prohibited by article 2 of regulation n°123-67 as amounting to withdrawal of the products from the market and as constituting quantitative restrictions capable of affecting, potentially at any rate, the system of trade as it has been set up by the organization of the market established by regulation n°123-67.

20 Nevertheless it must be considered whether the circumstance that the commission suggested to the trade and joint-trade organizations that they should accept a voluntary limitation of production by their members perhaps justifies an interpretation of article 2 in accordance with which a decision of a national public authority entrusted with the organization of the trade imposing a common measure on all the undertakings concerned is in accordance with the said article 2 and consequently permissible.

21 Although article 2 of regulation n°123-67 provides, in order to facilitate the adjustment of supply to marketing organizations, that recourse may be had to action by trade and joint-trade organizations, this is subject to the express condition that community measures are concerned, and such action may not include withdrawal from the market.

22 Whilst the adoption of community measures does not necessarily imply that the implementing measures should be in all respects identical throughout the community it nevertheless precludes measures adopted independently by trade and joint-trade organizations each in a specifically national framework, since uncoordinated action is of such a nature as to cause discrimination between producers and consumers and to distort trade between the member states.

23 Furthermore even if cooperation of this nature between producers or associations of producers could be considered compatible with regulation n°26-62 of 4 april 1962 applying certain rules of competition to production of and trade in agricultural products ( oj, english special edition ( 1959-1962, p. 129 ), nevertheless such agreements cannot have as their objective the infringement of the express provision in article 2 of regulation n°123-67 prohibiting action relating to withdrawal from the market.

24 Serious doubts must accordingly be entertained whether the encouragement and suggestions of the commission to the trade or joint-trade organizations concerning withdrawal from the market were in accordance with article 2 of regulation n°123-67.

25 The circumstance that the community authorities encouraged practices which are not in accord with community law does not allow the court to concede that like measures taken by a public institution of a member state are compatible with regulation n°123-67.

26 Furthermore it must be observed that there is in any event a marked difference between measures relating to voluntary reduction and binding measures imposed by an authority governed by public law.

27 the reply to the question submitted must therefore be that regulation n°123-67, especially articles 2 and 13 thereof, must be interpreted as making measures enacted by the national authorities to impose a quota on the slaughtering of poultry incompatible with those provisions.

28 the reply which has been given renders superfluous an interpretation of articles 30 to 37 of the treaty.

Costs

29 the costs incurred by the netherlands government and the commission of the european communities which submitted observations to the court are not recoverable.

30 as these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the national court, costs are a matter for that court.

On those grounds,

The court

In answer to the question submitted to it by the gerechtshof, amsterdam by judgment of 28 october 1976, hereby rules:

Regulation n°123-67, especially articles 2 and 13 thereof, must be interpreted as making measures enacted by the national authorities to impose a quota on the slaughtering of poultry incompatible with those provisions.