CJEC, January 17, 1980, No 95-79

1 By judgments of 7 and 30 may 1979, which were received at the Court on 15 and 19 June 1979 respectively, the tribunal de premiere instance (Court of first instance), namur, (criminal chamber), referred to the Court of justice under article 177 of the EEC treaty questions for a preliminary ruling on the interpretation of regulation (EEC) No 805-68 of the council of 27 June 1968 on the common organization of the market in beef and veal (official journal, English special edition 1968 (i), p. 187) and of regulation No 121-67-EEC of the council of 13 June 1967 on the common organization of the market in pigmeat (official journal, English special edition 1967, p. 46).

2 These questions were raised during criminal proceedings brought against two retail butchers in andenne (case 95-79) and namur (case 96-79) on the charge that on 14 October 1976 and 13 April 1977 respectively they increased the retail prices of beef and veal and pigmeat to an extent contrary to the provisions of the Belgian ministerial order of 27 March 1975 (moniteur belge of 29 March 1975), articles 1 and 2 of which provide that the selling prices to the consumer for beef and veal and pigmeat respectively charged by retail butchers may not exceed the amounts resulting from the weighted average purchase price as increased by a maximum gross profit margin of bfr 22 per kilogram and value-added tax. For this purpose, article 2 (4) of the above-mentioned order specifies that the weighted average purchase price is calculated by dividing the total of the invoices by type of purchase, excluding value-added tax, for the previous four weeks by the corresponding number of kilograms, less 2.5 %.

3 The two accused claimed that the above-mentioned provisions are incompatible with the community regulations which established the common organizations of the markets in pigmeat and in beef and veal and cannot for that reason form the legal basis of the two criminal proceedings brought against them.

4 So as to clarify this problem, the national Court referred to the Court of justice in case 95-79 the following questions:

''Did the ministerial order of 27 March 1975, fixing the selling price to consumers of beef and veal or of pigmeat, contain an infringement of:

1. Regulation (EEC) No 805-68 of the council of 27 June 1968 on the common organization of the market in beef and veal, in particular, article 5.3.1 ; article 6 (1) (a) and (b) and of the regulations fixing the basic price of beef and veal, in particular the regulations as implemented by regulations:

- No 1652-72 of 31 July 1972;

- No 1192-73 of 8 may 1973;

- No 667-74 of 28 March 1974;

2. Regulation No 121-67-EEC of the council of 13 June 1967 on the common organization of the market in pigmeat, in particular, article 3.4.1 ; article 5 (1), second indent, and of the regulations fixing the basic price of pigmeat, in particular the regulations as implemented by regulations:

- No 2305-71 of 29 October 1971;

- No 1351-73 of 15 may 1973;

- No 1133-74 of 29 April 1974? ''

In case 96-79, that Court referred to the Court of justice the following question:

''Do the provisions of the ministerial order of 27 March 1975 fixing the selling price to the consumer of beef and veal and of pigmeat contain an infringement of regulation (EEC) No 805-68 of the council of 27 June 1968 on the common organization of the market in beef and veal?

''

5 Although, within the framework of proceedings brought under article 177 of the EEC treaty, it is not for the Court to give a ruling on the compatibility of rules of internal law with provisions of community law, the Court is competent to supply the national Court with any criteria of interpretation coming within community law enabling that Court to determine whether such rules are compatible with the community rule evoked. It is therefore appropriate to consider the questions which have been referred to this Court as asking whether and to what extent regulation No 121-67-EEC of the council of 13 June 1967 on the common organization of the market in pigmeat and regulation (EEC) No 805-68 of the council of 27 June 1968 on the common organization of the market in beef and veal allow a power to continue to exist on the part of the member states to regulate by means of internal rules selling prices to consumers in the above-mentioned sectors. In view of the fact that these questions are related it is appropriate to consider them jointly.

6 In this instance, it follows from articles 1 and 2 of the ministerial order of 27 March 1975 to which the national Court refers that the national measures in question relate to price formation at the stage of sale to consumers. On the other hand, it is an established fact that the products whose prices are affected by the above-mentioned measures are governed by the common organization established by regulation No 121-67-EEC in the market in pigmeat and by regulation (EEC) No 805-68 in the market in beef and veal.

7 As the Court indicated in its judgment of 29 June 1978 in the Dechmann case, case 154-77 (1978) ecr 1573, as regards regulation No 121-67-EEC, and in its judgment of 12 July 1979 in the Grosoli case, case 223-78, as regards regulation (EEC) No 805-68, the common organization of the markets established by those regulations are intended to create in the market in pigmeat and the market in beef and veal respectively a single market for the community subject to common administration. In order to bring about these single markets, those regulations established a system of rules and a framework for organization in which a central place is held by the ''price system ''applicable to the production and wholesale stages. These special features of the common organizations of the markets established by regulation No 121-67-EEC and regulation (EEC) No 805-68 are not affected either by the regulations adopted subsequently by the council and referred to by the national Court, which are solely intended to implement the above-mentioned basic regulations by fixing in respect of each period under consideration certain components of their price system or marketing conditions, nor, as regards more particularly regulation No 121-67-EEC, by regulation (EEC) No 2759-75 of the council of 2 October 1975 (official journal 1975, l 282, p. 1) which merely presents a codified version of regulation No 121-67-EEC and of the subsequent amendments thereto.

8 As the Court has moreover stated in its case-law - judgment of 23 January 1975 in the Galli case, case 31-74 (1975) ecr 427 ; judgments of 29 February 1976 in the Tasca case, case 65-75 (1976) ecr 291 and the Sadam case, joined cases 88 to 90-75 (1976) ecr 323 ; judgment of 29 June 1978 in the Dechmann case, case 154-77 (1978) ecr 1573 ; judgment of 12 July 1979 in the Grosoli case, case 223-78, judgment of 18 October 1979 in the buys case, case 5-79, and judgment of 11 November 1979 in the Danis case, joined cases 16 to 20-79 - in sectors covered by a common organization of the market, and a fortiori when this organization is based on a common price system, member states can no longer take action, through national provisions adopted unilaterally, affecting the machinery of price formation as established under the common organization. It held in the same judgments that provisions of a community agricultural regulation which comprise a price system applicable at the production and wholesale stages leave member states free - without prejudice to other provisions of the treaty - to take appropriate measures relating to price formation at the retail and consumption stages, on condition that they do not jeopardize the aims or functioning of the common organization of the market in question, in particular its price system.

9 In principle the fixing of a maximum gross profit margin for retailers to charge when selling to the ultimate consumer is not apt to jeopardize the aims or functioning of such an organization, so long as the profit margin is calculated essentially on purchase prices as charged at the production and wholesale stages, so as not to affect the functioning of the price system on which the common organization of the market concerned is based.

10 This is not however the case where the purchase prices taken into consideration do not take into account marketing and importation costs which the retailer has in fact borne both at the supply stage and at that of sale to consumers or where the gross profit margin itself is fixed at a level which, taking into account the detailed rules for the calculation of purchase prices, is not capable of ensuring that the retailer obtains fair remuneration for his activity. A gross profit margin which does not fulfil these conditions could in fact freeze maximum retail selling prices, and this would be apt to affect at prior stages of marketing the price mechanism resulting from the common organization of the markets or to affect intra-community trade by an appreciable reduction in imports.

11 For those reasons it is necessary to reply to all the questions referred to this Court that regulation No 121-67-EEC of the council of 13 June 1967 on the common organization of the market in pigmeat and regulation (EEC) No 805-68 of the council of 27 June 1968 on the common organization of the market in beef and veal, both viewed in the light of the other regulations mentioned by the national Court, do not prohibit the unilateral fixing by a member state of a maximum gross profit margin for the retail of pigmeat or beef and veal which is calculated essentially on the basis of the purchase prices charged at previous marketing stages and which varies according to those prices, provided that the purchase prices used in the calculation of the profit margin are increased by the marketing and import costs actually borne by the retailer at the supply stage and at the stage of sale to consumers and that the margin is fixed at a level which does not impede intra-community trade.

Costs

12 The costs incurred by the Belgian government and the commission of the European Communities which have submitted observations to the Court are not recoverable. 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, the decision on costs is a matter for that Court.

On those grounds,

The Court,

In answer to the questions submitted to it by the tribunal de premiere instance, namur, by judgment of 7 may 1979 in case 95-79 and 30 may 1979 in case 96-79, hereby rules: