Conclusions

OPINION OF ADVOCATE GENERAL
STIX-HACKL
delivered on 14 November 2002 [(1)](#Footnote1)


**Case C-355/00**

Freskot AE
**v**
**Elliniko Dimosio**

(Reference for a preliminary ruling from the Diikitiko Protodikio Thessalonikis (Hellenic Republic))
((Common agricultural policy – Free movement of goods – Freedom to provide services – State aid – Agricultural products – Imposition of a contribution to finance a system of insurance against damage resulting from natural disasters and epidemics))


 I ─ Introduction1. In the present case the national court essentially seeks to ascertain whether the imposition of a contribution provided for
under Greek legislation on the purchase and sale of domestically-produced agricultural products to finance an organisation
insuring agricultural risks is compatible with Community law, in particular Articles 30, 38, 39, 40, 59, 60 and 92 of the
EC Treaty (now, after amendment, Articles 28 EC, 32 EC, 33 EC, 34 EC, 49 EC, 50 EC and 87 EC) and with the First Council Directive
73/239/EEC of 24 July 1973. 
[(2)](#Footnote2)II ─ Legislation

A ─
National law2. Law 1790/1988 concerning the organisation and operation of the Organismos Ellinikon Georgikon Asfaliseon (Greek Agricultural
Insurance Organisation) and other provisions 
[(3)](#Footnote3) (hereinafter
the 1988 Law) provides
*inter alia* : Article 11. An organisation promoting the public interest called the Organismos Ellinikon Georgikon Asfaliseon (ELGA), a private legal
person wholly owned by the State, is hereby established.2. The ELGA shall have its headquarters in Athens and be supervised by the Minister of Agriculture, in accordance with the provisions
of this Law.Article 21. The ELGA has the object of organising and implementing programmes of proactive protection and insuring the production and
assets of agricultural enterprises.2. For the purposes of this Law,
insurance means the protection by insurance and the proactive protection of the agricultural production and vegetable, animal and real
property assets of farmers, and of plant and buildings of their agricultural enterprises, ... from natural risks....Article 31. More specifically, insurance with the ELGA shall include:(a) compulsory insurance against damage which is caused to production from systematic cultivation, to the vegetable, animal and
real property assets of farmers, to the buildings and plant of their agricultural enterprises, ... ; ...(c) proactive protection of vegetable assets and vegetable production....Article 41. Natural or legal persons who own or operate agricultural, stock-breeding, poultry, apicultural, [piscicultural,] aquacultural
or other related undertakings shall be subject to insurance under Article 3....Article 5The resources of the ELGA are:1.(a) income from a special insurance contribution;...2. Detailed rules for the application of this article shall be adopted by decision of the Minister of Agriculture.3. Article 5a was inserted in the 1988 Law by Law 2040/1992 governing the competence of the Ministry of Agriculture and of legal
persons performing supervisory functions there and other provisions 
[(4)](#Footnote4) (hereinafter
the 1992 Law). That provision states
*inter alia* as follows:1. The following domestically-produced agricultural products and by-products shall be subject to the special insurance contribution
in favour of the ELGA:(a) products [and by-products] of vegetable or animal origin or originating from fishing ... ....3. The special insurance contribution is set at 2% for products of vegetable origin and 0.5% for products of animal origin or
those originating from fishing. Those percentages shall be calculated on the basis of the value of the products....7. Subject to the rules in paragraphs 12 and 13 of this article, the special insurance contribution shall be paid to the competent
public finance service by persons statutorily liable thereto within the time-limits laid down in Article 30(2) of the Kodikas
Forologikon Stikhion (Tax Code)....8. The persons liable to pay the special insurance contribution to the competent public finance service are, subject to the rules
in paragraphs 12 and 13 of this article, those persons who, in accordance with the Tax Code, are obliged to issue purchase
and sale invoices for agricultural products....14. The ELGA's income from the special insurance contribution levied by the public finance services shall be entered in the State
budget as State income and shall appear under a dedicated heading for income. Such income shall be paid to the ELGA from the
budget of the Ministry of Agriculture by a transfer of funds in the same amount each year following a proposal to that ministry
by the ELGA.

B ─
Community law4. In the field of insurance, freedom to provide services and freedom of establishment have been implemented by several directives.5. Article 1(1) of First Council Directive 73/239/EEC, as amended by Council Directive 84/641/EEC, 
[(5)](#Footnote5) states the following: This Directive concerns the taking-up and pursuit of the self-employed activity of direct insurance, including the provision
of assistance referred to in paragraph 2, carried on by undertakings which are established in the territory of a Member State
or which wish to become established there.6. Article 2 of Directive 73/239 provides: This Directive does not apply to:1. The following kinds of insurance:...(d) Insurance forming part of a statutory system of social security;....III ─ Facts, main proceedings and question referred7. The applicant in the main proceedings is a public limited company incorporated under Greek law and called
Freskot. The object of its business is the production and purchase of poultry with a view to selling it wholesale in the domestic
market and the slaughter of poultry for third parties in return for payment.8. Whilst carrying out a check, the tax administration ascertained that in the fourth quarter of 1993 Freskot did not pay the
special insurance contribution due on the poultry purchases made by Freskot during that period.9. Pursuant to an assessment of 20 January 1997, Freskot was required to pay the contribution still outstanding and a not inconsiderable
additional amount because of an inaccurate declaration or failure to declare.10. Freskot then applied to the national court for annulment of that assessment on the basis of Community law, in particular Articles 30
et seq., 38, 39, 40, 59, 60, 85 et seq., 90 and 92 of the EC Treaty (now, after amendment, Articles 28 et seq. EC, 32 EC,
33 EC, 34 EC, 49 EC, 50 EC, 81 et seq. EC, 86 EC and 87 EC) and on Council Directive 73/239.11. In particular, Freskot submitted to the national court that, in so far as it concerns poultry production, the contribution
at issue was contrary to the objectives of the common agricultural policy within the meaning set out in Articles 38 and 39
of the EC Treaty (now Articles 32 EC and 33 EC) and to the relevant market organisation. The system of compulsory insurance
at issue would deny poultry producers and traders in Greece the possibility of freely making the sales which they wish to
make, both in Greece, where their undertakings are established, and in other Member States in the conditions laid down by
the particular Community provisions. In addition, it contends that the contribution at issue constitutes a measure having
an effect equivalent to a quantitative restriction on imports within the meaning of Article 30 of the EC Treaty (now Article 28
EC) because it has a detrimental effect on the exports of Greek producers and it favours producers outside Greece. Finally,
it submits that the monopolistic regime of compulsory insurance is incompatible with the freedom to provide services and the
legislative and administrative provisions relating to direct insurance.12. Since the national court considered an interpretation of Community law necessary, it stayed proceedings and referred the following
question to the Court of Justice for a preliminary ruling:Whether the imposition of the insurance contribution referred to in the grounds of the judgment, to which domestically-produced
agricultural products and by-products of vegetable or animal origin or originating from fishing are subject and which is levied
and paid as income to the competent public finance service, is, given the objective it pursues, namely organising and implementing
programmes of proactive protection and insuring the production and assets of agricultural enterprises, contrary to the provisions
of European Union law concerning the free movement of goods (Article 28), the common agricultural policy (Articles 38, 39
and 40), the freedom to provide services (Articles 59 and 60), permitted State aid (Article 92) and the provisions of the
First Council Directive 73/239/EEC of 24 July 1973?IV ─ Analysis13. By its question, the national court essentially seeks to establish to what extent a contribution to finance a compulsory insurance
system in the area of agricultural risks is contrary to Community law.14. In that connection it must first of all be examined whether and to what extent the rules on market organisation permit legislation
such as that at issue. What must also be ascertained is to what extent such legislation falls within the scope of fundamental
freedoms, namely the free movement of goods and the freedom to provide services. Finally, I would like to examine how the
law on aid relates to the proceedings.

A ─
Compatibility of the national legislation with the common agricultural policy1. Submissions of the parties15. The Greek Government and the Commission take as the starting point for their considerations the objectives of the common agricultural
policy set out in Article 39 of the EC Treaty (now Article 33 EC), and the measures set out in Article 40 of the EC Treaty
(now Article 34 EC) which may be taken within the framework of common organisations of the market in order to attain such
objectives. They point out that a common organisation of the market (hereinafter
COM) exists for the products at issue, namely the COM for poultrymeat established by Regulation (EEC) No 2777/75 of the Council. 
[(6)](#Footnote6)16. In that connection they submit that, in accordance with the case-law of the Court, once the Community has legislated for establishment
of the common organisation 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. 
[(7)](#Footnote7)17. Both the Greek Government and the Commission note that the COM for poultrymeat does not contain any measure concerning the
insurance of products covered by it against damage caused by natural risks. The Commission adds that the said COM does not
provide either for measures to implement a single sale price on the Community market or for the payment of subsidies to producers.18. The Greek Government submits that the contribution at issue forms an integral part of a national social insurance system,
that it serves the general interest in the proactive protection of agricultural products ─ including poultry enterprises ─
against natural risks, and that the resultant burden on Greek poultry producers must be regarded as low. It adds that the
contribution does not have a significant effect on pricing and on the mechanisms provided for by the COM.19. Moreover, it refers to a Commission decision under the law on aid 
[(8)](#Footnote8) under which a compensatory levy of 1% of the price paid to the grower in favour of the Greek Cotton Board is consonant with
the market organisation for cotton since that COM does not specifically exclude such a levy.20. Furthermore, it points out that the contribution at issue in this case does not result in discrimination against Greek poultry
producers in so far as it is sufficiently justified and it is based on objective reasons in the general interest which are
not covered by specific Community legislation.21. The Greek Government concludes from the above that the contribution at issue is contrary neither to primary legislation nor
to the COM in poultrymeat.22. The Commission considers that the line of reasoning pursued by the Court in
*Irish Creamery Milk Suppliers Association and Others*  
[(9)](#Footnote9) is applicable to this case in so far as those cases concerned an indirect tax and this case concerns a parafiscal charge.23. In its view, it must therefore be established first of all that the contribution at issue is aimed at apportioning the cost
of insuring against certain risks among the various producers of products who are exposed to such risks. Such a measure constitutes
a national social measure and as such is in principle contrary neither to the provisions under primary law relating to the
common agricultural policy nor to the COM in poultrymeat. However, what must then be examined is whether that measure would
impede the proper functioning of the mechanisms provided for under the relevant COM. It is for the national court to assess
whether and to what extent, if any, the contribution at issue in conjunction with other taxes on the same products gives rise
to distortions on the domestic market and changes to the flow of imports and exports owing to the fact that it has a considerable
influence on price formation and, indeed, on the conduct of producers, for instance, by discouraging them from producing poultrymeat.2. Legal assessment24. It is not disputed that the insurance contribution at issue is levied in particular on products which are covered by the COM
in poultrymeat.25. Article 33 EC sets out the objectives of the common agricultural policy. To attain those objectives, Article 34(1) EC provides
for the possibility in particular of setting up European market organisations according to product. The COM in poultrymeat
is such a market organisation. Therefore, the compatibility of a national measure with the objectives of the common agricultural
policy must be examined first of all in the light of specific provisions of the applicable COM.26. The COM in poultrymeat consists essentially of two sets of rules: on the one hand, measures to facilitate marketing ─ promoting
measures drawn up by professional and sectoral organisations, and marketing rules ─, and, on the other hand, rules for trade
with third countries.27. It must be stated that the above COM does not provide for a common price policy. Nor does it contain any rules on underwriting
damage caused by natural disasters.28. As regards assessing national measures in the light of Community rules on market organisation, the Court differentiates between
measures which affect such rules directly, whether because they create exceptions to them or supplement them, and measures
which, although not falling within the scope of the rules on market organisation, are capable of affecting the market organisation
mechanisms. The former are in principle inadmissible, 
[(10)](#Footnote10) while the validity of the latter depends on there being no negative effect on the market organisation mechanisms. 
[(11)](#Footnote11)29. The contribution at issue in the present case does not constitute a measure subject to the rules on market organisation because
it clearly encompasses all agricultural and piscicultural products. What must therefore be determined is whether and to what
extent it affects the mechanisms of the COM in poultrymeat.30. In that connection, the Commission has pointed out that the imposition of a contribution on the value of domestically-produced
agricultural products leads to an increase in their price. Therefore, an effect on the flow of trade had to be expected because
foreign products would consequently become more attractive in comparison. Although that assertion must not be dismissed, it
must also be noted that a system of insurance based on principles of national solidarity makes it possible to strike a balance
between supply and demand in line with the objectives of the agricultural policy 
[(12)](#Footnote12) by absorbing the effects of natural disasters and epidemics on the producers. Moreover, the Commission clearly assumes there
is a narrow relationship between the amount of the contribution and price formation. However, it must be stated in that regard
that the absence of a system of insurance of the type at issue would not necessarily have to result in a fall in production
prices because the producers would have to provide for risks by other means.31. Even if the contribution at issue were to have a demonstrable influence on the price of the products concerned, the fact remains
that the COM in poultrymeat does not contain any rules on price formation. In
*Irish Creamery Milk Suppliers Association* , 
[(13)](#Footnote13) the effect of national rules on price formation was addressed precisely because the relevant COM contained such rules. Thus,
in itself, the question whether the rules at issue have any influence on price formation seems irrelevant in the present case.32. Moreover, the Commission considers that the mechanisms of the relevant COM could be adversely affected by producers switching
to production of other products because of loss of competitiveness caused by the contribution. 
[(14)](#Footnote14) An objection must be raised to that view to the effect that such a consequence is hardly likely since the insurance contribution
at issue is imposed on all agricultural products.33. At the hearing, the Commission reinforced the view that the legislation at issue was capable of changing the flow of trade
by causing a relative increase in price for domestic products. Departing from the view expressed in its written observations,
it stated that that fact alone would be evidence of an adverse effect on the mechanisms of the COM. That conclusion also seems
worth discussing: the COM in poultrymeat primarily concerns external trade in the products concerned. Although a possible
price increase in the domestic products at issue may lead to an increase in imports, I can, however, see no reason to believe
here that products from third countries would be favoured over products from Member States. In this respect, the Commission's
conclusion seems somewhat hasty. Finally, it cannot be ruled out that the national legislation at issue in the present case
may stem the flow of imports from third States in so far as the insurance payments contribute to the continuity of production
in the Member State concerned.34. I therefore suggest that, in line with its settled case-law, the Court rules that the imposition of an insurance contribution
on all domestically-produced agricultural products for the purpose of financing the insurance of the products and assets of
agricultural enterprises is not in principle contrary to the Treaty provisions concerning the common agricultural policy within
the context of Regulation (EEC) No 2777/75 of the Council on the common organisation of the market in poultrymeat, unless
the national court establishes that the mechanisms of that market organisation are adversely affected, in particular as a
result of an increase from third countries in imports of the products concerned, which is detrimental to the market. However,
such adverse effect does not automatically follow from a possible price increase in domestic products.

B ─
Compatibility of the national legislation with fundamental freedoms1. Free movement of goods(a) Submissions of the parties35. The Greek Government considers that the compensation at issue, which, in its view, concerns an area which is not harmonised
at Community level, is not contrary to the Treaty provisions on free movement of goods because it does not give rise to any
discrimination against similar products from other Member States, particularly since it does not apply to such products. In
its opinion, at most discrimination exists against domestic products, which cannot be challenged under Community law.36. The Commission essentially shares that view. As grounds, it states that the contribution at issue is imposed on all domestic
products. It does not affect the intra-Community movement of goods because it is imposed neither on imported products nor
exclusively on exported products. It could at most be assumed that discrimination exists against domestic products as compared
with foreign products.37. Finally, the Commission points out that in the area of fiscal policy, which is relevant in the present case, Member States
are in principle free to pursue a national burden-sharing policy to serve the general interest.(b) Legal assessment38. The contribution at issue is characterised by the fact that it is imposed on all domestically-produced agricultural products;
the income it generates is first of all paid to the State. It is allocated to the ELGA by the competent ministry only at a
later stage in the process, so as to finance the system of insurance. In that regard the insurance contribution is in the
nature of a charge.39. It can be inferred from the national legislation that the contribution at issue is not imposed either on foreign products
or exclusively on domestic products intended for export. Consequently, the contribution at issue cannot be regarded as a charge
having an effect equivalent to customs duties on imports and exports within the meaning of Article 25 EC. Moreover, since
the contribution is not imposed on goods from other Member States, it cannot be regarded as discriminatory internal taxation
under Article 90 EC either.40. Nor is it clear to what extent the contribution at issue might constitute a measure having an effect equivalent to a quantitative
restriction on imports or exports since, on the one hand, it is not imposed on products from other Member States and, on the
other, no distinction is made as to whether the products subject to it are intended for the domestic market or a foreign market.41. The Commission is correct to point out that the additional burden on Greek producers on account of the imposition of an insurance
contribution is ultimately due to the lack of harmonisation of the fiscal policies of the Member States.2. Freedom to provide services(a) Submissions of the parties42. The Greek Government contends that the services provided by the ELGA in the compulsory insurance of natural risks do not fall
within the scope either of the Treaty provisions on freedom to provide services or of the applicable secondary legislation,
because they are part of a national system of social insurance and are financed primarily from public income. Thus, they would
not meet the definition of
services because they are not generally provided for consideration within the meaning of the case-law of the Court.43. The Greek Government further contends that the services provided by the ELGA do not fall within the scope of the First Non-Life
Assurance Directive either. It asserts that Article 2(1)(d) therein precludes that directive from being applied to insurance
forming part of a statutory system of social security and adds that the insurance at issue in the present case falls precisely
into that category.44. The Commission points out that the services provided by the ELGA in the field of compulsory insurance do not conform to the
technical characteristics of insurance as defined in the First Non-Life Assurance Directive in particular. In that connection,
it argues that the contribution at issue does not constitute a premium in the technical sense of the term because it is not
calculated on the basis of a specific risk; the compensatory nature of the contribution at issue is limited; most of the risks
covered cannot be insured because of their frequency and the extent of the damage associated with them; the financing of the
ELGA precludes the establishment of technical reserves in accordance with the insurance directives, and the ELGA cannot influence
State decisions with regard to the amount of the contributions, capital funding or the amount of the benefits.45. On the basis of those findings, the Commission concludes that the activities of the ELGA do not fall within the scope of the
directives concerning non-life assurance but rather they are characteristic of an insurance fund or a non-profit-making insurance
system. It maintains that payment of the contribution at issue is comparable to payment of a tax because the income from it
is recorded in the State budget, which enables the State, through the ELGA, to cover certain uninsurable risks relating to
natural disasters and other natural risks.(b) Legal assessment46. According to the findings of the national court, the national legislation at issue could affect the freedom to provide services
by keeping foreign insurers from the market, in so far as the income from the contribution at issue is used to finance a system
of insurance operated by an organisation in a monopoly position.47. It must be determined whether the activities of the ELGA are services within the meaning of Article 50 EC. For that to be
the case, they must in particular be services which
are normally provided for consideration. This implies that the services must be provided for profit.48. Article 2(1)(d) of Directive 73/239, which states that the directive does not apply to insurance forming part of a statutory
system of social security, must be regarded in this context as giving concrete expression to Article 50 EC. Such a system
is, after all, not operated for profit. 
[(15)](#Footnote15)49. Both the Commission and the Greek Government assume that the ELGA falls outside the scope of Directive 73/239.50. The fact that the ELGA is financed not by contributions levied by that insurance organisation on the basis of the risk to
be covered but by funds allocated by the State ─ and accordingly without the establishment of technical reserves ─ appears
to be more of a consequence than a cause of the non-applicability of Directive 73/239 and the subsequent insurance directives.51. However, the fact that the ELGA pursues a social aim by providing full insurance cover irrespective of the financial capacity
of the agricultural enterprises lends support to the view taken by the Commission and the Greek Government. It must also be
pointed out that, based on the principle of national solidarity, the ELGA guarantees a redistribution of resources so that
enterprises which are faced with frequent or extensive damage on account of their activity continue to be covered under economically
acceptable conditions.52. From that point of view, the activity falls within the scope of Article 2(1)(d) of Directive 73/239 and consequently that
directive does not apply to the activities of the ELGA in the field of compulsory agricultural insurance. On the same grounds,
it follows that the activities at issue of the ELGA do not fall within the scope of freedom to provide services.53. Of course, this interim conclusion does not mean that the existence of a market for the insurance of agricultural risks must
be precluded in principle. The Commission was correct to point this out in its written observations. On the contrary, it is
completely feasible that certain economic operators, namely private insurers ─ including insurers from other Member States
─ could be in a position to insure the risks covered by the ELGA under economically acceptable conditions.54. The principle of solidarity which forms the basis of the system of insurance at issue certainly permits risks which are uninsurable
from an economic point of view; however, implementation of that principle does not necessarily require an insurance monopoly
to be maintained; State regulation of the offer of insurance ─ for example, in the form of compulsory insurance with compulsory
acceptance and a minimum level of cover ─ would also be feasible in principle. From this point of view, the existence of a
monopoly such as the ELGA does create certain problems.55. However, it must be noted that the national court has not sought an interpretation of Article 86(2) EC, although the Court
of Justice has already relied on that provision on several occasions when examining service monopolies. 
[(16)](#Footnote16) Moreover, any further examination of that issue seems unnecessary, however, since the Court has always given Member States
a broad discretion where organising their systems of social insurance is concerned.56. Thus, with regard to freedom to provide services, it must be stated that the ELGA does not carry out an economic activity,
and consequently neither Directive 73/239 nor Article 49 EC et seq. conflict with the national legislation at issue.3. Compatibility of the national legislation with the law on aid57. The question referred makes express reference to Article 92 of the EC Treaty (now Article 87 EC); however, the order for reference
does not indicate how the national legislation at issue might conflict with that provision. In the written procedure, the
parties examined to what extent the income allocated to the ELGA from the contribution at issue could constitute State aid.
It was only in reply to a question from the Court that the Commission explained at the hearing that it regarded the benefits
paid to farmers by the ELGA as an issue requiring consideration.58. Against that background, it seems worth examining the extent to which the national court has sufficiently explained the reference
to Article 87 EC to enable the Court to give a useful reply. The Court has held that the need to provide an interpretation
of Community law which will be of use to the national court makes it necessary that the national court define the factual
and legal context of the questions it is asking, or at the very least, explain the factual circumstances on which those questions
are based. Those requirements are of particular importance in the area of competition, where the factual and legal situations
are often complex. 
[(17)](#Footnote17)The information provided and the questions raised in orders for reference must not only be such as to enable the Court usefully
to reply but also to make it possible for the governments of the Member States and other interested parties to submit observations
pursuant to Article 20 of the EC Statute of the Court of Justice. 
[(18)](#Footnote18) Since, pursuant to that provision, only the orders for reference are notified to the interested parties, the fact that the
national court refers to the observations submitted by the parties to the main proceedings ─ which, moreover, are likely to
contain different accounts of the dispute ─ is not sufficient to safeguard that possibility for the interested parties. 
[(19)](#Footnote19) Furthermore, it is essential that the national court should give at the very least some explanation of the reasons for the
choice of the Community provisions of which it requests an interpretation and on the link it establishes between those provisions
and the national legislation applicable to the dispute. 
[(20)](#Footnote20) Consequently, a question from a national court which does not explain what the link is between the provisions of which it
requests an interpretation, and the facts of the case or the national legislation applicable to the dispute, is clearly inadmissible
because it does not contain the information necessary to satisfy those requirements.59. The link between Article 87 EC and the facts in the main proceedings is clearly in evidence in the present case. However,
the fact that the order for reference does not state the grounds on which it is based means that the parties have submitted
observations merely on part of the matter under consideration.60. If, because of the evident, albeit unexplained link, the Court gives an interpretation of Article 87 EC, the temptation to
draw conclusions from the scant explanations of the factual and legal framework must be resisted. In my opinion, the Court
is, in particular, not in a position to make a reliable assessment of the existence of a relevant market, as indeed has already
become apparent in connection with the question of compatibility with the freedom to provide services. 
[(21)](#Footnote21)(a) Is the ELGA an undertaking?(i) Submissions of the parties61. Both the Greek Government and the Commission refer first of all to the settled case-law of the Court which states that in
the context of competition law the concept of an undertaking encompasses every entity engaged in an economic activity, regardless
of the legal status of the entity and the way in which it is financed. 
[(22)](#Footnote22)62. They also point out that, in
*Poucet et Pistre* in particular, the Court recognised that the activity of sickness funds or organisations which are involved in the management
of the public social security system and fulfil an exclusively social function is not an economic activity, and, therefore,
the above definition would not apply to such organisations.63. They submit that, because of both its rules and regulations and its activities in the field of compulsory social insurance,
the ELGA must be regarded as an organisation involved in the management of the public social security system and accordingly
is not engaged in an economic activity. Therefore, the ELGA cannot be regarded as an undertaking within the meaning of Article 85
et seq. of the EC Treaty.64. In this connection, the Greek Government points out that, historically and institutionally, the ELGA is an integral part of
systems of social insurance. This is apparent in particular from the fact that it has taken on some of the activities of a
social insurance organisation for farmers, the OGA. Moreover, it refers to the fact that natural risks are essentially uninsurable
and that the amount of the contribution is low compared with the potential benefits. Finally, it refers to the principle of
solidarity which it considers to be fundamental: it argues that the rate of compensation set annually by the competent minister
is, after all, not dependent on the income from the insurance contribution.65. The Commission justifies its view by stating that the principle of national solidarity is fundamental to the ELGA. It argues
that this is clear from the fact that, on the one hand, when deciding on the level of contribution no differentiation is made
amongst those liable and, on the other, any damage incurred is underwritten irrespective of the risk. The Commission also
points out that there is no intention to make profit.(ii) Legal assessment66. Only recently, the Court had the opportunity to give its opinion on the concept of an undertaking with regard to an Italian
institute for insurance against accidents at work. 
[(23)](#Footnote23)67. The Court took as the starting point for its considerations the settled case-law 
[(24)](#Footnote24) to the effect that
in the context of competition law, the concept of an undertaking encompasses every entity engaged in an economic activity,
regardless of the legal status of the entity and the way in which it is financed. The Court defines
economic activity as follows:
any activity consisting in offering goods and services on a given market. 
[(25)](#Footnote25)68. The Court first of all emphasised the social aim of the system at issue. However, after holding that
the social aim of any insurance scheme is not in itself sufficient to preclude the activity in question from being classified
as an economic activity, 
[(26)](#Footnote26) it immediately focused on the fact that that the insurance scheme in question applied the principle of solidarity. The Court
demonstrated this by stating that, on the one hand, the contributions to finance the insurance scheme were not systematically
proportionate to the risk insured and that, on the other, the amount of benefits paid was not necessarily proportionate to
the insured persons' earnings. The Court also emphasised that the activity of the insurance body was subject to supervision
by the State. Thus, the Court held that
the amount of benefits and the amount of contributions ... are subject to supervision by the State and that the compulsory
affiliation which characterises such an insurance scheme is essential for the financial balance of the scheme and for application
of the principle of solidarity, which means that benefits paid to insured persons are not strictly proportionate to the contributions
paid by them. 
[(27)](#Footnote27) From that the Court concluded that, in participating in the management of one of the traditional branches of social security,
the insurance body concerned fulfils an exclusively social function, from which it follows that it does not carry out an economic
activity.69. The above line of reasoning would seem to be directly applicable to this case.70. The Greek system of insurance at issue is clearly an integral part of Greek social security and applies the principle of solidarity:
the same rate of insurance contribution is imposed on all agricultural products; 
[(28)](#Footnote28) in particular, the rates are not dependent on the actual risk profile of the producer. Moreover, the amount of the benefits
is not dependent on the amount of the contributions paid. In this connection, it must also be pointed out that the ELGA is
subject to supervision by the State: both the amount of the insurance contribution coming in and the amount of the compensation
rates are set by the competent ministers. 
[(29)](#Footnote29)71. Thus, the system of insurance operated by the ELGA permits comprehensive cover against natural and epidemic risks. Undoubtedly,
this fulfils a social aim, in so far as small businesses which may not be able to finance such insurance cover are provided
with cover against risks which could threaten their existence. Moreover, the system provides cover for risks which are uninsurable
because of their frequency and the amount of damage associated with them.72. In summary, it is clear from the foregoing that the ELGA does not carry out an economic activity and consequently, that body
does not constitute an undertaking within the meaning of Article 87 EC.(b) To what extent do benefits paid by the ELGA constitute an advantage for the producers?(i) Submissions of the parties73. In response to a written question from the Court, the parties submitted observations at the hearing on the extent to which
the benefits paid to the producers by the ELGA are covered by aid within the meaning of Article 92 of the EC Treaty (now Article 87
EC).74. At the hearing, the Commission expressed the view that the benefits paid to the producers by the ELGA are aids granted by
States because they constitute an advantage for the beneficiaries. In contrast, the Greek Government pointed out that there
is no advantage for the producers in so far as, in the final analysis, the benefits paid by the ELGA constitute consideration
for participation in a system based on national solidarity.(ii) Legal assessment75. When examining whether the benefits paid by the ELGA to farmers constitute aid, what must be determined in particular is whether
they give the beneficiary an unfair cost advantage. There can scarcely be any doubt, however, that such benefits constitute
a financial advantage and that they are paid from State funds, if only because the contributions are recorded as State income.
The selective nature of the measure is apparent from the fact that the benefits paid by the ELGA are reserved for domestic
undertakings.76. Unlike the Commission, I think it very doubtful that the benefits paid by the ELGA can be seen as an unfair cost advantage.
What must be stressed in this regard is that the benefits are, in the final analysis, financed by the contribution at issue.
However, the group of persons who have to pay the contribution is the same as that of the potential beneficiaries. The fact
that the benefits in each particular case do not bear any relation to the contributions paid must be regarded not as the granting
of an unfair advantage but as the very expression of the principle of solidarity. Moreover, the fact that the consideration
for payment of a contribution is not the compensation actually paid but the entitlement to cover, is perfectly consistent
with the technique of insurance. It is true that the link between the financing of the insurance system and the benefits derived
from that system would be clearer if the insurance body ─ the ELGA in the present case ─ imposed the contributions itself.
However, from an economic point of view, it makes no difference whether the insurance contribution is imposed by the ELGA
or by the State.77. A different conclusion could be justified only if the benefits paid by the ELGA were not financed essentially from the income
from the insurance contribution. 
[(30)](#Footnote30) In that event, the benefits paid to the insured farmers could no longer be considered to be financed by contributions. 
[(31)](#Footnote31)V ─ Conclusion78. I therefore propose that the Court:Declare that Articles 28 EC, 29 EC, 49 EC, 50 EC and 87 EC, Regulation (EEC) No 2777/75 of the Council on the common organisation
of the market in poultrymeat and the First Council Directive 73/239/EEC on the coordination of laws, regulations and administrative
provisions relating to the taking-up and pursuit of the business of direct insurance other than life assurance do not in principle
prohibit the imposition of an insurance contribution on domestically-produced agricultural products and by-products of vegetable
or animal origin or originating from fishing by the competent public finance service or the paying of the corresponding income
to a State organisation for the purpose of organising and implementing programmes of proactive protection and insuring the
production and assets of agricultural enterprises.However, it is for the national court to establish whether the national legislation at issue adversely affects the mechanisms
of the organisation of the market in poultrymeat established by Regulation (EEC) No 2777/75 of the Council, in particular
as a result of an increase from third countries in imports of the products concerned, which is detrimental to the market.

---

[1](#Footref1) –
: Original language: German.

---

[2](#Footref2) –
: ... on the coordination of laws, regulations and administrative provisions relating to the taking-up and pursuit of the business
  of direct insurance other than life assurance (73/239/EEC) (the
  First Non-Life Assurance Directive) OJ 1973 L 228, p. 3).

---

[3](#Footref3) –
: FEK (Official Gazette) A' 134.

---

[4](#Footref4) –
: FEK A' 70.

---

[5](#Footref5) –
: ... of 10 December 1984 amending, particularly as regards tourist assistance, the First Directive (73/239/EEC) on the coordination
  of laws, regulations and administrative provisions relating to the taking-up and pursuit of the business of direct insurance
  other than life assurance (OJ 1984 L 339, p. 21).

---

[6](#Footref6) –
: ... of 29 October 1975 on the common organisation of the market for poultrymeat (OJ 1975 L 282, p. 77).

---

[7](#Footref7) –
: They refer to Case 51/74
  *Van der Hulst's Zonen* [1975] ECR 79, and Case 83/78
  *Pigs Marketing Board* [1978] ECR 2347.

---

[8](#Footref8) –
: ... of 20 July 1999, C (1999) 2536 final.

---

[9](#Footref9) –
: Joined Cases 36/80 and 71/80 [1981] ECR 735.

---

[10](#Footref10) –
: See, for example,
  *Van der Hulst* (cited in footnote 7), paragraph 25:
  Once the Community has, pursuant to Article 40 of the Treaty, legislated for establishment of a common organisation 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.

---

[11](#Footref11) –
: For instance, in Joined Cases 36 and 71/80
  *Irish Creamery Milk Suppliers Association* (cited in footnote 9), the Court held:
  such incompatibility [with the provisions of the EEC Treaty on agricultural policy, or with Community rules on the common
  organisation of the markets] would, however, exist if and in so far as the duty had the effect of impeding the proper functioning
  of the machinery established as part of the relevant common organisations for the formation of common prices and to regulate
  market supplies.

---

[12](#Footref12) –
: Under Article 33(1) EC, stabilisation of the markets is one of the objectives of the common agricultural policy.

---

[13](#Footref13) –
: Cited in footnote 9.

---

[14](#Footref14) –
: . *Irish Creamery Milk Suppliers Association* (cited in footnote 9) clearly concerned a contribution which was imposed only on specific products.

---

[15](#Footref15) –
: With regard to profit-making where social insurance organisations are concerned ─ albeit in connection with the definition
  of an undertaking ─ see also Joined Cases C-159/91 and C-160/91
  *Poucet and Pistre* [1993] ECR I-637, paragraph 18 et seq.

---

[16](#Footref16) –
: See, for example, Case C-55/96
  *Job Centre* [1997] ECR I-7119. See also Case C-266/96
  *Corsica Ferries II* [1998] I-3949. See, in this respect, Blum/Logue,
  *State Monopolies under EC Law* , p. 137 et seq. and, by way of criticism, see Holoubeck, in Schwarze
  *EU-Kommentar* (EU Commentary), Article 49 EEC, paragraph 87, with further references.

---

[17](#Footref17) –
: Reference need only be made to Joined Cases C-51/96 and C-191/97
  *Deliège* [2000] ECR I-2549, paragraph 30.

---

[18](#Footref18) –
: Order in Case C-116/00
  *Laguillaumie* [2000] ECR I-4979, paragraph 14.

---

[19](#Footref19) –
: Order in Case C-422/98
  *Colonia Versicherung and Others* [1999] ECR I-1279, paragraph 5.

---

[20](#Footref20) –
: Order in Case C-167/94
  *Gran Gomis and Others* [1995] I-1023, paragraph 9.

---

[21](#Footref21) –
: In this connection see also the careful choice of words in a memorandum dated 15 February 2002 from the Spanish presidency
  to the Council, concerning agricultural insurance for the prevention of risks in the areas of agriculture and cattle rearing:
  L'expérience montre que, laissée à l'initiative privée, l'implantation des systèmes d'assurance agricole est très limitée.

---

[22](#Footref22) –
: They refer in particular to Case C-41/90
  *Höfner and Elser* [1991] ECR I-1979, paragraph 21, and
  *Poucet and Pistre* (cited in footnote 15), paragraph 17.

---

[23](#Footref23) –
: Case C-218/00
  *Cisal* [2002] ECR I-691.

---

[24](#Footref24) –
: See
  *inter alia* Joined Cases C-180/98 to C-184/98
  *Pavlov and Others* [2000] ECR I-6451, paragraph 22. See also
  *Hoffner and Elser* (cited in footnote 22, paragraph 21),
  *Poucet and Pistre* (cited in footnote 15, paragraph 17), Case C-244/94
  *Fédération française des sociétés d'assurance and Others* [1995] ECR I-4013, paragraph 14, and Case C-67/96
  *Albany* [1999] ECR I-5751, paragraph 77, Joined Cases C-115/97 to C-117/97
  *Brentjens'* [1999] ECR I-6025, paragraph 77, and Case C-219/97
  *Drijvende Bokken* [1999] ECR I-6121, paragraph 67.

---

[25](#Footref25) –
: . *Cisal* (cited in footnote 23), paragraph 23, with further references.

---

[26](#Footref26) –
: . *Cisal* (cited in footnote 23), paragraph 37.

---

[27](#Footref27) –
: . *Cisal* (cited in footnote 23), paragraph 44.

---

[28](#Footref28) –
: A distinction is made only between animal and vegetable products. To change the contribution rate for a particular sector
  or product, a joint decision by the ministers for finance and for agriculture is required.

---

[29](#Footref29) –
: In this regard, the Greek Government has also stated that the rate of contribution is set by the competent ministers on the
  basis of a proposal from the ELGA to the agriculture minister. Any other influence on the rate of contribution or the amount
  of the compensation payments by the ELGA is clearly not possible.

---

[30](#Footref30) –
: According to information from the Greek Government, without exception, between 1996 and 2000 over 90% of the income of the
  ELGA came from the income from the insurance contribution. The ELGA's income from direct additional payments amounted only
  to between 2.1% and 9.8%.

---

[31](#Footref31) –
: In the event of the alternative conclusion, Article 87(2)(b) EC makes it clear that benefits to make good the damage caused
  by natural disasters or exceptional occurrences must in principle be considered as aid.