Opinion of the Advocate General — ECLI:EU:C:2000:234
Date: 2000-05-11
Language of the case: Italian
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Agriculture and Fisheries;Milk products
Procedure: Reference for a preliminary ruling
Origin: Italy

summary of the other material provisions of Law No 88/88 is set out above, at paragraphs 5 and 7. IV - Submissions of the parties 11. Biraghi argues that Regulation No 804/68 precludes any provision of national law intended to fix a uniform price for milk, by any method. (5) However, 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. 12. The Italian Government points out that Law No 88/88 does not provide for public authorities to exert any influence directly, or to determine prices. Nor is there any direct link between an inter-trade agreement within the meaning of Law No 88/88 and the establishment of the target price pursuant to Article 3 of Regulation No 804/68. The target price should not be thought of as a single, Community-wide market price, but rather as a lower limit beyond which the intervention machinery of the common organisation of the market in question would be activated. By contrast, market prices are determined by market trends. Studies have revealed considerable variations in trade prices among Member States. It follows that there is no conflict between Law No 88/88 and Regulation No 804/68. 13. The Commission points out that, according to the Court's case-law, Member States may not promote or encourage the formation of producer prices in respect of products for which there is a common organisation of the market. Thus Member States would be in breach of Regulation No 804/68 if they intervened in the establishment of prices in such a way as to set prices which differed from the Community target price, as that would ultimately disturb the common market. Moreover, any State involvement in price-formation is liable to distort competition in the common market. National provisions which favour agreements between undertakings conflict with the Community's competition rules and infringe Articles 5 and 85 of the EC Treaty. V - Assessment 14. The compatibility of national provisions on the fixing of milk prices with the common organisation of the market in milk and milk products has already been considered by the Court on a number of occasions; the relevant Italian legislation, in particular, has been examined by the Court several times. (6) 15. In those cases the Court first considered the fundamental characteristics of the Community rules. Article 3(1) of Regulation No 804/68 stipulates that a target price for milk shall be fixed for the 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. 16. There are no direct intervention measures for milk; support for the price of milk is achieved primarily by means of the 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 consistent with the laws of the market within the Community 17. In order to achieve that objective, the regulation also contains a system of rules for protection at the Community's frontiers, 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 refunds to be paid. The latter are calculatedon a uniform basis for the whole Community, though they may be differentiated according to the third country of destination. 18. One of the principal objectives of that organisation is to ensure that milk producers can obtain a price for such products in the region of the target price. The mechanisms introduced by the regulation to achieve that end are under the exclusive jurisdiction of the Community. (7) 19. The question before the Court in Toffoli (8) was whether Italian Law No 306/75 - subsequently replaced by Law No 88/88, the subject of these proceedings - was compatible with Regulation 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 producers' associations was to be subject to the rules and procedures laid down by the association; in addition, members of an association were obliged to sell their milk through it. The producer price for milk, for whatever use the milk was intended, was fixed for each agricultural year and for each region by means of collective negotiation with the participation of the relevant trade parties. The agreements reached between the parties were published and were then binding on them. If no such agreement was reached within 30 days of the start of the agricultural year the producer price for milk was fixed by a commission appointed by decree of the President of the region. That commission's decision was likewise published and was binding on the parties. 20. The question referred to the Court was whether Regulation No 804/68 prevented the Italian State from conferring by law the power to set the producer price for milk on its administrative authorities. 21. The Court proceeded from a consideration of the objectives of the organisation of the market; it held that 'in sectors covered by a common organisation of the market, a fortiori when that organisation is based on a common price system, Member States can no longer take action, through national provisions taken unilaterally, affecting the machinery of price formation at the production and marketing stages established under the common market organisation. It follows that national legislation designed to promote and encourage, by any method, the establishment of a uniform producer price for milk, by agreement or by authority, at the national or regional level is, by its nature, outside the bounds of the powers given to Member States and runs contrary to the principle established by Regulation No 804/68, in particular Article 3 thereof, of attaining a target producerprice for the milk sold by Community producers during the milk year on the Community market and on external markets. (9) 22. The Court accordingly held, in answer to the question referred, that 'it is incompatible with the common organisation of the market in milk and milk products established by Regulation No 804/68 ... for a Member State to fix directly or indirectly the producer price for milk. 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. (10) The Court went on to state that Community law prohibits any legislative measure which provides for any intervention whatsoever on the part of a public, national or regional authority with a view to promoting and encouraging the establishment by agreement of a uniform producer price for milk. (11) 24. Thus national legislation designed to promote and encourage, by any method, the establishment of a uniform producer price for milk, by agreement or by authority, at the national or regional level, is incompatible with Regulation No 804/68. 25. It is therefore necessary, in the present case, to consider whether Italy has directly or indirectly established the producer price for milk and thereby infringed Regulation No 804/68. 26. In its order, the referring court has set out a number of factors which in its view suggest that the public authorities may have promoted or encouraged the establishment of a uniform producer price, at least indirectly. Thus it refers to the fact that the inter-trade agreements are binding, and 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 the conclusion of inter-trade agreements. The parties to those agreements must promote the conclusion of contracts in respect of the sale of the products concerned, and must check that the contracts concluded are consistent with the agreements. Finally, undertakings which have concluded contracts in line with the agreements are toreceive preferential treatment in respect of the award of financial assistance for the modernisation and restructuring of the food and agriculture sector. 27. It follows from the foregoing that, while the State does not fix the producer price for milk directly, it at least promotes the conclusion of the relevant inter-trade agreements. By concluding the inter-trade agreements the parties qualify for favourable treatment in the form of financial aid which would otherwise be denied them. Moreover, the fact that the inter-trade agreement is binding, together with the fact that the parties are formally convened by the public authorities, suggests that the State is involved indirectly in the establishment of producer prices. 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 particularly 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 external markets, it must be concluded that national legislation to that effect is incompatible with the common organisation of the market in question. 29. I should point out finally that it is for the national court to establish the facts of the case, and to determine, and in particular to interpret, the provisions of national law governing the case before it. 30. My conclusion is therefore that provisions of national law whereby a Member State promotes or encourages the conclusion of inter-trade agreements concerning the establishment of producer prices for milk are incompatible with the common organisation of the market in milk and milk products established by Council Regulation No 804/68 of 27 June 1968. As the agreements in question are, by virtue of Law No 88/88, binding on the parties to them, and as in addition provision has been made for those parties to enjoy preferential treatment in regard to the award of financial assistance, the question of whether or not the Member State itself was directly involved in fixing the producer prices is no longer material. VI - Costs 31. The costs incurred by the Italian Government 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 concerned, a step in the action pending before the referring court, the decision on costs is a matter for the latter. Vll - 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. 1: - Original language: German. 2: - For the text of the Law see below at III, 2. 3: - Council Regulation (EEC) No 804/68 of 27 June 1968 on the common organisation of the market in milk and milk products (OJ, English Special Edition 1968 (I), p. 176). 4: - GURI No 69 of 23 March 1988. 5: - If the inter-trade agreements were consequently unenforceable, the action before the national court would be dismissed. 6: - Judgments in Case 10/79 Toffoli v Regione Veneto [1979] ECR 3301; Case 166/82 Commission v Italy [1984] ECR 459; and Case 225/86 Commission v Italy [1988] ECR 2271. For examples of the Court's case-law on unilateral measures by Member States fixing the prices of agricultural products see also inter alia the judgments in Case 31/74 Galli [1975] ECR 45; Case 5/79 Buys [1979] ECR 3203; and Joined Cases 16/79 to 20/79 Joseph Danis [1979] ECR 3327. 7: - See Toffoli (cited in footnote 6 above), paragraph 11. 8: - Cited in footnote 6, above. 9: - See Toffoli (cited in footnote 6 above), paragraph 12. 10: - See Case 166/82 (cited in footnote 6 above), paragraph 24. 11: - See Case 166/82 (cited in footnote 6 above), paragraph 25.