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( 1 ) BY DECREE N 67-796 OF 20 . SEPTEMBER 1967 , THE FUNCTIONS OF THE SOCIETE COMMERCIALE DES POTASSES D'ALSACE PASSED TO THE ENTREPRISE MINIERE ET CHIMIQUE ( EMC ) WHICH PERFORMS THEM THROUGH A SUBSIDIARY , THE SOCIETE COMMERCIALE DES POTASSES ET DE L'AZOTE ( SCPA ) .

COMMISSION RECOMMENDATION

OF 25 NOVEMBER 1969

TO THE FRENCH REPUBLIC ON THE ADJUSTMENT OF THE STATE MONOPOLY OF A COMMERCIAL CHARACTER IN POTASH

( ONLY THE FRENCH TEXT IS AUTHENTIC )

( 70/13/EEC )

I

1 . THE FRENCH GOVERNMENT , BY LETTER OF 14 FEBRUARY 1959 , INFORMED THE COMMISSION OF THE EUROPEAN ECONOMIC COMMUNITY THAT POTASH IS IN FRANCE SUBJECT TO A STATE MONOPOLY OF A COMMERCIAL CHARACTER WITHIN THE MEANING OF ARTICLE 37 OF THE EEC TREATY .

UNDER THAT PROVISION MEMBER STATES ARE REQUIRED PROGRESSIVELY TO ADJUST STATE MONOPOLIES OF A COMMERCIAL CHARACTER SO AS TO ENSURE THAT , WHEN THE TRANSITIONAL PERIOD HAS ENDED , NO DISCIMINATION REGARDING THE CONDITIONS UNDER WHICH GOODS ARE PROCURED AND MARKETED EXISTS BETWEEN NATIONALS OF MEMBER STATES .

2 . SINCE 1959 , THE FRENCH GOVERNMENT HAS TAKEN CERTAIN MEASURES FOR THE ADJUSTMENT OF THAT MONOPOLY .

IN 1959 , IT OPENED A QUOTA ( N 27 CE 01 ) " MINERAL OR CHEMICAL FERTILIZERS , POTASSIC " FOR CRUDE NATURAL POTASSIUM SALTS AND POTASSIUM CHLORIDE USED AS FERTILIZERS ( HEADING N EX 31.04 ) , FIXED AT 3 % OF NATIONAL PRODUCTION . IN 1960 THE QUOTA WAS RAISED TO 4 % OF NATIONAL PRODUCTION . SINCE 1961 POTASH HAS NOT BEEN SUBJECT TO A QUOTA .

MOREOVER , BY DECREE N 61-1330 OF 4 DECEMBER 1961 , THE FRENCH GOVERNMENT REVISED THE LIST OF PRODUCTS SUBJECT TO AN IMPORT AND EXPORT MONOPOLY , ELIMINATING CERTAIN POTASH PRODUCTS FOR INDUSTRIAL USES .

3 . THE COMMISSION CONSIDERED , HOWEVER , THAT THE MEASURES ADOPTED BY THE FRENCH GOVERNMENT WERE NOT SUFFICIENT TO MEET THE REQUIREMENT OF PROGRESSIVE ADJUSTMENT LAID DOWN IN ARTICLE 37 , AND ON 12 APRIL 1962 IT ADDRESSED A RECOMMENDATION TO THAT GOVERNMENT UNDER COVER OF A LETTER OF 13 APRIL 1962 .

THE COMMISSION RECOMMENDED THAT PERMISSION SHOULD BE GIVEN FOR THE IMPORTATION AND MARKETING OF POTASH PRODUCTS WITHOUT A TRADE NAME , COMING FROM OTHER MEMBER STATES , BY PERMITTING SUPPLIERS IN THOSE COUNTRIES TO SUPPLY , EITHER TO THE SOCIETE COMMERCIALE DES POTASSES D'ALSACE ( 1 ) OR BY OTHER APPROPRIATE MEANS UP TO A TOTAL QUANTITY FOR 1962 OF 5 % OF NATIONAL PRODUCTION FOR 1960 , AND TO INCREASE THAT QUANTITY EACH YEAR BY AT LEAST 15 % .

FURTHERMORE , IN THE CASE OF POTASH PRODUCTS SOLD UNDER A TRADE NAME , THE COMMISSION RECOMMENDED THE ABOLITION OF DISCRIMINATION IN THE MATTER OF PRICE FORMATION .

BY LETTER DATED 3 AUGUST 1962 THE FRENCH GOVERNMENT ADVISED THAT :

_ IN THE CASE OF POTASH PRODUCTS SOLD WITHOUT A TRADE NAME IT WAS READY TO PERMIT SUPPLIERS IN OTHER MEMBER STATES TO SUPPLY THE SOCIETE COMMERCIALE DES POTASSES D'ALSACE UP TO AN AMOUNT CALCULATED ACCORDING TO THE METHOD PROPOSED BY THE COMMISSION ; PREFERENCE WOULD BE GIVEN TO SUPPLIERS MAKING THE BEST OFFERS AND , SHOULD OFFERS BE EQUALLY FAVOURABLE , PURCHASES WOULD BE EQUITABLY DISTRIBUTED ;

_ IN THE CASE OF POTASH PRODUCTS SOLD UNDER A TRADE NAME , THE PART PLAYED BY THE MONOPOLY IS MERELY THAT OF AN OBLIGATORY IMPORT AGENCY , PRICES BEING NEGOTIATED BETWEEN BUYER AND SELLER ON A FREELY COMPETITIVE BASIS .

4 ( A ) WITH REGARD TO PRODUCTS IN THE FIRST CATEGORY _ POTASH IN SIMPLE FORM _ IMPORTS INTO FRANCE FROM OTHER MEMBER STATES IN THE YEARS FOLLOWING THE COMMISSION RECOMMENDATION HAVE BEEN SOMEWHAT IRREGULAR . THEY ROSE FROM ABOUT 10 000 METRIC TONS ( K2O ) FOR THE AGRICULTURAL YEAR 1962/63 TO 10 400 METRIC TONS ( K2O ) FOR THE YEAR 1965/66 , BUT FELL TO 4 600 AND 2 559 METRIC TONS ( K2O ) FOR THE YEARS 1966/67 AND 1967/68 RESPECTIVELY .

DURING THE YEAR 1968/69 IMPORTS SHOWED AN EXCEPTIONAL INCREASE TO 86 000 TONS ( K2O ) OWING TO THE SPECIAL CIRCUMSTANCES WHICH , IN 1968 , AFFECTED THE FRENCH ECONOMY AS A WHOLE .

FOR THE FIRST MONTHS OF THE YEAR 1969/70 ( MAY-SEPTEMBER 1969 ) IMPORTS CAME TO ABOUT 28 000 METRIC TONS ( K2O ) . IT IS TO BE NOTED THAT A LARGE PROPORTION OF THOSE IMPORTS WERE POTASH PRODUCTS OF A KIND NOT PRODUCED IN FRANCE .

TOTAL FRENCH CONSUMPTION INCREASED FROM ABOUT 900 000 METRIC TONS ( K2O ) FOR THE YEAR 1962/63 TO 1 280 000 METRIC TONS ( K2O ) FOR THE YEAR 1968/69 .

WITH REGARD TO EXPORTS , THE SCPA , BY VIRTUE OF THE EXCLUSIVE EXPORT RIGHTS CONFERRED BY ARTICLE 183 OF THE CODE MINIER , IMPOSES ON BUYERS IN ITS GENERAL CONDITIONS OF SALE A PROHIBITION ON RESALE OUTSIDE FRANCE OF POTASH SALTS SUPPLIED BY THE SCPA .

( B ) WITH REGARD TO POTASH PRODUCTS UNDER A TRADE NAME _ THAT IS TO SAY COMPOSITE FERTILIZERS _ IMPORTS FROM MEMBER STATES HAVE STEADILY INCREASED ; THEY ROSE FROM ABOUT 800 METRIC TONS ( K2O ) FOR THE YEAR 1961/62 TO ABOUT 124 000 METRIC TONS ( K2O ) FOR THE YEAR 1968/69 . CONSUMPTION DURING THE YEAR 1968/69 AMOUNTED TO 947 000 METRIC TONS ( K2O ) .

5 . THE COMMISSION CONSIDERS THAT THE MEASURES SO FAR TAKEN , WHILE IN LINE WITH THE PRINCIPLE OF PROGRESSIVE ADJUSTMENT LAID DOWN IN ARTICLE 37 , DO NOT , HOWEVER , CONSTITUTE A FULL ADJUSTMENT . SINCE THE END OF THE TRANSITIONAL PERIOD IS APPROACHING , MEASURES SHOULD NOW BE ADOPTED TO BRING TO AN END ALL DISCRIMINATION BETWEEN NATIONALS OF MEMBER STATES REGARDING THE CONDITIONS UNDER WHICH GOODS ARE PROCURED AND MARKETED .

ARTICLE 37 WHICH COMES UNDER THE TITLE RELATING TO FREE MOVEMENT OF GOODS , AND , MORE PARTICULARLY , UNDER THE CHAPTER CONCERNING THE ELIMINATION OF QUANTITATIVE RESTRICTIONS BETWEEN MEMBER STATES , AIMS AT ACHIEVING BY THE END OF THE TRANSITIONAL PERIOD IN RESPECT OF PRODUCTS SUBJECT TO A STATE MONOPOLY OF A COMMERCIAL CHARACTER ( OR A LIKE SYSTEM ) THE SAME RESULT AS THAT ACHIEVED FOR OTHER PRODUCTS BY THE APPLICATION OF ARTICLES 30 TO 34 , THAT IS TO SAY THE FREE MOVEMENT OF GOODS .

A DIFFERENT PROCEDURE WAS PROVIDED IN ORDER TO ACHIEVE THAT RESULT IN THE SECTORS COVERED BY STATE MONOPOLIES . THEIR PROGRESSIVE ADJUSTMENT WAS PROVIDED FOR PARTLY IN ORDER TO TAKE ACCOUNT OF THE FACT THAT IN THE VIEW OF THE MEMBER STATES CONCERNED THE PRODUCTS SUBJECT TO A MONOPOLY PRESENTED SPECIAL PROBLEMS AND PARTLY SO THAT THE ELIMINATION OF QUANTITATIVE RESTRICTIONS AND OF MEASURES HAVING AN EQUIVALENT EFFECT IN THOSE SECTORS SHOULD NOT BE WITHOUT PRACTICAL RESULT . THERE WERE INDEED GROUNDS FOR FEARING THAT THE LIBERALIZATION OF TRADE IN RESPECT OF THE PRODUCTS SUBJECT TO A MONOPOLY WOULD NOT TAKE PLACE IF THE MONOPOLIES , BY VIRTUE OF THEIR EXCLUSIVE RIGHT TO IMPORT , EXPORT AND MARKET CERTAIN PRODUCTS , WERE TO REMAIN FREE TO DECIDE TO WHAT EXTENT AND UNDER WHAT CONDITIONS PRODUCTS FROM OTHER MEMBER STATES COULD BE ALLOWED ON THE DOMESTIC MARKET ( OR , CONVERSELY , TO WHAT EXTENT DOMESTIC PRODUCTS COULD BE EXPORTED TO OTHER MEMBER STATES ) .

IT IS FOR THAT REASON THAT ARTICLE 37 CONTAINS THE PROVISION DESIGNED " TO ENSURE THAT WHEN THE TRANSITIONAL PERIOD HAS ENDED NO DISCRIMINATION REGARDING THE CONDITIONS UNDER WHICH GOODS ARE PROCURED AND MARKETED EXISTS BETWEEN NATIONALS OF MEMBER STATES " .

IT SHOULD BE STRESSED THAT THE ENDING OF DISCRIMINATION RESULTING DIRECTLY FROM PROVISIONS APPLICABLE TO PRODUCTS SUBJECT TO A MONOPOLY IS NOT THE ONLY REQUIREMENT IN ARTICLE 37 ; THAT OBJECT COULD BE ATTAINED , IN THE ABSENCE OF AN ARTICLE GOVERNING STATE MONOPOLIES , BY MEANS OF OTHER PROVISIONS OF THE TREATY , IN PARTICULAR THOSE PROHIBITING CHARGES HAVING AN EQUIVALENT EFFECT TO CUSTOMS DUTIES AND MEASURES HAVING A EQUIVALENT EFFECT TO QUANTITATIVE RESTRICTIONS . IT FOLLOWS FROM WHAT HAS BEEN SAID ABOVE IN RELATION TO THE SPECIAL CHARACTERISTICS OF STATE MONOPOLIES AND OF THE RESTRICTIONS TO WHICH THEY CAN GIVE RISE THAT THE OBJECTIVE OF THE " ADJUSTMENT " , I.E . OF ENSURING THAT " NO DISCRIMINATION EXISTS " , IS TO ELIMINATE THE POSSIBILITY THAT THE PARTICULAR POWERS VESTED IN THE MONOPOLIES IN RESPECT OF THE IMPORTING AND DOMESTIC MARKETING , OR THE EXPORTING , OF CERTAIN PRODUCTS MIGHT AT THE END OF THE TRANSITIONAL PERIOD STILL GIVE RISE TO DISCRIMINATION .

SINCE THESE ARE THE OBJECTIVES LAID DOWN IN ARTICLE 37 , IT IS INCUMBENT UPON FRANCE TO ADJUST THE POTASH MONOPOLY BEFORE THE END OF THE TRANSITIONAL PERIOD IN ORDER THAT THE OBJECTIVES MAY BE ATTAINED . FURTHER , IT IS FOR THE COMMISSION , IN ADDITION TO ITS GENERAL DUTY TO SEE THAT THE TREATY IS IMPLEMENTED , TO MAKE RECOMMENDATION IN ACCORDANCE WITH ARTICLE 37 ( 6 ) AS TO THE MANNER IN WHICH THE ADJUSTMENT PROVIDED FOR IN THAT ARTICLE SHALL BE CARRIED OUT .

IN THE CASE OF THE POTASH MONOPOLY , THE COMMISSION NOTES THAT , IN SPITE OF THE ABOLITION OF QUOTAS , IMPORTS FROM OTHER MEMBER STATES ( SEE PARAGRAPH 4 ( A ) ) HAVE NOT APPRECIABLY INCREASED .

IN THE OPINION OF THE COMMISSION THAT SITUATION ARISES MAINLY FROM THE FACT THAT ON THE FRENCH MARKET THERE IS ONLY ONE PURCHASER AND THAT IN THIS PARTICULAR CASE THE MONOPOLY COVERS PRODUCTS WHICH ARE LARGELY HOMOGENEOUS AND INDIFFERENTIATED , WHICH LIMITS THE RANGE OF CHOISE FOR FRENCH CONSUMERS . IN THESE CIRCUMSTANCES THE ABOLITION OF QUOTAS IS WITHOUT PRACTICAL SIGNIFICANCE UNLESS THE ONE PURCHASER IS PLACED UNDER THE OBLIGATION OF OBTAINING SUPPLIES IN THE OTHER MEMBER STATES . SUCH AN OBLIGATION CANNOT , HOWEVER , BE REQUIRED ON THE STRENGTH OF ARTICLE 37 AND WOULD , MOREOVER , BE CONTRARY TO THE ECONOMIC OBJECTIVES LAID DOWN IN THE TREATY . AS THE SCPA IS ALONE AUTHORIZED TO IMPORT AND SELL THESE PRODUCTS IN FRANCE , IT CAN FOR EXAMPLE DECIDE WHETHER , TO WHAT EXTENT AND IN RESPECT OF WHICH QUALITIES THE NEEDS OF THE FRENCH MARKET SHOULD BE MET BY SUPPLIERS IN OTHER MEMBER STATES .

THE INFLUENCE WHICH THE SCPA HAS ON PRICES GIVES RISE TO OTHER CONSIDERATIONS . SINCE FRENCH POTASH AND POTASH FROM OTHER MEMBER COUNTRIES ARE BOTH SOLD IN FRANCE AT THE SAME PRICE , SUPPLIERS FROM THE MEMBER STATES ARE NOT IN A POSITION TO EXERT ANY COMPETITIVE PRESSURE ON THE FRENCH MARKET .

FINALLY , WITH REGARD TO EXPORTS , THE COMMISSION IS OF THE OPINION THAT THE PROHIBITION ON EXPORTATION , SAVE WITH THE EXPRESS AUTHORIZATION OF THE SCPA , WHICH IS IMPOSED ON BUYERS IN THE GENERAL CONDITIONS OF SALE , IN CONTRACTS CONCLUDED BY THAT COMPANY , COULD GIVE RISE TO DISCRIMINATION WITHIN THE MEANING OF ARTICLE 37 IN SO FAR AS THE SCPA RETAINS THE POWER TO OPPOSE EXPORTATION .

FOR THESE REASONS IT SEEMS TO THE COMMISSION THAT THE BEST SOLUTION FOR ACHIEVING THE OBJECTIVE LAID DOWN IN ARTICLE 37 , BECAUSE THERE IS NO DOUBT THAT IT WILL BE EFFECTIVE , IS TO ABOLISH THE EXCLUSIVE IMPORTING , EXPORTING AND MARKETING RIGHTS OF THE SCPA , IN SO FAR AS THOSE RIGHTS CONCERN TRADE BETWEEN MEMBER STATES .

II

ON THESE GROUNDS THE COMMISSION OF THE EUROPEAN COMMUNITIES , IN ACCORDANCE WITH ARTICLE 37 ( 6 ) OF THE EEC TREATY , RECOMMENDS THE FRENCH REPUBLIC TO TAKE THE FOLLOWING MEASURES NOT LATER THAN 31 DECEMBER 1969 :

1 . WITH REGARD TO POTASH PRODUCTS WHICH , IN FRANCE , ARE SUBJECT TO AN IMPORT AND SALES MONOPOLY :

( A ) TO ALLOW FREE IMPORTATION OF ALL QUANTITIES AND QUALITIES OF PRODUCTS FROM MEMBER STATES ;

( B ) TO ALLOW ALL OPERATIONS NECESSARY FOR THE MARKETING OF POTASH PRODUCTS FROM OTHER MEMBER STATES TO BE FREELY CARRIED OUT ON THE FRENCH MARKET .

TO THAT END :

_ TO ALLOW SUPPLIERS FROM OTHER MEMBER STATES TO HOLD STOCKS IN FRANCE AND TO SET UP THEIR OWN SALES NETWORK THERE ;

_ TO ALLOW SUPPLIERS FROM OTHER MEMBER STATES TO ENGAGE FREELY IN ALL FORMS OF ADVERTISING ;

_ TO ALLOW PRICES FOR PRODUCTS FROM OTHER MEMBER STATES TO BE FREELY AGREED BETWEEN SELLERS AND BUYERS AT THE DIFFERENT STAGES OF MARKETING .

2 . WITH REGARD TO THE POTASH PRODUCTS WHICH IN FRANCE ARE SUBJECT TO AN EXPORT MONOPOLY : TO ALLOW ALL EXPORTS TO OTHER MEMBER STATES OF THE EEC WITHOUT RESTRICTION AND WITHOUT THE INTERVENTION OF THE SCPA .

DONE AT BRUSSELS , 25 NOVEMBER 1969 .

FOR THE COMMISSION

THE PRESIDENT

JEAN REY