OPINION OF MR ADVOCATE GENERAL LENZ

delivered on 28 February 1985 ( *1 )

Mr President,

Members of the Court

A.

In these proceedings for a declaration that a Member State has failed to fulfil its obligations under the Treaty on which I deliver my opinion today, the question at issue is whether the Italian Republic correctly carried out its obligations under Council Regulation (EEC) No 1360/78 of 19 June 1978, on producer groups and associations thereof. ( 1 )

That regulation was adopted by the Council on 19 June 1978 after a protracted legislative process — the first Commission proposals date back to 1967 — and was intended to solve structural problems in the agricultural sectors of certain areas of the Community. The aim was to improve the marketing of a number of agricultural products in Italy, certain regions of France and Belgium. In order to achieve that aim the regulation was meant to encourage the creation of producer groups (and associations of such groups). The incentive consisted in providing for the Member States to assume part of the formation and operating expenses of producer groups and for them to be refunded a proportion of the aid required — between 25 and 50% — by the European Agricultural Guidance and Guarantee Fund. The regulation contains detailed provisions on the recognition of producer groups, their activities and their financing. Article 6 (3) of the regulation requires the Community institutions to adopt certain rules of application; Article 19 requires the Member States to communicate to the Commission the laws, regulations and administrative provisions which they adopt concerning the application of the regulation.

On 20 October 1978, Italy adopted Law No 674, laying down rules for agricultural producer groups. The first paragraph of Article 1 reads as follows: ‘La presente legge ha lo scopo di integrare il regolamento del consiglio delle Comunità europee del 19 giugno 1978, n. 1360, ...’. The Law is therefore intended to supplement Regulation No 1360/78. The Law only lays down a framework because under Italian constitutional law, legislation in the fields in question falls within the competence of the regions and the two autonomous provinces. The requirement to enact legislation contained in Law No 674 was complied with by most of the provinces in the course of time although by the time of the oral procedure implementing legislation had still not been enacted in two regions (Valle d'Aosta and Friuli) and in the two autonomous provinces (Bolzano and Trentino).

The Commission complied with the provision requiring it to adopt rules of application by adopting Regulations Nos 2083/80 ( 2 ) and 2084/80 ( 3 ) on 31 July 1980.

We are therefore faced with a complex body of legislation enacted at several different levels:

(1) Council Regulation No 1360/78 of 19 June 1978;

(2) Commission Regulations Nos 2083/80 and 2084/80 of 31 July 1980;

(3) Italian Law No 674 of 20 October 1978; and

(4) the Italian regional Laws which have since been adopted in 17 regions.

The Commission contends that Italy has legislated too much in some respects and too little in others. In particular, it takes the view that Italy has acted contrary to its obligations under Council Regulation No 1360/78 by

(i) laying down in Law No 674 and its regional implementing legislation conditions for granting and withdrawing recognition of producer groups different from those laid down in the Council regulation;

(ii) retaining in its regional implementing legislation provisions concerning matters in which the Community has exclusive competence as well as provisions repeating Community rules; and

(iii) failing to adopt in part of its territory the supplementary legislation needed to implement the Council regulation.

B.

In my view the application raises four issues which I shall discuss in turn:

(1) The compatibility with Community law of the Italian provisions on the granting and withdrawing of recognition of producer groups;

(2) The incorporation in Italian legislation of individual provisions of Community law;

(3) The inaction of some regional legislatures;

(4) A separate issue: the adoption of implementing provisions by the Piedmont Regional Council.

1. The compatibility with Community law of the Italian provisions on the granting and withdrawing of recognition of producer groups

(a) Articles 4 to 7 of Regulation No 1360/78 govern the recognition of producer groups by the Member States. Article 6 (1) (c) requires producer groups to lay down the nature or their activity in their statutes. It gives them the choice of two principal kinds of activity: (i) a rulemaking activity: the producer group establishes rules for contributions and for placing goods on the market under which its members sell their production; the producer group supervises observance of the rules; (ii) an economic activity: the producer group trades on the market itself. The economic activity of the producer group may be conducted in three different ways. The Community regulation provides that the producer group may place its products on the market either (i) on behalf of its members and for their account, or (ii) for the account of its members but on the group's behalf, or (iii) for the account of and on behalf of the producer group. The Community regulation leaves it to the producer groups to decide which of those forms of activity to adopt. The second paragraph of Article 2 of Italian Law No 674 also contains provisions on what the statutes of producer groups must provide. They must provide, ‘inter alia, that ... (4) The producer group shall adopt rules for its operation, draw up production and marketing plans and conclude agreements ... on behalf of its members ... for the transfer, ... storage and marketing of the products ... ... (8) It shall promote the formation of cooperatives ... ’. The Commission considers those provisions to be incompatible with Regulation No 1360/78. It takes the view that the Italian provisions are more restrictive than the Community provisions. For example, the statutes of producer groups must provide that the group is to conclude contracts as a representative of its members. The Italian Law therefore restricts the forms of commercial activity of producer groups to the first of the three possibilities provided for in the Community regulation, so that the other two possibilities, not being expressly mentioned, are excluded. Because the Italian Law regulates the activities of producer groups in detail, additional activities are presumably not permitted. In reply to that argument, the defendant maintains that Law No 674 by no means regulates the activities of producer groups exhaustively. This is quite clear from the wording of Article 2, which provides that the statutes of producer groups must contain, inter alia, a number of specific provisions. Producer groups are at liberty to adopt additional provisions in their statutes. In particular, there is nothing to prevent producer groups from opting for one of the other two forms of activity mentioned in the Community regulation. It goes without saying that a producer group may trade on the market on its own behalf as well. What is not obvious, however, is that a producer group may trade on the market as a representative of its members, so that appropriate authorization would need to be contained in the producer group's statutes. Furthermore, the defendant argues, producer groups are not obliged to adopt precisely those forms of activity; they are merely obliged to ensure that their statutes give them the requisite powers so that they can use them if necessary. I think that there are two questions here which must be kept separate. The first is whether the obligation to provide for a specific form of activity in the statutes of a producer group is compatible with Article 6 of the regulation. The second is whether the express mention of a particular form of activity in Law No 674 does in fact prevent a producer group from assuming other kinds of activity. The obligation to empower a producer group to act as a representative of its members seems to me in fact to conflict with the Community regulation. Under Italian law, if producer groups decided to adopt one of the other two forms of activity provided for in the regulation and did not adopt in their statutes the form of activity provided for in Point (4) of the second paragraph of Article 2 of Law No 674, their recognition might be withdrawn although Regulation No 1360/78 would entitle them to recognition. Furthermore, that conclusion is not shaken by the assertion that that obligation is purely formal and does not compel producer groups to adopt that form of activity. After all, the statutes of a producer group basically regulate the relationship between its members and itself. The Italian Law compels the members of a producer group to provide it with powers which they might not wish to give and, above all, which Community law does not require. In this respect it must be agreed with the Commission that the Italian Law is indeed framed more restrictively than the Community regulation. However, I cannot accept the Commission's view as far as the exclusion of the other forms of commercial activity is concerned. The defendant has rightly pointed out that the provisions contained in the second paragraph of Article 2 of Law No 674 are not exclusive. The wording alone makes this clear; besides, a producer group has, by its legal nature, the power to adopt the other two forms of activity. In rebuttal of that argument the Commission draws attention to the general scheme of the Italian Law and suggests that by regulating many matters in detail the Law gives the impression of being exhaustive. Here we are faced with two different interpretations of national law. If the national government concerned provides a wholly plausible interpretation of its national law, the Court should regard that interpretation as correct. It is not sufficient for the Commission merely to put forward a contrary interpretation; it must produce solid arguments and refer, for example, to national administrative practice, court decisions and the like. However, the Commission admits that it has no such arguments. Finally, I shall briefly examine the obligation laid down in point (8) of the second paragraph of Article 2 of Law No 674 to promote the formation of cooperatives and other joint bodies. Such an activity may be quite useful but I can find no basis in the Community regulation for requiring it to be expressly provided for in the statutes of producer groups and for making the recognition of producer groups dependent upon it.

(b) From what I have said so far, it is clear what my answer must be to the question whether the Italian provisions governing the withdrawal of recognition from producer groups are compatible with Community law. Articles 4 and 5 of Law No 674 provide in effect that recognition is to be withdrawn if a producer group seriously and repeatedly infringes provisions of Community law and national law. That provision therefore allows recognition to be withdrawn from producer groups even if national provisions, which are themselves contrary to Community law, are infringed. I have in mind here the two conditions for recognition which I have just described as contrary to Community law. The remarks I have made on the Italian legislation as regards the granting and withdrawal of recognition of producer groups also logically apply to the regional Laws ( 4 ) which have either incorporated those provisions or refer to them. Those provisions — in so far as they are referred to in the Commission's reasoned opinion — are to be found in the annex to my opinion.

2. The incorporation in Italian legislation of individual provisions of Community law

The Commission further contends that some of the regional Laws passed to implement Law No 674 incorporate particular provisions of Regulation No 1360/78. It argues that that is not permissible because it creates uncertainty about the legal basis and legal nature of those provisions. The defendant considers that contention unfounded, first because only an insignificant number of individual provisions of Community law are to be found reproduced in regional Laws and secondly because the Italian authorities and courts are fully aware of the fact that the substantive rules of law on producer groups are based on Community law.

In its reasoned opinion and its application to the Court, the Commission raises this point against a number of Italian regional Laws but the only example it gives is the Law of the Region of Lombardy of 19 November 1980. In view of the importance of a reasoned opinion in defining the subject-matter of the legal proceedings, I take the view that only that Law of the Region of Lombardy must be considered in this connection. In view of the vagueness of the Commission's arguments, I consider it inadmissible to examine the legislation of the other regions in so far as it exists. Moreover, such an examination would interfere with the rights of the defendant, which has made submissions on this point only as regards the legal position in Lombardy.

In fact, Articles 3 and 4 of the Law of the Region of Lombardy contain particular provisions taken from Articles 5 and 6 of Regulation No 1360/78. Having regard to the judgment of the Court of Justice of 7 February 1973 in Case 39/72, Commission v Italy ( 5 ) I think that such action on the part of a national legislature is not permissible. I quote from paragraph 17 of the judgment:

‘By following this procedure, the Italian Government has brought into doubt... the legal nature of the applicable provisions ... According to the terms of Article 189 and 191 of the Treaty, Regulations are, as such, directly applicable in all Member States and come into force solely by virtue of their publication in the Official Journal of the Communities ... Consequently, all methods of implementation are contrary to the Treaty which would have the result of creating an obstacle to the direct effect of Community Regulations and of jeopardizing their simultaneous and uniform application in the whole of the Community.’ ( 6 )

The Court of Justice arrived at that view after examining an Italian decree which provided that the provisions of a Community regulation were ‘deemed to be included’ in it. If such wholesale incorporation into national law of the provisions of a regulation is not permissible, then neither can it be permissible to incorporate only selected passages of a Community regulation into national legislation. In order to illustrate still further the legal uncertainty which may be produced by such action, it should be pointed out that both the Community legislature and the national legislature may at any time enact amendments to the legislation in force. Should the substance of Community law and national law differ as a result, Community citizens might be in doubt as to which law they are to comply with.

3. The inaction of some regional legislatures

Regulation No 1360/78 entered into force on 26 June 1978; it became applicable from the time of the entry into force of Regulations Nos 2083/80 and 2084/80 on 8 August 1980. Law No 674 of the Italian Republic dates from 20 October 1978. Nevertheless, by the end of the oral procedure, implementing legislative measures had still not been adopted in two regions, Valle d'Aosta and Friuli, and in two autonomous provinces, Trentino and Bolzano.

It may at first appear astonishing that in order to implement a regulation which is binding in its entirety and directly applicable in all Member States, national implementing measures must be enacted. It is all the more surprising since Regulation No 1360/78 neither specifically sets out the measures which are to be adopted nor lays down a time-limit for the adoption of those measures. Article 19 of the regulation merely requires the Member States to report on the application of the regulation. However, examination of the individual provisions of the regulation makes it clear that national implementing measures are required. For example, under Article 5 (2) of the regulation the Member States concerned may widen the category of persons who may be members of producer groups. Under Article 6 (1) (h) they may inspect the accounts of producer groups, and under Article 10 the aid to be granted to producer groups in the three years following their recognition may be paid over five years. All those provisions require more detailed implementing measures. Furthermore, rules are necessary to determine who has competence for recognizing producer groups and the documents to be attached to an application for recognition — the Italian regional Laws already enacted have done this. Lastly, the agencies which are to pay the aid provided for in Article 10 must be determined. As long as those points have not been dealt with by legislation, Regulation No 1360/78 cannot have any practical effect despite its direct applicability.

Since Regulation No 1360/78 does not indicate a date by which the national implementing provisions must be in force, it remains to consider the question of the latest date by which such measures ought to have been adopted. No matter whether one opts for the date on which Regulation No 1360/78 was to take effect or the latest possible date from which the aid provided for in Article 10 of the regulation had to be paid, the fact remains that at the time when the action was brought the time-limit within which the Italian legislature had to act had been exceeded. Since it did not introduce legislation in respect of certain parts of its territory, it must be held that Italy has failed to do what was required in order to comply in full with its obligations under Regulation No 1360/78.

4. The separate issue: the adoption of implementing provisions by the Piedmont Regional Council

Within the domain of the Italian regional legislation, the Commission also takes exception to Article 12 of the Law of the Region of Piedmont of 22 April 1980. Under that article, the Regional Council is to adopt by way of regulation implementing provisions regarding common production and marketing rules, the minimum cultivated area, the minimum number of members of producer groups, the definition of the products concerned and the determination of the expenditure attracting aid. The Commission sees in that article an encroachment upon the legislative powers conferred upon the Community institutions by Articles 6 (3) and 11 (3) of Regulation No 1360/78. The defendant, on the other hand, points out that the enabling provision in question merely enables regional provisions to be adopted to implement Community implementing provisions. That, it declares, is immediately clear from the wording of the provision, which expressly refers to the powers of the Community institutions under Article 6 (3) of Regulation No 1360/78.

One could regard the passage requiring the Community's powers under Article 6 (3) to be respected as a kind of saving clause. However, I am inclined to take the view that the provision has its own meaning, for several reasons. In the first place, the Region of Piedmont adopted its Law at a time when the Community institutions had not yet decided upon the particulars of application provided for in Article 6 (3) of the regulation. Those particular rules ought to have been adopted within six months after the entry into force of the regulation, that is to say by 26 December 1978. However, as we know, the Commission's regulations date from only 31 July 1980. So the Piedmont regional legislature was not in a position to know precisely which implementing measures would eventually be required. Indeed, it cannot be blamed for having prepared the legal instrument for the adoption of implementing measures after the Community institutions had delayed the operation of Regulation No 1360/78 for more than a year, contrary to Article 6 (3) of the regulation. It should also be pointed out that Article 12 of the Law of the Region of Piedmont is a provision conferring legislative powers which must be exercised with due regard to the decisions of the Community institutions. It would be going too far to regard that enabling provision as a usurpation of powers by the Region of Piedmont. Bearing in mind that the legislative action of the Region of Piedmont was contemporaneous with the legislation enacted by the Community institutions, there can be a breach of the Treaty only if Piedmont did in fact act under that enabling provision in a manner contrary to Regulation No 1360/78 and the Commission's two implementing regulations. However, the Commission has not made any submission to that effect. Besides, it is wrong in contending that the implementing regulations did not leave any scope at all for decision-taking by the Member States. In Article 2 of Regulation No 2083/80 there is at least the power to fix the minimum size of producer groups in derogation from the normal case. Here at least we therefore find that there is still scope for national legislative measures.

5.

In conclusion, I should like briefly to state my views on an issue which received some attention in the written and oral procedures but which does not appear to me to be of decisive importance.

One argument which the defendant employed in its defence was that it circulated letters to the regions drawing their attention to the fact that Community law had precedence and that any provisions of Law No 674 which conflicted with Regulation No 1360/78 were not to be applied. I doubt whether such Government circulars can have any legal effect on the legislative bodies of the regions and autonomous provinces because I do not think it is possible to depart from acts of the national legislature on the strength of administrative directions. However, the important point in my view is that the circular failed to have the desired effect at least in so far as certain regional laws are in breach of the Treaty (by incorporating Community law).

C.

Having said all that, I propose that the Court should:

(1) Declare that the Italian Republic has failed to fulfil its obligations under Council Regulation (EEC) No 1360/78 of 19 June 1978, on producer groups and associations thereof, by (i) laying down in Law No 674 of 20 October 1978 and in the regional implementing legislation conditions for granting and withdrawing recognition of producer groups and associations of such groups different from those laid down in Council Regulation (EEC) No 1360/78; (ii) retaining in the regional legislation provisions repeating Community provisions; and (iii) failing to adopt in respect of part of its territory the supplementary legislation needed to implement Council Regulation (EEC) No 1360/78;

(2) Dismiss the remainder of the application;

(3) Order the defendant to pay three quarters of the costs and the applicant one quarter.

( *1 ) Translated from the German.

( 1 ) Official Journal 1978, L 166, p. 1.

( 2 ) Official Journal 1980, L 203, p. 5.

( 3 ) Official Journal 1980, L 203, p. 9.

( 4 )

( 5 ) Judgment of 7 February 1973 in Case 39/72 Commission v Italy [1973] ECR 101.

( 6 ) Idem p. 113.