Case C-404/05

Commission of the European Communities

v

Federal Republic of Germany

(Regulation (EEC) No 2092/91 – Organic production of agricultural products – Private inspection bodies – Requirement of an establishment or permanent infrastructure in the Member State where the services are provided – Justifications – Connection with the exercise of official authority – Article 55 EC – Consumer protection)

Opinion of Advocate General Sharpston delivered on 12 July 2007

Judgment of the Court (First Chamber), 29 November 2007

Summary of the Judgment

Freedom to provide services – Restrictions

(Arts 45 EC, 49 EC and 55 EC; Council Regulation No 2092/91)

A Member State which requires private inspection bodies of organically farmed products approved in another Member State to maintain an establishment in national territory in order to be able to provide inspection services there fails to fulfil its obligations under Article 49 EC.

In the first place, the auxiliary and preparatory role conferred on private bodies by Regulation No 2092/91 on organic production of agricultural products and indications referring thereto on agricultural products and foodstuffs vis-à-vis the supervisory authority cannot be regarded as a direct and specific participation in the exercise of official authority for the purposes of Article 55 EC read in conjunction with the first paragraph of Article 45 EC, justifying an exception by virtue of those provisions, but as an additional activity separable from the exercise of such authority. Moreover, such a requirement goes beyond what is objectively necessary to attain the objective of consumer protection capable of justifying interference with the freedom to provide services.

(see paras 37-38, 44, 48, 52, operative part)

JUDGMENT OF THE COURT (First Chamber)

29 November 2007 ( )

(Regulation (EEC) No 2092/91 ‑ Organic production of agricultural products – Private inspection bodies – Requirement of an establishment or permanent infrastructure in the Member State where the services are provided – Justifications – Connection with the exercise of official authority – Article 55 EC – Consumer protection)

In Case C-404/05,

ACTION under Article 226 EC for failure to fulfil obligations, brought on 17 November 2005,

Commission of the European Communities, represented by E. Traversa and G. Braun, acting as Agents, with an address for service in Luxembourg,

applicant,

v

Federal Republic of Germany, represented by M. Lumma and C. Schulze-Bahr, acting as Agents,

defendant,

THE COURT (First Chamber),

composed of P. Jann, President of the Chamber, A. Tizzano, A. Borg Barthet, M. Ilešič and E. Levits (Rapporteur), Judges,

Advocate General: E. Sharpston,

Registrar: R. Grass,

having regard to the written procedure,

after hearing the Opinion of the Advocate General at the sitting on 12 July 2007,

gives the following

Judgment

1 By its application, the Commission of the European Communities asks the Court to declare that, by requiring of private inspection bodies of organically-farmed products (‘private bodies’) which are established and approved in another Member State that they maintain a place of business or other permanent infrastructure in Germany in order to be able to carry out their activities there, the Federal Republic of Germany has failed to fulfil its obligations under Article 49 EC.

Legal background

Community legislation

2 Council Regulation (EEC) No 2092/91 of 24 June 1991 on organic production of agricultural products and indications referring thereto on agricultural products and foodstuffs (OJ 1991 L 198, p. 1), as amended by Council Regulation (EC) No 1804/1999 of 19 July 1999 (OJ 1999 L 222, p. 1; ‘Regulation No 2092/91’), lays down minimum rules in respect of organic production of agricultural products, inspection procedures of the production methods concerned and certification of the products of such production. Under that regulation, products which satisfy its requirements may be designated with the indication ‘Organic Farming – EC Control System’, particularly in the form of labelling.

3 Articles 1, 2 and 4 of Regulation No 2092/91 set out the products concerned and the indications referring to organic production methods, and define various terms. Article 3 of that regulation provides that the latter is to apply without prejudice to other Community provisions or national provisions, in conformity with Community legislation. Article 5 of that regulation lays down the conditions under which the labelling and advertising of a product may refer to organic production methods, while Article 6 of the regulation sets out the rules of production implied by the concept of organic production methods.

4 Article 8 of Regulation No 2092/91 is worded as follows:

‘1. Any operator who produces, prepares or imports from a third country products as specified in Article 1 for the purpose of marketing them shall:

(a) notify this activity to the competent authority of the Member State in which the activity is carried out; such notification shall include the information specified in Annex IV;

(b) submit his undertaking to the inspection system referred to in Article 9.

2. Member States shall designate an authority or body for the reception of notifications.

Member States may provide for the communication of any additional information which they consider to be necessary for effective supervision of the operators concerned.

3. The competent authority shall ensure that an updated list containing the names and addresses of operators subject to the inspection system is made available to interested parties.’

5 Article 9 of Regulation No 2092/91 provides:

‘1. Member States shall set up an inspection system operated by one or more designated inspection authorities and/or by approved private bodies to which the operators producing, preparing or importing from third countries products as referred to in Article 1 shall be subject.

2. Member States shall adopt the measures necessary to ensure that an operator who complies with the provisions of this Regulation and pays his contribution to inspection expenses has access to the inspection system.

3. The inspection system shall comprise at least the application of the precautionary and inspection measures specified in Annex III.

4. For the application of the inspection system operated by private bodies, Member States shall designate an authority responsible for the approval and supervision of such bodies.

5. For the approval of a private inspection body, the following shall be taken into account:

(a) the standard inspection procedure to be followed, containing a detailed description of the inspection measures and precautions which the body undertakes to impose on operators subject to its inspection;

(b) the penalties which the body intends to apply where irregularities and/or infringements are found;

(c) the availability of appropriate resources in the form of qualified staff, administrative and technical facilities, inspection experience and reliability;

(d) the objectivity of the inspection body vis-à-vis the operators subject to its inspection.

6. After an inspection body has been approved, the competent authority shall:

(a) ensure that the inspections carried out by the inspection body are objective;

(b) verify the effectiveness of its inspections;

(c) take cognisance of any irregularities and/or infringements found and penalties applied;

(d) withdraw approval of the inspection body where it fails to satisfy the requirements referred to in (a) and (b) or no longer fulfils the criteria indicated in paragraph 5 or fails to satisfy the requirements laid down in paragraphs 7, 8, 9 and 11.

6a. Before 1 January 1996, Member States shall issue a code number to each inspection body or authority approved or designated in accordance with the provisions of this Article. They shall inform the other Member States and the Commission thereof; the Commission shall publish the code numbers in the list referred to in the last subparagraph of Article 15.

7. The inspection authority and the approved inspection bodies referred to in paragraph 1 shall:

(a) ensure that at least the inspection measures and precautions specified in Annex III are applied to undertakings subject to their inspection;

(b) not disclose information and data they obtain in their inspection activity to persons other than the person responsible for the undertaking concerned and the competent public authorities.

8. Approved inspection bodies shall:

(a) give the competent authority, for inspection purposes, access to their offices and facilities, together with any information and assistance deemed necessary by the competent authority for the fulfilment of its obligations pursuant to this Regulation;

(b) send to the competent authority of the Member State by 31 January each year a list of operators subject to their inspection on 31 December of the previous year and present to the said authority a concise annual report.

9. The inspection authority and inspection bodies referred to in paragraph 1 shall:

(a) ensure that, where an irregularity is found regarding the implementation of Articles 5, 6 and 7 or of the measures referred to in Annex III, the indications provided for in Article 2 referring to the organic production method are removed from the entire lot or production run affected by the irregularity concerned;

(b) where a manifest infringement, or an infringement with prolonged effects is found, prohibit the operator concerned from marketing products with indications referring to the organic production method for a period to be agreed with the competent authority of the Member State.

...

11. As from 1 January 1998 and without prejudice to the provisions of paragraphs 5 and 6, approved inspection bodies must satisfy the requirements laid down in the conditions of standard EN 45011.

…’

6 Article 10 of Regulation No 2092/91 provides for the affixing of an indication and/or a logo which comply with Annex V to that regulation to the labelling of products subject to the inspection scheme under Article 9. In that regard, Article 10(3) imposes on inspection bodies enforcement obligations equivalent to those laid down in Article 9(9).

7 Article 10a of Regulation No 2092/91, relating to general enforcement measures, states:

‘1. Where a Member State finds irregularities or infringements relating to the application of this Regulation in a product coming from another Member State and bearing indications as referred to in Article 2 and/or Annex V it shall inform the Member State which designated the inspection authority or approved the inspection body and the Commission [thereof].

2. Member States shall take whatever measures and action are required to prevent fraudulent use of the indications referred to in Article 2 and/or Annex V.’

8 Annex III to Regulation No 2092/91 specifies the minimum inspection requirements and the precautionary measures under the inspection scheme referred to in Articles 8 and 9 of that regulation.

9 In particular, the general provisions of that Annex provide, in the second subparagraph of paragraph 9, and in paragraph 10, that private bodies are authorised to require, provisionally, that an operator may not market with an indication of organic production method a product suspected of non-compliance with the standards specified by Regulation No 2092/91 and that those bodies have the right of access to that operator’s premises and accounting documents.

The German legislation

10 The Law on the transposition of Community acts in the field of organic farming (Gesetz zur Durchführung der Rechtsakte der Europäischen Gemeinschaft auf dem Gebiet des ökologischen Landbaus), in its version of 10 July 2002 (BGBl. 2002 I, p. 2558; hereinafter ‘the ÖLG’), implements the provisions of Regulation No 2092/91.

11 Paragraph 3(1) of the ÖLG states that the inspection system provided for in Article 9(1) of Regulation No 2092/91, read in conjunction with Article 9(3) thereof and Annex III thereto, may be implemented by private bodies, in so far as the execution of the duties does not involve the exercise of an administrative procedure.

12 Under Paragraph 4(1)(4) of the ÖLG, the carrying out of inspections by private bodies in Germany requires the obtaining of an approval, which itself requires the existence of an establishment in Germany. The ÖLG provides for no procedure for the recognition of approvals issued to private bodies in the other Member States.

The pre-litigation procedure

13 The Commission, having sent, on 8 November 2000, a letter of formal notice to the authorities of the Federal Republic of Germany, drawing their attention to the fact that the requirement to maintain a place of business or permanent infrastructure in Germany imposed on private bodies approved in another Member State was incompatible with Article 49 EC, and finding the Federal Republic of Germany’s reply of 19 February 2001 unsatisfactory, issued a reasoned opinion on 23 October 2002, requesting that Member State to comply with its obligations within a period of two months from the sending of that opinion.

14 In its reply of 13 February 2003, the Federal Republic of Germany forwarded to the Commission the text of the ÖLG and maintained that in order to serve the interests of consumers and competition effectively, it was absolutely indispensable, for a private body, to maintain an establishment in the Member State in which it wished to carry out its inspection activities.

15 The Commission took the view that the Federal Republic of Germany had not complied with the reasoned opinion and, consequently, brought the present action.

The action

Arguments of the parties

16 The Commission submits that Paragraph 4(1)(4) of the ÖLG is, for a private body approved in another Member State but not having an establishment in Germany, an obstacle to the freedom to carry out its inspection activities there.

17 The system of approval and supervision of private bodies put in place by Regulation 2092/91 presupposes the establishment of those bodies only in the Member State which issues their approval, and not in each Member State in which they wish to carry out their inspection activities.

18 The Commission states in that regard that, since Regulation No 2092/91 does not fully harmonise the field concerned, the freedom to provide services enshrined in Article 49 EC must be taken into consideration in order to determine whether the contested German legislation involves an obstacle to that freedom.

19 Moreover, the Commission points out, first, that the Council of the European Union, in adopting Regulation No 2092/91, did not refer to Article 66 of the EEC Treaty (which became Article 66 of the EC Treaty, now Article 55 EC), read in conjunction with Article 55 of the EEC Treaty (which became Article 55 of the EC Treaty, now Article 45 EC), so that the inspection and labelling of organically‑farmed products are not activities excluded from the scope of Article 49 EC.

20 Secondly, the first paragraph of Article 45 EC concerns only activities which are, as such, connected directly and specifically with the exercise of official authority. Therefore, even if the inspection of organically-farmed products is, ultimately, an exercise of official authority, the private bodies are not connected directly and specifically with the exercise of that authority.

21 Since Article 9(1) of Regulation No 2092/91 permits the Member States to establish an inspection system operated by private bodies, it demonstrates, by itself, that the inspection activities concerned are not part of the functions related to the exercise of public powers. Therefore, they are certainly not a central function of the State necessitating a direct and specific connection with the exercise of official authority.

22 In that regard, the fact that the German private bodies which carry out the inspections required by Regulation No 2092/91 also carry out other activities capable of partaking of official authority is irrelevant in the light of Community law.

23 Finally, the Commission submits that the objective of consumer protection cannot justify the requirement of establishment in Germany imposed on private bodies approved in another Member State. Such a requirement is not indispensable in order to verify the objectivity of inspections and ensure such protection. The competent authority in the Member State has, under Regulation No 2092/91, powers enabling it to effect the necessary verification in that regard and to adopt the requisite penalties if the inspection criteria are not observed. A simplified approval procedure, which took account of the checks made by the competent authority of the Member State of approval, would enable the German authorities to satisfy themselves that private bodies wishing to carry out inspections in Germany actually met the requirements relating to resources of staff and administrative facilities under that regulation. In addition, the system of communication between the authorities of the Member States would enable them to adopt the requisite measures where irregularities are found in inspections made in another Member State.

24 The Federal Republic of Germany submits, primarily, that Regulation No 2092/91 harmonises the field concerned exhaustively. Accordingly, it follows from the Court’s case-law that it is therefore no longer possible to invoke the fundamental freedoms guaranteed by the EC Treaty in that field. That Member State refers, in that regard, to Case 222/82 Apple and Pear Development Council [1983] ECR 4083; Case 190/87 Moormann [1988] ECR 4689, paragraph 10; Case C‑37/92 Vanacker and Lesage [1993] ECR I‑4947, paragraph 9; and Case C‑324/99 DaimlerChrysler [2001] ECR I‑9897, paragraph 43).

25 Since the question of recognition of approvals obtained in another Member State is, however, not governed by the provisions of Regulation No 2092/91, each Member State is entitled to require of any private body wishing to offer its services in that State’s territory compliance with the requirements for approval laid down by that regulation. Furthermore, to require a Member State to allow private bodies approved in another Member State, on the basis of that approval alone, to carry out their activities in the former State’s territory involves a restriction of the freedom conferred on each Member State in the conception of its inspection system.

26 In addition, the Federal Republic of Germany argues, first, that the activities of private bodies partake of the exercise of official authority within the meaning of Article 55 EC read in conjunction with the first paragraph of Article 45 EC and, secondly, that Paragraph 4(1)(4) of the ÖLG is justified by the objective of consumer protection.

27 As regards, first, the derogation under Article 55 EC, read in conjunction with the first paragraph of Article 45 EC, the primary role in the system of inspection of organically-farmed products, in which private bodies are cast, arises, first, from the fact that, under Article 9 of Regulation No 2092/91, the Member States may entrust the function of inspection to a public authority and, secondly, from the special powers which are involved in the carrying-out of that activity and can affect the rights of the operators inspected. The fact that those bodies cannot, themselves, enforce the decisions they adopt is not decisive. On the contrary, the mandatory nature of their decisions, which can be challenged only by judicial proceedings, is a factor which militates in favour of their being directly and specifically connected with the exercise of official authority, as follows from the Court’s case-law, in particular, Case 2/74 Reyners [1974] ECR 631, paragraph 43, Case C‑42/92 Thijssen [1993] ECR I‑4047, paragraph 8.

28 As regards, secondly, the justification for Paragraph 4(1)(4) of the ÖLG, the Federal Republic of Germany submits that the obligation to maintain an establishment in Germany is required for overriding reasons in the public interest, namely consumer protection. That obligation is, moreover, proportionate to that objective.

29 Thus, that obligation is indispensable in order to allow adequate supervision of the activities of private bodies by the competent public authorities. Indeed, it is necessary that such supervision be effected by the competent authorities of the Member State in which those bodies are active and, to that end, that they there maintain an establishment or permanent infrastructure.

Findings of the Court

30 As a preliminary point, it should be noted that, in cases where Member States have opted for a system whereby the inspection of organically-farmed products is operated by approved private bodies, Regulation No 2092/91 lays down the procedure and requirements for approval of those bodies, the detailed rules of inspection which those bodies must apply and the procedure for supervision to which they are themselves subject in their Member State of approval. That regulation contains, however, no provision relating to the provision of inspection services by private bodies in a Member State other than that of their approval.

31 Whilst it is true that, in a sector which has not been subject to full harmonisation at Community level, Member States remain, in principle, competent to define the conditions for the pursuit of the activities in that sector, they must, when exercising their powers, respect the basic freedoms guaranteed by the Treaty (see Case C‑514/03 Commission v Spain [2006] ECR I‑963, paragraph 23, and Case C‑257/05 Commission v Germany [2006] ECR I‑134, paragraph 18).

32 In this case, the question arises of the conformity with Article 49 EC of the requirement to have an establishment in Germany imposed by Paragraph 4(1)(4) of the ÖLG on private bodies which are already approved and, therefore, already have an establishment in another Member State.

33 It is settled case-law that all measures which prohibit, impede or render less attractive the exercise of the freedom to provide services must be regarded as restrictions of that freedom (see Case C‑452/04 Fidium Finanz [2006] ECR I‑9521, paragraph 46 and the case-law cited).

34 Therefore, the establishment requirement under the contested provision runs directly contrary to the freedom to provide services, since it renders impossible the provision, in Germany, of the services in question by private bodies established only in other Member States (see, by analogy, Case C‑355/98 Commission v Belgium [2000] ECR I‑1221, paragraph 27 and the case-law cited).

35 Consequently, it is necessary to determine whether the contested provision can be justified by the derogations provided for by the Treaty or by overriding reasons in the public interest.

36 The Federal Republic of Germany argues, primarily, that the activities of private bodies are directly and specifically connected with the exercise of official authority, within the meaning of Article 55 EC read in conjunction with the first paragraph of Article 45 EC, and, in the alternative, that the contested provision is justified by an objective of consumer protection.

37 As regards the primary argument, it must be remembered that, as a derogation from the fundamental rule of freedom to provide services, Article 55 EC, read in conjunction with the first paragraph of Article 45 EC, must be interpreted in a manner which limits its scope to what is strictly necessary to safeguard the interests which it allows the Member States to protect (see, to that effect, Case C‑451/03 Servizi Ausiliari Dottori Commercialisti [2006] ECR I‑2941, paragraph 45 and the case-law cited).

38 Thus, according to settled case-law, derogation under those articles must be restricted to activities which, in themselves, are directly and specifically connected with the exercise of official authority (see Servizi Ausiliari Dottori Commercialisti, cited above, paragraph 46 and the case-law cited), which excludes from being regarded as connected with the exercise of official authority, within the meaning of that derogation, functions that are merely auxiliary and preparatory vis-à-vis an entity which effectively exercises official authority by taking the final decision (Thijssen, cited above, paragraph 22).

39 It follows from Regulation No 2092/91 that the activities of private bodies and the detailed rules and procedures for carrying them out can be described as follows.

40 First, private bodies implement, in accordance with Article 9(3) of Regulation No 2092/91, the inspection measures and precautions mentioned in Annex III to that regulation.

41 Secondly, under Article 9(9)(a) and (b) of that regulation, those bodies effect the consequences of the inspections which they carry out by permitting or not indications relating to the organic production method for products marketed by the operators they inspect and, in cases of manifest infringement or infringement with prolonged effects, by prohibiting the marketing, with indications referring to the organic production method, of the products of the operator in question, for a period previously established with the competent public authority.

42 Thirdly, under Article 9(6)(c) and (8)(a) and (b) of Regulation No 2092/91, those bodies must give an account of their activities to the authority responsible for their approval and for their supervision, respectively, by informing it of the irregularities and infringements found and penalties applied, by giving it all necessary information and by sending it, each year, a list of the operators subject to their inspection as well as a report on their own activities. In addition, the said Article 9(8)(a) provides that private bodies are to give the competent authority to which they are subject access, for inspection purposes, to their offices and facilities, together with any information and assistance deemed necessary by that authority for the fulfilment of its obligations.

43 Whilst it follows that the activities of private bodies are not limited to the organisation of mere inspections of the conformity of organically-farmed products, but also include the exercise of powers as to the consequences to be drawn from those inspections, it must none the less be pointed out that Regulation No 2092/91 provides for the oversight of those bodies by the competent public authority. Thus, Article 9(4) thereof subjects those bodies to the supervision of that authority. Among other provisions, Article 9(6) sets out the detailed rules and procedures for the exercise of that supervision, providing, in particular, that the authority, apart from its powers of issue and withdrawal of approval, is to ensure the objectivity and verify the effectiveness of the inspections carried out by private bodies. In addition, Article 9(8)(a) requires those bodies to give the competent authority access, for inspection purposes, to their offices and facilities.

44 It is therefore apparent that private bodies carry out their activities under the active supervision of the competent public authority which, in the final analysis, is responsible for the inspections and decisions of those bodies, as is demonstrated by that authority’s obligations noted in the preceding paragraph of the present judgment. That conclusion is also supported by Paragraph 3(1) of the ÖLG, since it shows that the execution by private bodies of the duties of inspection under Regulation No 2092/91 cannot involve the implementation of an administrative procedure. It follows that the auxiliary and preparatory role devolved on private bodies by that regulation vis-à-vis the supervisory authority cannot be regarded as being directly and specifically connected with the exercise of official authority, within the meaning of Article 55 EC, read in conjunction with the first paragraph of Article 45 EC.

45 The Federal Republic of Germany argues, however, that private bodies are invested, in Germany, with rights and powers derogating from that regulation. Thus, they have powers to adopt administrative acts, the binding force of which is equivalent to that of decisions adopted by a public authority.

46 In that regard, it must be pointed out, first, that, as recalled in paragraph 37 of the present judgment, the derogation provided for by Article 55 EC, read in conjunction with the first paragraph of Article 45 EC, must be interpreted in a manner which limits its scope to what is strictly necessary to safeguard the interests which it allows the Member States to protect.

47 Secondly, while Regulation No 2092/91 does not preclude the Member States from conferring on private bodies rights and powers of public authority to carry out their inspection activities, or even from entrusting to them other activities which, taken in themselves, are directly and specifically connected with the exercise of official authority, it is however clear from the Court’s case-law that the extension of the exception allowed by Articles 45 EC and 55 EC to an entire profession is not possible when the activities connected with the exercise of official authority are separable from the professional activity in question taken as a whole (see, as regards Article 45 EC, Reyners, cited above, paragraph 47).

48 It must be recalled that, as has been held in paragraph 44 of the present judgment, the activities of private bodies as defined by Regulation No 2092/91 are not, in themselves, activities directly and specifically connected with the exercise of official authority, with the result that any other additional activity so connected is necessarily separable from them.

49 As regards the secondary argument developed, in the alternative, by the Federal Republic of Germany relating to the justification for Paragraph 4(1)(4) of the ÖLG on grounds of consumer protection, it submits, in particular, that the requirement to maintain an establishment or permanent infrastructure in Germany is indispensable in order that the competent German authorities, first, may satisfy themselves that private bodies which provide inspection services there have the necessary infrastructure and staff and, second, can carry out the inspections on site required by Regulation No 2092/91.

50 In that regard, is it is to be noted that, in accordance with settled case-law, consumer protection can justify interference with the freedom to provide services (see, to that effect, Joined Cases C‑34/95 to C‑36/95 De Agostini and TV-Shop [1997] ECR I‑3843, paragraph 53; Case C‑243/01 Gambelli and Others [2003] ECR I‑13031, paragraph 67; and Joined Cases C‑338/04, C‑359/04 and C‑360/04 Placanica and Others [2007] ECR I‑0000, paragraph 46).

51 However, it is important to check that the measures taken for that purpose do not exceed what is objectively necessary (see, to that effect, Case C‑496/01 Commission v France [2004] ECR I‑2351, paragraph 68).

52 The requirement imposed on private bodies approved in another Member State to maintain an establishment in Germany in order to be able to carry out their activities there goes beyond what is objectively necessary to attain the objective of consumer protection.

53 It must be recalled that Regulation No 2092/91 lays down the minimum criteria in respect of the supervision of those bodies. Those criteria are applicable throughout the Member States, with the result that it is guaranteed that such a body which is approved in a Member State and provides inspection services in Germany meets, in particular, the various criteria set by that regulation and, consequently, that the protection of consumers is ensured.

54 Therefore, by requiring of private bodies approved in another Member State that they maintain an establishment in Germany in order that the German authorities can supervise their activities, Paragraph 4(1)(4) of the ÖLG precludes the obligations and monitoring measures to which those bodies are already subject in their Member State of approval from being taken into account.

55 It would be possible for the German authorities to obtain the guarantees required by Regulation No 2092/91 and consumer protection by less restrictive measures.

56 First, for example, those authorities could, prior to any provision of services, require of a private body approved in another Member State proof that it actually has, in its Member State of establishment, approval and the infrastructure and staff required to provide the services it wishes in Germany. Those matters could be corroborated by the competent authorities of the Member State of establishment which are responsible for supervising the activities of the body concerned.

57 Second, should any irregularity be found in the inspections carried out in Germany by that body, Article 10a of Regulation No 2092/91 provides for a system of exchange of information between the Member States which would permit the German authorities to inform the authorities supervising that body of the irregularity, in order that they might adopt the requisite measures, namely, for example, the inspection of that body’s premises, and, if necessary, withdraw its approval.

58 Therefore, it must be held that the requirement resulting from Paragraph 4(1)(4) of the ÖLG is not proportionate to the objective of consumer protection invoked by the Federal Republic of Germany.

59 Accordingly, it follows from the foregoing that, by requiring of private bodies approved in another Member State that they maintain an establishment in Germany in order to be able to provide inspection services there, the Federal Republic of Germany has failed to fulfil its obligations under Article 49 EC.

Costs

60 Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the Commission has applied for costs and the Federal Republic of Germany has been unsuccessful in its submissions, the latter must be ordered to pay the costs.

On those grounds, the Court (First Chamber) hereby:

1. Declares that, by requiring of private inspection bodies of organically‑farmed products approved in another Member State that they maintain an establishment in Germany in order to be able to provide inspection services there, the Federal Republic of Germany has failed to fulfil its obligations under Article 49 EC;

2. Orders the Federal Republic of Germany to pay the costs.

[Signatures]