OPINION OF MR ADVOCATE GENERAL MISCHO

delivered on 25 June 1986 ( *1 )

Mr President,

Members of the Court,

In these proceedings the Court is asked to interpret a provision of Commission Regur lation (EEC) No 649/78 of 31 March 1978 on the sale at reduced prices of intervention butter for direct consumption as concentrated butter (Official Journal 1978, L 86, p. 33).

The third indent of Article 5 (1) of that regulation provides that:

‘1. Concentrated butter must: ... ... be marketed in plastic packs of not more than 250 grams, the form of which makes it possible to distinguish between concentrated butter and ordinary butter, bearing on the upper surface in letters at least 5 millimetres high, one or more of the following statements : “butteroil for cooking” ...’.

In accordance with that regulation, between 25 March 1978 and 12 February 1979, Nicolas Corman et fils SA (hereinafter referred to as ‘Corman’) concluded with the Office belge de l'economie et de l'agriculture [Belgian Trade and Agriculture Board, hereinafter referred to as ‘the Board’] five contracts pursuant to which it agreed to purchase 210 tonnes of intervention butter at a reduced price. As a guarantee that the butter would be processed into concentrated butter and marketed in accordance with' Regulation No 649/78, Corman lodged the securities provided for in Article 2 of that regulation.

It subsequently re-sold the concentrated butter in packs fitted with transparent plastic lids.

Inside the packs a sheet of paper was placed on the concentrated butter, bearing the required statement, which could be read through the transparent lid.

Following an investigation the Commission informed the Board that that packaging did not comply with the requirements of the abovementioned article and that it was liable to create opportunities for fraud in connection with the subsequent use of the butter.

At that point the securities lodged in respect of two of the five contracts had already been released. The Board refused to release the remaining three securities.

In order to obtain the release of those securities, Corman brought an action against the Board before the tribunal de première instance [Court of First Instance], Brussels.

The Board in its turn lodged a counterclaim for the repayment of the other two securities.

In order to determine the exact scope of the abovementioned Article 5, the Brussels court referred the following question to the Court of Justice :

‘Must the third indent of Article 5 (1) of Commission Regulation No 649/78 of 31 March 1978 be interpreted as meaning that the packaging of concentrated butter in plastic packs of 250 grams with a transparent lid through the upper surface of which it is possible to see the statements required by the regulation printed on a sheet of paper placed inside the pack on the butter itself is perfectly lawful having regard to the purpose of the rules in question?’

In order to show that its packaging of the concentrated butter complied with the requirements of the regulation, Corman relied on the following arguments:

(i) The wording of the third indent of Article 5 (1) refers to the upper surface of the packaging and not to a lid since the definition of the word ‘godet’ (pack) does not imply the presence of a lid. Consumer interests are adequately protected provided that the required statement remains legible.

(ii) The packaging used makes any attempt at fraud more difficult because it is easier to replace a printed lid by another than to try to remove a sheet of paper at the risk of soiling the concentrated butter to which the paper adheres.

(iii) The essential requirement is that the butter should be packed in little packs. It makes no difference whether the statement appears on a sheet of paper, and is legible through the transparent lid, or on the lid itself.

I propose to examine those arguments in turn.

(1) Does a ‘godet’(pack) imply the presence of a lid? The plaintiff in the main proceedings is correct in claiming that the definition of the word ‘godet’ given in the French dictionary, ‘Petit Robert’, does not necessarily suggest the presence of a lid. That definition refers principally to ‘small drinking recipients without stem or handle’. On the other hand the ‘Nouveau Larousse Universel’, another French dictionary, includes a further definition: ‘small recipients for diverse uses’. The German, Danish and Dutch versions of Regulation No 649/78 use the expression ‘Bechern’, ‘baegere’ and ‘bakjes’ respectively, which in themselves do not suggest the presence of a lid. The English and Italian versions on the other hand use words which suggest packaging covering the entire surface of the product, namely ‘plastic packs’ or ‘contenitori di plastica’. The wording of the French version (‘godet... portant sur la face supérieure’) suggests that the ‘godets’ or packs referred to in the regulation must themselves be fitted with an upper surface, in other words a lid. The words ‘face supérieure’ [upper surface] unquestionably refer to the word ‘godet’ and not to ‘emballage’. ( 1 ) The same reasoning applies to the Danish (‘i Baegere ... og som pa oversiden’) and the Dutch (‘bakjes ... waarop op de bovenkant’) versions and a fortiori to the English (‘plastic packs... bearing on the upper surface’) and Italian (‘contenitori di plastica ... recanti sulla parte superiore’ versions. Only the German version is not immediately open to that interpretation (‘in Bechern ... vermarktet werden und auf der Oberseite der Verpackung eine oder mehrere Aufschriften tragen’). ( 2 ) However, the use of the word ‘Verpackung’, that is to say packaging, nevertheless suggests that the product must be protected from the outside world on each of its surfaces so that the whole article is completely covered. The pack must therefore be sealed either by a rigid lid properly so-called or, possibly, a flexible sheet of paper, which must however be attached to the sides of the pack so that the whole covering forms a single package (which was not so in the case of the sheet of paper placed on the butter by Corman). It may therefore be concluded that it would not have been permissible under Article 5 of Regulation No 649/78 to put the concentrated butter in a pack which was not fitted with a lid, and which was sealed merely by a sheet of paper placed on the butter and not attached to the sides of the pack.

(2) Does the expression ‘packs ... bearing on the upper surface ... one or more of the following statements’mean that it is necessary to print the statement in question on the lid of the pack or can that requirement be satisfied by placing a printed sheet under a transparent lid on the product itself?. It may be recalled that, according to the different language versions, the statement must be marked on: (i) la face supérieure du godet (the French version corresponds to the Danish and Dutch versions) (ii) the ‘upper surface’ of the ‘packs’ (iii) the ‘Oberseite’ of the ‘Verpackung’ (iv) the ‘parte superiore... ’ of the ‘contenitori’. It follows that all those versions refer to the external surface of the package, in other words the lid of the pack or, conceivably, a sheet of paper attached to the sides of the pack and serving as a lid.

(3) Does the contested presentation make fraud easier? In order to reply to that question it is necessary to compare the costs in terms of material and labour (in other words the number of steps required to complete the operation) of an attempt to defraud in either case. Where the statement ‘concentrated butter’ appears on the lid of the pack, it is sufficient for a person intent on fraud: (i) to buy blank lids (whether or not transparent); and (ii) to replace the existing lids with the new ones. On the other hand, where the pack has a transparent lid, he: (i) does not have to buy new lids since the existing transparent lids may be used again; but (ii) has to open the lids, take off the detachable sheet of paper and replace the transparent lid. As far as the cost of materials is concerned, the second operation is significantly cheaper because it is not necessary to buy new lids. It must moreover be cheaper to purchase packs bearing no printed statements in the first place than to purchase packs with a lid on which a statement has been printed, because it would be possible to buy mass produced packs capable of being used for packaging all sorts of products. As regards the labour cost involved, an additional step is necessary in the second case, namely that of removing the sheet of paper placed on the butter. It is however relatively simple. That additional step is moreover in my view not such as to increase significantly the costs of manufacture since Corman has admitted that it sold to a German wholesaler a quantity of concentrated butter after replacing the original sheet of paper with another sheet of foil bearing the statements required by the German authorities. Thus that operation was still profitable despite the fact that it entailed an additional step, namely the interposition of a new sheet of paper (and costs incurred in printing that sheet). The fact of that sale also contradicts Corman's argument that the removal of the original sheet would soil the butter and that therefore such an operation would not be viable. In conclusion on that point it may therefore be stated that in terms of the cost of materials it would be cheaper to make fraudulent use of packs with transparent lids than to do so with other packs. That advantage would be offset to an extent which is difficult to calculate by the cost of the additional work involved in removing the sheet of paper. I therefore conclude that the method of packaging used by Corman does not provide greater opportunities for fraud than those afforded by the method prescribed by the Commission. If the Commission had wished to make fraud really difficult it should have required that the statement ‘concentrated butter’be marked on the sides of the pack. For the sake of completeness, I would nevertheless like to point out that, in its decisions concerning Community regulations providing for the grant of subsidies, the Court has firmly insisted on strict compliance with those provisions of the regulations which were intended to prevent fraud. In its judgment of 29 April 1982 in Joined Cases 66 and 99/81 (Pommerehnke v BALM [1982] ECR 1363), which also concerned the detailed rules for the resale of concentrated butter, the Court gave Commission Regulation No 349/73, which preceded Regulation No 649/78, the interpretation which was most likely to prevent the concentrated butter from being used other than for its intended purpose. In its judgment of 2 December 1982 in Case 272/81 (RU-MI v Forma [1982] ECR 4167) the Court ruled that the fact that the denaturing of a product departed to a slight extent from the method prescribed by a regulation was already capable of depriving a trader of the entire benefit of the special aid instituted by that regulation. However, in that case the denaturing of skimmed-milk powder clearly constituted the primary obligation and the regulation provided expressly that the aid could be paid only if a denaturing certificate had been issued by the supervisory body. The judgment of 2 December 1982 in Case 273/81 (Société Laitière de Gacé v Forma [1982] ECR 4193) shows the strict approach adopted by the Court in relation to aid for the processing of certain products. In that case the product did not satisfy the requirements because the producer had failed to notice that a machine had been incorrectly set. The result of that incorrect setting was nevertheless that the product obtained did not comply with the quality requirements imposed by the Community rules. Nor has the Court been prepared to consider whether or not a system of supervision applied by a Member State in preference to that prescribed by the Community rules was more effective than the Community system. It merely declared that it was necessary for Community regulations to be applied uniformly (judgment of 14 January 1981 in Case 819/79 Germany v Commission [1981] ECR 21).

(4) Did the method chosen by Corman secure that company a competitive advantage in relation to its competitors in the other Member States?

In two judgments of 7 February 1979 (Case 11/76 Netherlands v Commission [1979] ECR 245, paragraph 9 of the decision, and Case 18/76 Germany v Commission [1979] ECR 343, paragraph 8 of the decision), the Court held that:

‘... the management of the common agricultural policy in conditions of equality between traders in the Member States requires that the national authorities of a Member State should not, by the expedient of a wide interpretation of a given provision, favour traders in that State to the detriment of those in other States where a stricter interpretation is applied. If such a distortion of competition between Member States arises ... ’

As far as this case is concerned it has been seen that it was probably slightly less expensive to use packs with transparent lids requiring the addition of only a sheet of paper bearing a printed statement than to use packs with lids on which the statement was printed. That would seem to be established by the fact that Corman was able to deliver concentrated butter in Germany after removing the sheet of paper and replacing it with another sheet bearing the required statements in German. It is thus possible that competition was to some extent distorted.

It may consequently be concluded that the presentation chosen by Corman

(i) did not comply with the provisions of Regulation No 649/78; and

(ii) could have secured for that company a competitive advantage.

It is for the national court to consider what importance may be attached to the fact that the Board, at least tacitly, accepted the solution chosen by Corman because, together with the national milk board, it carried out inspections at the premises of the company during the processing and packaging operations without raising any objection. Each packaging would seem even to have been the subject of a certificate of conformity signed by representatives of those two bodies.

Clearly the Board could easily have asked the Commission in good time how Article 5 should be interpreted. But it is also true that the same possibility was open to Corman.

I would further note in passing that I have not found any provision of Community law which provides clearly that the repayment of a processing security should be refused where packaging does not comply with requirements of the abovementioned Article 5.

A provision concerning the forfeiture of the security was indeed inserted in Regulation No 649/78 by Commission Regulation No 131/79 of 25 January 1979 (Official Journal 1979, L 19, p. 19).

The article in question is Article 10a. That article provides for a reduction in the amount of security forfeited where the time-limit for processing has been exceeded by less than 20 days; in addition, paragraph (4) thereof reads as follows:

‘4. Except in cases of force majeure, the processing security referred to in the second indent of the second subparagraph of Article 2 (3) shall be forfeit for the quantities in respect of which the proof required under Regulation (EEC) No 1687/76 has not been furnished within 12 months of the day on which the product has been taken over.’

Commission Regulation (EEC) No 1687/76 of 30 June 1976 lays down common detailed rules for verifying the use and/or destination of products from intervention (Official Journal 1976, L 190, p. 1). It has been repeatedly amended.

Article 13 (4), as amended by Regulation No 1723/77 of 28 July 1977 (Official Journal 1977, L 189, p. 39), provides that:

‘Release of the security shall be subject to the production of the proof referred to either in Article 8 (2) or in Article 12 ... ’.

Article 12, which would seem to apply in this case, reads as follows:

‘Proof that requirements of control laid down in Article 2 (1) have been complied with shall be furnished as follows:

(a) For products in respect of which the removal from intervention stock and the use and/or destination have been verified by the authorities of a single Member State, by the production of documents specified by that Member State.’

Article 2 (1) of Regulation No 1687/76 provides that:

‘From the time of their removal from intervention stock until the use and/or destination specified has been verified, the products referred to in Article 1 shall be subject to customs or equivalent administrative control.’

Finally Article 3 of Regulation No 1687/76, as amended by Regulation No 3135/75 (Official Journal 1976, L 353, p. 38), provides that:

‘Products shall be considered as having complied with the prescribed use and/or destination, when it is established that,

(d) in respect of products to be sold for direct consumption as concentrated products, they have been concentrated, wrapped in paper and taken over by the retail trade.’

The Commission would therefore seem to have omitted to adapt Regulation No 1687/76 to the requirement of presentation in packs.

On the other hand, I consider that it is difficult to infer from the abovementioned regulation that a method of packaging such as that chosen by Corman which differs only partially from the method described must necessarily lead to the confiscation of the entire security.

However, those observations go beyond the scope of the question submitted by the tribunal de première instance, Brussels, to which I propose that the Court should reply as follows:

‘The third indent of Article 5 (1) of Commission Regulation No 649/78 must be interpreted as meaning that the statement or statements which the pack containing the concentrated butter must bear must appear on the upper surface of that pack and not on a sheet of paper placed under the lid.’

( *1 ) Translated from the French.

( 1 ) Translator's note: the word ‘packaging’ (emballage) does not appear in the English version.

( 2 ) Das Butterreinfett muß in Bechern von höchstens 250 g, die so aufgemacht sind, dass Butterreinfett nicht mit Butter verwechselt werden kann, vermarktet werden und auf der Oberseite der Verpackung in mindestens 5 mm grossen Buchstaben eine oder mehrere der folgenden Aufschriften tragen