2.

Having reached this point in the discussion, I do not feel it possible to examine the subsequent questions one after the other and in the order in which they are put to you. Question B covers the effects of Articles 31 and 32 on the rules introduced subsequent to the Treaty; question C relates to the consequences of Article 33, which provides for the progressive elimination of quotas in the French petroleum import system; question D finally poses the problem of the progressive prohibition of public monopolies. But, on the relations between these different Articles, on their combination, their exclusive or cumulative application, the most varied arguments have been put forward in the written procedure and repeated at the oral proceedings. In the opinion of the French Government and, subject to certain qualifications, of the Commission, only Article 37 is applicable to a system such as the French one. The Belgian Government, on the other hand, doubts whether such a complex body of rules comes within the situations described in Article 37 (1). As for the Netherlands Government, it forcibly declares that there is no clear distinction in Chapter 2 between the quantitative restrictions on imports, measures having equivalent effect and the system of ‘State trading’ or of monopolies; that all the provisions of that Chapter concern all three types of measure, which are not governed each by its own separate rules. In order to take up a position on these different points and then to reply to the questions asked, we must thus consider logically first whether Article 37 envisages rules such as those applied in France to the import of petroleum when the Treaty entered into force and, if so, whether that Article must or must not be combined with those preceding Articles to which the Tribunale Civile of Rome refers. Article 37 (1) determines the field of application of the system of rules which is developed in the following paragraphs. It relates to those State monopolies which have a commercial character, to monopolies delegated by the State to others and to ‘any body through which a Member State, in law or in fact, directly or indirectly supervises, determines or appreciably influences imports or exports between Member States’. It imposes on these latter an obligation to ‘adjust’ them progressively so 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. This Article includes a ‘standstill’ clause the scope of which you have defined and which you recognized by your judgment of 15 July last (Case 6/64, Costa v E.N.E.L.) as having a ‘self-executing’ character. It provides for a timetable for the measures referred to in paragraph (1) and requires the Commission to make, with effect from the first stage, recommendations as to the manner in which and the timetable according to which the adjustment shall be carried out. The existence of a special system for monopolies and like organizations may, I think, be explained by two reasons, one political and the other technical. The fact that the importation of certain products happened to be placed at the time of negotiation of the Treaty under a system of commercial monopoly suffices to show that the States concerned attached to those products an importance such that they intended to remove them from the free play of the market in all its aspects, a free play which was the principle of their private commerce, even if it was to a great extent restricted by quotas. The regulation of imports by monopoly belonged to the field of general policy and extended far beyond economic or financial policy. It was thus in vain — and in any case impossible in fact — to require of them the immediate and the thoroughgoing abolition of these monopolies. But above all, the mechanism of the preceding Articles of Chapter 2 appeared ill-adapted to achieving the aims of the Treaty in the case of the monopolies. If the State, the monopoly holder, desires to import smaller quantities than would the market if there were freedom of trade, that limitation could be obtained by other methods than that of quotas. Once a quota is open in the field of private commerce, the importer will make use of the power given him according to the marketing possibilities in the domestic market. The State monopoly-holder will, in importing the product subject to quotas, be actuated by the very considerations which led it to institute the monopoly and not by the real needs of the market. All the more so, since, in controlling imports, the action of the monopoly appears through an effect on prices and sometimes on wholesale and retail trade. But, although the system is different, monopolies cannot, at least in the end, escape from conforming to the principles which underlie the Treaty and to which Chapter 2 gives concrete expression. At the end of the transitional period, they will need to have been adjusted in such a way that they do not involve any discrimination between nationals of Member States. That means that, even if the institution of monopoly does not necessarily have to disappear, its functioning will be greatly modified. Alter these general remarks, does a scheme like the French system governing the importation of petroleum come within Article 37 of the Treaty? The explanations already devoted to this system will allow us to keep to essentials, by restricting us in time to the date at which the action giving rise to the reference to you was brought before the Tribunale Civile of Rome. The Law of 30 March 1928 subjects the import of crude oil, its derivatives and residues to the control of the State and to the possession of a special authorization issued by decree. The system varies on certain points according to whether the authorization granted bears on one or other of these two categories of product, and it may be pointed out in passing that the contract made between the companies Albatros and Sopéco concerned the importation, not of crude oil, but of petrol. In every case, the decree determines the duration of the authorization within the limits of a maximum fixed by law. It also fixes the amount of the imports authorized. With regard to finished products, this amount is ‘provisionally unlimited’ for all products other than petrol and lubricants, in respect of which the tonnage is precisely fixed by the authorization decrees. With regard to crude oil, the amount authorized is fixed in such a way as to permit the treatment and the delivery to the consumer of a given tonnage of petrols and lubricants. It is quite clearly a matter of encouraging refining. The tonnages authorized can, within the limits of a certain percentage, be increased or decreased by the State, during the currency of the authorization, but always by a general measure and in the same proportion. These authorizations which are special and limited in time also impose a certain number of obligations on the importers. The latter, who must be French or, if they are companies, have French managements, must, in particular, periodically supply detailed information on their activities and obtain prior approval of all their important operations arising therefrom; they must have storage and delivery facilities according to their needs and build up reserve stocks; they must, in case of necessity, supply the public services as a priority; the State can compel them where necessary to carry out contracts described as ‘in the national interest’ in proportion to their import rights. As for the importers of crude oil, they must, in addition, if they also hold an authorization for the import of finished products, refine in their factories 90 % of the product which they deliver on the internal market. Apart from some changes in the duration of the authorizations, the system created by the Law of 1928 had not undergone any modifications either in its principle or in its application up to the entry into force of the Treaty. Shortly afterwards came an Ordonnance of 24 September 1958 which is the reason for question B and to which I shall return. Then came various provisions which Sopéco analysed in its pleadings: the Decree of 16 October 1961, extending to products of national origin a system based on that for imported products; decrees of 27 February 1963 concerning the importation of crude oil. These decrees are irrelevant here, for, being subsequent to the refusal of a licence to the Sopéco company, they were not considered by the Italian court among the provisions in the light of which you were asked to interpret the Treaty. And, in addition, the decrees of 27 February 1963 exclusively concern the import of crude oil, whereas the transactions envisaged by the company related to the import of petrol. Does Article 37 apply to a system as complex as that which we have just analysed? To decide this, and since this is a matter of Community law, I shall leave on one side the indications, which anyway are contradictory, given in the written procedure as to the intentions of the authors of the Law of 1928. For the same reason I shall ignore the judgment of the French Conseil d'Etat of 19 June last. If it is necessary to interpret the meaning and scope of an Article of the Treaty, you alone are competent to do so, subject to the provisions of Article 177 (2). Article 37 relates to widely varying situations: not only State monopolies but also monopolies delegated by the State to others and finally any body through which a State directly or indirectly supervises, determines or appreciably influences imports or exports between the Member States; in other words, not only cases in which the State reserves to itself the exclusive right to manage a product, but also those in which it transfers that exclusive right to a representative which it appoints, a concessionaire for example, and finally — a situation at once vaguer and more comprehensive — cases in which it exercises a control, some guidance, an appreciable influence on imports or exports between Member States. The existence of several importers who are in competition between themselves prevents one from being able to describe the French system as a State monopoly proper or even delegated. It seems to me, on the contrary, that it constitutes one of those types of control of imports covered by Article 37 (1) of the Treaty. It appears indisputable, however fragmentary may be the indications available on the negotiations leading to the Treaty of Rome, that the French system was considered at the time as coming within the scope of Article 37. The Commission, after having reserved its decision, plainly took that view and on 24 July 1963 sent a recommendation to the French Government based on that Article. This argument, finally, is followed by Mr Catalano (‘Manuel de Droit des Communautés Européennes’ [cit. supra], p. 278) and by Mr Karl Schilling in a study on the EEC Treaty and national commercial monopolies (‘Sociaal Economische Wetgeving’ December 1960 pp. 214-218). And I should add, in reply to an observation made by the Belgian Government, that the complex character of that body of rules in no way prevents its being included in the category specified in the second paragraph of Article 37 (1); indeed the reverse is true. If this first point does not seem to me to raise any serious difficulty, the question of the relations between that Article and those which precede it is certainly more difficult. Two situations are involved. Either we analyse the system covered by Article 37 into its constituent parts and apply directly to each of the elements which comprise the monopoly the rules of the preceding Articles under the conditions determined by those Articles, conditions as to the timetable for example or the possibility of the Commission's setting out certain rules by way of directives, or else we consider that Article 37 is only directly applicable to the case of monopolies and like organizations; which is not to say that the application of the rules contained in the preceding Articles is entirely excluded, but that these Articles are applicable through Article 37 in so far as the latter refers to them. It is not without some hesitation that I propose in the end that you should adopt this second argument which was advocated before you by the Commission; It appears all the more logical if one examines the wording of the various paragraphs of Article 37, which I have analysed briefly above and which I apologize for returning to again. I shall note the following points: Article 37 (1) first imposes on Member State monopoly-holders the obligation to adjust their monopolies. This adjustment is to be gradual: it involves a time-limit, the end of the transitional period. It fixes a result to be attained: on that date all discrimination between nationals of the Member States as regards conditions concerning the supply or marketing of goods must have disappeared. Nothing is more general than the term discrimination which, placed next to ‘conditions under which goods are procured and marketed’, includes in particular but not exclusively the various forms of quantitative restrictions on imports and exports. Nothing, however, indicates that the progressive nature of this adjustment does not apply to all measures of a discrirninatory character. It is necessary to prevent the ending of all discrimination by the end of the transitional period being rendered more difficult by the action of the State after the entry into force of the Treaty. You have held that the standstill clause constituted by Article 37 (2) which is designed to ward off that danger and which is a self-executing provision is extremely general in character. It extends even beyond Chapter 2 on the elimination of quantitative restrictions since it also seeks to prevent disguised continuance of customs duties. It is therefore self-sufficient and seems to me to exclude, in the field of monopolies, recourse to any other standstill clause in the preceding Articles, the field of application of which is covered by it. Although the time-limit for the ending of the discrimination is given in paragraph (1) its timetable remains to be fixed and its supervision to be secured. Paragraphs (3) and (6) also provide respectively that the timetable of adjustment shall be harmonized with the abolition of quantitative restrictions provided for by Articles 30 et seq., and that, with effect from the first stage, the Commission shall make recommendations to the Member States on the manner of doing this. What is striking here is the flexibility — not to say the vagueness — of the machinery provided. No precise date is given; but, if the time-limit for adjustment leaves room for discretion, it is nonetheless limited. In particular, I think, as does the Belgian Government, that the progressive nature of the adjustments prevents the Member State from postponing these to the end of the transitional period, from arbitrarily delaying them; it obliges the State to establish its rate of progress so as to take account of the timetable of the Treaty, but not to keep literally to it. As for the Commission, which is responsible for supervising the action taken by the State, its means appear limited, since, if it takes action with effect from the first stage, it is only to make recommendations, a lesser power than that which it has under Article 33 (7) for the purpose of abolishing measures having an effect equivalent to quotas. The Commission has remarked on this matter in its oral observations that Article 37 also concerns this latter question and that there would result from the concurrent application of Article 33 on this point an unacceptable conflict between the provisions: there would be a contradiction between the concepts of gradual abolition and progressive adjustment contained respectively in these two Articles, between the compulsory plan and the free choice of action by the Member State, between the compulsory directives and the mere recommendation. All this leads me in the end to think that, with regard to State monopolies or organizations which the Treaty subjects to the same rules, only Article 37 is applicable ipso jure and that the preceding provisions of the same chapter are only applicable in the same way in so far as Article 37 refers to them and subject to the adjustments which it applies to them. Does this, as has been said, amount to derogating from the basic principles of the Treaty? Certainly not, for it is not a matter of denying that the monopolies are subject to aims which are those of the Treaty, but simply of recognizing that the Treaty employs in their regard particular methods and a particular timetable in order to attain its purposes. Is it necessary to add finally that the system which gave rise to the present request for interpretation is not the only one which falls within the scope of Article 37? Nineteen of them, of fairly varied types, have been enumerated in the six countries of the Community, and the Commission, in the recommendations which it has had occasion to make concerning them, has always followed the same line of action and maintained the argument which it has employed in the present case and which I have finally come to adopt