2.

The Italian price system must now be considered against the agricultural provisions of the Community in the sphere of sugar prices, that is, it is necessary to examine whether the national system contains elements which are incompatible with the Community system. Let me in this connexion first remind you that Mr Advocate-General Mayras seriously doubted whether after Regulation No 1009/67 entered into force and the Community sugar prices were introduced, the Italian authorities could still fix maximum prices even at the consumer and retail stages, even if it were only through the system of the price margins relating to the derived intervention price. In answering the questions raised the judgment of 23 January 1975 in Case 31/74, Galli [1975] ECR 47, is important. That was concerned with a national price-freezing system in connexion with cereals and flour derived from oil seeds for fodder. Whilst the common organization of the market in cereals provides price rules for basic products and even for products of the first processing stage, the Community rules for fats and oils (apart from olive oil, for which a price system was introduced) comprise, as regards to the other products coming under its scope, nothing more than customs protection in trade with third countries reserving the possibility to take protective measures where the market is disturbed. Furthermore, exceptions were possible to this national system of price freezing. In these circumstances in the judgment in Galli it was declared, with reference to the common price system applicable at the production and wholesale stages, that ‘the incompatibility of national measures intended to influence the formation of prices may be particularly apparent in the case of market organizations comprising a Community price formation system’ and that ‘Member States can no longer interfere through national provisions taken unilaterally in the machinery of price formation as established under the common organization’. In the present cases we are concerned with national rules which, without exception, fix the selling price of processed products, probably in the result at all stages, although Community rules exist for fixing the producer and wholesale price for this product (a) If the arguments in the judgment in Galli are adhered to — and this seems to me imperative, first having regard to the requirements of the free movement of goods and the uniformity of the market and then the fact that all measures necessary to prevent an undesirable price trend are taken under the common organization of the market — it follows that any national fixing of prices for producers and wholesalers is no longer possible due to the existence of the organization of the market in sugar. (b) With regard to the fixing of national maximum prices for consumers the answer is not so clear. In this respect the judgment in Galli contains the statement that the provisions on the organization of the market left Member States free ‘to take the appropriate measures relating to price formation at the retail and consumption stages’; it is true there is the proviso that they should not jeopardize the aims or functioning of the common organization of the market. Although it was objected in the proceedings, not without good reason, that the distinction made appeared artificial since fixing prices for consumers necessarily had effects on the prices at the previous commercial stages, in my view, however, the said distinction must at present be regarded as justified since most Member States are convinced of the importance and efficiency of consumer price rules and, moreover, in the present state of integration the necessary machinery is lacking at the Community level. Accordingly it is necessary, when considering maximum consumer prices, to enquire whether the provisos in the judgment in Galli apply. (aa) Let us turn first to price Order No 9/74 which is important in Case 89/75. On this the Commission has provided a summary from which it appears that the maximum consumer prices in question — a break-down of figures is possible if profit margins and legal charges are taken into account — corresponds to a producer price which is exactly at the level of the derived intervention price for Italy. It adds the conclusion that ‘this fixing of the price was compatible neither with the objectives nor the implementation of the common organization of the market’. The Italian Government on the other hand has' made another calculation applicable for sugar of the first category and it comes to the conclusion, because it has regard to the increase in the Italian consumer prices due to the proportion of the ‘sovraprezzo’, that the Community price level is not affected. On this point I think it must be stated that the choice of the category of sugar has no influence on the carrying out of the necessary calculations since it is possible to make the necessary conversions by means of certain coefficients. It is also clear to me that of course the ‘sovraprezzo’ should not be taken into account since according to the Community rules it was expressly allowed to Italy as an aid. On this basis it would appear — precise findings are naturally for the national court — that the inference drawn by the Commission is correct. At the same time this means, however, that the national price system is not in harmony with the Community rules precisely because Order No 9/74 gives producers only the intervention price and price formation up to the threshold price is thus prevented. (bb) With regard to Order Nos 28/74 and 39/74, which are relevant in the other actions, on making the corresponding calculations the Commission comes to another conclusion. Tracing back the maximum consumer prices governed by the regulations to the level of production and wholesale prices in fact warrants the finding that a level was possible for the latter prices which was above the Community target price, intervention price, and threshold price. It may therefore be said that the proviso in the judgment in Galli is not an issue in the same way as it is with regard to Order No 9/74. That is not to say, however, that it does not apply at all, but rather that in this connexion another consideration is important which, if I may anticipate my conclusion, likewise justifies speaking of an impermissible intervention by the Italian rules in the price system of the Community. I refer to the measures which the Community took to relieve the shortages particularly noticeable in Italy at a time when there was obviously no longer the possibility of importing into Italy sugar from third countries or other Member States at the target price. The following details should be known: Because of the finding that the cif price for sugar was higher than threshold price and supplies to the Community as a whole could no longer be assured, that in addition sugar prices on the Community market, particularly in the deficit areas, were appreciably higher than the prices fixed for the Community by Regulation No 2931/74 (OJ No 311 of 22. 11. 1974, p. 8) of 18 November 1974, the Council introduced a subsidy on the import of white and raw sugar from third countries. During the first stage the quantity for which the subsidy was to be granted was limited to 200000 metric tons. It was provided that tenders were to be invited for the purpose of determining the amount of the subsidy (Article 3); the contract was to be awarded to the tender involving the lowest subsidies; the expenses occasioned by these subsidies were to be regarded as intervention measures intended to regularize agricultural markets (Regulation No 2932/74 of the Council of the same day ibid. p. 10). At the same time by Regulation No 2932/74 the Council decided to grant a Community sugsidy on sugar produced in excess of the maximum quota, the so-called ‘C’-sugar, to which the export levy was not to be applied. The provisions implementing Regulation No 2931/74 were laid down by Regulation No 3062/74 of the Commission of 3 December 1974 (OJ No 324 of 4. 12. 1974, p. 7). With regard to this it should be mentioned that before adopting this regulation the Commission obtained not only the opinion of the Management Committee for Sugar but also that of the Monetary Committee set up under Article 105 of the EEC Treaty. According to the said regulation the Member States were to issue a stranding invitation to tender in respect of subsidies for imports from third countries of white and raw sugar, and during the period of validity of the standing invitation to tender they were to issue partial invitations to tender (Article 1). In conjunction with this subsidy granted out of the European Agricultural Guidance and Guarantee Fund this maximum selling price for imported white sugar was fixed at 32-40 u.a. per 100 kg of products, exclusive of packaging, delivered at the cif stage in the Member State in which the sugar was to be put into free circulation (Article 12 (a)). After the fixed quantity had been exhausted by a partial invitation to tender dated 15 January 1975 the standing invitation to tender was temporarily suspended by Regulation No 122/75 of the Commission of 17 January 1975 (OJ L 13 of 18. 1. 1975, p. 24). The said 200000 metric tons went mainly to the United Kingdom; no one had come forward from Italy to make an offer. By Regulation No 191/75 of 21 January 1975 (OJ L 20 of 25. 1. 1975, p. 39) the Council provided for an additional subsidized importation of 200000 metric tons of sugar. In addition the maximum selling price to be observed by tenderers was adjusted. On this occasion it was not the Commission but the Council itself which fixed the maximum selling price at 35.81 u.a. per 100 kg; moreover it was provided that the subsidized imports could be restricted to deficit areas of the Community. On the occasion of the first two tenders for the subsidized importations, including the further quantity, Italy was still unable to enjoy the benefits provided for. Italy was not even represented on the occasion of the first call for tenders; on the occasion of the second call for tenders Italian bids exceeded those of other countries by about 30 % (answer of the Commission of 21 April 1975 to the Parliamentary written question No 821/74 of 7 March 1975). (OJ C 122 of 2. 6. 1975, pp. 34-35). In the light of this experience, the Commission introduced new tendering procedures intended to ensure that Italy would have first call on supplies of sugar on the best possible terms. This was the objective of Regulations Nos 557/75 and 558/75 of 4 March 1975, both of which were adopted after seeking the opinion of the Monetary Committee and the Management Committee for Sugar (OJ L 59 of 5. 3. 1975, pp. 8 and 16). At the same time, to allow Category C white sugar produced in the Community to be released on to the Community market and to determine the amount of the subsidy to be granted under Regulation No 2932/74 of the Council a standing invitation to tender was provided for by Regulation No 312/75 of the Commission of 7 February 1975 (OJ L 35 of 8. 2. 1975, p. 5). For the supply of this white sugar to Italy the condition was made that the sugar had to reach the retail stage in the natural state. The successful tenderer had to supply it at a selling price which did not exceed 35.56 u.a. per 100 kg of unpacked goods either free Italian frontier or cif Italian ports (Notice of a standing invitation to tender in OJ C 52 of 5. 3. 1975, p. 13). Finally on 25 March 1975 the Council by Regulation No 821/75 (OJ L 79 of 28. 3. 1975, p. 1) increased the quantity originally provided for in Regulation No 191/75 to 300000 metric tons. From the foregoing account which in part goes beyond the period covered by the main action, it emerges that the threshold price and the target price were only theoretical values in view of the scarcity and the doubling of the world market prices. Moreover the Community authorities had created a genuine maximum price system at a Community level specially for Italy. The maximum Community price fixed by the Community authorities had replaced the target price of the Community for the requirements not covered by Community production, that is, essentially the requirements of Italy. Since, however, the Italian maximum prices were lower than the prices at which sugar imported from third countries with the help of Community subsidies or Community sugar produced above the maximum quotas could be sold in Italy, the Italian refineries or importers had no possibility of participating in the invitations to tender issued by the intervention agencies of the Member States. Looked at in this light it may be said, in respect of Orders Nos 28/74 and 39/74 of the CIP a? well, that their price rules are incompatible with the provisions issued under the organization of the market in sugar.