Opinion of Mr Advocate General Lenz delivered on 24 March 1988. - Commission of the European Communities v Hellenic Republic. - Failure of a Member State to fulfil its obligations - Maximum import prices for sheepmeat and goatmeat. - Case 127/87.



European Court reports 1988 Page 03333



Opinion of the Advocate-General

Mr President,

Members of the Court,

A - Facts

1 . In the present action the Commission of the European Communities, the applicant, is seeking a declaration that the Hellenic Republic, the defendant, has failed to fulfil its obligations under the EEC Treaty by fixing maximum import prices for sheepmeat and goatmeat and for live sheep and goats .

2 . A decision taken on 19 March 1984 by the Greek Minister of Trade provided that invoices for the import of live sheep and goats and of sheepmeat and goatmeat had to be submitted for prior checking to an exchange control committee . Such invoices were to be approved provided that they did not exceed a price of USD 1 650 per tonne for live animals and USD 2 730 per tonne for meat . No distinction was made according to the geographical origin of the goods . The decision applied both to imports from other Member States of the Community and to imports from non-member countries .

3 . The applicant claims that the defendant' s conduct infringes the following rules of Community law : the prohibition against measures having equivalent effect to quantitative restrictions on imports, the principles of the common commercial policy, agreements between the European Economic Community and certain non-member countries and the rules of the common organization of the market in sheepmeat and goatmeat .

4 . After clarification of the issues in the oral procedure the applicant claims that the Court should :

( 1 )Declare that by virtue of its legislation and practice with regard to imports of sheepmeat and goatmeat and of live sheep and goats the Hellenic Republic has failed to fulfil its obligations under Articles 30 and 113 of the EEC Treaty, Council Regulation No 1837/80, Commission Regulations Nos 19/82 and 20/82 and the agreements concluded in the form of exchanges of letters between the European Economic Community and certain non-member countries on trade in the sheepmeat and goatmeat sector, inasmuch as it makes importation subject to observance of maximum prices; and

( 2 ) Order the Hellenic Republic to pay the costs .

5 . The defendant contends that the Court should dismiss the application and order the Commission to pay the costs .

6 . The defendant considers that the measures which it has adopted are necessary to control currency movements . At the same time they are also in the interests of consumers who are thereby protected from excessive import prices . Furthermore, it argues, the prices fixed are not maximum prices but target prices which facilitate the task of the exchange control authorities .

7 . However, in the oral procedure the defendant conceded that in practice permission was not granted for imports costing more than the fixed prices .

8 . In the oral procedure the applicant commented generally on the relation between the prices fixed by the defendant and those fixed by the Community, but did not produce any concrete data .

9 . However, the regulations concerned reveal the following relation : in the 1984/85 marketing year the basic price in the sheepmeat sector was fixed at ECU 428.04 and the intervention price at ECU 363.83 . ( 1 ) At the representative rate of exchange for the sheepmeat sector applicable from 2 April 1984, ECU 1 = DR 90.5281, ( 2 ) this gives a basic price of DR 38 749.65 and an intervention price of DR 32 936.84 .

10 . On 4 April 1984 the rate of exchange of the dollar to the drachma was USD 1 = DR 103.9 . ( 3 ) This meant that the maximum price fixed by the defendant for 100 kg of sheepmeat was DR 28 364.7 and for the same weight of live sheep DR 17 143.5 .

11 . At the Court' s request the applicant submitted some information on prices to the Court but explained at the same time that the intervention price was not applicable to sheepmeat in Greece because there were no corresponding national implementing measures . Furthermore, the applicant stated that the basic price did not influence the market price .

12 . I will deal where necessary with any further statements of the parties in the next section .

B - Analysis

1 . The prices fixed by the defendant

13 . Before analysing the facts in the light of the law it is necessary to determine whether the prices fixed by the defendant are in fact maximum prices or simply target prices .

14 . It is apparent from the Bank of Greece' s letter of 19 March 1984 that the purpose of the system introduced on that day by the decision of the Minister of Trade is preventive control of import prices . There is no support in that letter for the argument that those fixed prices are simply target prices which may be exceeded . The same is true of the later rules of 12 November 1987, which are also strictly formulated and contain no reference to exceptions . Furthermore, it should be noted that the defendant was obliged to concede at the hearing that the very existence of the prices fixed by it tends to keep prices down and that in practice products were not imported at a higher price .

15 . In my view, these findings suffice to show the plausibility of the applicant' s contention, founded on the wording of the contested decision and the information furnished by the defendant at the hearing, that those prices are maximum prices .

16 . Thus the following analysis is based on the premiss that, as the applicant maintains, the defendant fixed maximum prices for the imports concerned .

2 . Breach of Article 30 of the EEC Treaty

17 . The Commission provided in Article 2 ( 3 ) ( a ) of Directive 70/50 ( 4 ) that measures which "lay down, for imported products only, minimum or maximum prices below or above which imports are prohibited, reduced or made subject to conditions liable to hinder importation" are measures having an effect equivalent to quantitative restrictions on imports .

18 . In Greece there are no comparable maximum prices for domestic products . Since the maximum prices thus apply solely to imports, the defendant' s rules contain a prohibited measure with effects equivalent to a quantitative restriction on imports within the meaning of Article 30 of the EEC Treaty in so far as such rules are applicable to imports from other Member States of the Community . Since the defendant' s decision is of general application and does not differentiate between imports from Member States and imports from non-member countries, it also affects imports from the other Member States of the Community . In this context it is irrelevant that there are no significant imports of live sheep and goats or sheepmeat and goatmeat from the other Member States of the Community into Greece . According to the Court' s case-law all trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade are to be regarded as measures having an effect equivalent to quantitative restrictions . ( 5 ) It is evident that a system fixing maximum prices which are considerably lower than those considered by the Community to be appropriate is at least potentially capable of hindering intra-Community trade . Indeed, it may well be precisely because of the level of the maximum prices that there is no significant trade in the above products between Greece and the rest of the Community .

19 . Since the measure in question is a preventive control, the relevant provision is Article 30 of the EEC Treaty, not Article 106 ( 2 ) which is applicable when imports are in principle allowed and only the "export" of the means of payment is impeded .

20 . The defendant has therefore breached Article 30 of the EEC Treaty .

3 . Failure to observe the price rules of the common organization of the market in sheepmeat and goatmeat

21 . According to the Court' s consistent case-law, in sectors covered by a common organization of the market, and a fortiori when this organization is based on a common price system, Member States can no longer take action, through national provisions adopted unilaterally, affecting the machinery of price formation at the same production or marketing stage as that for which prices are governed by the commmon organization . ( 6 ) The regulation on the common organization of the market in sheepmeat and goatmeat ( 7 ) contains in Title I price rules which provide inter alia for a basic price to be fixed annually and an intervention price . The fixing of maximum prices for imports may be regarded as action affecting the machinery of price formation of the common organization of the market, especially in view of the fact that the maximum import prices fixed by the defendant are considerably lower than the common intervention or basic price .

22 . The applicant has asserted generally that the maximum import prices fixed by the defendant have had such an effect on price formation and has produced data on comparisons between the Greek market prices and the permissible import prices for the latter part of 1987, in other words for a period which is not material to the present proceedings . However, the applicant has not produced any concrete data on the effect which the maximum prices fixed in 1984 had on prices governed by the common organization of the market in sheepmeat and goatmeat . On the contrary, in its written reply to a question put by the Court in the oral procedure the applicant stated that the basic price had no effect on the market price and that the intervention price was not applied in Greece since there were no special national measures to implement it . It is not necessary to decide for the purposes of this action whether the latter constitutes a failure to fulfil obligations under the Treaty, since the point was raised for the first time during the oral procedure .

23 . According to the case-law of the Court, ( 8 ) once the Community has adopted, pursuant to Article 40 of the EEC Treaty, regulations establishing a common organization of the market in a given sector, Member States are under an obligation to refrain from taking any measures which might undermine or create exceptions to it . However, in so far as the price rules under the common organization of the market for sheepmeat and goatmeat are not applied at all in Greece, the applicant should have specified in what way those price rules are undermined by the fixing of maximum prices for imports or how exceptions are created from those common rules . No such specific details have been given by the applicant .

24 . Thus the applicant has not demonstrated conclusively that by fixing maximum import prices the defendant has interfered with the price formation system of the common organization of the market in sheepmeat and goatmeat .

4 . Breach of the external-trade rules

25 . With regard to imports from non-member countries, the applicant considers the fixing of maximum import prices by the defendant to be a national commercial policy measure which is prohibited as being contrary to Article 113 of the EEC Treaty, Article 20 of the regulation on the common organization of the market in sheepmeat and goatmeat, and a number of Community agreements with non-member countries on trade in sheepmeat and goatmeat and the implementing measures taken by the Commission in consequence of them .

26 . For its part, the defendant argues that the maximum import prices which it has fixed are exchange-control measures and do not concern commercial policy .

27 . Under Article 20 ( 2 ) of Council Regulation ( EEC ) No 1837/80 the application of any quantitative restriction or measure having equivalent effect is prohibited in trade with non-member countries unless otherwise provided in the regulation or otherwise decided by the Council .

28 . Furthermore, the Community has concluded "voluntary restraint agreements" on trade in sheep and goats with a number of non-member countries . ( 9 ) Under Article 228 ( 2 ) of the EEC Treaty such agreements are also binding on the Member States . In return for the non-member countries' limiting their exports to the Community, the Community undertakes to adopt all the necessary measures to ensure that import licences for the products named in the agreements originating in the country concerned are issued automatically subject to the production of an export licence issued by the competent authority of the exporting State . Under Commission Regulations Nos 19/82 and 20/82 ( 10 ) the import licence must be issued on the working day after it has been applied for, subject only to the presentation of an export licence issued by the exporting State . Having regard to those rules, there is no scope for Member States unilaterally to impose additional conditions on imports of the products concerned .

29 . The defendant has made the issuing of import licences dependent on compliance with the maximum import prices which it has fixed . Those maximum import prices are therefore contrary to the provisions of Commission Regulations Nos 19/82 and 20/82, to the abovementioned agreements with certain non-member countries and to Article 20 of the regulation on the common organization of the market in sheepmeat and goatmeat . Therefore, by fixing maximum import prices and thereby encroaching on the powers of the Community with respect to the formation of the common commercial policy the defendant has failed to fulfil its obligations under Article 113, Article 189 ( 2 ) and Article 228 ( 2 ) of the EEC Treaty .

5 . Exchange control

30 . The defendant claims that the measures which it has taken are permissible since they are necessary to control illegal currency movements . It must be observed that, according to the consistent case-law of the Court, national rules are prohibited if their objectives can be achieved as effectively by less restrictive measures such as spot checks and appropriate sanctions . ( 11 )

31 . That principle can be fully applied to the present case . For example, import transactions could be subjected to spot checks and sanctions imposed in the case of illegal currency transfers . Therefore, the defendant' s measures cannot be justified from the point of view of exchange control .

6 . Costs

32 . Since the applicant has been successful in the major part of its action, the defendant must pay the costs .

C - Conclusion

33 . In the light of the foregoing I propose that the Court should :

"( 1 ) Declare that by virtue of its domestic legislation and practice with regard to imports of sheepmeat and goatmeat and of live sheep and goats the Hellenic Republic has failed to fulfil its obligations under Articles 30, 113, 189 ( 2 ) and 228 ( 2 ) of the EEC Treaty inasmuch as it makes the import of live sheep and goats and sheepmeat and goatmeat subject to observance of maximum prices, in breach of the rules on external trade, Article 20 of Council Regulation No 1837/80, the provisions of Commission Regulations Nos 19/82 and 20/82 and the obligations contained in certain agreements with non-member countries on trade in sheep and goats .

( 2 ) Order the Hellenic Republic to pay the costs .

( * ) Translated from the German .

( 1 ) Council Regulation No 873/84 ( OJ L 90, p . 42 ).

( 2 ) Council Regulation No 855/84, Annex V ( OJ L 90, p . 1 ).

( 3 ) OJ 1984, C 94, p . 1 .

( 4 ) Commission Directive 70/50/EEC of 22 December 1969 based on the provisions of Article 33 ( 7 ), on the abolition of measures which have an effect equivalent to quantitative restrictions on imports and are not covered by other provisions adopted in pursuance of the EEC Treaty ( OJ, English Special Edition 1970 ( I ), p . 17 ).

( 5 ) See judgment of 11 July 1974 in Case 8/74 Procureur du Roi v Dassonville (( 1974 )) ECR 837, at p . 852 .

( 6 ) See judgment of 29 June 1978 in Case 154/77 Procureur du Roi v Dechmann (( 1978 )) ECR 1573, at p . 1584 .

( 7 ) See Council Regulation ( EEC ) No 1837/80 of 27 June 1980 on the common organization of the market in sheepmeat and goatmeat ( OJ 1980, L 183, p . 3 ).

( 8 ) See judgment of 7 February 1984 in Case 237/82 Jongeneel Kaas v Netherlands (( 1984 )) ECR 483, at p . 501 et seq .; judgment of 4 February 1988 in Case 255/86 Commission v Belgium (( 1988 )) ECR 693 .

( 9 ) For example with Bulgaria ( OJ 1982, L 43 ), Hungary ( OJ 1981, L 150 ), Poland ( OJ 1981, L 137 ), Romania ( OJ 1981, L 137 ), Czechoslovakia ( OJ 1982, L 204 ).

( 10 ) OJ 1982; L 3, pp . 18 and 26 respectively .

( 11 ) See judgment of 16 December 1986 in Case 124/85 Commission v Hellenic Republic (( 1986 )) ECR 3935 .