Judgment of the Court of 27 March 1984. - Commission of the European Communities v Italian Republic. - Failure of a Member State to fulfil its obligations - Agricultural aid for the Sicilian Region. - Case 169/82.



European Court reports 1984 Page 01603



Summary

Parties

Subject of the case

Grounds

Decision on costs

Operative part



Keywords

1 . AGRICULTURE - COMMON ORGANIZATION OF THE MARKETS - CEREALS - STATE AID - AID FOR THE PRODUCTION OF DURUM WHEAT - INCOMPATIBILITY WITH COMMUNITY LEGISLATION

( REGULATION ( EEC ) NO 2727/75 , ART . 10 )

2 . AGRICULTURE - COMMON ORGANIZATION OF THE MARKETS - WINE - STATE AID - MEASURES TO ENCOURAGE THE USE OF TABLE GRAPES FOR WINE PRODUCTION - INCOMPATIBILITY WITH COMMUNITY LEGISLATION

( COUNCIL REGULATION ( EEC ) NO 337/79 )

3 . AGRICULTURE - COMMON ORGANIZATION OF THE MARKETS - PRODUCTS PROCESSED FROM FRUIT AND VEGETABLES - STATE AID - AID FOR THE PROCESSING OF TOMATOES - INCOMPATIBILITY WITH COMMUNITY LEGISLATION

( COUNCIL REGULATION ( EEC ) NO 516/77 , AS AMENDED BY REGULATION ( EEC ) NO 1152/78 , ARTS 3A TO 3C )

4 . AGRICULTURE - COMMON ORGANIZATION OF THE MARKETS - FRUIT AND VEGETABLES - SCOPE - ALMONDS , HAZEL-NUTS AND PISTACHIO NUTS - INCLUSION

( REGULATION ( EEC ) NO 1035/72 OF THE COUNCIL )

Summary

1 . ARTICLE 10 OF REGULATION NO 2727/75 PROVIDES FOR THE GRANT , ON CERTAIN CONDITIONS , OF AID OF A UNIFORM AMOUNT FOR THE WHOLE COMMUNITY FOR THE PRODUCTION OF DURUM WHEAT . IT FOLLOWS FROM THAT SYSTEM THAT ANY SUPPORT MEASURE FOR CEREALS MUST BE DECIDED UPON AT COMMUNITY LEVEL IN ORDER TO AVOID THE RISK OF JEOPARDIZING THE FUNCTIONING OF THE COMMON ORGANIZATION BY THE GRANT OF ADDITIONAL AID . THE GRANT OF NATIONAL AID FOR THE PRODUCTION OF DURUM WHEAT IS THEREFORE CONTRARY TO THE RELEVANT COMMUNITY LEGISLATION AND IS CAPABLE OF DISTORTING THE SYS- TEM ESTABLISHED BY REGULATION NO 2727/75 .

2.UNDER THE COMMON ORGANIZATION OF THE MARKET IN WINE THE COMMUNITY WISHES TO RESTRICT THE VINE VARIETIES INTENDED FOR THE PRODUCTION OF TABLE WINES AND ALSO THE PRODUCTION OF TABLE WINES , BECAUSE THEY ARE CONSIDERED TO BE OF INSUFFICIENT QUALITY . NATIONAL MEASURES INTENDED TO ENCOURAGE THE USE OF TABLE GRAPES FOR WINE PRODUCTION THEREFORE PURSUE AN OBJECTIVE WHICH IS IRRECONCILABLE WITH THE OBJECTIVES OF THE RELEVANT COMMUNITY LEGISLATION .

3.ARTICLES 3A TO 3C OF REGULATION NO 516/77 , WHICH WERE ADDED BY REGULATION NO 1152/78 , LAY DOWN A COMPREHENSIVE SET OF COMMUNITY RULES ON THE MARKET IN PRODUCTS PROCESSED FROM FRUIT AND VEGETABLES , INCLUDING TOMATOES , WHICH ARE INTENDED TO STABILIZE THE COMMUNITY MARKET BY MEANS OF A COMMUNITY SYSTEM OF PRICES AND AID AND PRECLUDE THE GRANT OF FURTHER AID BY THE MEMBER STATES . IT FOLLOWS THAT NATIONAL AID INTENDED TO PROMOTE THE PROCESSING OF TOMATOES IS INCOMPATIBLE WITH THE RELEVANT COMMUNITY LEGISLATION .

4.ALMONDS , HAZEL-NUTS AND PISTACHIO NUTS FALL WITHIN THE SCOPE OF REGULATION NO 1035/72 , AS IS CLEAR FROM ARTICLE 1 THEREOF IN CONJUNCTION WITH HEADINGS NOS 08.05 A , B AND D OF THE COMMON CUSTOMS TARIFF .

Parties

IN CASE 169/82

COMMISSION OF THE EUROPEAN COMMUNITIES , REPRESENTED BY ITS LEGAL ADVISER , GIANLUIGI CAMPOGRANDE , ACTING AS AGENT , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICE OF ORESTE MONTALTO , A MEMBER OF THE COMMISSION ' S LEGAL DEPARTMENT , JEAN MONNET BUILDING , KIRCHBERG ,

APPLICANT ,

V

ITALIAN REPUBLIC , IN THE PERSON OF ITS AGENT , A . SQUILLANTE , HEAD OF THE DEPARTMENT FOR CONTENTIOUS DIPLOMATIC AFFAIRS , TREATIES AND LEGISLATIVE MATTERS , REPRESENTED AND ASSISTED BY O . FIUMARA , AVVOCATO DELLO STATO , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE ITALIAN EMBASSY , 5 RUE MARIE-ADELAIDE ,

DEFENDANT ,

Subject of the case

APPLICATION FOR A DECLARATION THAT THE ITALIAN REPUBLIC HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER THE EEC TREATY BY ADOPTING SICILIAN REGIONAL LAWS NO 47 OF 27 MAY 1980 , NO 49 OF 4 JUNE 1980 AND NO 83 OF 12 AUGUST 1980 , GRANTING AID IN SUPPORT OF CERTAIN AGRICULTURAL ACTIVITIES IN SICILY , AND BY DELAYING NOTIFICATION TO THE COMMISSION OF THE ADOPTION OF THOSE LAWS ,

Grounds

1 BY APPLICATION LODGED AT THE COURT REGISTRY ON 15 JUNE 1982 THE COMMISSION OF THE EUROPEAN COMMUNITIES BROUGHT AN ACTION UNDER ARTICLE 169 OF THE EEC TREATY FOR A DECLARATION THAT THE ITALIAN REPUBLIC , BY GIVING NOTICE TO THE COMMISSION OF THE DRAFT LAWS WHICH SUBSEQUENTLY BECAME

SICILIAN REGIONAL LAWS NO 47 OF 27 MAY 1980 , NO 49 OF 4 JUNE 1980 AND NO 83 OF 12 AUGUST 1980 AFTER THEIR ADOPTION , AND BY ADOPTING MEASURES INVOLVING INTERVENTION IN SUPPORT OF AGRICULTURE SUCH AS ARE CONTAINED IN CERTAIN ARTICLES OF LAWS NO 47 AND NO 83 , HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER THE EEC TREATY .

2 DURING THE PRELIMINARY STAGE OF THE PROCEDURE LAID DOWN BY ARTICLE 169 OF THE EEC TREATY , THE COMMISSION SENT A REASONED OPINION TO THE ITALIAN REPUBLIC ON 5 FEBRUARY 1982 , IN WHICH IT STATED , FIRST , THAT ' ' THE FAILURE TO GIVE NOTICE OF THE DRAFT LAWS GRANTING AID UNTIL AFTER THEIR ADOPTION AND PROMULGATION . . . CONSTITUTES AN INFRINGEMENT OF THE PROVISIONS OF ARTICLE 93 ( 3 ) OF THE EEC TREATY ' ' AND , SECONDLY , THAT CERTAIN PROVISIONS OF THOSE REGIONAL LAWS CONSTITUTED INFRINGEMENTS OF THE COMMUNITY PROVISIONS ON THE COMMON ORGANIZATION OF AGRICULTURAL MARKETS , AND IT REQUESTED THE ITALIAN GOVERNMENT TO ' ' ADOPT THE MEASURES NEEDED TO COMPLY ' ' WITH THE OPINION WITHIN TWO MONTHS FROM THE DATE OF ITS NOTIFICATION .

3 SINCE IN ITS REPLY TO THE COMMISSION ' S LETTER OF 19 JUNE 1981 THE ITALIAN GOVERNMENT HAD STATED THAT IT WOULD APPROACH THE SICILIAN REGIONAL ADMINISTRATION IN ORDER TO PREVENT THE RENEWAL OF SOME OF THE MEASURES IN QUESTION , THE COMMISSION STATED IN ITS REASONED OPINION ' ' THAT ONLY THE IMMEDIATE SUSPENSION OF THE APPLICATION OF THE PROVISIONS IN QUESTION CAN PREVENT ANY FUTURE INFRINGEMENT . AN UNDERTAKING TO TAKE ALL POSSIBLE STEPS TO AVOID A FURTHER RENEWAL IS NOT SUFFICIENT TO GUARANTEE THE FULFILMENT BY THE ITALIAN REPUBLIC OF ALL ITS OBLIGATIONS UNDER THE TREATY AND THE MEASURES ADOPTED BY THE COMMUNITY INSTITUTIONS ' ' .

4 IN ITS APPLICATION , THE COMMISSION CHARGES THE ITALIAN REPUBLIC WITH TWO CATEGORIES OF INFRINGEMENT WITH RESPECT TO THE PROVISIONS OF COMMUNITY LAW IN QUESTION : FIRST , THE FAILURE TO NOTIFY THE COMMISSION IN SUFFICIENT TIME OF THE DRAFT LAWS IN QUESTION , WHICH , CONTRARY TO ARTICLE 93 ( 3 ) OF THE TREATY , WERE NOT NOTIFIED UNTIL AFTER THEIR PROMULGATION , AND , SECONDLY , THE GRANT OF AID BY CERTAIN PROVISIONS OF THE REGIONAL LAWS CONTRARY TO THE COMMUNITY PROVISIONS RELATING TO THE COMMON ORGANIZATION OF AGRICULTURAL MARKETS . IT IS THEREFORE NECESSARY TO CONSIDER BOTH CATEGORIES OF INFRINGEMENT .

5 ACCORDING TO ARTICLE 42 OF THE EEC TREATY , THE PROVISIONS OF ARTICLE 93 THEREOF , LIKE ALL THE PROVISIONS OF THE CHAPTER RELATING TO THE RULES OF COMPETITION , ARE APPLICABLE ' ' TO PRODUCTION OF AND TRADE IN AGRICULTURAL PRODUCTS ONLY TO THE EXTENT DETERMINED BY THE COUNCIL WITHIN THE FRAMEWORK OF ' ' THE PROVISIONS RELATING TO THE AGRICULTURAL POLICY .

FAILURE TO NOTIFY THE COMMISSION IN SUFFICIENT TIME

6 ARTICLE 10 OF SICILIAN REGIONAL LAW NO 47 OF 27 MAY 1980 , SICILIAN REGIONAL LAW NO 49 OF 4 JUNE 1980 AND ARTICLES 2 , 3 , 8 TO 12 , 15 AND 17 OF SICILIAN REGIONAL LAW NO 83 OF 12 AUGUST 1980 RENEWED CERTAIN MEASURES GRANTING AID FOR DURUM WHEAT , TABLE GRAPES , WINE , TOMATOES , CITRUS FRUITS AND ALMONDS , HAZEL-NUTS AND PISTACHIO NUTS .

7 THE PRODUCTS IN QUESTION ARE COVERED BY THE COMMON ORGANIZATIONS OF THE MARKETS ESTABLISHED BY THE FOLLOWING REGULATOINS :

( A ) REGULATION ( EEC ) NO 2727/75 ON THE COMMON ORGANIZATION OF THE MARKET IN CEREALS ( OFFICIAL JOURNAL 1975 , L 281 , P . 1 );

( B)REGULATION ( EEC ) NO 337/79 ON THE COMMON ORGANIZATION OF THE MARKET IN WINE ( OFFICIAL JOURNAL 1979 , L 54 , P . 1 );

( C)REGULATION ( EEC ) NO 516/77 ON THE COMMON ORGANIZATION OF THE MARKET IN PRODUCTS PROCESSED FROM FRUIT AND VEGETABLES ( OFFICIAL JOURNAL 1977 , L 73 , P . 1 ); AND

( D)REGULATION ( EEC ) NO 1035/72 ON THE COMMON ORGANIZATION OF THE MARKET IN FRUIT AND VEGETABLES ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1972 ( II ), P . 437 ).

8 THOSE REGULATIONS CONTAIN , IN ARTICLES 22 , 59 , 17 AND 31 RESPECTIVELY , AN IDENTICAL PROVISION EXTENDING THE APPLICATION OF ARTICLE 93 ( 3 ) OF THE TREATY , WHICH PROVIDES THAT THE COMMISSION MUST BE INFORMED IN SUFFICIENT TIME OF ANY PLANS TO GRANT OR ALTER AID , TO THE PRODUCTION OF AND TRADE IN THE PRODUCTS IN QUESTION .

9 IT SHOULD BE NOTED IN THAT REGARD THAT THE ITALIAN GOVERNMENT ITSELF ACKNOWLEDGES THAT THE MEASURES IN QUESTION PROVIDE FOR THE GRANT OF AID AND THAT THEY WERE NOT NOTIFIED TO THE COMMISSION UNTIL AFTER THEIR PROMULGATION . HOWEVER , IT CONTENDS THAT THE ADOPTION OF THE LAWS IN QUESTION SHOULD BE REGARDED AS A SINGLE SIMPLIFYING PROCEDURE CONNECTED WITH THE ESTABLISHMENT OF THE BUDGET BY MEANS OF THE SUBSTANTIAL RENEWAL OF EXISTING PROVISIONS WHICH ARE WELL KNOW AND ARE NOT CONTESTED AT COMMUNITY LEVEL .

10 NONE OF THOSE CONTENTIONS CAN RELIEVE THE ITALIAN REPUBLIC OF THE OBLIGATION IMPOSED UPON IT BY ARTICLE 93 ( 3 ) OF THE TREATY TO NOTIFY THE COMMISSION IN SUFFICIENT TIME OF ANY DRAFT LAWS GRANTING AID .

11 IT FOLLOWS FROM THE FOREGOING THAT THE ITALIAN REPUBLIC , BY FAILING TO NOTIFY THE COMMISSION OF THE DRAFT LAWS IN QUESTION UNTIL AFTER THEIR ADOPTION AS LAWS NO 47/80 , NO 49/80 AND NO 83/80 , HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER ARTICLE 93 ( 3 ) OF THE TREATY .

COMPATIBILITY OF THE AID GRANTED WITH THE RELEVANT COMMUNITY LEGISLATION

ADMISSIBILITY

12 THE ITALIAN GOVERNMENT MAINTAINS THAT THE PART OF THE APPLICATION WHICH CONCERNS THE SECOND CATEGORY OF INFRINGEMENT MUST BE DISMISSED BY VIRTUE OF THE SECOND PARAGRAPH OF ARTICLE 169 OF THE TREATY , BECAUSE THE COMMISSION STATED IN ITS REASONED OPINION THAT ' ' ONLY THE IMMEDIATE SUSPENSION OF THE APPLICATION OF THE PROVISIONS IN QUESTION CAN PREVENT ANY FUTURE INFRINGEMENT ' ' . THE ITALIAN GOVERNMENT CONTENDS THAT , AS A RESULT OF ITS INTERVENTION , THE SICILIAN REGIONAL AUTHORITIES SUSPENDED THE APPLICATION OF THE PROVISIONS IN QUESTION AND THEREFORE THE REQUEST CONTAINED IN THE REASONED OPINION WAS COMPLIED WITH .

13 IN THAT REGARD IT IS CLEAR FROM BOTH THE STATEMENT OF REASONS CONTAINED IN THE REASONED OPINION AND THE OPERATIVE PART THEREOF THAT THE COMMISION DEMANDED NOT ONLY THE SUSPENSION OF THE APPLICATION OF THE MEASURES IN QUESTION , BUT ALSO THEIR DEFINITIVE REPEAL . ALTHOUGH THE SENTENCE RELIED UPON BY THE ITALIAN GOVERNMENT IS TO BE FOUND IN THE TEXT OF THE REASONED OPINION , IT DOES NOT HAVE THE MEANING ATTRIBUTED TO IT BY THE DEFENDANT . IT IS CLEAR FROM THE DOCUMENTS BEFORE THE COURT THAT THE SENTENCE IN QUESTION WAS INSERTED IN RESPONSE TO THE ITALIAN GOVERNMENT ' S AFOREMENTIONED PROPOSAL TO APPROACH THE REGIONAL ADMINISTRATION WITH A VIEW TO SECURING THE SUSPENSION OF THE APPLICATION OF THE MEASURES IN QUESTION .

14 THE OBJECTION OF INADMISSIBILITY MUST THEREFORE BE DISMISSED .

SUBSTANCE

15 THE COMMISSION CONSIDERS THAT CERTAIN PROVISIONS OF REGIONAL LAWS NO 47/80 AND NO 83/80 ARE CONTRARY TO THE COMMUNITY PROVISIONS RELATING TO THE COMMON ORGANIZATION OF AGRICULTURAL MARKETS . THE PROVISIONS AT ISSUE ARE , IN PARTICULAR , ARTICLE 10 OF REGIONAL LAW NO 47/80 GRANTING AID TO DURUM-WHEAT PRODUCERS , ARTICLES 2 AND 3 OF REGIONAL LAW NO 83/80 GRANTING AID FOR THE DISPOSAL TO COOPERATIVES OF TABLE GRAPES INTENDED FOR VINIFICATION , ARTICLES 8 AND 9 OF THE SAME LAW GRANTING AID FOR TOMATOES INTENDED FOR PROCESSING , ARTICLES 10 AND 11 OF THE LAW GRANTING LOANS ON FAVOURABLE TERMS TO SICILIAN CANNING UNDERTAKINGS , ARTICLE 12 OF THE LAW GRANTING AID TO CITRUS-FRUIT PRODUCERS WHO ARE MEMBERS OF COOPERATIVES AND ARTICLES 15 AND 17 OF THE LAW GRANTING SUBSIDIES FOR THE PRODUCTION OF ALMONDS , HAZEL-NUTS AND PISTACHIO NUTS INTENDED FOR DISPOSAL TO COOPERATIVES .

16 IN THAT REGARD THE COMMISSION MAINTAINS THAT THE RELEVANT COMMUNITY REGULATIONS COVER IN A COMPLETE AND COMPREHENSIVE MANNER THE ORGANIZATION OF AGRICULTURAL MARKETS IN THE PRODUCTS REFERRED TO ABOVE AND THE AID APPLICABLE THERETO , WITH THE RESULT THAT THE MEASURES IN QUESTION ARE INCOMPATIBLE WITH THOSE REGULATIONS SINCE THEY ARE CONTRARY TO THE OBJECTIVES PURSUED BY THE COMMUNITY LEGISLATURE AND ARE CAPABLE OF DISTORTING COMPETITION , JEOPARDIZING THE EFFECTIVENESS OF THE COMMUNITY INTERVENTION MEASURES AND INTRODUCING A DISRUPTIVE FACTOR IN THE MARKET TREND .

COMPATIBILITY OF ARTICLE 10 OF REGIONAL LAW NO 47/80 WITH REGULATION NO 2727/75

17 ARTICLE 10 OF REGIONAL LAW NO 47/80 PROVIDES FOR THE RENEWAL AND , IN PART , ALSO THE INCREASE OF AID FOR THE PRODUCTION OF DURUM WHEAT . IN THE COMMISSION ' S VIEW , NO SUCH AID IS PROVIDED FOR BY REGULATION NO 2727/75 OF THE COUNCIL ON THE COMMON ORGANIZATION OF THE MARKET IN CEREALS , WHICH ESTABLISHED A COMPLETE AND COMPREHENSIVE SYSTEM DENYING THE MEMBER STATES ANY ADDITIONAL POWER TO INFLUENCE THE FORMATION OF PRICES AT PRODUCTION LEVEL .

18 IT IS CLEAR FROM REGULATION NO 2727/75 , AND IN PARTICULAR FROM ARTICLE 2 THEREOF , THAT THE REGULATION PROVIDES FOR A SYSTEM OF PRICES AND OTHER MEASURES INTENDED TO ESTABLISH A SYSTEM OF UNIFORM PRICES FOR CEREALS THROUGHOUT THE COMMUNITY . ARTICLE 10 PROVIDES FOR THE GRANT ON CERTAIN CONDITIONS OF AID OF A UNIFORM AMOUNT FOR THE WHOLE COMMUNITY FOR THE PRODUCTION OF DURUM WHEAT . IT FOLLOWS FROM THAT SYSTEM THAT ANY SUPPORT MEASURE MUST BE DECIDED UPON AT COMMUNITY LEVEL IN ORDER TO AVOID THE RISK OF JEOPARDIZING THE FUNCTIONING OF THE SYSTEM BY THE GRANT OF ADDITIONAL AID .

19 THE GRANT OF THE NATIONAL AID IN QUESTION IS THEREFORE CONTRARY TO THE RELEVANT COMMUNITY LEGISLATION AND IS CAPABLE OF DISTORTING THE SYSTEM ESTABLISHED BY REGULATION NO 2727/75 .

20 THE ITALIAN REPUBLIC HAS THEREFORE FAILED TO FULFIL AN OBLIGATION UNDER THE TREATY BY GRANTING AID AT A FIXED RATE FOR THE PRODUCTION OF DURUM WHEAT .

COMPATIBILITY OF ARTICLES 2 AND 3 OF REGIONAL LAW NO 83/80 WITH REGULATION NO 337/79

21 ARTICLE 2 OF REGIONAL LAW NO 83/80 PROVIDES FOR FINANCIAL ASSISTANCE FROM THE SICILIAN REGION FOR THE PAYMENT OF INTEREST ON AGRICULTURAL LOANS CONTRACTED BY GRAPE-PRODUCER COOPERATIVES FOR THE PURPOSE OF GRANTING ADVANCES TO THEIR MEMBERS WHO SUPPLY THEM WITH TABLE GRAPES FOR PROCESSING . ARTICLE 3 OF THE SAME LAW PROVIDES THAT THE ADVANCE REFERRED TO IN ARTICLE 2 MUST AMOUNT TO AT LEAST 80% OF THE MINIMUM PRICE FIXED EVERY YEAR BY THE COMMUNITY FOR WINE OBTAINED BY PROCESSING TABLE GRAPES AND INTENDED FOR DISTILLATION .

22 IN THE COMMISSION ' S VIEW , THAT MEASURE PROMOTES VINIFICATION OF TABLE GRAPES AND THUS PRODUCES EFFECTS WHICH ARE WHOLLY CONTRARY TO THE OBJECTIVES PURSUED , WITHIN THE FRAMEWORK OF THE COMMON ORGANIZATION OF THE MARKET IN WINE , BY COUNCIL REGULATION NO 337/79 . IN ANY EVENT , THE MEASURE IN QUESTION IS AN INDEPENDENT MEASURE UNILATERALLY ADOPTED BY ITALY IN A SECTOR WHOLLY REGULATED BY THE COMMUNITY INTERVENTION SYSTEM .

23 THE ITALIAN GOVERNMENT , HOWEVER , CONTENDS THAT THE MEASURE IN QUESTION IS DESIGNED TO PROMOTE THE FORMATION OF AGRICULTURAL ASSOCIATIONS , THEREBY FACILITATING THE DISPOSAL OF TABLE GRAPES FOR PROCESSING AND SUBSEQUENTLY DISTILLATION , AS PROVIDED FOR BY THE RELEVANT COMMUNITY LEGISLATION .

24 THE ARGUMENTS PUT FORWARD BY THE ITALIAN GOVERNMENT CANNOT BE ACCEPTED . IT IS CLEAR FROM ARTICLE 2 OF THE REGIONAL LAW IN QUESTION , READ IN CONJUNCTION WITH ARTICLE 3 THEREOF , THAT BY THE PROCESSING OF TABLE GRAPES THE REGIONAL LEGISLATURE MEANS VINIFICATION AND NOT DISTILLATION , WHICH IS A STAGE SUBSEQUENT TO VINIFICATION .

25 IT IS CLEAR PARTICULARLY FROM RECITALS 20 TO 26 IN THE PREAMBLE TO REGULATION NO 337/79 THAT THE COMMUNITY WISHES TO RESTRICT THE VINE VARIETIES INTENDED FOR THE PRODUCTION OF TABLE WINES AND ALSO THE PRODUCTION OF TABLE WINES , BECAUSE THEY ARE CONSIDERED TO BE OF INSUFFICIENT QUALITY . IN THAT CONNECTION , THE NINTH RECITAL ALSO CONTEMPLATES THE DISTILLATION OF SUCH WINES - DESCRIBED IN THE REGULATION ITSELF AS A PREVENTIVE MEASURE - ' ' AT A BUYING-IN PRICE WHICH IS NOT SUCH AS TO ENCOURAGE PRODUCTION OF WINE OF INSUFFICIENT QUALITY ' ' .

26 FOR THOSE PURPOSES , ARTICLE 6 ( 2 ) OF THE REGULATION EXCLUDES TABLE WINES FROM ALL INTERVENTION MEASURES , WITH THE EXCEPTION OF THOSE PROVIDED FOR BY THE REGULATION ITSELF WHICH ARE NOT APPLICABLE IN THIS CASE . ARTICLE 15 , WHICH PROVIDES FOR THE IMPLEMENTATION OF THE PROVISIONS LAYING DOWN THE CONDITIONS FOR THE DISTILLATION OF TABLE WINES , ALSO PROVIDES IN PARAGRAPH ( 2 ) ( B ) THAT THOSE CONDITIONS ' ' SHALL NOT BE SUCH AS TO ENCOURAGE THE PRODUCTION OF WINE OF INSUFFICIENT QUALITY ' ' .

27 FURTHERMORE , TITLE III OF THE REGULATION CONTAINS RULES CONCERNING PRODUCTION AND FOR CONTROLLING PLANTING , THE ESSENTIAL FEATURE OF WHICH IS THE PROHIBITION OF THE CULTIVATION OF WINE VARIETIES NOT AUTHORIZED BY THE COMMUNITY ( ARTICLES 29 , 30 ET SEQ .).

28 ARTICLE 57 PROVIDES THAT INTERVENTION MEASURES MAY BE ADOPTED BY THE COUNCIL TO THE EXTENT NECESSARY TO SUPPORT THE MARKET IN TABLE WINES .

29 FROM THE FOREGOING ANALYSIS OF THE COMMUNITY RULES , IT IS POSSIBLE , FIRST OF ALL , TO DEDUCE THAT THEY ARE COMPLETE AND COMPREHENSIVE IN CHARACTER AND , SECONDLY , TO IDENTIFY THE OBJECTIVES OF THE COMMUNITY LEGISLATION RELATING TO INTERVENTION IN THIS AREA .

30 THE MEASURES PROVIDED FOR BY ARTICLES 2 AND 3 OF REGIONAL LAW NO 83/80 PURSUE AN OBJECTIVE WHICH IS IRRECONCILABLE WITH THE ABOVEMENTIONED OBJECTIVES OF THE COMMUNITY LEGISLATION APPLICABLE IN THE PRESENT CASE . THE CONCLUSION MUST THEREFORE BE DRAWN THAT THE ITALIAN REPUBLIC HAS FAILED TO FULFIL AN OBLIGATION UNDER THE TREATY .

COMPATIBILITY OF ARTICLES 8 AND 9 OF LAW NO 83/80 WITH REGULATION NO 516/77

31 ARTICLES 8 AND 9 OF REGIONAL LAW NO 83/80 PROVIDE FOR THE GRANT OF AID TO ASSOCIATIONS OF TOMATO PRODUCERS AND TO PRODUCER COOPERATIVES IN ORDER TO PROMOTE THE PROCESSING OF TOMATOES BY CANNING UNDERTAKINGS . IN THAT REGARD , THE COMMISSION RAISES THE SAME OBJECTION AS BEFORE , NAMELY THAT THE MEASURE IN QUESTION AMOUNTS TO STATE INTERVENTION IN AN AREA WHOLLY REGULATED BY THE COMMON ORGANIZATION OF THE MARKET , IN PARTICULAR BY REGULATION NO 516/77 .

32 THE ITALIAN GOVERNMENT , WHILST ACKNOWLEDGING THAT THE MEASURES IN QUESTION PROVIDE FOR THE GRANT OF AID , CONTENDS THAT THEIR PURPOSE IS TO PROMOTE THE DEVELOPMENT OF THE COOPERATIVE MOVEMENT WITHOUT INTERVENING DIRECTLY IN THE MARKET SECTOR REGULATED BY THE COMMUNITY MEASURES .

33 ARTICLES 3 A TO 3 C OF REGULATION NO 516/77 , WHICH WERE ADDED BY COUNCIL REGULATION ( EEC ) NO 1152/78 ( OFFICIAL JOURNAL 1978 , L 144 , P . 1 ), LAY DOWN A COMPREHENSIVE SET OF COMMUNITY RULES ON THE MARKET IN PRODUCTS PROCESSED FROM FRUIT AND VEGETABLES , INCLUDING TOMATOES , WHICH ARE INTENDED TO STABILIZE THE COMMUNITY MARKET BY MEANS OF A COMMUNITY SYSTEM OF PRICES AND AID AND PRECLUDE THE GRANT OF FURTHER AID BY THE MEMBER STATES .

34 THE DETAILED RULES FOR THE APPLICATION OF THE ARTICLES IN QUESTION ARE SET OUT IN ARTICLE 20 OF THE REGULATION , WHICH PROVIDES FOR THE INTERVENTION OF COMMUNITY BODIES .

35 IT THEREFORE FOLLOWS THAT THE AID GRANTED BY THE ITALIAN REPUBLIC IS INCOMPATIBLE WITH THE RELEVANT COMMUNITY LEGISLATION AND THAT THAT STATE HAS CONSEQUENTLY FAILED TO FULFIL AN OBLIGATION UNDER THE TREATY .

COMPATIBILITY OF ARTICLES 10 AND 11 OF REGIONAL LAW NO 83/80 WITH REGULATION NO 516/77

36 ARTICLES 10 AND 11 OF REGIONAL LAW NO 83/80 PROVIDE FOR THE GRANT OF LOANS AT FAVOURABLE INTEREST RATES TO CANNING UNDERTAKINGS ESTABLISHED IN SICILY WHICH UNDERTAKE TO PAY THE PURCHASE PRICE OF SICILIAN TOMATOES TO PRODUCERS WITHIN FIVE DAYS AFTER DELIVERY OF THE PRODUCT . ACCORDING TO THE COMMISSION , THAT MEASURE DISTORTS TRADE AND HAS THE EFFECT OF ENCOURAGING AGRICULTURAL PRODUCTION BEYOND THE LIMITS OF COMMUNITY POLICIES . FURTHERMORE , IT ENABLES SICILIAN PROCESSING UNDERTAKINGS TO OBTAIN PAYMENT OF COMMUNITY AID CONSIDERABLY EARLIER THAN WOULD BE POSSIBLE UNDER ARTICLE 3 B ( 5 ) OF REGULATION NO 516/77 , WHICH MAKES PAYMENT OF SUCH AID CONDITIONAL ON VERIFICATION OF DUE PAYMENT OF THE MINIMUM PRICE TO THE PRODUCERS . THUS , IN THE COMMISSION ' S VIEW , THE NATIONAL AID IN QUESTION ENABLES RECIPIENTS TO ASSERT THEIR RIGHT TO THE COMMUNITY AID EARLIER .

37 IN THE ITALIAN GOVERNMENT ' S VIEW , THE CONTESTED MEASURE IS INTENDED TO FACILITATE ACCESS TO AGRICULTURAL LOANS AND DOES NOT CONSTITUTE AID SUPPLEMENTING THE COMMUNITY MEASURES .

38 AS REGARDS THE COMMISSION ' S FIRST ARGUMENT , IT HAS FAILED TO DEMONSTRATE , EITHER IN THE WRITTEN STATEMENTS WHICH IT HAS SUBMITTED TO THE COURT OR AT THE HEARING , WHY PAYMENT OF THE PURCHASE PRICE OF TOMATOES TO PRODUCERS WITHIN FIVE DAYS AFTER DELIVERY OF THE PRODUCT CONSTITUTES A MEASURE WHICH IS CAPABLE OF DISTORTING TRADE AND ENCOURAGING THE PRODUCTION OF TOMATOES .

39 AS REGARDS THE SECOND ARGUMENT ADVANCED BY THE COMMISSION , IT SHOULD BE NOTED THAT ARTICLE 3 B ( 5 ) OF REGULATION NO 516/77 LAYS DOWN THREE CONDITIONS FOR PAYMENT OF THE COMMUNITY AID TO THOSE CONCERNED :

( A ) PRODUCERS MUST HAVE BEEN PAID THE MINIMUM PRICE ;

( B)THE PRODUCTS MUST HAVE BEEN PROCESSED ; AND

( C)PRODUCTS AFTER PROCESSING MUST COMPLY WITH THE QUALITY STANDARDS IN FORCE .

THE COMMISSION DOES NOT EXPLAIN HOW , NOTWITHSTANDING THE THREE CONDITIONS REQUIRED , COMPLIANCE WITH ONE CONDITION ALONE , NAMELY VERIFICATION OF DUE PAYMENT OF THE MINIMUM PRICES , CAN ENTITLE THE CANNING UNDERTAKING CONCERNED TO PAYMENT OF THE COMMUNITY AID .

40 CONSEQUENTLY , THE ARGUMENTS PUT FORWARD BY THE COMMISSION CANNOT BE ACCEPTED . THIS PART OF THE APPLICATION MUST THEREFORE BE DISMISSED .

COMPATIBILITY OF ARTICLE 12 OF REGIONAL LAW NO 83/80 WITH REGULATION NO 1035/72

41 ARTICLE 12 OF REGIONAL LAW NO 83/80 GRANTS TO CITRUS-FRUIT PRODUCERS WHO ARE MEMBERS OF COOPERATIVES AND TO ASSOCIATIONS THE CONTRIBUTIONS PROVIDED FOR BY REGIONAL LAW NO 24 OF 3 JUNE 1975 , AS SUBSEQUENTLY AMENDED . ACCORDING TO THE COMMISSION , THAT MEASURE CONSTITUTES AID CONTRARY TO THE COMMON ORGANIZATION OF THE MARKET IN FRUIT AND VEGETABLES , ESTABLISHED BY REGULATION NO 1035/72 .

42 THE ITALIAN GOVERNMENT CONSIDERS THAT THE MEASURE IS DESIGNED TO PROMOTE THE DEVELOPMENT OF THE COOPERATIVE MOVEMENT .

43 THE COMMISSION HAS OMITTED TO EXPLAIN - AND HAS NOT EVEN SUBMITTED THE COMPLETE TEXT OF THE PROVISIONS TO WHICH THE CONTESTED ARTICLE REFERS - THE NATURE OF THE CONTRIBUTIONS PROVIDED FOR BY THE ARTICLE AND WHY THEY ARE CONSIDERED EQUIVALENT TO AID . FURTHERMORE , THE COMMISSION HAS ALSO FAILED TO IDENTIFY THE PROVISIONS OF REGULATION NO 1035/72 WITH WHICH THE CONTESTED ARTICLE IS ALLEGED TO BE COMPATIBLE .

44 THEREFORE , IRRESPECTIVE OF THE REPLY GIVEN BY THE ITALIAN GOVERNMENT , WHICH IS EQUALLY CONCISE , THIS PART OF THE APPLICATION CANNOT BE UPHELD .

COMPATIBILITY OF ARTICLES 15 AND 17 OF REGIONAL LAW NO 83/80 WITH REGULATION NO 1035/72

45 ARTICLES 15 AND 17 OF REGIONAL LAW NO 83/80 PROVIDE FOR THE ALLOCATION OF FUNDS FOR ALMONDS , HAZEL-NUTS AND PISTACHIO NUTS . THE COMMISSION MAINTAINS THAT THE MEASURES CONSTITUTE AID TO COOPERATIVES AND THEIR CONSORTIA DESIGNED TO BRING ABOUT STRUCTURAL IMPROVEMENTS IN PRODUCTION AND ARE INCOMPATIBLE WITH REGULATION NO 1035/72 .

46 THE ITALIAN GOVERNMENT ON THE OTHER HAND CONTENDS , FIRST , THAT THE MEASURES ARE PROTECTIVE MEASURES ADOPTED IN SUPPORT OF ENDANGERED CROPS CULTIVATED ON A SMALL SCALE AND TO PROMOTE ECOLOGICAL AND ENVIRONMENTAL BALANCE AND , SECONDLY , THAT THE MEASURES RELATE TO A SECTOR WHICH DOES NOT SEEM TO FORM PART OF A COMMON ORGANIZATION OF THE MARKET .

47 AS FAR AS THE LATTER ARGUMENT IS CONCERNED , IT MUST BE POINTED OUT THAT THE PRODUCTS IN QUESTION FALL WITHIN THE SCOPE OF REGULATION NO 1035/72 , AS IS CLEAR FROM ARTICLE 1 THEREOF IN CONJUNCTION WITH HEADINGS NOS 08.05 A , B AND D OF THE COMMON CUSTOMS TARIFF .

48 HOWEVER , IN THIS PART OF ITS APPLICATION ALSO , THE COMMISSION HAS FAILED TO EXPLAIN WHY THE ALLOCATION OF THE FUNDS IN QUESTION IS IN THE NATURE OF AID TO COOPERATIVES . MOREOVER , THE COMMISSION HAS NOT IDENTIFIED THE PROVISION OF THE REGULATION WITH WHICH THE AID IS ALLEGED TO BE INCOMPATIBLE , REGARD BEING HAD TO THE FACT THAT ARTICLE 14 OF THE REGULATION AUTHORIZES THE GRANT OF AID TO PRODUCER ORGANIZATIONS ON CERTAIN CONDITIONS .

49 ACCORDINGLY , THIS PART OF THE APPLICATION MUST BE DISMISSED .

Decision on costs

COSTS

50 UNDER ARTICLE 69 ( 2 ) OF THE RULES OF PROCEDURE , THE UNSUCCESSFUL PARTY IS TO BE ORDERED TO PAY THE COSTS .

51 HOWEVER , UNDER ARTICLE 69 ( 3 ) OF THE RULES OF PROCEDURE , WHERE EACH PARTY SUCCEEDS ON SOME AND FAILS ON OTHER HEADS , THE COURT MAY ORDER THAT THE PARTIES BEAR THEIR OWN COSTS IN WHOLE OR IN PART .

52 SINCE THE COMMISSION HAS BEEN UNSUCCESSFUL IN SOME OF ITS SUBMISSIONS , THE PARTIES ARE TO BEAR THEIR OWN COSTS .

Operative part

ON THOSE GROUNDS ,

THE COURT

HEREBY :

1 . DECLARES THAT THE ITALIAN REPUBLIC HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER THE EEC TREATY BY FAILING TO NOTIFY TO THE COMMISSION THE DRAFT LAWS WHICH SUBSEQUENTLY BECAME SICILIAN REGIONAL LAWS NO 47/80 ( ARTICLE 10 ), NO 49/80 AND NO 83/80 ( ARTICLES 2 , 3 , 8 TO 12 , 15 AND 17 ) UNTIL AFTER THEIR ADOPTION ;

2.DECLARES THAT THE ITALIAN REPUBLIC HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER THE TREATY AS A RESULT OF THE ADOPTION BY THE SICILIAN REGION OF THE MEASURES PROVIDED FOR BY ARTICLE 10 OF REGIONAL LAW NO 47/80 AND BY ARTICLES 2 , 3 , 8 AND 9 OF REGIONAL LAW NO 83/80 .

3.DISMISSES THE REMAINDER OF THE APPLICATION ;

4.ORDERS THE PARTIES TO BEAR THEIR OWN COSTS .