1.

Considering the problems referred to us the first two questions should be taken together. Accordingly it must first be considered whether the Community provisions on the cereals market exclude national intervention agencies from unilaterally resolving to dispose of the wheat in their possession without following the procedure laid down in Regulation No 132/67 of the Council (OJ English Special Edition 1967, p. 73) — now Regulation No 2738/75 (OJ L 281, 1975 p. 49) — and Regulation No 376/70 of the Commission (OJ English Special Edition 1970 (I), p. 126) and at a price other than that prescribed by Regulation No 376/70. It is further necessary to examine whether such action, when limited to the mills of one province and thus excluding processing undertakings of neighbouring areas, contravenes the prohibition on discrimination contained in the second paragraph of Article 40 (3) of the EEC Treaty. Let me first of all remind you of what is laid down in the said provisions. Article 3 of Regulation No 132/67 (now Regulation No 2738/75) provides ‘Cereals held by the intervention agency shall be disposed of by invitation to tender’. Article 2 of Regulation No 376/70 provides that an invitation to tender, that is, a call for offers to be submitted, shall be made public. Article 3 of Regulation No 132/67 (now Regulation No 2738/75) provides that ‘The terms of the invitation to tender shall ensure equality of access and treatment to all persons concerned irrespective of the place of their establishment within the Community’. Article 4 of Regulation No 132/67 (now Regulation No 2738/75) provides that the Council may establish a selling procedure other than that laid down in Article 3, if special circumstances require. With regard to prices, Article 3 of Regulation No 132/67 (now Regulation No 2738/75) provides that disposal shall be on the basis of price conditions which are determined before the beginning of the marketing year, and are such as will not cause a deterioration of the market. Article 3 of Regulation No 376/70 provides — I shall confine myself to this now — that if the offered cereals are stored at a marketing centre, their selling price must be not less than the local market price and may not, in any circumstances, be lower than the intervention price valid at that centre plus 1.50 u.a. per tonne. Finally I would like to mention that Regulation No 935/70 (OJ English Special Edition 1970 (I), p. 264) adds a fourth paragraph to Article 3 of Regulation No 376/70 to the effect that in exceptional cases and at the request of a Member State the intervention agency of that Member State may be authorized to restrict the invitation to tender to use for specified purposes. According to the statements of the plaintiff in the main action and the observations of the court making the reference the impression may be obtained that the contested sales relate to intervention cereals. If this is in fact so the answer to the questions raised should cause no difficulties. Article 7 of Regulation No 120/67 of the Council on the common organization of the market in cereals (OJ English Special Edition 1967, p. 33 — now Regulation No 2727/75 of the Council — OJ L 281, 1975 p. 1) deals expressly with the subsequent fate of the cereals taken into intervention. Paragraph 3 provides that under conditions to be laid down in accordance with paragraphs 4 and 5, the intervention agencies shall offer the cereals bought in for sale, for export to third countries or for supply to the internal market. Paragraph 4 provides that the Council shall adopt general rules governing intervention. Paragraph 5 provides that detailed rules for the application of this Article shall be adopted in accordance with the well-known Management Committee procedure, including the procedures and conditions for disposal of produce by the intervention agencies. It is precisely these provisions which I have mentioned and whose content I have described. Accordingly it is clear that the intervention agencies must provide for invitations to tender to be made public and afford interested parties equal access; further they are obliged to respect the relevant provisions on prices, that is the prices fixed by them should not adversely affect the normal price formation. If this is not done then there may certainly be said to be an infringement of Community law. In view of all that has been said, in particular with regard to the requirement in Article 3 of Regulation No 132/67 (now Regulation No 2738/75) that the terms of the invitation to tender shall ensure equality of access and treatment to all parties concerned, it is not necessary to have recourse to Article 40 of the EEC Treaty which provides that the common organization shall be limited to the pursuit of the objectives set out in Article 39 and shall exclude any discrimination between producers or consumers within the Community. If nevertheless it is considered appropriate, then I can only agree with the Commission on this point. It cannot be doubted — I will limit myself to this observation — that Article 40 binds not only the Community legislature but applies also to the Member States in so far as with their intervention agencies they undertake functions within the terms of the common organization of the market. These observations do not suffice, however. First, the Italian Government in justification of its action has maintained that the AIMA did not act as an intervention agency in the present case but as an institution of the State providing assistance in alleviating local want and therefore it was not bound by the intervention rules on the sale of wheat which was not obtained under the Community rules. Further the Italian Government takes the view that Community law does not provide comprehensive rules. It is tailored to meet situations of surplus and contains no provisions on the protection of the consumer in cases of shortages. There is in particular no provision for the case where a disturbance is limited to a Member State or part of it and relates mainly to products which are particularly important to a Member State. In these circumstances Member States must be regarded as empowered to adopt national measures. On this point, it is true, it must be said that the fact that the cereals sold by the AIMA were not intervention cereals, that is not cereals that were taken over by intervention agencies in the context of the organization of the cereals market at the expense of the Community in order to stabilize the market, leads to the further observation that such cereals sales cannot be subject to the said provisions of Regulations Nos 132/67 (now 2738/75) and 376/70. This does not however mean that national agencies acting on the instructions of the Government are completely free in their action. The Commission has rightly cited Case 60/75 (Russo v AIMA [1976] ECR 45) in case the other situation should in fact be the true one. This shows that State intervention to control inflation in respect of certain foodstuffs is compatible with the common organization of the market only in so far as it does not jeopardize the objectives or operation of that organization. Such jeopardy was assumed where the action of the national agency was likely to cause a fall in prices below the level of the target price or even the intervention price. If I see it correctly this effect was inherent in the relevant actions of the AIMA in the present case. This emerges in any event from the particulars provided by the Commission of the target and intervention prices applying at the time and a comparison with the prices fixed by the AIMA. There would accordingly in any event be an infringement of the pricing rules laid down in the context of the common organization of the market. Moreover it also seems to me clear that the Member States are bound by the prohibition on discrimination in Article 40 in such circumstances, namely the direct disposal of cereals outside intervention. This likewise follows from the judgment in Case 60/75 with its reference to the fact that State measures must not jeopardize the objectives and operation of a common organization of the market. It may accordingly be assumed that a Member State on adopting measures which effect the common organization of the market must have regard to all principles governing this sphere, that is including the prohibition on discrimination. Reference may also be made to the judgment in Case 51/74 (Van der Hulst's Zonen v Produktschap voor Siergewassen [1975] ECR 79). In this case the principle of Article 40 was declared applicable by analogy to a national intervention system intended to complement the common organization of the market. Moreover the view of the Italian Government that the Community rules are incomplete and consequently the Member States have the power to adopt purely local measures is scarcely tenable. First of all it is erroneous in regarding the protective clauses of the common organization of the cereals market, in particular Article 19 of Regulation No 120/67, as tailored to meet situations of surplus. In fact Article 19 refers to the case of the cif price being appreciably higher than the threshold price, that is, it contemplates a situation in which the world market prices are above the Community prices and therefore the resulting attraction of the world market could cause difficulties of supply for the Community. The new version of Article 19 in Regulation No 2727/75 has in no way changed this basic principle even though the basis preferred for measures is the equilibrium between the world market price and Community prices. The opinion is also untenable that Community law provides nothing for cases of local shortages where intervention in the working in the common organization of the market becomes necessary. I refer in this respect to the fact that Regulation No 935/70 adds a provision to Regulation No 376/70 to the effect that in exceptional cases the intervention agency of a Member State may be authorized to restrict the invitation to tender to use for specified purposes. It is also relevant that Article 4 of Regulation No 132/67 (now Regulation No 2738/75) provides that the Council may establish another procedure for the sale of cereals through the intervention agencies, if special circumstances require. The Commission has cogently shown in the proceedings how these provisions have worked in practice and indeed in favour of Italy. Thus Regulation No 1984/73 of the Council (OJ L 201, 1973) authorized the Italian Republic to sell by mutual agreement a certain quantity of common wheat and it was also provided that Italy should ensure ‘that wheat sold under this Regulation is used exclusively for the manufacture of foodstuffs to be supplied to the population of the areas of Southern Italy, in particular the towns of Naples, Palermo, Ragusa and Caltanissetta’. Regulation No 2043/73 (OJ L 207, 1973) extended this power to an additional quantity of common wheat which could likewise be sold on the conditions referred to in Regulation No 1984/73. Further, mention should be made of Regulation No 2104/73 of the Council (OJ L 214, 1973) — now since 1 November 1973 Regulation No 2737/75 of the Council (OJ L 281, 1975 p. 47) — according to which the German, French and Belgian intervention agencies had to hold certain quantities of common wheat at the disposal of the Italian intervention agency. The Italian Republic could also sell these quantities by mutual agreement but again it had to ensure that the wheat was used exclusively for the manufacture of foodstuffs to be supplied to the populations concerned. Finally the Council Decision of 18 May 1976 on the sale and use of common wheat held by the Italian intervention agency (OJ L 136, 1976) is also relevant. This provided that the Italian intervention agency should place a certain quantity of common wheat at the disposal of the Italian Government. Article 1 (3) of this Decision expressly provides: ‘the Italian Government shall hand over the quantity laid down in paragraph 1 to the milling industry to be processed for the making of bread known as “pane comune” at a reduced price which will enable the least-favoured consumers to purchase that bread’. All this makes it clear that the common organization of the cereals market must be regarded in fact as a comprehensive set of rules and, contrary to what the Italian Government alleges, it also applies where the adoption of special measures in relation to exceptional circumstances of a purely local nature are concerned. The Court's judgment in Case 31/74 (Galli [1975] ECR 47) must therefore continue to apply unchanged. Essentially this is that the common organization of the cereals market has, for the sake of establishing a single market, established a system covering a number of provisions of substantive law and provisions conferring powers and thus lays down a framework of organization enabling all eventualities to be dealt with. Accordingly where to counter inflation Member States propose measures in a sector subject to a common organization of the market, they must adopt the appropriate ones in the context of the Community to ensure that measures are adopted or approved by the competent Community authorities in accordance with the requirements of the single market created by Regulation No 120/67 (now Regulation No 2727/75).