4.

The first of the charges which are common to the various cases is, as we have seen, concerned with the incompatibility of Regulation (EEC) No 563/76 with the objectives of the common agricultural policy laid down in Article 39 (1) of the Treaty. Without quoting that provision word for word, I would remind the Court that the objectives which it lays down are, in essence, the following: (a) to increase agricultural productivity by promoting technical progress and by ensuring the rational development of agricultural production and the optimum utilization of the factors of production; (b) thus to ensure a fair standard of living for the agricultural community; (c) to stabilize markets; (d) to ensure the availability of supplies; and (e) to ensure that supplies reach consumers at reasonable prices. The undertakings which are consumers of feeding-stuffs and are involved in the present proceedings contend that the obligation to purchase the skimmed-milk powder in question bears no relation to any of those objectives and that, furthermore, there has been an infringement of the provision in the first subparagraph of Article 40 (3) of the Treaty upon which, to be valid, the Council regulation must be based. That provision lays down that ‘the common organization established in accordance with paragraph (2) may include all measures required to attain the objectives set out in Article 39’. The undertakings claim that the contested regulation was by no means necessary for the achievement of the objectives referred to in Article 39. Apart from having nothing to do with ensuring the availability of supplies or reasonable prices for consumers it does not encourage an increase in agricultural productivity but is inconsistent with the rational development of agricultural production and the aim of ensuring a fair standard of living for the agricultural community. With reference to the question of fixing the intervention price for milk at too high a level, the undertakings concerned contend that, far from helping to stabilize the markets, it results in over-production and an increase in stocks. In their view, stabilization of markets must mean the adjustment of supply to demand, in particular the demand within the Community; when this consideration is taken into account, the whole Community policy in milk and milk products as subsequently expressed in the regulation under consideration must be regarded as alien to the pursuit of that aim. On the other hand, the Commission and the Council contend that Regulation (EEC) No 563/76 is justified in terms of the pursuit of the objective of stabilization of markets. In this connexion they point out that, on account of the unacceptable level of stocks of skimmed-milk powder built up during 1975, the regulation was intended to prevent their further increase. In particular, the Commission maintains that the stabilization of the market requires not only preventive measures but also corrective measures designed to obviate or reduce the consequences of an already existing imbalance. If the usefulness of the measures in question is to be assessed in relation to their purpose they must be looked at against the general background of the Community's policy in milk and milk-products. Furthermore, according to the Commission, the measure adopted was not only, for the foregoing reason, appropriate for the stabilization of the markets but was an essential indeed the only feasible one for the purpose since action designed to eliminate the causes of the structural surpluses would not have been able to contribute in the short term to the reduction of stocks. The introduction of a levy which, in the long term, is better calculated to produce an improvement in the situation, could not, however, be achieved from one day to the next because of the many problems to which it gave rise. Before commenting on these conflicting arguments, I think it would be as well to reiterate a principle which I laid down earlier: an appraisal of whether or not the regulation is consistent with Articles 39 and 40 of the Treaty cannot involve consideration of the whole of the Community's economic policy in milk and milk-products. I refer in particular to the question of the fixing of intervention prices for milk, which, it is contended, are excessively high and which gave rise to the surplus situation which Regulation (EEC) No 563/76 sought, in part and on an interim basis, to correct. In view of this, the question arises what connexion an agricultural regulation must have with Article 39 for it to be considered valid. It is clearly impossible to claim that every legislative measure must pursue all the objectives laid down in the article; it is sufficient that it should pursue one of them. But the main difficulty arises from the fact that, on occasion, the pursuit of one objective leads to the neglect of others. According to Granaria, the plaintiff in Case 116/76, which in particular put forward the arguments on this point, a regulation which, while calculated to achieve certain objectives of Article 39, runs contrary to other objectives laid down therein must be regarded as inconsistent with Article 39 and, in consequence, invalid. This, it claims, is exactly the position with Council Regulation (EEC) No 563/76. Such a concept is perhaps somewhat inflexible and doctrinaire. The multiple objectives of Article 39 involve requirements which in practice may, in the context of a particular measure, conflict with each other. It is, accordingly, easy to imagine situations in which the pursuit of an objective which is regarded as having priority can be achieved only by means of measures which are in point of fact incompatible with another of the objectives aid down in the same provision. In its judgment of 13 March 1968 in Case 5/67, Beus v Hauptzollamt Munchen [1968] ECR 83, the Court ruled that the objectives of Article 39, which are intended to safeguard the interests of both farmers and consumers, may not all be simultaneously and fully attained. From this it follows that the Council must be acknowledged to have the power to reconcile the various interests involved and if necessary to make a choice in each individual case, giving priority to one interest over another having regard to considerations of expediency arising out of the particular circumstances. This is moreover in line with the principles laid down by the Court in the context of the coal and steel market in its judgment of 8 February 1968 in Case 28/66, Netherlands v Com mission [1968] ECR 1. Referring to the general objectives set out in Articles 2 and 3 of the ECSC Treaty, the Court held on that occasion that they cannot always be pursued simultaneously in their totality and that the Community must reconcile them and, when conflict arises, must grant such priority to one or other of the objectives as appears necessary, having regard to the economic facts or circumstances. The same principle has also been expressly recognized as being applicable to the objectives of Article 39 of the EEC Treaty (judgment of 24 October 1973 in Case 5/73, Balkan Import-Export v Hauptzollamt Berlin-Packhof [1973] ECR 1091). It is clear that in exercising these economic policy options, the Council has a wide margin of discretion. Accordingly, it is not enough to establish that, in a particular intervention measure, one objective or the other is subordinated or sacrificed to the claims of another to justify a finding that the Treaty has been infringed: what must be established is that the facts do not justify the sacrifice of that objective. In the present case, the question to be determined is whether Regulation (EEC) No 563/76 does, in fact, conflict with any of the objectives set out in Article 39. According to the undertakings concerned there is above all incompatibility with the objective in subparagaph (a) relating to increased agricultural productivity inasmuch as the regulation is the last link in a chain of provisions imposing an artificially high level of prices and thereby increasing surplus production of milk at the cost of the rational development of production. I have already said that the previous conduct of the Council, except in circumstances in which it gives rise to illegal acts which, in law, constitute the basis for the regulation under consideration here, cannot be a decisive factor in determining whether or not the regulation is valid. Again, we have seen that Regulation (EEC) No 563/76 was intended to make good a situation which, on an objective view, was one of difficulty for the intervention agencies both on account of the size of stocks and the financial burden thus involved. While, in the circumstances, it is true that the regulation contributes nothing to the objectives referred to in Article 39 (1) (a), neither, in my view, can it be said that, in itself, it conflicts with it. Again, the undertakings concerned have alleged that the regulation in question is also in conflict with the second objective provided for in Article 39 (1). They contend that this objective, which is to ensure a fair standard of living for the agricultural community, must be achieved by increasing productivity, promoting technical progress, the rational development of production and the optimum utilization of the factors of production, that is to say, in accordance with the guidelines laid down in Article 39 (1) (a). This is clear, they state, from the wording of Article 39 which, after prescribing these guidelines in paragraph (1) (a) as primary objectives of the agricultural policy, lays down, in subparagraph (b), the need ‘thus to ensure a fair standard of living for the agricultural community’. From this it is argued that the attainment of this objective must be pursued by means of the measures provided for under subparagraph (a). Although such a strict interpretation is literally justified by the wording of Article 39 (1) (b), it does not appear to satisfy the working requirements of a system which is characterized by the need to cope with urgent and conflicting needs. Prominent among those needs are those of a social character which, in the short term at least, frequently require purely economic considerations to take second place. In the present circumstances such an interpretation might justify the conclusion that the whole of the market policy so far followed by the Community is illegal in view of the fact that, as we are aware, its essential basis is the fixing of prices to suit agricultural products in order to assure farmers of an adequate income, whereas the policy favouring the modernization and structural improvements and, in consequence, the rational development of agricultural production has been late in gathering momentum and is now evolving slowly and with considerable difficulty. In my opinion it would be fair and realistic to interpret the provisions in question as meaning that it is only in the long term that the objective in Article 39 (1) (b) can be secured through the attainment of the other objective, referred to in subparagraph (a), namely structural improvement. But to lay down that there must have been, since the entry into force of the Treaty, an essential and automatic relationship between the two kinds of objective would have made any Community action impossible in terms of market policy, since no structural policy had yet been laid down, nor would it have been possible to put one into effect within a short time. In my view, the foregoing considerations make it impossible, on any but a long-term view, to accept the argument that the first two objectives of Article 39 are strictly connected with each other. Apart from this possibility, Granaria pointed out that the obligation to purchase imposed by Regulation (EEC) No 563/76 has made feeding-stuffs dearer and has accordingly increased the cattle raisers' costs without a corresponding increase in their returns. This, it claims, is a further point of conflict between the regulation and Article 39 (1) (b). On the other hand the Commission emphasized that, in terms of social policy, it would not have been fair to make milk producers solely responsible for paying the charges which had to be borne in order to facilitate the disposal of stocks of skimmed-milk powder. A solution along these lines would, in practice, have meant a retroactive reduction in the guaranteed prices previously granted to milk producers. In this connexion it must be borne in mind that the question of the various consequences for the different categories of farmer of the measure concerned must be reconsidered in the light of the principles of non-discrimination and of proportionality. In terms of the compatibility of the measure in question with the objective contained in Article 39 (1) (b), it must, I think, be recognized that there is no conflict. Finally, viewed in the light of Article 39 (1), Regulation (EEC) No 563/76 appears to be valid in so far as it pursues the aim of stabilizing the market in milk powder and is not inconsistent with other aims. It must, of course, be borne in mind that the regulation was not intended to provide a radical solution for the problem of the surplus in milk powder but merely to alleviate certain negative results of a policy which undoubtedly required to be reviewed. There seems to be no doubt whatever that the regulation in question, regarded in the short term, was able to provide partial relief in a serious situation of imbalance and, accordingly, to make a contribution to the stabilizing of the market.