OPINION OF ADVOCATE GENERAL SIR GORDON SLYNN

DELIVERED ON 4 MARCH 1982

My Lords,

These three references for a preliminary ruling are made by the Kantongerecht of Apeldoorn in the Netherlands. They concern what it is said are the first prosecutions under a Dutch Royal Decree of 8 September 1961 (the Mestkalverenbesluit, Staatsblad, p. 296), which gives effect to Article 1 of a Statute for the protection of animals (the Wet op de Dierenbescherming). The accused, Mr Gerrit Holdijk, Mr Lubbartus Mulder and a limited company which I shall call “Alpuro”, were all charged with having kept fatting calves in pens which did not comply with Article 2 (b) of the Decree. This provides that such pens must be large enough for the animal to lie down unhindered on either side, stand easily on its legs and, in that position, freely move its head.

According to the written observations submitted on behalf of Alpuro, a recent survey in the Netherlands showed that over 83% of calves for slaughter are kept in pens between 55 and 64 cm wide. This appears to be the normal width but a certain number less than 55 cm wide are used for calves which are sold when they reach about 60 kg in weight. In general calves are sold when about five months old and 200 kg in weight. It seems from the Kantongerecht's file that the prosecution of Mr Holdijk arose from the discovery, on Mr Mulder's premises, of calves between 200 and 220 kg in weight kept in pens 60 cm wide and 150 or 160 cm long.

In a report submitted to the Kantongerecht it is said that fatting calves lie fully on their side, i.e. with all four legs stretched out sideways, for no more than six 5 minute periods every 24 hours. To allow a calf weighing 200 kg to do so would require a pen 100 cm wide. On the other hand, says the report, the Decree may also be interpreted as requiring pens to be wide enough for the animal to lie down with its forelegs bent under its chest and the hind legs stretched out sideways and forwards. On this basis the pen would only need to be 72 cm wide for calves weighing 180 to 200 kg. The Kantongerecht has not indicated in the orders for reference what it considers to be the meaning and effect of the Decree.

A draft Decree has been drawn up to replace the 1961 Decree, which provides that calves less than 100 kg in weight would have to be kept in pens at least 60 cm wide and 160 cm long, while those whose weight is over 100 kg would have to be kept in pens 70 cm wide and 170 cm long.

The Kantongerecht came to the view that “of crucial importance for the enquiry into the case is the answer to the question whether or not the Decree in question of 8 September 1961 laying down rules for the implementation of Article 1 of the Law on the Protection of Animals is contrary to or incompatible with the EEC Treaty as regards the keeping of fatting calves and if so whether that is also the case if a specific set of rules, which still do not exist, are adopted in an amended Decree in this regard concerning the pen in which a calf is kept”. It decided to refer that question to this Court for a preliminary ruling. The “specific set of rules, which still do not exist”, to which the Kantongerecht refers, are not specified by it but are assumed to be an allusion to the draft Decree.

The absence from the orders for reference of any findings of fact, of any indication of the reasoning which led the Kantongerecht to make the references and of any reference to specific articles of the Treaty or of secondary legislation which it may have had in mind, does not make it any the easier for this Court to give an answer to this question. Nevertheless it is not in my view necessary to remit the matter to the Kantongerecht for clarification, which appears to be the suggestion underlying the Danish Government's criticism in its written obsenations of the form of the reference. It is agreed, however, by the Defendants and the Commission, that the Kantongerecht's question should be rephrased, since it is not for the Court, in proceedings under Article 177, to decide whether national legislation is contrary' to or incompatible with Community law. A better way of putting the question seems to be the following: “Does any prohibition contained in the EEC Treaty or secondary legislation or any other principale of Community law at the present time prohibit national rules as to the conditions in which fatting calves are kept?” Put in this way, the question avoids the problem, remarked by the Commission, whether the Court can properly give a ruling in these proceedings on legislation which has not yet been enacted.

The written and oral observations presented on behalf of Alpuro, the Dutch Government and the Commission have turned on provisions of Community law contained in (i) Articles 30 to 36 of the Treaty and (ii) Council Regulation No 805/68 of 27 June 1968 (OJ English Special Edition, 1968, p. 187) which set up the common organisation of the market in beet and veal.

The Dutch veal fattening industry is geared to export: according to Alpuro, more than 90 % of total veal production in the Netherlands is exported, mostly to Germany, France and Italy. Since the normal width of the pens used by fatteners in the Netherlands is between 55 and 64 cm, while the 1961 Decree would require, depending on its precise construction, pens between 70 and 100 cm wide, all of the pens at present in use would have to be widened and the capital loss, it has been said, would be as high as 720 million guilders. It is not clear how this figure is arrived at. No detailed information has been given to the Court concerning the practicability of convening existing pens or as to the cost of doing so. It is, however, strenuously argued that the financial consequences of the application of the 1961 Decree are such that producers would be likely to forsake the Netherlands and set up in business in other Member States where, it is said, conditions are less stringent or no rules at all are applied, and where pens are more or less of the same size as those used on Mr Mulder's premises.

It seems to be agreed that the Dutch Decree affects calves, and therefore veal, destined for the home market and for expon indiscriminately, but that it does not affect imponed veal at all, even indirectly or potentially. In these circumstances, the question is whether it constitutes a measure having equivalent effect to a quantitative restriction on expons, prohibited by Article 34 of the Treaty, and at the hearing Counsel for Alpuro rightly abandoned reliance on Article 30, which was in the forefront of the Commission's written submissions. It is sufficient to refer to the two most recent authorities, Case 15/79 Groenveld v Produktschap voor Vlee en Vlees [1979] ECR 3409 and Case 155/80 Oebel,14 July 1981, as yet unreported. Both cases concerned restrictions on the production of goods. In Groenveld the national legislation prohibited manufacturers of sausages from having in stock or processing horse meat and products containing proteins derived from such meat. The case arose from an attempt by a wholesaler of horse meat to manufacture sausages from it. The object of the legislation was to protect exports of meat products to other Member States and third countries where there were objections to the consumption of horse meat or even prohibitions on its import. In Oebel the national legislation prohibited baking before 4 a.m.

In answer to the argument put in both cases that the national legislation hindered exports and was therefore prohibited by Article 34, the Court held as follows (I quote from paragraph 15 of the judgment in the Oebel case): “Article 34 concerns national measures which have as their specific object or effect the restriction of patterns of exports and thereby the establishment of a difference in treatment between the domestic trade of a Member State and its export trade, in such a way as to provide a particular advantage for national production or for the domestic market of the State in question”, in the Groenveld case the Court added to that sentence “at the expense of the production or of the trade ot other Member States” and continued: “This is not so in the case of a prohibition like that in question which is applied objectively to the production of goods of a certain kind without drawing a distinction depending on whether such goods are intended for the national market or for export” (paragraph 7 of the judgment).

The substance of the argument addressed to the Court on behalf of Alpuro was that the mere fact that the rules applicable in one Member State relating to the conditions in which animals are kept are different from, or stricter than, those, if any, applicable in another, leads to the conclusion that the former are prohibited by Article 34 if, as here, their effect is to limit production and, hence, exports. A number of authorities have been cited to the Court (Case 173/73 Italy v Commission [1974] ECR 709 at paragraph 19, Case 147/77 Commission v Italy [1978] ECR 1307 at paragraph 2 and Cases 15-16/76 France v Commission [1979] ECR 321 at paragraph 31), in support of this proposition. I am not satisfied that any of them does so.

It follows from the judgments in the Groenveld and Oebel cases that different treatment between domestic products and those originating in another Member State is not a relevant criterion for the application of Article 34. It is only when the different treatment is applied as between national products intended for the domestic market and those intended for export that the prohibition in Article 34 applies. In the present case this is not so. The fact that over 90% of the veal produced in the Netherlands is exported is not in itself proof that the Dutch legislation possesses the characteristics described by the Court. No other evidence has been produced to the Court to show that it results in a difference in treatment between veal produced for consumption in the Netherlands and that produced for export, or gives a particular advantage to the former.

Accordingly, it seems to me on the basis of the Court's decisions in the Groenveld and Oebel cases that Article 34 does not apply to national legislation of the type in question here. As a result, it is not necessary to consider whether it might serve a purpose “which is in the general interest and such as to take precedence over the requirements of the free movement of goods” (see Case 120/78 Rewe v Bundesmonopolverwaltung für Branntwein [1979] ECR 649 at paragraph 14), nor whether this principle applies in the context of Article 34, as opposed to Article 30, which was in issue in that case, nor whether the legislation falls within Article 36. I should, however, add that if I had come to the opposite conclusion as to whether legislation of the nature of that in question was prohibited by Article 34, I would not accept the argument that there is a clear dichotomy between animal “health” and animal “well-being”. “Health” and “well-being” are different concepts and the latter may cover matters which do not affect the former; but there is plainly, in my view, an area where they overlap or are interrelated. Accordingly, even if it can be said that provisions of the kind here in question relate to “well-being” it remains to be considered whether they are prohibitions justified for the protection of the health of animals under Article 36 of the Treaty.

It is also argued by Alpuro that all national rules capable of affecting the movement of trade or of influencing prices are incompatible with a common organization of a market. The Member States cannot take measures which would compromise equality of treatment throughout the Community or distort competition when a common organization exists and, pursuant to 40 (3) and 43 of the Treaty, the market organization must exclude discrimination and apply conditions similar to those existing in a national market. There appear to be two possible bases for this contention. The first is the wording of Article 22 íl) of Regulation No 805/68; the second, the system set up by that Regulation rather than any specific provision of it. Article 22 (1) of Regulation No 805/68 provides, inter alia,“The following shall be prohibited in the internal trade of the Community ... any quantitative restriction or measure having equivalent effect”.

The effect of this kind of prevision and its interrelation with Article 34 of the EEC Treaty are dealt with in many cases which have been referred to in the submissions of the parties in this case On one view, provisions oí this kind have a wider scope than Article 34 (Case 190/73 Officier van Justitie v Van Haaster [1974] ECR 1123, Mr Advocate General Mayras at p. 1139); on another view, such provisions are spent after the end of the transitional period (Case 251/78 Denkavit Futtermittel v Minister fur Ernährung, Landwirtschaft und Forsten [1979] ECR 3369: Case 53/80 Officier van Justine v Kaasfahńek Eyssen [1981] ECR 409 at p. 427, Mr Advocate General Warner). It has been said that in relation to a regulation that did not contain provisions similar to those in Articles 30 to 34, the latter are to be regarded as “an integral pan of the common organization of the market” (Case 83/78 Pigs Marketing Board v Redmond [1978] ECR 2347 at paragraph 55 of the judgment); on the other hand, that where such similar provisions are contained in the relevant regulations, an interpretation of Articles 30 to 37 of the Treaty is “superfluous” (Case 111/76 Officier van Justitie v Van den Hazel [1977] ECR 901 at paragraphs 27 and 28 of the judgment). The Dutch Government has pointed out that Article 34 may be interpreted (a) narrowly, as prohibiting only discrimination between internal and export trade the Groenveld case, supra). Or (b) broadly, where there exists a common organization of the market, as prohibiting measures which may impede directly or indirectly, actually or potentially, intra-Community trade (the Van Haas ter case, supra; Case 94/79 Vriend [1980] ECR 327). Reference is also made to the fact that in a number of cases largely concerned with national price-control measures, the Court has held that, once the Community has created by legislation a common organization of the market in a given sector, the Member States are bound to refrain from taking any measure which might undermine or create exceptions to the common organization or jeopardize its aims or functioning (see, tor example, of the many cases. Case 31/74 Galli [1975] ECR 47 at paragraphs 27 to 30; Cases 36 and 71/80 Irish Creamery Milk Suppliers Association v Ireland [1981] ECR 735 at paragraph 15).

The Dutch Government submits after analysing the cases that those measures are prohibited which affect matters covered by the common organization of the market. In respect of those matters, national legislation must give way; national provisions dealing with other matters, even in relation to animals or products the subject of a common organization of the market, are not necessarily covered by Community rules. Substantially, I would accept that submission.

In the present case one thing is clear. There is nothing in Regulation No 805/68 which expressly deals with the conditions in which animals, subject to the common organization of the market, are kept. Article 23 is concerned only with the effect on free movement of measures for combating the spread of diseases and provides for the adoption of market support measures where necessarv. That is quite different from the kind of provision contained in the Dutch decree. Rules relating to the health or welfare of animals are unconnected with the system of guide prices, intervention measures, impon levies and expon refunds dealt with in the Regulation. In paragraph 20 of the judgment in the Irish Creamery case (supra) the Court said of the common organization created by the Regulation in question “The essential aim of the machinery of the common organizations in question is to achieve price levels at the production and wholesale stages which take into account both the interests of Community production as a whole in the relevant sector and those of consumers, and which guarantee market supplies without encouraging overproduction. Those aims might be jeopardized by national measures adopted unilaterally, which have an appreciable influence, even if unintentionally, on price levels on the national market at the same stages or on supplies on that market”.

In the present Regulation, the mechanism set up, so far as trade within the Community is concerned, is a price structure and there is no direct control of production or marketing. Accordingly it seems to me that there is no direct conflict between the express provisions of the Regulation and the kind of provisions to be found in the Dutch decree. They are dealing with different matters. Prima facie, therefore, the Regulation does not prohibit provisions dealing with the conditions in which animals are kept. Nor does Article 22 itself contain such a prohibition either because (a) it is spent, or (b) because it ought to be construed in the light of the Court's decision in the Groenveld case as relating only to discrimination between domestic and export transactions and accordingly is not violated here.

It seems to be Alpuro's view that the failure to set out in Regulation No 805/68 rules controlling the production of veal, thus allowing differing national rules to apply, can be made good by reference to the prohibition of discrimination between producers or consumers in Article 40 (3) of the Treaty. This argument is based on a misconception. The first part of Article 40 (3) says that a common organization “may include all measures required to attain the objectives set out in Article 39”. The prohibition of discrimination set out in the second paragraph applies to those measures which are included in the common organization. It cannot be interpreted, in derogation from the first paragraph, as making up for the fact that some measures are not included in it. Nor can it be construed as requiring the inclusion of all measures necessary to eliminate every conceivable difference of treatment between producers or consumers in the Community. It is also said that the common organization must ensure conditions of trade “similar to those existing in a national market” (Article 43 (3) (b)). In the first place, this applies when a common organization replaces a national market organization. There is no evidence that this is the case here. Secondly, the criticism levelled by Counsel for Alpuro is not that the “conditions of trade” are different from those existing in a national market but that the conditions of production vary from one Member State to another. Thirdly, the only discrimination alleged derives from the fact that the Dutch decree is, it seems, stricter than conditions in other Member States. This in itself is not contrary to the principle of nondiscrimination (see the Oebel case at paragraph 9).

I would accordingly answer the question posed on the basis that there is no rule of Community law at the present time which prohibits national rules as to the conditions in which fatting calves are kept.

If on the other hand the Court comes to the conclusion that national legislation dealing with conditions in which fatting calves are kept is capable of jeopardizing the common organization of the market or interfering with intra-Community trade, then it is for the national court to consider whether the particular Dutch decree in force does jeopardize, or is capable of jeopardizing, the functions of the price machinery created by Regulation No 805/68 in “an appreciable way”. In doing so it will take into account the economic factors concerned and no doubt also bear in mind that the 1961 decree was in force before the Regulation came into effect and that it was always obligatory upon those involved in this activity to comply with the legislation.

In my opinion, however, the question should be answered on the basis that there is no rule of Community law at the present time which prohibits national rules as to the conditions in which fatting calves are kept, where those rules apply without distinction to calves intended to supply the domestic market and those intended for expon.