2.

The two bases for Regulation No 104/65, which fixed the reference price for outdoor table grapes, were Article 11(2) of Regulation No 23 on the progressive establishment of a common organization of the market in fruit and vegetables, as amended by Regulation No 65/65, and Regulation No 99/65, which defined the conditions for the application of that article. The Commission gave a detailed explanation of the machinery for calculating the reference price, and of the various operations as a result of which it fixed a reference price of 15.9 u.a. for the month of October 1965. To assist its explanation it produced a ‘working document’ tracing the various stages in the fixing of the price. Without repeating its explanation in detail, I would recall that by Article 11 (2) of Regulation No 23 the reference price is in principle fixed for one year, but that each year may be divided into several periods for which there is relative stability of prices, and the reference price is equal to the arithmetical average of the producer prices of each Member State, increased by a certain amount. In each Member State the producer prices are recorded for products or varieties which represent a considerable part of the marketed output throughout the year or during a part thereof (in fact for table grapes only France and Italy are concerned). The records are made from the representative market or markets in the areas of production where prices are lowest, and the markets may vary according to the variety. The price is the average of the prices recorded for the three years preceding the date when the reference price is fixed, but this average is fixed taking no account of prices which appear excessively high or excessively low compared with the normal fluctuations recorded on the relevant market. First the average of the producer prices for a period and a variety is obtained in one Member State and then, from the prices of the varieties, the average is obtained for each Member State of the producer prices of the product for which a reference price is to be fixed. Finally the arithmetical mean of the averages thus arrived at for each Member State is the reference price, as defined in Article 11(2) of Regulation No 23. The mechanism is therefore particularly complicated, but in fact the legal issues are concerned only with how account came to be taken of one given variety of grape, the Ohanez, for the purposes of fixing the Italian producer price for October, and therefore the reference price in force for the whole of the Community. The various varieties of grape are classified as early, normal and late. Ohanez is a late variety of which the average production according to the estimates of the Minister of Agriculture of the Italian Republic — which are however disputed by the Beus company — amounts to about 10000 metric tons or a little more than a quarter of all the late varieties of that country, which correspond to 4.5 % of the total annual production. This variety which comes to maturity in the middle of September was regarded as representing a considerable part of the marketed output during a part of the year and therefore was used in this way in spite of its quite small tonnage. It appeared important from the point of view of the common agricultural policy to favour the late varieties which are less widespread, and thus to extend the period during which ‘Community’ grapes are offered on the market, both in the interest of the producer and of the consumer. The Commission emphasizes on this subject that the concept of ‘considerable part of the marketed output’ (‘partie considerable de la production commercialisée’), used in the French version of Regulation No 23 is not merely quantitative but refers also to the more or less interesting nature which this part displays from the point of view of the objectives of the agricultural policy, which presupposes a real value-judgment. That argument might in fact find certain support in the German version where the expression ‘wesentlichen Teil’ appears. The ‘working document’ appearing in the file shows you to what extent the Ohanez variety was used in the fixing of the reference price for the month of October 1965 on the basis of the prices in the three preceding years: it is not disputed that it was used in the same way as the Regina variety in the sense that, if one or the other were used, the arithmetical average of their prices was taken and not the weighted average. The Regina variety, which is the most widespread of the normal varieties (this description is used here as opposed to the early or late varieties), represents at least 50 % of the annual total of Italian production; even for the month of October and in the absence of exact figures it does not appear to be disputed that its production is much greater than that of the Ohanez variety. Further more, the examination of a number of prices recorded during that period for both varieties confirms if it were necessary that quantitatively there is no common ground between the Regina variety and the Ohanez variety. Starting from these facts, the criticism of Regulation No 104/65 is developed on two planes which are distinct but not without a mutual relationship. First, there is a dispute as to the method of calculation used for the fixing of the reference price, although it is not possible to see clearly the positions adopted by the Beus company if it intends to maintain that the Ohanez variety does not constitute a variety to be used as representing a considerable part of the marketed output, or only that the average of prices of this variety and of the Regina variety should have been weighted. On the first point it should be recalled that quite clearly it is within the framework of the period in question, that is to say, of the month of October and not of the complete year, that it is necessary to decide whether the variety represents a considerable part of the marketed output; I think, in addition, that his decision is not exclusively quantitative but must take into account the objectives of the agricultural policy: it is not unreasonable a priori for the reasons indicated above to seek particularly to develop the late varieties like the early varieties, but I would hesitate a long time before reviewing the value of this policy which appears to me a matter for consideration by the Commission. Despite its relatively small tonnage during the month of October, it appears to me consequently not contrary to Article 11(2) of Regulation No 23 to make the Ohanez variety appear among those which should be taken into account for the reference price for the month of October. It is necessary, on the other hand — this is the second point — to take the arithmetical average between the Ohanez or Regina varieties as has been done, or to weight this average? In support of the second opinion one is immediately tempted to rely on the clear disproportion between the two varieties and what appears at first to be the shocking nature in the light of common sense of the system which puts them on the same footing. Article 11 of Regulation No 23 on which Regulation No 104/65 is founded is worded thus: ‘The reference price shall be equal to the arithmetic average, increased by the amount defined in the fourth subparagraph, of the producer price in each Member State. These producer prices shall correspond to the average of the prices recorded during the three years prior to the date of fixing the reference price’. Thus whilst the average is, in the first argument, arithmetically adjusted, that requirement does not appear in the second case, which concerns us, and the Beus company concludes from it that it is a matter therefore of a weighted average. One might regret with the Commission that the disputed wording was not made the subject of more precise drafting, but it appears to me that the argument of the Beus company should be set aside because it conflicts with current language. The expression ‘average’ used without an adjective refers to the arithmetical average; when one wishes on the contrary to: bring in a weighted average one says so and one says on what basis the weighting should be done. For, although everybody knows how to calculate an arithmetical average, weighted averages vary infinitely according to the methods adopted and the values given to the various factors. The Beus company, which would like to see the average of producer prices weighted, has however never given details of the method of such weighting: in accordance with the respective tonnage of each variety during the year, or only during the period in question? But although the prices of each variety are known it would be very difficult to state the tonnages exactly. Or would it be necessary to adopt another method of calculation? The Commission advances also a reason based on agricultural policy which should favour the exclusion of weighting: this operates to the detriment of early or late varieties which always amount to a relatively small part of total production and which must however be encouraged. I do not think therefore that the wording of Article 11 can lead to setting aside the system used. But you will remember that at the hearing counsel for the Beus company did not confine himself to disputing the legality of the system which takes account of the Ohanez variety but to a certain extent criticized the advisability of it, basing his arguments in the publication by Mr Vivona ‘Vitigni di Mensa’. It appears from that work that the late varieties have no future: they have a high cost of production and they arrive on the market at a time when the consumer is turning towards other fruits such as oranges or apples. To this discouraging picture he adds. the opinion formed by the Süddeutsche Zeitung to the effect that consumers do not appreciate the Ohanez variety because it has a skin which is too hard… All that is very interesting and has taught me much, but it has no direct influence on the question put before you, because the Commission may overestimate the value of late varieties or be mistaken as to the presumed tastes of consumers without its decision being vitiated by illegality for all that. Lastly a criticism of another type was made concerning Regulation No 104/65; namely that its statement of reasons was insufficient. I have already had occasion last June to discuss the reasoning of legislative measures in connexion with Regulation No 144/65. I would add that the regulation criticized today analyses the provisions of Article 11(2) of Regulation No 23 and mentions the Ohanez variety among the more important varieties cultivated in the Community and used for deciding the arithmetical average of the producer price. Such reasoning, taking into account the nature of the measure, appears to me sufficient unless one requires in addition a mention of all the data which appears in the ‘working document’. Thus Regulation No 104/65, criticized as serving as the basis of Regulation No 144/65, appears to me to have been a proper application of Regulation Nos 23, as redrafted, and 99/65. It was next objected that on this argument it is Regulation No 23 itself which was illegal as being irreconcilable with the Treaty, especially with Articles 39 and 110 thereof. This is a question on which I will say a word in ending.