2.

With regard to the first question it must be recalled that Article 1 of Regulation No 974/71 provides inter alia that monetary compensatory amounts may be applied to imports into Member States whose currency increases in value in respect of products covered by intervention arrangements under the common organization of agricultural markets (paragraph (2) a)) or whose price depends on the price of the products mentioned in subparagraph (a) and which are governed by the common organization of the markets (paragraph (2) (b)). Whey and products derived from it are not covered by intervention arrangements under the common organization of agricultural markets. In order to show that powdered whey is a product to which monetary compensatory amounts may be applied it would however be sufficient to establish that its price depended on the price of the raw material, milk, a product for which intervention measures have been provided. The undertaking Milac maintains that there is no such relationship because the liquid whey used to produce powdered whey has no price or market value. As we have seen, the court making the reference shares this point of view. The plaintiff in the main action explains that cheese manufacturers who dispose of powdered whey only occasionally obtain anything for it, amounting at the most to half a pfennig per litre, but this must be considered not as a sale price, but rather as a mere reimbursement of the costs of collection and disposal of the product. On the other hand the Commission considers that this charge must be regarded as the price of the whey, whilst conceding that it is not paid in every case. In particular where the undertaking producing the whey and the undertaking receiving it are situated within a given distance from one another the latter obtains the liquid whey free. Let us concede for the sake of argument that the charge paid by the undertaking using the liquid whey to the cheese factory may properly be classified as the selling price of the whey. Even if this were so it would still be necessary to establish that the price of whey depends on the price of milk. In order to establish this it would be necessary to find a constant relationship between the two prices so that where the price of milk varied, at any rate in excess of a certain percentage, there would be proportionate variations in the price of liquid whey. However, it is not clear that this is the case. This also applies to the variations in the prices of milk and of powdered whey. Thus with regard to the relationship between the price of the product in question and the price of the raw material it appears to me difficult to say that the former depends on the latter. Nevertheless for the purposes of Article 1 (2) (b) of Regulation No 974/71 it is sufficient that the price of a product not covered by intervention arrangements depends on the price of another product which is so covered (and which is governed by the common organization of the agricultural markets); further it is unnecessary that this latter product should constitute the raw material from which the former is derived. The products in question might also be in competition with one another as long as it can be established that the prices of the product not covered by intervention arrangements are composed on the basis of the prices of the other product. The Commission has maintained that the price of powdered whey depends to a certain degree on the price of skimmed-milk powder (which, since there is an excess of this latter product in the Community, is identical with the intervention price). The relationship between the two products is one of competition, albeit limited, since powdered whey is increasingly substituted for skimmed-milk powder in the composition of animal feeding-stuffs. This view is directly opposed by Milac, which categorically denies that the products are interchangeable and emphasizes the problems which would follow from the very high percentage (70-75 %) of lactose contained in powdered whey. The Commission replies that modern techniques make it possible to reduce that percentage of lactose and to add other components to the powdered whey so that up to 60 % of the latter can be used in the composition of animal feeding-stuffs. The decisive point, however, is the degree to which the price of powdered whey depends on that of skimmed-milk powder. In this connexion it seems to me that two points call for emphasis. First the Commission itself concedes that the price of powdered whey is determined above all by the production costs, which are higher than the production costs of skimmed-milk powder. Secondly, the Commission admits that fluctuations in the price of powdered milk do not produce an automatic and constant effect on the price of powdered whey. Since, unlike skimmed-milk powder, powdered whey is not covered by intervention arrangements the price of the whey is formed freely on the market and is thus to a large degree influenced by supply and demand. This is moreover clear from the Commission's table on the composition of prices for the two products for the period 1971 to 1977. It is to be noted for example that in 1974, when the intervention price for powdered milk was 66 units of account per quintal, the market price in Germany for powdered whey was 20.68 units of account per quintal; on the other hand in 1975 powdered whey registered an appreciable fall in price (to 15 units of account) as compared with an appreciable rise in price (to 88.70 units of account) for the intervention price of powdered milk. Furthermore, whilst in 1971 the price of powdered whey on the German market was equal to one third of the intervention price for skimmed-milk powder, in 1977 it had fallen to a little less than one fifth. It is to be regretted that the Commission failed to supply an appropriate explanation for this, the more so since not only the undertaking concerned but the court making the reference takes the view that the price of powdered whey does not depend on that of skimmed-milk powder and indeed it appears from the wording of the first question that the latter accepts as an established fact that there is no such dependence. I think that if these facts are accepted and if, as I have suggested, it is held that the price of the product in question does not depend on the price of the raw material, milk, the first question submitted by the Finanzgericht des Saarlandes should undoubtedly be answered in the affirmative: Article 1 of Regulation (EEC) No 539/75 of the Commission appears to contradict Article 1 (2) (b) of Regulation (EEC) No 974/71 of the Council where it fixes compensatory amounts for the import of powdered whey. Nevertheless doubt may still arise from the widely-diverging positions adopted by Milac and the Commission with regard to a series of technical points which cannot be examined in detail on the basis of the information on the file. I therefore consider it appropriate to pass on now to consider the problem posed by the second question from the German court since the answer thereto may render superfluous further consideration of the first question.