5.

It should not be particularly difficult to find the appropriate answer to the question which has been referred to the Court if these essential features are borne in mind, particularly the fact that the objective in the Community is to attain a certain price level at the producer stage with the aid of special mechanisms in such a way as to bring about as unified a market as possible, and if the basic reasoning contained in the relevant case-law is applied. (a) It is obviously incompatible with the common organization of the market for national price levels which apply even at the producer stage to be fixed below the level of the target price, for this prevents the attainment of the Community objective — the target price being sought for all producers. Another consequence of that situation, which admittedly does not exist in Italy, is that resort is made more frequently to intervention — because prices are too low — and efforts are made to expand production, which from the Community point of view — I would just mention the co-responsibility levy designed to counteract this — may be undesirable. (b) The fixing of prices nationally above the level of the target price and the price which would emerge if free play were given to the market forces is equally incompatible with the common organization of the market. There are a number of considerations which support this. — Such a method of price fixing amounts, in fact, to an additional guarantee for the producer which is not provided for by the common organization of the market, in other words, special treatment for milk producers in the country concerned. — It produces unacceptable effects in so far as it prevents the approach to the target price which would otherwise be brought about by encouraging a corresponding flow of trade from Member States with excessive milk production and therefore lower producer prices. — This method of price fixing is also a distorting influence on intra-Community trade. On the one hand it leads quite naturally to an increase in imports and on the other hand it hampers the export of processed products where fresh milk is used for their production — which apparently applies in the case of the two most important Italian cheeses — so that milk from other Member States cannot be used instead. In fact there is evidence of such a development in Italy. I would just mention the development of imports of fresh milk into Italy following the enactment of the Law at issue in these proceedings, as set out in the table produced by the Commission; I would also mention the declaration which has been made by the Italian Government in the proceedings that the export figures for the two most important Italian cheeses remained constant from 1974 until 1977. These economic aspects need not, however, be explained in detail in the present proceedings for reasons which will emerge presently. Consequently, it is also unnecessary to examine in more detail the reference made by the Italian Government to the fact that Italian domestic consumption of milk and milk products has increased in recent years, and there is no need to examine the merits of the argument that the two most important Italian cheeses are in any case mostly produced by cooperatives for which the governmental price fixing here in dispute is of only limited economic relevance because they are composed of agricultural producers. — What must be considered, however, is the effects of the price fixing on the common intervention system. These effects are shown in the fact that a high milk price means high costs for processors, who then obtain too low a return for their products when they sell them to the intervention agencies. They can also be seen in the manner in which it becomes more difficult to reduce the intervention stocks under the normal conditions. In that regard it is not, of course, important that the intervention scheme is hardly used in Italy at all, for there is obviously no question but that this problem must be considered in a Community context and any fragmentation of the scheme ruled out. — Lastly, it has also rightly been observed that this kind of price policy may conflict with the Community frontier controls, that is to say, the system of levies and refunds which — as already mentioned — depend on the target price. The processors will encounter difficulties because they will be unable to withstand competition from imported products, on which the levies are too low in comparison with the national price laid down by the government, and also because their exports to non-member countries are not competitive, the Community refunds being too low if the national prices are too high. (c) Together with the Commission we must go further and accept that the amount of the price to be applied is quite irrelevant and so is also, therefore, the question whether it does in fact lie close to the price which would otherwise have been formed on the market — that means, in Italy, taking into account domestic production which is insufficient and for practical reasons cannot be significantly increased (it covers approximately 60 % of Italy's needs) — which is approximately 20 % above the target price. There is a practical reason for this. If this kind of inquiry had to be made the national court, which ultimately has to decide on the compatibility of national measures with Community law unless proceedings under Article 169 of the EEC Treaty have been instituted, would be compelled to carry out very difficult investigations which — if they do not actually fall outside the sphere of legal proceedings — must delay the necessary resolution of the question in dispute for an unconscionable time. Support for this view is to be found in various statements in judgments on the subject delivered by this Court, to which I have already referred. I think it is interesting to note that they covered the inadmissibility of national measures which are capable of jeopardizing the common organization of the markets, unacceptable interference in the common system of price formation or an unlawful prejudicing of the aims and functioning of the common organization of the market. It is also of interest to note that the Court emphasized the requirements of a uniform market and condemned national measures which are capable of jeopardizing trade between the Member States. Therefore, as far as national measures affecting prices are concerned, it has to be accepted that they may jeopardize the common organization of the market and it must be considered sufficient that they present a real danger for the system established by Community law. In the present case this means, particularly because the common organization of the market includes the fixing of a price at the production stage, that even if it is not precisely fixed for the producers within the context of a common organization of the market but also includes ‘recommended’ prices, the Member States must refrain from any price-fixing measures at all in this sphere. Once the fact is recognized that the Community system is so constructed that a guide price may be attained, but is not guaranteed, with the help of certain measures (intervention prices for processed products, rules governing external trade) but that apart from this prices are left to be formed by the free play of market forces, the conclusion must inevitably be drawn that it is incompatible with this fundamental structuring of the common economic policy on the milk market for States to fix prices nationally at a particular level. Otherwise it would be necessary to accept not only the fragmentation of the common market, but also the real danger of discrimination between producers or consumers and the jeopardizing of the objectives of Article 39, in respect of which only Community institutions have the right to instigate proceedings and weigh the arguments of both sides. It is also clear from this, however, that there is no need in fact to consider in more detail the question which was discussed at length in the course of the oral proceedings, whether and in what manner — in fact by eliminating VAT — the comparison drawn up by the Commission between the Community target price and the average price in Italy for milk, which differently from the other Member States has always been above the target price, should be amended and whether the result would be that the price fixed for milk in the Veneto region at issue in the main action is not far from the price which would anyhow have been formed in the market. Even if that were so, account would have to be taken of the fact that the Italian price relates to milk with 3.5 % fat content whereas the target price applies to milk with 3.7 % fat content.