A. H. Kuipers v Productschap Zuivel.
Date: 2005-05-26
32. In that regard, it is important to note that, in the event of proceedings relating to an agricultural sector governed by a common organisation of the market, the problem raised must first be examined from that point of view having regard to the precedence necessitated by Article 38(2) of the EC Treaty (now, after amendment, Article 32(2) EC) for the specific provisions adopted in the context of the common agricultural policy over the general provisions of the Treaty relating to the establishment of the common market (Case 177/78 McCarren  [1979] ECR 2161, paragraph 9).
33. The application of that principle to this case means that consideration should first be given to the first and second questions, which relate to the system of common prices instituted by Regulation No 804/68 and to Article 24(1) and (2) thereof, provisions which both form an integral part of the common organisation of the market instituted by that regulation (see, by analogy, McCarren , cited above, paragraph 10).
34. This method of dealing with the questions is necessary also in a separate respect.  By virtue of Article 42 of the EC Treaty (now, after amendment, Article 36 EC), the provisions of Title VI, Chapter 1 thereof, relating to rules on competition, are applicable to production of and trade in agricultural products only to the extent determined by the Council within the framework of measures adopted for the organisation of agricultural markets.  In that regard, Article 23 of Regulation No 804/68 provides that, save as otherwise provided in that regulation, Articles 92 to 94 of the EC Treaty (now Article 89 EC) are to apply to the production of and trade in the products covered by that regulation.  It follows from Article 23 that, although Articles 92 to 94 of the Treaty are fully applicable to the milk and milk products sector, their application nevertheless remains subordinate to the provisions governing the common organisation of the market established by the regulation.  In other words, recourse by a Member State to the provisions of Articles 92 to 94 on aid cannot receive priority over the provisions of the regulation on the organisation of that sector of the market (see, by analogy, McCarren , paragraph 11).
37. With regard to the first part of the first question, relating to the scope of the system of common prices instituted by Regulation No 804/68, it should be observed at the outset, as the Advocate General noted in point 32 of her Opinion, that it is settled case-law that, where there is a regulation on the common organisation of the markets in a given sector, the Member States are under an obligation to refrain from taking any measures which might undermine or create exceptions to it.  Rules which interfere with the proper functioning of a common organisation of the markets are also incompatible with such common organisation, even if the matter in question has not been exhaustively regulated by it (see, inter alia, Case C-1/96 Compassion in World Farming  [1998] ECR I-1251, paragraph 41, and the case-law there cited).
38. Submitting that the rules under the national system at issue in the main proceedings have the sole aim of encouraging dairy farmers to deliver only high‑quality milk so as to help its sale, however, the Netherlands Government and the Productschap rely on settled case‑law of the Court according to which the establishment of a common organisation of the agricultural markets pursuant to Article 40 of the EC Treaty (now, after amendment, Article 34 EC) does not have the effect of exempting agricultural producers from any national provisions intended to attain objectives other than those covered by the common organisation, even though such provisions may, by affecting the conditions of production, have an impact on the volume or the cost of national production and therefore on the operation of the common market in the sector concerned (see Joined Cases 141/81 to 143/81 Holdijk and Others  [1982] ECR 1299, paragraph 12; Case 118/86 Nertsvoederfabriek Nederland  [1987] ECR 3883, paragraph 12; and Case C-309/96 Annibaldi  [1997] ECR I-7493, paragraph 20).
39. The Netherlands Government and the Productschap point out, more particularly, that the Court has, when faced with national measures on the quality of products containing a prohibition on the production of cheese of a quality other than that laid down by the national legislation, accepted that, in the absence of any rule of Community law on the quality of cheese products, the Member States retain the power to apply rules of that kind to cheese producers established within their territory (Case 237/82 Jongeneel Kaas and Others  [1984] ECR 483, paragraphs 12 to 14).
40. Furthermore, the Netherlands Government and the Productschap reiterate that the target price referred to in Article 3 of Regulation No 804/68 is a political objective at Community level and is not a guarantee to all producers in every Member State that they will earn an income corresponding to the target price (Case C-137/00 Milk Marque and National Farmers’ Union  [2003] ECR I-7975, paragraph 88).
41. It must, however, be stated that the legal principles thus referred to by the Netherlands Government and the Productschap in no way bring into question the fact that one of the main objectives of the common organisation of the market in the milk and milk products sector instituted by Regulation No 804/68 is to ensure that milk producers can obtain a price for that product in the region of the target price and that the mechanisms instituted by the regulation and designed to achieve that end – among which, in particular, is a system of intervention prices, in accordance with Article 5 of that regulation, for certain derived products, as well as import levies and export refunds – are subject to the exclusive jurisdiction of the Community (see, to that effect, Case 10/79 Toffoli and Others  [1979] ECR 3301, paragraph 11).
42. Nor are the legal principles referred to by the Netherlands Government and the Productschap such as to bring into question the assessment that, in a sector covered by a common organisation, a fortiori  where that organisation is based on a common pricing system, Member States can no longer take action, through national provisions taken unilaterally, affecting the machinery of price formation at the production and marketing stages established under the common organisation (see Toffoli and Others , cited above, paragraph 12; Case 166/82 Commission  v Italy  [1984] ECR 459, paragraph 5; Case 127/87 Commission  v Greece  [1988] ECR 3333, paragraph 8; and Milk Marque and National Farmers’ Union , cited above, paragraph 63).
43. As the Netherlands Government and the Productschap point out, the Court has held that national measures intended to remove a distortion of competition resulting from the abuse of the dominant position occupied by an agricultural cooperative on the national market by reducing the market power of that cooperative and its ability to increase the price of milk charged by member producers beyond levels judged to be competitive cannot be considered measures affecting the machinery of price formation under the common organisation within the meaning of the case-law cited at paragraph 42 of this judgment.  Measures of that kind do not as such affect the fixing of prices but rather seek to safeguard the proper working of the machinery for setting prices in order to achieve price levels which serve the interests of both producers and consumers ( Milk Marque and National Farmers’ Union , paragraphs 64, 84 and 86).
46. Furthermore, as the Court has already held, the essential aim of the machinery of the common organisation of the market in milk and milk products 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 (see Joined Cases 36/80 and 71/80 Irish Creamery Milk Suppliers Association and Others  [1981] ECR 735, paragraph 20, and Milk Marque and National Farmers’ Union , paragraph 85).
47. The payment of supplements such as those laid down by the national system at issue in the main proceedings to all dairy farmers who have delivered standard-quality milk in the Netherlands is, inter alia, likely to harm those objectives by conferring an advantage on those farmers.  Moreover, it should be noted in that regard that the target price referred to in Article 3 of Regulation No 804/68 is fixed by reference to a standard type of milk accepted as typical of Community production (Case 179/84 Bozzetti  [1985] ECR 2301, paragraph 33).