JUDGMENT OF 30. 10. 1974 — CASE 190/73 OFFICIER VAN JUSTITIE v HAASTER

In Case 190/73 Reference to the Court under Article 177 of the EEC Treaty by the Economic Magistrate of the Arrondissementsrechtbank (District Court) of Haarlem, The Netherlands, for a preliminary ruling in the action pending before that court between

THE COURT composed of: R. Lecourt, President, C. Ó Dálaigh, President of Chamber, R. Monaco, J. Mertens de Wilmars, P. Pescatore (Rapporteur), H. Kutscher and M. Sørensen, Judges, Advocate-General: H. Mayras Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts

I — Facts and written procedure

II — Written observations submitted to the Court

III — Oral procedure

IV — Developments in the procedure

Grounds

Costs

I —. Facts and written procedure

II —. Written observations submitted to the Court

(a). As regards this, it must be remembered that the notion of a measure having an effect equivalent to a quantitative restriction only refers to regulations relating to trade in agricultural products and does not extend to measures relating to production itself.

(b). As a subsidiary point one could ask the question whether Article 10 of Regulation No 234/68 permits the control of production. In this respect it must be emphasized that, contrary to many other Regulations on the establishment of common organization of agricultural markets, Regulation No 234/68 has only a limited purpose. Pursuant to its first Article, it involves a system of quality standards and of trade with third countries; free movement of funds within the Community is ensured by the prohibition of any customs duty or charge having an equivalent effect, of any quantitative restriction or measure having an equivalent effect, and of recourse to Article 44 of the Treaty, as well as by application of Articles 92 to 94. The Regulation does not establish a price and intervention system with a view to stabilizing the market; nevertheless Article 12 thereof envisages the possibility of the Council taking measures that might be necessary with a view to supplementing the provisions of this Regulation in the light of the experience acquired, a possibility of which no use has been made up to the present time. The reference to the procedure under Article 43 (2) of the Treaty emphasizes the Council's intention to make a Regulation having only a limited objective.

(c). The Regulation of 1971 relating to the cultivation of hyacinths establishes a control system which is already quite old, having the purpose of ensuring the stability of a market characterized by substantial costs of investment and high productivity. The Regulation No 234/68 of an instrument for stabilizing the market, the Dutch Regulation of 1971 is useful for stabilizing both the Dutch market and the whole Community market, since the Dutch production represents approximately 95 % of the total Community production; it thus corresponds to the purpose and scope of the Community Regulation. In the absence of a Community system for controlling cultivation, the continuation of national measures is perfectly justified.

(a). Article 10 of Regulation No 234/68 relies upon the same notions as Articles 30, 31, 32 and 34 of EEC Treaty; yet the quantitative restrictions or measures having an equivalent effect aimed at by those provisions do not in principle include measures for limiting production. Their sense and their place in the Treaty show that they apply to goods and to products but not to activities; they only take effect at the marketing stage and therefore in no way affect the power of Member States to regulate national production. This finding clearly results from Article 37, which limits the application of the principles set out in the preceding Articles solely to State monopolies having a commercial character, concerning the trade in a particular product.

(b). The national proceedings also raise the question whether the Community organization of the market in live trees and other plants, bulbs, roots and like, cut flowers and ornamental foliage, excludes national measures for limiting production.

III —. Oral procedure

IV —. Developments in the procedure

1. By judgment dated 10 December 1973, lodged at the Registry on 17 December 1973, the Economic Magistrate of the Arrondissementsrechtbank of Haarlem has referred to the Court, under Article 177 of the EEC Treaty, a question for a preliminary ruling, on the interpretation of Regulation No 234/68 of the Council of 27 February 1968 on the establishment of a common organization of the market in live trees and other plants, bulbs, roots and the like, cut flowers and ornamental foliage (OJ L 55, p. 1), in the light of certain provisions of the Dutch regulation relating to hyancinth cultivation, made on 29 June 1971 by the Produktschap voor Siergewassen and approved by the Minister of Agriculture by decree of 28 July 1971.

2. By the effect of this national regulation, the cultivation of hyancinth bulbs is forbidden to anyone other than the holder of a cultivation licence which is granted annually, by the Produktschap for a specific area.

3. It appears from the Court file that the question referred for a preliminary ruling was submitted, in the course of criminal proceedings against a grower, for having engaged in the cultivation of hyancinth bulbs without holding such a licence.

4. More specifically it seeks an answer to the question whether a system restricting production, such as that established by the Dutch regulation for the trade in question, is compatible with Article 10 of Regulation No 234/68, which prohibits inter aliaany quantitative restriction or measure having equivalent effect in the internal trade of the Community.

5. The national system in question and the provision under Community law of which the interpretation is requested relate to different stages of the economic process, that is to say to production and to marketing respectiveley.

6. Accordingly it is necessary to put Article 10, which in the first place relates to marketing, back into the global system of the organization of the market set up by Regulation No 234/68.

7. In the absence of express provisions as to the compatibility of a national regulation restricting production with the organization of the market set up by Regulation No 234/68, it is necessary to seek the solution to the question referred in the light of the objects and the purposes of the Regulation within the framework of the principles laid down by the Treaty itself.

8. In the sector of live trees and other plants, bulbs, roots and the like, cut flowers and ornamental foliage, Regulation No 234/68 has set up an organization of the market characterized in the words of Article 1 thereof, by common quality standards and a trading system.

9. As regards trade, Article 10 has the purpose of eliminating any quantitative restrictions or measures having equivalent effect in the internal trade of the Community by in particular prohibiting customs duties or measures having equivalent effect and quantitative restrictions or measures having equivalent effect.

10. Moreover, Article 11 declares that in principle the provisions of Articles 92 and 93 of the Treaty shall apply to trade in the products in question, with a view to eliminating interference with competition by the grant of state aid.

11. Apart from rules concerning the marketing of the products the organization of the market also involves diverse provisions applicable to the production stage.

12. Major importance is in this respect given to common quality standards, the application of which, in the words of the preamble, should have the effect of eliminating from the market products of unsatisfactory quality and of promoting commercial relations on the basis of genuine competition.

13. Seen in this light, Articles 1, 2 and 3 provide a totality of Community measures on the introduction of common quality standards, having the purpose of encouraging trade initiatives with a view to improving the quality of the products and of perfecting the organization of production.

14. Even if the quality standards were intended to deal merely with the marketing of the products, they would nevertheless have a restrictive effect on the production stage.

15. It thus follows from the general tenor of the Regulation that, as regards the internal trade of the Community, the organization of the market for the products in question is based upon freedom of commercial transactions under conditions of genuine competition, thanks to stabilization of the quality of the products.

16. Such a system excludes any national system of regulations which could impede directly or indirectly, actually or potentially, trade within the Community.

17. A national organization having the purpose of rationing production affects — or is at any rate capable of affecting — the system of trade thus defined, and must accordingly be considered a measure having an effect equivalent to quantitative restrictions within the meaning of the Regulation.

18. Accordingly the question referred ought to be answered to the effect that Article 10 of Regulation No 234/68, interpreted within the framework of the totality of the provisions on the establishment of a common organization of the market in live trees and other plants, bulbs, roots and the like, cut flowers and ornamental foliage, excludes the existence of any national system having the purpose of quantitatively restricting the cultivation of one of the products falling within the common organization of the market.

19/20. The costs incurred by the Government of the Kingdom of the Netherlands and by the Commission of the European Communities, which have submitted observations to the Court, are not recoverable, and as these proceedings are, insofar as the parties to the main action are concerned, a step in the action pending before the national court, costs are a matter for that court.

On those grounds, THE COURT in answer to the question referred to it by the Economic Magistrate of the Arrondissementsrechtbank of Haarlem by a judgment dated 10 December 1973, hereby rules: