Opinion of mr advocate general Mayras

Mr President,

Members of the Court,

As appears from the file forwarded by the national court, the case in which this reference for a preliminary ruling has been made has arisen in the following circumstances:

On 4 September 1976 the Italian undertaking Tedeschi placed an order with Denkavit Commerciale, also an Italian undertaking, for ten quintals (1 metric ton) of powdered milk of the brand-name Start, to arrive between 20 and 25 September 1976. The product in question is a complete food for animals, composed partly of skimmed milk powder and partly of powdered whey. Whey is a by-product from the making of cheese. It contains residues of potassium nitrates, which are used in the process for the making of cheese.

On 12 September 1976 Denkavit Commerciale ordered 250 quintals of Start from the undertaking Pesch, in the Netherlands, delivery to take place before 30 September. On 16 September Pesch gave Denkavit Commerciale confirmation that 250 quintals of the complete feeding-stuff of the brand-name specified were being sent by lorry. The next day, 17 September, Denkavit acknowledged receipt of Tedeschi's order and of the deposit paid and confirmed that it would deliver on 20 September.

But the lorry carrying the goods from the Netherlands was stopped at the Italian frontier on 25 September upon an order from the inspector responsible for health controls. Since the goods in question did not comply with the requirements fixed by an urgent note sent out by the Italian Ministry of Health on 7 September, they were refused entry and the lorry returned to the Netherlands. The note in question set the maximum acceptance level of potassium nitrates at 30 parts per million for whole milk or skimmed milk, whether fresh or powdered, and at 50 parts per million for powdered whey. That measure applied both to products intended for human consumption and to those for animal consumption.

On 5 October 1976, Denkavit Commerciale informed Tedeschi of this mishap and offered to return the deposit. But on 21 October 1976 Tedeschi claimed reimbursement from Denkavit Commerciale of a sum equal to twice the deposit for non-performance of the contract. It argued before the Pretore di Lodi, before whom the dispute was brought, that Denkavit had entered into the contract at a time when it had knowledge of the contents of the note from the Ministry. It had thus deliberately taken the risk that its goods might be stopped at the frontier. In its defence, Denkavit argued that the failure to perform the contract was due to an intervention on the part of the Italian authorities, contrary to the Community provisions in force.

Three national associations of manufacturers of feeding-stuffs intervened in support of Denkavit Commerciale. It is in these circumstances that the Pretore di Lodi is asking you whether the prohibition laid down by the Italian authorities against new substances considered harmful and the setting of maximum permitted levels of those substances is compatible with Article 5 of Council Directive No 74/63 of 17 December 1973, the said substances not being mentioned in the annex to that directive.

Although Tedeschi has not availed itself of its right to submit observations, the defendant in the main action, supported by the three national associations to which I have referred, the Council, the Commission, the Government of the United Kingdom and, of course, the Government of the Italian Republic, have on the contrary shown great interest in the case.

I should add that there exists an undertaking Denkavit Nederland, whose registered office is at Voorthuizen, at the same address as Pesch. The periodical Denkavit Aktualiteiten, No 29, for the month of September 1969, published an article according to which there were — at that time — four different prices for skimmed milk powder: Fl 150 for skimmed milk powder intended for human consumption; Fl 129 for powder intended for the feeding of calves; Fl 42·50 for powder intended for the feeding of pigs and poultry; and finally the price of powder intended for export to third countries. The article goes on: anybody who does not understand that this system leaves the door open to fraud must be very naïve.

Since Regulation No 465/75 of the Council of 27 February 1975 a Community aid has been granted for buttermilk powder used as feed, as it was previously granted for skimmed milk powder, subject to the reservation that the skimmed milk and buttermilk resulting from the processing of milk into cream or butter… may not be diluted in any way which is not normally part of the production method used, in particular with water and/or whey' (Regulation No 2114/75 of the Commission of 11 August 1975). So far as I know, no Community rules have yet been adopted fixing the proportions in which it is permissible to add powdered whey to powdered skimmed milk in such a way that the latter continues to qualify for Community aids.

On 14 September 1976 Denkavit Nederland complained directly to the Commission in Brussels about the restrictions thus imposed by the Italian authorities on freedom of movement for goods, despite the fact that those goods are covered by common organizations of markets, and the said undertaking did not exclude the possibility that legal action might follow. You have heard the technical explanations of one of its representatives at the oral hearing.

I —. As often happens, you are called upon, pursuant to Article 177, to rule on the application of a Community text by the authorities of a Member State to a particular case. Worded in abstract terms, the three questions which have been addressed to you by the Italian court concern the extent of the power which is left to the Member States by Council Directive No 74/63 of 17 December 1973 on the fixing of maximum permitted levels for undesirable sub-stances and products in feeding-stuffs.

II —. The Italian Government is arguing that in reality the intention of its officials has been to apply not the directive on undesirable substances but the directive on additives, and it is with regard to the latter that the action of the Italian authorities should really be assessed.

III —. Whilst I shall refrain from assessing whether the national measure contested in the main action is in accord with the Treaty, I ought nevertheless, in order that the context in which the questions arise should be perfecdy plain, to examine the circumstances in which the Italian measure was adopted.

IV —. From this detailed exposition the following findings, it seems to me, may be arrived at:

V —. The system provided for by Article 5 of the directive may interfere with Article 30 of the Treaty, but the latter provision is only applicable without prejudice to Article 36. Admittedly, the absolute priority given to the protection of the health of consumers and of animals can in fact conceal economic motives. Then again, Article 36 provides that any prohibitions or restrictions introduced shall not… constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States. Article 5 itself does not cover this question fully and it has to be examined as part of the Standing Committee Procedure to prevent abuse by Member States. The very purpose of Article 10, and the time-limits which it prescribes, are intended to prevent such abuse.

VI —. As to the arbitrary nature of the discrimination which may thus be exercised at the frontier and only at the frontier, on trade between Member States, I shall confine myself to pointing out that Article 7 provides: Member States shall ensure that feeding-stuffs which conform to this directive are not subject to any other marketing restrictions as regards the presence of undesirable substances and products, and that under Article 8 (1): Member States shall take all necessary measures to ensure that feeding-stuffs are officially controlled, at least by random sampling, to verify whether the conditions laid down in this directive are satisfied. Given that the conditions required in order that feeding-stuffs may be made directly available for consumption by animals must be satisfied at all stages of trading up to delivery to the final user, they must be satisfied when they are first put into circulation and when they are introduced into a Member State. It is natural for official controls to start at the frontier not only for obvious practical reasons, but also because trading or marketing begins at the frontier, particularly in the case of a product which is not manufactured on the same scale or under the same conditions as within the country.

I am of the opinion that you should rule that:

1 Translated from the French.