Opinion of Mr advocate general Mayras

Mr President,

Members of the Court,

I —. The plaintiff in the main action is engaged in the Netherlands in the production, marketing and export of potatoes; it is a member of the Vereniging van Nederlandse exporteurs van aardappelen [Association of Netherlands Potato Exporters] (V.N.E.A.). On 5 January 1975 it shipped a consignment of 20 tonnes of ware potatoes to London in order, as it openly declares, to test the British market. The consignment arrived in Great Yarmouth that same day but Her Majesty's Customs and Excise Department refused to allow the products to enter British territory on the grounds of a ban on importation of potatoes from whatever source.

II —. Without making an exhaustive study of the potato sector in the Community which would be appropriate in the context of the proceedings for failure to comply with the Treaty I ought nevertheless to sketch in outline the interests of the protagonists which are not just those of the British housewives on whose behalf the Commission is so solicitous.

III —. Let me now turn to considerations of a more strictly legal nature. The problem before the Court is whether Article 60 (2) of the Act concerning the Conditions of Accession and the Adjustments to the Treaties, generally known as the Act of Accession, annexed to the Treaty of Brussels of 22 January 1972 signifies that the Treaty rules relating to the free movement of goods can be relied on in the new Member States after 31 December 1977 with regard to agricultural products which are not covered by a common organization of the markets and which come from the original member countries whereas the same agricultural products are subject to a national organization in the new Member States.

IV —. It is now appropriate to consider whether that interpretation of the Act of Accession is called in question by the clarification contained in the preliminary ruling in the Charmasson case [1974] 2 ECR 1383) and whether the doctrine contained in that judgment can purely and simply be transferred to the effects of the expiry of a transitional period allegedly referred to in Articles 52 and 59 of the Act of Accession.

V —. At this point in the discussion the plaintiff in the main action, supported by the Commission and by the Netherlands Government, argues that even if the Act of Accession differs from the EEC Treaty the doctrine in the Charmasson judgment should nevertheless guide the interpretation of the Act of Accession as otherwise unfortunate discrimination may be brought about between on the one hand, the original Member States and, on the other, the new States which would have the result of maintaining, at least for some time, a sort of Community on two levels or at two stages.

VI —. 1. In the sector of milk and milk products a problem relating to the transitional law arose in the SAIL case (concerning the Italian milk centres). Under Article 8 (7) and Article 40 (1) of the Treaty the Council should have established, before the expiry of the transitional period, a common organization for that sector. The establishment of this common system would automatically have entailed the abolition of the corresponding national organizations. The Council did not fully comply with that obligation and the question therefore arose whether a Member State could be constrained to abolish its national organization while the Community was not in a position to replace it with an equivalent system. Article 22 (2) of the basic Regulation No 804/68 limited the period of grace for the Italian milk centres to 31 December 1969. Regulation No 2622/69 of 21 December 1969 prolonged that period of grace until 31 March 1970. It was only on 29 June 1971, however, that, by Article 9 (2) of Regulation No 1411/71, the Council reintroduced a period of grace for those milk centres. Thus right in the middle of the period of the definitive application of the common market a transitional system was revived in respect of a situation which the Council itself recognized as being incompatible with the common organization of the market once that had been established. Whilst in its judgment of 21 March 1972 ([1972] 1 ECR 119) the Court ruled that the expiry of the period laid down in Article 22 (2) of Regulation No 804/68 of the Council of 27 June 1968 and extended by Article 2 of Regulation No 2622/69 of the Council of 21 December 1969, implied, at the time of the events submitted for consideration by the national court, the abolition of the exclusive sales right laid down within the framework of the system of collection and distribution areas for milk in the Italian Republic and that, consequently, all provisions of national legislation granting that exclusive right were inapplicable, it has never been ruled that Regulation No 1411/71 of the Council which allowed Italy a certain additional period in order to permit the reconversion of the milk centres was contrary to the Treaty. Still in that sector it is surprising that the Commission waited until 31 December 1977 (the last day of a transitional period of five years) to propose to the Council the necessary provisions to adapt, with a view to a new transitional period, the milk marketing boards to the prohibition of the system of cooperatives based on national legislation, which prohibition is laid down in the common organization of the market in this sector which had, however, been in existence for a long time. In fact Council Regulation No 1421/78 of 20 June 1978, amending Regulation No 804/68, authorizes, notwithstanding the existence of the common organization, certain activities of the Milk Marketing Boards existing in the United Kingdom and provides that in each individual case the Council shall lay down general rules relating to the grant and maintenance of certain rights which at present are held by those boards. In particular those rules contain provisions enabling, in the case of an existing organization, its progressive adaption to Community rules within a maximum period to be determined. Certainly these provisions must be compatible with the general principles of the Treaty, in particular the free movement of goods and non-discrimination between producers, and may affect competition in the agricultural sector only to the extent strictly necessary and finally they must not call in question the proper functioning of the common organization in the sector in question. However a check that all these criteria have been satisfied can be carried out only a posteriori. Thus the Council has made this derogation although there exists a common organization of the markets and the transitional period under the EEC Treaty has expired. The same should apply a fortiori in sectors in which there exists no common organization at least in dealings between original and new Member States and between the latter. The direct effect of the prohibition of charges, restrictions and measures having equivalent effect is not dependent on the passing of a date, but on the prior adoption of a certain number of basic provisions which would make those measures purposeless. The Court itself ruled in a judgment of 2 July 1974(Holtz & Willemsen v Council and Commission [1974] 1 ECR 675) that: At its initiation however the common organization of the market may not completely measure up to the objectives listed in Article 39 of the Treaty and may contain gaps capable of endangering the stability of the market in a part of the Community. Although it is incumbent upon the institutions responsible to seek with all due diligence the causes of such difficulties and to adapt the regulations on the common organization of the markets as soon as possible to remedy the defects revealed, they are at liberty, in the meantime, to take provisional measures, which are limited to those Member States in which the market has been more particularly affected. This must be particularly true where a common organization does not exist and where the new Member States are concerned. The Court was inspired by a related idea in its judgment in the Defrenne case of 8 April 1976Defrenne v Sabena [1976] ECR 455) wherein it ruled that: the application of Article 119 [relating to equal pay] was to have been fully secured by the original Member States as from 1 January 1962 … and by the new Member States as from 1 January 1973; that it is appropriate to take exceptionally into account the fact that, over a prolonged period, the parties concerned have been led to continue with practices which were contrary to Article 119 and that important considerations of legal certainty affecting all the interests involved, both public and private, make it impossible in principle to re-open the question [of remuneration] as regards the past. 2. With regard to the agricultural sectors which are not organized it must be held that the system of minimum prices under Article 44 of the EEC Treaty has continued to be applied notwithstanding the expiry of the transitional period. Article 44 was implemented by Council Decision of 4 April 1962 determining the objective criteria for fixing these prices. Paragraph 6 of that article provided that at the end of the transitional period a table of minimum prices still in force should be drawn up and that the Council should determine the system to be applied within the framework of the common agricultural policy. If therefore, the maintenance of minimum prices beyond the end of the transitional period was envisaged, it would only be possible in accordance with rules to be applied in the context of the common agricultural policy. On the basis of that provision, on the eve of the expiry of the transitional period, the Council adopted a Decision of 20 December 1969: as it was not possible to establish before the end of that period a common organization of the markets for a number of products which were still subject to a system of minimum prices and which could be organized, the decision expressly provided, for certain Member States, either the maintenance in force of the system of minimum prices or the levying of a compensatory charge in its place. Thus the Council authorized the levying of compensatory charges to replace minimum prices on imports into Germany of edible vinegar and substitutes therefor, with the exception of wine vinegar, and on imports into France of seed potatoes and certain fishery products. The compensatory charges for wine vinegar and for fishery products were abolished on 1 June 1970 in application of Regulation No 816/70 of the Council of 24 April 1970 laying down additional provisions for the common organization of the market in wine and on 1 February 1971 respectively in application of Regulation No 2142/70 of the Council of 20 October 1970 on the common organization of the market in fishery products (that latter regulation provided indeed expressly that the rules laid down therein were to apply only from 1 February 1971 except for the transitional provisions). The Council Decision of 20 December 1969 the application of which was to cease on 31 December 1970 at the latest was subsequently extended on a number of occasions. Its scope was gradually diminished. However as no common organization of the market in … potatoes, including seed potatoes, and edible vinegars and edible substitutes therefor other than wine vinegar, will have been established by 31 December 1973 the system of compensatory charges was extended for the importation respectively into France and Germany, most recently by Council Decision of 17 December 1974. Thus compensatory charges replacing minimum prices still existed on 31 December 1975 for importations of potato plants into France and certain vinegars into Germany (Commission Decision of 25 January 1975). Similarly France and Germany were authorized to postpone the application of the Common Customs Tariff duties for these products by Commission Decision of 11 December 1974, that is the very day after the Court's judgment in the Charmasson case. 3. In its proposals to the Council the Commission adopts an attitude which is radically different from that which it takes before the Court: I shall refer first to the market in sheepmeat and I hope you will excuse this incursion into proceedings which are also pending before the Court. By Commission Decision of 22 December 1972 France was authorized to apply protective measures for mutton and lamb from third countries put into free circulation in other Member States until the adoption of a Council regulation on the common organization of the market for the product in question. That decision was periodically renewed, most recently on 9 February 1978. Under Article 2 of that decision its validity is limited until the coming into effect of a Council regulation on the establishment of a common organization of the market for the products in question but in any event not beyond 31 December 1978. From the date of accession as regards the new Member States, the measures which could have been taken by the original Member States under the safeguard clause of Article 115 are to be considered as forming part of the national market organization. Those measures lapse only at the time of the entry into force of a common organization. An even more decisive argument may be brought against the view put forward by the Commission: even after the Charmasson judgment and before its last proposal of 31 March 1978 the Commission had submitted a draft of a provisional regulation entitled "Proposal for a Council Regulation on the transitional common organization of the market in the sheepmeat, which was to apply from 1 January 1976 until 31 December 1977. That draft shows that the Commission itself accepted, until 31 December 1977, derogations from the principle in the Charmasson judgment with regard to the original Member States. In its proposal submitted on 18 September 1975 the Commission noted that at present, trade in sheepmeat products between Member States is governed by the provisions of the Act of Accession and by those of the national market organizations, particularly in France; special transitional provisions should therefore be laid down for the Member States concerned; … pending the definitive common organization of markets, the national arrangements concerning imports from non-member countries should be allowed to continue; … however, the provisions of the Act of Accession governing the progressive removal of customs duties within the Community must be observed. The system thereby established was to apply from 1 January 1976 to 31 December 1977. In its proposal for a regulation on the (definitive) common organization of the market in sheepmeat the Commission still accepted that the transition from the present system in each Member State to that established by that regulation should be effected as smoothly as possible; transitional measures -may prove necessary to facilitate that process. However, such measures should be limited to the period strictly necessary, to avoid disturbances of trade which might endanger the objectives of Article 39 (2) (b) of the Treaty"; measures may also be taken in the form of aid granted to Community producers in order to comply with the conditions set out in Article 43 (3) (a) of the Treaty. Article 43 (3) provides that: The Council may, acting by a qualified majority and in accordance with paragraph 2, replace the national market organizations by the common organization provided for in Article 40 (2) if: (a) the common organization offers Member States which are opposed to this measure and which have an organization of their own for the production in question equivalent safeguards for the employment and standard of living of the producers concerned, account being taken of the adjustments that will be possible and the specialization that will be needed with the passage of time; …. Title IV of that proposal for a regulation contains under the heading Other measures, that is to say, what must certainly be called transitional measures, Article 26, the first paragraph of which provides that: The Commission may adopt appropriate measures to facilitate the transition from the system in force in each Member State before the application of this regulation to the system established by this regulation. 4. With regard to ethyl alcohol of agricultural origin for which a common organization of the market is also provided, I shall confine myself to the following remarks: The amended proposal submitted by the Commission to the Council on 7 December 1976, which has still to be revised, contains in particular transitional measures for molasses alcohol during a period which may not exceed seven marketing years (Article 7) and transitional measures applicable until 30 June 1979at the latest, to facilitate the transition from the existing system to the system established by this regulation (Article 41). In answer to a question which the Court asked it in Case 91/78, Hansen, the Commission declares that so far as it is aware the Federal Republic of Germany wishes to retain its national organization of the market in ethyl alcohol of agricultural origin and, consequently, the price guarantee for covering the costs until the system can be replaced by the proposed common organization of the markets. 5. Let me now return to the sector at issue in the present proceedings. It is axiomatic that a true Community system of the type generally adopted for agricultural products, that is to say, based on the formation of a market price corresponding to the needs of the national producers and accompanied by various compensatory mechanisms, presupposes the abolition by the United Kingdom of its support policy for farmers (deficiency payments and other measures). This is clearly evident from the Act of Accession. Realizing that a system which is entirely liberalized is hardly satisfactory and also without doubt in order to absolve itself from its responsibilities following the Charmasson judgment, the Commission attempted to establish a common organization in order to ensure that after 31 December 1977 there should be no interruption between the national organizations, which were intended to come to an end on that date, and the common organization. On 23 January 1976 it submitted to the Council a proposal for a regulation which is based on the principles set out above. Unfortunately up to now its efforts have been unsuccessful. Under the proposal submitted by the Commission itself to the Council a transitional period is to be laid down to facilitate the transition to a system established by Community rules. That indicates that the common organization can only definitively be set up over a long period. Indeed Article 34 of the proposal provides that: Should transitional measures be necessary to facilitate the transition from the system in force within the Community and in Member States to that established by this regulation, in particular if the introduction of the new system on the date provided for would give rise to substantial difficulties, such measures shall be adopted in accordance with the procedure laid down in Article 27 (the Management Committee procedure). They shall be applicable until 31 July 1977 at the latest. To the best of my knowledge the Commission has not up to now amended its proposal on this point. That implies therefore that in 1976 still, in the view of the Commission, measures of the type taken in the context of the existing national market organizations (compensatory charges, measures having an effect equivalent to quantitative restrictions etc.), which, however, have been incompatible with the EEC Treaty since 1 January 1970 by virtue in particular of the decision of the Court in the Miritz case, could once again become lawful until 31 July 1977 if they were transformed into Community measures. The Commission itself recognizes, in its statement of the grounds for its proposed prices for 1978, that the pure and simple abolition of the national organizations, which at first sight, could appear to be a logical consequence of the Treaty rules, may not be in conformity with the objectives laid down in Article 39 of the Treaty. It declares that it is fully aware of the situation on the potato market in the Community and of the consequences which could follow from the pure and simple abolition of the present rules in the United Kingdom and it states that it is actively seeking a general solution. According to the Commission those reasons make it indispensable to adopt as a matter of urgency its proposal for a common organization of the market which is at present under consideration by the Council or which, more precisely, has been returned to it since the resolution of the European Parliament of 16 September 1976. Unfortunately that is a declaration without practical effect which can be of no assistance to potato producers in the United Kingdom. The allegation would be more credible if the Commission initiated proceedings against the Council based on the Council's obligation, in the context of Article 60 (2) as interpreted by the Commission, to adopt a common policy for potatoes. But apart from the political difficulties into which such an initiative would run, the plain fact is that the ball is once again in the Commission's court since the above-mentioned resolution of the European Parliament. The Commission's argument would also carry more conviction if the Commission had intervened under Article 2 of Regulation No 26 of the Council with regard to the groups of Netherlands producers. The proposal for a regulation on the common organization of the market in potatoes submitted by the Commission to the Council on 23 January 1976 makes express provision for producer groups (Article 7), but it was provided that the groups should refrain from occupying a dominant position on the common market and that in order to determine that condition the criteria dictated by Commission practice and the case-law of the Court of Justice should be applied. As that proposal has not yet produced any final result it must be concluded that the producer groups which do not satisfy that condition remain prohibited. Similarly, contrary to the proposal submitted by the Commission to the Council, Council Regulation No 1360/78 of 19 June 1978 on producer groups and associations thereof, did not include the potato within its scope. If therefore the Council excluded producer groups from its regulation in spite of or because of the fact that the Community has not yet adopted a common policy for that product it is because the Treaty rules relating to competition must apply fully to those who harvest and market that product. Regulation No 26 in conjunction with Article 42 of the Treaty is applicable to potatoes which are an agricultural product within the meaning of Annex II to the Treaty. Its provisions restrict the applicability of the rules to competition and, in particular, those relating to the prohibition of aids granted to agricultural products which do not yet form the subject of a regulation on the common organization of the market. Article 2 (1) of the regulation provides that: Article 85 (1) of the Treaty shall not apply to such of the agreements, decisions and practices … as form an integral part of a national market organization or are necessary for attainment of the objectives set out in Article 39 of the Treaty. However since the expiry of the transitional period of the EEC Treaty and of the alleged transitional period of the Act of Accession, according to the Commission, those bodies automatically cease to be exempt as a matter of course from the provisions of Articles 85 and 86 of the EEC Treaty and are therefore prohibited. It would be interesting to know whether, in the opinion of the Commission, those provisions of Regulation No 26 have also lapsed since 31 December 1977 and whether, consequently, the applicability of the rules relating to competition with regard to potatoes has become automatic as from that date and what conclusions the Commission has drawn with regard to producer groups in the Netherlands. Finally the Commission puts forward an argument with regard to policy. As I have said, it must be noted that its efforts have remained unsuccessful up to now. In fact some think that a common organization would be of no avail. Others take the view that the proposed organization would not give sufficient guarantees to producers, which is a condition set out by the Treaty for the substitution of a common organization for the existing national organizations. The result, in law, is that there exists a sort of free trade zone or rather a legal vacuum, without the component of support measures which accompanies every common organization of the market as the effect of the Charmasson judgment is precisely to exclude any link between the obligations of the Member States in this regard and the adoption of Community measures. As Mr Advocate General Reischl clearly showed in his opinion in the Rewe case ([1976] ECR 181 at p. 208) the effect of considering that the national market organization in question must be deemed to have been adjusted at the end of the transitional period notwithstanding the fact that it is provided that the organization must be replaced by a common organization and that such an organization has not been set up, would be to deprive a Member State of an important argument in the negotiations relating to the substitution of a common organization for the existing national organization, which element however is expressly reserved by Article 43 (3). Those Member States which are already not very keen supporters of the establishment of such an organization because production and marketing are organized on a voluntary basis or which are not favourable to a light organization would have even less reason to accept such an organization or a more heavy organization as they would already have obtained the adjustment, not to say the dismantling of the competing national organizations; having an interest only in the application of the provisions of the Treaty relating to the free movement of goods, they could achieve their aim simply by obstruction and lapse of time. Conversely a State which was opposed to the establishment of a wholly limp common organization because it did not offer to the State guarentees equivalent to those of its existing national organization would not be able to use the prerogative which is however, expressly conferred on it by Article 43 (3) (a). Thus far from being a step forward towards the adoption of a common organization, as is argued by the Commission, the dismantling of the national organization would deprive the establishment of such a common organization of a substantial proportion of its value.

VII —. In conclusion I should like to examine the problem on a somewhat higher plane.

Subject to what may be said in Case 231/78 I propose that the following answer should be given to the question asked:

The application of quantitative restrictions after 31 December 1977 on imports of an agricultural product which was not the subject of a common organization of the market on the date of accession and was still not so subject on 1 January 1978, in so far as these measures were an integral part of a national market organization in force on the date of accession and in so far as it is necessary to ensure the maintenance of the national organization pending the establishment of the common organization of the market for the product in question is not contrary to Article 60 (2) of the Act of Accession.

1 Translated from the French.