Report for the Hearing delivered in Case 141/87

I — Legal framework and background to the dispute

A — The Community rules

According to the second paragraph of Article 1 of Regulation No 338/79, quality wines produced in specified regions means wines which satisfy the provisions of this regulation and those national rules adopted pursuant thereto (those provisions are identical to those of Article 1 of Regulation No 823/87).

According to Article 3(2) of Regulation No 338/79, each specified region shall be precisely demarcated, as far as possible on the basis of the individual vineyard or vineyard plot. Such demarcation shall be effected by each of the Member States concerned and shall take into account the factors which contribute towards the quality of the wines produced in those regions, such as the nature of the soil and subsoil, the climate and the situation of the individual vineyard or vineyard plot. (Those provisions are identical to those of Article 3 of Regulation No 823/87.)

Article 3(1) defines the expression specified region. It provides that that expression means a wine-growing area or combination of wine-growing areas which produces wine possessing special quality characteristics and whose name is used to designate those of its wines which are defined in Article 1. Article 2 of Regulation No 338/79 (the provisions of which are identical to those of Article 2 of Regulation No 823/87) sets out the factors which may be taken into account in determining quality wines produced in specified regions. Account is to be taken of the traditional conditions of production and the determination is to be based on the following factors:

Article 2(2) provides that the Member States may determine other conditions of production, taking into account fair and traditional practices.

B — Background to the dispute

The Commission does not deny that the general Italian rules on quality wines produced in specified regions, that is to say, wines having a registered designation of origin, are in conformity with the Community rules. However, it considers that in the actual demarcation of the area of production of the wine known as Caldaro or Lago di Caldaro, the Italian Republic did not comply with the criteria laid down in the Community rules and in its own rules.

A decree of the President of the Republic of 23 March 1970 (GURI 115, 9.5.1970, p. 2872) defined the area of production of grapes to be used in the making of Lago di Caldaro wine. That decree was intended to implement a decree of the President of the Republic of 12 July 1963 (Supplemento ordinario alla GURI 188, 15.7.1963, p. 3), adopted on the basis of enabling Law No 116 of 3 February 1963 (GURI 58, 1.3.1963, p. 1104) which determines the demarcation of the area of production of wines having a denominazione d'origine controllata, in accordance with Community rules of 1962. The area of production thus defined includes territory located in two categories of local administrative areas. On the one hand, 12 areas in the province of Bolzano and, on the other, seven in the province of Trento, namely Rovere della Luna, Faedo, San Michele all'Adige, Lavis, Giovo, Lisignago and Cembra. By a decree of the President of the Republic of 22 September 1981 (GURI 92, 3.4.1982, p. 2607), the area of production in Lavis and Giovo was extended and two other local administrative areas in the province of Trento were added to the area of production, namely Mezzocorona and Faver.

That demarcation gave rise to many protests as early as 1970 on the ground that it was not traditional to market under the names Caldaro or Lago di Caldaro wine made from grapes produced in local administrative areas situated in the province of Trento.

That is the position defended by the Commission. It considers that the designation should be reserved for wines produced from grapes harvested in certain local administrative areas in the province of Bolzano. It claims that it is not traditional to market under that name wine coming from the province of Trento and that the characteristics of the soil in those areas is not the same as that of the soil in the areas in the province of Bolzano.

It therefore argues that the demarcation of the area of production has been made contrary to the provisions of Regulation No 338/79.

C — The procedure for failure to fulfil obligations

In a letter of 18 November 1983, the Commission informed the Italian Republic that it considered that the demarcation of the area of production of the wine known as Caldaro or Lago di Caldaro made by the decree of 23 March 1970, as amended by the decree of 22 September 1981, was not in accordance with the provisions of Regulation No 338/79 and it called upon the Italian Republic to submit its observations within two months.

The Italian Republic put forward its observations and added to them in a further letter, dated 23 July 1984, stating that it considered that the area of production of the wine in question had been demarcated in accordance with the provisions of the Italian and Community rules.

Under those circumstances, the Commission, on 17 July 1985, delivered the reasoned opinion provided for in Article 169 of the Treaty. Since the Italian Republic refused to comply with the reasoned opinion, the Commission brought an action before the Court, which was received at the Court Registry on 7 May 1987.

II — Conclusions of the parties

The Commission claims that the Court should:

The Italian Republic contends that the Court should:

Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General the Court decided to open the oral procedure and called upon the parties to reply to a series of questions within one month. The parties submitted their replies within the time allowed.

III — Summary of the observations submitted to the Court

A — The need for Member States to comply with the factors constituting the concept of specified region

B — The question of the actual compliance on the part of the Italian Republic with the conditions laid down in the Community rules for the demarcation of a specified region

1. Absence of tradition

The Commission claims that the contested demarcation does not take account of traditional conditions of production and that it does not comply with the condition of homogeneity of the area of production under Articles 2 and 3 of Regulation No 338/79.

1. Absence of tradition

The Commission points out that under the Italian rules, an area of production may include not merely the district indicated by the designation of origin in question but also the neighbouring districts, provided that analogous natural conditions exist there and that on the date on which the decree of 12 July 1963 entered into force wine marketed under the same designation had been produced there for at least 10 years.

However, it considers that it is not possible to speak of a practice going back to at least 1953 in regard to Caldaro or Lago di Caldaro wines in respect of the local administrative areas situated in the province of Trento.

The Commission claims that the production of wine in the area around Lake Caldaro is a centuries-old tradition. The wine is a red wine obtained from Schiava vines. That wine has long had major markets in Switzerland, Austria and the Federal Republic of Germany, in which it is known under the name Kälterer or Kalterersee. The Commission points out that in the local administrative areas in the province of Trento which are today included in the area of production of Caldaro, Schiava grapes were not particularly common before 1960 and the wine produced in those areas was sold under the different name of Sorni (which is a locality in the local administrative area of Lavis).

In any event, when, in 1959, the Italian and German Governments agreed to use the indication Auslese (selection) in addition to the geographical designation Caldaro or Kälterer, they decided that the wine had to come exclusively from localities bordering the lake or from adjacent localities. It was after the adoption of the decree of 12 July 1963 that various traders in the province of Trento asked that the designation Caldaro should also apply to local administrative areas in that province. The Commission points out that, in an Opinion of 20 June 1966, the Regional Agricultural Committee for the Trentino-Alto Adige region (which includes the provinces of Trento and Bolzano) disapproved the inclusion of the administrative areas in the province of Trento in the Caldaro production area.

It was the National Committee for the Protection of Designations of Origin which proposed the inclusion in the area of production of three local administrative areas in the province of Trento and excluded four other areas in the province of Bolzano. It was as a result of that deliberation that the contested decree of 23 March 1970 was adopted.

The Commission also bases itself on various publications on the subject of wines to show that the designation Caldaro was not used for wines produced in Trentino, the normal designation for such wines being Sorni. Finally, although the Commission accepts that many wine producers in the province of Bolzano bought wine in Trentino which was later marketed in various places under the designation Caldaro, it considered that such unfair and fraudulent practices can in no circumstances constitute a tradition within the meaning of Regulation No 338/79.

2. Lack of homogeneity of the area of production

The Commission points out that according to Regulation No 338/79, in particular Article 3 thereof, the demarcation of an area of production must be carried out in the light of factors such as the nature of the soil and subsoil, the climate and the situation of the individual vineyard, which give rise to a certain homogeneity the consequence of which is that the wine coming from such an area is of a particular quality.

However, the Commission claims that that homogeneity does not exist between the local administrative areas in the province of Bolzano and those situated in the province of Trento and that, on the contrary, there are substantial differences between them.

The Commission bases its analysis both on the nature of the soil and subsoil and on the climate.

It points out that the soil of the local administrative areas of Giovo, Faver and Lavis is porphyritic in nature, whereas in the Caldaro area the land is calcareo-morainic.

With regard to the climate, the Commission argues that there are significant differences as regards both rainfall and sunshine and in the situation of the individual vineyards or vineyard plots. Referring to various sources, the Commission points out first that rainfall is significantly higher in the region of Trento and San Michele than in that of Bolzano. With regard to sunshine, the table produced shows that the amount of sunshine is significantly higher in Bolzano than in San Michele. Finally, it is pointed out that in the Caldaro area, most of the vineyards or vineyard plots are at an altitude of 200 to 400 metres whereas in the areas of production in the province of Trento, they reach 650 metres.

The Commission therefore considers that there are significant differences between the Caldaro region and the districts of the local administrative areas in the province of Trento which the Italian rules place in the Caldaro production area and those differences are all the more significant because the Caldaro region is particularly favourably situated by virtue of the fact that the valley of the Adige is, at that point, wide and faces south whereas the Val di Cembra, where most of the areas of Trento included in the production area are situated, is bounded on the south by a fairly high range of mountains and certain areas of land in which vines have been planted do not even face south.

Consequently, the two regions, even though they are only about 30 kilometres apart, are in fact quite different. That difference is reflected in a difference of quality of wines produced, the Trentino wine having a higher level of acidity and a lower phosphate content.

The Italian Republic contends that the contested rules were adopted as a result of detailed studies and of opinions of the competent regional bodies. The contested demarcation is in accordance with the Italian rules.

With regard to the use of the name Caldaro or Lago di Caldaro, the Italian Republic relies on the existence of invoices supplied by wine producers and on a report of the President of the Regional Subcommittee for the Study of the Designation Caldaro and maintains that, for many years, a wine similar to Caldaro has been marketed under that name in local administrative areas in the province of Trento. In particular, it was common for traders in the province of Bolzano to buy wine from the province of Trento and sell or export it as Lago di Caldaro.

The absence of any reference to Caldaro or Lago di Caldaro in various publications concerning the Trentino region does not prove anything inasmuch as those publications were concerned with wine in bottles whereas the wine in question was sold in bulk.

With regard to environmental difference, the Italian Republic points out first that the Bolzano meteorological station is far from the vineyards and that, consequently, the information supplied by it cannot usefully be employed to establish comparisons.

With regard to the nature of the soil and subsoil, the geological nature and origin of the land in which the vines producing Caldaro are planted are practically identical in the two provinces. In both areas the land is of dolomitic origin. Although land of porphyritic origin may be found in a small part of the Cembra valley in the province of Trento, it is in fact to be found principally in various local administrative areas of the province of Bolzano.

With regard to the climate, the Italian Republic considers that there is no significant difference. The only difference — a small one — is in regard to sunshine. That said, the Italian Republic contends that if the period from April to September, which is the most important for vines, is examined separately, the statistics recorded in the two provinces are practically similar.

With regard to altitude, the vineyards in the province of Trento are situated at an altitude of between 230 and 600 metres at most, which does not disclose any significant difference vis-à-vis the land planted with vines in the region of Bolzano. Furthermore, the limit of 600 metres is the result of the Italian rules applicable to the area of production at issue.

Finally, the decree of 1970, which was not amended on that point by the decree of 1981, expressly provides that the environmental conditions of the vineyards concerned and the manner in which the vines are cultivated there must be traditional and that the vineyards must be well exposed and situated at an altitude not exceeding 600 metres. Similarly, Article 7 of the production regulation fixes the upper limit of acidity at 4 per 1000. No rules, and in particular no Community rules, prescribe a phosphate content.

Finally, the Italian Republic adds that the local administrative area of Faver was never included in the area of production and that certain areas in the province of Bolzano are further from Lake Caldaro than a number in the province of Trento.

C — The economic context and consequences

The Commission insists that its application is not merely a reflection of local rivalries but that the economic interests at stake are important. The significant extension of the area of production of Caldaro brought about by the 1970 decree has had pernicious economic consequences. In 1978, production of Caldaro in Trentino was greater than 54000 hectolitres and has unfailingly increased since then (55442 hectolitres in 1985).

Even before the extension of the area of production in 1981, Caldaro from Trentino was sold at a price one-third below that of Caldaro from the Alto Adige. It therefore caused the price of the latter to drop. During the last 10 years, the price relationship between Caldaro, on the one hand, and Bardolino and Valpolicella (wines comparable from the point of view of type and destination) changed from 2: 1 to 1:1. Furthermore, exports of Caldaro have fallen.

The Commission considers, in brief, that the Community rules, the purpose of which was to avoid confusion which could damage traders, have not been complied with and have been used, in the case of Caldaro, to legalize abuses committed by unscrupulous traders which are in fact the very abuses which the Community rules were intended to eliminate.

The Italian Republic rejects those assertions in their entirety. It considers, in particular, that no evidence has been produced that the fall in the price of Caldaro or in exports are attributable to the inclusion of certain local administrative areas in the province of Trento in the Caldaro production area.

D — The burden of proof

The Commission claims that the dispute is concerned exclusively with issues of fact the resolution of which is particularly complex because it entails not merely verifications but also a technical assessment of the facts. It did indeed propose to the Italian Republic that an expert's report be obtained, but the Italian Republic refused to accept that proposal.

The Commission considers that in a case of this kind, where the facts and technical data to be collated are specific to Italian territory, the Italian Republic should share the burden of proof in order to complete the information which the Court must have at its disposal.

Since the Commission has put forward solid evidence, it is for the Italian Republic, if it intends to contest that evidence, itself to supply proof that the demarcation of the Caldana area of production is in conformity with Community law. In the alternative, the Commission asks the Court to order that an expert's report be obtained.

The Government of the Italian Republic contends that it is for the Commission to prove that the Italian Republic did not take into account the factors of which it was required to take account by Community law for the purpose of demarcating the area of production. It also contends that, far from refusing to cooperate with the Commission, it provided the latter with all the documents proving that the demarcation had been correctly carried out.

Should the Court wish to review the facts of the case, the Italian Republic, in the alternative, asks that the Commission be ordered to produce all those documents.

IV — Replies to questions put by the Court

A — The Commission 's replies

The Commission concentrated its comments on the first two series of documents. It points out first that the only climatological tables of interest are those which deal with precipitation and sunshine. From that point of view, it can be seen that precipitation is greater in San Michele, in Trentino, than in Bolzano, whereas the number of hours of sunshine is greater in Bolzano. That explains why the wines from the classic Caldaro region are different in character from those produced in the more southerly region.

The Commission claims secondly that the analytical table of 44 Lago di Caldaro Scelto wines submitted by Italy shows that Trentino wines have a greater acidity than those produced in the Alto Adige.

B— The Italian Republic's replies

The Court asked the Italian Republic:

The Italian Republic replied as follows:

In any event, the climatic differences are minimal and thus are not likely to influence the organoleptic characteristics of the grapes or of the wine.

Furthermore, from the point of view of rainfall levels, if the information concerning Bolzano and Trento is compared with the information for Caldaro rather than with that for San Michele all'Adige, the figures are much more similar because the monthly average rainfall in millimetres is 829 in Caldaro (as against 704 in Bolzano and 943 in San Michele all'Adige). It is all the more important to take into consideration inasmuch as the differences appear negligible during the growing season (from April to September) whereas they are greater during the winter months.

The Italian Republic concludes that there is a genuine homogeneity between the wines produced in the area under consideration even if that homogeneity cannot be equated with genuine identity, since small differences may exist between the various wines.

Finally, the Italian Republic states that the local administrative area of Faver was never included in the area of production and it produces the decision of the Consiglio di Stato of 9 June 1972 (No 39) which the Court asked it to supply.

1 Language of the case. Italian.