Union des minotiers de la Champagne v French Government (11/74)

I —Facts and procedure

II —Written observations submitted to the Court

The Council first of all considers the system of regionalization of prices for cereals, its basic rules and how they were applied in the 1970/1971 marketing year. It states inter alia that in the Community the fact that surplus regions overlap geographically with deficit regions, the fact that the latter may partly obtain their supplies outside the Community together with the amount of excess in the surplus regions result in prices being derived mainly in terms of transport costs although they do not reflect solely a mathematical computation. Regionalization can therefore be defined according to both fixed and variable criteria.The Council then considers the applicant's complaints and states that in fact it is the basic rule of regionalization which is being challenged.In the Council's opinion the lack of specificity in the complaints is not theleast, difficulty in replying to the-applicant. This leads the Council to a preliminary observation: the lack of particulars in the supplementary statement filed at the Conseil d'État results from the fact that neither in laying down the mechanisms for regionalization under Regulation No 131/67 nor in the application of these mechanisms for the 1970/71 marketing year by Regulation No 1210/70 did the Council of the Communities ‘go beyond what could be regarded as necessary to attain the objectives’ of the Community organization of the market in cereals. The Council also states that the vagueness of the application arises from the fact that the main proceedings only involved a statement of claim and a statement of defence, without a reply or a rejoinder.The Council then replies to the objections against Regulation No 131/67. As regards the alleged disregard of the rule requiring consideration of the ‘disparities in prices to be expected in a normal harvest under natural conditions of price formation’, the Council states that it as an improper claim on principle to claim that the criteria for fixing the derived intervention prices provided for in Article 1 of Regulation No 131/67 may differ from the natural conditions of price formation.As regards the alleged infringement of Article 6 of Regulation No 131/67 which states that the derived intervention prices must not disturb the normal pattern of trade, the Council stresses the illogicality of saying that a provision of a Regulation infringes another of the same Regulation.The Council states further that the objective of Article 6 is not to condemn any provision which has the effect of altering the ‘traditional pattern’. The only concept of which Article 6 speaks is the alteration of the ‘normal pattern’, which is very different. This concept is contained in the idea of compensation between surplus areas and deficit areas on the Community level, in which Regulation No 120/67 sought to place the single market in cereals. A certain development of French exports is to be expected in the normal pattern of trade.As regards the third complaint with regard to Regulation No 131/67, the Council states that it would be difficult to say that Article 1 of the Regulation has a discriminatory effect with regard to producers and consumers contrary to Article 40 of the EEC Treaty, since the derived prices for each of the five areas is fixed on the basis of the ‘natural conditions of price formation’.The Council states further that market prices in France in 1970/71 were constantly at a higher level than the highest derived intervention prices and that as regards the 1970/71 marketing year the price situation was clearly the reverse of that which the supplementary statement claimed as resulting from the system.As regards the determination of the different derived intervention prices under Regulation No 1210/70, the Council refers not only to the absence of proof regarding substantial errors in their calculation, but also to the absence of specific grounds of complaint.It states likewise that the price disparity in question does not seem to have harmed the applicant. During the calendar years 1967 and 1970 roughly equal amounts of flour were milled in the department of the Marne, and although sales in the department itself went down slightly, those in the other departments and especially those for export went up.The Commission is of the opinion that the request for a preliminary ruling is admissible although it queries the interest that an individual could have in an application to annul a French decree. Supposing that this Court declared that the Regulation is not valid and as a result the Conseil d'État annulled the Decree, matters would remain as they are between the parties to the proceedings: the directly applicable Community Regulation, which is in truth the sole objective of the proceedings, would in no way be affected.The Commission takes the view that the Decree which is challenged is a simple reproduction of Regulations Nos 1210/70 of the Council and 1248/70 of the Commission (OJ L 142, p. 20) and observes that the objections to which such detailed rules for implementing Community law give rise ought not to be dealt with within the context of the present case.It outlines the framework of Regulations into which the provisions, the validity of which is challenged, fit. It states that a system of derived intervention prices meets the necessity of simultaneously pursuing two equally essential objectives, that is, that of ensuring a fair standard of living for the agricultural population in the Community and that of the free movement of cereals within the Community. A single intervention price would not allow this requirement to be met. If the intervention price were fixed at a high level in relation to the target price, the intervention price would be too high in surplus areas; save as regards local needs, the whole of the production would be sold on intervention and only cereals bought and transported by the intervention agencies would be transfered for sale from the production areas to the consumer areas.It states moreover that the criteria contained in Regulation No 131/67 should not be rigidly applied. The wording itself of Article 1 shows this. Moreover their very objective, that is the anticipation of ‘the disparities in prices to be expected in a normal harvest under natural conditions of price formation on the market’, accords ill with criteria which are both strict and pre-established.The Commission then examines the case in the main proceedings. It believes it possible to deduce from the file that the dispute is not about the way in which Regulation No 1210/70 applied the system of derived intervention prices but about, the system itself as set out in Regulation No 131/67. Consequently it is of the opinion that to establish the validity of Regulation No 1210/70 it suffices to show that the system of derived intervention prices is in accordance with the second paragraph of Article 4 (1) of Regulation No 120/67 and does not disregard the provision, of the second paragraph of Article 40 (3) of the Treaty.It states that the system of derived intervention prices does not interfere with the ‘natural conditions of price formation’. It observes that this requirement is not an objective in itself. It is only in so far as the two objectives of the system referred to above are not achieved that the question can arise whether the derived intervention prices have been correctly established. In this respect the Commission notes that the figures relating to the proportion represented by the rest of the Community in the sales outlets for the French production has increased. In the Commission's view these figures are in any case not decisive in assessing whether the regionalization of prices has been properly applied. What matters in short is the proportion which the market of a deficit region of the Community represents in the sales outlets of a surplus region of the Community.The Commission observes further that the fact that during a period of plenty the derived intervention prices become the prices on the market in each region is inherent in the very existence of the intervention price; it does not show that the differences between the prices in each region which arise in these circumstances do not correspond to the disparities in prices which arise under natural conditions of price formation. Moreover, derived intervention prices are established on the assumption of a normal harvest and not on the assumption of a marked disequilibrium between supply and demand.The Commission states that the system does not disturb the ‘normal pattern of trade’ either. This term refers to the ‘normal’ and not the ‘traditional’ pattern. The normal pattern is that which is established in the single market. The fact that regionalization leads to a disparity between the intervention price in the Marne and that in Central France, whereas during the marketing year in question more than 80 % of the French production continued to be marketed in France, is not such as to undermine the validity of the regionalization of prices with regard to the criterion of the ‘normal pattern’. The character appropriate to the derived intervention price applicable in the Marne is to be assessed in terms of the production of the Marne which is disposed of in the deficit areas of Germany and should be able to be disposed of in these areas in a free market, where the normal pattern of trade can develop without any hindrance. It is not assessed in relation to the disposal of the French production in a Community market, in which the pattern of trade has not yet developed quite normally.Finally the Commission states that the system of derived intervention prices does not disregard Article 40 (3) of the Treaty. It observes that this rule is intended to protect the interests of agricultural producers and consumers and not those of processors and dealers in agricultural products. Moreover, as this Court has stated in its Judgment of 24 October 1973 (Case 43/72, Merkur v Commission, [1973] ECR, p. 1055), the disparity in treatment of the millers constitutes an infringement of this principle only if it appears arbitrary. It is clear that this disparity cannot be regarded as arbitrary. The difference between the derived intervention prices is intended to reflect in those prices the disparities which arise under natural conditions of price formation on the market. In the last analysis it depends on the more or less advantageous position of a given production area-in relation to the deficit areas.The Commission points out that according to the figures which it has the sales of French flour in Germany increased from 17800 metric tons in 1965/66 and 17400 metric tons in 1966/67 to 32700 metric tons in 1970/71. Although the difference in intervention prices had the result of increasing the purchase price for millers in certain regions in relation to others, in return it necessarily played a rôle in opening frontiers.The oral observations of the Commission were presented on 13 June 1974.The Advocate-General delivered his opinion on 10 July 1974.

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