Pigs and Bacon Commission v Mc Carren and Company Limited (177/78)

II —Written observations submitted to the Court

The Pigs and Bacon Commission, the plaintiff in the main action, takes the view that the levy in question is in no way compatible with Community law.(a) The Pigs and Bacon Commission ceased to be a national or State monopoly in February 1973. It continued as a central marketing agency and a State aid to the bacon industry with statutory powers to impose a levy on every pig carcase used for the production of bacon in the Republic of Ireland to finance the State aid. The only, or at any rate the primary, question in these proceedings is whether such a levy is recoverable in law having regard to the provisions of the Treaty of Rome. It follows clearly however from the judgment of the Court of 12 July 1973 (Case 2/73, Riseria Luigi Geddo v Ente Nazionale Risi [1973] ECR 865) that the Treaty does not prohibit an internal tax affecting domestic products alone and designed to build up a fund to promote national production.The other issues raised in the order for reference are therefore irrelevant and do not require an answer.(b) In any case, the Pigs and Bacon Commission and its activities supported by the levy in question constitute a State aid within the meaning of Article 92 of the EEC Treaty which existed in the Republic of Ireland prior to its entering the Community.This State aid is compatible with the Common Market because it is intended, within the meaning of Article 92 (3), to ‘promote the economic development of areas where the standard of living is abnormally low or where there is serious underemployment’ and to ‘facilitate the development of certain economic activities or of certain economic areas’ without adversely affecting trading conditions to an extent contrary to the common interest.As it existed prior to the Republic of Ireland's entering the Common Market, the legality of the aid cannot be challenged because Article 92 of the Treaty is not self-executing. It follows from the judgment of the Court of 19 June 1973 (Case 77/72, Carmine Capolongo v Azienda Agricola Maya [1973] ECR 611) that, as regards aids existing in the Member States, ‘the provisions of Article 92 (1) are intended to take effect in the legal systems of Member States, so that they may be invoked before national courts, where they have been put in concrete form by acts having general application provided for by Article 94 or by decisions in particular cases envisaged by Article 93 (2)’.It cannot be maintained that a new aid was introduced since 1 February 1973; the few changes made in the administration of the system of aid and the changes in the rate of the levy do not constitute an ‘alteration’ of State aid within the meaning of Article 93 (3).(c) The levy in question relates only to carcases used for the production of bacon; it is not a levy imposed on pig carcases or on pork meat generally.There is however no specific Community legislation dealing with an intervention system for bacon. It is clear from Article 3 of Council Regulation (EEC) No 2759/75 of 29 October 1975 on the common organization of the market in pigmeat (Official Journal 1975, L 282, p. 1) that the Community intervention system does not apply to ‘meat … of domestic swine, salted in brine, dried or smoked’, in other words, to bacon.(d) The system of State aid administered by the Pigs and Bacon Commission does not constitute discrimination against the defendant in the main action.The central marketing agency and the other services provided by the Pigs and Bacon Commission exist for the benefit of all producers and curers; the statutory levy imposed on pig carcases used for the production of bacon is imposed for the benefit of the bacon industry generally and to support the State aid administered by the Pigs and Bacon Commission. McCarren and Company Limited is in the position of any citizen who has to pay out a levy or taxation for a service supplied by the State, whether or not he accepts that service.The defendant benefits from the activities of the Pigs and Bacon Commission which, in its capacity as a central marketing agency, helps to eliminate fluctuations on the home and export markets and to provide a system which will give proper returns to producers and to curers.(e) The central, if not the only, issue in the main action is the validity of the statutory levy to support the State aid administered by the Pigs and Bacon Commission.In this respect it is necessary to state that Article 16 of the EEC Treaty has nothing to do with this issue. The levy in question and the system of aid supported by it cannot be regarded as a quantitative restriction on exports or as a measure having equivalent effect within the meaning of Article 34.The Pigs and Bacon Commission is not a State monopoly within the meaning of Article 37: the Republic of Ireland abolished the State monopoly which formerly existed in the market in bacon prior to joining the EEC and since February 1973 no discrimination has existed regarding the conditions under which bacon is procured and marketed between nationals of Member States. In any event, under the provisions of Article 44 of the Act of Accession the Republic of Ireland was not obliged to complete the adjustment of State monopolies until 31 December 1977.It is appropriate to recall, as regards Article 40 of the Treaty and Regulation No 2759/75, that that regulation provides no system of intervention for the bacon industry and that there is nothing in that regulation to prevent the kind of State aid and statutory aid with which this case is concerned.The examination of a system of State aid is a matter for the Commission, not for a private individual. The mere fact that the Community has enacted legislation dealing with a particular matter does not preclude national legislation not inconsistent with it and not designed to undermine it.Articles 85 and 86 of the Treaty have nothing to do with a levy designed to support a scheme of State aid.The scheme of State aid administered by the Pigs and Bacon Commission prior to February 1973 is an ‘old aid’ within the meaning of Articles 92 and 93 of the Treaty. No true alteration has been made to this system of aid; it is not a new aid or an altered aid within the meaning of Article 93 (3).(f) The judgment of the Court of 22 March 1977 (Case 74/76, Iannelli & Volpi S.p.A v Ditta Paolo Meroni [1977] ECR 557) answers clearly the only relevant question raised by the main action which is whether the amount of the statutory levy claimed by the Pigs and Bacon Commission is recoverable or not; it follows clearly from that judgment that ‘the fact that an aspect of aid, which is not necessary for the attainment of its object or for its proper functioning, is incompatible with a provision of the Treaty other than Articles 92 and 93 does not in fact invalidate the aid as a whole or for that reason vitiate by reason of illegality the system of financing the said aid’.(g) It is necessary to give the following answers to the questions raised by the High Court of Ireland:Questions 1 (a) and (b): No; Question 1 (c): Yes; Question 2: No; Question 3 (a): Yes, except in the case of failure to follow the procedure prescribed under Article 93 (3) of the Treaty in the case of new or altered aid. Question 3 (b): Yes; Question 3 (c): Yes; Question 4: No; Question 5: No; Question 6: The levy is recoverable from 1 February 1973 and (though it does not arise directly in these proceedings) since that date. Question 7: The system is not compatible with Article 40, or with Regulation No 2759/75. In any event, the levy is recoverable. Question 8: The agreement is not a violation of Article 85. The levy is recoverable in any event. Question 9 (a): Article 86 has no application to the circumstances of the present case. Question 9 (b): This question does not arise. Question 9 (c): The levy is unaffected by the provisions of Article 86, and is recoverable. Question 10: This is a matter of Irish law. The money should not be refunded in the circumstances found in the present case. If the monies were refunded, a deduction should be made in respect of the bonus received by the defendants.McCarren and Company Limited, the defendant in the main action, considers that a number of facts established before the High Court indicate clear breaches of a number of articles of the EEC Treaty.(a) It is doubtful whether the operations of the Pigs and Bacon Commission can truly be regarded as ‘State aid’ in the sense of Article 92 of the Treaty. The dominant feature of its operations is its export marketing system and the bonus incentive scheme. Their effects on competition and freedom of movement of goods have become ends in themselves and not side-effects of and incidental to the primary function of the aid.The Pigs and Bacon Commission claims no longer to act as a public organization pursuing a public policy; the ‘State aid’ aspect of the operation consists only in the ready availability of the statutory powers to enforce its decisions on all producers. These powers are only a means and not the object of the operations themselves; the objects of the operation are the purely commercial objects pursued by the producers. It may not be appropriate therefore to approach the matter as being exclusively for consideration under Articles 92 and 93 of the Treaty.(b) To the extent to which the operations of the Pigs and Bacon Commission fall to be considered as State aids, they constitute a new aid or, at best, an existing aid which was radically and fundamentally altered as of 1 February 1973.The Pigs and Bacon Commission has expressly claimed that, as from 1 February 1973, it ‘adjusted’ the old state monopoly so as to create the fundamentally new ‘voluntary organization’. The obligation to notify the introduction of such a new system to the Commission under Article 93 (3) therefore also existed on that date.Whether the system is regarded as being an entirely new one or the fundamental alteration of the old system the obligation to notify under Article 92 of the Treaty, Article 21 of Regulation No 2759/75 and Article 60 (1) of the Act of Accession was binding upon Ireland. The obligation to inform the Commission and the absolute prohibition came into effect on the same day as the aid itself was introduced. The introduction of the system on 1 February 1973 without notification to the Commission was an infringement of the provision of Article 93 (3). Further the changes which have occurred since 1973 in the so-called ‘voluntary system’ are substantial alterations which, if they had been introduced by a government independently, would have been regarded as being new aids in themselves.(c) Question 1 (a) must be answered in the affirmative: any national marketing system for an agricultural product which was based upon facilities which constitute a State aid and which came into operation on or after 1 February 1973 is governed by the provisions of Article 93 (3) which lay down the requirement to inform the Commission and the prohibition against giving effect to the system. In addition, any material alteration in a system of aid which increased the amount of the aid or extended its scope or purpose was similarly governed by the procedure and the prohibition of Article 93 (3).Question 1 (b) must also be answered in the affirmative: the prohibition contained in Article 93 (3) is absolute where there has been no notification of the intended aid or alteration to the Commission.The third part of Question 1 must also be answered in the affirmative and to the effect that the absolute prohibition contained in Article 93 (3) extends to all aspects of an aid including a compulsory financing system implemented as part of that aid under national law where the aid in question has been illegal ab initio by reason of the absence of any notification.(d) The second question will not need to be answered. In any event in the light of the decided cases of the Court of Justice, in particular the judgment of 22 March 1977 (Case 78/76 Steinike and Weinlig v Germany [1977] ECR 595) and the judgment of 9 March 1978 (Case 106/77 Amministrazione delle Finanze dello Stato v Simmenthal [1978] ECR 629) there is an obligation for a national court to refrain from enforcing a provision of national law which is potentially in conflict with Article 92 until such time as it has been satisfied that no incompatibility exists.(e) The answer to the question posed in Question 3 (a) is to be found in the case-law of the Court of Justice: any question as to the compatibility of a particular aid with the Common Market is to be determined solely by the Commission subject to an appeal to the Court of Justice. The second and third parts of this question do not, therefore arise.(f) The test to be borne in mind in relation to Question 4, relating to Article 16 of the EEC Treaty, is that formulated by the Court of Justice in its judgment of 26 February 1975 (Case 63/74 Cadsky v I.N.C.E. [1975] ECR 281). The combined effect of the levy charge with the bonus system is to hinder and restrict exports of pigmeat from Ireland by enterprises who wish to operate independently of the Pigs and Bacon Commission. Even if the levy is to be judged separately from the bonus payment analogous application of the judgment of the Court of Justice of 23 January 1975 (Case 51/73 Van der Hulst v Produktschap voor Siergewassen [1975] ECR 79) clearly shows that it is still a measure equivalent to a customs duty on exports.A compulsory national levy on a product constitutes a measure equivalent in effect to a customs duty on exports and prohibited by the Treaty, where it falls more heavily on a particular class of exports or where it has the effect of hindering exports which take place independently of an organized marketing system.(g) As regards the fifth question it should be held that the system in question falls within the scope of the prohibition on measures having an effect equivalent to quantitative restrictions as defined by the judgments of the Court of Justice of 11 July 1974 (Case 8/74 Procureur du Roi v Dassonville [1974] ECR 837), of 20 May 1976 (Case 104/75 De Peijper [1976] ECR 613) and of 12 July 1973 (Case 2/73 Geddo v Ente Nazionale Risi [1973] ECR 865).(h) In answer to Question 6 it must be held that the Pigs and Bacon Commission is a State monopoly of a commercial character within the meaning of Article 37 of the EEC Treaty: it is established as such in law; it operates as a body entrusted with the supervision of all aspects of trade in pigmeat in Ireland; the compulsory element was an indispensable element in the system. The fact that producers can export independently is irrelevant: the discriminatory refund of part of the levy through the bonus system is equivalent to the action of a monopoly.In those circumstances the introduction of the marketing system operated by the Pigs and Bacon Commission did not constitute a sufficient adjustment of a state monopoly of a commercial character to satisfy the requirements of Article 37 (1). By the introduction of a new system which failed to satisfy the requirement of Article 37 (1), a new measure was introduced by the Pigs and Bacon Commission which constituted a breach of Article 37 (2) even during the transitional period. The levy is not enforceable through the agency of the Pigs and Bacon Commission since the date of infringement of Article 37 (2) namely, 1 February 1973.(i) As regards Question 7 and the common organization of the market in pigmeat, as laid down by Regulation No 2759/75, it should be held that the system of the Pigs and Bacon Commission involves the regulation of the level of domestic . Irish prices by controlling the level of exports, the deliberate channelling of all exports through a single body, the ability to monitor the home and export markets and the stimulation of trade which constitute a complex of national measures and mechanisms through which the Irish market in pigmeat is regulated. They are deliberately designed to partition the Irish market and to exploit it as a national entity; they constitute a deliberate interference with the creation of a single market.Such a national system is incompatible with the common organization of the market at Community level: it infringes the prohibition on customs duties and quantitative restrictions as well as the provisions of Articles 92 and 93 of the Treaty and it is, therefore, in direct breach of Articles 19 and 21 of Regulation No 2759/75,By subsidising exports to third countries the Pigs and Bacon Commission is artifically stimulating the. trade of one Member State and runs contrary to the objects and effects of the common organization of the market.The objectives of Article 39 (1) of the Treaty cannot be achieved throughout the Community on a basis of equality where Member States continue to distort or augment the effects of the common organization by maintaining national organizations.The facility provided at national level, based upon a compulsory levy and a bonus system, distorts and hinders both intra-Community trade and exports to third countries.The Pigs and Bacon Commission is guilty of introducing a threefold discrimination affecting Irish exporters who operate through it and who therefore pay the levy but receive both the bonus and the Community export refund, Irish exporters who operate independently of the Pigs and Bacon Commission but pay the levy while receiving back only the Community export refund and exporters from other Member States who adhere to the Community system and rely only upon the Community export refund.The fundamental incompatibility between the very existence of national measures such as those at issue in the main action and the Community organization of the market is confirmed by the judgments of the Court of Justice of 23 January 1975 (Case 31/74 Galli [1975] ECR 47 and Case 51/74 Van der Hulst v Produktschap voor Siergewassen [1975] ECR 79), of 30 October 1974 (Case 190/73 Officier van Justitie v Van Haaster [1974] ECR 1123) and of 16 March 1977 (Case 68/76 Commission v France [1977] ECR 515).(j) Both parts of Question 8 must be answered in the affirmative.Since 1 February 1973 the operations of the Pigs and Bacon Commission have been conducted upon the basis of and as a result of the agreement with the enterprises engaged in the production of bacon in Ireland. Accordingly, the system involves not just a concerted practice but a continuing express agreement by virtue of which 27 of the 28 producers in Ireland are able to hinder and restrict exports from Ireland by the defendant in the main action.The main characteristic of the Pigs and Bacon Commission is now that of a joint selling agency or trade association of producers; its primary activities and the principal effects are those of a commercial and competitive kind and the public authorin aspects of the situation are in a sense incidental and accidental. The mere fact that a commercial organization happens to be organized in law as a public authority does not remove the commercial activities of that organization from the requirements of Articles 85 and 86.The system operated by the Pigs and Bacon Commission, consisting of an exclusive dealing agreement with producers backed by a compulsory levy under national law adversely affects exports and hinders competition.(k) As regards Question 9, the Pigs and Bacon Commission is in a dominant position because it can behave independently. The dominant position can result not merely from economic factors.The dominant position applies in a substantial part of the Common Market, which as regards bacon consists of two Member States only, namely the United Kingdom and Ireland, the only States in which bacon is purchased in substantial quantities.The Pigs and Bacon Commission abuses its dominant position by using its powers and its economic independence to compel all producers to export only through its agency. The bonus payments made only to producers who submit to that compulsion is in fact a form of loyalty rebate.The levy should be declared to be irrecoverable, because it forms part of the very mechanism used by the Pigs and Bacon Commission to achieve objectives which themselves infringe the Treaty. Community law requires the national court to give full effect to the directly applicable provisions of Community law, to protect the rights, conferred on individuals and to refuse to enforce any conflicting provisions of current national law.Where a national authority or anybody conferred with delegated powers seeks to enforce a provision of national law for the purpose of maintaining or implementing a system or practice which is contrary to a directly applicable provision of Community law, the national court should refuse to give effect to the national measure so long as the infringement is continued and to the extent to which the infringement is thereby rendered possible.(l) The answer to Question 10 flows from the fundamental principle that Community law should be applied equally to all Member States and should have equal effect and consequences in them. The question of the recoverability of the money paid on the basis of powers rendered illegal by Community law cannot depend solely on the diverse laws of the Member States, for this would give rise to discrimination.The principles of Community law are applicable to a claim for repayment of money levied by a national authority in breach of the provision of Community law; the principle of equal application and effect of that law requires that such money should be repaid to the individuals or undertakings concerned subject only to any deductions allowable under national law in respect of benefits which the individuals or undertaking may have received from the authority in question.The Government of Ireland takes the view that the EEC Treaty does not preclude the imposition of a statutory levy, the proceeds of which are to be used to finance the work of a central marketing organization, and the payment of aids in the form of an export bonus.(a) The levy at issue is an internal charge of a para-fiscal nature, and no grounds exist under the Treaty for challenging its validity. It follows from the case-law of the Court that the fact that an aspect of aid is incompatible with a provision of the Treaty other than Article 92 and 93 does not in fact vitiate by reason of illegality the system of financing the aid.(b) A number of other functions performed by the Pigs and Bacon Commission can be regarded as aid to the pigmeat industry in Ireland; the payment of the export bonus constitutes an aid paid out of State resources to the extent to which it is financed by a levy charged under a statute.Article 92 of the Treaty prohibits aid which distorts or threatens to distort competition. Such aid is regarded as incompatible with the Common Market to the extent to which it adversely affects trade between Member States. However, Article 92 (3) recognizes many forms of aid which may be regarded as consistent with the Treaty obligations. Moreover, it has been recognized in a number of judgments of the Court that the appropriate mechanism for monitoring the grant of aid and for challenging its validity where it appeared to be necessary to do so, was the systematic examination by the Commission referred to in Article 93, with the ultimate sanction of proceedings before the Court by the Commission or by any interested State, but not at the behest of an individual aggrieved by the existence of the aid.(c) The bonus payment to exporters existed as a form of aid for the pig industry in Ireland prior to accession to the Community, and has continued ever since in essentially the same form.The Commission has been informed of it. A breach of Article 93 (3) of the Treaty by failure to give notice of the aid can undoubtedly in theory give rise under certain circumstances to rights in favour of private persons enforceable in the national courts concurrently with the right of the Commission itself to proceed under Article 169. Annulment of the aid could have the effect of bringing to an end the payment of the aid in whole or in part, but would not invalidate the levy in so far as past payments were concerned, or bring about its termination for the future. Any question as to a possible infringement of Article 93 (3) is of necessity intimately associated with other aspects of the aid whose legality or acceptability are for the Commission to decide. Any question concerning the effect in a particular case of the prohibition contained in the last sentence of Article 93 (3) should await the Commission's examination of the aid as a whole.(d) The establishment of a common organization of the market in pigmeat does not exclude all national measures but only those which directly impinge on the mechanisms provided by the common organization of the market.The price fixing exercise to be carried out for the purposes of Regulation No 2759/75 is carried out by reference to pig carcases of a standard quality, while the export bonus referred to in the present proceedings is payable only for pig carcases of a higher quality than that referred to in the regulation. Even in principle, therefore, the payment of the aid could not affect the price determined for the purposes of the common organization of the market.The continued functioning of the Pigs and Bacon Commission is quite compatible with the common organization of the market; its statutory power to impose a compulsory levy on meat processors for the purpose of financing its activities is also compatible with the Treaty and with Regulation No 2759/75. The validity of the aid falls to be considered in accordance with the procedure referred to in Article 93 of the Treaty.(e) The aid in question cannot be regarded either as. a customs duty on exports or a charge having equivalent effect within the meaning of Article 16 or as a quantitative restriction on exports or measure having equivalent effect within the meaning of Article 34 ot the EEC Treaty.Assuming that the Pigs and Bacon Commission was a State monopoly within the meaning of Article 37 of the Treaty and Article 44 of the Act of Accession in the pre-accession period, it should be found that it divested itself of this character by discarding all its former statutory powers of compulsory purchase and price-fixing; it has retained only the power to impose a levy to defray the cost of its operations as a marketing organization enjoying the voluntary co-operation and support of the pigmeat industry in Ireland. It cannot be denied that, by the expiry of the period referred to in the Act of Accession, the Pigs and Bacon Commission had suffered an adjustment of the most far-reaching nature in its character and functions, in accordance with the obligations undertaken by Ireland. The continuing system of compulsory levies and payment of export bonuses does not in any way involve a discrimination between nationals of Member States regarding the conditions under which goods are procured and marketed.Any question of distortion of competition as a result of the present operations of the Pigs and Bacon Commission arises not in relation to Articles 85 and 86 of the Treaty but in the context of the grant of aids, and hence in relation to Articles 93 to 94. In any event the Pigs and Bacon Commission should not be regarded as an undertaking holding a dominant position within the Common Market or in a substantial part of it, and there has been no abuse by it of a dominant position, in particular no abuse calculated to affect trade between Member States.In relation to the claim for repayment of levies received by the Pigs and Bacon Commission, it is submitted that there is no principle of Community law which would require a Member State statutory body or private undertaking to make a refund in a situation such as that envisaged by the counterclaim. Therefore the national court should in any event apply the national law.(f) The questions referred to the Court should be answered as follows:— Where the validity of aids granted by Member States or through State resources is in issue, the matter falls to be determined by reference to the provisions of Articles 92 and 94 of the Treaty, rather than by reference to other Articles of the Treaty in respect of which it is alleged that some incidental breach has also occurred.— The provisions of Article 92 (1) do not have direct effect in the legal systems of the Member States and cannot therefore be relied on before the national courts.— Where the question whether part of an aid has been granted in disregard of procedure in Article 93 so as to be caught by a prohibition which has direct effect is a complex one which is closely associated with other aspects of the aid the validity of which is a matter for the Commission, it is appropriate that all aspects of the aid should be considered by the Commission and that any question as to a possible disregard of procedure under Article 93 should be postponed pending the Commission's examination of the aid as a whole.— The appropriate procedure for testing the validity of aids by reference to the provisions of Article 92 of the Treaty involves an examination of the situation by the Commission in accordance with the provisions of Article 93, and the adoption by it (where considered necessary) of the procedure therein set forth; alternatively by the exercise by the Council of the powers reserved to it by the same Article.— Where, however, the real issue in a particular case concerns not the validity of an aid but the validity of charges of a fiscal nature which are imposed for the purpose of financing the payment of aids, the principle to be applied is that already enunciated by the Court in previous cases, to the effect that a fiscal charge is not per se invalidated by reason of the fact that it provides the resources out of which is paid (inter alia) some form of aid which may be deemed to be incompatible with the Common Market.— If a situation arises where payments of charges or levies which have already been made could not lawfully have been demanded by reason of some incompatibility with the Treaty or secondary legislation thereunder, the question whether a claim for reimbursement arises is to be determined in accordance with the national law in the absence of any positive law of the Community dealing with the situation.The Commission of the European Communities considers that where there is a common organization of the market, as in the case of pigmeat, the compatibility of any national measures must above all be considered in the light of that organization.(a) The case-law of the Court shows that, once the Community has established a common organization of the market, Member States are under an obligation to refrain from taking any measures which might undermine or create exceptions to it.The outstanding feature of the Irish national system financed by the production levy is the bonus scheme which amounts to an export aid. Such a scheme of aids for exports is incompatible with the common organization of the market in pigmeat.The bonus scheme hinders and restricts the exports of curers who choose to sell independently of the Pigs and Bacon Commission by depriving them of the export bonus. The bonus gives the Pigs and Bacon Commission a competitive advantage over the defendant in the main action; the bonus penalizes it for not selling to the Pigs and Bacon Commission.The bonus scheme amounts to an aid which is implicitly excluded by the common organization: the export bonus gives an incentive to the sale of certain grades on the export market and thereby potentially deprives the home market of the relevant supplies.The price system etablished by Regulation (EEC) No 2759/75 involves the fixing of a basic price for the Community and intervention measures when the prices on the representative markets in each Member State fall below a certain level. The Irish export bonus scheme has the potential to affect prices on representative markets in other Member States.Bacon is one of the products subject to the system of monetary compensatory amounts. The export bonus could be analysed as amounting to a reduction in the amount charged on exports from Ireland; it thus derogates from the system of monetary compensatory amounts applicable to products subject to the common organization of the market.The export bonus conflicts with Title II of Regulation (EEC) No 2759/75 dealing with trade with third countries. Article 15 provides for an export refund; however, the export bonus amounts to an additional export refund, applicable to any Irish exports to third countries.(b) The prohibition by Article 16 of customs duties on exports and charges having equivalent effect covers any pecuniary charge affecting goods by reason of their crossing a frontier. This is not the case with the charge in question. As for the bonus system financed by the charge, it must be regarded rather under Article 34 than under Article 16 of the Treaty.(c) The discriminatory nature of the export bonus may have an effect equivalent to a quantitative restriction on exports in so far as it is paid only to undertakings exporting through the Pigs and Bacon Commission. Article 34 of the Treaty is to be interpreted as forbidding the maintenance in force of national legislation which requires producers to market products subject to a common organization only through a national marketing board. In this case operators may lawfully export separately from the Pigs and Bacon Commission but are financially penalized for doing so.(d) With regard to Articles 92 and 93 of the Treaty it should be noted that the reply given by the Court in the present proceedings under Article 177 cannot in any event prejudice the outcome of any investigation by the Commission as to whether Irish state aids are incompatible with Article 92. Furthermore, although national courts have jurisdiction under Article 93 (3) where aid is introduced or altered without the proper formal notice to the Commission, they have no jurisdiction in the case of existing aids where the procedure under Article 93 (1) can only be implemented by the Commission. In addition, incompatibility of an aid with the Treaty does not necessarily vitiate its system of financing.(e) In the case of a product covered by a common organization of the market, a national marketing system including aids and other measures must be assessed, by virtue of Article 44 (1) and Article 60 (1) of the Act of Accession, not in the context of Article 37 of the Treaty but within a purely-agricultural framework.(f) The legal problem before the national court cannot be resolved by reference to Article 85 or 86; it is primarily a state system for financing an export bonus by means of a levy imposed by law.(g) The Irish export bonus scheme is incompatible with the common organization of the market in pigmeat and with Article 34 of the Treaty. However, a distinction must be made between the raising of an internal tax or levy and the use of its proceeds; the fact that the proceeds are used partly to finance a national aid system incompatible with the common organization of the market does not render the tax itself invalid.The question remains whether the levy itself, regardless of the manner in which its proceeds are used, is incompatible with Article 34 or with the regulation establishing the common organization. As regards Article 34, it should be noted that the levy is charged on all bacon production in Ireland, irrespective of its destination, and that it cannot therefore be classified as a measure having equivalent effect to a quantitative restriction on exports; the levy could only be incompatible with the common organization if, by affecting the prices which bacon curers can pay to producers of pigs, it had the effect of modifying the formation of prices as provided for in the context of the common organization of the market. The national court could not be justified in finding that the levy was incompatible in this way unless it could be shown that the levy on curers in Ireland affects the prices which they could pay for their carcases and thereby put the ‘basic price’ at risk.(h) If the answers suggested by the Commission are given to the national court it is extremely unlikely that the latter would find that the levy was incompatible with Community law and therefore irrecoverable; the counterclaim made by the defendant in the main action would therefore also fail.With regard to charges imposed in infringement of a directly applicable provision of Community law, they should, to the extent to which the action was brought within the prescribed periods, be refunded by the national authority, otherwise the direct applicability of Community law would be put in jeopardy.(i) The following answers should be given to the questions submitted by the High Court of Ireland:1. Article 34 of the EEC Treaty is to be interpreted as prohibiting a national measure which discriminates against products exported otherwise than through a particular agency.2. Regulation (EEC) No 2759/75 is to be interpreted as prohibiting a national export subsidy on products covered by the regulation.3. Regulation (EEC) No 2759/75 is not to be interpreted as prohibiting a national levy on processing of products covered by the regulation except in so far as the levy has the effect of modifying the formation of prices as provided for in the regulation.