Procureur général v Hans Buys, Han Pesch and Yves Dullieux and Denkavit France SARL (5/79)

A —Observations of the accused parties

So as to reply to Question 1, Buys, Pesch, Dullieux and Denkavit France S.à.r.l, the accused parties in the main proceedings, first of all consider the composition of the products in dispute which, contrary to what has been recorded by the court of reference, is as follows:— skimmed-milk powder: 60-65 %— whey powder: 12-20 %— maize starch: 4-7 %— fats: 15-20 %— additives: 0.3 %.All those raw materials, except for the additives, are agricultural products subject to common organizations of the market.By reason of their composition the milk-feed products must be classified under subheadings 23.07 B 1 a 3 and 23.07 B 1 a 4 of the Common Customs Tariff.Since prepared animal fodder referred to in Chapter 23 of the Nomenclature of the Common Customs Tariff appears in the list which is the subject of Annex II to the EEC Treaty it should be considered as an agricultural product. It corresponds in fact to the definition of products of first-stage processing as set out by the Court of Justice in the König judgment, 185/73 ([1974] ECR 607). Its close economic interdependence with basic agricultural products is proved by the fact that the products in question contain 99.7 % of agricultural raw materials and that the price of these substances amounts to 85-90 % of the price of the finished product.Milk-feed products — as agricultural products within the meaning of Article 38 (1) of the Treaty — are moreover expressly governed by the system of common organizations of the agricultural markets within the meaning of Article 40 of the Treaty, by virtue of Article 1 (g) of Regulation (EEC) No 804/68 on the common organization of the market in milk and milk products.It follows therefore from the foregoing considerations not only that the products in question contain products covered by a common organization of the market but also that they are themselves subject to a common organization.Moreover, provided that they contain at least 60 % of skimmed-milk powder, they also come within the definition of animal feedingstuffs according to Article 4 of Regulation (EEC) No 990/72 (Official Journal, English Special Edition 1972 (II), p. 428). as amended by Regulation (EEC) No 804/76.Question 2 merges in essentials with Question 1. The applicability to a certain product of specific rules resulting from the common agricultural policy — in this case monetary compensator amounts — confirms that the product is in fact subject to the common organization of agricultural markets.It may be seen from Commission Regulation (EEC) No 572/76 of 15 March 1976 (Official Journal L 68, p. 5) as amended by Commission Regulation (EEC) No 2232/76 of 14 September 1976 (Official Journal L 253, p. 1) that compensatory amounts were fixed not only for the majority of raw materials used in the composition of milk feed but also for milk-feed products themselves.The system of monetary compensatory amounts is necessarily applicable to products of first-stage processing such as milk feed which is composed as to 99.7 % of agricultural raw materials subject almost entirely to that system and containing at least 60 % skimmed-milk powder, a product for which intervention measures are laid down by Article 5 et seq. of the basic regulation for the milk sector, No 804/68.This is confirmed by the fact that milk-feed products have always been subject to the system of monetary compensatory amounts since Regulation No 974/71 first came into force.Once it has been established that the products in question are subject to the system of monetary compensatory amounts, that proves that they are ‘products whose price depends on the price’ of products ‘covered by intervention arrangements under the common organization of agricultural markets’ and that they ‘are governed by the common organization of markets or are the subject of a specific arrangement under Article 235 of the Treaty’ within the meaning of Article 1 (2) of Regulation No 974/71.Since milk-feed products are not subject to a specific arrangement under Article 235 of the Treaty it follows irrefutably that they come under the common organization of agricultural markets.As to Question 3 it must be emphasized that, as is clear from the first sentence of Question 1 and from the character of the products in question, it concerns the problem whether a national price freeze may be applied to milk-feed products at the production and wholesale stages.In this connexion the case-law of the Court of Justice regarding the compatibility of national price control measures with the system of the common organizations of agricultural markets may be recalled (judgments in the cases of Galli 31/74; Tasca 65/75; Sadam 88-90/75 and Dechmann 154/77).The conclusions to be drawn from this case-law are that:— No unilateral intervention of a Member State in the price formation machinery for products coming under a common organization of the markets at the production and wholesale stages is compatible with Community agricultural rules;— At the stages of retail sale and consumption, national price control rules are incompatible with the common organization only if they are of such a nature as to endanger the objectives and functioning of such an organization.The categorical non-applicability of national price control rules in the fields covered by the common organizations of the markets at the production and wholesale stages is moreover recognized in legal theory and even by the French Government as is clear from the written observations submitted by that government in Case 88/77 (Minister for Fisheries v C.A. Schonenberg and Others [1978] ECR 473).In this case the question is of applying those principles to milk-feed products at the production stage. Those products are subject, as has been seen, to the common organization of the market in milk and milk products so that the Member States no longer have any power to intervene in the machinery for the formation of their prices.The foregoing conclusion is all the more valid inasmuch as the common organization covering the products in question is based on a common price system.The price level for milk-feed products is infact decisively governed by the decisions adopted within the framework of the common agricultural policy and in particular by the common price system according to the common organization of the market in milk products.The following facts which support that statement may be recollected:(1) Milk-feed products are composed as to 99.7 % of agricultural raw materials, the prices of which are governed by decisions adopted within the framework of the common agricultural policy.(2) The composition of these feeding-stuffs is — in particular as regards the most expensive raw material, that is to say, skimmed-milk powder — rigorously fixed by Community agricultural rules which make the grant of aid for the skimmed-milk powder used in animal feeding-stuffs dependent on the presence in the finished product of at least 60 % of that raw material. The amount of that aid is so high that it would be economically impossible to give it up. Producers of milk feed thus have no opportunity to reduce the level of the prices of their finished product by adapting its composition.(3) In consequence of the need to incorporate at least 60 % of skimmed-milk powder in milk-feed products, the intervention price for that raw material — in combination with the aid referred to above — governs the level of prices of milk feed. The intervention price was increased on 16 September 1976 (one day after the reference date for the price freeze imposed by Order No 76-86 P), which proves a fortiori the impossibility of national rules freezing the level of prices of products governed by that Community decision.(4) If Community aid on the skimmed-milk powder used in animal feeding-stuffs is compared with the price of the finished product during the period in question it will be noticed that that aid is so high that the price of the finished product depends decisively upon it. The amount of the aid is fixed in accordance with the criteria of Article 2a of Regulation (EEC) No 986/68 (Official Journal, English Special Edition (1), p. 260), as amended by Regulation (EEC) No 666 /74 (Official Journal L 85. p. 58) and particularly having regard to:— The intervention price for skimmed-milk powder applicable during the milk year in question;— The trend of the supply position for skimmed milk and skimmed-milk powder and their use in animal feeding-stuffs;— The trend of prices for calves;— The trend of market prices for proteins competing with skimmed-milk powder.This system of aids therefore itself forms a Community price policy, specifically applicable to cattle feeding-stuffs having a basis of milk powder.It is clear that a rigid national system of maximum prices is of such a nature as to ‘distort’ an assessment of the criteria indicated above and, consequently, to affect the establishment of the amount of the Community aid in question.(5) Milk-feed products are subject as such to the system of compensatory amounts laid down to compensate for the differences in the price level of products subject to a common organization which might have resulted between Member States following the monetary measures.It would be precisely contrary to the purpose of that system if Member States could cause subsequent differences between the price levels of the said agricultural products in the various countries by the application of unilateral measures such as a price freeze.(6) In trade with non-member countries import levies and export refunds are fixed for milk-feed products. That system can function well only on condition that the price formation machinery for the products concerned within the Community is not altered by the unilateral intervention of a Member State. If the position were different Community rules applicable to the sector in question within French territory would bring about distortions. Aid for milk powder and monetary compensatory amounts would for example turn out to be too low whilst on the contrary the refunds and levies applicable to trade in the products in question with non-member countries would turn out to be too high.As regards Question 4 the accused parties remark that its purpose is to discover, in the event of a negative reply's being given to Question 3, whether a national price freeze can be compatible with the rules for the free movement of goods when it freezes not only profit margins but also freezes the level of prices at the level reached on an arbitrary date fixed by internal rules.After recalling that all national rules capable of hindering, directly or indirectly, actually or potentially, intra-Community trade are to be considered as a quantitative restriction or a measure having equivalent effect, whether or not there exists, in the sector to which they are applied, a common organization of the markets, they consider the problem in the context of national rules on prices for the products.In this respect they emphasize that, according to an opinion supported by the Commission during the first years of the existence of the EEC, national provisions on the prices which are applicable both to national products and to imported products do not necessarily constitute quantitative restrictions or measures having equivalent effect. Subsequently, however, the Commission took the view expressed in the case-law of the Court according to which both maximum prices which, because they are loo low, oblige importers to sell at a loss and minimum prices which, because they are too high, are apt to eliminate the competitive advantage which importers might have as a result of a cost price lower than that for products manufactured abroad are contrary to the free movement of goods even if they are applied without distinction both to national products and to foreign products.According to that case-law which, as it was evolved in cases relating to the stages of retail trade and consumption, applies a fortiori to the production and wholesale stages, national price rules, so as not to impede the free movement of goods, must be limited to fixing either a maximum or a minimum margin of profit as the case may be.It must be concluded therefore that any national price rules which apply without distinction both to national products and to imported products are incompatible with the rules of the free movement of goods inasmuch as they do not permit the variations in the purchase prices of imported products to be reflected in the sales prices of such products.National rules of the type in question, applicable to agricultural products, are no doubt contrary to the provisions of Articles 30 to 34 of the EEC Treaty.In fact, the different common organizations to which agricultural products are subjected lay down as a fundamental principle the system of the unity of prices throughout the Community. The absolute level of these prices and its variations are very high in relation to the profit margins of manufacturers of processed products or of wholesalers. Consequently, if the variations in the purchase prices of agricultural products could no longer be reflected in sales prices as a result of the unilateral rules of a Member State such products could no longer be imported except at a loss.The accused company had in fact to face such a situation although its net profits — as is usual for trade in agricultural products — formed a very low percentage (1 1/2 %) of its turnover.As emerges from a table illustrating the variations in the prices of the most important raw materials at the end of each quarter in the years 1975, 1976 and 1977, such variations were so high in comparison with Denkavit's net profit margin that the company could not refrain from recouping them by means of its sales prices if it was not to sell at a loss. The general price freeze laid down by Order No 78-76 P in fact stopped it from doing so and thus made it impossible for the company to import raw materials from other Member States in which prices were not frozen.In the opinion of the accused parties if Question 5 were to be retained as formulated by the court of reference the question would merge with the third question and would no longer need to be considered.To avoid this it should be understood as inquiring whether a Member State can apply a different price system to agricultural raw materials on the one hand and to products of first-stage processing on the other.In the context of the third question it has already been proved that the prices for animal feed are governed by decisions adopted within the framework of the Community agricultural policy. However, a still more fundamental question is whether a member State can subject a product of first-stage processing containing 99.7 % of agricultural raw materials to a system of prices other than that for the raw materials themselves.It could never be accepted under the common organization of the markets that a Member State should institute an absolute freeze on the prices of a product of first-stage processing within the meaning of Article 38 of the Treaty without controlling the price of the raw materials. Such a practice would automatically compel the producers of animal feed to sell at a loss since the variations in the level of prices for the raw materials are considerably higher than the normal profit margins of the manufacturers and would thus endanger the objectives and functioning of the common organization in question. Since they could no longer be used in the manufacture of milk feed, the raw materials, and in particular the skimmed-milk powder, would be either exported, which would involve an alteration of patterns of trade, or else sold to the relevant intervention body.The statement that the price system applicable to milk feed must necessarily be the same as that applicable to the agricultural raw materials is also supported by the following considerations:— If, as Mr Advocate General Warner stated in Case 31/74 (Galli), a prohibition on controlling the prices of a basic product must logically imply a prohibition on controlling the prices of the derived products, a fortiori that conclusion is valid for a derived product which is itself governed by the common organization of the markets;— The Community authorities use all the price control instruments which apply to the raw materials equally for milk-feed products;— Even the consequences of a given temporary set of rules regarding a raw material have been taken into consideration by the Community authorities for fixing compensatory amounts for milk-feed products.With regard to Question 6 the accused parties recall first of all that the authors of the EEC Treaty selected, amongst several possible options, that of a market economy based on the principle of free competition.To guarantee observance of this principle on the pan of undertakings, the EEC Treaty laid down a prohibition on agreements and concerted practices which might affect trade between Member States and which have ‘as their object or effect the prevention, restriction or distortion of competition within the Common Market’.Article 85 does not merely prohibit undertakings generally from making agreements capable of limiting competition but by way of example it adds a list of prohibited ‘agreements’ amongst which there occur, first, agreements which ‘directly or indirectly fix purchase or selling prices or any other trading conditions’. There is nothing surprising in that in view of the fact that it is precisely in the free determination of the price of a product that the most elementary form of competition between undertakings may be seen.For that reason the Commission also has been particularly strict with regard to agreements having a bearing on prices, to the point of refusing its authorization to an agreement which provides simply that a producer shall pass on to his competitors the essential elements of his price policy.From a consideration of the Commission's attitude as well as of the case-law of the Court it emerges therefore that competition is the fundamental ‘asset’ which must be protected on the market.A measure laying down a total price freeze at the level reached by undertakings on a given date gravely affects that ‘asset’. It simply does not distinguish between undertakings which have adapted their own prices to market prices before the date of the freeze and those which were unable to do so, as was the case with Denkavit, which had proposed to increase its prices on 20 September 1976 as a result of the increase in the prices of the raw materials used in its products. Other undertakings in the sector which may have increased their prices before 15 September 1976 (the date of the freeze) were thus enabled undeservedly to occupy an advantageous competitive position during the whole period of the price freeze.Furthermore, observance of the prices imposed by the authorities implies the total and radical elimination of any form of rivalry and competition between undertakings. This amounts to a most serious blow, at the highest level, against competition and is the kind of occurrence against which the Commission and the Court of Justice have taken action even when it has made its appearance in much less striking ways.One might have been tempted to object in this respect that the Community rules on competition apply only to undertakings and not to States. However, that objection is unfounded. When the Court, in its judgment in Case 40/73 (Suiker Unie and Others) annulled the fines inflicted by the Commission on certain Italian sugar undertakings which had been accused of restricting competition on the Italian market. the Court limited itself to recording the state of necessity in which these undertakings were obliged to operate by reason of the Italian rules then in force, but it by no means recognized the legality of the behaviour of the Italian State,This position is moreover confirmed by the judgment in Case 13/77 (GB-INNO-B. M. v ATAB) in which the Court emphasized that competition will be adversely affected even where the restriction on competition necessarily flows from rules laid down by a Member State.Under Article 5 of the EEC Treaty therefore Member States are obliged to refrain from adopting internal rules which might have as their effect the elimination of competition between undertakings. In view of the fact that the French rules applicable in this case radically suppress competition between undertakings in the sector in question, a reply should be given in the affirmative to the question put by the court of reference.After considering the questions on which a preliminary ruling is requested the accused parties observe that they were referred to the Court of Justice by a criminal court. The questions therefore raise the problem of the compatibility of national penal sanctions with Community law.A system of penalties such as that laid down by the French legislation seems contrary to Community law for various reasons. It diverges in fact from the machinery by which as a rule Community law regulates the operation of the market, that is to say in particular means which do not involve price freezes and a system of penalties intended to guarantee the freeze.The penalties laid down by French legislation are irreconcilable with Community law in view of the fact that they produce effects capable of adversely affecting or distorting the operation of the market. They put a particular restraint on the decisions made by traders and are thus all the more contrary to the models of freedom selected by Community law. It may be seen from the case-law of the Court of Justice that Member States, whilst they may ask traders to carry out certain formalities which are not forbidden by Community law, cannot apply, in case of an infringement, anything but administrative sanctions which moreover are not of a compelling nature.If Community law permits only the application of administrative sanctions which, further, are not forceful ones, that means that the legal ‘asset’ protected by national rules is not particularly appreciable from the Community point of view.Faced with the fundamental principle of freedom of competition laid down by Community law, Member States, even if they were free to regualte prices rigidly, and also under the threat of penalties, cannot adopt sanctions of such a nature as to prevent traders from observing that principle.In conclusion, as regards the position of national criminal rules in relation to Community law, three hypotheses may be envisaged:— The incompatibility with Community law of the national provision (civil or administrative) which forbids certain actions. In that case it is clear that the criminal rule also which provides a penalty for infringement of that provision is not applicable.— The incompatibility with Community law of the penal provision as such. In this case, too, the internal rule cannot be applied.— The influence of Community law as regards factors capable of supplying justification or reasons for not preferring a charge. According to legal theory the fact of having acted in conformity with a Community provision might, if such behaviour were penalized by a national provision, involve the existence of a factor capable of supplying justification (for example the exercise of a right) or, at least, a reason for not preferring a charge if the person concerned had acted in the conviction, perfectly justified by Community law, that his conduct was lawful.Each of the three above-mentioned hypotheses might apply to this case.

B —Observations of the French Government

The French Government seeks to show first of all that animal milk-feed products are not subjected to price provisions in the framework of the common organization of the market in milk products and are thus not excluded from the matters to which the Ministerial Order No 76-86 P of 23 September 1976 applies.In this connexion it observes that, although these products appear in Article 1 of Regulation No 804/68 of the Council on the common organization of the market in milk and milk products,— They have no Community price guarantee, as an intervention price is laid down simply for the raw material (skimmed-milk powder) which forms a considerable though not a preponderant part of their composition;— They are not subject to monetary compensatory amounts except to the level of the incidence in their sale price of the said raw material;— Under Regulation No 986/68 they benefit from an aid the sole purpose of which is, however, to facilitate the marketing of the surplus skimmed-milk powder.No price guarantee in the form of an intervention price determined in the context of the common agricultural policy is thus granted to milk-feed products as such, which is explained moreover by the industrial nature of the products concerned. This nature is shown very clearly by the following considerations:— As milk powder is itself a product of first-stage processing, milk-feed products which result in their turn from the processing of the milk powder can only constitute a product of second-stage processing;— The extent of the added value (average 35 %) shows the complexity of the processes undergone by the raw materials incorporated into the feeding-stuffs and thus shows clearly that the final product is an industrial one.Having stated that, the French Government observes that the Member States retain without any doubt power in principle to regulate the prices of products not subject to price provisions in the context of the common organizations of the market.The compatibility of such measures with Community law is nevertheless subject, according to the case-law of the Court of Justice, of the condition that they shall not damage the proper functioning and the objectives of the common organizations of the market.Order No 76-86 P satisfied that condition. An analysis of Denkavit's prime costs and sale prices shows that skimmed-milk powder, whilst constituting 60 % of the raw material, represents only 38 % of the sale price of the finished product, which singularly restricts the incidence of the freezing measures.The rates for skimmed-milk powder intended for animal feeding-stuffs were not affected by the measure in question and even underwent an increase of 7 % for the whole of the year 1976. The percentage of milk powder denatured during the period of the price freeze (15 September to 31 December 1976) was slightly higher than the percentages noted during the same periods in the years 1975 and 1977.Finally, in support of that statement it may be recollected that the Commission of the European Communities also took the view in its reply to a written question from Mr Cointat. a Member of the European Parliamentary Assembly, that the French Order No 76-86 P of 23 September 1976 had not affected the functioning of the common organization of the market in milk and milk products.For these reasons the French Government suggests that the following reply should be sent to the questions put by the court of reference:(1) Milk-feed products for animals are products of an industrial nature and not subject to any price provision in the context of a common organization of the markets. It was therefore perfectly legal for them to be subjected to the French rules temporarily freezing industrial prices.(2) The price freeze for milk-feed products laid down by Order 76-86 P of 23 September 1976 did not run counter to either the objectives or the functioning of the common organization of the market in milk products.’

C —Observations of the Commission of the European Communities

After recalling the essential aspects of the common organization of the market in milk and milk products, and in particular Community rules determining the price formation of milk-feed products for cattle, the Commission considers the questions put to the Court of Justice by the court of reference.As regards Question 1 it remarks that an affirmative reply would allow the Court to give its views on the compatibility of the price freeze measure adopted by the national authorities with the common organization of the market under which the products in dispute are said to come.In its opinion an affirmative answer is necessary because the products in dispute are products of first-stage processing directly related to basic products within the meaning of Article 38 (1) of the EEC Treaty, in accordance with the criteria for interpretation which emerge from the case-law of the Court. In fact, the price of the basic agricultural raw materials used in the production of milk feed which is composed as to 60 % of milk and as to 20 % of whey) amounts to 70 to 85 % of the price of the products of processing. Far from being marginal, it is therefore altogether decisive, which implies an economic interdependence between the basic products and the products of processing, irrespective of the number of operations involved in the production process. Having regard to the percentage of milk products (more than 50 %) which they contain, the products in question come under the common organization of the market in milk and milk products.To Question 2, in which the court of reference asks whether the fixing of monetary compensatory amounts for a product involves its being subject to a common organization of the market, the answer must be that the system which is laid down by Regulation No 974/71 is the converse: monetary compensatory amounts can be applied only to products coming under a common organization of the market. Milk-feed products for calves have always been subject to the system of compensatory amounts.Once it has been established that the products in question are governed by the common organization of the market in milk and milk products, the question arises whether and to what extent the freezing of prices by a Member State is compatible with the rules of the common organization.With reference to this problem, which is raised by Question 3, the Commission states that, in accordance with the case-law of the Court, although Member States in principle retain the power to regulate the sale prices of agricultural products, they must nevertheless refrain from any action capable of compromising the realization of the common agricultural policy.The national price freeze measures adoped by the French Government risk, in abstracto, a clash with the Community price system.First, although there is no intervention price for milk-feed products, it must not be forgotten that the intervention price for powdered milk constitutes in this case 70 to 85 % of the total cost of the raw materials. If the maximum price fixed by the price freeze measure were lower than that price the Member State concerned would in fact be preventing the obtaining of a price level guaranteed by Community law.Secondly, although it is true that Community law does not guarantee the realization of the target price, all the machinery for the organization of the markets inescapably aims at obtaining this result. However, it might be that price freeze for milk-feed products, having regard to an increase in the intervention price for skimmed-milk powder, might bring about an excessive reduction in the margin of profit of the manufacturer of these products and consequently might have an indirect incidence on the formation of the price of skimmed-milk powder and consequently on the price of the milk which, thus, could not approach the target price.Thirdly, it is essential for the Community to be able to dispose of a pan of the excess production of milk products in the manufacture of animal feeding-stuffs. This purpose could not be attained if the national price freeze were to restrain or prevent the production of milk-feed products.Finally, having regard to the interdependence between Community prices and the fixing of refunds and levies, the national price freeze might indirectly affect trade with non-member countries.In this case, these risks materialized, at least to some extent.It is possible in fact to take the view that, so as to permit an increase in the price of liquid skimmed milk corresponding to the target price, the market price for skimmed-milk powder would have to be about 5 % above the intervention price.The price freeze in France occurred at a time when the price for skimmed-milk powder was between the intervention price and the presumed level of the target price for milk. This meant that it made more difficult, on the one hand, the actual realization of the target price and, on the other hand, the sale of skimmed-milk powder in public stores.Even if the freeze had occurred at a level above the target price for milk it would have had the same consequences. In fact as a result of the operation of the machinery of the common organization, prices tend to fall to reach at most the level of the target price, above which they can only remain for a brief period.In these circumstances, having regard to the time-lag between the purchase of the raw material and the sale of the finished product, the freeze had the effect in this case also of prohibiting a producer who has purchased the raw material before the price rise from passing the rise on in the sale price of his products during the period in which the prices of the raw material are high.The purpose of Question 4 is to inquire whether the national measure in question may constitute a measure having an effect equivalent to quantitative restrictions within the meaning of Article 30 of the EEC Treaty.According to the case-law of the Court the answer should be that a general price freeze at an absolute level which completely excludes the passing on in sale prices of the increase in purchase prices of the raw materials or finished products does in fact come within that concept, since it tends to abolish or restrict the opportunities for import both for the finished products and for the raw materials to be used in the manufacture of such products.As regards Question 5 it may be noted that the French measures do in fact lay down special provisions for agricultural products the prices of which are governed by decisions adopted within the context of the common agricultural policy and that it is for the court of reference to determine whether the internal administrative distinctions made in this respect are in conformity with the order bringing the price freeze into effect.Question 6, asking whether the national measures in question are compatible with the combined provisions of Articles 5 and 85 of the EEC Treaty, does not call for any reply in this case. In fact, the question of the compatibility with Community law of a national measure must above all be assessed, if there is a common organization of the market for a given product, with regard to that organization and to the rules relating to the free movement of goods. The incompatibility of the national measures in question with Community law is already clear from the answers proposed to Questions 3 and 4, so that Question 6 has lost its purpose.Having regard to the observations set out above, the Commission proposes that the following answers should be given to the questions referred to the Court:"1. Milk-feed products for calves coming under tariff subheading 23.07 B and containing more than 50 % of milk products are subject to Regulation No 804/68 on the common organization of the market in milk and milk products.The Community aid provided for in Article 10 of the regulation referred to above is granted to the extent to which such milk-feed products contain inter alia at least 60 % of skimmed-milk powder.2. For the marketing year 1976/1977 milk-feed products coming under Regulation No 804/68 were subject to the monetary compensatory amounts fixed by Regulation No 572/76.3. Regulation No 804/68 must be interpreted as prohibiting national rules imposing a price freeze on milk-feed products for calves at the production and distribution stages since they endanger the objectives or the functioning of that common organization of the market, in particular of its price rules.4. Article 30 of the EEC Treaty and Article 22 of Regulation No 804/68 must be interpreted as prohibiting unilateral rules by a Member State to freeze prices which exclude the possibility of passing on, in the sale price for milk-feed products, the increase in the purchase prices of the raw materials or of the finished products imported from another Member State.

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