Procureur du Roi v Charles Kefer and Louis Delmelle (95/79, 96/79)

I —Facts and written procedure

II —Written observations submitted under Article 20 of the Protocol on the Statute of the Court of Justice

The Belgian Government first of all examines the structure of the Community regulations on the common organization of the markets in beef and veal and pigmeat respectively. With regard to the latter common organization of the market, which is mentioned solely in Case 95/79 (Kefer), it observes that at the time when the facts took place the market in pigmeat was governed by Regulation (EEC) No 2759/75 of the Council of 29 October 1975 and not by Regulation No 121/67/EEC of the Council of 13 June 1967, as mentioned incorrectly in the question referred to the Court for a preliminary ruling. This is however not of practical importance since Regulation No 2759/75 is only the codified version of the previous regulation, so that the principles valid for one are also valid for the other. It then sets out the Belgian rules following from the Ministerial Order of 27 March 1975, as amended by the Ministerial Order of 14 July 1976. The principal characteristic of the system set up by those rules is the fixing of a fixed gross profit margin on the basis of a fluctuating purchase price. The retail price of beef and veal and pigmeat is made up of the wholesale price freely negotiated by the retailer and by a gross profit margin added to the wholesale price which alone is limited. This implies that the system can have no influence on the previous marketing and production stages. Since the formation of wholesale prices is completely free, the objectives or the functioning of the common organizations of the markets in those products are in no way jeopardized.The observations lodged by the Belgian Government in Case 95/79 (Kefcr) differ from those lodged in Case 96/79 (Delmelle) in that they also broach the problems of the interpretation of the regulation on the common organization of the market in pigmeat. In this respect, the Belgian Government states that the Court has already had occasion to give a specific ruling on a similar question by means of the judgment of 29 June 1978 in Case 154/77, the Dechmann case, and that it is therefore sufficient to refer the national court to that judgment. As regards the question relating to the common organization of the market in beef and veal (which is common to both cases), the Belgian Government recalls the development of Community case-law on the fixing of prices through the judgment in the Galli case (Case 31/74), - the Tasca case (Case 65/75), the SADAM case (Joined Cases 88 to 90/75) and the Dechmann case (Case 154/77). In paragraphs 18 to 20 of the decision in the latter judgment, the Court stated that in principle the fixing of a maximum profit margin for retailers to charge when selling to the ultimate consumer is not apt to jeopardize the aims or functioning of a common organization of the market, whilst specifying that such a margin might nevertheless be incompatible with Community law if it did not take sufficient account of the marketing and importing costs or did not ensure that the retailer obtained fair remuneration for his activity. There is nothing to prevent this reasoning being applied to the market in beef and veal. It was in fact applied to that market by the Court in its recent judgment in the Grosoli case (Case 223/78).With this in mind, it is necessary to recall that the Belgian system :— concerns solely the sale of beef and veal by retailers to the consumer, and not the wholesale trade;— does not impose any retail price freeze at a specific level independent of. the market trend and of the particular features of certain specific situations;— essentially varies in time and space on the basis of the sources of supply chosen by the retailer and of the price trend on the markets concerned;— merely fixes a gross profit margin which covers running expenses and selling costs and the retailer's profit and which is adjusted, where necessary, after consultation of the Belgian Commission for Price Control, which includes representatives of the groups concerned.The gross profit margin of Bfr 22 per kilogram was moreover described as reasonable by the Commission in the statement lodged by the latter in the Deckmann case.It is therefore necessary to conclude that national rules of the type in question cannot be considered to be incompatible with Regulation (EEC) No 805/68 of the Council of 27 June 1968.The Commission of the European Communities observes, first of all, that the only new factors in Joined Cases 95 and 96/79 by comparison with Case 154/77, the Dechmann case, are on the one hand, the date of the facts in the main actions (October 1976 and April 1977 respectively in the present cases and a period in 1975 in the Dechmann case) and, on the other, in the fact that on this occasion the questions referred to the Court concern not only the common organization of the market in pigmeat but also the common organization in force in the market in beef and veal. In view of the fact that neither the national rules in question nor the common organization of the market in pigmeat have been fundamentally amended between 1975 and 1977, the interpretation given by the Court in the Dechmann case remains wholly valid with regard to the market in pigmeat. It only remains therefore to consider whether that interpretation is also applicable to the common organization of the market in beef and veal.In the opinion of the Commission, the arguments which form the basis of the judgment of the Court in the Dechmann case with regard to the common organization of the market in pigmeat are still completely valid as regards the rules relating to the common organization of the market in beef and veal and, in particular, Regulation No 805/68.The common organization of the market in beef and veal aims, by setting up a single market in that product, to stabilize the markets and to ensure a fair standard of living for the agricultural community concerned. For this purpose, Regulation No 805/68 contains rules on prices, which are however valid only for the production and wholesale stages, as well as rules intended to ensure the abolition of all obstacles to the free movement of the products within the Community.In order to tell whether a maximum gross profit margin fixed nationally for the retail trade is compatible with the rules of the common organization of the market in beef and veal, it is therefore necessary to consider its effects on the free movement of the products.The determining factor to take into consideration is, as in the case of pigmeat, to what extent the margin in question is fixed at a level calculated to cover the marketing and importing costs borne by the retailer and to ensure fair remuneration for him. In fact, if that were not the case, the margin would have on the previous marketing stages the effect of a true maximum price and would encourage in particular producers to export instead of supplying the national market or else would have the effect of handicapping the sale of imported products.It is for the national court to settle in concreto the question of compatibility on the basis both of all the facts pointed out at the time of the dispute which comes before it and of the general rule of interpretation set out above.On the basis of the preceding considerations, the Commission proposes that the question referred to the Court for a preliminary ruling should be answered as follows:“Regulations Nos 805/68 and 2759/75 must be interpreted as not prohibiting the unilateral fixing by a Member State of a maximum gross profit margin for the retail of beef and veal or pigmeat which is calculated essentially on the basis of the purchase prices charged at the previous marketing stages and which varies according to the trend in those prices, provided that the margin is fixed at a level which does not form an obstacle to intra-Community trade”.

III —Oral procedure

The accused in the main action in Case 96/79, represented by J. M. Van Hille, Advocate of the Ghent Bar, the Belgian Government, represented by E. Knops, and the Commission of the European Communities, represented by J. Delmoly, presented oral argument at the hearing on 21 November 1979.The Advocate General delivered his opinion at the hearing on 13 December 1979.

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