Apple and Pear Development Council v K.J. Lewis Ltd and others (222/82)
law://eu/cjeu/1982/c-222-82/hd_1_1_2_1_2@2026-11-13law://eu/cjeu/1982/c-222-82/hd_1_1_2_1_2@2026-11-13The Development Council considers two judgments of the Court, namely Pigs and Bacon Commission v McCarren, cited above, and the judgment of 29 November 1978 in Case 83/78 Pigs Marketing Board [1978] ECR 2347 and observes that Article 40 of the Treaty must be interpreted and considered in conjunction with the regulation on the common organization of the market in the product in question and with the provisions of the Treaty on the abolition of tariffs and commercial barriers, which provisions must be regarded as an integral part of the common organization of the markets. The Development Council refers to the principle that once the Community has, pursuant to Article 40 of the Treaty, legislated for the establishment of a common organization of the markets in a given sector the Member States are under an obligation to refrain from taking any measure which might undermine or create exceptions to it. In this connection the Development Council relies upon the Pigs and Bacon Commission and Pigs Marketing Board cases cited above. It also refers to the judgment of 18 October 1979 in Case 5/79 Buys and Others [1979] ECR 3203, emphasizing that it is consistently clear from the case-law that the existence of a common organization of the markets in a given sector does not preclude a Member State from taking action in that sector provided that the aims or functions of the common organization of the market are not thereby endangered or jeopardized.In view of that principle, the Development Council considers it necessary to examine its constitution, powers and functions in the light of the provisions of the regulation establishing the common organization of the market in fruit and vegetables, regard being had to the provisions of the Treaty on the free movement of goods. That examination confirms that the Development Council and its activities are entirely consistent with the relevant rules of Community law.The Development Council analyses the relevant parts of Regulation No 1035/72, as amended, and states that the initiative for the creation of a body to promote the production of sound standards, to encourage market and consumer research and to collect and disseminate relevant information and statistics came from growers in England and Wales.The Development Council then provides a summary of its functions, as laid down in the 1980 Order. Those functions include :— the standardization of products;— publicity;— improved production, distribution and marketing (including promotion of cooperative producer organizations) ;— the collection and dissemination of relevant statistics and other information needed by the industry.In this connection the Development Council considers it necessary to emphasize at the outset certain factors relating to the nature of its status which are of crucial significance in the context of this action. The Development Council is essentially a promotional, advisory, research and coordinating body. It has no power to trade or otherwise intervene in the market in apples and pears or to impose upon growers in the industry an obligation to obey rules whether in relation to production, marketing, pricing, distribution or to other matters. Consequently, growers are completely free, so far as the Council is concerned, to carry on business in whatever way they see fit. Moreover, the Council does not play any part in relation to the physical importing or exporting of apples and pears. In this respect the Development Council submits that this case is wholly distinct from other cases which have come before the Court where national measures have been held to be incompatible with the common organization of a particular market, as for example, the judgments of 30 October 1974 (Case 190/73 Van Haaster [1974] ECR-1123), of 22 January 1976 (Case 60/75 Russo [1976] ECR 45), of 23 January 1975 (Case 51/74 Van der Hulst's Zonen [1975] ECR 79), of 23 January 1975 (Case 31/74 Galli [1975] ECR 47) and of 18 May 1977 (Case 111/76 Van den Hazel [1977] ECR 901) and the Buys, Pigs Marketing Board and Pigs and Bacon Commission cases cited above.In those cases the national measure of which complaint was made fell into one or other of the following categories :(i) Measures having the effect of a production quota for a product subject to common organization of the market;(ii) Measures forbidding the producer to trade unless such trading was done through a particular body;(iii) Measures which restrict in other ways the ability of the producer to trade freely;(iv) Measures interfering with the price formation machinery of the common organization;(v) Payments of export bonuses.The fundamental limitations upon the Development Council's powers set out above are sufficient in themselves to refute any suggestion that its activities could be incompatible with the common organization or could infringe the provisions of the Treaty relating to the free movement of goods. Moreover a detailed examination of the Development Council's powers and activities reveals that they are completely consistent with the common organization of the market. There is accordingly no basis for the contention of the defendants in the main proceedings that the Development Council or its functions undermine or create exceptions to or jeopardize the common organization of the market.The Development Council next compares the “essential objectives” of Regulation No 1035/72, as amended, with its own activities and makes the following observations.
According to the Development Council several of its functions are related to supply and demand. None of these in any way conflicts with the Community objectives; rather they are complementary. Moreover, no steps taken by the Development Council relating to these matters has or could in any way hinder the functioning of Community machinery in this area. Indeed the advisory functions of the Development Council, in so far as they assist in increasing efficiency in production and marketing and in ascertaining consumer preferences, further the Community interest.
Nothing that the Development Council does has, in its opinion, any direct effect upon prices or the profitability of production. The only possible effect would be indirect in so far as the Development Council attempts to increase demand by its publicity activities. The Development Council is under an express obligation to improve and develop the service rendered by the industry to consumers and to enable the industry to provide an economic service, and this it does. All these matters are entirely consistent with the “essential objectives” of the common organization of the market and further the Community interest.
The Development Council states that the principal United Kingdom varieties of both apples and pears are distinctive in quality and in flavour. It is in the interests of consumers throughout the Community that these varieties should survive commercially and many of the Development Council's advisory and promotional activities are intended to achieve that result.In reply to the questions submitted by the Court the Development Council stated that the promotional campaigns (“the Friends of the Cox” and “the Bramley Queen Contest”) were of very little significance in the context of the general promotional activities of the Development Council. As a rule, the Development Council's advertising is generic.
In this connection the Council invokes the Vriend judgment, cited above, in which the Court implicitly accepted the Commission's argument that national measures intended to promote the quality of a product pursue precisely the same objective as the regulation on the common organization of the market in the sector in question. Furthermore, the circumstances in the Vriend case differ from those of the Development Council, which has no power to enforce legally binding standards and may only provide encouragement.The function mentioned in Paragraph 3 of Schedule I to the 1980 Order is the promotion of the production and marketing of standard products. It is recognized by the Development Council that growers must be reminded of the importance of maintaining quality standards so as to ensure that apples and pears grown in England and Wales and offered for sale are comparable in quality, presentation and packaging to imported fruit. Some of the steps taken by the Development Council to assist in this are described in Paragraph 7 of the Council's Report for the year ended 31 March 1980. One of the initiatives mentioned in that paragraph was the setting up in May 1979 of an Information Group consisting of growers and representatives of other interests in the industry. In this connection the Development Council states that one of the functions of that Group is to discourage growers from marketing immature fruit and it observes that the Community regulations, which have the same aim in view, provide for an increase in the normal Community minimum sizes for a specified period at the beginning of each season. The government of each Member State may choose whether or not to accept this derogation and is also free to extend the specified period if appropriate for its area of the Community. In respect of varieties not covered by those EEC regulations, the Information Group recommends minimum sizes for the same periods and in very exceptional circumstances the Group recommends that in respect of a variety covered by the EEC regulations the period of derogation specified in the regulation in question be extended where this is desirable in view of local conditions. These recommendations are based on the same principles as the Community regulations in so far as they increase the minimum sizes but do not in any way conflict or even overlap with the Community's sphere of operation. The recommendations are without any binding force and in issuing them the Group takes the opportunity of reminding growers of the Community regulations relating to minimum sizes.With regard to certification, registration of trademarks for certified products and the functions of the proprietors of such marks, the Development Council emphasizes that, save for its ownership of the certification trademark rights in the “Kingdom Scheme” logo, the Council has not exercised any of the abovementioned functions. The existence of a power to exercise rights in relation to trademarks cannot possibly jeopardize or undermine the common organization in question or hinder intra-Community trade. That could only happen if such rights were exercised in a manner contraiy to Community law and there is no question of that in the present case.
The Development Council considers that there are no grounds for any allegation that those activities are capable of undermining, creating exceptions to or otherwise jeopardizing the common organization of the markets in that sector. Regulation No 1035/72 itself is silent as to publicity save in so far as its encouragement of the creation of producers' organizations implicitly approves the promotional ventures in which such organizations would engage. Furthermore, the activities of the Development Council are part and parcel of the “fair competition” and “specialization” included in the list of objectives of that regulation.Furthermore in other Member States there are State-subsidized bodies which organize publicity campaigns abroad, for example in the United Kingdom, to promote fruit produced in their country.The Development Council submits that the obligation upon growers to register with it in no way conflicts with or affects the common organization and is not capable of infringing either Article 30 or Article 34 of the Treaty. If the case-law of the Court referred to above is taken into account it is impossible to see how that obligation could have, actually or potentially, an effect equivalent to a quantitative restriction upon either imports or exports. In the Pigs Marketing Board case the Court held that an obligation to register was unlawful because that obligation formed part and parcel of a national marketing scheme which was manifestly incompatible with the Community rules in so far as it was designed to channel all trade in a product through a national authority.With regard to the Vriend case cited above the Development Council claims that in that case, by contrast with the present case, the obligation to register was such that traders who failed to register and who were not producers, where prohibited from carrying out commercial transactions in any form whatever and that compulsory affiliation to an official supervisory body carried with it the obligation for its members to comply with the rules and general instructions issued by the supervisory body. Furthermore, in the Vriend case the rules in question conferred a trading monopoly on affiliated producers. In the present case growers are at liberty to carry on their business as they please and the requirement of registration does not affect in any way the quantity of apples and pears available on the market.The Development Council declares that in those circumstances the obligation to register must be regarded as wholly a matter of administrative convenience connected to the payment of the annual charge and the making of returns. The Development Council considers that, if its other functions are not incompatible with Community law, the obligation to register is likewise not incompatible.Finally, with regard to the exemption from the national measures which is afforded to growers occupying less than two hectares of land or land planted with less than 50 apple or pear trees, the Development Council submits that such an exemption accords with common sense, good administration and with the principle of proportionality and that it cannot constitute discrimination so as to contravene Article 40 (3) or any other provision of Community law. The exempted producers cannot realistically be regarded as commercial growers. The exemption in question certainly does not constitute a breach of the principle of nondiscrimination contained in Article 40 (3) which, as the Court emphasized in the Holdijk case, applies to the objectives pursued by the relevant common organization of the markets. A right to confer certain advantages on certain small-scale producers was upheld in the judgment of 30 October 1980 (Case 76/80 Schneider-Import, [1980] ECR 3469).The United Kingdom considers that the mere existence of a common organization of the market does not ipso facto preclude all national measures affecting the agricultural products concerned. In this connection it refers to the judgment of the Court of 2 February 1977 in Case 50/76 Amsterdam Bulb [1977] ECR 137 and to the judgment in the Holdijk case cited above.With reference to the Pigs and Bacon Commission case and the Buys case, cited above, the United Kingdom considers that a national measure is incompatible with the common organization of the markets if it undermines or creates exceptions to, or jeopardizes its aims and functioning.According to the United Kingdom the essential question is whether a national compulsory levy to finance promotional activities for apples and pears is so clearly incompatible with Regulation No 1035/72 that individuals may invoke such incompatibility in the national courts.In that regard, the United Kingdom observes that the Development Council has no power to, and does not, make binding rules as to common quality standards, that it has no power in relation to producer organizations and does not affect their formation or activities in any way and that likewise no activity of the Council infringes upon the intervention and price mechanism established under Regulation No 1035/72.With regard to Articles 92 and 93 of the Treaty, which were given effect by Article 31 of the regulation, the United Kingdom Government refers to the Pigs and Bacon Commission case, cited above, which, in its view, does not entail the result that all State aids are rendered unlawful but establishes that, in addition to being subject to Articles 92 to 94, the aid must not of its nature be incompatible with the common organization of the market. For the reasons set out above the levy at issue is not incompatible with the common organization. Nevertheless, on the basis of the Steinike case cited above the levy remains subject to review by the Commission pursuant to Article 93 of the Treaty.In the opinion of the United Kingdom examination of the characteristics of the regulation in question do not suggest that the levy at issue is incompatible with the specific mechanisms thereof. Furthermore, the United Kingdom submits that there is no principle of Community law whereby a levy used to finance advertising and related activities is of its nature incompatible with the regulation in question. In this connection the United Kingdom refers to the decisions of the Court in the Geddo and Pigs and Bacon Commission cases, cited above. In conclusion it should be observed that there is no a priori reason why a levy like the one in question should be contrary to the principles of the common organization of the markets.Thus, whilst the United Kingdom fully accepts that the basic principle underlying Regulation No 1035/72 is the freedom of trade and of commercial transactions subject to the provisions of that regulation, it does not consider that the levy at issue endangers that principle.With regard to the obligation of growers to register with the Development Council the United Kingdom considers that registration of itself is unobjectionable provided that the levy as such is compatible with Community law. Nor may it be suggested that the means of collecting the levy are out of proportion to the end to be achieved.The Danish Government declares in its written observations that this case turns primarily on the question whether national rules setting up an organization such as the Development Council are compatible with the common agricultural policy. It considers that the object of the Development Council appears to be to improve the efficiency and productivity of the sector as a whole and observes that it is therefore necessary to determine the extent to which the national rules on agricultural products, for which a common organization of the market exists, are permitted under Community law. In this connection it summarizes the principles which the Court has set out in its case-law, for example, in the judgments in the Van der Hulst's Zonen, Pigs Marketing Board, and Irish Creamery cases, cited above.The Danish Government concludes from its analysis of that case-law that once a common organization of the market has been established for a given product Member States are under an obligation to refrain from taking any measure which might alter the common organization or affect its scope. On the other hand the existence of a common organization of the market does not exclude all national measures. Thus the Member States are obliged to adopt the necessary provisions for implementing the common rules, for example provisions imposing penalties, rules of procedure, and rules on supervision. Even in the more restricted sphere of measures regulating the market properly so-called the Member States continue to retain certain powers. The extent of such supplementary powers depends upon an appraisal both of the express provisions of the common organization of the market and of its objectives.Finally, the Member States may assess taxes and duties, subject always to the limitations flowing from Community law, in particular from the requirement that such taxes and duties may not hinder the operation of common organizations of the markets.The Danish Government then refers to the other central provisions of Regulation No 1035/72 and notes that the regulation contains provisions concerning aid for the formation of producers' organizations with a view to consolidating the position of producers through concentration of supply and regulation of prices at the producer stage.The Community has taken the view that, in particular in the market in fruit and vegetables, it is important to consolidate the position of producers.The Danish Government refers to the Van der Hulst's Zonen case, cited above, and emphasizes that the organization of the market in question contains no reference, either in positive or in negative terms, to the compatibility or otherwise of national regulations, present or future, with the common organization of the market. That also applies to the organization of the market in fruit and vegetables.The Danish Government considers that the United Kingdom measures concerning the Development Council are compatible with the objective of the common organization of the markets and with Regulation No 1035/72. On the basis of the information available to the Danish Government there is no reason to consider that the measures in question limit production or the right of the producers freely to market their products. They do not affect the rules of the organization of the market and of the Treaty concerning trade between Member States and with nonmember countries.There are, finally, no grounds for considering that any other aspect of the national measures in this case entails any discriminatory treatment contrary to the principles laid down in the Treaty.With regard to the levy of the charge, the Danish Government considers that, in the absence of any provisions on the matter, it is not contrary to the provisions governing the common organization of the market. It is proper for the expense of financing the Development Council to be shared equally by the growers concerned, all of whom benefit from it.It is assumed that the charge is not so heavy as to affect the operation of the organization of the market, including its system of prices.The settled case-law of the Court of Justice shows that it is the task of the national court to decide whether a national measure has in fact produced effects which hinder the operation of the common organization of the market.The Commission observes for its part that if the sales promotion carried out by the Development Council covered apples and pears generally, the Commission would see no objection to it as regards Community law in general or the common organization of the market. However, the Development Council carries out sales promotion for English and Welsh apples and pears only which could lead to their share of the market increasing at the expense of competing products from other Member States. Indeed, the Council's Report and Statement of Accounts for the Year 1981 shows clearly that the aim of the promotion campaign “is to recover for growers their rightful share of the United Kingdom market”. The Commission therefore considers that the campaign appears to be directed in particular at certain varieties of apples and pears at the expense of others.The Commission is unwilling to express a definitive view at this stage regarding the compatibility of such a campaign with the common organization of the market and recalls the two judgments of the Court in the Geddo and Van der Hulst's Zonen cases, cited above. If, as the Commission thinks, the approval of the Court relates to publicity campaigns the second case may be regarded as reversing Geddo pn that point in so far as the Court stated that national provisions conflict with the principle of nondiscrimination “where the revenue from the charge is intended to place national products at an advantage”. The Commission also refers to the Pigs and Bacon Commission case, cited above, in which the Court held that in so far as a levy was employed for purposes incompatible with the common organization of the market that levy was itself incompatible therewith, and to the Irish Creamery case, likewise cited above, which the Commission considers may not be entirely relevant here since that case was concerned with a charge paid into the general budget of the State and accordingly was not earmarked for a use which would in any way affect the operation of the common organization of the market.After considering the relevant case-law the Commission regrets that it is still unable to express a view as to whether an advertising compaign of the kind in question is compatible with Regulation No 1035/72. If the campaign is not compatible, the levy must also be incompatible in so far as it is used to finance the campaign.With regard to the Development Council's influence on the quality of apples and pears produced in the United Kingdom, the Commission observes that it is incompatible with the common organization of the market in fruit and vegetables. Member States do not have sweeping powers to derogate from the quality standards fixed by the Community.The Member States indeed enjoy a certain discretion, as is shown by the requirement that “the fruit must be sufficiently developed and sufficiently ripe to withstand the transport and handling ensuring its arrival in a satisfactory condition at its place of destination” (Section II (A) of the Annex to Regulation (EEC) No 1641/71 of the Commission of 27 July 1971 laying clown quality standards for dessert apples and pears (Official Journal, English Special Edition 1971 (II), p. 616).Likewise, when a derogation from the Community quality standards is provided for by a Community regulation the Member States may be empowered not to apply that derogation (see Article 1 (1) of Regulation (EEC) No 1677/82, Official Journal 1982, L 186, p. 11). Nevertheless, such a measure must take the form of a formal decision by a Member State and not an administrative measure adopted by a body such as the Development Council.According to the Commission the Development Council's 1981 Annual Report shows that the Council exerts its influence on growers to prompt them to comply with quality standards which are not necessarily those of the Community. Such compliance is ensured by means of “recommendations” which appear to be more peremptory than is usually implied by that word, since the report states “it was rarely that a grower again marketed such fruit after the lapse had been brought to his notice” and that wholesalers who repeatedly supply “substandard” fruit are reported to the National Federation of Fruit and Potato Traders.Furthermore, the Development Council is not one of the authorities notified by the United Kingdom to the Commission as empowered to apply quality standards pursuant to Article 8 of Regulation No 1035/72. The Commission considers that it is unable to take a final decision on this point and observes that if the Development Council induces or seeks to induce producers to comply with quality standards other than those fixed by the Community regulations it may undermine the operation of the common organization of the market. Consequently, in so far as the levy is applied for such purposes it is also incompatible with the common organization of the market.As regards exemption from the levy and the requirement of registration the Commission considers that they are not incompatible with Article 40 (3) of the Treaty. It is clearly sound to exempt from such requirements producers who are not engaged in commercial production and those who produce small quantities. The Commission considers that the requirement to register is merely incidental to the collection of the levy even though failure to comply with the requirement has been made a separate offence under English law. In this case the requirement cannot be considered to be a restriction on growers' access to the market. That is why the Commission considers that the judgment of the Court in the Vriend case, cited above, is not relevant since in that case, according to the Commission, the requirement of registration constituted a restriction on marketing. The lawfulness of a requirement to register thus depends on the lawfulness of the levy.
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