JUDGMENT OF 28.3.1984 — JOINED CASES 47 AND 48/83 PLUIMVEESLACHTERIJEN MIDDENNEDERLAND AND VAN MIERT

In Joined Cases 47 and 48/83 REFERENCE to the Court under Article 177 of the EEC Treaty by the College van Beroep voor het Bedrijfsleven [administrative court of last instance in matters of trade and industry] for a preliminary ruling in the administrative appeal proceedings against a disciplinary measure brought before that court by

THE COURT (Fourth Chamber) composed of: T. Koopmans, President of Chamber, K. Bahlmann, P. Pescatore, A. O'Keeffe and G. Bosco, Judges, Advocate General: S. Rozès Registrar: H. A. Rühi, Principal Administratör

gives the following

JUDGMENT

Facts and Issues

The facts of the case, the course of the procedure and the observations submitted pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the EEC may be summarized as follows:

I — Facts and written procedure

The common organization of the market in poultrymeat is governed by Regulation (EEC) No 2777/75 of the Council, of 29 October 1975 (Official Journal L 282, p. 77), which replaced Regulation No 123/67/EEC of the Council of 13 June 1967 (Official Journal, English Special Edition 1967, p. 63).

Article 2 of Regulation No 2777/75 provides as follows:

“1. In order to encourage action by trade and joint trade organizations to facilitate the adjustment of supply to market requirements, with the exception of action relating to withdrawal from the market, the following Community measures may be taken in respect of the products specified in Article 1 (1): measures to promote better organization of production, processing and marketing, measures to improve quality, measures to permit the establishment of short- and long-term forecasts on the basis of the means of production used, measures to facilitate the recording of market price trends. General rules concerning these measures shall be adopted in accordance with the procedure laid down in Article 43 (2) of the Treaty. 2. Marketing standards: shall be adopted for one or more of the products specified in Article 1 (1) (b), may be adopted for the products specified in Article 1 (1) (a), (c), (d), (e) and (f). These standards may relate in particular to grading by quality and weight, packaging, storage, transport, presentation and marking. Standards, their scope and the general rules for their application shall be adopted by the Council, acting by a qualified majority on a proposal from the Commission.”

Only one Community measure has so far been adopted for the implementation of Article 2 of Regulation No 2777/75, namely Council Regulation (EEC) No 2967/76 of 23 November 1976 laying down common standards for the water content of frozen and deep-frozen chickens, hens and cocks (Official Journal L 339, 8.12.1976, p. 1).

In the Netherlands the rules applicable at the relevant time were contained in the Verordening Kwaliteitseisen [Regulation on quality standards] of 24 February 1966, laid down by the Bedrijfschap voor de Pluimveehandel en -industrie [Trade and Industry Board for Poultry, hereinafter referred to as “the Board”] and approved by the relevant Government authorities; with effect from 23 December 1982 that regulation was replaced by the Verordening Kwaliteitseisen en Etikettering [Regulation on quality standards and labelling] of 20 January 1982.

The 1966 regulation contains detailed provisions on the classification, presentation, packaging and transport of slaughtered poultry. Disciplinary sanctions may be imposed on undertakings that infringe those rules by the Tuchtgerecht voor de Pluimveehandel en -industrie [Disciplinary Tribunal for the Poultry Trade and Industry, hereinafter referred to as the “Tuchtgerecht”] pursuant to the Verordening Tuchtrechtspraak [Regulation on jurisdiction in disciplinary matters] laid down by the Board. Appeals against decisions of the Tuchtgerecht lie to the College van Beroep voor het Bedrijfsleven [hereinafter referred to as “the College”].

On 12 January 1982 the Tuchtgerecht imposed two fines upon Pluimveeslachterij Midden-Nederland BV, a poultry-slaughtering undertaking whose registered office is in Harderwijk, the Netherlands, for infringement of Article 7 of the Verordening Kwaliteitseisen, which requires undertakings to ensure that slaughtered poultry, wrapped in plastic packaging, whether sealed or not, or in packaging units, whether or not provided with a lid, as well as the packaging itself, is in conformity with the rules laid down in the Verordening or pursuant to it.

On 2 March 1982, for the same reasons, the Tuchtgerecht imposed a fine on Pluimveeslachterij C. van Miert BV, a poultry-slaughtering undertaking whose registered office is at Breukelen.

On 18 March and 6 April 1982 respectively, the two companies appealed to the College against the penalties imposed upon them by the Tuchtgerecht.

Holding that, in order to rule upon those appeals, it was necessary to decide whether Article 2 of Regulation No 2777/75 had left intact the Member States' power to lay down national quality standards for slaughtered poultry, the College decided, pursuant to Article 177 of the EEC Treaty, by judgments delivered on 22 March 1983, to suspend the proceedings in the two cases until the Court of Justice had given a preliminary ruling on the following question:

“Must Article 2 of Regulation (EEC) No 2777/75 be interpreted as meaning that national provisions not based on Community law which lay down requirements as to quality for slaughtered poultry and are enforceable by means of disciplinary measures are incompatible with it?”

The judgments of the College were received at the Court Registry on 25 March 1983 as Cases 47/83 and 48/83.

Pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the EEC, written observations were submitted on 2 June 1983 by the Commission of the European Communities, represented by Jean-François Verstrynge, a member of its Legal Department, and on 27 June 1983 by the Board, represented by its Secretary, H. H. J. Smit.

Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory inquiiy. However, it invited the Commission and the Board to answer certain questions in writing and they did so within the period specified.

By two orders of 19 October 1983, the Court, pursuant to Article 95 (1) and (2) of the Rules of Procedure, assigned Cases 47/83 and 48/83 to the Fourth Chamber.

By an order of 16 November 1983, the Court (Fourth Chamber) joined Cases 47/83 and 48/83 for the purpose of the procedure and of its judgment pursuant to Article 43 of the Rules of Procedure.

II — Written observations submitted to the Court

The Board, in a general survey of the relevant Netherlands rules, states that the 1966 regulation (Verordening Kwaliteitseisen) was applicable to undertakings which traded in poultry or carried on the business of a commission agent oían intermediary in the poultry sector or which engaged in the industrial processing of, in particular, poultry. That regulation has since been replaced by the Verordening Kwaliteitseisen en Etikettering, which has broadly the same structure and which, for the products concerned, implements Council Directive 79/112/EEC of 18 December 1978 on the approximation of the laws of the Member States relating to the labelling, presentation and advertising of foodstuffs for sale to the ultimate consumer (Official Journal L 33, 8.2.1979, p. 1).

The Board explains that the retail trade is governed by the Verordening Kwaliteitseisen Pluimvee en geslacht Gevogelte [Regulation on quality standards for poultry and slaughtered birds] and also by certain provisions relating to preservation laid down by the Produktschap voor Pluimvee en Eieren [Poultry and Eggs Production Board] on 27 May 1959.

The Produktschap voor Pluimvee en Eieren laid down quality standards for inter alia slaughtered poultry in the Verordening Kwaliteitseisen en Aanduidingsvoorschriften geslacht Pluimvee, Wild en geslachte Konijnen [Regulation on quality standards and marking provisions for slaughtered poultry, game and rabbits] of 25 August 1982; that regulation also implemented the EEC directive on labelling. For the retail trade it forms the counterpart of the new regulation of the Board to which it refers.

The Board points out that account must also be taken of the veterinary provisions implementing Council Directive 71/118/EEC of 15 February 1971 on health problems affecting the trade in fresh poultrymeat (Official Journal, English Special Edition 1971 (I), p. 106), laid down by the Netherlands Ministry of Agriculture and Fisheries and some of the general provisions of the Algemeen Besluit (Warenwet) [General Decree (Law on Goods)] of 11 July 1949 on hygiene standards.

Turning specifically to the question referred to the Court for a preliminary ruling, and with regard to the objectives of Regulation No 2777/75, the Board quotes the third recital in the preamble to the regulation: “in the poultrymeat sector, in order to stabilize markets and to ensure a fair standard of living for the agricultural community concerned, provision should be made for measures to facilitate the adjustment of supply to market requirements.”

The organization of the market therefore introduced a single trading system at the external frontiers of the Community, including a system of levies and refunds.

The Board further states that in intra-Community trade, State aids, customs duties or charges having equivalent effect, quantitative restrictions or measures having equivalent effect and any intervention system, whatever form it took, are forbidden. Article 2 of the regulation also provides for the establishment of common marketing rules.

Therefore the Community indisputably has the power to adopt measures in this field; however the regulation does not prescribe the period within which it is to be implemented.

Regarding the question of the powers of the Member States, the Board points out that the disputes in the main action show the present proceedings concern the maintenance of existing national rules rather than the adoption of new provisions. The Verordening Kwaliteitseisen was adopted in 1966 and therefore antedates any organization of the market at Community level. The measures provided for by Article 2 of Regulation No 2777/75 seek to facilitate the adjustment of supply to market requirements, in order to attain the objectives set out in Article 39 of the Treaty. The Council has so far adopted only one measure implementing Article 2, namely Regulation No 2967/76, various proposals from the Commission having come to nought. The organization of the market in poultrymeat is aimed at promoting sales by means of a policy on quality standards; but, despite the fact that in the express terms of Article 2 (2) of Regulation No 2777/75 it considers common marketing standard to be necessary, the Council has not given practical effect to that policy except for one point.

The Board observes that, in the absence of Community rules, the Member States still have the power to adopt themselves or to maintain quality standards for the marketing of poultrymeat. It is not sufficient to hold that the basic power lies with the Community; if the Community has not actually exercised its powers, the Member States still have the power to act.

The case-law of the Court shows, in the Board's view, that a common organization of the market does not always confer exclusive legislative power òn the Community, but rather that Member States must refrain from any measure likely to undermine or create exceptions to that common organization.

The first consequence of that reasoning is that national rules are contrary to a common organization of a market if they contravene one of the provisions of the common organization which already governs the matter adequately.

The second consequence is that there is a conflict with the common organization if the national rules have recourse to an instrument that the Community legislature deliberately chose not to use on the basis of a given economic policy.

The mere existence of a common organization of the market in poultrymeat does not prevent Member States from taking measures in an area in which Community rules have not yet been adopted. The absence of Community provisions on quality standards is not the result of deliberate economic choice since the Commission and the Council have stated that it is necessaiy to adopt quality standards.

On the point whether the national regulation has a disruptive effect or whether its operation impinges upon the rules of the free movement of goods upon which the common organization of the market is based, in other words whether it includes restrictions which are disproportionate to the desired objectives, the Board observes that the national measures in question have a twofold purpose: to ensure fair trade by creating equal conditions of competition, and to protect the consumer by ensuring that the presentation of goods is clear and by guaranteeing minimum standards of quality and processing. Those measures were adopted also in order to promote sales by means of the quality guarantees offered. The regulation applies to products approved for human consumption pursuant to Directive 71/118 without imposing any supplementary restrictions.

As for the content of the disputed national measures, the Board points out that they are provisions relating to the processed state of the slaughtered poultry, to the processing itself, to grading by quality, to weight, to packaging and to transport.

Article 8 requires poultry to be graded and marked according to its processed state and thus contributes to the transparency of the market.

The seventh paragraph of Article 9, prohibiting the injection of water, is necessary to ensure fair trade and to protect the interests of consumers.

Grading into categories, instituted by Article 10, also encourages fair trade and is a guarantee of quality for the consumer; it is in conformity with the objective of the organization of the market set out in Article 2 (1) of Regulation No 2777/75.

Weight tolerances, provided for by Article 11, are to take account of international commercial practice.

Labelling rules, provided by Article 14 for individual packages, are fixed for the protection of the consumer, in the interest of trade and to facilitate inspection. At the time when the main action arose, there were no comparable provisions for the retail trade. The disputed measures were adopted in the interests of the consumer, since the producers or wholesalers supply products ready for consumption.

Measures for the protection of public health in the national rules contain no restrictions going beyond those in Directive 71/118.

The Board states that since their objective was the protection of consumers and of fair trade, the disputed national rules should be regarded as reasonable; they arc, moreover, as close as possible to the proposals made by the Commission at the time. The Board concludes that the national rules concerned are lawful in view of the fact that the Council has fulfilled only a very small part of its task under Article 2 of Regulation No 2777/75; those rules do not detract from the proper functioning of the common organization of the market. The Board therefore proposes that the following answer be given to the question submitted by the College van Beroep:

For as long as and inasmuch as the Community has not fulfilled all its tasks and duties under Article 2 (1) and (2) of Regulation No 2777/75 on the common organization of the market in poultrymeat, Member States have the power to promulgate national measures on quality requirements, provided that they do not interfere with the proper functioning of the organization of the market.

The Commission recalls that the preambles to Regulation No 2777/75 and Regulation No 123/67 both contain identical recitals on the purposes of the common agricultural policy with regard to Article 2 of each regulation, which is couched in substantially the same terms, setting out the need to be able to take measures to facilitate the adjustment of supply to market requirements in the poultry sector.

In a judgment of 18 May 1977 (Case 111/76 Officier van Justitie v Beert van den Hazel [1977] ECR 901), relating to Regulation No 123/67, the Court ruled that certain national measures were incompatible with Community rules; the Court stated that Member States are under an obligation to refrain from taking any measure which might undermine or create exceptions to the common organization of the market and made action by trade and joint-trade organizations subject to the express condition that Community measures are concerned. The Court further stated that uncoordinated action by trade or joint-trade organizations in the various Member States is of such a nature as to cause discrimination between producers and consumers and to distort trade between the Member States.

The Commission submits that the very existence of Article 2 in Regulation No 2777/75, its wording, the fact that it was taken from Regulation No 123/67, and the first recital of the preamble to Regulation No 2967/76, which refers to the aims of the marketing standards provided for in Article 2 of Regulation No 2777/75 and states that the special measures which it institutes are necessary pending the adoption of more comprehensive Community rules, suggest that the Community legislature intended by that provision to “occupy the ground” in that regard.

If those indications are not sufficient, the Commission suggests adopting the reasoning followed by the Court in its judgment of 30 October 1974 (Case 190/73, Officier van Justitie v. J. W.J. Van Haaster[1974] ECR 1123); thus, for the purposes of the present case, in the absence of express provisions as to the compatibility of the national rules in question with the organization of the market set up by Regulation No 2777/75, it is necessary to seek the solution to the question from the national court in the light of the objects and the purposes of the regulation within the, framework of the principles laid down by the Treaty.

In that context the Commission draws attention to the following points :

In the poultrymeat sector, Regulation No 2777/75 established an organization of the market characterized by a system of quality standards and of rules governing trade;

Article 11 of the Regulation seeks to eliminate all obstacles to free trading transactions within the Community;

Article 19 states that the provisions of Articles 92 and 93 of the Treaty are applicable, in principle, to trade in the products concerned;

Apart from rules relating to the marketing of the products, the organization of the market also includes various provisions applicable to. the production stage, in particular Article 2 (1);

Paramount importance is attached to Community quality standards, which must contribute to adjusting supply to the requirements of the markets;

To that end, Article 2 envisages a series of Community measures on the introduction of common quality standards and other measures to encourage action within the trade with a view to improving the quality of products and of the organization of production;

Even if the quality standards are aimed only at the distribution of the products, they none the less have repercussions restricting the level of production;

It follows from the general scheme of the regulation that, for intra-Community trade, the organization of the market is based on the freedom to enter into commercial transactions in conditions of fair competition by virtue of improvement in the quality of the products;

Such a system excludes any national rules capable of hindering intra-Community trade, whether directly or indirectly, actually or potentially;

It follows from the case-law of the Court (in particular from the judgment of 29 November 1978 in Case 83/78 (Pigs Marketing Board v Redmond [197'8] ECR 2347) that the common organization of the market in poultrymeat is also based on the concept of an open market, to which every producer has free access and the functioning of which is regulated solely by the instruments provided for by that organization;

The case-law of the Court (sec the Van den Hazel case cited above) recognized that the absence of all measures of intervention from the regulation on the common organization of the market in poultrymeat is justified by the consideration that such measures would not be desirable on the market in eggs and poultrymeat since the volume of production is to be adjusted to demand not by means of the intervention mechanisms but by market forces; the Court recognized that the absence of such measures does not stem from an omission or from an intention to leave measures of this nature to the appraisal of the Member States but is rather the consequence of a considered choice of economic policy of relying essentially on market forces to attain the desired balance;

It also follows from that case-law that national provisions which establish quality standards and which are not based on Community law are excluded by the regulation: such measures might derogate from or adversely affect the organization of the market and might endanger the fulfilment of its aims and proper functioning; any interference by a Member State with the market mechanism creates the risk of preventing the common organization of the market from working properly.

Thus, the Commission submits, the existence of national rules on quality standards not based on Community law might prejudice the achievement of the objective of establishing quality standards at Community level. Moreover it leads to discrimination between producers and consumers, which is prohibited by Article 40 (3) of the Treaty, and distortions in trade between Member States, since the undertakings in the various Member States are not able to manufacture and market their products on the footing of equal conditions of competition.

That inequality of conditions of competition, acting on the level of prices between the various Member States, could impede the proper functioning of the system of price protection laid down by Regulation No 2777/75. Like the measures mentioned in Article 2 (1) of Regulation No 123/67, the measures provided for in Article 2 (2) of Regulation No 2777/75 can only be taken on the express condition that they are Community measures.

The Commission therefore suggests that the following answer be given to the questions referred to the Court:

Taking account of the principles set out in the EEC Treaty, Regulation No 2777/75, and in particular Article 2 thereof, must be interpreted as meaning that national measures laying down quality standards for poultrymeat which are not based on Community law are incompatible with the aforementioned provisions.

III — Replies to the questions put by the Court

The following replies were given to the questions put by the Court:

a) The Commission points out that the Community legislature has recognized that the marketing standards referred to in Article 2 (2) of Regulation No 2777/75 may be necessary in order to adjust supply to market requirements but is has also reserved the right to determine their content and scope. The coexistence of differing national standards distorts and interferes with the working of the common organization of the market. The regulation acknowledges the need for common marketing standards for slaughtered poultry; the adoption of similar standards for other products is a matter for a Council decision. The difference between the Council's obligation to adopt marketing standards for slaughtered poultry and its discretion to adopt standards for other products is of little importance in view, in particular, of the fact that, even in the case of the mandatory standards, the Community legislature is able to decide the matters which the standards are to govern. Article 2 (2) of Regulation No 2777/75 may be interpreted as meaning that the Community legislature has reserved the power not only to adopt marketing standards for slaughtered poultry but also to decide whether they must be adopted for other products and to prescribe them; the absence of standards for products other than slaughtered poultry may amount to a decision that there shall be no standards, Community or national. On a narrower interpretation, the Community may have reserved itself exclusive power only in respect of the mandatory marketing standards for slaughtered poultry whilst the Member States may in principle remain competent to enact legislation governing the other products, so long as the Community has not exercised its own power by adopting standards or announcing that none need to be adopted. Member States could maintain their own preexisting standards, such as the contested 1966 regulation, provided that they are not incompatible with the common organization of the market or the Treaty. However, the adoption of new national standards or the substantial amendment of existing standards is hardly compatible with the Community's exclusive competence. The Community may hardly continue to claim exclusive competence if it does not exercise it within a reasonable time. On the other hand, to admit that in that case the Member States recover the competence relinquished to the Community would weaken their desire to cooperate in the establishment of common marketing standards. Besides, the Community's inaction does not create a legal vacuum which the Member States may themselves fill: even the mandatory standards are not legally indispensable to the proper functioning of the organization of the market, although they are indeed considered necessary for the better adjustment of supply to market requirements. In any case national legislation such as the contested Netherlands regulation must be judged in the light of its compatibility with the common organization of the market in question and the general rules of the Treaty, taking into account the obligations of the Member States arising from the task entrusted to the Community legislature. In prescribing quality standards the Netherlands regulation has two aims: to ensure fair trading by establishing equal conditions of competition, and to protect the consumer, by providing him with clear labelling and guaranteeing minimum standards of quality and processing, which also promote sales of the product. The protection of public health is not one of its aims. The classification of marketed products into categories is incompatible with the organization of the market if their free access to the market is restricted and this is not justified by the protection of public health or other mandatory requirements of public interest. On the other hand, an “open” regulation of quality, whereby products are classified without any of them being excluded from the market, may be optional and applied to products imported from other member States without any disadvantage to those products. The application to domestic products of mandatory rules requiring undertakings to offer their products in defined categories in specific types of packaging, giving in particular the trade description and other required information, is not incompatible with the market organization so long as those rules are “open”. If they are applied to products imported from other Member States, they constitute a measure having an effect equivalent to a quantitative restriction which is incompatible with the common organization of the market and Article 30 of the EEC Treaty. In previous decisions the Court has held that a Member State may not apply such rules to products imported from another Member State in which they are lawfully marketed unless there are overriding requirements of the public interest relating to consumer protection or fair trading. In such cases the Member State into which the products are imported may apply such measures as are strictly necessary and least restrictive in their effect. In exercising their residual powers Member States have certain duties: under Article 5 of the Treaty they must assist the Community in adopting common marketing standards and abstain from any measure which could hinder it in accomplishing that task; while Community standards are being discussed they must refrain from introducing new national standards or sub- stantially amending their existing standards in such a way as to compromise the introduction of Community standards; as far as possible they must limit the disparities between the various national standards and the resultant distortion. The powers of the Member States are now only subordinate and transitional in nature.

b) The Commission points out that on 15 July 1971 it submitted to the Council a proposal for a regulation on quality standards for poultrymeat; only Regulation No 2767/76 on water content was adopted. The 1971 proposal led in 1978 to a compromise version which came to nothing and the Commission withdrew it on 12 December 1982.

c) According to the Commission, the whole of the 1966 Netherlands regulation is applicable to products imported from other Member States and therefore has the same effect on trade as a quantitative restriction without this being justifiable by requirements of the public interest. The application of the system to domestic products is not incompatible with the common organization since the provisions laid down do not preclude any type of presentation. The application of disparate national rules to imports from other Member States creates obstacles to intra-Community trade and distortions between Community producers.

d) In the Board's view, the Verordening Kwaliteitseisen makes no distinction between poultry produced in the Netherlands and poultry imported from other Member States.

It applies only to those undertakings for which the trade organization was established, that is to say, the wholesale trade and slaughtering and cutting undertakings which supply their products to retailers; it does not apply to transactions with undertakings which are expressly excluded from its application, whether or not imports are involved.

Statistics show that only a small proportion of poultrymeat consumed in the Netherlands is imported; most of the imports are from other Member States. Imports are showing a tendancy to increase. The regulation in question is not applicable to deboned poultrymeat, which accounts for a large proportion of imports; since the regulation is also inapplicable to imports destined for certain categories of undertaking, in practice it affects only a relatively small proportion of imports, namely, whole chicks or chick portions distributed through wholesale channels. The aggregate practical effect of the regulation on imports is very small. In the last few years the Netherlands general inspection service has only twice, in very exceptional cases, taken action on poultry imports.

IV — Oral procedure

At the sitting on 30 November 1983 the Bedrijfschap voor de Pluimveehandel en -industrie, represented by E. Grabandt, of the Bar of The Hague, and the Commission, represented by its Legal Adviser, R. C. Fischer, presented oral argument and replied to questions put by the Court.

The Advocate General delivered her opinion at the sitting on 1 February 1984.

Decision

1. By two orders dated 22 March 1983, which were received at the Court on 25 March 1983, the College van Beroep voor het Bedrijfsleven [administrative court of last instance in matters of trade and industry] referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty a question, which is identical in both cases, on the interpretation of Article 2 of Regulation (EEC) No 2777/75 of the Council of 29 October 1975 on the common organization of the market in poultrymeat (Official Journal 1975, L 282, p. 77).

2. The question was referred in order to enable the College van Beroep to assess whether the Verordening Kwaliteitseisen [regulation on quality standards] of 24 February 1966 adopted by the Bedrijfschap voor de Pluimveehandel in -industrie [Trade and Industry Board for Poultry, hereinafter referred to as “the Board”]. The Netherlands regulation contains detailed provisions regarding the classification, presentation, packaging and transport of slaughtered poultry. In the event of infringement it provides for disciplinary sanctions in the form of fines which are imposed by the Board's disciplinary tribunal (Tuchtgerecht). Appeals from such decisions lie to the College van Beroep voor het Bedrijfsleven.

3. By Regulation No 123/67/EEC of 13 June 1967 (Official Journal, English Special Edition 1967, p. 63) the Council adopted the first common organization of the market in poultrymeat. The regulation was amended several times and the matter is now codified in Regulation No 2777/75. Like its predecessor, Regulation No 123/67, that regulation provides in Article 2 that measures designed in particular to improve quality and fix marketing standards must be adopted in subsequent regulations to be enacted by the Council.

4. It should be noted that, with the exception of a regulation governing watercontent of frozen poultrymeat (Regulation No 2967/76 of 23 November 1976, Official Journal L 339, p. 1), which is irrelevant in this context, the Council has still not adopted the standards referred to in Article 2.

5. According to the information which the Commission provided to the Court, on 15 July 1971 it submitted to the Council a proposal for a regulation on marketing standards for poultrymeat and, owing to the difficulties which the proposal encountered within the Council, it submitted a “compromise” text in 1978. Since the examination of that text also resulted in deadlock after many fruitless efforts in 1978 and 1979, and the Council had not discussed the proposal since that time, the Commission withdrew it on 21 December 1982. The Commission has let it be known that it is at present planning to submit to the Council a proposal concerning the egg market and will not return to the question of the poultry market until the question of eggs is settled.

The facts and history of the case

6. According to the documents before the Court, the two poultry-slaughtering undertakings Midden-Nederland BV and C. van Miert BV, appearing as the appellants in the main actions were fined by the Tuchtgerecht in 1982 after inspections revealed various infringements of the provisions of the Verordening Kwaliteitseisen consisting in particular of the marketing of products which were not fresh, the incomplete cleaning of poultry carcases and the presence of dirt, bruises and broken bones. The undertakings appealed from those decisions to the College van Beroep.

7. According to the orders for reference, that court asked the parties to state their views on the question “whether the provisions of Article 2 of Regulation No 2777/75 have left intact the power to lay down national quality standards for slaughtered poultry”. After hearing their views, the College van Beroep referred the following question to the Court in both cases:

“Must Article 2 of Regulation (EEC) No 2777/75 be interpreted as meaning that national provisions not based on Community law which lay down requirements as to quality for slaughtered poultry and are enforceable by means of disciplinary measures are incompatible with it?”

8. The appellants in the main actions did not submit observations to the Court. Written and oral observations were, however, submitted by the Board and the Commission.

The substance of the case

9. The Board's opinion is that, so long as the Council has not exercised the power which it vested in itself in Article 2 of Regulation No 2777/75, Member States are at liberty to establish and apply their own quality standards within the scope of the regulation's objectives. In any event, according to the Board, the powers defined in the regulation do not exclude the enactment of national measures. National rules may not therefore be considered incompatible with the organization of the market unless it isproved that they in fact prevent it from functioning properly. That is not the case here, since the rules which were brought into force by the Board have no other aim than to guarantee fair competition and ensure that consumers are protected.

10. The Board further points out that the provisions challenged by the appellants in the main actions were already in force when the common organization of the market was introduced and that in substance they are equivalent to the proposals later introduced by the Commission. In its decisions on fisheries, and most recently in its judgment of 5 May 1981 in Case 804/79 (Commission v United Kingdom, [1981] ECR 1045), the Court has held that, if the Council fails to act, Member States may not only maintain national provisions which are consistent with the aim laid down by Community law but even amend them if necessary.

11. Finally, the Board emphasizes the close link between provisions governing quality and those governing health inspections; in its view, this last point cannot be ignored when the question referred to the Court by the College van Beroep is examined.

12. In its written observations the Commission argues that in Article 2 of Regulation No 2777/75 the Community legislature expressed its intention to “occupy the ground” regarding the matters governed by the organization of the market and that Member States may therefore no longer legislate on those matters. In its opinion, the maintenance of national quality standards disturbs the functioning of the market organization and makes the subsequent introduction of Community quality standards more difficult.

13. In reply to questions put by the Court the Commission admitted that the Community may hardly continue to claim to have exclusive powers in this area if it does not exercise them in one way or another within a reasonable time. It therefore considers it permissible for Member States to maintain their existing quality and marketing standards, provided that they are consistent with the aim of the common organization of the market. At the same time it draws attention to the danger to the free movement of the products in question which might arise if, owing to the Council's inaction, Member States introduce their own quality rules, which, owing to the differences between them, might create obstacles to trade between Member States. It therefore emphasizes that any powers which may be recognized as being vested in the Member States in this field are subordinate and transitional only, and that in any event the Member States must grant free access to their markets to products which have been legally marketed in the Member State of origin in accordance with the legislation applicable there.

14. As regards the Netherlands regulation, the Commission acknowledges that it contains no provisions which, considered in isolation, run counter to the aim of the common organization of the market. It considers, however, that if that regulation were applied to imported poultry its detailed nature might create obstacles to intra-Community trade.

15. Finally, the Commission considers it unnecessary to examine the question of health regulations, which are not the subject-matter of the question raised by the national court and which at the Community level are governed by provisions different from those governing the common organization of the market.

16. Before the question raised by the College van Beroep is examined it should be observed that it is apparent from the documents before the Court and more particularly the orders for reference that the question to be resolved in these proceedings does not concern health control measures. This question was not raised by the national court and could not therefore be considered by the parties. The arguments advanced by the Board in this regard must therefore be disregarded.

17. In order to answer the question raised by the College van Beroep it should first be recalled that the common organization of the market in poultrymeat, as at present laid down in Regulation No 2777/75, is based on a set of measures designed to stabilize the market and ensure fair prices without resort to intervention measures of the kind provided for in other agricultural markets. According to Article 2, supply is to be adjusted to market requirements by means of a set of measures designed to promote better organization of production, processing and marketing, to improve quality and to facilitate the establishment of market forecasts and the recording of price trends.

18. To this end Article 2 (1) provides that the Council may in accordance with the procedure laid down in Article 43 (2) of the Treaty adopt measures to improve the quality of the products covered by the market organization.

19. According to Article 2 (2), marketing standards are to be adopted by the Council, acting by a qualified majority on a proposal from the Commission. They must be adopted for the products specified in Article 1(1) (b), that is to say, for dead poultry and edible poultry-offal, and may be adopted for the other products to which the market organization applies. It is stated that such standards may relate in particular to grading by quality or weight, packaging, storage, transport, presentation and marketing.

20. It is not entirely clear from those provisions whether the Council must adopt binding standards or whether the regulation merely enables it to do so. However, the whole of Article 2 evinces a clear intention to establish progressively uniform binding quality standards and common marketing standards, which are in fact indispensable for a properly functioning, transparent market in which normal conditions of competition prevail.

21. In this context it is necessary to point out the Council's almost total failure to act; in a sector governed by a common organization of the market since 1967 it has still not enacted the rules needed to enable that organization to function normally. Having encountered resistance in the Council, the Commission has apparently resigned itself for the moment to not using its right to make proposals and the other possibilities of taking action open to it under the Treaty.

22. In those circumstances there cannot in principle be any objection to a Member State's retaining or introducing national measures designed to achieve in its own territory the aims of the market organization and, more particularly, of Article 2 of Regulation No 2777/75.

23. However, in conformity with the Court's judgment of 5 May 1981, cited above, such measures must not be regarded as involving the exercise of the Member State's own powers, but as the fulfilment of the duty to cooperate in achieving the aims of the common organization of the market which, in a situation characterized by the inaction of the Community legislature, Article 5 of the Treaty imposes on them. Consequently, the measures adopted by the Member States may only be temporary and provisional in nature and they must cease to be applied as soon as Community measures are introduced.

24. However, in view of the risk, rightly mentioned by the Commission, that the consolidation of unilateral and possibly different national rules may have the effect, owing to continuing inaction on the part of Community authorities, of creating obstacles to trade, it is important to draw attention to certain conditions which must be taken into account in appraising such rules.

25. In the first place it should be borne in mind that, as the Court held in its judgment of 23 January 1975 in Case 51/74 (Van der Hulst v JProduktscbap voor Siergewassen, [1975] ECR 79) and of 18 May 1977 in Case 111/76 (Officier van Justitie v Van den Hazel, [1977] ECR 901), provisions adopted or maintained by Member States in the circumstances described above are permissible only if they are compatible with the principles of the common organization of the market.

26. It may be observed, as the Commission has acknowledged, that in principle measures of the kind provided for by the rules applied by the Board with respect to quality and marketing standards are unobjectionable with regard to the requirements of the common organization of the market in poultry m e at.

27. Secondly, it must be emphasized that the application of national quality and marketing standards must not restrict the freedom to import poultrymeat lawfully produced and marketed in other Member States in accordance with the quality and marketing standards in force there.

28. Finally, if free trade is restricted by the differences between the national rules or the absence of measures for ensuring appropriate quality control leads to economic disturbances in the market sector in question, the Council's failure to act cannot discharge the Commission from its duty to take the necessary steps, using its powers under Article 155 of the Treaty, to ensure that the products covered by the organization of the market can move freely within the Community under conditions consistent with the aims of that organization.

29. Taking all those considerations into account, the answer to the question referred to the Court by the College van Beroep must be that Article 2 of Regulation No 2777/75 is to be interpreted as meaning that, in a situation characterized by the absence of the implementing measures provided for by that regulation, national provisions laying down marketing and quality standards for slaughtered poultry and enforceable by disciplinary measures are compatible with it, provided that they are compatible with the aim of the common organization of the market and applied in such a way that imports of poultrymeat lawfully produced and marketed in accordance with the marketing and quality standards in force in the other Member States are not restricted.

30. It is for the national court to decide, in the light of the principles set forth in this judgment, whether the quality and marketing standards laid down by the Netherlands legislation are compatible with the requirements of the common organization of the market in poultrymeat.

Costs

31. The costs incurred by the Commission of the European Communities, which submitted observations to the Court, are not recoverable. Since these proceedings are, in so far as the parties to the main actions are concerned, in the nature of a step in the appeals pending before the national court, the decision on costs is a matter for that court.

On those grounds, THE COURT (Fourth Chamber), in answer to the question submitted to it by the College van Beroep voor het Bedrijfsleven by orders of 22 March 1983, hereby rules: