Report for the Hearing delivered in Case 263/87

I — Summary of the facts

A — Origin of the dispute

Grana Padano cheese is a hard granular cheese with a specific water and fat content. The adjective ‘Padano’ refers to the Italian region where that cheese is traditionally manufactured, namely the plain around the river Po (which is called ‘Padus’ in Latin).

Pursuant to Ministerial Order No 540 of 3 December 1969 on the manufacture and marketing of cheeses, the Danish Minister for Agriculture authorized, by means of a circular, the manufacture of Grana-type cheeses, provided that they complied with certain standards relating in particular to their form, texture, rind, water content and fat content. By the same order, he authorized the marketing of such cheeses under the name ‘Dansk Grana’ or ‘Dansk Grana Padano’.

Article 5(1) of Regulation No 876/68 of the Council laying down general rules for granting export refunds on dairy products (Official Journal, English Special Edition 1968 (I), p. 234) provides that the Commission is periodically to adopt regulations containing a list of the products for which a refund is to be granted, together with the amount of the refund concerned.

By means of such periodical regulations, the Commission grants refunds for several types of cheese, of which the fifth type, ‘E. Other (cheeses)’ is described as follows:

The present dispute stems from the fact that the Danish authorities paid to exporters of cheese of the Grana type produced in Denmark refunds for 1983, 1984 and 1985 at the rate for Grana Padano cheeses bearing the code 47.10.11 mentioned above (subheading 04.04 E I ex (a) 1 of the Common Customs Tariff). Since 1980, those refunds have been greater than those granted to the exporters of cheeses bearing code 47.10.22 (subheading 04.04 E I ex (a) 3 of the Common Customs Tariff).

The Commission refused, for the financial years involved, to reimburse to the Danish authorities the total refunds paid by the latter, confining itself to paying refunds at the lower rate specified for cheeses bearing code 47.10.22.

The Danish Government then brought an action for the annulment of the Commission decisions on the clearance of the accounts presented by the Member States in respect of the expenditure financed by the EAGGF for the financial years in question, in so far as that expenditure related to the reimbursement of refunds paid for exports of Grana-type cheeses produced in Denmark.

B — Course of the procedure

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 inquiry. The parties were invited to reply in writing to certain questions. They did so within the time-limit set for that purpose.

II — Conclusions of the parties

The Danish Government claims that the Court should declare void the Commission decision of 19 June 1987 and the decisions of 18 June 1987 on the clearance of the accounts presented by the Member States in respect of the European Agricultural Guidance and Guarantee Fund, Guarantee Section, expenditure for 1983, 1984 and 1985, to the extent to which it relates to the reimbursement of the refunds paid for exports of Grana-type cheese produced in Denmark.

The Commission contends that the Court should dismiss the application as unfounded and order the applicant to pay the costs.

III — Submissions and arguments of the parties

The Danish Government claims that any hard granular cheese of a specified fat content is a Grana Padano cheese qualifying for the refund corresponding to code 47.10.11, even if it is produced in Denmark. In support of that view, it advances, in essence, three arguments.

a) The Danish Government observes that the Grana-type cheese produced in Denmark has essentially the same characteristics as Grana Padano cheese manufactured in Italy and that it is marketed under the name ‘Dansk Grana’ or ‘Dansk Grana Padano’. Accordingly, Grana-type cheese produced in Denmark falls within the category of ‘Grana Padano’ cheeses mentioned in the text of the abovementioned periodical regulations and qualifies for the refund corresponding to code 47.10.11.

b) The Danish Government then refers to Article 17 of Regulation No 804/68 on the common organization of the market in milk and milk products (Official Journal, English Special Edition 1968 (I), p. 176), by virtue of which export refunds are to be the same throughout the Community. It infers that the refunds granted in respect of a given product must be identical regardless of their place of production in the Community.

c) Finally, the Danish Government puts forward an argument based on Articles 5(2) and 8(1) of Regulation No 804/68. They provide for an intervention mechanism for Grana Padano cheeses which they apply only to cheeses ‘qualifying to bear the designation of origin’. Those provisions are thus intended to reserve the benefit of the intervention price to cheeses produced in Italy in the areas defined by the Italian regulations which qualify, by virtue of those same regulations, for a designation of origin within Italian territory. By contrast, the periodical regulations issued by the Commission concerning refunds make no reference to such designation of origin. Consequently, Grana-type cheese produced in Denmark should benefit from the same refunds as those received in respect of Grana Padano cheese produced in Italy.

The Commission gives two main reasons for its contention that the cheese in question can qualify only for the lower refund applicable to the category of cheeses bearing code 47.10.22.

a) In the first place, the Commission states that the name of the cheese Grana Padano bearing code 47.10.11, just like Parmigiano Reggiano which bears the same code, makes a very clear reference to a clearly defined Italian region. The ‘Grana Padano’ manufactured in Denmark is merely, in fact, a ‘Grana-type’ type cheese. If the Commission had wished to grant the higher refund to exporters of Grana-type cheeses, it would have used only the name ‘Grana’ in its periodical regulations, without adding an adjective referring to a specific Italian region. Moreover, the Danish Minister for Agriculture himself conceded that a Grana-type cheese produced in Denmark should be distinguished from the Grana Padano cheese manufactured in Italy. In his circulars on the manufacture and export of that cheese, he invariably referred to it by using the terms ‘Grana’ or ‘Dansk Grana’. It was only with a view to giving Danish manufacturers of Grana-type cheese the benefit of the higher refund introduced in 1980 that he stated that Danish Grana could also be called ‘Dansk Grana Padano’ or even ‘Dansk Parmesan’, in the event of the cheese being exported to the United States.

b) In the second place, the Commission contends that the grant of a higher refund for Grana Padano cheese produced in Italy is accounted for by the fact that that cheese is the only one qualifying for an intervention price in the Community and is therefore sold at a higher price than similar cheese manufactured elsewhere in the Community. Consequently, the difference between the Community price and the world price for that cheese is more pronounced than for other cheeses and a special refund had to be introduced to offset that difference. The Commission explains the reasons which prompted the Community to establish an intervention mechanism solely for Grana Padano cheese produced in Italy. It states that the intervention mechanism is designed to ensure that the producer receives what is known as the target price, that is to say the price which the Community authorities would like him to receive when selling milk to dairies. Since milk does not itself, as a fresh product, lend itself to the use of that intervention mechanism, the latter is applied to the main products derived from milk, namely butter and skimmed-milk powder. However, in view of the scant production of those two products in Italy, the intervention mechanism is applied to a third product, Grana Padano cheese. The Commission develops the two arguments outlined above and goes on to emphasize that the Danish Government's reference to Article 17(2) of Regulation No 804/68 concerning the uniformity of refunds in the Community is irrelevant. Grana Padano manufactured in Italy is a different cheese from the Grana-type cheese produced in Denmark. The principle that refunds should be uniform merely means that a Danish trader who exports from Denmark Grana Padano cheeses which he has purchased in Italy is entitled to the larger refund just like a trader established in Italy who exports the same product.

R. Joliet

Judge-Rapporteur

1 Language of the case: Danish.