Report for the Hearing delivered in Case 0-315/88

I — The relevant legislation

1. The essential provisions governing the organization of the market in wine were consolidated in Council Regulation (EEC) No 822/87 of 16 March 1987 (Official Journal 1987, L 84, p. 1). Title II of that regulation concerns the rules governing oenological practices and processes. Annex VI to the regulation contains a list of authorized practices and processes. Article 15(2) (in Title II) of the regulation provides that ‘Member States may, in respect of the oenological practices and processes referred to in Annex VI, impose stricter conditions to ensure the preservation of the essential characteristics of quality wines psr’.

2. Council Regulation (EEC) No 823/87 of 16 March 1987 (Official Journal 1987, L 84, p. 59) consolidates the special provisions relating to quality wines produced in specified regions. In order to preserve the authentic nature of those wines, Article 6(2) of that regulation lays down the principle that: That provision also specifies: Article 6(3) of that regulation provides that the provisions under which Member States may authorize derogations from that general principle are to be adopted in accordance with the procedure laid down in Article 83 of Regulation No 822/87. Article 20 of Regulation No 823/87 repealed, with effect from 1 April 1987, Council Regulation (EEC) No 338/79 of 5 February 1979 laying down special provisions relating to quality wines psr (Official Journal 1979, L 54, p. 48), which contained provisions identical to those cited above.

‘The processing of grapes as referred to in paragraph 1(a) into must and of must into wine shall be carried out within the specified region where the grapes were harvested.

The preparation of a quality sparkling wine psr shall take place only within the specified region referred to in the foregoing subparagraph.’

‘However, the operations referred to in the first and second subparagraphs may take place outside the specified region, where:

a) the rules of the Member State in whose territory the grapes were harvested permit, and

b) production is supervised.’

3. Regulation (EEC) No 1698/70 of the Commission of 25 August 1970 (Official Journal, English Special Edition 1970 (II), p. 579) defines the circumstances in which Member States may derogate from the principle that the vinification of a quality wine psr must take place within the region of production. That regulation was adopted on the basis of Regulation (EEC) No 817/70 of the Council of 28 April 1970 laying down special provisions relating to quality wines psr (Official Journal, English Special Edition 1970 (I), p. 252), now repealed.

II — The facts

1. Angelo Bagli Pennacchiotti is the President of a wine-growers' cooperative at Monte Porzio, Latium, Italy. The undertaking for which he is responsible vinified 1495 hectolitres of Frascati wine, which is classified as a quality wine psr or a quality sparkling wine psr, carrying out the vinification process in secondary premises belonging to the cooperative outside the area where the grapes were harvested.

2. Criminal proceedings have been brought on that account against Mr Bagli Pennacchiotti, on the basis of Article 515 of the Penal Code, which concerns commercial fraud, and Article 28 of Decree No 930 of the President of the Republic of 12 July 1963, which lays down penalties for ‘the production, sale, offering for sale or distribution in any manner for consumption under a registered or registered and certified designation of origin wines which do not fulfil the conditions laid down for the use of such a designation ... ’.

3. The defendant, referring to the existence in Italian law of ‘inconsistent administrative measures’ concerning the movement of grapes outside the area in which they were harvested, requested that the national court should seek, under Article 177 of the EEC Treaty, a preliminary ruling from the Court of Justice on whether Council Regulation No 822/87 entailed an outright prohibition of such transfers or whether it authorized Member States to adopt different rules in that regard.

4. The national court considered that the question was material to the decision on the defendant's criminal liability; it allowed the request and, by order of 21 September 1988, sought a preliminary ruling from the Court on the following question:

‘Do the powers conferred on the Member States by Regulation (EEC) No 822/87 concerning movements and territorial limits in regard to vinification entail a mere prohibition, or do they enable Member States to adopt measures laying down different rules?’

5. The order for reference was received at the Court Registry on 27 October 1988.

6. In accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the European Communities, written observations were submitted by Angelo Bagli Pennacchiotti, represented by Enrico Esposito, of the Rome Bar; the Government of the Italian Republic, represented by its Agent, Ivo M. Braguglia, avvocato dello Stato; the Government of the Kingdom of Spain, represented by its Agents, Javier Conde de Saro, Director-General for Community Legal and Institutional Coordination, and Rafael García-Valdecasas, abogado del Estado, Head of the Legal Department for Matters before the Court of Justice of the European Communities; the Commission of the European Communities, represented by Alberto Prozzillo, its Legal Adviser.

7. 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. It nevertheless requested the Commission to reply in writing to two questions; the Commission complied with that request within the allotted time.

8. By decision of 6 December 1989, the Court assigned the case to the Third Chamber.

III — Written observations submitted to the Court

1. (a) In Mr Bagli Pennacchiotti's submission, the relevant Community provisions are contained in: (i) Council Regulation No 338/79, especially Article 2(2), concerning the power of Member States to define other conditions of production for quality wines psr, and Article 6(2), concerning the processing of grapes and grape musts outside the area of production; (ii) Regulation No 822/87, Article 15(2) of which, read in conjunction with Annex VI thereto, authorizes, subject to certain conditions, movement outside the area of production in order to carry out operations such as aeration and heat treatment. (b) According to Mr Bagli Pennacchiotti, the internal legislative provisions and regulations of the Italian Republic are inconsistent with regard to that question: (i) Article 5 of the Decree of the President of the Republic of 8 August 1983 regulating the production of Frascati wine prohibits vinification operations outside the area of production; (ii) the Decree of the President of the Republic of 12 July 1963, which has legislative force, and the Decree of the President of the Republic of 31 October 1979, on the other hand, authorize such practices in the circumstances specified in Circular No 12 of the Minister for Agriculture and Forestry. That circular authorizes the movement both inside and outside the area of production of wines which have not yet acquired the characteristics required by the regulations. Such movement is authorized provided that the products concerned are accompanied by administrative documents indicating their precise nature. The wines may be brought back into their area of production in order to complete their preparation (in that case, the period spent outside the area is not counted when calculating the ageing of the wine). (c) Mr Bagli Pennacchiotti proposes that, because of those contradictions in the Italian legislative and other provisions, the national court's question should be interpreted as seeking a ruling on whether the movements authorized by Circular No 12 are compatible with Anieles 2 and 6 of Regulation No 338/79. (d) Mr Bagli Pennacchiotti proposes that the question, interpreted in that manner, should be answered as follows: (i) Movements for technical and/or economic reasons which do not affect the identity of the vinification are covered by the powers conferred on the States by the Community provided that a system of control exists; (ii) Inasmuch as they exclude any part of the preparation process, the Italian provisions authorizing storage outside the area of production are consistent with Community law even without reference to Article 6 of Regulation No 338/79, which authorizes Member States to adopt derogating measures with regard to the place where the vinification process is to be carried out.

2. The Commission, the Italian Republic and the Kingdom of Spain agree that: (i) the applicable legislation is not Regulation No 822/87 as stated in the order for reference, but Regulation No 823/87, Article 6(2) of which lays down the principle that the operations involved in the vinification of quality wines psr or quality sparkling wines psr may be carried out only in the region of production; (ii) national rules may derogate from that principle in accordance with the provisions of Article 6(3), and in that connection the Commission and the Spanish Government also refer to Regulation (EEC) No 1698/70 of the Commission of 25 August 1970 on certain derogations concerning the production of quality wines psr.

3. The Commission points out that, with one exception which is immaterial to the present case, the right of derogation granted by Community law has not been used in the Italian rules in connection with Frascati wine. The Commission therefore proposes that the answer to the national court's question should be that:

‘Community law [Article 6(2) of Council Regulation (EEC) No 823/87] provides that, for the production of quality wines produced in specified regions, the processing of grapes into must and the preparation must take place within the region in question, unless the legislation of the Member State in whose territory the grapes were harvested contains any contrary authorization.’

4. The Italian Republic asserts that the national rules governing Frascati wine are contained in the Decree of the President of the Republic of 3 March 1966, as amended by the Decrees of 1 August 1983 and 18 November 1987. Those rules are consistent with Community law since, with the exception of part of the territory of one commune, the principle that operations of vinification outside the area of production are prohibited applies (see, in particular, Article 6 of the Decree of 1 August 1983). The same prohibition is contained in the Decree of 31 October 1979 of the President of the Republic laying down rules concerning the areas within which wines having a registered designation of origin or a registered and certified designation of origin must be vinified. The Italian Government also points out that there are no administrative forms designed for the movement of musts intended for the preparation of Frascati wines. It therefore proposes that the Court should answer the question put to it in the following terms:

‘Member States may allow operations in the vinification of quality wines produced in specified regions to be carried out outside the area in which the grapes are produced, within the limits laid down by the third subparagraph of Article 6(2) of Regulation (EEC) No 823/87.’

5. The Kingdom of Spain lists the requirements to be met when operations in the vinification process are carried out outside the area of production. Those requirements, pursuant to Council Regulation No 823/87 and Regulation No 1698/70 of the Commission, are as follows: (1) The operations must be authorized under the rules of the producer Member State; authorization may be granted only if justified on serious grounds; (2) A prior application must be made to the competent authority of the Member State; (3) The authorization must be expressly granted by that authority; (4) The vinification must be carried out in the immediate proximity of the specified region of production; (5) Grapes and grape musts intended for the production of quality wines psr must be held separately from other grapes and musts; (6) The grapes and musts must be identifiable; (7) The data relating to the processing must be entered in turnover records; (8) The Member State concerned must take the necessary measures to ensure control. The Spanish Government considers that the quality of quality wines psr can be preserved only by compliance with those conditions; the characteristics of such wines are dependent not only on the grape variety, the soil and the method of cultivation, but also on the circumstances in which the vinification process is carried out. It points out, finally, that Spanish legislation complies with the Community provisions since the process of vinification of wines having a registered designation of origin must be carried out within the area of production. The Spanish Government proposes that the national court's question should be answered in the following terms:

‘Regulations Nos 823/87 and 1698/70 provide that, in order for the designation “quality wine produced in a specified region (psr)” to be used, the whole production process must take place within the region in which the grapes are produced; it is, however, possible for the vinification to be carried out, exceptionally, outside the region of production, provided that the relevant rules of the Member State in which the region of production is situated so permit and that, as a minimum requirement, all the conditions laid down by the abovementioned Community regulations are fulfilled.’

IV — Answers of the Commission to the questions put by the Court

1. First question

The Commission is requested to state the legal reasons for which Regulation No 1698/70 applies to quality sparkling wines psr.

Answer

Pursuant, inter alia, to Article 6 of the basic regulation, Regulation No 823/87 (the provisions of which are identical to those of Regulation No 817/70, previously the basic regulation), Regulation No 1698/70 lays down certain derogations concerning the production of quality wines psr. Those provisions and that regulation are therefore identical in scope. At the material time in the case before the national court, before the formal amendments introduced by Council Regulation (EEC) No 2044/89 of 19 June 1989 (Official Journal 1989, L 202, p. 8), Article 6 of Regulation No 823/87 applied without distinction to all quality wines psr, including quality sparkling wines produced in specified regions.

2. Second question

The Commission is requested to state the legal reasons for which the mere storage of products during the course of vinification outside the limits of the specified region is prohibited by the Community legislation governing quality wines psr and quality sparkling wines psr.

Answer

The production of a quality sparkling wine psr includes its storage during the production process as defined by Article 17 of Council Regulation (EEC) No 358/79 of 5 February 1979 on sparkling wines produced in the Community (Official Journal 1979, L 54, p. 130).

The second subparagraph of Article 6(2) of Regulation No 823/87, which provides that the vinification process must be carried out within the specified region, therefore applies to such storage.

F. Grévisse

Judge-Rapporteur

1 Language of the case: Italian.

2 Grapes from which quality wines psr are made.