Report for the Hearing in Case C-196/89

I — Facts and procedure

1. Italian legislation prohibits the production, importation and marketing in Italy of cheeses whose fat content is lower than that prescribed by that legislation. No derogation is permitted in favour of products from another Member State whose composition is in conformity with the legislation of that State.

2. In the course of an inspection carried out in April 1989 in a supermarket run by Mr Enzo Nespoli, inspectors from the Presidio multizonale di igiene e prevenzione (Inter-area Health and Safety Unit), Milan, found that a French cheese with a fat content of 30% was being marketed. That cheese, called ‘Predor Light’, had been imported into Italy by Predor Italia, whose chairman was Giuseppe Crippa.

3. Since ‘Predor Light’ is a cheese of the Emmenthal type, which is required by the Italian legislation to have a minimum fat content of 45%, both Mr Crippa and Mr Nespoli were prosecuted.

4. In the criminal proceedings instituted before it, the Pretura di Milano (Magistrates' Court, Milan) found that the product in question was clearly cheese since the Italian description ‘prodotto caseario’ (cheese product) on the label was synonymous with the word ‘formaggio’ (cheese), and stated that it was clear from the structure of the product that it was an Emmenthal-type cheese. Next, the Pretura raised the question whether the Italian legislation, in so far as it applied to cheeses other than ‘typical local cheeses’ and cheeses of specific origin, was compatible with Articles 30 and 36 of the EEC Treaty. In its view, the Italian legislation could be regarded as constituting an obstacle to intra-Community trade and could not be justified either on grounds of the protection of public health or by mandatory requirements relating to consumer protection or fair trading.

5. Accordingly, by order of 9 June 1989, the Pretura di Milano decided to stay the proceedings and to refer the following question to the Court for a preliminary ruling: The order for reference was lodged at the Court Registry on 19 June 1989.

‘Are Articles 30 and 36 of the Treaty of Rome to be read and interpreted as meaning that the Italian legislation on cheese other than that protecting “typical local” products or products of specific origin is not compatible with those articles and is therefore unlawful, in so far as it lays down for ordinary cheeses minimum fat contents by reference to dry weight, at a high level, moreover, where it is established that those rules constitute an obstacle to the free movement of such foodstuffs within the Community which is not justified on grounds of the protection of public health or by the mandatory requirements of protecting consumers and ensuring fair trading?’

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 the French Government, represented by Edwige Belliard, acting as Agent, by the Italian Government, represented by Luigi Ferrari Bravo, Head of the Legal Department at the Ministry of Foreign Affairs, acting as Agent, assisted by Pier Giorgio Ferri, avvocato dello Stato, by the Commission of the European Communities, represented by Sergio Fabro, a member of its Legal Department, acting as Agent, by the Associazione italiana lattiero-casearia (Italian Association of Dairy Producers), represented by Fausto Capelli, of the Milan Bar, and by Enzo Nespoli and Giuseppe Crippa, represented by Nicole Coutrelis, of the Paris Bar.

7. On 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.

II — Summary of the parties' observations

1. Mr Crippa and Mr Nespoli, the accused in the main proceedings, point out that, in its order for the reference, the national court itself has answered the question raised, taking the view that the Italian legislation constituted a barrier to trade and was not justified either by mandatory requirements or on any of the grounds provided for in Article 36 of the Treaty. Nevertheless, they wish to add the following observations: (a) The product in question is not regulated at Community level since Regulation (EEC) No 804/68 of the Council of 27 June 1968 on the common organization of the market in milk and milk products (Official Journal, English Special Edition 1968 (I), p. 176) does not contain any provision relating either to the definition and quality of cheeses or to their fat content. According to the Court's case-law (Case 237/83 Jongeneel Kaas v Netherlands [1984] ECR 483), the contested Italian legislation is not contrary to Community law provided that it applies only to cheeses produced in Italy. (b) The Italian legislation constitutes an obstacle to imports within the meaning of Article 30 of the Treaty inasmuch as it prohibits the marketing in Italy of cheeses with a fat content lower than the minimum it lays down. (c) The product in question is lawfully manufactured and marketed in France, whence it was imported, since the French legislation, based on Decree No 88-1206 of 30 December 1988, restricts certain names to specified cheeses on the basis of their fat content, but does not lay down any prohibition on production or marketing on the basis of that criterion, on condition that consumers are provided with proper information. ‘Predor Light’ is entirely in conformity with that legislation. According to the ‘Cassis de Dijon’ case (Case 120/78 REWE Zentral v Bundesmonopolverwaltung für Branntwein [1979] ECR 649), that product should therefore be able to move freely in the Member States, unless the national legislation of the importing Member State is applicable to domestic and imported products alike and is justified by mandatory requirements. (d) In this case, the Italian legislation on the minimum fat content of cheeses is not justified by any mandatory requirement. Consumer protection and fair trading are sufficiently safeguarded by the fact that the label of the cheese in question clearly specifies its fat content with the result that consumers are provided with full information regarding the nature of the product. Mr Crippa and Mr Nespoli add that the observations made by the national court concerning the names ‘cheese product’ and ‘cheese’ have no effect on the analysis to be carried out in the light of Community law since the Court's statements concerning the designation of products, made with regard to beer in Case 178/84 Commission v Germany [1987] ECR 1227, should be applied to cheeses. (e) Nor is the Italian legislation justified by one of the exceptions referred to in Article 36 of the Treaty. In the first place, although that legislation could, at the time of its adoption in 1938, be justified by the requirements of public health in order to ensure the proper nutritional value of foodstuffs, that is no longer the case today, as the national court itself has pointed out. Secondly, since the national court stated that its question was not concerned with legislation protecting ‘typical local products’ or ‘products of a specific origin’, the protection of industrial and commercial property, which relates to names used to describe products coming from specific geographical areas but not to generic terms, cannot be relied upon (see, for instance, the judgment in Case 286/86 Ministère public v Deserbais [1988] ECR 4907). In conclusion, Mr Crippa and Mr Nespoli suggest that the question submitted for a preliminary ruling should be answered as follows :

‘The application to imported products lawfully manufactured and marketed in another Member State of the national legislation of a Member State which prohibits the sale of cheeses not having a minimum fat content constitutes a measure having equivalent effect to a quantitative restriction on imports which is prohibited by Article 30 of the EEC Treaty and is not justified on the basis of Article 36.’

2. The Associazione italiana lattiero-casearia (Italian Association of Dairy Producers), the intervener in the main proceedings, observes at the outset that this case relates to ‘cheese’ in general, excluding ‘typical local’ cheeses or cheeses with a registered designation of origin, in respect of which any legal problems would necessitate a different solution. The intervener recalls that according to the Italian provisions in Royal Decree Law No 1177 of 17 May 1938, ratified by Law No 396 of 2 February 1939, cheeses must have a specified fat content and any infringement with regard to the production or sale of cheeses carries a criminal penalty. Hence it is not possible to manufacture a product under the name ‘cheese’ if its fat content is less than 25% or, consequently, to use the expression ‘low-fat cheese’ for products whose fat content is less than that 25% minimum, in contrast to the situation in other European countries. The intervener points out, however, that under the Stresa Convention of 1 June 1951 on the use of designations of origin and names for cheeses, generally speaking, it is possible to use wholly skimmed milk for the manufacture of cheeses and it is therefore permissible to produce and market, under the designation ‘low-fat cheese’, a product with a fat content of approximately 20%. The Stresa Convention, as an international agreement lawfully ratified in Italy, must take precedence over any conflicting national provision previously adopted, according to the case-law of the Italian Corte di Cassazione (Court of Cassation). Next, considering the problem from the point of view of Community law, the intervener points out that Regulation No 804/68 of 27 June 1968 applies to cheeses but does not contain any specific provision regulating the use of the word ‘cheese’. The Member States are therefore at liberty to adopt rules in respect of the production of cheeses subject to compliance with the principle of the free movement of goods and the other principles of Community law which are also applicable. As regards the free movement of goods, the intervener analyses the case-law of the Court, referring in particular to the judgment in Case 59/82 Scbutzverband gegen Unwesen in der Wirtschaft v Weinver-triebs-GmbH [1983] ECR 1217. In its view, it is clear from that judgment that when national measures prescribe discriminatory treatment of domestic and imported products, they are assumed to be unlawful under Article 30 of the Treaty, and only the exceptions provided for in Article 36 can justify a different legal assessment. If, however, as in this case, the national measures are applicable to domestic and imported products alike, any adverse effect they may have on the principle of the free movement of goods may be justified on the basis of a broader and less rigid frame of reference than that provided for in Article 36. That is why the Court has referred in that regard, since its judgment in the ‘Cassis de Dijon’ case, to the mandatory requirements relating, in particular, to consumer protection and fair trading. In the said case, moreover, the Court applied and extended criteria such as the proportionality of national rules, their excessive rigidity, the need for them, their protectionist effect and so on. In its aforesaid judgment in Jongeneel Kaas, the Court acknowledged that the Netherlands was entitled to regulate the production of cheese in that State in pursuit of aims which are in the general interest, such as the protection of the quality of cheeses, for the benefit of consumers. According to the Court, however, those production rules cannot be imposed on producers from other Member States, nor can they have the effect of prohibiting them from selling on the Netherlands market cheeses which they have produced in accordance with the legislation of the country of production. Those principles should be applied in this case. The product in question, which is lawfully marketed in France under the name ‘cheese’, must also be capable of being marketed in Italy. The result, however, is reverse discrimination since imported products are accorded more favourable treatment than domestic products, which continue to be subject to the restrictive Italian legislation. In order to avoid such discrimination, it is sufficient to have recourse to the second subparagraph of Article 40(3) of the Treaty. Unlike the Netherlands legislation in the Jongeneel Kaas case, the Italian legislation here cannot be justified by the concern ‘to improve the quality of domestic production so as to make it more attractive to consumers’ since fat content does not constitute a quality criterion and, moreover, consumers nowadays are drawn to products with a low fat content. Having regard to the aforesaid provisions of Article 40, the discrimination against domestic producers is unjustified, particularly since it hinders the application in Italy of new production techniques which are used in the other States and which enable, in particular, the value of milk to be enhanced through protein enrichment. The Associazione italiana lattiero-casearia suggests that the question submitted for a preliminary ruling should be answered as follows:

‘1) With reference to dairy and cheese products from a Member State of the European Economic Community which have lawfully been designated as “cheese” in that country, Article 30 of the Treaty of Rome must be interpreted as precluding the application of the internal legislation of the importing Member State which prohibits the sale on its own territory of such imported products (and also the designation of such products as “cheese”) on account of the fact that their fat content in relation to dry matter is less than that laid down by the aforesaid national legislation for the corresponding domestic products. That is so where the imported dairy and cheese products are regarded as ordinary cheeses, that is to say they are not sold on the market of the importing Member State under a specific name in addition to the generic name “cheese” which is liable to confusion with names which in the latter country are reserved for “typical local” cheeses or cheeses of a specific origin (which are subject to special rules as regards composition, manufacture and wrapping).

2) The second subparagraph of Article 40(3) of the EEC Treaty must be interpreted as prohibiting a Member State's discriminatory treatment of its domestic undertakings operating in the dairy sector, which is covered by Regulation (EEC) No 804/68, even where such discriminatory treatment is the indirect result of an advantage which the application of the Community rules confers on competing undertakings from other Member States.’

3. After referring to the judgments in REWE Zentral and in Case 8/74 Procureur du Roi v Dassonville [1974] ECR 837, the French Government points out that, according to the case-law, any product from a Member State must in principle be allowed to enter the territory of the importing Member State if it has been lawfully manufactured, that is to say if it is in conformity with the legislation as well as the proper and traditional manufacturing procedures of the exporting country, and is marketed in the territory of the latter. A Member State cannot prohibit the sale on its territory of a product lawfully manufactured and marketed in another Member State except in so far as it establishes that that prohibition is necessary in order to satisfy mandatory requirements or is justified by one of the derogations provided for in Article 36. According to the French Government, the Court gave a restrictive interpretation of Article 36 limiting its scope (judgment in Case 46/76 Bauhuis v Netherlands [1977] ECR 5). Furthermore, the Court pointed out that in adopting measures in conformity with Article 36 the Member States had to comply with the principle of proportionality, which is a fundamental principle of Community law (the aforementioned judgment of 12 March 1987 in Commission v Germany). Finally, it is for the national authorities to show, in the event of a challenge, that the national measures are necessary for the effective protection of the interests referred to in Article 36 (judgment in Case 304/84 Ministère public v Muller [1996] ECR 1511). The French Government maintains that that general case-law concerning the free movement of goods should be applied to this case. Although milk and milk products are covered by a common organization of the market, in the absence of any Community rules on the quality of cheeses and any minimum fat content, it is still for the Member States to lay down national production and marketing rules (judgment in Jongeneel Kaas). The Italian Republic was therefore justified in laying down its own national rules with regard to the manufacture and marketing of cheese and in ensuring compliance with quality standards by specifying a minimum fat content. If those rules were imposed on Italian producers alone, the legislation concerned could not be called in question under Community law. However, in so far as the requirement laid down by the legislation with regard to fat content applies to Italian products and imported products alike, the question arises of the compatibility of that legislation with Article 30 et seq. of the Treaty. In that regard, the French Government emphasizes that ‘Predor Light’ was lawfully produced and marketed in France and that Italian consumers were provided with proper information by means of labelling. The absolute requirement imposed by the Italian legislation with regard to fat content therefore constitutes, albeit indirectly, a serious obstacle to trade in such cheese. Furthermore, as a result of that requirement, the Italian legislation ultimately treats the fat content as an identifying feature of cheese. Recalling the wording used by the Court in its aforementioned judgment of 22 September 1988 in Deserbais, the French Government considers that it must be possible for a cheese such as ‘Predor Light’ not only to be marketed but also to be described as ‘cheese’ on the Italian market. It is not even necessary to ascertain whether the national legislation at issue is capable of satisfying mandatory requirements since ‘Predor Light’ was adequately labelled in accordance with the French legislation. Nor can that legislation be justified in the light of Article 36 of the Treaty since, in laying down an absolute prohibition, it is in any event disproportionate to the objective pursued. Hence such legislation is not in conformity with Article 30 et seq. of the Treaty. Nor does it correspond, in economic terms, to the development of cheese products in the Community or, in consumer terms, to changes in eating habits amongst part of the population. Finally, the French Government refers to its efforts to promote the harmonization of national legislation on the quality of foodstuffs. It has requested the Commission to enact, as soon as possible, Community rules on the manufacture of primary foodstuffs and submitted proposals to that effect which were consistent with the common agricultural policy, in particular with regard to cheeses. In conclusion, the French Government suggests that the Court should answer the question submitted as follows:

‘Article 30 et seq. of the EEC Treaty must be interpreted as precluding a Member State from applying national legislation which requires compliance with a minimum fat content for the marketing of ordinary cheeses other than “typical local” cheeses or cheeses with a designation of origin to products imported from another Member State which are lawfully manufactured and marketed as such in that State, where consumers are provided with proper information.’

4. The Italian Government points out that the Italian legislature intended to restrict the name ‘cheese’ solely to products containing specified nutrients, in order to protect the legitimate expectations of consumers with regard to the traditional manufacture of that foodstuff. The relevant legislation also prevents a number of domestic products from being offered for sale under the name ‘cheese’; those products are released for consumption under other names. The relevant legislation cannot be regarded as contrary to Community law. In the absence of any Community rules in the matter, the Member States retain the power to regulate within their own territory the production, marketing and designation of those products, including the power to lay down specific requirements, such as the minimum fat content for every variety of cheese. Some Member States, such as France, the Federal Republic of Germany and Denmark, have exercised that power. In a situation of that kind, in which there are different national rules in force lawfully regulating the production of the foodstuff known as ‘cheese’ within the various States, the application of the principle of freedom to market cheese in conformity with the rules of the country of manufacture and not those of the country in which it is released for consumption would be very confusing for consumers. According to the Italian Government, therefore, the question submitted for a preliminary ruling should be answered in the negative.

5. The Commission of the European Communities notes at the outset that the Italian legislation is the subject of infringement proceedings under Article 169 of the Treaty currently pending before the Court. It argues that the relevant Community legislation does not impose a minimum dry matter or fat content for cheeses and that, consequently, each Member State retains in principle the power to regulate, for its own territory, the production, marketing and designation of cheeses. However, Member States are required to comply with the fundamental principles of the Treaty, such as, in particular, the free movement of goods, and to apply the general principles of law. According to the Commission, the Italian legislation constitutes a measure having equivalent effect, within the meaning of Article 30, and cannot be justified by mandatory requirements. Finally, the Commission refers to the wording of the answer given by the Court in its judgment of 22 September 1988 in Deserbais. In its view, therefore, the question submitted for a preliminary ruling should be answered as follows:

‘On a true construction of Article 30 of the Treaty of Rome, the conduct of the Government of the Italian Republic, which makes the importation of cheeses from other Member States into Italy subject to compliance with the provisions of Law No 396 of 2 February 1939 which converted Royal Decree No 1177 of 17 May 1938 into law, in particular the rules prohibiting the production for sale of cheeses whose fat content is lower than that prescribed by the Italian legislation (Article 1 of the aforesaid law), is contrary to the said Article 30.’

F. Grévisse

Judge-Rapporteur

1 Language of the case: Italian.