OPINION OF MR ADVOCATE-GENERAL MAYRAS

DELIVERED ON 24 JANUARY 1973 (*1)

Mr President,

Members of the Court,

The legal questions raised by this case are similar to those which we had to argue before you a short while ago concerning the action by the Commission of the European Communities based on the failure of the Italian Government to implement — or the delay found in its application of — the Community systems of premiums in respect of the slaughter of dairy cows and the withholding of milk and milk products from the market.

Today we deal with the measures for the rationalization of fruit production in the Community.

In this sector of Community agriculture, the balance between supply and demand should normally result simply from the fixation, at a given level, of both basic and purchase reference prices, given that the Member States refrain from supporting their national markets. In the case of accidental and temporary over-production, the Regulations in force (notably Articles 2 and 7 of Regulation No 158/66 of the Council) allow the Commission to decide that produce of a quality below established standards shall be withheld from the market and, where appropriate, to impose stricter standards.

But, if these short-term measures for the stabilization of the market prove inadequate, it becomes necessary to introduce a longer-term policy aimed at reducing production potential.

This is what the Council was led to decide at the end of 1969 with regard to dessert apples and pears and also peaches. The supply of these fruits was shown to be structurally in excess of demand. This situation arose from the fact that in previous years large plantations had been set up, even though the old orchards still survived. Furthermore, this excessive production was often of unacceptable quality and demonstrated, in certain cases, a failure to adapt varieties to the requirements of the consumer.

Following the example of certain states, such as Belgium and the Netherlands, the Council then endeavoured by financial inducement to encourage the growers to reduce their excess plantings. To this end they established a system of premiums for grubbing by Regulation No 2517/69 (9 December 1969), subsequently modified by No 2475/70. The terms of application were governed by Regulations Nos 2637/69 and 2565/70 of the Commission.

This system, the operation of which devolved on the Member States, was structured as follows:

Provided they undertook not to engage in any new planting of these fruit trees for a period of five years, those producers, who, before 1 March 1973, proceeded with the grubbing of their trees, had the right to the award of a premium, the amount of which was fixed according to hectare of orchard reduced (variable in relation to the type of plantation).

Applications for the granting of premiums could be validly lodged up to 1 March 1971.

The authorities appointed by each Member State were obliged to investigate these claims, to check the information furnished and, having recorded the undertaking of the grower, to state that the application could be approved.

They also had the duty to investigate the genuineness of the grubbing and, if this proved positive, to give to the producer a certificate, on the basis of which the premium would be paid to him by the national administration. The financing of the premiums devolved on the Member States, but the European Agriculture Guidance and Guarantee Fund had to refund to each Member State, upon the claim being substantiated, one half of the cost incurred.

In general outline this scheme for encouraging the reduction of certain fruit production follows the same technique as was adopted by the Council some weeks earlier with the object of absorbing the surpluses found to exist in milk production. The effectiveness of its application depended upon measures, both administrative and financial, which the Member States had to adopt.

But while, since the 1971 financial year, four of the Member States had applied to the European Fund for a partial refund of the premiums paid by them to the participants in their scheme, it appeared that no premiums had been paid in Italy, in spite of the fact that almost 20000 growers, covering an area of some 40000 hectares, had lodged claims before the deadline of 1 March 1971.

Certain administrative steps had been taken, merely, by the Minister of Agriculture to have the applications investigated, but no financial measures had been taken to allow the payment of premiums.

Nevertheless, the Commission had not failed to draw the Italian Government's attention, on 3 February 1971, to this delay, which of its nature hampered the efficacy of the policy adopted by the Commission, and to request it to take the necessary national steps within two months of that date. This warning having gone unheeded, the Commission decided to adopt the procedure provided for in Article 169 of the Treaty of Rome. Consequently, having expressly notified the Italian Government, on 2 June 1971, that its failure to apply the system of premiums for grubbing ‘constitutes a breach of the relevant Community Regulations and involves grave prejudice to the administration of the market’ requested the Government to let it have its comments within one month. In face of the persistent silence of the Italian Government, the Commission had no alternative but to issue a ‘reasoned opinion’, the necessary preliminary to an action for a finding of default on the part of a State.

The Commission had to wait until 29 November 1971 to get from the Permanent Resident of Italy merely an indication that, a few weeks earlier, there had been an ‘outline’ draft law put to the Ministers concerned, aimed at releasing financial resources for the payment of grubbing premiums, and that this would be submitted to the Council of Ministers ‘at a very early date’.

Finally, in reply to questions put one month later by the Director-General of Agriculture, on the subject of the position regarding applications for premiums, the areas on which grubbings had been carried out, and the checking of these, the Italian Permanent Delegation confined itself to recalling, on 25 March 1972, that the instructions as to procedure had long since been issued, concerning the acceptance of applications and prior investigations on site; but that it had not been possible ‘to give any formal undertaking to the applicant farmers, as the national measure releasing the necessary funds had not yet passed through the legislative procedure’.

As a matter of information, the number of claims received was stated viz. 19706, and the area of plantings pledged for grubbing, viz. 40415 hectares.

Considering, therefore, that Italy had not complied with the reasoned opinion that the breach was already complete, the Commission brought before you on 8 June last an action for a declaration that the Italian Republic, in not having enacted a body of provisions allowing for the effective application within its territory of the system of premiums for grubbing certain fruit trees, has failed to fulfil its obligations under Regulations No 2517/69 of the Council and No 2637/69 of the Commission.

The proposition of the Commission has been thoroughly analysed in the report at the hearing. We therefore think it pointless to go over it again. But we point out that it does not aim at showing that the Italian Republic has intentionally refused to put into operation the system of premiums for grubbing, or even that it has refrained from adopting any of the provisions necessary for its application.

What the Commission does allege against Italy is not having adopted in good time the body of provisions, so that objectively the practical application of the Community Regulations could not be assured on Italian territory.

That is why you have invited the applicant to specify in writing before the hearing, the measures, other than the payment of premiums, which the Italian State should have taken — and in what period of time — in order to satisfy its obligations.

It is proper, then, to define in the first place what were the obligations placed on each Member State; secondly to evaluate the nature and the real effect of the steps taken by the Italian authorities; finally, we must examine whether the failure of those authorities to adopt, within the appropriate time-limits, certain of those measures which would have allowed the effective application of the system of premiums for the grubbing of fruit trees, constitutes, according to your case law, the default envisaged by Article 169 of the Treaty.

Two kinds of obligation devolve on the Member States from Regulations Nos 2517/69 and 2637/69, as modified in 1970.

The first consists in the establishment of an administrative procedure, albeit simple, involving measures of checking prior to grubbing, provided for by Articles 4 and 5 of the implementing Regulation No 2637/69.

These measures are as follows:

1.The appointment of the competent authority to receive the applications for the granting of the premium.

2.Verification by agents so authorized of the information contained in the applications (area covered if the orchard in question is fully planted; the number of trees if it is an irregularly planted orchard or of mixed cultivation; the approximate age and type of the trees); the same information to be given regarding the trees to be grubbed; further, the variety of trees and their yield of fruit during the preceding three years; finally, the date set for grubbing.

3.The recording of the undertaking of the grower not to plant any new apple trees, pear trees or peach trees for a period of five years from the date of grubbing.

Having made these investigations, it rests with the competent authority to state that the application can be approved.

It should be noted, in this regard, that this authority has not acquired from the Regulations any power of judgment; it has a restricted competence, in the sense that it must declare approved every application which fulfils the conditions laid down by these regulations.

In the second stage, after the completion of the grubbing, it is incumbent on the national officials to establish the genuineness of the operation and to certify when the grubbing took place.

The presentation of this certificate by the producer constitutes the proof necessary and sufficient for obtaining payment of the premium in accordance with Article 3 of Regulation 2517/69.

The second category of obligations imposed on the Member States consists in securing the payments of the premiums, which implies that, domestically, credits are provided towards this end in the budget.

This end could be achieved by the giving of a general competence by Parliament to the executive authority aimed at allowing the Administration to allocate, in each financial year, certain credits capable of being applied to the implementation of operations decided upon by the Community institutions.

We know that in Italy a special act of the legislature is required every time the application of Community legislation requires having recourse to public funds.

We would mention that the system of premiums for the grubbing of fruit trees was established on a temporary basis, the rationalization of fruit production requiring to be completed within a period of three years, since the deadline for grubbing was fixed as 1 March 1973. As for applications for premiums, these could be validly lodged up to 1 March 1971.

Hence, although no precise timetable was imposed on the national authorities for taking the necessary steps for the application of the Regulations, it is reasonable to assume that such steps had to be taken in good time to allow the operations to develop in accordance with the intentions of the Commission.

Now, on the one hand the basic regulation and the first implementing regulation were brought into force on 1 January 1970; from that date they were obligatory on each Member State.

On the other hand, the normal period for the grubbing of trees lies between the end of the harvest and the renewal of growth. The Member States had, then, at their disposal a period of eight to nine months to make suitable arrangements, so that the grubbings could commence effectively from Autumn 1970.

Such then were the practical steps required of the national authorities and the time-limits within which they had to be taken, always accepted that the growers who had proceeded with grubbing from the month of October or November 1970, had from that time, by virtue of the direct effect of the Regulations, a subjective right to obtain payment of the premium.

Now it remains to examine whether the steps taken by the Italian authorities were of such a nature as to allow for the effective putting into operation of the system of premiums in the conditions which we have described.

In this regard, it emerges from the documents contained in the dossier that from 14 February 1970 the Minister of Agriculture and Forestry, whilst informing the local authorities of the publication of Regulation No 2517/69 and stating that he intended, as soon as possible, to issue the appropriate instructions for the payment of premiums, took a first step which was purely preservative, namely to prohibit the authorities from giving grants for expenses connected with work on apple orchards or plantations of pear and peach trees.

It was, then, merely a question of placing an obstacle for the future against the extension of these plantations and not of promoting the reduction of areas already planted.

On the other hand, by a circular dated 12 May 1970, the Minister gave provincial inspectorates precise instructions for the reception of premium applications, the verification of the accompanying information, the checking of the grubbings, and the awarding of premiums. Specimens of the forms to be used were attached to the circular.

These directions were comprehensive; also, they were given in good time. But they were not operational, because the circular laid down finally that ‘while waiting for the legislative action allocating the necessary funds for implementing the measures here provided for’, the provincial services should confine themselves to the reception of applications lodged by the growers concerned, whilst giving the required publicity to the circular.

The government stultified the operation of the premium system by tying it to the introduction of a legislative act, of which, it is established, not even the draft had been worked out at that time.

Then under pressure, not only from the applicant growers but also from associations and community groups, the Minister of Agriculture on 26 November 1970, issued a new circular authorizing the provincial inspectors to carry out the preliminary ‘on-site’ investigations.

But at this point, those directions of the Minister capable of being immediately applied stopped short. He invoked once more the absence of a law, and it was not possible, he said, to foresee when such a law might be passed. Thus, he inferred that it was not possible for the inspectors to enter into any formal undertaking concerning the payment of premiums. Not merely was the payment of premiums relegated sine die, but the Administration could not verify the grubbings or certify the date they had taken place.

At most, the inspectors were authorized by this new circular to give provisional authorization for grubbing, if they considered it expedient.

The administrative procedure thus advanced one step, but if provided — they received authorization — certain growers could commence the grubbing process, they were by no means sure of collecting their premiums. One can see, therefore, that the effective application of the Community Regulations was not practically possible.

Furthermore, the Minister introduced an element of discretionary power, not provided for by the Community Regulations, in making authorization to grub dependent on his departments' assessment of expediency.

Finally, in any case, even the date of that circular — 26 November 1970 — was itself already late, since the time favourable for grubbing was already eroded by almost two months.

As for the legislative procedure, which, according to Italian public law, must be followed for opening the necessary credits for the payment of premiums, it was not yet in motion at this time, since on 29 November 1971, even after the time-limit laid down in the reasoned opinion of the Commission had expired, the Commission was informed that an ‘outline’ of a draft law had been worked out, and conveyed to the interested Ministers. In March 1972, this initial draft was still at the stage of discussion between Ministers; it had not been presented to Parliament. Even more tardily was it submitted to the legislative assemblies. The representative of the Italian Government could tell you, nevertheless, at the hearing of 10 January last, that the Senate Agricultural Committee had that same day expressed an opinion favourable to its adoption.

If, then, one can envisage today the early adoption of this instrument, one is compelled to declare that at the time when the term set by the reasoned opinion expired and even at the date on which the Commission laid the matter before your Court, Italy had not put into operation the body of provisions necessary for the application of the system of premiums for grubbing; it had not given its Administration the means of ensuring their payment.

But, had the Government concluded all the arrangements necessary allow the growers to proceed with the grubbings, yet the failure to pay the premiums would, of itself, constitute a breach of Italy's obligations.

For the obligation imposed on Member States by Community law is to produce results.

In order to establish the default in this case, it will be sufficient for us to recall briefly the main points of your case law.

First of all, in order to judge the existence of a default on the part of a State, we must approach the matter as at the date the action is commenced. Then it is for you to say if a default has been committed, without having to examine whether, after that date, the State concerned has taken the necessary steps to terminate that default. That is what you have decided, particularly in your judgments of 19 December 1961 (Case 7/61, Commission v Italian Republic, Rec., p. 653) and 13 July 1972 (Case 48/71, Commission v. Italian Republic, Rec. 1972, p. 529).

In the second place, the fact that the authorities of a Member State fail to take the measures necessary for the operation of a Community regulation, obligatory for that state and of direct application, that is, establishing subjective rights for the benefit of individuals, is such as to constitute a default within the meaning of article 169 of the Treaty (Judgment 17 February 1970, Case 31/69, Commission v Italian Republic, Rec. p. 33).

The positive and effective implementation of Community legislation lies squarely on the Member States; not only non-implementation but delay in implementation must be deemed to be a default.

In the case at issue, as we have seen, the Community operation for the rationalization of fruit production, foreseen as being for a period of three years and defined in documents from the beginning of 1970, should have begun to be applied as from the following autumn. It is an established fact that nothing was done about it in Italy; the instructions given to the competent authorities merely allowed them to receive the applications as from May 1970, then to proceed with investigations and to authorize provisionally the grubbing of trees and without assuming any obligation as to the granting of premiums.

Finally, the obligations stemming from the Treaty — or Community law deriving from it — fall upon the States as such; their responsibility is founded on Article 169, no matter which State body's inaction is at the root of the default, even if an independent institution such as the Parliament itself is involved (Judgment of 5 May 1970, Commission v Kingdom of Belgium, Case 37/69, Rec. p. 244 — Judgment of 18 November 1970 Case 8/70, Commission v Italian Republic, Rec. p. 967).

Failure to act on the part of Parliament, then, cannot be validly invoked as a case of force majeure to justify the non-fulfilment of a Community obligation.

But, without formally submitting that the Commission's action should be dismissed the defendant Government pleads, no less, as its justification, the impossible position in which Parliament as well as itself found itself, in bringing to a conclusion the legislative procedure aimed at opening credits for the payment of premiums for grubbing, by reason of the grave political crisis which affected the operation of the Italian constitutional organs between the end of 1971 and the first months of 1972.

After the election of the Head of State, the premature dissolution of Parliament and the necessary recourse to new elections for the legislature presented an insuperable obstacle to the introduction and examination of of a draft law, the outline of which was worked out only in November 1971.

Such an argument cannot be sustained. You have already set aside a similar plea in Case 8/70, Commission v Italy, in deciding that a Member State cannot plead, in justification, obstacles — such as, in that case, a ministerial crisis — which did not arise until a date substantially later than that on which the obligations, which it is accused of failing to fulfil, were created.

The Community Regulations regarding premiums for grubbing came into force; as we have said, on 1 January 1970. But the obstacles cited did not appear, on the defendant government's own statement, until the autumn of 1971, or eighteen months later.

Whatever may have been the alleged difficulties in freeing the necessary financial resources, in face of the heavy charges imposed on the State for the adjustment of the economic and social structures of the country, it is impossible to concede that these difficulties could justify such a long delay in the drafting, presentation and adoption of a law.

Whatever else besides, default by a State is an objective concept. It is sufficient for you to establish its existence, which stems in the present case from the fact that, on the date when the Commission's action was commenced, it is certain that the system of premiums for the grubbing of fruit trees had not been effectively applied, mainly because of the absence of a legislative instrument of a kind to give the Administration the necessary financial resources.

We submit in conclusion, then, that you should declare that as a matter of law, the Italian Republic, in not having enacted the body of provisions allowing for the effective application within its territory of the system of premiums for grubbing fruit trees, has failed to fulfil the obligations imposed on it by Regulations No 2517/69 and No 2637/69.

We also submit that the defendant should be ordered to bear the costs.

* * *

(*1) Translated from the French.