DELIVERED ON 3 DECEMBER 1980 (*1)

Mr President,

Members of the Court,

1. By a judgment of 19 February 1980, which is based on Article 177 of the EEC Treaty, the Tribunal d'Instance of the First Arrondissement of Paris asks the Court to consider the validity of the regulations “pursuant to which monetary compensatory amounts are levied on exports of Roquefort cheese from France to other countries, both Member States and non-member countries”. The question arises out of an action pending before that court in which a number of producers and exporters of Roquefort cheese are claiming reimbursement from the French customs authorities of sums which were paid by way of monetary compensatory amounts on exports, and which the plaintiffs consider were unduly paid, between March 1976 and June 1979 (the period during which the system of compensatory amounts applied to Roquefort cheese). The answer to the question makes it necessary for the regulations by means of which the Commission laid down that Roquefort cheese should be subject to that system to be examined in the light of Regulation No 974/71 of the Council of 12 May 1971 on certain measures of conjunctural policy to be taken in agriculture following the temporary widening of the margins of fluctuation for the currencies of certain Member States, that is to say, the legislative measure which created the system of monetary compensatory amounts and laid down its basic conditions.

2. It is appropriate to recall at the outset what those conditions are. In terms of Article 1 (2) of Regulation No 974/71 the Commission may lay down compensatory amounts as regards specific products covered by the common organization of agricultural markets where intervention arrangements are provided for them, or, alternatively, the price of them depends on the price of other products for which intervention arrangements are provided (leaving aside the case of products which are not covered by the common organization of the market and are subject to specific rules pursuant to Article 235 of the Treaty). Moreover, the power conferred on the Commission may only be exercised as regards products in which trade is disturbed by monetary fluctuations (Article 1 (3) of Regulation No 974/71 as amended by Regulation No 2746/72 of the Council of 19 December 1972).

3. In regard to the first point, the Commission observes first that all cheeses gain advantages of a general nature from the common organization of the market in milk products by benefiting from specific measures such as levies on imports, even though intervention prices were fixed only for two cheeses, Grana Padano and Parmigiano Reggiano. In the context of the common organization of the market in question, the Commission perceives a general relationship of dependence between the prices of cheeses and those of butter and powdered milk, two products for which intervention arrangements are provided. That relationship exists for all cheeses whether made from cow's or sheep's milk. Moreover, Roquefort and “blue” cheeses made from cow's milk are interdependent as regards their selling prices since the price of Roquefort varies according to variations in the prices of the other blue cheeses which are in competition with it.

In support of the general relationship of dependence which it asserts, the Commission recalls the observations made by Mr Advocate General Roemer in his opinion delivered on 26 June 1973 in Case 5/73 Balkan-Import-Export GmbH [1973] ECR 1091. What was involved then was an examination of the dependence of the prices of cheese (and in particular of a Bulgarian cheese made from sheep's milk to which compensatory amounts had been applied on import) on intervention prices for butter and skimmed-milk powder. The Advocate General stated inter alia: “For even if there is no close connexion between the price of cheese and the intervention prices mentioned, yet one cannot accept that there is no connexion at all. Indeed the intervention prices in respect of butter and skimmed-milk powder could at least guarantee minimum price levels for cheese” (p. 1131).

That opinion was accepted by the Court. In its judgment of 24 October 1973 in the Balkan case it in fact recognized (at paragraph 39) the existence of a link between the price of cheese on the one hand and that of butter and skimmed-milk powder on the other hand, notably as regards threshold prices, by virtue of Regulations Nos 804/68 and 823/68 of the Council of 27 and 28 June 1968, respectively, which contain provisions determining the groups of products and the special provisions for calculating levies on milk and milk products. Then, more recently, the Court had another opportunity to attribute a broad interpretation to the concept of dependence adopted in Article 1 (2) of Regulation No 974/71. It stated, in fact, in its judgment of 3 May 1978 in Case 131/77 Milac [1978] ECR 1041 that “the price of a product depends ... on the price of a product covered by intervention arrangements under the common organization of agricultural markets, which is governed by the common organization of the markets, if the former price fluctuates appreciably owing to the incidence of variations in the latter price” (paragraph 5 of the decision). The two precedents appear to me to be decisive.

However, the producers of Roquefort maintain that that cheese, in contrast to the cheese, also made from sheep's milk, to which the Balkan judgment related, has special characteristics which take it out of competition with other cheeses and the influence of the Community intervention machinery. The judgment of the Court making the reference itself also alludes to the specific characteristics of Roquefort cheese which are said to justify the doubt concerning the validity of the Community regulations by which payment of monetary compensatory amounts on export was laid down.

It is in fact the case that Roquefort may be distinguished from other analogous products because it is made from sheep's milk. But that does not alter the fact that it belongs to the family of “blue” cheeses (which are also defined as “blue-veined cheese”) and that, from the point of view of the consumer, its belonging to that family constitutes its primary and fundamental characteristic. It thus does not appear to me to be correct that the product in question is removed from competition because it is unique. In the experience of the average consumer, the difference in taste compared with other blue cheeses is not such as to make Roquefort irreplaceable.

Then, in regard to prices, it is well known that Roquefort, just because it is produced from sheep's milk, is traditionally more expensive (by some 30% at least), than other blue cheeses made from cow's milk. But what is of interest to us is the constant relationship between the prices of the one and the others. The table produced by the Commission, which has not been subject to any challenge in the course of the procedure, indicates that in the period between 1974 and 1978 the price of Roquefort fluctuated, both up and down, following a curve parallel to that of similar cheeses made from cow's milk, amongst which Bleu des Causses and Bleu d'Auvergne are the best known in France.

The Roquefort producers have submitted that in France the price level for sheep's milk, which is significantly higher than that of cow's milk, is determined by the production of Roquefort, which constitutes its principal outlet. If that is true, the variations in the price of Roquefort must be regarded as produced by factors other than the price of sheep's milk and precisely by the trends in the market for blue cheeses produced from cow's milk. In fact, since the production of Roquefort is much more limited than that of similar cheeses made from cow's milk, it is necessary to hold that it is the prices of the latter which influence the price of Roquefort and not vice versa.

It should be said finally that Roquefort, like the other blue cheeses of the Community, benefits at least indirectly from the protection which flows from the system of levies which are applicable to all blue-veined cheeses. In particular, it is protected against imports into the Community of such cheeses coming from the countries of Eastern Europe.

I therefore share the Commission's view that, in the same way as other cheeses, Roquefort must be regarded as part of the market in milk products as a whole and that the price of Roquefort is included amongst those prices which have a relationship of dependence on the price of products subject to intervention arrangements in the framework of the common organization of the market in milk (butter and skimmed-milk powder).

4. The other point which must be clarified is whether there was in 1976 a risk of disturbance in trade in the product in question as a consequence of fluctuations in the exchange rates. In that regard, it must be borne in mind at the outset that under Article 6 of Regulation No 974/71 it is for the Commission, which engages in consultations in accordance with the so-called Management Committee Procedure, to establish whether there is a risk of disturbances of the kind indicated. As the Court observed in the judgment which it delivered on 22 January 1976 in Case 55/75, the second Balkan-Import case [1976] ECR 19 (especially at paragraphs 8 and 11 of the decision), where the assessment of a complex economic situation is involved, the Commission and the Management Committee enjoy a wide measure of discretion. In reviewing the legality of the exercise of such discretion, the Court must confine itself to examining whether it contains a manifest error or constitutes a misuse of power or whether the authority did not clearly exceed the bounds of its discretion. (This view was repeated in the judgment of 25 May 1978 in Case 136/77 Firma A. Racke v Hauptzollamt Mainz [1978] ECR 1245.) The Court excluded in particular the Commission's being obliged to decide case by case, in respect of each product individually, whether there is a risk of disturbance and interpreted the provisions of the final paragraph of Article 1 of Regulation No 974/71 as meaning that the Commission may in this respect carry out general evaluations relating to entire groups of products. Therefore, even were it demonstrated, subsequently to the fixing of compensatory amounts on a given product, that the importing or exporting of it could not cause disturbances in trade in agricultural products in the Community, it would not follow from that alone that the Commission had made a manifest error or clearly exceeded the bounds of its discretion in holding that in the absence of compensatory amounts trade in the product in question would have been disturbed (see paragraph 11 of the decision in the above-mentioned judgment in Case 55/75).

The considerations of a practical nature which speak in favour of that approach have already been set forth by Mr Advocate General Roemer in his aforementioned opinion in the first Balkan case. He observed indeed that the Commission could not regard itself as bound to assess the expediency of exceptions for individual products when introducing monetary compensatory amounts on a given category of goods (cheese) since that would have entailed the necessity of making the products in question subject to special tests which would constitute a considerable burden upon the administration ([1973] ECR at p. 1133). In the same context, Mr Advocate General Roemer added that at the time of the fixing of compensatory amounts by means of Commission regulations, “a correct exercise of discretion required no more than a summary prognosis of the future development of a number of products”. The Advocate General stated finally that, at most, special treatment of individual products could be considered following an express request coupled with precise grounds. The Court accepted that point of view when it stated — in paragraph 41 of the decision in the said judgment of 24 October 1973 — that “the necessarily general and flat-rate nature of the compensatory amounts system and the need to adapt [it] quickly to constant fluctuations in currency justify the Commission's having considered disturbances only in relation to groups of products ...”.

In the present case, the tests adopted in the earlier decisions of this Court lead to a precise conclusion. Given that, at the time of introducing the compensatory amounts in question, neither interested parties nor any of the governments represented on the relevant Management Committee were concerned to bring to the Commission's attention the alleged special position of Roquefort cheese or to ask that it be exempted from the application of monetary compensatory amounts the Commission was lawfully entitled to subject Roquefort to the general treatment extended to almost all other cheeses.

5. This conclusion of a general nature appears to be reinforced when the respective positions of the principal French blue cheeses are considered from the point of view of their ability to compete. It should not be overlooked that in the period to which reference must be made the monetary compensatory amounts applied in France were fairly high (some 18 to 20%). On the other hand, according to the Commission's statements, the difference between the price of Roquefort and that of its most immediate competitor, Bleu des Causses, was some 30%. Accordingly, any exemption of Roquefort from compensatory amounts would have allowed the producers concerned to align the price of their product considerably nearer to that of other French blue cheeses the quality of which was less highly esteemed and thereby put their product in a privileged competitive position on both the French and export markets. That would have seriously distorted conditions of competition and reflected adversely on the balance of trade-flows in the agricultural products in question, jeopardizing the proper functioning of the common organization of the market in milk and milk products in the blue-veined cheese sector.