In Joined Cases C-319/93, C-40/94 and C-224/94,
REFERENCES to the Court under Article 177 of the EEC Treaty by the Gerechtshof, Leeuwarden, and the Arrondissementsrechtsbank, 's-Hertogenbosch (Netherlands), for a preliminary ruling in the proceedings pending before those courts between
Hendrik Evert Dijkstra (C-319/93)
and
Friesland (Frico Domo) Cooeperatie BA
and between
Cornelis van Roessel and Others (C-40/94)
and
De cooeperatieve vereniging Zuivelcooeperatie Campina Melkunie BA
and between
Willem de Bie and Others (C-224/94)
and
De Cooeperatie Zuivelcooeperatie Campina Melkunie BA
on the interpretation of Article 2(1) of Regulation No 26 of the Council of 4 April 1962 applying certain rules of competition to production of and trade in agricultural products (OJ, English Special Edition 1959-1962, p. 129),
THE COURT,
composed of: G.C. Rodríguez Iglesias, President, C.N. Kakouris, D.A.O. Edward, J.-P. Puissochet and G. Hirsch (Presidents of Chambers), J.C. Moitinho de Almeida (Rapporteur), P.J.G. Kapteyn, C. Gulmann, J.L. Murray, P. Jann and L. Sevón, Judges,
Advocate General: G. Tesauro,
Registrar: H.A. Ruehl, Principal Administrator,
after considering the written observations submitted on behalf of:
° Mr Dijkstra (C-319/93), by P.E. Mazel, of the Leeuwarden Bar,
° Friesland (Frico Domo) Cooeperatie BA (C-319/93), by M.B.W. Biesheuvel, of the Hague Bar,
° Mr de Bie and others (C-224/94), by I.W. VerLoren van Themaat, of the Amsterdam Bar,
° De cooeperatieve vereniging Zuivelcooeperatie Campina Melkunie BA (C-40/94 and C-224/94), by T.R. Ottervanger, of the Rotterdam Bar,
° the Netherlands Government (C-40/94), by A. Bos, Legal Adviser at the Ministry of Foreign Affairs, acting as Agent,
° the French Government (C-319/93), by C. de Salins, Deputy Director in the Legal Affairs Directorate of the Ministry of Foreign Affairs, and J.-M. Belorgey, chargé de mission in the same directorate, acting as Agents,
° the Danish Government (C-40/94), by P. Biering, Principal Director in the Ministry of Foreign Affairs, acting as Agent,
° the Commission of the European Communities (C-319/93, C-40/94 and C-224/94), by B.J. Drijber, of its Legal Service, acting as Agent,
having regard to the Reports for the Hearing in Cases C-319/93 and C-40/94 and the Report of the Judge-Rapporteur in Case C-224/94,
after hearing the oral observations of H.E. Dijkstra (C-319/93), represented by P.E. Mazel, C. van Roessel and others (C-40/94), represented by P.J.L.J. Duijsens, of the Hague Bar, Friesland (Frico Domo) Cooeperatie BA (C-319/93), represented by M.B.W. Biesheuvel, De cooeperatieve vereniging Zuivelcooeperatie Campina Melkunie BA (C-40/94), represented by T.R. Ottervanger, the Netherlands Government, represented by J.W. de Zwaan, Deputy Legal Adviser at the Ministry of Foreign Affairs, acting as Agent, the French Government, represented by J.-M. Belorgey, and the Commission, represented by B.J. Drijber, at the hearing on 21 February 1995,
after hearing the Opinion of the Advocate General at the sitting on 12 September 1995,
gives the following
Judgment
1 By three orders of 12 May 1993, 21 January 1994 and 29 July 1994, received at the Court on 18 June 1993, 31 January 1994 and 2 August 1994 respectively, the Gerechtshof (Regional Court of Appeal), Leeuwarden (C-319/93) and the Arrondissementsrechtbank (District Court), 's-Hertogenbosch (C-40/94 and C-224/94) referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty, now the EC Treaty, various questions on the interpretation of Article 2(1) of Regulation No 26 of the Council of 4 April 1962 applying certain rules of competition to production of and trade in agricultural products (OJ, English Special Edition 1959-1962, p. 129, hereinafter "Regulation No 26").
2 Those questions were raised in proceedings between dairy farmers and the agricultural cooperatives of which they were members concerning the fee payable by them under the statutes of those cooperatives on withdrawal or expulsion from the latter.
3 Upon leaving or being excluded from the cooperative to which they belonged, the farmers were required to pay a fee amounting, depending on the circumstances, to 10% of the average annual milk revenue received by them from the cooperative during the previous five financial years or 4% of the milk revenue they received during the financial year prior to the cessation of their membership.
4 The applicants in the main actions maintained in the proceedings before the national courts that the fee is incompatible, in particular, with Articles 85 and 86 of the EEC Treaty. Some of them contended, in particular, that the fee required by the cooperatives in fact creates an exclusive supply obligation for an indeterminate period which restricts the economic freedom of their members and therefore constitutes an obstacle for the cooperative' s competitors.
5 They also referred to the proceeding initiated by the Commission under Article 85 of the EEC Treaty against Zuivelcooeperatie Campina BA. That proceeding culminated in the acceptance of an undertaking on the part of the cooperative to amend the clauses in its statutes governing the conditions applying to the departure of its members, in such a way as to allow them to leave on three dates within the course of a financial year, having given two years' prior notice of their intention so to do, without having to pay a fee, or on the 1st of April, after giving three months' notice, subject to an obligation to pay a fee of 4% (21st Report on Competition Policy, 1991, paragraphs 83 and 84).
6 Lastly, the applicants in the main proceedings contended that the fee in question did not fall within the exception laid down in Article 2 of Regulation No 26, which provides as follows:
"1. Article 85(1) of the Treaty shall not apply to such of the agreements, decisions and practices referred to in the preceding article as form an integral part of a national market organization or are necessary for attainment of the objectives set out in Article 39 of the Treaty. In particular, it shall not apply to agreements, decisions and practices of farmers, farmers' associations, or associations of such associations belonging to a single Member State which concern the production or sale of agricultural products or the use of joint facilities for the storage, treatment or processing of agricultural products, and under which there is no obligation to charge identical prices, unless the Commission finds that competition is thereby excluded or that the objectives of Article 39 of the Treaty are jeopardized.
2. After consulting the Member States and hearing the undertakings or associations of undertakings concerned and any other natural or legal person that it considers appropriate, the Commission shall have sole power, subject to review by the Court of Justice, to determine, by decision which shall be published, which agreements, decisions and practices fulfil the conditions specified in paragraph 1.
3. The Commission shall undertake such determination either on its own initiative or at the request of a competent authority of a Member State or of an interested undertaking or association of undertakings.
..."
7 They observe in that regard, first, that the requirements set out in the first sentence of Article 2(1) have not been fulfilled and, second, that the second sentence of that provision does not have any independent meaning, in that agricultural cooperatives must be subject to the same requirements as those governing the application of the exemption pursuant to the first sentence.
8 The national courts observe that the application of the second sentence of Article 2(1) of Regulation No 26 has always given rise to doubts and has resulted in two different interpretations.
9 According to the first of those interpretations, which is based on the wording of the provision, the second sentence of Article 2(1) performs no independent function. The words "in particular" appearing at the start of the sentence mean that it merely provides an example of the type of agreement which qualifies for exemption under the system laid down in the first sentence of Article 2(1). The Commission has adopted that interpretation in some of its decisions.
10 According to the second interpretation, which is based on the genesis of Regulation No 26 and which was followed by the Commission in its initial decisions and in some of its more recent decisions, the second sentence of Article 2(1) of Regulation No 26 has an autonomous meaning. In view of the importance of cooperatives in the agricultural sphere, it lays down an exception which is distinct from the cases of non-application of Article 85 provided for in the first sentence. Indeed, that second sentence introduces a reversal of the onus of proof in favour of agricultural cooperatives, since, as regards agreements such as those described in the second sentence, it is for the Commission to prove that competition is excluded by such agreements or that the objectives of the Treaty are thereby jeopardized. Since the object of the provision is to establish a more flexible system in relation to agricultural cooperatives, any different interpretation would result in a heavier burden being imposed on those cooperatives, inasmuch as the conditions laid down in both the first and the second sentences would have to be fulfilled.
11 In those circumstances, the national courts, considering that the actions raised problems as to the interpretation of Community law, decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:
° In Cases C-319/93, C-40/94 and C-224/94:
"(1) Does the second sentence of Article 2(1) of Regulation No 26 applying certain rules of competition to production of and trade in agricultural products, which relates to agreements, decisions and practices of farmers, farmers' associations or associations of such associations belonging to a single Member State, have an independent meaning, so that national courts must presume that such agreements, decisions and practices are valid so long as the Commission has not found that they exclude competition or jeopardize the aims of Article 39 of the EEC Treaty?
(2) If the answer is yes, must a Commission finding to that effect necessarily appear in a decision issued pursuant to Article 2(2)?
(3) If the answer is no, must national courts, when it is claimed in proceedings before them that an agreement concluded or decision taken by an agricultural cooperative is void because it conflicts with Article 85 of the EEC Treaty, and the cooperative relies on the second sentence of Article 2(1) of Regulation No 26/62, submit the matter to the Commission for its assessment?"
° In Case C-224/94, the following additional questions were referred:
"(I) Should Article 2(2) of Regulation No 26, in conjunction with Article 1 of that regulation, be interpreted as meaning that, so long as the Commission has not determined by decision pursuant to Article 2(2) that an agreement fulfils the positive requirements for exemption laid down in Article 2(1), Article 85(1) of the EEC Treaty is directly applicable as a result of Article 1 of Regulation No 26?
(II) Would the answer to Question (I) be different as regards a finding by the Commission pursuant to the last part of the second sentence of Article 2(1) of Regulation No 26 that competition is excluded or that the objectives of Article 39 of the EEC Treaty are jeopardized?
(III) If Questions (I) and (II) must be answered in the negative, is the national court nevertheless entitled to declare on its own initiative that the derogating rules set out in Article 2(1) of Regulation No 26 are inapplicable because the Commission has intimated, albeit in a manner otherwise than by decision, that Article 2(1) of Regulation No 26 is not applicable, or should it request the Commission to take a formal decision and stay the proceedings until such time as the Commission has ruled on the matter by means of a decision?"
12 By order of 1 December 1994 the Court joined Cases C-319/93 and C-40/94, pursuant to Article 43 of the Rules of Procedure, for the purposes of the oral procedure and the judgment.
13 By order of 14 July 1995 the Court joined Cases C-319/93, C-40/94 and C-224/94, pursuant to Article 43 of the Rules of Procedure, for the purposes of the judgment.
14 It is apparent from an examination of the questions referred that the national courts are seeking guidance, first, as to the interpretation of Article 2(1) of Regulation No 26, particularly the second sentence thereof, and, second, as to the respective powers of the Commission and the national courts in the application of that article.
Interpretation of Article 2(1) of Regulation No 26
15 It should be noted, first, that, according to Article 42 of the Treaty, the provisions of the chapter relating to rules on competition are to apply to production of and trade in agricultural products listed in Annex II to the Treaty (Article 38(3)) only to the extent determined by the Council.
16 On the basis of those provisions, the Council adopted Regulation No 26, Article 1 of which provides that Articles 85 to 90 of the Treaty and provisions made in implementation thereof are to apply, subject to Article 2 of the regulation, to all agreements, decisions and practices which relate to production of or trade in the products in question.
17 It should be noted in that regard that, for the purposes of interpreting the second sentence of Article 2(1), it is necessary to take into account its genesis and the reasons on which Regulation No 26 is based.
18 It is apparent, first of all, from the genesis of that regulation that, by adding that second sentence ° which did not appear in the Commission' s original proposal for a regulation ° at the behest of the European Parliament, the legislature sought to introduce an exception applying in favour of agreements, decisions and practices of farmers where they fulfil the criteria laid down in it, unless the Commission finds that competition is thereby excluded or that the objectives of Article 39 of the Treaty are jeopardized.
19 Next, that desire to protect agricultural cooperatives is apparent from the reasons given for the regulation, and in particular from the fourth recital in the preamble to Regulation No 26, which states that special attention is warranted in the case of farmers' organizations.
20 To interpret the second sentence as having no independent meaning would run squarely counter to the wishes of the legislature, inasmuch as it would result in more stringent conditions being applied to agreements which are to be made more flexible, since they would have to fulfil the conditions laid down in both the first and second sentences. Moreover, the Commission could scarcely find that an agreement jeopardized the objectives of Article 39 of the Treaty if, by virtue of the derogation set out in the first sentence, it had already been established that that agreement or decision was necessary for the attainment of those objectives.
21 Furthermore, it is necessary to reject the argument that such agreements are capable of having provisional validity so long as the Commission has not found that competition is excluded or that the objectives of Article 39 of the Treaty are jeopardized, since the second sentence of Article 2(1) merely introduces a reversal of the burden of proof in favour of farmers.
22 Consequently, where it is found that an agreement or a decision falls within the scope of Article 85(1), that the criteria for exemption referred to in the second sentence of Article 2(1) of Regulation No 26 are not fulfilled and that it does not qualify for exemption under Article 85(3) of the Treaty, it is void in accordance with Article 85(2). Such nullity has retroactive effect (see, in particular, the judgment in Case 48/72 Brasserie de Haecht [1973] ECR 77, paragraph 27).
23 It is with that system in mind that the Council provides, where it considers it appropriate so to do, for an exception to the principle that the nullity of agreements prohibited by Article 85(1) has retroactive effect. Indeed, it is for that reason that Article 17 of Council Regulation No 1360/78 of 19 June 1978 on producer groups and associations thereof (OJ 1978 L 166, p. 1) provides that, where it is decided, pursuant to Article 2 of Regulation No 26, that Article 85(1) of the Treaty is applicable to the agreements covered by that regulation, that decision is to apply only from the date on which that decision was reached.
24 In the light of all of the foregoing considerations, the answer to be given to the first question must be that the inapplicability of Article 85 of the Treaty to agreements, decisions and practices of farmers, farmers' associations or associations of such associations is exclusively subject to the conditions laid down in the second sentence of Article 2(1) of Regulation No 26. If an agreement or decision falls within the scope of Article 85(1) of the Treaty and the criteria for exemption referred to in the second sentence of Article 2(1) of Regulation No 26 are not fulfilled, and it does not qualify for exemption pursuant to Article 85(3), it is automatically void and such nullity has retroactive effect.
The power to apply Article 2(1) of Regulation No 26
25 As regards the division of powers between the Commission and the national courts for the purposes of applying Article 2(1) of Regulation No 26, it should first of all be pointed out that, by virtue of Article 2(2) and (3), the Commission has exclusive competence, subject to review by the Court, to determine whether an agreement fulfils the conditions specified in Article 2(1).
26 On the other hand, the Commission does not have exclusive competence to apply Article 85(1). As the Court previously noted in its judgment in Case C-234/89 Delimitis [1991] ECR I-935, paragraph 45, the Commission shares that competence with the national courts. In its judgment in Case 127/73 BRT [1974] ECR 51, the Court stated that Article 85(1) produces direct effects in relations between individuals and creates direct rights in respect of the individuals concerned which those national courts must safeguard.
27 It is necessary to consider next the consequences of that division of powers as regards the application of the Community competition rules in practice by the national courts in the light of the principles laid down by the Court in its judgment in Delimitis.
28 It is necessary in that regard to take account of the fact that the national courts before which it is contended that an agreement between farmers or associations thereof is covered by the special exception provided for by Regulation No 26 may be prompted to reach decisions contrary to those taken or envisaged by the Commission in relation to the application of the second sentence of Article 2(1) of Regulation No 26 or, as the case may be, the application of Article 85(1) and (3). However, such inconsistent decisions would be incompatible with the general principle of legal certainty, and must therefore be avoided where the national courts are ruling on agreements or practices which may yet be decided on by the Commission.
29 In order to reconcile the need to avoid inconsistent decisions and the obligation incumbent on a national court to rule on the claims of the party to the proceedings who pleads the automatic nullity of an agreement, the national court may take into account the following considerations as regards the application of Article 85.
30 If the criteria for applying Article 85(1) are clearly not fulfilled, the national court may follow the normal procedure for the purposes of ruling on the contested agreement.
31 If, on the other hand, the national court considers that the agreement fulfils the criteria for the application of Article 85(1), it must determine whether, in accordance with the second sentence of Article 2(1) of Regulation No 26, the agreement in question constitutes an agreement between farmers, farmers' associations or associations of such associations belonging to a single Member State which concerns the production or sale of agricultural products or the use of joint facilities for the storage, treatment or processing of agricultural products and under which there is no obligation to charge identical prices.
32 If the national court finds that the agreement fulfils those conditions and it is clear, taking into account the criteria established by the case-law of the Court and the practice of the Commission, which is apparent not only from the decisions adopted by it but also, in particular, from its reports on competition policy and its communications, that the agreement excludes competition or jeopardizes the objectives of Article 39, it may declare that agreement void pursuant to Article 85(2) of the Treaty if it is incapable under any circumstances of qualifying for an exemption decision under Article 85(3).
33 It should be recalled in that regard that an agreement can only qualify for such a decision if it has been notified or is exempt from the requirement of notification. Under Article 4(2) of Regulation No 17, an agreement is exempt from the requirement of notification where the only parties thereto are undertakings from one Member State and it does not relate to imports or exports between Member States. The dairy cooperatives' statutes may fulfil those conditions.
34 If, on the other hand, the national court considers that the contested agreement may fall within the exemption referred to in the second sentence of Article 2(1), it may decide to stay the proceedings, in order either to allow the parties concerned to seek from the Commission a decision under Article 2(3), or to obtain for itself information on the progress of proceedings which that institution may have instituted and on the likelihood of an official decision by the Commission on the agreement in issue, or to obtain economic and legal information which that institution may be in a position to provide to it.
35 In any event, the national court may stay the proceedings in order to make a reference to the Court for a preliminary ruling pursuant to Article 177 of the Treaty.
36 Consequently, the answer to be given to the third question must be that a national court before which a party pleads the nullity of a clause in the statutes of an agricultural cooperative on the ground that it infringes Article 85(1) of the Treaty, and before which the cooperative seeks to rely on Article 2(1) of Regulation No 26, may continue the proceedings and adjudicate on the dispute if it is clear that the criteria for the application of Article 85(1) are not fulfilled, or may declare the clause void under Article 85(2) if it is certain that that provision does not fulfil the conditions for application of the exception laid down in Article 2(1) of Regulation No 26 and does not qualify for exemption under Article 85(3). Where there is any doubt, the national court may, if it is appropriate and consistent with the national rules of procedure, obtain additional information from the Commission or allow the parties to seek a decision from the Commission.
37 In view of the answers given to the first and third questions, there is no need to answer the other questions.
Costs
38 The costs incurred by the Netherlands, the French and Danish Governments and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the actions pending before the national courts, the decision on costs is a matter for those courts.
On those grounds,
THE COURT
in answer to the questions referred to it by the Gerechtshof, Leeuwarden, by order of 12 May 1993 (C-319/93) and by the Arrondissementsrechtbank, 's-Hertogenbosch, by orders of 21 January and 29 July 1994 (C-40/94 and C-224/94), hereby rules:
1. The inapplicability of Article 85 of the Treaty to agreements, decisions and practices of farmers, farmers' associations or associations of such associations is exclusively subject to the conditions laid down in the second sentence of Article 2(1) of Regulation No 26. If an agreement or decision falls within the scope of Article 85(1) of the Treaty and the criteria for exemption referred to in the second sentence of Article 2(1) of Regulation No 26 are not fulfilled, and it does not qualify for exemption pursuant to Article 85(3), it is automatically void and such nullity has retroactive effect.
2. A national court before which a party pleads the nullity of a clause in the statutes of an agricultural cooperative on the ground that it infringes Article 85(1) of the Treaty, and before which the cooperative seeks to rely on Article 2(1) of Regulation No 26, may continue the proceedings and adjudicate on the dispute if it is clear that the criteria for the application of Article 85(1) are not fulfilled, or may declare the clause void under Article 85(2) if it is certain that that provision does not fulfil the conditions for application of the exception laid down in Article 2(1) of Regulation No 26 and does not qualify for exemption under Article 85(3). Where there is any doubt, the national court may, if it is appropriate and consistent with the national rules of procedure, obtain additional information from the Commission or allow the parties to seek a decision from the Commission.
