Commission of the European Communities v Hellenic Republic. [1989] EUECJ C-128/87 (17 January 1989)

Judgment 1 By application lodged at the Court Registry on 15 April 1987, the Commission of the European Communities brought an action before the Court under Article 169 of the EEC Treaty for a declaration that by restricting official recognition of olive oil producer organizations to those which are " entitled to pursue, on behalf of their members and on their reponsibility, all commercial activities relating to the collection, distribution and sale of olive products" and whose "members - natural persons - participate in the organization or are represented by local organizations established at the level of communities or adjoining communities, having legal personality and pursuing economic and social objectives" and "undertake to provide the organization with information concerning all their agricultural activities", the Hellenic Republic has failed to fulfil its obligations under Council Regulation No 2261/84 of 17 July 1984 laying down general rules on the granting of aid for the production of olive oil and of aid to olive oil producer organizations ( Official Journal 1984, L 208, p . 3 ) and under Article 40(3 ) of the EEC Treaty . 2 Regulation No 2261/84 was adopted pursuant to Article 5(4 ) of Regulation No 136/66 of the Council of 22 September 1966 on the establishment of a common organization of the market in oils and fats ( Official Journal, English Special Edition 1965-66, p . 221 ), as amended by Council Regulation No 1562/78 of 29 June 1978 ( Official Journal 1978, L 185, p . 1 ). Regulation No 136/66, which is the basic regulation in this sector, set up a Community system of production aid for olive oil . 3 As far as the grant of production aid and producer organizations are concerned, the basic regulation was amended by Council Regulation No 1413/82 of 18 May 1982 ( Official Journal 1982, L 162, p . 6 ). That regulation inserted a new Article 20c, which lays down the characteristics of producer organizations and associations of such organizations . In the preamble to that regulation fear is expressed that the system previously applicable will not be applied in the near future . It is also stated that the system does not seem well suited to the structure of olive oil production in Greece . 4 Articles 4 to 13 of Regulation No 2261/84, which is an implementing regulation in the olive oil sector, lays down the requirements which olive oil producer organizations and associations of such organizations must fulfil . Article 20 of the regulation, which forms part of the final provisions, authorizes the Commission to adopt the measures necessary "to ensure a smooth transition from the arrangements currently in force to those established under this Regulation ". The second paragraph of Article 20 reads as follows : " With a view to ensuring the respect of the objectives of this Regulation whilst taking into consideration specific problems which may arise in certain Member States in the application of these provisions, the Member States concerned may, after consulting the Commission, whilst taking into consideration any additional criteria, grant for a transitional period of three marketing years, from the marketing year 1984/85, provisional recognition to such producers' organizations and their associations which make a request ." 5 Under that provision, the Greek Ministry of Agriculture adopted Order No 330358 of 25 October 1984, which lays down "additional criteria" for the recognition of olive oil producer organizations in Greece . Paragraph 3 of the order contains the provision contested by the Commission . 6 Reference is made to the Report for the Hearing for a fuller account of the relevant legislation, the background to the dispute and the conclusions, submissions and arguments of the parties, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court . 7 The Commission considers that the aim and effect of the additional criteria laid down by Ministerial Order No 330358 is to limit recognition to associations of agricultural cooperatives, called "second degree cooperatives", and to exclude, from the outset and generally, any other form of organization . By laying down such criteria the Greek Government has exceeded the limits of the powers conferred on the Member States by the Community rules and, in particular, by Article 20 of Regulation No 2261/84 . Moreover, the criteria chosen give rise to arbitrary discrimination between producers, contrary to Article 40(3 ) of the Treaty . 8 In order to consider whether the Greek Government has exceeded the limits of the powers conferred on it by the Community rules, the limits of those powers must first be ascertained . 9 In the first place, it must be observed that the preamble to Regulation No 2261/84 does not refer to the power granted to the Member States by Article 20 of that regulation in order to lay down for the recognition of producer organizations "additional" criteria other than those already prescribed by the Community regulations . However, the wording of Article 20 suggests that the additional criteria are to ensure "a smooth transition" from the arrangments previously in force to those established under Regulation No 2261/84, and to ensure that the objectives of the regulation are respected while taking into consideration "specific problems which may arise in certain Member States" in the application of the provisions of that regulation . Those problems are also referred to in the preamble to Regulation No 1413/82, according to which the need to fix new criteria for the recognition of producer organizations is based, inter alia, on the fact that the previous system did not seem "well suited to the special structure of olive oil production in Greece ". 10 It can thus be seen from a consideration of the scope of Article 20 of Regulation No 2261/84 that the nature of the additional criteria which may be laid down by Greece depends on the nature of the specific problems caused by the special structure of olive oil production in that country . However, the Court cannot ascertain from the documents before it what those specific problems are . The Commission merely states that it is for the Greek Government to specify what those problems are . The Greek Government simply refers to the hilly terrain and to the dispersal of olive groves in Greece, without attempting to establish any link between those facts and the legal rules applicable to olive oil producer organizations . 11 In those circumstances, the Court could hold that the Greek Government has exceeded the limits of the powers conferred on it by the Community regulations only if it were established that the fixing of the additional criteria by Greece was vitiated by a manifest misuse of powers . 12 In order to consider whether that is so it must be borne in mind that the two submissions put forward by the Commission, namely that the limits of the powers conferred have been exceeded and discrimination between producers, are both based on the claim that the additional criteria laid down in the contested order are drafted in such a way that they exclude the recognition of any producer organization which is not an association of agricultural cooperatives or, in any event, an association of a cooperative nature . That argument must therefore be considered first . 13 The Commission puts forward three arguments in support of its position . First, it claims that a consideration of the Greek legislation shows that only associations of agricultural cooperatives can fulfil all the criteria laid down in Order No 330358 . Secondly, it refers to the list of producer organizations recognized on the basis of the additional criteria for the 1984/85 marketing year, which consists only of associations of cooperatives . Lastly, it points out that the preamble to the ministerial order setting out that list ( Order No 762 of 10 January 1985 of the Minister for Agriculture ) contains an express reference to the Greek law on agricultural cooperatives . 14 The first argument is based directly on the wording of the additional criteria as laid down in paragraph 3 of Ministerial Order No 330358 . The Commission claims that that wording corresponds to the definition of associations of cooperatives, contained in the Greek law on agricultural cooperatives . 15 The alleged limitation of recognition to associations of cooperatives must first be considered . According to the Commission, that limitation flows from the fact that, according to the order, the members must participate in the organization, not directly, but through local organizations established at the level of communities or adjoining communities . However, that claim is based on a misinterpretation of the wording of the contested order . It provides that the members - natural persons - are to "participate" in the organization "or" are to be represented by a local organization . The wording of the order thus implies that it is possible for a cooperative in the management of which growers themselves participate to be granted recognition . 16 It must next be ascertained whether, as the Commission claims in the alternative, the wording of the additional criteria as laid down in the order exclude recognition of organizations which are neither agricultural cooperatives nor associations of such cooperatives . 17 As far as that point is concerned, it must be observed that although the wording of the contested order limits recognition of producer organizations to those which are entitled to pursue, "on behalf of the members and on their responsibility", certain commercial activities, it does not refer to that factor which, in Greek law, distinguishes agricultural cooperatives from other associations, namely the fact that the agricultural cooperative has as its objective "the economic, social and cultural development of its members", namely farmers, "within the framework of a common undertaking, through cooperation on the basis of equality", as it is put in Article 1 of Law No 1541 of 1985 on agricultural cooperatives ( Official Journal of the Hellenic Republic I, No 68, of 18 April 1985 ). 18 The Commission also claims that the wording of the order corresponds to the definition of the functions of agricultural cooperatives and associations of such cooperatives, but an examination of the Greek law on agricultural cooperatives reveals only a vague resemblance . Admittedly, the list of the activities of agricultural cooperatives contained in the law ( Article 3 of Law No 1541, cited above ) refers to cooperatives taking responsibility for the collection and sale of agricultural products from the holdings of their members and the function of associations of cooperatives is, inter alia, to see to the marketing of their members' produce ( Article 49 of Law No 1541 ). Under Greek law, however, those activities of cooperatives and associations of cooperatives form part of a very varied range of activities . The mere fact that some of those activities coincide with the additional criteria laid down in the contested order does not permit the conclusion to be drawn that the wording of that order limits recognition to agricultural cooperatives or associations of such cooperatives . 19 The Commission has not attempted to show that the characteristics of the other forms of association or company known to Greek law are such that choice of such a legal form would automatically mean that the organization concerned could not fulfil the conditions laid down in the contested order . 20 It follows from the foregoing that the Commission' s argument that, as a direct result of the wording of Order No 330358 only associations of cooperatives, or only agricultural cooperatives, can meet the additional criteria laid down, must be rejected . 21 The arguments based on the list of producer organizations recognized for the 1984/85 marketing year and the reference in the preamble to that list to the law on agricultural cooperatives still have to be considered . 22 The list in question, which is among the documents before the Court, contains 77 producer organizations, which are all regional associations of agricultural cooperatives . The preamble refers to the law on agricultural cooperatives without mentioning any other legislative provision . Neither of those facts have been satisfactorily explained by the Greek Government, which merely stated that applications made by organizations other than cooperatives did not at the time fulfil the conditions laid down by the Community regulations and by Order No 330358 . 23 In its reply, the Commission referred to three specific cases in which a producer organization whose legal form was not that of an association of cooperatives ( two of the cases concerned non-profit-making associations and the third a limited company ) was not recognized by the Greek authorities . However, the Greek Government explained, without being contradicted by the Commission, that the Greek authorities had refused to recognize the three organizations involved for reasons other than their legal form and, moreover, that some 10 cooperatives had also been refused recognition . 24 It must be considered that the composition of the list of recognized producer organizations gives a strong impression that the Greek Government wished to confine the grant of recognition as olive oil producer organizations to associations of cooperatives . However, that impression has not been corroborated by other evidence . In itself, it is not sufficient to justify the conclusion that the additional criteria laid down in Order No 330358 exclude recognition of organizations other than associations of agricultural cooperatives . However, the alleged failure to fulfil obligations refers to the criteria laid down in the order and not to the practical implementation of those criteria by the Greek authorities . 25 Consequently, the Commission has not produced the evidence necessary to make out the alleged failure to fulfil obligations . As a result, the application must be dismissed . Costs 26 Under Article 69(2 ) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been asked for in the successful party' s pleading . However, Article 69(3 ) provides that the Court may order the parties to bear their own costs where the circumstances are exceptional . That provision should be applied in this case, since the two parties have failed to provide the Court with the necessary information in order to reach its decision . On those grounds, THE COURT hereby : ( 1 ) Dismisses the application; ( 2 ) Orders the parties to bear their own costs . © European Communities, 2001 All rights reserved BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII