Court of Justice of the European Communities (including Court of First Instance Decisions)

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1. Agriculture - Common organization of the markets - Oils and fats - Olive oil - Classification - Examination of organoleptic characteristics - Absence of a Community procedure - Application of national procedures - Objective - Implementation of the Community classification
(Commission Regulation No 3472/85, Art. 3(2) )
2. Agriculture - Common Agricultural Policy - Financing by the EAGGF - Principles - Legality of expenditure incurred by way of intervention - Classification of products offered for intervention - Commission' s power of inspection - Scope
(Council Regulation No 729/70, Art. 9)

1. Article 3(2) of Commission Regulation No 3472/85 of 10 December 1985 must be interpreted as meaning that, so long as no Community rules have been adopted, the examination of the organoleptic characteristics of edible virgin olive oil is to be carried out in accordance with national procedures whose sole purpose must be to establish the characteristics required by the Community provisions for classification according to the descriptions set out therein.
2. Within the framework of the EAGGF' s responsibility for expenditure incurred by a Member State by way of intervention, Community law authorizes the Commission, for the purpose of verifying, according to strict conditions of reliability, that intervention transactions are executed correctly, to carry out a subsequent check on the initial classification of the product in question which does not consist in a mere repetition of the analyses carried out when it was offered for intervention.

In Joined Cases C-161/90 and C-162/90,
REFERENCE to the Court under Article 177 of the EEC Treaty by the Pretura di Lecce for a preliminary ruling in the proceedings pending before that court between
Carmela Petruzzi
and
1. Associazione Italiana Produttori Olivicoli (AIPO)
2. Associazione Salentina Olivicoltori (ASO)
3. Azienda di Stato per gli Interventi sul Mercato Agricolo (AIMA)
and between
Addolorata Longo
and
1. Associazione Italiana Produttori Olivicoli (AIPO)
2. Associazione Salentina Olivicoltori (ASO)
3. Azienda di Stato per gli Interventi sul Mercato Agricolo (AIMA)
on the interpretation of Article 3(2) of Commission Regulation (EEC) No 3472/85 of 10 December 1985 on the buying-in and storage of olive oil by intervention agencies (Official Journal 1985 L 333, p. 5) and on the validity of the decision adopted by the Commission following an investigation into the quality of olive oil which was the subject of intervention to the effect that the expenditure incurred in the acquisition and management of the batches of oil referred to in AIMA' s letters of 29 March 1989 (No 4387) and 3 August 1989 (No 1120) does not qualify for intervention,
THE COURT (Sixth Chamber),
composed of: G.F. Mancini, acting as President of the Chamber, M. Díez de Velasco and C.N. Kakouris, Judges,
Advocate General: M. Darmon,
Registrar: V. Di Bucci, Administrator,
after considering the written observations submitted on behalf of:
- C. Petruzzi and A. Longo, by Emilio Cappelli, of the Rome Bar,
- the Italian Government, by Oscar Fiumara, Avvocato dello Stato, acting as Agent,
- the Greek Government, by E.-M. Mamouna, a lawyer in the Department for Contentious Community Matters at the Ministry of Foreign Affairs, and M. Tsotsanis, a lawyer at the Ministry of Agriculture, acting as Agents;
- the Commission of the European Communities, by G. Campogrande, a member of its Legal Service, acting as Agent;
having regard to the Report for the Hearing,
after hearing the oral observations of C. Petruzzi and A. Longo, represented by Paolo de Caterini of the Rome Bar, the Italian Government, the Greek Government and the Commission of the European Communities, represented by Eugenio de March, a member of its Legal Service, acting as Agent, at the hearing on 30 April 1991,
after hearing the Opinion of the Advocate General at the sitting on 18 June 1991,
gives the following
Judgment

1 By orders of 28 March 1990, which were received at the Court on 25 May 1990, the Pretura (Magistrate' s Court) Lecce (Italy) referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty three questions on the interpretation of Article 3(2) of Commission Regulation No 3472/85 of 10 December 1985 on the buying-in and storage of olive oil by intervention agencies and on the validity of the decision of the Commission of the European Communities and any other decision adopted by that institution to the effect that the expenditure incurred in the acquisition and management of the batches of oil referred to in the letters of the Azienda di Stato per gli Interventi nel Mercato Agricolo (hereinafter referred to as "AIMA") of 29 March 1989 and 3 August 1989 (Nos 4387 and 1120, respectively, in the documents annexed to the statement submitted by the plaintiff) does not qualify for intervention.
2 Those questions arose in proceedings between Carmela Petruzzi (Case C-161/90) and Addolorata Longo (Case C-162/90), on the one hand, and the Associazione Italiana Produttori Olivicoli (Italian Olive Oil Producers' Association, hereinafter referred to as "AIPO"), the Associazione Salentina Olivicoltori (Salento Olive Growers' Association, hereinafter referred to as "ASO") and the Azienda di Stato per gli Interventi sul Mercato Agricolo (Italian Intervention Agency, hereinafter referred to as "AIMA"), on the other hand, in which the plaintiffs sought a declaration that any claim for recovery of the amounts paid by way of intervention prices for olive oil pursuant to Article 4 et seq. of Regulation No 136/66/EEC 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) was unfounded and unlawful.
3 It is apparent from the documents before the Court that Mrs Petruzzi and Mrs Longo, who are both olive growers at Vernole (Lecce), had had 12,38 quintals and 8,57 quintals of virgin olive oil harvested during the 1987 olive marketing year collected from their respective premises by ASO.
4 Following an analysis carried out by certain laboratories on their behalf, the Community authorities declared that the oil offered for intervention had to be classified as olive oil other than (fine) virgin oil. Owing to the extent of the irregularities established, the Commission, by the aforementioned decision, disallowed the expenditure incurred by Italy in respect of intervention for olive oil during the period from 1 October 1988 to 30 September 1989.
5 Having regard to the results of the aforementioned analyses and to the conclusions drawn therefrom by the Commission, AIMA requested the storage agencies to repay the sums it had paid to them in respect of the intervention purchases, which those agencies in turn claimed back from the producers who had supplied the oil in question.
6 Mrs Petruzzi and Mrs Longo accordingly brought proceedings in the national court against ASO (Lecce), AIPO (Rome) and AIMA for a declaration that any claim for repayment of the sums of LIT 4 438 895 and LIT 3 072 800 paid to the plaintiffs by way of intervention prices was unfounded and unlawful.
7 Taking the view that those applications raised a number of questions of Community law, the national court decided to stay the proceedings pending a preliminary ruling by the Court on the following questions:
"A. 1. May Article 3(2) of Commission Regulation (EEC) No 3472/85 of 10 December 1985 be interpreted as meaning that the examination of the organoleptic characteristics of edible virgin olive oil other than lampante oil is to be carried out exclusively in accordance with national procedures until a Community procedure has been adopted?
2. If that is the case, may the results and certifications of the tests and analyses carried out according to national procedures at the time when the oil is offered for intervention and during its storage at the intervention centre be refuted by the results of tests carried out in accordance with procedures and methods which differ from national procedures?
B. Is the decision of the Commission of the European Communities and any other decision of that institution valid if it is to the effect that the expenditure incurred in the acquisition and management of the batches of oil referred to in AIMA' s letters of 29 March 1989 and 3 August 1989 (Nos 4387 and 1120, respectively, in the plaintiff' s bundle of documents) does not qualify for intervention, with an order, if necessary, for the production of the Commission' s decision and any other decision of that institution."
8 Reference is made to the Report for the Hearing for a fuller account of the facts of the case, the procedure and the pleas and arguments of the parties, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court.
Question 1
9 To begin with, it should be borne in mind that Article 35 of Regulation No 136/66 provides as follows:
"Without prejudice to the harmonization of legislation on olive oil for human consumption, Member States shall, for the purposes of intra-Community trade and trade with third countries, except in respect of exports to third countries, adopt the descriptions and definitions of olive oil set out in the Annex to this regulation."
10 In pursuance of that provision, the Annex defines the following four categories of virgin olive oil:
"(a) Extra: olive oil of absolutely perfect flavour, with a free fatty acid content expressed as oleic acid of not more than 1 g per 100 g;
(b) Fine: olive oil with the same characteristics as 'Extra' but with a free fatty acid content expressed as oleic acid of not more than 1.5 g per 100 g;
(c) Ordinary (the expression 'semi-fine' may also be used): olive oil of good flavour with a free fatty acid content expressed as oleic acid of not more than 3.3 g per 100 g;
(d) Lampante (lamp-oil): off-flavour olive oil or olive oil with a free fatty acid content expressed as oleic acid of more than 3.3 g per 100 g."
11 The third and fourth subparagraphs of Article 3(2) of Regulation No 3472/85 provide that:
"With regard to edible virgin olive oil, the examination of the organoleptic characteristics [shall be] carried out according to a Community procedure.
Until such a procedure is laid down, the Member States shall carry out the above examination in accordance with national procedures."
12 It follows from the fact that those provisions are contained in a regulation that the criteria referred to therein regarding entitlement to a particular designation prevail over any national rules relating thereto, so that the national procedures mentioned in Article 3(2) of the regulation can have no purpose other than to implement those criteria.
13 The answer to the national court' s question must therefore be that Article 3(2) of Commission Regulation No 3472/85 of 10 December 1985 must be interpreted as meaning that, so long as no Community rules have been adopted, the examination of the organoleptic characteristics of edible virgin olive oil is to be carried out in accordance with national procedures whose sole purpose must be to establish the characteristics required by the Community provisions for classification according to the descriptions set out therein.
Second question
14 The question whether methods other than those provided for at national level may be used in order subsequently to check the classification of the oil, as initially determined when it was offered for intervention, entails a preliminary examination of the lawfulness of a subsequent check of that kind.
15 It should be borne in mind in that regard that Article 8(1) of Council Regulation (EEC) No 729/70 of 21 April 1970 on the financing of the Common Agricultural Policy (Official Journal, English Special Edition 1970 (I), p. 218) provides as follows:
"The Member States in accordance with national provisions laid down by law, regulation or administrative action shall take the measures necessary to:
- satisfy themselves that transactions financed by the Fund are actually carried out and are executed correctly;
- prevent and deal with irregularities;
- recover sums lost as a result of irregularities or negligence.
The Member States shall inform the Commission of the measures taken for those purposes and in particular of the state of the administrative and judicial procedures."
Similarly, Article 9(1) requires Member States to:
"... facilitate the supervision which the Commission may consider it necessary to undertake within the framework of the management of Community financing, including inspections on the spot."
16 It follows from those provisions, whose aim is to confer upon the authorities concerned the necessary powers in order to prevent the EAGGF from being burdened with the expenditure relating to intervention transactions carried out in a manner inconsistent with Community law, that a subsequent check on the initial classification of the oil is a matter for the Commission.
17 In that regard, furthermore, if subsequent checks on the initial classification of the oil are actually to be effective, the Commission must be entitled to apply any system of analysis enabling it to determine conclusively whether the classification of the oil at the time when it was offered for intervention complied with the designation criteria referred to in the relevant Community rules.
18 The answer to the national court' s question must therefore be that Community law authorizes the Commission, for the purpose of verifying, according to strict conditions of reliability, that intervention transactions are executed correctly, to carry out a check which does not consist in a mere repetition of the analyses carried out when the oil was offered for intervention.
Question 3
19 Having regard to the overall scheme of the questions submitted by the national court, Question 3 must be considered to be devoid of purpose since it is apparent from the information supplied by the national court that the answers given to the questions previously examined are sufficient to enable it to settle the dispute.

Costs
20 The costs incurred by the Greek Government, the Italian Government 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 proceedings pending before the national court, the decision on costs is a matter for that court.

On those grounds,
THE COURT (Sixth Chamber),
in answer to the questions referred to it by the Pretura di Lecce, by orders of 28 March 1990, hereby rules:
1. Article 3(2) of Commission Regulation (EEC) No 3472/85 of 10 December 1985 must be interpreted as meaning that, so long as no Community rules have been adopted, the examination of the organoleptic characteristics of edible virgin olive oil is to be carried out in accordance with national procedures whose sole purpose must be to establish the characteristics required by the Community provisions for classification according to the descriptions set out therein;
2. Community law authorizes the Commission, for the purpose of verifying, according to strict conditions of reliability, that intervention transactions are executed correctly, to carry out a check which does not consist in a mere repetition of the analyses carried out when the oil was offered for intervention.