Openbaar Ministerie (Public Prosecutor) v. Nertsvoederfabriek Nederland B.V. (Case 118/86)

Transcription

1 Openbaar Ministerie (Public Prosecutor) v. Nertsvoederfabriek Nederland B.V. (Case 118/86) Before the Court of Justice of the European Communities (5th Chamber) ECJ (5th Chamber) (Presiding, Galmot P.C.; Schockweiler, Bosco, Everling and Joliet JJ.) SR José Da Cruz Vilaça, Advocate General. 6 October 1987 Reference from the Netherlands by the Gerechtshof (Court of Appeal), Arnhem, under Article 177 EEC. Public monopolies. Licensed operations. Where an agricultural processing operation may only be carried out under licence (which is available to all who meet the requirements), it does not constitute a state monopoly of a commercial character and Article 37 EEC does not apply. [7] Exports. Processing restrictions. Agriculture. Animal waste. Where processing of poultry offal may only be carried out under licence and poultry producers may dispose of their offal only to licenced processors there is a restriction on exports under Article 34 EEC which may nevertheless be permissible under the public health provision in Article 36 EEC, but only if other measures less restrictive of inter-state trade are not available. Prohibition of exportation is not essential to the effectiveness of such a system. [12]-[14], [16] The Court interpreted Regulations 827/68 and 2777/75 and Articles 30, 34, 36 and 37 EEC in the context of Dutch law requiring that all processing of poultry offal could only be carried out by licensed plants and that poultry producers could dispose of their offal only to such plants, the defendant having been prosecuted for operating such a plant without a licence, to the effect that Article 37 did not apply, that imports were not affected, that there was an implied prohibition of exports covered by Article 34 EEC, that the public health purpose of Article 36 might apply but only if there was no less restrictive way of attaining the same

2 end, that the system itself was indispensable but the implied export prohibition was not, and *437 that therefore the defendant could not rely on the illegality of the licensing system to save him. Representation H. J. Bronkhorst, of the Hague Bar, in the written proceedings, and D. J. Drijber, also of the Hague Bar, in the oral proceedings, for the defendant company. E. F. Jacobs, acting Secretary General at the Ministry of Foreign Affairs, for the Dutch Government as amicus curiae in the written proceedings only. Robert Fischer, Legal Adviser to the E.C. Commission, for the Commission as amicus curiae. The following cases were referred in the judgment: 1. Holdijk ( /81), 1 April 1982: [1982] E.C.R. 1299, [1983] 2 C.M.L.R Gaz:141/ Campus Oil Ltd. v. Minister for Industry and Energy (72/83), 10 July 1984: [1984] E.C.R. 2727, [1984] 3 C.M.L.R Gaz: 72/83. The following further cases were referred to by the Advocate General: 3. Gesellschaft für Überseehandel mbh v. Handelskammer Hamburg (49/76), 26 January 1977: [1977] E.C.R. 41. Gaz:49/ Enka BV v. Inspecteur der Invoerrechten en Accijnzen (38/77), 23 November 1977: [1977] E.C.R. 2203, [1978] 2 C.M.L.R Gaz:38/ Procureur du Roi v. Dechmann (154/77), 29 June 1978: [1978] E.C.R. 1573, [1979] 2 C.M.L.R. 1. Gaz:154/ Frans--Nederlandse Maatschappij voor Biologische Producten BV (272/80), 17 December 1981: [1981] E.C.R. 3277, [1982] 2 C.M.L.R Gaz:272/ Officier Van Justitie v. Van den Hazel (111/76), 18 May 1977: [1977] E.C.R. 901, [1980] 3 C.M.L.R. 12. Gaz:111/ Pigs Marketing Board (Northern Ireland) v. Redmond (83/78), 29 November 1978: [1978] E.C.R. 2347, [1979] 1 C.M.L.R Gaz:83/ Re: Peter Vriend (94/79), 26 February 1980: [1980] E.C.R. 327, [1980] 3 C.M.L.R Gaz:94/ Procureur de la Republique v. Association de Defense des Bruleurs D'Huiles Usagees (240/83), 7 February 1985: [1985] E.C.R Gaz:240/ Syndicat National des Fabricants Raffineurs D'Huile de Graissage v. Inter- Huiles GIE (172/82), 10 March 1983: [1983] E.C.R. 555, [1983] 3 C.M.L.R Gaz:172/82 *438. The following additional case was referred to in argument: 12. De Samvirkende Danske Landboforeninger v. Ministeriet for Skatter og Afgifter (297/82), 26 October 1983: [1983] E.C.R. 3299, [1985] 1 C.M.L.R Gaz:297/82.

3 TABULAR OR GRAPHIC MATERIAL SET FORTH AT THIS POINT IS NOT DISPLAYABLE Opinion of the Advocate General (Sr José Luis da Cruz Vilaça) I The Gerechtshof (Court of Appeal), Arnhem (Netherlands), has asked the Court to interpret a number of provisions of Community law, with a view to determining the compatibility therewith of the system for the licensing of rendering plants provided for in the Destructiewet (Dutch Act on the destruction of animal carcases and offal) of 21 February 1957, in particular with regard to poultry offal. The question submitted, to which there is a preamble putting it into context, is worded as follows: How should the following be interpreted--article 30, Article 34, Article 36 and Article 37 of the EEC Treaty, singly or in combination, Council Regulation 827/68 on the common organisation of the market in certain products listed in Annex II to the Treaty and Council Regulation 2777/75 on the common organisation of the market in poultry-meat, singly or in combination--in view of the fact that the destruction of poultry offal is restricted solely to a few licence-holders? The question arose in criminal proceedings brought by the Dutch Public Prosecutor against Nertsvoederfabriek Nederland BV ('Nertsvoederfabriek'), which was accused of having set up and brought into operation or kept in operation between January and October 1984 contrary to section 5 of the Destructiewet, a plant exclusively or mainly intended to render innocuous unsound material from the animals slaughtered there, in particular by processing it into a product (a brownish powder) suitable for incorporation into animal feedingstuffs. That operation is governed by the Destructiewet, in order to prevent any risk or damage to or impairment of the environment and public health. The Destructiewet applies in particular to poultry offal which is manifestly unfit for human consumption and comes from establishments where poultry is slaughtered by way of trade, with the exception of offal put to any other useful purpose (section 2(1)(f)). *439 Section 4 prohibits the disposal of offal otherwise than by processing in a rendering plant and section 5(1) prohibits the setting up or keeping in operation, and the extension or alteration, of a rendering plant without a licence. Accordingly, a person owning or in possession of offal is obliged to declare it and to hand it over, free of charge, to the appropriate municipal authority, although in some cases a payment is made (section 12). The local authority gives the offal to a duly authorised rendering plant, which is required, also free of charge, to take delivery of the offal and process it. Any company in possession of offal is thus prevented from disposing of it otherwise than in the prescribed manner, such as by processing it itself, converting it or using it in any other way, or marketing it or, as stated in the question submitted by the national court and acknowledged by the Dutch

4 Government, by exporting it to other member-states or to non-member countries. By virtue of that provision, not even the rendering plants themselves can sell the offal received on the market in the Netherlands or export it. At the present time there are four rendering plants in the Netherlands, each operating in an area allocated to it in which it enjoys exclusive rights. The economic importance of the system lies in the fact, to which attention is drawn in the order for reference, that the slaughtering of poultry yields offal which represents about 18 per cent. of the bird (between 20 and 25 per cent. according to the Dutch Government), of which about one quarter can be usefully employed for another purpose. As a result, Dutch undertakings which slaughter poultry are prevented from carrying out the potentially profitable processing of the offal which, although unfit for human consumption, has an economic value if it is converted into high-protein animal meal. II Since the application of Article 169 of the Treaty is not involved in this case, it is inappropriate here to determine whether or not a member-state has failed to comply with the Community rules. A question has been submitted under Article 177 for a preliminary ruling, and it is for the Court to give a decision on the interpretation of Community law, against the background of the matters of fact and law described by the national court, so as to enable the latter to adopt a decision in the main proceedings that is not incompatible with the provisions of Community law which are directly applicable in the internal legal system. [FN1] FN1 See, for example, Case 49/76, Gesellschaft für Überseehandel: [1977] E.C.R. 41 *440 ; Case 38/77 Enka: [1977] E.C.R. 2203, [1978] 2 C.M.L.R. 212; Case 154/77, Dechmann: [1978] E.C.R. 1573, [1979] 2 C.M.L.R. 1; Case 272/80, Biologische Produkten: [1981] E.C.R. 3277, [1982] 2 C.M.L.R. 497 at para. [9]. The fact that the Commission has instituted proceedings against the Dutch State under Article 169 for failure to fulfil its obligations cannot change the nature of the present proceedings, which are not intended to serve the same objectives and, consequently, could not be substituted for proceedings under Article 169. It must also be emphasised that the question in these proceedings relates only to poultry offal and not to the offal of animals in general, and my analysis will be restricted accordingly. The question submitted by the national court appears to me to have the following objectives: On the one hand, to determine whether a system of the type provided for in the Dutch Law, which entails an almost total prohibition of the marketing of the offal in question, is compatible with the prohibition of measures having an effect equivalent to quantitative restrictions on imports and exports laid down in Articles 30 and 34 EEC, and whether that prohibition might possibly be regarded as justified on public health grounds under Article 36; On the other hand, to determine whether that system is compatible with the rules

5 on the common organisation of the market laid down in Regulations 827/68 and 2777/75, in so far as it eliminates the free market in such products by compelling producers to give the poultry offal to the only authorised purchaser in a given region, with the result that the latter enjoys a monopsony. I would add that the reference by the national court to Article 37 EEC does not appear to require this Court to interpret that provision, in view of the nature of the matters of fact and of law set out in the order for reference. It will in fact suffice to consider the exclusive rights position from the point of view of its effect on the functioning of the common organisation of the market or markets. III Let us therefore analyse the two points into which I have just resolved the question submitted, starting, for logical reasons, with the second, namely determination of the extent to which the two sets of rules on the common organisation of the markets referred to by the national court preclude a system of the type set up in the Netherlands. Poultry offal unfit for human consumption is covered, under Tariff heading 05.15, by Council Regulation 827/68 on the common organisation of the market in certain products listed in Annex II to the Treaty. *441 As regards the other common organisation of the market mentioned in the question submitted for a preliminary ruling, which was established by Council regulation 2777/75 and relates to the poultry-meat sector, it does not cover poultry offal unfit for human consumption but only edible offal. Since the question submitted relates only to the first type of offal, I do not think that it is necessary, for the purpose of giving the national court guidance for a decision in the main proceedings, to interpret the principles underlying Regulation 2777/75. It is true that the Commission referred, in the observations which it submitted in these proceedings, to Directive 71/118 on health problems affecting trade poultry-meat [FN2], in support of the view that certain poultry offal might, in particular circumstances, be covered by Regulation 2777/75. FN2 [1971] O.J. Spec. Ed. (I) 106. However, the Commission made it clear that it had in mind a case where the slaughtered bird was, at the time of the compulsory veterinary inspection, regarded as partially unfit for human consumption as a result of damage suffered, the offal nevertheless remaining fit for human consumption. But the present case is concerned exclusively with offal which is unfit for human consumption; it is therefore unnecessary here to consider the interpretation of Directive 71/118 or Regulation 2777/75. Moreover, the fact that, according to the reply given by Nertsvoederfabriek to a question put by the Court, by virtue of consumer habits in the Netherlands certain offal, which is regarded as edible 'according to Community law definitions' may be regarded as unfit for consumption does not mean that Regulation 2777/75 is applicable to the present case. That regulation is designed to protect human

6 consumers and is not relevant with respect to waste materials which are to be destroyed. Let us therefore consider to what extent the Destructiewet is compatible with Regulation 827/68. In my opinion, that regulation does not preclude member-states from establishing systems for collection and processing which are designed to maintain hygiene and protect human and animal health and to conserve the environment, which might otherwise be exposed to danger. As we have seen, those are the objectives of the system governed by the Destructiewet, in so far as it provides that offal or waste materials which cannot be put to any other useful purpose must be collected and destroyed in such a way that, having regard to their potential harmfulness, they cannot constitute a danger to public health. Regulation 827/68, which is at times regarded as a 'subsidiary regulation' or one of a residual nature, is intended above all to cover products which, although not covered or not capable of *442 being covered by a common organisation of the market, whether existing or to be established, are marketable in one form or another. Thus, that regulation covers, in particular, miscellaneous waste materials of vegetable and animal origin and has been referred to as a 'dustbin' or a 'drawer' for left-overs. It is not therefore surprising that the regulation does not lay down specific machinery for a common organisation of the market created by it, by contrast with the procedure followed for the great majority of the other market organisations. In essence, it is a set of commercial rules based simply on the principle of freedom of commercial transactions within the Common Market, the application of the Common Customs Tariff and the prohibition, in principle, of State subsidies. Consequently, it does not seem to me to be possible to extrapolate for that common organisation of the market, as suggested in the observations of the defendant in the main proceedings and the Commission, principles established by the case law of the Court with respect to other common organisations, such as the 'open market' principle, according to which every producer is to have free access to the market and the functioning thereof is regulated solely by the instruments and machinery provided for by the respective common organisations. [FN3] FN3 See, for example Case 111/76, Van den Hazel: [1977] E.C.R. 901, [1980] 3 C.M.L.R. 12; Case 83/78, Pigs Marketing Board: [1978] E.C.R. 2347, [1979] 1 C.M.L.R. 177; Case 94/79, Vriend: [1980] E.C.R. 327, [1980] 3 C.M.L.R However, the question must still be asked whether such a system, based on the existence of a limited number of duly licensed rendering plants each of which has exclusive rights in a particular area, is compatible with the principles of freedom of trade embodied in Regulation 827/68. It is undeniable that a licensing system of that kind does in principle have a restrictive effect on freedom of trade.

7 However, it should be remembered that, as emphasised by the Court in its 1985 judgment on 'waste oils', [FN4] 'the principle of freedom of trade is not to be viewed in absolute terms but is subject to certain limits justified by the objectives of general interest pursued by the Community provided that the rights in question are not substantively impaired.' FN4 Case 240/83, Procureur de la Republique v. Association de Defense des Bruleurs D'Huiles Usages: [1985] E.C.R. 531 at para. [12]. There can be no question of excluding protection of the environment and of public health from the general objectives of the European Community. Having regard to those same objectives, Council Directive 75/439 of 16 June 1975 [FN5] established a system similar to that under review here, which, for the disposal of waste oils, allowed member-states *443 the possibility of authorising only one undertaking to collect and dispose of such products in the area assigned to it. FN5 [1975] O.J. 194/31. The Court, in its judgment in Procureur de la République v. Abdhu, [FN6] took the view that such a system did not infringe any superior rule of Community law. FN6 [1985] E.C.R Account should also be taken of the fact that there has been no harmonisation or approximation of the laws of member-states in relation to the matter at issue here and therefore the member-states cannot be denied the right freely to establish the systems for collection and destruction of waste materials which they consider most conducive to the protection of public health and the environment. It is always necessary, however, for restrictions on the principle of freedom of trade to be kept to the minimum required to achieve those objectives, having regard to the principles of proportionality and non-discrimination [FN7]. In particular, systems of licences and allocation of zones will only be beyond criticism where it cannot be shown that those objectives can be attained by systems which encroach to a lesser extent upon the principle of proportionality. FN7 Ibid at para. [13]. That is particularly true in view of the fact that the Dutch legislation in question expressly excludes from its provisions offal that can be put 'to another useful purpose', which is allowed to be marketed provided that the precautions laid down in the applicable regulations are observed (for example, storage of the waste materials in closed casks until they are cooked--an operation which can be dispensed with in certain cases). Those operations may involve risks to the environment and to human and animal health which are identical to those arising from waste materials which are to be processed into products that can be used in

8 animal feedingstuffs. The legislature took the view, however, that in one case such risks could be controlled without detriment to normal trade but could not in the other case. IV A. The other aspect of the question submitted is the issue of the extent to which the restrictive effect on intra-community trade resulting from the system provided for in the Destructiewet is compatible with the prohibitions laid down in Articles 30 and 34 of the Treaty and whether, if that is not the case, those effects may be justified under Article 36. The defendant in the main proceedings and the Commission contend, in their respective observations, that, by prohibiting the disposal of poultry offal otherwise than under the system of *444 processing established by it, the Destructiewet prohibits exports and, indirectly, imports. It is doubtful whether the answer to this part of the question submitted is of any real use to the national court since the main proceedings concern charges against an entrepreneur who installed and brought into operation in his slaughterhouse a unit for the processing of offal for which he did not have proper authorisation. The national court--which has the responsibility of disposing of the case before it and has direct knowledge thereof--is in a better position than anyone else to decide as to the relevance of the questions submitted and as to the usefulness of the interpretative criteria which it seeks from the Court of Justice with a view to giving the judgment required of it. [FN8] FN8 See Pigs Marketing Board: Supra, at p (E.C.R.), pp (C.M.L.R.). B. It must, however, be stated that, as regards the interpretation of Article 30--the principle of which is, moreover, reflected in the second part of Article 4 (1) of Regulation 827/68--with a view to providing the national court with guidance enabling it to assess any impact on imports of the system established by the Destructiewet, the information on record in these proceedings is clearly insufficient to allow a categorical and direct answer. But it seems to me that the Dutch legislation does not directly give rise to any prohibition of imports of the products in question. Apparently, anyone who wishes may import them provided that he brings them within the compulsory system created, within the frontiers of the country, by the Destructiewet, by handing them over to the local authorities for subsequent transfer to the disposal undertakings. However, it is the conditions upon which the products must be handed over--in principle, without any payment being made--which ultimately discourage imports. The Court has taken the view on innumerable occasions [FN9] that 'Article 30 of the Treaty, in prohibiting all measures having equivalent effect to quantitative restrictions on imports, covers any measure which is capable of hindering, directly or indirectly, actually or potentially, intra-community trade.' FN9 See, for example, Case 72/83, Campus Oil: [1984] E.C.R. 2727, [1984] 3

9 C.M.L.R. 544 at para. [15]. The peculiar feature of the present case lies in the fact that the system created by the Dutch legislation conduces to a complete prohibition of marketing, by preventing the market mechanisms from operating not only in relation to imports but also within the Netherlands. The system created by the Destructiewet is not designed to, nor does it in fact, have a protective effect on any internal production since, as a rule, Dutch traders are also prevented from making any profit out of the inedible poultry offal in their possession. *445 On the other hand, it should be remembered that in this area there is no harmonisation of the national provisions in force, and no details are available of the regulations applicable to such products in the other member-states. This aspect of the issue is, moreover, of secondary importance in the context of the main proceedings and it does not appear from the actual question submitted by the national court, even though it refers at the end to Article 30 of the Treaty, that an answer on this point is required (by contrast with the case of exports). In any event, the observations submitted in these proceedings by the Dutch Government show that, in certain cases, the licensed rendering plants are themselves obliged to pay for the offal which they receive, in order to avoid competition from other quarters as a result of the possibility of processing the offal with a view to putting it to 'other useful purposes'. This means that the system does not completely eliminate the market, and therefore the situation does not in all cases give rise, as an inevitable consequence, to the discouragement of imports. If, in addition, other restrictions on imports were imposed, which hindered the entry of products legally marketed in other member-states, Article 30 would without doubt come into play. However, in these proceedings there is nothing to indicate that that is the case. Accordingly, it is unnecessary to consider whether the conditions justifying exceptions provided for in Article 36 are fulfilled. I consider, therefore, that any answer to be given on this matter must be limited to the specific points which have been duly clarified, formulating the general principles applicable. C. As regards the interpretation of Article 34, it likewise cannot be said that the information given in these proceedings is wholly conclusive. The positions of the various parties involved concerning the restrictive effect on exports attributable to the Destructiewet do not wholly coincide. The national court stated in its judgment submitting the question that ' according to the government concerned the legislation entails a prohibition on the exportation of material for destruction.' Similarly, the Commission considers that the Dutch legislation prohibits exports by anyone whatsoever, in such a manner as to constitute, in its opinion, an outright infringement of Article 34 of the Treaty. For its part, the Dutch Government concedes that the Destructiewet, by requiring that offal should be handed over to the local authority, by implication prohibits the removal of the offal from the municipal area. There is accordingly, it explains, a

10 total prohibition on marketing, both internally and in other member-states, and there is thus no specific restriction on exports. *446 Nertsvoederfabriek points out that section 4 of the Destructiewet entails, by implication, a prohibition of exports but that in practice there has ceased to be a restriction, since a judgment was given on 13 November 1985 by the Raad van State (court of last instance in administrative matters)--or a decision of the President thereof--to the effect that the Destructiewet does not prohibit the exportation of offal and that the competent administrative authorities must take the measures necessary to facilitate exports. Be that as it may, the Court of Justice has already held, first in the Inter-Huiles [FN10] judgment and subsequently in the 1985 judgment on waste oils, [FN11] that the Community rules prevent any member-state from organising within its territory a system for the collection and disposal of waste oils which, by virtue of exclusive rights of the kind provided for in the Destructiewet, is liable to prohibit exports to a licensed disposal or recycling undertaking in another member-state. FN10 Case 172/82, Fabricants Raffineurs D'Huile de Graissage v. Inter-Huiles: [1983] E.C.R. 555 at p. 566, [1983] 3 C.M.L.R. 485 at 506. FN11 Procureur de la Republique v. Abdhu, aupra, at para. [14]. Considerations of protection of public health would not of themselves be such as to justify that prohibition: that objective (like that of protecting the environment) is attained just as certainly where the poultry (like the waste oil--cf. the Inter-Huiles judgment, paragraph 14) is sold to a specialised establishment situated in another member-state as where it is disposed of in the member-state of origin-- provided that, during transport and disposal, the necessary precautions are taken to prevent any risks--regardless of the fact that the various national systems are not in any way harmonised. In any event, it is incumbent upon a member-state which seeks to rely upon such considerations to show that there are no less onerous ways of ensuring compliance with the requirements of public health to which Article 36 of the Treaty refers. The Dutch Government also claims that it is necessary to ensure the profitability of the licensed rendering plants, which are obliged by law to collect free of charge all animal offal, with or without economic value. Although it may not be feasible to require a payment from small producers of such offal (who might then be tempted to avoid surrendering the offal for destruction), the fact remains that there are other ways of paying for fulfilment of the public service obligations imposed on rendering plants, without having recourse to a prohibition of exports (Inter-Huiles, paragraph 13). I therefore propose that the Court should give the following answers to the questions submitted by the Gerechtshof, Arnhem: * Council Regulation 827/68 does not prevent a member-state from V

11 adopting a system under which all poultry offal intended for processing, so as to render it harmless by converting it into useful products, must be handed over, in principle free of charge, to a limited number of duly licensed undertakings, provided that the same objectives cannot be attained by a system which is less restrictive of freedom of trade within the Community. 2. Article 30 of the Treaty prevents the imposition, as part of such a system, of restrictions on the importation of offal lawfully marketed in other member-states, which make it impossible to take advantage of such market conditions as exist, provided that the other marketing requirements applicable to national traders are fulfilled. 3. The Community rules on free movement of goods and, in particular, Article 34 of the Treaty, prohibit a system of the type provided for by the Destructiewet for the collection and destruction of poultry offal unfit for human consumption to the extent to which it leads to an absolute prohibition of exports of such offal, purportedly justified by the fact that such a system is necessary to ensure the profitability of licensed rendering plants. Any restriction introduced under Article 36 of the Treaty, in particular for the protection of the life and health of humans and animals, must be non-discriminatory and proportionate to the objective pursued. JUDGMENT [1] By order of 27 March 1986, which was received at the Court Registry on 21 May 1986, the Gerechtshof (Court of Appeal), Arnhem, referred to the Court for a preliminary ruling under Article 177 EEC a question on the interpretation of Articles 30, 34, 36 and 37 EEC, Council Regulation 827/68 on the common organisation of the market in certain products listed in Annex II to the Treaty and Council Regulation 2777/75 on the common organisation of the market in poultrymeat. [2] The question was raised in criminal proceedings against Nertsvoederfabriek Nederland BV, a company governed by Dutch law, which was accused of having, between January 1984 and 23 October 1984 in Veenendaal, kept in operation without a licence, in breach of section 5 of the Destructiewet (Dutch Act on the destruction of animal carcases and offal) of 21 February 1957 [FN12], a plant intended mainly for rendering offal innocuous by processing it into useful products and of having processed poultry offal in the above-mentioned plant (rendering plant) into an end-product (a *448 brownish powder) suitable for incorporation in animal feedingstuffs by means of heating in a drying plant. FN12 St [3] Considering that the dispute raised a question of interpretation of Community law, the Gerechtshof stayed the proceedings and submitted the following question to the Court: Assuming that the legislation of a member-state construes: 'destruction' as meaning rendering

12 waste material innocuous by processing it into useful products in a rendering plant; 'rendering plant' as meaning an installation exclusively or mainly intended to render waste material of animal origin innocuous by processing it into useful products; 'waste material' as meaning inter alia game and poultry offal manifestly unfit for human consumption which arises in establishments where game and poultry are slaughtered by way of trade, with the exception of offal having another useful purpose; where poultry is slaughtered approximately 18 per cent. of the poultry consists of slaughter offal, of which about a quarter can be put to another useful purpose; under the legislation it is prohibited to withhold animal waste from destruction; under the legislation it is prohibited to set up, to bring into operation, to keep in operation, to extend or to alter a rendering plant without a licence and such a licence may be granted in order to ensure that there are adequate facilities for destruction; in the member-state concerned four licences have been issued; the holder of a licence is obliged to collect and destroy (or have destroyed) free of charge all waste material in the territory assigned to him; the destruction of poultry offal--which is a remunerative activity--is therefore restricted to licence-holders; according to the government concerned the legislation entails a prohibition on the exportation of waste materials; how should the following be interpreted: Article 30, Article 34, Article 36 and Article 37 of the EEC Treaty, singly or in combination, Council Regulation 827/68 of 28 June 1968 on the common organisation of the market in certain products listed in Annex II to the treaty and Council Regulation 2777/75 of 29 October 1975 on the common organisation of the market in poultry-meat, singly or in combination, in view of the fact that the destruction of poultry offal is restricted solely to a few licence-holders? [4] Reference is made to the Report for the Hearing for an account of the facts, the course of the procedure and the observations submitted pursuant to Article 20 of the Protocol on the Statute of the Court of Justice, which are referred to or mentioned hereinafter only in so far as is necessary for the reasoning of the Court. [5] The essential purpose of the question submitted by the national court is to determine whether national rules which provide that only holders of a licence issued by the administrative authorities for the operation of a rendering plant, who are responsible for disposing of all animal waste, may process poultry offal and that the producers of such offal must dispose of it only to those *449 approved rendering plants in return for payment by the latter, are compatible with the provisions of the Treaty concerning quantitative restrictions on imports and exports and measures having an equivalent effect and with those concerning national monopolies of a commercial character, and also the regulations on the common organisation of the market by which such offal is covered. [6] It is necessary in the first place to determine which of the Community provisions listed by the national court are applicable to the situation described above.

13 [7] Article 37 of the Treaty is not applicable in this case. By making a licence compulsory for the operation of a rendering plant and providing that animal waste, including poultry offal, may be disposed of and processed only by the holders of such a licence, to whom all animal waste must be delivered, the national rules described by the Dutch court do not set up a State monopoly of a commercial character, the only kind covered by that provision. It need merely be stated that it is undisputed that the rules in question allow any person who fulfils the conditions laid down by the rules and agrees to be bound by the obligations which they impose to apply for and obtain the required licence. [8] As regards the regulations on the common organisation of the market, it need merely be stated, without its being necessary to determine whether in this case poultry offal is covered by the common market organisation governed by Regulation 827/68 or by that governed by Regulation 2777/75, that the only provisions liable to affect the rules in question are Article 4 of Regulation 827/68 and Article 11 of Regulation 2777/75 which merely prohibit, in intra-community trade, any quantitative restriction or measure having an equivalent effect, subject only to the reservations laid down in those regulations. [9] Since those provisions reproduce the prohibitions laid down by Articles 30 and 34 of the Treaty, the rules described by the national court must be appraised exclusively in the light of those Articles, which prohibit quantitative restrictions on imports and exports and any measures having equivalent effect, and which are regarded as forming an integral part of the common organisation of the markets. [10] Since the rules described do not disclose any prohibition of imports, there is no need to consider Article 30. The allegation that rendering plants pay only minimal prices for poultry offal does not detract from that finding since it merely concerns the way in which a business is conducted. [11] As regards Article 34, it is applicable to the extent to which the national rules, by imposing an obligation on producers to deliver poultry offal to their local authority, involve by implication a prohibition of exports. It is therefore necessary to consider whether such a restriction on trade is justified having regard to *450 Article 36 of the Treaty, upon which the Dutch government relies in support of its view that the Destructiewet, as is apparent from its preamble, pursues objectives relating to health, namely prevention of the spread of animal diseases and any pollution liable to endanger the quality of life. [12] Since there are no Community provisions designed to harmonise all the measures necessary to provide, in respect of poultry offal and in particular poultry offal which is unfit for human consumption, for protection of the life and health of humans and animals, and to establish Community procedures to ensure compliance therewith, Article 36 of the Treaty may be relied upon by member- States to justify certain restrictions on intra-community trade in poultry offal, and in particular poultry offal unfit for human consumption. The mere establishment of a common organisation of the market does not have the effect of exempting agricultural producers from any national provisions intended to attain objectives other than those covered by the common organisation, even though such provisions may have an impact on the operation of the market in the sector

14 concerned (cf. judgment in Joined Cases /81, Holdijk and Others. [FN13] FN13 [1982] E.C.R. 1299, [1983] 2 C.M.L.R [13] But national rules fall within the derogation provided for in Article 36 only where the health and life of humans and animals cannot be as effectively protected by measures less restrictive of intra-community trade. [14] With respect, in the first place, to the obligation to deliver poultry offal only to licensed rendering plants to the exclusion of any other operator carrying on business within the national territory, the Dutch Government argued convincingly that that obligation was essential in order to maintain the overall effectiveness of the system set up by the Destructiewet, with a view to ensuring that all animal waste was removed and disposed of in a manner providing all the required safeguards for the life and health of humans and animals. [15] In those circumstances, it is irrelevant that the poultry offal can, after processing, yield a product which can be marketed by the rendering plants, thus ensuring their profitability. As the Court acknowledged in Case 72/83, Campus Oil Ltd. v. Minister for Industry and Energy [FN14], the mere fact that national provisions, justified by objective circumstances corresponding to the needs of the interests referred to therein, enable other objectives of an economic nature to be achieved as well, does not exclude the application of Article 36. That applies with greater force where the objective of an economic nature necessarily enables the objective relating to health to be attained. FN14 [1984] E.C.R. 2727, [1984] 3 C.M.L.R. 544 *451. [16] With respect, in the second place, to the implied prohibition of exports, it must be stated that, in order to attain the objective pursued by provisions which are designed to ensure that all the measures required to safeguard health are taken when animal waste is disposed of, it does not appear necessary to prohibit the exportation of poultry offal, provided that the conditions relating to health laid down by those provisions are satisfied with respect to removal and transport of national territory. [17] Consequently, it must be stated in reply to the question submitted by the Gerechtshof, Arnhem, that it is not incompatible with Council Regulation 827/68 on the common organisation of the market in certain products listed in Annex II to the Treaty and Council Regulation 2777/75 on the common organisation of the market in poultry-meat for national rules laid down in the interests of the protection of the health and life of humans and animals to provide that only holders of a licence to operate a rendering plant licence issued by the administrative authorities may collect and process all waste products of animal origin and that producers of poultry offal must dispose of it, as a waste product of animal origin, only to authorised licence-holders. However, in so far as they affect intra-community trade, such rules are compatible with Articles 30, 34 and 36 of the Treaty only in so far as they do not place in the way of imports from and

15 exports to other member-states barriers other than those justified under Article 36 of the Treaty by a concern to secure compliance, in the national territory, with health provisions governing the collection and transportation of products regarded as harmful to health. Costs [18] The costs incurred by the Government of the Kingdom of the Netherlands and by the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. As these proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the action before the national court, the decision on costs is a matter for that court. Order On those grounds, THE COURT (Fifth Chamber), in reply to the question submitted to it by the Gerechtshof, Arnhem, by order of 27 March 1986, HEREBY RULES: It is not incompatible with Council Regulation 827/68 on the common organisation of the market in certain products listed in Annex II to the Treaty and Council Regulation 2777/75 on the common organisation of the market in poultrymeat for national rules laid down in the *452 interests of the protection of the health and life of humans and animals to provide that only holders of a licence to operate a rendering plant issued by the administrative authorities may collect and process all waste products of animal origin and that producers of poultry offal must dispose of it, as a waste product of animal origin, only to authorised licence holders. However, in so far as they affect intra-community trade, such rules are compatible with Articles 30, 34 and 36 of the Treaty only in so far as they do not place in the way of imports from and exports to other member-states barriers other than those justified under Article 36 of the Treaty by a concern to secure compliance, in the national territory, with health provisions governing the collection and transportation of products regarded as harmful to health. (c) Sweet & Maxwell Limited [1989] 2 C.M.L.R. 436 END OF DOCUMENT