L 94/38 Official Journal of the European Union 30.3.2012 REGULATION (EU) No 261/2012 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 14 March 2012 amending Council Regulation (EC) No 1234/2007 as regards contractual relations in the milk and milk products sector THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty on the Functioning of the European Union, and in particular the first paragraph of Article 42 and Article 43(2) thereof, Having regard to the proposal from the European Commission, After transmission of the draft legislative act to the national parliaments, Having regard to the opinion of the European Economic and Social Committee (1), Having regard to the opinion of the Committee of the Regions (%), Acting in accordance with the ordinary legislative procedure (%), Whereas: (1) Successive reforms of the common market organisation covering milk and milk products, now contained in Council Regulation (EC) No 12342007 of 22 October 2007 establishing a common organisation of agricultural markets and on specific provisions for certain agricultural products (Single CMO Regulation) (%), have been aimed at market orientation, that is, letting price signals guide the decisions of farmers in terms of what and how much to produce, so as to strengthen the competitive situation of the dairy sector and its sustainability in the context of globalised trade. It was therefore decided to increase quotas gradually, by adopting Council Regulation (EC) No 72/2009 of 19 January 2009 on modifications to the Common Agricultural Policy by amending Regu- lations (EC) No 247/2006, (EC) No 320/2006, (EC) No 1405/2006, (EC) No 1234/2007, (EC) No 3/2008 and (EC) No 479/2008 and repealing Regulations (EEC) No 1883/78, (EEC) No 1254/89, (EEC) No 2247/89, (EEC) No 2055/93, (EC) No 1868/94, (EC) No 2596/97, (EC) No 1182/2005 and (EC) No 315/2007 (%) (the ‘Health Check’ reform of 2008-2009), in order to ensure a smooth phasing out of the milk quota system by 2015. () OJ C 218, 23.7.2011, p. 110. () OJ C 192, 1.7.2011, p. 36. (}) Position of the European Parliament of 15 February 2012 (not yet published in the Official Journal) and decision of the Council of 28 February 2012. (% OJ L 299, 16.11.2007, p. 1. () OJ L 30, 31.1.2009, p. 1. ) In the period from 2007 to 2009, exceptional devel- opments took place in the milk and milk products sector markets, which ultimately resulted in a price collapse in 2008/09. Initially, extreme weather conditions in Oceania brought about a significant decline in supplies, leading to a rapid and significant increase in prices. Although world supplies started to recover and prices started to return to more normal levels, the subsequent financial and economic crisis negatively affected Union dairy producers, aggravating price vola- tility. Higher commodity prices resulted in a significant increase in feed and other input costs including energy. Subsequently, a drop in worldwide, as well as Union, demand, including demand for milk and milk products, during a period when Union production remained stable, led Union prices to fall to the lower safety net level. This sharp decline in dairy commodity prices failed to fully translate into lower dairy prices at consumer levels, generating, for downstream sectors, a widening in the gross margin for most milk and milk sector products and countries, and preventing demand for them from adjusting to low commodity prices, slowing down price recovery and exacerbating the impact of low prices on milk producers, the viability of many of whom was put at serious risk. In response to this difficult market situation for milk, a High Level Expert Group on Milk (HLG) was set up in October 2009 with the purpose of discussing mid- and long-term arrangements for the milk and milk products sector which, in the context of the end of dairy quotas in 2015, would contribute to stabilising the market and milk producers’ incomes and to enhancing transparency in the sector. The HLG obtained oral and written input from major European stakeholder groups in the dairy supply chain representing farmers, dairy processors, dairy traders, retailers and consumers. Furthermore, the HLG received contributions from invited academic experts, third- country representatives, national competition authorities and from the Commission’s services. A dairy stakeholder conference was also held on 26 March 2010 allowing a wider range of actors in the supply chain to express their views. The HLG delivered its report on 15 June 2010. The report contained an analysis of the current state of the dairy sector and a number of recommendations which focused on contractual relations, the bargaining power of producers, interprofessional/interbranch organi- sations, transparency (including the further elaboration of the European Price Monitoring Tool), market measures and futures, marketing standards and origin labelling, and innovation and research. As a first step, this Regulation addresses the first four of these issues.