Summary
Parties
Subject of the case
Grounds
Decision on costs
Operative part
Keywords
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1 . AGRICULTURE - COMMON ORGANIZATION OF THE MARKETS - CEREALS - DENATURING PREMIUMS - ADJUSTMENT - THREATS OF DISTURBANCE - INTERVENTION MEASURES - CHOICE - DISCRETION OF COMMISSION - CONTROL BY THE COURT - JURISDICTION OF THE COURT - LIMITS
( REGULATION NO 120/67 OF THE COUNCIL; REGULATION NO 172/67 OF THE COUNCIL, ARTICLE 4, AS AMENDED BY REGULATION NO 644/68 OF THE COUNCIL )
2 . AGRICULTURE - COMMON ORGANIZATION OF THE MARKETS - CEREALS - DENATURING SYSTEM - ADJUSTMENT DURING THE MARKETING YEAR - EXCEPTIONAL NATURE
( REGULATION NO 172/67 OF THE COUNCIL, ARTICLE 4, AS AMENDED BY REGULATION NO 644/68 OF THE COUNCIL )
Summary
1 . IN ORDER TO MEET THE THREAT OF DISTURBANCE, THE COMMISSION HAS WIDE DISCRETION BOTH AS REGARDS THE POSSIBLE FACTORS OF DISTURBANCE WHICH IT CONSIDERS AND THE CHOICE OF MEANS INTENDED TO MEET IT, WHICH MUST BE EXERCISED IN THE LIGHT OF THE OBJECTIVES OF ECONOMIC POLICY IN THE CONTEXT OF THE COMMON AGRICULTURAL POLICY .
THE COMMISSION HAS THE POWER COMPLETELY TO SUSPEND PAYMENT OF A PREMIUM IF THE ECONOMIC CIRCUMSTANCES REQUIRE .
WHEN EXAMINING THE LAWFULNESS OF THE EXERCISE OF SUCH FREEDOM, THE COURTS CANNOT SUBSTITUTE THEIR OWN EVALUATION OF THE MATTER FOR THAT OF THE COMPETENT AUTHORITY, BUT MUST RESTRICT THEMSELVES TO EXAMINING WHETHER THE EVALUATION OF THE COMPETENT AUTHORITY CONTAINS A PATENT ERROR OR CONSTITUTES A MISUSE OF POWERS .
2 . ADJUSTMENTS OF THE DENATURING SYSTEM DURING THE MARKETING YEAR ARE OF AN EXCEPTIONAL NATURE IN VIEW OF THE FACT THAT PREMIUMS ARE FIXED FOR THE DURATION OF EACH MARKETING YEAR AND MAY BE ADJUSTED DURING THE MARKETING YEAR ONLY WHERE THE BALANCE OF THE MARKET IS LIKELY TO BE DISTURBED .
DENATURING UNDERTAKINGS MAY THEREFORE LEGITIMATELY ARRANGE THEIR PROJECTS FOR THE ENTIRE CEREAL MARKETING YEAR .
Parties
IN CASE 5/75
REFERENCE TO THE COURT UNDER ARTICLE 177 OF THE EEC TREATY BY THE VERWALTUNGSGERICHT ( ADMINISTRATIVE COURT ), FRANKFURT-AM-MAIN FOR A PRELIMINARY RULING IN THE ACTION PENDING BEFORE THAT COURT BETWEEN
DEUKA, DEUTSCHE KRAFTFUTTER GMBH B . J . STOLP, HAVING ITS REGISTERED OFFICE IN DUESSELDORF,
AND
EINFUHR - UND VORRATSSTELLE FUER GETREIDE UND FUTTERMITTEL, HAVING ITS REGISTERED OFFICE AT FRANKFURT-AM-MAIN,
Subject of the case
ON THE VALIDITY AND INTERPRETATION OF REGULATIONS NO 2859/73 OF THE COMMISSION OF 19 OCTOBER 1973 AND NO 175/74 OF 23 JANUARY 1974, BOTH AMENDING REGULATION NO 1897/73 OF THE COMMISSION OF 11 JULY 1973 FIXING THE DENATURING PREMIUM FOR COMMON WHEAT FOR THE 1973/74 MARKETING YEAR,
Grounds
1 BY ORDER DATED 17 DECEMBER 1974, FILED AT THE REGISTRY OF THE COURT ON 16 JANUARY 1975, THE VERWALTUNGSGERICHT FRANKFURT AM MAIN PUT, UNDER ARTICLE 177 OF THE EEC TREATY, FOUR QUESTIONS ON THE VALIDITY AND, AS A SUBSIDIARY QUESTION, THE SCOPE IN POINT OF TIME OF REGULATIONS NO 2859/73 OF THE COMMISSION OF 19 OCTOBER 1973 AND NO 175/74 OF THE COMMISSION OF 23 JANUARY 1974 AMENDING REGULATION NO 1897/73 FIXING THE DENATURING PREMIUM FOR COMMON WHEAT FOR THE 1973/1974 MARKETING YEAR ( OJ 1973, L 293, P . 31 AND 1974, L 20, P . 28 ).
QUESTIONS 1 AND 3 ( SUBSTANTIVE JUSTIFICATION OF REGULATIONS NOS 2859/73 AND 1975/74 )
2 THE FIRST QUESTION ASKS WHETHER REGULATION NO 2859/73 REDUCING THE DENATURING PREMIUM ON COMMON WHEAT ORIGINALLY FIXED FOR THE 1973/74 MARKETING YEAR IS COMPATIBLE WITH THE SECOND SENTENCE OF ARTICLE 4 ( 1 ) OF REGULATION NO 172/67 OF THE COUNCIL OF 27 JUNE 1967 ON GENERAL RULES GOVERNING THE DENATURING OF WHEAT ( OJ P . 2602 ) AS AMENDED BY ARTICLE 1 OF REGULATION NO 644/68 OF THE COUNCIL OF 29 MAY 1968 ( OJ L 122, P . 3 ). THE THIRD QUESTION ASKS WHETHER REGULATION NO 175/74 OF THE COMMISSION OF 23 JANUARY 1974, WHICH FIXES THE AMOUNT OF THE DENATURING PREMIUM AT ZERO AS FROM 10 FEBRUARY 1974, IS COMPATIBLE WITH THE SAME PROVISION .
3 IT APPEARS FROM THE ORDER OF REFERENCE THAT THE VERWALTUNGSGERICHT HAS DOUBTS ON THE JUSTIFICATION OF THE REGULATIONS OF THE COMMISSION WITH REGARD TO THE SYSTEM ESTABLISHED BY THE BASIC REGULATION OF THE COUNCIL . IN ITS OPINION THE POWER OF AMENDING THE AMOUNT OF THE PREMIUM, FIXED AS A RULE FOR THE DURATION OF THE MARKETING YEAR, MUST BE EXERCISED SPARINGLY TO ALLOW THE UNDERTAKINGS CONCERNED TO MAKE THEIR DENATURING PLANS IN A REASONABLE WAY . FURTHER, THE GROUNDS OF THE REGULATIONS OF THE COMMISSION FIRST OF ALL REDUCING AND THEN COMPLETELY ABOLISHING THE PREMIUM DURING THE MARKETING YEAR ARE DEBATABLE .
4 UNDER ARTICLE 4 OF REGULATION NO 172/67 OF THE COUNCIL AS AMENDED BY ARTICLE 1 OF REGULATION NO 644/68, THE COMMISSION MAY ADJUST THE DENATURING PREMIUM DURING THE COURSE OF THE MARKETING YEAR 'WHERE THE BALANCE OF THE MARKET IN CEREALS IS LIKELY TO BE DISTURBED '. IN ORDER TO MEET THE THREAT OF DISTURBANCE, THE COMMISSION HAS WIDE DISCRETION BOTH AS REGARDS THE POSSIBLE FACTORS OF DISTURBANCE WHICH IT CONSIDERS AND THE CHOICE OF MEANS INTENDED TO MEET IT, WHICH MUST BE EXERCISED IN THE LIGHT OF THE OBJECTIVES OF ECONOMIC POLICY LAID DOWN BY THE BASIC REGULATION IN THE MATTER, THAT IS REGULATION NO 120/67 OF THE COUNCIL OF 13 JUNE 1967 ON THE COMMON ORGANIZATION OF THE MARKET IN CEREALS ( OJ P . 2269 ), IN THE CONTEXT OF THE COMMON AGRICULTURAL POLICY . THE DISCRETION ALLOWED TO THE COMMISSION INCLUDES THE POWER COMPLETELY TO SUSPEND PAYMENT OF THE PREMIUM IF THE ECONOMIC CIRCUMSTANCES REQUIRE . WHEN EXAMINING THE LAWFULNESS OF THE EXERCISE OF SUCH FREEDOM, THE COURTS CANNOT SUBSTITUTE THEIR OWN EVALUATION OF THE MATTER FOR THAT OF THE COMPETENT AUTHORITY, BUT MUST RESTRICT THEMSELVES TO EXAMINING WHETHER THE EVALUATION OF THE COMPETENT AUTHORITY CONTAINS A PATENT ERROR OR CONSTITUTES A MISUSE OF POWERS .
5 THE DOUBTS RAISED BY THE NATIONAL COURT REVEAL NO EVIDENCE OF SUCH AN ERROR OR MISUSE OF POWERS . IT IS RIGHT TO OBSERVE MORE PARTICULARLY IN THIS RESPECT THAT IN THE GROUNDS OF THE MEASURES WHICH IT HAS TAKEN, THE COMMISSION HAS BEEN ABLE TO REFER PERTINENTLY TO THE MOVEMENT OF THE WORLD CEREAL MARKET, ON WHICH THE COMMUNITY MARKET IS LARGELY DEPENDENT, HAVING REGARD TO THE FREEDOM OF EXTERNAL TRADE . IN THE GROUNDS OF THE REGULATIONS CHALLENGED THE COMMISSION HAS REFERRED TO A GROWING PRESSURE ON THE WORLD MARKET, PARTICULARLY MARKED AT THE TIME OF REGULATION NO 175/74 . THIS PRESSURE, ACCORDING TO THE PREAMBLE TO REGULATION NO 175/74, CAUSED GROWING DIFFICULTIES OF SUPPLY AND A TENDENCY TO INCREASED PRICES . THIS MOVEMENT INVOLVED THE DISAPPEARANCE OF IMPORT LEVIES AND REQUIRED EVEN THE INTRODUCTION OF AN EXPORT LEVY . IN THESE CIRCUMSTANCES IT COULD APPEAR AS PARTICULARLY CONTRA-INDICATED ARTIFICIALLY TO CAUSE QUANTITIES OF WHEAT TO MOVE INTO THE MARKET IN FEED GRAINS AT A TIME WHEN, BECAUSE OF THE INCREASED DEMAND, THE FEED GRAIN MARKET OFFERED MORE FAVOURABLE SALES POSSIBILITIES FOR TRUE FEED GRAINS, IN PARTICULAR BARLEX, AS IS MENTIONED IN THE GROUNDS OF THE REGULATIONS CHALLENGED .
6 THE EXAMINATION OF THE QUESTIONS RAISED HAS THUS NOT REVEALED ANY FACTOR CAPABLE OF AFFECTING THE VALIDITY OF REGULATIONS NOS 2859/73 AND 175/74 .
QUESTIONS 2 AND 4 ( DETERMINATION OF THE SCOPE IN POINT OF TIME OF REGULATIONS NOS 2859/73 AND 175/74 )
7 THE SECOND QUESTION ASKS WHETHER REGULATION NO 2859/73 APPLIES ALSO TO DENATURING WHICH HAS BEEN NOTIFIED TO THE INTERVENTION AGENCY IN THE FORM PRESCRIBED BEFORE 1 NOVEMBER 1973 - THE DATE ON WHICH, UNDER ARTICLE 1 OF THE REGULATION, THE ALTERATION OF THE DENATURING PREMIUM TOOK EFFECT - BUT IN RESPECT OF WHICH MIXING WAS NOT DONE UNTIL A LATER DATE, ALBEIT WITHIN THE PERIOD PRESCRIBED FOR THIS PURPOSE . THE SAME QUESTION IS RAISED IN RESPECT OF REGULATION NO 175/74 AS REGARDS DENATURING NOTIFIED TO THE INTERVENTION AGENCY BEFORE 10 FEBRUARY 1974 - THE DATE FROM WHICH, UNDER ARTICLE 1 OF THE REGULATION, THE PREMIUM WAS ABOLISHED - BUT IN RESPECT OF WHICH THE MIXING WAS NOT DONE UNTIL A LATER DATE, ALBEIT STILL WITHIN THE PERIOD PRESCRIBED FOR THIS PURPOSE .
8 THE ORDER OF REFERENCE STRESSES IN THIS RESPECT THE FACT THAT, SINCE ALL THE ARRANGEMENTS HAD BEEN MADE BY THE PLAINTIFF IN THE MAIN ACTION FOR THE PURPOSE OF THE DENATURING AND THE SALE OF THE DENATURED WHEAT AT THE TIME THE APPLICATION WAS MADE TO THE INTERVENTION AGENCY, THE PAYMENT OF A REDUCED PREMIUM AND THE TOTAL ABOLITION OF THE PREMIUM WOULD NO LONGER IN ANY EVENT HAVE BEEN ABLE ACHIEVE THE OBJECTIVE AIMED AT BY THE REGULATIONS IN QUESTION . FURTHER, THE PROTECTION OF CONFIDENCE REQUIRES THAT THE CALCULATIONS OF COMMERCIAL OPERATORS BASED ON THE LEVEL OF THE PREMIUM IN FORCE AT THE TIME WHEN THE DENATURING WAS BEGUN, SHOULD NOT BE UPSET WITHOUT COMPELLING REASONS .
9 ARTICLE 4 OF REGULATION NO 172/67 OF THE COUNCIL IN ITS ORIGINAL FORM SHOWS IT AS NORMAL THAT DENATURING OPERATIONS SHOULD BE DETERMINED ON THE BASIS OF THE ANNUAL CEREAL MARKETING YEAR . THIS PERSPECTIVE WAS NOT FUNDAMENTALLY ALTERED BY REGULATION NO 644/68, ARTICLE 1 OF WHICH GIVES ALTERATIONS OF THE DENATURING SYSTEM DURING A MARKETING YEAR AN EXCEPTIONAL CHARACTER, SINCE SUCH ALTERATIONS CANNOT BE MADE EXCEPT WHERE THERE IS A THREAT OF DISTURBANCE IN THE MARKET . IT CANNOT THEREFORE BE CONSIDERED ABNORMAL FOR A DENATURING UNDERTAKING TO ARRANGE ITS PROJECTS FOR THE ENTIRE CEREAL MARKETING YEAR .
10 WHERE, THEREFORE THERE HAS BEEN A COMMITMENT TO DENATURING BEFORE THE EXPIRY OF THE PERIODS STIPULATED IN REGULATION NOS 2859/73 AND 175/74 - RESPECTIVELY 1 NOVEMBER 1973 AND 10 FEBRUARY 1974 - BY THE SUBMISSION TO THE INTERVENTION AGENCY OF THE APPLICATION PROVIDED FOR BY ARTICLE 4 ( 2 ) OF REGULATION NO 172/67, RELATING TO QUANTITIES OF GOODS BOUGHT BEFORE THE ENTRY INTO FORCE OF ONE OR THE OTHER OF THE REGULATIONS REFERRED TO ACCORDING TO THE CASE, IT IS RIGHT TO APPLY, IN THE INTERESTS OF LEGAL CERTAINTY, FOR THE COMPUTATION OF THE AMOUNT OF THE DENATURING PREMIUM, THE PROVISIONS IN FORCE AT THE TIME THE APPLICATION WAS LODGED, EVEN IF THE TECHNICAL MIXING IS NOT DONE UNTIL A SUBSEQUENT DATE, ALBEIT WITHIN THE PERIOD PRESCRIBED BY THE INTERVENTION AGENCY .
11 IT IS THEREFORE RIGHT TO REPLY TO THE SECOND QUESTION THAT REGULATION NO 2859/73 CANNOT BE APPLIED TO DENATURING WHICH HAS BEEN NOTIFIED TO THE INTERVENTION AGENCY BEFORE 1 NOVEMBER 1973 IN THE FORM PRESCRIBED BY IT, BUT IN RESPECT OF WHICH THE TECHNICAL MIXING HAS NOT BEEN DONE UNTIL AFTER 1 NOVEMBER 1973, ALBEIT WITHIN THE PERIOD PRESCRIBED FOR THIS PURPOSE . IT IS RIGHT TO SAY IN ANSWER TO THE FOURTH QUESTION THAT REGULATION NO 175/74 DOES NOT APPLY, IN THE SAME CIRCUMSTANCES, TO DENATURING WHICH HAS BEEN NOTIFIED TO THE INTERVENTION AGENCY BEFORE 10 FEBRUARY 1974 .
Decision on costs
12 THE COSTS INCURRED BY THE COMMISSION OF THE EUROPEAN COMMUNITIES, WHICH HAS SUBMITTED OBSERVATIONS TO THE COURT, ARE NOT RECOVERABLE AND AS THESE PROCEEDINGS ARE, IN SO FAR AS THE PARTIES TO THE MAIN ACTION ARE CONCERNED, A STEP IN THE ACTION PENDING BEFORE THE VERWALTUNGSGERICHT FRANKFURT-AM-MAIN, COSTS ARE A MATTER FOR THAT COURT .
Operative part
ON THOSE GROUNDS,
THE COURT
IN ANSWER TO THE QUESTIONS REFERRED TO IT BY THE VERWALTUNGSGERICHT FRANKFURT AM MAIN BY ORDER DATED 17 DECEMBER 1974, HEREBY RULES :
1 . EXAMINATION OF THE QUESTIONS RAISED HAS NOT REVEALED ANY FACTOR CAPABLE OF AFFECTING THE VALIDITY OF REGULATIONS NO 2859/73 OF THE COMMISSION OF 19 OCTOBER 1973 AND NO 175/74 OF 23 JANUARY 1974, AMENDING REGULATION NO 1897/73 OF 11 JULY 1973 FIXING THE DENATURING PREMIUM FOR COMMON WHEAT FOR THE 1973/74 MARKETING YEAR .
2 . REGULATION NO 2859/73 CANNOT BE APPLIED TO DENATURING WHICH HAS BEEN NOTIFIED TO THE INTERVENTION AGENCY BEFORE 1 NOVEMBER 1973 IN THE FORM PRESCRIBED BY IT, BUT IN RESPECT OF WHICH THE TECHNICAL MIXING HAS NOT BEEN DONE UNTIL AFTER 1 NOVEMBER 1973, ALBEIT WITHIN THE PERIOD PRESCRIBED FOR THIS PURPOSE .
3 . REGULATION NO 175/74 DOES NOT APPLY, IN THE SAME CIRCUMSTANCES, TO DENATURING WHICH HAS BEEN NOTIFIED TO THE INTERVENTION AGENCY BEFORE 10 FEBRUARY 1974 .
Full & Egal Universal Law Academy