Summary
Parties
Subject of the case
Grounds
Decision on costs
Operative part
Keywords
1 . AGRICULTURE - COMMON ORGANIZATION OF THE MARKET - DISCRIMINATION BETWEEN PRODUCERS AND CONSUMERS WITHIN THE COMMUNITY - PROHIBITION - CONCEPT
( EEC TREATY , SECOND SUBPARAGRAPH OF ARTICLE 40 ( 3 ))
2 . AGRICULTURE - COMMON ORGANIZATION OF THE MARKET - CEREALS - PRODUCTION REFUNDS - QUELLMEHL AND MAIZE STARCH - DIFFERENCE OF TREATMENT - INADMISSIBILITY - ILLEGALITY
( REGULATION NO 120/67/EEC OF THE COUNCIL , ARTICLE 11 ; REGULATION ( EEC ) NO 1125/74 OF THE COUNCIL , ARTICLE 5 )
Summary
3 . ILLEGALITY - CONSEQUENCES - OBLIGATION OF THE INSTITUTIONS
1 . THE WORDING OF THE SECOND SUBPARAGRAPH OF ARTICLE 40 ( 3 ) OF THE TREATY DOES NOT REFER IN CLEAR TERMS TO THE RELATIONSHIP BETWEEN DIFFERENT INDUSTRIAL OR TRADE SECTORS IN THE SPHERE OF PROCESSED AGRICULTURAL PRODUCTS . THIS DOES NOT ALTER THE FACT THAT THE PROHIBITION OF DISCRIMINATION LAID DOWN IN THE AFORESAID PROVISION IS MERELY A SPECIFIC ENUNCIATION OF A GENERAL PRINCIPLE OF EQUALITY WHICH IS ONE OF THE FUNDAMENTAL PRINCIPLES OF COMMUNITY LAW . THIS PRINCIPLE REQUIRES THAT SIMILAR SITUATIONS SHALL NOT BE TREATED DIFFERENTLY UNLESS DIFFERENTIATION IS OBJECTIVELY JUSTIFIED .
2 . THE PROVISIONS OF ARTICLE 11 OF REGULATION NO 120/67/EEC OF THE COUNCIL OF 13 JUNE 1967 , AS WORDED WITH EFFECT FROM 1 AUGUST 1974 FOLLOWING THE AMENDMENT MADE BY ARTICLE 5 OF REGULATION ( EEC ) NO 1125/74 OF THE COUNCIL OF 29 APRIL 1974 , AND REPEATED IN SUBSEQUENT REGULATIONS , ARE INCOMPATIBLE WITH THE PRINCIPLE OF EQUALITY IN SO FAR AS THEY PROVIDE FOR QUELLMEHL AND PRE-GELATINIZED STARCH TO RECEIVE DIFFERENT TREATMENT IN RESPECT OF PRODUCTION REFUNDS FOR MAIZE USED IN THE MANUFACTURE OF THESE TWO PRODUCTS .
3 . IN THE PARTICULAR CIRCUMSTANCES OF THE CASE , THIS FINDING OF ILLEGALITY DOES NOT INEVITABLY INVOLVE A DECLARATION THAT A PROVISION OF REGULATION ( EEC ) NO 1125/74 IS INVALID . THE ILLEGALITY OF ARTICLE 5 OF REGULATION ( EEC ) NO 1125/74 CANNOT BE REMOVED MERELY BY THE FACT THAT THE COURT , IN PROCEEDINGS UNDER ARTICLE 177 , RULES THAT THE CONTESTED PROVISION WAS IN PART OR IN WHOLE INVALID . AS THE SITUATION CREATED , IN LAW , BY ARTICLE 5 OF REGULATION ( EEC ) NO 1125/74 IS INCOMPATIBLE WITH THE PRINCIPLE OF EQUALITY , IT IS FOR THE COMPETENT INSTITUTIONS OF THE COMMUNITY TO ADOPT THE MEASURES NECESSARY TO CORRECT THIS INCOMPATIBILITY .
Parties
IN JOINED CASES 117/76 AND 16/77 ,
REFERENCE TO THE COURT UNDER ARTICLE 177 OF THE EEC TREATY BY THE FINANZGERICHT HAMBURG FOR A PRELIMINARY RULING IN THE ACTIONS PENDING BEFORE THAT COURT , IN CASE 117/76 BETWEEN
THE CONSORTIUM OF :
1 . ALBERT RUCKDESCHEL & CO ., KULMBACH ( GERMANY ),
2 . HANSA-LAGERHAUS STROH & CO ., HAMBURG ,
AND
HAUPTZOLLAMT HAMBURG-ST . ANNEN
AND , IN CASE 16/77 , BETWEEN
DIAMALT AG , MUNICH ,
AND
HAUPTZOLLAMT ITZENHOE ,
Subject of the case
ON THE VALIDITY OF ARTICLE 11 OF REGULATION NO 120/67/EEC OF THE COUNCIL OF 13 JUNE 1967 ON THE COMMON ORGANIZATION OF THE MARKET IN CEREALS ( OJ ENGLISH SPECIAL EDITION 1967 , P . 33 ) AS LAST AMENDED BY REGULATION ( EEC ) NO 665/75 OF 4 MARCH 1975 ( OJ L 72 , P . 14 ) AND OF ARTICLE 1 OF REGULATION ( EEC ) NO 1955/75 OF THE COUNCIL OF 22 JULY 1975 ON PRODUCTION REFUNDS IN THE CEREALS AND RICE SECTORS ( OJ L 200 , P . 1 ) AND , IF NEED BE , OF ARTICLE 11 OF REGULATION ( EEC ) NO 2727/75 OF 29 OCTOBER 1975 ON THE COMMON ORGANIZATION OF THE MARKET IN CEREALS ( OJ L 281 , P . 1 ) IN SO FAR AS THESE MEASURES MAKE NO PROVISION FOR A PRODUCTION REFUND FOR MAIZE USED IN THE MANUFACTURE OF QUELLMEHL OF AN AMOUNT EQUIVALENT TO THAT OF THE REFUND GRANTED FOR THE PROCESSING OF THIS PRODUCT INTO STARCH ,
Grounds
1 BY TWO ORDERS DATED RESPECTIVELY 8 NOVEMBER 1976 AND 18 JANUARY 1977 , WHICH REACHED THE COURT ON 10 DECEMBER 1976 AND 31 JANUARY 1977 , THE FINANZGERICHT HAMBURG HAS REFERRED TO THE COURT UNDER ARTICLE 177 OF THE EEC TREATY TWO QUESTIONS CONCERNING THE VALIDITY OF CERTAIN PROVISIONS OF COMMUNITY REGULATIONS ON THE SUBJECT OF REFUNDS FOR THE MANUFACTURE OF PRODUCTS DERIVED FROM MAIZE .
2 SINCE THE QUESTIONS REFERRED IN BOTH CASES ARE IDENTICAL AND HAVE ESSENTIALLY THE SAME OBJECT , IT IS PROPER TO JOIN THE CASES FOR THE PURPOSES OF JUDGMENT .
3 THE SUBSTANCE OF THE FIRST QUESTION IS WHETHER THE PROVISIONS OF ARTICLE 11 OF REGULATION NO 120/67/EEC OF THE COUNCIL ON THE COMMON ORGANIZATION OF THE MARKET IN CEREALS , AS SUBSEQUENTLY AMENDED , ARE INVALID IN SO FAR AS THEY DO NOT GRANT A PRODUCTION REFUND OF THE SAME AMOUNT ON MAIZE FOR THE MANUFACTURE OF QUELLMEHL AS THEY DO FOR THE PROCESSING OF THIS PRODUCT INTO STARCH .
THE SECOND QUESTION IS WHETHER , IN THE EVENT OF THE REPLY BEING IN THE AFFIRMATIVE , MANUFACTURERS OF QUELLMEHL CAN LAY DIRECT CLAIM TO THE SAME PRODUCTION REFUND AS THAT GRANTED TO MANUFACTURERS OF PRE-GELATINIZED STARCH OR WHETHER A LEGAL MEASURE ADOPTED BY THE COUNCIL IS REQUIRED FOR THIS .
4 THESE QUESTIONS WERE REFERRED IN CONNEXION WITH PROCEEDINGS FOR THE PAYMENT OF A PRODUCTION REFUND FOR QUELLMEHL BROUGHT AGAINST THE COMPETENT NATIONAL AUTHORITIES BY THE MANUFACTURERS OF THIS PRODUCT , WHO CLAIM THAT THE PROVISIONS WHICH ABOLISHED THIS REFUND WHILE MAINTAINING IT FOR STARCH CONSTITUTE DISCRIMINATION CONTRARY TO THE SECOND SUBPARAGRAPH OF ARTICLE 40 ( 3 ) OF THE TREATY .
5 THE PRODUCTION REFUND FOR QUELLMEHL EXTRACTED FROM MAIZE , WHICH HAS BEEN GRANTED IN GERMANY SINCE 1930 , WAS INTRODUCED INTO THE COMMON ORGANIZATION OF THE MARKET IN CEREALS , FIRST AS DISCRETIONARY BY REGULATION NO 142/64/EEC OF THE COUNCIL OF 21 OCTOBER 1964 ( JO OF 27 . 10 . 1964 , P . 2673 ) AND SUBSEQUENTLY AS COMPULSORY BY ARTICLE 11 OF REGULATION NO 120/67/EEC OF THE COUNCIL OF 13 JUNE 1967 ( JO ENGLISH SPECIAL EDITION 1967 , P . 33 ).
THESE ARRANGEMENTS WERE IDENTICAL WITH THOSE ESTABLISHED BY THE SAME REGULATIONS FOR THE GRANT OF PRODUCTION REFUNDS FOR STARCH AND THE AMOUNT OF THE REFUNDS WAS ALSO THE SAME FOR THE TWO PRODUCTS .
ALTHOUGH THE REASON FOR THE GRANT OF PRODUCTION REFUNDS FOR STARCH WAS THE NEED TO KEEP PRICES COMPETITIVE COMPARED WITH THE PRICES OF SUBSTITUTE PRODUCTS DERIVED PRINCIPALLY FROM OIL , THE REASON FOR THE GRANT OF PRODUCTION REFUNDS FOR QUELLMEHL WAS , AS IS MADE CLEAR IN PARTICULAR BY THE TENTH RECITAL IN THE PREAMBLE TO REGULATION NO 120/67/EEC , THE INTERCHANGEABILITY OF STARCH AND QUELLMEHL .
6 THE SITUATION REMAINED THE SAME UNTIL 1 AUGUST 1974 , THE DATE OF THE ENTRY INTO FORCE OF REGULATION ( EEC ) NO 1125/74 OF THE COUNCIL OF 29 APRIL 1974 ( OJ L 128 OF 10 . 5 . 1974 , P . 12 ), WHEREBY ARTICLE 11 OF REGULATION NO 120/67/EEC WAS SUPERSEDED BY A NEW TEXT PROVIDING FOR THE GRANT OF PRODUCTION REFUNDS FOR STARCH BUT NOT FOR QUELLMEHL .
THE RECITALS IN THE PREAMBLE TO REGULATION ( EEC ) NO 1125/74 STATED THAT THE REASON FOR ABOLISHING THE PRODUCTION REFUND FOR QUELLMEHL WAS THAT EXPERIENCE HAD SHOWN THAT THE OPPORTUNITY FOR SUBSTITUTING QUELLMEHL FOR STARCH FOR CERTAIN SPECIFIC USES AS FOOD FOR HUMAN CONSUMPTION WAS ' ECONOMICALLY SLIGHT , IF NOT NON-EXISTENT ' .
7 THE SECOND SUBPARAGRAPH OF ARTICLE 40 ( 3 ) OF THE TREATY PROVIDES THAT THE COMMON ORGANIZATION OF AGRICULTURAL MARKETS ' SHALL EXCLUDE ANY DISCRIMINATION BETWEEN PRODUCERS OR CONSUMERS WITHIN THE COMMUNITY ' .
WHILST THIS WORDING UNDOUBTEDLY PROHIBITS ANY DISCRIMINATION BETWEEN PRODUCERS OF THE SAME PRODUCT IT DOES NOT REFER IN SUCH CLEAR TERMS TO THE RELATIONSHIP BETWEEN DIFFERENT INDUSTRIAL OR TRADE SECTORS IN THE SPHERE OF PROCESSED AGRICULTURAL PRODUCTS .
THIS DOES NOT ALTER THE FACT THAT THE PROHIBITION OF DISCRIMINATION LAID DOWN IN THE AFORESAID PROVISION IS MERELY A SPECIFIC ENUNCIATION OF THE GENERAL PRINCIPLE OF EQUALITY WHICH IS ONE OF THE FUNDAMENTAL PRINCIPLES OF COMMUNITY LAW .
THIS PRINCIPLE REQUIRES THAT SIMILAR SITUATIONS SHALL NOT BE TREATED DIFFERENTLY UNLESS DIFFERENTIATION IS OBJECTIVELY JUSTIFIED .
8 IT MUST THEREFORE BE ASCERTAINED WHETHER QUELLMEHL AND STARCH ARE IN A COMPARABLE SITUATION , IN PARTICULAR IN THE SENSE THAT STARCH CAN BE SUBSTITUTED FOR QUELLMEHL IN THE SPECIFIC USE TO WHICH THE LATTER PRODUCT IS TRADITIONALLY PUT .
IN THIS CONNEXION IT MUST FIRST BE NOTED THAT THE COMMUNITY REGULATIONS WERE , UNTIL 1974 , BASED ON THE ASSERTION THAT SUCH SUBSTITUTION WAS POSSIBLE .
HOWEVER , THE PLAINTIFFS IN THE MAIN ACTIONS ON THE ONE HAND , AND THE COUNCIL AND THE COMMISSION ON THE OTHER ARE NOT IN AGREEMENT CONCERNING THE CONTINUED EXISTENCE OF THAT SITUATION .
THE PLAINTIFFS IN THE MAIN ACTIONS CONTEND THAT THE OPPORTUNITIES FOR SUBSTITUTION ARE THE SAME AS PREVIOUSLY , WITH THE RESULT THAT , SINCE THE ABOLITION OF THE REFUND FOR QUELLMEHL , TRADE IN THE LATTER HAS FALLEN OFF IN FAVOUR OF STARCH .
WHILE THE COUNCIL AND THE COMMISSION HAVE GIVEN DETAILED INFORMATION ON THE MANUFACTURE AND SALE OF THE PRODUCTS IN QUESTION , THEY HAVE PRODUCED NO NEW TECHNICAL OR ECONOMIC DATA WHICH APPRECIABLY CHANGE THE PREVIOUS ASSESSMENT OF THE POSITION .
IT HAS NOT THEREFORE BEEN ESTABLISHED THAT , SO FAR AS THE COMMUNITY SYSTEM OF PRODUCTION REFUNDS IS CONCERNED , QUELLMEHL AND STARCH ARE NO LONGER IN COMPARABLE SITUATIONS .
CONSEQUENTLY , THESE PRODUCTS MUST BE TREATED IN THE SAME MANNER UNLESS DIFFERENTIATION IS OBJECTIVELY JUSTIFIED .
9 WITH REGARD TO THIS LATTER ASPECT , THE COUNCIL AND THE COMMISSION CONTEND THAT THE ABOLITION OF THE REFUND FOR QUELLMEHL IS JUSTIFIED BY THE FACT THAT QUELLMEHL HAS BEEN TO A GREAT EXTENT DIVERTED FROM ITS SPECIFIC USE IN FOOD FOR HUMAN CONSUMPTION IN ORDER TO BE SOLD AS ANIMAL FEED .
ALTHOUGH THIS GROUND , THE CORRECTNESS OF WHICH IS MOREOVER DISPUTED BY THE PLAINTIFFS IN THE MAIN ACTIONS , IS REFERRED TO IN THE STATEMENT WHICH ACCOMPANIED THE PROPOSAL SUBMITTED BY THE COMMISSION TO THE COUNCIL AND LATER ADOPTED AS REGULATION ( EEC ) NO 1125/74 , IT DOES NOT APPEAR IN THE RECITALS TO THAT REGULATION .
DURING THE PROCEEDINGS , THE COMMISSION WAS REQUESTED BY THE COURT TO PRODUCE EVIDENCE TO SHOW THAT QUELLMEHL HAD BEEN USED FOR ANIMAL FEED BUT IT WAS UNABLE TO COMPLY WITH THIS REQUEST .
EVEN IF ADEQUATE PROOF HAD BEEN FORTHCOMING THAT IT WAS PUT TO SUCH USE AND THAT SUBSIDIZED STARCH HAD NOT BEEN PUT TO SIMILAR USE THIS COULD HAVE JUSTIFIED THE ABOLITION OF THE REFUND ONLY IN RESPECT OF THE QUANTITIES PUT TO SUCH USE AND NOT IN RESPECT OF THE QUANTITIES OF THE PRODUCTS USED IN FOOD FOR HUMAN CONSUMPTION .
10 IN VIEW IN PARTICULAR OF THE LENGTH OF TIME DURING WHICH THE TWO PRODUCTS WERE GIVEN EQUALITY OF TREATMENT WITH REGARD TO PRODUCTION REFUNDS , IT HAS NOT BEEN ESTABLISHED THAT THERE ARE OBJECTIVE CIRCUMSTANCES WHICH COULD HAVE JUSTIFIED ALTERING THE PREVIOUS SYSTEM AS WAS DONE BY REGULATION ( EEC ) NO 1125/74 , WHICH PUT AN END TO THIS EQUALITY OF TREATMENT .
IT IS CLEAR FROM THE FOREGOING THAT THE ABOLITION , AS A RESULT OF REGULATION ( EEC ) NO 1125/74 , OF THE REFUND FOR QUELLMEHL , WHILE THE REFUND WAS MAINTAINED FOR MAIZE-BASED STARCH , AMOUNTS TO A DISREGARD OF THE PRINCIPLE OF EQUALITY .
11 IN THE PARTICULAR CIRCUMSTANCES OF THE CASE , HOWEVER , THIS FINDING OF ILLEGALITY DOES NOT INEVITABLY INVOLVE A DECLARATION THAT A PROVISION OF REGULATION ( EEC ) NO 1125/74 IS INVALID .
12 IT MUST FIRST OF ALL BE BORNE IN MIND THAT THE AMENDMENT OF ARTICLE 11 OF REGULATION NO 120/67/EEC EFFECTED BY ARTICLE 5 OF REGULATION ( EEC ) NO 1125/74 TOOK THE FORM NOT OF THE DELETION OF THAT PART OF THE TEXT WHICH RELATES TO QUELLMEHL BUT OF THE REPLACEMENT OF THE PREVIOUS WORDING BY A NEW WORDING IN WHICH THERE IS NO MENTION OF THAT PRODUCT .
THUS THE PROVISION IS UNLAWFUL BECAUSE OF SOMETHING FOR WHICH IT MAKES NO PROVISION RATHER THAN ON ACCOUNT OF ANY PART OF ITS WORDING .
13 HOWEVER , THIS UNLAWFULNESS CANNOT BE REMOVED MERELY BY THE FACT THAT THE COURT , IN PROCEEDINGS UNDER ARTICLE 177 , RULES THAT THE CONTESTED PROVISION IS IN PART OR IN WHOLE INVALID .
ON THE OTHER HAND THE CONCLUSION MUST BE DRAWN THAT , IN LAW , THE SITUATION CREATED BY ARTICLE 5 OF REGULATION ( EEC ) NO 1125/74 , WHEREBY THE PREVIOUS TEXT WAS REPLACED BY A NEW WORDING OF ARTICLE 11 OF REGULATION NO 120/67/EEC , IS INCOMPATIBLE WITH THE PRINCIPLE OF EQUALITY AND THAT IT IS FOR THE COMPETENT INSTITUTIONS OF THE COMMUNITY TO ADOPT THE MEASURES NECESSARY TO CORRECT THIS INCOMPATIBILITY .
THE NEED FOR A REPLY TO THIS EFFECT TO THE QUESTIONS ASKED IS BORNE OUT BY THE EXISTENCE OF SEVERAL COURSES OF ACTION WHICH WOULD ENABLE THE TWO PRODUCTS IN QUESTION ONCE AGAIN TO BE TREATED EQUALLY AND TO MAKE GOOD ANY DAMAGE SUSTAINED BY THOSE CONCERNED AND BY THE FACT THAT IT IS FOR THE INSTITUTIONS RESPONSIBLE FOR THE COMMON AGRICULTURAL POLICY TO ASSESS THE ECONOMIC AND POLITICAL CONSIDERATIONS ON WHICH THIS CHOICE OF ACTION DEPENDS .
Decision on costs
COSTS
14 THE COSTS INCURRED BY THE COUNCIL AND 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 ACTION ARE CONCERNED , IN THE NATURE OF A STEP IN THE ACTION PENDING BEFORE THE NATIONAL COURT , THE DECISION ON COSTS IS A MATTER FOR THAT COURT .
Operative part
ON THOSE GROUNDS ,
THE COURT
IN ANSWER TO THE QUESTIONS REFERRED TO IT BY THE FINANZGERICHT HAMBURG BY ORDERS OF 8 NOVEMBER 1976 AND 18 JANUARY 1977 , HEREBY RULES :
1 . THE PROVISIONS OF ARTICLE 11 OF REGULATION NO 120/67/EEC OF THE COUNCIL OF 13 JUNE 1967 , AS WORDED WITH EFFECT FROM 1 AUGUST 1974 FOLLOWING THE AMENDMENT MADE BY ARTICLE 5 OF REGULATION ( EEC ) NO 1125/74 OF THE COUNCIL OF 29 APRIL 1974 , AND REPEATED IN SUBSEQUENT REGULATIONS , ARE INCOMPATIBLE WITH THE PRINCIPLE OF EQUALITY IN SO FAR AS THEY PROVIDE FOR QUELLMEHL AND PRE-GELATINIZED STARCH TO RECEIVE DIFFERENT TREATMENT IN RESPECT OF PRODUCTION REFUNDS FOR MAIZE USED IN THE MANUFACTURE OF THESE TWO PRODUCTS .
2 . IT IS FOR THE INSTITUTIONS COMPETENT IN MATTERS OF COMMON AGRICULTURAL POLICY TO ADOPT THE MEASURES NECESSARY TO CORRECT THIS INCOMPATIBILITY .
Full & Egal Universal Law Academy