Summary
Parties
Subject of the case
Grounds
Decision on costs
Operative part
Keywords
1 . AGRICULTURE - PROVISIONS OF THE TREATY - ARTICLE 46 - APPLICABILITY AFTER THE TRANSITIONAL PERIOD
( EEC TREATY , ART . 46 )
2 . AGRICULTURE - COUNTERVAILING CHARGE ON PRODUCTS NOT COVERED BY A COMMON ORGANIZATION - PURPOSE - NOT A CHARGE HAVING AN EFFECT EQUIVALENT TO A CUSTOMS DUTY
( EEC TREATY , ART . 46 )
Summary
1 . ARTICLE 46 MAY BE APPLIED AFTER THE EXPIRY OF THE TRANSITIONAL PERIOD TO PRODUCTS WHICH HAVE NOT YET BEEN MADE SUBJECT TO A COMMON ORGANIZATION OF THE MARKET .
2 . ALTHOUGH A COUNTERVAILING CHARGE INTRODUCED IN PURSUANCE OF ARTICLE 46 OF THE TREATY APPEARS TO BE AN IMPEDIMENT TO INTRA-COMMUNITY TRADE , IT CANNOT BE COMPARED TO A CHARGE HAVING AN EFFECT EQUIVALENT TO A CUSTOMS DUTY . IT IS A CHARGE IMPOSED IN THE GENERAL INTEREST , THE AMOUNT OF WHICH IS FIXED BY THE COMMISSION AND NOT UNILATERALLY BY A MEMBER STATE . IT ENABLES PRODUCTS FROM STATES WHERE AIDS ARE GRANTED TO BE EXPORTED TO OTHER MEMBER STATES WITHOUT DISTURBING THEIR MARKETS AND THUS PREVENTS ARTIFICIAL DIFFERENCES BETWEEN PRICES IN THE EXPORTING MEMBER STATE AND THOSE IN THE IMPORTING MEMBER STATE , RESULTING FROM DISPARITIES IN THE NATIONAL MARKETS BEFORE THE ESTABLISHMENT OF A COMMON ORGANIZATION , FROM CREATING IMBALANCES IN TRADE .
Parties
IN CASE 337/82
REFERENCE TO THE COURT UNDER ARTICLE 177 OF THE EEC TREATY BY THE FINANZGERICHT ( FINANCE COURT ) DUSSELDORF FOR A PRELIMINARY RULING IN THE PROCEEDINGS PENDING BEFORE THAT COURT BETWEEN
ST . NIKOLAUS BRENNEREI UND LIKORFABRIK , GUSTAV KNIEPF-MELDE GMBH , RHEINBERG ,
AND
HAUPTZOLLAMT ( PRINCIPAL CUSTOMS OFFICE ) KREFELD ,
Subject of the case
ON THE VALIDITY OF COMMISSION REGULATION ( EEC ) NO 851/76 OF 9 APRIL 1976 FIXING A COUNTERVAILING CHARGE FOR IMPORTS INTO BELGIUM , GERMANY , LUXEMBOURG AND THE NETHERLANDS OF ETHYL ALCOHOL OF AGRICULTURAL ORIGIN PRODUCED IN FRANCE ( OFFICIAL JOURNAL 1976 , L 96 , P . 41 ),
Grounds
1 BY AN ORDER DATED 8 SEPTEMBER 1982 , WHICH WAS RECEIVED AT THE COURT ON 23 DECEMBER 1982 , THE FINANZGERICHT ( FINANCE COURT ) DUSSELDORF REFERRED TO THE COURT FOR A PRELIMINARY RULING UNDER ARTICLE 177 OF THE EEC TREATY TWO QUESTIONS ON THE VALIDITY OF COMMISSION REGULATION ( EEC ) NO 851/76 OF 9 APRIL 1976 FIXING A COUNTERVAILING CHARGE FOR IMPORTS INTO BELGIUM , GERMANY , LUXEMBOURG AND THE NETHERLANDS OF ETHYL ALCOHOL OF AGRICULTURAL ORIGIN PRODUCED IN FRANCE ( OFFICIAL JOURNAL 1976 , L 96 , P . 41 ).
2 THE PLAINTIFF IN THE MAIN PROCEEDINGS IMPORTED INTO THE FEDERAL REPUBLIC OF GERMANY ETHYL ALCOHOL OF FRENCH ORIGIN AND WAS REQUIRED TO PAY A COUNTERVAILING CHARGE UNDER REGULATION NO 851/76 . QUESTIONING THE COMPATIBILITY OF THAT REGULATION WITH THE EEC TREATY , IT CONTESTED THE DEMAND FOR PAYMENT IN PROCEEDINGS BEFORE THE FINANZGERICHT .
3 ACCORDING TO THE PREAMBLE TO THE REGULATION , THE COUNTERVAILING CHARGES WERE INTENDED TO MITIGATE THE EFFECTS OF THE DISTURBANCE , OR THE THREAT OF DISTURBANCE , OF THE GERMAN AND BENELUX MARKETS CAUSED BY IMPORTS FROM FRANCE OF AGRICULTURAL ALCOHOL AT PRICES CONSIDERABLY LOWER THAN THE PRICES PREVAILING ON THOSE MARKETS . THOSE SUPPLIES OF CHEAP ALCOHOL WERE A RESULT , IN PARTICULAR , OF THE PRICING POLICY APPLIED BY THE FRENCH ALCOHOL MONOPOLY .
4 REGULATION NO 851/76 IS BASED ON ARTICLE 46 OF THE EEC TREATY , ACCORDING TO WHICH :
' ' WHERE IN A MEMBER STATE A PRODUCT IS SUBJECT TO A NATIONAL MARKET ORGANIZATION OR TO INTERNAL RULES HAVING EQUIVALENT EFFECT WHICH AFFECT THE COMPETITIVE POSITION OF SIMILAR PRODUCTION IN ANOTHER MEMBER STATE , A COUNTERVAILING CHARGE SHALL BE APPLIED BY MEMBER STATES TO IMPORTS OF THIS PRODUCT COMING FROM THE MEMBER STATE WHERE SUCH ORGANIZATION OR RULES EXIST , UNLESS THAT STATE APPLIES A COUNTERVAILING CHARGE ON EXPORT .
THE COMMISSION SHALL FIX THE AMOUNT OF THESE CHARGES AT THE LEVEL REQUIRED TO REDRESS THE BALANCE ; IT MAY ALSO AUTHORIZE OTHER MEASURES , THE CONDITIONS AND DETAILS OF WHICH IT SHALL DETERMINE . ' '
5 THE FINANZGERICHT DUSSELDORF TOOK THE VIEW THAT ARTICLE 46 OF THE TREATY AND THE REGULATIONS BASED ON THAT PROVISION HAD BECOME DEVOID OF PURPOSE AFTER THE EXPIRY OF THE TRANSITIONAL PERIOD AND THAT THE FRENCH MONOPOLY OUGHT TO HAVE BEEN ADJUSTED PURSUANT TO ARTICLE 37 OF THE TREATY . IT THEREFORE REFERRED TO THE COURT THE FOLLOWING QUESTIONS :
' ' 1 . IS COMMISSION REGULATION ( EEC ) NO 851/76 OF 9 APRIL 1976 VOID IN SO FAR AS IT IS BASED ON ARTICLE 46 OF THE EEC TREATY , WHICH IS NO LONGER APPLICABLE AFTER THE EXPIRY OF THE TRANSITIONAL PERIOD?
2.IF THE ANSWER TO QUESTION 1 IS IN THE AFFIRMATIVE , WHAT LEGAL CONSEQUENCES ARISE FROM THE INVALIDITY OF THE REGULATION?
' '
THE FIRST QUESTION
6 THE FIRST QUESTION IS INTENDED ESSENTIALLY TO ESTABLISH WHETHER ARTICLE 46 OF THE EEC TREATY IS STILL APPLICABLE AFTER THE EXPIRY OF THE TRANSITIONAL PERIOD AND CONSEQUENTLY WHETHER OR NOT REGULATION NO 851/76 . ADOPTED IN PURSUANCE OF THAT ARTICLE , IS VALID .
7 ACCORDING TO THE PLAINTIFF IN THE MAIN PROCEEDINGS , ARTICLE 46 NO LONGER CONSTITUTED A VALID BASIS FOR THE ADOPTION OF REGULATION NO 851/76 AFTER THE EXPIRY OF THE TRANSITIONAL PERIOD , BY WHICH TIME ALL THE NATIONAL ORGANIZATIONS OF THE MARKET SHOULD HAVE BEEN ADJUSTED TO THE RULES LAID DOWN FOR THE ESTABLISHMENT OF THE COMMON MARKET . THE PLAINTIFF CONSIDERS THAT THE ONLY LEGAL REMEDY WHICH THE COMMISSION WAS ENTITLED TO MAKE USE OF , IN ORDER TO MITIGATE THE DISTORTIONS OF COMPETITION CAUSED IN THIS INSTANCE BY FRANCE , WAS AN ACTION UNDER ARTICLE 169 FOR INFRINGEMENT OF THE RULES LAID DOWN IN THE TREATY .
8 THE COMMISSION CONSIDERS THAT ARTICLE 46 CAN NOW APPLY ONLY WITH REGARD TO LAWFUL NATIONAL MEASURES , IN VIEW OF THE FACT THAT THE PROCEDURE UNDER ARTICLE 169 REPRESENTS AN ADEQUATE MEANS OF COUNTERING NATIONAL MEASURES WHICH ARE CONTRARY TO THE TREATY . THE COMMISSION TAKES THE VIEW THAT THE IMPOSITION OF A COUNTERVAILING CHARGE MAY BE JUSTIFIED ONLY WHERE IT REPRESENTS THE SOLE MEANS OF REDRESSING THE BALANCE , SINCE SUCH A CHARGE HAS THE EFFECT OF CREATING A BARRIER TO THE FREE MOVEMENT OF GOODS , WHICH IS ONE OF THE FUNDAMENTAL PRINCIPLES OF THE COMMON MARKET .
9 FINALLY , THE UNITED KINGDOM CONSIDERS THAT ARTICLE 46 RETAINS A FUNDAMENTAL ROLE , EVEN AFTER THE EXPIRY OF THE TRANSITIONAL PERIOD , WHERE THERE IS NO COMMON ORGANIZATION OF THE MARKET , IRRESPECTIVE OF WHETHER THE NATIONAL MEASURES IN QUESTION ARE LAWFUL OR UNLAWFUL .
10 IN VIEW OF THE PROBLEMS RAISED BY THE INTERPRETATION OF ARTICLE 46 OF THE TREATY , IT IS NECESSARY , IN ORDER TO DETERMINE THE SCOPE OF THAT PROVISION , TO CONSIDER ITS WORDING , ITS CONTEXT AND ITS AIMS .
11 EVEN THOUGH THE SCOPE OF ARTICLE 46 IS BOUND TO BE REDUCED GRADUALLY , AS THE COMMON ORGANIZATIONS OF THE MARKET ARE ESTABLISHED , THERE IS NO MENTION IN THAT PROVISION OF ITS APPLICATION BEING LIMITED TO THE TRANSITIONAL PERIOD . ON THE CONTRARY , IT FOLLOWS FROM THE WORKING OF ARTICLE 46 THAT IT APPLIES WHENEVER IN A MEMBER STATE A PRODUCT IS SUBJECT TO A NATIONAL MARKET ORGANIZATION OR TO INTERNAL RULES HAVING EQUIVALENT EFFECT , WHICH IS THE CASE HERE .
12 MOREOVER , PURSUANT TO ARTICLE 42 OF THE TREATY , THE PROVISIONS OF THE CHAPTER RELATING TO RULES ON COMPETITION , AND IN PARTICULAR THOSE CONCERNING STATE AIDS , DO NOT APPLY TO AGRICULTURAL PRODUCTS , UNLESS THE COUNCIL HAS ADOPTED A SPECIFIC DECISION WITHIN THE FRAMEWORK OF THE DEVELOPMENT OF COMMON ORGANIZATIONS OF THE MARKET . FOR PRODUCTS WHICH ARE NOT SUBJECT TO SUCH AN ORGANIZATION , REGULATION NO 26 OF THE COUNCIL OF 4 APRIL 1962 APPLYING CERTAIN RULES OF COMPETITION TO PRODUCTION OF AND TRADE IN AGRICULTURAL PRODUCTS ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1959-1962 , P . 129 ) PROVIDES THAT ONLY ARTICLE 93 ( 1 ) AND THE FIRST SENTENCE OF ARTICLE 93 ( 3 ) APPLY . UNDER THOSE PROVISIONS THE COMMISSION HAS THE RIGHT TO BE INFORMED OF SUCH AIDS . THE COMMISSION IS THEREFORE DEPRIVED OF THE POWER TO INSTITUTE PROCEEDINGS UNDER ARTICLE 93 ( 2 ) OF THE TREATY IN RESPECT OF THOSE AIDS .
13 ON THE OTHER HAND , ARTICLE 37 ONLY PARTLY FILLS THE LACUNA RESULTING FROM THE LIMITED APPLICABILITY TO THOSE PRODUCTS OF THE RULES RELATING TO AIDS . ONLY IF THE PARTICULAR CONDITIONS SPECIFIED IN ARTICLE 37 ARE SATISFIED MAY THE COMMISSION ACT AGAINST NATIONAL AIDS AFFECTING COMPETITION WITHIN THE COMMUNITY .
14 IT FOLLOWS FROM THE FOREGOING THAT , SO LONG AS AN AGRICULTURAL PRODUCT HAS NOT BEEN MADE SUBJECT TO A COMMON ORGANIZATION OF THE MARKET , ARTICLE 46 CONSTITUTES FOR THE COMMISSION A USEFUL INSTRUMENT WHICH ALLOWS IT TO ADOPT IMMEDIATE SAFEGUARDS AGAINST DISTORTIONS OF COMPETITION CREATED BY A MEMBER STATE . THE INTRODUCTION OF A COUNTERVAILING CHARGE PURSUANT TO THAT ARTICLE THUS FACILITATES THE ACHIEVEMENT - BY THE MAINTENANCE OF NORMAL TRADE PATTERNS IN THE EXCEPTIONAL AND TEMPORARY CIRCUMSTANCES WHICH JUSTIFY THE MEASURE - OF THE AIMS OF ARTICLE 39 OF THE TREATY , WHICH SEEKS INTER ALIA TO STABILIZE THE MARKETS AND TO ENSURE A FAIR STANDARD OF LIVING FOR THE AGRICULTURAL POPULATION CONCERNED .
15 MOREOVER , ALTHOUGH SUCH A COUNTERVAILING CHARGE APPEARS TO BE AN IMPEDIMENT TO INTRA-COMMUNITY TRADE , IT CANNOT BE COMPARED TO A CHARGE HAVING AN EFFECT EQUIVALENT TO A CUSTOMS DUTY . IT IS A CHARGE IMPOSED IN THE GENERAL INTEREST , THE AMOUNT OF WHICH IS FIXED BY THE COMMISSION AND NOT UNILATERALLY BY A MEMBER STATE . IT ENABLES PRODUCTS FROM STATES WHERE AIDS ARE GRANTED TO BE EXPORTED TO OTHER MEMBER STATES WITHOUT DISTURBING THEIR MARKETS AND THUS PREVENTS ARTIFICIAL DIFFERENCES BETWEEN PRICES IN THE EXPORTING MEMBER STATE AND THOSE IN THE IMPORTING MEMBER STATE , RESULTING FROM DISPARITIES IN THE NATIONAL MARKETS BEFORE THE ESTABLISHMENT OF A COMMON ORGANIZATION , FROM CREATING IMBALANCES IN TRADE . IN EACH CASE IT IS FOR THE COMMISSION TO ENSURE THAT THE DURATION AND THE AMOUNT OF THE CHARGE REMAIN WITHIN THE LIMITS CIRCUMSCRIBED BY THE NEED TO RE-ESTABLISH EQUILIBRIUM .
16 FINALLY , IT FOLLOWS FROM THE REASONS SET OUT ABOVE THAT ARTICLE 46 IS NOT DEPRIVED OF ITS RAISON D ' ETRE , EVEN IF OTHER PROVISIONS OF THE TREATY SERVE TO MITIGATE THE EFFECTS OF DISTORTIONS OF COMPETITION THUS CREATED . ON THE CONTRARY , IN SO FAR AS A COMMON ORGANIZATION OF THE MARKETS CREATING HARMONIOUS CONDITIONS OF COMPETITION HAS NOT BEEN ESTABLISHED , ARTICLE 46 MAKES IT POSSIBLE TO COUNTER , WITH THE UTMOST ALACRITY , THE IMBALANCES CAUSED BY CERTAIN NATIONAL SUPPORT MEASURES . SUCH A MECHANISM IS RENDERED NECESSARY SOLELY BY THE DISTURBANCE OF COMPETITION CAUSED BY A MEMBER STATE , REGARDLESS OF THE VIEW THAT MAY BE TAKEN OF THE LEGALITY OF THE NATIONAL MEASURES WHICH CREATE THAT DISTURBANCE . IT IS THEREFORE THE TASK OF THE COMMISSION , SUBJECT TO THE REVIEW OF THE COURT , TO ASSESS SOLELY , ACCORDING TO THE TERMS OF ARTICLE 46 , WHETHER THE RULES OF A MEMBER STATE AFFECT THE COMPETITIVE POSITION OF THE PRODUCTS OF ANOTHER MEMBER STATE AND THEREFORE JUSTIFY THE IMPOSITION OF A COUNTERVAILING CHARGE .
17 IT ALSO FOLLOWS THAT , CONTRARY TO THE COMMISSION ' S VIEW , IT IS NOT NECESSARY TO MAKE A DISTINCTION ACCORDING TO WHETHER OR NOT THE IMBALANCES WHICH IT IS SOUGHT TO REDRESS ARE THE CONSEQUENCES OF MEASURES WHICH ARE IN CONFORMITY WITH COMMUNITY LAW .
18 MOREOVER , IF THE COMMISSION CONSIDERS THAT THE MEMBER STATE IN QUESTION HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER THE TREATY , THE INTRODUCTION OF A COUNTERVAILING CHARGE DOES NOT RELIEVE IT OF ITS DUTY TO EXERCISE THE POWER CONFERRED UPON IT BY ARTICLES 155 AND 169 OF THE TREATY AND THUS TO COMMENCE THE PROCEDURE LAID DOWN IN THE LATTER PROVISION .
19 IN REPLY TO THE NATIONAL COURT IT MUST THEREFORE BE STATED THAT ARTICLE 46 OF THE EEC TREATY MAY BE APPLIED AFTER THE EXPIRY OF THE TRANSITIONAL PERIOD TO PRODUCTS WHICH HAVE NOT YET BEEN MADE SUBJECT TO A COMMON ORGANIZATION OF THE MARKET . IN CONSEQUENCE THE VALIDITY OF COMMISSION REGULATION NO 851/76 OF 9 APRIL 1976 FIXING A COUNTERVAILING CHARGE FOR IMPORTS INTO BELGIUM , GERMANY , LUXEMBOURG AND THE NETHERLANDS OF ETHYL ALCOHOL OF AGRICULTURAL ORIGIN PRODUCED IN FRANCE ( OFFICIAL JOURNAL 1976 , L 96 , P . 41 ) CANNOT BE CALLED IN QUESTION ON THE GROUND THAT IT IS BASED ON ARTICLE 46 .
THE SECOND QUESTION
20 IT IS NOT NECESSARY TO REPLY TO THE SECOND QUESTION SINCE IT RELATED SOLELY TO THE POSSIBILITY THAT REGULATION NO 851/76 MIGHT BE FOUND TO BE INVALID .
Decision on costs
COSTS
21 THE COSTS INCURRED BY THE UNITED KINGDOM 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 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 DUSSELDORF BY ORDER OF 8 SEPTEMBER 1982 , HEREBY RULES :
THE VALIDITY OF COMMISSION REGULATION NO 851/76 OF 9 APRIL 1976 FIXING A COUNTERVAILING CHARGE FOR IMPORTS INTO BELGIUM , GERMANY , LUXEMBOURG AND THE NETHERLANDS OF ETHYL ALCOHOL OF AGRICULTURAL ORIGIN PRODUCED IN FRANCE ( OFFICIAL JOURNAL 1976 , L 96 , P . 41 ) CANNOT BE CALLED IN QUESTION ON THE GROUND THAT IT IS BASED ON ARTICLE 46 OF THE EEC TREATY , WHICH MAY BE APPLIED AFTER THE EXPIRY OF THE TRANSITIONAL PERIOD TO PRODUCTS WHICH ARE NOT YET SUBJECT TO A COMMON ORGANIZATION OF THE MARKET .
Full & Egal Universal Law Academy