Opinion of the Advocate-General
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My Lords,
1. This Opinion concerns two related cases in which Greece is challenging the validity of regulations. In the first of the cases (Case C-353/92) Greece seeks the annulment of Council Regulation (EEC) No 1765/92 of 30 June 1992 establishing a support system for producers of certain arable crops ("the Council Regulation"). (1) In the second case (Case C-385/92) Greece seeks the annulment of Commission Regulation (EEC) No 2294/92 (2) of 31 July 1992 on detailed rules for the application of the support system for producers of the oil seeds referred to in Regulation No 1765/92 ("the Commission Regulation").
2. I should point out at this stage that, although in its applications the Greek Government seeks the annulment of the Council Regulation and of the Commission Regulation in general, it is clear from the Government' s arguments that, essentially, it disputes the validity of those regulations only in so far as they apply to producers of soya beans.
Background to the dispute
3. The Council Regulation establishes a support system for producers of certain arable crops, in particular, cereals, oil seeds and protein crops. Soya beans are one of the oil seeds covered by its provisions. (3) The Council Regulation gives effect to the reform of the common agricultural policy decided on 21 May 1992. It provides for a support system which is different from that which applied previously and which had been established by Council Regulation (EEC) No 3766/91. (4)
4. The underlying objective of the Council Regulation is laid down in the second recital of its preamble which states:
"... in order to ensure better market balances, a new support system has to be established; ... the best way to achieve this objective is to approximate the Community prices of certain arable crops to the prices of the world market and to compensate the loss of income caused by the reduction of the institutional prices by a compensatory payment for producers who sow such products ... ."
5. In accordance with that objective, the Council Regulation establishes a system of compensatory payments for Community producers. Those producers may apply for a compensatory payment under the conditions set out in Title I. The compensatory payment is fixed on a per hectare basis and it is regionally differentiated. (5)
6. The compensatory payment may only be granted for an area which does not exceed a regional base area. That area is established as the average number of hectares within a region down to arable crops or, where appropriate, fallowed in conformity with a publicly funded scheme during 1989, 1990 and 1991. A region is understood to mean a Member State or a region within the Member State, at the option of the Member State concerned. (6) Instead of a system of regional base areas, a Member State may apply a system of individual base areas for all of its territory. Under that system, a base area for each holding is established as the average number of hectares which were down to arable crops, or which were fallowed in conformity with a publicly funded scheme, during 1989, 1990 and 1991. (7)
7. The compensatory payment is granted under a "general scheme" open to all producers or under a "simplified scheme" open to small producers. (8) Small producers may opt either for the general or for the simplified scheme. Small producers are defined as those who make a claim for compensatory payments for an area no bigger than the area which would be needed to produce 92 tonnes of cereals, if they achieve the average cereals yield which has been determined for their region or, in the case of the Member States who operate the system of individual base areas, whose individual base area is no bigger than that area. (9)
8. Producers applying for the compensatory payment under the general scheme are subject to the obligation to set aside part of the land of their holding from production and receive compensation for that obligation. (10) Under the simplified scheme, no set-aside requirement is imposed but the compensatory payment is paid at the rate applicable to cereals irrespective of the crops actually sown. (11) The rate applicable to cereals is substantially lower than the rate applicable to oil seeds. (12)
9. Article 10, which is of primary importance in these proceedings, provides as follows:
"1. The compensatory payments for cereals, and protein crops, as well as the compensation for the set-aside obligation, shall be paid between 16 October and 31 December next following the harvest.
2. In order to qualify for the compensatory payment, a producer must, at the latest by 15 May preceding the relevant harvest:
- have sown the seed,
- have lodged an application.
... ."
10. The Commission Regulation contains detailed rules for the application of the support system established by the Council Regulation to producers of oil seeds. Article 2 of the Commission Regulation states that the compensatory payment provided for by the Council Regulation shall be allocated solely to areas under oil seed crops which are covered by an application lodged with the competent authority by the date set by the Member State and which are entirely sown by that date. Article 2 also states that the date in question may not be later than the date mentioned in Annex I. Annex I specifies as the final date for sowing the crop and for submitting applications with regard to all oil seeds, including soya beans, the date of 15 May prior to the marketing year.
11. There are two types of cultivation of soya beans: principal cultivation and secondary cultivation. Secondary cultivation precedes or follows the principal cultivation of another crop and lasts between two and five months. Where it precedes a principal cultivation, its main objective is to prepare the soil for that cultivation. Where it follows a principal cultivation, it takes advantage of fertilizers already existing in the soil.
12. It appears that in Greece the best period for the cultivation of soya beans is between 20 April and 15 July and that secondary cultivation starts after 15 May. It is not disputed that all Greek producers of soya beans are small producers within the meaning of the Council Regulation. They are eligible therefore to participate either in the general or in the simplified scheme established by that regulation.
13. In its action against the Council, the Greek Government states that since, under Article 10(2) of the Council Regulation, a producer does not qualify for a compensatory payment unless he has sown the crop by 15 May, secondary cultivation of soya beans in Greece is excluded from the compensatory payment. The Greek Government claims that, in requiring a producer of soya beans to have sown the crop and to have lodged the application by 15 May in order to be entitled to a compensatory payment, the Council Regulation is void on the following grounds: lack of reasoning, breach of the principle of non-discrimination, breach of Article 39 of the Treaty, breach of the principle of protection of legitimate expectations, and breach of a principle of Community preference.
14. In its defence, the Council argues that the date of 15 May provided for by Article 10(2) of the Council Regulation applies only to producers of cereals and protein crops. The date by which a producer of oil seeds must have sown the crop and must have lodged an application in order to qualify for a compensatory payment is fixed by Article 2 of the Commission Regulation in combination with Annex I to that regulation. The Council concludes that the application of the Greek Government against it should be rejected as inadmissible. By way of a subsidiary argument, the Council claims that the grounds of challenge submitted by the Greek Government should be rejected.
15. The Commission, which has intervened in support of the Council, also claims that the application of the Greek Government should be rejected as inadmissible or, in any event, as unfounded on the basis of arguments similar to those submitted by the Council.
16. In its action against the Commission, the Greek Government seeks the annulment of the Commission Regulation in the event that the date of 15 May is fixed with regard to oil seeds by that regulation and not by the Council Regulation.
17. The Greek Government reproduces the submissions from its action against the Council and states that they apply mutatis mutandis with regard to the Commission Regulation. It also claims that Article 4 of the Commission Regulation, which provides that one plot of land may not be the subject of more than one application for a compensatory payment as provided for in the Council Regulation in the same marketing year, is invalid on the ground that the Council Regulation did not confer upon the Commission authority to adopt that provision.
18. I shall start by examining the issue whether the requirement that the crop must have been sown and that the application must have been lodged by 15 May is imposed on producers of soya beans by the Council Regulation or by the Commission Regulation.
The date of 15 May
19. The date of 15 May is set, as we have seen, (13) by Article 10(2) of the Council Regulation. However, Article 10 must be read as a whole. Article 10(1) refers to the compensatory payments for cereals and for protein crops but it does not refer to the compensatory payments for oil seeds. Although Article 10(2) refers in general to "the compensatory payment", it is clear that it refers to the compensatory payment for cereals and for protein crops only. The compensatory payment for oil seeds is dealt with in Article 11. That article, however, does not set a date, but leaves the date to be specified by a subsequent implementing measure of the Commission. (14) That measure is the Commission Regulation.
20. The Commission Regulation, for its part, sets the date only for producers who come within a general scheme: Article 2(1)(b), which is the only material provision, is expressly limited to areas "included in a 'general scheme' as referred to in Article 2(5)(a) of Regulation (EEC) No 1765/92". It is impossible to read the Commission Regulation as setting the date for producers who take part in the simplified scheme.
21. The explanation of the conundrum is, in my view, as follows. Producers of oil seeds who take part in the simplified scheme are entitled to the compensatory payment for cereals. Therefore they come within the scope of application of Article 10 of the Council Regulation, which must be read as applying not only to cereal producers but also to those oil seed producers who qualify for the compensatory payment for cereals. (It will be noted that Article 10 refers to the "compensatory payment for cereals" (15) and not to the compensatory payment payable to cereal producers.) Article 10(2) of the Council Regulation therefore sets the date of 15 May for oil seed producers who take part in the simplified scheme. The Commission Regulation fixes the same date for producers who come within the general scheme.
22. It follows that the argument of the Council and of the Commission that the application of the Greek Government against the Council should be rejected on the ground that Article 10(2) of the Council Regulation does not apply to producers of soya beans cannot be accepted. Both the challenge to the Council Regulation and the challenge to the Commission Regulation should be examined since each of those regulations applies to a separate category of soya bean producers.
The background to the legislation
23. Before examining the grounds of annulment submitted by the Greek Government, it is helpful to summarize the development of Community legislation with regard to the production of soya beans.
24. In 1962, within the framework of the General Agreement on Tariffs and Trade (Dillon Round), the Community agreed to the importation into the Community of soya beans from third countries without duties. At that time, the Community production of soya beans was very small, but Community producers were thereafter in direct competition with producers from third countries.
25. In view of that competition, and in order to promote the production of soya beans in the Community, the Council introduced support measures. The first measure was Council Regulation (EEC) No 1900/74 laying down special measures for soya beans (16) which provided for the establishment of a guide price. When the guide price valid for a marketing year was higher than the average world market price, a subsidy equal to the difference between those two prices would be granted to Community producers. The support system established by Regulation No 1900/74 was replaced by Council Regulation (EEC) No 1614/79. (17) Under that regulation, aid was to be granted to persons who had concluded with soya bean producers a contract providing for payment to the producer of a price at least equal to the minimum price established under that regulation. Regulation No 1614/79 was replaced by Council Regulation (EEC) No 1491/85 (18) which provided for a similar support system.
26. Regulation No 3766/91 (19) established a new support system for producers of soya beans, rape seed and colza seed and sunflower seed. The adoption of that regulation is closely connected with the general reform of the common agricultural policy decided on 21 May 1992. It is necessary to look briefly at the reasons which led to that reform.
27. When the common agricultural policy was established in 1962, one of its primary objectives was to attain self-sufficiency in food production since at that time the Member States were in deficit for most food products. As a result of the common agricultural policy, the Community moved into surplus production. This led to a serious increase in budgetary costs. Despite the increase in production, the income of producers improved very little over the period 1975 to 1989 and over the same period the Community' s active agricultural population fell by 35 per cent. (20) In view of those developments, the Commission noted in 1991 that the "mechanisms of the CAP as currently applied are no longer in a position to attain certain objectives prescribed for the agricultural policy under Article 39". (21) In order to avoid a build-up of stocks and excessive growth in spending, the Commission set as a key objective of the common agricultural policy for the future the control of production "to the degree necessary to bring the markets back into balance". (22)
28. The Commission identified cereals, protein crops and oil seeds as a sector of arable crops which should be made subject to a common support system. However, the existing support system of soya beans had been found to be in breach of the Community' s obligations under the General Agreement on Tariffs and Trade. With a view to complying with those obligations, the Council adopted Regulation No 3766/91 which was intended to apply only until the introduction of an integrated support system applicable to producers of cereals, protein crops and oil seeds. (23)
29. Under the support system established by Regulation No 3766/91, Community producers were entitled to apply for a regionalized system of direct payments. Article 4(2) provided that in order to qualify for any payment a producer must, by the date specified for the region in question, have sown the crop and have lodged an application. Specific provision was made with regard to the secondary cultivation of soya beans. Article 4(7) stated that, by way of derogation, producers who intended to plant soya beans as a catch-crop could apply by 30 May provided that the other requirements of Article 4 were fulfilled. Regulation No 3766/91 also provided for maximum guaranteed areas. If the area planted to oil seed exceeded the maximum guaranteed area the relevant direct payments would be reduced proportionately.
30. Regulation No 3766/91 only applied for the marketing year 1992 to 1993. An integrated support system for cereals, protein crops and oil seeds was introduced by the contested Council Regulation, which replaced Regulation No 3766/91 and abolished the system of maximum guaranteed areas.
31. It will be noted that there are certain basic differences between, on the one hand, the support system based on compensatory payments established by the Council Regulation and, on the other hand, the price support systems established by previous regulations. Those differences are as follows:
- The output of the individual producer is not taken into consideration for the purposes of granting the compensatory payment.
- Support is not granted automatically but only following the lodging of an application by the producer.
- Support is granted once the crops have been sown irrespective of the results of the harvest. Under the previous systems, support was granted only when the production was marketed.
32. The support system established by the Council Regulation is based on the principle that the compensatory payment may only be paid once a year for a given area. That is made clear in the seventeenth recital of the preamble to that regulation. It is also confirmed by Article 4 of the Commission Regulation which states that one plot of land may not be the subject of more than one application for a compensatory payment in the same marketing year.
33. The contested Council Regulation was recently amended by Council Regulation (EC) No 231/94 (24) and Council Regulation (EC) No 232/94. (25) The latter regulation was adopted with a view to giving effect to an Agreement on oil seeds concluded in the framework of the General Agreement on Tariffs and Trade between the European Community and the United States of America. (26) That Agreement refers to a GATT Panel ruling which found that the Community' s support scheme for oil seeds was an impairment of the value of the tariff concession which the Community had granted to the United States. In accordance with the terms of the Agreement, Regulation No 232/94 provides for maximum guaranteed areas for oil seed payments and excludes from the support system the cultivation of a certain variety of sunflower seed. Regulations No 231/94 and No 232/94 apply from the 1994 to 1995 marketing year and are not directly relevant to the present proceedings.
34. I turn now to examine the issues between the parties.
35. As we have seen, in its application against the Commission, the Greek Government invokes the grounds of annulment which it submits in its application against the Council and states that they apply mutatis mutandis in relation to the Commission Regulation. It also claims that Article 4 of that regulation is invalid on the ground that, in adopting it, the Commission exceeded its powers.
36. In its defence, the Commission claims that the application should be rejected as inadmissible to the extent that the Government does not specify the grounds of annulment on which the application is based but merely reproduces the grounds submitted in its action against the Council. I do not accept that argument. The application of the Government against the Commission duly describes the subject-matter of the dispute and the grounds on which it is based. It cannot be rejected on the ground that the Government' s submissions are the same as those in its action against the Council. Since the date by which a producer must have sown the crop and must have lodged an application in order to be entitled to a compensatory payment is fixed by the Council Regulation with regard to one category of soya bean producers and by the Commission Regulation with regard to another category of those producers, the Government' s approach in challenging both regulations has been shown to be justified.
37. I shall first examine those submissions which are common to the Council Regulation and to the Commission Regulation. I will then examine the submission alleging that the Commission exceeded its powers.
38. It will be remembered that the grounds of annulment which are common to the Council Regulation and the Commission Regulation are the following: lack of reasoning, breach of the principle of non-discrimination, breach of Article 39 of the Treaty, breach of the principle of protection of legitimate expectations, and breach of the principle of Community preference.
Lack of reasoning
39. The Greek Government claims that the Council Regulation is void for lack of reasoning. It states that one of the objectives of that regulation is to compensate for the loss of income caused by the reduction of institutional prices by granting to producers a compensatory payment. However, producers who sow the crop after 15 May are excluded from that compensatory payment. In the view of the Greek Government, the exclusion of those producers runs counter to the basic objective of the Council Regulation, which is to protect the income of all producers who are adversely affected by the reduction of institutional prices, and makes it necessary to include in that regulation specific reasons which explain why producers who sow the crop after 15 May need to be excluded.
40. The Greek Government also claims that, on the basis of the arguments stated above, the Commission Regulation is void for lack of reasoning.
41. Article 190 of the Treaty provides that regulations, directives and decisions of the Council and of the Commission must state the reasons on which they are based. As a general rule, the statement of reasons must disclose in a clear and unequivocal fashion the reasoning of the enacting authority, but the extent of the reasoning required depends on the nature of the act in question and the context in which it was adopted. (27) With regard to acts of general application, especially regulations, it is sufficient if the reasons given explain in essence the measures taken without need for a specific statement of reasons in support of all the details which might be contained in such a measure, provided that such details fall within the general scheme of the measure as a whole. (28)
42. In the present case, the Council and the Commission suggest, the requirement that the crop must have been sown and that the application for the compensatory payment must have been submitted by 15 May serves practical needs. In particular, it facilitates the administration and the supervision of the support system. Contrary to what the Greek Government claims, it does not run counter to the objectives of the Council Regulation but is an integral part of the support system established by that regulation.
43. It seems clear that some date had necessarily to be fixed as the deadline in order for the system to be effective. The Council and the Commission have not, however, explained the reasons for the choice of the date of 15 May, nor why the date of 30 May set by Regulation No 3766/91 with regard to the secondary cultivation of soya beans was advanced to 15 May in the contested regulations. It appears that the explanation is as follows. Regulation No 3766/91 had a transitional character. It introduced a support system for oil seeds and applied only for the marketing year 1992 to 1993. At that time, cereals and protein crops were subject to the traditional support system, under which Community aid was proportionate to the quantity produced. Although Regulation No 3766/91 introduced a system of direct payments similar to that subsequently provided for by the contested Council Regulation, it did not incorporate all the elements of the support system established by that regulation. In line with the support system applicable to cereals and protein crops, it allowed aid for the principal as well as for the secondary cultivation. In order to facilitate the granting of direct payments for secondary cultivations it provided for the deadline of 30 May. Since, however, under the contested Council Regulation, a producer may only claim support for one cultivation, the earlier date of 15 May could reasonably be chosen.
44. No explanation of the choice of date is offered in the contested regulations themselves. The eighteenth recital of the preamble to the Council Regulation states as follows:
"... it is necessary to determine certain conditions for applying for compensatory payments and to specify when producers shall be paid".
That statement provides no justification for the requirement laid down in Article 10(2) of the Council Regulation that, in order to be entitled to the compensatory payment for cereals or for protein crops, a producer must have sown the crop and must have lodged an application by 15 May. In the light of the case-law of the Court set out above, however, it is clear that it was not necessary for the Council to include in the preamble specific reasons in order to justify the choice of a certain date since the setting of that date was a detail which fell within the general scheme of the Council Regulation as a whole. Moreover the choice of the date of 15 May could readily be understood given that the basis of the support system established by the Council Regulation was the principle that the compensatory payment may only be paid once a year for a given area; and the reasons for the adoption of that system are made clear in the preamble. Consequently the suggestion that the Council Regulation was not sufficiently reasoned cannot be sustained. Moreover, the date of 15 May applies only as a general rule. In order to prevent that date from giving rise to unfair consequences, Article 12, seventh indent, of the Council Regulation empowers the Commission to change it with regard to areas where exceptional climatic conditions render it inapplicable.
45. The preamble to the Commission Regulation does not provide a justification for requiring the producer to have sown the crop and to have lodged an application by 15 May. That is not to say, however, that it is not sufficiently reasoned. The Commission Regulation implements the Council Regulation. The Court has accepted that the statement of reasons of an implementing regulation may be brief if, read together with the statement of reasons of the parent regulation, it makes sufficiently clear to the interested parties the concern which prompted the enactment of the implementing rules contained in it. (29) It follows that the statement of reasons of the Commission Regulation is supplemented by, and must be read in combination with, the statement of reasons of the Council Regulation.
46. Further, the fifth recital of the preamble to the Commission Regulation states that certain criteria should be common to both the general scheme and to the simplified scheme. That explains why the Commission Regulation fixes the same date as that fixed by the Council Regulation. Moreover, as is the case with the Council Regulation, the date of 15 May fixed by the Commission Regulation applies only as a general rule. Article 2(2) of that regulation allows derogations in the event that climatic conditions prevent the oil seeds from being sown prior to 15 May. Contrary to the contentions of the Greek Government, therefore, the Commission Regulation is sufficiently reasoned.
47. I conclude that the claim of the Greek Government that the Council Regulation and the Commission Regulation are void for lack of reasoning must be rejected.
The principle of equality
48. According to the Greek Government, the requirement that, in order to qualify for the compensatory payment, a producer of soya beans must have sown the crop by 15 May runs counter to the principle of equality, as laid down in particular by Article 40(3) of the Treaty, which states that the common organization of agricultural markets must exclude any discrimination between producers and consumers within the Community.
49. The Greek Government argues that, owing to climatic conditions and conditions pertaining to the soil, the best period for the cultivation of soya beans in Greece is between 20 April and 15 July. The requirement that a producer must have sown the crop by 15 May excludes from the compensatory payment, on the basis of an arbitrary criterion, soya bean producers in Greece and in other areas where the climate and the soil are similar to those of Greece and where as a result the crop is sown after that date.
50. The Commission claims that the requirements of the principle of equality are satisfied by the fact that producers are entitled to a compensatory payment only once a year for a given area. If a producer could receive a compensatory payment for every cultivation which takes place within the same marketing year that would lead to inequality. In regions where the climate and the soil are favourable, a producer could sow crops twice or even three times a year and receive a compensatory payment for each sowing. By contrast, in regions where the climate and the soil are not favourable, a producer could only sow crops once and therefore he could receive only one compensatory payment.
51. In reply, the Greek Government makes it clear that it does not argue that the rule according to which a producer is entitled only to one compensatory payment for a given area in a marketing year is contrary to the principle of equality. Its argument is that those producers who sow the crop after 15 May are excluded from the compensatory payment and therefore are discriminated against vis-à-vis producers who sow the crop before that date.
52. In my view, that argument cannot be accepted for the following reasons.
53. It is true that the setting of a specific date for the whole of the Community may affect different producers in different ways. That does not mean, however, that it is contrary to the principle of equality. The general principle of equality, of which Article 40(3) is a specific expression, precludes comparable situations from being treated differently unless the difference in treatment is objectively justified. It does not preclude the Community legislature from adopting a criterion of general application. The establishment of a common agricultural policy necessitates the adoption of common rules. The fact that the introduction of a measure under the common organization of the market may affect producers in different ways, depending upon the particular nature of their production or on local conditions, cannot be regarded as discrimination prohibited by Article 40(3) of the Treaty if the measure is determined on the basis of objective rules, formulated to meet the needs of the general common organization of the market. (30)
54. Nor does the principle of equality require that a Community measure may never have adverse consequences for a particular producer or a certain group of producers. The Court has held that Community rules may treat a producer adversely in comparison with other producers if that is justified in the interests of both legal certainty and the effectiveness of the rules in question. (31)
55. If the Greek Government considers that the deadline of 15 May infringes the principle of equality, it is incumbent upon it to furnish evidence to substantiate the alleged discrimination. Such evidence as there is in the present case does not support the Government' s submissions.
56. Greek producers are clearly not totally excluded from claiming the compensatory payment. Since the best period for the cultivation of soya beans in Greece is between 20 April and 15 July, Greek producers may claim the compensatory payment, provided that they sow the crop and lodge the application between 20 April and 15 May. The Greek Government has not explained why it is particularly difficult for Greek producers to sow the crop within that period.
57. As we have already seen, the deadline of 15 May is not absolute. Article 12, seventh indent, of the Council Regulation and Article 2(2) of the Commission Regulation provide for derogations in the event that exceptional climatic conditions render the normal dates inapplicable. If a Greek producer of soya beans is unable to sow the crop by 15 May because of exceptional climatic conditions, he may take advantage of those provisions.
58. By a letter of 9 March 1993, annexed to the Commission' s submissions, the Greek Government requested the Commission to allow the lodging of applications for a compensatory payment with regard to producers who sow soya beans as a secondary cultivation until 30 June. However, the Government did not give any reasons justifying its request, despite being invited to do so by the Commission.
59. The Greek Government argues that, since secondary cultivation of soya beans in Greece starts after 15 May, that cultivation is excluded from the compensatory payment. It has not however provided any evidence to show that there is discrimination against Greek producers in that respect vis-à-vis producers from other Member States. The secondary cultivation of crops is not a practice known only in Greece but one which is widespread in the Community. Whereas in Greece secondary cultivation of soya beans covers not more than 2 800 hectares, the Commission points out, without being contradicted by the Greek Government, that in Italy it covers 180 000 hectares.
60. In any event, the exclusion of secondary cultivation from the compensatory payment cannot in itself be considered as an infringement of the principle of equality. Since a producer is entitled to a compensatory payment only once a year for a given area, he cannot receive a compensatory payment both for the principal and for the secondary cultivation. The Greek Government has not established that a Greek producer is unable to complete the sowing for the principal cultivation before 15 May and receive compensatory payment for that cultivation. Nor has it provided any evidence to show that a Greek producer would benefit more if he received a compensatory payment in relation to his secondary cultivation of soya beans than in relation to his principal cultivation.
61. It might be suggested that a Greek producer who sows crops which fall outside the scope of the Council Regulation as his primary cultivation may wish to sow soya beans as a secondary cultivation and that he is not able to do so before 15 May. However, that producer may be able to avail himself of the exceptions provided for in Article 12, seventh indent, of the Council Regulation and in Article 2(2) of the Commission Regulation. In any event, it could well be argued that a producer who sows crops which fall outside the scope of the Council Regulation as a principal cultivation does so at his own risk. He cannot expect to be treated on the same footing with regard to the compensatory payment as a producer who sows crops which fall within the scope of that regulation as a primary cultivation.
62. I conclude that the claim of the Greek Government in so far as it is based on an infringement of the principle of equality must be rejected.
Infringement of Article 39 of the Treaty
63. The Greek Government claims that the Council Regulation and the Commission Regulation infringe Article 39 of the Treaty, which lays down the objectives of the common agricultural policy. It points out that under Article 39(1)(b) one of those objectives is to ensure a fair standard of living for the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture. The Government argues that the deadline of 15 May runs counter to that objective on the ground that producers who sow the crop after 15 May are not entitled to a compensatory payment and as a result suffer a reduction of their income by almost 50 per cent. According to the Government, such a substantial reduction of the income of producers is not justified by the need to pursue the other objectives of the common agricultural policy provided for by Article 39.
64. The Government also refers to Article 39(1)(d), according to which one of the objectives of the common agricultural policy is to assure the availability of supplies. It interprets that provision to mean that, in adopting measures in the field of agriculture, the Community institutions should ensure that Community production in agricultural products is, at least to a certain extent, self-sufficient. It argues that the exclusion of producers who sow the crop after 15 May from the compensatory payment discourages those producers from continuing production and thus contributes to the reduction of Community soya beans production, which is already far from sufficient to cover the needs of the Community. It concludes that the Council Regulation and the Commission Regulation run counter to the objectives laid down in Article 39(1)(b) and Article 39(1)(d) and also to the objective to stabilize agricultural markets provided for by Article 39(1)(c).
65. Furthermore, the Greek Government refers to Article 39(2) which states that, in working out the common agricultural policy, account must be taken of the particular nature of agricultural activity which results from the social structure of agriculture. It argues that, in accordance with that provision, the common agricultural policy should include measures which aim at reducing inequalities between large and small producers. The Greek producers who sow soya seed after 15 May are small producers and their exclusion from the compensatory payment results in the reduction of their income. By contrast, large producers do not suffer such a reduction. It follows, according to the Greek Government, that the support system established by the Council Regulation not only fails to reduce inequalities between small and large producers but leads to their increase.
66. In my view, those arguments cannot be accepted. The Court has consistently held that the Community institutions have a wide discretionary power in regard to the common agricultural policy. (32) They must seek to reconcile any conflicts between the objectives laid down in Article 39 taken individually and, where necessary, allow any one of them temporary priority. (33) However, the institutions must not pursue any one of those objectives in isolation in such a way as to render impossible the realization of the others. (34)
67. The Court has also held that agricultural policy objectives must be conceived in such a manner as to enable the institutions to carry out their duties in the light of developments in agriculture and in the economy as a whole. (35) In adopting measures in the field of agriculture, therefore, the institutions must take into account the prevailing market conditions. They must also take into account the internationalization of the markets and the liberalization of world trade. The ultimate aim of the support system established by the Council Regulation is to ensure better market balances and to approximate Community prices to the prices on the world market. (36) In view of the obligations undertaken by the Community in the framework of the General Agreement on Tariffs and Trade and in view of the fact that producers from third countries may place soya in the Community at lower prices, those objectives cannot be considered as being contrary to the objectives of the common agricultural policy even if they may have the effect of reducing Community production of soya beans. Nor is it correct to say that the support system established by the Council Regulation ignores the interests of producers. It provides for compensatory payments which are calculated in such a way as to ensure, as far as possible, a sufficient income for the producer. In view of the prevailing market conditions which make Community soya production uncompetitive, the Community institutions cannot be required to support that production with the sole purpose of maintaining the income of producers at its existing level.
68. I do not accept the Greek Government' s interpretation of Article 39(1)(d). It is true that one of the objectives of the common agricultural policy is to assure the availability of supplies. However, contrary to what the Government argues, Article 39 does not require that the Community must be self-sufficient.
69. The Government has not established that the deadline of 15 May increases the inequalities between small and large producers contrary to Article 39(2). As already stated, it has not established that Greek producers, who are all small producers, cannot sow the crop before the date of 15 May. Moreover, although it may be true to say that in Greece producers who sow soya beans after 15 May are small producers, that may not be so in other Member States. The support system introduced by the Council Regulation recognizes that large and small producers are not in the same situation and provides for their different treatment. Small producers can apply for the compensatory payment in accordance with the simplified scheme, which is not available to large producers, and under which they have no obligation to set aside part of their land.
70. I conclude that the submissions of the Greek Government concerning the infringement of the objectives of the common agricultural policy must be rejected.
The principle of protection of legitimate expectations
71. The Greek Government argues that the requirement that the producer must have sown the crop by 15 May infringes the principle of protection of legitimate expectations. It points out that from 1974 until the adoption of the Council Regulation a number of Community measures provided financial support for the production of soya beans in the Community irrespective of the time of sowing. It argues that the requirement that the crop must have been sown by 15 May runs counter to the consistent policy which the Community institutions followed for a period of 17 years and that, consequently, it infringes the principle of protection of legitimate expectations.
72. I do not find that argument persuasive. The Court has consistently held that, although the principle of protection of legitimate expectations is one of the fundamental principles of the Community legal order, traders cannot have a legitimate expectation that an existing situation which is capable of being altered by the Community institutions in the exercise of their discretionary power will be maintained. (37) That is particularly so in an area such as the common organization of the markets whose purpose involves constant adjustments to meet changes in the economic situation. (38) Therefore traders cannot claim a vested right to the maintenance of an advantage which they derive from the establishment of the common organization of the markets and which they enjoyed at a given time. (39) It follows that the Community measures which granted financial support for the production of soya beans before the adoption of the Council Regulation cannot give rise to a legitimate expectation that the Community will continue to support that production irrespective of the time of sowing of the crop.
73. As we have seen, Regulation No 3766/91 included a specific provision with regard to the secondary cultivation of soya beans. Article 4(7) stated that producers who intended to plant soya beans as a catch-crop could apply for a direct payment by 30 May.
74. I cannot see, however, how that provision can be of assistance to the Greek Government in the present proceedings. For the reasons which I gave above, it is not possible to claim that Article 4(7) of Regulation No 3766/91 gave rise to a legitimate expectation on the part of soya bean producers that producers who sow the crop after 15 May would be entitled to a compensatory payment under the new support system established by the contested Council Regulation. Moreover, it was clear that the regime introduced by Regulation No 3766/91 was merely transitional. It was to be effective, as the fifth recital of the preamble stated, only "as long as an integrated approach to support for the producers of arable crops as proposed by the Commission is not applied".
75. Furthermore, as the Commission points out, the Council Regulation has neither retroactive effect nor immediate application. It was published in the Official Journal dated 1 July 1992 and came into force on that date. The support system which it introduced applies from the 1993 to 1994 marketing year. Thus Member States and producers were informed of the new support system well before it came into effect.
76. I conclude that the claim of the Greek Government that the Council Regulation and the Commission Regulation infringe the principle of protection of legitimate expectations must fail.
The principle of Community preference
77. The Greek Government claims that the Council Regulation and the Commission Regulation should be annulled on the ground that they are contrary to the principle of Community preference. It states that Community producers of soya beans are at a competitive disadvantage vis-à-vis producers of soya beans from third countries who can place their products on the Community market at lower prices. According to the Greek Government, the Council must provide Community producers with the necessary economic support in order to prevent their income from being reduced, taking into account their competitive position on the market.
78. It is not necessary in my view to determine whether, in invoking the principle of Community preference, the Greek Government seeks to contend that Community producers must be given preference over producers in third countries, or only that Community producers must not be treated less favourably. The essence of the Government' s complaint is that Greek producers are not given sufficient financial compensation for the loss of income which they have suffered. The complaint therefore does not require any direct comparison to be made between their position and that of producers in third countries. Moreover what is in issue in this case is compensation for Community producers rather than comparison between Community products and products of third countries.
79. In any event, if the Greek Government' s argument were to be understood as a submission that Community law requires preference to be given to Community products, that submission seems to me to be questionable. It seems to me that Community preference, although sometimes regarded as a legal principle, is rather a matter of policy. It is true that in an early case, Beus v Hauptzollamt Muenchen, (40) the Court appeared to regard Community preference as "one of the principles of the Treaty". However the Court appears to have extrapolated that principle from the very specific provision of Article 44(2) of the Treaty, which provided that the system of minimum prices, allowed by Article 44(1) during the transitional period, "shall not be applied so as to form an obstacle to the development of a natural preference between Member States". It seems questionable whether that provision can provide a foundation for a general principle of Community preference. Moreover the Court was there considering a complaint, not that that principle had been infringed, but on the contrary that the Community provision in issue unduly favoured the interests of Community producers; and the Court reached the conclusion that "that provision, considered as a whole, indicates a desire to ensure protection for Community producers only within reasonable limits". That judgment suggests that it is not unlawful for the Community legislature, within certain limits, to give preference, as a matter of policy, to Community producers. It does not establish that the Community legislature must give such preference.
80. In subsequent cases, the principle of Community preference seems generally to have been invoked in the particular context of transitional arrangements of various kinds. Thus the principle has been invoked in the context of the introduction of a common organization of the market where, in the process of transition from the system of national markets to a common organization, trade with other Member States might be temporarily disadvantaged compared with trade with third countries. (41) Similarly, in a number of cases (42) the Court has interpreted certain provisions of the Acts of Accession specifically intended to ensure that the principle of Community preference was observed in trade between the Community as originally constituted and the new Member States before the full integration of the latter into the common organization of agricultural markets. (43)
81. It may be only to that limited extent that Community preference can be recognized as a matter of law, even though, as is well known, the structure of most common organizations has in practice advantaged Community products. While the Court has recognized the legitimacy of Community preference as an element in agricultural policy, it has not treated Community preference as a legal requirement the violation of which would result in the invalidity of the legislation. It has merely recognized that in certain circumstances it is not unlawful to give preference to Community production. (44)
82. In my view, therefore, neither Article 39 of the Treaty nor any other principle or provision of Community law embodies any general requirement that preference be given to Community producers. Moreover, any such general requirement would be difficult to reconcile with the aim set out in the preamble to the Treaty and in Article 110 of contributing to the progressive abolition of restrictions on international trade. In any event, Article 39 cannot be read as making Community preference mandatory in circumstances where that would be inconsistent with the international obligations of the Community. Those obligations may in some circumstances make Community preference, not merely not mandatory, but unlawful. Whether that would be so in the present case it is not necessary to decide here. It is sufficient to point out that Community law does not require the Community legislature to give preference to Community products.
Excess of powers
83. The Greek Government claims that Article 4 of the Commission Regulation, which provides that one plot of land may not be the subject of more than one application for a compensatory payment in the same marketing year, is invalid. It argues that Article 4 is not based on any specific provision of the Council Regulation and that, in adopting it, the Commission exceeded the power conferred upon it by that regulation. The Government also refers to the Commission' s proposal which led to the adoption of the Council Regulation. (45) That proposal included in the sixteenth recital of the preamble to the proposed regulation a statement which was not included in the final preamble to the Council Regulation. According to that statement "no aid should be granted for a second crop following or preceding the main one". The Greek Government claims that Article 4 of the Commission Regulation introduces a principle similar to that which was contained in the Commission' s proposal and which was excluded from the final text of the Council Regulation.
84. The arguments of the Greek Government are fallacious. As we have already seen, the support system established by the Council Regulation is based on the premise that the compensatory payment may only be paid once a year for a given area. That is stated expressly in the seventeenth recital of the preamble to that regulation and it is an underlying principle of its provisions. It is not correct to say therefore that Article 4 of the Commission Regulation, which gives effect to the same principle, falls outside the scope of the Council Regulation. Nor is it correct to say that Article 4 reintroduces the principle envisaged in the Commission' s proposal that no Community aid should be granted for a secondary cultivation. Article 4 provides that the compensatory payment may only be paid once a year for a given area but it does not exclude a secondary cultivation from the compensatory payment. In principle, a producer is free to apply for the compensatory payment in connection with his secondary rather than in connection with his principal cultivation.
85. I conclude therefore that the argument of the Greek Government according to which Article 4 of the Commission Regulation is invalid must be rejected.
Conclusion
86. I am therefore of the opinion that:
In Case C-353/92
(1) the application should be dismissed;
(2) the Greek Government should be ordered to pay the costs of the Council; the Commission, as intervener, should bear its own costs.
In Case C-385/92
(1) the application should be dismissed;
(2) the Greek Government should be ordered to pay the costs of the Commission.
(*) Original language: English.
(1) - OJ 1992 L 181, p. 12.
(2) - OJ 1992 L 221, p. 22.
(3) - See Annex I to Regulation No 1765/92.
(4) - OJ 1991 L 356, p. 17, see below, paragraphs 26 et seq.
(5) - Regulation No 1765/92, Article 2(2), first subparagraph.
(6) - Article 2(2), second subparagraph.
(7) - Article 2(3).
(8) - Article 2(5).
(9) - Article 8(2).
(10) - Article 2(5).
(11) - Article 8(3).
(12) - See Articles 4 and 5.
(13) - See text of Article 10, above at paragraph 9.
(14) - See Article 11(3) and Article 11(6).
(15) - Article 10(1).
(16) - OJ 1974 L 201, p. 5.
(17) - OJ 1979 L 190, p. 8.
(18) - OJ 1985 L 151, p. 15. See also Council Regulation (EEC) No 2194/85 adopting general rules concerning special measures for soya beans, OJ 1985 L 204, p. 1.
(19) - See above, paragraph 3.
(20) - See Commission, The development and future of the common agricultural policy , EC Bulletin, Supplement No 5 of 1991, p. 9.
(21) - Ibid.
(22) - Op. cit., p. 12.
(23) - See the fifth recital of the preamble to Regulation No 3766/91, below paragraph 74 and see also The development and future of the common agricultural policy , cited in note 20, p. 26.
(24) - OJ 1994 L 30, p. 2.
(25) - OJ 1994 L 30, p. 7. See also Commission Regulation (EC) No 243/94 amending the contested Commission Regulation, OJ 1994 L 30, p. 41.
(26) - See Council Decision 93/355/EEC, OJ 1993 L 147, p. 25.
(27) - Case 108/81 Amylum v Council [1982] ECR 3107, paragraph 19 of the judgment; Case C-350/88 Delacre and Others v Commission [1990] ECR I-395, paragraphs 15-16.
(28) - Case 166/78 Italy v Council [1979] ECR 2575, paragraph 8 of the judgment; Joined Cases 63/90 and 67/90 Portugal and Spain v Council [1992] ECR I-5073, paragraph 16.
(29) - Case 230/78 Eridania v Minister for Agriculture and Forestry [1979] ECR 2749, paragraphs 15-16 of the judgment.
(30) - See Case 179/84 Bozzetti v Invernizzi [1985] ECR 2301, paragraph 34 of the judgment.
(31) - Case 84/87 Erpelding v Secrétaire d' État à l' Agriculture et à la Viticulture [1988] ECR 2647, paragraph 30 of the judgment. See also Case C-177/90 Kuehn v Landwirtschaftskammer Weser-Ems [1992] ECR I-35, paragraph 18.
(32) - Joined Cases 279, 280, 285 and 286/84 Rau v Commission [1987] ECR 1069, paragraph 34 of the judgment; Case C-350/88 Delacre and Others v Commission, cited in note 27, paragraph 32.
(33) - Case 5/73 Balkan-Import-Export v Hauptzollamt Berlin-Packhof [1973] ECR 1091, paragraph 24 of the judgment; Case 203/86 Spain v Council [1988] ECR 4563, paragraph 10.
(34) - Joined Cases 197 to 200, 243, 245 and 247/80 Ludwigshafener Walzmuehle v Council and Commission [1981] ECR 3211, paragraph 41 of the judgment.
(35) - Case 68/86 United Kingdom v Council [1988] ECR 855, paragraph 10 of the judgment; Case C-331/88 Fedesa and Others [1990] ECR I-4023, paragraph 26.
(36) - See Regulation No 1765/92, preamble, second recital, above paragraph 4.
(37) - Case C-350/88 Delacre and Others v Commission, cited in note 27, paragraph 33 of the judgment; Case 245/81 Edeka v Germany [1982] ECR 2745, paragraph 27.
(38) - Delacre, cited in note 27; Case 84/78 Tomadini v Amministrazione delle Finanze dello Stato [1979] ECR 1801, paragraph 22 of the judgment.
(39) - Delacre, cited in note 27, paragraph 34 of the judgment; Case 230/78 Eridania v Minister for Agriculture and Forestry, cited in note 29, paragraph 22.
(40) - Case 5/67 [1968] ECR 83 at 98.
(41) - Case 106/81 Kind v EEC [1982] ECR 2885.
(42) - See e.g. Case 6/78 Union Française de Céréales v Hauptzollamt Hamburg-Jonas [1978] ECR 1675; Case 119/86 Spain v Council and Commission [1987] ECR 4121.
(43) - See Article 55(6) of the Act concerning the conditions of accession of the Kingdom of Denmark, Ireland, the Kingdom of Norway and the United Kingdom to the EEC and to the Euratom (OJ, English Sp. Ed., 27 March 1972) and Article 85(4) of the Act concerning the conditions of accession of the Kingdom of Spain and the Portuguese Republic to the European Communities (OJ 1985 L 302, p. 23).
(44) - See e.g. Case 55/75 Balkan-Import Export v Hauptzollamt Berlin-Packhof [1976] ECR 19, paragraph 15 of the judgment; and Case 58/86 Coopérative Agricole d' Approvisionnement des Avirons v Receveur des Douanes [1987] ECR 1525, paragraph 9.
(45) - COM(91) 379 final, OJ 1991 C 303, p. 1.
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