Opinion of the Advocate-General
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My Lords,
1. In these related cases, the Pretura Circondariale di Perugia and the Pretura Circondariale di Caserta have referred questions on the validity of certain regulations concerning the common organization of the market in raw tobacco.
2. In particular, in Case C-133/93, the Pretura Circondariale di Perugia has requested a preliminary ruling on the validity of Council Regulation (EEC) No 1114/88 of 25 April 1988 (1) amending Regulation (EEC) No 727/70 on the common organization of the market in raw tobacco and on the validity of the regulations adopted in order to implement that regulation.
3. In Case C-300/93 and Case C-362/93, the Pretura Circondariale di Caserta has requested a preliminary ruling on the validity of Council Regulation (EEC) No 1738/91 of 13 June 1991 (2) fixing, for the 1991 harvest, the norm and intervention prices and the premiums granted to purchasers of leaf tobacco, the derived intervention prices for baled tobacco, the reference qualities, the production areas and the guaranteed maximum quantities and amending Regulation (EEC) No 1331/90. In Case C-362/93, the referring court has also requested a preliminary ruling on the validity of the regulations adopted in order to implement Regulation No 1738/91.
4. By order of 4 February 1994, the President of the Court decided to join these cases for the purposes of the oral procedure and the judgment.
5. I shall first examine the Community legislation which is relevant to these proceedings. I shall then consider the issues arising from the questions referred.
The legislation
6. A common organization of the market in raw tobacco was first established by Council Regulation (EEC) No 727/70, (3) which provided for a support system based on norm and intervention prices. The Council was responsible for fixing each year a norm price and an intervention price for Community leaf tobacco for the crop of the following calendar year. The intervention price was fixed initially at 90% of the norm price and represented the minimum price at which producers disposed of their products. Producers could either sell their products to the intervention agencies, which were under an obligation to purchase at the intervention price, or sell on the market. In order to encourage purchases by users directly from producers at a production price as near as possible to the norm price, Article 3(1) provided that, subject to certain conditions, a premium would be granted to persons who purchased leaf tobacco directly from Community producers and who undertook the first processing and market preparation of tobacco. Article 3(2) extended that premium to individual producers or associations of producers who subjected their own leaf tobacco to first processing and market preparation.
7. With a view to controlling the increase in Community production, Regulation No 1114/88 provided for the introduction of maximum guaranteed quantities. It added a fifth paragraph to Article 4 of Regulation No 727/70 which stated as follows:
"Each year ... the Council shall fix a maximum guaranteed quantity, in particular in the light of market requirements and the socio-economic and agricultural conditions of the regions concerned, for each variety or group of varieties of Community-produced tobacco for which prices and premiums are fixed. The overall maximum quantity for the Community shall be fixed at 385 000 tonnes of leaf tobacco for each of the 1988, 1989 and 1990 harvests.
Without prejudice to Articles 12a and 13, for each 1% by which the maximum guaranteed quantity is exceeded per variety or group of varieties, the intervention prices and the premiums concerned shall suffer a reduction of 1%. A correction corresponding to the reduction of the premium shall be applied to the norm price of the harvest in question.
The reduction referred to in the second subparagraph shall not exceed 5% for the 1988 harvest and 15% for the 1989 and 1990 harvests.
For the purposes of applying this paragraph, the Commission shall establish before 31 July whether production exceeds the maximum guaranteed quantity for a variety or group of varieties.
... ."
8. The first subparagraph of Article 4(5) was amended by Council Regulation (EEC) No 1251/89 (4) which, so as to enable producers to plan their production, provided that the Council should each year fix the maximum guaranteed quantity for the harvest of the following year. Article 4(5) was further amended by Council Regulation (EEC) No 1329/90 (5) which fixed the overall maximum guaranteed quantity at 385 000 tonnes for each of the 1988 to 1993 harvests; it also provided that the reductions referred to in the third subparagraph of Article 4(5) must not exceed 15% for the 1989 to 1993 harvests. (6)
9. In accordance with the fourth subparagraph of Article 4(5), the Commission by Regulations (EEC) Nos 2158/89, (7) 2046/90, (8) 2267/91 (9) and 2178/92 (10) established the quantities actually produced and determined the prices and premiums payable for the 1988, 1989, 1990 and 1991 harvests respectively.
10. Council Regulation (EEC) No 2075/92 of 30 June 1992 (11) repealed Regulation No 727/70 and introduced a new common organization of the market in raw tobacco with effect from the 1993 harvest. The new common organization of the market differs substantially from the previous one. The preamble to Regulation No 2075/92 states, in the third recital, that the present situation on the tobacco market calls for a substantial overhaul of the Community arrangements, while ensuring the continuation of tobacco growing by the traditional producers; it also refers to the need to limit production in line with the requirements of the market and the demands of the Community budget. Article 1 states that the common organization of the market shall comprise, inter alia, measures to orientate and limit production.
11. Article 8 fixes a maximum global guarantee threshold for the Community and provides that, every year, the Council must fix a specific guarantee threshold for each group of varieties. In order to ensure observance of the guarantee thresholds, Article 9 provides for a system of processing quotas for the harvests of 1993 to 1997. For each harvest, the Council must allocate among the producer Member States the quantities available for each group of varieties. In general, Member States have two options. On the basis of the quantities available to them, they may distribute processing quotas among "first processors". Alternatively, subject to certain conditions being fulfilled, they may distribute quotas directly to producers.
12. By Regulation (EEC) No 3477/92, the Commission laid down detailed rules for the application of the raw tobacco quota system for the 1993 and 1994 harvests. (12)
Case C-133/93
13. Mr Crispoltoni is a tobacco planter at Lerchi in the province of Perugia. He delivered to the Fattoria Autonoma Tabacchi di Città di Castello ("the Fattoria"), a professional association to which he belongs and which carries out the first processing and market preparation of leaf tobacco, a certain quantity of leaf tobacco of the "Bright" variety harvested in 1991. He received, by way of advance payment and subject to the lodging of a security, the premium laid down in Article 3(2) of Regulation No 727/70. Following the finding by the Commission that the maximum guaranteed quantity for tobacco of the "Bright" variety for the 1991 harvest had been exceeded, (13) that premium was reduced by 15%. By a letter dated 14 December 1992, the Azienda di Stato per gli Interventi sul Mercato Agricolo ("AIMA"), the Italian intervention agency, demanded reimbursement corresponding to the 15% reduction of premiums from the Fattoria which passed that demand to its members, including Mr Crispoltoni. By a letter dated 18 January 1993, the Fattoria specified the amount due from Mr Crispoltoni at LIT 4 400 000.
14. In the main proceedings, Mr Crispoltoni disputes the demand for reimbursement that he received from the Fattoria on the ground that Regulation No 1114/88 ("the Regulation") is invalid. As a result, the referring court has requested a preliminary ruling on the validity of that regulation "and the regulations adopted in order to implement it".
15. In the order for reference, the referring court expresses doubts with regard to the validity of the Regulation and the regulations adopted for its implementation. It questions whether those regulations are appropriate in order to attain the objectives which they seek to pursue and raises the issue whether they should be declared invalid on the ground that they are vitiated by a misuse of powers.
16. Before dealing with the substance of the case, it is necessary to examine a preliminary objection raised by the Council.
17. The order for reference gives little information on the facts of the case. The Council claims that that runs counter to the principle of judicial cooperation established by Article 177. It refers to the judgment of the Court in Telemarsicabruzzo (14) and argues that the Court should decline to answer the question referred.
18. As I stated in my recent Opinion in Vaneetveld, (15) it is helpful, and in some cases necessary, for the national court to set out succinctly the factual background on the basis of which the questions referred have arisen. That is not to say, however, that an order for reference which provides little or no information on the facts of the case should necessarily be rejected. Provided that the questions referred are not hypothetical (16) and that the preliminary reference procedure is not used in an abusive manner, (17) in deciding whether to answer the questions referred, the Court is guided primarily by a functional criterion, that is to say, whether it can provide a useful answer to the national court.
19. In Telemarsicabruzzo, (18) the Court held that the need to arrive at an interpretation of Community law which is useful for the national court requires that court to define the factual and legislative context of the questions, or at least to explain the factual hypotheses on which they are based. In Vaneetveld the Court held, however, that that requirement is less pressing where the questions are of such a nature as to enable the Court to give a useful reply even where the national court has not given an exhaustive description of the legal and factual situation. (19) In that case, the Court answered the questions referred on the ground that the case-file forwarded by the national court and the submissions of the parties to the main proceedings gave the Court enough information to enable it to interpret the rules of Community law in question in respect of the situation which was the subject-matter of the main proceedings.
20. In my view, similar considerations apply in the present case. The order for reference defines the legal background to the case. The essential facts, which are not disputed, emerge from the submissions to the Court of Mr Crispoltoni and of the Italian Government and the Commission. Unlike the situation in Telemarsicabruzzo and in Monin, (20) in this case the issue is a straightforward one pertaining to the validity of Community measures and it is not difficult to see the relevance of the question referred to the main proceedings. Also, at least in part, the legal and factual background to the case is known to the Court from a previous reference made by the same court concerning the same producer, which led to the judgment of the Court in the previous Crispoltoni case, (21) as is pointed out in the present order for reference. Nor can the present case be compared with Meilicke (22) where it appeared from the order for reference that the questions referred had a hypothetical character.
21. Considerations of procedural economy also support the view that the Court should answer the question referred in this case. If the Court declined to answer it on the ground that the order for reference provides little information on the facts of the case, it is probable that a new reference would be made. That would lead to more delay, would increase costs and would run counter to the objectives of Article 177.
22. I turn therefore to examine the question referred.
23. Mr Crispoltoni and the Greek Government claim that the Regulation is invalid on the ground that it is vitiated by a misuse of powers. The Greek Government also claims that the Regulation should be annulled on the ground that it runs counter to the principle of equality and the principle of protection of legitimate expectations. The Italian Government claims that the Regulation infringes the principle of proportionality. The Council and the Commission dispute those arguments.
24. I will examine first the allegation that the Regulation is vitiated by a misuse of powers. I will then examine the allegations that it infringes the principle of proportionality and the principle of equality. I will examine last the argument that it runs counter to the principle of protection of legitimate expectations.
The allegation of a misuse of powers
25. Mr Crispoltoni states that he does not challenge the underlying objective of the Regulation, which is to control Community production in tobacco. He states that a responsible producer cannot but share the view that production of tobacco should be reduced. He claims, however, that the measures adopted are ineffective and unsuitable to achieve that objective.
26. He points out that, under the system introduced by the Regulation, if the maximum guaranteed quantity for a certain variety of tobacco is exceeded that has as a result a reduction in the prices and the premiums which affects all producers of that variety including those who are not responsible for the excess production. In order to control "any increase in production" as stated in the preamble to the Regulation, (23) it is not sufficient to fix a maximum guaranteed quantity and penalize indiscriminately all producers for the excess production. The fixing of maximum guaranteed quantities must be accompanied by measures such as those laid down in Regulation No 2075/92 providing for the allocation by the Member States of those quantities to processing undertakings or to producers. Mr Crispoltoni concludes that the system established by the Regulation is unsuitable to achieve its objectives because it is incomplete.
27. The Greek Government also claims that the system of maximum guaranteed quantities is vitiated by a misuse of powers. It refers to Article 39(1)(b) of the Treaty which states that one of the objectives of the common agricultural policy is to ensure a fair standard of living for the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture. It also refers to Article 40(3), second paragraph, which states that the common organization shall be limited to pursuit of the objectives set out in Article 39 and shall exclude any discrimination between producers or consumers within the Community.
28. The argument of the Greek Government, as I understand it, is that the Regulation infringes those provisions. The failure of the Regulation to provide for the allocation of individual quotas to producers makes it impossible to guarantee a fair standard of living for producers and leads to a reduction of their income.
29. The Court has consistently held that a measure may amount to a misuse of powers only if it appears, on the basis of objective, relevant and consistent factors, to have been taken with the exclusive purpose, or in any event the main purpose, of achieving an end other than that stated or of evading a procedure specifically prescribed by the Treaty for dealing with the issue in question. (24) In order for an act to be annulled on the grounds of a misuse of powers, therefore, it must be proved that it was adopted in order to achieve a purpose other than that for which it was intended.
30. Mr Crispoltoni argues that a measure is vitiated by a misuse of powers not only where it pursues a purpose foreign to its objectives but also where it is patently unsuitable to achieve those objectives.
31. In my view, it is better to make a distinction between a misuse of powers and a breach of the principle of proportionality. In order to establish that an act is vitiated by a misuse of powers, the applicant must prove that the institution adopted it in order to pursue a purpose other than that which it is lawfully entitled to pursue. It follows that the allegation of a misuse of powers involves an inquiry as to the motives of the institution which adopted the act in question. (25)
32. By contrast, the principle of proportionality requires the application of an objective test. In order to establish whether a provision of Community law is consonant with the principle of proportionality, it is necessary to establish whether the means it employs to achieve the aim correspond to the importance of that aim and whether they are necessary for its achievement. (26)
33. It is true, as Mr Crispoltoni points out, that if a measure is patently unsuited to the objective which the competent institution seeks to pursue that may affect its legality. (27) That is not to say, however, that in such a case the measure will necessarily be vitiated by a misuse of powers. If a measure is patently unsuitable to achieve its objectives, that may well provide a strong indication that the institution adopted it in order to attain an objective other than that which it was entitled to pursue. As a general rule, however, where the means used are patently unsuitable to achieve the desired aim that would lead to a breach of the principle of proportionality.
34. According to its preamble, the Regulation pursues a twofold objective. It seeks to curb any increase in the tobacco production of the Community and at the same time to discourage the growing of varieties which are difficult to dispose of. (28) The preamble also refers to the need to "continue to implement a policy aimed at encouraging the most sought-after varieties and to take account of specific socio-economic and regional features of tobacco production". (29)
35. No argument has been submitted in this case to show that the system of maximum guaranteed quantities introduced by the Regulation seeks to attain objectives other than those stated in its preamble. The argument of the Greek Government is essentially that the Regulation infringes Article 39(1)(b) of the Treaty.
36. That argument cannot be accepted. It is clear that a support system which seeks to control Community production does not necessarily run counter to the objectives of the Treaty. Measures may be necessary to limit surplus production, and measures may legitimately be taken to limit the quantities of products which benefit from Community support.
37. The Greek Government claims that the system of maximum guaranteed quantities introduced by the Regulation leads effectively to a reduction in the income of producers. The Court has held, however, that the Community institutions have a wide discretionary power in regard to the common agricultural policy. (30) 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. (31) The market in tobacco is characterized by over-production. Measures designed to control production, and therefore to bring the market back into balance, not only serve the objective of stabilizing the market and that of ensuring the rational development of agricultural production, which according to Article 39 are among the objectives of the common agricultural policy, but ultimately serve the interests of all producers. It is notable that, as we have seen, Mr Crispoltoni states that a responsible producer cannot but share the view that production of tobacco should be reduced.
38. In view of the state of the market, if the Council took no measures to control production with the sole objective of maintaining the income of producers at its existing level, it would risk pursuing only one of the objectives of the common agricultural policy in isolation in such a way as to render impossible the realization of the others. According to the case-law of the Court, that runs counter to Article 39. (32)
39. The arguments of the Greek Government are all the more difficult to accept seen in the light of the recent reform of the common agricultural policy. Traditionally, financial support to producers was linked to the volume of production. That had undesirable consequences: it stimulated output beyond the market' s absorption capacity thus leading to a building up of stocks; it encouraged the intensification of production, which had adverse consequences for the environment; and it led to a substantial increase in Community expenditure. By contrast, the purchasing power of agricultural income improved very little over the period 1975 to 1989. In view of those developments, the Community institutions decided to reform the common agricultural policy, a new key objective being to control production. (33) The system of maximum guaranteed quantities is linked to those developments.
40. It is notable that Community expenditure to subsidize tobacco growing and first processing has increased dramatically since the adoption of Regulation 727/70, so much so that a recent report of the Court of Auditors refers to tobacco as being by far the Community' s most expensive crop: the expenditure in 1993 amounted to no less than ECU 1 274 million. (34)
41. It is not correct to say therefore that the Regulation runs counter to Article 39.
42. With regard to the submissions made by Mr Crispoltoni, it is clear from what I have said above that, if they are accepted, that would not lead to the invalidity of the Regulation on the ground that it is vitiated by a misuse of powers, but on the ground that it runs counter to the principle of proportionality. For that reason, I shall examine those arguments together with the arguments submitted by the Italian Government.
The principle of proportionality
43. Mr Crispoltoni and the Italian Government claim that the Regulation is invalid on the ground that the system of maximum guaranteed quantities is unsuitable to achieve its objectives. The Italian Government also argues that it runs counter to the principle of proportionality because it penalizes indiscriminately all producers for the excess production irrespective of whether, and if so the degree by which, they contribute to the maximum guaranteed quantity being exceeded. It does not enable the reduction of premiums and prices to be adjusted taking into consideration the individual circumstances of each producer.
44. The Italian Government points out that Community production in tobacco increased between 1988 and 1991, leading to an increase in Community expenditure. In its view, the increase in production occurred precisely because of the failure of the Regulation to provide for the allocation of individual quotas to processing undertakings and producers. The Government and Mr Crispoltoni claim that the adoption of Regulation No 2075/92 confirms by implication the unsuitability of the system of maximum guaranteed quantities to attain the objective of controlling production.
45. The validity of a measure must be determined taking into account the circumstances prevailing at the time of its adoption. The Court has held that the validity of a Community measure cannot depend on "retrospective considerations of its efficacy". (35) Where the Community legislature is obliged, in connection with the adoption of rules, to assess their future effects, which cannot be accurately foreseen, its assessment is open to criticism only if it appears manifestly incorrect in the light of the information available to it at the time of the adoption of the rules in question. (36)
46. The Court has also held that, in view of the political responsibilities and the broad discretion which the Community legislature has in matters concerning the common agricultural policy, the legality of a measure adopted in that sphere can be affected only if it is manifestly inappropriate having regard to the objective which the competent institution is seeking to pursue. (37)
47. In my view, it is not correct to say that the system of maximum guaranteed quantities was manifestly inappropriate to achieve its objectives.
48. It is true that that system did not have the desired results in that it failed to control production sufficiently. The reform effected by Regulation No 2075/92 became necessary precisely for that reason. It is not correct to say, however, that the system introduced by the Regulation proved totally ineffective. A comparison between the maximum guaranteed quantities set for each variety of tobacco for the 1989 to the 1991 harvests and the quantities actually produced in those harvests shows that for the majority of the varieties the maximum guaranteed quantities were not exceeded. If the system of maximum guaranteed quantities had not been introduced, production might well have increased even more.
49. In any event, at the time when the Council decided to introduce the system of maximum guaranteed quantities, it could not reasonably be foreseen that it would prove inadequate. The results of the first two years during which the system was in force did not provide conclusive evidence to that effect. With regard to tobacco of the "Bright" variety in particular, which is produced by Mr Crispoltoni, the maximum guaranteed quantity set for the 1989 harvest was not exceeded. That quantity was 44 250 tonnes whereas the quantity actually produced was 36 685 tonnes. (38)
50. By contrast, the maximum guaranteed quantities set for the 1990 and for the 1991 harvests were exceeded. The maximum guaranteed quantity set for the 1990 harvest was 46 750 tonnes whereas the actual quantity produced was 54 023 tonnes. There was therefore an excess of 15.6%. (39) The maximum guaranteed quantity set for the 1991 harvest was 46 750 tonnes whereas the actual quantity produced was 60 094 tonnes. There was therefore an excess of 28.54%. (40)
51. The excess of the maximum guaranteed quantity for the 1990 harvest led to a reduction of the prices and premiums by the maximum rate permissible, that is to say, 15%. The Council was entitled to wait for another year with a view to seeing whether that reduction would have an effect on production. Once the quantities actually produced in the 1991 harvest were established in 1992, and it was clear that the system of maximum guaranteed quantities had not succeeded in controlling production sufficiently, the Council promptly adopted Regulation No 2075/92.
52. The fact that, after the Regulation was in force for some years, it became clear that it was not sufficient to curb the increase in production does not mean that that regulation must be declared invalid. In adopting the Regulation, the Council had to make an assessment as to its possible impact on production and no evidence has been adduced to show that its assessment was manifestly incorrect.
53. The Commission points out that, when the Council decided to introduce measures with a view to controlling production, there were good reasons which made the choice of the system of maximum guaranteed quantities an attractive one. In its view, that system is less restrictive for the individual producer than a system of individual quotas. Mr Crispoltoni and the Italian Government dispute that view. They claim that the system of maximum guaranteed quantities has an arbitrary character in that the amount of the premium to which a producer is entitled depends on whether other producers have led to the maximum guaranteed quantity being exceeded.
54. As a general rule, the system of maximum guaranteed quantities provided for by the Regulation is less restrictive for the individual producer than the system of individual quotas introduced subsequently by Regulation No 2075/92. Under the first system, although the producer runs the risk of suffering a proportionate reduction in prices and premiums in case the maximum guaranteed quantity set for a variety is exceeded, he is none the less certain that he can receive support for all his produce, albeit at a reduced rate. He is also certain that, irrespective of how much the maximum guaranteed quantity is exceeded, the reduction of premiums and prices will not exceed a certain threshold. That threshold was set at 15% for the 1989 to 1991 harvests. By contrast, under the system introduced by Regulation No 2075/92 a producer receives no support for production in excess of his individual quota.
55. Although the possibility cannot be excluded that certain producers would benefit more if a system of individual quotas had been introduced than under the system of maximum guaranteed quantities that is not a ground for invalidating the Regulation.
56. Contrary to what Mr Crispoltoni and the Italian Government suggest, under the system of maximum guaranteed quantities it is very difficult to identify those producers who contribute to the maximum guaranteed quantity being exceeded. That is because it is not possible to know with certainty what the individual quota of a given producer would have been if the maximum guaranteed quantity fixed for a specific variety had been allocated to producers. It is wrong to assume that in a system of individual quotas the maximum guaranteed quantity for a given variety will necessarily be allocated equally among all producers of that variety. A Member State might legitimately favour certain production regions or certain classes of producers.
57. The Italian Government claims, however, that the system of maximum guaranteed quantities suffers from an inherent flaw. It encourages producers to be careless because they know that the consequences of excess production will not affect them individually but will be spread among all producers. In answer to that argument, it is sufficient to point out that, in introducing a measure for the benefit of producers, the Community legislature can expect them to act prudently so as to lead to its success. The failure of producers to do so cannot be a ground for invalidating that measure.
58. As we have already seen, the system of maximum guaranteed quantities is in general less restrictive than the system of individual quotas introduced subsequently. By adopting the Regulation, therefore, the Council sought to satisfy the requirements of the principle of proportionality, which requires that where there is a choice between several appropriate measures recourse must be had to the least onerous. (41) The Council also sought to comply with Article 39(2)(b) of the Treaty which requires that, in working out the common agricultural policy, account must be taken of the need to effect the appropriate adjustments by degrees.
59. Both Mr Crispoltoni and the Italian Government cite the judgments in Werner Faust (42) and Wuensche. (43) I cannot see, however, how those judgments could support the claim that the Regulation is invalid.
60. In those cases the Court was concerned with the validity of Commission Regulation (EEC) No 3429/80, Article 1 of which provided for the levy of an additional amount at a fixed rate where preserved mushrooms were released into free circulation in the Community in excess of the quantities laid down in its provisions. The Court held that Article 1 infringed the principle of proportionality on the ground that it did not enable the additional amount to be set at different levels according to the quality of the goods and the circumstances in which they were imported.
61. There are two material differences between those cases, on the one hand, and the present case, on the other hand. Werner Faust and Wuensche concerned the imposition of a charge which the Court found was effectively an economic penalty on traders. That is not the case in the present proceedings. In my view, there is a clear difference between the imposition of a flat-rate economic penalty and a sharing in the reduction of subsidies once the maximum guaranteed quantity has been exceeded. The second difference is that, in Werner Faust and in Wuensche, the additional amount had been introduced pursuant to a regulation of the Council which provided for the application of protective measures only to such an extent as was strictly necessary. The Court applied the principle of proportionality as expressed specifically in the enabling regulation. (44) That is not so in the present case. For the reasons which I gave above, the imposition of a flat-rate reduction in the prices and premiums where the maximum guaranteed quantity is exceeded cannot be regarded as manifestly inappropriate having regard to the objectives which the Regulation sought to pursue.
62. By contrast, the view that the Regulation is valid is supported by the judgment of the Court in Zardi. (45) In that case, the Court was concerned with Article 4b of Council Regulation (EEC) No 2727/75, which provided for a levy to be collected from cereal producers for all quantities of cereal placed on the market. The levy would be reimbursed in full only if production in the marketing year in question did not exceed the maximum guaranteed quantity. It was argued that it was not necessary to require payment of the levy as soon as the cereals were placed on the market since other, less restrictive, means existed. The Court held, however, that the collection of the additional levy when the cereals were placed on the market was likely, by reducing the price paid to producers, to persuade them not to increase production during the marketing year and that the Community legislature had not committed any manifest error of assessment in rejecting other options. (46)
The principle of non-discrimination
63. The Greek Government claims that the system of maximum guaranteed quantities set up by the Regulation leads to discrimination between producers and infringes the principle of equality laid down in Article 40(3) of the Treaty.
64. The argument of the Greek Government is closely connected with the argument of the Italian Government examined above. Both the Italian Government and the Greek Government point to the fact that an excess of the maximum guaranteed quantity laid down for a certain variety results in a proportionate flat-rate reduction in the prices and premiums with regard to that variety. Whereas the Italian Government considers that that runs counter to the principle of proportionality, the Greek Government considers that it results in discriminatory treatment in that it extends the adverse consequences of an excess in production to all producers irrespective of whether, and if so the degree to which, they contribute to that excess.
65. Article 40(3) is a specific expression of the general principle of non-discrimination. Discrimination occurs not only when comparable situations are treated differently but also when different situations are treated in the same way unless such treatment is objectively justified. (47) I do not agree, however, that in this case the principle of non-discrimination has been infringed.
66. According to the case-law of the Court, 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 if the measure is determined on the basis of objective rules, formulated to meet the needs of the general common organization of the market. (48)
67. In SITPA, (49) the Court examined an argument similar to that under consideration. In that case, the Court was concerned with the validity of Council Regulation (EEC) No 989/84 introducing a system of guarantee thresholds for certain processed fruit and vegetable products. That regulation fixed a guarantee threshold for each marketing year corresponding to a certain quantity of processed tomato products and provided that, if that threshold were exceeded, the aid payable to producers would be reduced for the following marketing year, depending on the extent to which the threshold had been exceeded. It was argued that the reduction in aid made by the Commission, following a finding that the threshold had been exceeded, infringed the prohibition of discrimination. It applied uniformly throughout the Community so that French processors who were not responsible for the fact that the thresholds were exceeded were treated in the same way as producers in other Member States who were so responsible. In response to that argument, the Court held: (50)
"... in a common organization of markets with no system of national quotas all Community producers, regardless of the Member State in which they are based, must together, in an egalitarian manner, bear the consequences of the decisions which the Community institutions are led to adopt, in the exercise of their powers, in order to respond to the risk of an imbalance which may arise in the market between production and market outlets."
68. The Court took a similar view in Eridania. (51) An argument submitted in that case was that, under the quota system for sugar set up by Council Regulation (EEC) No 1785/81, Italian producers were required to assist in the financing of surpluses for which they were not responsible and that the burden imposed upon them was contrary to Article 39(1)(d) of the Treaty. The Court held, however, that that view was incompatible with the very principle of a common market, where the undertakings or the Member State responsible for any surplus production could not be identified.
69. It follows from those judgments that a flat-rate reduction in premiums and prices which affects all producers, in cases where the maximum guaranteed quantity is exceeded, does not infringe the principle of non-discrimination.
70. The system of maximum guaranteed quantities is based on general and objective criteria. Under Article 4(5) of the Regulation, in fixing the maximum guaranteed quantity for each variety, the Council must take into account the market requirements and the specific conditions of different regions. (52) Also, with a view to taking into account differences in quality in a variety of tobacco depending on the characteristics of the soil and the climate, Regulation No 1251/89 provided that separate maximum guaranteed quantities might be fixed for specific production areas.
71. I conclude that the claim that the Regulation infringes the principle of non-discrimination should fail.
The principle of protection of legitimate expectations
72. The Greek Government claims that the failure of the Regulation to provide for the allocation of individual quotas to producers infringes the principle of protection of legitimate expectations because it makes it impossible for a producer to plan his production. It runs counter to the ultimate objectives of the common organization of the market in tobacco which, under Regulation No 727/70, are to safeguard a fair income for producers and to increase that income.
73. As we have already seen, the Regulation does not run counter to the objectives of the common agricultural policy laid down in Article 39. Nor is it correct to say that it infringes the principle of protection of legitimate expectations.
74. 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. (53) 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. (54) 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. (55) It follows that, even if the application of the system of maximum guaranteed quantities led to a reduction in the income of producers, that did not infringe the principle of protection of legitimate expectations.
75. Nor has that principle been infringed by the failure to provide for the allocation of individual quotas to producers. The system of maximum guaranteed quantities has an inherent degree of uncertainty in that producers do not know in advance the exact amount of the prices and premiums which they will receive, that amount being dependent on whether, and to what extent, the maximum guaranteed quantity has been exceeded. That uncertainty, however, is a normal commercial risk which producers can be expected to bear. The requirement to protect legitimate expectations is satisfied by the fact that the maximum guaranteed quantity fixed for a given variety is known to producers in advance. It is also satisfied by the fact that the producers know that they will receive support for all their production and that, irrespective of the amount by which the maximum guaranteed quantity is exceeded, the reduction in prices and premiums cannot exceed an upper threshold fixed in advance. The argument of the Greek Government should therefore be rejected.
Cases C-300/93 and C-362/93
76. It will be remembered that in these cases the Pretura Circondariale di Caserta has requested a preliminary ruling on the validity of Regulation No 1738/91.
77. Mr Natale and Mr Pontillo are growers of tobacco of the "Burley" variety in the province of Caserta. They sold their production from the 1991 harvest to Donatab Srl, an undertaking which carries out the first processing and market preparation of tobacco. They received, by way of advance payment and subject to the lodging of a security, the premium laid down in Article 3 of Regulation No 727/70. Following the finding by the Commission that the maximum guaranteed quantity for tobacco of the "Burley" variety for the 1991 harvest had been exceeded, (56) the prices and premiums were reduced by 15%. Mr Natale and Mr Pontillo received from Donatab Srl a demand for reimbursement corresponding to the reduction of premiums.
78. In the main proceedings, they dispute the reduction of premiums on the ground that Regulation No 1738/91 is invalid. It is as a result of that argument that the Pretura has made these references.
79. By Regulation No 1738/91, the Council fixed for the 1991 harvest the norm and intervention prices and the premiums granted to purchasers of leaf tobacco, the derived intervention prices for baled tobacco, the reference qualities, the production areas and the guaranteed maximum quantities and amended Council Regulation (EEC) No 1331/90. (57) In Case C-362/93 the referring court requests a ruling also on the validity of the regulations implementing Regulation No 1738/91. The national court is presumably referring to Regulation No 2178/92 by which the Commission established the quantities actually produced and determined the prices and premiums payable for the 1991 harvest. (58)
80. In the orders for reference, the referring court questions the validity of Regulation No 1738/91 on the ground that it infringes the principle of protection of legitimate expectations. The contested regulation is dated 13 June 1991 and was published in the Official Journal dated 26 June 1991. The referring court states that it applied retroactively in that it fixed the maximum guaranteed quantity for tobacco of the "Burley" variety for the 1991 harvest at a time when the producers of that variety had already planted the tobacco and had already concluded contracts with first processing undertakings and registered them with AIMA.
81. If the maximum guaranteed quantity for the 1991 harvest had been fixed retroactively, i.e. after producers had to make their decisions regarding production for that year, that would indeed run counter to the principle of protection of legitimate expectations. In the previous Crispoltoni case (59) the Court examined the validity of Regulation No 1114/88 and of Council Regulation (EEC) No 2268/88 by which the Council fixed, for the 1988 harvest, the maximum guaranteed quantities. Both regulations were published after farmers had made their decisions for the 1988 harvest. The Court held that they were invalid in so far as they laid down a maximum guaranteed quantity for tobacco of the "Bright" variety harvested in 1988. It came to that conclusion on the ground that those regulations had retroactive effect, that that effect was not justified by the purpose to be achieved and that the legitimate expectations of the economic operators concerned had been infringed. (60)
82. In the present cases, however, the doubts expressed by the referring court as to the validity of Regulation No 1738/91 are based on an erroneous assumption. As the Council and the Commission point out, the maximum guaranteed quantity for the variety "Burley I", which is in issue in the main proceedings, harvested in 1991 was fixed for the first time not by Regulation No 1738/91 but by Regulation No 1331/90 which was published in the Official Journal on 23 May 1990, that is to say, long before producers had to make their decisions for the 1991 harvest. That regulation fixed the maximum guaranteed quantity for the "Burley I" variety at 46 750 tonnes. (61)
83. It is true that Regulation No 1738/91 amended Regulation No 1331/90 by increasing the maximum guaranteed quantities for the 1991 harvest for certain varieties. However, that increase was made in the interests of producers, in view of the unification of Germany. (62) With regard to the variety "Burley I", Regulation No 1738/91 did not affect the maximum guaranteed quantity set by Regulation No 1331/90.
84. It is clear, therefore, that Regulation No 1738/91 cannot be declared invalid on the grounds referred to in the orders for reference. In their submissions to this Court, however, Mr Natale and Mr Pontillo dispute the validity of the contested regulation on the ground that that regulation fixed retroactively for the 1991 harvest the amount of the premiums granted to purchasers.
85. They point out that the prices and premiums fixed by Regulation No 1738/91 for the 1991 harvest are lower than those which applied by virtue of Regulation No 1331/90 for the 1990 harvest and they claim that that reduction of prices and premiums brought about a deterioration in their legal situation. They argue that the reduction could not have been foreseen either at the time when producers had to make their decisions regarding production for the 1991 harvest, that is to say, in November 1990, or at the time when the tobacco had to be sown in seed beds, that is to say, in February 1991. They conclude that, at the time when they had to make a decision whether to cultivate tobacco of the "Burley" variety for the 1991 harvest, the information which they possessed encouraged them to continue to cultivate that variety. They conclude that Regulation No 1738/91 runs counter to the principle of legitimate expectations.
86. At the hearing, the Council and the Commission argued that that issue should not be discussed since it is not raised by the national court in the orders for reference. The question arises therefore whether the Court should examine the validity of the contested regulation in so far as it fixes the prices and premiums for the 1991 harvest.
87. On a reference for a preliminary ruling the Court will sometimes, with a view to assisting the national court, rule on questions formulated differently from those put by the national court. For the same purpose, the Court may consider provisions of Community law to which the national court has not referred in its question. (63) The Court has gone as far as to provide a ruling on the validity of a Community provision where the national court posed only a question of interpretation: see for example Schwarze v Einfuhr- und Vorratsstelle fuer Getreide. (64)
88. In my view, however, in the circumstances of this case, it would not be appropriate for the Court to examine the issue whether the fixing of the prices and premiums by the contested regulation runs counter to the principle of protection of legitimate expectations. As already stated, that issue has not been referred by the national court but has been raised only by the applicants in the main proceedings in their submissions before this Court.
89. However, it is the national court alone which can determine the questions to be submitted to this Court, the parties to the main proceedings being unable to change the scope of those questions (65) or to require the national court to refer a specific question. (66) Article 177 establishes direct cooperation between this Court and the national courts by way of a non-contentious procedure excluding any initiative of the parties to the national proceedings who are merely invited to be heard in the course of that procedure. (67) If the Court examined the issue raised by Mr Natale and Mr Pontillo, that would run counter to the above principles. More importantly, it would run counter to the rights of defence. The information contained in an order for reference not only enables the Court to answer the questions referred but also enables the Governments of the Member States and the Community institutions to make submissions to the Court in accordance with Article 20 of the Statute of the Court. Article 20 provides for the submission of written observations with no opportunity for written reply. In Holdijk, (68) the Court stated that it has a duty to ensure that the opportunity to submit observations provided for by Article 20 is safeguarded, in view of the fact that only the decision making the reference is notified to the interested parties.
90. The opportunity for Member States and the Community institutions to make written submissions must be safeguarded in particular where the Court is asked to rule on the validity of a Community act. In such a case, save perhaps in a wholly exceptional case where a Community act is patently invalid, it would not be appropriate to deny to the institution which is the author of the act the right to make submissions. It follows that the Court should only examine the issues which expressly or by implication arise from the order for reference and on which the institution in question could be expected to comment.
91. Mr Natale and Mr Pontillo do not merely challenge the validity of the contested regulation on different grounds from those referred to by the national court. They dispute the validity of a different aspect of the contested regulation from that to which the question of the national court relates. Unlike other cases where the Court examined issues not expressly raised by the order for reference, in this case no ambiguity arises as to the meaning or the precise scope of the question posed by the referring court. The present case can be distinguished from cases such as Schwarze: there, the Court examined the validity of the measure in question on the ground that, although the question referred enquired as to the interpretation of a Community measure, it was clear from the order for reference and the dispute in the main action that the real purpose of the questions submitted was to obtain a ruling on validity. In this case, there is no indication that the referring court intended to request a ruling with regard to the fixing by the contested regulations of the prices and premiums.
92. In any event, I do not accept the argument that the fixing of prices and premiums by Regulation No 1738/91 for the 1991 harvest runs counter to the legitimate expectations of the producers concerned.
93. First, it is clear that, under the system of maximum guaranteed quantities, the exact amount of the prices and premiums which producers receive with regard to a certain variety is not known until after the decision to cultivate that variety has been made. That is so because the amount of the prices and premiums depends on whether the maximum guaranteed quantity has been exceeded and if so by how much. Therefore, an element of uncertainty is inherent in the support system established by Regulation No 1114/88.
94. Secondly, although it is true that the prices and premiums fixed for the 1991 harvest were lower than those fixed for the 1990 harvest, the amount of prices and premiums payable is fixed by the Council on a yearly basis and variations may occur to the benefit as well as to the detriment of producers. The prices and premiums payable for the 1990 harvest were higher than those payable for the 1989 harvest. The premium for tobacco of the "Burley I" variety for the 1989 harvest was fixed at ECU 1 653 per kg (69) whereas for the 1990 harvest it was fixed at ECU 2 013 per kg. (70) Nor was the reduction for the 1991 harvest so large as to justify a claim that it runs counter to the principle of protection of legitimate expectations. With regard to tobacco of the "Burley I" variety, the premium for the 1991 harvest was fixed at ECU 1 748 per kg. (71) Those variations constitute normal commercial risks which are inherent in a system introduced for the benefit of producers and which producers can reasonably be expected to bear. It is not correct to say that a prudent and informed producer was unable to foresee them.
Conclusion
95. I am accordingly of the opinion that:
In Case C-133/93 the question put by the Pretura Circondariale di Perugia should be answered as follows:
Consideration of the matters examined has disclosed no factor of such a kind as to affect the validity of Council Regulation (EEC) No 1114/88 and the regulations adopted for its implementation.
In Cases C-300/93 and C-362/93 the questions put by the Pretura Circondariale di Caserta should be answered as follows:
Consideration of the matters examined has disclosed no factor of such a kind as to affect the validity of Council Regulation (EEC) No 1738/91 and the regulation adopted for its implementation.
(*) Original language: English.
(1) - OJ 1988 L 110, p. 35.
(2) - OJ 1991 L 163, p. 13.
(3) - OJ, English Special Edition, 1970 (I), p. 206.
(4) - OJ 1989 L 129, p. 16.
(5) - OJ 1990 L 132, p. 25.
(6) - Subsequently, Council Regulation (EEC) No 1737/91 (OJ 1991 L 163, p. 11) fixed the overall maximum guaranteed quantity at 390 000 tonnes of leaf tobacco for each of the 1991 to 1993 harvests. Council Regulation (EEC) No 860/92 (OJ 1992 L 91, p. 1) provided that that reduction must not exceed 23 per cent for the 1992 harvest.
(7) - OJ 1989 L 207, p. 15.
(8) - OJ 1990 L 187, p. 23.
(9) - OJ 1991 L 208, p. 26.
(10) - OJ 1992 L 217, p. 75.
(11) - OJ 1992 L 215, p. 70.
(12) - OJ 1992 L 351, p. 11.
(13) - See Regulation No 2178/92, above, note 10.
(14) - Joined Cases C-320 to C-322/90 Telemarsicabruzzo and Others [1993] ECR I-393.
(15) - Case C-316/93 Vaneetveld v SA Le Foyer, Opinion of 27 January 1994, paragraphs 6 to 11 of the Opinion.
(16) - See Case C-343/90 Lourenço Dias [1992] ECR I-4673, paragraphs 17 to 18 of the judgment.
(17) - See Case 104/79 Foglia v Novello [1980] ECR 745.
(18) - Telemarsicabruzzo, cited in note , paragraph 6 of the judgment. See also Case C-157/92 Banchero [1993] ECR I-1085; Case C-386/92 Monin Automobiles v French State [1993] ECR I-2049.
(19) - Judgment of 3 March 1994, paragraph 13.
(20) - Monin, cited in note .
(21) - Case C-368/89 [1991] ECR I-3695. See below, paragraph .
(22) - Case C-83/91 Meilicke [1992] ECR I-4871.
(23) - See Regulation No 1114/88, preamble, first recital. See below, paragraph .
(24) - Case C-331/88 Fedesa and Others [1990] ECR I-4023, paragraph 24 of the judgment; Case 69/83 Lux v Court of Auditors [1984] ECR 2447, paragraph 30; Case C-323/88 Sermes [1990] ECR I-3027, paragraph 33.
(25) - See Hartley, The Foundations of European Community Law, Second ed., pp. 415-417.
(26) - See e.g. Case 66/82 Fromançais v FORMA [1983] ECR 395, paragraph 8 of the judgment; Case 15/83 Denkavit Nederland v Hoofdproduktschap voor Akkerbouwprodukten [1984] ECR 2171, paragraph 25.
(27) - Case 138/78 Stoelting v Hauptzollamt Hamburg-Jonas [1979] ECR 713, paragraph 7 of the judgment.
(28) - Regulation No 1114/88, preamble, first recital.
(29) - Op. cit., second recital.
(30) - See e.g. Joined Cases 279, 280, 285 and 286/84 Rau v Commission [1987] ECR 1069, paragraph 34 of the judgment.
(31) - 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.
(32) - Joined Cases 197 to 200, 243, 245 and 247/80 Ludwigshafener Walzmuehle v Council and Commission [1981] ECR 3211, paragraph 41 of the judgment.
(33) - See Commission, The development and future of the common agricultural policy, COM(91) 258, EC Bulletin, Supplement 5 of 1991, pp. 9-12 and especially for the sector of tobacco pp. 27-28.
(34) - See Special Report No 8/93 concerning the common organization of the market in raw tobacco, OJ 1994 C 65, paragraph 1.1.
(35) - Case 40/72 Schroeder v Germany [1973] ECR 125, paragraph 14 of the judgment. See also Joined Cases 9 and 11/71 Cie d' Approvisionnement v Commission [1972] ECR 391, paragraph 39.
(36) - Joined Cases C-267/88 to C-285/88 Wuidart and Others [1990] ECR I-435.
(37) - Case 265/87 Schraeder [1989] ECR 2237, paragraphs 21 and 22 of the judgment; Wuidart, cited in note , paragraph 14; Case C-331/88 Fedesa, cited in note , paragraph 14.
(38) - See Regulation No 2046/90, cited in note , Annex I.
(39) - See Regulation No 2267/91, cited in note , Annex I.
(40) - See Regulation No 2178/92, cited in note , Annex I.
(41) - See e.g. Fedesa, cited in note , paragraph 13 of the judgment.
(42) - Case C-24/90 [1991] ECR I-4905.
(43) - Case C-25/90 [1991] ECR I-4939.
(44) - See Werner Faust, cited in note , paragraphs 19 and 29 of the judgment; Wuensche, cited in note , paragraphs 20 and 30.
(45) - Case C-8/89 Zardi [1990] ECR I-2515.
(46) - Paragraph 13 of the judgment.
(47) - See e.g. Case 106/83 Sermide v Cassa Conguaglio Zucchero [1984] ECR 4209, paragraph 28 of the judgment.
(48) - Case 179/84 Bozzetti v Invernizzi [1985] ECR 2301, paragraph 34 of the judgment.
(49) - Case C-27/90 [1991] ECR I-133.
(50) - Paragraph 20 of the judgment.
(51) - Case 250/84 Eridania v Cassa Conguaglio Zucchero [1986] ECR 117, paragraph 32 of the judgment.
(52) - See Article 4(5), above, paragraph 7.
(53) - Case C-350/88 Delacre and Others v Commission [1990] ECR I-395, paragraph 33 of the judgment, Case 245/81 Edeka v Germany [1982] ECR 2745, paragraph 27.
(54) - Delacre, op. cit., Case 84/78 Tomadini v Amministrazione delle Finanze dello Stato [1979] ECR 1801, paragraph 22 of the judgment.
(55) - Delacre, op. cit., paragraph 34 of the judgment, Case 230/78 Eridania v Minister of Agriculture and Forestry [1979] ECR 2749.
(56) - See Regulation No 2178/92, cited in note .
(57) - OJ 1990 L 132, p. 28.
(58) - Cited in note .
(59) - Case C-368/89, cited above in note .
(60) - The Council gave effect to the judgment of the Court by adopting Regulations (EEC) Nos 1570/92 (OJ 1992 L 166, p. 6) and 1571/92 (OJ 1992 L 166, p. 7).
(61) - See Regulation No 1331/90, cited in note , Article 3(3) and Annex V.
(62) - See Regulation No 1738/91, cited in note , preamble, sixth recital.
(63) - Case C-241/89 SARPP [1990] I-4695, paragraph 8 of the judgment, Case C-315/92 Verband Sozialer Wettbewerb eV v Clinique Laboratories SNC and Estée Lauder Cosmetics GmbH, judgment of 2 February 1994, paragraph 7.
(64) - Case 16/65 [1965] ECR 877.
(65) - Case 44/65 Hessische Knappschaft v Singer [1965] ECR 965, p. 970; Joined Cases C-134 and C-135/91 Kerafina-Keramische und Finanz-Holding et Vioktimatiki [1992] ECR I-5699, paragraph 16 of the judgment.
(66) - See Case 283/81 CILFIT v Ministry of Health [1982] ECR 3415, paragraph 9 of the judgment.
(67) - See e.g. Hessische Knappschaft v Singer, cited in note , p. 971.
(68) - Joined Cases 141 to 143/81 [1982] ECR 1299, paragraph 6 of the judgment.
(69) - See Council Regulation (EEC) No 1252/89, OJ 1989 L 129, p. 17, Annex IV.
(70) - See Regulation No 1331/90, cited in note , Annex IV.
(71) - Regulation No 1738/91, cited in note , Annex IV.
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