Opinion of the Advocate-General
I - Introduction
1. These proceedings for a preliminary ruling raise several questions concerning the validity of Council Regulation (EEC) No 525/93 of 8 March 1993 establishing the value of the final regional reference amounts for producers of soya beans, rape seed, colza seed and sunflower seed for the 1992/93 marketing year.
II - Legal framework
2. Council Regulation (EEC) No 3766/91 of 12 December 1991 establishing a support system for producers of soya beans, rape seed, colza seed and sunflower seed (hereinafter the basic regulation) introduced a support system, based on the principle of direct compensatory payments to producers of a fixed sum per hectare which varied according to the average yields of the different production regions of the Community.
3. Article 3(1) of the basic regulation provides:
A projected reference price for oilseeds is set at ECU 163 per tonne.
This projected reference price represents an estimate by the Commission of the expected short-term reference price for oilseeds on a stabilised world market.
4. Article 3(2) provides:
A Community reference amount for oilseeds is set at ECU 384 per hectare.
This relates to a theoretical value which represents the projected average amount of the compensatory payment per hectare within the Community.
5. The amount of the compensatory payment to be paid to producers is established in two stages.
6. Firstly, in accordance with Article 3(3) of the basic regulation, the Commission fixes, for each production region identified pursuant to Article 2 of that regulation a projected regional reference amount reflecting the ratio between the average Community cereal or oilseed yield and the average yield of the region in question.
7. Then, before 30 January in each marketing year, the Commission calculates a final regional reference amount based on the observed reference price for oilseeds, in accordance with Article 3(4) of the basic regulation. When making this calculation, the observed reference price is substituted for the projected reference price; no account is to be taken of price variations less than 8% of the projected reference price.
8. It follows that, if the observed reference price under Article 3(4) of the basic regulation differs by more than 8% from the projected reference price, the final regional reference amount is to be calculated by adjusting the projected regional reference price in proportion to the variation in question. Pursuant to Article 3(6), the publication of the amounts in the Official Journal must also be accompanied by a succinct explanation of the calculations made. In addition, in accordance with Article 6(2) of Regulation No 3766/91 the final regional reference price is to be reduced if the area planted with oilseeds exceeds the maximum guaranteed area fixed in Article 6(1).
9. According to Article 4(1) of the basic regulation only producers established in the Community who sow and intend to harvest the products listed in Article 1 of that regulation are to be entitled to apply for a regionalised system of direct payments. Under Article 4(2), in order to qualify for payment, a producer must, by the date specified for the region in question, have sown the seed and have lodged an application. Article 4(3) states that applications can only be made in respect of arable land cultivated during the period from 1989/90 to 1990/91.
10. On 5 March 1993 the Commission adopted Regulation (EEC) No 515/93 establishing the value of the projected regional reference amounts for the producers of soya beans, rape seed, colza seed and sunflower seed in the 1992/93 marketing year. The projected regional reference amount for Bavaria was fixed at ECU 517.42 (DEM 1 218.10) per hectare.
11. On 8 March 1993 the Commission adopted Regulation (EEC) No 525/93 establishing the value of the final regional reference amounts for soya beans, rape seed, colza seed and sunflower seed for the 1992/93 marketing year. Annex II to that regulation shows that the final regional reference amount for Bavaria was also fixed at ECU 517.42 (DEM 1 218.10 ) per hectare.
12. Annex I to Regulation No 523/93 provides the following explanation of the calculation of the final regional reference amounts:
An observed reference price which represents the average price recorded on the world market during the 1992/93 market year has been determined separately for each oilseed.
These observed reference prices have been calculated using quotations and executed transaction prices, expressed on a Rotterdam equivalent basis, for bulk consignments of oilseeds delivered in representative port areas. The prices and quotations were recorded during the period July 1992 to January 1993. Wherever possible, account was taken of both the current month and the term delivery prices of the transactions and quotations.
The values of the observed reference prices are such that no adjustment of the projected regional reference amounts, pursuant to the provisions of Article 3(4) of Regulation No 3766/91, is necessary.
The latest estimates of the areas of eligible oilseed sowings have been calculated.
The sizes of the areas calculated are such that no adjustment of the projected regional reference amounts pursuant to the provisions of Article 6(2) of Regulation No 3766/91 is necessary.
For the 1992/93 marketing year, the final regional reference amounts are confirmed as being of the same value as the projected regional reference amounts.
III - Facts and main proceedings
13. On 29 May 1992 Martin Weber GdBR, a firm constituted under German law, Martin and Maria Weber being the sole partners in it, applied to the Amt für Landwirtschaft und Bodenkultur (Office for Agriculture and Arable Farming, the Office) Regensburg for direct payments to oilseed producers for the 1992 harvest in respect of an area of 6.37 hectares on which rape seed was cultivated. By notice of 23 September 1992 the Office agreed to make an advance payment (50% of the projected regional reference amount) of DEM 3 879.65. The calculation was based on the amount of land specified in the application at a rate of DEM 609.05 per hectare for Bavaria. The firm lodged an objection contesting the assessment, claiming that the losses resulting from the fall in prices were not covered by the advance payment. By notice of 28 April 1993 the Office awarded a total support of DEM 7 759.29 (final reference amount per hectare for Bavaria: DEM 1 218.10), at the same time taking into account the advance payment already made. An objection was lodged against that notice as well, with a request that a ruling should not be given on it until the Court of Justice of the European Communities had delivered judgment in the action which was to be brought before it.
14. By application dated 5 May 1993 Martin Weber GdBR brought an action before the Court of Justice, which was then assigned to the Court of First Instance, for annulment of Commission Regulation No 525/93 on the ground that the final regional reference price had been arbitrarily fixed. The Court of First Instance dismissed the action as inadmissible. In the view of the Court of First Instance, the action was not inadmissible on the ground that the partnership lacked legal personality under German law because, in the particular circumstances, the action had been brought by Martin and Maria Weber. The applicants were not, however, individually concerned by the regulation at issue.
15. By Notice of 4 December 1997, the Regierung der Oberpfalz (Upper Palatine government) dismissed the objection. The decision based on Commission Regulation No 525/93 of 8 March 1993 was ultimately definitive and lawful. The actual calculation and the Commission's reasons why it was not necessary to adapt the projected regional reference amounts pursuant to Article 6(2) of the basic regulation could not be reconstructed and could not therefore be reviewed. The submission that Regulation No 525/93 infringed the duty of the EU institutions under Article 253 of the EC Treaty to state the reasons on which their measures are based could not be denied. However, the agriculture administration was bound by the EU rules.
16. In their action dated 9 January 1998 the applicants appealed against that notice, which was served on them on 17 December 1997, and requested that the Court annul the notice of the Office of 28 April 1993 in the form of the notice of the Upper Palatine Government of 4 December 1997 and order the defendant to adopt a new decision on the applicants' application of 24 May 1992, in accordance with Article 4(2) of the basic regulation for direct payment of a support system for producers of soya beans, rape seed, colza seed and sunflower seed, taking into account the interpretation of the Court of Justice. The applicants also submitted that the matter should be referred to the Court of Justice pursuant to Article 234 of the EC Treaty.
IV - Questions referred for a preliminary ruling and procedure
17. By decision of 30 August 2000 the Bayerisches Verwaltungsgericht Regensburg referred the following questions to the Court of Justice for a preliminary ruling:
(1) Was the Commission, when establishing the final regional reference amount, entitled, notwithstanding the wording of Annex I to Regulation No 525/93, to leave out of account reference prices from months in the period between 1 July 1992 and January 1993, to include in its calculation reference prices from months after that period, and to replace missing information on reference prices by an estimate?
(2) Was it permissible to increase the prices established for Hamburg and "Fac Atlant" by the addition of notional freight costs of ECU 3.8 per tonne?
(3) When determining the final reference price was it permissible to use as a basis purely arithmetically determined average prices, without taking into account the different quantities marketed in the individual months of the calculation period?
(4) If questions 1, 2 and 3 are answered in the affirmative, is Regulation No 525/93 defective as regards its criteria for calculating the final regional reference amount in that it fails to state reasons within the meaning of Article 253 (previously Article 190) of the EC Treaty?
(5) Would that failure to state reasons be so material that it would lead to the nullity, in whole or in part, of the regulation?
18. In these proceedings, only the Commission has submitted written observations under Article 20 of the Statute of the Court of Justice. There was no oral procedure.
V - The first, second and third questions
19. The first three questions essentially concern abusive or arbitrary calculation of the reference price.
A - Arguments of the Commission
20. The Commission first of all states that abuse, should be understood to mean misuse of powers within the meaning of Article 230 of the EC Treaty. The claim that there has been a misuse of powers has, however, not been raised by the applicants in the present proceedings nor is there any evidence for such misuse of powers.
21. On the question of arbitrariness, the Commission states that neither the basic regulation nor any other applicable regulation in the 1992/93 marketing year contained binding requirements for the calculation of the reference price. The Commission was therefore basically free to choose the method of calculation, whilst taking into account the general principles of Community law. Pursuant to the case-law of the Court of Justice, the Community legislature enjoys a wide discretion in the area of the common agricultural policy.
22. The Commission based its calculation of the final reference price on the world market prices in representative port areas of the Community. By basing the projected reference price on the short-term equilibrium price on a stabilised world market, the comparability is guaranteed.
23. With particular reference to the first question, the Commission submits that it has not exceeded its discretion. It rightly took into account the estimated forward prices for February and March 1993 because of the large variations at the time. Certain other prices for soya beans and rape seed were therefore not taken into account because they were not representative. Furthermore, the taking into account of those items would have led to a variation of less than 8%.
24. With regard to the second question, the Commission states that an increase in the prices communicated by Member States so as to include freight costs was necessary.
25. With reference to the third question, the Commission contends that, when it calculated the final reference price, it was right not to weight the prices in accordance with quantities actually marketed for any given month, because the necessary data for this was missing. The Commission believes however that in so doing, it did not manifestly exceed its discretion.
B - Assessment
26. On the question whether the Commission was basically entitled, when establishing the final regional reference amount, to take into account, leave out of account or estimate certain reference prices and, when determining the final reference price, to apply arithmetically determined average prices without taking into account the different quantities marketed in the individual months of the calculation period, it is necessary to refer firstly to the discretion which the Commission enjoys, particularly in the area of the common agricultural policy.
27. According to settled case-law of the Court, the Commission would have acted unlawfully only if it had clearly misjudged the factual and legal position or had manifestly (and gravely) exceeded the limits of its discretion.
28. In this context, it is necessary to refer to a fundamental principle of the reference price system, namely the establishment (first) of a projected reference amount and (second) of a final reference amount. Under this system of fixing reference prices it is necessary to have regard to the comparability of these two amounts. It is therefore only proper that the Commission should apply the same criteria to both amounts.
29. Since the projected reference price is the short-term equilibrium price on a stabilised world market, it is in keeping with the reference price system at issue that this should also apply to the final reference price. Owing to the unusual situation in the 1992/93 marketing year and in particular to the instability of the market, it is therefore understandable that the Commission based its calculation not only on the spot price but also on the more stable forward prices to allow for a realistic comparison of prices.
30. In view of the freedom which the relevant regulation gives to the Commission with regard to the method of calculation, it would seem that the calculation method (and in particular the prices) applied by the Commission in the above circumstances is prima facie a reasonable solution, or in any case does not seem to be manifestly inappropriate within the meaning of the case-law of the Court.
31. Furthermore, the applicants in the main proceedings have not shown that the other prices which could have been taken into consideration in the calculation (for example, wholesale prices, free at oil mill or the CIF future terms) were more appropriate. Moreover, this is a question of complex facts, in the assessment of which, according to the case-law of the Court, the Commission enjoys a wide discretion.
32. The question of the permissibility of increasing the prices established for Hamburg and Fac Atlant to include notional freight charges is also to be considered in the context of the specific situation in the 1992/93 marketing year, during which the export of oilseed from the EC was unusually high in comparison with other marketing years.
33. The addition of freight charges was therefore necessary, since the Commission also received information on wholesale prices from Member States. In order to adjust these prices to the Rotterdam world market reference prices, they had to be increased by transport and insurance costs to Rotterdam.
VI - On the fourth and fifth questions
34. The fourth and fifth questions are concerned with whether the Commission complied with its obligation under Article 253 of the EC Treaty to provide a statement of reasons.
A - Arguments of the Commission
35. With reference to the question whether it has given adequate reasons in Regulation No 525/93, the Commission submits that it has complied with the requirements prescribed in the established case-law of the Court of Justice. The method of calculation for the final reference price is explained in the first two paragraphs of Annex I. Moreover, in the first recital reference is made to the basic regulation's principal provision on the calculation of final reference prices. Further details were unnecessary.
B - Assessment
36. In accordance with settled case-law of the Court, the duty to state reasons under Article 253 of the EC Treaty requires that a legal measure (and therefore also the contested regulation) must clearly state the essential factual and legal considerations of the Community institution concerned, in order to allow the persons concerned to ascertain the reasons for the measure and to enable the Court to exercise its supervisory jurisdiction.
37. According to this case-law there is however no requirement that the legal measure should go into every relevant point of fact and law. It is sufficient that the contested measure discloses the essential objective pursued by the Commission and the criteria for adopting the measure. This can also take place by a reference being made to the basic regulation.
38. In addition, the contested legal measure is a regulation, and so a measure of general application, for which, in principle, the obligation to provide a statement of reasons is less strict.
39. In the present case the requirements prescribed by the case-law of the Court have been adhered to. The contested regulation serves to establish the amounts governed by the basic regulation and thus forms part of the framework of the legislation as a whole. In addition, Annex I to the regulation at issue provides an explanation of the calculation.
40. Moreover, the reference information necessary to understand the Commission's calculation was clearly available to the persons concerned. Since Article 3(6) of the basic regulation requires only a succinct explanation, the Commission was entitled to restrict the information given to specific details.
41. Having regard to the answer I propose to the Court, it is not necessary to consider any further the question of the invalidity, in whole or in part, of the regulation.
VII - Conclusion
42. In view of the foregoing considerations, I propose that the Court should answer the questions referred to it for a preliminary ruling as follows:
Examination of the questions referred to the Court, has disclosed no factor of such a kind as to affect the validity of Regulation (EEC) No 525/93 establishing the value of the final regional reference amounts for producers of soya beans, rape seed, colza seed and sunflower seed for the 1992/93 marketing year.
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