Judgment of the Court of First Instance (Third Chamber) of 17 March 2005. Agraz, SA and Others v Commission of the European Communities. Agriculture

Case T-285/03

Agraz, SA and Others

v

Commission of the European Communities

(Agriculture – Common organisation of the markets in processed fruit and vegetable products – Production aid for processed tomato products – Method of calculating the amount – 2000/01 marketing year)

Judgment of the Court of First Instance (Third Chamber), 17 March 2005 

Summary of the Judgment

1.     Agriculture – Common agricultural policy – Discretionary power of the Community institutions – Limits – Observance of the procedural guarantees conferred by the Community legal order in administrative procedures – Taking into account, in fixing production aid, the price of the raw material in one of the main producing and exporting countries – None – Illegality capable of engaging the non-contractual liability of the Community

(Council Regulation No 2201/96, Art. 4(1) and (2); Council Regulation No 1519/2000)

2.     Non-contractual liability – Conditions – Actual and certain damage caused by an unlawful act – Burden of proof

(Arts 235 EC and 288, second para., EC)

1.     In matters relating to the common agricultural policy, the Commission enjoys a discretion, while being required, by virtue of the principles of a duty of care and of sound administration, to gather the factual elements necessary for the exercise of its discretion. Where a Community institution has a wide discretion, observance of the procedural guarantees conferred by the Community legal order is of even more fundamental importance. Those guarantees include, in particular, the obligation for the competent institution to examine carefully and impartially all the relevant elements of the individual case.

Concerning Regulation No 1519/2000 setting for the 2000/01 marketing year the minimum price and the amount of production aid for processed tomato products, the Commission, by taking no account whatsoever of the price of the raw material in one of the main producing and exporting third countries, namely China, failed to comply with the mandatory conditions laid down in Article 4(1) and (2) of Regulation No 2201/96 on the common organisation of the markets in processed fruit and vegetable products, which establishes the data which the Commission must take into account when fixing the amount of production aid.

Such an illegality, which constitutes a sufficiently serious breach of a rule intended to confer rights on individuals, is capable of engaging the non-contractual liability of the Community owing to its harmful consequences.

(see paras 49, 61)

2.     In the context of the non-contractual liability of the Community, the damage for which compensation is sought must be actual and certain. It is for the applicant to produce to the Court the evidence to establish the fact and the extent of such damage. Accordingly, if the damage calculated by the applicants is not certain, the action for damages must be dismissed.

(see paras 70-71, 77)

JUDGMENT OF THE COURT OF FIRST INSTANCE (Third Chamber)

17 March 2005 (*)

(Agriculture – Common organisation of the markets in processed fruit and vegetable products – Production aid for processed tomato products – Method of calculating the amount – 2000/01 marketing year)

In Case T‑285/03,

Agraz, SA, established in Madrid (Spain),

Agrícola Conservera de Malpica, SA, established in Toledo (Spain),

Agridoro Soc. coop. rl, established in Pontenura (Italy),

Alfonso Sellitto SpA, established in Mercato S. Severino (Italy),

Alimentos Españoles, Alsat, SL, established in Don Benito, Badajoz (Spain),

AR Industrie Alimentari SpA, established in Angri (Italy),

Argo Food – Packaging & Innovation Co. SA, established in Serres (Greece),

Asteris Industrial Commercial SA, established in Athens (Greece),

Attianese Srl, established in Nocera Superiore (Italy),

Audecoop distillerie Arzens – Techniques séparatives (AUDIA), established in Montreal (France),

Benincasa Srl, established in Angri,

Boschi Luigi & Figli SpA, established in Fontanellato (Italy),

CAS SpA, established in Castagnaro (Italy),

Calispa SpA, established in Castel San Giorgio (Italy),

Campil – Agro Industrial do Campo do Tejo, Lda, established in Cartaxo (Portugal),

Campoverde Srl, established in Carinola (Italy),

Carlo Manzella & C. Sas, established in Castel San Giovanni (Italy),

Carmine Tagliamonte & C. Srl, established in Sant’Egidio del Monte Albino (Italy),

Carnes y Conservas Españolas, SA, established in Mérida (Spain),

Cbcotti Srl, established in Nocera Inferiore (Italy),

Cirio del Monte Italia SpA, established in Rome (Italy),

Consorzio Ortofrutticoli Trasformati Polesano (Cotrapo) Soc. coop. rl, established in Fiesso Umbertiano (Italy),

Columbus Srl, established in Parma (Italy),

Compal – Companhia produtora de Conservas Alimentares, SA, established in Almeirim (Portugal),

Conditalia Srl, established in Nocera Superiore,

Conservas El Cidacos, SA, established in Autol (Spain),

Conservas Elagón, SA, established in Coria (Spain),

Conservas Martinete, SA, established in Puebla de la Calzada (Spain),

Conservas Vegetales de Extremadura, SA, established in Bajadoz,

Conserve Italia Soc. coop. rl, established in San Lazzaro di Savena (Italy),

Conserves France SA, established in Nîmes (France),

Conserves Guintrand SA, established in Carpentras (France),

Conservificio Cooperativo Valbiferno Soc. coop. rl, established in Guglionesi (Italy),

Consorzio Casalasco del Pomodoro Soc. coop. rl, established in Rivarolo del Re ed Uniti (Italy),

Consorzio Padano Ortofrutticolo (Copador) Soc. coop. rl, established in Collecchio (Italy),

Copais Food and Beverage Company SA, established in Nea Ionia (Greece),

Tin Industry D. Nomikos SA, established in Marousi (Greece),

Davia Srl, established in Gragnano (Italy),

De Clemente Conserve Srl, established in Fisciano (Italy),

DE. CON Srl, established in Scafati (Italy),

Desco SpA, established in Terracina (Italy),

‘Di Lallo’ – Di Teodoro di Lallo & C. Snc, established in Scafati,

Di Leo Nobile – SpA Industria Conserve Alimentari, established in Castel San Giorgio,

Marotta Emilio, established in Sant’Antonio Abate (Italy),

E. & O. von Felten SpA, established in Fontanini (Italy),

Egacoop, S. Coop., Lda, established in Andosilla (Spain),

Elais SA, established in Athens,

Emiliana Conserve Srl, established in Busseto (Italy),

Perano Enrico & Figli Spa, established in San Valentino Torio (Italy),

FIT – Fomento da Indústria do Tomate, SA, established in Águas de Moura (Portugal),

Faiella & C. Srl, established in Scafati,

‘Feger’ di Gerardo Ferraioli SpA, established in Angri,

Fratelli D’Acunzi Srl, established in Nocera Superiore,

Fratelli Longobardi Srl, established in Scafati,

Fruttagel Soc. coop. rl, established in Alfonsine (Italy),

G3 Srl, established in Nocera Superiore,

Giaguaro SpA, established in Sarno (Italy),

Giulio Franzese Srl, established in Carbonara di Nola (Italy),

Greci Geremia & Figli SpA, established in Parma,

Greci – Industria Alimentare SpA, established in Parma,

Greek Canning Co. SA Kyknos, established in Nauplie (Greece),

Grilli Paolo & Figli – Sas di Grilli Enzo e Togni Selvino, established in Gambettola (Italy),

Heinz Iberica, SA, established in Alfaro (Spain),

IAN – Industrias Alimentarias de Navarra, SA, established in Vilafranca (Spain),

Industria Conserve Alimentari Aniello Longobardi – Di Gaetano, Enrico & Carlo Longobardi Srl, established in Scafati,

Industrias de Alimentação Idal, Lda, established in Benavente (Portugal),

Industrias y Promociones Alimentícias, SA, established in Miajadas (Spain),

Industrie Rolli Alimentari SpA, established in Roseto degli Abruzzi (Italy),

Italagro – Indústria de Transformação de Produtos Alimentares, SA, established in Castanheira do Ribatejo (Portugal),

La Cesenate Conserve Alimentari SpA, established in Cesena (Italy),

La Dispensa di Campagna Srl, established in Castagneto Carducei (Italy),

La Doria SpA, established in Angri,

La Dorotea di Giuseppe Alfano & C. Srl, established in  Sant’Antonio Abate,

La Regina del Pomodoro Srl, established in Sant’Egidio del Monte Albino,

‘La Regina di San Marzano’ di Antonio, Felice e Luigi Romano Snc, established in Scafati,

La Rosina Srl, established in Angri,

Le Quattro Stelle Srl, established in Angri,

Lodato Gennaro & C. SpA, established in Castel San Giorgio,

Louis Martin production SAS, established in Monteux (France),

Menú Srl, established in Medolla (Italy),

Mutti SpA, established in Montechiarugolo (Italy),

National Conserve Srl, established in Sant’Egidio del Monte Albino,

Nestlé España, SA, established in Miajadas,

Nuova Agricast Srl, established in Verignola (Italy),

Pancrazio SpA, established in Cava De’Tirreni (Italy),

Pecos SpA, established in Castel San Giorgio,

Pelati Sud di De Stefano Catello Sas, established in Sant’Antonio Abate,

Pomagro Srl, established in Fisciano,

Pomilia Srl, established in Nocera Superiore,

Prodakta SA, established in Athens,

Raffaele Viscardi Srl, established in Scafati,

Rispoli Luigi & C. Srl, established in Altavilla Silentina (Italy),

Rodolfi Mansueto SpA, established in Collecchio,

Riberal de Navarra S. en C., established in Castejon (Spain),

Salvati Mario & C. SpA, established in Mercato San Severino,

Saviano Pasquale Srl, established in San Valentino Torio,

Sefa Srl, established in Nocera Superiore,

Serraiki Konservopia Oporokipeftikon Serko SA, established in Serres,

Sevath SA, established in Xanthi (Greece),

Silaro Conserve Srl, established in Nocera Superiore,

ARP – Agricoltori Riuniti Piacentini Soc. coop. rl, established in Gariga di Podenzano (Italy),

Société coopérative agricole de transformations and de ventes (SCATV), established in Camaret-sur-Aigues (France),

Sociedade de Industrialização de Produtos Agrícolas – Sopragol, SA, established in Mora (Portugal),

Spineta SpA, established in Pontecagnano Faiano (Italy),

Star Stabilimento Alimentare SpA, established in Agrate Brianza (Italy),

Steriltom Aseptic – System Srl, established in Piacenza (Italy),

Sugal Alimentos, SA, established in Azambuja (Portugal),

Sutol – Indústrias Alimentares, Lda, established in Alcácer do Sal (Portugal),

Tomsil – Sociedade Industrial de Concentrado de Tomate, SA, established in Ferreira do Alentejo (Portugal),

Transformaciones Agrícolas de Badajoz, SA, established in Villanueva de la Serena (Spain),

Zanae – Nicoglou levures de boulangerie industrie commerce alimentaire SA, established in Thessaloniki (Greece),

applicants,

represented by J. da Cruz Vilaça, R. Oliveira, M. Melícias and D. Choussy, lawyers,

v

Commission of the European Communities, represented by M. Nolin, acting as Agent, with an address for service in Luxembourg,

defendant,

APPLICATION for damages for the loss alleged to have been sustained by the applicants owing to the method adopted for the calculation of the amount of the production aid provided for in Commission Regulation (EC) No 1519/2000 of 12 July 2000 setting for the 2000/01 marketing year the minimum price and the amount of production aid for processed tomato products (OJ 2000 L 174, p. 29),

 

THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Third Chamber),

composed of J. Azizi, President, F. Dehousse and E. Cremona, Judges,

Registrar: J. Palacio González, Principal Administrator,

having regard to the written procedure and further to the hearing on 8 September 2004,

gives the following

Judgment

 Legal framework

1       Article 33(1) EC provides:

‘The objectives of the common agricultural policy shall be:

(a)      to increase agricultural productivity by promoting technical progress and by ensuring the rational development of agricultural production and the optimum utilisation of the factors of production, in particular labour;

(b)      thus to ensure a fair standard of living for the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture;

(c)      to stabilise markets;

(d)      to assure the availability of supplies;

(e)      to ensure that supplies reach consumers at reasonable prices.’

2       Article 2 of Council Regulation (EC) No 2201/96 of 28 October 1996 on the common organisation of the markets in processed fruit and vegetable products (OJ 1996 L 297, p. 29; ‘the basic regulation’), provides, in the version applicable to the present case:

‘1. A system of production aid shall apply to the products listed in Annex I obtained from fruit and vegetables harvested in the Community.

2. Production aid shall be granted to processors who have paid producers for their raw materials a price not less than the minimum price under contracts between, on the one side, producer organisations recognised or provisionally authorised under Regulation (EC) No 2200/96, and processors on the other …’

3       Article 4 of the basic regulation states, in the version applicable to the present case:

‘1. The production aid may not exceed the difference between the minimum price paid to the producer in the Community and the price of the raw material in the main producing and exporting third countries.

2. The amount of production aid shall be so fixed as to enable the Community product to be disposed of within the limit set in paragraph 1. In establishing the amount of the aid, without prejudice to the application of Article 5, account shall be taken in particular of:

(a)      the difference between the price of the raw material in the Community and that obtaining in the major competing third countries;

(b)      the amount of the aid fixed or calculated before the reduction provided for in paragraph 10, if applicable, for the previous marketing year; and

and

(c)      where Community production of a product accounts for a substantial share of the market, trends in the volume of external trade and in the prices obtaining in such trade, where the latter criterion results in a reduction in the amount of the aid.

3. The production aid shall be fixed in terms of the net weight of the processed product. The coefficients expressing the relationship between the weight of raw material used and the net weight of the processed product shall be defined on a standardised basis. They shall be regularly updated on the basis of experience.

…

5. The price of the raw material in main competing third countries shall be determined mainly on the basis of the prices actually applying at the farm-gate stage for fresh products of a comparable quality used for processing, weighted on the basis of the quantities of finished products exported by those third countries.

6. Where Community production accounts for at least 50% of the quantities of a product making up the Community consumption market, the trends in prices and the quantities of imports and exports shall be assessed by comparing the data for the calendar year preceding the start of the marketing year with the data for the previous calendar year.

7. In the case of products processed from tomatoes, the production aid shall be calculated for:

(a)      tomato concentrate falling within CN code 2002 90 ;

…

9. The Commission shall fix the amount of the production aid before the start of each marketing year … The coefficients referred to in paragraph 3, the minimum quality requirements and the other detailed rules for the application of this Article shall be adopted in accordance with the same procedure.

10. For products processed from tomatoes, the overall expenditure must not exceed, for each marketing year, the amount that would have been reached if the French and Portuguese quotas for concentrates for the 1997/98 marketing year had been set as follows:

–       France: 24 323 tonnes,

–       Portugal: 670 451 tonnes.

To that end, the aid fixed for tomato concentrates and their derivatives in accordance with paragraph 9 shall be reduced by 5.37%. A supplement may be paid after the marketing year if the increase in French and Portuguese quotas is not entirely used up.’

4       Last, Commission Regulation (EC) No 1519/2000 of 12 July 2000 setting for the 2000/01 marketing year the minimum price and the amount of production aid for processed tomato products (OJ 2000 L 174, p. 29), provides in Article 2(1) that ‘[f]or the 2000/01 marketing year the level of production aid referred to in Article 4 of [the basic regulation] shall be as set out in Annex II’. The amount of the production aid was fixed at EUR 17.178 per 100 kg of tomato concentrates with a dry weight content of 28% or more but less than 30%.

 Facts and procedure

5       By letter of 4 February 2000, the Commission requested the Chinese authorities to provide it as quickly as possible with the information necessary to fix the aid for the 2000/01 marketing year in the processed fruit and vegetable sector, by completing the attached questionnaire. That letter went unanswered.

6       Following the adoption of Regulation No 1519/2000, a number of delegations and associations representing producers of products processed from tomatoes from Spain, France, Greece, Italy and Portugal informed the Commission of their objections and challenged the failure to take the price of Chinese tomatoes into account in fixing the amount of the aid granted.

7       The Organisation européenne des industries de la conserve de tomates (‘the OEICT’) and the Associação Portuguesa dos Industriais de Tomate submitted a number of requests to the Commission to adjust the amount of the aid granted. One of those requests was accompanied by a copy of a contract containing the price for the product paid to the Chinese producer.

8       By letter of 5 March to the Portuguese Minister of Agriculture, in answer to his request to revise the calculation of the amount of the aid, the Commission stated that the amount of the aid for the processing of tomatoes for the 2000/01 marketing year was fixed in strict compliance with Articles 3 and 4 of the basic regulation. It further confirmed having received, on 13 December 2000, a letter from the OEICT communicating the price of a contract concluded in China, but also stated that it was unable to amend its decision on the basis of the price specified in a single contract and not confirmed by the national authorities concerned.

9       In September 2001 the Spanish diplomatic services in Peking obtained a certificate issued by the Chinese authorities setting out, for the 1999 and 2000 marketing years, the average price for tomatoes paid to producers in the province of Xinjiang, which represents approximately 88% of the total Chinese processed tomato production. That document was communicated to the Member of the Commission responsible, Mr Fischler, on 9 November 2001, by the Portuguese Minister for Agriculture and also on 7 December 2001 by the OEICT.

10     On 31 January 2002 the Commission replied to the OEICT and again emphasised that the amount of the aid had been fixed in conformity with Articles 3 and 4 of the basic regulation. Relying, moreover, on the fact that the situation did not penalise the Community tomato industry, which in the Commission’s view had reached a record processing level, the Commission therefore did not consider it necessary to revise Regulation No 1519/2000.

11     Following a meeting held on 6 November 2002 and various letters sent by the applicants to the Commission, the Commission declared, by letter of 7 January 2003, that it had no reason to reconsider Regulation No 1519/2000.

12     It was in those circumstances that, on 18 August 2003, the applicants brought the present action.

 Forms of order sought by the parties

13     The applicants claim that the Court should:

–       order the Commission to pay to each applicant company the balance of the production aid (as detailed in Annex A.27 to the application), plus interest at the rates to be fixed by the Court, with effect from 12 July 2000 – or, in the alternative, from 13 July 2000, or, further in the alternative, from 16 July 2000 – until the date of actual payment;

–       order the Commission to pay the costs.

14     The Commission contends that the Court should:

–       dismiss the action as unfounded;

–       order the applicants to pay the costs.

 Substance

15     The parties rely on the well-established case-law of the Court of Justice and the Court of First Instance, according to which the Community’s non-contractual liability is dependent on the coincidence of a series of conditions as regards the unlawfulness of the acts alleged against the Community institution, the fact of damage and the existence of a causal link between the wrongful act and the damage complained of (Joined Cases 197/80 to 200/80, 243/80, 245/80 and 247/80 Ludwigshafener Walzmuehle and Others v Council and Commission [1981] ECR 3211, paragraph 18; Case T-168/94 Blackspur and Others v Council and Commission [1995] ECR II-2627, paragraph 38; and Joined Cases T-481/93 and T-484/93 Exporteurs in Levende Varkens and Others v Commission [1995] ECR II-2941, paragraph 80).

16     It is necessary to ascertain whether those three conditions are satisfied in the present case.

 The lawfulness of the Commission’s conduct

17     In order to establish that the Commission’s conduct was unlawful, the applicants rely principally on breach of the basic regulation and of Article 33 EC and also of a breach of the principles of a duty of care and of sound administration. In the alternative, they claim that there has been a breach of the principle of legitimate expectations.

 Arguments of the parties

–       Breach of the basic regulation and of Article 33 EC

18     The applicants claim that the Commission engaged in unlawful conduct of such a kind as to involve the liability of the Community by adopting Regulation No 1519/2000 in breach of the provisions of the basic regulation.

19     It is common ground that in calculating the amount of the aid in issue, the Commission took into account the United States, Israel and Turkey. However, the applicants submit that the terms of the basic regulation refer to the ‘main producing and exporting third countries’ (Article 4(1)) and to the ‘major [or main] competing third countries’ (Article 4(2) and (5)). In their submission, those provisions therefore deprive the Commission of any discretion and require it to take into account the countries whose production and exports of tomatoes are the largest. Even though the Commission may possibly be entitled to take other factors into consideration, it must in any event necessarily take account of those expressly mentioned in Article 4(2) of the basic regulation, the first of which is the price in the main third countries. A different interpretation would mean that the Commission would have an arbitrary power to choose the reference exporting countries, which could ultimately lead it not to provide for any aid, depending on the choice of reference countries.

20     The applicants maintain that since 1998 China has been the second largest producer of tomatoes in the world. In 1999 it exported more than 108 246 tonnes of tomatoes, or less than Turkey (168 691 tonnes) but more than the United States (92 913 tonnes) and Israel (9 557 tonnes). In addition, Chinese exports to the countries of the European Community have risen to around 24 171 tonnes, accounting for 22.30% of China’s total world exports. China must therefore be considered a competing country.

21     By not including Chinese prices in the calculation of the production aid, the Commission therefore breached the basic regulation, the provisions of which are clear and unambiguous. The applicants claim that, within the meaning of the Bergaderm case-law (Case C-352/98 P Bergaderm and Goupil v Commission [2000] ECR I-5291), the regulation establishes a rule of law which is intended to confer rights on individuals and the breach of which is sufficiently serious. Since the Commission’s powers were limited very precisely when Regulation No 1519/2000 was adopted, a mere illegality on its part is in their view sufficient to involve the non-contractual liability of the Community.

22     Furthermore, in the applicants’ submission, the Commission itself requested that the data on Chinese prices be communicated to it, but refused to take them into account when they were provided.

23     The applicants maintain that the Commission’s approach also disregarded the political objectives of the aid system provided for by the basic regulation. Those objectives sought to favour European farmers and industrialists by guaranteeing a minimum income to farmers and by allowing processors of tomato-based products to meet competition from third countries whose raw materials are purchased at a lower price than that pertaining on the European market. By failing to observe those objectives, Regulation No 1519/2000 also infringed Article 33 EC.

24     The Commission contends that it had a wide discretion to determine the amount of the aid in question. Its liability could therefore be engaged only if it had manifestly and seriously ignored the limits imposed on the exercise of its powers within the meaning of the case-law established in Bergaderm and Goupil v Commission, paragraph 21 above.

25     The Commission observes that Article 4 of the basic regulation makes it possible to fix a maximum production aid and that that aid ‘may not exceed the difference between the minimum price paid to the producer in the Community and the price of the raw material in the main producing and exporting third countries’. Accordingly, there was no guarantee that the amount of the aid would be equal to that difference.

26     The Commission further submits that the criteria for the establishment of the aid are not determined exhaustively. Article 4(2) of the basic regulation states: ‘In establishing the amount of the aid …, account shall be taken in particular of …’. That article refers, in subparagraph (c), to the possibility of a reduction in the amount of the aid to take account of the volume of external trade and the prices obtaining in such trade. Since Community production represents a substantial amount of the Community market, in fact more or less 90%, the Commission was entitled to take those data into account.

27     The Commission also criticises the applicants’ failure to mention the objective of the aid, namely to ‘enable the Community product to be disposed of’. It contends that, regard being had to that objective and to the economic data available to it, it was perfectly lawful for it to disregard the price of Chinese tomatoes.

28     Data on tomato production were supplied by the United States, Israel and Turkey; the Chinese authorities did not respond to the Commission’s request. The Commission concluded that the aid to processors for the production of tomato concentrate should be reduced by 20.54% owing to the depreciation of the euro against the United States dollar (-12.2%) and the increase in the cost of the raw material in competing third countries, notably the United States (+8.4%) and Turkey (+4.4%).

29     The Commission goes on to state that the data available on the Community market for tomato concentrates showed that overall imports fell and that imports from China were stable between 1997 and 1999, that prices for products originating in ‘China’ rose considerably and that there was a regular increase in Community exports. Those elements confirm a net improvement in the international situation for Community production and still limited competition from China. There was therefore no need to alter the rules governing the calculation of the aid.

30     The Commission maintains that although if the price of the Chinese raw material had actually been taken into account that might have led to a reduction in the estimated price of the raw material in the main producing and exporting third countries, that reduction would not necessarily have resulted in an increase in the production aid.

31     In any event, in spite of the absence of a reply from the Chinese authorities, the Commission was required to fix the amount of the production aid before the beginning of the 2000/01 marketing year. Up to then the Commission had never taken the price of Chinese tomatoes into account and there was no reason why that price should suddenly be incorporated for the first time in the calculation of the aid.

32     As regards the infringement of Article 33 EC, the Commission recalls that the production aid has as its objective to enable the Community products to be disposed of. It maintains that the applicants have wholly failed to show that it thwarted that objective.

–       Breach of the principles of duty of care and of sound administration

33     As regards the breach of the duty of care and of the principle of sound administration, the applicants claim that the Commission did not take the trouble to obtain the Chinese prices, as a diligent and prudent administration would have done. The Commission then did not correct its error, in breach of the commitment it had given, even though that correction would not have caused any particular difficulty.

34     The Commission contends that it was able, while complying with the objectives and the provisions of the basic regulation, to fix the amount of the production aid without having data relating to the prices of Chinese tomatoes. It would therefore have been pointless for it to persevere with its approaches to the Chinese authorities, which had still remained unanswered in relation to other products.

35     As regards the complaint that it refrained from amending the calculation of the aid in spite of being aware of the price for tomatoes paid to Chinese producers, the Commission observes that the first information was communicated to it by letter of 13 November 2000, or four months after Regulation No 1519/2000 was adopted. As the information related only to the price of one contract, the Commission considered that it could not in any event be regarded as representative of the price of Chinese production.

36     The Commission further claims that it was only on 9 November 2001, or 16 months after Regulation No 1519/2000 was adopted, that what were perhaps more probative figures were communicated to it. It was unimaginable that the regulation should be amended after such a long time and, furthermore, there was no legislative provision on the basis of which it could make such a retroactive amendment. It would have been able to do so only if there had been a technical error. Furthermore, the 2000/01 marketing year had been ended for several months and a new mechanism had been put in place.

 Findings of the Court

37     The parties are disagreed as to the interpretation of the provisions of the basic regulation and the extent of the discretion which it confers on the Commission in respect of the fixing of the amount of production aid.

38     It should be borne in mind that it follows from a consistent line of decisions that the involvement of the non-contractual liability of the Community within the meaning of the second paragraph of Article 288 EC depends on the satisfaction of a number of requirements, namely: the unlawfulness of the conduct of which the institutions are accused, the reality of the damage and the existence of a causal connection between the conduct and the damage in question (Case 26/81 OleificiMediterranei v EEC [1982] ECR 3057, paragraph 16; Case T-175/94 International Procurement Services v Commission [1996] ECR II-729, paragraph 44; Case T-336/94 Efisol v Commission [1996] ECR II-1343; and Case T-267/94 Oleifici Italiani v Commission [1997] ECR II-1239, paragraph 20).

39     As regards the first of these conditions, the case-law requires that there must be established a sufficiently serious breach of a rule of law intended to confer rights on individuals (Bergaderm and Goupil v Commission, paragraph 21 above, paragraph 42). As regards the requirement that the breach must be sufficiently serious, the decisive test for finding that it is satisfied is whether the Community institution concerned has manifestly and gravely disregarded the limits on its discretion. Where that institution has only a considerably reduced or even no discretion, the mere infringement of Community law may be sufficient to establish the existence of a sufficiently serious breach (Case C-312/00 P Commission v Camar and Tico [2002] ECR I-11355, paragraph 54; and Joined Cases T‑198/95, T‑171/96, T‑230/97, T‑174/98 and T‑225/99 Comafrica and Dole Fresh Fruit Europe v Commission [2001] ECR II-1975, paragraph 134).

40     In particular, the finding of an irregularity which in comparable circumstances would not have been committed by a normally prudent and diligent administration permits the conclusion that the conduct of the institution constituted an illegality of such a kind as to involve the liability of the Community under Article 288 EC (Comafrica and Dole Fresh Fruit Europa v Commission, paragraph 39 above, paragraph 134).

41     It is therefore necessary to examine first of all the provisions of the basic regulation in order to determine the extent of the Commission’s discretion and then to ascertain whether, in that context, it did or did not commit a breach of that regulation of such a kind as to involve its liability.

–       The Commission’s discretion under the basic regulation

42     It should be borne in mind, first of all, that it is settled case-law that the Community legislature enjoys a considerable power of discretion in circumstances where it is necessary to evaluate a complex economic situation, as is the case as far as the common agricultural and fisheries policies are concerned. Its discretion is not limited solely to the nature and scope of the measures to be taken but also, to some extent, to the finding of basic facts. Accordingly, where it is called upon to ascertain whether the alleged breach of a rule of law is sufficiently serious, the Court must confine itself to examining whether the institution accused of that breach has made a manifest error in the exercise of its discretion or misused its powers or whether the authority in question has clearly exceeded the bounds of its discretion (see, to that effect, Case 113/88 Leukhardt [1989] ECR 1991, paragraph 20; Case C-4/96 NIFPO and Northern Ireland Fishermen’s Federation [1998] ECR I-681, paragraphs 41 and 42; Case C-179/95 Spain v Council [1999] ECR I-6475, paragraph 29; Case C-120/99 Italy v Council [2001] ECR I-7997, paragraph 44; and Case T-13/99 Pfizer Animal Health v Council [2002] ECR II-3305, paragraphs 166 and 168).

43     In the second place, the Commission, also under the basic regulation, has a wide discretion when fixing the production aid.

44     Admittedly, recital 2 to the basic regulation states that ‘certain processed products are of particular importance in the Mediterranean regions of the Community where production prices are noticeably higher than in those third countries’ and recital 4 states that ‘the amount of aid must compensate for the difference between the prices paid to producers in the Community and prices paid in third countries’. However, that recital goes on to state that ‘therefore, a basis of calculation must be laid down which takes account of this difference and of the impact of changes in the minimum price, without prejudice to the application of certain technical elements’. The inclusion (in certain language versions) of the equivalent of ‘in particular’ after ‘which takes into account’ indicates that, when fixing of the amount of production aid, account must be taken, in any event, of the difference between the prices paid to producers within the Community and prices paid in third countries, of the impact of changes in the minimum price, and that, apart from those factors, other elements may also be taken into account, these being left to the Commission’s unfettered discretion.

45     The detailed rules on production aid are laid down in Article 4 of the basic regulation. Paragraph 1 of that article provides that the production aid ‘may not exceed the difference between the minimum price paid to the producer in the Community and the price of the raw material in the main producing and exporting third countries’. That provision cannot be interpreted as meaning that the production aid must be equal to that difference, which would leave no discretion to the Commission.

46     Article 4(2) of the basic regulation then places the Commission under an obligation to fix the amount of the production aid ‘so … as to enable the Community product to be disposed of within the limit set in paragraph 1’. After setting out that objective, Article 4(2) lists certain elements to be taken into account in establishing that amount. The presence in that context of the words ‘in particular’ and of the conjunction ‘and’ between (b) and (c) implies that the Commission’s assessment of those three criteria presupposes that certain facts and essential figures, such as, in particular, the cost of the raw material in the Community and that of the raw material in competing third countries, and also the amount of the aid fixed for the previous marketing year, are satisfied together. It also follows that that list of mandatory criteria cannot be exhaustive, which indicates that a discretion is conferred on the Commission within the limits set out in Article 4(1) and on condition that the procedural constraints governing its application are observed.

47     It follows that the Commission, in principle, enjoys a wide discretion in fixing the aid. That discretion does not extend to the presence of the facts and figures corresponding to the criteria which it is obliged to take into account, such as the prices of the raw material in the major third countries within the meaning of Article 4(2)(a) of the basic regulation.

48     It is in the light of the principles set out above that the Court must ascertain the merits of the applicants’ arguments relating to the unlawful behaviour of the Commission. In that context, the Court deems it necessary first to assess the merits of the plea alleging breach of the principles of a duty of care and of sound administration.

–       Breach of the principles of care and of sound administration

49     The Commission enjoys a discretion, while being required, by virtue of the principles of a duty of care and of sound administration, to gather the factual elements necessary for the exercise of its discretion. According to a consistent line of decisions, where a Community institution has a wide discretion, observance of the procedural guarantees conferred by the Community legal order is of even more fundamental importance. Those guarantees include, in particular, the obligation for the competent institution to examine carefully and impartially all the relevant elements of the individual case. Only in that way is the Community judicature able to ascertain whether the elements of fact and of law on which the exercise of the discretion depends were present (see, to that effect and by analogy, Case C-269/90 Technische Universität München [1991] ECR I-5469, paragraph 14; Case T-167/94 Nölle v Council and Commission [1995] ECR II-2589, paragraph 73 et seq.; Case T-42/96 Eyckeler & Malt v Commission [1998] ECR II-401, paragraph 165; Case T-231/97 New Europe Consulting and Brown v Commission [1999] ECR II-2403, paragraph 37 et seq.; and Pfizer Animal Health v Council, paragraph 42 above, paragraph 171).

50     In the context of the application of the basic regulation, the obligation to act diligently implied, in particular, the duty to assemble all the essential factual elements provided for in Article 4(2) of that regulation which were capable of having a significant impact on the outcome of the decision-making procedure, in order to allow the Commission to exercise its discretion to the full and in a proper manner. In the light of that provision, it is common ground that in the present case the cost of the raw material originating in China was one of the essential elements which the Commission was required to take into account in calculating the amount of the production aid, as China was considered at the time when the aid was fixed to be one of the major third countries competing with Community production.

51     In that regard, it is common ground that the Commission merely sent the Chinese delegation to the European Union a single letter, dated 4 February 2000, requesting the requisite information; that letter went unanswered, yet the Commission took no further steps to obtain the information during the period to July 2000.

52     On the other hand, observance of the principles of a duty of care and of sound administration would, in the light of the essential nature of the information relating to the cost of the raw material for the purposes of the Commission’s assessment, have required that the Commission take additional steps to obtain the necessary information from the Chinese authorities, for example by sending reminders or by contacting the Permanent Representative of the People’s Republic of China to the European Union by telephone. In that regard, the silence of the Chinese authorities, which, according to the Commission, ‘is in a long tradition of refusing or being unable to respond to any information on similar questions’, cannot justify the Commission’s failure to act because of an irrebuttable presumption that the requisite information would not be available or that any other request would have met with the same silence. On the contrary, given the indispensable nature of the information concerned for the lawfulness of the exercise of the discretion in fixing the amount of the aid, that silence should rather have encouraged the Commission’s services to make further efforts in good time to obtain the information rather than do nothing at all.

53     As regards the Chinese contract sent to Mr Fischler on 13 November 2000, it is true that the Commission was not in a position to take the figures in that contract, which became applicable on 15 March 2000, into account, since, in application of Article 4(6) of the basic regulation, the Commission had to base its calculation on the prices charged in 1999. However, in the light of the principles of a duty of care and of sound administration, and in view of the silence on the part of the Chinese authorities following the Commission’s letter of 4 February 2000, the minimum effort to be expected of a diligent institution in the present case would have consisted, at the very least, in asking those authorities whether those prices were representative of the prices applied in 1999, particularly in the light of the fact that the contract related to the region of Xinjiang, which, according to the applicants, represents a significant proportion of Chinese production of processed tomatoes. Such an obligation weighed even more on the Commission because Mr Fischler had himself observed that ‘the Commission could not regard the price mentioned in a private contract as representative of the national average price for the production of tomatoes for the 2000/01 marketing year if that price was not officially confirmed by the Chinese Government’.

54     It follows from the foregoing that the Commission’s failure to act after sending the letter of 4 February 2000 constitutes a sufficiently serious breach, within the meaning of the case-law, of the principles of care and of sound administration.

–       Infringement of the basic regulation

55     According to Article 4(1) of the basic regulation, the production aid may not exceed the difference between the minimum price paid to the producer in the Community and the price of the raw material in the main producing and exporting third countries. Article 4(2) of that regulation provides that in establishing that amount, account is to be taken in particular of the difference between the price of the raw material in the Community and that obtaining in the major competing third countries.

56     The applicants maintain that under those provisions the Commission was required to take the price of the Chinese raw material into account, as China was the second largest world exporter of tomatoes.

57     It is clear that the basic regulation requires that the price of the raw material in the main producing and exporting or competing third countries be taken into account. China was one of those countries. The Commission was therefore required to take the Chinese price into account as soon as China became one of those countries.

58     Nor does the Commission deny that China was one of the main tomato-producing countries. Its services, moreover, had first sought information from the Chinese authorities early in 2000, but the authorities did not respond to their request.

59     The Commission asserts that the question which it faced was whether, in the absence of that information, it could none the less fix the amount of the production aid by virtue of its discretion, while observing the objectives of the aid, namely to ‘enable the Community products to be disposed of’. It emphasises that up till then it had never taken the price of Chinese tomatoes into account and that there was no need to amend the rules on calculating the aid, particularly since that was the last occasion on which the aid was to be fixed before the reform of the production aid system.

60     Those arguments are unconvincing. The fact that the Commission had never previously taken the price of Chinese tomatoes into account cannot justify its continuing failure to do so if, as is indisputably the case, market conditions so required. Likewise, the fact that that was the last occasion on which prices were to be fixed before the reform of the production aid system did not justify their being fixed in circumstances that were not consistent with the basic regulation. Furthermore, that regulation did admittedly allow the Commission to take other criteria into account and to adjust the amount of the aid according to those additional criteria. On the other hand, as explained at paragraph 50 et seq. above, it did not allow the Commission to ignore the price of the raw material in one of the main competing third counties, since it explicitly provides that that figure is to be taken into account.

61     Accordingly, in so far as the terms of Regulation No 1519/2000 take no account whatsoever of the price of the raw material in one of the main producing and exporting third countries, namely China, that regulation fails to comply with the mandatory conditions laid down in Article 4(1) and (2) of the basic regulation. Such an illegality, which constitutes a sufficiently serious breach of a rule intended to confer rights on individuals, is capable of engaging the non-contractual liability of the Community owing to its harmful consequences.

62     As the plea whereby the applicants allege infringement of the basic regulation must be upheld, there is no need to examine the plea alleging breach of the principle of legitimate expectations, on which the applicants rely in the alternative.

 Damage

 Arguments of the parties

63     The applicants claim that the damage which they have sustained corresponds exactly to the difference between the amount of the aid fixed in Regulation No 1519/2000 and the price that would have been applied if the Commission had taken the Chinese prices into account.

64     On the basis of the figures relating to the Chinese prices set out in the certificate obtained from the Chinese authorities in September 2001, the applicants have calculated the amount of the aid that ought to have been paid for the 2000/01 marketing year. If China had been taken into consideration in the calculation of the average prices in the main tomato-producing third countries, that price would, in the applicants’ submission, have been considerably lower, and therefore the difference between the price paid to farmers and the price of the main exporting third countries would have been significantly higher than that calculated by the Commission. The applicants maintain that for each quintal of tomato concentrate 28/30, the industry obtained EUR 4.031 less than it should have received if the Chinese price had been taken into account. That means that the industry received aid that was 23% below what it ought to have received. That is therefore the percentage which they are entitled to claim from the Commission.

65     The applicants further maintain that they have sustained significant economic damage linked not only with the Community’s failure to pay them the sums due, but also to monetary erosion and to the fact that the sums which they would have received if the Commission had properly calculated the amount of the aid payable would have allowed them to receive at least the proceeds if those sums had been placed in bank accounts.

66     The applicants maintain that, owing to the application of an incorrect and unlawful calculation method, the aid granted to them was less than it ought to have been. The error on the Commission’s part and the refusal to correct it caused them to suffer certain loss. As their loss originated in the Commission’s unlawful conduct, the causal link, in their contention, is established.

67     The Commission observes that, according to settled case-law, the damage for which compensation is sought must be actual and certain. However, although if the price of the Chinese raw material had been taken into account that might initially have led to an appreciable reduction in the estimated price of the raw material in the main producing and exporting third countries, that reduction would not necessarily have led, in the light of the Commission’s discretion, to an increase in the production aid.

68     A fortiori, in the Commission’s submission, it is not certain that that increase in the aid would have been equivalent to the difference based on the calculation of the raw material in the main producing and exporting countries with and without the price of Chinese tomatoes being taken into account.

69     The Commission contends, accordingly, that the amount of the damage claimed by the applicants is hypothetical and cannot be accepted by the Court. The same conclusion must be drawn as regards the economic damage on which they rely.

 Findings of the Court

70     It must be borne in mind that, according to the case-law (Case 51/81 De Franceschi v Council and Commission [1982] ECR 117, paragraph 9; Joined Cases 256/80, 257/80, 265/80, 267/80 and 5/81 Birra Wührer and Others v Council and Commission [1982] ECR 85, paragraph 9; and Case T-478/93 Wafer Zoo v Commission [1995] ECR II-1479, paragraph 49), the damage for which compensation is sought must be actual and certain.

71     It is for the applicant to produce to the Court the evidence to establish the fact and the extent of the loss which he claims to have suffered (Case 26/74 Roquette Frères v Commission [1976] ECR 677, paragraphs 22 to 24; Case T-575/93 Koelman v Commission [1996] ECR II-1, paragraph 97; and Case T-184/95 Dorsch Consult v Council and Commission [1998] ECR II-667, paragraph 60).

72     The applicants evaluate their loss at the precise difference between the amount of the aid fixed in Regulation No 1519/2000 and that which would have been applied had the Commission taken the Chinese prices into consideration.

73     First of all, it is appropriate to observe that the Chinese prices on which the applicants base their argument are those which they obtained through the Spanish diplomatic services in Beijing. The relevant price was the average price for tomatoes paid to producers in the province of Xinjiang, representing, according to the applicants, approximately 88% of Chinese production of processed tomatoes. Those figures are disputed by the Commission, in that they represent a low average. Nor was the Commission in a position to ascertain whether they were consistent with the provisions of the basic regulation. When evaluating a complex economic situation, the Commission’s discretion also applies to the finding of the basic facts (see, to that effect, Case 138/79 Roquette Frères v Council [1980] ECR 3333, paragraph 25).

74     As the basic regulation confers on the Commission a certain discretion in fixing the amount of the aid, it is impossible to determine with certainty what the impact on the amount of the aid would have been had the price paid to Chinese tomato producers been taken into account. Article 4(1) does not provide that the production aid must be equal to the difference between the minimum price paid to the producer in the Community and the price of the raw material in the main producing and exporting third countries. It merely fixes an upper limit.

75     In that regard, it should be observed that the fact that the Commission may in the past have fixed the amount of the aid at a level which precisely reflected the difference between the minimum amount paid to the producer in the Community and the price of the raw material in the main producing and exporting third countries did not in any way require it to maintain the aid at that level. It would even be contrary to the letter and the purpose of the basic regulation for the Commission not to take account of developments in the situation of international markets and possibly thereby make the disposal of the Community product more difficult.

76     The applicants cannot therefore rely on a right to a maximum aid equivalent to the difference between the minimum price paid to the producer in the Community and the price of the raw material in the main third countries after the Chinese prices had been taken into account.

77     Accordingly, the damage calculated by the applicants and set out in the table in Annex A.27 to the application cannot be certain.

78     As all the conditions that must be satisfied in order to engage the non-contractual liability of the Community are not fulfilled, the application must be dismissed.

 Costs

79     Under Article 87(3) of the Rules of Procedure of the Court of First Instance, the Court may, where the circumstances are exceptional, order that the costs be shared. Although the applicants have been unsuccessful, account must be taken, in making an order for costs, of the defendant’s conduct, which was inconsistent with the Community rules.

80     The Court will therefore make an equitable assessment of the circumstances of the case by deciding that the applicants are to bear five sixths of their costs and that the Commission, in addition to bearing its own costs, is to pay one sixth of the applicants’ costs.

On those grounds,

THE COURT OF FIRST INSTANCE (Third Chamber)

hereby:

1.      Dismisses the action;

2.      Orders the applicants to bear five sixths of their own costs and the Commission to bear its own costs and, in addition, to pay one sixth of the applicants’ costs.

Azizi

Dehousse

Cremona

Delivered in open court in Luxembourg on 17 March 2005.

H. Jung

 

      J. Azizi

Registrar

 

      President

* Language of the case: French.

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