C-24/62

JUDGMENT OF 4. 7. 1963 — CASE 24/62

In Case 24/62

Government of the Federal Republic of Germany , represented by Arved Deringer, advocate at the Oberlandesgericht at Cologne, acting as

Agent, with an address for service in Luxembourg at the Chancery of the Embassy of the Federal Republic of Germany, 3 Boulevard Royal, applicant, v

Commission of the European Economic Community , represented by Hubert Ehring, Legal Adviser of the European Executives, acting as Agent, assistedby Hans Peter Ipsen, Professor of the University of Hamburg, with an for service in Luxembourg at the office of Henri Manzanares, address

Secretary of the Legal Service of the European Executives, 2 Place de Metz, defendant,

Advocate-General: K. Roerher Registrar: A. Van Houtte

gives the following

JUDGMENT

Issues of fact and of law

I — Facts price, it must import wines of which the

alcohol level is increased by the addition The Federal Republic of Germany has of wine spirit. It obtained supplies of

result that a market was dismis­ 'that the application should be created for the sale of spirits at par­

sed and that the costs of the proceedings ticularly low prices for direct consump­

should be Lorne by the applicant'. tion'.

The entry into force of the common III — Arguments of the external tariff, however, had the result parties sub­ of raising, suddenly and to very A — Infringement of an essential pro­ stantial degrees, the duty applicable to

wines imported from third countries. cedural requirement under Article 190 According to the applicant this could

produce a 60% rise in the price of The Federal Republic of Germany wine for distilling, with extremely seri­ alleges that there has been an infringe­ ous consequences for the German pro­ ment of Article 190 of the Treaty, duction of cheap spirits. which requires the Commission to state

pp. 3 and 4). duty to issue decisions on numerous

On 26 July 1962 the federal Republic requests for quotas which compel it for of Germany instituted proceedings reasons of 'rationalization of work'

and

against this Decision to the extent that because of limited staff to 'reduce to

it refused the remainder of the request. essentials the statement of reasons for its decisions'. In any event the Decision was sufficiently reasoned for its purpose II — Conclusions of the to emerge clearly. The Commission was parties not obliged to a legal opinion, supply or to submit the applicant's argument The applicant claims that the Court to a critical analysis, particularly when should: 'the form of an the request assumed

'1. annul the Decision the Commis­ for derogate of application permission to

B—­ Infringement of Article 25 of the industry was in a position to adapt

Treaty itself to using the qualities of wine The Federal Republic of Germany states available in the Community (rejoinder, 3-5). that paragraph (3) of Article 25, as dis­ pp.

tinct from paragraphs (1) and (2) of that The parties disagree on whether, as a

Article, stipulates only a negative pre­ matter of law, Article 25 (3) confers a

requisite for the grant of tariff quotas, discretionary power on the Commission. '. disturb­ . . provided that no serious

ance of the market of the products con­ C—­ Infringement of Article 29 of the

The Federal Republic of Germany The Commission considers that the find­ states that the refusal of a quota presup­ ing that there was a serious risk of

poses that a disturbance is almost cer­ disturbance did not necessitate any tain. mention of the criteria laid down in The Commission replies that Article 25 Article 29. (3) leaves it the task of assessing the The Federal Republic of Germany, probable future development of the mar­ moreover, pleads the fact that since it ket and that such an estimate must, by was not possible, during the negotia­

its very nature, be concerned with mere tions on the duties applicable to List G, probabilities. to unanimity on the German obtain

The Federal Republic of Germany com­ Customs Tariff for wines for distilling, plains that the Commission did not the Federal Republic of Germany then

make any accurate assessment of the accepted that a duty should be fixed at production of wine in the Community an increased rate 'in consideration of

and failed to take account of the threats the Commission's promise to grant it to the German spirits industry which tariff quotas'. In the final document of

agri­ of the common and . . . when the

It that the Com­ cultural policy. considers state of the market within the grant of a quota constitutes exceptional munity does not allow ... an adequate

treatment. It maintains that events sub­ supply in quantity and in quality on

sequent to the commencement of the conditions enjoyed by other consumers Community' proceedings prove that the German within the and that it did

GERMANY v COMMISSION

not have the powers to go beyond the question whether the market situation

conditions enjoyed by other consumers by the Court. within the Community', the Commission considered it impossible to grant, with­

out risking serious disturbance, a quota IV — Procedure

exceeding 100 000 hectolitres (statement The fol­ of defence, pp. 13-15, 30, 32-34). written and oral procedures

The parties supported these submissions lowed the normal course. Questions with various economic arguments which were however put to the parties, which

they also use as a basis for a number of answered them in the course of the oral

other submissions. They differ on the procedure.

Commission to be guided by the need to promote trade with third

countries.

For the purpose of examining these complaints, it is important to place

the above-mentioned Articles within the context of the Treaty as a whole and to consider, in relation to the fundamental provisions of Articles 2, 3 and 9, and the guiding principles of Article 29, the power vested in the

Commission by Article 25 to evaluate the legality and the expediency of the grant applied for.

Article 25 contains derogations from the common external tariff, which 'foundations' constitutes one of the of the Community by provided for Article 3 and set up by Articles 18 et seq., from which the said Article 25 allows exemptions only under specific conditions.

This interpretation is all the more imperative since Article 25 derogates from Article 2, which provides for the establishment of a single market, the purpose of which is to cause Member States to develop their economic relationships within the Community.

The Commission was obliged to adhere to these rules which are unaffected

by the Declarations of 2 March 1960 referring to Article 25. In arriving at its decisions, it must be guided by the whole of the considerations set out in Article 29, whilst having regard to the fundamental rules of Articles 2 and 3. It is within the framework of these principles that the discretionary

power granted to the Commission by Article 25 must be exercised.

Taken as a whole, this Article implies that the Commission has a duty to evaluate the state of the market for the products concerned and the

difficulties encountered in connection with supplying the demands of the

Although it appears that these rules have not been disregarded, the

applicant on hand rightly submits that the statement of reasons the other

for the Decision is deficient and that therefore Article 190 is contravened.

GERMANY v COMMISSION

In imposing upon the Commission the obligation to state reasons for its decisions, Article 190 is not taking mere formal considerations into account but seeks to an opportunity to the parties of defending their rights, give

to the Court exercising its supervisory functions and to Member States of

order to reach a conclusion 'that the production of the wines in question

is amply sufficient'.

Com­ This elliptical reasoning is all the more objectionable because the

mission gave no indication, as it did belatedly before the Court, of the

evolution and surpluses, but only repeated, without expanding size of the

the reasons for it, the same statement 'that there was no indication that the

case between the two concepts which it links one with the other by a simple deduction. However, by granting a restricted quota notwithstanding its description of production as 'amply sufficient', and thereby admitting that Article 25 (3) applied, the Commission thus conceded that this factor was it' not enough to make it possible 'to deduce from the risk of serious

disturbance.

Thus the statement of reasons expressed appears on this point to be

contradictory, since in spite of its statement with regard to an adequate

supply and of the automatic conclusion to be drawn therefrom the Com­

mission grants a quota and thereby implies that it would not cause any

Costs

Under the terms of Article 69 (2) of the Rules of Procedure, the unsuccess­

ful party shall be ordered to pay the costs.

On those grounds,

Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the parties; Upon hearing the opinion of the Advocate-General;

Having regard to Articles 2, 3, 9, 25, 29 and 190 of the Treaty establishing the European Economic Community; Having regard to the Protocol on the Statute of the Court of Justice of the European Economic Community;

regards those parts of the said Decision which have been submitted to the Court;

2. Orders the defendant to pay the costs.

Donner Delvaux Lecourt

Hammes Rossi Trabucchi Strauß

Delivered in open court in Luxembourg on 4 July 1963.

A. Van Houtte A. M. Donner