C-5/67

HAUPTZOLLAMT (PrincipalCustomsOffice) Munchen , Landsbergerstrasse,

onthevalidity of Regulation No 144/65/EEC of the Commissionof the EEC of 18 October 1965 introducinga countervailing charge on the importation of outdoor table grapesfrom Bulgariaand from Romania(Official Journal No 172 of 18 October1965, p.2720),

THE COURT

composed of:R. Lecourt, President, A. M. Donner and W. Strauß (Rapporteur), Presidents ofChambers, A. Trabucchiand R.Monaco, Judges,

Advocate-General: J. Gand

Registrar: A. Van Houtte

I— Facts — Incases where the entry price of a given productis less thanthe reference price, 1.Origin ofthe reference theimport of this product isto give rise to the collectionof a Community A— On 4April 1962, onthe basis inpartic countervailing charge ('Ausgleichsabga- ularof Articles 42 and 43of the Treaty, the be')of the same amount for all Member Councilof the EECadopted 'Regulation States and equalto the difference between No 23 onthe progressive establishmentof a two prices. common organization ofthe market in fruit and vegetables' (OfficialJournalof 20April C —ByRegulation No 99/65/EEC (Official 1962, p. 965;hereinafter referred toas Journal of 8July 1965, p. 2109; hereinafter 'Regulation No 23'). referred to as 'Regulation No 99/65'), the B —Article 1of Regulation No 65/65/EEC Commissionspecified the methods of cal ofthe Council of 13 May 1965 (Official culation of thereference price andthe entry

. .shall be the prices recorded onthe describedby the expression'Article 11(2) representative wholesale markets'; each (as amended) of Regulation No 23') maybe oftheseprices must have deducted from summarized as follows: itcustoms duties, 'other taxes on — Forproductsof Community origin imports' ('Einfuhrabgaben')and trans portcosts (cf. B above). 'referenceprices applicableto the whole Community' are tobe fixed annually. — The following markets are to be con Forthis purpose'each year maybe sideredas 'representative wholesale divided intoseveral periods'. 'The re

down. outdoor table grapes (hereinafter referred to — For products imported fromthird as 'table grapes') according to the month of countries, 'entry prices'('Einfuhrpreise') the year. are to be fixed 'on thebasis ofthe lowest The referencepricewhich it fixed for Octo- prices recordedonthe representative for October 1965 was 15.9 units of account importmarkets . . .less customs duty (u.a.). arising from applicationof Article23 of the Treaty and less other taxes on E— In Regulation No 138/65 (Official imports ("Eingangsabgaben") aswell as Journal of 6 October 1965, p. 2650; herein transport costs from those markets to the afterreferred to as 'Regulation No 138/65'), Communityfrontier crossingpoints'. whichwas applicablefrom 9 to 16 October,

F — By Regulation No144/65/EEC (Offi On 25 January 1967 the Finanzgericht, cial Journal No 172 of18 October1965, p. Munich, decided to refer to the Court for a 2720, hereinafterreferred to as 'Regulation preliminaryruling the question 'whether No 144/65'), the Commission reimposed, Regulation No 144/65/EEC of the Com for the period from21 to 31October 1965, mission .

. . hasthe effect of giving the No 23,were 'forseveral days oncertain plaintiffthe opportunityof having the markets at alevellower than the refer validity ofthe Regulation reviewed,an ence price'; opportunity of which it would otherwise be — 'the entryprice to be usedas a flat rate for deprived asa consequence of the narrow fixingthe amount ofthe countervailing limits which the second paragraph of charge, calculated onthebasis of the Article 173 of the EECTreaty gives to the lowestprices,less customs duties, other rightof appeal. The doubts of the plaintiff taxeson imports andtransport costs, is as to thelegality of the regulation do not fixed at 13.9 u.a.

June1967. vailing charge of DM 8(or 2u.a., in (2) By order of 6 July 1967, theCourt de accordancewith the figures ofRegulation cided to reopenthe oral procedure and set No 144/65)per 100kg. TheBeus company theCommission a time-limitexpiring on31 took proceedingsbefore the Finanzgericht August1967 to completeits explanations on (Finance Court),Munich, asking for this certain points in writing (calculation, on the

one hand, of the reference priceand, on the 144/65 instituted a Community counter­ other, of theentry price and the 'other vailingcharge for the purpose of correcting taxes on imports') and allowedthe Beus aparticular disturbance of the market, the company the optionof submitting before existenceof this disturbance must be 30 September1967 written observationson capable ofbeing establishedfrom its pre­ the explanationswhich theCommission amble. was requested to provide. The Commission andthe Beuscompany TheCommission replies tothis argument lodgedstatements ofcase withinthe time- withthe following points: limits whichhad been givento them and —Regulations neednot be reasoned in presentedfurther oral observations at the such adetailed manner as decisions. hearingon 8 November1967. — Under the terms ot Article 11(2) (as The Advocate-General delivereda further amended)of RegulationNo 23,the reasoned,oral opinion at the hearingon 30 amount ofthe Community counter­ November 1967. vailingcharge must be 'equalto the dif­ (3) The Beus company wasrepresented by ferencebetween the reference price and Oskar Mohring,Rolf Beisswingert, Dietrich the entry price'. It was enough con­ Reimer, Detlef Wunderlich,Wolfgang sequently that Regulation No 144/65 Pohle andK. Zimmermann, allAdvocates should mentionthis principle and of the Munich Bar, and theCommission of indicate the reference price andthe the European Communities was represented entry price. There was no reason to set byits Legal Adviser, MrEhlermann. out themethod of calculating the entry price, as the correctness of the calcula­ III — Summary ofthe arguments of tion is capable of being demonstrated the Beus companyand ofthe and established during the legalpro­ Commission ceedings. —The importersknew the criteria on the 1. Arguments putforwardbefore the basisof which Regulation No 144/65 reopening of theoral procedure statedthat the entry price was lowerthan the reference price, that is tosay, the The Commission andthe Beuscompany markets, the prices of which were are agreedthat the orderreferring the mat­ recorded, those prices themselves, the tershould be understood to apply only to customs duties and other taxes onim­ imports fromBulgariaand not toimports from Romania. ports to be deducted from those prices andthe transport costs from the Com­

collectedbefore the entryinto forceof justifying a new countervailing charge. Regulation No 144/65 TheCommission replies that the concept of 'other taxes on imports' was intentionally The Beuscompanycomplains that theCom formulated in wide terms distinct from the mission, while calculating the entry prices expression'charges having equivalent ef ('Preisefrei Grenze')for the daysprior to fect', so thatit would include taxes like theentry intoforce of Regulation No the German turnover equalization tax 144/65 (cf. aboveI, 1, C), regarded the ('UASt'),which it is difficult to describe in German turnover equalizationtax ('Urn- relationto the EEC Treaty. satzausgleichssteuer') and the Community Itmaintains that inrespect of the Commun countervailing charge('Ausgleichsabgabe') ity countervailing charge the argument of of 3 u.a. in forceat that time, as 'other the Beus company would haveunacceptable taxes on imports' within themeaning of results.The Commissionattempts to Article 11(2)(as amended)of Regulation demonstrate thisby takingas examples the No 23and thatit consequently deducted figuresbeing used in the present case and by them from theprices recorded on the rep showing what results.

would immediately be necessary to re pensate for the disadvantages resulting establish it;in this way, with the offer price fordomestic goods from the fiscal burden ofthird countries remaining thesame, it which they bearby way of turnover would be necessary continually to bring tax.It does notamount consequently to into forceandthen abolishthe conter a 'charge having equivalenteffect' (to vailing charge of 2 u.a. that of customsduties) within the mean ing of Article12 of the EECTreaty. By (b) The taking into account ofprices using the expression 'other taxeson recorded on the representative imports', Article11(2) (as amended) of markets RegulationNo 23 canonly have been referring to 'charges havingequivalent The Beus company considers that it is a

It ation of thefactors in respect ofwhich adds that evenif,contrary to its argument, prices should bereduced: 'customs itis considered necessary to take prices in dutiesarising fromthe application of isolation, Regulation No 144/65 is based on Article 23 ofthe Treaty'. Furthermore incorrect assumptionsof fact, since during theCommission's argument wouldlead the days inquestion the entry price is lower to a 'cumulative effect':the deduction of than the reference price only onone market, the Communitycountervailing charge thatof Munich. previouslycollected considerably lowers The Commissionreplies that the argument the prices which mayhave the effectof of'average weighted prices' is contrary to

the letter andspirit of the provisions ap (as amended) of Regulation No 23, which plicable in the matter,which speak of 'the constitutes the basis of Regulation No lowest prices'and which are intended to 144/65, is contrary to Articles 39and 110 of protect producers everywhere inthe Com the EECTreaty. munity against imports atprices lowerthan Insupport of thisallegation itadvances the the referenceprice. following arguments: It pointsout further thatit follows from the Article 11(2)(asamended) ofRegulation said provisions thatit hasa wide areaof No 23 does nottake into account the discretion in fixing the entry price.It states objective set outin Article 39(l)(e) which that it has totake account inparticular of consistsinensuring that supplies reach the probable development of prices as well consumers at reasonable prices.

. . to the . . . progressive abo have been entitled tofix the priceata lition of restrictions on international trade lower level. Itendeavours to prove its and the lowering of customs barriers', as is assertions by producingsupporting figures. provided for in Article 110 ofthe EEC Treaty,to which Article 16(a) of Regulation No23 expresslyrefers. (c) Absence of revocation oramendment of Regulation No144/65 TheCommission replies by referringto the origin ofArticle 11(2) (as amended)of Regulation No 23 and points out that the The Beus companyseesanother reason for old rules, which only allowed theinstitution saying thatRegulation No 144/65is invalid in the fact that the Commissiondid not ofa countervailing charge where the market was threatened with disturbances,did not revokeor amend italthough it was required take sufficient account of the interestsof to doso under the very terms of thatregula

ations : a Communitycountervailing charge when theentry priceis less thanthe reference Articles39 and110 of the EEC Treaty do Drice. notset outobjectives whichare perfectly TheCommissionreplies by pointingout, consistent.According to the case-law of the with thesupport of figures,that the entry Court, insuch circumstances the institution pricewasclearly less than thereference requiredto act must do its bestto reconcile price during the period when Regulation theobjective by giving, where necessary, No 144/65 was in force. priorityto one or other qf them.

JUDGMENT OF 13. 3.1968 —CASE 5/67

Italian'producer price'to the average price corrected prices were higher thanthe refer of thetwo varieties,the Commission ence price. arbitrarilyfixed the reference price at too On the question whether the reference price high alevel. andtheentry price are comparable, it makes It declaresthat thesefacts can onlyreinforce thefollowing points: thecomplaints whichit madepreviously, since itappears in particular that: — The reference price is the wholesale pur — RegulationNo 104/65 is also insufficient chase pricein the production areas ly reasoned,asits wordingdoes not where prices are lowest, whilst the entry show thatvarieties of such different price is thepurchase price of the whole importancehave beenputon the same saler at the Communityfrontier.

On since the Beuscompany had notpointed the other hand, only Germany (through them outbefore the Munich Finanzgericht, the'Umsatsausgleichssteuer'or turnover although it could havedone so. It pointsout equalizationtax) and Italy collect a tax

Germany andItaly (continues theCom­ Itmaintains that, if certain States have no mission)the Beus companymight be turnover equalization tax, it is clear that it right in sayingthat itis not permissible is not possible to deduct a charge of this to deduct the 'Umsatzausgleichssteuer' type inorder to calculate the entry price, when calculating the entry price. But in but that thissituationdoes not justify inany factit happens frequently (and itis soin way thededuction of the German equaliza­ the presentcase) thatthe reference price tion tax. iscalculated on the basis of producer It addsthat the new allegations of theCom­ pricesof Member States otherthan mission strengthen the view that it isnot Germany. permissible eitherto deductthe Community — Having regard tothe factthat several countervailing charge in order to calculate MemberStates haveno taxes like the the entryprice. Germanturnover equalization tax, the It appearsthat the figures which were pro­ non-deduction of that chargewould duced showthat the days onwhich the prevent the pricesin these Statesfrom prices increased on the German markets are being used to decidethe entry price. In preciselythose on which theCommunity fact: countervailing charge was not collected, which showsthat the market alonedecides — onthe one hand, anentry pricede­ prices andnot the existence or thenon­ cided on the basis ofthose prices existence ofa charge or its amount. wouldnot be comparablewiththe It states,producing a detailed demonstra­ reference price; tion, thatthe Commission's argument leads — onthe other hand, an entryprice fixed in thismanner could notbe in general tofixing the reference,price artificially at too high a leveland the entry compared either withthe entry price price attoo low alevel. calculated onthe basis ofGerman or The Beuscompany adds finally that if the Italianprices. interpretation whichthe Commission gives The Beus companyreplies thatin the present to Article 11(2) (as amended) of Regulation caseonly the pricesrecorded on the German No 23 andwhich is set out above (A and B) markets were usedto determine the entry were correct, it would follow precisely from price and thatconsequently theconsider­ that fact that this provision itself cannot be ations intendedto show how it is possible to in accordance withtheTreaty.

Finally it willbe considered whether theCommissionwas required to amend or revoke RegulationNo 144/65before thedate laid down for its expiration.

I — Thevalidity of Regulation No144/65

1.The calculationof the entryprice

A —The deduction ofthe German 'Umsatzausgleichssteuer' (turnoverequaliza­ tion tax) and ofthe Community countervailing charge

TheCommission wrongly interpreted the sixthsubparagraph of Article 11(2) (as amended) of Regulation No 23,by consideringthat the concept of 'othertaxes on imports', specified by that provision,included, on the one hand, the German turn­ over equalizationtax and,on the other hand, theCommunity countervailing charge of 3u.a. applicableprior to the entry into force of Regulation No 144/65/EEC.

(b) Itis allegedthat thereference price includes certain taxes leviedupon national trade inCommunity products, taxes against whichsuch a charge asthe turnover

BEUSv HAUPTZOLLAMT MÜNCHEN

equalizationtax is preciselyintended to countervail. Consequently, in order to ensure comparability between reference prices and entryprices, the latter must include the turnover equalization tax.

According tothe first subparagraphof Articles 11(2) (asamended) or Regulation No 23,the fixingof a reference price isintended to 'avoid disturbancesdue to offers fromthird countries at abnormal prices'. This protection ofCommunity products mustclearly act upon any market in which these products are incompetition with products from thirdcountries. This consideration isparticularly important forthe product, themarketsand the periodin questioninthe present case. In fact, in the month of Octoberconsiderablequantities of tablegrapes originating inother MemberStates areoffered onthe German markets. However, itis clear, on the one hand,that these imports are subject to the turnoverequalization tax and, onthe other hand,that that charge cannot be included in the referenceprice, which is fixedon the basis ofprices recorded intheproducer Member States.

Consequently, if thischargewere acceptedas a partof the entry price, products from third countries would beplaced,on the German markets, in a situation more favourable than would theproductsoriginatingin otherMember States,which would bediametrically opposedto the objectiveof RegulationNo 23. The deduc­ tion of the turnoverequalizationtax is thus compatiblewith Regulations Nos 23 and 65/65.

B— Thepricesrecorded on the representative markets

Theregulation isalleged to be invalid becauseof the manner in which the Com­ mission,in fixing the countervailingcharge, took intoconsideration theprices recorded ontherepresentative marketsduring the market days prior to the entry intoforce ofthat charge. In particular the complaint is made that the Commission referredessentially to theMunich marketwhere the prices were particularly low, insteadof acting on thebasis of thequantities of Bulgarian table grapes sold on each representativemarket and thus of arriving ata 'weighted average'.

Under the termsof the sixthsubparagraph ofArticle 11(2) (as amended) of Regula­ tionNo 23 theentry price is tobe fixed 'on thebasis of the lowestprices recorded on the representativeimport markets', lessthe amount of customs duties, other taxes onimports and transport costs. Itfollows fromthisthat the Commission musttake into accountthe lowestprices ruling on each market during the observa­ tionperiod.

Itis accepted that, duringthe periodfrom 11to 15 October 1965, prices for Bul­ garian table grapes wereonly able to be recorded on four representative markets of the Community,namely Düsseldorf, Frankfurt, Hamburg and Munich. During that period andfor eachofthe said markets the lowestprices, less the deductions which havebeen mentioned,amountedrespectively to 12, 4, 14.8,15.6 and 10.7 u.a. Allthese prices were thuslower thanthe referenceprice of 15.9 u.a. and with regard moreparticularly to the marketsatDiisseldorf and Münich, this difference amounted to3.5 and 5.2 u.a.respectively, thus exceeding toan appreciable extent the amountof 2u.a. at which figure thedisputed countervailing charge wasfixed.

Theextent ofthe requirement laid downby Article 190 of theTreaty to state the reasons onwhich measuresare based,depends on thenature of the measure in question.

Itis aquestion in thepresent case of a regulation, that is tosay, a measure intended tohave general application, thepreamble to whichmay be confined to indicating the general situationwhich ledto its adoption, on the one hand, andthe general objectiveswhich it isintended to achieveon the other.

Consequently,it isnot possibletorequire that it shouldset out the variousfacts, whichareoften verynumerous and complex, onthe basis ofwhich the regulation was adopted, ora fortiorithatit should provide amore or lesscomplete evaluation of thosefacts.

It cannotbe complained, further, thatthis regulation did not indicateto what extent, forthe period in question, there were 'disturbancesdue to offers from third countries atabnormal prices'(first subparagraph of Article 11(2) (as amended) of Regulation No23). In fact,in thesystem established bythis paragraph such 'disturbances' do notconstitute a distinct condition for the adoption of a counter­ vailing charge,but theyare consideredto comeintoexistence as soon as the entry price,properly calculated, is lower thanthe referenceprice.

II — The validityof Regulation No 104/65

1. The jurisdictionof the Court

A— It is alleged that in calculatingthereference pricethe Commission wrongly took into consideration thepricesrecorded forthe Italian variety Ohanez and that that varietyholds only an insignificant place in comparison with the Regina variety, the only other Italian variety consideredbythe Commission for the purposeof calculating the referenceprice.

Under the termsof thesecond subparagraph of Article 11(2)(as amended)of Regulation No23, thereference priceis to bedetermined on the basis of the producer pricesof each MemberState. Under that provisionthe latter prices are calculated onthe basis ofthe prices recorded'for theproducts or varieties which representa considerablepart of the marketed outputthroughout theyear or during a part thereof.

It followsfrom the expression'considerable part of the ... output' that the Com­ mission hasacertain area of discretionas tothe choice of varieties to be considered. TheCourt must therefore confine itself to considering whether or not the choice madeby the Commissionis of an arbitrary nature.

It is appropriatefirst to notethat the referenceprice on the basis of which the countervailing chargewas calculated andthat chargeitself were only in force in the month ofOctober, so that an examination may be limited to the data relating to that month.

B —It isalleged that the preamble to Regulation No 104/65 fails to mentionthat forthe purposes ofcalculating the reference pricethe Ohanez variety wastreated on an equal footing withvarieties which were muchmore important such as the Chasselas duMidi, Gros vertand Regina.

Thatstatement isincorrect,as the second recitalof thepreamble to Regulation No104/65sets out thesevarieties without distinction as 'appearing among the most important cultivated in theCommunity', andstating that the data relating to them 'allow thefixing of the arithmetical average ofproducer pricesin accordancewith the criterialaid down in Article11(2) of Regulation No 23 and in Article 1 of Regulation No 99/65/EEC.

III —The validity of Article 11(2) (as amended) of Regulation No 23

It is allegedthatRegulation No 144/65is invalid because the provisions of Article 11(2)(asamended) of Regulation No23are incompatible with the Treaty; this paragraph no longermakes theintroduction of a countervailing charge subjectto the conditionthat 'the Community marketsexperience or are threatened with serious disturbancesresulting fromimports fromthirdcountries atprices lower than thereference price', but onlyto 'the entry priceof a product importedfrom thirdcountries beinglower thanthe reference price'.It is further alleged that in moving thusto a purely automaticsystem, thenew drafting of Article 11(2)gave a unilateral preference to theinterests of Community producers of fruit and vegeta­ bles and thus infringedArticles 39(d) and(e) and 110 of the Treaty.

As appears from itstitle, RegulationNo 23isto befound within the framework of measures intended to establisha commonorganization of the agricultural markets.

Looked at inthe light of these considerations, it doesnot appear that Article 11(2) (asamended) of RegulationNo 23 infringedthe requirements of theTreaty. In fact,that provision,considered as a whole, indicates a desire toensure protection forCommunity producers only withinreasonable limits. It is sufficient to mention thatthe reference price isbased onthe marketsof producer countries 'wherethe prices arelowest' andthat itwill normallybe lower than the prices at which the productsof aMember Stateare sold inother Member States, as these prices also includethe transport costsfrom one Stateto another and anyimport duties collected by the importing State. Although Article 11(2) (as amended) nolonger makestheintroduction of a countervailing charge dependent upon the threat of serious disturbances, it must be consideredthat this criterion allows very different applications, even thoughthe new rules laydown more objective criteria.

IV —The failure of the Commission to amend or revoke Regulation No 144/65

Thecomplaint is madethatthe Commission did not revoke or amend Regulation No 144/65 before 31 October 1965,as provided for inArticle 2 of that regulation should the introduction of a countervailingcharge of 2 u.a. no longer fulfill the conditions specified in Article 11(2) (asamended) of Regulation No 23 and that takinginto accountthe latermovement ofprices recordedon the representative markets, this conditionwas actuallyfulfilled.

Duringthe period inquestion, the prices recordedon the representative markets, corrected inaccordance with the sixthsubparagraph of Article 11(2) (as amended) of RegulationNo 23, showed asufficiently marked risein comparison with the previous situation, andeventhe lowestof theprices mentioned above were lower than thereference price byless than 2u.a. However,as was established above, the countervailingcharge must takeeffect each time, not during the observation period whichprecedes the adoptionof theregulations relating to that charge but during the period which follows it. The Commission wasthus entitled toretain thedis­ puted chargesince itcould reasonablysuppose thatthat charge would be appropri­ ate for thedays tofollow. Inthisconnexion, it maybe stated that after 24 October 1965onthe representative marketat Munich thedifference between the corrected prices and the reference pricevaried between2.2 and 1.9 u.a. The forecasts made by the Commission were nottherefore contradicted by later developments.

Generally, the time-lagbetween observation periods and implementation periods, which is inherent inany system suchas the oneinquestion, has the necessary con­ sequencethat, asincreased by thecountervailing charge,the entry prices for each day and eachrepresentative market are sometimesslightly higher and sometimes slightly lowerthan thereferenceprice. Itis not thereforeproved that in the present case the Commission neglectedits duty.

Itfollows fromall the foregoingconsiderations under I to IV above that an examination of the questionsubmitted to the Courtby the Finanzgericht, Munich, has notrevealed anyfacts likely tocast doubt on thevalidity of Regulation No. 144/65/EEC.

Having regardto the Treaty establishingthe EEC, especially Articles9,12 et seq., 18 et seq., 39, 40, 44,95 etseq., 177 and 190; Having regard to the Protocol on theStatute of the Court of Justice of the EEC, especially Article20; Having regard to RegulationNo 23 oftheCouncil of the EECon the progressive establishment of a commonorganization of themarket in fruit andvegetables (OfficialJournal of 20 April 1962, p.965et seq.),especially Articles 11(2) and 13; Having regard to Regulation No 65/65/EEC of the Council amendingArticle 11(2) of Regulation No 23(Official Journal of 20 May 1965, p. 1458 et seq.); Having regard to Regulation No99/65/EEC of the Commission onprocedure for giving effect toArticle11(2) of RegulationNo 23 (Official Journal of 8 July 1965, p.2109et seq.),especially Article 2; Having regard to Regulation No 104/65/EEC ofthe Commission fixing reference pricesfor outdoor tablegrapes (OfficialJournalof 8 July 1965, p. 2116); Having regardto Regulation No 144/65/EECof theCommission introducing a countervailingcharge on imports of outdoor table grapes from Bulgaria and Romania (Official Journalof 18 October1965, p. 2720 et seq.); Having regardto the Rules ofProcedure ofthe Court of Justice of the European Communities,

THE COURT

in answerto the question referredto it bythe Finanzgericht, Munich,by orderof that courtof 25January 1967, hereby rules:

An examination of the question referred tothe Court by the Finanzgericht, Munich, has not revealed anyfact capableof affecting the validity of Regulation No 144/65/EEC of theCommissionof 18 October 1965 introducing a counter­ vailing charge onimports of outdoor table grapes from Bulgaria and Romania;

Registrar President