C-1/69

JUDGMENT OF THE COURT 9 JULY 19691

Government of the Italian Republic v Commission of the European Communities2

Case 1/69

Summary

1. Transport — Rates and conditions involving an element of support — Examina­ tion — Authorization — Powers and duties of the Commission (EEC Treaty, Article 80)

2. Measures adopted by an institution — Statement of reasons (EEC Treaty, Article 190)

1 — Language of the Case: Italian. 2 — CMLR.

JUDGMENT OF 9. 7. 1969 — CASE 1/69

v

Commission of the European Communities , represented by its Legal Adviser, Armando Toledano-Laredo, acting as Agent, with an address for service in Luxembourg at the offices of Émile Reuter, Legal Adviser to the Commission, 4 boulevard Royal, defendant,

Application for the annulment of the decision of the Commission of the European Communities of 31 October 1968 (Official Journal L 281 of 20 November 1968, p. 18), concerning the 'draft amendment to the 'Condizioni e tariffe per i trasporti delle cose sulle F.S."'. concerning Part II — Chapter VI — table entitled 'Rates', Title I of Special Tariff No 201 — Series C — of the Italian State Railways,

THE COURT

ITALY v COMMISSION

of 17 May 1962, p. 1229); this be amended or revoked if the Com­ authorization is still valid. mission finds on its own initiative or on Secondly, the Commission granted a application by a Member State that it limited authorization of the application is no longer justified or that its applica­ of the special export tariff (Tariff No tion is causing distortions of competition 251 — point A), which only concerned between forms of transport'. the transport of agricultural products The applicant referred the matter to the coming from the South of Italy and Court of Justice by application dated exported to the other Member States. 30 December 1968 and lodged at the This authorization, which was granted Court Registry on 10 January 1969. for the first time by decision of 19 The procedure followed the normal March 1964 (Official Journal No 57 of course.

decision which forms the subject of the — dismiss the action brought by the present application. Government of the Italian Republic By this decision, which refers only to by application dated 30 December Tariff No 201 (series C), the Com­ 1968; mission authorizes its application until — order the Italian Republic to pay all the costs. 31 December 1969 as provided for in the draft, and 'during a subsequent period of one year, on condition that III — Submissions and argu­ the reductions included in that tariff ments of the parties shall be decreased by at least 50% as Admissibility from 1 January 1970 and completely abolished on 1 January 1971'. More­ The defendant puts forward no objec­ over, the decision provides that it 'may tions to the admissibility of the action.

JUDGMENT OF 9. 7. 1969 — CASE 1/69

visions of the EEC Treaty, while The applicant observes that the Com authorizing certain support tariffs on a mission acknowledged that the amend temporary basis. The draft Ministerial ments to be made to Tariff No 201, Decree No 12811 satisfied this desire series C, satisfied the conditions referred inasmuch as it provided for a general to in Article 80(2), in particular as solution to the problem of support regards the requirements of an appro tariff measures. After examining this

On the other will change within the time-limits fixed hand, and here it agrees with the by the Commission; moreover, the Italian Government, the Commission Commission has not put forward any considered that the reductions made in argument capable of supporting such the Special Tariff No 201 — C involved a forecast. an element of support in favour of the In its reply, the defendant considers agricultural producers of the South of that as Article 80(2) involves an excep Italy. It is, thus, this point which tion to the general prohibition provided formed the subject of the contested for in paragraph (1), the authorizations decision. The Commission considered provided for therein must be temporary that it was obliged to lay down both and exceptional in nature. strict and brief limitation periods, taking To support its argument the Com into account, first, the warnings which mission relies both on the text of it had given to the Italian Government Article 80 of the EEC Treaty and on in the earlier authorization decisions, the case-law of the Court of Justice according to which the elements of tariff concerning the fourth paragraph of support were to be abolished as in Article 70 of the ECSC Treaty, a pro compatible with the Common Market vision similar to Article 80 of the EEC system, and, secondly, of the final intro Treaty (Joined Cases Nos 27, 28 and duction of the common organization of 29/58 and Case 28/66). the markets in fruit and vegetables by Finally, it maintains that the contested means of Regulation No 159/66/EEC. decision is not an isolated act, but forms In its reply, the applicant maintains,

first, that the decision which forms the ance with the applicant's argument that subject of the present application con such an authorization must be main stitutes an independent measure intro tained in force as long as the reasons duced by the Commission on the basis exist which justified its introduction. of the finding that the present case is As regards the applicant's allegation that concerned with adjustment of support it is unprofitable and irrelevant to take tariff measures already enforced and earlier situations into account, the authorized by that body. It is therefore defendant maintains in its rejoinder that superfluous to take the earlier situations it is sufficient to refer to a letter of 11 into consideration.

In fact, of Article 80(2) of the EEC Treaty is the decision expressly provides that: different and wider, as it refers less to — the authorization was to be limited the position of each undertaking than as to time; to complete sectors, in conjunction with — the Commission declared that it the requirements of a regional economic would consider sympathetically an policy and the needs of underdeveloped extension for 1965; areas. It follows that the objective of — within as short a period as possible Article 80(2) of the EEC Treaty is not the Italian authorities were to find a to encourage the beneficiaries of such solution which was compatible with authorizations to adapt themselves to a the Common Market and were to new competitive situation, but rather to take into account the progressive remedy the objective situation of the implementation of a common agri regional sector in question, a situation cultural policy. with which the undertakings could not As regards the parallel between Article cope on their own initiative. Thus, 80(2) of the EEC Treaty and the fourth Article 80(2) constitutes a legal rule paragraph of Article 70 of the ECSC intended to authorize measures of a Treaty, 'the defendant considers that general nature which are even more this results from an analysis of the two necessary and justifiable in that they texts. Article 80 of the Treaty contains, form part of a governmental pro first, a prohibition and, secondly, the gramme for the development of under discretionary power of the Commission developed areas. to authorize exceptions to this prohibi The applicant again observes that, in its tion. In this respect the fourth subpara decision authorizing the existing Special graph of Article 70 of the ECSC Treaty Tariff No 201, the Commission did not does not contain an express prohibition, lay down any limitation in time, but but provides for a prior authorization merely the possibility of an amendment which is only given after examining or revocation when it was no longer whether it is in accordance with the justified in maintaining the authoriza principles of the Treaty.

JUDGMENT OF 9. 7. 1969 — CASE 1/69

The Commission, of the EEC Treaty in order to conclude however, had then given assurances on a contrario that in Community law every the possible extension of the authoriza legal measure must be considered tion (letter of 29 May 1964), which had independently and that the argument led the Government to refrain from which the Commission seeks to put for bringing an action before the Court. ward on the basis of previous situations it thus misconceived. 3. Infringement of another aspect of Secondly, the applicant further develops Articles 80(2) and 2 of the EEC its arguments against the alleged Treaty and infringement of Article parallel between Article 80(2) of the 3(d) of that Treaty; infringement of EEC Treaty and the fourth paragraph an essential procedural requirement of Article 70 of the ECSC Treaty by and misuse of powers maintaining, in particular, that, whilst the ECSC provision provides for an In its application, the Government of exception to a prohibition which is both the Italian Republic claims that when general and clear, the function of Article the Commission took account of the 80(2) of the EEC Treaty is rather to recent entry into force of Regulation enable transport policy to be harmonized No 159/66/EEC concerning the with the other aims of the Treaty such organization of the markets in fruit as regional development. and vegetables, this had nothing to do The defendant, for its part, adhered to with the application of Article 80(2) of its attitude and the arguments already the EEC Treaty, which must be correct set out in the course of the written pro ly and independently applied to the cedure. situations for which it provides.

ITALY v COMMISSION

Commission cannot ignore the effects of the introduction of a common policy these regulations and the new situations could only be a condition of the applica­ to which they give rise, since the intro­ tion of Article 80(2) of the Treaty to the duction of these Regulations has direct extent to which its effects have already repercussions on the position of the been produced 'in concreto'. However, in undertakings who are benefiting from this instance, the Council's regulations the tariffs in question. have not yet given rise to a new situa­ After setting out the details of the tion of this type. common organization of the markets and In its rejoinder, the defendant recalls the the consequences of its implementation various aspects of the common organiza­ as regards the aids and supports granted tion of the markets in fruit and vege­ by the Member States, the defendant tables and maintains that the issue in draws the conclusion that it is clear this instance was no longer one of the that an exception to the prohibition progressive introduction of a common laid down in Article 80(1) of the EEC policy, but rather concerned a concrete Treaty in favour of the Italian support situation. tariffs could no longer be justified. In its oral observations the applicant However, in the light of the fact that, stated that although the explanations first, this measure concerned an adapta­ and arguments put forward by the tion which considerably reduced the defendant may, perhaps, appear plausible, earlier support measures and, secondly, they in no way correspond to the pre­ that the producers' organizations anti­ amble to the contested decision, on the cipated within the context of this basis of which the contested measure organization had not yet had the time must be considered. to become operative and effective, the The defendant replies that as the state­ Commission authorized the measures in ment of reasons for a decision cannot question subject to the fixing of the go into every detail, the preamble in time-limits necessary to bring about a question clearly shows the logical progressive abolition. sequence of the arguments which form In its reply, the applicant maintains that the basis of the decision.

examine such rates and conditions, taking account in particular of the require­ ments of an appropriate regional economic policy, the needs of under­ developed areas and the problem of areas seriously affected by political circumstances on the one hand, and of the effects of such rates and condi­ tions on competition between the different modes of transport on the other. 3 The applicant Government contests in particular the limitations as to time which the Commission attached to the authorization in question and alleges that, once it is established that the tariffs authorized are in accordance with the requirements of Article 80(2), the withdrawal or expiry of the authoriza­ tion could only be justified by a change in the circumstances on which the authorization itself is based. Thus, to fix in advance excessively short time- limits for the expiry of the authorization would, in the absence of any excep­ tional circumstances, be contrary to the objectives and the wording of Article 80. In support of its interpretation of this article, the Italian Government also refers to the general objectives of the Treaty, as set out in Article 2. 4 By empowering the Commission to act on its own initiative or on applica­ tion by a Member State to examine the rates and conditions involving an element of support and by instructing it in this examination to take account in particular of the requirements, needs, problems and effects referred to in Article 80(2), the Treaty has conferred on the Commission a large measure of discretionary power, not only as regards the tariffs to be authorized, but also as regards the details of the authorization to be granted.

7 As the Commission considered a progressive modification in the tariff situa­ tion to be desirable, it was able to authorize the tariff in question for a brief period of adaptation. Such a measure, designed to mitigate the effects of previous decisions, normally falls within the powers and duties laid down by Article 80, although no conclusions are necessarily to be drawn from the measure.

8 The Italian Government alleges that the statement of reasons for the measure in question does not disclose, with even the necessary minimum of clarity, the reasons which led the Commission to limit its authorization as to time and it again puts forward the submission of infringement of an essential procedural requirement. In addition, it claims that the statement of reasons was also contradictory, as, although the Commission recognized that the measures authorized satisfied the requirements of Article 80(2), it only authorized them for a limited period. 9 A statement of reasons must show clearly and unambiguously the grounds on which the measure is based. Although the statement of reasons in quetsion seems for the most part to set out the reasons which led the Commission to authorize the tariff in dispute, rather than to justify the limited duration of the authorization, nevertheless the wording and, in particular, the reference in the notes to previous decisions of the Commission, were sufficient to inform the Italian Government, to whom these decisions were addressed, of the grounds on which it was based and to show in what light its request for an authorization had been examined and considered.

14 However, the purpose of this passage in the statement of reasons was merely to permit the conclusion to be drawn that, inasmuch as they are limited as to time, certain temporary aids may still be granted without adversely affecting the proper functioning of the common organization of the markets in fruit and vegetables. The applicant cannot therefore invoke the grounds for a temporary authorization in order to infer the existence of an obligation to grant an authorization of indefinite duration.

15 It follows from the foregoing that the grounds of complaint put forward cannot be accepted and the application must therefore be dismissed.

Costs

16 Under Article 69(2) of the Rules of Procedure the unsuccessful party shall be ordered to pay the costs. The applicant has failed in its submissions. It must therefore be ordered to pay the costs of the action.

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 the Treaty establishing the European Economic Com­ munity, especially Articles 2, 3 and 80; Having regard to the Protocol on the Statute of the Court of Justice; Having regard to the Rules of Procedure of the Court of Justice;

Donner Strauß Monaco Pescatore

Delivered in open court in Luxembourg on 9 July 1969.

A. Van Houtte R. Lecourt

Registrar President

OPINION OF MR ADVOCATE-GENERAL ROEMER

DELIVERED ON 19 JUNE 19691

1 — Translated from the German.