C-30/70

Otto SCHEER, having its offices in Hannover,

and

Einfuhr- und Vorratsstelle für Getreide und FUTTERMITTEL, Frankfurt-am- Main,

on the interpretation of Article 16 (2) and (3) of Regulation No 19 of the Council of 4 April 1962, on the progressive establishment of a common organization of the market in cereals, in relation to the second paragraph of Article 7 of Regulation No 87 of the Commission of 25 July 1962, on the establishment of detailed rules of application in respect of import and export licences for cereals and cereal products, and to Paragraph 7 of the German Law of 26 July 1972 implementing Regulation No 19.

THE COURT

composed of: R. Lecourt, President, A. M. Dormer and A. Trabucchi, Presidents

I — Facts and procedure cereals and cereal products (OJ 1962, p. 1895), on which paragraph 7 of the German On 13 March 1963 the Otto Scheer under­ Law implementing Regulation No 19 is taking obtained from the Einfuhr- und based, is illegal, in particular because it Vorratsstelle für Getreide und Futtermittel involves a sub-delegation to the Member an import licence in respect of 150 metric States of the power to lay down the detailed tons of oats. rules for the lodging, amount and forfeiture In accordance with Paragraph 7 (1) of the of the deposit. German Law of 26 July 1962 implementing By judgment of 15 June 1966 the Verwal­ Regulation No 19 (Bundesgesetzblatt 1962, tungsgericht Frankfurt-am-Main dismissed I. p. 455) the issue of the licence was con­ the action. It held in particular that the ditional on the lodging of a deposit, amount­ German Law implementing Regulation No ing to 10% of the free-at-frontier price, the 19 was not based on a sub-delegation of cif price or the offer price of the products, powers, as on the contrary Member States guaranteeing that the obligation to import have an original power to legislate on a during the period of validity of the licence matter relating to the powers of the Com­ would be fulfilled. munity so long as it has not itself made use As no import transaction was effected of its legislative power and that the Commis­ during the period of validity of the licence, sion was not obliged itself to lay down im­ the Einfuhr- und Vorratsstelle für Getreide mediately the detailed rules on the lodging, und Futtermittel by decision of 24 July 1963 amount and forfeiture of the deposit. declared DM 3 682.20 of the deposit for­ On Otto Scheer's appeal against that judg­ feited. ment to the HessischerVerwaltungsgerichts­ When on 9 September 1963 the Einfuhr- und hof, that court, by order of 15 May 1970 Vorratsstelle rejected Otto Scheer's objec­ received at the Court Registry on 17 June tion, that undertaking brought an action on 1970, requested the Court of Justice under 19 September 1963 before the Verwaltungs­ Article 177 of the EEC Treaty for a pre­ gericht (Administrative Court) Frankfurt- liminary ruling on the interpretation of am-Main. Article 16 (2) and (3) of Regulation No 19 It maintained that the second paragraph of of the Council of 4 April 1962 on the pro­ Article 7 of Regulation No 87 of the Com­ gressive establishment of a common organ­ mission of 25 July 1962, on the establish­ ization of the market in cereals (OJ 1962, ment of detailed rules of application in p. 933) and, more particularly, to rule respect of import and export licences for whether the second paragraph of Article 7

of Regulation No 87 of the Commission of 3 (a) In adopting the detailed rules of ap 25 July 1962, on the establishment of detail plication referred to in Article 16 (3) ed rules of application in respect of import of Regulation No 19, should the and export licences for cereals and cereal Commission have itself laid down all products, and Paragraph 7 of the German the requirements relating to the Law of 26 July 1962 implementing Regula lodging, forfeiture and amount of the tion No 19 are compatible with Article 16 deposits in respect of import licences? (3) of Regulation No 19.

licences until their harmonization in No 19 be understood to mean that accordance with Article 26 of Regula from the entry into force of that regu lation the grant of an import licence tion No 19 and merely to require the Member States to notify it of the could be conditional on the lodging of measures taken? a deposit and that a deposit could be forfeited if importation was not 4 Is the procedure of Article 26 of effected during the period of validity of the licence? Regulation No 19, in accordance with which the Commission adopted Regulation No 87, compatible with (b) Or could such provisions concerning Community law of a higher rank? the lodging and forfeiture of a deposit in respect of an import licence only be In accordance with Article 20 of the Proto adopted after the entry into force of col on the Statute of the Court of Justice of the detailed rules of application re the EEC written observations were sub ferred to in Article 16 (3) of Regula mitted on 5 August 1970 by the plaintiff in

the Federal Republic of Germany was II — Observations submitted to the entitled to adopt in Paragraph 7 of the Court Law implementing Regulation No 19 rules relating to deposits in respect of import licences? Otto Scheer, the plaintiff in the main action,

advances the following arguments in partic tion on the world market. On the other ular against the validity of the system of hand, a quantitative check, such as arises deposits: from the system of import and export licences, the utilization of which must be guaranteed by means of a deposit, is only of (a) On the formal level secondary importance. It appears therefore that the system of Forfeiture of the deposit constitutes a deposits is ineffectual in attaining the quasi-penal sanction or a fine imposed on objective sought by the agricultural regula the importer or exporter on failure to carry tions and is even contrary to the scheme of out the obligation of public law imposed those regulations. Moreover, it is also

of this nature. Commission are not technically in a posi The system of deposits is based on the so tion to exploit the formation provided by called Management Committee voting pro the system criticized. cedure. That procedure is contrary to the Finally, the obligation to lodge a deposit Treaty: it enables the Management Com places a heavy burden on the liquidity of mittee to participate in the legislative work undertakings, in particular small and of the Commission, makes the obligation to medium-sized undertakings and the amount consult the Assembly illusory and gives the of the deposit, especially in the case of Member States the opportunity of obtaining advance fixing of the levy or refund, is ex from the Council an 'annulment' of the cessive in relation to normal trade profit regulations of the Commission. The regula

ity law. In this respect the followingobserva in order to attain it, there are other methods tions in particular should be made: which may be more conveniently applied. The regulations establishing the common The system of deposits also violates the organization of the agricultural markets are principle of proportionality in that in limited in principle to the formation of respect of exemption from forfeiture of the market policy by means of prices. The regu deposit it refuses, otherwise than in cases of lation of prices has an automatic sluice-gate force majeure, to take into consideration effect on quantitative movements in the situations in which the licence to import or Community market and avoids any dis export has not been utilized for wholly turbance to it. Consequently, the point of justifiable commercial reasons, in particular prime importance in the assessment of the when utilization would have been contrary market and market trends is the observance to the objectives of the common organiza and checking, first, of the prices on the tion of the markets or to commercial logic internal market and, secondly, of the situa- (for example, in the event of amendment of

the applicable legislation between the date ities submits substantially the following of the application for the licence and that of observations : its issue). (a) Article 16 (3) of Regulation No 19 in no (c) With regard to the specific questions put way obliged the Commission itself to lay by the Hessischer Verwaltungsgerihtshof, down immediately all the requirements for the plaintiff in the main action submits the the lodging, forfeiture and amount of the following observations in particular : deposits in respect of import licences.

it deemed necessary in each case. The lished in the Official Journal of the Com obligation for it to adopt all those edtailed munities on 28 July 1962, did not, under the rules of application constituted a well-nigh terms of Article 10 thereof, enter into force impossible task, overlooked the experimen until 30 July). Article 16 (2) and (3) of tal and evolving nature of Regulation No Regulation No 19 did not, however, by 19 and was contrary to the wording and itself constitute an authorization directly structure of the EEC Treaty, which is enabling the German legislature to adopt governed by the principle of the gradual Paragraph 7 of, the implementing German and progressive establishment of the com

sets of rules. The Community did not sion to delegate to the Member States the establish a complete and definitive set of power to adopt the detailed rules of applica rules for products covered by Regulation tion with regard to the lodging, forfeiture No 19 and the matters not governed by the and amount of the deposit and the second Community implementing provisions re paragraph of Article 7 of Regulation No 87 main within the sphere of competence of the is consequently null and void. Moreover, by Member States. omitting to lay down the maximum amount capable of being forfeited, the Commission The second paragraph of Article 7 of Regu lation No 87 does not therefore involve a introduced into the system of deposits dis parities causing distortion of competition. delegation of powers ; it obliges the Member The Management Committee procedure in States to lay down provisionally detailed fringes the Treaty in that it confers on that rales for the lodging, amount and forfeiture Committee a right of collaboration wider of the deposit and thus to continue to than a mere right of consultation and thus exercise their legislative powers so long as adversely affects both the legislative powers the Community does not take it upon itself

SCHEER ν EINFUHR- UND VORRATSSTELLE GETREIDE

Grounds of judgment

1 By order of 15 May 1970, received at the Court on 15 June 1970, the Hessischer Verwaltungsgerichtshof under Article 177 of the EEC Treaty has requested a preliminary ruling on the interpretation of Article 16 (2) and (3) of Regulation No 19 of the Council of 4 April 1962 on the progressive establishment of a common organization of the market in cereals (OJ 1962, p. 933) and, in particular, to rule whether the second paragraph of Article 7 of Regulation No 87 of the Commission of 25 July 1962 on the establishment of detailed rules of application in respect of import and export licences for cereals and cereal products (OJ 1962, p. 1895) and Paragraph 7 of the German Law of 26 July 1962 implementing Regulation No 19 of the Council (BGBI. I, p. 455) are compatible with Article 16 (3) of Regulation No 19.

2 It appears from the file sent to the Court that this question was raised in the context of an appeal against a judgment of the Verwaltungsgericht Frankfurt-am-Main

JUDGMENT OF 17. 12. 1970 — CASE 30/70

(b) Or could such provisions concerning the lodging and forfeiture of a deposit in respect of an import licence only be adopted after the entry into force of the detailed rules of application referred to in Article 16 (3) of Regulation No 19?

2 (a) Must Article 16 (3) of Regulation No 18 be understood to mean that from the date of the entry into force of that regulation only the Commission had the power to lay down rules as to the lodging, forfeiture and amount of deposits in respect of import licences?

(b) Or were the Member States authorized, until the entry into force of the detailed rules of application to be adopted under Article 16 (3) of Regulation No 19, to lay down rules as to the lodging, forfeiture and amount of the

SCHEER ν EINFUHR- UND VORRATSSTELLE GETREIDE

deposits in respect of import licences, with the result that the Federal Republic of Germany was entitled to adopt in Paragraph 7 of the Law implementing Regulation No 19 rules relating to deposits in respect of import licences?

3 (a) In adopting the detailed rules of application referred to in Article 16 (3) of Regulation No 19, should the Commission have itself laid down all the requirements relating to the lodging, forfeiture and amount of the deposits in respect of import licences?

(a) The period subsequent to the entry into force of Regulation No 87

6 Article 16 (3) of Regulation No 19 provides that 'The detailed rules for the applica­ tion of this article ... shall be adopted in accordance with the procedure laid down in Article 26'. For its part, Regulation No 87, adopted in implementation of the said Article 16, provides in the second paragraph of Article 7 thereof that until

JUDGMENT OF 17. 12. 1970 — CASE 30/70

subsequent provisions are adopted 'the detailed rules relating to the lodging and forfeiture of the deposit, as well as to its amount, shall be laid down by Member States and notified without delay to the Commission and the other Member States'. This provision is criticized by the plaintiff in the main action on the ground that the Treaty does not permit the institutions of the Community to 'delegate to the Member States the task of taking the legislative measures which they should them­ selves adopt in the framework of the common organization.'

7 Article 16 (3) of Regulation No 19 must be interpreted in relation to the legal context in which it is inserted and to the time at which it came into being. In itself, this enabling provision does not have the effect of determining the nature of the future detailed rules of application with regard to the delimination of functions between the Community and the Member States. The object of Regulation No 19, which forms its legal context, is the 'progressive' establishment of a common organ­ ization of the market, as is indicated both in the preamble and, in particular, in Article 1 of the regulation itself. This concept is fully in conformity with the system of the Treaty as it appears from the general provisions of Article 8 and, in the particular sphere of agriculture, from Articles 39 (2) (b) and 40 (1).

SCHEER ν EINFUHR- UND VORRATSSTELLE GETREIDE

(b) The intermediate period between the entry into force of Regulation No 19 and that of Regulation No 87

10 The provisions of Article 16 (2) of Regulation No 19, relating to the effect of import licences for cereals and to the lodging of deposits, were applicable from the entry into force of that regulation. In so far as the detailed rules of application in­ dispensable to the functioning of the import and export system laid down in that same Article 16 had not yet been determined by the Community, the Member States were entitled and, by virtue of the general provisions of Article 5 of the Treaty, obliged to do everything in their power to ensure the effectiveness of all the provisions of the regulation.

11 Consequently, Article 16 of Regulation No 19 must be interpreted in the sense that, before the entry into force of the implementing provisions provided for in para­ graph (3) of that article, the Member States were able to take, on a transitional basis and without prejudice to any future action on the part of the common institutions, any implementing measures compatible with the principles of the regulation.

The question relating to the compatibility of the Management Committee procedure with Community law of a higher rank

12 The Court is asked by Question 4 whether the procedure of Article 26 of Regulation No 19 of the Council, in accordance with which Regulation No 87 of the Commis­ sion was adopted, is compatible with Community law of a higher rank.

15 Both the legislative scheme of the Treaty, reflected in particular by the last indent of Article 155, and the consistent practice of the Community institutions establish a distinction, according to the legal concepts recognized in all the Member States, between the measures directly based on the Treaty itself and derived law intended to ensure their implementation. It cannot therefore be a requirement that all the details of the regulations concerning the common agricultural policy be drawn up by the Council according to the procedure in Article 43. It is sufficient for the purposes of that provision that the basic elements of the matter to be dealt with have been adopted in accordance with the procedure laid down by that provision. On the other hand, the provisons implementing the basic regulations may be adopted according to a procedure different from that in Article 43, either by the Council itself or by the Commission by virtue of an authorization complying with Article 155.

16 The measures dealt with by implementing Regulation No 87 of the Commission do not go beyond the limits of the implementation of the principles of basic Regulation No 19. The Commission was thus validly authorized by Regulation No 19 to adopt the implementing measures in question, the validity of which cannot therefore be disputed within the context of the requirements of Article 43 (2) of the Treaty.

17 Secondly, the plaintiff in the main action criticizes the Management Committee procedure in that it constitutes an interference in the Commission's right of decision, to such an extent as to put in issue the independence of that institution. Further, the interposition between the Council and the Commission of a body which is not provided for by the Treaty is alleged to have the effect of distorting the relationships between the institutions and the exercise of the right of decision.

19 The legality of the so-called Management Committee procedure, as established by Articles 25 and 26 of Regulation No 19, cannot therefore be disputed in the context of the institutional structure of the Community.

20 The plaintiff in the main action has also criticized the Management Committee procedure inasmuch as that machinery has deprived the Court of Justice of certain of its functions by instituting 'a right of annulment' reserved to the Council for measures taken by the Commission.

21 That objection is based on a false analysis of the Council's right to take over the decision. The procedure laid down by Article 26 of Regulation No 19 has the effect of enabling the Council to substitute its own action for that of the Commission where the Management Committee gives a negative opinion. The system is therefore arranged in such a way that the implementing decisions adopted by virtue of the basic regulation are in all cases taken either by the Commission or, exceptionally, by the Council. These measures, whatever their author, are capable of giving rise in identical circumstances either to an application for annulment under Article 173 or to a reference for a preliminary ruling under Article 173 of the Treaty. It there­ fore appears that the exercise by the Council of its right to take over the decision in no way limits the jurisdiction of the Court of Justice.

Costs

22 The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable. As these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the Hessischer Verwaltungsgerichtshof, the decision as to costs is a matter for that court.

(a) the provisions of paragraph (2), relating to the effect of import licences and to the lodging of deposits, were applicable from the entry into force of that regulation;

(b) before the entry into force of the implementing provisions provided for by paragraph (3), the Member States were empowered to take, on a tran­ sitional basis and without prejudice to any future action of the common institutions, any implementing measure compatible with the principles of the regulation;

(2) Examination of the question put has not revealed any factor capable of affecting the validity of the second paragraph of Article 7 of Regulation No 87 of the Commission, adopted in application of Article 16 (3) of Regula­ tion No 91;

SCHEER ν EINFUHR- UND VORRATSSTELLE GETREIDE

(3) Article 16 (3) of Regulation No 19 did not prohibit the Member States from preparing legislative or other measures for the purpose of enabling them to assume fully, on the entry into force of Regulation No 87, the functions devolving on them in the interest of the Community under the second para­ graph of Article 7 of that regulation.

Lecourt Donner Trabucchi