C-37/70

JUDGMENT OF THE COURT 11 FEBRUARY 19711

Rewe-Zentrale des Lebensmittel-Großhandels GmbH

v Hauptzollamt Emmerich2 (Reference for a preliminary ruling by the Finanzgericht Düsseldorf)

Case 37/70

Summary

Transitional period — General protective measures — Scope — Common organisa­ tion of the agricultural markets — Special protective measures — Powers of the Commission

on the validity, or alternatively, on the scope of the Commission's Decisions of 30 October 1969 (69/375/EEC), 31 October 1969 (69/377/EEC), 3 November 1969 (69/392/EEC) and 17 November 1969 (69/410/EEC), authorizing protective measures with regard to agriculture for the benefit of the Federal Republic of Germany,

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

JUDGMENT OF 11. 2. 1971 — CASE 37/70

THE COURT

composed of: R. Lecourt, President, A. M. Donner and A. Trabucchi (Rapporteur), Presidents of Chambers, R. Monaco, J. Mertens de Wilmars, P. Pescatore and H. Kutscher, Judges,

Advocate-General: A. Dutheillet de Lamothe Registrar: A. Van Houtte

I — Summary of facts and In the meantime, by an application of of procedure 27 October 1969, the Government of the Federal Republic of Germany re­ The facts which form the basis of the quested authorization from the Commis­ dispute and the progress of the pro­ sion to take transitional protective meas­ cedure may be summarized as follows: ures to alleviate the effects of the above­ Following the revaluation of the Ger­ mentioned revaluation on the German man Mark with effect from 27 October agricultural market. 1969 the Council of the European By Decision of 30 October 1969 (OJ L Communities, in view of the change in 273 of 31. 10. 1969) the Commission, the relationship between the parity of on the basis of Article 226 of the EEC the German Mark and the value of the Treaty, authorized the Federal Repub­ unit of account and, further, of the fact lic of Germany to take measures in the that the value of the unit of account agricultural sector with effect from 27 and of common prices fixed within the October 1969 until 7 December 1969 framework of the common agricultural inclusive. The measures authorized were policy had not been altered, considered to involve: it necessary to extend, by means of Regu­ — the increase by 9.29% of the inter­ lation No 2111/69 of 28 October 1969 vention prices or purchase prices to (OJ L 270 of 28. 10. 1969), the sus­ be paid by the Federal Republic of pension of the value of the unit of Germany for interventions on the account with regard to the Federal Re­ domestic market in accordance with public pursuant to Article 4 of Regu­ the regulations on the common or­ lation No 653/68 (OJ L 123 of 31. 5. ganization of the agricultural markets 1968) until a date to be decided as (Article 2); quickly as possible by the Commission. — the right to increase the amount to The purpose of this extension was to be paid by the Federal Republic in allow the adoption of transitional meas­ respect of other interventions on the ures pending the establishment of a sys­ domestic market within the meaning tem of subsidies necessary to ensure the of Articles 5 and 6 of Regulation No maintenance of the level of prices in 17/64 EEC as amended by Regulation Germany and to avoid disturbances on No 1892/68 (Article 3); the market. — the right on the part of the Federal

Republic of Germany to levy counter nexion were wrongly based on Article vailing charges on imports from 226. That article was not applicable Member States and third countries since the necessary conditions of law and to grant subsidies for exports to and of fact were not present. In particu such States, in order to compensate lar, Article 226 (3) required the avoid for the effects of the said measures ance of any difficulties which might have (Article 4). arisen in German agriculture following By a Decision of 31 October 1969 (OJ the revaluation of the German Mark, L 277 of 4. 11. 1969) the Commission laid owing to an increase in intervention down detailed rules for the implementa prices for German products alone, de tion of the decision of 30 October. This signed to compensate for loss of income decision was supplemented by the Deci by agricultural producers; this would sion of 3 November 1969 (OJ L 280 of have made it possible to avoid the 7. 11. 1969). serious disturbance of the normal func By a Decision of 17 November 1969 tioning of the common market in agri (OJ L 290 of 18. 11. 1969) modifying culture involved in establishing counter the decision of 30 October, the Com vailing charges in respect of imports. mission extended the period of applica Alternatively, the question arises whether

gard to the future. Apart from this, ber of consignments of foodstuffs from Regulation No 653/68 does not permit the Netherlands, lodged complaints retroactive effect. against the imposition of a countervail Finally, there is the further question of ing charge levied independently of the whether the extension of validity of the turnover tax in respect of imports under Commission's Decision of 30 October provisions adopted by the Federal Ger 1969, effected for political reasons, is in man Government on 3 and 5 November accordance with Regulation No 2111/69 1969 in accordance with the above of the Council and with Article 226 (3) mentioned decisions of the Commission. of the EEC Treaty. The Hauptzollamt (principal customs If the abovementioned decisions of the office) dismissed as unfounded the com Commission are considered valid, and if plaints submitted in connexion with the it is found that those decisions may imports given customs clearance on 29 directly provide valid authority within October 1969. the national legal system for provisions Before the Finanzgericht Düsseldorf, of the national executive it may be con Rewe-Zentrale pleaded against this de ceded that the national provisions are cision of rejection that Article 21 (2) (4) valid, although they may not be founded of the Zollgesetz (German Customs on Article 226.

JUDGMENT OF 11. 2. 1971 — CASE 37/70

As a result of the foregoing, the German the authorization beyond 7 Decem­ court, by an order of 15 July 1970, re­ ber 1969, although the conditions corded in the Court Register on 23 in Article 226 of the EEC Treaty July 1970, brought the following ques­ were not satisfied at that time, that tions before the Court of Justice: is to say, for the period after 7 December 1969? (I) Are the Decisions of the Commis­ sion of the EEC of 30 October (V) (1) In the event of the abovemen­ 1969 (69/375/EEC), 31 October tioned decisions of the Com­ 1969 (69/377/EEC), 3 November mission being valid, even if 1969 (69/392/EEC) and 17 they may not be based on November 1969 (69/410/EEC) in­ Article 226 but solely on valid in that they authorize the some other enabling provision levying of a countervailing charge of Community law, can they in in connexion with the revaluation turn, from the point of view of the German Mark because of the Community, directly Article 226 of the EEC Treaty on provide the necessary internal which they are founded was not authority for provisions of the applicable, having regard to the executive bodies? special protective measures for the (2) If so, does this apply even if organizations of agricultural mar­ under national law the execu­ kets and to Regulations of the tive does not have legislative Council Nos 804/68 of 27 June powers? 1968 and 653/68 of 30 May 1968? In its decision making the reference the Finanzgericht observes that only Ques­ (II) If a negative reply is given to tion IV is not of decisive importance to Question I, do the said decisions the question whether levying the coun­ of the Commission constitute illegal tervailing charge is lawful in the dis­ authorizations to levy the said puted cases, but it considered that this countervailing charge because: question should also be submitted to the (1) the factual conditions for the Court because the present action was application of Article 226 of initiated as a test case and because a

many and the Commission submitted Furthermore, any possibility of applica­ their oral observations. tion of Article 226 would also be con­ The plaintiff in the main action was trary to the conferment of powers effec­ represented by H. Ditges and D. Ehle ted by Article 43 (2) of the Treaty and, of the Cologne Bar. ipso jacto, to the particular objectives The Government of the Federal Re­ laid down in Article 39. In fact in the public of Germany was represented by sphere of the common agricultural policy R. Morawitz, Adviser at the Ministry the Council and not the Commission for Economic Affairs. has power to take decisions. The Coun­ The Commission of the European Com­ cil might be divested of the responsi­ munities was represented by its Legal bility relating to the elaboration and im­ Adviser, H. Matthies, acting as Agent. plementation of the common agricul­ The Advocate-General delivered his tural policy if the Commission were able opinion on 13 January 1971. to substitute itself for it without con­ sultation, acting on the basis of Article 226 of the Treaty. The Commission thus II — Written observations had no power whatsoever to take the submitted to the Court decisions in question. Furthermore, the very general objective contemplated in The observations submitted under Article 226 does not necessarily take Article 20 of the Statute of the Court account of the specific objectives of the may be summarized as follows: common agricultural policy set out in Article 39 of the LUV Treaty.

JUDGMENT OF U. 2. 1971 — CASE 37/70

Furthermore, The Commission of the European Com from the legal point of view, there is munities observes that under Article only one transitional period and this 38 (2) of the Treaty the rules laid down alone governs the application of Article for the establishment of the Common 226. The practice followed by the Com Market shall apply to agricultural pro mission and by the Member States in ducts, save as otherwise provided in recent years confirms the generally Articles 39 to 46, and that Article 226 accepted view that Article 226 and the is also one of the rules laid down for protective provisions in the agricultural the establishment of the Common Mar regulations are not mutually exclusive.

Between the point proper functioning of the common or when the automatic readjustment took ganizations of the market require that effect and the time when the measures the particular provisions adopted within to compensate the effects of those re the framework thereof come within the adjustments were to take effect, that is derogation provided for in Article 38 (2). to say, from 27 October to 31 Decem The protective measures contained in ber 1969, there was a lacuna which the the regulations relating to the organiza Member States and the Commission tions of the market apply solely to trade agreed should be filled by measures with third countries and lay down meas maintaining the earlier price conditions ures relating to the Community as a in Germany. In order to do so without

REWE-ZENTRALE v HAUPTZOLLAMT v EMMERICH

account. In fact such a measure would pass on no more than part of the price have resulted in an increase in the advantage following the revaluation. volume of excess production in the other There was thus no justification whatso Member States. ever for the fear of 'serious difficulties’. For reasons similar to those of the The fall in intervention prices resulting Commission, the German Government from the alteration in the parity of the maintains that neither the specific pro German Mark in relation to the unit of visions on agriculture laying down pre

Further tion of the arrangements for compensa more, an authorization to levy counter tion the agricultural sector may be vailing charges cannot eliminate the divided on the basis of a distinction difficulties which may be inherent in a made on the ground of the existence loss of income for agricultural producers. or otherwise of an intervention system On the other hand, a rise in the level for products subject to a market organiza of intervention prices would have con tion. The difficulties referred to by the stituted a marketing guarantee for Commission in fact relate to the inter agricultural products at a fixed price vention agencies, which do not constitute and would have been the least pre a sector of the economy within the judicial method.

JUDGMENT OF 11. 2. 1971 — CASE 37/70

Finally, since of the ECSC Treaty. The Commission the German intervention agencies lacked emphasizes that the Council initially sufficient warehouses they would have concurred in considering that the diffi been incapable of making the necessary culties threatening German agriculture purchases of German products. The were serious and liable to persist if appearance of surpluses and of artificial special measures were not taken to assist patterns of trade would have had serious that sector. Until the entry into force consequences for large sectors of the of the system of aids it was necessary economy, which would have been diffi to fill the lacuna existing in the transi cult to rectify. In addition, the retro

With regard to a crease in purchase and intervention decision authorizing a State to adopt prices to German products would not measures derogating from the Treaty it

must be duly demonstrated in the plied for the decision of the Commission, decision itself that all the conditions laid also taking into account the case-law of down in the safeguarding clause are the Court and in particular the judgment present. In the present case the Com in Case 2/56. mission limited itself in essence to para phrasing the wording of Article 226 Question III without giving any indication of what constituted the difficulties allegedly The plaintiff in the main action considers threatening 'German agriculture', a con that owing to the exceptional nature of cept which it employs instead of that of the measures referred to by Article 226 a 'sector of the economy'. this provision cannot be applied with The recitals in the preamble to the retroactive effect. Contrary to the rule Decision of 30 October 1969 contain a contained in the second paragraph of factual contradiction in that in the Article 115 of the Treaty, Member second sentence of the first recital it is States are not empowered to take pro stated that the Council had come to the tective measures independently.

In which extended until 31 December the the present case the defendant in the duration of the validity of the above main action could rely on the fact that a mentioned decisions. protective measure could not be intro This latter decision gives no indication duced before notification of the Com whatsoever why the period originally mission's decision of authorization and prescribed proved insufficient. its conversion into national law on 31 The Commission of the European Com October 1969. As the revaluation of the munities observes that the degree of German Mark had been expected at precision of a statement of reasons in a least since 29 September 1969 the Ger decision must be weighed against prac man Government had sufficient time to tical realities and the time and technical apply to the Commission for authorization facilities available for making it, as is to take protective measures.

JUDGMENT OF 11. 2. 1971 — CASE 37/70

This situa they may be applied retroactively. No tion differs from that referred to in support may be deduced from Article Article 115 of the Treaty which relates 226 for the existence of a prohibition to an authorization (Ermächtigung), be against authorizing the State concerned cause it relates to a unilateral act of the from applying protective measures retro Commission which need not be preceded actively. by an application from the State con The suspension of the value of the unit cerned. On the other hand, implementa

In this case there is of the decision containing the said meas thus no problem in connexion with ures. In fact the purpose of the suspen retroactivity. sion was temporarily to create a legal With regard to the argument based on hiatus so that settlement of transactions the maintenance of legal certainty, the to be carried out during this period German Government refers to the possi should take place at the end of the period bility of recourse to retroactive measures of suspension on the basis of the value provided for by Regulation No 653/68 of the unit of account then applicable, and the relationship existing between also taking account of any measures such measures and the arrangements for adopted for the adjustment of various compensation at the frontier.

The Commission of the European Com The Government of the Federal Re munities declares that it does not oppose public of Germany observes that in terms consideration of this question, which is of the fifth paragraph of Article 4 of naturally and closely connected with the Regulation No 653/68 it was logical to foregoing questions, and it observes that apply the new value of the unit of if the question were to remain un account from 27 October and that in answered a number of the transitional those circumstances it was necessary also provisions applied from 27 October to

31 December 1969 would remain the considerable time required for the obscure. discussions which took place in Brussels. The Commission observes that the argu­ ments put forward by the plaintiff in the Question V main action as they emerge from the order making the reference are indistinct The plaintiff in the main action states and formulated on the basis of incorrect that, considered from the viewpoint of arguments. Regulation No 2111/69 of Community law, the decisions of the the Council which extended with regard Commission of 30 October and 17 to the Federal Republic the period of November 1969 constitute a directly ap­ suspension of the value of the unit of plicable authorization for the body which, account was intended to provide time according to German constitutional law, for the adoption of measures guarantee­ is competent to transform the enabling ing the status quo of prices in Germany decisions of the Commission into na­ and to avoid disturbances on the market. tional law. On the other hand, such de­ The Council regulation necessary to cisions are incapable of modifying either introduce the system of aids is that of the separation of powers under the 9 December 1969 and the German law constitution or the regulatory powers granting compensation for the conse­ of the executive bodies in the Federal quences in the agricultural sector of the Republic. revaluation of the German Mark was The Commission of the European Com­ dated 23 December 1969. Consideration munities considers that this question is of those dates is sufficient to account for hypothetical and so ill-defined that it the necessity for extending the decision of seems impossible to reply to it. Further­ the Commission of 30 October 1969. more its admissibility is subject to reser­ The Government of the Federal Republic vations, as it appears to relate solely to of Germany declares that it would also the interpretation of national law be very glad if, in the interest of the The Government of the Federal Republic equitable administration of justice, the of Germany also considers that this Court would also give a ruling on the question raises problems unrelated to the fourth question, which is closely con­ interpretation of Community law. It nected with the third, even if in the observes that in the absence of an ade­ present case the Finanzgericht Düssel­ quate enabling rule laid down by the dorf would be able to deliver its judg­ national legislature the provisions of ment without obtaining a reply to this German law providing for the levy of question. countervailing charges are void under The German Government observes in German law, even if under Community addition that the adoption of legislative law they are covered by the decisions of measures in connexion with compensa­ the Commission. However, this is a tion for loss of income was delayed not question relating to the interpretation of only by the formation of the new Ger­ national law on which the Court has no man Government but also by reason of jurisdiction to give a ruling.

3 In accordance with Article 226 of the Treaty, during the transitional period prescribed in Article 8 protective measures may be taken if difficulties arise which are serious and liable to persist in any sector of the economy. In ac­ cordance with the principle set out in Article 38 (2) of the Treaty, the pro­ visions of Article 226 apply to agricultural products. The scope of Article 226 cannot be affected by the insertion of safeguarding clauses in agricultural regulations, taking account of the specific nature of those protective mechan­ isms and in particular of the fact that they relate to trade with third countries.

7 In its decision of 30 October 1969 the Commission finds that the revaluation of the German Mark by 8.5% would involve a decrease in German agri­ cultural prices, which are fixed in units of account but expressed in German Marks, and therefore a loss of income for German agricultural producers.

8 Owing to its extent and unexpectedness such a decrease in income would have constituted per se a serious difficulty liable to persist in a sector of the economy justifying the adoption of protective measures to rectify the situation.

For this purpose provision had to be made during a brief transitional period for the establishment of a system of levies at the frontier isolating the German agricultural market until a system of long-term aids for agri­ cultural producers could be introduced.

It was therefore necessary, in order to avoid a collapse in German agricultural prices, provisionally to maintain the level of prices until German agriculture was capable, with the help of the introduction of the projected system of aids, of withstanding and adapting itself to the fall in prices which would inevitably follow from the revaluation of the German Mark within a system based on the free movement of agricultural products. The text of the deci­ sions sets out these reasons succinctly but adequately.

9 The German court referred in addition to the argument put forward by the plaintiff in the main action, according to which the difficulties which the revaluation of the German Mark might have caused for German agriculture could have been avoided by an increase in intervention prices exclusively for German products so as to compensate for the loss of income of agricultural producers.

14 This question relates to the fact that the decision of 30 October 1969 (Article 6), published in the Official Journal of 31 October 1969, authorized the Federal Republic of Germany to take protective measures with effect from 27 October 1969.

15 Until a system of aids for German agricultural producers was established it was necessary to avoid any interruption in the maintenance of the level of agricultural prices existing in Germany at the time of the revaluation of the German Mark.

The transitional protective measures authorized by the decision of 30 October 1969 would not have been capable of attaining their objective fully if they had not been applicable from the entry into force of the new parity of the German Mark.

16 It was thus proper to fix at this same date the point when the protective measures authorized could take effect. The decision of the Commission of 30 October 1969 and those of 31 October and 3 November 1969 which supple­ mented it are consequently not invalid to the extent to which they have retroactive effect.

The fourth question

17 The question is then asked whether the disputed decision of the Commission of 17 November 1969 is invalid because it extended the authorization beyond 7 December 1969.

On those grounds,

Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the oral observations of the plaintiff in the main action, the Commission of the European Communities and the Government of the Federal Republic of Germany; Upon hearing the opinion of the Advocate-General; Having regard to the Treaty establishing the European Economic Com­ munity, especially Articles 8, 38, 177 and 226; Having regard to the Decisions of the Commission of 30 and 31 October 1969 (69/375 and 69/377 EEC) and of 3 and 17 November 1969 (69/392 and 69/410 EEC); Having regard to the Protocol on the Statute of the Court of Justice of the European Economic Community; Having regard to the Rules of Procedure of the Court of Justice of the Euro­ pean Communities,

THE COURT

in answer to the questions referred to it by the Finanzgericht Düsseldorf by order of that court of 15 July 1970, hereby rules:

JUDGMENT OF 11. 2. 1971 — CASE 37/70

Consideration of the questions put does not reveal any factor capable of affecting the validity of the Decisions of the Commission of the European Communities of 30 and 31 October 1969 (69/375 and 69/377 EEC) and of 3 and 17 November 1969 (69/392 and 69/410 EEC).

DUTHEILLET DE LAMOTHE

DELIVERED ON 13 JANUARY 19711

Mr President, request of the German Government, the Members of the Court, Court was required to give a ruling on an application for suspension of the The present case will lead the Court to execution of a decision taken by the give a ruling on the validity of various Commission which, in the view of the Community acts taken consequent upon Government of the Federal Republic, the revaluation of the German Mark in was inadequate. October 1969. At the time Mr Advocate-General Gand