C-3/73

'Denaturing of wheat'

Case 3/73

Summary

Agriculture — Common of the markets — Cereales Denaturing — organization —

Supervision — Member States — Powers — Obligations

(Regulation No 172/67 of the Council, Art. 7; Regulation No 1403/69 of the Com­ mission, Art. 4 (3))

responsibility qualities necessary to avoid risks of

The national legislature is obliged to abuse. The refusal to place any trust in a ensure by adequate supervision that plant is subject to judicial control.

In Case 3/73

Reference to the Court under Article 177 of the EEC Treaty by the Hessischer

Verwaltungsgerichtshof, VIIth Senate, for a preliminary ruling in the action

pending before that court between:

the Council of 27 June 1967 and of Regulation No 1043/69/EEC of the

Commission of 18 July 1969,

THE COURT

composed of: R. Lecourt, President, R. Monaco and P. Pescatore, Presidents of

Chambers, A. M. Donner, J. Mertens de Wilmars, H. Kutscher, C. Ó Dálaigh (Rapporteur), M. Sørensen and A. J. Mackenzie Stuart, Judges,

Advocate-General: J. P. Warner Registrar: A. Van Houtte

The Hessischer Verwaltungsgerichtshof official of the intervention agency or

(Administrative Court of Hesse) has whether the requirement of supervision

asked the Court of Justice of the may be satisfied if the intervention European Communities for a preliminary agencv merely ensures the possibility of

ruling nn the question: an inspection of the denaturing operation at any moment, but requires 'Whether Article 7 of Regulation No "reliability" on the part of the person in 172/67/EEC of the Council of 27 June denaturing plant.'

charge of the 1967 on general rules governing the

denaturing of wheat and rye of The wording of the two abovementioned bread-making quality (OJ No 130 of 28 Regulations is as follows: Tune 1967, p. 2602/67) and Article 4 (3) of Regulation No 1403/69/EEC of the A — Regulation No 172/67 of the

mon Custom Tariff...' (Art. 4 (3)). jer'

No 148 of 10 August 1968, mentioned

The main action is concerned with the in BGBl 1968 I p. 968), a Decree of 13 recognition of the March 1970 amending the former Decree plaintiff's plant as a ('Bundesanzeiger' No 58 of 25 March denaturing undertaking. On 15 1970, mentioned in BGBl 1970, I, p. 310) January 1970, the plaintiff ap­

and the Decree of 19 November 1971 on plied for the recognition of his plant as

for the denaturing premium for cereals an undertaking denaturing by the (BGBl, I p. 1831). These decrees ensure colouring of wheat orby the admixture to that cereal of fish oil/cod liver oil. that denaturing operations, for which

the persons concerned intended to claim This application was passed to the defendant by the son of Mr Karl Heinz a premium, are only (i) in carried out

law of 30 July 1968 (BGBl, p. 874) and supervision prescribed in the forms for which is now replaced by paragraphs 6 cases in which supervision is entrusted to to 9 of the Law of 31 August 1972 independent authorities. implementing the common organization (c) In cases where there has been no of the markets ('Marktorganisationsge­ actual supervision, or incomplete setz —

MOG') (BGBl I, p. 1617), the supervision, the denaturing permium is German legislature authorized the granted on the mere basis of a Federal Minister of Food, Agriculture 'denaturing by the certificate'

completed and Forestry (hereinafter called the denaturing plant. Minister) to draw up rules on the conditions and the procedure for Under Paragraph 4 (d) (1), second

granting and the amount of denaturing sentence, No 4, of the Decree of 19 premiums ..., in so far as the adoption November 1971, the 'recognition'

of

is for the of such rules necessary denaturing plants is not only subject to implementation of the comon organ­ their having the requisite equipment and ization of the markets. qualified but also to the condition staff,

administrative court. By a Decision dated 10 June 1970 the

defendant rejected the plaintiff's Both the plaintiff and the defendant

application on the ground that for its appealed against this decision to the

Administrative Court of the Land of recognition as a denaturing plant the

to Article Hesse the VIth Senate of which, probity required comply with

Regulation 8 August considering that the solution to the 4 (1) (i) of the of dispute depends on the interpretation of 1968 on the granting of a denaturing premium for common wheat and with provisions made by Community 1 Directives institutions, decided to suspend heading 2 — of the of 1 August 1969 proceedings and to submit the question on the granting of a

worth about 10 000 DM. The appeal the actual practice adopted by the said

office. And moreover this requirement of was rejected as unfounded by a Decision 'reliability' would be superfluous and dated 9 July. unjustified if the practice of the Cereals On 12 August 1970 the plaintiff brought Office were not in accordance with the proceedings to uphold the personal provisions adopted by the Council and probity of Mr Karl Schottler. In fact, the the Commission of the EEC mentioned particular limited partnership concerned in the question referred to the European is one in which the son of the partner Court of Justice and every denaturing with full liability had a real influence on had to be effected under complete management. The son is 41 years old, supervision. In the opinion of the Court whereas Karl Schottler is 68. In fact, the of Hesse the outcome of the action management of the undertaking is depends on the meaning to be given to already in the hands of the son, and 'supervision' in the word appearing the there is no dispute as to his probity. The Regulations of the Council and the plaintiff submitted that, after having Commission of the EEC, and on the annulled the defendant's decisions of 10 question whether even supervision can Tune 1970 and 9 July 1970 the be satisfied by the detailed rules laid Verwaltungsgericht compelled it to down in the German Decree of 19 recognize the plaintiff's denaturing plant. November 1971 and on the manner in The Verwaltungsgericht of Frankfurt-on- which they are applied by the Cereals Main decided that the Decree of 8 Office. Consequently, it is necessary August 1968 was illegal on procedural particularly to determine whether proof

Hessische Mehlindustrie Karl Schottler, is subject to by supervision the

represented by Maitre Giindisch, the intervention agency of the denaturing operations and that in Germany the Government of the Federal Republic of premium is only granted in the case of Germany, represented by Mr Seidel, as cereals, which have been denatured in agent and the Commission of the accordance with the law in 'a recognized European Communities, represented by Mr Kalbe presented their written denaturing plant'. The Commission points out that the defendant makes submissions, and made oral observations particular reference to the fact that it is at the hearing on 22 May 1973. The impossible for it to supervise the whole Advocate-General presented his opinion

at the hearing on 7 June 1973. of each stage of denaturing by its own

supervisors and it must have recourse to

supervision on the spot by sampling as

well as the inspection of the books of II — Written Observations account. This is the reason why submitted before the conditions of imposed on the probity Court under Article must be reinforced in undertaking as, 20 of the Statute is such circumstances, the premium paid

reliability (Zuverlassigkeit) of the denaturing without infringing Communi­ manager, for such a criterion would go ty law. In other words, it is a question of

beyond the general framework whether or not the provisions of German of

national industrial law. The plaintiff law on this matter are compatible with

considers that supervision of the register the Community legislation governing is not compatible with the concept of. denaturing premiums. 'supervision' in the aforementioned legal The Commission states that there is no 'supervision' provisions. In effect the specific provision determining in what

must be sufficient to ensure the effective manner and by what method the

denaturing of cereals for which a national intervention agencies are to

matters and instead left the Member cannot be accepted in the interests of a

States complete freedom to settle, in uniform application of Community law. respect of organization and procedure, (The Commission refers to Cases 34/70 the detailed rules necessary for the and 39/70). essential measures of supervision in T he Commission also admits that recog­

relation to their own legal systems and nition as a denaturing plant and refusal to on their own responsibility, by allowing grant such recognition unquestionably them to choose the solution most apt for exceed the defendant's powers as to

their capabilities and their needs. The internal organization and are thus in Commission refers to Case 39/70 from principle capable of affecting the

which it follows, in its opinion, that the plaintiff's legal position under the

national authorities are not forbidden in common system of premiums. But the

supervision methods and in this maintains that even if the wording of chosen, respect it must not be ignored that the Regulations Nos 172/67/EEC and

considerable financial importance of this 1403/69 does not specifically state it, system of grants involves the risk of these provisions indicate that it is the 'denaturer' abuse. It is within this general who has the right to the

framework of diligence and efficacy that premium and not the denaturing plant as one requires that the intervention such.

agencies only give aid for reasons of The Commission maintains that if one

certainty, to denaturing plants whose considers the scope of a refusal of

commercial capacity, diligence and recognition, one can see that it is in no

corresponding premiums. Such benefit is at the conclusion that with regard to a

only an indirect request and not the aim denaturing plant under the system of

or the justification of the system of denaturing premiums for cereals, the

premiums, and it is not therefore, the Community provisions with regard to

subject of a right established in procedure and supervision or the general

Community law. principles of law are not opposed to the

the question of whether Community law observations that it follows from the

adequately ensures in the case at issue in dispute that wording of the provisions the legal position the denaturing be of denaturing must supervised, and it plant. that the manner in maintains which

The to supervision must be carried out is not commission, referring the

in force in Member specified by Community legislation. regulations other It further submits that, because the States, points out, that denaturing plants is a legal are recognized by different criteria in the concept of supervision

various Member States and one concept which must be put into practice, cannot, super­ find level the nature and exercise of the therefore, at Community of the legal position and of vision must be prescribed in detail uniformity interests from which alone an by the Member States. The aim of the

infringement of the principle of equal supervision is the criterion which should

detailed system of the detailed rules of whether any reference to Community security and supervision, whereas the law can be made if it leaves the choice of Regulations to be interpretated in this the method of supervision to Member States case do not set up exhaustive rules. and if the refusal on grounds of

personal probity does not affect the Finally, the German Government asserts

rights of the plaintiff guaranteed by that it is necessary and also consistent

Community law. Finally, subject to all with the standards of Community law to the principles in provisions being both of require, for the undertaking to be a general and individual nature such as recognized as one for denaturing, that those concerning the 'personal probity'

the person who manages it should be of the applicant, the Commission arrives reliable and that, having regard to the

JUDGMENT OF 11. 7. 1973 — CASE 3/73

Grounds of judgment

1 By order dated 20 November 1972, received at the Court on 23 January 1973, the Hessischer Verwaltungsgerichtshof referred, under Article 177 of the EEC

Treaty to the Court, for a preliminary ruling on the interpretation of Regu­ lation No 172/67/EEC of the Council of 27 June 1967 (OJ No 130 of 28 June 1967, p. 2602) on general rules governing the denaturing of wheat and rye of bread-making quality and of Regulation No 1403/69/EEC of the Commission of 18 July 1969 laying down detailed rules for the application of the provisions concerning denaturing of common wheat and rye of breadmaking

quality.

By the terms of the question, it is asked whether these Regulations must 'be interpreted as meaning that the denaturing must be carried out entirely under intervention agency'

the personal supervision of an official of the — or

Article 7 provides that 'to qualify for the premium denaturing should be effected in agreement with the intervention agency and under its supervision'.

HESSISCHE MEHLINDUSTRIE v EINFUHR- UND VORRATSSTELLE GETREIDE

3 Regulation No 1403/69/EEC fixes the standard method for denaturing by colouring, provides that in the case of denaturing otherwise than by colouring

the means used must be at least as reliable as the standard methods, outlines

the compound feedingstuffs to be used in denaturing by admixture, and

defines the quality of cereals qualifying for a premium.

without specifying in what manner and by what method the national

intervention agencies are to fulfil their obligations of supervision.

The word supervision implies an adequate inspection carried out by the State agencies or by agencies appointed by it.

In the management of this supervision the national legislature is obliged to

ensure that the denaturing is carried out in accordance with the relevant

provisions and that claims for premiums are well founded.

(b) As to the second part of the question

8 There is no rule of Community law opposed to a Member State subjecting the

possibility of a denaturing plant benefiting from the system provided to the condition of special recognition.

The right to a premium is not affected by refusal to recognize a plant as one for denaturing as the owner of cereals is still free to have his stocks denatured in accordance with the law in a recognized denaturing plant.

9 In view of this, the intervention agencies can demand that the managers of

plants possess the personal qualities necessary to avoid the risks of abuse.

Costs

11 The costs incurred by the Commission of the European Communities and by the Government of the Federal Republic of Germany, which have submitted observations to the Court, are not recoverable and 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 on costs is a matter for that court.

On those grounds,

Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur;

HESSISCHE MEHLINDUSTRIE v EINFUHR- UND VORRATSSTELLE GETREIDE

Having regard to Regulation No 1403/69 or the Commission or the European Communities of 18 July 1969;

Having regard to the protocol on the statute of the Court of Justice of the European Communities, especially Article 20;

Having regard to the Rules of Procedure of the Court of Justice of the

European Communities:

THE COURT

in answer to the question referred to it by the Hessischer Verwaltungsgerichts­ hof by order dated 20 November 1972, hereby rules:

Donner Mertens de Wilmars Kutscher

Ó Dalaigh Sørensen Mackenzie Stuart

Delivered in open court in Luxembourg on 11 July 1973.

A. Van Houtte R. Lecourt

Registrar President