C-5/73

103 is the coordination of Member necessarily follow that that obligation States' conjunctural policies and the must be measured in relation to the adoption of appropriate common individual situation of any one measures. particular group of operators. Bearing in mind the monetary 4. The Community Institutions must situation at the time the disputed harmonize the various objectives of measures were adopted, and the fact the common agricultural policy which, that the common agricultural policy taken separately, appear to conflict contained no adequate provision for with one another and, where the case which would enable the necessary, allow temporary priority necessary measures to be taken in to one of them in accordance with the order to deal with such monetary demands of those economic factors or situations, the Council was justified in conditions in view of which their making interim use of the powers decisions are made. conferred on it by Article 103 of the Treaty. 5. Article 40 contemplates only dis­ crimination between producers or 2. Article 103 does not preclude between consumers, while the balance Community Institutions from having to be held between the conflicting powers to introduce, without interests of these two groups is dealt prejudice to other procedures set out with in Article 39. in the Treaty, any conjunctural 6. Compensatory amounts are Com­ measures which may appear to be munity measures which, while they do necessary in order to safeguard the objectives of the Treaty. The Council involve a partitioning of the market, shall in each instance select the form serve to compensate for variations in to be taken by the measure which it fluctuating exchange rates and thus considers to be the most suitable. help to preserve the normal flow of trade in products under the 3. While the Community Institutions exceptional conditions temporarily must ensure, in the exercise of their created by the monetary situation. powers, that the amounts which The authorization to charge commercial operators are charged are compensatory amounts on agricul­ no greater than is required to tural imports from third countries for achieve the aim which the authorities a time when rates of change are are to accomplish, it does not fluctuating is valid.

on the interpretation and validity of Regulation (EEC) No 974/71 of the Council of 12 May 1971 on certain measures of conjunctural policy to be taken in agriculture following the temporary widening of the margins of fluctuation for the currencies of certain Member States (OJ L 106, 12. 5. 1971, p. 1) and possibly also Regulations (EEC) No 1013/71 (OJ L 110, 18. 5. 1971, p. 8), No 1014/71 (OJ L 110, 18. 5. 1971, p. 10) and No 548/72 (OJ L 66, 18. 3. 1972, p. 1) of the Commission,

THE COURT

composed of: R. Lecourt, President, A. M. Donner and M. Sørensen, Presidents of Chambers, R. Monaco, J. Mertens de Wilmars (Rapporteur), P. Pescatore, H. Kutscher, C. Ó Dálaigh, Lord Mackenzie Stuart, Judges,

Advocate-General: K. Roemer

Registrar: A. Van Houtte

gives the following

Communities, 12 May 1971, L 106, (b) Is Article 2 (2) of the said p. 1), or are the Regulations imple­ Regulation, having regard to its menting it, viz. Regulations (EEC) No form and scope, a sufficiently 1013/71, 1014/71 and 548/72 of the definite basis of assessment for Commission, valid, in so far as they this purpose? provide for the making and (c) Is a rate of 45.50 DM per 100 kg computation of compensatory of Bulgarian cheese of sheep's amounts for the import of milk milk on 24 March 1972, in products from Bulgaria? accordance with these principles? In particular The order for reference of 19 January (a) Was the Council of the European 1973 was registered at the Court of Communities empowered by Justice on 5 February 1973. Article 103 (2) of the EEC Treaty On the report of the Judge-Rapporteur, to make Regulation No 974/71, as and upon hearing the Advocate-General, a measure of conjunctural policy the Court decided to proceed without in the common interest, in the any preparatory enquiry. form of a Regulation? The plaintiff in the main action, the (b) Is the levying of compensatory Government of the Federal Republic of amounts, in particular in so far Germany, the Council and the as, in the case of imports from Commission of the European Communi­ Bulgaria, the amount is fixed not ties presented their written observations. on the basis of any profit made At the hearing of 5 June 1973, the by the importer on the rate of plaintiff in the main action represented exchange, but on the basis of the by Mr Ehle of the Cologne Bar, the relationship of the Deutschmark Commission represented by its legal to the US dollar, (Article 2, adviser, Mr Gilsdorf, the Council Regulation No 974/71), compat­ represented by its legal adviser, Mr ible with the principle of Lambers and the German Government proportionality, and with Articles represented by Mr Seidel, Regierungs- 39, 40 and 110 of the EEC direktor, presented oral arguments. Treaty, or with the legal The Advocate-General presented his principles contained in the said Articles? opinion at the hearing on 26 June 1973.

cannot be founded on Article 103 (2), of a third country and at least in relation because it was not made within the to the weighted average of the parities of framework of conjunctural policy but the currencies of third countries. solely to ensure the application of the The method of calculating the intervention system in agricultural compensatory amounts provided for in markets, that there was no question of Article 2 of Regulation No 974/71 Common interest and that it authorized moreover infringes the principle of the Council only to make directives proportionality expressly recorded in the

DM, account could have been and (OJ L 50, 23. 2. 1973, p. 1.) solely on should have been taken at least of the Articles 28, 43 and 235 of the Treaty. fluctuations of the DM in relation to a Regulation No 974/71 should therefore be declared null and void until it was weighted average of the currencies of representative third countries. On this amended by Regulation No 509/73 of 22 assumption the effect of revaluation of

account under Article 33 of Regulation No 804/68 (OJ L 148, 28. 6. 1968, p. Second Question 13). As the Finanzgericht of Berlin admitted in its Order for reference, the The plaintiff in the main action compensatory amount had a like effect considers that the collection of the to customs duties, prohibited by the compensatory duty was no longer Treaty and by Article 19 of Regulation justified on 24 March 1972, the date on No 804/68, to the extent that they which the request was made for the exceeded the effect of the floating of the goods in issue to be put in free Deutschmark in relation to the currency circulation.

Article 8 (2) of Regulation No 974/71 on the product at issue — the objective specifies that it 'shall cease to be appli of the third question — the plaintiff in cable as soon as all the Member States the main action observes that it was not concerned again apply the international possible to answer it so long as the rules on margins of exchange-rate Commission did not prove whether and fluctuation around official parity'. Under how it took account of the various the agreement of 18 December 1971 at components in calculating the compensa Washington, the Member States agreed tory amounts affecting the product at to the fixing of a new central rate for the issue, whose price was mainly determined DM in relation to the dollar (3.2225 by market forces and quite easily DM/dollar), the Bundesbank resuming compensated monetary fluctuations. its interventions on the currency market Moreover for agriculture the revaluation to maintain the exchange rate for the of the DM was equivalent to a reduction DM within the margin of fluctuation in the cost of production. agreed (3.150 DM — 3.295 DM).

months. limits authorized by international rules leading 'to disturbances in trade in agricultural products'. The existence of B — Observations of the Council similar disturbances which should be observed product by product was not established for the product concerned: First Question the price of cheese did not depend on that of products for which intervention (a) In the Council's view Regulation measures are provided within the No 974/71 was indeed a conjunctural framework of the common organization measure within the meaning of Article of agricultural markets (Article 2 (a) and 103 of the Treaty.

Indeed the happened in March 1972. purpose of Regulation No 974/71 was to Third Question prevent abnormal deviations in prices and incomes caused by massive imports As regards the factors involved in the of agriculture into countries with a calculation of the compensatory amount floating currency.

The specific procedures provided for in As to the fact that the measure at issue the Treaty did not prevent recourse to was enacted in the form af a regulation, Article 103, whose field of application the Council considers that Article 103 (2) would be considerably narrowed if, in does not limit the choice of the every field in which particular pro Institutions of the Community as to the cedures are provided for, measures of legal form to be adopted. The term conjunctural policy could be taken only 'decide upon' was not used in its where the conditions required by the technical sense. As to paragraph (3), if other Articles for these particular it provides for the legal form of a procedures were satisfied. directive for implementation measures, even where the legal rule to be The requirements for every conjunctural implemented is a regulation, this was policy were such that in many cases explained by the fact that these regard could not be had to other implementation measures can be taken procedures without compromising it. by qualified majority. Consequently it Accordingly in the view of the Council would have been reasonable to provide the purpose af Article 103 permits its use only for the most flexible means of in fields where particular rules of the intervention, namely the directive and to Treaty are provided, so long as the reserve recourse to regulations for rules measures are designed with a adopted unanimously. conjunctural end in view.

It must to be realized. The introduction of com not be overlooked that in spite of certain pensatory amounts was based on the difficulties of implementation, the consideration that the aims must not be solution selected does not involve compromised by short term fluctuations charges which unjustifiably exceed the caused by the floating of certain curren incidence of alterations in the exchange rates. cies within the Community. Moreover it ensured free movement of goods for the Nor was there a discrimination which future whatever decisions might be taken was prohibited by Article 40.

JUDGMENT OF 24. 10. 1973 — CASE 5/73

amounts. (a) The German Government considers that Regulation No 974/71 is an To sum up, there could be an intergral part of conjunctural policy and infringement of the fundamental is quite properly based on Article 103 of principle formulated in Articles 39 and the Treaty. In fact a conjunctural policy 110 only if the Institutions had exceeded or a short term economic policy whilst the margin of discretion which they must linked to the general aims of long or be allowed so that they can reconcile medium term policy, had as its precise aims which are partly contradictory. aim the lessening of inflationary and deflationary movements in economic Second Question development. Moreover the abnormal

These powers new parity but left the States concerned moreover had in view first and foremost face to adopt the 'central rates' which structural requirements and did not did not have the legal effects resulting provide any suitable procedure for from the fixing of a parity in accordance immediate action of conjunctural with the rules of the International character by the Community. The Monetary Fund. Moreover the whole expression 'without prejudice to any system of agricultural prices governed by other procedures provided forin this the Community market organizations Treaty' in Article 103, meant therefore continued to be based on a unit of that, simultaneously with regulations for account whose relationship with the a particular sector, recourse could be currencies of the Member States was had to Article 103. determined on the basis of the official The compensation system laid down by parities notified to the IMF. The Regulation No 974/71 was not against abandonment of the compensatory the common interest because it included amounts would have had incalculable the greater part of the agricultural sector consequences for the implementation of and avoided serious imbalances in the

(b) There was no infringement of the principle of proportionality by reason of Second Question the all-embracing nature of compensa­ At the 24 March 1972 there was no tory amounts from a practical point of fundamental change in the events which view. A system in which the amount of led to the issue of Regulation No compensatory tax corresponded exactly, 974/71. In spite of the introduction of for each import, with the incidence of central rates following the Washington the monetary measure could not be Agreements of 18 December 1971, the achieved, having regard to the large effects of the fluctuations in the rates of number of compensatory amounts exchange even within the limits imposed already in existence in the system in use. by those Agreements had justified the Moreover, if the relationship between retention of the measure. No return to the floating currency and the currency of the parities to be declared to the IMF a third importing country had been had occurred, at the time of these taken into account in fixing the Agreements, to justify the abolition of compensatory amounts, it might have compensatory amounts under Article 8 caused large scale deflection of trade. On (2) of Regulation No 974/71. The the other hand a system of compensation parities termed 'central rates' had not the in terms of an arithmetic mean of the same force in law as the official variations of the Deutschmark in exchange rates declared to the IMF. relation to the currency of third countries was also of an all-embracing character and this too did not allow D — Observations of the Commission sufficient compensation when the parity of the currency of the third country in The Commission observes that the question in relation to the DM was examination of the third question should below the mean parity of the currencies also extend to the possible absence of of third countries. Faced with a choice of disturbances in trade in agricultural several solutions the Council, pursuant products which, according to one to its discretionary power, had been able argument of the Balkan company before to choose the one it deemed most the national judge, made the inclusion of suitable and most advantageous from the Bulgarian cheese of sheep's milk within

the scope of Regulation No 974/71 the levies. A proposal to amend illegal. Regulation No 974/71 presented by the Commission on 16 May 1972, designed Economic context to limit recourse to compensatory amounts had not been followed up, In analysing the origin and the working because the anticipated revaluation of of the system of compensatory amounts, certain Community currencies had not formulated in Regulation No 974/71, the Commission draws attention to the taken place. A second proposal integrating the system of compensatory following points. amounts into agricultural policy was In order to lessen the effect of the influx adopted by Regulations of the Council of currencies into the Federal Republic No 2746/72 of 19 December 1972 (OJ L of Germany and the Netherlands, the 291, 28. 12. 1972, p. 148). Council, by Resolution of 9 May 1971 After the fresh devaluation of the dollar (OJ C 58, 10. 6. 1971, p. 1) authorized the said Member States to float their on 13 February 1973 it was decided to exchange rates under Article 103 of the record the variations of the exchange Treaty so as to avoid disturbances in rates provided for in Article 2 (1) of trade in agricultural products which Regulation No 974/71 by reference to Regulation No 974/71 would have the actual dollar parity. caused. The latter was based on the principle First Question that official parities have not changed. So the introduction of compensatory (a) According to the Commission, amounts had been justified by the fact Article 103 of the Treaty must be that the intra-Community prices for considered as the correct legal basis for Regulation No 974/71 since the latter products subject to intervention or products whose price depended on these effectively constitutes a measure of had remained unchanged while the price conjunctural policy. on the extra-Community market Monetary measures so far as they are expressed in DM had fallen following short term, constitute typical conjunctural the revaluation and in proportion to it. measures whose specific objective was constituted by short term aims, not In Regulations No 1013/71 (OJ L 110, 18. 5. 1971, p. 8) and No 1014/71 (OJ L exceeding periods of 18 months, and 110, 18. 5.1971, p. 10) fixing the pro­ consisting essentially of methods of cedures for implementing Regulation correcting or damping cyclic movements. No 974/71, the Commission had sought As to the objection raised on the to limit the list of products to which the grounds that Regulation No 974/71 was compensatory amounts applied. pursuing aims of agricultural policy Subsequently the Commission, particu­ having only fortuitous conjunctural larly after the abolition of the effects, this lost sight of the fact that the convertibility of the dollar into gold Regulation at issue concerns the (15. 8. 1971), and the floating of the agricultural aspect of an aggregate of Belgian and Luxembourg currencies measures of a monetary character (23. 8. 1971) and later also the pound enacted by the Member States in sterling and the lira (beginning of 1972), agreement with the Community had been led several times to widen the Institutions.

markets in the currencies of Germany If the Council, on the proposal of the and the Netherlands being swamped Commission, gave preference to Article with offers of dollars. As a common 103, this was because of a desire to floating of Community currencies was avoid incorporating the system of not yet possible in May 1971, the compensatory amounts in agricultural floating of the florin and the DM policy, to emphasize its exceptional and required accompanying measures even if short-term nature and avoid Community they hindered free movement of goods. financing because it was preferable to let the Member States concerned bear the A ban on the lifting of the fixed parities between Member States was not to be

powers which are in addition to the concerning the realization by stages of powers in individual sectors, the Council economic and monetary union within cannot be reproached for not having had the Community (OJ C 28, 27. 3. 1971, p. recourse of Article 19 (2) of Regulation 1) expressed only a political commitment of the Council No 804/68 establishing a and the measures relating to exchange common organization of the markets in rates remained within the powers of the the milk and milk products sector (OJ L Member States; it followed that the 148, 28. 6. 1968, p. 13), which definitely decision to let a currency float could not allows derogation from the prohibition be considered incompatible with the on imposition of customs duties and obligation to cooperate referred to in charges having equivalent effect.

In any event powers are concurrent. the system of compensatory amounts If the plaintiff's view were followed, the was less restrictive than possible powers would be shared between quantitative restrictions. various Community bodies and As to the form of Regulation No 974/71, conjunctural measures would be the Commission observes that, if having fragmented contrary to what was regard to the flexible voting procedure implied in Article 103, since that provides on the methods of implementation for more flexible procedures than those provided for in Article 103 (3), it was needing Parliamentary consultation, understandable that the Council should precisely because measures of a in accordance with this provision use the conjunctural character are necessarily most flexible measure, viz. the directive, urgent. that did not in any event preclude the

(1) of Regulation No 974/71, the within the limits of the discretion Commission observes that only an all-in available to the legislator. The system of compensatory amounts was implementation of the Regulation at issue attainable in practice and in any event it would always have allowed the was not possible to limit the collection Commission to adapt the compensatory of compensatory amounts to cases where amounts to changes in circumstances. the imported product enjoyed an No discrimination was to be found in advantage due to currency fluctuations the system of compensatory amounts because that would have implied since, on the one hand, the imposition supervision for every single import was based on objective criteria and on transaction and this would have gone the other hand, as regards the different against the principles governing the burden on each product, not based on collection of levies and payment of monetary measures, account had to be refunds; the Court of Justice itself had taken of the matters raised concerning recognized the validity of abstract infringement of proportionality. As to methods of calculation for this purpose the alleged advantage of agricultural (Judgment of 15. 12. 1970, Case 31/70, producers in acquiring raw materials, the Deutsche Getreide und Futtermittel, Rec. Commission observes that for agri­ 1970). cultural products (e. g. seeds) the com­ The use of the dollar parity as a pensatory amounts reduced this advan­ standard of comparison took account of tage and that for imported industrial the realities of international trade, while products the effect of revaluation had an all-in calculation, based on the mean been only a moderate price reduction. of the parities of the currencies of third The infringement of Article 39, resulting countries, needing such diverse factors to from a very high price to the consumer be taken into consideration as the size, (Article 39 (1) (e)) could not be value, origin and contractual methods established since the compensatory whereby agricultural products were amounts had not been fixed too high

and Article 39 authorized the legislator, Third Question within the limits of its discretion, to secure a balance between the aims there As regards products for which set out. intervention measures are provided, the intra-Community compensatory amount As to Article 110, this was too wide and was determined by adding to the indefinite for individual rights to be intervention price the percentage by derived from it. Moreover the system used had minimized harm to which the Community currency concerned had been revalued in relation international trade having regard to the to the American dollar.

For States concerned again apply the extra-Community compensatory amounts the calculation was made on the basis international rules on margins of exchange rate around official parity'. In of free-at-frontier prices. fact the 'Member States concerned' had The method adopted for cheese, for still not resumed the implementation of which the compensatory amount is the international rules; on the one hand based on the incidence of compensa the central rates of the DM, florin and tory amounts in the price of butter and Belgian franc were, at first sight, outside skimmed-milk powder, is logical and in the margins of fluctuation fixed by the conformity with the provisions of Article international rules and, on the other 2 (2) of Regulation No 974/71. hand, the new margins of fluctuation When the calculation of the levies and agreed on (2.25 % instead of 1 %) also refunds was made on the basis of the departed from international regulations. world-market price for various kinds of If the Community Institutions have cheese, the Council had voluntarily continued to retain the official parities, decided on another system for the this is because agricultural regulations as calculation of compensatory amounts. a whole were based on them. It was The rules relating to levies and refunds therefore to be expected that the same was the fruit of long experience and it course should be followed in Regulation was impossible to apply it as it stood to No 974/71. the system of compensatory amounts Only after the second devaluation of the which was of a temporary nature and dollar on 13 February 1973 did the also concerned intra-Community trade. Within these rules thus established the Commission, drawing on past experience, take account of the true parities for Commission had only a 'technical' calculating levies and refunds which margin of discretion available. avoided the need to alter the If the fixing of compensatory amounts is compensatory amounts.

JUDGMENT OF 24. 10. 1973 — CASE 5/73

The plaintiff in the main action had varieties of Community cheese, especially observed that the import of Bulgarian goat's milk cheese. cheese of sheep's milk did not involve any disturbance of trade in agricultural The Commission considers that its products so that under the terms of answer to the first question must be that Article 1 (2), last intention, there was no nothing has occurred to call into case for fixing compensatory amounts. question the validity of Regulation No Such an argument could not be based on 974/71, to the second question, that the the monetary situation because the collection on 24 March 1973 of Commission could not be expected to compensatory amounts on imports from foresee the course and impact of imports third countries was in accordance with from each third country. In the contrary Community law and to the third question case, the requests for exemption would that Article 2 (2) of Regulation No have multiplied and the system of 974/71 was a sufficiently precise basis of compensatory amounts would have been calculation and that the rate of 45.50 weakened. Contrary to what the plaintiff DM per 100 kg of Bulgarian cheese in the main action asserts, there was of sheep's milk does not infringe competition with Italian cheese of Community measures either as regards sheep's milk (pecorino) and other the principle or the amount.

Grounds of judgment

1 By order dated 19 January 1973, lodged at the Registry on 5 February 1973, the Berlin Finanzgericht referred to the Court for a preliminary ruling the question of the interpretation and validity of various provisions contained in Regulation (EEC) No 974/71 of the Council of 12 May 1971, concerning certain measures of conjunctural policy to be taken in agriculture following the temporary widening of the margins of fluctuation for the currencies of certain Member States (OJ L 106, 12. 5. 1971, p. 1), and, if appropriate, of some of the provisions of Regulations (EEC) Nos 1013/71, 1014/71 of the Commission (OJ L 110, 18. 5. 1971, p. 8 and 10), and 548/72 (OJ L 66, 18. 3. 1972, p. 1) implementing the above Regulation No 974/71.

4 The organization of agricultural markets is designed, inter alia, to ensure a fair standard of living for the agricultural community and to stabilize markets, in particular by means of a stable price system whereby target prices, threshold prices and intervention prices are determined on the basis of fixed parities for the currencies of the various Member States by reference to a single unit of account.

Since it was not possible to fix new parities while the DM and the guilder were floating, the price levels considered to be appropriate continued to be determined and calculated, for products with fixed intervention prices and for products whose price depends on the price of the first-mentioned products, on the basis of the parities previously declared to the IMF, even for the Netherlands and the Federal Republic.

But while these prices thus remained unaltered in theory, they were in fact reduced — particularly when they were expressed in DM — in proportion to

JUDGMENT OF 24. 10. 1973 — CASE J/73

the effects of the de facto revaluation of this currency, causing disturbances in agricultural trade detrimental to producers and capable of disrupting the intervention system established by Community legislation.

5 As a result, the Council decided that the measures to be taken immediately should consist in the introduction of a system of compensatory amounts which these Member States would be authorized to charge on imports and grant on exports in their trade both with other Member States and with third countries, with a view to offsetting the effects of the monetary measures on the price of basic products for which intervention prices have been imposed, and for agricultural products whose price depends on the price of those products.

BALKAN-IMPORT-EXPORT v HAUPTZOLLAMT BERLIN-PACKHOF

At the Washington Conference on 18 December 1971 the rates of exchange were closely re-defined in relation to the dollar in the form of central rates, the margins of fluctuation remaining, however, wider than those authorized under the Bretton Woods Agreements.

Nevertheless, since no official change of parities followed these decisions and the monetary system was still in disarray, the compensatory amounts scheme was extended to France and Italy and to all the agricultural products mentioned in Article 1 of Regulation No 974/71.

8 Subsequent to the facts giving rise to the action, the Council, by Regulation No 2746/72 of December 1972, made the compensatory-amounts scheme compulsory and 'incorporated' it into the framework of the common agricultural policy, giving Articles 28, 43 and 235 of the Treaty as its basis.

9 The circumstances outlined above and their continuing development must be borne in mind in considering the intervention made by the Council and the Commission.

I — Question one

and marketing, storage and carry-over arrangements and common machinery for stabilizing imports and exports.

By virtue of the third paragraph of Article 43 (2), the Council shall (on a proposal from the Commission and after consulting the Assembly, acting, after the end of the second stage of the transitional period, by a qualified majority) make regulations, issue directives, or take decisions in this sphere.

It is evident from these provisions that the powers conferred for implementing the common agricultural policy do not relate merely to possible structural measures but extend equally to any immediate short-term economic intervention required in this area of production, and that the Council is empowered to resort to them in accordance with the decision-making procedures there set out.

13 On the other hand, Article 103 refers to Member States' conjunctural policies, which they must regard as a matter of common concern.

Consequently it does not relate to those areas already subject to common rules, as is the organization of agricultural markets.

The real object envisaged by Article 103 is the coordination of Member States' conjunctural policies, and, according to the terms of paragraph 2 of that Article, the adoption of common measures appropriate to the situation.

Consequently — while the suddenness of the events with which the Council was faced, the urgency of the measures to be adopted, the seriousness of the situation and the fact that these measures were adopted in an area intimately connected with the monetary policies of Member States (the effects of which they had partially to offset) all prompted the Council to have recourse to Article 103 — Regulation No 2746/72 shows that this state of affairs was only a temporary one, since the legal basis for the measure was eventually found in other provisions of the Treaty.

(b) The form in which the disputed measure was adopted

16 The next question is whether Regulation No 974/71 is invalid on the ground that Article 103 of the Treaty, notably in paragraph 3, authorizes the adoption of measures only in the form of a directive or decision, not in the form of a regulation.

It is alleged that such an interpretation is borne out by the wording of Article 103 and is justified in view of the fact that in the realm of conjunctural policy no more than a coordinating role has been given to the Institutions.

17 Although by Article 103 (1) Member States are bound to regard their conjunctural policies as a matter of common concern, the wording does not preclude Community Institutions from having power to lay down themselves, without prejudice to other procedures set out in the Treaty, conjunctural measures on matters within the spheres of their competence.

On the contrary, Article 103 (2), by declaring that the Council may, 'acting unanimously ... decide upon the measures appropriate to the situation', confers on that body — subject to the condition referred to above — the powers necessary to adopt, in principle, any conjunctural measures which may appear to be needed in order to safeguard the objectives of the Treaty.

19 The next question asked is whether Regulation No 974/71 conflicts with the principle of proportionality and with Articles 39, 40 and 110 of the Treaty and Article 19 of Regulation No 804/68 of the Council of 27 June 1968 creating a common organization of the market in milk and milk products (OJ L 148, 28. 6. 1968, p. 13), on the grounds that the compensatory amounts are not based on any profit made by the importer on the rate of exchange, but solely on the relationship between the official parity of the DM compared with the dollar and its true parity.

20 According to the final paragraph of the preamble to Regulation No 974/71, the amounts adopted should be limited to those strictly necessary to compensate the incidence of the monetary measures.

It is not disputed that, owing to the fact that a single overall criterion was selected, imports into Germany from countries whose currencies are fluctuating in relation to the DM to an extent different from that of the dollar, are affected by compensatory amounts which do not always correspond precisely to the effects in the monetary field of the revaluation of the DM.

The plaintiff in the main action claims that the Council ought either to have varied the compensatory amounts in accordance with the rates of exchange against the dollar of the different currencies of countries importing from or exporting to the Federal Republic and the Netherlands, or to have computed

BALKAN-IMPORT-EXPORT v HAUPTZOLLAMT BERLIN-PACKHOF

them on the basis of a set weighted average dependent on the volume of trade.

22 Moreover, a weighted system, because of its flat-rate nature, would bring the same disadvantages as those criticized, yet without supplying the complete protection deemed necessary in relation to the world's leading exporter of agricultural produce.

Since one of the aims of the conjunctural measures planned was to provide a short-term remedy for the consequences of the revaluation of the DM which might place in jeopardy the goal of a fair standard of living for the agricultural community, it was reasonable to contemplate the necessity of allowing a maximum corrective factor.

In excercising their powers, the Institutions must ensure that the amounts which commercial operators are charged are no greater than is required to

JUDGMENT OF 24. 10. 1973 — CASE 5/73

achieve the aim which the authorities are to accomplish; however, it does not necessarily follow that that obligation must be measured in relation to the individual situation of any one particular group of operators.

Given the multiplicity and complexity of economic circumstances, such an evaluation would not only be impossible to achieve, but would also create perpetual uncertainty in the law.

Moreover, it has not been established that the measures questioned gave rise to prices which would appear obviously unreasonable on selling to consumers.

25 According to the second paragraph of Article 40 (3) of the Treaty, the common organization of the market shall be limited to pursuit of the objectives set out in Article 39 and shall exclude any discrimination between producers or consumers within the Community.

BALKAN-IMPORT-EXPORT v HAUPTZOLLAMT BERLIN-PACKHOF

It appears from the reference to this provision made by the national court that the latter contemplated the possibility that discrimination had occurred between producers and consumers to the detriment of the consumers.

26 Article 40 refers only to discrimination between producers or between consumers, while the balance to be held between the conflicting interests of these two groups is dealt with in Article 39.

The Council did not, therefore, contravene Article 40 by adopting the measures in dispute.

They are also intended to prevent the disruption in the Member State concerned of the intervention system set up under Community Regulations.

Furthermore, these are not levies introduced by some Member States unilaterally, but Community measures which, bearing in mind the exceptional circumstances of the time, are permissible within the framework of the common agricultural policy.

JUDGMENT OF 24. 10. 1973 — CASE 5/73

30 The Council did not contravene Article 19 of Regulation No 804/68 in adopting them.

Examination of the first question, therefore, has not revealed any elements capable of affecting the validity of the Regulation in dispute.

II — Question two

Moreover, even after the Agreement mentioned, the trend towards the revaluation of certain currencies in the Community continued within the scope of the widened margins of fluctuation; at the time of the disputed

BALKAN-IMPORT-EXPORT v HAUPTZOLLAMT BERLIN-PACKHOF

imports, the difference between the DM and its old official parity had reached 13 %, where it remained until the devaluation of the dollar on 8 May 1972.

Finally, the fact that it was certain that the Member States concerned would not go back to the old parities against the dollar was not relevant, since the international rules mentioned in Article 8 do not provide for one set parity but for a system of fixed parities.

III — Question three

34 The third question asks whether Article 2 (2) of Regulation No 974/71 forms a sufficiently precise basis of assessment for compensatory amounts and whether the rate of 45.50 DM charged under Regulation No 548/72 of the Commission on the imports in issue results from the application of the principles contained in that Article.

For this reason, in applying Article 2 (2) of Regulation No 974/71 to cheese, the Commission first calculated the incidence of the compensatory amounts, applied to the price of butter and skimmed-milk powder, on fat and skimmed milk, which are two of the ingredients of those products.

Once it had thus measured the effect of the countervailing charge on the unit price of fat and skimmed milk, the Commission was able to carry over that effect and apply it to the fresh milk from which cheese is made.

This deductive method requires only a limited margin of discretion on the part of the Commission, as is shown by the calculations it submitted which arrive at the figure of 45.50 DM.

38 The plaintiff in the main action also complains that no compensatory amount could be charged on the product in dispute because, contrary to the requirement in Article 1 (2) (b) of Regulation No 974/71, the price of cheese does not depend on the price of a product subject to intervention, but is to a great extent determined by the market.

39 The prices for cheese, on the one hand, and for butter and skimmed-milk powder on the other hand, are linked, notably as regards threshold prices, by Regulations of the Council Nos 804/68 of 27 June 1968 and 823/68 of 28 June 1968 determining the groups of products and the special provisions for calculating levies on milk and milk products.

The fact that in Regulation No 804/68 the free-at-frontier prices for cheese are fixed on the basis of the most favourable buying conditions on the international market, does not preclude the Council from being entitled, in calculating compensatory amounts, to select a less complex method, bearing in mind the temporary nature of the system.

43 The costs incurred by the Government of the Federal Republic of Germany, the Council and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable, and as these proceedings are, insofar as the parties to the main action are concerned, in the nature of a step in the action pending before a national court, 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; Upon hearing the observations of the Balkan firm, the Government of the Federal Republic of Germany, the Council and the Commission; Upon hearing the opinion of the Advocate-General; Having regard to the Treaty establishing the European Economic Community, especially Articles 38 to 47, 103, 110 and 177; Having regard to Regulations of the Council Nos 804/68 of 27 June 1968, 823/68 of 28 June 1968, 974/71 of 12 May 1971 and 2746/72 of 19 December 1972; Having regard to Regulations of the Commission Nos 1013/71 and 1014/71 of 18 May 1971 and 548/72 of 18 March 1972; Having regard to the Resolution of the Council of 9 May 1971; Having regard to the Protocol on the Statue of the Court of Justice of the European Economic Community, 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 questions referred to it by the Berlin Finanzgericht by order of that court dated 19 January 1973, hereby rules:

OPINION OF MR ROEMER — CASE 5/73

OPINION OF MR ADVOCATE-GENERAL ROEMER

DELIVERED ON 26 JUNE 1973 1

Mr President, within the Community had been Members of the Court, disturbed by speculative movements and by the abnormal influx of short-term By Order dated 19 January 1973 the capital. Having regard to the resultant Finanzgericht at Berlin submitted to the increase in the volume of money, which Court a series of questions bearing upon could have had dangerous inflationary the validity of some Community effects, the Federal Republic of Germany Regulations (insofar as they have as their and the Kingdom of the Netherlands on subject matter compensatory amounts 9 May 1971 freed the rates of exchange on imports of milk products from of their currencies, i.e. they widened the Bulgaria). I shall not now read out the fluctuational margins of these rates of rather extensive list of questions; in this exchange in relation to the official respect I would refer you to the Report parity. Once the actual rate of exchange for the hearing. deviated beyond certain limits from the It will aid an understanding of the official parity, these measures were proceedings if I preface my opinion by bound to cause difficulties for the the following preliminary remarks: — functioning of the common market During the months of April and May organizations, which are based upon 1971 some foreign currency markets units of account and official parities, for

1 — Translated from the German.