C-151/73

applicant,

Council of the European Communities , represented by H. Darwin, Director

of the Council's Legal Service, as agent, assisted by D. Vignes, Legal Adviser to the Council, with an address for service in Luxembourg at the chambers of J. N. Van den Houten, Director of the Legal Service of the European

Investment Bank, 2 place de Metz,

defendant,

Application for annulment of Regulation (EEC) No 1365/73 of the Council of 21 May 1973 (OJ L 137, 1973), to the extent that that Regulation is concerned with the fixing of compensatory amounts for tomatoes,

JUDGMENT

Facts

I —

Summary of facts and which the conditions referred to in written procedure Article 65 (1) are fulfilled and the

Community as originally constituted, The facts and the written procedure may another new Member State, with the

be summarized as follows: exception of those referred to in the

extent necessary, by the incidence of (c) the producer price in that new duties.' customs Member State appreciably ex­

basic As regards the criteria for the calculation ceeds the price applicable

in of the compensatory amount, Article 4 the Community as originally constituted during the period (2) of Regulation No 159/66 of the preceding the application of the Council, of 25 October 1966 (OJ No Community system to the new 192, 1966), provides that: Member States. 'the basic price shall be equal to the

arithmetic mean of prices recorded on 2. The producer price referred to in the representative Community market or paragraph 1 (c) shall be calculated by markets which are situated in the surplus applying to the national data of the production areas having the lowest new Member State concerned the in Article 4 prices during the three marketing years principles set out (2) of preceding the date on which the basic Regulation No 159/66/EEC laying price is fixed for a product with defined down additional provisions in respect of the common organization of the commercial characteristics (variety or

in fruit and vegetables. type, quality class, sizing and market packaging). In calculating the arithmetic …' 3. mean, prices which on each

representative market could be Article 66 (1) continues as follows: considered excessively high or excess­

30 % of Community output of the Member State and third countries in (subheading product.'

relevant respect of cauliflowers ex

07.01 B I of the Common Customs The following paragraph is added to the above provision at Article 4 (4) by Tariff) and tomatoes (subheading ex

Article 2 of Regulation No 2515/69 of 07.01 M of the Common Customs

Council 9 December 1969 L Tariff) shall be as shown in Annex I. the of (OJ These amounts shall apply only to 318, 1969): products for delivery fresh to the 'For a product with commercial consumer.'

characteristics different from those of the Annex I to this Regulation provides an product by reference to which the basic amount, to be applied by Ireland, of 7·3 price is fixed, the price at which the product is bought-in pursuant to Article u.a./100 kg net for 'tomatoes for delivery be fresh to the consumer'. 7 shall calculated by applying conversion factors to the buying-in price Moreover, the last recital of the same

228/73 31 1973 L several years at a standard figure of 0·55 of January (OJ 27, should be applied in respect of the prices 1973) that: for tomatoes grown under glass.'

'The compensatory amount for fruit and On 16 July 1973 the Government of vegetables shall comprise two compo­

Ireland brought an action for annulment nents: against the abovementioned Regulation, (a) the basic compensatory amount, to the extent that it provides for the hereinafter called the "basic application of a conversion factor. amount", calculated in accordance

first 2. Upon hearing the report of the with the and second Judge-Rapporteur and the opinion of subparagraphs of Article 66 (1) of

the Act; the Advocate-General, the Court decided to open the oral procedure without any (b) the amount of the customs duties preparatory inquiry. referred to in subparagraph 3 of Act.' Article 66 (1) of the

In Accordance with this distinction and II — Conclusions of the with reference to the 'basic amount' parties component, the Council supplemented

for differ in tomatoes,'

and that under glass, which certain

respects from the tomatoes grown in the '— the costs of this application be borne basic relates'

defendant.' open, to which the price by the In (last recital). the applicant's view,

The defendant submits that the Court there is no difference between the

'commercial characteristics'

Submissions and argu­ protected by temporary measures

ments of the parties prohibiting imports or making the latter subject to customs duty. The basic The Government of Ireland amount fixed by Regulation No 1365/73 states, firstly, that Article 65 (2) of the Act of is lower than this duty, whereas,

Accession makes express for according to Article 4 of Regulation No reference, the the 228/73, it should be reduced by the calculation of producer price, to the 'principles set out in Article 4 (2) of amount of the customs duty, the

Regulation No 159/66/EEC The latter remaining portion being the compensa­

provision makes no mention of the tory amount to be applied. Following the import application factors, which of conversion abolition of restrictions

are laid down by Article 4 (4), added by required by Ireland's entry into the

contemplated by the authors of the Act in fruit and vegetables was first of Accession. Accordingly the applica­ implemented it has been impossible in tion of a conversion factor involves the numerous cases to take account of a

introduction of a new principle, single variety of those products. In cases

modifying the principles for calculation where a basic price established for a

to which the text of Article 65 (2) of the single variety had to be applied to

Act of Accession refers, and amounts to concrete circumstances it seemed

a misuse of powers by the Council and necessary to fix prices adapted to

compensatory amounts, not only for as between comparable products. tomatoes, but also for apples, pears and If the compensatory amounts were fixed cauliflowers. During the planning of the high at too a level, because they were Common Agricultural Policy the based upon prices which were not Commission had already acknowledged comparable, the result would be a that tomatoes grown under glass and distortion of the market. On the one those grown in the open differ in certain hand, the application of excessively high respects. compensatory amounts, resulting in The best evidence of the existence of tariff barrriers which were too high, such differences is shown by the would shelter the markets of the new disparity between the prices of tomatoes States from competition from the other grown under glass and of those grown in Member States, even where such the open. According to the statistical competition was legitimate. On the other data set out at Annex IV to Annex 4 B high hand, the application of these of the statement of defence, the price of compensatory amounts would mean that tomatoes grown under glass, in 1970, from Member States exports the new 1971 and 1972, was on average 1·8 times would be excessively subsidized, which higher than that for tomatoes grown in level would lower their prices to a well the open. It is no easy matter to establish below that for tomatoes cultivated under with certainty the reasons for this Community. This would glass within the disparity. Account has to be taken of lead in turn to the artificial stimulation reflec­ subjective consumer preferences, of production of this product within the ted in the structure of the market and of new Member States during the early which it would be possible to suggest years of the transitional period. only a tentative explanation. Moreover, were the Irish Government's Furthermore, it must be borne in mind point of view to be adopted, anomalies that the distinction between tomatoes would arise in the working of the grown under glass and those grown in system, arising from the fact that, in the open has been recognized by the putting on to the market a specified Council itself, independently of the variety of product, a compensatory context of compensatory amounts, in amount was applied which bore no particular in Regulations Nos 999/73 relation to the price of that variety. and 1624/73, in relation to reference

applicable in grown in the open (Regulation EEC No the Community as originally constituted, 1173/72 of the Council of 6 June 1972,

that is to say the price at the production OJ L 130, 1972), a conversion factor had a concept familiar in to be applied to the Irish production in stage, already Community legislation. order to compare the price of tomatoes

grown under glass in Ireland with the In such a system, the object of which is above basic price. to integrate the markets in fruit and

vegetables into a single unified market of Finally, as regards the argument that the all the Member States, despite initial system at issue offers no additional

differences between levels existing price protection to the Irish tomato grower in within the new Member States before relation to that which he enjoyed in the

IRELAND v COUNCIL

do not differ from tomatoes grown in the Council concerned with reference

the open in any respect which would prices and withdrawal prices distinguish justify the application of a conversion between tomatoes grown under glass

factor. The analogy drawn by the and tomatoes grown in the open, it is Council from differences existing also true that in those fields the

between different varieties of other jurisdiction of the Council and of the

products (apples, pears, cauliflowers) is Commission is not limited by the

irrelevant. In the context of tomato provisions of the Act of Accession, production the terms 'commercial which are applicable in this case. characteristics'

and on the fact that the latter can be relationship between the two price

sold at times when demand exceeds components involved in the calculation

supply. of the compensatory amount, the

conversion factor should have been The Irish Government next refutes the applied not to the producer price in argument that if its claim were upheld a Ireland — done by the Council as was distortion of the market would result. — but to the common basic price. In the Firstly, in view of the marginal latter case the compensatory amount percentages of Irish production and would have been considerably higher export of tomatoes in 1970, it would be (13·4 u.a.) than that which was in fact fanciful to suppose that failure to apply calculated (7·3 u.a.). a conversion factor could stimulate

exports to any appreciable extent during Finally, the Irish Government submits

the short period during which the that there was no adequate statement of

alleged to exist

between the commercial character­ the market, the Council returns to the

istics of tomatoes grown under glass problem of the commercial distinction and those of tomatoes grown in the between tomatoes grown under glass

and tomatoes grown in the open, within open, the meaning of Article 4 (2) of — the legal grounds for the use of a Regulation No 159/66. It notes here that conversion factor, the 'variety', the 'type' etc. listed at

Article 4 does not constitute an — the choice of the factor employed, exhaustive enumeration and therefore is — the application of this factor to the not to be read as definitive of the

producer price and not to the concept 'commercial characteristics'.

markets aimed at by Articles 65 and 66 before the Court in fact show that

as compared with the other common during the summer tomatoes grown

organizations with which the other under glass are produced and consumed

provisions are concerned. within the Community at the same time as tomatoes grown in the open. As its The reference in Article 65 (2) to the 'principles' final remark on this problem, the in question must be Council refers to a report giving reasons considered in relation to the whole range in justification of the distinction at issue of legislation in this field, without losing 'types' 'varieties' between the two or of sight of the link, within Regulation No tomato. 159/66, between Article 4 (2) and Article 7 (4) which provides for the application Turning next to the applicant's

of conversion factors. By repeating this objections as to the way in which the

last provision at Article 4 (4), Regulation conversion factor was applied in this

level is fixed During the course of the hearing the ed', the of which by Irish government produced forms drawn Regulation No 1173/72. On the other up by the Commission intended to hand, Article 65 (2) provides for the gather the information required for the application of the principles contained in calculation of the basic prices for fruit Article 4 (2) of Regulation No 159/66 'to and vegetables, including tomatoes, for the national data of the new Member the period 1969-1971. These forms States'. It is entirely justified and in expressly defined the commercial accordance with the wording of the Act characteristics to be specified in respect of Accession to accept that the of each product, but nowhere conversion factor should be applied to characteris­ mentioned, amongst those those price data regarded as being tics, the distinction between glasshouse flexible, that is, to the producer price, and open field cultivation. and not to the common basic price, which is, on the a fixed The Council, apart from challenging contrary, component. the regularity of this production of

for based documents, on the grounds that it was Finally, as the argument on

lack of an adequate statement of belated, noted, firstly, that the originator of these forms was not the Council but reasons, the Council maintains that

Regulation No 1365/73 fulfils the the Commission, and, secondly, that

their failure to mention the distincition conditions as to legality required in this between glasshouse and open field field by Community law as defined by the Court of Justice in its case law, and cultivation may be explained by the fact that at that time it was not thought seeks to show, by means of a detailed necessary to make the distinction. examination, that, on the various points

Treaties' Accession and the Adjustments to the (hereinafter referred to as the

JUDGMENT OF 21. 3. 1974 — CASE 151/73

'Act of Accession') annexed to the Treaty of Accession signed at Brussels on 22 January 1972, in that, for the purpose of fixing the compensatory amount for tomatoes, it applied a conversion factor to the producer price. The

application of this conversion factor is alleged to be all the more unjustified

in that the Irish producer price related to a product commercially comparable

to that in relation to which the Common basic price was fixed.

a common basic price and, on the other hand, in the new Member State

concerned, of a producer price which appreciably exceeds the basic price

applicable in the Community as originally constituted during the period

preceding the application of the Community system to the new Member

States.

5 According to Article 66 (1) of the said Act, the compensatory amount shall be equal to the difference between the producer price in the new Member State concerned and the common basic price.

Furthermore, the Irish producer price was fixed pursuant to the criteria

contained in Article 65 (2) of the Act of Accession, by applying to the national data of the new Member State the 'principles set out in Article 4 (2) of Regulation No 159/66/EEC laying down additional provisions in respect of the common organization of the market in fruit and vegetables'. Since the

Irish national data are concerned solely with the cultivation of tomatoes

under glass- the producer price employed refers to tomatoes grown under

glass.

9 Regulation No 1365/73 of the Council fixed the compensatory amount at

originally constituted. This adaptation is to be effected by means of

transitional measures, amongst which Article 55 (1) (a) provides for the

application, in the agricultural sector, of compensatory amounts levied on

imports and exports by the new Member States in trade between the latter

and with the Community as originally constituted, such amounts being designed to compensate differences between the national price levels in those States and common price levels.

JUDGMENT OF 21. 3. 1974 — CASE 151/73

for the protection of the market, is clearly apparent from this provision.

14 The compensatory amounts envisaged by Article 65 and 66 of the Act of Accession should therefore offer Irish tomato producers a measure of

protection, against imports of tomatoes from the Community as originally

constituted, comparable to that provided by the quantitative restrictions and

measures having equivalent effect applied in 1971.

15 Even on the supposition that tomatoes grown in the open are, in a

Accession, for the application of conversion factors to the producer price in the new Member State.

IRELAND v COUNCIL

17 Article 65 (2), since it derives from the above-mentioned Article 4 (2) the 'principles' to be applied for the fixing of the producer price, gives a precise

definition of the scope and limits of its reference. The extension of this 'principles'

reference to other than those contained in Article 4 (2) would

constitute a disregard of the spirit as well as the letter of Article 65 (2) of the

include in the reference the principles contained in the final paragraph of that

provision. In fact it is clear from the provisions of the Act of Accession devoted to other agricultural markets, and more precisely from Sections 4 to 8 of Chapter 2, Title II, which also contains Articles 65 and 66, that, in cases where the Act allows of the possibility of employing conversion factors for the assessment of the compensatory amount, it does so expressly, defining at the same time the details of their application.

19 It follows that Article 65 (2) of the Act of Accession, when it refers to the 'principles' contained in Article 4 (2) of Regulation No 159/66, is concerned solely with the criteria for calculation expressly defined by the last-mentioned provision and does not include the possibility, which is envisaged by other provisions of the said Regulation, of employing conversion factors.

20 Moreover, the Council's argument that the distinction which, in its opinion, exists in the commercial context between tomatoes grown in the open and

those grown under glass rendered the application of conversion factors to the Irish producer price inevitable is in no way justified by Article 4 (2) of

Regulation No 159/66 and, furthermore, is in conflict with the practice

22 However, it is clear from the text and objective of Article 4 (2) of Regulation No 159/66 that since the basic price is fixed for a product with defined commercial characteristics, the characteristics upon which the definition of

the relevant product is based must be specified when the basic price is fixed and mentioned in the act by which that price is fixed. The fact that the distinction between tomatoes grown under glass and those grown in the open was subsequently employed in Council Regulations Nos 999/73 of 11 April 1973 (OJ L 99, 1973) and 1624/73 of 8 June 1973 (OJ L 163, 1973), fixing the reference price and the withdrawal price for tomatoes, for the 1973 marketing year and the 1973/74 marketing year respectively, is here not relevant.

23 Accordingly the conclusion must be drawn that Regulation No 1365/73 of the Council of 21 May 1973, in that it applies a conversion factor to the Irish producer price for tomatoes for the purpose of caculating the compensatory

amount, infringed Articles 65 and 66 of the Act of Accession, as well as

Article 4 (2) of Regulation No 159/66.

24 Regulation No 1365/73 must therefore be declared void, to the extent that it provides for the application of a conversion factor to the producer price and, in consequence, fixes the compensatory amount to be applied in Ireland to

Accordingly, pursuant to the applicant's pleadings, the defendant must be ordered to pay the costs.

On those grounds,

Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the oral observations of the parties; Upon hearing the opinion of the Advocate-General;

Having regard to the Treaty establishing the European Economic

Community, especially Article 173; Having regard to the Act concerning the Conditions of Accession and the

Adjustments to the Treaties, annexed Treaty concerning the Accession to the

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

European Communities;

THE COURT

hereby:

1. Declares Regulation (EEC) No 1365/73 of the Council of 21 May 1973 void, to the extent that it provides for the application of a

OPINION OF MR WARNER — CASE 151/73

Delivered in open court in Luxembourg on 21 March 1974.

A. Van Houtte R. Lecourt

Registrar President

OPINION OF MR ADVOCATE-GENERAL WARNER

DELIVERED ON 19 FEBRUARY 1974

My Lords, That is subject to Article 9 (1) of the