C-23/75

Cassa CONGUAGLIO ZUCCHERO

on the validity and interpretation of Article 6 of Regulation (EEC) No 834/74 of 5 April 1974 laying down requisite provisions to prevent the sugar market from being disturbed as a result of the price increase in this sector for the 1974/75 sugar marketing year, (OJ 1974, L 99, p. 15).

THE COURT

composed of: R. Lecourt, President, R. Monaco and H. Kutscher, Presidents of Chambers, A. M. Donner, J. Mertens de Wilmars, P. Pescatore, M. Sørensen, A. J. Mackenzie Stuart and A. O'Keeffe, Judges,

Advocate-General: H. Mayras Registrar: A. Van Houtte

gives the following

On 22 November 1974 the Pretura This Decree-law provided inter alia that authorized the seizure which was effected the aforesaid Cassa should directly in Rome on 26 November 1974. distribute the sums so received to all the Italian beet growers as from 31 December 1974 in accordance with the The Cassa Conguaglio Zucchero was cited before the Pretura and made a party conditions laid down by the Inter- to the proceedings. On 17 January 1975 ministerial Committee on prices. three national associations representing Italian industrial users of sugar The Decree-law came into force on intervened in the proceedings in support publication. of the claims made by Rey Soda.

The Cassa Conguaglio Zucchero is an After hearing argument from the parties Italian public body created by Decree No the Pretura by order dated 30 January

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2. Was Article 6 of Regulation (EEC) 1495/74 and 2106/74 of the No 834/74 of the Commission, as Commission illegal, in so far as it supplemented and amended by may (if at all) be interpreted as Regulations (EEC) Nos 1495/74 and authorizing the Italian State to 2106/74 of the Commission, adopted require payments to be made by illegally, inasmuch as a charge of the consumers of sugar in respect of kind authorized must be expressly stocks of over 500 kg, thus approved by the Council of constituting inequality of treatment,

6. at all) be interpreted as authorizing 834/74 of the Commission as Italy to require consumers of sugar to supplemented and amended by make payments to sugar-beet Regulations (EEC) Nos 1495/74 and producers, is it illegal on the ground 2106/74 of the Commission, illegal that it is in breach of the principle of on grounds of incorrect appraisal, equality and non-discrimination (in misrepresentation of the facts and the fiscal as well as other fields), contradictory reasoning: introduced by Articles 40 (3) and 7 of (a) in that the holding by industrial the EEC Treaty and common to the consumers on 1 July 1974 of constitutions of the Member States?

REY SODA v CASSA CONGUAGLIO ZUCCHERO

7. Is Article 6 of Regulation (EEC) No to an end before the adoption and 834/74 of the Commission, as publication of the act in supplemented and amended by question? Regulations (EEC) Nos 1495/74 and 10. Under the principles on which the 2106/74 of the Commission, illegal European Community is based, is it since, despite the democratic basis of lawful for one category of citizens, Community law and that of the namely sugar consumers, to be Member States, it was adopted subjected to a precuniary charge the without any prior consultation with proceeds of which are used for the the Community citizens affected benefit of another category of and/or with their representative citizens, namely beet growers,

9. Does the Community legal system 12. Is the expression, 'the increased value recognize principles which enable the of stocks, in Article 6 of Regulation legislative act of a Member State to be No 834/74 (on the assumption that declared illegal in so far as it conflicts it is held to be valid by the Court of with Community law, in circum Justice and, moreover, to be stances: applicable to consumers of sugar for (a) when the legislative act is adopted processing) to be interpreted as for the purpose of implementing meaning that such increased value measures of the Community represents the difference between institutions, which, whilst in two prices, one of which is theory provided for under Article obtainable as the Community 189 of the EEC Treaty are, in fact, intervention price for sugar laid illegal and invalid; down for the 1973/74 marketing year (b) when the Constitution of the whereas the other is obtainable as Member State allows the adoption the threshold price laid down for the of such a legislative act only in 1974/75 marketing year; or as

organization of the market in sugar. 2. The requisite provisions to prevent the sugar market being disturbed as a It emerges from this regulation that the result of an alteration in price level at common market in sugar has a system of the change-over from one marketing target and intervention prices for sugar year to the next may be adopted in and minimum prices for beet. 'Derived accordance with the procedure laid intervention prices shall be fixed..., down in Article 40.' account being taken of the regional variations which, given a normal harvest In Regulation No 769/68 adopting the and free movement of sugar, might be measures necessary to compensate the expected to occur in the price of sugar difference between national sugar prices under natural conditions of price and Community prices valid from July formation.' (Article 3 (2)). 1968 (OJ 1968, L 143, p. 14), the Council provided for a return to be made Under Article 6 of this regulation the throughout the Community of the sugar Council '... shall adopt outline stocks in excess of 1 000 kg per stockist. provisions dealing in particular with the The Member State was required to levy a general conditions governing purchasing, certain tax on the stocks save in respect delivery, reception and payment to which of working stock. The amount of the agreements within the trade at sugar which constitutes the working Community, regional or local level and stock of a consumer is defined in Article contracts concluded between buyers and 1 (3) as 'the amount of sugar held by sellers of beet must conform'. industrial users necessary for normal working for a maximum of four weeks'. Since 'the establishment of a single market based on a common price system Following the devaluation of the French would be jeopardized by the granting of franc Regulation (EEC) No 1344/71 of certain aids', Articles 92 to 94 of the the Commission (OJ 1971, L 140, p. 27) Treaty have been applied to the sugar provided that France should obtain a sector (Article 36). However, Article 34 return of the quantities of sugar in excess provides: of 5 000 kg per holder. A tax of FF 10-70 '1. During the 1968/69 and 1974/75 per 100 kg of white sugar was provided marketing years, Italy may grant for in respect of the quantities referred adaptation subsidies to its beet to.

quantity France was obliged to take all down requisite provisions to prevent the the measures necessary to avoid different sugar market being disturbed as a result treatment between those concerned. of the price increase in this sector for the 1974/75 sugar marketing year (OJ L 99, Neither Regulation No 769/68 of the p. 15). The regulation entered into force Council nor Regulation No 1344/71 of on the day following its publication in the Commission obliged the Member the Official Journal, that is to say, 10 State to use the product of the tax or April 1974. charge to any particular end. This regulation is based expressly on 3. Following the devaluation of the Article 37 (2) and Article 38 of Italian lira a conversion rate for the lira Regulation No 1009/67/EEC of the at a level more closely related to the Council, Article 11 of Regulation (EEC) actual economic situation was fixed on No 206/68 laying down outline 31 October 1973 by the Council in provisions for contracts and intertrade Regulation No 2958/73 (OJ 1973, L 303, agreements on the purchase of beet and p. 1). Council Regulation (EEC) No 974/71 of 12 May 1971 on certain measures of On the same date, the Council conjunctural policy to be taken in nevertheless adopted Regulation No agriculture following the temporary 2959/73 which, taking the view that the widening of margins of fluctuation for short-term economic situation at that the currencies of certain Member States time made the increase of prices of (OJ L 106, 1971, p. 1). agricultural products unacceptable in respect of sugar but that, on the other The seventh recital states that 'the hand, Italian prices for this product increase in Italy of the prices of sugar could be adjusted within a reasonable expressed in Italian lire resulting from period of time, by reference to the the exchange rate to be applied for the beginning of the marketing year, laid Italian lira in the sugar sector is down that the intervention price for appreciably higher than the Community sugar and the minimum prices for sugar increase; whereas it is absolutely beet, applicable in Italy should be necessary to prevent disturbances on the maintained until the end of the 1973/74 Community market on the one hand by sugar year, that is to say, until the end of providing a reduction of the monetary June 1974, at their level on 31 October compensatory amounts for sugar 1973, expressed in Italian lire. imported before 1 July 1974 and marketed for . consumption from this The devaluation of the lira was not to date, but on the other by requiring Italy effect the intervention price of sugar to adopt national measures on its market; until 1 July 1974. whereas these national measures must

14 June 1974 supplementing Regulation Commission of the European Com­ (EEC) No 834/74 (OJ 1974 L 158, p. 20) munities on 21 April 1975, on behalf of which refers to Article 37 (2) of the Italian Republic on 12 May 1975 and Regulation No 1009/67/EEC provided on behalf or the Rey Soda and the for the insertion of the following intervening Italian associations on 13 paragraph in Article 6 of Regulation May 1975. (EEC) No 834/74: 3. 'All holders in Italy at 00.00 hours on On hearing the report of the 1 July 1974, on whatever basis, of Judge-Rapporteur and the views of the white sugar, raw sugar, syrups of sugar, Advocate-General the Court decided to or to whom such products are in open the oral procedure without a transit, shall declare to the competent preparatory inquiry. Nevertheless ques­ Italian authorities by 10 July 1974 at tions were put by the Court to the the latest such quantities in question Commission. in excess of 500 kg.'

The reason for this provision given by II — Summary of the written the Commission in the regulation is that observations it would enable Italy to take national measures speedily to prevent disturb­ (a) The scope of Article 6 of Regulation ances on its market. No 834/74 (Question 1)

those holding sugar on 1 July 1974, including users, must logically be subject Regulation No 1495/74 did not clarify to the payment of a sum from which the the position. Article 1 of this regulation beet growers would benefit. is limited to imposing an obligation to declare. Neither Article 1 of the The Italian Government adds that it regulation nor the corresponding recitals would be wrong to call the measure on their own show that this provision is imposed by the national rules applying intended to define the persons on whom the Community provision a pecuniary the obligation to pay is placed.. charge. If account were taken of the increased value which sugar stocked It is not proper to infer from the simple before 1 July 1974 had, then it would obligation to make a declaration of any have to be admitted that the measure indication of the person subject to the referred to does not constitute a charge, payment of the tax. There is not that is to say, a tax applying to an already necessarily any causal link between the existing situation, but that it was limited obligation to declare and the obligation to preventing the whole of this increased to pay the tax. value from being realized. A statement of the persons required to The charge is not therefore of a fiscal make a declaration is perfectly nature, but constitutes an equalizing reasonable. This obligation is explicable measure between classes interested in the by the reasonable concern of the same sector of the market. From the fact Community institutions to know the that the provision in question expressly position of the Italian market in order in mentions stocks without making any consequence to adopt adequate measures. distinction between the products which may constitute these stocks and from the The Commission could not reasonably fact that Article 1 of Regulation No have expected manufacturers of 1495/74 expressly imposes the obligation confectionery and users in general to be to make a declaration on all holders of able to liquidate their stocks within a sugar in Italy, on whatever basis, it is period of 15 days so as to escape a charge obvious that the provision in question since users normally have stocks applies to all stocks of sugar. sufficient for some months' work. Nor could they have increased production so Observations of Rey Soda and the as to use the stocks within 15 days. Even associations intervening in the main less could they have liquidated their action (hereinafter together called 'Rey stocks. Moreover they did not have Soda') available a distribution network for the sale of the sugar. Rey Soda observes that it is sufficient to tind that the provision in question states who are to benefit from the transaction. The only possible interpretation of The provision states moreover the Regulation No 1495/74 is that the only amount of the payment but it does not, objective of the obligation to declare is a on the other hand, give the least statistical one and is not to designate indication of those who must bear the who were liable to make a payment. pecuniary charge. The provision does not indicate whether the payment to the beet Article 1 of Regulation No 2106/74 does growers must be made by the State or by not give any enlightenment on the those holding sugar and whether in the question either.

In these circumstances it is right in any intend to authorize a levy on working event to give to the provisions of Article stock which represents the normal 6 of Regulation No 834/74 and to the requirements of the processing industry. The institutions must ensure, in the subsequent provisions an interpretation having the least serious consequences. exercise of their powers, that the amounts which commercial operators are As regards Article 6 of Regulation No charged are no greater than is required to achieve the aim which the authorities are 834/74, the authorization given to the Member State ought not to be to accomplish (Case 5/73 Balkan understood as meaning that it is Import-Export v Hauptzollamt Berlin intended to allow the imposition of a tax Packhof [1973] ECR 1091). on those, such as users, who have not Rey Soda mentions the measures which had the benefit of any increased value. the Community institutions applied when the goods in short supply on the If Regulation No 834/74 were intended market before Regulation No 834/74 was to authorize the Member State to strike at adopted, that is, during the summer and speculation the Member State could have autumn of 1973. But none of the struck solely at holders of sugar who measures provided for by the were in a position to speculate and Community institutions authorized the therefore not at users. The products imposition of a tax on stock and even manufactured by industrial users of sugar less so on working stock. are sold according to price scales which do not vary from day to day. The To impose on sugar users a payment in processing industry, and in particular favour of beet growers would have large-scale industry, is very often tied to required obviously difficult checking to long-term sale contracts for deliveries establish whether the increased value of which have their prices fixed in advance. stocks had not been absorbed by other To impose a tax on stocks intended for a higher charges which the concern had to production which has already been sold face. Users should have been exempted, at agreed prices would prejudice vested especially since, on the one hand, the rights and disappoint legitimate processing costs had increased and, on expectations. the other hand, consumer prices had been largely frozen as a result of the The interpretation proposed by Rey Soda Italian provisions in force at the time. is in accordance with the provisions of Regulation Nos 769/68 and 1344/71. Rey Soda concludes that the attainment The previous practice is an indication of the objectives aimed at and a sense of

The Italian Republic states that the the disturbances the increase of some second recital to Regulation No 1009/67 7 % in the intervention prices for sugar provides that one of the aims of the for the new marketing year could cause common agricultural policy on sugar is to the market whereas in Italy the 'to ensure that the necessary guarantees position was much more serious. in respect of employment and standards of living are maintained for Community Moreover the position which existed in growers of sugar beet'. France three years previously and which gave rise to Regulation No 1344/71 of In the opinion of the Commission and the Commission is not comparable to the Italian Republic Articles 37 and 38 of that of Italy. In 1974 a serious sugar Regulation No 1009/67 and Article 11 of shortage was recorded both in the Regulation No 206/68 constitute a valid Community and on a world scale. Italy is basis for the provision in question: they one of the countries where the market are implementing measures adopted supply caused and still causes serious within the terms of Article 37 (2). The anxiety. In 1971 on the other hand, in Commission was therefore justified in France, the largest sugar producer in the adopting them: see Case 25/70 — Community, there was a large surplus of Einfuhr- und Vorratsstelle für Getreide stock. v Köster [1970] ECR. The Commission had to intervene ex The Commission does not see which ante; it could not wait until the representative body other than the disturbances occurred. To judge the

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(iv) Vacatio legis and retro­ By exacting a payment intended to active nature ensure the regular supply to the market the Commission knew that in the The Commission refers to the dates on absence of express provision the which the various regulations entered payments would go to the Italian into force and concludes that it is not Treasury. Assigning the sums to the State possible to speak of inadequate vacatio or paying them to the beet growers did legis. The legislature had imposed the not compromise the attainment of the obligation well in advance on those who objective pursued which was to ensure 2 months and 22 days later would be the regular supply of the market. Taking holders of substantial stocks of sugar. guidance from the objectives of the

REY SODA v CASSA CONGUAGLIO ZUCCHERO

to stock sugar to such an extent that the quantities stocked by them were more It states that Article 155 of the Treaty than 400 % higher than those of the applies to the rules of the agricultural previous year. Exemption is justified in market, cf. Cases Einfuhr- und the case of urgent measures but there is Vorratsstellefür Getreide v Köster no reason for it when the payment to be [1970] ECR and Merkur v Commission made on stocks was notified long in [1973] ECR 1055. advance so as to allow dealers to take it into account in fixing prices for their Rey Soda concludes that in the products sold after 1 July 1974. agricultural markets it must always be a question of the implementation by the Commission of rules which the Council Those who had manufactured products intended to be sold after 1 July 1974 lays down and solely of implementation. from sugar from previous marketing Where the power of implementation is years have already benefited by virtue of conferred it presupposes a provision by this, and, in proportion to the sugar used the Council laying down the basic rules. in the manufacture of the products, benefited from a. substantial increase for Since the implementation of rules laid they had been able to take account, in down by the Council constitutes the fixing the price of the product to be limit of the power given to the delivered after 1 July 1974, of the Commission is to be interpreted increase which sugar had been subject to restrictively. To exceed this limit would after this date. The normally prudent and prejudice the balance of powers and the informed manufacturer should have respect for the powers which constitute a considered that Community intervention 'fundamental guarantee' laid down by the would certainly take place and should Treaty. therefore have fixed the prices on the It is always possible to delegate provided basis of the sugar prices applicable on that this does not disturb the balance of 1 July 1974. powers within the Community, cf. Meroni v High Authority (Rec. 1958, In the situation existing when Vol. IV, p. 9 at p. 42). Regulations Nos 769/68 and 1344/71 were adopted it was not possible, in view Any possibility for the Commission to of the urgency, to adopt national amend or derogate from or exceed the

As for fiscal charges, any decision with It is true that the Council in regard to their application is for the Council of Ministers. The Council can implementation of Article 37 (1) had put only confer on the Commission a levy on stocks whilst excluding the implementing powers. working stock of industrial users but the Council had the power to impose this The levying of taxes is according to the levy in so far as it can be recognized to law of the Member States a prerogative of have powers in the sphere of taxation. Parliament and not the executive. The way in which the Community system is Further, Article 37 (2) did not give the built up, the technical institution, the Commission the power to dispose of the Commission, cannot be called upon to income from the levy in order to legislate in this matter. The only introduce an aid to beet growers. There is deliberative institution capable of doing no rule in the basic regulation providing it is of necessity the Council. for the aid in question. On the contrary, in Article 34 of the basic regulation, the As for the power of national Council, as an exceptional measure, administrations Rey Soda refers to Case authorized Italy to grant certain aids 31/74, Galli [1975] ECR 47. The subject to a clearly-defined ceiling. No problem arises when the Commission, implementing power was reserved to the given certain powers by the Council, Commission.

REY SODA v CASSA CONGUAGLIO ZUCCHERO

Rey Soda concludes that the reference consumption only on the ground that he which is made in Regulation No 834/74 has been found in possession of a certain to the rule in Article 37 (2) authorizes the quantity of goods. The trial judge should Commission to make only simple rules ... investigate the facts chronologically implementing the provisions of the in their context and as they took place in Council such as those of Article 2 of the order to obtain a full and accurate picture regulation in question. of the whole activity'.

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certain increased value, the tax should One of the reasons of this situation is the have been calculated only on the basis of large extent of the cartel structure of the the various prices of the raw material. sector. The rales introduced as a result of the adoption of Article 6 of Regulation Producers were easily in a position to No 834/74 make the conditions of pass on the tax. The position of competition in the sugar market even processers was completely different. For worse.

The Italian Republic and the Finally, the legal rules effect the Commission are of the opinion that the conditions of competition between provisions governing competition cannot producers and users of sugar in the be taken into account save when it is common market. established that there is an agreement between undertakings or at least a The passing on to users of the financial concerted practice or an abuse of a charge related to the contribution in dominant position. question was all the more easy for producers to effect since the sugar Rey Soda observes that the establishment shortage experienced in Italy in 1974 and of a system ensuring that competition is the necessity to have this material in not distorted in the common market is order to continue production put one of the main objectives of the industrial users in a position of even Community. greater weakness with regard to producers. In the sugar sector competition plays a more restricted rôle within the The agricultural rules of the Treaty can Community than in the other sectors. authorize the exacting of a contribution

REY SODA v CASSA CONGUAGLIO ZUCCHERO

The legality of the regulation of the Commission must therefore be The Commission suggests the following considered in relation to the rules on reply to the last question. competition laid down in Article 3 (f) or Articles 85 and 94 of the Treaty. The increased value on stocks referred to in Article 6 of Regulation No 834/74 Moreover the unlawful nature of the could be determined on the basis of sale regulation of the Commission must prices free ex factory applicable on the appear in the light of the rules on sugar market in Italy.' competition in force in the agricultural sector.

This The Commission maintains that the increased value always establishes a words 'increased value' in Regulation No relationship between two amounts which 834/74 clearly mean the increase in value exist at two different but clearly of a product, expressed in Italian lire, due determined points in time. The original to causes which have nothing to do with point may be fixed arbitrarily by the the activity of traders and more especially rules. When no date is fixed the original to those which result from the point is that when the item in question application of a conversion rate for the comes into the possession of the Italian lira in the sugar sector at 1 July tax-payer; the final point in time, in the 1974. absence of any indication, is when the article in question is sold. The Commission maintains that although this provision does not forcibly The Community rules seem to indicate show the way in which the increased the final point as the date laid down for value must be calculated, it fixes a limit the notification of stocks.

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By Such rules are contrary to the prohibition approving Article 6 of Regulation No against discrimination in the widest 834 the Commission assumed a power which it does not have. sense of the Community law. More precisely they are contrary to the 2. To recognize the Commission as principle of neutrality in taxation. having the power to impose or authorize the imposition of a tax on all Italian subjects who met certain In financial theory there is a distinction well defined conditions, would between monetary increased value and constitute the most serious violation real or economic increased value.

This is prices of the European market. They confirmed by Article 222 of the Treaty. should already have included the devaluation of the lira without As a wholly ancillary matter, Rey Soda concerning themselves with the observes that Italy has exceeded the measures adopted by the Commission limits fixed by Regulation No 834/74 of for the Italian market. Granulated the Commission. According to the sugar is largely imported into Italy seventh recital to Regulation No 834/74, from other countries from the which is drafted in watertight terms, the Community.

REY SODA v CASSA CONGUAGLIO ZUCCHERO

stocks were notified. In any case the tax by increasing the price of their tax-payers must know in advance what products. taxes they will have to pay and be free to act in consequence. Mr Maestripieri, as Agent for the Commission, put forward the following Rey Soda contests the value of the four arguments: Commission's estimate of the stocks of sugar held by industrial users in 1973. 1. The Commission had under Article The total figure of 20 000 metric tons is 37 (2) of Regulation No 1009/67 the purely arbitrary and was also used during power to lay down a tax on stocks of

own authority. Following the measures of by the Council of its legislative power. the Council which had delayed the influence of devaluation of the lira on The Commission wished to introduce the Italian market and following the into the basic regulation in the milk increase in Community prices of 7 % sector a formula similar to that of Article those who had acquired the product at 37 (2) of Regulation No 1009/71. the old prices enjoyed an increase in However, certain delegations in the value of some 37 %.

Community principle. The maximum worded as follows: delegatus non potest delegare does not strictly apply to modern institutions and 'In order to prevent the market in milk cannot constitute a true principle of and milk products being disturbed as a Community law. result of price alterations at the time of

A measure providing for the taxation of decide that the benefit of this payment stocks and milk products stored before should go to beet growers. the beginning of a new milk year, may, By Article 34 of Regulation No 1009/77 however, only be taken by the Council, which is a concrete application of Article acting on a proposal from the 42 of the Treaty, the Council authorized Commission, in accordance with the within certain limits, certain national aid. voting procedure provided for in Article The position created by Article 6 of 43 (2) of the Treaty.' Regulation No 834/74 is quite different. It is here a question of 'joint measures' or The Ministers for Agriculture at their 'joint aids' in the sense that the grant is meeting on 26 and 27 May 1975 were decided by the Community and the concerned with the shortage of sugar on financing is effected by the State. Articles the Italian market. The French Minister 92 to 94 and Article 42 do not apply to stated that France had sugar to meet the these 'joint measures'. By these 'joint needs of the Italian market but that no measures' the Community assumes its one at that date wished to sell in responsibility of managing a market and anticipation of 1 July at which date the it only remains to examine in the prices were to be increased by 15 %. The context of Article 40 (3) whether the Ministers delcared that the fact of measure of equalization in the present announcing taxation of stocks would case comes within the measures cause sugar to find its way back to the necessary to attain the objectives defined markets. It was understood that this in Article 39. measure would be adopted by the Commission. 3. The Commission was entitled to impose this payment on all holders of The interpretation advocated by the sugar including users. Commission was the raison d'être of the said provision. In certain circumstances Even if there had been no interest in the only effective means, in the absence exporting sugar during the last quarter of of which the delegation to the the sugar year because of special export Commission would lose all effectiveness, levies it was obvious however that there is the payment such as has been imposed was always an interest in stocking up in the present case. sugar at the prices for the 1973/74 marketing year and keeping it in store The Commission's interpretation is in until 1 July 1974. Apart from the accord with previous regulations and measures applicable in all the Member case-law: Regulation No 769/68 of the States and provided for by the first three Council and Regulation No 1344/71 of articles of Regulation No 834/74, special the Commission. The Commission refers measures had to be taken for Italy and to Article 37 (1) of Regulation No the only measure of a kind to guarantee 1009/67 and Regulation No 769/68 of the security of supplies was the payment the Council which have already been of the increased value on stocks. examined by the Court: Case 5/71 Zuckerfabrik Schöppenstedt v Council. The Commission stresses the difference Mr Advocate-General Roemer observes: between this situation and the previous ones dealt with by Regulations Nos 'Mention is made quite generally of 769/68 of the Council and 1344/71 of "measures necessary' which properly the Commission.

The reason which led the Commission The national administrations do not have not to exempt the working stock of users a discretionary power enabling them to from payment was the seriousness of the adopt measures the scope of which situation on the Italian sugar market. The would exceed the limits imposed by Commission feared that consumers Community rules: Mr Advocate-General would be deprived of sugar, which Mayras in Wasaknacke v Einfuhr- und explains the severity of the measure Vorratsstelle für Getreide (Case 32/72, adopted. The Commission wonders on Rec. 1972, p. 1188). The Commission what basis users ought to be protected also cites the case of Westzucker [1973] from measures brought about by the ECR 321 343) and in particular the situation on the sugar market. Both sugar opinion of the Advocate-General. producers and traders have working stocks. Why should not the exemption The Advocate-General delivered his

claimed by users be given to these opinion at the hearing on 1 October categories as well? 1975.

Law

1 By order dated 30 January 1975, received at the Court on 19 February 1975, the Pretura di Abbiategrasso requested the Court under Article 177 of the EEC Treaty to give a preliminary ruling on the validity and interpretation of Article 6 of Regulation (EEC) No 834/74 of the Commission (OJ 1974, L 99, p. 15) supplemented and amended by Regulations of the Commission (EEC) No 1495/74 (OJ L 158, p. 20) and No 2106/74 (OJ 1974, L 218, p. 53).

2 It appears from the order for reference that the answer to the questions is intended to enable the national court to judge whether the levying by the Cassa Conguaglio Zucchero of a tax on sugar stocks held by the Italian industrial users on the change-over to the 1974/75 sugar year conforms with Community law.

7 The plaintiff in the main action maintains in the first place that Article 37 (2) did not enable the Commission to require a Member State to impose a pecuniary charge on sugar stocks held in that State.

8 In the second place, even if the Commission had been so enabled it could not impose such an obligation save to offset the alteration in the level of Community prices expressed in units of account and not variations of these prices in national currency as a result of a devaluation of that currency.

9 Since the objective of Article 155 of the Treaty is the preservation of the balance between the powers of the Council and the Commission, the powers conferred on the Commission by Article 37 (2) must be interpreted strictly.

10 When Article 155 of the Treaty provides that 'the Commission shall exercise the powers conferred on it by the Council for the implementation of the rules laid down by the latter', it follows from the context of the Treaty in which it must be placed and also from practical requirements that the concept of implementation must be given a wide interpretation.

11 Since the Commission alone is able continually to follow with attention trends on the agricultural markets and to act with urgency as the situation requires, the Council may be led in the sphere of the common agricultural policy, to confer on the Commission wide powers of discretion and action.

REY SODA v CASSA CONGUAGLIO ZUCCHERO

17 Article 37 (2) provides:

The requisite provisions to prevent the sugar market from being disturbed as a result of an alteration in price level at the change-over from one marketing year to the next may be adopted in accordance with the procedure laid down in Article 40' (that is to say, according to the so-called Management Committee procedure).

18 The similarity in powers reserved to the Council on the change-over to the first sugar year and conferred on the Commission for the purpose of subsequent marketing years is explained by the Council in the 15th recital to this regulation.

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19 It is there explained:

'whereas the transition to the system established by this Regulation must be effected as smoothly as possible; whereas to this end certain transitional measures may prove necessary; whereas the same need may arise at each change-over from one marketing year to the next; whereas provision must therefore be made for the possibility of adopting appropriate measures'.

25 Nevertheless Article 37 (2) of the basic regulation enabling the Commission to take, in accordance with the consultation procedure of the Management

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Committee, measures directly applicable in a Member State, cannot be interpreted as enabling the Commission to impose upon a Member State the obligation to draw up, under the guise of implementation measures, essential basic rules which would not be subject to any control by the Council.

26 Thus under the system established by Article 37 (2) of the basic regulation it is for the Commission, when it decides after consultation with the Management Committee to require certain holders of sugar of a Member State to pay a tax on the stocks, itself to determine in a precise manner the essential basic rules.

27 Since the effects of an announcement of a tax to discourage excessive stocking of a product depends to a large extent on the rate of the tax, the announcement must show, in addition to the parties liable, the bases of the calculation of the tax.

28 Accordingly in fulfilling the obligation which is placed on it under Article 37 (2), the Commission should have fixed the basis of the calculation of the tax and the categories of persons liable and submitted this decision to the Management Committee for its opinion.

32 Although the first paragraph of this article requires Italy to make a payment to beet growers, it does not define what is meant by the concepts 'increased value' and 'stocks'.

33 It is therefore necessary to examine whether the context and the Community precedents are such as to give a precise content to this provision.

34 In Regulation (EEC) No 750/68 of the Council of 18 June 1968 laying down general rules for offsetting storage costs for sugar it is explained that although sugar is normally held in store by sugar manufacturers, in some Member States it is also held in store by persons engaged in other businesses.

35 In the recitals to Regulation (EEC) No 748/68 of the Council of 18 June 1968 laying down general rules for postponing part of the sugar production to the following marketing year (OJ No 137, p. 1) it is explained that the manufacturer who carries forward sugar 'can obtain a price equal to the intervention price valid for that marketing year' and 'under Article 37 (2) of Regulation No 1009/67 EEC in the event of an alteration of price levels … measures may be adopted to offset the price difference in respect of sugar in store on 1 July'.

36 It follows that the concept of stocks in regard to sugar covers mainly stocks held by manufacturers.

37 The stocks held by industrial users, just as those of other consumers, do not as a general rule, come under common organization of the markets since, once sugar has arrived at this stage, the production and marketing cycle is finished

43 It says that this argument is confirmed by Regulation No 1495/74 of the Commission which imposes an obligation to declare on 'All holders in Italy at 00.00 hours on 1 July 1974, on whatever basis, …'.

44 An obligation to declare of this kind is compatible with exemption of working stocks as it was in the previous Community regulations.

45 Article 6 of Regulation No 834/74, either taken alone or in conjunction with Regulation No 1495/74 or in the light of previous Community regulations, cannot be interpreted as defining the classes of traders subject to the tax.

46 It must be concluded from this that the Commission, having defined the aim of the measures which the Italian authorities were required to take, should have determined in respect of each class of business, having regard to the size of the undertakings, what was to be understood by 'excessive stocking'.

JUDGMENT OF 30. 10. 1975 — CASE 23/75

47 Moreover, since the concept of 'increased value' is a new term in agricultural regulations, as the Commission explained in the course of the proceedings, the method of calculating this increased value requires precise rules.

52 The other questions of the national court relate to the validity of the provision of Article 6 of Regulation No 834/74 in other respects, so that, in view of the answer to the first two questions, they serve no purpose.

Costs

53/54 The costs incurred by the Commission of the European Communities and by the Italian Republic, which have presented observations to the Court, are not recoverable and as these proceedings are, in so far as the parties to the main action are concerned, a step in the action pending before the national court, the decision as to costs is a matter for that court.

REY SODA v CASSA CONGUAGLIO ZUCCHERO

On those grounds,

THE COURT

A. Van Houtte R. Lecourt

Registrar President

OPINION OF MR ADVOCATE-GENERAL MAYRAS DELIVERED ON 1 OCTOBER 1975 1

Mr President, taken by the Decree-law of the Italian Members of the Court, Government for the purpose of giving effect to the provisions adopted by the Introduction Commission in Article 6 of Regulation No 834/74. The present request for a preliminary ruling from the Pretura di Abbiategrasso The objective of these provisions was to has its origin in the combination of prevent disturbances on the market Community decisions relating to the resulting, according to the Commission, sugar market in Italy and the measures from the increase on 1 July 1974, that is

1 — Translated from the French.