C-67/75

2. Agriculture — Common organization of the market — Intra-Community trade and trade outside the Community — Monetary crisis — Compensatory amounts — Purpose — Maintenance — Conditions

1. On the assumption that the parties 2. Since the object of the establishment concerned could make the Com­ of the system of monetary com­ munity liable for the consequences of pensatory amounts was the main­ an unfilled expectation concerning tenance of single agricultural prices, the course which Community the granting or levying of compensa­ legislation will take, such liability tory amounts is acceptable in respect could only exist with regard to actual of a specific product only if trade in and certain losses which they had that product (intra-Community or suffered as a result. with third countries) would be disturbed in their absence.

In Joined Cases 67 to 85/75

LESIEUR COTELLE ET ASSOCIÉS S.A., a Société Anonyme under French law, having its registered office at 122, avenue du Général Leclerc, Boulogne sur Seine;

HUILERIES DE CHAUNY, a Société à Responsabilité Limitée under French law, having its registered office at rue Geo Lufbéry, 02300 Chauny;

HUILERIES PRECY, a Société Anonyme under French law, having its registered office at 45220 Chateau Renard;

HUILERIES FELIX MARCHAND, a Société à Responsabilité Limitée under French law, having its registered office at 35, Rue Gamier, 53200 Château-Gontier;

PERROTTE POULLARD ET COMPAGNIE, a Société Anonyme under French law, having its registered office at 5 rue de l'Entrepôt, 76202 Dieppe;

MR RAYMOND GUYOT, oil refiner and miller, carrying on business as a sole proprietor under the business name of Huilerie Guyot at Bantanges 71500 Louhans;

HUILERIE COOPÉRATIVE DE LIGNON, an agricultural cooperative established under French law, having its office at Lignon 51290 Saint Rémy en Bouzemont;

HUILERIES ALSACIENNES, a Société Anonyme under French law, having its registered office at Place Henry Levy, 67000 Strasbourg;

ROBBE, a Société Anonyme under French law, having its registered office at Venette, 60206 Compiègne;

represented and assisted by Lassier et Budry, a professional partnership, Advocates at the Cour de Paris, 39 Quai d'Orsay, 75007 Paris,

and

COMPTOIR COMMERCIAL ANDRÉ ET CIE, a Société Anonyme under French law, having its registered office at 4 bis Rue du Bouloi, 75001 Paris, represented and assisted by Mr Lussan, Bâtonnier and Advocate at the Cour de Paris, and by Lassier et Budry, a professional partnership, Advocates at the Cour de Paris, 39 Quai d'Orsay, 75007 Paris, with an address for service in Luxembourg at the Chambers of Ernest Arendt, Centre Louvigny, 34 b rue Philippe-II, Luxembourg,

applicants,

v

COMMISSION OF THE EUROPEAN COMMUNITIES, represented by its Legal Adviser, Peter Kalbe, acting as Agent, assisted by Jacques Delmoly, member of the Legal Service, with an address for service in Luxembourg at the office of Mario Cervino, Legal Adviser to the Commission, Bâtiment CFL, Place de la Gare,

JUDGMENT OF 17. 3. 1976 - JOINED CASES 67 TO 85/75

JUDGMENT

Facts

The facts of the case and the arguments 'If, for the purposes of commercial of the parties put forward during the transactions, a Member State allows the written procedure may be summarized as exchange rate of its currency to fluctuate follows: by a margin wider than the one permitted by international rules, it shall be authorized to:

I — Facts and procedure (a) charge on imports from Member States and third countries, Regulation No 136/66/EEC of the (b) grant on exports to Member States Council of 22 September 1966 on the and third countries, compensatory establishment of a common organization amounts for the products referred of the market in oils and fats (OJ, to below under the conditions

LESIEUR v COMMISSION

Following the announcement of the new II — Conclusions of the parties par value of the dollar by the International Monetary Fund, the The applicants claim that the Court Commission, by an Opinion of 12 May should: 1972, indicated that levies, refunds and — declare that the Commission of the other components based on world European Communities is liable to market prices would thenceforth be the applicants for its wrongful acts or calculated by using this new par value omissions in applying Regulation No (OJ C 47 of 12. 5. 1972, p. 1). In respect 133/66 of the Council on the of oils and fats, the result of this was that establishment of a common the subsidies were calculated on the basis organization of the market in oils and of world prices expressed in dollars in fats with regard to the events accordance with the new official par described in the applications; value. — order the Commission of the European Communities to make The applicants who, inter alia, mill good the injury suffered by the colza seed, consider that the abolition of applicants; the compensatory amounts relating to oils and fats made the subsidies fixed in — order the Commission of the

advance before 26 January 1972 and European Communities to pay the those fixed in advance between 1 following damages: February and 1 April 1972 insufficient FF 740 700 to the applicant in Case 67/75 and that they have therefore suffered injury. FF 145 551 to the applicant in Case 68/75 FF 203 481 to the applicant in Case After requesting compensation from the 69/75 Commission of the European Com­ FF 166 829 to the applicant in Case munities without success, they lodged an 70/75 application against the Commission FF 199 027 to the applicant in Case under the second paragraph of Article 71/75 215 of the EEC Treaty. FF 1 279 to the applicant in Case 72/75 The applications were entered in the FF 1 715 to the applicant in Case Registry of the Court on 31 July 1975. 73/75 FF 142 647 to the applicant in Case By an order of 13 October 1975, the 74/75

FF 4 383 to the applicant in Case The subsidies fixed in advance between 83/75 1 February and 1 April 1972 were FF 31 323 to the applicant in Case calculated by subtracting the world 84/75 market price in dollars from the target FF 189 461 to the applicant in Case price calculated in units of account. 85/75 Since the world market price used in this and, in the case of all the applicants, calculation is much higher than the interest at the Bank of France actual world market price, the result is discount rate calculated from 10 that the subsidy is clearly inadequate. December 1974; — order the Commission of the Before their abolition, the compensatory European Communities to bear all amounts paid when colza was imported the costs; from outside the Community were added — in the alternative, if the Court to the world market price expressed in requires further information, to order United States dollars. The subsidy an expert's report for the purpose granted to Community colza millers was of assessing the amount of calculated on the basis of the price for compensation due to the applicants; colza from outside the Community — in that case, reserve costs but order expressed in units of account at the date the Commission of the European on which it reached the Community Communities forthwith to bear and frontier. When compensatory amounts to make an advance payment towards are levied, the subsidy is calculated on all the costs of the expert's report. the basis of the free-at-frontier world

market price expressed in units of The Commission contends that the Court account, which accordingly reduces it in should: comparison with the subsidy which is — reject the applications as unfounded; calculated on the basis of the free- — order the applicants to bear the costs. at-frontier world market price expressed in dollars.

adopting a legislative measure making of the facts. Only half the colza harvest the abovementioned subsidies which in France was sold by 1 February 1972 were fixed in advance inadequate in view because imports already exceeded exports of Articles 27 and 29 of Regulation No (see table, p. 6). From the financial point 136/66 of the Council. In so doing, the of view, the trend followed by the dollar Commission has infringed rules of law (see table, p. 7) should have led the intended to protect citizens of the Commission to increase the compensa­ Community. tory amounts rather than to abolish them. The recitals of the preamble to Regu­ lation No 136/66 emphasize that the Even supposing that such had not been production of colza must be supported the factual situation, the discontinuance and that the interests of producers and of the compensatory amounts without at processing industries must be protected the same time implementation of against disturbances caused by imports machinery for correcting the subsidies from third countries. Such is the function would nevertheless have constituted a of the system of subsidies which thus wrongful act, that is, inequality of creates rights which must be protected competition because of the different for the benefit especially of the floating of the various national currencies processing industries. in relation to the unit of account.

have appreciated more than the French been bought at the target price. This led franc in relation to the dollar were able to losses.

to import colza from outside the Community more cheaply than French According to the applicants, this damage undertakings, there was in addition a is all the more unjust since the subsidy further type of distortion of competition. intended for colza producers is paid to the processers, because entitlement to the The wrongful act of the Commission subsidy only arises at the time when the consists further in an adequate appraisal seed is milled or placed under control.

JUDGMENT OF 17. 3. 1976 — JOINED CASES 67 TO 85/75

advance between 1 February 1972 and 31 March 1972 for seed placed under As soon as the application of compensa­ control in February, March, April, May tory amounts no longer appears and June 1972, the deficit is equal to necessary to avoid disturbances in trade the reduction in the par value of the in the products concerned, the dollar in relation to the unit of Commission may properly decide to account and corresponds likewise to abolish them (Judgment of the Court of the compensatory amounts. 14 May 1975 in Case 74/74, Comptoir National Technique Agricole (CNTA) The applicants in Cases 67/75 , 68/75, SA. v Commission, [1975] ECR 533). 71/75, 73/75, 79/75, 81/75, 83/75 and 85/75 suffered the first type of damage, In so doing it is in no way disregarding the applicants in Cases 72/75, 76/75, the function and purpose of those 77/75 and 84/75 suffered the second type amounts, because their objective is not in and the applicants in Cases 69/75, 70/75, general merely to mitigate 'the reduction 74/75, 75/75, 78/75, 80/75 and 82/75 in the par value of the dollar in relation suffered both types of damage to the unit of account'. None of the simultaneously. provisions or rules of Community law relied upon by the applicants prescribes The applicants add that if the Court does the maintenance of the system of not accept this general scheme it would compensatory amounts. then be open to it to order an expert's report to be obtained. The Commission contests that the Community was under a duty, in view of B — Defence monetary disparities, to make full compensation for the effets on the After describing the regulations and the position of the applicants brought about financial situation at the time of the by the monetary decisions of the events in the present case, the Com­ Member States and third countries. To mission maintains that the abolition of accept such a duty would amount to the compensatory amounts in respect of making the Community bear the oils and fats did not constitute a consequences of decisions which are wrongful act such as to make the mainly the result of the unilateral action Community liable under the second of the Member States and to making it paragraph of Article 215 of the Treaty liable in a sphere of policy in which it

has at present insufficient power, both as had no noticeable effect on the price of regards the Community and in respect of colza seed on the French market or on third countries. the price of oils. The development of the price of colza oil is generally controlled On this point the Commission relies by that of the price of soya oil, a product upon the judgment of the Court of 24 for which there are no compensatory October 1973 in Case 43/72 Merkur- amounts. The effect of Regulation No Außenhandels-GmbH v Commission 189/72 therefore was in no way to force [1973] ECR 1055. the applicants to buy seed at the target price and sell oil at a discount.

them. This is the benefit of obtaining an requirement to pay the target price to the 'adequate' subsidy in the sense that producer. the compensatory amounts on imports brought the cost price of imported seed As regards the damage in respect of up to the level of that of the Community competition, the Commission claims that seed purchased by the applicants. the applicants have not explained what the damage consists in. As regards the inaccurate appraisal of the facts, the Commission states that it Nevertheless it must be observed that found, on the basis of statistics relating to because of the abolition of compensatory the certificates of advance fixing of amounts, a type of distortion of compe refunds and of subsidies issued, that on 1 tition different from that asserted by the February 1972 84 % of Community pro applicants has been prevented.

unfounded. The applicants assume that the world market, thus increasing their the prices of oil actually fell and that this profits in comparison with the appli fall was the result of the abolition of the cants' profits. That difference, if any, compensatory amounts. That abolition cannot however constitute damage for

which the Community must make In order to maintain equality between compensation. Community processers, the Commission must grant them a subsidy of the same In any case, the applicants must also amount and enable them to obtain both establish the actual existence of damage Community colza and colza sold on the and produce proof which enables the world market on the same conditions. validity of the assessment which they put forward to be substantiated. In order to maintain equality between Community processers and processers in The causal link other parts of the world, whilst observing the principle of Community preference, Even if the applicants have in fact Community processers should be given a suffered damage because of a fall in the subsidy which is adequate to enable market price of oils, that is the result of them to bring the price of Community the conduct of the applicants themselves. colza down to the actual world market

common organizations of the market in purchases seed on the world market or relation to the French franc. Community seed and whether he has or has not asked for the advance fixing of On this level the link between the the subsidy for that seed. compensatory amount and the subsidy appears: Articles 27 and 29 of Regulation C — Reply No 136/66 require the Commission to grant a subsidy calculated on the basis of The malfunctioning of the common the world market price at the Com organization of the market in oils and munity frontier, determined on the basis

Community. The function of both is to regard to that reduction it was inadequate enable Community processers to obtain and in breach of the rights created by Community colza at the world price, Regulation No 136/66. process it and sell it at the world price both on the world market and on the In the present case there is no question Community market. of a guaranteed price because the subsidy

is the difference between two prices, nelle des Oléagineux of 18 January 1972, based on the principle of Community the proportion of seed sold on the preference. French market in relation to seed harvested was slightly less than 50 %. It appears from the third recital of the preamble to Regulation No 974/71 that The damage the system of compensatory amounts was established to avoid serious difficulties as According to the applicants, the damage regards the functioning of the common is quite clear: because they had to obtain market. the raw material at the full price and sell the finished product in accordance with Further, the Commission itself explained the fall in prices on the world market, the link between the compensatory they were unable to avoid losing profit, amounts and the functioning of a com even if they made no losses.

The Commission certainly fails to appreciate the implementation in France As for the truth of the facts, the of the common organization of the applicants consider that the Commission market in oils and fats. In France, the (statement of defence, p. 15) is confusing grant of the subsidy is subject to milling the advance fixing of subsidies with the and the claim for payment must include actual sale of colza seed processed into a milling declaration. oil. The statements of the Commission In France, colza producers must sell their concerning the conduct of a diligent seed through authorized agents. These trader suggest that it also fails to agents immediately declare to the Société appreciate the true nature of the facts Interprofessionnelle des Oléaginaux im and of the French legislation in force. ports of colza and sales to millers or exporters in the same way as the milling Colza is processed in order to produce operations and export transactions which 41 % oil and 53.5 % oil cake.

market in France. Further, the circulars

of the French Ministry for Finance of the market in the sense that is must (Annexes IV and V) authorize forward compensate for the effect of the actual sales of goods on foreign markets only to devaluation of the dollar on the cal­ cover actual imports from abroad. The culation of the subsidy or even to applicants were not therefore able to maintain Community preference or cover themselves for the oil obtained equality between traders in view of the from colza produced in France, even monetary fluctuations. though they were bound by long-term supply contracts. The argument set out in the reply is not capable of establishing that the absence Because they had, as a precaution, to of compensation for the depreciation of continue the programme for obtaining the dollar infringes the rights which the supplies in France even after the common organization of the market abolition of the compensatory amounts creates in favour of the applicants. the second type of damage specified in the application occurred. Arguments based on the 'special charac­ teristics' of the common organization of As regards the problem of competition the market in oils and fats are irrelevant. between colza and soya, the applicants As for the degree of compensation to be consider that since soya was not being made for the effect of fluctuations in the produced in Europe at the time of the currencies of third countries, that facts in question it cannot have common organization is no different repercussions on the damage suffered. from others. The subsidy granted to That seed, not being the object of a Community seed fulfils a function subsidy, is sold at the real value of its comparable to that of import levies in world market price. other common organizations of the market. The fact that in the first case The world market price of colza is Community production is sold at the regulated by the competition between world market level and in the second at the two seeds and therefore by the Community level does not make a world market price of soya. Conse­ fundamental difference to the problem. quently, the subsidy calculated on the With regard to the organization of the basis of the world market price of colza market in cereals, the Court has in fact must take account of the world market ruled that the Community institutions prices of soya. By making the subsidy are not required to make compensation inadequate, the Commission did not put for all the effects of national monetary an end to distortion in the competition measures. This also applies to monetary between the two seeds. measures adopted by third countries. The parallel between the subsidy and the D — Rejoinder export refund is unfounded for three reasons:

(c) Lastly, the method of calculation is adds that the applicants cannot claim different; further, the subsidy is fixed that it is necessary to maintain by five months in advance and the another method compensation for the repayment two months in advance, as 'secondary effects' which the compensa­ a general rule. tory amounts may have had on their position. As for the observance of equal conditions of competition and Community prefer­ As for the situation of the market in ence, the Commission considers that it France, the applicants are mistaken about is in practice impossible to adhieve the inferences which should be drawn absolutely identical conditions of supply, from that situation. As soon as the even if these are kept theoretically Commission was able to establish that identical by means of the machinery of large quantities of seed were not likely to the common organization. be involved in intervention it was able lawfully to abolish the compensatory Furthermore, the market price adopted amounts. The fact that this abolition has by the Commission for the calculation of no effect on the prices on the French the subsidy is not the same as 'the actual market shows that the Commission was world price', because Article 29 of not mistaken in its appraisal. Regulation No 136/66 provides that it 'shall be determined on the basis of the most favourable purchasing oppor­ The damage tunities, prices being adjusted where The Commission considers that it has appropriate, to take the prices of competing products into account'. refuted the statement of the applicants concerning the losses claimed because It is for the applicants to show the argument on this point set out in the specifically that the subsidies granted do statement of defence (p. 16) was not not actually, in their position, give them contested. The damage caused by the failure to make a profit is based on the Community preference and equal conditions of competition. assumption that if the compensatory amounts had been maintained, the price Even if the argument of the applicants is which the applicants would have been justified, it has not been established that able to obtain on the market would have

Law

1 The applications, lodged on 31 July 1975, seek a declaration that the European Economic Community is liable for the damage which the applicants allege that they have suffered because of the abolition by Regulation No 189/72 of the Commission of 26 January 1972 (JO L 24, 1972, p. 25) of the compensatory amounts applicable to oils and fats, especially to colza seed and oils obtained from that seed and because of the malfunctioning of the common organization of the market in oils and fats which was the result thereof.

2 The applications claim in consequence that the Court should order the Community to pay the sums specified in the applications.

3 The applicants, which are undertakings the objects of which are inter alia, the purchase, sale and milling of colza seed, state that the common organization of the market in oils and fats established by Regulation No 136/66 of the Council of 22 September 1966 (OJ English Special Edition 1965-1966, p. 221) provides, in addition to a target price and an intervention price fixed in accordance with the usual procedures, for production subsidies which are paid to processers when the target price applicable to a type of seed is higher than the world market price of that product.

4 They state that that subsidy is equal to the difference between these two prices expressed in units of account and the world market price to be taken into consideration is determined periodically by the Commission in accordance with the procedure laid down by Community rules.

LESIEUR v COMMISSION

Admissibility

9 Towards the end of the oral procedure, the Commission, the defendant, contested the admissibility of the application, alleging that the claim for damages in fact called in question the method of calculation used by the competent national authority, that is to say the Société Interprofessionnelle des Oléagineux to fix in advance the subsidies provided for in Regulation No 136/66 relating to the period in dispute, a complaint which the applicants could and should have brought before the competent national courts for a decision on the legality of the national measures adopted in execution of Community provisions.

JUDGMENT OF 17. 3. 1976 — JOINED CASES 67 TO 85/75

10 During the proceedings and especially during the oral procedure, the applicants modified their arguments and referred to the wrongful act constituted by the failure to adjust the determination of the world market prices to be adopted for the fixing of subsidies to the fluctuations of the dollar rather than the abolition of the compensatory amounts.

11 Consequently the argument of the applicants that the objection of inadmissibility is out of time appears insufficiently founded.

12 Furthermore, that argument is irrelevant because the admissibility of the proceedings must be examined by the Court of its own motion.

LESIEUR v COMMISSION

The substance of the case

The argument of the applicants may be summarized as follows:

(a) The common organization of the market in oils and fats involves for producers guaranteed remuneration for their products, in the present case colza seed, equal to the target price fixed for the marketing year in question.

(b) Since the alteration in the rate of exchange of the dollar, which occurred in Autumn 1971, the subsidies laid down in order to provide the abovementioned remuneration have become inadequate to attain that objective because of their method of calculation (in unaltered units of account).

(c) In order to compensate for that deficiency and to protect Community production against competition from colza seed and oil derivatives offered at prices based on the devalued rate of exchange of the dollar, it became necessary to introduce the system of compensatory amounts on imports and exports.

assumption that it would be made particularly difficult for them to purchase seed on the world market because of the duty to pay the compensatory amounts.

21 Because that assumption proved to be mistaken as soon as the compensatory amounts in question were abolished, in the meanwhile they lost the opportunity of obtaining supplies more cheaply on the world market, this being damage for which they consider the Community liable.

22 However, even on the assumption that the parties concerned could make the Community liable for the consequences of an unfilled expectation concerning the course which Community legislation will take, such liability could only exist with regard to actual and certain losses which they had suffered as a result.

23 Since such losses have not been proved, damage for which the Community might be liable has not been established.

24 As regards point (c), the rules in question do not bear out the existence of a link between the introduction of the system of monetary compensatory amounts, on the one hand, and the functioning of the common organization of the market in oils and fats, especially as regards the determination of subsidies, on the other, as presumed by the applicants.

25 In fact, the establishment of the system of monetary compensatory amounts was motivated by concern that the Member States or third countries might, by the adoption of monetary measures, create distortions in intra-Community trade or trade with third countries in the agricultural products concerned such as seriously to disturb the functioning of the Community markets.

30 As regards point (b), Article 1 of Regulation No 129 of the Council of 23 October 1962 on the value of the unit of account and the exchange rates to be applied for the purposes of the common agricultural policy (OJ English Special Edition 1959-1962, p. 274) provides: 'Where, in instruments concerning the common agricultural policy which are adopted by the Council under Article 43 of the Treaty, or in provisions adopted pursuant to those instruments, sums are expressed in units of account, the value of that unit of account shall be 0·88 867 088 grammes of fine gold'.

31 Under Article 2 (1) of that regulation, 'Where measures taken in pursuance of the instruments or provisions referred to in Article 1 require sums given in one currency to be expressed in another currency, the exchange rate to be applied shall be that which corresponds to the par value communicated to and recognized by the International Monetary Fund'.

32 Lastly, according to Article 3 of that regulation, the Council and the Commission may 'Where monetary practices of an exceptional nature are likely to jeopardize the implementation of the instruments or provisions referred to in Article 1 … make derogations from this regulation'.

33 It follows that the Council and the Commission had to continue to apply Article 2 (1) of the abovementioned regulation in calculating the subsidy as long as the fluctuations of the dollar were not such as to jeopardize the functioning of the common organization of the market in oils and fats.

JUDGMENT OF 17. 3. 1976 — JOINED CASES 67 TO 85/75

40 Lastly, as regards point (a), in so far as Regulation No 136/66 is intended to give guarantees, the latter relate to colza seed farmers and not processers, as appears from Article 24 thereof, according to which 'The derived intervention price … guarantees that producers will be able to sell their produce at a price which, allowing for market fluctuations, is as close as possible to the target price'.

LESIEUR v COMMISSION

41 The subsidies granted to seed processers are not intended to guarantee to the latter a fixed payment for their processing, but to enable them to buy Community seed at prices close to the target price.

42 Furthermore, Regulations Nos 116/67, 2114/71 and 2730/71 of the Council of 6 June 1967, 28 September and 20 December 1971 respectively (JO 1967, p. 2198 and 1971, L 222, p. 2 and L 282, p. 18) by giving the power to fix the subsidy in advance entails the opportunity for processers of obtaining from the system all the benefits which it may include, as long as they undertake to place their product under control during the period of advance fixing.

43 In these circumstances, the applicants have no basis for claiming an alleged guarantee provided by Regulation No 136/66.

44 They have alleged further that, having regard to the system of subsidies as laid down by that regulation, the sudden abolition of the monetary compensatory amounts constitutes, especially with regard to undertakings which obtained advance fixing during January 1972, an infringement of the principle of the protection of legitimate expectation.

On those grounds,

THE COURT

hereby:

1. Dismisses the applications as inadmissible in so far as they concern subsidies fixed in advance between 1 February 1972 and 31 March 1972;

2. As for the remainder, dismisses them as unfounded;

3. Orders the applicants to bear the costs.

My Lords, monetary compensatory amounts (which I shall call for short 'm.c.a.'s') on colza The applicant in each of these nineteen and rape seed. actions is a French oil-miller. The

actions are brought against the Com­ Your Lordships will remember that the mission under Article 178 and the common organization of the market in second paragraph of Article 215 of the oils and fats was established by Council EEC Treaty for damages in respect of Regulation No 136/66/EEC of 22 that Institution's allegedly wrongful September 1966. So far as colza and rape exercise, in the early part of 1972, of its seed, and oil extracted from them, are powers relating to subsidies and to concerned, that organization has regard