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Súdny dvor Európskej únie·Rozsudok·19.10.1977

C-117/76

ECLI:EU:C:1977:160

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Súdny dvor Európskej únie
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61976CJ0117

JUDGMENT OF 19. 10. 1977 — JOINED CASES 117/76 AND 16/77

3. In the particular circumstances of the that the contested provision was in case, this finding of illegality does not part or in whole invalid. As the

inevitably involve a declaration that a situation created, in law, by Article 5 provision of Regulation (EEC) No of Regulation (EEC) No 1125/74 is 1125/74 is invalid. The illegality of incompatible with the principle of

Article 5 of Regulation (EEC) No equality, it is for the competent

1125/74 cannot be removed merely institutions of the Community to

by the fact that the Court, in adopt the measures necessary to

proceedings under Article 177, rules correct this incompatibility.

In Joined Cases 117/76 and 16/77,

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

Finanzgericht Hamburg for a preliminary ruling in the actions pending before that court, in Case 117/76 between

The consortium of:

1. ALBERT RUCKDESCHEL & CO., Kulmbach (Germany),

2. HANSA-LAGERHAUS STRÖH & CO., Hamburg,

and

HAUPTZOLLAMPT HAMBURG-ST. ANNEN

and, in Case 16/77, between

DIAMALT AG, Munich,

and

HAUPTZOLLAMT ITZENHOE,

on the validity of Article 11 of Regulation No 120/67/EEC of the Council of 13 June 1967 on the common organization of the market in cereals (OJ English Special Edition 1967, p. 33) as last amended by Regulation (EEC) No 665/75 of 4 March 1975 (OJ L 72, p. 14) and of Article 1 of Regulation (EEC) No 1955/75 of the Council July 1975 on production refunds in the of 22 cereals and rice sectors (OJ L 200, p. 1) and, if need be, of Article 11 of Regulation (EEC) No 2727/75 of 29 October 1975 on the common organization of the market in cereals (OJ L 281, p. 1) in so far as these measures make no provision for a production refund for maize used in the

manufacture of quellmehl of an amount equivalent to that of the refund

granted for the processing of this product into starch,

RUCKDESCHEL v HAUPTZOLLAMT HAMBURG-ST. ANNEN

THE COURT

composed of: H. Kutscher (President), M. Sørensen and G. Bosco, Presidents

of Chambers, A. M. Donner, P. Pescatore, J. Mertens de Wilmars, Lord Mackenzie Stuart, A. O'Keeffe and A. Touffait, Judges,

Advocate-General: F. Capotorti Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts and issues

The facts of the case, the course of the Such measures had been adopted by procedure and the written observations Regulation No 55 of the Council of 30 submitted under Article 20 of the June 1962 relating to the system in Protocol on the Statute of the Court of respect of processed products based on

Justice of the EEC may be summarized cereals (JO of 2. 7. 1962, p. 1583). Article as follows: 17 of that regulation had established the

system of discretionary refunds for certain starches. The thirteenth recital in I — Facts and written procedure the preamble to the regulation reads as

follows: 1. Quellmehl, a product processed from maize, common wheat or broken rice, 'Whereas because of the special situation

and pre-gelatinized starch, which is on the market in starches and in processed from the same basic products, particular the need for that industry to are to some extent in competition with keep prices competitive with those for each other, their common feature being substitute products, it is necessary by way that they are both used as an aid to of derogation from the provisions ... of

baking, more specifically as leavening in Regulation No 19 of the Council, to the bread. by means of a production refund making of rye ensure

that the basic products used by the 2. Regulation No 19 of the Council of industry are made available to it, at a 4 April 1962 on the progressive lower price than that which would result

establishment of the common from applying the system of levies.. '

organization of the market in cereals (JO of 20. 4. 1962, p. 933), introduced a Regulation No 141/64/EEC of the

system of levies for certain cereal Council of 21 October 1964 concerning products. Article 24 of the regulation the rules applying to processed products provided however that the Council might derived from rice and other cereals (JO

derogating from 27. 10. adopt measures those of 1964, p. 2666) had continued provisions. the system of liscretionary production

JUDGMENT OF 19. 10. 1977 — JOINED CASES 117/76 AND 16/77

refunds. It had however established for Council, fixing the production refunds

the first time a production refund for for starch, potato starch and quellmehl

maize and common wheat used in the (JO of 28. 6. 1967, p. 2617 and of quellmehl industry. 31. 7. 1967, p. 40) maintained this parity between starch and quellmehl.

Regulation No 142/64/EEC of the Council of 21 October 1964 The production refund for quellmehl was providing for the extension and adjustment to 31 maintained until 1 August 1974 with

March 1965 of the limitations on the effect from which date it was abolished

production refunds for cereal and potato by Regulation (EEC) No 1125/74 of the

starch (JO of 27. 10. 1964, p. 2673) and Council of 29 April 1974 amending fixing the refunds provided for under Regulation No 120/67/EEC (OJ L 128 of Regulation No 141/64/EEC accordingly 10. 5. 1974, p. 12). However the refunds

provided in Article 1 (1) (e) thereof that: for maize, common wheat and broken rice used for the manufacture of starch

'In the case of quellmehl the refund for and consequently pre-gelatinized starch

maize, common wheat and broken rice continued to be granted. used in the manufacture of that product

shall be the same as that granted for the The third and fourth recitals in the

same cereals used for starch preamble to the latter regulation stated manufacture.'

that:

The system established by the definitive 'the production refund for quellmehl was

basic Regulation No 120/67/EEC of the initially granted with a view to

Council of 13 June 1967 on the promoting certain specific uses of

common organization of the market in quellmehl as a food for human cereals (OJ English Special Edition 1967, consumption, account being taken of the p. 33) made the grant of the production possibility of its competing with a

In products;'

refund compulsory. the tenth recital number of other

in the preamble to that regulation it is inter alia stated and that

'Whereas because of the inter­ 'experience has shown that the ...

changeability of starches with quellmehl opportunity for such substitution is and maize groats and meal, production economically slight, if not non-existent; refunds should also be granted in respect ... the production refund for quellmehl

latter be abolished;'

therefore products;'

of the should

Article 11 (1) of the regulation reads: Regulation (EEC) No 1132/74 of the Council of 29 April 1974 on production

'1. A production refund shall be granted: refunds in the cereal and rice sectors (OJ (a; tor maize ana common wheat L 128 of 10. 5. 1974, p. 24), which fixed used by the starch industry for the refunds provided for by Regulation the manufacture of starch and (EEC) No 1125/74, resulted in the

quellmehl; reduction of the production refund for

(b) tor potato starch; maize and common wheat used for the

(c) for maize used in the maize manufacture of starch to 24.60 units of

industry for the manufacture of account per metric ton [hereinafter called '­

maize groats and meal (gritz) used 'tonne­ ]. In order to give a reason for the

by the brewing industry. maintenance of the refund for starch

manufacture, the second recital in the

Regulations Nos 178/67/EEC of 27 June preamble to the regulation states inter 1967, 371/67/EEC of 25 July 1967 of the alia that

RUCKDESCHEL v HAUPTZOLLAMT HAMBURG ST. ANNEN

'a precise assessment of the situation provided for the grant of production

resulting from the level of common refunds for quellmehl. prices and from the competition

between, on the one hand, maize starch, The plaintiffs in the main actions

rice starch, potato starch and, on the brought the present proceedings before other, the substitute chemical products, the Finanzgericht Hamburg against these indicates that the refund should be fixed decisions rejecting the applications.

at such a figure that the price of maize

used in starch manufacture is brought Before that court, the plaintiffs in the

down to 8-20 u. a. per 100 main actions urged in particular that the kg...;'

prohibition of discrimination laid down Regulation (EEC) No 3113/74 of the in the second subparagraph of Article 40 Council of 9 December 1974 amending (3) of the Treaty has been infringed in so Regulation (EEC) No 1132/74 on far as a production refund was granted

production refunds in the cereals and only for pre-gelatinized starch and not rice sectors (OJ L 332, p. 1) resulted in a for quellmehl, a product which is in subsequent reduction (to 15.55 u. a. per competition with starch.

tonne) of the refund granted for maize

for the manufacture of starch. The defendants in the main actions

contended that the applications should

be dismissed. Regulation (EEC) No 665/75 of the Council of 4 March 1975 amending 4. Holding that the cases raised Regulation (EEC) No 120/67/EEC (OJ L questions of interpretation of 72 of 20. 3. 1975, p. 14) which entered Community law the Finanzgericht into force on 1 August 1975 made, inter Hamburg, by orders of 8 November 1976 alia, the production refund for cereals and 18 January 1977, stayed the used in the manufacture of starch no proceedings and requested the Court of longer compulsory. Moreover the Justice under Article 177 of the EEC regulation abolished the production

refund for maize groats and meal (gritz) Treaty to give a preliminary ruling on

the following questions: used by the brewing industry.

'1. Do Article 11 of Regulation No In Regulation (EEC) No 1955/75 of the 120/67/EEC as last by amended Council of 22 July 1975 on production Regulation (EEC) No 665/75 of 4 refunds in the cereals and rice sectors March 1975 (OJ L 72 of 20. 3. 1975, (OJ L 200 of 31. 8. 1975. p. 1) which also p. 14) and Article 1 of Regulation entered into force on 1 August 1975, the (EEC) No 1955/75 of 22 July 1975 production refund on, inter alia, maize (OJ L 200 of 31. 8. 1975, p. 1) or does for the manufacture of starch was once Article 11 of Regulation (EEC) No more reduced and fixed at 10 u. a. per 2727/75 of 29 October 1975 (OJ tonne. L 281 of 1. 11. 1975, p. 1) infringe the prohibition of discrimination 3. The respective plaintiffs in the main contained in Article 40 (3) of the

actions, who are producers of quellmehl, EEC Treaty and are they invalid in so

applied to the respective defendants in far as they do not grant a production

the main actions on 22 July (Case refund of the same amount on maize

117/76) and 15 August (Case 16/77) 1975 for the manufacture of quellmehl as

for a permit relating to the grant of a they do for the processing of this

production refund for maize used for the product into starch? manufacture of quellmehl. These 2. If the answer to Question 1 is in the

applications were rejected on the ground affirmative, have manufacturers of

that Community regulations no longer quellmehl a direct claim to the same

JUDGMENT OF 19. 10. 1977 — JOINED CASES 117/76 AND 16/77

the non-existent, does production refund as manufac­ not correspond to the

turers of pre-gelatinized starch or is a facts. legal measure adopted by the Council required for this? The adjudicating Senate finds that it is unable to ascertain and review the actual

5. In the grounds for the orders prerequisites for the abolition of the making the reference the Finanzgericht Hamburg production refund in connexion with the

made, inter alia, the following manufacture of quellmehl, in order to be comments: able to decide accordingly whether there is any prohibited discrimination against

The determination of this dispute turns the plaintiff and other similar

on the question whether the abolition of undertakings. The recitals in the

the production refund on maize for the preamble to Regulation (EEC) No manufacture of quellmehl is invalid 1125/74 disclose that those responsible

because it infringes the prohibition of for the regulation were in possession of

discrimination in Article 40 (3) of the information, which is not available to the EEC Treaty. court, to the effect that quellmehl as a

substitute product in fact was not or was

There might under Community law be only to an economically insignificant prohibited discrimination if — as the extent in competition in the territory of plaintiff maintains — quellmehl and the EEC with products containing starch. pre-gelatinized starch are interchangeable Since the plaintiff contests this, with

as aids to baking in the baking industry supporting evidence, the question arises and if as a result of the abolition of the whether Regulation (EEC) No 1125/74 is

production refund for quellmehl on the valid in so far as it relates to the abolition one hand and the retention of the of the production refund on quellmehl, production refund for pre-gelatinized since it may infringe Article 40 (3) of the starch on the other hand quellmehl is no EEC Treaty. The adjudicating Senate longer competitive and has been ousted therefore ruling by the considers that a

from its former market. The recitals in European Court of Justice is necessary in the preamble to Regulation No the interest of a uniform application of

120/67/EEC state that a production Community law. refund should be granted because of the

inter-changeability of starches with If the Court of Justice should come to

quellmehl. Accordingly if the purpose of the conclusion that the abolition of the

the production refund is the production refund on quellmehl is interchangeability of the products, there invalid, then there remain doubts as to

might be discrimination against the the legal basis upon which the plaintiff

plaintiff in connexion with the can satisfy its claim and as to the formal manufacture of quellmehl if and in so far conditions which have to be fulfilled. For as a production refund is granted on the this reason it has been necessary to refer 2.'

raw materials used in the manufacture of Question pre-gelatinized starch, because from the

point of view of technology, economics 6. The orders making the references and price quellmehl and pre-gelatinized were registered at the Court Registry on

starch are interchangeable. The plaintiff 10 December 1976 and 31 January 1977 submits that the recital in the preamble respectively.

to Regulation (EEC) No 1125/74, which states that the production refund for the In accordance with Article 20 of the

manufacture of quellmehl should be Protocol on the Statute of the Court of

abolished, because experience has shown Justice of the EEC, written observations

that the opportunity for such substitution were submitted by the plaintiffs in the

is economically slight, if not main actions, the plaintiff in Case 117/76

RUCKDESCHEL v HAUPTZOLLAMT HAMBURG-ST. ANNEN

being represented by the Chambers of advantage over pre-gelatinized starch.

Fritz Modest, Hamburg, the plaintiff in This advantage amounts to less than the Case 16/77 being represented by E. production refund paid in respect of

Eckelt, A. Kallenbach and K.-D. Rathke, maize starch. On the other hand the

Advocates, of Augsburg, and by the advantage is so marked that in the first Council, represented by Daniel Bignes, place, the baking industry and bakers Director of its Legal Service, assisted, in prefer quellmehl-based aids to baking Case 16/77, by Felix Van Craeyenest, and, secondly, the starch industry no

Principal Administrator of the said longer disputes that advantage because it service and by the Commission, has other ways of selling its starch. The represented by its Legal Advisers Peter grant of a production refund of the same

Kalbe and Gdtz zur Hausen, acting as amount as for maize and rice processed

Agents. into quellmehl or starch has enabled

quellmehl to retain intact its competitive By order of 25 May 1977 the Court advantage over pre-gelatinized starch.

decided to join the cases for the purposes of the procedure. (d) The reasons advanced to justify the abolition of the production refund

After hearing the report of the granted for the manufacture of quellmehl

Judge-Rapporteur and the views of the and the retention of the refund for starch Advocate-General the Court decided to are untrue.

open the oral procedure without any preparatory inquiry. (e) It is only because the allocation of a production refund of an equivalent

Nevertheless the Court requested the amount enables the natural competitive

parties, the Council and the Commission situation between pre-gelatinized starch

to give certain explanations in writing and quellmehl to be maintained that

either before or during the hearing. pre-gelatinized starch has not ousted

quellmehl from the market in baking aids for rye-flour-based products.

II — Written observations sub­

mitted to the Court (f) The abolition of the production refund for quellmehl created a fundamental The first question change in the competitive situation

which naturally exists between quellmehl 1. (a) The plaintiffs in the main and pre-gelatinized starch; after it was actions point out first of all that abolished pre-gelatinized starch could be quellmehl does not have the same offered on the market at a lower price importance in the other Member States than quellmehl. as in Germany. On the other hand it is not correct to claim, as the defendants in According to the plaintiff in the main the main actions have done, that action in Case 117/76 it is because the quellmehl is of importance only in manufacturers of quellmehl and of Germany. ingredients of quellmehl-based baking products paid the production refund out (b) From the technical point of view

quellmehl and pre-gelatinized starch are of their own pockets that they have been able, in the main, to maintain their interchangeable and equal from the position on the market. point of view of their use as aids to the

baking of products made from rye flour. The plaintiff in the main action in Case

(c) Where there is free competition as 16/77 considers that the level of prices

regards prices, quellmehl has a slight subsequent to the abolition of the

JUDGMENT OF 19. 10. 1977 — JOINED CASES 117/76 AND 16/77

production refund led to a reducation of According to the plaintiffs in the main

more than 70 % in the turnover in actions it is possible to restrict the

quellmehl-based products. It adds that allocation of a production refund for the the selling price of quellmehl cannot, on processing of maize, rice and potatoes

the most conservative estimate, be less used in the manufacture of starch

than DM 100 per 100 kg. On the other inasmuch as this starch is intended for hand pre-gelatinized starch made from the industrial sector and is in maize or wheat is at present already competition with chemical substitute

being offered at from DM 85 per 100 kg products.

free at destination. The two biggest manufacturers of quellmehl-based (h) There is also an unofficial reason for ingredients of baking products have the abolition of the production refund

suffered a reduction in their turnover in for quellmehl: that a great deal of

one case of 75 % in 1975, compared quellmehl based on maize and rice is with 1974, in the other case of 40 % in sold for animal feed and its use for this

1976, compared with 1974. In the case of purpose is an abuse which must be the two undertakings referred to this redressed by abolishing the production

reduction in sales has, apart from the refund.

abolition of the production refund, resulted in a substantial reduction in the The plaintiffs in the main actions dispute cover for overheads (Deckungsbeitragen). this statement. The association of

The plaintiff in the main action in Case manufacturers of ingredients for baking 16/77 points out that, until the spring of products has declared that its members

1975, the two manufacturers still held have never sold quellmehl for animal

their stocks of maize for which feed. There still exist in the Federal production refunds had been granted Republic of Germany one or two small before entry into force of the contested undertakings which do not belong to the regulation. The result is that the association of manufacturers of

reduction in the cover for overheads ingredients for baking products but their (Deckungsbeitragen) has become more output is not very great. Outside marked. The manufacturers of quellmehl Germany, there is an undertaking are suffering losses or, according to manufacturing quellmehl in Denmark circumstances, a considerable reduction and there are one or two in the

in their income and the sole reason for Netherlands, but their output is this is to be found in the fact that a insignificant. But even if these

production refund is paid for the undertakings were to have sold

manufacture of pre-gelatinized starch, quellmehl for use as animal feed such

whereas, in contrast to this, none is paid sales would still have been of

for the manufacture of quellmehl. comparatively little importance.

(g) According to the official statement They go on to say that the Community of the grounds, a production refund for regulations on production refunds for the maize, rye and potato starch appears to two products in question did not prohibit be required only to enable the starch sale of those products for animal feed.

industry to compete with chemical Nor is the production refund restricted

substitute products. This is an admisssion to quellmehl or starch used for human that it is necessary in so far as starch not consumption or for chemical products. is sold for use in connexion with food for human consumption. Despite this, the Unlike quellmehl, large quantities of

production refund is granted for products maize starch are in fact sold for animal

used in the manufacture of starch feed. But a production refund continues

without regard to the sector in which the to be granted even for starch used in the starch is sold. animal feed industry.

RUCKDESCHEL v HAUPTZOLLAMT HAMBURG-ST. ANN­ EN

(i) In the same way as the production if quellmehl is of economic importance refund can be restricted to starch used in in the food industry throughout the

industry for chemical purposes, it can, in Common Market. There are in the

the case of quellmehl or starch, be Community production refunds which

restricted exclusively to cases where these benefit only the undertakings in certain products are used for human con­ Member States such as the aid to durum sumption. wheat, colza and olive oil.

It is not difficult for control to be (1) Moreover, in the case of the

effectively exercised. The unofficial quellmehl manufacturers concerned, reason for the abolition of the production discrimination is appreciable and

refund does not therefore stand up to substantial and even if discrimination

scrutiny on any count. were minimal the de facto situation

would not justify it. (j) The plaintiff in the main action in furthermore The plaintiffs in the main actions Case 16/77 refers to the fact accordingly request the Court to answer that the need to reduce the budget of the the first question of the Finanzgericht to Community was also used as an excuse the effect that the provisions mentioned to justify the abolition of the production therein are contrary to the prohibition of refund for quellmehl. It finds this discrimination laid down in Article 40 (3) argument unconvincing: in the first place the production refund granted hitherto of the Treaty and are null and void in so far as they make no provision for a for the manufacture of quellmehl is of production refund for maize used in the little importance compared with the total

volume of production refunds and also manufacture of quellmehl up to the same amount as that of the refund granted for with the production refund for the the processing of this product into starch. manufacture of starch. Secondly, there is no doubt that it is perfectly possible to 2. (a) The Council and the abolish the production refunds. Commission point out in the first place Nevertheless, when account is taken of

that, in Case 117/76, the plaintiff in the the principle of non-discrimination, this main action lodged its application on 22 could only lead to the abolition of the July 1975, that is to say, during the production refund both for the 1974/75 marketing year, while in Case manufacture of quellmehl and for the 16/77 the application was lodged on 15 manufacture of pre-gelatinized starch. August 1975 and therefore during the Finally, it would not be possible to effect 1975/76 marketing year. any saving in the budget of the

Community for the simple reason that, In consequence, any entitlement to the as is shown by the state of the market, refunds and the amounts of the refunds after the abolition of the refund for depend, in Case 117/76, on Regulations quellmehl, pre-gelatinized starch, for the Nos 1132/74 (EEC) 1125/74, and manufacture of which a production 3113/74 of the Council and on refund is granted, would be used in its Regulation (EEC) No 2518/74 of the place. Commission of 4 October 1974 (OJ L 270, p. 1) and, in Case 16/77, on

(k) Finally the plaintiffs in the main Regulations (EEC) Nos 1125/74, 665/75 actions contend that there is no and 1955/75 of the Council. substantial ground for abolishing the

natural disparity between the (b) According to the Council, quellmehl competitiveness of the two products in and pre-gelatinized starch are to some

question. Contrary to the contention of extent interchangeable in particular

the defendant in the main action, it is when used as baking materials in the

not true that there is discrimination only manufacture of rye bread. However

JUDGMENT OF 19. 10. 1977 — JOINED CASES 117/76 AND 16/77

because of its different properties It was because it was aware of this state

quellmehl is more useful than of affairs that the Council reduced the

pre-gelatinized starch. It has a greater refund for starch (in Regulations (EEC) capacity to absorb water; apart from Nos 1132/74, 3113/74 and 1955/75), starch it contains other raw material made it discretionary (in Regulation constituents which are of nutritional (EEC) No 665/75) and abolished it for value; the process enabling it to be quellmehl (in Regulations (EEC) Nos extracted from the raw material is a 1125/74 and 1132/74). simple physical operation relatively whereas the manufacture of starch (d) To grant a refund for starch is employs a technique which involves consistent with the provisions of Article

relatively more work; and the raw 39 (1) (c) and (d) of the Treaty. material extraction level is higher. The Conversely, because of the use of

effect of these advantages is to make quellmehl as animal feed, the abolition

quellmehl from 15 to 20 % cheaper than of the refund for this product furthers pre-gelatinized starch, which is far more the objective designed to limiting the than the amount of the refund which common agricultural policy 'to pursuit of 39'

pre-gelatinized starch continued to the objectives set out in Article receive until the 1975/76 marketing year. (second subparagraph of Article 40 (3) of the Treaty). Thus the abolition of the subsidy would

not have abolished the advantages as (e) With regard to the alleged

regards price and quality which infringement of the rule against

quellmehl enjoys in terms of the discrimination, the Council contends

manufacture of cooking agents. that to treat dissimilar situations

differently does not amount to

(c) As the result of the oil crisis, prices discrimination. The grant of a production of products competing with starch went refund for starch is justified by the state up and in consequence did not compete of the market in this product and by its so strongly against starch which, in turn, key position between the common

became a weaker competitor against agricultural market and the common

quellmehl. The competitive pressure of industrial market. Quellmehl, however, is imported processed products was also in a different position. The grant of a

weaker. Moreover the maize market itself refund for quellmehl is in the first place

felt the repercussions of the world unnecessary as protection for its increase in the prices of cereals and there traditional outlets since the refund

was less need to protect the processing granted for pre-gelatinized starch has on

industries of the Community. Again, the several occasions been considerably fact that the manufacture of starch is reduced and, secondly, unjustified

much more costly and complex than that inasmuch as it helps to create an

of quellmehl also resulted in making the unintended outlet by way of animal feed. production costs of starch markedly more This different position justifies different sensitive to the increase in investment treatment despite the fact that the two

costs and in labour costs. Finally, the products concerned are to some extent in Community realized that quellmehl was competition.

no longer put solely to its traditional use, baking, but that, owing to the refund, it (f) The Council also states that even if, was used as a constituent of animal feed. in the past, quellmehl and starch have in But these developments, which arose general received the same treatment this

from the refund, do not fall within the does not constitute a right to the same

objectives of the common agricultural treatment, as claimed by the plaintiffs in policy for the purposes of which the the main actions. In this connexion the

refund was introduced. Council refers to the various grounds

RUCKDESCHEL v HAUPTZOLLAMT HAMBURG-ST. ANNEN

which it has already given and which, it of the consequences of which is the

declares, have now ceased to exist, reduction of refunds for starch. A charge however much they may have justified of discrimination cannot therefore be this identity of treatment in the past. based on the abolition per se of refunds

in the case of quellmehl but at most on

This is clear from the fourth recital in the fact that the refund granted for the preamble to Regulation (EEC) No pre-gelatinized starch was not abolished

1125/74 which gives grounds for the in its entirety. abolition of the payment of a refund for quellmehl and begins to reduce it for (b) From the legal standpoint

starch. The reduction to 10 u.a. per tonne Commission contends that an economic

of the refund for starch restored the decision of the same kind as the

natural superiority of quellmehl as a contested measure cannot be

cooking agent. discriminatory unless it was based on

considerations which are manifestly (g) In terms of law, the Council refers erroneous; judgment of the Court of 24 to the decisions of the Court since its October 1973 in Case 43/72, Merkur v judgment of July 1963 in Case 13/63 17 Commission [1973] ECR 1055. Italy v Commission [1963] ECR 165 which laid down that it is not (c) The Commission accordingly sets

discriminatory to treat dissimilar forth the considerations on which the

situations differently. The Council also contested measures were based: the

refers to paragraph 22 of the judgment of financial burdens of the common

theCourt of 11 July 1974 in Case 11/74, agricultural policy had to be reduced; Union des Minotiers de la Champagne v price arrangements under the system of

France [1974] ECR 877, according to production refunds had to be adjusted to

which difference in treatment cannot be economic realities: the supply price (the regarded as discrimination basis of calculation of the production constituting which is prohibited unless it appears refund, which represents the difference arbitrary. between this price and the Community threshold price) had not followed the

In the Council's view it appears to be trend of market and threshold prices, clear from the facts which it has set out, which was steadily rising and the refunds

especially from those relating to the were, in consequence, pratically doubled; natural superiority of quellmehl from the and, because of the increase in the price

competitive point of view and its use in of synthetic products which are in the manufacture of animal feed, which is competition with cereal-based starch as

contrary to the original object of the the 'result of the rise in price of oil

subsidy, that it was not guilty of arbitrary products, consideration was being given discrimination in Regulation (EEC) No to the need for a fundamental reappraisal

1125/74 (1974/75 marketing year, Case of the policy of granting refunds.

117/76) or in Regulations (EEC) Nos 665/75 and 1955/75 (1975/76 marketing (d) Because starch was in competition

year, Case 16/77). The same applies to with synthetic substitute products, the

Regulation (EEC) No 2727/75, which was Council did not abolish production

for starch but merely reduced the effective only from 1 November 1975. refunds

relevant amounts.

3. (a) The Commission states that the

abolition of the production refund for (e) In consequence the question arose

quellmehl is only one aspect of the whether the timing of the reduction in comprehensive change in the the production refund for quellmehl

Community's subsidies policy in the case should be the same as in the case of

of products processed from cereals, one starch.

JUDGMENT OF 19. 10. 1977 — JOINED CASES 117/76 AND 16/77

An analysis of the competitive position quantity of pre-gelatinized starch makes

of these two products disclosed vital it possible to obtain absolutely the same

differences which made it unnecessary to capacity to absorb water ...'

keep regulationsthe governing the

refund completely in parallel as they so Given that the cost price of the raw

had been hitherto. The explanation why material is the same, the refund, adapted

quellmehl and starch are treated alike in to the needs of starch manufacture, has Article 11 of Regulation No 120/67/EEC over-subsidized the already cheaper

lies in the political argument of the production of quellmehl. This difference rights'

'preservation of the acquired of in price, together with the ability to use

quellmehl manufacturers rather than in cheaper low grade flour, makes it economic necessity and the similarity of possible for the quellmehl industry to

economic conditions. In this connexion invade the market in animal feed. it must be borne in mind that the

manufacture of quellmehl has benefited It is for this reason that the Community from a German internal subsidy since institutions reached the conclusion that 1930. there was no compelling reason to

adhere to the principle of strict equality (f) The amount of the refunds is based of treatment between the manufacturers

on the overall assumption that 161 kg of of quellmehl and manufacturers of

maize are required for the manufacture starch.

of 100 kg of starch. On the other hand In view of the substantial reductions the extraction rate for quellmehl is, at which took place in the production most, between 102 and 110 kg and the refunds for starch simultaneously with manufacture of quellmehl involves much the abolition of the refund for quellmehl, less work and requires much less there is no reason to suppose that great technical knowhow than the manufacture and irreparable harm would be done to of starch. the competition with pre-gelatinized

starch. Furthermore, cereals themselves need not necessarily serve as raw material for In the animal feed industry, the higher quellmehl. All the other cheaper prices of maize as a raw material could products of the milling starch-producing have been easily offset by the use of

industry can be used. lower-grade flours which are cheaper.

(g) The interchangeability of the two Similarly, there is little reason to suppose products in question has, in practice, that pre-gelatinized starch is forcing been hitherto of little importance. rye-flour cooking agents out of the

traditional market Pre-gelatinized starch On this point the Commission quotes is certainly coming to supersede the plaintiff in the main action in Case quellmehl but not specific cooking 16/77 as follows: agents because it does not possess their

qualities.

'... quellmehl has better technical

qualities. The capacity to absorb water in (h) Nor is there reason to fear that any particular is higher in the case of ... the natural advantage possessed by quellmehl; ... quellmehl has better quellmehl-based products in terms of

qualities from the nutritional point of competition will be reversed as a result of view ..­ the undue advantage granted to .;'

pre-gelatinized starch in terms of price. '... In the end, however, the choice

between the two products is only a The increase in the price of raw material

matter of price since the use of a greater caused by the abolition of the refund is

RUCKDESCHEL v HAUPTZOLLAMT HAMBURG-ST. ANNEN

not reflected fully but only in part in the effect, the production refund for the

price of quellmehl, which is also manufacture of quellmehl from maize

considerably influenced by other factors. and rice up to an amount equal to that

The effect of this increase on the price of granted for the manufacture of starch

cooking agents ready to be marketed, like from maize and rice during the same

those manufactured by the plaintiffs in period.

the main actions, is even less significant.

The plaintiff in the main action in Case Similarly the reduction, owing to the 16/77 adds that if Regulation (EEC) No maintenance of refunds, in the price of 1125/74 is annulled it will mean that

maize as a raw material compared with Article 11 ofRegulation No 120/67/EEC, the cost price of quellmehl has only a as it was worded before the entry into

partly favourable effect on the price of force of Regulation (EEC) No 1125/74, is pre-gelatinized starch as the finished again valid in so far as it governs the product. production refund for maize used in the

manufacture of quellmehl.

Price fluctuations due to changes in the amount of the refunds amount to The second paragraph of Article 215 of

discrimination only if they cause the the Treaty has the same legal effect. The price of quellmehl to rise appreciably principle that the person responsible for above that of starch. the damage should, in the first place, restore the situation to what it would

Like quellmehl producers, the starch have been if the event causing the

manufacturing industry had to bear damage had not taken place is one of the substantial price increases for maize as its general principles relating to the liability

raw material. The advantage which that of the Community for damage caused by industry enjoyed in terms of price its institutions. The same principle is compared with quellmehl manufacturers illustrated by the right to have the

lay only in the maintenance of a lower consequences made good, which is production refund. The amount of the recognized in administrative law and is refund which, in the beginning, was as also common to the legal systems of the

much as 20-40 units of account per tonne Member States. fell to 18-45 units of account per tonne

in July 1975 and, after August 1975, to The plaintiffs in the main actions 10 units of account per tonne. This was accordingly request the Court to give an not enough even to come within reach of affirmative answer to the second the advantage of at least DM 100 which question. quellmehl previously enjoyed as a

finished product. 2. The Council contends that, even if

Nor in the Court finds that a set of regulations is has experience gained the legally invalid, it may not put itself in meantime supplied evidence of any competition which makes it possible for the place of the Community legislature in the exercise of the powers of pre-gelatinized starch to replace discretion conferred upon the latter and quellmehl because of the refunds it promulgate a positive rule since a whole receives. range of alternative courses is open to the legislature. Second question

1. The plaintiff in the main action in Moreover, the aim of the second question Case 117/76 states that, in the present is to have an issue concerning the

case, discrimination can be eliminated application of the law settled by the

retroactively by granting, with retroactive Court, and this is not possible.

JUDGMENT OF 19. 10. 1977 — JOINED CASES 117/76 AND 16/77

3. The Commission points out that, market in animal feed components at a

even if quellmehl were reentered on the price of from DM 65 to DM 70 per 100 list in Article 11 of Regulation No kg compared with starch products

120/67/EEC of the products entitled to a fetching from DM 80 to DM 85 per 100 refund, the Council is not bound to grant kg and was thus selling at from about

a refund for quellmehl. Regulation (EEC) 80% to 82% of the price of

No 665/75 abolished the compulsory starch-based and glucose-based products.

refund which existed previously and left the decision whether a refund should be The Commission has not been able to

granted for one of the listed products to see the original documents or to place

the discretion of the Council. them at the disposal of the Court because contained confidential they certain

A finding that there had been a misuse matter.

of powers would mean that the measures

taken were invalid and would oblige the Council to replace them with a IV — Oral procedure

non-discriminatory measure coming within the scope of its discretionary At the hearing on 21 June 1977, oral

power. observations were made by the plaintiff in the main action in Case 117/76, There could be an exception only if the represented by Fritz Modest, the plaintiff Council's margin of discretion was in the main action in Case 16/77, confined to one decision only: that of represented by K.-D. Rathke, the

restoring unchanged and with retroactive Council, represented by the Director of

effect the right to the refund. In this its LegalService, Daniel Vignes, acting as case, there is, in any event, a choice of Agent, and the Commission, represented several possible solutions. by its Legal Adviser, Götz zur Hausen, acting as Agent.

III — The written reply to a The plaintiff in the main action in Case question put by the Court 117/76 states that, according to

information which it is unable to prove

In response to the Court's request for beyond doubt, only one undertaking in evidence to prove that quellmehl has the Federal Republic of Germany, been used for animal feed, the Interquell, has processed some 5 000 Commission produced a telex from the tonnes of into quellmehl, half of maize

Federal Ministry of Food. its output, or 2 500 tonnes, being sent to the animal feed industry, while the

According to this telex the trade quellmehl industry as a whole processes association for the animal feed from about 40 000 to 50 000 tonnes of

production industry ('Fachverband der maize into quellmehl.

Futtermittelindustrie') is one of the

groups which has got into touch with the It does not understand how Ministry concerning the abolition of the pre-gelatinized starch can replace

production refund for quellmehl because quellmehl but not the particular baking its abolition placed quellmehl at a aids which have different properties; like disadvantage compared with quellmehl, pre-gelatinized starch can be pre-gelatinized starch in the production used as the basic ingredient of an aid for of milk substitute foods for calves and bakery products. pigs. It also appears from the telex that

the Ministry of Food is in possession of a The cost price of quellmehl is DM 98-79 report which shows that, at that time, per 100 kg while starch was, owing to the quellmehl was being offered on the refund, on offer at DM 98 per 100 kg.

RUCKDESCHEL v HAUPTZOLLAMT HAMBURG-ST. ANNEN

The plaintiff in the main action in Case covered to be discretionary (refund may 16/77 states that, while quellmehl, like be granted).'

starch, is largely used as a component of food products other than cooking agents, The Commission's reply was that, in the ways in which the two products can neither case, was quellmehl any longer be used are much the same. The mentioned by the aforesaid provision.

production costs of pre-gelatinized starch This is therefore a question which would

and of quellmehl are the same. arise only if the abolition of the refund

for quellmehl were to be declared invalid It is not true that quellmehl is from 15 by the Court. If that occurred, quellmehl to 20 % cheaper to produce than starch. would, as a finished product, once more

In the foodstuffs industry the price come under the regulation concerning in relationship is the the basic opposite: prices are product respect of which a

from 20 % higher in the case of production refund is granted in the first quellmehl than in the case of case and may be granted in the second

pre-gelatinized starch. Prices mentioned case.

in the telex of the German Federal

Ministry of Food referred only to animal Even if a basic regulation lays down that

feed. a refund shall be granted this does not

confer any right to it on the party Referring to the statement of the plaintiff concerned. A right would be conferred

in the main action that pre-gelatinized on the party by the concerned only starch was on sale at DM 98 per 100 kg, fixing of the amount of the refund. Nor, the Commission states that this figure against this, could it be objected that the

relates to the present position whereas amount of the refund had already been the comparison of prices made by the fixed for pre-gelatinized starch and that a Commission refers to the time when the now legislative measure was not therefore

abolition of the refund was being necessary to introduce the refund; this

discussed. would amount to saying that the Council had exercised its discretion irrevocably, The fact that quellmehl was used in the once and for all, because it had fixed the animal feed industry was not merely an refund at a specific sum for starch. In the

unofficial ground: there was a reference, Commission'­s view such a contention

though rather vague, to this effect in the would be difficult to justify: the act of

third recital in the preamble to the simply transferring to quellmehl the regulation. refund which had originally been fixed for starch is the only way to achieve not

The Court invited the Commission to this equality of treatment. It is equally

develop its arguments at the hearing on possible to confine the refunds to food

the following point: for human consumption or to restrict the

level of the refund for the two products.

The difference between Cases 117/76 That, too, can ensure equality of

and 16/77 arising from the fact that the treatment. In the case of the 1975/76 application for grant of a refund in the marketing year, equality is a matter for first case was submitted on the date when decision by the legislature and could Article 11, as amended, of Regulation No even consist of the total abolition of the

120/67/EEC made the grant of a refund refund for pre-gelatinized starch because for the products covered by the article at the material time the refund was not

compulsory (refund shall be granted), compulsory.

whereas the application in the second

case was submitted on a date when the The Advocate-General delivered his

wording in force of Article 11 provided opinion at the hearing on 22 September for the refund in respect of the products 1977.

JUDGMENT OP 19. 10. 1977 — JOINED CASES 117/76 AND 16/77

Decision

1 By two orders dated respectively 8 November 1976 and 18 January 1977, which reached the Court on 10 December 1976 and 31 January 1977, the

Finanzgericht Hamburg has referred to the Court under Article 177 of the

EECTreaty two questions concerning the validity of certain provisions of

Community regulations on the subject of refunds for the manufacture of

products derived from maize.

2 Since the questions referred in both cases are identical and have essentially the same object, it is proper to join the cases for the purposes of judgment.

3 The substance of the first question is whether the provisions of Article 11 of

Regulation No 120/67/EEC of the Council on the common organization of

the market in cereals, as subsequently amended, are invalid in far as they so

do not grant a production refund of the same amount on maize for the

manufacture of quellmehl as they do for the processing of this product into starch.

The second question is whether, in the event of the reply being in the

affirmative, manufacturers of quellmehl can lay direct claim to the same

production refund as that granted to manufacturers of pre-gelatinized starch

or whether a legal measure adopted by the Council is required for this.

4 These questions were referred in connexion with proceedings for the payment of a production refund for quellmehl brought against the competent national

authorities by the manufacturers of this product, who claim that the

provisions which abolished this refund while maintaining it for starch

constitute discrimination contrary to the second subparagraph of Article 40

(3) of the Treaty.

5 The production refund for quellmehl extracted from maize, which has been

granted in Germany since 1930, was introduced into the common

organization of the market discretionary by Regulation No in cereals, first as

142/64/EEC of the Council of 21 October 1964 (JO of 27. 10. 1964, p. 2673)

and subsequently as compulsory by Article 11 of Regulation No 120/67/EEC of the Council of 13 June 1967 (JO English Special Edition 1967, p. 33).

RUCKDESCHEL v HAUPTZOLLAMT HAMBURG-ST. ANNEN

These arrangements were identical with those established by the same

regulations for the grant of production refunds for starch and the amount of

the refunds was also the same for the two products.

Although the reason for the grant of production refunds for starch was the

need to keep prices competitive compared with the prices of substitute

products derived principally from oil, the reason for the grant of production refunds for quellmehl was, as is made clear in particular by the tenth recital in the preamble to Regulation No 120/67/EEC, the interchangeability of

starch and quellmehl.

6 The situation remained the same until 1 August 1974, the date of the entry into force of Regulation (EEC) No 1125/74 of the Council of 29 April 1974

(OJ L 128 of 10. 5. 1974, p. 12), whereby Article 11 of Regulation No 120/67/EEC was superseded by a new text providing for the grant of

production refunds for starch but not for quellmehl.

The recitals in the preamble to Regulation (EEC) No 1125/74 stated that the reason for abolishing the production refund for quellmehl was that

experience had shown that the opportunity for substituting quellmehl for starch for certain specific uses as food for human consumption was

'economically slight, if not non-existent'.

7 The second subparagraph of Article 40 (3) of the Treaty provides that the

common organization of agricultural markets 'shall exclude any discrimination between producers or consumers within the Community'.

Whilst this wording undoubtedly prohibits any discrimination between producers of the same product it does not refer in such clear terms to the

relationship between different industrial or trade sectors in the sphere of

processed agricultural products.

This does not alter the fact that the prohibition of discrimination laid down in the aforesaid provision is merely a specific enunciation of the general

principle of equality which is one of the fundamental principles of

Community law.

This principle requires that similar situations shall not be treated differently unless differentiation is objectively justified.

JUDGMENT OF 19. 10. 1977 — JOINED CASES 117/76 AND 16/77

8 It must therefore be ascertained whether quellmehl and starch are in a

comparable situation, in particular in the sense that starch can be substituted for quellmehl in the specific use to which the latter product is traditionally put.

In this connexion it must first be noted that the Community regulations

were, until 1974, based on the assertion that such substitution was possible.

However, the plaintiffs in the main actions on the one hand, and the Council and the Commission on the other are not in agreement concerning the

continued existence of that situation.

The plaintiffs in the main actions contend that the opportunities for substitution are the same as previously, with the result that, since the

abolition of the refund for quellmehl, trade in the latter has fallen off in favour of starch.

While the Council and the Commission have given detailed information on

the manufacture and sale of the products in question, they have produced no

new technical or economic data which appreciably change the previous

assessment of the position.

It has not therefore been established that, so far as the Community system of production refunds is concerned, quellmehl and starch are no longer in comparable situations.

Consequently, these products must be treated in the same manner unless

differentiation is objectively justified.

9 With regard to this latter aspect, the Council and the Commission contend

that the abolition of the refund for quellmehl is justified by the fact that

quellmehl has been to a great extent diverted from its specific use in food for human consumption in order to be sold as animal feed.

Although this ground, the correctness of which is moreover disputed by the plaintiffs in the main actions, is referred to in the statement which

accompanied the proposal submitted by the Commission to the Council and later adopted as Regulation (EEC) No 1125/74, it does not appear in the

recitals to that regulation.

RUCKDESCHEL v HAUPTZOLLAMT HAMBURG-ST. ANNEN

During the proceedings, the Commission was requested by the Court to

produce evidence to show that quellmehl had been used for animal feed but it was unable to comply with this request.

Even if adequate proof had been forthcoming that it was put to such use and that subsidized starch had not been put to similar use this could have justified the abolition of the refund only in respect of the quantities put to such use

and not in respect of the quantities of the products used in food for human consumption.

10 In view in particular of the length of time during which the two products were given equality of treatment with regard to production refunds, it has not

been established that there are objective circumstances which could have justified altering the previous system as was done by Regulation (EEC) No 1 125/74, which put an end to this equality of treatment.

It is clear from the foregoing that the abolition, as a result of Regulation

(EEC) No 1125/74, of the refund for quellmehl, while the refund was

maintained for maize-based starch, amounts to a disregard of the principle of

equality.

11 In the particular circumstances of the case, however, this finding of illegality does not inevitably involve a declaration that a provision of Regulation (EEC) No 1125/74 is invalid.

12 It must first of all be borne in mind that the amendment of Article 11 of

Regulation No 120/67/EEC effected by Article 5 of Regulation (EEC) No 1125/74 took the form not of the deletion of that part of the text which

relates to quellmehl but of the replacement of the previous wording by a new

wording in which there is no mention of that product.

Thus the provision is unlawful because of something for which it makes no

rather than on account of part of its wording. provision any

13 However, this unlawfulness cannot be removed merely by the fact that the Court, in proceedings under Article 177, rules that the contested provision is in part or in whole invalid.

judgment of 19. 10. 1977 — joined cases 117/76 and 16/77

On the other hand the conclusion must be drawn that, in law, the situation created by Article 5 of Regulation (EEC) No 1125/74, whereby the previous text was replaced by a new wording of Article 11 of Regulation No

120/67/EEC, is incompatible with the principle of equality and that it is for the competent institutions of the Community to adopt the measures

necessary to correct this incompatibility.

The need for a reply to this effect to the questions asked is borne out by the existence of several courses of action which would enable the two products in

question once again to be treated equally and to make good any damage sustained by those concerned and by the fact that it is for the institutions responsible for the common agricultural policy to assess the economic and

political considerations on which this choice of action depends.

Costs

14 The costs incurred by the Council and the Commission of the European

Communities, which have submitted observations to the Court, are not

recoverable.

As these proceedings are, in so far as the parties to the main action are

concerned, in the nature of a step in the action pending before the national

court, the decision on costs is a matter for that court.

On those grounds,

THE COURT

in answer to the questions referred to it by the Finanzgericht Hamburg by orders of 8 November 1976 and 18 January 1977, hereby rules:

1. The provisions of Article 11 of Regulation No 120/67­ /EEC of

the Council of 13 June 1967, as worded with effect from 1 August 1974 following the amendment made by Article 5 of Regulation (EEC) No 1125/74 of the Council of 29 April 1974, and repeated in subsequent regulations, are incompatible with the principle of equality in so far as they provide for

quellmehl and pre-gelatinized starch to receive different treatment in respect of production refunds for maize used in

the manufacture of these two products.

RUCKDESCHEL v HAUPTZOLLAMT HAMBURG-ST. ANNEN

2. It is for the institutions competent in matters of common

agricultural policy to adopt the measures necessary to correct

this incompatibility.

Kutscher Sørensen Bosco Donner Pescatore

Mertens de Wilmars Mackenzie Stuart O'Keeffe Touffait

Delivered in open court in Luxembourg on 19 October 1977.

A. Van Houtte H. Kutscher

Registrar President

OPINION OF MR ADVOCATE-GENERAL CAPOTORTI DELIVERED ON 22 SEPTEMBER 1977 <apnote>1</apnote>

Mr President, benefit from aids (in the form of 'quellmehl'

Members of the Court, 'production refunds') are and

'gritz'; the product which continues to 1. The opinion which I have to deliver benefit from them is starch. Quellmehl, today is concerned with six cases (Joined which is by the processing of produced

Cases 64 and 113/76, Joined Cases maize, wheat or broken rice by means of 117/76 and 16/77 and Joined Cases a heat treatment helps to keep dough 124/76 and 20/77) relating to agriculture damp in the breadmaking process and is and they have one important feature in traditionally used in Germany and common: they all raise the issue of Denmark as an additive in the

observance of the principle of manufacture of rye bread. Gritz is meal

non-discrimination by the Community which is made from maize by means of a legislature. More specifically, the central purely mechanical operation and is issue is whether and under what mainly used in the brewing of beer. For conditions the principle of the main purpose for which they are

non-discrimination must be considered used, each of the two products can, to have been breached when, by means technically speaking, be replaced by of regulations, the Community starch.

authorities decide to abolish aids granted

for a time to particular products while During the stage at which the common maintaining aids already granted to a organization of the market in cereals was

product in competition with them. being progressively established, the

similar treatment of starch and

I should state at once that the products quellmehl in the matter of production

which in the present case no longer refunds was the outcome, in particular, of

1 — Translated from the Italian.

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