C-29/77

JUDGMENT OF 20. 10. 1977 — CASE 29/77

common agricultural policy taken demands of the economic factors or

individually and, where necessary, conditions in view of which their

allow any one of them temporary decisions are made.

priority in order to satisfy the

In Case 29/77

fluctuation for the currencies of certain Member States (OJ, English Special Edition 1971 (I), p. 257) and on the validity of Commission Regulation (EEC) No 652/76 of 24 March 1976 changing the monetary compensatory amounts

following changes in exchange rates for the French franc (OJ L 79, 1976, p. 4),

THE COURT

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

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

Advocate-General: J.-P. Warner Registrar: A. Van Houtte

Court of Justice of the EEC may be Justice for a preliminary ruling under

summarized as follows: Article 177 of the EEC Treaty: I. For the institution or maintenance in

force of monetary compensatory I — Facts and written procedure amounts, does Article 1 (3) of Regulation (EEC) No 974/71 of the

In March 1976, the French Government Council of 12 May 1971: decided to take the French franc out of (a) require the Commission to refer to the 'European currency snake', and on 24 the risk of disturbances in trade: March 1976 the Commission adopted (b) and/or, prohibit it from fixing Regulation No 652/76 establishing compensatory amounts when

monetary compensatory amounts on there is no such risk?

trade between France and Member States 2. what must the disturbances in

with Article 39 of the Treaty, and it to the entire monetary effect on the brought an action before the Tribunal price of the basic product adjusted d'Instance, Lille, seeking an order for the merely by a standard abatement, termination of the levying of the without considering whether that

compensatory amounts and for the general measure is strictly necessary? restitution of the sums levied by the 5. Are the institution and maintenance

Administration des Douanes. in force of the compen­ monetary satory amounts by Regulation No The said Tribunal found that a certain 652/76 of the Commission and later number of points arose concerning the instruments compatible with the interpretation of Community law, and by provisions of Article 39 of the Treaty

JUDGMENT OF 20. 10. 1977 — CASE 29/77

of Rome even though, having been is markedly higher than the intervention introduced for the purpose of price.

preventing short-term changes in exchange rates from having The changes in exchange rates for the

The judgment of the court a quo was Article 39 (1) (b) of the Treaty in so far as received at the Court of Justice on 1 it prevents French farmers, whose

March 1977. production costs increase in inverse proportion to the loss in value of the

Upon hearing the report of the franc, from passing on that increase by Judge-Rapporteur and the views of the way of the selling price of their product,

Advocate General, the Court decided to in this case maize. open the oral procedure without any preparatory inquiry. Finally, it is obvious that fluctuations in exchange rates for the French franc have no effect on transactions with countries

II —

Summary of the written in the franc area.

that the option of or granting underlies the entire of the charging philosophy compensatory amounts shall be exercised scheme of monetary compensatory only where the application of national amounts. The first part of the first monetary measures would lead to such question amounts to asking whether the disturbances. Moreover, the Court has risk of disturbances can be presumed by re-stated that principle in Cases 43/72 the Commission, to the extent to which (Merkur v Commission [1973] II ECR Article 1 of Regulation No 974/71 does 1055) and 74/74 (CNTA v Commission not oblige it expressly to refer to a

[19751 ECR 533). disturbance in trade in agricultural

products when it fixes compensatory The intervention system has never been amounts. In this connexion, the Court applied in the maize sector: since it is a has held that the Commission and the

cereal of which there is a deficit at the Management Committee enjoy a 'wide discretion'

European level, the normal market price measure of in assessing a

ROQUETTE v FRANCE

essentially in deflections of trade. consists system which the Court has already held The only motives for such deflections are to be compatible with Article 39 of the

speculative monetary considerations, and Treaty, namely the system of Regulation their effect is, among other things, to No 974/71 (cf. Case 5/73). The Proposal drive prices down in the market of the for a Council Regulation relating to the Member State has whose currency fixing of representative exchange rates in increased in value, and, in consequence, the agricultural sector, submitted by the

to upset the intervention arrangements Commission on 5 November 1976, is on that market. As far as trade outside directed towards a situation entirely the Community is concerned, imports different to that in the main action: its

aredeflected through the Member State aim is to prevent the system of

in which levies are lowest, namely that compensatory amounts from resulting in having the lowest-valued currency, the guarantee of excessively large price

whereas exports are made from the differences in the Member States when

JUDGMENT OF 20. 10. 1977 — CASE 29/77

Regulation only in quite exceptional by its Legal Adviser, Mr Gilsdorf, acting circumstances. as Agent, assisted by Mr Delmoly, presented oral argument.

At the hearing on 29 June 1977 the

plaintiff in the main action, represented The Advocate General delivered his by Mr Veroone, and the Commission of opinion at the hearing on 27 September the European Communities, represented 1977.

Decision

1 By a judgment of 4 February 1977, which was received at the Court on 1

2 In March 1976, the French Government decided to take the franc out of the

system under which the currencies of certain Member States float in relation

to outside currencies while maintaining certain margins of fluctuation in relation to each other (the 'snake'), and the Commission adopted the

aforementioned Regulation No 652/76, which established monetary compensatory amounts on trade between France and the Member States or third countries, with effect from 25 March 1976.

3 The questions referred for a preliminary ruling have been raised in the

context of a dispute over the payment by the plaintiff in the main action of

s The second question asks what the disturbances in question must consist in.

6 The third question asks whether the risk of disturbances must be assessed at

the level of the basic products (referred to in Article 1 (2) (a)) or at the level of the processed products involved (referred to in Article 1 (2) (b) of Regulation

No 974/71).

7 The fourth question asks whether Regulation No 652/76 of the Commission of 24 March 1976 and the subsequent regulations must be considered as valid

having regard to the basic Community legislation, in that they introduce monetary compensatory amounts on maize (10.05 B) and the products

Article 39 of the Treaty of Rome even though, having been introduced for the purpose of preventing short-term changes in exchange rates from having immediate repercussions on agricultural prices in national currency, they cause, according to the Commission (Proposal for a Regulation of 5 November 1976), disturbing effects on the unity of the agricultural market and distortions of competition and though, according to Roquette, they reduce the real income of French farmers.

9 In substance, these questions are designed to ascertain whether or not

Regulation No 652/76 of the Commission and the subsequent regulations are

valid.

10 The system of monetary compensatory amounts instituted by Article 1 (1) of Regulation No 974/71 as amended by Regulations Nos 2746/72 of the Council of 19 December 1972 (OJ, English Special Edition 1972 (28-30

December), p. 64) and 509/73 of the Council of 22 February 1973 (OJ L 50, 1973, p. 1) provide that if a Member State allows the exchange rate of its

11 Paragraph (3) of the said Article 1 provides that paragraph (1) shall apply only where application of the monetary measures referred to in that paragraph

would lead to disturbances in trade in agricultural products.

12 The Commission must establish that this situation exists after obtaining the opinion of the Management Committees.

13 The possibilities of disturbances in trade in agricultural products are so

numerous and so diverse that it would be difficult, if not impossible, for the Commission to list all those possibilities in a regulation.

14 Consequently, the Commission may find that there is a risk of disturbances merely on the basis of an appreciable fall in the rate of exchange of a

Article 1 (1) (b) of the regulation at issue and is to be read as doing so.

17 Although it is true that the Commission did not expressly state that in the

absence of monetary compensatory amounts there would be reason to fear disturbances in trade in agricultural products, it is clear that the insertion of

such a recital would have been of a purely formal nature.

ROQUETTE v FRANCE

18 Consequently, the fact that the statement of reasons for the regulation took the form of a reference to the conditions set out in Article 1 (1) of Regulation No 974/71 is not to be regarded as equivalent to a lack of any statement of

21 Article 1 (3) of Regulation No 974/71 cannot be interpreted as obliging the Commission to decide case by case, or in respect of each product individually,

and making distinctions according to the country of export, whether there is a risk of disturbance.

22 The very terms of that provision show that evaluations of a general nature

may be made in this respect.

23 In particular, compelling reasons relating to the practicability of the system of

compensatory amounts enable groups of products to be taken into consideration in assessing the possibility of disturbances in trade in agricultural products.

JUDGMENT OF 20. 10. 1977 — CASE 29/77

26 The monetary compensatory amounts on products derived from maize were

calculated strictly in accordance with Article 2 (2) of Regulation No 974/71

which provides that for the other products referred to in Article 1, the

compensatory amounts shall be equal to the incidence, on the prices of the

product concerned, of the application of the compensatory amount to the

regulations of the Council.

29 As regards the validity of the basic regulation, Article 39 of the Treaty sets out various objectives of the common agricultural policy.

30 In pursuing those objectives, the Community Institutions must secure the permanent harmonization made necessary by any conflicts between these objectives taken individually and, where necessary, allow any one of them

temporary priority in order to satisfy the demands of the economic factors or conditions in view of which their decisions are made.

31 If, owing to developments in the monetary situation, preference happens to be given to the requirements of stabilizing the market, Regulation No 974/71 does not in doing so contravene Article 39.

32 As regards the argument based on the Commission's Proposal of 5 November 1976, that proposal was directed at the danger that the system of monetary compensatory amounts might be turned from its purpose by the maintenance

Costs

36 The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable.

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

On those grounds,

Delivered in open court in Luxembourg on 20 October 1977.

A. Van Houtte H. Kutscher

Registrar President