C-84/78

and

AMMINISTRAZIONE DELLE Finanze DELLO stato [State Finance Administration]

on the validity of Commission Regulation (EEC) No 2604/77 of 25 November 1977 introducing monetary compensatory amounts in respect of durum wheat and the products derived therefrom (Official Journal 1977, L 302, p. 40),

THE COURT

composed of: J. Mertens de Wilmars, President of the First Chamber, acting as President, Lord Mackenzie Stuart (President of the Second Chamber), P. Pescatore, M. Sørensen, A. O'Keeffe, G. Bosco and A. Touffait, Judges,

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

I — Facts and written procedure "No compensatory amount shall be fixed where, in any Member State, the percentage referred to in Article 2 (1) A — The framework of the regulations does not exceed 2.5%" (this percentage represents the difference between the official conversion rate of the currency Article 1 (1) of Regulation No 974/71 of concerned and the so-called green rate). the Council of 12 May 1971 on certain measures of conjunctural policy to be taken in agriculture following the The monetary compensatory amounts temporary widening of the margins of system was applied to durum wheat and fluctuation for the currencies of certain the products derived from it until 12 Member States (Official Journal, English August 1974. The said amounts were Special Edition 1971 (I), p. 257) auth­ then abolished, because the price of durum wheat had risen on the world orizes the Member States to charge and grant monetary compensatory amounts market above the threshold price and in addition the difference between the on imports and exports of the products actual rate of the Italian lira and the rate described in Article 1 (2): of the green lira had fallen to 2.5%. "… products covered by intervention arrangements under the common organi­ The price of durum wheat on the world zation of agricultural markets; market fell in 1975 and 1976, and the Commission introduced a levy on … products whose price depends on the imports from non-member countries. In price of the products referred to [above] the monetary field, the lira continued to and which are governed by the common depreciate and the difference between organization of markets or are the the green lira and its actual value reached 21.6% in March 1976. subject of a specific arrangement under Article 235 of the Treaty." Complaints were received in Brussels from traders, in particular Italian traders (importers, associations of millers and Article 1 (3) of the regulation as manufacturers of pasta products), and in amended by Regulation No 2746/72 of the Council of 19 December 1972 (Official Journal, English Special Edition 1 — Translator's note: This is a corrected version of the text Appearing in the Official Journal, which is defective; 1972 (28-30 December), p. 64), provides cf. Mr Advocate General Warner's comments in Case that paragraph 1 29/77 Roquette [1977] ECR 1835, at p. 1847.

April 1976 a proposal to reintroduce latter shall not apply "to operations monetary compensatory amounts in carried out under cover of a certificate respect of the products in question was fixing the export refund or the import submitted to the competent Management levy in advance in respect of which the Committee. The proposal not having application was lodged prior to 26 been adopted, a number of further re November 1977". presentations were received (in particular from the Belgian, Luxembourg and By Regulation No 2917/77 of 28 December 1977 on transitional measures German Governments) protesting against the failure to introduce monetary concerning the application of monetary compensatory amounts for durum wheat compensatory amounts to certain and/or pasta products. products in the cereals sector (Official Journal 1977, L 340, p. 37), the Stating in the preamble to Regulation Commission decided that during the No 2604/77 that the absence of period from 2 January to 28 February monetary compensatory amounts had in 1978 the monetary compensatory recent months (that is, during summer amounts fixed for the products falling 1977) caused difficulties as regards both within subheadings 10.01 B and durum wheat and the products derived 11.02 A I (a) were to be granted on therefrom, that deflections of trade in certain exports and imports only under the case of durum wheat and distortions specified terms. of competition in the case of some of the products in question had been noted, B — The facts and that this state of affairs was fur thermore worsened by the sharp drop in In January 1978 the Tomadini under supplies of home-grown durum wheat taking exported to the Federal Republic and the increased need for imports from of Germany 8 500 kilograms net of pasta non-member countries, the Commission

products). This regulation was adopted support of its claim that Regulation No without the competent Management 2604/77 was illegal and inapplicable to Committees having delivered opinions exports carried out in performance of a within the time-limits set by their contract concluded in April 1977, that is chairmen. It applied with effect from 2 to say prior to its adoption. January 1978. The Amministrazione delle Finanze By Regulation No 2792/77 of 15 raised the objection that the Pretura December 1977 (Official Journal 1977, L dealing with the case

TOMADINI v AMMINISTRAZIONE DELLE FINANZE DELLO STATO

oppose a reference to the Court of with Regulations (EEC) Nos 2792/77 Justice, pointing out that the Court had and 2917/77 be considered to be already been requested to consider the applicable to exportations of pasta validity of the Community provisions at products from Italy to the other issue following the application submitted Member States and non-member by the Italian Government in Case 12/78 countries after 2 January 1978, sub judice. pursuant to contracts concluded prior to 25 November 1977, the date of the The Unione Industriale Pastai Italiani adoption of Regulation No 2604/77, [Association of Industrial Pasta Manufac­ during a period in which it was not turers, hereinafter referred to as "the possible to foresee the introduction of UIPI"] intervened in the main action in any compensatory amount in the support of Tomadini's case. sector in question?

JUDGMENT OF 16. 5. 1979 — CASE 84/78

further processing: the present case even member countries take the form of concerns pasta containing eggs, which import subsidies which are deducted demands much more elaborate industrial from the Community levies and make preparation. Therefore it follows that the imports themselves cheaper. On the Regulation No 2604/77 is void. other hand, as regards countries with a strong currency, those compensatory amounts take the form of actual import The disturbance deemed to be sufficient charges and therefore certainly do not to justify the introduction of facilitate the increase of imports from compensatory amounts on durum wheat non-member countries. should have been noted in summer 1977. Comparison of the situation prevailing in summer 1976 with that prevailing in summer 1977 does not reveal any The Commission has acknowledged that disturbance, or even any particular the disturbances of the Italian market variation, in the imports and prices of were due to the intervention of the durum wheat capable of being attributed public authorities (the AIMA<appnote>1</appnote>), which exclusively to monetary fluctuation. In were buying durum wheat directly on the fact, whilst imports of durum wheat into world market and then reselling it within Italy from non-member countries in Italy, and to the existence of a freeze on summer 1976 amounted to some 143 000 pasta prices in Italy. However, the quintals (from June to October 1976), Commission passively accepts these they amounted to some 277 000 quintals breaches of the Community rules. for the same period in 1977.

TOMADINI v AMMINISTRAZIONE DELLE FINANZE DELLO STATO

the sector under consideration following subject of the protection of acquired political pressures exerted at the direct rights and legitimate expectations. instigation of German pasta manufac­ turers in competition with Italian manu­ facturers. The Commission itself expressly admits these pressures in the document of 10 February 1978 on the In Case 131/77 Milac [l97S] ECR 1041, "Economic Effects of the Agri-monetary Mr Advocate General Capotorti System" (COM (78) 20 final): "The agri- emphasized that monetary compensatory monetary system as applied has proved amounts were introduced only with one itself pernicious in having over an precise aim in view, namely the need "to extended period protected the agri­ compensate the incidence of the cultural sector — already to some extent monetary measures on the price of basic sheltered from the laws of the market — products covered by intervention from the effects which monetary events arrangements". The measures adopted in normally have on sectors of the Regulation No 2604/77 have no direct economy". incidence in the monetary sphere. Even if the compensatory amounts were held to be lawful measures laid down in the public interest, at all events they cannot be held to present a utility so overriding and ineluctable as — in a certain context

JUDGMENT OF 16. S. 1979 — CASE 84/78

B — Observations submitted by the by means of these deflections of Italian Government trade, because the levy expressed in units of account and converted into pounds sterling at the so-called green rate allowed a profit of approx­ imately 30% to be made, having The Italian Government refers to the regard to the charge for which arguments and conclusions submitted in Belgian, Netherlands and German Case 12/78 cited above. importers would have been liable if the imports had been carried out directly. In this way imports of durum wheat from France were penalized. Information supplied by the United Kingdom reveals that C — Observations submitted by the from January to November 1977 Commission some 112 000 tonnes of durum wheat had been imported into that State, of which some 53 000 were re-exported to other Member States. In the preceding years there had been no The Commission argues that it was right such re-exports. in fearing disturbances in trade (difficulties and deflections of trade) due to the level of prices expressed in national currency, which differed widely from one Member State to another. The — Italy was in a special situation: On the one hand, imports of durum existence of those disturbances is proved wheat suffered from the absence of by the following considerations: monetary compensatory amounts, and importers had no choice but to give up imports or make them at a loss. On the other hand, the AIMA's — Imports of durum wheat by traders sales of durum wheat imported from into Italy were meeting with ever-in­ non-member countries amounted to

market in pasta. In 1976 Italian exports close to the intervention price. When increased by 50% over 1975, and would production of that product within the have increased even more in 1977. A Community is in deficit, prices ought crisis would thus have been provoked in to be close to the target price. The the competing sectors of the other decision to intervene in the durum Member States. wheat market was determined by the Italian authorities' intention to freeze the maximum retail selling price of pasta; Once the disturbances pertaining to the durum wheat market had been verified, the Commission was under a duty to turn its attention to the derived products, — By the particularly favourable in particular pasta, whose value is conditions enjoyed by. exports, from the Member States with a weak primarily determined by the cost of the wheat used in their manufacture. This currency, of pasta manufactured problem is not new and was examined in from common wheat and not subject Case 29/77 Roquette [1977] ECR 1835, to compensatory amounts, when in which the Court held that "the imports of the basic product benefited from those amounts. Commission may assess the risks of disturbance either for trade in basic products or for trade in both basic and derived products". It is Italian importers of durum wheat who have reason to complain that monetary compensatory amounts were The Commission points out that the not reintroduced in due time. Pasta reintroduction of monetary compen­ exporters, for their part, profited from satory amounts in the sector at issue was this delay, just as they benefited for a not decided lightly, but on the contrary number of years from the existence of as the result of extensive examination monetary compensatory amounts on and thorough discussions, as is shown by common wheat whilst they were exempt the laborious evolution of the contested from payment of those amounts on pasta measure. which was, however, manufactured in whole or in part from the same common wheat.

The argument to the effect that the derived products taken as a reference for — or, having missed the opportunity the assessment of possible disturbances of automatic extension at the time must exclusively be agricultural products when monetary compensatory and that account must not be taken of amounts were introduced on the disturbances affecting products covered basic agricultural products, never by Regulation No 1059/69 of the again to be able to apply them. Council of 28 May 1969 laying down the trade arrangements applicable to certain goods resulting from the processing of agricultural products (Official Journal, Regulation No 2792/77 deals with English Special Edition 1969 (I), p. 240) operations carried out under cover of a is unacceptable for the following certificate fixing the export refund or the reasons: import levy in advance. The reasons against extending the exemption to exports to the other Member States may be summarized as follows: — Regulation No 974/71 is also based on Article 235, and its provisions apply "to products … which … are the subject of a specific arrangement — The Commission's intention was well under Article 235 of the Treaty". known to traders, who were not taken by surprise and consequently were able to take adequate steps.

Decision

: By an order of 16 March 1978, which was received at the Court on 23 March 1978, the Pretura di Trento referred several questions to the Court of Justice for a preliminary ruling under Article 177 of the EEC Treaty on the validity of Commission Regulation No 2604/77 of 25 November 1977 intro­ ducing monetary compensatory amounts in respect of durum wheat and the products derived therefrom (Official Journal 1977, L 302, p. 40).

2 These questions were raised in the context of a dispute over the charging of monetary compensatory amounts totalling Lit 724 200 in respect of the expor­ tation from Italy to the Federal Republic of Germany in January 1978 of 8 500 kilograms net of pasta containing eggs by the Tomadini undertaking, the plaintiff in the main action.

3 The plaintiff asked the Pretura di Trento to declare unlawful the charging of a compensatory amount on these goods pursuant to Regulation No 2604/77 by the Amministrazione delle Finanze, the defendant in the main action.

JUDGMENT OF 16. 5. 1979 — CASE 84/78

4 The Amministrazione delle Finanze raised the objection that the Pretura had no jurisdiction ratione materiae and on the substance of the case contended that Tomadini's application should be dismissed, but it did not oppose a reference to the Court of Justice, pointing out that the Court had already been requested to consider the validity of the Community provisions at issue following the application submitted by the Italian Government in Case 12/78.

9 A few days later, by Regulation No 2792/77 of 15 December 1977, the Commission added a paragraph to Article 2 of the preceding regulation, according to which the compensatory amounts introduced by the latter shall not apply "to operations carried out under cover of a certificate fixing the export refund or the import levy in advance in respect of which the application was lodged prior to 26 November 1977".

TOMADINI v AMMINISTRAZIONE DELLE FINANZE DELLO STATO

10 Two weeks later, by Regulation No 2917/77, the Commission decided that during the period from 2 January 1978 to 28 February 1978 the compensatory amounts fixed for the products falling within tariff sub­ headings 10.01 B (durum wheat) and 11.02 AI (a) (groats and meal of durum wheat) were to be granted on certain exports and imports only under specified terms.

11 The questions raised by the Pretura di Trento are as follows:

1. Must Regulation (EEC) No 974/71 of the Council (as successively amended) be interpreted as meaning that the Community institutions may, following a period of three years — during which they refrained from applying compensatory amounts to a basic agricultural product (durum wheat) — introduce specific monetary compensatory amounts in relation to products derived from the said basic product (pasta products), even though within the said three years and certainly during the last year (1977), no disturbances whatever had occurred on the market in the basic agricultural product in question (durum wheat)?

2. In the event of a negative answer to Question 1 (above), must Commission Regulation (EEC) No 2604/77 be considered invalid, at least in so far as it introduces monetary compensatory amounts on exports of pasta products?

Question 3

15 The plaintiff in the main action argues that, if Regulation No 2604/77 is valid, the monetary compensatory amounts should not be applied to expor­ tations of pasta from Italy to the other Member States pursuant to contracts concluded prior to 25 November 1977, the date of the adoption of Regu­ lation No 2604/77.

16 In order better to dispose of their products on the markets of the other Member States, Italian exporters concluded long-term contracts.

17 The plaintiff argues that at the time of the conclusion of the contract under which the exports at issue in the main action were carried out, the Italian producer could not reasonably have foreseen the introduction of monetary compensatory amounts on pasta.

18 In 1976 the Italian pasta producers requested that monetary compensatory amounts on durum wheat and pasta should be reintroduced, but by a letter of 9 August 1976 the Commission refused this request.

19 The plaintiff submits that the adoption of Regulation No 2604/77 without any transitional arrangements being laid down for intra-Community trade breaches the principle of legitimate expectations, all the more so as Regu­ lation No 2792/77 of 15 December 1977 exempted operations carried out under cover of a certificate fixing the export refund or the import levy in advance in respect of which the application had been lodged prior to 26 November 1977, an exemption which applies only to trade with non-member countries.

24 It is true that this exemption is linked to the trader concerned having applied for and obtained a certificate fixing the levy or refund in advance, which restricts the benefit of the exemption to trade with non-member countries and excludes from such benefit intra-Community trade, in respect of which there is no refund or levy and consequently no advance fixing.

25 However, for the reasons stated above, neither the general principle of respect for acquired rights nor that of respect for legitimate expectations required such exemption to be extended to all contracts in progress on 26 November 1977.

JUDGMENT OF 16. 5. 1979 - CASE 84/78

26 Furthermore, by publishing Regulation No 2604/77 on 26 November 1977 when it was to apply only with effect from 2 January 1978, the Commission mitigated the effects of the new rules on operations in the course of being performed, to the extent consistent with maintaining the aims pursued by the reintroduction of monetary compensatory amounts.

27 The submission based on the failure to respect legitimate expectations must therefore be dismissed.

28 Accordingly the answer to Question 3 should be that, apart from the exception provided for by Regulation No 2792/77, the monetary compensatory amounts laid down by Regulation No 2604/77 are applicable to the exportation of pasta from Italy to other Member States and to non- member countries as from 2 January 1978 in pursuance of contracts concluded prior to 25 November 1977.

1. Consideration of the first two questions raised by the Pretura di Trento has disclosed no factor of such a kind as to affect the validity of Regulation No 2604/77.

2. Apart from the exception provided for by Regulation No 2792/77, ' the monetary compensatory amounts laid down by Regulation No 2604/77 are applicable to the exportation of pasta from Italy to the

TOMADINI v AMMIN1STRAZIONE DELLE FINANZE DELLO STATO

other Member States and to non-member countries as from 2 January 1978 in pursuance of contracts concluded prior to 25 November 1977.

Mertens de Wilmars Mackenzie Stuart Pescatore

Sørensen O'Keeffe Bosco Touffait