C-95/78

1. In order to justify the application of 3. According to the provisions of Article compensatory amounts to processed 26 of Regulation No 2727/75, it is products, it is sufficient for the only if the Commission adopts compensatory amounts applicable to measures which are not in accordance the basic products to have a with the opinion of the Management considerable incidence on the price of Committee that those measures must the processed products. be communicated to the Council. In these circumstances the absence of an 2. The Commission is not bound to fix opinion by the Committee in no way compensatory amounts for all the affects the validity of the measures products in a group, but may assess adopted by the Commission. the need to apply compensatory amounts either by products or by groups of products.

In Case 95/78

REFERENCE to the Court under Article 177 of the EEC Treaty by the Pretura di Milano for a preliminary ruling in the proceedings pending before that court between

1 — Language of the Case: Italian.

JUDGMENT OF 5. 4. 1979 — CASE 95/78

DULCIORA S.PA.

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

gives the following

JUDGMENT

Facts and Issues

The facts of the case, the course of the Protocol on the Statute of the Court of procedure and the observations Justice of the EEC may be summarized submitted under Article 20 of the as follows:

DULCIORA v AMMINISTRAZIONE DELLE FINANZE DELLO STATO

… products whose price depends on the compensatory amounts currently price of the products referred to [above] applicable; … in the case of the and which are governed by the common processed products not subject to organization of market or are the subject monetary compensatory amounts, the of a specific arrangement under Article difference in prices of the basic products 235 of the Treaty." has become so marked as to have a Article 1 (3) of the regulation as considerable effect on the conditions of amended by Regulation No 2746/72 of competition of the processed products, the Council of 19 December 1972 having regard to the characteristics of (Official Journal, English Special Edition the market in certain sensitive products." 1972 (28-30 December), p. 64) provides The sixth recital provides that the list of that paragraph 1 non-Annex II products should be "… shall apply only where application reviewed by the end of the year in the of the monetary measures referred to … light of their economic situation. Thus would lead to disturbances in trade in the second subparagraph of Article 2 (2) agricultural products." <apnote>1</apnote> of the regulation provides that monetary Article 4 of Regulation No 974/71 compensatory amounts shall not apply provides that: beyond 31 December 1977 in respect of "No compensatory amount shall be fixed products falling within tariff subheadings where, in any Member State, the 17.04 D (sugar confectionery not percentage referred to in Article 2 (1) containing cocoa, other than liquorice does not exceed 2.5 %" (this percentage extract, chewing gum and white represents the difference between the chocolate), 18.06 B (ice cream (not official conversion rate of the currency including ice cream powder) and other concerned and the so-called green rate). ices containing cocoa), 18.06 C By Regulation No 800/77, a number of (chocolate and sugar confectionery goods were bought within the system of containing cocoa), 19.08 B (pastry, monetary compensatory amounts. They biscuits, cakes and other fine bakers' wares other than gingerbread and the were different kinds of sugar confec­ tionery, ice cream and other ices, choco­ like) and 21.07. C (ice cream (not including ice cream powder) and other ices not containing cocoa). 1 — Translator's note: This is a corrected version of the text By Regulation No 2657/77, the time- appearing in the Official Journal, which is defective; limit on the applicability of Regulation cf. Mr Advocate General Warner's comments in Case 29/77 Roquette [1977] ECR 1835, at p. 1847. No 800/77 was abolished and the

monetary compensatory amounts on the B — The facts products eration were maintained for an indefinite period. In the last months of 1977 and the first months of 1978 Dulciora S.p.A. exported The adoption of Regulation No 800/77 sugar confectionery to the other Member States and non-member countries. In had been preceded by the Commission Decision of 23 March 1977 authorizing respect of these exports it had to pay the Ireland to take protective measures in monetary compensatory amounts respect of certain processed agricultural provided for by Regulations Nos 800/77 products under Article 135 of the Act of and 2657/77.

"… the compensatory amounts charged or granted … [on] basic products would The Amministrazione delle Finanze amount to 34.7% in the case of the raised the objection that the Pretura United Kingdom and to 10.4% in the before which Dulciora had brought the case of Ireland; . . . this situation, action had no jurisdiction ratione loci or entailing a relative disadvantage to the ratione materiae and on the substance of manufacturers … in Ireland on the cost the case contended that the plaintiff's of the basic products of 24.3%, may lead claims should be dismissed, but it did not to distortion in the terms of competition oppose a reference to the Court of in trade in the processed agricultural Justice, pointing out that the Court had products referred to in the Irish already been requested for a ruling on application between the Member States the validity of the Community provisions concerned; … this situation, in its at issue in Cases 151/77 Peiser and present acute form since November 11/78 Italy v Commission (sub judice). 1976, has given rise to serious difficulties for the sectors concerned in Ireland …" The Associazione Industrie Dolciarie Italiane (hereinafter referred to as the A.I_D_I_) intervened in the main action in The monetary compensatory amounts thus introduced by this bilateral system support of the plaintiff's claim. between the United Kingdom and Ireland were replaced by fresh amounts annexed to the Commission Decision of C — The questions referred for a pre 4 May 1977 amending that of 23 March liminary ruling 1977 (Official Journal 1977, L 123, p. 18).

DULCIORA v AMMINISTRAZIONE DELLE FINANZE DELLO STATO

JUDGMENT OF 5. 4. 1979 — CASE 95/78

Such an interpret Regulation No 974/71, and even if it ation infringes Regulation No 974/71, were, it could depend on reasons and for this reason Regulation no unconnected with the existence of 800/77 should be declared illegal for monetary compensatory amounts on the failure to comply with the Council regu basic products from which the lation. confectionery products are derived. The existence of compensatory amounts has no influence on trade in confectionery products because, since they are luxury The market in the basic products can products, consumers are essentially never be influenced by trade in the influenced by quality. It emerges from derived confectionery products referred the NIMEXE <apnote>1</apnote> statistics that, owing to to in Regulation No 800/77. As regards the fact that on average the consumption sugar, in 1976 Italian confectionery of confectionery products increased in undertakings exported confectionery countries with a strong currency and products containing in all 187 000 decreased in countries with a weak quintals of that basic product: even if currency following an imbalance such a quantity were considerably in between per capita income and the cost creased, it would never succeed in of living, the trend for exports from disturbing the market in sugar in Italy, countries with a weak currency to the total consumption of which over the countries with a strong currency to same period amounted to more than increase arose without being in any way 16 000 000 quintals (the percentage is connected with developments in the agri 1.17%). The same reasoning can be cultural markets. It follows from the applied, with even more striking results, judgment of the Court in Case 131/77 to the sector of common wheat from Milac [1978] ECR 1041 that the which the flour used in confectionery application of compensatory amounts is products is derived, to the sector of subject to there being a close correlation maize in the form of glucose, and to between the price of the basic product milk and milk powder. and that of the derived product.

DULCIORA v AMMINISTRAZIONE DELLE FINANZE DELLO STATO

determined largely by their value as should certainly declare the processed products and by the cost of compensatory amounts laid down in processing and very little by the value of Regulation No 800/77 inapplicable to the basic agricultural products; … fur­ contracts concluded prior to the entry thermore, such products can be into force of the prolonging Regulation assimilated to a considerable extent to No 2657/77 (that is to say contracts those of the industrial sector, for which concluded before 1 December 1977). there are no compensatory amounts". Traders who had concluded such contracts in the belief that the expression "not … beyond" in Regulation No 800/77 imposed an obligation upon the Regulation No 800/77 is also void Commission, quoted prices for deliveries because it breaches the principle of non­ after 1 January 1978 which did not allow discrimination laid down in the second for compensatory amounts, which were subparagraph of Article 40 (3) of the to expire on 31 December 1977. They Treaty. In fact if there were any products thus placed reliance upon the immuta­ to which compensatory amounts should bility of the legal situation determined by be applied on the grounds put forward Regulation No 800/77, knowing, parti­ by the Commission for Regulation No cularly in the month of December 1977, 800/77, they would be those referred to that no valid reason could have in tariff headings 19.02, 19.05 and 19.07 prompted the Commission to provide for (preparations … of a kind used as infant prolongation. food or for dietetic or culinary purposes, corn flakes and other ordinary bakers' wares), that is to say mixtures made from agricultural products of first-stage Dulciora next undertakes a long analysis processing and of practically no added of the case-law of the Court in the field value, in respect of which the incidence of protection of acquired rights and of monetary compensatory amounts on legitimate expectations. the basic products can therefore entail marked variation in the price of the finished product.

not arbitrary — interventions by the up with an inconsistent statement of institutions. reasons in infringement of Article 190 of the Treaty is not sustainable. In Case 5/67 Beus [1968] ECR 83 at p. 95, the Court has already held that the extent of the requirement to state the reasons on which measures are based depends on B — Observations submitted by the Irish the nature of the measure in question. It Government cannot be considered that the Commission was inconsistent in its The Irish Government refers to its obser reasoning when in Regulation No vations in Case 151/77, cited above. 2657/77 it stated that the situation had not greatly changed since the entry into It is not correct to say that prior to the force of Regulation No 800/77. adoption of Regulation No 800/77, there had been no disturbances (or threat thereof) on the market in the basic

Treaty. of the year in the light of the economic As to Question 3 (b), the validity of situation" of the products in question. In Regulation No 2657/77 cannot be its decisions in Joined Cases 95 to 98/74 and 100/75 Union Nationale des challenged on the ground that the relevant Management Committees did Coopératives Agricoles de Céréales [1975] not deliver opinions within the time- ECR 1615, and Case 146/77 British Beef limits set by their respective chairmen. [1978] ECR 1347, the Court stated that To construe the provisions governing the the actual right to receive a monetary Management Committee procedure to compensatory amount and the charge the effect that, although the Commission resulting from the levying of such an would have been free to act even if the amount are only created by the per Committees had delivered opinions formance of the import or export which were contrary to its proposals, it transaction as the case may be and only from the moment when that transaction was powerless to act in the absence of such opinions within the stipulated time- takes place, and that in the absence of an limits, would not only render the time- express provision to the contrary (there limits, meaningless but would also tend being no such provision applicable to the to undermine the very purpose of the present case) the amounts to be paid or Management Committee procedure levied are those fixed by the rules in itself. force at the moment of the import or export whatever may be the date on As to the invalidity of Regulation No which the contract relating to the 2657/77, the allegation that it was drawn transaction in question was concluded.

As regards Question 3 (b) (i), the Italian the average value of the goods. In Government confines itself to observing addition, no compensatory amount was to be fixed if it would amount to less that the fact that Regulation No 2657/77 was adopted without the Management than 0.25 units of account per 100 kg. Committee having delivered an opinion is a sure sign of a major disagreement as The number of products covered by to whether it was appropriate to apply monetary compensation was thus monetary compensatory amounts to enlarged and then diminished according confectionery products. to the monetary situation. In 1975, a As regards Question 3 (b) (ii), since the guiding principle was laid down economic situation which had prompted according to which monetary the Commission to appoint 31 December compensation was to be fixed only for 1977 as the final time-limit had remained processed products in respect of which stable, it is impossible to understand how the average maximum incidence that time-limit was then quite simply exceeded 5%. abolished and the monetary compensatory amounts reintroduced for an indefinite period. It may doubtless be When the situation deteriorated again in admitted that, even in spite of the final 1976 (on 1 January 1977 the difference time-limit laid down in Regulation No between the actual rates and the so- 800/77, the Commission had the power called green rates for the pound sterling to reintroduce monetary compensatory was — 38.5%, for the Italian lira amounts as from 1 January 1978. — 19.2% and for the French franc However, the exercise of such a power — 17.5%), the Commission first of all would presuppose that the existence of a considered it justifiable not to re- different economic and monetary establish compensatory amounts auto­ situation had been assessed and matically for the processed products established. referred to in Regulation No 1059/69. As to Question 4, it should be confirmed However, following repeated repres­ that before 1 December 1977 there was a entations by the Irish Government, it was secure situation upon which, on the basis prompted to intervene rapidly in order to of the final time-limit mentioned above, reduce the difference of 24.3% which even the most prudent trader could place had arisen owing to the fixing of reliance. This is the conclusion which is different green rates for the pound to be drawn by reasoning a contrario sterling and the Irish pound in spite of from the Court's decision in Case the fact that these two currencies are a 146/77 cited above, in which breach of single unit from the monetary point of the principle of the protection of view. legitimate expectations was excluded because of the uncertainty which characterized the situation in the main action. 2. Regulation No 800/77

decision adopted in respect of Ireland, As regards the products at issue, it which was replaced by Regulation No should be noted that at the time when 800/77. Regulation No 800/77 was adopted the differences between the exchange rates of the currencies taken into At the time when that regulation was consideration for the fixing of the adopted, the rates of difference of the monetary compensatory amounts were various currencies taken into account for particularly large. As regards the risks of the fixing of the compensatory amounts disturbance, a considerable increase was were as follows: pound sterling, observed in Italian exports between 1974 — 34.7%; Irish pound, — 10.4%; and 1976. French franc, — 16.2%; Italian lira, — 21.1%; German mark, + 9.3%; As to Question 2, for the application of Belgian and Luxembourg francs, monetary compensatory amounts the + 1.4%; Netherlands guilder, + 1.4%; Commission can carry out an exam­ Danish kroner, 0. It emerged that the ination product by product but, in difference between the pound sterling certain cases when it is faced with a and the Irish pound was much smaller multitude of products, it must also adopt than the difference between the pound an abstract, general method. In the sterling and all the strong currencies; present case, the criterion adopted was in likewise that difference was less than the principle that of the degree of incidence difference between for example the mark of the monetary compensatory amounts, and the Italian lira. Thus the actual applied when that incidence rose to incidence of the monetary compensation approximately 5% of the value of the as regards the products concerned goods. exceeded the 5% limit regarded in 1975 as a decisive factor for the abolition of As regards pasta, the monetary the said compensation. In the light of compensatory amounts were this situation, the general application of reintroduced by Regulation No 2604/77 monetary compensation was forthwith a of 25 November 1977 (cf. Cases 12/78 logical and obvious solution, which Italy v Commission and 84/78 Tomadini, moreover corresponded to the usual sub judice). practice. Gingerbread and similar products coming under tariff subheading 19.08 A were included in the monetary 3. Answers to the questions referred for compensation system, but only for a a preliminary ruling short time. Complete examination of the statistics relating to recent years showed that there had been no appreciable As to Question 1, it is to be noted variations in trade and, in these circum­ that the introduction of monetary stances, it was considered that it was not compensatory amounts is subject to there necessary to apply monetary being a risk of disturbances. This is a compensatory amounts to those matter of ex ante anticipation in respect products. of which the Commission has discret­ ionary power. In reviewing the legality For white chocolate, no request has so of acts adopted by virtue of that discret­ far been submitted for monetary ionary power, the Court must confine compensatory amounts to be applied; itself to considering whether there has neither has there been any complaint. been manifest error, misuse of powers or manifest excess of the limits of the Before 1975, monetary compensation discretionary power. was applied to cocoa powder and similar

products within subheading 18.06 A, but paying them when the monetary the statistics available in spring 1977 situation makes it necessary to maintain disclosed no trend giving reason to think or introduce them (cf. the setded that there was a risk of disturbance. case-law of the Court). The answers to the first two questions Regulation No 2657/77 allowed a period make Question 3 (a) purposeless. of one month, so that traders should As to Question 3 (b), it suffices to state know in advance what arrangements that the Management Committees were would apply as from 1 January 1978. It consulted but did not express any may even be presumed (cf. the letter of opinion. Moreover, on the date when the 24 October 1977 from Italy's Permanent regulation at issue was adopted, the pro­ Representation, relating to the proposed longation was fully justified if what is prolongation of Regulation No 800/77) stated in the preamble corresponds to the that traders were aware well before 30 truth, namely that the differences November 1977 of the Commission's between the currencies were particularly intention to prolong the period laid large on that date and that there was a down in Regulation No 800/77. risk of disturbance in trade in the products at issue. Dulciora and the A.I.D.I., represented by The Commission considers that the G. M. Ubertazzi and F. Capelli, reference to the date of 31 December Advocates of the Milan Bar, the Irish Government, represented by J. Murray, 1977 had a precise meaning, in relation Barrister-at-Law, the Italian Govern­ to which the prolongation laid down in Regulation No 2657/77 involves no ment, represented by I. M. Braguglia, contradiction. Member States and traders Avvocato dello Stato, and the Com­ mission of the European Communities, thus krew that in order to prolong the application of the compensatory amounts represented by its Legal Adviser, C. beyond that date, the Commission had to Maestripieri, acting as Agent, presented oral argument at the hearing on 12 adopt a new regulation. December 1978. As to Question 4, in the field of monetary compensatory amounts it is not The Advocate General delivered his possible to rely upon a legitimate opinion at the hearing on 1 February expectation of being exempted from 1979.

4 The Associazione Industrie Dolciarie Italiane intervened in the main action in support of the plaintiffs claim.

5 The dispute concerns the application of the monetary compensatory amounts system to certain products which are not covered by Annex II to the Treaty and are the subject of a specific arrangement under Article 235 of the Treaty according to the terms of Article 1 (2) (b) of Regulation No 974/71 of the Council of 12 May 1971 on certain measures of conjunctural policy to be taken in agriculture following the temporary widening of the margins of fluc­ tuation for the currencies of certain Member States (Official Journal, English Special Edition 1971 (I), p. 257).

6 The said products, to which Regulation No 800/77 relates, come under tariff headings 17.04 D (sugar confectionery not containing cocoa, other than liquorice extract, chewing gum and white chocolate), 18.06 B (ice cream (not including ice cream powder) and other ices containing cocoa), 18.06 C (chocolate and sugar confectionery containing cocoa), 19.08 B (pastry, biscuits, cakes and other fine bakers' wares other than gingerbread and the like) and 21.07 C (ice cream (not including ice cream powder) and other ices not containing cocoa).

DULCIORA v AMMINISTRAZIONE DELLE FINANZE DELLO STATO

7 It emerges from the second and third recitals in the preamble to Regulation No 800/77 that, since all the basic agricultural products from which those goods are derived were subject to monetary compensatory amounts of a high level, the difference in prices of the baisc products had become so marked as to have a considerable effect on the conditions of competition of the processed products, having regard to the characteristics of the market in certain sensitive products.

JUDGMENT OF 5. 4. 1979 — CASE 95/78

12 Prolongation of Regulation No 800/77, for an indefinite period, was decided by Regulation No 2657/77 of 30 November 1977.

13 The questions asked by the Pretura di Milano are the following:

1. Must Regulation (EEC) No 974/71 of the Council (as successively amended) be interpreted as meaning that the Community institutions may apply monetary compensatory amounts to imports and exports between Member States and between Member States and non-member countries of products listed in Regulation No 800/77 even though no disturbances whatever have occurred on the market in the basic products from which the products listed in the said Regulation No 800/77 are derived?

2. Having regard to the provisions of Regulation No 974/71 and those of the first<apnote>1</apnote> subparagraph of Article 40 (3) of the Treaty of Rome (prohibition on discrimination) is the Commission authorized to apply by means of a regulation (in the present instance Regulation No 800/77) monetary compensatory amounts to the exportation and importation of the sugar confectionery indicated in the said Regulation No 800/77 without introducing similar compensatory amounts for all the other sugar confectionery having characteristics similar to those of the products affected and which are subject to the same conditions?

3. (a) If Question (1) or Question (2) above is answered in the negative must Commission Regulations (EEC) Nos 800/77 and 2657/77 be considered invalid?

14 The plaintiff and the Italian Government submit that by adopting Regulation No 800/77 the Commission infringed the provisions of Article 1 (3) of Regu­ lation No 974/71, according to which, "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".

15 They submit that by virtue of that provision compensatory amounts on products not covered by Annex II to the Treaty and forming the subject of a specific arrangement under Article 235 of the Treaty could not have been introduced except in order to avoid the risk of disturbances in trade in the basic agricultural products (sugar, cereals and so on) on which the processed products, namely ice cream, chocolate, biscuits and so on, depend.

16 They submit that, according to the recitals in the preamble to Regulation No 800/77, the Commission assessed not the risk of disturbances in trade in agricultural products but the risk of distortions in competition in the products at issue.

17 They also submit that the statement of the reasons on which Regulation No 800/77 was based is defective inasmuch as it fails to take account of the risk of disturbances in trade in agricultural products and in that it confines itself to establishing the risk of disturbances in the conditions of competition in trade in the processed products.

18 It is true that in order to justify Regulation No 800/77 the Commission stated that "in the case of the processed products not subject to monetary compensatory amounts, the difference in prices of the basic products has become so marked as to have a considerable effect on the conditions of competition of the processed products …".

24 The statement of the reasons on which Regulation No 800/77 is based is sufficient.

25 The Italian Government submits that the Commission applied monetary compensatory amounts to the products at issue not in order to deal with the difficulties to which monetary instability might give rise for the proper functioning of the common organization of the market, but in order to deal

DULCIORA v AMMINISTRAZIONE DELLE FINANZE DELLO STATO

with the difficulties complained of by Irish processing industries in trade with the United Kingdom.

26 It submits that application of monetary compensatory amounts to the products at issue in respect of trade between Member States and with non- member countries is not justified by the small incidence which the monetary differences might have on the prices of the processed products.

27 It submits that under Article 14 of Regulation No 1059/69, the Council could have taken appropriate measures either to deal with the possible effect on trade between Member States and with non-member countries of special measures adopted under the common organizations as regards the prices of certain basic products, or to deal with a special situation which may arise in respect of certain goods.

33 It emerged from this that the difference between the pound sterling and the Irish pound was much smaller than the difference between the pound sterling and all the strong currencies and between the German mark and the Italian lira.

34 Furthermore the actual incidence of the monetary compensation on the products at issue exceeded the 5% limit which was regarded in 1975 as a decisive factor for the abolition of the said compensation.

35 Article 14 of Regulation No 1059/69 refers to the Council's adopting "appro­ priate measures" only "to deal with the possible effect on trade between Member States and with third countries of special measures which may be adopted under the common organization of agricultural markets as regards the prices of certain basic products".

36 The Commission submits that consequently this provision is not appropriate to deal with the risk of disturbances in trade in processed products caused by the monetary situation of the Member States.

37 The plaintiff and the Italian Government have not called in question the stati­ stical data supplied by the Commission.

38 The plaintiff submits that the extension of the monetary compensation system to confectionery products is not justified by the fact that the compensatory amounts applied to the basic products also led to price differences and distortions at the stage of the processed products, because the Commission failed to state why it extended the compensatory amounts system to certain processed agricultural products but not to other important groups of products — such as, in particular, preparations of a kind used as

43 Accordingly, the answer to the first two questions must be that consideration of the provisions in question has disclosed no factor of such a kind as to affect the validity of Regulation No 800/77.

44 In the light of the answer to these questions, Question 3 (a) does not require an answer.

Question 3 (b) (i)

45 Question 3 (b) (i) asks whether Commission Regulation No 2657/77 must be considered invalid because it extends the application of Regulation No 800/77 beyond 31 December 1977 without an opinion having been delivered by the Management Committee.

JUDGMENT OF 5. 4. 1979 — CASE 95/78

46 Article 6 of Regulation No 974/71 provides that detailed rules for the application of that regulation shall be adopted in accordance with the procedure laid down in Article 26 of Council Regulation No 120/67 on the common organization of the market in cereals, as last amended by Regu­ lation No 2434/70, or, if appropriate, the corresponding article of the other regulations on the common organization of agricultural markets.

49 According to the provisions of Article 26 of Regulation No 2727/75, it is only if the Commission adopts measures which are not in accordance with the opinion of the Committee that those measures must be communicated to the Council.

so In these circumstances the absence of an opinion by the Committee in no way affects the validity of the measures adopted by the Commission.

DULCIORA v AMMINISTRAZIONE DELLE FINANZE DELLO STATO

Question 3 (b) (ii)

51 The plaintiff and the Italian Government submit that by the second subpara­ graph of Article 2 (2) of Regulation No 800/77 the Commission intended to limit its own discretionary power itself, that is to say limit the exercise of that power to the period ending on 31 December 1977 without the possibility of any prolongation.

52 They argue that consequently, when the situation has not greatly changed and the Commission decides that the compensatory amounts are to be applied for an indefinite period, it is guilty of misuse of powers.

Question 4

58 Question 4 asks whether Regulation No 2657/77 can be considered applicable to the exportation of products listed in Regulation No 800/77 from Italy to other Member States or to non-member countries after 1 January 1978 in performance of contracts concluded before 1 December 1977, the date on which Regulation No 2657/77 was adopted.

59 The Italian Government and the plaintiff submit that there is also a breach of the principle of legitimate expectations inasmuch as the fixing of the period laid down in Regulation No 800/77 was so imperative that it was to be expected that the compensatory amounts would not apply beyond 31 December 1977.

60 They submit that the fact that Regulation No 2657/77 entered into force a month before that period expired is not sufficient to protect legitimate expectations since it had been declared that the period could not be prolonged, the terms of the second subparagraph of Article 2 (2) of Regu­ lation No 800/77 providing that "monetary compensatory amounts shall not apply beyond 31 December 1977".

61 They submit that consequently, even if Regulation No 2657/77 were not to be declared invalid, the monetary compensatory amounts should not be applied to contracts concluded before the entry into force of that regulation, that is to say before 1 December 1977.

62 However, in the light of the terms of the sixth recital in the preamble to Regulation No 800/77 which is cited above, a prudent trader could not infer from the wording of the second subparagraph of Article 2 (2) of that regu­ lation that the Commission would abolish compensatory amounts on the products in question if the situation at the end of the year remained unchanged.

THE COURT,

in answer to the questions referred to it by the Pretura di Milano by an order of 11 April 1978, hereby rules:

1. Consideration of the provisions in question has disclosed no factor of such a kind as to affect the validity of Regulation No 800/77.

2. Consideration of Question 3 (b) has disclosed no factor of such a kind as to affect the validity of Regulation No 2657/77.

3. There were therefore no grounds for exempting from the application of compensatory amounts contracts concluded before the date of Regulation No 2657/77.

Mertens de Wilmars Mackenzie Stuart Pescatore