C-131/78

JUDGMENT OF 29. 3. 1979 — JOINED CASES 131 AND 150/78

as to affect the validity of Regulation Regulation No 1427/74 of the No 1173/75 of the Council in so far Council in so far as it relates to as it relates to common wheat or of sorghum.

In Joined Cases 131/78 and 150/78

REFERENCE to the Court under Article 177 of the EEC Treaty by the Hessisches Finanzgericht for a preliminary ruling in the action pending before that court between

FIRMA KURT A. BECHER, Bremen,

and

BECHER v BUNDESANSTALT FÜR LANDWIRTSCHAFTLICHE MARKTORDNUNG

JUDGMENT

Facts and Issues

The facts of the case, procedure and wheat was fixed at 136.45 units of observations submitted under Article 20 account per 1 000 kilograms for the of the Protocol on the Statute of the 1975/76 marketing year. Court of Justice of the EEC may be According to a working document summarized as follows: drawn up by the services of the Commission for the purpose of its proposal for the fixing of the threshold I — Facts and procedure prices submitted to the Council, the threshold price is made up as follows: A — Case 131/78 1. Basic target price: 139.44 Under the first subparagraph of Article 5 2. Freight rate from Rotterdam to (1) of Regulation No 120/67/EEC of the Council of 13 June 1967 on the Duisburg Ø of the two most favourable months: 1.30 common organization of the market in cereals (Official Journal, English Special 3. Import margin: 1.20 Edition 1967, p. 33), a threshold price is 4. Transhipment charges (sea-going fixed in respect of common wheat in vessel/river vessel): 0.50 such a way that the selling price for the 5. Threshold price calculated: 136.44 imported product on the Duisburg market is the same as the target price, 6. Threshold price fixed: 136.45 differences in quality being taken into account. The target prices of the cereals The marketing costs (which are equal to were fixed for the 1975/76 marketing the difference between the target price year by Regulation No 666/75 of the and the threshold price) were therefore Council of 4 March 1975 (Official fixed at a standard rate of 2.99 units of

for the Land of Hesse] in Kassel against other words maize and barley, reach the the amount of the rates of the levy fixed target price on the Duisburg market. in advance. It claimed that the levy was Under the Sole Article of Regulation No fixed at too high a level because the 1427/74 of the Council of 4 June 1974 threshold price in Regulation No fixing the threshold prices for cereals for 1173/75 had been fixed at too high a the 1974/75 marketing year (Official level in infringement of the objectives of Journal L 151, p. 1), the threshold price Regulation No 120/67/EEC owing to of sorghum was fixed for that marketing the fact that insufficient account had year at 105.55 units of account per 1 000 been taken of "preliminary costs". kilograms. By order of 3 May 1978 the Seventh In July 1974, Firma Kurt A. Becher Senate of the Hessisches Finanzgericht obtained from the Bundesanstalt für land decided to stay the proceedings and to wirtschaftliche Marktordnung an import refer to the Court of Justice under licence for 6 500 tonnes of sorghum.

It common wheat because it infringes claimed that the levy had been fixed at Article 5 (1) of Regulation No too high a level since Regulation No 120/67/EEC of the Council of 13 June 1427/74, on the basis of which the rates 1967 (Official Journal, English Special of levy were calculated, had fixed the Edition 1967, p. 33), as last amended by threshold price incorrectly. In fact, by Regulation (EEC) No 85/75 (Official taking insufficient account of the pre Journal 1975 L 11, p. 1)?" liminary costs (Vorkosten) the threshold The order was entered on the Court price was fixed in breach of the Register on 9 June 1978. objectives of Regulation No 120/65/

Senate of the Hessisches Finanzgericht lation in such a way that the price for decided to stay the proceedings and to those cereals mentioned in paragraph (1) refer to the Court of Justice under which are in competition with the Article 177 of the EEC Treaty the products listed in Article 1 (a) reaches following question for a preliminary the target price on the Duisburg market. ruling: As regards sorghum, which is not a "Is Regulation (EEC) No 1427/74 of the cereal indigenous to Europe, Article 5 Council of 4 June 1974 fixing the (2) of Regulation No 120/67/EEC indicates that the threshold price of that product must be fixed in such a way that the products which are in competition, in

threshold prices for cereals for the of account (that is, DM 10.7) per tonne 1974/75 marketing year (Official Journal for the 1975/76 marketing year were 1974 L 151, p. 1) invalid and therefore determined inaccurately and on the basis inapplicable in so far as it relates to of a mistaken appraisal. In fact, when the sorghum because it infringes Article 5 (1) cost factors were calculated and fixed for of Regulation No 120/67/EEC of the the purpose of fixing the threshold price Council of 13 June 1967 (Official for the 1975/76 marketing year Journal, English Special Edition 1967, (transport costs, transhipment charges p. 33), as last amended by Regulation and trading margin), insufficient account (EEC) No 1125/74 (Official Journal was taken of the actual facts and of the 1974 L 128, p. 12)?" foreseeable inflationary development in The order was entered on the Court costs. Regulation No 1173/75 of the Register on 26 June 1978. Council of 28 April 1975 fixing the threshold prices for cereals for the C — Procedure 1975/76 marketing year is therefore invalid and inapplicable in so far as it In accordance with Article 20 of the concerns common wheat because it Protocol on the Statute of the Court of conflicts with the provisions of Article 5 Justice of the EEC, written observations (1) of Regulation No 120/67/EEC of were submitted in the two cases by the the Council of 13 July 1967 and plaintiff in the main action, the Council moreover involves a mistaken appraisal. of the European Communities and the Commission of the European Com­ In the opinion of the plaintiff, it is munities. necessary to take into account the marketing costs for the 1975/76 By separate orders of 25 October 1978, marketing year as follows: the Court referred the two cases to the Second Chamber. (a) It is necessary to adopt an amount of 2.47 units of account (that is, DM By order of the same date the Court 8.86) per tonne as transport costs (Second Chamber) joined the cases for between Rotterdam and Duisburg, as the the purposes of the oral procedure and defendant has already stated in its the final judgment. application in the main action. The The Court (Second Chamber), after plaintiff supplies the details of the calcu­ hearing the report of the Judge-Rap­ lation of that amount which are based, it porteur and the views of the Advocate states, as regards the section of the route General and having asked for certain lying within foreign territory, on the information from the Commission (see Directives of the Federal Minister for under III below), decided to open the Food on the grant of freight aid to oral procedure without any preparatory cereals of 9 June 1971, together with inquiry. subsequent amendments, and as regards the section of the route lying within the Federal Republic, on fixed rates of II — Written observations sub­ charge (see No 17 of the Frachten- und mitted under Article 20 of Tarifanzeiger der Binnenschiffahrt [In- the Protocol on the Statute of the Court of Justice of the EEC

land Navigation Freight and Carriage to take into account the cost of the loss Rates Gazette] of 20 June 1975). in weight incurred during transport and the costs of insurance and interest. If, contrary to this argument, objections must be raised to the calculation of the The Council recalls the case-law of the transport costs which must be taken into Court (in particular the judgment of 12 consideration the plaintiff claims as a July 1973 in Case 11/73, Getreide Import precaution that the transport costs GmbH v Einfuhr- und Vorratsstelle für amounting to 1.30 units of account per Getreide und Futtermittel [1973] ECR tonne calculated by the Commission for 919 and the judgment of 5 December the 1975/76 marketing year are in no 1973 in Case 119/73, Deutsche Getreide-

1976. In support of this argument the procedure for the fixing of the threshold plaintiff annexes to its observations the prices for the 1975/76 marketing year letter from Rhenus-WTAG Aktien and refers to the numbered working gesellschaft of 9 August 1978. documents drawn up by the services of the Commission for the purposes of the (b) The transhipment charges should proposal for the fixing of the prices have been fixed at exactly DM 3.15, as which it submitted to the Council and on shown by a table produced by the the basis of which the Council adopted plaintiff on the cost of transhipment Regulation No 1173/75. "Reeling Seeschiff his Schiffsraum Considering that its document, together Binnenschiff" (charges for transhipment with the Commission's figures, contains from sea-going vessels to river vessels). sufficient information for the Court to be The plaintiff annexes to that table the able to deliver judgment, the Council rates of charge of the Vereniging van suggests that it should find that Nederlandse Graanfactors en Graan

items: customs formalities, inspection of plant species, cost of the obligatory import deposit and the cost of the inspection on receipt. It is also necessary

(c) Trading margin 1.20 4.14 4.40 4.00

(d) Other expenses (deposit, 0.13 inspection, customs in (c) 0.02 formalities) 0.40

10.99 16.56

It follows from this table that no most favourable months of the reference appreciable difference can be found period. For this purpose the Community between the cost factors taken into based its calculations on the information consideration for the purpose of the which it had itself collected relating to calculation of the threshold price for the transport of that type and to the figures 1975/76 marketing year and the cost which had been made known to it by the factors indicated by the plaintiff as Netherlands and German agencies which regards the transhipment and transport are competent as regards the organ­ costs. ization of the markets (Annex 3 to the Commission's observations). The dif­ As regards the transhipment charges, the ference of Hfl 4.48 per tonne or DM Commission states that it followed the 4.76 per tonne as against the amount of official port rates of charge at Rotterdam 8.86 indicated by the plaintiff is far according to which those costs are at higher than the highest freight rates paid least Hfl 1.43 per tonne, that is 0.42 at that time for transport between units of account. For the purpose of the Rotterdam and Duisburg. Even the rates fixing of the threshold price this amount applicable in the spring of 1978 were was rounded up to 0.50 units of account DM 4 per tonne lower than the amount per tonne, that is, Hfl 1.72 per tonne or indicated by the plaintiff. DM 1.83 per tonne. The transport costs between Rotterdam and Duisburg were calculated on the basis of the average amount of the two

In addition to the transhipment and calculation of this amount is described in transport charges, the plaintiff claims as detail in Annex 3 to those observations separate cost factors charges for customs and was carried out according to the formalities, costs of lodging a security same method and on the basis of the and of inspection on receipt and a same documents as those used for the certain trading margin whereas the calculation of the costs of the transport Community included all these costs in a of common wheat within the context of standard amount called the trading or Case 131/78. import margin. However, the difference If, contrary to this argument, objections between the total amount indicated by must be raised to the calculation of the the plaintiff and the standard amount transport costs which must be taken into calculated by the Community is consideration, the plaintiff claims as a negligible. precaution that the transport costs In view of the foregoing it is impossible amounting to 1.25 units of account per to perceive any indications which might tonne calculated by the Commission for validly be relied upon for the purpose of the 1974/75 marketing year are in no claiming that the threshold price fixed way realistic. At the beginning of 1974 for common wheat in Regulation No — at the time of the Commission's calcu­ 1173/75 was calculated in breach of the lations — such transport costs were prescribed criteria for calculation. nowhere foreseeable. In the case of annual contracts for the transport of In Case 150/78 cereals from Rotterdam to Duisburg it The plaintiff claims that in so far as was possible to foresee at the beginning sorghum is concerned, Regulation No of 1974 that the ship's freight rates for 1427/74 of the Council fixing the cargoes of 300 to 500 tonnes (the threshold prices for cereals for the customary unit) would amount to at least 1974/75 marketing year is invalid and is DM 6 per tonne (that is, 1.64 units of inapplicable because it conflicts with the account per tonne) in the case of a provisions of Article 5 (1) of Regulation contract from February 1974 to January No 120/67/EEC and moreover involves 1975. In support of this argument, the a mistaken appraisal. In fact, when the plaintiff annexes to its observations a cost factors were calculated and fixed for letter from Rhenus-WTAG Aktiengesell­ the purpose of establishing the threshold schaft of 9 August 1978. price for the above-mentioned marketing year (transport costs, transhipment (b) The transhipment charges should charges and trading margin), insufficient have been fixed at exactly DM 2.72, as account was taken of the actual facts and follows from the documents relating to of the foreseeable inflationary develop­ those charges produced by the plaintiff ment in costs. in the context of Case 131/78.

(c) As regards the trading margin, it is market. In the case of sorghum, these necessary to adopt an amount of DM competing products are in particular 6.52 (that is, 1.78 units of account) per maize and barley (the nutritive value of tonne, in the calculation of which the sorghum is comparable to that of maize). plaintiff has already taken into account In the contested regulation, the Council (see Annex 2 to its observations) customs fixed the threshold prices of maize and formalities, inspection of plant species, barley respectively at 106.60 and 107.70 cost of the obligatory import security units of account per 1 000 kilograms, and the cost of the inspection on receipt. whereas it fixed the threshold price of The Council observes that the national sorghum at 105.55 units of account per 1 000 kilograms, an amount which is court is mistaken in wishing the Court to

amending Regulation (EEC) No 950/68 on the Common Customs Tariff, Official validity of Regulation No 1427/74. Journal L 1 of 1 January 1974, p. 1, at p. The Commission also points out that the 54). Sorghum is therefore one of the national court is mistaken in considering products referred to in Article 1 (a) of that the threshold price of sorghum is Regulation 120/67/EEC (now Regu fixed as in the case of wheat in

wheat. There is no target price for sorghum. In the case of sorghum it is necessary to fix the threshold price in such a way that the competing products reach the target price on the Duisburg

The Council judged that the conditions IV — Oral Procedure of competition of sorghum in relation to barley were reflected in the prices on the The plaintiff in the main action, world market. As regards the 1973/74 represented by W. Mielke, Advocate at marketing year, the prices of sorghum the Hamburg Bar, the Council of the fluctuated between 83 % and 107 % of European Communities, represented by the price of barley and of maize, mostly its Agent, B. Schloh, and the reaching more than 90 % and on Commission of the European Com­ average more than 92 % and 95 %. munities, represented by its Agent, P. Kalbe, presented oral argument at the In view of the objective of the levy on hearing on 1 February 1979. sorghum, in other words the stabilization Within the context of Case 131/78, the of the competitive position of Commission in particular contested the Community barley and maize, the fixing accuracy of the amount of DM 8.86 per of the threshold price in question at a tonne which, according to the written level below that of the threshold price of statements of the plaintiff in the main the competing products cannot be action, should have been adopted as the criticized. transport costs between Rotterdam and Duisburg. According to the Commission, Regulation No 1427/74 is valid and this figure does not correspond to the applicable also to the threshold price of actual freight rates but is the result of a sorghum. national calculation made by carriers in the Federal Republic of Germany to obtain a transport subsidy. The actual III — Information requested transport costs, the characteristic feature from the Commission of which is "fierce" competition, are (Case 131/78) very low, in particular because of the dumping by Eastern European countries Following a request by the Court, the and because of the excess cargo capacity Commission lodged the transhipment on the Rhine, and were not affected by rates of Grainwave BV of Rotterdam on an inflationary increase. which it based its estimate of the In reply to a question put during the transhipment costs of wheat and hearing the plaintiff in the main action indicated the source of the information conformed that the calculation of the regularly communicated to it on the above-mentioned amount is notional in nature. transport costs from Rotterdam to Duisburg as stated in Annex 3 to its The Advocate General delivered his observations. opinion at the hearing on 8 March 1979.

"Is Regulation (EEC) No 1427/74 of the Council of 4 June 1974 fixing the threshold prices for cereals for the 1974/75 marketing year (Official Journal L 151, p. 1) invalid and therefore inapplicable in so far as it relates to sorghum because it infringes Article 5 (1) of Regulation No 120/67/EEC of the Council of 13 June 1967 (Official Journal, English Special Edition 1967, p. 33), as last amended by Regulation (EEC) No 1125/74 (Official Journal L 128, p. 12)?"

2 These questions have been raised within the context of two actions in which the plaintiff in the main action contested the rates of levy fixed in advance for the months of August, September and October 1975 and for the months of July, August and September 1974 by the German intervention agency, the defendant in the main action, in licences which it issued relating to the impor­ tation into the Community of certain quantities of common wheat (in 1975) and sorghum (in 1974).

3 Both before the national court and before the Court of Justice, the plaintiff has claimed that the levies in question were fixed at too high a level because the above-mentioned regulations, on the basis of which the rates of levy were calculated, fixed the threshold price inaccurately because the marketing costs borne by the importer were not taken into sufficient consideration in

JUDGMENT OF 29. 3. 1979 — JOINED CASES 131 AND 150/78

infringement of the objectives of Regulation No 120/67/EEC of the Council of 13 June 1967 on the common organization of the market in cereals.

The first question

5 Under Article 5 (1) of that regulation a threshold price derived from the target price is fixed inter alia for common wheat in such a way that the selling price on the Duisburg market is the same as the target price, differences in quality being taken into account. This threshold price, which is calculated for Rotterdam according to Article 5 (4), is intended to fix by means of levies the level to which the price of the imported product must be raised to preclude its being offered for sale on the market in question at a price lower than the target price. To meet this condition the price of the imponed product after crossing the frontier must be the same as the target price and thus the threshold price must be equal to the target price less the marketing costs incurred by the imponer between the stage of the c.i.f. price for Rotterdam and the wholesale stage at Duisburg for which the target price has been fixed. Under Article 13 (1) of the regulation, the levy imposed on imports into the Community is equal to the threshold price less the c.i.f. price on the world market for Rotterdam.

6 Marketing costs include those expenses inherent in the procedures and formalities of impon which every imponer must inevitably incur as well as the normal expense of transporting the imponed goods to the wholesale stage at Duisburg. Moreover, in accordance with the general system of levies

BECHER v BUNDESANSTALT FÜR LANDWIRTSCHAFTLICHE MARKTORDNUNG

introduced by Regulation No 120/67/EEC, marketing costs should not be calculated on the basis of costs actually incurred by the imponer for a specific delivery which are largely dependent upon decisions made by the imponer but should be calculated at a flat rate in relation to those expenses which an imponer of the products in question must inevitably incur in respect of the importation.

10 It follows from the figures supplied by the Commission that the values determined for transport costs since the 1969/70 marketing year have risen

JUDGMENT OF 29. 3. 1979 — JOINED CASES 131 AND 150/78

slightly, in particular from the 1974/75 to the 1975/76 marketing year, for which an amount of 1.30 units of account (that is, DM 4.76) per tonne was adopted. According to the statements made by the Commission at the hearing these figures are the result of permanent contacts with economic circles active in this field. The Commission moreover explained without being contradicted on this point that the actual transport costs, which are influenced by fierce competition in particular because of dumping by certain third countries and excess cargo capacity on the Rhine, have not been affected by inflationary increases.

BECHER v BUNDESANSTALT FÜR LANDWIRTSCHAFTLICHE MARKTORDNUNG

13 It follows from all the foregoing facts which were verified after both parties had put forward their arguments at the hearing that the criticisms made by the plaintiff of the assessment of the transpon costs by the Community auth­ orities are unfounded.

The transhipment charges at Rotterdam

14 As regards the charges for transhipment from sea-going vessels to river vessels at Rotterdam, the Commission based its calculations for the purpose of its proposal for the fixing of the threshold price on the transhipment rates of Grainwave BV, Rotterdam, according to which the amount adopted in the case of common wheat rose from Hfl 1.43 per tonne on 1 July 1974 to Hfl 1.64 per tonne on 1 May 1975. On the basis of that information the Commission adopted an amount of Hfl 1.72 (DM 1.83) whereas the plaintiff, relying upon the rates of charge of the Vereniging van Nederlandse Gran­ factors en Granexpediteurs, considers that the amount should have been fixed at a figure of DM 3.15 per tonne.

15 It is necessary however to observe that the prices listed in the rates of charge upon which the plaintiff relies are fixed including "weighing, receipt and inspection, evening, night and week-end work". It is clear from the file that the Commission took into consideration the factors of weighing and inspection within the context of the trading margin. Moreover, special costs resulting from night work and week-end work cannot be considered as costs which an importer must inevitably bear and which the Community auth­ orities must take into account in the assessment of the marketing costs.

The second question

19 In the second question the national court asks whether Regulation No 1427/74 of the Council fixing the threshold prices for cereals for the 1974/75 marketing year is invalid in so far as it relates to sorghum because it infringes Article 5 (1) of Regulation No 120/67/EEC.

го Sorghum, the production of which is almost non-existent within the Community, is not one of the cereals listed in Article 5 (1) of Regulation No 120/67/EEC but comes within Article 5 (2) of that regulation according to which a threshold price is fixed for that product for the Community in such a way that the price for those cereals mentioned in paragraph 1 which are in competition with sorghum reaches the target price on the Duisburg market. It is therefore necessary to reply to the question referred to the Court by examining the validity of Regulation No 1427/74 in relation to Article 5 (2) of Regulation No 120/67/EEC.

21 Under the Sole Article of Regulation No 1427/74, the threshold price for sorghum was fixed at 105.55 units of account per tonne for the 1974/75 marketing year. The plaintiff claims that for the purpose of fixing the threshold price the Community authorities did not take adequate account of

BECHER v BUNDESANSTALT FÜR LANDWIRTSCHAFTLICHE MARKTORDNUNG

the marketing costs incurred by importers of sorghum, with the result that that price was fixed at too high a level. In support of this argument the plaintiff relies upon arguments and documents analogous to those which it put forward for the purpose of contesting the validity of the fixing of the threshold price for common wheat for the 1975/76 marketing year.

23 According to the explanations given by the Council and the Commission the Community authorities based their calculations for the purposes of fixing the threshold price of sorghum for the 1974/75 marketing year on the conditions of competition of that product in relation to barley and maize as reflected in the prices on the world market converted to the c.i.f. Rotterdam prices for a period corresponding to the previous marketing year. According to a list of those prices supplied by the Commission, the accuracy of which has not been contested by the plaintiff, the prices of sorghum fluctuated between 83 % and 107 % of the prices of maize and barley. The Council fixed by Regu­ lation No 1427/74 the threshold prices of maize and barley for the 1974/75 marketing year at 106.60 and 107.70 units of account per tonne respectively and the threshold price of sorghum at 105.55 units of account per tonne, an amount which is consequently more favourable for that product. In these circumstances, having regard to the objective of Article 5 (2) of Regulation No 120/67/EEC, there is nothing to suppose that by fixing the threshold price of sorghum at the above-mentioned amount the Council went beyond the limits of the proper exercise of its discretion in the matter.

JUDGMENT OF 29. 3. 1979 — JOINED CASES 131 AND 150/78

24 It is therefore necessary to conclude that consideration of the second question submitted to the Court has disclosed no factor of such a kind as to affect the validity of Regulation No 1427/74 in so far as it relates to sorghum.

Costs

Delivered in open court in Luxembourg on 29 March 1979.

A. Van Houtte A. J. Mackenzie Stuart Registrar President of the Second Chamber