C-151/78

JUDGMENT OF THE COURT OF 16 JANUARY 1979 1

Sukkerfabriken Nykøbing Limiteret v Ministry of Agriculture (preliminary ruling requested by the Højesteret)

Case 151/78

Agriculture — Common organization of the market — Sugar — Relations between sugar manufacturers and beet growers — Rules — Exclusive Community competence — Intervention of the Member States — Prohibition — Derogation pursuant to a Community regulation (Regulation (EEC) No 741/75 of the Council, Art. 1)

Since the common organization of the of inter-trade agreements concerning market in sugar covers relations between conditions for the delivery of sugar-beet, sugar manufacturers and beet growers, Regulation No 741/75 is intended to such relations, in so far as they remove that disability on the part of the specifically concern sugar production, Member States in the cases defined by fall exclusively within the competence of the regulation so that the Member States the Community so that the Member are entitled under Community law to States are no longer in a position to intervene on the basis of their own adopt unilateral measures. In view of powers and in accordance with the pro- possible difficulties in the conclusion cedures of their own legal systems.

In Case 151/78

on the interpretation of Regulation (EEC) No 741/75 of the Council of 18 March 1975 laying down special rules for the purchase of sugar-beet (Official Journal 1975, L 74, p. 2),

THE COURT,

composed of: H. Kutscher, President, J. Mertens de Wilmars and Lord Mackenzie Stuart (Presidents of Chambers), A. M. Donner, P. Pescatore, M. Sørensen, A. O'Keeffe, G. Bosco and A. Touffait, Judges,

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

gives the following

JUDGMENT

exceeding 30 % of the intervention price within the basic quota limits, the is paid. 1 Member State concerned may itself lay down rules for such allocation. Sugar produced by an undertaking outside its maximum quota, known as These rules may also grant to traditional "C sugar", must be sold on the world sellers of beet to co-operatives delivery market and does not qualify for an rights other than those which they would export refund (Article 26). enjoy if they belonged to such co- In order to ensure that these differences operatives." in price shall also apply to the production of sugar-beet the Council (b) Facts fixes minimum prices for beet. Such beet is produced in accordance with contracts Even before accession to the EEC

concluded before sowing. Sugar manufac- Denmark had set up its own national turers and beet producers are free to fix organization of the market in sugar. The the conditions governing the delivery of production and refining of sugar were beet. Regulation (EEC) No 206/68 of reserved to two undertakings, A/S De the Council (Official Journal, English Danske Sukkerfabrikker and Sukkerfa-

Special Edition 1968 (I), p. 19), merely briken Nykøbing, the appellant in the lays down outline provisions for main action.

contracts and inter-trade agreements on Sukkerfabriken Nykøbing is established the purchase of beet. That regulation as a co-operative, which traditionally provides inter alia that contracts shall be obtains its supplies of sugar-beet partly made in writing for a specified quantity from its members and partly from of beet and shall specify the purchase producers under contract. Its capital of price and sugar content etc. DKR 7 000 000 is divided into 8 750

amount which the production quota for kerfabriken Nykøbing to allocate its the factory made it possible to absorb. basic quota for the 1976/77 to 1979/80 marketing years in such a way that the After accession to the Community prior right conferred upon the members Denmark was allotted a basic quantity of of the co-operative did not exceed 290 000 tonnes of white sugar amounting 4 053 kg of pole sugar per share, more or less to the average sugar output corresponding to the average yield per of the preceding five years. tonde for the 1970/71 to -1973/74 For the 1973/74 marketing year the marketing years. basic quota (known as "Quota A") Sukkerfabriken Nykøbing instituted allotted to Sukkerfabriken Nykøbing proceedings against the Ministry of Agri- amounted to 38 947 tonnes of white culture on 9 July 1975 in which it sugar corresponding to 43 400 tonnes of claimed that the measure whereby the pole sugar. Sukkerfabriken granted the Ministry had determined the extent of members of the co-operative rights to the members' prior cultivation right was cultivate the equivalent of 4 167 kg of unlawful. The Østre Landsret (Eastern pole sugar A per tonde whilst the Division of the High Court) found producers under contract were allocated against Sukkerfabriken Nykøbing in its the equivalent of 2 000 kg of pole sugar judgment of 4 July 1977; Sukkerfabriken per tonde on Quota A intervention then lodged an appeal against this conditions for the beet. For the 1974/75 judgment with the Højesteret (Supreme marketing year Sukkerfabriken Ny- Court) in which it relied upon the claims købing's entire quota of A sugar was which it had invoked before the reserved to the members of the co- Landsret. It maintains in particular that operative who thus obtained the right to Regulation No 741/75 of the Council approximately 5 000 kg of pole sugar per empowers the Minister to determine the share. allocation between the two categories of Regulation No 3330/74 of the Council producers only if the undertaking is increased to 328 000 tonnes the annual guilty of an abuse of the members' basic quantity of white sugar allotted to privileged position. It denies that an Denmark for the period 1975/76 to abuse of this nature can arise from the 1979/80. fact that the members' prior right was The members of the co-operative of fixed on objective and fully justified Sukkerfabriken Nykøbing agreed to bases at 4 167 kg of pole sugar per reserve 40% of the increase in the quota tonde. The Ministry of Agriculture on for new producers of beet. With regard the other hand claims that the said Regu- to the remainder they claimed a prior lation No 741/75 of the Council right in respect of 4 167 kg of pole sugar empowers it to determine the delivery per share from the basic quota which rights of traditional producers of sugar- corresponded to the average yield per beet within the limits of the basic quota tonde in the two marketing years even if it is then no longer possible to 1970/71 and 1971/72. The producers fulfil members' rights entirely within the under contract considered that they limits of that quota. could concede to the members of the co-

than those expressly stated in the (1) Thefirst question preamble to Regulation (EEC) No 741/75 of the Council and in Article (a) Sukkerfabriken Nykøbing, the ap- pellant in the main action, considers that 1 (1) thereof are met? the first question relates exclusively to 2. If the conditions on which a Member Danish law. State can lay down rules for It maintained before the Østre Landsret allocating the basic quota are met and that, given the existence of a prior an unfair basis for such allocation has cultivation right which Sukkerfabriken not been adopted, is it in accordance Nykøbing claims, it must necessarily be with the Community regulations on accepted that the latter fixes the cul- sugar, in particular Regulation (EEC) tivation rights of the members of the co- No 741/75 of the Council, for the operative. The Ministry of Agriculture is Member State to make provision for empowered to alter that fixing if it goes an allocation between the members beyond the prior right properly and other traditional suppliers to the understood and calculated. undertaking in question even though such allocation means that the beet The purpose of this argument is to which the members of the co- establish that the Ministry's power operative are obliged and entitled pursuant to Regulation No 741/75 to under the undertaking's statutes to reduce the above-mentioned prior right deliver to the factory cannot entirely is dependent upon the existence of a be supplied within the basic quota misuse of power by the members of the alone? co-operative or by Sukkerfabriken.

Sukkerfabriken considers that the point In conclusion the Danish Government concerns Danish law alone. In case the suggests that the reply to the first Court considers that the question also question should be as follows: concerns Community law the appellant "Where agreement cannot be reached in the main action suggests that the between share-holders in a sugar factory second part of the alternative referred to organized as a co-operative undertaking in the first question should be answered and other traditional sellers of beet to in the affirmative. the factory as to the allocation of the quantities which may be supplied within (b) The Danish Government considers the factory's basic quota and where there with regard to the first question that is no agreement on this point within the .Regulation No 741/75 of the Council trade, the Community regulations on does not subject the power of the sugar, in particular Regulation (EEC) Member State to regulate the allocation No 741/75 of the Council of 18 March of the quantities of sugar-beet amongst 1975, authorize a Member State to suppliers to conditions other than those determine the allocation." relating to the failure of members of the co-operative and producers under contract to reach agreement. (c) The Commission considers that with regard to the conditions for the When those conditions are fulfilled the application of the measure, the wording Ministry is empowered to intervene and of the provisions of Regulation No proceed to make an allocation subject 741/75 is perfectly clear. In accordance always to the general provisions of both with the recitals and with the first administrative law. This view is based on paragraph of Article 1 of that regulation the express wording of the provision. the sole and decisive criterion for

SUKKERFABRIKEN NYKØBING MINISTRY OF AGRICULTURE

delivered within the limits of the under- that, when a Member State lays down taking's basic quota where there is no rules for the allocation of the quantities agreement within the trade on this point, of sugar-beet to be cultivated in and no further conditions need be connexion with a co-operative,' it must fulfilled." respect in their entirety any rights which may arise from membership of such a co- operative in accordance with the rules of (2) The second question domestic law.

In the course of the procedure before the (b) The Danish Government states that Østre Landsret the Ministry of Agri- this question concerns the interpretation culture however modified its position. It of the second paragraph of Article 1 of in fact recognized that members of a co- Regulation No 741/75. operative, including those in the present case, might have prior rights but added The wording of the Danish version is not that such rights, being linked to the entirely unequivocal. In theory it is possession of shares, could be restricted susceptible of two interpretations. by the Ministry of Agriculture. Sukkerfabriken considers that the second

paragraph of Article 1 of Regulation No 741/75 must be understood as meaning

JUDGMENT OF 16. 1. 1979 — CASE 151/78

ation. On the other hand the. Danish the co-operative under private law. Government considers that only the In conclusion the Danish Government second interpretation is valid so that the considers that the answer to the second Ministry of Agriculture, in allocating the question should be in the affirmative. basic quota amongst the various producers, is not bound by the under- (c) The Commission observes that taking's internal rules concerning pursuant to the first paragraph of production. The Danish Government Article 1 of Regulation No 741/75 also refers to the versions of the regu- Member States may lay down rules for lation in question in other languages and the allocation of the supply rights within to the case-law of the Court of Justice the basic quota limits. No restriction is (paragraph 14 of Case 30/77 Regina v contained in those provisions on the Bouchereau [1977] ECR 1999). powers of the Member States in this One of the objectives of the common sphere. agricultural policy is to improve agri- The second paragraph of Article 1 cultural productivity.

various producers. In this connexion a proposal submitted by Denmark in 1974 to settle that point led the Commission to submit a proposal. Finally the Council adopted Regulation No 741/75.

2 In order to arrive at an interpretation this regulation must be considered in the context of the common organization of the market in sugar as it was established first by Regulation No 1009/67/EEC of the Council of 18 December 1967 on the common organization of the market in sugar (Official Journal, English Special Edition 1967, p. 304) and subsequently by Regulation (EEC) No 3330/74 of the Council of 19 December 1974 (Official Journal 1974 L 359, p. 1) which replaced it.

3 That organization entails the fixing of production quantities for each Member State whilst the latter determines quotas for sugar manufacturers in accordance with criteria laid down in the regulation.

4 The quotas fixed for manufacturers consist of a basic quota, Quota A, which corresponds to the requirements of the domestic market, may be marketed without restriction and may be offered to intervention agencies at the intervention price, with a supplement up to a maximum quota, Quota B,

JUDGMENT OF 16. 1. 1979 — CASE 151/78

which is treated as equivalent to the sugar of the basic quota only on payment of a production levy whilst any sugar produced in excess of the maximum quota may not be distributed on the domestic market but must be exported to non-member countries.

5 It is assumed in the regulations that the advantages of the guarantee of marketing both the basic quota and the maximum quota at minimum prices will be passed on by sugar manufacturers to beet growers and it is left to the manufacturers and growers to lay down the conditions governing delivery whilst Regulation No 3330/74 merely provides in Article 6 that "The Council, acting by a qualified majority on a proposal from the Commission, shall adopt outline provisions in respect of the general conditions governing purchase, delivery, acceptance and payment to which agreements within the trade at Community, regional or local level and contracts concluded between buyers and sellers of beet must conform."

8 Although the common organization of the market provides for general rules on the sale and purchase of sugar-beet it is nevertheless clear that the agreements and contracts referred to continue to be governed, subject to the said general rules, by the domestic law of contract under which they were concluded.

SUKKERFABRIKEN NYKØBING MINISTRY OF AGRICULTURE

9 It appears from the decision referring the matter to the Court that the appellant in the main action (hereinafter referred to as "Sukkerfabriken") is organized in the form of a co-operative which has a share capital of Dkr 7 000 000 divided into 8 750 shares and whose members are obliged to cultivate one tonde (0.56 hectare) with sugar-beet and to deliver the beet harvested to the factory.

10 Since the members of the co-operative did not produce enough for its requirements Sukkerfabriken usually purchases more beet from other growers who are not members of the co-operative (hereinafter referred to as "producers under contract").

11 Since the production quantity allotted to Denmark on its accession to the Community exceeded the quantities which had been fixed in the past by national legislation, Sukkerfabriken's basic quota accordingly exceeded the quantities which, under the previous national system, could be produced at guaranteed prices.

12 Since Sukkerfabriken and the producers under contract could not agree how that increase should affect the fixing of the quantities covered by the basic quota to be purchased from the members of the co-operative and the producers under contract the Danish Government considered it necessary to intervene in order to effect an allocation.

"A. Where agreement cannot be reached between shareholders in a sugar factory organized as a co-operative undertaking and other traditional sellers of beet to the factory as to the allocation of the quantities which may be supplied within the factory's basic quota and where there is no agreement on this point within the trade, is it in accordance with the Community regulations on sugar, in particular Regulation (EEC) No 741/75 of the Council of 18 March 1975, for a Member State to determine the allocation, or is it a requirement of the regulations that a Member State can only determine the allocation where conditions other than those expressly stated in the preamble to Regulation (EEC) No 741/75 of the Council and in Article 1 (1) thereof are met?

B. If the conditions on which a Member State can lay down rules for allocating the basic quota are met and an unfair basis for such allocation has not been adopted, is it in accordance with the Community regu- lations on sugar, in particular Regulation (EEC) No 741/75 of the Council, for the Member State to make provision for an allocation between the members and other traditional suppliers to the undertaking in question even though such allocation means that the beet which the members of the co-operative are obliged and entitled under the under- taking's statutes to deliver to the factory cannot entirely be supplied within the basic quota alone?"

16 The two questions may be considered together.

17 Since, as has been stated, the common organization of the market in sugar covers relations between sugar manufacturers and beet growers, such relations, in so far as they specifically concern sugar production, fall exclusively within the competence of the Community so that the Member States are no longer in a position to adopt unilateral measures.

22 Whilst it is true that Regulation No 741/75, in empowering the Member States to intervene, cannot release them from their duty to observe the principles and general rules of the common agricultural policy the position nevertheless remains that it constitutes a mere enabling provision so far as Community law is concerned and leaves a determination of the conditions and specific procedures which are necessary for action to be taken to the legal system of the Member State in question.

23 From this point of view the second paragraph of Article 1 of Regulation No 741/75 appears as a mere extension of the power conferred by the first paragraph to situations in which the difficulties do not concern the allocation

JUDGMENT OF 16. 1. 1979 — CASE 151/78

amongst "the sellers of beet", but also to situations, like that which is at the origin of the dispute in the main action, where the allocation must be effected between sellers of beet on the one hand and growers who are members of a co-operative which is the sugar manufacturer on the other hand, which would not, on a literal reading, be covered by the first paragraph as it is worded.

24 It follows from what has been stated concerning the meaning of the regu- lation that the second paragraph is not intended to lay down any Community rule affecting the legal situation of sellers to a co-operative who are not members, as against those who are, but must be interpreted as abolishing the Community prohibition on the adoption by the Member State concerned in accordance with the provisions of its own legal system of the rules and decisions necessary to permit it to carry out an allocation in the case referred to by the said regulation.

THE COURT,

in answer to the questions referred to it by the Højesteret on 28 June 1978, hereby rules:

Article 1 of Regulation (EEC) No 741/75 of the Council of 18 March 1975 laying down special rules for the purchase of sugar beet is intended to empower Member States, having regard to impediments which might result from Community powers, to proceed in conformity with their national law to allocate delivery rights for beet within the basic quota limits of the sugar manufacturer concerned when the condition set out in Article 1 of the regulation is fulfilled.

Kutscher Mertens de Wilmars Mackenzie Stuart Donner Pescatore

Sørensen O'Keeffe Bosco Touffait

Delivered in open court in Luxembourg on 16 January 1979.