C-261/78

represented by E. Eckelt, A. Kallenbach and K.-D. Ratke, Augsburg, with an address for service in Luxembourg at the Chambers of A. Bonn, 22 Cote d'Eich,

applicants, v

The European Economic Community , represented by its institutions:

1. Council OF the European COMMUNITIES, , represented by D. Vignes, Director of the Legal Department, acting as Agent, assisted by B. Schloh and A. Brautigam, respectively Legal Adviser and Administrator in the said department, acting as Joint Agents, with an address for service in Luxembourg at the office of J. N. Van Den Houten, Director of the Legal Department of the European Investment Bank, 2 Place de Metz,

2. Commission OF the EUROPEAN Communities , represented by its Legal Adviser, J. H. Bourgeois, acting as Agent, assisted by J. Sack, a member of its Legal Department, with an address for service in Luxembourg at the office of its Legal Adviser, M. Cervino, Jean Monnet Building, Kirchberg, defendants,

APPLICATIONS under Article 178 and the second paragraph of Article 215 of the EEC Treaty,

Facts and Issues

The facts of the case, the course of the regulations, are incompatible with procedure, the conclusions and the the principle of equality in so far as submissions and arguments of the parties they provide for quellmehl and pre­ may be summarized as follows: gelatinized starch to receive different treatment in respect of production refunds for maize used in the manu­ facture of these two products; I — Facts and procedure (2) It is for the institutions competent in matters of common agricultural 1. In its judgment of 19 October 1977 policy to adopt the measures in Joined Cases 117/76 and 16/77 necessary to correct this Ruckdeschel & Co. and Hansa-Lagerbaus incompatibility. Ströh & Co. v Hauptzollamt Hamburg-St. Annen, and Diamalt AG v Hauptzollamt Itzehoe, [1977] ECR 1753 (hereinafter 2. By Regulation No 1125/78 of 22 referred to as the judgment of 19 May 1978, amending Regulation No October 1977), the Court decided that: 2727/75 on the common organization of the market in cereals (Official Journal (1) The provisions of Article 11 of Regu­ L 142 of 30 Mav 1978, p. 21) and No lation No 120/67/EEC of the 1127/78 of 22 May 1978, amending Council of 13 June 1967, as worded Regulation No 2742/75, on production with effect from 1 August 1974 refunds in the cereals and rice sectors following the amendment made by (Official Journal L 142 of 30 May 1978, Article 5 of Regulation (EEC) No p. 24), the council reintroduced until the 1125/74 of the Council of 29 April end of the 1978/79 marketing year a 1974, and repeated in subsequent scheme of production refunds for the

These applications, which were submitted on 15 December 1978, seek in 2. The Council and the Commission particular an order that the European claim that the Court should: Economic Community compensate the applicants for the damage arising from the failure to re-introduce the — Dismiss the applications as production refund for sales of quellmehl inadmissible; made between 1 August 1974 and 19 October 1977. — Alternatively, dismiss them as unfounded;

4. A claim for damages following the abolition of production refunds for — Order the applicants to pay the costs.

JUDGMENT OF4. 10. 1979 — JOINED CASES 261 & 262/78

The applicants reply that the Council's reasoning is erroneous, since the national According to the applicants, the authorities cannot grant production compensation claimed has, in fact, no refunds without an appropriate legal purpose other than to remove the legal basis. effects upon them resulting from the unlawful abolition of the production refund and from the fact that measures The Council observes in its rejoinder that of the sort described in the aforesaid in view of the pragmatic approach by the Court in the sixth paragraph of the judgment hat not been taken; in such a decision in its judgment of 28 March case an action for damages is admissible 1979 in Case 90/78 Granaria, it will according to the principles laid down by the Court in Case 25/62 Plaumann & leave the question of admissibility to the Court. Co. v Commission, judgment of 15 July 1963 [1963] ECR 95.

2. The Commission observes that the The Commission adds in its rejoinder applicants could not secure the adoption that under Article 215 of the Treaty an

INTKRQUKELL STÄRKE v COUNCIL AND COMMISSION

On the other hand the applicants in these It recalls that a production refund for cases have the possibility of bringing pre-gelatinized starch and quellmehl, actions in the national courts. It is true without any limitation based on the use that those courts could not, in the to which the products are put, was absence of a legislative provision, introduced by Regulation No 141/64 of the Council of 21 October 1964 on the recognize the applicants' right in such an action, but they could refer the case to system for products processed from the Court of Justice and thus obtain a cereals and rice (Journal Officiel 1964, p. decision on the question whether the 2666). Nor was that legal situation refusal to pay the refund to the altered in principle by the abolition of applicants between 1 August 1974 and 18 the production refunds for quellmehl by Regulation No 1125/74. October 1977 is contrary to a superior rule of Community law. The applicant emphasizes that considerable sums have indeed been

On the basis of that argument, the (d) The applicants go on to state that Council emphasizes that the aim of the according to the judgment of the Court scheme of refunds was never to attain of 19 October 1977 the abolition of the equality of treatment amongst the refund for quellmehl constituted an various animal feeds, but to permit the infringement of the principle of equality. starch industry to maintain competitive That breach of a fundamental principle prices with regard to the prices of of the Treaty must, according to the chemical substitutes. According to the applicants, be regarded as wrongful Council, there are no chemical sub­ conduct, for the consequences of which stitutes on the market in animal feed, so the Community is obliged to pay that failure to grant the refund for damages in accordance with Article 215 products intended for that market is of the Treaty. The damage suffered by explained perfectly by the main object of the applicants lies in the fact that they the system of refunds. were treated unequally in relation to the manufacturers of pre-gelatinized starch, The Council's final observation in this that is to say, they did not obtain the production refund granted to those context is that it is generally accepted producers. that the traditional market for quellmehl is bread-making and not animal feed. Therefore the two products in question are not in comparable situations in the animal-feed market, so that different The applicants then contend that the Community is also obliged to make good treatment of the products, in so far as that damage for the following reason: they are intended for such a use, does not constitute discrimination. according to paragraph 2 of the operative part of the judgment of the Court of 19 October 1977, the Community institutions were to adopt (b) The Council also emphasizes that the measures necessary to correct the the present actions presuppose that inequality of treatment suffered by the Regulations Nos 1125/78 and 1127/78 applicants as undertakings producing are not only invalid, but also entail a quellmehl, as against the manufacturers serious breach of a superior rule of law of pre-gelatihized starch. In fact equality for the protection of the individual. of treatment for the period between the abolition of the refunds and 19 October It recalls that the measures involved an 1977 has not yet been established. That economic choice, therefore entailing, in also constitutes, according to the accordance with the settled case-law of applicants, wrongful conduct on the part the Court, a wide degree of discretion of the Community institutions which on the part of the Community gives rise to a claim for damages. institutions.

The Council goes on to state that in its result that they cannot be the cause of a judgment of 19 October 1977 the Court sufficiently serious breach of a superior left open the choice between the re- rule of law for the protection of the introduction of the refunds for quellmehl individual. and the abolition of the refunds for pre- gelatinized starch. The Council adds that if this second alternative had been Alternatively, working on the assumption chosen, equality between the two that the applicants did not in fact products could have been re-established increase their selling prices in order to as from I August 1974 without, compensate for the abolition of the however, its being necessary to recover refunds, the Council raises the question the refunds already paid to the producers whether there really were compelling of pre-gelatinized starch. In fact it reasons preventing them from doing so. considers that there are compelling reasons of legal certainty which go in It recalls in this context that it is clear favour of not recovering the refunds paid from the summary of the observations of when the right to those refunds is the plaintiffs in the main action in the abolished retroactively in order to judgment of 19 October 1977 that in a correct an error of the administration. It situation of free competition, apart from emphasizes that the judgment of the any refund, quellmehl is, as regards the Court of 9 March 1978 in Case 54/77 cost of its manufacture, cheaper than Herpels v Commission [1978] ECR 585, pre-gelatinized starch; when pre- at paragraph 38 of the decision, corrob­ gelatinized starch was offered at DM 85 orates that point of view. per 100 kg, quellmehl should, on account of the abolition of the refund, have been sold at DM 100. On the basis Therefore, if the refund for pre- gelatinized starch had been abolished of those prices there arises, according to with effect from 1 August 1974, the the Council, by reason of the refund for applicants could not, according to the pre-gelatinized starch, a competitive Council, claim any refund whatsoever advantage of around 8.6% over the for their products. If the matter is selling price of quellmehl. If account is considered from that point of view, it taken of the increase in the price of raw seems difficult, in the Council's materials during the period for which the submission, to accept that it was not refund was not paid, which increase was permissible, in choosing a solution much around 30%, it seems improbable to the more favourable for the producers in Council that the applicants were unable question, to limit the regulations in point to alter their selling prices in order to of time, as was done in this case. The allow for that difference of 8.6%, which Council goes on to note that in its even becomes 6.3% as the prices of the judgment the Court did not require the two products have increased by 30%. In institutions to take measures of a retro­ this context the Council emphasizes that active nature; it recalls that the proposals the producers of pre-gelatinized starch of the Commission did not envisage any were also affected by the increase in the retroactivity. prices of raw materials.

Finally, the Council points out that in by those concerned, but the existence of the absence of the information necessary such damage would have been certain at to form an opinion about the the time, as regards the period elapsed, implications of the cost price of the for it was no longer possible after the quellmehl produced by the applicants, event to recover from the manufacturers the selling prices and the increased of pre-gelatinized starch the refund competition from pre-gelatinized starch which had been granted to them. due to the benefit of the refund, it is not possible for it at this stage of the procedure to comment more fully on the (b) The Commission observes further question whether any damage was really that the applicants do not satisfy the suffered by the applicants. In any event, other conditions governing the liability it has doubts on this point about the of the Community for a legislative admissibility of the applications in the measure, as laid down in the judgment light of Article 38 (1) of the Rules of of the Court of 25 May 1978 in Joined

refunds. The Commission therefore principle constitutes a superior rule of considers that it has grounds to suppose law for the protection of the individual. that the abolition of those refunds did not cause the applicants any real damage. However, the Commission considers that the infringement of the principle of equality was limited to the spheres in It recalls that according to the judgment which there exists genuine competition of the Court of 15 June 1976 in Case between quellmehl and pre-gelatinized 74/74 CNTA v Commission [1976] ECR starch, namely in bread-making, which is 797, it is not the unpaid benefits which the main sphere in which quellmehl is must be regarded as damage for which traditionally used.

INTERQUELL STARKE v COUNCIL AND COMMISSION

gelatinized starch was not used in the Community to incur liability was not competition. The Commission confirms satisfied: the fact that the applicants were that it has been able to ascertain that that apparently able to continue producing was the case. the same quantities of quellmehl without suffering losses, or even to increase their turnover, suggests that the measures The Commission points out in this taken by the Commission did not affect context that, since the applicants do not the applicants seriously enough to make claim that the quellmehl manufactured the Community liable and thereby justify by them was used for the manufacture of an action for damages. bread to the exclusion of other uses and since, moreover, they have not proved that quellmehl was in competition with pre-gelatinized starch in the manufacture If the abolition of the production refund of other food products, the Community for quellmehl in 1974 did not lay a duty institutions cannot, at least as far as they on the Community to make good the are concerned, have infringed the damage suffered by the applicants, such principle of equality as a superior rule of an obligation, says the Commission, may law, by no longer providing production no more be derived, contrary to what the refunds for quellmehl after I August applicants say, from the fact that the 1974. It follows, according to the Community institutions omitted to re­ Commission, that there was not in this introduce the refund retroactively as case a serious breach of a superior rule from 1 August 1974. On the contrary, of law for the protection of the the decision to grant the refund with retroactive effect from 19 October 1977 individual. is itself an extremely generous solution and the limitation of the refund to bread-making is objectively justified (c) The Commission observes in since there is no public interest in addition that even if it is necessary to subsidizing new spheres of use. conclude that there was an infringement of such a rule, the elements constituting a manifest and serious abuse of powers are lacking as far as the Commission is concerned. 4. The applicant's replies

erroneous, seeing that the product has been used for that purpose since 1962. It adds that that statement is also irrelevant, because in that case pre- The applicants do not deny that the said institutions had a choice of several gelatinized starch likewise was used in animal feed only by reason of the measures to correct the inequality of refunds. treatment, but maintain that total inaction in respect of the disputed period could not remove such inequalities; account must be taken in this case of the The applicant observes further that it is fact that the proceedings in the main clear from the documents submitted with action which led to the judgment of the the reply that pre-gelatinized starch and Court of 19 October 1977 concerned quellmehl are interchangeable in certain only the period prior to that judgment. animal feeds and were used in competition with each other for the manufacture of those foods during the The only consequence, according to the period concerned in the present dispute. applicants, of the reasons of legal According to the applicant, that proves certainty relied on by the Council was that the two products are in comparable that in respect of the period prior to the situations within the meaning of the judgment of the Court equality of eighth paragraph of the decision in the treatment could not be established by Court's judgment of 19 October 1977. abolishing the refunds for pre-gelatinized starch, whereas such a possibility did exist for the future. Further, what counts is not the traditional use of quellmehl b the actual use of the two products during the When the Council adds that it was period in question. The applicant further permissible for the Community points out that it is the granting of institutions to limit the system of refunds refunds for pre-gelatinized starch which in point of time, it forgets once again, in governs the refunds for quellmehl, the applicant's submission, to distinguish therefore the reference to the absence of between the period prior to 19 October chemical substitutes on the animal-feed market is irrelevant. 1977 and the period subsequent to that date.

caused by the abolition of the refunds from manufacturers of pre-gelatinized did not reduce their loss.. That loss starch following the abolition of the comprised the difference between the production refunds in 1974 shows that material situation which would exist if the Council's claim that it was possible to the event giving rise to the loss had not pass on in the selling price the increase in taken place and the actual material costs due to the abolition of the situation. As an increase in the selling production refunds is untenable. In this prices, assuming that it could take place, connexion it encloses a letter from the would have been possible even if the Verband der Backmittelhersteller production refunds had been maintained [Association of Manufacturers of Bakery and, as the applicants would in fact have Additives of the Federal Republic of taken such a step in order to obtain Germany] showing that the effects of the profit, the damage assessed in that way is abolition of the refund went beyond the always equal to the amount of the limits of the risks inherent in the unpaid refund. economic activities of quellmehl manu­ facturers.

JUDGMENT OH 4. 10. 1979 — JOINED CASES 261 & 262/78

production refund actually granted for possible, if considered appropriate, to pre-gelatinized starch, taking account of limit the production refund to the the business done in quellmehl. That is quellmehl used in food for human exactly what the applicant did in its consumption. application. Thus it may be seen, according to the applicant, that in no way in the present proceedings is it 5. The Council's rejoinder claiming entitlement to the production refund itself. (a) In its rejoinder the Council ex­ presses an opinion on the applicant's The applicant adds that in assessing the argument that the damage suffered by a damage the production cost and the person is represented by the theoretical difference between the financial situation selling price of the quellmehl manu­ factured by it are irrelevant. of that person if the damage had not occurred and the situation arising as a result of that damage. (e) In the opinion of the applicants, the principle of equality was also infringed Doubting the relevance even in German to the extent to which the refund for law of that doctrine of civil law in the

(b) The Council also observes that 110 kg of maize or common wheat at the (f) As for the Commission's argument most are needed to produce 100 kg of that there has been no manifest and quellmehl, whilst to produce the same serious abuse of powers, having regard quantity of pre-gelatinized starch 161 kg to the use of quellmehl in animal feed, are required. That difference results in a the applicants state that it is clear from clear advantage for quellmehl, even if it their account of the facts that the does not benefit from any refund. abolition of the refunds for quellmehl used in animal feed also constitutes an In this context the Council also infringement of the principle of equality. emphasizes that the increase due to the rise in the price of maize, in combination Besides, the occasional use of quellmehl with the relationship between the in animal feed does not justify unequal quantities of maize required, largely treatment as regards food for human compensated for the negative effect of consumption: it would have been the non-payment of the refund for

INTERQUELL STÄRKE v COUNCIL AND COMMISSION

amounts is DM 7.78, whilst the average 6. The Commission's rejoinder refund for pre-gelatinized starch was DM 8.62 during the period in question, the Council finds it difficult to see how The Commission observes that a subsidy the producers of pre-gelatinized starch which was not granted to the applicants were able to confront the quellmehl does not constitute a loss: either there producers with keener competition and exists a legal obligation to grant them the thus inflict a commercial loss on them said subsidy after the event, in which owing to the refunds from which they case the applicants do not suffer any continued to benefit. loss, or such an obligation does not exist, in which case the applicants may not bring an action for damages.

provided. The applicant has not proved that "pure" pre-gelatinized starch is really used as an ingredient of the said The Commission goes on to argue that, animal feeds. Even supposing that that is since the aim of the subsidy is not to technically possible, it must, according to guarantee the applicants a particular the Council, also be economically benefit, it cannot be inferred that in the possible. event of the abolition of the subsidy the applicants sustain material injury to the extent of the subsidy by the amount of If account is taken of the fact that the which their profits are henceforth manufacturing process for pre- reduced.

JUDGMENT OF 4. 10. 1979 — JOINED CASES 261 & 262/78

was not possible to require the manufac­ considers that in the circumstances there turers of pre-gelatinized starch to repay is no reason to subsidize quellmehl in so the amounts received in refunds. None far as it can increasingly be put to uses the less the fact that the Court did not which traditionally played no part in its require the Council or the Commission marketing. In the opinion of the to grant the refunds retroactively but Commission, the aims of the subsidy did expressly mentioned in this regard the not include the assistance of quellmehl possibility of making good contingent put to such uses; for that reason neither losses must, in the opinion of the does the principle of equality of Commission, be of some importance. treatment require such assistance to be The reason for allowing compensation to given, because different things are be paid only for contingent losses is involved. essentially, in its opinion, the fact that granting the refunds ex post facto no The Commission adds that the judgment longer permits attainment of the of the Court of 19 October 1977 itself objective in pursuance of which they shows that the production of quellmehl were established, namely encouraging need not be encouraged indefinitely as the sale of certain products during a far as animal feed is concerned and that certain period. the Court confirmed that view in its judgment in Case 19/78 Granaria.

INTERQUELL STÄRKE-CHEMIE v COUNCIL AND COMMISSION

Decision

1 The applicants in these cases request that the European Economic Community, represented by the Council and the Commission, be ordered, pursuant to the second paragraph of Article 215 of the EEC Treaty, to compensate them for the loss which they claim to have suffered on account of the abolition of the production refunds for quellmehl as a result of Regu­ lation No 1125/74 of the Council of 29 April 1974 amending Regulation No 120/67 on the common organization of the market in cereals (Official Journal 1974, L 128, p. 12).

2 The cases were joined for the purpose of the procedure and it is appropriate to maintain the joinder for the purpose of the judgment.

3 In its judgment of 19 October 1977 delivered pursuant to a reference for a preliminary ruling from the Finanzgericht Hamburg in Joined Cases 117/76 and 16/77 Ruckdeschel & Co. v Hauptzollamt Hamburg-St. Annen and Diamalt AC v Hauptzollamt Itzehoe [1977] ECR 1753, the Court ruled that the disputed provisions of the Council regulations were incompatible with the principle of equality in so far as they provided for quellmehl and pre- gelatinized starch to receive different treatment in respect of production refunds. The Court said further that it was for the institutions competent in matters of common agricultural policy to adopt the measures necessary to correct that incompatibility.

4 Following that judgment production refunds for quellmehl intended for use in the bakery industry were re-introduced by Council Regulation No 1125/78 of 22 May 1978 amending Regulation No 2727/75 on the common organization of the market in cereals (Official Journal 1978, L 142 of 30 May 1978, p. 21). The amount of the refunds was fixed by Council Regu­ lation No 1127/78 adopted and published on the same date as Regulation No 1125/78 (Official Journal 1978, L 142, p. 24). Both regulations entered into force on the third day following their publication in the Official Journal of the European Communities. However, pursuant to the last paragraph of Article 1 of Regulation No 1125/78 and Article 6 of Regulation No 1127/78, the refunds were granted at the request of the interested party as

6 The Council and the Commission, the defendants, object that in order to obtain the refunds claimed the applicants should have brought an action for payment of the refunds against the competent national bodies in the national courts. However, that objection cannot be upheld. Although it is true that an action for the payment of amounts due under Community regulations may not be brought under Article 178 and the second paragraph of Article 215 of the EEC Treaty, the claims submitted by the applicants in this case cannot be classed as claims for the payment of amounts due, but rather as claims for compensation for the alleged damage resulting from the unlawfulness established by the judgment of the Court of 19 October 1977. In the circumstances of the case, moreover, it is clear that, pursuant to the said judgment of the Court, a national court could not have upheld such an action in the absence of any provision of Community law authorizing the national bodies to pay the amounts claimed.

7 The same considerations apply to the Commission's objection that the real object of the applications, namely the payment of the refunds not granted, may be achieved only by the adoption of a new regulation and that. since the applicants may not pursue such an objective by means of the actions provided for in Articles 173 and 175 of the EEC Treaty, they are equally unable to do so by means of the action for damages under Article 178 and the second paragraph of Article 215. In fact, as the Court has declared on repeated occasions, the latter action was set up as an independent remedy. Thus the claims submitted by the applicants must be considered by way of that action and may be upheld, if they are well founded, without its being necessary for the defendants to adopt new legislative measures.

10 It follows that is only as regards the quellmehl used for bread-making that the abolition of the production refunds for quellmehl was incompatible with the principle of equality for the reasons accepted by the Court in its judgment of 19 October 1977.

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11 The problem which then arises is whether the unlawfulness thus established is of such a nature as to render the Community liable under the second paragraph of Article 215 of the EEC Treaty.

INTERQUELL STÄRKE-CHEMIE v COUNCIL AND COMMISSION

equality of treatment with the producers of maize starch, which had been observed from the beginning of the common organization of the market in cereals, was ended by the Council in 1974 without sufficient justification.

15 For those reasons the Court arrives at the conclusion that the Community incurs liability for the abolition of the refunds for quellmehl under Regu­ lation No 1125/74 of the Council.

16 This said, it is necessary to go on to examine the damage resulting from the discrimination to which the quellmehl producers were subjected. The origin of the damage complained of by the applicants lies in the abolition by the Council of the refunds which would have been paid to the quellmehl producers if equality of treatment with the producers of maize starch had been observed. Hence, the amount of those refunds must provide a yardstick for the assessment of the damage suffered.

17 The Council and the Commission objected to that method of calculating the damage on the ground that the quellmehl producers eliminated the damage, or could have done so, by passing on the loss resulting from the abolition of the refunds in their selling prices. In principle, in the context of an action for damages, such an objection may not be dismissed as unfounded. In fact, it must be admitted that if the loss from the abolition of the refunds has actually been passed on, or could have been passed on, in the prices the damage may not be measured by reference to the refunds not paid. In that case the price increase would take the place of the refunds, thus compensating the producer.

The claim for interest

22 The applicants further claim that the Community should be ordered to pay interest at the rate of 8 % from the date of lodgment of the applications.

23 As it is a question of a claim made in relation to the non-contractual liability of the Community, pursuant to the second paragraph of Article 215, it must be considered in the light of the principles common to the legal systems of the Member States, to which that provision refers. It follows that a claim for interest is in general admissible. Taking into account the criteria for the assessment of damages laid down by the Court, the obligation to pay interest arises on the date of this judgment, in that it establishes the obligation to make good the damage. The rate of interest which it is proper to apply is 6%.

INTERQUELL STÄRKE-CHEMIE v COUNC AND COMMISSION

On those grounds,

THE COURT,

Delivered in open court in Luxembourg on 4 October 1979.

A. Van Houtte H. Kutscher

Registrar President

OPINION OF MR ADVOCATE GENERAL CAPOTORTI (see Case 238/78, p. 2976)