C-124/79

J U D G M E N T OF T H E C O U R T (SECOND CHAMBER) OF 13 MARCH 1980 *

J. A. van Walsum B.V. v Produktschap voor Vee en Vlees (preliminary ruling requested by the College van Beroep voor het Bedrijfsleven)

"Allocation of a Community Tariff Quota"

Case 124/79

Common Customs Tariff— Community tariff quotas — Frozen beef and veal — Power of management of Member States — Appointment of national shares — Persons concerned — Concept — Undertakings benefiting from the special system for importation of frozen beef and veal intended for processing — Inclusion (Council Regulation No 3063/78, Art. 3 (1))

Any methods of allocation laid down by (1) of Council Regulation No 3063/78 a competent national authority, which opening, allocating and providing for the involve including undertakings which administration of a Community tariff benefit from the system contained in quota for frozen beef and veal, are Article 14 (1) (b) of Regulation No compatible with those provisions, even if 805/68 of the Council, as amended by they result in a corresponding reduction Council Regulation No 425/77, amongst in other importers' shares in the the "persons concerned", who are allocation of the quota in question. referred to in the privisions of Article 3

on the interpretation of Article 3 (1) of Council Regulation (EEC) N o 3063/78 of 18 December 1978 opening, allocating and providing for the administration of a Community tariff quota for frozen beef and veal falling within subheading 02.01 A II (b) of the Common Customs Tariff (1979),

T H E C O U R T (Second Chamber)

composed of: A. Touffait, President of Chamber, P. Pescatore and O. Due, Judges,

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

gives the following

JUDGMENT

Community tariff quota for frozen beef subject to a full or partial levy or for and veal falling within subheading 02.01 which a Community quota has been A II (b) of the Common Customs Tariff opened and it excludes importations (Official Journal L 366, p. 6) the Council which have benefited from a total opened the Community tariff quota of suspension of levy. 38 500 tonnes for 1979 and proceeded to allocate it amongst the Member States. On 11 July 1979 the Produktschap decided in future to take into account Article 2 (1) of Regulation No 3063/78 for the division of the national quota provides that the Community tariff quota amongst the undertakings concerned also shall be divided into two parts, one those imports which had been effected totalling 22 000 tonnes and the other under application of Article 14 (1) (b) of 16 500 tonnes, of which 2 423 and 1 817 Regulation No 850/68 of the Council of tonnes respectively are allocated to the 27 June 1968 on the common organ- three Member States forming and ization of the market in beef and veal represented by the Benelux Economic (Official Journal, English Special Edition Union. 1968 (I), p. 187) as amended by Article 3 of Council Regulation N o 425/77 (Official Journal L 61, p. 1). That Of the sub-quota of 4 240 tonnes provision stipulates, in effect, that meat reserved to the Benelux countries a quota intended for the processing industry for share of 6 5 % amounting to 2 756 tonnes the manufacture of preserved food which was apportioned to the Netherlands in does not contain characteristic com- accordance with an internal scale of ponents other than beef and jelly shall apportionment used by the Benelux qualify for a total or partial suspension countries. of levy. Those imports have actually been subject to a levy of 5 5 % of the full rate as from 1 July 1979. Under Article 3 (1) of Regulation No 3063/78 the Member States shall take all appropriate steps to guarantee all persons J. A. van Walsum B.V., a company concerned established within their having its registered office at Rotterdam, territories free access to the quota shares considered itself to have been adversely allocated to them. affected by the Produktschap's decision of 11 July 1979 in that the decision reserved one half of the national quota The annual sub-quota allocated to the to the processing industry and reduced Netherlands is divided amongst the the opportunities for importing under persons concerned by the Produktschap preferential tariff arrangements open to voor Vee en Vlees. undertakings which do not carry on processing. Under the scale of apportionment used by the Produktschap since 1977, the Consequently, J. A. van Walsum B.V. allocation to Netherlands undertakings is instituted proceedings before the College made on the basis of their average share van Beroep voor het Bedrijfsleven in The of the imports of beef and veal taken Hague for annulment of the Produkt- into account in the period of three schap's decision and requested that court calendar years immediately preceding the to order the adoption of interim relevant quota year. The Produktschap measures. In support of its application it takes into account only importations submitted, in particular, that the decision from non-member countries which are to include imports falling within Article

14 (1) (b) of Regulation No 425/77, (b) traders to whom this favourable amending Regulation No 805/68, was system does not apply are denied not compatible with Article 3 (1) of access to a considerable part of the Regulation No 3063/78 and the GATT quota in the event of no obligation thereby imposed on the share in that considerable part of the Member States of guaranteeing all GATT quota being allocated to them persons concerned established within by the national authority? their territories free access to the quota shares allocated to them. The order of the President of the College van Beroep voor het By order of 31 July 1979 the President Bedrijfsleven was received at the Registry of the College van Beroep voor het of the Court on 6 August 1979. Bedrijfsleven ordered the suspension until final judgment of the Produkt- In accordance with Article 20 of the schap's decision of 11 July 1979 and, Protocol on the Statute of the Court of pursuant to Article 177 of the EEC Justice of the EEC, written obser- Treaty, stayed the proceedings until the vations were submitted on 11 October Court of Justice has given a preliminary 1979 by the Commission of the ruling on the following question: European Communities, represented by H. Bronkhorst, a member of its Legal Is it incompatible with the provision in Department; on 22 October 1979 by Article 3 (1) of Council Regulation J. A. van Walsum B.V., the appellant in (EEC) N o 3063/78 of 18 December the main action, represented by J. H. 1978 opening, allocating and providing Koolschijn, Advocate of The Hague; for the administration of a Community and on 24 October 1979 by the tariff quota for frozen beef and veal Produktschap voor Vee en Vlees, the falling within subheading 02.01 A II (b) respondent in the main action, of the Common Customs Tariff (1979), represented by J. P. Pluim Mentz, the or indeed with the principle which director of its Legal Department. underlies that provision, and which in accordance with that provision is After hearing the report of the Judge- normally formulated in the Council regu- Rapporteur and the views of the lations in which the GATT quotas are Advocate General, the Court decided to opened annually, or with any other open the oral procedure without any provision of the Treaty or with any other preparatory inquiry. binding Community rule or legal principle, for the national authority, in By order of 30 January 1980 the Court the allocation of the GATT quota, the resolved to assign the case to the Second administration of which is entrusted to Chamber, in accordance with Article 95 that authority, to use methods whereby: (1) and (2) of the Rules of Procedure.

(a) Article 3 (1) of Regulation No 3063/78 is of general scope and is not subject to any qualification. "Traditional (d) The Member States do not have importers" are just as much "persons power to adopt, at a national level, concerned" as the processing industry. A complementary implementing measures significant part of the GATT quota in regard to products covered by a having been reserved by the Produkt- common organization of the market, schap's decision to the processing especially when those measures may industry, the "traditional importers" affect the price-formation mechanism. In have access only to the remaining quota the present case, since a large part of the share, and that in competition with the GATT quota is reserved to the processing industry. The decision under processing industry and since meat attack is therefore incompatible with the imported under that quota may be freely wording of Article 3 (1) of Regulation sold, the processing industry is placed in No 3063/78. the position of being able to play a decisive role in fixing the price of the product in question. Accordingly, the principle flowing from Article 40 of the Treaty has been contravened. (b) That provision is based upon the principle, expressed in the second recital of the preamble to Regulation No 3063/78, that equal and continuous (e) The answer to all the points in the access to the quota should be ensured for question referred to the Court for a pre- all persons concerned until the quota is liminary ruling should therefore be in the used up. All persons concerned are affirmative. therefore entitled to equal access to the whole of the quota; however, by reason of the decision in dispute the traditional importers do not have access to the The Produktschap voor Vee en Vlees, the significant part of the quota which is defendant in the main action, sets forth reserved to the processing industry. The details of the way in which the annual Produktschap's decision accordingly sub-quota allocated to the Netherlands is offends also against the principle divided and administered and it reminds expressed in Regulation No 3063/78. the Court, in particular, that imports effected under exemption from levy are excluded, in order to avoid the giving of a double benefit. Since imports effected under application of Article 14 (1) (b) of (c) Moreover, the decision in dispute is Regulation No 805/68 as amended by contrary to Article 40 (3) of the EEC Regulation N o 425/77 were again Treaty under which, in the establishment subjected to a partial levy as from 1 July

1979 they had to be taken into May an authority charged with the consideration. By Commission Regu- administration of a GATT quota bring lation No 1136/79 of 8 June 1979 into account, in allocating the quota, (Official Journal L 141, p. 10) adopted imports carried out under the system of following the judgment of the Court of 6 14 (1) (b) of Regulation N o 805/68 as March 1979 in Case 92/78, Simmenthal amended by Regulation No 425/77 [1979] ECR 777, the benefit of that where, consequent upon Community system was restricted to persons who measures, a specific group of traders may have been engaged in the meat indeed no longer apply for licences processing industry for at least a year. under that system with the result that Under that system, importers who are they may no longer acquire directly, not processors, such as the appellant under that system, rights which would be company, can no longer apply for an taken into account in the allocation of import licence in their own name; but the GATT quota, but where that group they may acquire import licences is not however precluded from importing indirectly by assignment. The effect of under that system and thus acquiring the Produktschap's decision of 11 July such rights, by reason of their having the 1979 was to make only about 12% of possibility of obtaining a licence by way the GATT quota for 1980 inaccessible to of assignment? importers who are not processors: pro- cessors avail themselves to a relatively substantial extent of the power to assign the "import opportunities" represented by an import licence under application of Article 14 (1) (b) of Regulation No 805/68, with the result that a significant The Community rules leave to the portion of the GATT quota remains Member State concerned the discretion accessible to importers who are not pro- of selecting a method of administration, cessors. Moreover, the final part of the but require it to proceed to an allocation question referred to the Court proceeds which is appropriate from an economic upon a premise which is not accurate: point of view. Those rules enshrine two "traders to whom this favourable system principles, that of equality and the [under Regulation No 805/68] does not "economic principle". The Produktschap apply" enjoy rights of importation has not acted in contravention of those obtained by assignment and the rules and has not acted unlawfully in Produktschap allocates to them, on that regard to Community law in deciding to basis, a portion of the GATT quota on a include the system under Article 14 (1) footing of absolute equality with pro- (b) of Regulation No 805/68 in the basis cessors who carry out their own import- of allocation of the 1980 GATT quota. ation. According to the forecasts, the decision of the Produktschap in dispute appears to make hardly any alteration in the share of the 1980 GATT quota which every party involved in the market will obtain. Since the principles of equality and of economic logic could be in opposition to each other, the seeking of a fair balance between them is a matter of policy. The Produktschap has achieved that balance The question put to the Court ought in the system which it applies therefore to be formulated as follows: consistently and which provides for the

Within that framework, however, the Member States enjoy a certain margin of Having regard to the opportunities manoeuvre; they may make rules and lay available in the trade of arranging impor- down objective criteria for the allocation tations in the framework of the system of the quota. It follows from the recitals under Article 14 (1) (b) of Regulation of the preamble to Regulation No N o 805/68 the continuance of the 3063/78 that "it appears best to leave to present policy does not involve any each Member State the choice of a serious affront to the principle of management system for its share of the equality. On the other hand, any quota, so that it may ensure an alteration of that policy would conform allocation which is appropriate from an less with the economic principle economic viewpoint". The Member confirmed by the Commission. States are therefore free to determine their own criteria for the allocation of the quota; in fact, they have actually opted for different systems of allocation. Moreover, the regulation does not oblige Member States to effect the division amongst all the persons concerned in 3. The Commission notes in general such a way that the quantities allocated terms that the GATT quota is a are too small to be of any economic Community quota and that it is therefore interest. The Community legislature for the Community to determine the intended to avoid the sub-quotas being conditions under which it should be broken down too far by the Member utilized, subject to the obligations which States. the Community has undertaken at an international level or in accordance with the general or sectoral aims of the economic policy which the institutions pursue in the context of their powers. The rules laid down by the Community (a) In regard to the Produktschap's for the allocation by the Member States decision of 11 July 1979 it is appropriate of the quota must be regarded as purely to examine whether the criteria adopted implementing measures of an adminis- by it effectively guarantee equality of trative nature; the limited nature of that treatment for all traders concerned. delegation does not leave any power for Rules which take account, in the scale of action at national level which is contrary apportionment, of quantities imported to Community principles of economic for the processing industry under a policy or which may offend against the favourable system do not appear to be principle of equality of treatment for all contrary to that principle. The processing citizens of the Community. In regard to industry or those who import for that the quota subject to Regulation No industry in accordance with the system 3063/78, the Member States have power provided for in Article 14 (1) (b) of

Regulation No 805/68 as amended are National rules, drawn up in just as concerned in the Community implementation of Council Regulation quota as other categories of importers of No 3063/78, which have the result of beef and veal. The fact of their having reserving a significant part of the GATT imported beef and veal under a quota to the processing industry which favourable system is not a circumstance imports under the system provided for in warranting the exclusion of the imports Article 14 (1) (b) of Regulation No concerned. The rule laid down by the 805/68 with the consequence that other Produktschap is an objective one. traders do not have access to that part of the GATT quota are not incompatible The position would be otherwise if with the principle of free access to the certain categories of persons concerned national quotas, which the Member were entitled to a percentage of the States must guarantee to all persons quota, fixed arbitrarily and in advance. concerned established within their In the present case, importers who territories, or with any other provision of import for the processing industry are the Treaty or with any other binding treated, in their capacity as traders provision or principle of Community law. concerned to have access to the sub- quota, on the same footing as other IIII — Oral procedure importers, namely, in proportion to imports carried out in the course of a J. A. van Walsum B. V., the appellant in fixed reference period. the main action, represented by A. J. Sandberg, of the Bar of The Hague, the Moreover, the Netherlands system does Produktschap voor Vee en Vlees, the not take account in calculating individual respondent in the main action, quota shares of imports which have represented by J. P. Pluim Mentz, and benefited from a total suspension of levy. the Commission of the European That provision is also wholly objective Communities, represented by Peter and guarantees equality of treatment for Kuyper, a member of its Legal all traders concerned. Department, submitted oral argument and replied to questions from the Court at the sitting on 28 February 1980. (b) It is appropriate to give the following answer to the question put by The Advocate General delivered his the College van Beroep: opinion at the same sitting.

4 By its decision of 11 July 1979 the Produktschap also included amongst the imports of meat taken into account for the purpose of dividing the quota imports which had been effected on the basis of Article 14 (1) (b) of Regu- lation No 805/68 of the Council of 27 June 1968 as amended by Article 3 of Council Regulation N o 425/77 of 14 February 1977 (Official Journal, English Special Edition 1968 (I), p. 187, and Official Journal L 61, p. 1 respectively). That provision provides for a total or partial suspension of levy for frozen meat intended for the processing industry for the manufacture of certain preserved foods. The amounts imported under that provision were

JUDGMENT OF 13. 3. 1980 — CASE 124/79

taken into account by the Produktschap by reason of the fact that, during the period under consideration, they had benefited only from a partial suspension of levy.

s The appellant in the main action considered itself to have been adversely affected by that new method of calculation adopted by the Produktschap. It maintained that since that new scheme reserved a significant part of the quota to the processing industry the opportunities for importing at the reduced rate of duty open to importers which do not carry on processing were significantly reduced. Since the allocation is carried out in proportion to imports in previous trading years that method would have the result of gradually increasing the share of the processing industry to the prejudice of importers so as completely to exclude the latter in the long term.

6 During the procedure before the national court the question arose whether the Produktschap's decision to include imports covered by Article 14 (1) (b) of Regulation N o 425/77 in the reference figures for the allocation of the national GATT quota was, in those circumstances, incompatible with Article 3 (1) of Council Regulation N o 3063/78 which obliges Member States to guarantee all persons concerned established within their territories free access to the quota shares allocated to them.

s In terms of Article 3 (1) of Regulation N o 3063/78 "the Member States shall take all appropriate steps to guarantee all persons concerned established within their territories free access to the quota shares allocated to them".

9 It appears from the second and fourth recitals in the preamble that that provision has the aim of ensuring "equal and continuous access to the quota .. . for all persons concerned" while leaving "to each Member State the choice of a management system for its share of the quota so that may ensure an allocation which is appropriate from an economic viewpoint".

io The system practised by the Netherlands Produktschap, which consists in taking imports carried out in the course of previous trading years as a reference criterion, satisfies, in principle, those requirements in that it guarantees both continuity in the flow of imports and the adjustment of supplies to economic needs.

1 1 In fact, the complaint of the appellant in the main action relates exclusively to the fact that as from the 1979 season the Produktschap has included importers benefiting from the system of importation laid down in Article 14 (1) (b) of Regulation No 805/68, as amended by Regulation N o 425/77, amongst the undertakings invited to take part in the allocation of the quota in question.

JUDGMENT OF 13. 3. 1980 — CASE 124/79

H It does not appear" necessary to consider separately the argument based by the appellant in the main action on Article 40 (3) of the EEC Treaty in terms of which the common organization of a market "shall exclude any discrim- ination between producers or consumers within the Community". Indeed, as moreover the appellant itself recognizes, Article 3 of Regulation No 3063/78 amounts only to a specific expression of that principle in the light of the particular facts of the allocation of the quota in question, regard being had to the objectives of economic policy which are pursued in the context of the common organization of the market in beef and veal.

is The answer to the question submitted should therefore be that any methods of allocation laid down by a competent national authority, which involve

VAN WALSUM v PRODUKTSCHAP VOOR VEE EN VLEES

including undertakings which benefit from the system contained in Article 14 (1) (b) of Regulation N o 805/68 of the Council, as amended by Council Regulation N o 425/77, amongst the "persons concerned", who are referred to in the provisions of Article 3 (1) of Council Regulation N o 3063/78 of 18 December 1978 opening, allocating and providing for the administration of a Community tariff quota for frozen beef and veal falling within subheading' 02.01 A II (b) of the Common Customs Tariff (1979), are compatible with those provisions, even if they result in a corresponding reduction in other importers' shares in the allocation of the quota in question.

Costs

ie The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable.

quota for frozen beef and veal falling within subheading 02.01 A II (b) of the Common Customs Tariff (1979), are compatible with those provisions, even if they result in a corresponding reduction in other importers' shares in the allocation of the quota in question.

Touffait Pescatore Due

Delivered in open court in Luxembourg on 13 March 1980.

The Registrar by order H. A. Rühi A. Touffait Principal Administrator President of the Second Chamber

O P I N I O N OF MR ADVOCATE GENERAL WARNER DELIVERED O N 28 FEBRUARY 1980

My Lords, have therefore been asked, by the College, for a speedy decision.