C-145/79

ROQUETTE FRERES v FRENCH CUSTOMS ADMINISTRATION

of processed products of the basic product the price of which compensatory amounts applicable to depends on that of the latter product, the basic products. Thus by taking a system for calculating monetary into consideration factors which are compensatory amounts which results extraneous to that situation and in establishing for the various thereby fixing the compensatory products obtained by processing a amounts on a processed product on given quantity of the basic product in the basis of the intervention price a specific manufacturing process thereof without deducting the monetary compensatory amounts the production refund, when the sum of which amounts to a figure compensatory amounts on other clearly in excess of that of the products processed from the same monetary compensatory amount fixed basic product in respect of which no for that given quantity of the basic production refund is provided for are product. also calculated on the basis of the intervention price of the basic product, the Commission exceeds the 6. The second paragraph of Article 174 limits placed upon it by the said regu- of the EEC Treaty, whereby the lation. This also applies when it Court of Justice may state which of adopts, in order to establish the the effects of a regulation which it has compensatory amount applicable to a declared void shall be considered as dependent product, a price different definitive, is applicable by analogy, from that which it adopts for calcu- for the same reasons of legal certainty lating the compensatory amount on as those which form the basis of that the basic product. provision, to the judgments whereby the Court, in giving a ruling under 5. The Commission may not adopt, with Article 177, declares that a regulation regard to products processed from the is void.

JUDGMENT OF 15. 10. 1980 — CASE 145/79

widening of the margins of fluctuation for the currencies of certain Member States (Official Journal, English Special Edition 1971 (I), p. 257),

T H E COURT

composed of: H.' Kutscher, President, P. Pescatore and T. Koopmans (Presidents of Chambers), J. Mertens de Wilmars, Lord Mackenzie Stuart, A. O'Keeffe, G. Bosco, A. Touffait and O. Due, Judges,

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

gives the following

The products in question in this case are Sorbitol is covered by Regulation No starches (tariff heading 11.08 A), sorbitol 1059/69 of the Council of 28 May 1969 (tariff headings 29.04 and 38.19 T) and (Official Journal, English Special Edition isoglucose (tariff headings 17.02 D and 1969 (I), p. 240). Like all products 17.05 C). covered by these provisions the only specific measure laid down consists in charging an import levy consisting of a Starches are covered by the common fixed component and a variable organization of the market in cereals component (Article 5). For the purpose which is governed by Regulation No of calculating the variable component 2727/75 of the Council of 29 October Regulation No 1060/69 of the Council 1975 (Official Journal 1975 L 281 of 1 of 28 May 1969 (Official Journal, November 1975, p. 1). Article 11 thereof English Special Edition 1969 (I), p. 246) provides that a "production refund" may be granted: fixes as a standard amount the quantities of the basic products considered to have been used in the manufacture of the "(a) for maize and common wheat used goods covered by Regulation No in the Community for the manu- 1059/69. facture of starch; Finally, isoglucose is governed by the (b) for potato starch". "common provisions" adopted by the Council in Regulation No. 1111/77 of 17 May 1977 (Official Journal 1977 L An implementing regulation of the 134, p. 4). At the time of the facts in Council (Regulation No 2742/75 of 29 question, that is to say before 1979, the October 1975, Official Journal 1975 L regulation made provision for a 281, p. 57) laid down the conditions in production levy calculated on the basis which the Member States were to grant of the levy charged on sugar up to a the production refund for each of the maximum of 5 units of account per 100 products referred to. kg. There is no direct guarantee provided for the price of this product; in There exists no intervention measure fact the intervention price of sugar properly so-called in respect of the prices determines indirectly the market price of of these products. Only the basic isoglucose so that that price appears products, maize and common wheat, are from an economic point of view to be covered by a guaranteed price which is the most important for isoglucose in the the subject of monthly increases phased context of the common organizations of over all or part of the marketing year the market having a price guarantee.

Article 1 of Regulation (EEC) No (c) Procedure 974/71 of the Council of 12 May 1971 on certain measures of conjunctural policy to be taken in agriculture following the temporary widening of the Following its judgment of 26 October margins of fluctuation for the currencies 1978 the Tribunal d'Instance, Lille, of certain Member States (Official appointed an expert to establish the Journal, English Special Edition 1971 dependence of the prices of sorbitol and (I), p. 257) introduced monetary isoglucose with regard to the price of a compensatory amounts to be charged or product subject to a common organ- granted, as appropriate, not only on ization of the market and the existence agricultural products (a) covered by of distortion in competition between the intervention arrangements under the producers of the Common Market, as common organization of agricultural claimed by Roquette. markets but also for those (b) whose price depends on the price of the products referred to under (a). Article 2 The expert submitted his opinion on 13 (2) thereof provides that for the latter March 1979. In the first part he explains category of products the monetary the interpretation he considers should be compensatory amounts "shall be equal to placed upon the Community provisions the incidence, on the prices of the relating to the principle of compensating product concerned, of the application of currency fluctuations in order to the compensatory amount to the prices maintain equal conditions of competition of the product referred to in paragraph regarding supplies of basic agricultural 1, on which they depend". products. In the second part the expert examines the claims made by Roquette and on each point presents the results of his own investigations together with his The monetary compensatory amounts comments; he concludes by replying to introduced by Regulation No 974/71 the questions put by the Tribunal were fixed by Regulation No 572/76 of d'Instance, Lille, on the price of sorbitol the Commission of 15 March 1976 and of isoglucose. The expert agrees (Official Journal 1976 L 68, p. 5); that with the claims of Roquette that there is regulation, however, did not make in fact distortion in competition between provision for monetary compensatory the producers of the Common Market. amounts in the case of France. In an addendum also dated 13 March 1979 the expert replies to the comments made by Roquette on his opinion. Commission Regulation No 652/76 of 24 March 1976 (Official Journal 1976 L 79, p. 4), amending Regulation The Tribunal d'Instance, Lille, giving No 572/76, subsequently introduced judgment in accordance with Article monetary compensatory amounts with 7-10 of Order No 58.1284 of 22 regard to France too. December 1958 establishing its jurisdiction in customs matters, held that "the conclusions in the expert's report Regulation No 572/76 was then repealed should be confirmed in so far as they and replaced by Commission Regulation establish:

— That the price of sorbitol containing 3. Can the sum of the monetary more than 2% mannitol depends on compensatory amounts applied to all the price of maize and not on the the products and secondary products price of sugar; processed from the same basic product exceed the compensatory — That the price of isoglucose is amount applicable to the basic likewise dependent on the price of product? maize". If the reply to the third question is in the negative, The court furthermore considered that judgment on the claims of the Roquette Sub-question (a): company should be suspended "until the Court of Justice has decided whether the Should the compensatory amounts distortion referred to above is contrary applicable to the secondary products to Article 40 of the Treaty of Rome and be deducted when calculating the whether the method of calculating the compensatory amount applicable to monetary compensatory amounts should the principal derived product? be altered as Roquette wishes". Sub-question (b): With regard to the claim concerning the award of interest on the sums Should there be applied to each overcharged the court considered it derived product a coefficient which appropriate to refer to the Court of corresponds to the ratio between the Justice the problem whether any such quantity of the basic product interest should be paid by the French actually employed in the processing Treasury or be deducted from the and that deemed to have been used? amounts paid by France into the budget of the European Community. 4. Must the compensatory amount applied to potato starch be identical Accordingly, the Tribunal d'Instance, to that applied to maize starch? Lille, decided, by a judgment of 29 June 1979, to refer to the Court of Justice the 5. Must sorbitol containing more than following questions for a preliminary 2% mannitol, processed from maize, ruling: the price of which is related to that of maize, be subject to a monetary "1. Must the production refund which is compensatory amount based on that payable in 'green currency' be taken for maize? into account in calculating the monetary compensatory amounts 6. Must isoglucose processed from applicable to maize starch and to maize, the price of which is related derived products? to that of maize, be subject to a monetary compensatory amount 2. In calculating the monetary based on that for maize? compensatory amount applicable to wheat starch, must the price of the 7. If the Court replies in the affirmative basic product, before deduction of to one of the questions referred to it

for a preliminary ruling set out making the reference in so far as it does above, that is to say, if the replies not accept the conclusions of the above- given are such as to lead the court mentioned opinion of the expert. hearing the case to order a reimbursement, even a partial one, In reply to a question submitted by the of the monetary compensatory Court of Justice Roquette observes that, amounts, should any default interest with regard to the first six questions, the due, not by virtue of Community legal nature of the argument may be laws, but by virtue of national laws, considered from two aspects. be charged to the budget of the European Communities by deduction from the sums levied by The problem submitted is first of all a France for the account of the problem of the validity of the annexes to Community? Regulation No 652/76 and of the (implied) method of calculation employed by the Commission. Roquette, The judgment making the reference was however, maintains that in order to entered on the Court Register on 17 arrive at a proper method of calculation September 1979. it is necessary to interpret the principles and rules laid down by Regulation No In accordance with Article 20 of the 974/71 and, in the alternative, by Regu- Protocol on the Statute of the Court of lation No 572/76. Justice of the EEC, written observations were submitted by Roquette, the plaintiff in the main action, represented in this Thefirstquestion (maize starch) matter by Marcel Veroone, of the Lille Bar, by the Government of the French Roquette observes that the production Republic, represented in this matter by refund is fixed in units of account its Agent, Thierry Le Roy, and by the (Council Regulation No 1665/77 of 20 Commission of the European July 1977, Official Journal 1977 L 186, Communities, represented in this matter P. 15) and that that amount is by J. Delmoly, member of its Legal subsequently converted into each of Department, acting as Agent. the national currencies at the rate of exchange corresponding to the The Court, having heard the report of representative rate or the green rate the Judge-Rapporteur and the views of (Council Regulation No 878/77 of 26 the Advocate General, decided to open April 1977, Official Journal 1977 L 106, the oral procedure without any p. 27). preparatory inquiry. It nevertheless requested the plaintiff and the French The use of the agricultural rate of Government to reply in writing to exchange affects the amounts of the various questions. production refunds paid in the various Member States; thus the refunds paid in countries with hard currencies are higher II — Summary of the written than the refunds paid in those whose observations submitted to currency is soft. the Court The production refund reduces the price of the basic product. The incidence of The Commission states first of all that it the monetary measures on the amount of disagrees with the judgment of the court the refund consequently reduces the

Roquette states that in the case of The Commission considers that there is processed products of the maize starch no economic justification for the industry monetary compensatory argument advanced by the plaintiff to the amounts are calculated on the effect that it is necessary to adopt as the intervention price of maize without basis for calculating the monetary taking hito account the production compensatory amounts applicable to refund. This fact creates distortion in maize starch and products derived competition between the producers of therefrom the intervention price after the various Member States. In fact, the deduction of the amount of the producers in countries with hard production refund paid for starch. currencies receive too much in the form of monetary compensatory amounts whilst the amount paid by producers in This argument would be acceptable if the countries with depreciated currencies is market price of maize, that is to say the excessive. price at which Community producers of maize starch obtain their supplies, were at the same level as the intervention price This method of calculation is illegal on of maize. That is not so, however: two grounds. First, contrary to the sixth during the period in question the market recital of the preamble to Regulation No price of maize lay between the 974/71, the incidence of the monetary intervention price and the threshold measures is over-compensated although price. That situation is explained by the compensatory amounts should be limited fact that there is a shortage of maize in to the amounts strictly necessary to the EEC. Accordingly the threshold price compensate the incidence of the in general affects the market price of monetary measures on the prices of the that product in the Community. basic products. Secondly, the method violates the principle of non-discrimi- nation set out in Article 40 (3) of the The Commission recalls that the agri- Treaty. monetary system laid down by Regu- lation No 974/71 does not specify that the intervention price must be adopted According to Roquette the solution is to for the purpose of calculating monetary deduct the amount of the production compensatory amounts. Although the refund from the intervention price of intervention price is generally adopted, maize in calculating the monetary the objective of the arrangements is in compensatory amount applicable to fact to protect the intervention system. processed products of the starch Where the product concerned as such industry. benefits from an intervention price it is logical that the latter price should be used for the calculation of the monetary Roquette admits that Regulation No compensatory amount; furthermore, the 746/79 of 11 April 1979 (Official adoption of that choice makes it easier to Journal L 95, p. 3) and Regulation No manage the system of monetary 851/79 of 30 April 1979 (Official compensatory amounts. Journal L 108, p. 11) have in the meantime tried to remedy the situation but it claims that these measures have In this case, however, there is no specific only brought about a very slight intervention price for products processed

Furthermore, a whole series of factors It is thus reasonable to adopt for the favour producers established in countries calculation of the monetary com- with devalued currencies. pensatory amount that supply price as it is the price closest to the market price and at the same time the most relevant price with regard to the rules on the Thus the Commission declares that it common organization of the market in does not take into account, in calculating cereals with regard to certain processed the monetary compensatory amounts products. applicable to products processed from maize (and from wheat), monthly increases which affect the intervention (or reference) price and the threshold price Nevertheless, that choice of the supply of the basic products. The effect of price for calculating monetary excluding the monthly increases in the compensatory amounts was modified in method of calculation is to benefit cases where that price was above the producers in countries with devalued intervention price of maize. The level of currencies since the resulting monetary the supply price in relation to the compensatory amount is lower than that intervention price depends in part on the arrived at if the increases are taken into amount of the production refund. account. Although, up to 1975, the supply price was in general lower, from that year it was higher than the intervention price of maize. From 1975 the Commission thus The reduction of 1.50 points provided adopted the intervention price of maize for in Article 2 (1) (b) of Regulation

ROQUETTE FRERES v FRENCH CUSTOMS ADMINISTRATION

In conclusion the Commission considers Thus, in the case of processed products, that the choice of the most relevant price the monetary compensatory amounts are for calculating the monetary com- no longer equal to the incidence on the pensatory amounts applicable to products price of those products of the monetary processed from cereals forms part of a compensatory amount applicable to the general economic appraisal; in this basic product. This inequality infringes connexion, it considers that such a Article 2 of Regulation No 974/71 and choice comes within the wide discretion the principle of non-discrimination set which, according to the settled case-law out in Article 40 (3) of the Treaty. of the Court, has been conferred on the Commission in implementing the system According to Roquette, it is necessary to of monetary compensatory amounts take into consideration, with regard to (Case 43/72 Merkur-Außenhandels- processed products, the same price as in GmbH v Commission [1973] ECR 1055 the case of the basic product, after at 1073; Case 5/73 Balkan-Import-Export deduction of the production refund. GmbH v Hauptzollamt Berlin-Packhof [1973] ECR 1091 at 1106; Case 74/74 CNTA v Commission [1975] ECR 533 at The Commission considers that this 547 and Case 55/75 Balkan-Import- question should in substance receive the Export-GmbH v Hauptzollamt Berlin- same reply as that given to the first Packhof [1976] ECR 19 at 30). subject, however, to two differences.

In conclusion, Roquette claims that it is The third question (secondary products necessary, in calculating the monetary processedfrommaize and wheat) compensatory amount applicable to starch, to take account of the monetary Roquette sets out first of all certain compensatory amounts on the other technical details concerning manufac- products manufactured from maize or turing, in particular the fact that: from wheat. 1 tonne of maize produces The French Government refers to the 621 kg of starch arguments which it presented to the + 61 kg of germ Court in its recent observations in Case + 45 kg of gluten 4/79, Providence Agricole de la + other secondary products to which Champagne v ONIC, which is still pending before the Court, and requests monetary compensatory amounts do not the Court to refer to them. apply; 1 tonne of wheat produces The Commission states that in the course of the manufacture of maize starch in the 454.55 kg of starch various Member States various secondary + 72.00 kg of gluten products are obtained in addition to + 214.30 kg of bran starch, only some of which come under + 51.40 kg of sharps. the system of monetary compensatory amounts. Having regard to these facts the total of the monetary compensatory amounts on With regard to wheat starch the situation the derived products must be equal to regarding derived products is not so the monetary compensatory amount on clear. Statistical data do not however the basic product (after deduction of the indicate any distortion in competition production refund). with regard to that product. A reduction of 10% in the monetary compensatory This is not however the case. Instead, the amount for bran (tariff headings monetary compensatory amount on the 23.02 AII (a) and AII (b)) was not made basic product is passed on to starch in its because it would have entailed an entirety: increase in the monetary compensatory amounts in the case of wheat flour. — Monetary compensatory amount on 1 tonne of maize: FF 101.99 The totals for countries with revalued currencies and for countries with — Total monetary compensatory devalued currencies must be treated with amounts on processed products; of circumspection since double reckoning which: FF 115.83 cannot be excluded. They nevertheless show clearly that imports have been — Monetary compensatory amount on made virtually only into countries with starch: FF 101.97 revalued currencies where better prices

Furthermore, the Commission points out Roquette considers that the monetary the following factors which, for the compensatory amounts on maize starch starch industry in general, tend in its and potato starch must be kept identical. view to benefit producers established in That equality was upset by Regulation certain countries: No 746/79 of 11 April 1979 (Official Journal 1979 L 95, p. 3). Maize starch is listed among the products with a — The common organization of the monetary compensatory amount which is market in cereals is not neutral with reduced by 6%. Since that regulation regard to competition, it guarantees does not mention potato starch it follows to industries in producing countries that the monetary compensatory cost prices which are more advan- amounts on maize starch and potato tageous for the basic product because starch are henceforth different. the threshold price Rotterdam is based on the intervention price Ormes (Loiret) which benefits France The Commission observes that during the in particular; period in question (1976 to 1978) maize starch and potato starch were accorded identical treatment. It accordingly — A series of derived products can be considers that the question submitted is marketed without monetary irrelevant to the outcome of the main compensatory amounts; countries action. with devalued currencies thus derive benefit and countries with revalued currencies are placed at a disad- The fifth question (sorbitol) vantage; Roquette states that sorbitol containing — Monetary compensatory amounts are more than 2% mannitol may be manu- not applicable to large quantities of factured either from maize or from starch because they are marketed in sugar. In both cases the composition of the form of modified starch; the sorbitol is identical.

which constitutes an infringement of latter from sugar. The distinction Article 2 of Regulation No 974/71 and remains valid as it appears from the of Article 40 (3) of the Treaty. information available to the Commission that the maximum quantity of mannitol Roquette considers that where sorbitol is which can be found in sorbitol manu- produced from maize the monetary factured from maize is in fact approxi- compensatory amount must be calculated mately 2% (see Annex V to the obser- by reference to maize. vations of the Commission). On the other hand, although the basic Assuming that in a specific case a product employed cannot be determined chemical analysis contradicts this by the chemical analysis of sorbitol the standard classification, the Commission materials accounting records of manufac- considers that it must abide by the turers established in the Community and general rule which is based on a a simple method of administrative co- presumption which has been widely operation in respect of sorbitol imported accepted and is the only one enabling the from non-member countries make it system to be practicable; in fact a possible easily to avoid over- chemical analysis of that accuracy could compensation and the risk of deflection only be carried out in the factory where

sugar. The Commission maintains that in the calculation of the monetary compensatory amount it took the The sixth question- quantities of the basic product (maize or sugar) adopted by the Council in Regu- Roquette observes that isoglucose is a lation No 1060/69 of 28 May 1969 glucose syrup with a high fructose which fixes such quantities for the content which is obtained from maize by purposes of calculating the variable isomerization. components to be charged on products not covered by Annex II. Such quantities The monetary compensatory amount are in general determined as a standard applicable to isoglucose is equal to that amount. applicable to sucrose but, according to Roquette, the monetary compensatory With regard to sorbitol the fixing of a amount on isoglucose must be calculated standard amount is necessary by reason on the basis of the intervention price of of the extreme difficulties entailed in the maize. chemical analysis of the basic product which is actually employed. The The Commission states that isoglucose is Commission states that Regulation No a product directly competing with liquid 1060/69 of the Council thus drew a sugar syrups. This means that the market distinction between sorbitol with a price of isoglucose tends to be aligned on mannitol content not exceeding 2% and the market price of liquid sugar.

ROQUETTE FRERES v FRENCH CUSTOMS ADMINISTRATION

JUDGMENT OF 15. 10. 1980 — CASE 145/79

ROQUETTE FRERES v FRENCH CUSTOMS ADMINISTRATION

amounts at the lowest level possible. In The Commission emphasizes that fact, the market price is generally higher nowhere in the Community is there a than, or at least equal to, the supply price equivalent to the intervention price. intervention price after deduction of the production refund. It does not understand how, at this "unreal" price Nevertheless, there is, within the organ- level, disturbances exist in trade in agri- ization of the market in cereals, a special cultural products which alone justify factor, the production refund, which monetary compensatory amounts (see may, in certain circumstances, cause the the third subparagraph of Article 1 (2) of market price of starch to fall below the Regulation No 974/71). level of the intervention price of maize. For traders on this market the production refund constitutes the measure which has the preponderant influence on their supply price of maize. V — Oral procedure

For this reason that refund was taken At the hearing on 20 May 1980 the into account by deducting it not from plaintiff, represented by Mr Veroone, of the intervention price but from the the Lille Bar, the French Government, threshold price which, of the Community represented by its Agent, H. Marty- prices, is the most significant price Gauquie, and the Commission of the exerting an influence on the maize European Communities, represented by market. The price thus obtained is the its Agent, J. Delmoly, assisted by Mr supply price. Whenever the supply price Reifenrath, presented oral argument. was lower than the intervention price the former price was adopted for calculating the monetary compensatory amounts The Advocate General delivered a applicable to products processed from further opinion at the sitting on 17 June maize. 1980.

4 The defendant in the main action claims that the French State merely applies the Community provisions without being able to appraise the validity of the method of calculating the monetary compensatory amounts. It collects these amounts and pays them to the European Agricultural Guidance and Guarantee Fund.

5 The court ordered that an expert's report be obtained. It accepted the findings in the expert's report in so far as they concerned the existence and extent of the distortion alleged by Roquette as a consequence of the methods of calculating the compensatory amounts. In those circumstances, the court considered it necessary to stay the proceedings until the Court of Justice had decided whether the distortion thus established is contrary to Article 40 of the Treaty and whether it is necessary to modify the method of calculating the monetary compensatory amounts along the lines desired by Roquette.

ROQUETTE FRERES v FRENCH CUSTOMS ADMINISTRATION

Preliminary observation

6 The first six questions submitted by the court ask what the correct method is for calculating the monetary compensatory amounts applicable to maize starch, wheat starch, potato starch, sorbitol and isoglucose. It must be observed that the compensatory amounts in question were fixed and modified by Commission regulations; the Commission was empowered to do so by Articles 3 and 6 of Regulation No 974/71. The six questions request the Court of Justice to give a ruling on the methods of calculation which the Commission employed in determining the amounts fixed by it. The questions therefore indirectly request an appraisal of the validity of the provisions of the regulations whereby the Commission established the compensatory amounts applicable to the products in question.

10 Under Article 1 (2) of Regulation No 974/71, the charging or granting of compensatory amounts applies to products covered by intervention arrangements under the common organization of agricultural markets and to products whose price depends on the price of the products in that first category and which are governed by the common organization of the market or are the subject of a specific arrangement under Article 235 of the Treaty. Article 2 (2) states that for products other than those covered by intervention arrangements, the compensatory amounts shall be equal to the incidence, on the prices of the product concerned, of the application of the compensatory amount to the prices of the product covered by intervention arrangements on which they depend.

1 3 The Court admits that the calculation of the incidence on the prices of dependent products of the monetary compensatory amount fixed for a basic product causes difficult technical and economic problems with regard to a large number of products whose manufacturing process and composition may vary in the various regions of the Community. It is for the Commission to resolve these problems whilst maintaining a degree of consistency and clarity in the system of monetary compensatory amounts which it is required to establish in that sector. For this purpose it must have a wide margin of discretion in particular with regard to the existence or the threat of distur- bances in trade, the number of dependent products to which a compensatory amount must be applied and the incidence on the price of the dependent product of the compensatory amount applied to the basic product. The fixing of the compensatory amount on a processed product cannot be challenged on the sole ground that, for a particular undertaking or group of producers, the calculation of the incidence of the compensatory amount applicable to the basic product is not entirely appropriate, as it may be essential to make general assessments.

1 4 The discretion which the Commission must be recognized to have nevertheless has limits. If the result of the method of calculation employed is persistently to apply to processed products compensatory amounts the burden or, as the case may be, the benefit of which continually exceeds the amount necessary to take account of the incidence of the compensatory amount applicable to the basic product, the objective of the provisions establishing these amounts may no longer be deemed to be the neutralization of the effects of the currency fluctuations between the Member States. In that case the Commission no longer acts within its powers under Regulation No 974/71.

18 In the course of the procedure before the Court of Justice the Commission explained its method of calculating the compensatory amounts applicable to maize starch. In its opinion, there is no reason to take the intervention price of maize into consideration for the purposes of that calculation since starch producers obtain their supplies of maize at a price higher than the intervention price which is approximately that of the threshold price. In view of the difficulties entailed in taking into consideration the actual supply price, which depends on the market situation, the Commission based its calculation on a supply price fixed at a standard amount. Accordingly, in calculating the compensatory amounts applicable to maize starch it took into consideration the threshold price of maize after deduction of the production refund for starch. Nevertheless, where 'the supply price thereby determined is higher than the intervention price, the Commission based itself on the latter price instead of the supply price, on the ground that it is required to fix the lowest possible compensatory amounts having regard to the particular features of the agricultural sector in question. In this case there is no economic justification for deducting the production refund from the intervention price, since the latter is lower than the supply price including the production refund.

ROQUETTE FRERES v FRENCH CUSTOMS ADMINISTRATION

19 The tables submitted to the Court by the Commission show that since 1975 the intervention price of maize has been lower than the threshold price of maize after deduction of the production refund on starch. It follows that in the course of the period to which this action relates the compensatory amount applicable to maize starch was determined on the basis of the intervention price of maize without deducting the production refund.

JUDGMENT OF 15. 10. 1980 — CASE 145/79

affect producers situated in countries, like France, with depreciated currencies, such as for example the possibility of obtaining supplies of home- produced maize, the exemption provided for in Article 2 (1) (b) of Regu- lation N o 974/71 with regard to the calculation of the monetary compensatory amounts applicable to Member States with depreciated currencies and the fact that the monthly increases in the intervention price are not taken into account in calculating the compensatory amounts on products processed from maize. For these reasons it claims that the choice of the price to be taken into consideration comes within the wide discretion which the Commission enjoys in this field.

ROQUETTE FRERES v FRENCH CUSTOMS ADMINISTRATION

27 T h e Commission has stated that it determined the method of calculation applicable to wheat starch so as to treat w h e a t starch in the same w a y as maize starch, whilst taking into consideration the reference price of w h e a t instead of the intervention price since the former price performs the same function in the calculation of compensatory amounts with regard to wheat and its secondary products as the intervention price with regard to maize and its secondary products. T h e file shows that the compensatory amounts applicable to w h e a t are calculated on the basis of the reference price of w h e a t whilst the compensatory amounts applicable to w h e a t starch are established o n the basis of the threshold price of wheat after deduction of the production refund.

28 According to the information which the Commission has supplied to the Court, it adopted the threshold price after deduction of the production refund because the latter represents the supply price of w h e a t for starch manufacturers. It has stated that, nevertheless, unlike the situation in the maize sector, that supply price has always been lower than the reference price; accordingly it was invariably taken into consideration for the calcu- lation of the compensatory amounts applicable t o w h e a t starch.

29 Having regard to the considerations relating to maize starch and to the choice which the Commission has stated that it made to give identical treatment to maize starch and wheat starch, it is clear that the Commission has exceeded its powers by adopting in respect of the compensatory amounts applicable to w h e a t starch a basis of calculation other than the reference price after deduction of the production refund. It follows that the reply to the second question must be in the affirmative.

33 The fourth question asks whether the compensatory amount applied to potato starch must be identical to that applied to maize starch.

34 It should be recalled that Regulation No 974/71 makes provision for compensatory amounts on products covered by intervention arrangements and on products whose price depends on the price of the products covered by intervention arrangements and which are in addition governed by the common organization of the market or are the subject of a specific arrangement under Article 235 of the Treaty. It is common ground that no intervention arrangements have been laid down with regard to potatoes but that the price of potato starch depends on that of maize, since potato starch is in competition with or may even be substituted for maize starch.

35 In those circumstances the incidence, within the meaning of Article 2 (2) of Regulation No 974/71, on potato starch of the application of the compensatory amount to the prices of maize cannot be different from the same incidence on maize starch.

36 The Commission has however disputed this point of view. It emphasized that, with regard to potato starch, the secondary products obtained are of no real value and, consequently, are not subject to monetary compensatory amounts, unlike the situation in the maize sector. Furthermore, it considers that it must, within the framework of its discretion in economic matters, take account of the special difficulties of the potato starch industry, which were

ROQUETTE FRERES v FRENCH CUSTOMS ADMINISTRATION

acknowledged b y the C o u r t in its j u d g m e n t of 12 July 1979 (Case 166/78, Italian Republic v Council [1979] E C R 2575).

Sorbitol (fifth question)

40 In its fifth question the national court asks whether sorbitol containing more than 2% mannitol, processed from maize, the price of which is related to that of maize, must be subject to a monetary compensatory amount based on that for maize.

JUDGMENT OF 15. 10. 1980 — CASE 145/79

41 Sorbitol is a product covered by a specific arrangement under Article 235 of the Treaty. The trade arrangements applicable to sorbitol were laid down in Regulation (EEC) No 1059/69 of the Council of 28 May 1969 laying down the trade arrangements applicable to certain goods resulting from the processing of agricultrual products (Official Journal, English Special Edition 1969 (I), p. 240) and by Regulation (EEC) No 1060/69 of the Council of the same date fixing the quantities of basic products considered to have been used in the manufacture of the goods covered by Regulation (EEC) No 1059/69 (Official Journal, English Special Edition 1969 (I), p. 246).

42 Pursuant to Regulation No 1059/69, sorbitol is subject on importation into the Community to a charge consisting of a fixed component and a variable component. The method of calculating the variable component is determined by Regulation No 1060/69, which draws a distinction for this purpose between sorbitol containing 2% or less by weight of mannitol, calculated on the sorbitol content, which is considered to have been made from maize, and sorbitol containing more than 2% mannitol, which is considered to have been made from sugar (annex to the regulation, tariff subheading 29.04 C III). The Commission based itself on the same distinction in order to calculate the compensatory amounts applicable to sorbitol.

Isoglucose (sixth question)

46 The sixth question asks whether isoglucose, processed from maize, the price of which is related to that of maize, must be subject to a monetary compensatory amount based on that for maize.

47 The reply to that question is in the negative. Isoglucose is covered by a number of Community measures laying down special arrangements for that product which are however similar to the arrangements applicable to liquid sugar with which isoglucose is considered to be in direct competition. In these circumstances the Commission was correct in calculating the compensatory amounts applicable to isoglucose on the basis of those applicable to white sugar.

The validity of Regulation No 652/76 and the regulations amending that regulation

48 It follows from the replies given to the first, second, third and fourth questions that Regulation No 652/76 is invalid:

— in so far as it fixes the compensatory amounts applicable to maize starch on a basis other than that of the intervention price of maize after deduction of the production refund on starch;

50 Since this declaration of invalidity is made within the framework of a pre- liminary ruling under Article 177 of the Treaty, it is necessary to specify its consequences.

51 Although the Treaty does not expressly lay down the consequences which flow from a declaration of invalidity within the framework of a reference to the Court for a preliminary ruling, Articles 174 and 176 contain clear rules as to the effects of the annulment of a regulation within the framework of a direct action. Thus Article 176 provides that the institution whose act has been declared void shall be required to take the necessary measures to comply with the judgment of the Court of Justice. In its judgments of 19 October 1977 in Joined Cases 117/76 and 16/77 (Albert Ruckdeschel & Co. and Hansa-Lagerhaus Stroh & Co. [1977] ECR 1753) and in Joined Cases 124/76 and 20/77 (Moulins et Huileries de Pont-à-Mousson and Providence Agricole de la Champagne, [1977] ECR 1795) the Court has already referred to that rule within the context of a reference to it for a preliminary ruling.

52 In this case it is necessary to apply by analogy the second paragraph of Article 174 of the Treaty, whereby the Court of Justice may state which of the effects of the regulation which it has declared void shall be considered as definitive, for the same reasons of legal certainty as those which form the basis of that provision. On the one hand the invalidity of the regulation in this case might give rise to the recovery of sums paid but not owed by the undertakings concerned in countries with depreciated currencies and by the national authorities in question in countries with hard currencies which, in view of the lack of uniformity of the relevant national legislation, would be capable of causing considerable differences in treatment, thereby causing

55 It follows from the considerations set out above that this question has become purposeless.

Costs

56 T h e costs incurred by the Government of the French Republic and the Commission of the European Communities, which have submitted obser- vations to the Court, are not recoverable. As these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the national court, the decision on costs is a matter for that court.

JUDGMENT OF 15. 10. 1980 — CASE 145/79

On those grounds,

THE COURT,

2. The fact that that regulation is invalid renders invalid the provisions of the subsequent regulations of the Commission the purpose of which is to alter the monetary compensatory amounts applicable to the products referred to in the foregoing paragraph.

3. The fact that the above-mentioned provisions are invalid does not enable the charging or payment of monetary compensatory amounts by the national authorities on the basis of those provisions to be challenged as regards the period prior to the date of this judgment.

ROQUETTE FRERES v FRENCH CUSTOMS ADMINISTRATION

4. In fixing the monetary compensatory amounts applicable to sorbitol containing more than 2% of mannitol and manufactured from maize the Commission was not required to fix for that product a monetary compensatory amount based on that applicable to maize.

5. It is not necessary that isoglucose manufactured from maize should be subject to a monetary compensatory amount based on that applicable to maize.

Kutscher Pescatore Koopmans Mertens de Wilmars Mackenzie Stuart

(see Case 4/79, p. 2876)