C-126/81

J U D G M E N T OF T H E C O U R T (SECOND CHAMBER) 6 MAY 1982 '

Wünsche Handelsgesellschaft v Federal Republic of Germany (reference for a preliminary ruling from the Bundesverwaltungsgericht)

(Proiective measures — Preserved mushrooms)

Case 126/81

Agriculture — Common organization of the markets — Products processed from fruit and vegetables — Protective measures applicable to imports of preserved mushrooms Commission's discretion — Regulations Nos 1412/76 and 2284/76 — Validity (Commission Regulations Nos 1412/76 and 2284/76) In view of the situation on the market in 2284/76 laying down detailed rules for question, it cannot be denied that the applying protective measures applicable Commission kept within the limits of its to imports of preserved mushrooms, that discretion in considering, when it the protective measures introduced in adopted Regulations Nos 1412/76 and 1974 should not be abolished.

In Case 126/81

Community protective measures relating to imports of preserved mushrooms from non-member countries,

THE COURT (Second Chamber)

composed of: O. Due, President of Chamber, A. Chloros and F. Grévisse, Judges,

Advocate General: S. Rozès Registrar: M. Petersen, Legal Secretary

gives the following

JUDGMENT

conditions justifying the adoption of The percentage in question was fixed by protective measures ceased to exist as Commission Regulations Nos 1412/76 from 1 July 1976. and 2284/76 of 18 June and 21 September 1976 fixing for purposes of By judgment of 25 July 1978 the Verwal- application of the systems of import tungsgericht dismissed the action as licences for preserved mushrooms the unfounded, taking the view that the percentage applicable to the reference Commission had lawfully adopted the quantity (Official Journal 1976, L 158, protective measures. p. 37 and L 258, p. 5), at 70% of the reference quantity for imports in the course of the third quarter of 1976, and Wünsche then lodged an appeal before at 100% for imports in the course of the the Bundesverwaltungsgericht [Federal fourth quarter of 1976. In the second Administrative Court], contending that quarter of 1976, the percentage had been the Verwaltungsgericht Frankfurt had 55%, and in the first quarter of the same failed to apply correctly the Community year it had been 40%. law on the subject.

In its Regulation No 3096/76 of 17 2. Article 1 of Regulation N o 2107/74, December 1976 (Official Journal 1976, as amended by Commission Regulation L 348, p. 26), the Commission then No 1869/75 of 22 July 1975 (Official definitively repealed Regulation No Journal 1975, L 190, p. 23) provides for 2107/74 with effect from 1 January 1976 that the import of preserved 1977. mushrooms shall be subject to the submission of an import licence, for which application must be made before The last two recitals in the preamble to the beginning of the quarter to which it Regulation No 1412/76 are worded as relates. follows:

products processed from fruit and which might endanger the objectives set vegetables (Official Journal, English out in Article 39 of the Treaty, particular Special Edition 1971 (II), p. 468). It was account shall be taken of: replaced by Regulation N o 1927/75 of the Council of 22 July 1975 concerning (a) the volume of imports or exports the system of trade with third countries effected or foreseen; in the market and products processed from fruit and vegetables (Official Journal 1975. L 198, p. 7). Article 7 (1) (b) the quantities of products available thereof reproduces the basic rules on the Community market; contained in Regulation No 1427/71 on the introduction of protective measures: (c) the prices for Community products on the Community market or the "(1) If, by reason of imports or exports, foreseeable trend of these prices and the Community market in one or in particular any excessive upward or more of the products specified in downward trend thereof in relation Article 1 (1) is or is likely to be to prices in the years immediately exposed to serious disturbances preceding; which might endanger the objectives set out in Article 39 of (d) Where the above-mentioned the Treaty, appropriate measures situation arises as a result of imports, may be applied in trade with third the prices obtaining on the countries until such disturbances or Community market, at a comparable the threat has ceased. stage, for products from third countries, and in particular any The Council, acting on a proposal excessive downward trend in these from the Commission in prices". accordance with the voting procedure laid down in Article 43 (2) of the Treaty, shall adopt rules Should the situation referred to in Article for the application of this 7 (1) of Regulation No 1927/75 of the paragraph and shall define the cases Council arise, Article 2 (1) (a) of Regu- and the limits within which lation No 1928/75 permits the refusal to Member States may take protective issue import certificates for products measures". from non-member countries. However, according to the first sentence of Article 2 (2) those measures "may be taken only 3. Anicie 1 of Regulation No 1928/75 to such an extent and for such length of of the Council of 22 July 1975 laying time as is strictly necessary". down detailed rules for applying protective measures in the market in products processed from fruit and 4. Since it-considered that the dispute vegetables (Official Journal 1975, L 198, pending before it raised questions of p. 11) provides that: Community law, the Bundesverwaltungs- gericht decided to stay the proceedings pursuant to Anicie i 77 of the EEC "In order to assess whether the Treatv and it referred to the Court the Community market in one or more of following question: the products listed in Anicie 1 of Regu- laron (EEC) No 865/68 is, by reason of imports or exports, experiencing or "Did Regulation Í E E O No 2107/74 of threatened with serious disturbances the Commission of 8 August 1974 laying

down protective measures applicable to mushrooms had ceased to exist from 1 imports of preserved mushrooms July 1976 at the latest. On the German (Official Journal 1974, L 218, p. 54) market there had been a shortage rather infringe the combined provisions of than a disturbance. On the different Article 7 (1) of Regulation (EEC) No criteria for assessment set out in Article 1 1927/75 of the Council of 22 July 1975 of Regulation No 1928/75, Wünsche concerning the system of trade with third makes the following observations. countries in the market in products processed from fruit and vegetables (Official Journal 1975, L 198, p. 7) and Volume of imports effected or foreseen Article 2 (2) of Regulation (EEC) No 1928/75 of the Council of 22 July 1975 laying down detailed rules for applying The statistics relating to imports from measures in the market in products Taiwan showed the following trend: processed from fruit and vegetables 15 808 tonnes in 1974; 18 174 tonnes in (Official Journal 1975, L 198, p. 11) in 1975; 7 830.8 tonnes in 1976. so far as it was retained in force after 30 June 1976"? In 1976 the total deliveries therefore fell 5. The order of the Bundesverwal- to about 40% of the total for the tungsgericht referring the question to the previous year. The last consignment Court was received at the Court Registry cleared was sold and released to the on 25 May 1981. market during the marketing year 1975/76 in Taiwan on 1 April 1976. In accordance with Article 20 of the Apart from about 350 tonnes which Protocol on the Statute of the Court of remained in stock, Taiwan was unable to Justice of the EEC, written observations supply any more preserved mushrooms were submitted by the defendant in the until the new harvest, which takes place main action, represented by D. Ehle, in the month of December and in respect Rechtsanwalt, of Cologne, and by the of which imports cannot begin until Commission, represented by M. Hilf, a February or March at the earliest. member of its Legal Department. Upon hearing the report of the Judge- With regard to Korea, the import Rapporteur and the views of the statistics are as follows: 6 102.5 tonnes in Advocate General, the Court decided to 1974, 2 698.9 tonnes in 1975 and 1 898 open the oral procedure without any tonnes in 1976. preparatory inquiry. However, the Court asked the parties to the preliminary ruling proceedings to reply in writing to A considerable decrease in deliveries certain questions before the hearing. started to become discernible during the first half of 1976. From June 1976 By order of 9 December 1981 the Court onwards, there had been no known decided to assign the case to the Second offers from Korea. Chamber. The statistics concerning imports from the People's Republic of China are as II — Written o b s e r v a t i o n s sub- follows: 21 568.4 tonnes in 1974; mitted to the Court 16291.4 tonnes in 1975, and 16 183.7 tonnes in 1976. In 1976 the People's 1. Wünsche states that the serious Republic supplied about the same disturbances on the market in preserved quantity as in 1975.

In 1976 there was again an increase in Only France was, at the time in question the price of products from non-member at least, an exporter on the Community countries by comparison with both 1974 market. In the main the Netherlands and 1975. In relation to 1974, prices for produced only third-grade bottled preserved mushrooms imported from mushrooms which were sold as a Taiwan increased in part by as much as speciality. Before February 1977 80%. By comparision with 1975, the Wünsche received no offers from French price rise should be assessed at about suppliers. Other German wholesalers did 40%. At the Commission's request, not receive any offers from France until Taiwan increased by 15% the price of the second and third quarters of 1977. quantities released for the first quarter of Moreover, as from Februar)' 1976 there 1976. As a result, prices again underwent had been some difficulties with regard to an official increase of 25%. The Korean the continuity of deliveries from France. and Chinese producers of preserved mushrooms adopted that level of prices. According to Wünsche, all those factors show that, at least so far as the period from 1 July to 31 December 1976 is According to Wünsche, in the absence of concerned, the quantities offered on the serious disturbance or threat of such internal Community market were either disturbance, the objective relating to non-existent or, at any rate, inadequate. producers set out in Article 39 (1) (a) to (c) of the Treaty could not be endangered. On the other hand, the Commission infringed the objectives Prices for Community products on the concerning the protection of the Community market consumer, stated in Article 39 (1) (d) to (e) of the Treaty: the availability of supplies of preserved mushrooms to the From Julv/August 1974 to Julv/August consumer was not ensured and the 1976, prices rose by 90% and 100%. On consumers were no longer able to buy

preserved mushrooms at reasonable the swift abolition of the protective prices. measures. The most serious disad- vantages for Wünsche was the fact that, since it did not have enought impon certificates issued in its own name, it was The Commission ought to have confined compelled to have cenificates issued to its action to the pursuit of the objectives other undertakings transferred to it, in set out in Article 39 of the Treaty. By order to import the goods. maintaining the protective measures after 1 July 1976, however, it adopted a unilateral protectionist policy, not covered by Article 39 of the Treaty, in favour of French mushroom producers 2. The Commission observes that its and the French preserved mushroom conduct must be assessed by reference to industry. the moment when the protective measures were decided upon (see paragraph 24 of the judgment of 5 May 1981 in Case 112/80 Dürbeck v Haupt- Even if the Commission enjoys a wide zollamt Frankfurt am Main [1981] ECR discretion, in regard to the application of 1095). It considers that it enjoys a wide Article 7 of Regulation No 1927/75, discretion with regard to the assessment within the framework of Anieles 39 and of economic events. It remains free to 40 of the Treaty and of Regulation No take into account factors other than 1928/75, it clearly misused that those listed in Anicie 1 of Regulation discretion in this case: the factual No 1928/75. It must give special preconditions required even by only one consideration to those factors, but may of the criteria for assessment laid down also adopt measures where just one of in Article 1 of Regulation No 1928/75 the indicators discloses the existence of a no longer existed by 1 July 1976 at the serious threat. It must in addition limit or latest. abolish the effect of the measures adopted once they are no longer absolutely necessary. The facts as stated by Wünsche do not correspond to the situation on the market as it appeared to Wünsche points out that the protective the Commission before the entry into measures ought to have been abolished force of the contested measure. The as soon as the disturbances on the assessments made by the Commission at market had ceased. In this regard it that time were confirmed by the later refers to the fourth recital in the trends on the market. The Commission preamble to Regulation No 1927/75, to examines next whether the circumstances Article 7 (1) of that regulation, to the laid down in Anicie 1 of Regulation No first recital in the preamble to Regulation 1928/75 were present when it adopted No 1925/73 and also to Article 2 (2) the contested rules. thereof.

Republic of Germany from non-member remained between 5 000 and 10 00C countries amounted to about 20 000 tonnes and they did not again reach the tonnes a year before 1972, 37 633 tonnes pre-1974 level. in 1973, and 20 434 tonnes in the first half of 1974. The protective measures adopted on 30 August 1974 were not Stocks in the Netherlands reached about capable of preventing the import of 4 500 tonnes at the beginning of 1976 44 140 tonnes in 1974 and 37 340 tonnes and 3 000 tonnes in the middle of 1976 in 1975. Those measures began to have and fell to about 2 000 tonnes towards effect in 1976, when 26 797 tonnes were the end of 1976. imported. The Commission considers that if it had abolished those measures for the third and fourth quarters of 1976, The Commission concludes that the imports for that year would have been as known figures for stocks in June 197»; high as those for 1974. In the following did not disclose a shortage on the year, the stabilization achieved was market. Even at the end of 1976, demonstrated by the figure of 29 905 Community stocks still amounted to tonnes, before a sudden increase, in May more than 6 000 tonnes. 1978, in applications for import licences, for 40 914 tonnes, made it necessary to adopt new protective measures. Prices for Community products on the Community market

VÜNSCHE v GERMANY

actively confirmed the prices regarded as collapse in the price of Community representative by the Commission. The products. rise in the level of prices within the Community corresponded with the In the middle of 1976, the prices asked purpose of the protective measures for products from non-member countries applied. were still about 10% lower than the cost price of Community products. It was therefore necessary to maintain the Whereas the average prices on the protective measures. The average price German market for imports from France for the whole of the year in question was had always been above DM 1.70 per 0.5 appreciably lower than the average price kg, until 1971, those prices dropped for Community products, although below DM 1.50 from 1972 to 1975. towards the end of the year a tendency Since products from non-member towards convergence could be detected. countries had been putting the The earlier abolition of the protective Community market under pressure, as measures would have jeopardized that from 1973 in particular, they at once development. The virtual equality in impeded any normalization of prices. prices achieved in 1977 may be attributed The statistics demonstrate that after the inter alia to the discipline in the matter protective measures were discontinued it of prices observed by the non-member was possible from 1977 to 1979 to attain countries. once again average prices of D M 2.13, DM 1.89 and DM 1.98. On the basis of the foregoing considerations, the Commission suggests The documents in the Commission's that the question posed by the Bundes- possession do not confirm the existence verwaltungsgericht should be answered of a "rise of 90 or 100%", such as the as follows: appellant in the main action alleges in relation to prices in 1974. Moreover, "Consideration of the question referred such a rise does not correspond with the to the Court for a preliminary ruling has information in the possession of the disclosed no factor of such a kind as to Federal Statistics Office which shows an affect the validity of Commission Regu- average price in 1974 of DM 1.31 per 0.5 lation (EEC) No 2107/74, No 1412/76 kg and in 1976 of DM 1.81 per 0.5 kg, and N o 2284/76". amounting to a rate of increase of 3 8 % .

2 Those regulations fall within the context of the Community rules on the common organization of the market in the sector of products processed from fruit and vegetables. During the period in question, the introduction of protective measures in this sector was governed first by Regulation No 1427/71 of the Council of 2 July 1971 (Official Journal, English Special Edition 1971 (II), p. 468) and then by Regulation N o 1927/75 of the Council of 22 July 1975 (Official Journal 1975, L 198, p. 7), of which Article 7 (1), reproducing the wording of Article 1 (1) of Regulation N o 1427/71, reads as follows:

"If, by reason of imports or exports, the Community market in one or more . . . products . . . is or is likely to be exposed to serious disturbances which might endanger the objectives set out in Article 39 of the Treaty, appropriate measures may be applied in trade with third countries until such disturbances or the threat thereof has ceased".

The second subparagraph of the same paragraph authorized the Commission to adopt the necessary measures.

3 By two regulations (Nos 1428/71 and 1928/75), adopted on the same respective dates, the Council had defined the detailed rules for applying protective measures in the above-mentioned sector (Official Journal, English Special Edition 1965-1972, p. 86 and Official Journal 1975, L 198, p. 11). Anicie 1 of those regulations provided substantially that, in order to assess whether or not a situation such as that described above existed, particular account was to be taken of:

(a) the volume of imports or expons effected or foreseen;

5 In Anicie 3 of the regulation, the Commission reserved the right to limit impon licences issued to each applicant to a given percentage of a reference quantity equal to the quantity of preserved mushrooms imponed into the Community by the latter in the corresponding period in 1973 or to the average quantity of its impons during the same period in the years 1971 to 1973. Thereafter, the Commission fixed that percentage in successive regu- lations first at 50%, next at 2 5 % , then at 40% for the first quarter of 1976 and 5 5 % for the second quarter of the same year. By the two Regulations Nos 1412/76 and 2284/76, cited above, the percentage was fixed at 7 0 % for the third quarter and 100% for the fourth quarter of 1976. With effect from 1 January 1977, the protective measures introduced by Regulation N o 2107/74 were finally abolished.

JUDGMENT OF 6. 5. 1982 — CASE 126/81

6 On 9 July 1976, the appellant in the main action, the undertaking Wünsche Handelsgesellschaft, applied to the German authorities for the issue of a licence to impon 1 000 tonnes of preserved mushrooms from Taiwan. The authorities refused the application on the basis of the quota system described above and the undertaking then brought an action before the Verwaltungs- gericht [Administrative Court] Frankfurt am Main, claiming that after 1 Julv 1976 it was no longer justified in maintaining that system. Its action was dismissed and it then brought an appeal on a point of law by way of a direct action before the Bundesverwaltungsgericht.

? Those are the circumstances in which the Bundesverwaltungsgericht referred to the Court the following question:

VÜNSCHE v GERMANY

which had been issued could not be used to the full, and Community production, which is concentrated particularly in France, was no longer able to satisfy German demand. The prices obtaining on the market for Community products rose by 90 to 100% from July/August 1974 until the same months in 1976, and the prices for imponed products particularly from Taiwan rose in part by as much as 80% over the same period.

io In the observations which it submitted to the Court, the Commission states that that information does not correspond to the information deriving from the data which were at its disposal when Regulations Nos 1412/76 and 2284/76 were adopted and which were confirmed by the official statistics published later. In fact, the protective measures did not begin to produce the intended effects until the first two quarters of 1976. At the time when the two regulations were adopted, the actual situation on the market did not yet permit the abolition of the protective measures. It appeared to be absolutely essential to open the frontiers to non-member countries gradually, in order to avoid jeopardizing the normalization of the market which was taking shape.

n In view of those two conflicting arguments, it is necessary to consider whether, at the time when the contested regulations were adopted and taking account of the situation on the market in question and the discretion conferred upon the Commission by those provisions, the Commission properly applied Article 7 of Council Regulation N o 1927/75 and Articles 1 and 2 of Council Regulation No 1928/75. As more than 9 5 % of imports of preserved mushrooms into the Community are intended for the Federal Republic of Germany, it is above all necessary for that purpose to examine the situation on the German market.

i5 Such a significant rise, which, moreover, is derived only from fragmentary information, is not reflected in the statistics produced by the Federal Statistics Office, from which it appears that the rise in prices of preserved mushrooms in non-member countries during the said period did not exceed 30% or thereabouts. In that regard, it should be recalled that, according to the recitals in the preamble to Regulation No 2107/74, the offer prices from non-member countries in 1974 were 20 to 30% less than the cost price within the Community industry.

it, Finally, with regard to the prices of the products from Member States, the figures of the Federal Statistics Office show that they declined considerably from 1972 to 1974 but recovered to some extent in 1975 and rose considerably during 1976, without, however, until the latter months of that year, for which, moreover, information was not available at the time when the contested regulations were adopted, reaching the level in DM of the years prior to 1972.

17 In those circumstances, it cannot be denied that the Commission kept within the limits of its discretion in considering, when it adopted the contested regu- lations, that the situation on the market did not yet permit the abolition of the protective measures introduced in 1974.

WÜNSCHE v GERMANY

is The answer to the question referred to the Court should therefore be that consideration of Commission Regulations Nos 1412/76 and 2284/76 has disclosed no factor of such a kind as to affect their validity.

Costs

Delivered in open court in Luxembourg on 6 May 1982.

J. A. Pompe O. Due Deputy Registrar President of the Second Chamber