C-232/81

1. A regulation the purpose of which 2. The mere fact that the conditions on is to prevent the carrying out of which the Commission permitted the contracts of sale concluded between a sale of stocks of olive oil held by a national intervention agency and national intervention agency proved undertakings submitting tenders when to be extremely favourable to the the legal position of the parties has purchasers does not entitle the already been definitively determined is Commission to prevent the agency of direct and individual concern to from carrying out the contracts which those undertakings. had been concluded in accordance with the said conditions.

In Case 2 3 2 / 8 1

AGRICOLA COMMERCIALE O L I O S R L , w h o s e registered office is «at O s t u n i ,

ASTOLIO SRL, w h o s e registered office is at Ostuni,

1 — Language of the Case: Italian.

JUDGMENT OF 27. 11. 1984 — CASE 232/81

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

composed of: O. Due, President of Chamber, C. Kakouris, U. Everling, Y. Galmot and R. Joliét, Judges,

Advocate General: C. O. Lenz Registrar: H . A. Rühi, Principal Administrator

gives the following

AGRICOLA COMMERCIALE OLIO v COMMISSION

JUDGMENT

By Regulation No 71/81 of 12 January The Commission agreed to suspend the 1981 (Official Journal L 11, p. 5) the sale until such time as the necessary Commission decided that the Italian verifications had been carried out. The intervention agency, Azienda di Stato lots were not drawn until 1 June 1981, per gli Interventi sul Mercato Agricolo when the five applicants in this case and (hereinafter referred to as "AIMA"), the applicant in Case 264/81, Savma, should put up for sale some 33 000 were each allocated one lot, tonnes of virgin olive oil from in- tervention purchases made during the 1977/78 olive marketing year. On 3 August 1981, the Commission adopted Regulation No 2238/81 (Official Journal L 218 p. 27) which The oil had been put up for sale by repealed Regulation No 71/81 with tender as extra virgin olive oil on several effect from 13 January 1981. In the occasions but had not been sold. The preamble to Regulation No 2238/81 the Commission was of the opinion that the Commission declared that as a result of market situation on 12 January 1981 the delay in carrying out the sale caused appeared to be suitable for offering the by consideration of the above-mentioned oil for sale again. complaints, conditions on the olive oil market had altered so that to make the sale on the conditions originally laid The oil was put up for sale in six lots of down would result in serious disturbance about 5 500 tonnes each (Article 2) and on the market. The Commission the selling price was fixed at LIT 210 000 considered accordingly that it was per 100 kg (Article 4). necessary to cancel the sale in the overriding general interest. On 2 February 1981, the first day on which the applications to purchase could be submitted, 60 undertakings made On the same day, the Commission offers, each for the total six lots of 5 500 adopted Regulation No 2239/81 tonnes. (Official Journal L 218, p. 28) re- opening the sale by tender of the same quantity of olive oil held by the Italian Regulation No 71/81 provided that in intervention agency. That sale was such circumstances lots should be drawn restricted to the six undertakings

designated by the drawing of lots had to pay under the terms of the sale (Article 3). However, the sale was no undertaken pursuant to Regulation No longer to take place at a fixed price but 71/81. Payment of the remainder was on the basis of the best tender received suspended until the Court gave judgment and on condition that the price offered in the main action. was at least equal to the minimum selling price to be fixed not later than 31 August On hearing the report of the Judge- 1981 in accordance with the procedure Rapporteur and the views of the set out in Article 38 of Regulation No Advocate General, the Court decided 136/66, on the basis of the tenders to open the procedure without any received (Article 6). Applications to preparatory inquiry. However, it invited purchase had to be submitted not later the Commission to reply to certain than 24 August 1981 at 2 p.m. (local questions and to furnish some infor- time) (Article 4). Withdrawal of the oil mation. was to begin on 15 September 1981 and the purchaser was required to withdraw, The Commission replied to those in each period of 30 days, at least 10% questions and furnished the information and at most 20% of the purchased in a letter of 15 June 1982. quantity (Article 9). In the light of those replies, the Court decided to order a preparatory inquiry to II — "Written procedure and be carried out by the Third Chamber. m e a s u r e s of i n q u i r y The Chamber asked the parties to provide it with the names of witnesses best placed to inform it about the state of By an application lodged at the Court the olive oil market in Italy in 1981. It Registry on 10 August 1981, the ap- invited the applicants to comment on the plicants brought the present action Commission's replies to the questions put pursuant to Article 173 of the EEC to it by the Court. Treaty for a declaration that Regulations Nos 2238 and 2239/81 are void. The Chamber also put certain questions to the Italian Government pursuant to Article 21 of the Protocol on the Statute By application under Article 83 of the of the Court of Justice. Rules of Procedure of the Court of Justice, the applicants also sought to have the operation of the said regu- The applicants commented on the infor- lations suspended. By application of mation suplied by the Commission in a 19 August 1981 Savma SpA applied for letter received by the Court on 20 leave to intervene in the application for October 1982. the adoption of interim measures in support of the defendant's conclusions. The Chamber then requested the Italian Leave to intervene was granted by order Central Statistics Institute for infor- of the President dated 20 August 1981. mation pursuant to Article 21 of the Protocol on the Statute of the Court of On 21 August 1981 the President made Justice, and sent a second series of an order partially suspending application questions to the Commission. of Article 10 of Regulation N o 2239/81. The applicants who participated in the On 19 May 1983 the Third Chamber new sale by tender were required to pay heard evidence from Mario Guida, only the amount which they would have Secretary-General of Fedoliva (European

Since the Commission is convinced that its action is well founded from the II — C o n c l u s i o n s of t h e p a r t i e s economic and legal points of view, it does not wish to insist on this aspect of the case which is a procedural matter The applicants claim that the Court should: and which the Commission submits for the Court's consideration. 1. Declare the action admissible and well-founded; The applicants contest the objection raised by the Commission. They contend that the two regulations at issue are in 2. Declare void Regulations Nos 2238 and 2239/81; fact decisions. The content of Regulation No 2238/81 is general and abstract only in appearance. In fact, it was an act of 3. Order the defendant to pay the costs. authority whose content was specific and concrete and which was addressed only to the six undertakings who had been The Commission contends that the Court allocated lots, and to AIMA, and by should: virtue of which the existing concrete relations, which were already of a con- 1. Declare the action inadmissible or tractual nature, were destroyed. Regu- dismiss it as unfounded; lation No 2239/81 provides expressly for a sale by tender in which only those 2. Order the applicants to pay the costs. companies which had been allocated lots in accordance with Regulation No 71/81 were invited to take part. The applicants are thus directly and individually con- IV — S u b m i s s i o n s a n d a r g u m e n t s cerned by that regulation. of t h e p a r t i e s The applicants cite the past decisions of 1. Admissibility the Court in support of their argument.

The applicants state that the procedure The applicants contend that Regulation laid down in Article 38 of Regulation No No 2238/81 appears to be flatly contrary 136/66 (Official Journal, English Special to the general principle that repeal of Edition 1965-1966, p. 221) was not measures which affect the established followed by the Commission. That position of third parties is unlawful. Such article requires that the opinion of the repeal is unlawful, and the Commission Management Committee for Oils and does not have the power to adopt such a Fats be obtained before measures are measure because the Council could not adopted. If there is disagreement, the have delegated power to the Commission question must be referred to the Council. so to infringe acquired rights of third While the measures provided for in parties. Regulation N o 71/81 were adopted in accordance with the opinion of the The applicants have acquired all the Committee, Regulation N o 2238/81 rights of the purchaser under the expressly states that the Committee had contracts of sale which were concluded not delivered an opinion, and that the following the offer made to the public by earlier opinion stood. the notice of sale, the applications to purchase which were properly submitted The Commission points out that the and the drawing of lots. applicants are mistaken. The recital in question does not mean that the Since the lots were expressly identified in Committee was not consulted, but, on the notice of sale, the applicants have the contrary, that there was no majority become owners of the lots pursuant to for or against the draft regulation after Article 1376 of the Italian Civil Code, consultation had taken place. In that which provides that ownership is ac- case, the Commission was entitled to quired by simple consent in the case of a adopt the regulation. It is only in the contract of sale in respect of a specified case of a majority against the draft regu- object. lation that the matter must be referred to the Council for a decision. Since by virtue of its entry into force Regulation No 71/81 had become a rule The applicants reply that the Commission of Italian domestic law, it is obvious that was only entitled to take decisions after the lawfulness of its repeal must be the Management Committee had ex- considered on the basis of the principles pressed an opinion in favour of the draft of Italian law. regulation. In any event, the Commission could not decide without having con- In Italian law, repeal of an administrative sidered the opinion of the Manage- measure can only take effect ex nunc and ment Committee. cannot affect events which have already taken place. There is all the more reason The Commission maintains that Article therefore for those limits to apply in 38 of Regulation N o 136/66 permits the Community law. Commission to adopt measures if the opinion of the Management Committee The repeal of Regulation N o 71/81 is favourable to the proposal or if there is entailed infringement of the acquired no majority of either 45 votes in favour rights of the applicants, which is not or 45 votes against. in conformity with the case-law of the

Court of Justice, in particular with the which may be necessary to avoid dis­ judgment of 6 March 1979 (Case 92/78 turbances. Simmenthal v Commission [1979Ί, ECR 777). The Commission doubts that the drawing of lots gave rise to a right of If Regulation No 2238/81 is to be ownership in favour of the applicants. regarded as a kind of expropriation measure, it is unlawful because of the The sale procedure laid down in Regu­ absence of compensation. lation N o 71/81 consisted of several phases, followed by the allocation of the goods by means of a registered letter The Commission relies on Regulation N o signed by the Director-General of 136/66 as subsequently amended (see AIMA. That letter of allocation closes in particular Council Regulation N o the procedure and declares the person to 1562/78 of 29 June 1978, Official whom the lot has been allocated owner Journal L 1985, p. 1), which fixes a of it. It is also from the date of receipt of target price intended to ensure that that letter that the person to whom the producers obtain a fair income. To lot has been allocated becomes bound achieve that end, stabilizing machinery is by the obligations arising from that provided for, which includes the allocation, that is, he must provide a purchase of oil by intervention agencies guarantee and be present when the and its sale in the Community under containers are sealed. conditions which do not disturb the market (Articles 8 and 12). Only then is the contractual relationship complete, since the public authorities have decided definitively that the The Commission points out that operation, which constitutes an act of intervention has the double purpose of management of the olive oil market and supporting the market price by not simply a sale which has no other withdrawing surplus quantities and of purpose, is appropriate. putting the product back on the market when that appears to be appropriate, great care being taken to avoid It must be recognized that the Com­ disturbing the market. The purchases and mission has the power and the duty sales carried out by the intervention (confirmed by Article 12 (2) of Regu­ agency do not merely constitute suc­ lation N o 136/66) to ensure, in the cessive transfers of ownership. They must exercise of its discretion in economic be regarded as "public law relationship" matters, that agricultural management which permit the public authorities to measures are appropriate, particularly withdraw from contractual obligations if when, as in this case, the applicant had the situation changes in such a way that no right of ownership. the public interest can only be served if the contract is rescinded or amended. Even if the applicants had become owners of the goods, the Commission considers that it was entitled to expro­ At Community level, the Commission priate them. All national legal systems considers that it has an obligation to permit the public authorities to ex­ ensure that the common market organi­ propriate the property of a private zations continue to function correctly, individual, upon payment of fair com­ and to that end to adopt any measures pensation, when the public interest

The Commission's arguments regarding The applicants reply that both Regulation public law contracts are quite extra- No 71/81 and the notice of sale issued ordinary. The reference to planning law, by AIMA on 28 January 1981 referred governed by the public interest, is not expressly to a "sale" and to a "contract" relevant in the context of private law the execution of which was to be contracts. guaranteed, and provided that in case of delay, the oil was to remain in storage at In the reply and the rejoinder, the parties the "purchaser's" risk. If the guarantee exchanged observations on the question was not provided, AIMA could have of whether the sealing of the containers regarded the sale as automatically and the provision of guarantees took "terminated", which presupposes the place in the context of the first sale. existence of a complete, previously con- cluded contract. The Commission contends that the Commission's power and duty to ensure Regulation N o 2238/81 also speaks of a that agricultural management measures "sale" which must be cancelled. That are appropriate was exercised in the regulation contains provisions which context or a complex sale procedure are retroactively applicable to the re- culminating in the "allocation" of the lationship between AIMA and the six goods, which constituted the final and undertakings which had already been definitive manifestation of the will of established. the public authorities to carry out the intended operation, exclusively in the public interest. It was only then that the contractual relationship was complete. The effects of Regulation No 71/81 were exhausted by the sale of the olive oil by AIMA. The Commission cannot The Commission does not agree with the therefore adopt measures which alter applicants' statements that Regulation those effects. No 71/81 no longer has legal effect. Above and beyond the allocation of the goods, the payment of the guarantees, The principles that measures may not be the sealing of the containers and the retroactive and that acquired rights must periodic withdrawal of oil have yet to be respected are recognized in both take place.

The effect of a sale at a favourable price is not a disturbance of the market but an 4. Insufficient statement of reasons and increase in the profit margins of the error regarding disturbance of the applicants because prices are determined market on the basis of supply and demand.

The applicants maintain that the recitals The Commission replies that it con- in the preamble to Regulation No sidered it essential to cancel the sale of 2238/81 do not make clear either the the olive oil because the procedure had scope or the nature of the events relied taken longer than could have been upon and limit themselves to an allusion foreseen and therefore the sale would which is so vague as to be capable of have been carried out at a time when being used for any measure, at any time, conditions were radically different from in any place and under any circum- what they had been initially, with the stances. result that the sale would have seriously disturbed the olive oil market. The The Commission did not indicate the Commission therefore exercised the reason for its sudden change of view discretion which the Court has re- after a period in which it had not cognized that it has in regard to the reacted, even though it was aware of management of economic matters which what was happening. are complex and difficult to understand.

The applicants contest the Commission's At the time of the sale at LIT 210 000 statements regarding developments on per 100 kg, the intervention price

JUDGMENT OF 27. 11. 1984 — CASE 232/81

(December 1980) was about LIT The Commission's argument that the 200 000. The market price for refined oil 1980/81 harvest showed signs of being was approximately LIT 220 000, which far below expectations is not mentioned would have permitted a substantial profit in the preambles to the contested to be made. measures.

AGRICOLA COMMERCIALE OLIO v COMMISSION

of their refined products and thus reduce most of the competition rules to agri- their profit margins. culture, and in any event those rules are not relevant.

Those difficulties would have been even greater if the market price for lampante The concept of "disturbance" is relied grade oil had been closer to the in- upon in Article 12 (2) of Regulation No tervention price instead of moving away 136/66, which deals with the sale of from it, a phenomenon which is totally olive oil by the intervention agencies. unwarranted in a healthy market.

V — E x a m i n a t i o n of a w i t n e s s 5. Misuse of powers

JUDGMENT OF 27. 11. 1984 — CASE 232/81

VI — Oral procedure meant by risk of disturbance on the olive oil market was the danger that the At the sitting on 19 June 1984, oral applicants would get control of a share argument was presented on behalf of the of the market to which they were not applicants by G. Celona, P. Tabellini, entitled, and thus exclude other traders G. B. Compagno and G. Guarino, and from that market. on behalf of the Commission by G. Berardis. The Advocate General delivered his In reply to a question put by the Court, opinion at the sitting on 25 September the Commission stated that what it 1984.

Decision

1 By application lodged at' the Court Registry on 10 August 1981, Agricola Commerciale Olio Sri, Astolio Sri, Azienda Agricola Bellaria SpA, Italiana Olii e Risi SpA and San Giorgio Sezione Agricoltura SpA brought an action under the second paragraph of Artide 173 of the EEC Treaty for a declaration that Commission Regulation N o 2238/81 of 3 August 1981 repealing Regulation N o 71/81 on the sale of olive oil held by the Italian intervention agency (Official Journal L 218, p. 27), and Commission Regu- lation N o 2239/81 of 3 August 1981 re-opening the sale by tender of olive oil held by the Italian intervention agency (Official Journal L 218, p. 28), are void.

2 Article 12 of Regulation N o 136/66 on the establishment of a common organization of the market in oils and fats (Official Journal, English Special Edition 1965-1966, p. 221), as amended by Council Regulation N o 1562/78 of 29 June 1978 (Official Journal L 185, p. 1), obliges the intervention agencies designated by the producer Member States, as a means of stabilizing the olive oil market, to buy in, under certain conditions and at the intervention price fixed for the marketing year involved, olive oil of Community origin which is offered to them by producers. According to the second paragraph of that article, the intervention agencies are to sell within the Community the olive oil bought in by them under conditions such that the market at the production stage is not disturbed.

4 By Regulation No 71/81 of 12 January 1981 (Official Journal L 11, p. 5), the Commission decided that the Italian intervention agency (AIMA) should put up for sale some 33 000 tonnes of virgin olive oil from intervention purchases made during the 1977-78 olive marketing year, divided into six lots of about 5 500 tonnes each, at a fixed price of LIT 210 000 per 100 kg It was stated in the preamble to the regulation that the olive oil purchased by the Italian intervention agency during the said marketing year had been put up tor sale by tender on several occasions but it had only been possible to sell a small proportion of that oil. The preamble also stated that the existing market situation was suitable for putting the oil up for sale again and that production of olive oil in the 1980/71 marketing year was expected to be plentiful. However, so as not to interfere with the normal sale of production from that marketing year, it was stated that the purchasers of the oil should be obliged to refine it or market it outside the Italian and Greek markets.

s The regulation provided that sales were to commence on the tenth day following posting of the notice of sale and that lots were to be awarded in the order of submission of applications to purchase, until the lots put up for sale had all been disposed of. If applications to purchase were submitted on the same day for the same lot, AIMA was to designate as purchaser the

JUDGMENT OF 27. 11. 1984 — CASE 232/81

applicant who submitted applications to purchase several lots or, where that was impossible, AIMA was to determine the purchaser by drawing lots. Finally, the oil was to be withdrawn every 30 days from 15 March 1981, in quantities equal to at least 10% and at most 2 0 % of the purchased quantity. The purchaser was to pay the purchase price for each lot of oil withdrawn not later than the end of the fifth month following that in which the quantity concerned was withdrawn.

? On 3 August 1981, the Commission adopted the first of the regulations which the applicant seeks to have declared void, namely Regulation N o 2238/81 repealing, with effect from 13 January 1981, the aforementioned Regulation N o 71/81. In the preamble to Regulation N o 2238/81 the Commission stated that the. sale had been delayed as a result of the inquiry undertaken into the above-mentioned complaints, but that the consignments put up for sale had finally been allotted to tenderers in accordance with the provisions of Regulation N o 71/81. The Commission went on to say: " . . . meanwhile, the conditions on the olive oil market have altered so that to make the sale on the conditions originally laid down would result in serious disturbance on the market; . . . in particular, quantities could be sold by these operators at prices which would shut other operators out of the market", and accordingly "it is necessary, in the overriding general interest, to cancel the sale in question". Finally, measures were to be taken in parallel in order to take account of the situation of the operators to whom lots had been allocated.

8 Those measures were the subject of Regulation N o 2239/81 of the same date, which is the second of the regulations at issue, and by virtue of which the olive oil referred to in Regulation N o 71/81 was to be put up for sale by

AGRICOLA COMMERCIALE OLIO v COMMISSION

tender in six lots, the sale being "reserved for tenderers designated pursuant to . . . Regulation (EEC) No 71/81". The oil was to be sold not later than 10 September 1981 and withdrawn in lots commencing on 15 September 1981. The purchaser was to pay the purchase price for each of those lots at the time of withdrawal.

JUDGMENT OF 27. 11. 1984 — CASE 232/81

of the Community institutions preventing AIMA from carrying out its obligations to the tenderers designated by the drawing of lots necessarily constitutes a measure of direct and individual concern to them. Consequently, the application is admissible.

Substance

i2 The applicants' principal submission is that Regulation N o 2238/81 infringes the general principle that a measure cannot be repealed if that would prejudice the acquired rights of third parties. They contend that even if it is regarded as an expropriation measure, the regulation is unlawful by reason of the fact that the compensation offered is inadequate. Moreover, the applicants contest the Commission's statements in the preamble to the regu- lation regarding the development of the olive oil market and the effect on that market of the sale which had been contracted for. In the applicant's view, the Commission took false premises and made manifest errors of fact. Moreover, there was a misuse of powers, since the purpose of the regulations was not to protect the market but to deprive the applicants of their profits.

n The only reason given by the Commission to justify the retroactive repeal of Regulation N o 71/81 is that carrying out the sale on the conditions origi- nally laid down woud have resulted in serious disturbance of the olive oil market. It states that during the period which elapsed between the adoption of the first regulation and that of the second the conditions on that market had radically altered. On the one hand, the 1980/81 harvest was much below what had been predicted, and on the other, prices had increased beyond what had been predicted because of the fall in production and the limited quantities of lampante grade oil available on the world market, as well as the devaluation of the green lira.

17 Moreover, the Commission has not explained how a market on which there is a shortage and on which prices are tending to rise could be disturbed solely by the arrival on that market, at regular intervals, of additional quantities of the product likely to be sold at moderate prices. The Commission admitted, in particular during the oral procedure, that the disturbance that it feared was of a more indirect nature in the sense that the profits to be made by the undertakings who had been successful in the drawing of lots would have allowed those undertakings to obtain control of a share of the market to which they were not entitled, thus excluding other traders from the same market.

18 The mere fact that the conditions on which the Commission permitted the national agency to put the products up for sale proved to be favourable, and even extremely favourable, to the purchasers, does not entitle the Commission to prevent that agency from carrying out the contract which had been concluded in accordance with the said conditions. With regard to

JUDGMENT OF 27. 11. 1984 — CASE 232/81

the possibility of an abusive use of those profits it should be pointed out that the quantity put up for sale was divided between six independent under- takings. The Commission has not even tried to show how and why one of those undertakings would have used the profits so as to exclude, or to have the effect of excluding, other traders from the market.

i9 It appears, therefore, that the only ground relied upon by the Commission to justify the repeal of Regulation No 71/81 is vitiated by errors of fact. It is therefore unnecessary to consider whether, in other circumstances, the Commission would have been entitled to repeal the said regulation retro- actively and what would have been the consequences of such a repeal as regards the right of the undertakings to compensation. Regulation N o 2238/81 repealing Regulation No 71/81 must be declared void, and consequently Regulation N o 2239/81 must also be declared void.

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

hereby:

1. Declares Commission Regulation No 2238/81 of 3 August 1981 repealing Regulation No 71/81 on the sale of olive oil held by the Italian intervention agency void;

2. Declares Commission Regulation No 2239/81 of 3 August 1981 re- opening the sale by tender of olive oil held by the Italian intervention agency void;

3. Orders the Commission to pay the costs, including those relating to the application for the adoption of interim measures, and orders savma S>pA to bear its own costs.

Due Kakouris Erling Galmot JoHet