C-245/81

JUDGMENT OF 15 7. 1982 — CASE 2*5/81

a risk of a serious disturbance which the means needed to achieve their might endanger the objectives set out commercial policy, traders are unable in Article 39 of the Treaty and where to claim that they have a legitimate the measure is legally justified by expectation that an existing situation provisions of Community law. which is capable of being altered by decisions taken by those institutions 4. Since Community institutions enjoy a within the limits of their discretionary margin of discretion in the choice of power will be maintained.

In Case 2 4 5 / 8 1

R E F E R E N C E t o the C o u r t under Article 177 of the E E C T r e a t y by the Hessischer V e r w a k u n g s g e r i c h t s h o f [ H i g h e r Administrative C o u r t , Hesse], for a preliminary ruling in the action u n d e r administrative law pending before that court between

EDEKA Z E N T R A L E A G , Hamburg,

and

EDEKA v GERMANY

JUDGMENT

Facts and Issues

JUDGMENT OF IS 7 1982 — CASE :4S/ÍI

by the Commission". Article 3 states hai Edeka then brought an action before the the People's Republic of China is to competent Verwaltungsgericht [Adminis- benefit under the terms of Article 2. trative Court]. It argued that the ban on In the recitals in the preamble to Regu- imports imposed by the regulation at lation (EEC) No 1IC2/7S u is stated that issue was in breach of the prohibition ot the quantity of preserved mushrooms discrimination contained in Anicie 4C (3) which have been imported under import of the EEC Treat)· and contravened the licences issued or which by the end of principles of freedom of external trade, July 1978 will have been imponed under proportionality and equal competition. applications made for licences is greatly in excess of the quantity imported during The Hessischer Yerwaltungsgerichtshof, the whole of 1977, that the trend of before which the case came on appeal, imports from non-member countries was of the opinion that a decision in the whose offer prices for a large quantity of matter depended upon a determination such products are less than the cost price of the validity of Regulation (EEC) in the Community preserved mushroom No 1102/78. 'It therefore stayed the industry, may aggravate the difficulties proceedings and pursuant to Article 177 facing Community producers as regards of the EEC Treaty referred the following production and marketing and that question to the Court of Justice: therefore those imports threaten the Community market with serious distur- "Was Commission Regulation (EEC) bances capable of jeopardizing the No 1102/78 of 25 May 197« adopting objectives of .Article 39 of the EEC protective measures applicable to imports

2. The plaintiff in the main action, non-member countries?" Edeka Zentrale AG, hereinafter referred to as "Edeka", imports inter alia, It is clear from the grounds upon which preserved mushrooms from Taiwan and the order for reference was based that South Korea. On 25 September 1979 it the national court considered that clarifi- applied to the Bundesamt für Ernährung cation was required above all in order to und Forstwirtschaft [Federal Office for ascertain whether the protective measure Nutrition and Forestry Management], adopted by the regulation at issue was hereinafter referred to as "the wholly appropriate and necessary in

order to deal with market disturbances In so far as it suspends the issue of or whether it was in breach of the impon licences in respect of preserved prohibition of discrimination contained mushrooms originating in all non- in Article 40 (3) of the EEC Treaty, member countries except the People's because it introduced a general ban Republic of China, the regulation also on imports of preserved mushrooms, offends against the precept laid down in without taking into consideration the Article 40 (3) accordine to which the traditional trading relations of individual common organization of the markets is importers. to be limited to the pursuit of the objectives set out in Article 39 of the

On the other On hearing the report of the Judge- hand Edeka had to purchase its supplies Rapporteur and the views of the at second-hand from other direct Advocate General, the Court, by order importers at a price increased by the of 3 February 1982, decided to open the importing margin which resulted in an oral procedure without any preparatory imbalance in competitive conditions. The inquiry and, pursuant to Article 95 of the discriminatory treatment of traders Rules of Procedure, to assign the case to established within the Community is the Third Chamber.

1. Edeka submits that Regulation differently only in terms of objective (EEC) No 1102/78 is in breach of the criteria which ensure a proportionate prohibition of discrimination contained distribution of advantages and disad- in Article 40 (3) of the EEC Treaty vantages for those concerned. which is a specific illustration of the principle of equal treatment in the sphere In the light of that judgment the of the law relating to the organization of different treatment brought about by the the markets. regulation in question cannot be

regarded as being justified on objective quota has been recognized by the Court grounds. By exempting merely the of Justice in judgments of 12 December People's Republic of China, but not 1973 in Case 131/73 Grossoli [1973] South Korea and Taiwan, from the ECR 1555, 23 January 1980 in Case suspension of the issue of licences the 35/79 Grossoli [1980]' ECR 177 and regulation failed to discriminate on the 13 March 1980 in Case 124/79 Van basis of objective criteria. In that VTalsum [\9t0] ECR 813. connection Edeka denies that the People's Republic of China gave an assurance that they would voluntarily 2. The Commission submits that the restrict exports in 1979 to a prede- protective measure adopted by Regu- termined level and alleges further that lation (EEC) No 11C2/78 is one ot a Korea and Taiwan were not likewise senes of legal measures adopted by the requested by the Commission to give an Council and the Commission which since assurance of voluntary restraint. 1974 have pursued the objective of ensuring a regulated common market within the framework of existing basic On no account ought South Korea and regulations whenever serious distur- Taiwan to have been entirely excluded bances have arisen in the market for from supplying preserved mushrooms in preserved mushrooms.

be maintained. The latter principle found fication. That is not the case here since recognition inter alia in Article 12 (2) of the unequal allocation of delivery quotas Council Regulation (EEC) No 926/79 of among the various traditional supplier 8 May 1979 on common rules for countries stems not from an arbitrary imports (Official Journal 1979, L 131, exercise of judgment but is consistent p. 15) and in Article XIII (2) of the with the external policy of the General Agreement on Tariffs and Trade Community, laid down by the Council, (GATT). which takes account of the willingness of individual supplier countries to restrict their exports to the Community market. In the alternative Edeka submits that the Commission, in accordance with the According to the Commission it is clear principle of equal and countinuing access from Amele 39 (2) (c) of the EEC to quotas, first ought to have ensured Treaty that the Commission, in adopting that undertakings importing from protective measures, must have regard to Taiwan and South Korea were able to all aspects of commercial policy.

EDEKA > GERMANY

objectives sei oui in Articles 39 and 110 relationships or obligations with Taiwan of the EEC Treaty. Finally Article 3 of and South Korea. Council Regulation (EEC) No 521/77, which is binding on the Commission, In the context of the discretion conferred expressly stipulates that the Community's on the Commission in determining obligations under international agree- commercial poliev the fact that tra- ments are to be respected. It is plain ditional trading relations may be affected from the aforementioned provisions that, must be accepted as being obiectively in the sphere of external trade, in necessary Individual importers mav not particular as regards protective measures therefore reiv on the prohibition ot — where Community institutions enjoy discrimination or claim an inalienable wide discretion — Community law does right to the maintenance of existing not allow the only guiding principle for trading relations. action to be considerations arising out of the organization of markets but also The Commission therefore concludes attributes due importance to consider- that consideration o', the question raised ations of general commercial policy. has disclosed no tactor ot such a kind as to affect the vaiiditv of Regulation Bv approving, under Article 2 (1) of No i i : : / 7 s . Regulation (EEC) No 1102/78 an assurance by the People's Republic of China that it would voluntarily restrict Ill — Oral P r o c e d u r e its exports to a predetermined annual level, the Commission did not make At the sitting on 29 April 1982, Dietrich arbitrary use of the discretion which it Ehle, Rechtsanwalt, Cologne, on behalf has in matters of commercial policy but of Edeka Zentrale AG and Meinhard was acting in furtherance of the trade Hilf, a member of the Legal Department, agreement entered into by the on behalf of the Commission of the Community with the People's Republic European Communities, presented oral of China on 3 April 1978, under which argument and their replies to questions both parties undertake to use their best raised by the Court. endeavours to promote the harmonious development of mutual trade. There The Advocate General delivered his were no comparable contractural opinion at the sitting on 27 May 1982.

* The benefit of that exemption was extended to products originating in Taiwan by Commission Regulation No 1213/78 of 5 June 1978 on the non- application of protective measures applicable to preserved mushrooms (Official Journal 1978, L 150, p. 5), but that measure was repealed by Commission Regulation No 1449/78 of 28 June 1978 (Official Journal 1978, L 173, p. 25).

s Regulation No 1102/78 is based on Council Regulation (EEC) No 516/77 of 14 March 1977 on the common organization of the market in products processed from fruit and vegetables (Official Journal 1977, L 73, p. 1). Anicie 14 of that regulation authorizes the Commission to take the necessary measures where, within the Community, the market in one or more of the products covered by the common organization of the market in products processed from fruit and vegetables is or is likely to be exposed to serious disturbances, from impons or expons, which might endanger the objectives

EDEKA » GERMANY

set out in Article 39 of the Treaty. Those measures may be taken only to such extent and for such length of time as is strictly necessary, as is stated in Article 2 (2) of Council Regulation No 521/77 of 14 March 1977 laying down detailed rules for applying protective measures in the market in products processed from fruit and vegetables (Official Journal 1977, L 73, p. 28).

b Edeka took the view that Regulation No 11C2/78 contravened principles of . Community law and in particular that it was in breach of the prohibition of discrimination contained in the second subparagraph of Anicie 40 (3) of the EEC Treaty and was therefore invalid, and accordingly brought an action in the administrative court seeking a declaration that the Bundesamt was obliged to issue to it the impon certificates applied for.

ID The Court must therefore consider whether the policy pursued by the Commission as regards the importation of the products in question is in conformity with the principles mentioned above.

T h e p r i n c i p l e of n o n - d i s c r i m i n a t i o n

u As the Court held in its judgments of 19 October 1977 in Joined Cases 117/76 and 16/77 Ruckdescbel v Hauptzollamt Hamburg-St. Annen [1977] ECR 1753 and in Joined Cases 124/76 and 20/77 Moulins et Huileńes de Pont-à-Mousson [1977] ECR 1795, the prohibition of discrimination contained in the second subparagraph of Anicie 40 (3) of the Treaty is merely a specific enunciation of the general principle of equality which is one of the fundamental principles of Community law. That principle means that like situations should not be treated differently unless such different treatment is objectively justified.

i2 Since the discriminatory treatment alleged as between imponers results from the different treatment which Regulation No 1102/78 applies as between the supplier countries concerned and which is based on the fact that only the People's Republic of China and not Taiwan or South Korea agreed volun- tarily to restrict its expons to the Community the allegation made against the regulation in question is in truth directed at the policy, pursued by the Commission at the time of its negotiations with those countries, with a view to obtaining from them an assurance of voluntary.restraint.

u The Court must therefore consider whether that policy is arbitrary in nature, in particular whether the quantities of impons proposed by the Commission to the non-member countries concerned as the basis for an agreement of voluntary restraint were in accordance with the needs of the Community market.

1- On the other hand, as far as the year 1979 is concerned, a comparison between the quantities offered to each of the three countries in question and those imponed from those countries reveals preferential treatment in favour of the People's Republic of China at the expense of Taiwan and South Korea such as to provide the appellant in the main proceedings with grounds for complaint.

JUDGMENT OF 15. 7. 1982 — CASE 245/81

is However, it is clear from the explanations given by the Commission that it maintained Regulation N o 1102/78 in force unchanged for 1979, that is to say, by excluding from its sphere of application merely the People's Republic of China and not Taiwan and South Korea since initially only the People's Republic of China had accepted an agreement of voluntary restraint whilst South Korea agreed to restrict its exports to the Community only as late as September 1979, but, in actual fact, did not avail itself of the quota allocated, and negotiations with Taiwan did not result in an agreement of voluntary restraint before February 1980. The Commission increased the quota initially fixed for the people's Republic of China in July and August 1979, having regard to the state of negotiations with those three countries and after it had found that the Community market was capable of absorbing supplementary quantities.

i9 It is well established that Community institutions enjoy discretion in the sphere of commercial policy and, as the Court stated in its judgment of 22 January 1976 in Case 55/75 Balkan-Import-Export GmbH v Hauptzollamt Berlin-Packhof [1976] ECK 19, the Treaty contains no general principle which may be relied upon by traders, compelling the Community in its external relations to accord equal treatment in all respects to non-member countries. Therefore the fact that the Commission's regulations give rise to a deflection in the flow of imports from Taiwan and South Korea towards the People's Republic of China does not provide any ground for criticism.

23 It follows that the Commission is justified, when adopting protective measures, in taking account of whether or not a non-member country is ready to accept a voluntary restriciton of its exports to the Community. It cannot therefore be said that it exceeded the limits of its discretionary power by almost totally prohibiting imports from Taiwan and South Korea, countries which did not agree to such a voluntary restraint, in favour of imports originating in the People's Republic of China, which did accept an agreement of voluntary restraint, even though such a prohibition is capable of bringing about a deflection in the flow of imports from Taiwan and South Korea to the People's Republic of China.

u In that connection the appellant in the main proceedings refers to Article 110 of the Treaty which is also relied on as precluding a total prohibition of imports from Taiwan and South Korea. However, in this respect it is necessary merely to call to mind the judgment of the Court of 5 May 1981 in the previously-mentioned Diirbeck case, in which it was held that Article 110 of the Treaty could not be interpreted as prohibiting the Community from enacting, upon pain of committing an infringement of the Treaty, any measure liable to affect trade with non-member countries in particular where, as in the present case, the adoption of such a measure is made necessary by the risk of a serious disturbance which might endanger the objectives set out in Article 39 of the Treaty and where the measure is legally justified by provisions of Community law.

28 For all those reasons, the reply to be given to the Hessischer Verwaltungs- gerichtshof should be that consideration of the question submitted by it has disclosed no factor of such a kind as to affect the validity of Commission Regulation No 1102/78 of 25 May 1978.

Costs

2» The costs incurred by the Commission, which has submitted observations to the Coun, are not recoverable. As the 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, costs are a matter for that court.

EDEKA v GERMANY

On those grounds,

T H E C O U R T (Third Chamber),

My Lords, were commenced by a German unier- taking which I shall call "Edeka". Edeka is a large German food retailer and, This is a reference for a preliminary among its other commercial activities, it ruling from the Hessischer Verwaltungs- imports preserved mushrooms from gerichtshof. The proceedings before it Taiwan and South Korea. The dispute