C-8/82

JUDGMENT OF 23. 2. 1983 — CASE 8/82

storage costs shall be granted for 3. The fact that reimbursement is sugar which is in transit at the granted in respect of storage costs for beginning of the month, must not be sugar which, at the beginning of the regarded as merely interpreting the month, is in transit between two above-mentioned Article 3 (1) to the approved warehouses situated in the effect that sugar in transit between same Member State but is not granted approved warehouses fulfils, in in respect of sugar which is in transit principle, the requirement that the between two approved warehouses product be stored in a warehouse. situated in different Member States does not amount to discrimination 2. Discrimination consists in treating prohibited by Community law. The differently situations which are difference of treatment is based on identical, or treating in the same way requirements of supervision which situations which are different. may be justified objectively.

In Case 8 / 82

REFERENCE to the Court under Article 177 of the EEC Treaty by the Verwaltungsgericht [Administrative Court ] Frankfurt am Main for a preliminary ruling in the action pending before that court between

KOMMANDITGESELLSCHAFT IN DER FIRMA HANS-OTTO WAGNER GMBH AGRAR­ HANDEL, Bad Homburg ,

and

gives the following

JUDGMENT

Facts and Issues

The facts of the case, the course of The Council, acting pursuant to Article the procedure and the observations 8 (2) (a) of Regulation No 3330/74, submitted under Article 20 of the fixed the general rules for the offsetting Protocol on the Statute of the Court of of storage costs for sugar in Regulation Justice of the European Economic No 1358/77. Article 2 of that regulation Community may be summarized as provides that only traders approved as follows : specialized undertakings by the Member State concerned and fulfilling a number of conditions to be specified are entitled to reimbursement. Only stored sugar I — Facts and written procedure owned by the undertaking concerned affords a right to reimbursement.

Article 8 of Regulation (EEC) No Article 3 of Regulation No 1358/77 3330/74 of the Council of 19 December provides that: 1974 on the common organization of the market in sugar (Official Journal L 359, p. 1) provides for a scheme to reimburse "(1) Reimbursement shall be made in storage costs for sugar produced from respect of: raw material of Community origin. The flat-rate reimbursement, which is paid by the Member States, is financed from Undenaturcd white and raw sugar levies on producers and importers. The and certain syrups produced within offsetting of costs enables a constant the maximum quota, price level to be maintained throughout the marketing year and avoids excessive All imported preferential sugar, and recourse to intervention agencies after undenatured white sugar produced the marketing year has ended. therefrom,

stored in a warehouse approved by reimbursement of storage costs, as the Member State in whose terri­ referred to in Article 4 (2) of Regu­ tory the warehouse is situated. lation (EEC) No 1358/77, the sugar referred to in paragraph 1 Approval shall be granted subject to shall be considered as still stored in conditions to be specified. the departure warehouse at 24.00 hours on the last day of a month, and as already stored in the arrival- (2) In special circumstances special warehouse at 00.00 hours on the provisions may be adopted in. first day of the following month." accordance with the procedure laid down in Article 36 of Regulation (EEC) No 3330/74 to deal with sugar in transit at the beginning of The eleventh recital in the preamble to the period referred to in Article Regulation No 1998/78 reads as follows: 4 (2)." ". . . Article 3 (2) of Regulation (EEC) Article 4 states that: No 1358/77 provides that, in special circumstances, special provisions may be "(1) Calculation of the reimbursement adopted to deal with sugar in transit at shall 'be based on monthly returns the beginning of a month; whereas such oí quantities in store: special circumstances prevail in respect of raw sugar produced in the French (2) The quantity io be taken into overseas departments, in that practically account for any one month shall be none of the production is consumed on equal to the arithmetic mean of the the spot; whereas the long distance quantities held in store at the between those departments and Europe beginning and at. the end of the means that transport takes several weeks; month in question. whereas, therefore, it is unavoidable that such sugar, as a general rule, should be (3) in transit on the first day of a calendar month; whereas reimbursement should accordingly be limited to less than one The Commission's implementing month; whereas in the case of sugar provisions, which are decisive as regards transported from one approved the case before the national court, are warehouse to another within the same contained in Regulation No 1998/78. Member State, a system should be Article 11 thereof provides that: provided for which is analogous mutatis mutandis to that applied to cane sugar "(1) Reimbursement of storage costs from the French overseas departments." shall be granted in respect of raw or white sugar which at 00.00 hours on the first day of a month is The German version of the last clause of within a Member State in transit that recital expresses a link of cause and from an approved warehouse, other effect (". . . ist daher . . .") whereas the than transit as referred to in Article French text contains only the words 10, and which, on arrival, is stored ".. . il convient. . ." and not ". . . il in another approved warehouse in convient donc the same Member State.

Journal L 262, p. 17) replaced paragraph " 1 . Does sugar which is in transit from a 1 of Article 11 cited above with the warehouse approved under the first following provision : sentence of Article 3(1) of Council Regulation (EEC) No 1358/77 of 20 "In respect of raw or white sugar which June 1977 laying down general rules at 00.00 hours on the first day of a for offsetting storage costs for sugar month is in transit from an approved and repealing Regulation (EEC) No warehouse, other than transit as referred 750/68 (Official Journal L 156, 25. to in Article 10, and which on arrival is 6. 1977, p. 4) to another approved stored in another approved warehouse, warehouse constitute sugar which is reimbursement of storage costs shall be 'stored in a warehouse' within the granted in so far as the storage levy has meaning of that provision even if the not already been incurred." two warehouses are situated in different Member States ? The plaintiff in the main action [here­ inafter referred to as "Wagner"] is an If it does not, undertaking which is approved as a specialized sugar trader within the 2. Does the general prohibition of arbi­ meaning of Articles 1 and 2 of Regu­ trariness or the prohibition of lation No 1998/78. In 1979 it applied discrimination contained in the each month to the Bundesanstalt für second subparagraph of Article landwirtschaftliche Marktordnung [Fed­ 40 (3) of the EEC Treaty require eral Office for the Organization of Agri­ similar treatment to be granted to cultural Markets, hereinafter referred to the trader discriminated against, at as "the Federal Office"] for the any rate for as long as such reimbursement to offset its storage costs. treatment is granted unlawfully to In some cases Wagner's applications the favoured trader? related to quantities of sugar which on the last day of the relevant month were in transit from an approved warehouse in If it does, France to an approved warehouse-in the Federal Republic of Germany. The 3. Is the special provision of Article Federal Office refused Wagner's 11 (1) of Commission Regulation applications on the ground that under (EEC) No 1998/78 of 18 August Article 11 of Regulation No 1998/78 1978 laying down detailed rules for only sugar transported from one the offsetting of storage costs for approved warehouse to another sugar (Official Journal L 231, 23. 8. approved warehouse in the same 1978, p. 5) covered by the power Member State may be counted towards conferred in Article 3 (2) of Council stocks at the beginning and end of the Regulation (EEC) No 1358/77? month and be taken into account for the calculation of the reimbursement. If it is not, In an action brought against those decisions of the Federal Office the 4. Does the resultant unlawful pref­ Verwaltungsgericht Frankfurt am Main erence of sugar transported between decided by order dated 8 October 1981 approved warehouses in the same to stay the proceedings and to refer the Member State over sugar trans­ following questions to the Court for a ported between approved preliminary ruling under Article 177 of warehouses in different Member the EEC Treaty: States constitute discrimination

The Verwaltungsgericht Frankfurt am Pursuant to Article 20 of the Protocol on Main takes the view that transport the Statute of the Court of Justice of the between two approved warehouses must EEC written observations were lodged be assimilated to storage in one place in on 5 April 1982 by Wagner, represented an approved warehouse. It considers that by Dr Klaus Landry of Fritz Modest and the transport of a commodity does not Partners, Rechtsanwälte, Hamburg; on alter the fact that it remains withdrawn 26 March 1982 by the Federal Office, from the market and so the purpose of represented by Erdmann Schaller, acting the subsidy is not defeated. It does not as Agent, and on 11 March 1982 by the therefore matter whether the warehouses Commission of the European Com­ are situated in the same Member State or munities, represented by Meinhard Hilf, in different Member States. Article 3 of a member of its Legal Department, Regulation No 1358/77 contains no acting as Agent. restriction in this regard nor does any such restriction result from the concept of "storage". Upon hearing the report of the Judge- Rapporteur and the views of the Advocate General the Court decided to In an opinion requested by the Verwal­ open the oral procedure without any tungsgericht the Commission took the preparatory inquiry and, pursuant to view that it was proper to allow sugar to Article 95 (1) and (2) of the Rules of be transported between approved Procedure, to assign the case to the First warehouses in the same Member State Chamber, no Member State or during the period of storage but not institution having requested that the case between approved warehouses in be decided in plenary session. different Member. States. Even if that view were correct the Verwaltungs­ gericht considers that the rule in Article 11 of Regulation No 1998/78 is still unlawful because there is no legal II — Written observations lodged authority for its enactment. The only with the Court authority would appear to be Article 3 (2) of Council Regulation No 1358/77 authorizing the Commission in dero­ gation from paragraph 1 of that article 1. Observations submitted by Wagner to adopt "in special circumstances" special provisions to deal with sugar in transit. Moreover, to reason that sugar Wagner takes the view that Article 11 (1) transported between approved ware­ of Regulation No 1998/78 shows that houses within one Member State should sugar in transit between approved "therefore" [daher] be subject to a warehouses in principle constitutes sugar system analogous to that applicable to "stored in a warehouse". The primary

purpose of that provision is the interpret frontier are being discriminated against ation of Article 3 (1) of Regulation No that finding would simply cause the 1358/77. It is not based on Article 3 (2) question of how that breach of principle of Regulation No 1358/77, which is the is to be cured and the question of basis for Article 10 of Regulation No eliminating that discrimination to re- 1998/78 (which relates to cane sugar emerge in an action for damages against originating in the French overseas the Commission. departments which is in sea transit), and applies to cases in which sugar is transported to approved warehouses and As regards the third question and quite not to cases in which it is transported apart from the answer given to the first

If the special Member State. The contested provision circumstances allowing special provisions of Regulation No 1998/78 should be within the meaning of Article 3 (2) of construed accordingly. To construe it Regulation No 1358/77 to be adopted otherwise would offend against the for the French overseas departments may general prohibition of arbitrariness and be considered to be the greater distance the prohibition of discrimination because and the longer duration of transport the there are not justifiable grounds for obvious solution would have been to treating the two cases under apply the rules adopted for those consideration differently. departments to sugar transported between approved warehouses situated in Consequently Wagner's answers to the different Member States.

against. If the Court considers that it preference to transport within one cannot accept Wagner's argument yet Member State as against transport from finds that traders transporting across a one Member State to another. It

observes that in the case of intra- of Regulation No 2671/81). Article 12 of Community transport there are even Regulation No 1998/78 specifies opportunities for carrying out additional precisely the cases in which the levy is checks, namely during customs clearance payable. One of those cases is the exit of at the frontier (waybills and T 2 forms). sugar from the factory in which it was Thus the provision at issue for no valid produced, except in so far as the sugar reason discriminates against trade enters an approved warehouse of the between Member States and against manufacturer thereof situated in the undertakings involved in that trade same Member State.

In a case of that kind in which stored sugar is sold to another undertaking the factual condition of storage is not satisfied, and 2. Observations submitted by the Federal the sugar is certainly not "stored in a Office warehouse" within the meaning of Article 3 (1) of Regulation No 1358/77. From 1 July 1970 intervention agencies have been under the obligation to buy in sugar offered to them by manufacturers The Federal Office points put that the and so the reimbursement of storage aim and purpose of a reimbursement to costs is intended to obviate, in whole or offset storage costs for sugar is to in part, the need for intervention buying achieve a steady disposal of sugar (see the twelfth recital in the preamble to

74). The system of reimbursement should for which a reimbursement may be paid therefore be applied as restrictively as and international transport for which no possible. In the view of the Federal reimbursement may be paid owing to the Office it follows from the inter-relation final marketing destination in the event between the offsetting of storage costs of sale must be treated differently. and the levy that storage costs must According to the sixth recital in the never be offset when the levy becomes preamble to Regulation No 1358/77 and payable owing to the marketing of sugar the fifth, twelfth and thirteenth recitals (see the tenth recital in the preamble to in the preamble to Regulation No Regulation No 1358/77 and Article 1 (4) 1998/78, Member States must have some

appropriate measure of control. In cases to the grant of a market advantage. involving international transport Member According to a unanimous judgment of States can no longer fulfil the obligation the Bundesverwaltungsgericht [Federal to carry out controls or can do so Administrative Court], where the legal only in more difficult conditions. The situation does not call for the treatment controls must relate to the conditions sought there is no breach of the principle for entitlement to the reimbursement of equality if, contrary to the objective offsetting storage costs, which depends legal situation, that treatment has been

In the down in Article 11 of Regulation No matter of the offsetting of storage costs 1998/78 for sugar manufacturers who, there are no special, smoothly operating within their Member State, transfer sugar channels of communication between the from their factory to a foreign ware intervention agencies of Member States house or between two foreign ware which might be of use in this matter. houses. That operation, which is Moreover, since the controls effected especially necessary during the when storage costs are reimbursed are processing period (marketing year), is carried out on the spot by inspection not considered to be a disposal within of the applicant's warehouses and the meaning of Article 12 (1) of Regu his accounting documents, they are lation No 1998/78 and therefore does restricted to the Member State in not result in the storage-cost levy being question and it is not therefore possible charged. To extend the authority to carry out checks in other Member contained in Article 3 (2) of Regulation

JUDGMENT OF 23. 2. 1983 — CASE 8/82

If a general prohibition of arbitrary quantity of sugar is removed from the measures. warehouse before the end of the month half a month's reimbursement is due. The arrival of a quantity of sugar at the warehouse before the end of the month 3. Observations submitted by the also leads to half a month's re Commission imbursement. However, sugar still in transit at the end of a month does not count towards stocks existing at the The Commission first places the case in beginning or end of the relevant month the context of the relevant regulations. It and therefore necessitates special rules had to draw up rules governing the for calculating the reimbursement due. reimbursement of storage costs in a way The Council authorized the Commission that would reduce the risk of if need be to adopt "special provisions" intervention. At the same time it had to for those exceptional cases as well.

Court. lations, particularly possible methods of control, in order to keep the administrative costs of the national auth The Commission has heard of very few orities in reasonable proportion to the cases in which sugar has been aim pursued. The basic regulation, No transported from one Member State to 3330/74, accordingly provides for only a another and in which a reimbursement of flat-rate reimbursement of storage costs. storage costs has been claimed. Hitherto This accounts for the provisions it has been approached only by the restricting reimbursement to manufac Federal Office and only in connection turers and larger trading businesses and with claims made by Wagner.

WAGNER v BALM

DM 160 713 000 in the Federal Republic competent foreign authorities, which will of Germany, underlines the comparative enable them to ensure that a full check is insignificance of the transport operations carried out. But the Commission believes with which these proceedings are that on the whole this would lead to concerned (0.0026%). Furthermore, the administrative costs which would be risk of intervention to be avoided comes totally out of proportion to the mainly from manufacturers: admittedly comparatively insignificant operations traders also have the right to offer sugar actually carried out. It is important to for intervention, but if they buy bear in mind also that as a rule where quantities at a price higher than the the reimbursement of the storage costs intervention price the risk of intervention may amount to a considerable sum it is is practically non-existent because they possible to avoid sugar being in transit at expect to be able to sell at a higher price. the transition from one month to the next.

JUDGMENT OF 23. 2. 1983 — CASE 8/82

protection available to Wagner would Ill — Oral procedure depend on the measures adopted by the Commission. At all events, as long as the The plaintiff in the main proceedings, Commission has not taken any action the represented by Klaus Landry, the Federal plaintiff will have no rights, on the basis Office, represented by Eberhard of the principle of equal treatment alone, Grobosch and the Commission, rep­ to the reimbursement of storage costs. resented by Meinhard Hilf, presented Only by pursuing claims based on non­ oral argument at the sitting on 16 contractual liability might Wagner September 1982. acquire legal protection. The Advocate General delivered his opinion at the sitting on 14 October 1982.

Decision

1 By order of 8 October 1981, which was received at the Court on 8 January 1982, the Verwaltungsgericht [Administrative Court] Frankfurt am Main referred to the Court for a preliminary ruling pursuant to Article 177 of the EEC Treaty four questions relating to the interpretation and validity of Council Regulation (EEC) No 1358/77 of 20 June 1977 laying down general rules for offsetting storage costs for sugar (...) (Official Journal 1977, L 156, p. 4) and Commission Regulation (EEC) No 1998/78 of 18 August 1978 laying down detailed rules for the offsetting of storage costs for sugar (Official Journal 1978, L 231, p. 5), having regard to the prohibition of discrimination contained in the second sentence of Article 40 (3) of the EEC Treaty.

2 The questions arose in the course of proceedings between Hans-Otto Wagner GmbH Agrarhandel and the Bundesanstalt für landwirtschaftliche Marktordnung [Federal Office for the Organization of Agricultural Markets, hereinafter referred to as "the Federal Office"], the German intervention agency.

(2) Reimbursement for the sugar referred to in paragraph 1 shall, however, be limited to a period equal to three quarters of one month."

6 Article 11 of the same regulation provides as follows :

"(1) Reimbursement of storage costs shall be granted in respect of raw or white sugar which at 00.00 hours on the first day of a month is within a Member State in transit from an approved warehouse, other than transit as referred to in Article 10, and which, on arrival, is stored in another approved warehouse in the same Member State.

(2) For purposes of calculating the quantity of sugar qualifying for the reimbursement of storage costs, as referred to in Article 4 (2) of Regu­ lation (EEC) No 1358/77, the sugar referred to in paragraph 1 shall be considered as still stored in the departure warehouse at 24.00 hours on the last day of a month and as already stored in the arrival warehouse at 00.00 hours on the first day of the following month."

JUDGMENT OF 23. 2. 1983 — CASE 8/82

7 The plaintiff in the main action applied for reimbursement of his storage costs in respect of quantities of sugar purchased from a French undertaking which were in transit from an approved warehouse in France to an approved warehouse in the Federal Republic of Germany on the last day of the month in question. The relevant German authority, the Federal Office, rejected the application on the ground that under Article 11 of Regulation No 1998/78 only sugar transported between approved warehouses in the same Member State could be considered.

4. Does the resultant unlawful preference of sugar transported between approved warehouses in the same Member State over sugar transported between approved warehouses in different Member States constitute discrimination within the meaning of the second subparagraph of Article 40 (3) of the EEC Treaty, or does it at any rate offend against the general prohibition of arbitrariness which rests on common legal principles?"

9 The first question asks whether sugar which is in transit from one approved warehouse to another fulfils the requirement that it be stored in a warehouse within the meaning of Article 3 (1) of Regulation No 1358/77. The plaintiff in the main action maintains that Article 11 (1) of Commission Regulation No 1998/78 is not based on Article 3 (2) of Council Regulation No 1358/77. The latter provision is the basis for Article 10 of Regulation No 1998/78, which relates to sugar originating in the French overseas departments, and cannot therefore be the basis of Article 11(1). It is consequently of the opinion that the latter provision simply gives an interpretation of Article 3 (1) of Regulation No 1358/77 to the effect that sugar in transit between approved warehouses meets, in principle, the requirement that the product be stored in a warehouse.

i2 The latter provision has general application, like the similar provision contained in Regulation No 1358/77, and does not in any way restrict the nature of the circumstances which are to be regarded as special. The Commission relied upon that provision in Regulation (EEC) No 442/70 of 9 March 1970 laying down detailed rules for the application of the system of offsetting storage costs for sugar (Official Journal, English Special Edition 1970 (I), p. 140), when it adopted in Article 5 provisions similar to those of Article 10 of Regulation No 1998/78.

n In the recitals to Regulation (EEC) No 1688/74 of the Commission of 28 June 1974 (Official Journal 1974, L 176, p. 5), the Commission stated that for sugar which was in transit from an approved warehouse in one of the Member States at 00.00 hours on the first day of a month and which on arrival was stored in an approved warehouse in the same Member State, a system should be provided which corresponded substantially to the provisions set out in Regulation No 442/70 in respect of cane sugar from the French overseas departments. Regulation No 1688/74 therefore inserts into Regu­ lation No 442/70 a new article, Article 5a, which has essentially the same effect as Article 11 (1) of Regulation No 1998/78.

H It would appear therefore that the Commission exercised the power referred to above for the two purposes described even before the Council expressly

WAGNER v BALM

authorized it to take special measures in just those terms in Regulation No 1358/77, and it may thus be concluded that that authorization should not be interpreted narrowly as suggested by the plaintiff in the main action, but should be interpreted in such a way as to bear out the effects of Articles 10 and 11 (1) of Regulation No 1998/78.

JUDGMENT OF 23. 2. 1983 — CASE 8/82

the case. The difference of treatment is based on requirements of supervision which may be justified objectively. Council Regulation No 1358/77 emphasizes the need for supervision and therefore provides that the reimbursement should normally be made by the Member State in whose territory the sugar is stored.

20 The Commission rightly states that the supervisory measures which would be necessary if reimbursement had to be made in the case of international transport would involve disproportionate administrative costs. The warehouse of despatch and the warehouse of arrival are subject to the jurisdiction of different administrative authorities. In the absence of any system of cooperation to effect the necessary supervision the relevant authority of the Member State which is the destination of the consignment must check that the dealer has acquired ownership of the. goods, establish the moment when he acquired such ownership if he is also claiming reimbursement for the end of the month as far as the warehouse of departure is concerned, and check that the sugar was stored in an approved warehouse in the Member State from which the consignment was despatched.

21 It follows from the foregoing considerations that the situation with regard to sugar in transit at the beginning of a month between two approved warehouses in the same Member State is not the same as that where the warehouses are situated in different Member States. In the circumstances the difference between the two situations justifies a difference in treatment which does not amount to unlawful discrimination in Community law.

THE COURT (First Chamber),

in answer to the questions referred to it by the Verwaltungsgericht Frankfurt am Main by order of 8 October 1981, hereby rules:

1. Sugar which is in transit between one approved warehouse and another does not fulfil the requirement as to storage in a warehouse within the meaning of Article 3 (1) of Council Regulation No 1358/77 of 20 June 1977.

2. The special rule contained in Article 11 (1) of Commission Regulation No 1998/78 of 18 August 1978 is covered by the authority granted in Article 3 (2) of Regulation No 1358/77.

3. The fact that reimbursement is granted in respect of storage costs for sugar which, at the beginning of the month, is in transit between two approved warehouses situated in the same Member State but is not granted in respect of sugar which is in transit between two approved warehouses situated in different Member States does not amount to discrimination prohibited by Community law.

O'Keeffe Bosco Koopmans