C-66/82
ECLI:EU:C:1983:42
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JUDGMENT OF 23. 2. 1983 — CASE 66/82
question. It follows that preventing when the periods prescribed by the speculation is an aim of fundamental Community legislation are exceeded is importance to the proper functioning a measure which is proportionate to of the system. In those circumstances the aims pursued by Regulations Nos the total forfeiture of the security 1259/72 and 232/75.
In Case 66/82
REFERENCE to the Court under Article 177 of the EEC Treaty by the Tribunal Administratif [Administrative Court], Paris, for a preliminary ruling in the action pending before that court between
FROMANÇAIS SA, Paris,
and
FONDS D'ORIENTATION ET DE RÉGULARISATION DES MARCHÉS AGRICOLES (FORMA) [Agricultural Markets Guidance and Stabilization Fund, here inafter referred to as "the Fund "], Paris,
on the validity of Article 18 (2) of Regulation (EEC) No 1259/72 of the Commission of 16 June 1972 (Official Journal, English Special Edition 1972, (II), p. 559), Articles 18 (2) and 19 of Regulation (EEC) No 232/75 of the Commission of 30 January 1975 (Official Journal, 1975, L 24, p. 45) and Article 13 (4) of Commission Regulation (EEC) No 1687/76 of 30 June 1976 (Official Journal, 1976, L 190, p. 1),
THE COURT (First Chamber)
composed of: A. O'Keeffe, President of Chamber, G. Bosco and T. Koopmans, Judges,
Advocate General: G. Reischl Registrar: P. Heim
gives the following
FROMANÇAIS v FORMA
JUDGMENT
Facts and Issues
I — Facts and written procedure 1259/72. In particular, Article 18 (2) of Regulation No 1259/72 was reproduced in the first subparagraph of Article 18 (2) of Regulation No 232/75. 1. Legislation
Article 19 of Regulation No 232/75 relaxed the principle that the security In order to facilitate the disposal of should not be released where the time- excess butter, the Commission in limit for processing had not been troduced by Regulation No 1259/72 a observed. It provides that where the system for the sale of butter to certain prescribed period has been exceeded by Community processing undertakings at a no more than 30 clays, otherwise than as reduced price. Under that system butter a result of serious negligence on the part is sold to the interested parties by means of the person concerned, the amount of of a tendering procedure. In exchange the security to be retained is only two for the reduced price, the successful units of account per tonne for each day tenderer agrees in particular to process by which the prescribed period has been the butter or to cause it to be processed, exceeded. within a certain period, into specified products such as pastry and other fine bakers' wares and ice-cream. On taking 2. Facts over the butter, the successful tenderer must not only pay the reduced price but also lodge a processing security, the Between 1973 and 1980 Fromançais SA amount of which is intended to cover the purchased quantities of butter sold at a difference between the market price of reduced price pursuant to Regulations butter and the minimum selling price. Nos 1259/72 and 232/75 and lodged the Article 18 (2) of Regulation No 1259/72 requisite processing securities. Some of provides that except in cases of force that butter, which had been sold by majeure, the security is to be released Fromançais to Italian undertakings, only for the quantities in respect of either was not processed at all, or was which the tenderer provides the proof processed after the expiry of the pre that he has fulfilled his obligations. scribed period or on an unconfirmed date.
With effect from 1 February 1975, Regu By a decision of 21 January 1981, the lation No 1259/72 was replaced by Fund refused to release the securities in Regulation No 232/75 of the respect of the consignments of butter for Commission of 30 January 1975 on the which Fromançais had been unable to sale of butter at reduced prices for use in furnish proof that the requirements of the manufacture of pastry products and the Community legislation had been ice-cream, which essentially duplicated observed, in particular the conditions the provisions of Regulation No relating to the time-limit.
JUDGMENT OF 23. 2. 1983 — CASE 66/82
On 20 March 1981 Fromançais brought Justice of the EEC, written observations an action against that decision before the were lodged by Fromançais, represented Tribunal Administratif, Paris. by Xavier de Roux and Charles-Henry Leger of the Paris Bar; by the Fund, represented by Philippe Villey of the It claimed, inter alia, that the Paris Bar; and by the Commission of the Community regulations on which the European Communities, represented by decision was based constituted a breach François Lamoureux, a member of its of the principle of proportionality Legal Department, acting as Agent. inasmuch as they made the release of the security conditional upon observance of the time-limit for processing, although Upon hearing the report of the Judge- the time-limit had no decisive influence Rapporteur and the views of the on the achievement of the aims of those Advocate General, the Court decided to regulations. open the oral procedure without any preparatory inquiry.
By judgment of 26 January 1982, the Tribunal Administratif, Paris, stayed its By an order of 29 June 1982 the Court proceedings and asked the Court of decided to assign the case to the First Justice for a preliminary ruling on : Chamber pursuant to Article 95 (1) and (2) of the Rules of Procedure.
" The validity of Article 18 (2) of Regu lation (EEC) No 1259/72 of the Commission, Article 18 (2) and 19 of II — Written observations sub Regulation (EEC) No 232/75 of the mitted to the Court Commission and Article 13 (4) of Commission Regulation (EEC) No 1687/76." Fromançais notes that the question which has been referred to the Court is It should be noted that Article 13 (4) of intended to establish whether forfeiture Regulation No 1687/76, which was of the security in full when the de discussed in the judgment of the national naturing or processing provided for court, relates to administrative checks on under the Community regulations has in the destination of the butter and the fact taken place but only after the pres release of the security, and therefore cribed period has expired constitutes a does not directly concern the subject- breach of the principle of proporti matter of the case, namely the principle onality. that the security should not be released when the processing period is exceeded. In its view, it is manifestly dispro portionate to treat a tenderer who adheres to the Commission's fun 3. Procedure damental aim inasmuch as he actually processes the butter, albeit after the expiry of the prescribed period, in the The judgment making the reference was same way as the tenderer who does not received at the Court on 17 February process the butter and who sells it on the 1982. market as unprocessed butter. A real penalty is inflicted on the former solely In accordance with Article 20 of the because he has failed to observe an Protocol on the Statute of the Court of administrative time-limit, whereas the
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second, in losing his security (which would not even have been an corresponds to the difference between infringement if it had occurred after the the market price of the butter and the entry into effect of Regulation No special price paid by the successful 262/79. tenderer), merely pays the market price for the butter which he has re-sold as such on the market. In fact, the obligation to observe the time-limits for processing is designed to meet two requirements. Fromançais considers that in order to assess the validity of a provision in relation to the principle of proportion
The first and most important of those is ality, the object of the provision must to prevent speculation. It may be first be identified. It must then be ascer considered, however, that the risk of tained whether the provision represents a speculation is strictly limited when the means which is proportionate to that processing takes place a few days after objective. the expiry of the processing period. Accordingly, to impose on a tenderer who is suspected of speculating because The principal aim of the security he has exceeded the processing period by provided for by Regulations Nos a few days the same penalties as if 1259/72 and 232/75, as clearly indicated he had completely disregarded his in the identical fourth recitals in the obligations is clearly disproportionate. preambles to those regulations, is to ensure that the butter is processed.
The preambles to the regulations do not, Furthermore, it is clear that the however, refer to the period within processing period, which has been the which the processing must be carried subject of repeated alterations, is by no out. means so crucial an element of the Commission's policy that to exceed it, however slightly, might compromise the In contrast to the obligation to process implementation of that policy. the butter, the obligation to observe certain time-limits does not appear to be intended to ensure that "the butter is not The second requirement is purely diverted from its destination". The administrative in nature: the purpose purpose of that obligation is different of the time-limit is to ' enable the and clearly less important, as is shown by Commission to obtain information as to the alterations in the processing period, the results of the measures which it has which was fixed by Regulation No adopted, as quickly as possible, and to 1259/72 at 120 days calculated from the ensure that the administrative burden taking over of the butter, subsequently which each tenderer causes it to incur is increased to six months under the removed as soon as possible.
That aim provisions of Regulation No 232/75 and, cannot be as important as the principal finally, set at eight months from the last purpose of the security. The Commission day for the submission of tenders by certainly attaches more importance to Regulation No 262/79. the fact that the butter sold at a reduced price has been processed than to the possibility of closing its files at a slightly The failure to carry out processing earlier date. The two purposes are of very within the prescribed period, for which different weight and should therefore, in the same penalty is to be imposed as for accordance with the principle of pro the complete non-performance of the portionality, be subject to penalties, obligation to carry out the processing, which are likewise different, as is shown,
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moreover, by the judgment of the Court The Fund points out that in the above- of 20 February 1979 in Case 122/78 mentioned judgment in Joined Cases 99 Buitoni[l979] ECR 677). and 100/76 the Court stated that before the processing security could be released it had to be established that the processed products met the conditions laid down by Article 6 (1) (c) of Regu That the failure to observe the lation No 1259/72 and that they had processing time-limit is not particularly been produced within the period fixed by serious is confirmed by the way in which that provision. The Fund suggests the requirement in Regulation No therefore that that judgment may provide 1259/72 was amended in Regulation No the answer to the question raised in the 232/75. Article 19 of that regulation present case. provides that where the processing period has been exceeded by less than 30 day for reasons other than serious negligence, the amount of the processing security to be retained is much reduced. The Fund notes, moreover, that under That article thus applies the principle of Article 19 of Regulation No 232/75 the proportionality, but there remains position of a tenderer who fulfils his nevertheless a considerable and unjusti obligation with regard to processing after fiable difference between the tenderer a certain delay may now be taken into who has carried out the processing on account in relation to the system of the 30th day of the additional period, processing securities. In the view the and who loses only a small part of the .Fund the relevant question- is therefore security, and the tenderer- who- has whether in the light of the purpose of the carried out the processing after the 30th system, that provision makes a sufficient day, who forfeits the entire security distinction between the failure to process solely because he has failed to observe an and the delay in processing even if that administrative time-limit, the arbitrary delay exceeds the 30-day limit. .nature of which is illustrated by the fact that it was doubled and thus extended to 60 days by Regulation No 262/79.
The Fund refrains from suggesting a solution, however, and leaves the question to be decided by the Court. Finally, Fromançais submits that this case is to be distinguished from Joined Cases 99 and 100/76 De Beste Boter [1977] ECR 861, in which the Court, by its decision of 11 May 1977, declared that The Commission considers that, as the Article 18 (2) of Regulation No 1259/72 question submitted by the national court was valid as regards the principle of in Joined Cases 99 and 100/76 also proportionality. The problem raised in concerned the compatibility of the that case was what should happen to the refusal to release the security where the security in the event of failure to process processing period has been exceeded the butter, while in the present case the with the principle of proportionality and processing took place after the expiry of as that aspect of the question was the prescribed period. It is therefore not expressly referred to in the observations possible to apply the Court's decision in submitted by the parties and in the De Beste Boter to the present case auto Advocate General's opinion, the decision matically. given by the Court in its judgment of
FROMANÇAIS v FORMA
11 May 1977 applies to all cases in which who noted that the prescribed period the conditions laid down in Article 6 are enabled the Commission to administer not fulfilled and in which the penalty the system established with the maximum imposed is the refusal to release the efficiency and in accordance witli the security, even for failure to observe the objects of the legislation. time-limit for processing.
If, however, the Court finds that it has The imposition of a time-limit also not yet dealt with the question, the enables the Commission to complete the Commission contends that: necessary checks within a reasonable period of time. It is clear, however, that that second aim is independent of the In the light of the purpose of Regu purpose of the legislation and 'that it lations Nos 1259/72 and 232/75 the does, in itself, justify forteiture of the duty to observe the time-limit is security when the period has been inseparable from the obligation to exceeded. Thus the argument based on process; the judgment in Case 122/78, Bnitoni, in which the time-limit was justified exclusively on administrative grounds Consequently, the requirements with connected with record-keeping, does not regard to the lodging of a security are apply in this case. not disproportionate to the aims to be achieved. Having thus argued that the obligation to observe the processing time-limit is The Commission takes the view that the essential, the Commission maintains that aim of Regulations Nos 1259/72 and the forfeiture of the security where the 232/75, which is to create new period is exceeded is not a dispro possibilities for the disposal of butter in portionate means of achieving the aims the food industry, may be achieved only of the legislation. if the processing of the butter is carried out within a relatively short period. The processing period is in fact fixed in order to oblige the tenderer actually to process The processing time-limit is one of the the butter purchased and not to lay up conditions accepted as part of the con cheap reserves for speculative purposes. tractual agreement by the tenderer in If the time-limit did not have to be return for the considerable advantage observed, there would be a risk of specu represented by the reduction in price. As lation, because the tenderer might be the security amounts to the exact value tempted to accumulate stocks in of the difference between the reduced anticipation of an increase in the price of price and the market price, its forfeiture butter sold at reduced prices. Such action is not a penalty, since it merely reflects would defeat the purpose of the system, the additional amount of the original to the detriment of the Community market price and is therefore no more budget. than what is appropriate and necessary in order to achieve the required aim.
The Commission points out that the obligation to observe the time-limit was As regards Article 19 of Regulation No shown to be essential in the Beste Boter 232/75, which relaxed the terms for the case by Mr Advocate General Reischl, forfeiture of the security in cases where
JUDGMENT OF 23. 2. 1983 — CASE 66/82
the period was exceeded only slightly "Examination of the question referred to and not exclusively as a result of the the Court has disclosed no factor of such successful tenderer's negligence, the a kind as to affect the validity of Article Commission fails to see how that relax 18 (2) of Regulation No 1259/72, ation constitutes a breach of the principle Articles 18 (2) and 19 of Regulation No of proportionality. It was introduced in 232/75, or Article 13 (4) of Regulation the light of the experience of the No 1687/76." functioning of the system and gave effect to the intention not to impose excessive penalties on buyers who are victims of Ill — Oral procedure administrative delays not attributable to force majeure. It considers that, on Fromançais, represented by Xavier de the contrary, it demonstrates the Roux of the Paris Bar, the Fund, Commission's concern not to inflict represented by Philippe Villey of the excessive penalties on the persons Paris Bar, and the Commission of the concerned in such cases of minor European Communities, represented by overstepping of the time-limit, where François Lamoureux, a member of its there is no intention to speculate. Legal Department, acting as Agent, presented oral argument at the hearing On the basis of the above considerations, on 7 October 1982. the Commission proposes that the question referred to the Court by the The Advocate General presented his Tribunal Administratif, Paris, be Opinion at the hearing on 11 November answered as follows: 1982.
Decision
1 By a judgment of 26 January 1982 which was received at the Court on 17 February 1982 the Tribunal Administratif [Administrative Court ], Paris , referred to the Court under Article 177 of the EEC Treaty a preliminary question as to the effect of the principle of proportionality on the validity of Article 18 ( 2 ) of Regulation ( EEC ) No 1259 / 72 of the Commission of 16 June 1972 on the disposal of butter at a reduced price to certain Community processing undertakings (Official Journal , English Special Edition 1972 (II), p . 559), Article 18 (2) and 19 of Regulation ( EEC ) No 232 / 75 of the Commission of 30 January 1975 on the sale of butter at reduced prices for use in the manufacture of pastry products and ice-cream (Official Journal , 1975 , L 24 , p . 45) and Article 13 (4) of Commission Regu lation ( EEC ) No 1687 / 76 of 30 June 1976 laying down common detailed rules for verifying the use and / or destination of products from intervention (Official Journal , 1976, L 190, p . 1).
FROMANÇAIS v FORMA
2 The question was raised in the course of an action brought by Fromançais SA against the Fonds d'Orientation et de Régularisation des Marchés Agricoles ("the Fund"), which refused to release processing securities lodged by Fromançais in the period from 1973 to 1977 inclusive, when the latter bought on different occasions intervention butter sold at a reduced price for the manufacture of pastry products and ice-cream.
3 The Fund considered that as Fromançais had not provided proof that the quantities of butter in question had been processed within the period pre scribed by the Community legislation, it had not fulfilled the conditions for the release of the security applicable at that time under the regulations.
4 According to Article 18 (2) of Regulation No 1259/72, which came into force on 10 March 1973, and Article 18 (2) of Regulation No 232/75, which replaced it with effect from 1 February 1975, except in cases oí force majeure the processing security was to be released only for quantities in respect of which the successful tenderer furnished proof that certain conditions had been met. Among those conditions was the written agreement to carry out the processing of the butter within a specified period, which Regulation No 1259/72 fixed at 120 days to be calculated from the taking over of the butter and which Regulation No 232/75 subsequently extended to six months to be calculated from the same day. Article 19 (2) of Regulation No 232/75 provided that if the processing period was exceeded for reasons other than serious negligence on the part of the person concerned, that person could request, within a further 30-day period, that the amount of the processing security retained be only two units of account per tonne for each day by which the prescribed period was exceeded.
s The judgment of the national court also refers to Article 13 (4) of Regulation No 1687/76, which came into force on 1 October 1976. That provision, however, which relates to administrative controls on the destination of the butter and on the release of the security, does not directly concern the subject-matter of the action.
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6 Article 15 of that regulation states-that. Article.18 (2) of Regulation No 232/75 is repealed, but there are numerous reasons for supposing that it was not intended to repeal the first paragraph of that provision, which made the release of the security conditional on the fulfilment of certain conditions. The title of the regulation, which refers to "common detailed rules for verifying the use and / or destination of products from intervention", suggests that the regulation was solely intended to amend the rules governing the furnishing of proof that the obligations undertaken by the successful tenderer had been fulfilled, in other words, just those rules which were provided for in the second paragraph of the provision in question. Moreover, Regulation No 1687/76 did not repeal Article 19 (2) of Regulation No 232/75, which provided that only part of the security was to be retained where the period was exceeded as a result of negligence, other than serious negligence, on the part of the person concerned, and which would be meaningless if exceeding the prescribed period did not prevent the release of the security. Finally, Commission Regulation No 262/79 of 12 February 1979, which, once again, amended the conditions required for the release of the security, expressly repeals only Regulation No 232/75, a fact which would be difficult to explain if Regulation No 1687/76 imposed the same conditions.
7 Fromançais claims that by totally excluding the release of the security in the event of processing after the expiry of the prescribed period, the provisions in question apply to a relatively minor infringement of the undertakings entered into by the successful tenderer the same treatment as that which is reserved for a far more serious breach, such as the complete absence of processing, and are therefore contrary to the principle of proportionality.
8 In order to establish whether a provision of Community law is consonant with the principle of proportionality it is necessary to establish, in the first place, whether the means it employs to achieve its aim correspond to the importance of the aim and, in the second place, whether they are necessary for its achievement.
9 The provisions which require forfeiture of the security in,·, full when the processing period is exceeded seek to prevent tenderers who acquire butter at a reduced price from accumulating stocks for speculative purposes.
FROMANÇAIS ν FORMA
io In view of the fact that the price of butter sold by intervention agencies is determined on the basis of the price of competing vegetable fats and that the price of the latter varies according to fluctuations on the world markets, increases in the purchase price of butter sold at a reduced price are fore seeable some time in advance.
π If no processing period were imposed or if it could be extended for relatively long periods, the successful tenderer might be tempted to buy large quantities of butter in order to use it in conditions other than those envisaged by the Community legislation, in particular in order to create stocks which would enable him to avoid the effect of a subsequent increase in the purchase price,
12 Such speculation would conflict with the purpose of the regulations relating to the sale of butter at a reduced price, which is to remove surplus butter from the market by promoting its use as a substitute for other fats in the preparation of pastry products and ice-cream. It would be an incentive for the buyers with the most purchasing power to monopolize purchases, with the result that a veiy large percentage of the butter sold in that way would not be processed, but would be used to accumulate stocks which would be partly financed by the Community budget outside the framework of the regulations in question.
π It must therefore be concluded that preventing speculation is an aim of fundamental importance to the proper functioning of the system established by Regulations Nos 1259/72 and 232/75.
H The requirement of strict observance of the processing period in order to ensure that that aim is achieved may not be disputed by maintaining, as Fromançais has done, that by occasionally altering the length of the period the Commission has itself shown that no connection exists between the length of the processing period and the possibility of speculation.
is It is true that the processing period fixed by Regulation No 1259/72 was extended first by Regulation No 232/75 and then, a few years later, by
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Regulation No 262/78, which extended it to eight months from the last day for the submission of tenders. However, such alterations in no way establish that the Commission considered that observance of the processing time-limit was unimportant.
ie In reality the experience gained over the years enabled the Commission, in the exercise of its discretion in the economic sphere, to consider that slightly longer periods might be allowed the traders concerned; that must not, however, be regarded as an acknowledgement that no connection exists between the processing period and the possibility of speculation.
i7 The same observation applies to the supplementary period, which Regulation No 262/79 extended to 60 days. In that regard, likewise, there are no grounds for suggesting that, before deciding to extend the period, the Commission did not examine the question whether such an extension might lead to speculation.
is It follows from those considerations that withholding the security in full when the periods prescribed by the Community legislation are exceeded is a step which is proportionate to the aims pursued by Regulations Nos 1259/72 and 232/75.
i9 The reply to be given to the Tribunal Administratif, Paris, must therefore be that consideration of the question raised has disclosed no factor of such a kind as to affect the validity of Article 18 (2) of Regulation No 1259/72 or of Articles 18 (2) and 19 of Regulation No 232/75.
Costs
20 The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable. As these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the national court, the decision as to costs is a matter for that court.
PROMANÇAIS v FORMA
On those grounds,
THE COURT (First Chamber)
in answer to the question referred to it by the Tribunal Administratif, Paris, by judgment of 26 January 1982, hereby rules:
Consideration of the question referred to the Court has disclosed no factor of such a kind as to affect the validity of Article 18 (2) of Regu- lation (EEC) No 1259/72 of the Commission of 16 June 1972 or of Articles 18 (2) and 19 of Regulation (EEC) No 232/75 of the Commission of 30 January 1975.
O'Keeffe Bosco Koopmans
Delivered in open court in Luxembourg on 23 February 1983.
P. Heim A. O'Keeffe Registrar President of the First Chamber
OPINION OF MR ADVOCATE GENERAL REISCHL DELIVERED ON 11 NOVEMBER 1982 '
Mr President, during a milk year. According to Article Members of the Court, 7 (a) of Regulation (EEC) No 985/68 of the Council (Official Journal, English Special Edition 1968 (I), p. 256), which Article 6 of Regulation (EEC) No was inserted in that regulation by Regu 804/68 of the Council on the common lation (EEC) No 750/69 of the Council organization of the market in milk and (Official Journal, English Special Edition milk products (Official Journal, English 1969 (I), p. 204) such measures are to be Special Edition 1968 (I), p. 176) provides adopted in accordance with the so-called that special measures may be taken for Management Committee procedure laid butter held in public storage which down in Article 30 of Regulation (EEC) cannot be marketed on normal terms No 804/68.
1 — Translated from lhe German.