C-337/82

JUDGMENT OF 21. 2. 1984 — CASE 337/82

In Case 3 3 7 / 8 2

R E F E R E N C E to the C o u r t u n d e r Article 177 of the E E C T r e a t y by the Finanzgericht [Finance C o u r t ] Düsseldorf for a preliminary ruling in the proceedings p e n d i n g before t h a t court between

S T . NIKOLAUS BRENNEREI U N D LIKÖRFABRIK, GUSTAV KNIEPF-MELDE GMBH, Rheinberg,

and

HAUPTZOLLAMT [Principal C u s t o m s Office] KREFELD,

Facts and Issues

I — Facts and p r o c e d u r e cultural ethyl alcolol of French origin. At the time of importation the competent On 21 April 1976 the plaintiff in the customs office demanded payment of main proceedings imported into . the countervailing charges amounting to D M Federal Republic of Germany agri- 11 166.70. Those charges were payable

ST. NIKOLAUS BRENNEREI ν HAUPTZOLLAMT KREFELD

The order making the reference was According to the preamble to Regulation registered at the Court on 23 December N o 851/76, it became necessary to 1982. introduce a countervailing charge as a result of the absence of a common organization of the alcohol market and In accordance with Article 20 of the because the Council had not given a Protocol on the Statute of the Court of ruling, under Article 42 of the Treaty, on the applicability to agricultural ethyl Justice of the EEC, written observations alcohol of the provisions of the Treaty were submitted by the plaintiff in the relating to State aid. main proceedings, represented by P. Müller-Kemler, Rechtsanwalt, Hanover, by the United Kingdom, represented by In so far as they provided for that J. D. Howes, of the Treasury Solicitor's countervailing charge, the regulations Department, acting as Agent, assisted by were founded on Article 46 of the EEC C. Bellamy, of Gray's Inn, Barrister, and Treaty. by the Commission of the European

JUDGMENT OF 21. 2. 1984 — CASE 337/82

Communities, represented by Jörn Sack, Treaty require a considerably longer a member of its Legal Department, period, during which the conduct acting as Agent. contrary to the Treaty could be per- petuated with discriminatory effect. However, the Treaty does not provide Upon hearing the report of the Judge- any basis for such an approach. The only Rapporteur and the views of the course of action which might have Advocate-General, the Court decided to provided a quick solution would have open the oral procedure without any been an application for the adoption of preparatory inquiry. interim measures.

ST. NIKOLAUS BRENNEREI ν HAUPTZOLLAMT KREFELD

be necessary and desirable prior to (vi) Article 46 enables quick and the setting-up of a common organi­ effective action to be taken, whilst zation of the market, provided that the procedure under Article 169 is such measures are taken by the time-consuming and may involve Community, and not unilaterally by complex questions of fact and of the Member States concerned law. (judgment of 25 September 1979, Commission ν France cited above). The Commission of the European Com­ (iii) Whilst it is true that the Community munities puts forward arguments which may not impose charges having an are similar to those advanced by the effect equivalent to customs duties United Kingdom, in particular as regards in trade within the Community the wording of Article 46 and the in­ (judgment of 20 April 1978, Joined terpretation of the judgment of Cases 80 and 81/77 Ramel [1978] the Court of 25 September 1979 (Com­ ECR 927), that is so only if a mission v France, cited above). In common organization of the market addition, it maintains that: exists. In that case, Articles 39 to 46 of the Treaty do not contain any (i) The Court has so far only dealt exception to the application of the with Article 46 summarily and the general rule prohibiting charges reference which it has made to the having an effect equivalent to transitory character of the provision customs duties. On the other hand, must not be overestimated (judg­ in the present circumstances Articles ments of 20 April 1978 in Joined 38 (2) and 46 of the Treaty Cases 80 and 81/77 Ramel [1978] authorize the levying of counter­ ECR 927, and of 29 March 1979 in vailing charges in view of the Case 231/78 Commission v Uni/ed absence of a common organization Kingdom [1979] ECR 1460). of the market.

(3), are not to be rendered the Commission, at this stage, meaningless. Indeed it is precisely merely has the right to be informed as a result of the unrestricted of aid which has been granted but application of rules relating to the not to compel the Member State to free movement of goods that an abolish or to modify the aid (Article increased need for national aid 4 of Regulaton No 26 applying might make itself felt. certain rules of competition to production of and trade in agri­ cultural products, Official Journal, English Special Edition 1959-1962, Moreover, the Court of Justice has p. 129). Article 5 of the Treaty acknowledged that even within the cannot deprive Member States of framework of a common organiz­ the discretion which the Council ation of the market, it is possible in has expressly left them. principle to create appropriate mechanisms for the neutralization of trade between Member States, when, as a result of the different (iv) In his Opinion in Case 91/78 agricultural structures, it proves (Hansen II, [1979] ECR 935, at necessary to establish different p. 959) Mr Advocate General intervention measures in certain Capotorti considered that, after the regions of the Community (judg­ end of the transitional period, ment of 15 September 1982, Case Articles 92 to 94 of the EEC Treaty 106/81 Kind ν Council and Com­ also apply in their entirety to agri­ mission [1982] ECR 2885). cultural products for which a market organization has yet to be introduced. If the rules on the free (iii) If the provisions of Articles 92 to 94 movement of goods are fully were fully applicable to agriculture applied to products for which no even in the absence of special common organization of the market provisions, any measure implement­ exists, it is scarcely possible to ing Article 46 would be deprived of suggest that Member States should its legal basis, inasmuch as it is only be left complete discretion to grant reasonable to have recourse to that aids, in view of the fact that such a provision with a view to neutral­ state of affairs might result in izing lawful measures adopted by dangerous and reciprocal distur­ Member States. It would be very bances of the markets. However, it dangerous to apply Article 46 in the is only necessary to resolve the event of unlawful national problem of the full application of measures, because that would help Articles 92 to 94 if it is not possible to consolidate such measures. to have recourse to Article 46.

The Court requested the Commission to state briefly in writing why, when Regu­ lation No 851/76 was adopted, it did not If the Court of Justice were to hold that commence proceedings under Article 169 Article 46 is no longer applicable after of the EEC Treaty against France for the end of the transitional period, which, infringement of Article 37 of the Treaty, in the Commission's view, would be in view of the fact that the Commission quite possible from a legal point of view, had emphasized that Article 46 was although, in the light of the wording of applicable only in order to neutralize Artcile 42, it would represent a far- lawful measures adopted by Member reaching step, it should then also States. acknowledge that Articles 92 to 94 of the Treaty apply, after the end of the transitional period, to all agricultural In reply the Commission stated that it products. considered in 1976 that after the expiry of the transitional period Article 37 of the Treaty had only a very limited field of application. As regards the second question submitted for a preliminary ruling, relating to the However, in its judgement of 13 March consequences which might arise if Regu­ 1979 in Case 91/78 (Hansen ν Haupt­ lation No 851/76 were declared void, zollamt Flensburg [1979] ECR 935) the the Commission takes the view that if the Court took a different view. It Court considers the regulation invalid, it considered that Article 37 of the EEC should at least, by analogy, apply the Treaty was a lex specialis which took second paragraph of Article 174 of the priority over Article 92 et seq. On the EEC Treaty and declare that the legal basis of that judgment, the Commission effects of the regulation are definitive, repealed Regulation No 1408/78 at the despite its invalidity. As, in any event, beginning of 1980, after France had the regulation is no longer in force, such ceased its practice of granting aids for a decision would only have an effect on the export of agricultural alcohol, the past. In fact, a considerable number of arguments now support the validity of the regulation. Moreover, the levying of When the Commission was again asked the charge, in the final analysis, merely to deal with the question of aids granted removed an unjustified competitive by the French monopoly for the export advantage for importers. In that respect, of alcohol, it decided not to apply Article since the Member States and the 46 of the Treaty and preferred to Commission considered Article 46 institute proceedings against France applicable, no serious attempt was made under Article 169. to find an alternative means of removing the unjustified advantage accorded to French alcohol exports. Finally, the Commission does not know how many IV — Oral procedure actions for the repayment of charges levied under Regulation No 851/76 are pending or may still be brought in At the sitting on 11 Octobre 1983 oral Member States. argument was presented by the

For the United Kingdom, Mr Bellamy Article 46 has been used continually submitted that Article 46 was an effective since the end of the transitional period means of intervention, because in 1976 it and it cannot be maintained that that use brought about an immediate solution to has always been erroneous. the problem of the distortions created by French aids and thus made it possible to With regard to the continued ap- safeguard the interests of agricultural plicability of Article 46, Mr Bellamy producers and to stabilize the markets. cited Smith and Herzog, Law of the On the other hand, when French aids European Economic Community, at were again introduced in 1982 and 1983, p. 2443. the Commission was in some doubt as to the applicability of Article 46 and instead instituted proceedings against France With the Commission, Mr Sack stated under Article 169 (Case 57/83). Those that, in his view, Article 46 could apply proceedings failed to provide a rapid and only to lawful national measures and preventive solution. The purpose of that therefore Regulation No 851/76 Article 169 is to obtain a declaration that must be declared void. He advanced the there has been an infringement; it does following arguments in support of that not offer any protection. It follows that view: Articles 46 and 169 are not mutually exclusive. (a) The procedure under article 169 An application for the adoption of serves to mitigate the effects of interim measures is not a satisfactory unlawful situations. Article 46 is of alternative since it is not suitable for course quicker and more effective, resolving problems, except where the but there is no reason why, when problems are conspicuous. national aids are adopted, a par-

Decision

1 By an o r d e r dated 8 September 1982, which was received at the C o u r t on 23 D e c e m b e r 1982, the Finanzgericht [Finance C o u r t ] Düsseldorf referred to the C o u r t for a preliminary ruling u n d e r Article 177 of the E E C T r e a t y two questions on the validity of Commission Regulation ( E E C ) N o 8 5 1 / 7 6 of

JUDGMENT OF 21. 2. 1984 — CASE 337/82

9 April 1976 fixing a countervailing charge for imports into Belgium, Germany, Luxembourg and the Netherlands of ethyl alcohol of agricultural origin produced in France (Official Journal 1976, L 96, p. 41).

2 The plaintiff in the main proceedings imported into the Federal Republic of Germany ethyl alcohol of French origin and was required to pay a counter- vailing charge under Regulation N o 851/76. Questioning the compatibility of that regulation with the EEC Treaty, it contested the demand for payment in proceedings before the Finanzgericht.

3 According to the preamble to the regulation, the countervailing charges were intended to mitigate the effects of the disturbance, or the threat of disturbance, of the German and Benelux markets caused by imports from France of agricultural alcohol at prices considerably lower than the prices prevailing on those markets. Those supplies of cheap alcohol were a result, in particular, of the pricing policy applied by the French alcohol monopoly.

2. If the answer to Question 1 is in the affirmative, what legal consequences arise from the invalidity of the regulation?"

T h e first q u e s t i o n

6 The first question is intended essentially to establish whether Article 46 of the EEC Treaty is still applicable after the expiry of the transitional period and consequently whether or not Regulation N o 851/76. adopted in pursuance of that article, is valid.

7 According to the plaintiff in the main proceedings, Article 46 no longer constituted a valid basis for the adoption of Regulation N o 851/76 after the expiry of the transitional period, by which time all the national organizations of the market should have been adjusted to the rules laid down for the establishment of the common market. The plaintiff considers that the only legal remedy which the Commission was entitled to make use of, in order to mitigate the distortions of competition caused in this instance by France, was an action under Article 169 for infringement of the rules laid clown in the Treaty.

8 The Commission considers that Article 46 can now apply only with regard to lawful national measures, in view of the fact that the procedure under Article 169 represents an adequate means of countering national measures which are contrary to the Treaty. The Commission takes the view that the imposition of a countervailing charge may be justified only where it represents the sole means of redressing the balance, since such a charge has the effect of creating a barrier to the free movement of goods, which is one of the fundamental principles of the common market.

1 3 On the other hand, Article 37 only partly fills the lacuna resulting from the limited applicability to those products of the rules relating to aids. Only if the particular conditions specified in Article 37 are satisfied may the Commission act against national aids affecting competition within the Community.

14 It follows from the foregoing that, so long as an agricultural product has not been made subject to a common organization of the market, Article 46 constitutes for the Commission a useful instrument which allows it to adopt immediate safeguards against distortions of competition created by a Member State. The introduction of a countervailing charge pursuant to that article thus facilitates the achievement — by the maintenance of normal trade patterns in the exceptional and temporary circumstances which justify the

ST. NIKOLAUS BRENNEREI v HAUPTZOLLAMT KREFELD

measure — of the aims of Article 39 of the Treaty, which seeks inter alia to stabilize the markets and to ensure a fair standard of living for the agricultural population concerned.

15 Moreover, although such a countervailing charge appears to be an impediment to intra-Community trade, it cannot be compared to a charge having an effect equivalent to a customs duty. It is a charge imposed in the general interest, the amount of which is fixed by the Commission and not unilaterally by a Member State. It enables products from States where aids are granted to be exported to other Member States without disturbing their markets and thus prevents artificial differences between prices in the exporting Member State and those in the importing Member State, resulting from disparities in the national markets before the establishment of a common organization, from creating imbalances in trade. In each case it is for the Commission to ensure that the duration and the amount of the charge remain within the limits circumscribed by the need to re-establish equilibrium.

19 In reply to the national court it must therefore be stated that Article 46 of the EEC Treaty may be applied after the expiry of the transitional period to products which have not yet been made subject to a common organization of the market. In consequence the validity of Commission Regulation N o 851/76 of 9 April 1976 fixing a countervailing charge for imports into Belgium, Germany, Luxembourg and the Netherlands of ethyl alcohol of agricultural origin produced in France (Official Journal 1976, L 96, p. 41) cannot be called in question on the ground that it is based on Article 46.

The second question

20 It is not necessary to reply to the second question since it related solely to the possibility that Regulation No 851/76 might be found to be invalid.

Costs

21 The costs incurred by the United Kingdom and by the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. As these proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the action pending before the national court, the decision on costs is a matter for that court.

On those grounds,

Delivered in open court in L u x e m b o u r g on 21 February 1984.

For the Registrar H . A. Rühi J. Mertens de Wilmars Principal Administrator President

O P I N I O N OF M R ADVOCATE GENERAL REISCHL D E L I V E R E D O N 23 N O V E M B E R 1983 '

Mr President, That policy consisted in selling for Members of the Court, export ethyl alcohol at a price which was on average both substantially below the In 1976 the supply of cheap French agri- French domestic price and below the cultural alcohol led to disturbances, or price prevailing in the other countries threats of disturbances, on the German, referred to. In view of that situation the Belgian, Luxembourg and Netherlands Kingdom of Belgium, the Federal alcohol markets. The availability of Republic of Germany, the Grand Duchy cheap supplies was above all the result of of Luxembourg and the Kingdom of the the pricing policy applied by France, by Netherlands requested the Commission means of its national alcohol monopoly. to take measures pursuant to Article 46

I —Translated from the German.