C-278/84

OPINION OF SIR GORDON SLYNN —CASE 278/84

O P I N I O N OF ADVOCATE GENERAL SIR G O R D O N SLYNN delivered on 16 December 1986

My Lords, transitional measures. By Article 7 of the regulation, By an application lodged at the Registry of the Court on 23 November 1984 the Federal Republic of Germany asks that the 'Transitional measures necessary for: Court should declare void Articles 1, 2 and 3 of Commission Regulation No 2677/84 (i) easing the passage from one system for 'on transitional measures in readiness for calculating monetary compensatory the revaluation of the representative rate for amounts to the other, the German mark on 1 January 1985' (Official Journal 1984, L 253, p. 31). (ii) avoiding disturbances following the revaluation of the representative rates of The matter arises in this way. the German mark and the Dutch guilder as at 1 January 1985,

GERMANY v COMMISSION

application of that regulation, which might the chairman to the representatives of the include other derogations from the regu- Member States on the committee . . . These lations on the common agricultural policy, documents must reach the permanent repre- were to be adopted in accordance with the sentations of the Member States no later procedure laid down in Article 26 of than eight days before the date of the Council Regulation No 120/67/EEC of 13 meeting. June 1967 which was replaced by Council Regulation No 2727/75 (Official Journal 1975, L 281, p. 1). In emergencies, at the request of a represen- tative of a Member State or on his own initiative, the chairman may reduce the Article 26 of Regulation No 2727/75 lays minimum period for communication down the procedure to be followed by the referred to in the preceding paragraph to Management Committee for Cereals. That two clear days that are not public holidays article (as amended by the Greek Act of before the date of the meeting . . . Accession (Official Journal 1979, L 291, p. 17) provides that where the procedure laid down in that article is to be followed and In cases of the greatest urgency, at the the matter is referred to the committee, the request of a representative of a Member representative of the Commission is to State or on his own initiative, the chairman submit a draft of the measures to be may include the matter on the agenda of a adopted. The committee shall deliver its meeting in the course of that meeting.' opinion on the draft within a time-limit set by the chairman according to the urgency of the matter. An opinion shall be delivered by In the minutes of the meeting at which these a majority of 45 votes. Rules of Procedure were adopted it is stated that this provision shall not allow either the Commission or the Member States to Article 41 of Council Regulation No introduce questions the absolute necessity 1785/81 on the common organization of for which is not clear, and that the determi- the markets in the sugar sector (Official nation of the urgency of an item to be Journal 1981, L 177, p. 4), in the version in placed on the agenda is ultimately subject to force at the material time, was in similar the decision of the chairman. terms.

By a notice published by the Commission on In the preamble to Regulation N o 2677/84, 14 September 1984 (Official Journal 1984, L the Commission identifies four areas of 244, p. 45) it was stated: 'Interested parties concern : are hereby informed of the Commission's intention to adopt in the cereals sector measures under Article 7 of Regulation (i) So far as the intervention system for (EEC) N o 855/84, in order to avoid cereals is concerned, abnormally high abnormally high intervention purchases due deliveries into intervention before 1 to the modification of the representative January 1985 may lead to disturbances rate for the Deutschmark and the Dutch on the market and a disruption of the guilder on 1 January 1985. These measures intervention system in the Federal may be applied to quantities offered to an Republic and that, in order to avoid intervention agency from the day of publi- this, the amount of cereals which could cation of this notice.' be bought into intervention at the old green rate should be limited to the amount which would have been bought Pursuant to Article 7 of Council Regulation in up to 31 December 1984 under N o 855/84, the Commission adopted those normal conditions, estimated at transitional measures by Regulation No 2 500 000 tonnes; beyond that amount, 2677/84, the regulation the validity of quantities offered to the German inter- which is now challenged. The first recital in vention agency after 14 September the preamble to Regulation N o 2677/84 1984 should be made subject to the states the purport of that regulation as new green rate. follows:

(iii) In relation to the purchase of sugarbeet Their effect broadly was that: (i) for the a problem arose from the fact that intervention purchasing of cereals in the sugar manufacturers were obliged by Federal Republic the new green rate was to the common market rules to pay apply from 14 September to 31 December certain minimum prices to beet 1984 subject to the prior purchase into producers, but the beet was to be intervention of 2 500 000 tonnes of the 1984 harvested between October and harvest (Article 1); (ii) for the intervention December whilst the sugar produced purchasing of sugar in the Federal Republic from it was to be marketed for some the new green rate for the German mark time thereafter; thus, in the absence of was to apply from 21 September to 31 transitional measures, the minimum December 1984 (Article 2); (iii) for the obli- prices for the beet would result from gatory minimum prices which sugar manu- the old green rate of the German mark facturers were obliged to pay for sugarbeet but the sale price of the sugar would be for the entire 1984/85 marketing year an subject to the new green rate of the average green rate was to be applied German mark and hence lower. In part-way between the old and the new one order to avoid placing on sugar manu- (Article 3 (1)); and (iv) for the minimum facturers the entire burden of the lower price which starch manufacturers were prices expressed in national currency obliged to pay to potato producers for the resulting from the revaluation of the entire 1984/85 marketing year an average green rate of the German mark, on 1 green rate was to be applied falling between January 1985, and in order to ensure the old and the new one (Article 3 (2)). fair treatment as between them and the beet producers, the Commission stated that it was necessary to apply to those minimum prices neither the old green rate nor the new one but an average In support of its claim for the annulment of conversion rate between the two. Articles 1, 2 and 3 of Regulation No 2677/84, the Federal Republic makes six submissions.

included with the notice of the meeting. The Commission makes two contentions: first, draft Commission regulation was distributed when Regulation N o 2677/84 was adopted as a meeting document at the meeting of 20 the situation was one of 'the greatest September 1984. According to the minutes urgency' within the meaning of the third of the meeting this was followed by a broad paragraph of Article 3 of the internal regu- exchange of views. Then the meeting was lation of the Management Committee, adjourned from 12.30 until 15.00, according contrary to the Federal Republic's views; to the minutes in order to allow the dele- secondly, since the Federal Republic gations to contact their respective capitals. A participated in the committee's meeting of modified draft, taking account of certain 20 September 1984 without expressing any points raised in the discussions, was put at reservations, it has lost the right to complain the disposal of the delegations when the of any procedural irregularity. meeting resumed in the afternoon. The final vote was taken at 16.00, and the minutes state that the result was 38 votes in favour of the proposed regulation and 25 against. The majority being 45, this meant that no opinion was delivered, a fact stated in the last recital in the preamble to Regulation I do not accept the Commission's second N o 2677/84. Immediately after the record contention. The Management Committee of the vote, the minutes state, the German procedure is an administrative one; it should delegation challenged the measures them- not be treated as a technical legal selves and the validity of Article 7 of Regu- proceeding in which failure to take a point lation No 855/84 as a basis for measures may preclude a party from taking it later adversely affecting German traders. on. The failure of the representatives of the Federal Republic to object at the meeting to the short notice at which they had received the proposal cannot be taken to exclude the Federal Government's right to allege a breach of the Rules of Procedure in the present proceedings. The Federal Republic of Germany alleges that the Management Committee was not properly consulted inasmuch as its members were unable to give adequate consideration to the proposal submitted to them since it was only brought to their attention at the committee meeting, whereas in the Federal On the other hand, I am not satisfied that Republic's submission there was no question the short time which they had to consider of urgency in view of the fact that the the proposal actually prevented the German Commission had taken no action for several representatives from giving it adequate months, i.e. since the adoption of Regu- consideration. There is evidence before the lation N o 855/84 on 31 March 1984. Court of exchanges between the German Government and the Commission on the question of transitional measures at least from 20 July 1984 to the time of the meeting of the Management Committees. The correspondence put in evidence before the Court shows that both the Commission As to the alleged irregularity of the and the German authorities had appreciated Management Committee procedure the that transitional measures were desirable as

well as the constraints on any transitional unreasonable or arbitrary. The Com- measures which would be adopted, and that mission's case is that between 17 and 20 they had understood each other's position. September 1984 43 000 tonnes of sugar had The German Government had stressed the been sold into intervention in the Federal need to protect German farmers and Republic. Although this is not in itself a purchasers of agricultural products from the large quantity, no such intervention effects of the forthcoming revaluation of the purchase had taken place in the Federal German mark, but it had also made clear Republic for more than seven years. In that it was not prepared to finance any aid those circumstances the Commission could out of its national funds. Both sides were legitimately fear that it was only the aware of the prospect of a record harvest in beginning of large-scale selling into inter- 1984 and both sides had stressed the need to vention, all the more so as substantial quan- maintain stable market conditions and tities were being offered for intervention safeguard the intervention system. The purchase throughout the day of 20 Commission for its part had also stressed its September 1984, the actual day of the lack of funds. Whilst it is clear that the Management Committee meeting. In the German authorities would have preferred cereals market, it is common ground that the transitional measures to take the form of the Commission's notice published on 14 payments of aid out of Community funds to September 1984 had led to great uncer- purchasers of agricultural products in the tainty. As a result a large number of traders Federal Republic, the likelihood of a record had sought to offer cereals to the German harvest in 1984 and the serious budgetary intervention agency, which had difficulties which the Community was provisionally refused to accept the offers suffering at that time were facts which could pending the definitive adoption of measures not be altered by a longer period of by the Commission. Substantial falls in price reflection on the Commission's proposals. It took place. Moreover, the Community's seems to me, therefore, that even if there budgetary difficulties had at that time had been an infringement of the reached a point which made it urgent to Management Committee's internal regu- take action to protect the EAGGF lation, it would not have made any Guarantee Fund. These three factors were substantial difference to the outcome and sufficient in my view for it to be decided therefore would not constitute a ground for that the case was one of the greatest annulment. urgency; it cannot be said that the decision was unreasonable or based on a misdi- rection in law.

the sole cause of the extreme urgency. I should only be looked at if the provisions of consider that the Commission has estab- Article 7 are not clear. lished that the case came within the third paragraph of Article 3 of the internal regu- lation of the Management Committee, and therefore that it was entitled to distribute, and the chairman to accept, the draft of its In my view, it is plain, from the regulation proposed regulation only on the morning of as a whole, that Articles 1, 2 and 3 of Regu- the meeting concerned. Accordingly, the lation N o 2677/84 were adopted pursuant submission of infringement of essential to the second indent of Article 7 to avoid procedural requirements in my view fails. 'disturbances following the revaluation of the representative rates of the German mark and the Dutch guilder as at 1 January 1985'. They are not concerned with 'easing the passage from one system for calculating monetary compensatory amounts to the The second submission is that there was no other' in the first indent of that article. The legal basis for the contested provisions. second indent is not capable of being read in the way suggested by the Federal Republic. Its object is to avoid disturbances and not necessarily to maintain the income level of traders in agricultural products or This falls into two parts. First it is said that processors of those products in the Federal Article 7 of Regulation N o 855/84 was Republic. In Articles 1, 2 and 3 the intended to enable the giving of compen- Commission is seeking, within the margin of sation for the losses suffered by traders at appreciation conferred on it, to avoid those the processing and marketing stages as a disturbances in respect of cereals and sugar result of the fall in prices. Transitional and to spread the financial burden resulting measures involving the application of the from the revaluation more evenly between new conversion rate could not be adopted producers and purchasers of sugarbeet and under this article if they were detrimental to of potatoes for making starch. traders at the processing and marketing stages. Second, it is said that since the financing of MCAs had been incorporated in the agricultural market since 1972, when As regards the Community's alleged respon- Regulation N o 974/71 was adopted, the sibility to finance losses sustained in the powers conferred by Article 7 of Regulation marketing and processing stages on the N o 855/84 could only be exercised in such same basis that it is required to finance a way as to make it clear that the monetary compensatory amounts (MCAs), Community was responsible for any losses Council Regulation No 729/70 on the sustained as from 1 January 1985 in the financing of the common agricultural policy marketing and processing stages as a result (Official Journal, English Special Edition of the fall in prices. 1970 (I), p. 218) provides that the EAGGF Guarantee Section shall finance refunds on exports to third countries and intervention intended to stabilize the agricultural markets. By itself this does not cover MCAs, There has been much reference to the back- but it was extended to cover them by ground to the adoption of Regulations No Council Regulation No 2746/72 (Official 855/84 and N o 2677/84. This, in my view, Journal, English Special Edition 1972

(28-30 December), p. 64), which provided common market, the Commission shall: for MC As on trade with third countries to . . . exercise the powers conferred on it by be treated as part of the expenditure on the Council for the implementation of the refunds granted on exports to third rules laid down by the latter', the relevant countries and for the MCAs on trade powers in the present case being those between Member States to be treated as part conferred by Article 7 of Council Regu- of the expenditure on intervention intended lation No 855/84.

change in the representative rate of the German mark is a different matter not covered by those provisions, and therefore the Community is not responsible for financing its effects. Accordingly, in my opinion, the Federal Government's second submission fails in both parts. As a general rule, I would accept that implementing powers conferred on the Commission by the Council cannot be used to amend the basic provisions of a Council regulation unless the Commission is empowered by the Council expressly or impliedly to do so.

OPINION OF SIR GORDON SLYNN — CASE 278/84

potatoes for starch-making prior to the As to the complaint of discrimination coming into effect of the Council's regu- against late cereal harvests, the Commission lation, so long as the measures adopted contends that it is unfounded for the simple were transitional and were necessary for reason that the quota opened by the avoiding disturbances. Commission for interventions at the old price in the Federal Republic was not fully used up. That contention is not made out. In answer to questions by the Court, the Federal Republic has supplied statistics which show that the quota opened by the Commission for interventions at the old price was largely exceeded by quantities It is obvious that the measures adopted here offered to the German intervention agency: were transitional. In my view they have been the quota was 2 500 000 tonnes, whereas shown to be necessary for avoiding distur- 3 739 529 tonnes were offered to the bances in respect of particular products; in German intervention agency up to the respect of cereals it is indeed provided that time-limit set by the German legislation the quantity of cereals which the adopted pursuant to Article 1 (3) of Regu- Commission estimated would under normal lation N o 2677/84. Even allowing for the circumstances have been bought into inter- fact that some part of the quantities offered vention at prices resulting from the old for intervention may not have been of green rate are excluded from the transi- sufficient quality to satisfy the conditions tional provisions. What was done for intervention, it would seem from these accordingly, in my view, falls within the figures that the quota set by the powers conferred by Article 7 of Regulation Commission was exceeded by the quantities N o 855/84. offered for intervention purchasing.

It is also alleged that Article 3 (2) of Regu- discrimination alleged. On the one hand, lation No 2677/84 is invalid because it is the German Government accepts that contrary to the principle of non-discrimi- Article 3 (2) spreads the effect of the nation laid down in the second revaluation by averaging it out over the subparagraph of Article 40 (3) of the EEC whole marketing year; on the other hand, Treaty.

I starch, the Commission replies that in the conclude that the Federal Republic has second half of 1984 starch manufacturers failed to make out a submission of discrimi- were able to obtain supplies of cereals at nation against Article 3 (2) of Regulation prices close to those applicable on 1 January N o 2677/84. Accordingly, in my view, both 1985 whilst Article 3 (2) averaged out pans of the submission of a breach of the prices for potatoes over the whole prohibition on discrimination fail. marketing year with a weighting of 3 to 9 (3 months for the old prices and 9 months for the new prices), so that neutrality of compe- tition was not affected to the detriment of manufacturers of potato starch. By its fifth submission, the Federal Republic argues that Anicie 3 (1) of Regulation N o 2677/84 is invalid because it contains an internal contradiction, in infringement of Annex III to Regulation N o 855/84 laid Article 190 of the EEC Treaty.

The German Government does not challenge Regulation N o 855/84 in the present proceedings, but it says that Article 3 (2) of Regulation No In this respect the Commission points out 2677/84 is not sufficient to remedy this that the German sugar price was maintained disturbance. until 31 December 1984 at a level higher than the former intervention price. It contends that the German Government's argument that a 5 % reduction in the inter- vention price automatically brings about a T o my mind it has not been shown that corresponding drop in the market price is Regulation N o 2677/84 brought about the thus shown to be manifestly mistaken.

T h e figures supplied to the Court in answer Community measure from taking effect to questions which it put seem to me to from a point in time before its publication, it confirm the assertions of the Commission: may exceptionally be otherwise where the in the months of September, October, purpose to be achieved so demands and November and December 1984 the market where the legitimate expectations of those price for sugar in the Federal Republic was concerned are duly respected: Case 98/78 well above the intervention price, even Račke v Hauptzollamt Mainz [1979] ECR including in the latter charges for storage 69, at p. 86, and Case 84/81 Staple Dairy

contracts. The Commission rejects the complaint of infringement of the principle of the protection of legitimate expectation allegedly resulting from a retroactive effect on existing contracts, on the ground firstly On the other hand, producers of sugarbeet that almost all contracts of the type and potatoes, along with all other German concerned are expressed in ECU and prices agricultural producers, benefited from in ECU were unaffected by the revaluation special aid measures under Articles 3 and 4 of the green rate of the German mark and of Regulation N o 855/84.

GERMANY v COMMISSION

I consider that the legitimate expectations of criticism of Article 3 (1) and (2) of Regu- those concerned have not been shown to be lation No 2677/84 on this ground is disregarded and that the Federal Republic's unfounded.

Accordingly, I am of the opinion that the application should be dismissed and the Federal Republic of Germany ordered to pay the costs of the case, including those relating to the proceedings for interim measures.