C-281/84

ZUCKERFABRIK BEDBURG v COUNCIL AND COMMISSION

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

OPINION OF SIR GORDON SLYNN —CASE 281/84

The second provision is Article 3 (1), whereby: 'As regards the minimum prices for A and B sugarbeet referred to in Article 3 of Regulation (EEC) N o 1106/84 The applicants allege that Regulation N o (Official Journal 1984, L 113, p. 14) to be 855/84 is in breach of: (a) the provisions on paid in the Federal Republic of Germany by prices contained in the basic regulation sugar manufacturers to sugarbeet producers governing the common organization of the for the entire 1984/85 marketing year, these market in sugar, Regulation No 1785/81 shall be converted into national currency at (Official Journal 1981, L 177, p. 4), the following rate: 1 ECU = D M 2.41751'. inasmuch as Regulation No 855/84 fixes a This rate falls midway between the old, date in the middle of the sugar marketing higher rate and the new, lower rate, and the year as the date on which the new represen- applicants say that the purpose of this tative conversion rate for the German mark measure was to prevent the burden of the takes effect, without taking into account lower prices as from 1 January 1985 from that this leads to a fall in prices which falling on the sugar-manufacturing under- diminishes the profit margin of sugar manu-

In the price expressed in DM per tonne (DM 6.92 applicants' submission, by adopting the rules

in question the Council has manifestly and The Council and the Commission challenge substantially exceeded its powers, inasmuch all the grounds relied on. In addition they as the rules infringed and the principles contend that the applicants have not contravened by the Council are particularly suffered damage as alleged or as a result of important, the number of undertakings the two regulations. The Commission in its concerned is small and those undertakings rejoinder argues that only Bedburg suffered have been seriously affected. a loss as a result of the new arrangements (of DM 179 552) whereas Lippe and Lehrter were better off to the extent respectively of DM 567 168 and DM 1 646 111. Bedburg's loss is due to the fact that it sold less sugar than expected at the end of 1984 and is in any event well within normal commercial fluctuations. In their reply, the applicants admit that Commission Regulation No 2677/84 reduces the loss of at least DM 6.92 per 100 kg in the price of sugar caused by Regulation No 855/84 to DM 2.85 per 100 kg provided that Article 3 of that regu- As a preliminary matter, however, two pleas lation, which they do not challenge, is valid. They do, however, say that Article 2 of of inadmissibility are raised against the Commission Regulation No 2677/84, which present application. First, it is said that it is they allege prevented them from selling into inadmissible because the applicants should first have exhausted their remedies before intervention at the higher price, is a cause of loss jointly with Regulation No 855/84. the national courts. I do not accept that Taking the transitional arrangements into submission, principally because none of the account, Bedburg claims to have lost sugar at issue in the present case was sold DM 1 785 000, Lippe DM 2 330 000 and into intervention, and thus there does not Lehrter DM 5 178 000. appear to be any substantial basis on which the applicants could bring an action against the national intervention agency before the national courts. The damage is alleged to arise from a Commission and a Council regulation without the intermediary of any national agency, and it is therefore appro- priate for that claim to be able to be In answer to questions by the Court, the brought before this Court by way of an applicants recalculated their losses, taking action for damages, which is an independent into account the transitional measures laid remedy within the Community legal system: down by Regulation No 2677/84, as being Case 59/83 Biovilac v EEC [1984] ECR DM 1 423 406 for Bedburg, DM 1 919 928 4057 at p. 4074 (paragraphs 6 and 7). for Lippe and DM 5 059 367 for Lehrter. At the Court's request, they also estimated what the losses would have been if the alteration of the green rate of the German mark had taken place on 1 July 1984 (respectively DM 2 993 124, DM 3 680 428 The other objection to admissibility is that and DM 8 102 505) and on 1 July 1985 the application is made in respect of future (respectively DM 808 566, DM 1 098 022 damage which has not yet been caused and and DM 892 531). the likelihood of which is not sufficiently

established. Although on the basis of Regu- had the final figures. In view of the fact that lation No 855/84 it may have looked as if the question whether any actionable damage the introduction of a new representative rate has been suffered is a major issue in the case for the German mark in the middle of the it seems to me preferable to consider this sugar marketing year would cause the objection to admissibility with that question. applicants losses, the effect of the transi- tional measures in Commission Regulation No 2677/84 was still uncertain when the application was lodged. Moreover, the estimated losses were based on the inter- vention price, whereas none of the sugar at issue in the case was sold or was likely to be sold into intervention. The Commission has stated without being contradicted that from 1976/77 no sugar had been sold into inter- vention in the Federal Republic of Germany except for a quantity of 43 000 tonnes in The non-contractual liability of the September 1984 and a further quantity of Community depends on the fulfilment of 40 000 tonnes in December 1984, both three conditions as regards (1) the unlaw- apparently for speculative reasons and not fulness of the act alleged against the representing normal market trends. institutions, (2) the fact of damage and (3) Therefore it was not a reasonable the existence of a direct link in the chain of assumption to base an estimate of losses causation between the wrongful act and the directly on the intervention price. damage complained of: inter alia Case 49/79 Pool v Council [1980] ECR 569 at p. 580. Where the act complained of is of a legislative nature and constitutes a measure taken in the sphere of economic policy, a finding that the measure is unlawful is not sufficient in itself to give rise to liability on the part of the Community. When such a measure implies choices of economic policy it is further necessary that it be vitiated by a sufficiently serious breach of a superior rule of law for the protection of the individual: inter alia Case 238/78 Ireks-Arkady v In Joined Cases 56 to 60/74 Kampffmeyer v Council and Commission [1979] ECR 2955 Commission and Council [1976] ECR 711, at p. 2972 and Joined Cases 197-200, 243, confirmed in subsequent cases, the Court 245 and 247/80 Ludwigs haf ener Walzmühle held that an action may be brought under v Council and Commission [1981] ECR 3211 Article 215 with respect to imminent at p. 3246. In the application of the damage foreseeable with sufficient certainty economic policy of the Community (as in even if that damage cannot yet be precisely the present case) it follows that individuals assessed. As already indicated, the may have to accept, within reasonable applicants have put in three different sets of limits, economic loss or prejudice as a result figures for their losses. They explain this by of a legislative measure without being able saying that when they lodged the to obtain compensation from public funds application they were advancing notional even if that measure has been declared null prices, in the reply they used the provisional and void: Joined Cases 83 and 94/76, 4, 15 figures for the first half of the year and in and 40/77 Bayerischer HNL v Council and answer to the questions of the Court they Commission [1978] ECR 1209 at p. 1224.

In the instant case the change in the system of monetary compensatory amounts ('MCAs') was not made with immediate effect or without warning: Regulation N o The relevant transitional measure is that laid 855/84 was adopted on 31 March 1984 down in Article 3 (1) of Commission Regu- whereas the revaluation of the German lation N o 2677/84 quoted earlier in this mark for which it provided did not come Opinion and explained in the fourth and into effect until 1 January 1985. The change fifth recitals to that regulation. Those two was adopted in the higher interest of the recitals are in the following terms: proper functioning of the market organiz- 'Whereas, under the terms of Article 6 of ations and in particular, as stated in the Council Regulation 1785/81... sugar eighth recital to the regulation, in order to manufacturers are obliged to pay beet bring the representative rates 'closer to the producers the minimum prices for A and B level of the common prices', i.e. back into sugarbeet; whereas, owing to the modifi- contact with economic reality. The aim was cation of the representative rate for the that of putting an end to arrangements German mark on 1 January 1985, these which allowed Member States with strong minimum prices expressed in national currencies to enjoy the advantages of a currency would, in the ordinary course of strong currency whilst at the same time events, have to change in the Federal being insulated from competition from Republic of Germany on that date; whereas, cheaper exports from Member States with however, the sugarbeet harvesting and weaker currencies, which seems to me processing season begins in the said

Member State in early October and been shown to be justified consistent with continues until the end of December while the case-law of the Court. the sugar obtained is marketed continuously until the next harvest; whereas, in order to avoid obliging the sugar manufacturers to bear the entire burden resulting from a fall in prices expressed in national currency as from 1 January 1985, the conversion rate used in the calculation of the minimum prices Article 3 (1) of Regulation N o 2677/84 is in should be adapted for the entire marketing my opinion a proper and valid transitional year; whereas, in order to ensure fair measure, and in particular is not vitiated treatment for sugar manufacturers and either by excess of power or by retroactivity. sugarbeet producers, an average conversion rate should be used for these minimum prices, which should be obtained by weighting, on the one hand, the old representative rate for a period of three months, during which, with the exception of buying-in operations, the mechanisms of the The applicants' complaint is that Article 2, common organization of the market would whereby the Commission brought forward remain unchanged and, on the other, the the application of the revalued green rate new representative rate for a period of nine for the German mark to 21 September 1984 months' (emphasis added). for intervention purchases of sugar in the Federal Republic of Germany, prevented them from selling sugar into intervention. In relation to that it seems clear that none of the sugar was in fact sold into intervention so that no losses were realized as a result of that process and therefore none can be claimed. All the sugar sold by the applicants between 21 September 1984 and 31 Thus the transitional measures were December 1984 was sold at market prices directed at the very mischief complained of higher than the intervention price in in these proceedings. The words in italics German marks calculated at the old, higher make it clear that the aim of the transitional conversion rate. Therefore that submission, measures is to avoid making the sugar in my view, fails. In any event it has not, in manufacturers bear the entire burden my view, been shown that Article 2 was resulting from the revaluation of the green itself invalid for the reasons advocated by German mark in the middle of the the applicants. marketing year. Thus the Commission directed itself properly to alleviate the mischief. The weighting of the average conversion rate in the ratio of 3: 9 largely shifts the burden on to sugarbeet producers. The applicants do not complain of that since it is beneficial to them; nor could the I turn to the question of damage. The sugarbeet producers since they were application of Article 3 (1) meant that compensated, indeed, in my view, overcom- throughout the 1984/85 marketing year the pensated (for the reasons given in my applicants could buy their sugarbeet at Opinion in Case 253/84 GAEQ; and the German mark prices calculated at an fact that the provisions were retroactive has exchange rate of 1 ECU = D M 2.41751,

resulting in lower prices than the old rate of could legitimately expect the Community to 1 ECU = DM 2.51457, which would guarantee them, namely their 'processing otherwise have been in force during the margin'. harvesting months of October to December 1984. On the other hand, during the months The Council also contends that considerable of October to December 1984 the market quantities of the sugar processed by the price for sugar in the Federal Republic of applicants from beet purchased from the Germany held up at high levels corre- 1984/85 harvest were sold on the German sponding to the old green rate.

from 1 January 1985 would have been conversion rate laid down in Article 3 (1) of lawful had it been applied with effect from 1 Regulation No 2677/84 was based on an July 1984. Although at one stage they assumption that the old green rate would seemed to be saying that, I understood their cover sales over a period of three months counsel at the end of the hearing to resile and the new green rate would cover sales from that position. In any event the rules of

In other words, representative rate at the end of a marketing they more than mitigated the damage year certain stocks bought in at old prices resulting for them from the revaluation of would be affected, and the problem of their the green German mark on 1 January 1985. loss of value could still arise. Even, however, if the Council's actual figures are In this connection the Commission has not accepted its argument seems sound in so submitted a calculation, which it explained far as the applicants overall sold more than in answer to the Court's question, snowing 2 5 % of their production from the 1984/85 that in the light of actual sales at market beet harvest before 1 January 1985. prices, the applicants made a gain over their processing margin of D M 74 448 for The applicants' assessment of the effect of Bedburg, D M 894 605 for Lippe and the transitional measures is embodied in D M 2 200 091 for Lehrter. As I understand their overall evaluation of the losses which it, this calculation does not purport to show they claim to have suffered.

Calculation of the loss from the reduction in the green rate on 1 January 1985 Zuckerfabrik Bedburg AG I Lehrter Zucker AG Lippe-Weser Zucker AG Sales revenue Sales revenue Sales revenue DM/ DM/ DM/ DM 100 kg DM 100 kg DM 100 kg 100 kg 100 kg 100 kg

1. Stock at 30.9. 1984 23 604 84 381 46 102 2. Production (within max. quotas) 437 931 1582 799 584 709 3. Available production 461535 1667 180 630 811 4. Sales Oct. to Dec. 1984 - 92 520 146.39 13544114- 543217' 143.20 77 788 9 5 4 - 187531 143.87 26 979 546 5. Stock at 31. 12. 1984 369 015 1 123 963 443 280 6. Sales Jan. to March 1985 - 1 2 2 805 139.18 17 092 3 5 9 - 626 214 138.70 86 853 1 2 3 - 125 840 139.30 17 529 824 7. Sales Apr. to June 1985 - 119077 139.13 16 566 6 4 0 - 362 106 139.74 50 599 1 6 3 - 143 427 139.33 19984371 8. Sales July to Sept. 1985 - 108 313 140.56 15 224 3 9 8 - 134 550 140.42 18 894 0 9 8 - 110660 140.56 15 553 925 9. Stock at 30. 9. 1985 18 820 140.81 2 650044 1093 140.70 153 785 63 353 140.63 8 909 332 10. Total sales revenue (4-9) 65 077 555 234 289 123 88 956 998 11. Available value of 1984/85 production (figure 3) prior to Regulation N o 2677/84 l sal« value ° ' 461535 146.99 67 841030 1667 180 146.47 244 191855 630 811 146.90 92 666136 12. Loss of value resulting 9 902 732 ,,-„.,„ from price reduction ' 2 763 475 3 709 138 13. Saving resulting from re- duction in beet price (fig- ure 2 above x 3.06 D M / 100 kg) - 1340 069 4 843 365 -1789 210 14. Actual loss 1 1423 406 5 059367 | '919 928

1 Not including sales made in advance owing to lack of storage capacity at prices which were not fixed until 1985. 1 Method of calculation: Line 12: Stock at 30. 9. 1984 + 1984/85 production (within maximum quotas) x market price July to 20. 9. 1984, less sales October 1984 to September 1985 + stock at 30. 9. 1985 x actual market price October 1984 to September 1985. Line 14: Line 12 less a beet price reduction of DM 3.06 per 100 kg of 1984/85 sugar production (within maximum quotas).

These calculations in my opinion contain brought forward from the 1983/84 several defects. I consider that the principal marketing year. The beet purchased in that defect is in the method of calculation itself. marketing year was purchased at prices In the calculations the applicants work out a fixed under earlier regulations which are not sum representing the value of their entire impugned in the present case. Neither are 1984/85 production (plus the stock carried they entitled, in my view, to bring into forward at the beginning of that marketing account sales of sugar after the end of the year from the previous one) at the price 1984/85 marketing year, because those sales which, they say, it would have fetched at were made at market prices which prices prevailing between July 1984 and 20 correspond not to the intervention price September 1984, and they deduct from that fixed in the impugned legislation but to that sum their actual sales from October 1984 to fixed in later regulations which are also not September 1985 (plus an estimate of the at issue in the present proceedings.

The Commission does not contest the first two Furthermore, the applicants are not in my deductions but considers that the deduction opinion entitled to bring into account stocks for marketing costs (DM 1.20) is unjus-

tified and unusual. Comparing the adjusted lation No 1105/84. The actual yield in the ex-factory prices given in Annex 1 to the Federal Republic of Germany in the reply with the market prices given by the 1984/85 marketing year has been estimated German Government in answer to the by the Council at 142 kg of sugar per tonne question by the Court, it can be seen that of beet. For these reasons I consider that the the applicants' sales prices are consistently figures deducted at line 13 of the calculation below the German Government's market do not represent the real effect of the transi- prices by approximately the amount of tional measures laid down in Article 3 (1) of D M 1.20 which would correspond to the Regulation N o 2677/84. 'marketing costs'. Although it is not clear what exactly the 'marketing costs' consist of here, it seems probable that they represent part of the sugar manufacturers' profit margin which it is not legitimate to deduct from the ex-factory price for the purpose of the calculation of loss in the present context. If that is right, it deprives the applicants' calculation of much of its value, because an amount of DM 1.20 may be sufficient to This part of the calculation (which reflects make a difference between a loss and a the applicants' pleadings) fails to demon- profit in the present context. strate the inadequacy of the transitional measures provided for by the Council and adopted by the Commission. Since (in view of the Court's case-law on non-contractual liability, in particular Merkur) the only basis which might have been available to the applicants for their damages claim was failure to adopt adequate transitional measures, I consider that their claim could be dismissed on that ground alone. The last operation in the applicants' calcu- lation is to deduct from the alleged gross loss the saving resulting from the reduction in the beet price by virtue of Article 3 (1) of Commission Regulation N o 2677/84 (line 13). That saving is calculated by multiplying the production figure by a rate of D M 3.06 per 100 kg. That rate, however, is merely notional. It appears from page 18 of the reply that it is derived from the basic price Whether the action was inadmissible must for beet (40.89 ECU per tonne under be decided, as I see it, principally on the Council Regulation No 1105/84; Official way the case was initially pleaded. The Journal 1984, L 113, p. 12) whereas, as has claim for damages was based on the inter- been seen, Article 3 (1) of Regulation N o vention price which seems to me to have 2677/84 refers to the minimum prices for A been inappropriate since no sugar had been and B sugarbeet which are different prices. sold into intervention for a long period; Furthermore, it is based on the yield figure moreover the effect of the transitional of 130 kg of white sugar per tonne of beet measures was not known. On any view it which is only an assumption used in calcu- seems to me that the claim was premature. lating the sugar prices for the year, as is No actual damage had been caused and it apparent from the fourth recital to Regu- cannot be said with confidence that the

Accordingly, I am of the opinion that this application should be dismissed as unfounded and the applicants should be ordered to pay the costs.