C-181/85

St-Nikolaus-Brennerei concerned Commis­ sion Regulation No 851/76 (Official 'Where in a Member State a product is Journal 1976, L 96, p. 41) which also fixed subject to a national market organization or a countervailing charge to be imposed on to internal rules having equivalent effect exports of subsidised ethyl alcohol from which affect the competitive position of France, in that case only to Germany and similar production in another Member the Benelux countries. That Regulation was State, a countervailing charge shall be replaced by Commission Regulation No applied by Member States to imports of this 1407/78 (Official Journal 1978, L 170, product coming from the Member Sute p. 28) which fixed a fresh countervailing where such organization or rules exist, charge until it was repealed by Commission unless that State applies a countervailing Regulation No 841/80 (Official Journal charge on export. 1980, L 90, p. 30).

The Commission shall fix the amount of From then until 1984 no countervailing these charges at the level required to redress charge was imposed. Following numerous the balance; it may also authorize other complaints, including requests for the measures, the conditions and deuils of Commission to prohibit French exports which it shall determine.' under the powers given to it by the second paragraph of Article 46, the Commission adopted Regulation No 2541/84 (Official Journal 1984, L 238, p. 16) imposing a In Case 337/82 St-Nikolaus-Brennerei v countervailing charge from 13 September HZA Krefeld [1984] ECR 1051, the Court 1984 on imports from France into all other held that this Article continued in effect Member States of ethyl alcohol of agri-

France did not challenge the re-imposition In its rejoinder, the Commission claimed of the countervailing duty by that regu­ that reliance on Article 184 of the Treaty lation. On the basis of information supplied was a new argument not raised in the by Member States, the Commission application and therefore itself is inad­ subsequently took the view that the charge missible. At the hearing, the French had failed to have the desired effect. Government contended that its reliance on Accordingly, Articles 1 and 2 of Regulation Article 184 was not itself a new argument No 2541/84 were replaced by new but a new way of putting forward the provisions set out in Regulation No 644/85. arguments raised in the application as to the The amount of the countervailing charge legality of the countervailing charge. was increased with effect from February Although not without some doubt I would 1985; in the light of problems which had accept that submission. Accordingly, it arisen in the implementation of Regulation seems to me that the admissibility of the No 2541/84, the nature of the evidence French Government's claims as to the required to establish that the ethyl alcohol substance fall to be considered under both was of non-agricultural origin or that it had Article 173 and Article 184. been denatured in accordance with French provisions, was specified and changes were made as to the administrative provisions for the levying of the countervailing charge by The United Kingdom, although intervening other Member States. in support of the Commission on the substance, takes the view that the French Government's arguments are admissible France has advanced six arguments in under both Article 173 and Article 184. support of its contention that the contested regulation should be annulled. The Commission maintains that all the The arguments both ways in relation to arguments other than the first are inad­ Article 173 have an attraction. On the one missible and that all are unfounded. hand, it is argued that it is plain that a merely confirmatory act does not start time running again so as to enable the initial act, The Commission contends that five of which is merely confirmed, to be challenged France's arguments are in fact directed (e.g. Cases 42 and 49/59 Snupat [1961]

The new scheme is, accordingly, in several respects different from the old even if the essential criteria or method of calculation In my view, however, the present case does are the same. Without in any way criticizing not fall into any one of these three the Commission for adopting the new categories. It is not merely a confirmatory charge by way of amendment, it would have act; it is not an act amending simply an been equally possible and perhaps tidier to implementing regulation; equally it is not a have done what was done by way of a new wholly independent regulation replacing regulation. Albeit the initial regulation another. This is an amending regulation, the remains in being and cannot itself be chal­ initial regulation remaining in force save as lenged under Article 173, in the light of the amended. The amending regulation adopts the same criteria as were used for the first changes made in what is essentially the fixing of the charge in order to adjust the operative part of the regulation, I accept actual rate, subject to the administrative that Regulation No 644/85 produces a changes which have been made and to a different scheme and should be regarded as change in the reference period. an 'act' whose legality may be reviewed as a whole for the purposes of Article 173. To

OPINION OF SIR GORDON SLYNN — CASE 181/85

On that basis the French Government does not need to rely on Article 184. On the It has, however, been suggested that a alternative view, however, the question Member State cannot rely on Article 184 in would arise. view of its 'privileged' position under Article 173. It is always legally competent to attack a regulation under Article 173; to allow it to rely on Article 184 would give it a second It is clear that Article 184 can only be raised bite at the cherry after time had run for in proceedings brought before the Court bringing proceedings under Article 173. under another article of the Treaty (Joined Reference has been made to Case 92/78 Cases 31 and 33/62 Wöhrmann v Simmenthal v Commission [1979] ECR 777, Commission [1962] ECR 501). Those where the Court considered Article 184 to proceedings must obviously be admissible be the expression of a general principle proceedings so that if none of the grounds 'conferring upon any party to the relied on under Article 173 had been proceedings the right to challenge, for the admissible there would be no way in which purpose of obtaining the annulment of a France could rely on Article 184. It is, decision of direct and individual concern to however, accepted by the Commission that that party the validity of previous acts of the in respect of the first ground the institution which form the legal basis of the proceedings under Article 173 are decision which is being attacked, if that admissible. party was not entitled under Article 173 of the Treaty to bring a direct action challenging those acts by which it was thus affected without having been in a position to ask that A number of questions still arise. In they be declared void'. Wöhrmann the Court said that: 'The sole object of Article 184 is thus to protect an interested party against the application of an illegal regulation, without thereby in any way calling in issue the regulation itself, France, on the other hand, contends that in which can no longer be challenged because Case 32/65 Italy v Council and Commission of the expiry of the time-limit laid down by [1966] ECR 386, the Court implicitly Article 173'. More usually such a plea may accepted that a Member State could rely on

There must, however, be a sufficient link The Commission does not contend that between the regulation or decision, the Article 184 can never be relied on by a subject matter of the Article 173 Member State. It raises the question, proceedings, and the regulation the validity however, whether there should not be some of which is challenged under Article 184 limitation on the rights of Member States (Italy, supra). The latter will normally be the under Article 184 because of their privileged legal basis of the former. Moreover, the position under Article 173. It suggests that former regulation must be 'at issue' in the such a right may exist where the Member proceedings. Where the latter is merely State, which could have sought an order applying general criteria set out in the under Articie 173 and does not do so, is former then there will usually be no 'taken by surprise' by the way in which the difficulty in relying on Article 184. The act of the institution is applied. That could present is not such a case. However, in the not apply here, says the Commission, since present case, assuming that, for the reasons France was closely involved in the drafting advanced by the Commission, France of Regulation No 2541/84 and must have cannot challenge Regulation No 644/85 been fully aware of the intended effects. It under Article 173 in respect of the last five would, therefore, not be right to give grounds relating to matters adopted from France the opportunity to raise the matter in the earlier regulation, it seems to me that in this way. challenging the rate of charge adopted on the first admissible ground, France is also entitled to raise the 'inapplicability of the criteria or factors adopted in Regulation No Despite the 'privileged' position of Member 2541/84 on which Regulation No 644/85 is States under Article 173, I consider that based, which criteria effectively it repeats. 'any part' in Article 184 means 'any party' Those criteria do not have to be at issue as and not 'any party other than a Member admissible grounds under Article 173 in State'. I also consider that parties to respect of Regulation No 644/85 before proceedings, otherwise valid, are for this they can be challenged under Article 184 in purpose to be treated on the same footing. respect of Regulation No 2541/84.

As a final reason for refusing to admit France's plea under Article 184, the Commission draws an analogy with those cases in which the Court has refused to In my view, therefore, all the arguments allow a Member Sute to question the raised are admissible in these proceedings. validity of a negative decision under Article 93 (2) taken against it in proceedings brought by the Commission against that Member Sute for failure to comply with the decision. The relevant cases are Case 156/77 Commission v Belgium [1978] ECR 1881, Case 52/83 Commission v On that basis it is necessary to consider France [1983] ECR 3787 and Case 93/84 seriatim the six grounds raised. Commission v France [1985], judgment of 13 March 1985, ECR 829. I do not consider that those cases are in point. The relevant paragraphs from the Court's judgments in those cases are directed to an examination of the special rights of appeal to the Court provided by Article 93 (2). The second The first is that the Commission erred in paragraph of that provision provides as suting that 'the volume of such imports has follows: not followed a downward trend since the charge was introduced' (third reciul of the contested regulation), a factor which led the Commission to increase the charge.

'If the Sute concerned does not comply with this decision within the prescribed time, the Commission or any other interested Sute may, in derogation from the The French Government contends that provisions of Articles 169 and 170, refer the French exports had in fact fallen since the matter to the Court of Justice direct.' initial charge was fixed by Regulation No

In my view nothing that has been said by France shows that this is an erroneous or The Commission has put in statistics based untenable approach. on the information supplied to it by various Member States pursuant to Article 5 of Regulation No 2541/84. The two sets of figures are not directly comparable since they relate to different Member States and According to the French figures, French different periods. Because of that, the Court exports to other Member States in asked the parties to comment on each September 1984 were 73 197 hectolitres. In other's figures in writing before the hearing. October 1984, the first full month after the The Commission took the view that it could charge was introduced, the figure fell not contest the French figures which had dramatically to 35 426 hectolitres. It rallied never been communicated to it; the only slightly in the next two months, 43 960 figures supplied to the Commission by hectolitres for November and 39 699 France were not sufficiently precise as to the hectolitres for December. In January 1985, product in question in these proceedings to there was a steep increase to 64 844 be useful. France failed to reply to the hectolitres and in February, exports were Court's question. Why it did not do so has virtually what they had been when the not been satisfactorily explained. charge was introduced, namely 72 853 hectolitres.

On the figures available to the Commission Member States. Furthermore, it would have therefore French exports in January 1985 been impossible to compare French prices and more significantly in February 1985 against those ruling in the importing exceeded the level in September 1984 when Member States according to the various the charge was introduced and in any event categories of alcohol or their end use. The from November are consistently upwards. Member States could produce no figures enabling such a comparison to be made and, even if there were different markets in different Member States, they would not necessarily be directly comparable. By way On the basis of both sets of figures it seems of example, the Commission observes that to me that there is nothing to show that the in Belgium and Germany, prices depend on Commission was wrong to consider that end use whereas in Denmark and the French exports had not shown a downward United Kingdom prices depend on the trend in the relevant period. I accordingly quality of the alcohol itself. reject the first argument.

FRANCE v COMMISSION

in the Netherlands, there used to be a cartel adopt 'immediate safeguards' against and there is now one producer; in the distortions of competition 'in the excep­ United Kingdom there is also only one tional and temporary circumstances which producer. justify the measure' and it may have to proceed 'with the utmost alacrit/.

The Commission admits that the picture is complicated. The State monopoly in In my view the Commission was entitled in Germany is designed to protect smaller this case to devise a relatively simple scheme undertakings, whereas the system in Italy is whereby a flat-rate charge would be designed to favour agricultural over imposed on French exports for as long as industrial products. In France, producers they continued to be exported in significant tend to be vertically integrated with sugar quantities and at prices significandy below manufacturers whereas production is what, on a broad assessment of the position, concentrated in the hands of a single under­ might have been expected to be the taking in both the Netherlands and the prevailing Community price. This is United Kingdom. Given these and other especially so since both the charge and the disparities, the Commission argues that a theoretical equilibrium price were set at scheme which took them all into account prudently low levels within the range of would be extremely complicated. A different possibilities, a matter which the applicant level of charge would have to be set for has not contested. I do not consider that the each Member State and for each grade of second and third arguments have been made alcohol. If France is right that there were out. four grades of alcohol, that would have required up to 36 different rates. It would also be necessary to instai a system of surcharges and rebates for trade between France's fourth argument relates to one of the Member States other than France. It the elements used in calculating the equi­ chose the only really workable system. librium price. The fourth recital of the contested regulation reads as follows:

The applicant government claims that it is two prices is not to be expected. It produced inappropriate to take as the reference for a graph expressing the same figures on a calculating the equilibrium price the two-monthly rolling average basis which monthly quotation of cif prices for cane showed a smoother correlation. Even if this molasses at Rotterdam as the Commission is not a precise correlation it seems to me in fact did. According to France, cane that there is force in four arguments which molasses is used as the raw material for less the United Kingdom adduces and which than 20% of the agricultural alcohol have not been satisfactorily rebutted by the produced in the Community. Most evidence or arguments of the French Community alcohol is derived from beet Government. First, there is a constant molasses of which France is a leading relationship between the cane and beet producer since beet molasses is a by-product prices. The French Government is not right of sugar produced from beet. The cif to argue that cane and beet molasses are not Rotterdam price for cane molasses is also interchangeable: United Kingdom and irrelevant because alcohol producers obtain Netherlands producers use both kinds of their raw materials under annual contracts molasses. However, nitrogen is present in and are thus insulated from monthly fluctu­ beet molasses but has to be added to cane ations in price, and because cane molasses molasses for alcohol production. In conse­ and beet molasses are not interchangeable quence, beet commands a premium over for technical reasons. cane molasses. Second, this leads to a stable price relationship between the two kinds of molasses which makes the cif Rotterdam cane price, which is the only quoted price and therefore the only objectively verifiable one, an appropriate reference price. Third, it is not the case that all alcohol producers On the other side, the Commission argues in the Community conclude annual supply that cane molasses is the raw material for contracts; it is certainly not the case in the some 23% of Community alcohol, a figure United Kingdom. Lastly, the fact that which is not far removed from the 'less than French producers are insulated from 20%' advanced by the French Government. monthly fluctuations in prices is in reality a Of more importance, there is a consistent consequence of the French organization of relationship between cane and beet molasses the market. The Commission supports this and the only price which is regularly quoted point of view, adding that even in Member is the Rotterdam cif cane price. The States where annual contracts are Commission produced a table comparing concluded, they are not necessarily the Rotterdam price expressed in ECU and concluded at the same time of year and in in US dollars with the ex-works price of a any case nothing stops producers from German producer. The table shows that the obtaining additional supplies on the beet price is consistently higher than the Rotterdam market. cane price and that the two prices do tend to move in the same direction, although the disparity between the two fluctuates.

France's sixth and final argument is that the The fifth argument is directed at Article contested regulation should be annulled in 1(1)(b) of Regulation No 2541/84 as set out so far as the charge is imposed on all French in Article 1 of the contested regulation (the alcohol exports including those the price of equivalent provision in the original text of which exceeds the equilibrium price, which Regulation No 2541/84 being Article latter cannot be regarded as disturbing the ( 1 2)(b)). This provision makes the charge market within the meaning of Article 46. applicable unless the 'alcohol has been The Commission replies that all alcohol denatured in accordance with the relevant produced in France, whatever its quality and provisions in France'. price, benefits from the national market organization which, indeed, encourages exports since domestic sales are subject to a It follows that the charge will be imposed tax known as the 'soulte'. This latter on a consignment of non-denatured alcohol argument seems to me to be right. I even if it is intended for denaturing in consider that the Commission was entitled another Member State. to impose this charge across the board.

Accordingly, in my view, the application of the French Government should be regarded as admissible in its entirety but dismissed as unfounded. The applicant should, in my view, bear the costs of the Commission and of the United Kingdom Government.