C-38/86

Mr President, Consequently, the Verwaltungsgericht has Members of the Court, made a fresh request for a preliminary ruling on the very question whether, in the material circumstances, Article 16 (2) 1. This case is a continuation of Case of Commission Regulation (EEC) No 299/84, which was also concerned with a 2173/79 ' must not be regarded as invalid request for a preliminary ruling made by the owing to incompatibility with the principle Verwaltungsgericht (Administrative Court) of proportionality. Frankfurt am Main in connection with the same proceedings between Firma Karl- Heinz Neumann and Bundesanstalt für 6. However, in view of the fact that the landwirtschaftliche Marktordnung, here- Verwaltungsgericht expressly described the inafter referred to as 'the intervention principle of objective unfairness as a agency". particular embodiment of the principle of proportionality, the Court considered at length in its judgment of 14 November 1985 2. As a result, the Court is fully cognizant whether that principle, in the form with_the facts and. the relevant .regulations. recognized in-Community Jaw,-was capable of providing a solution to the dispute pending before the national court. However, the outcome of that examination 3. In its judgment of 14 November 1985 in was in the negative, as can be seen from Case 299/84 ([1985] ECR 3663) the Court paragraphs 27 to 33 of the judgment in held, inter alia, that there was no general question. By pointing out that the aim of the legal principle of objective unfairness security was to guarantee the performance ('sachliche Unbilligkeit') in Community law. by the buyer of the contractual obligations arising from his purchase application and observance of the conditions of sale laid 4. In reaching this finding the Court down in the regulations in question followed the opinion of its Advocate (paragraph 29), the Court, in particular, General who also, however, expressed the dismissed the idea that that part of the view that the principle of proportionality security which was forfeited had to be had been infringed. calculated on the basis of the damage suffered by the intervention agency concerned. 5. The Verwaltungsgericht considered that the Court did not follow the Advocate General on that point only because the 7. Contrary to what the applicant in the Verwaltungsgericht had not raised the main proceedings maintains in its obser- question of the amount of the security in vations, the Court carried out that exam- the context of the principle of propor- ination in the light of the actual circum- tionality or did not put an explicit question to the Court with regard to that aspect. 1 — Commission Regulation (EEC) N o 2173/79 of 4 October 1979 on detailed rules of application for the disposal of beef bought in by intervention agencies and repealing * Translated from the French. Regulation (EEC) N o 216/69 (OJ 1979, L 251, p. 12).

12. Accordingly if 'substitution' took place 9. Furthermore, the Verwaltungsgericht it was a unilateral substitution. now stresses more especially the fact that even though the initial contract of sale was in fact not honoured by the purchaser 13. The information set out in the reasons (Neumann), new contracts for the same for the new order for reference are not such quantity of goods were concluded and as to cast doubt on that conclusion. The performed in full by the same purchaser (or order states that 'after discussing the matter by a company belonging to the same group) by telephone with the defendant's officials, instead ('stattdessen') and with the [Neumann] had the contract cancelled by cooperation ('unter Mitwirkung') of the Martin Lund GmbH by telex messages of 14 seller, the intervention agency. and 23 April 1981' and that Neumann 'submitted, together with the notification of cancellation, two new applications, which 10. If the intervention agency had given its the defendant [the intervention agency] formal agreement to the straightforward accepted on the new terms'. The cancellation of the first contract and to its arrangement which may thus have been replacement after the critical date of 6 April agreed by telephone between the parties 1981, the date on which the new green seems therefore to have consisted at the rates 2 came into effect, the question would most of the unilateral termination by arise as to whether the intervention agency Neumann of the first contract and of a was still entitled to go back on that commitment on the part of the intervention agreement later by declaring forfeit the agency to consider, if not to accept, the security lodged in respect of the first second purchase applications. In all evidence purchase application. two successive and separate operations were involved. The expression used in the question put to the Court by the Verwal- 11. However, at the time of Case 299/84 tungsgericht is, moreover, 'new contracts'. the Court had no precise information as to how the contacts between the intervention agency and Neumann unfolded or as to the 14. Consequently, the concepts of arrangements which might have been agreed 'substitution' and 'cooperation' cannot be as to the said 'substitution' operation. construed as being equivalent to cancel- Consequently it had to take as its basis the lation by mutual agreement. Also, the new brief indications given in the order for contracts cannot be regarded as 'replacement contracts', as Neumann claims. 2 — Council Regulation (EEC) No 850/81 of 1 April 1981 Since the intervention agency was acting in amending Regulation (EEC) No 878/77 on the exchange rates to be applied in agriculture (OJ 1981, L 90, p. 1). this case pursuant to a provision of

Community law it would moreover have 21. I would observe moreover that it was been unable to agree to the first contract's not until 14 and 23 April 1981 respectively being replaced by a new contract and, at the that the new purchase applications were same time, to the release of the security. definitively lodged. However, under Article 1 (1) of Commission Regulation (EEC) No 15. It appears from Article 16 (1) of 7 1 3 / 8 1 , 3 the whole of the selling operation Commission Regulation N o 2173/79 that in question, which, as regards the German if, within the time-limit specified, 'the intervention agency, related to 4 000 tonnes purchaser does not pay for the of beef and veal, began on 30 March 1981 p r o d u c t . . . the contract shall be cancelled and ended on 30 April 1981. Since it was by the intervention agency in respect of the possible to lodge purchase applications as quantity not paid for'. from the publication of the regulation, that is to say 20 March 1981 (Neumann's first purchase offer is dated 27 March 1981) 16. Furthermore, under Article 16 (2) 'the and 'save in exceptional circumstances security shall be forfeit... in total, if the applications shall be accepted within five quantity paid for is less than 6 0 % of the working days following their submission' quantity covered by the contract'. (Article 3 (2) of Regulation N o 2173/79), it is very probable that on the aforementioned 17. However, in this case Neumann took dates the stocks were exhausted. The fact delivery pursuant to the first contract of that, nevertheless, Neumann's new 4 814 kilograms only out of a total of applications, made through Martin Lund 40 000 kilograms. (There was therefore part GmbH, a company belonging to its group, performance of the first contract.) were accepted, seems to indicate that the applications were given the priority attaching to the application of 27 March 18. However, Neumann stresses repeatedly 1981. There was therefore 'cooperation' in that, by their purchases, it or its sister the sense that the intervention agency company enabled Community stocks of beef earmarked and reserved for Neumann-Lund and veal to be reduced in the final analysis the quantities covered by the initial contract. by 40 tonnes. Consequently the aim of the regulation should be regarded as having been attained and it would be unfair not to release the security. 22. The combined effect of Articles 2, 3 19. That reasoning cannot be accepted. The and 4 of Regulation No 2173/79 is to cause disposal of stocks must take place in orderly the order of priority of purchase conditions and the security is not designed applications to be determined by the date on to ensure only that delivery is taken of the which they are submitted, provided that for quantities agreed but also that the price an application to be admissible a security fixed is respected. That was not the case must also be lodged in favour of the inter- here. vention agency.

between either lodging his purchase the two applications without having to bear application at once and running the risk, that the risks. the rate will be adjusted to the advantage of competitors subsequently, or of lodging the 26. Whilst, in the final analysis, Neumann application later and running the risk that did in fact assist in 'clearing' stocks of beef stocks might by that time be exhausted, as and veal held by the German intervention the keystone of its reasoning that in circum- agency, it did so to the detriment of equal stances such as those involved in the present access to products and equal treatment of case the forfeiture of the security cannot be purchasers which the abovementioned regarded as disproportionate. provisions of Regulation No 2173/79 are designed to safeguard (see third recital in 24. Competitors of Neumann which, like it, the preamble to the regulation). lodged their applications and security before 6 April 1981 but performed their contract 27. In those circumstances, it would have did indeed obtain priority but had to pay been the release of the security that would the higher price. Those who did not submit have been unfair or disproportionate. their applications until after 6 April 1981 indeed received a more favourable purchase 28. Moreover, it is correct to say, as the price but only in so far as the meat was still Commission points out, that Article 16 of available. Regulation No 2173/79 is drafted so as to respect the principle of proportionality and 25. In contrast, Neumann not only that the security laid down by the regulation obtained — thanks to its having lodged a can in no way be regarded as excessive. In new application after 6 April 1981—a view of the very specific situation to which lower selling price but also benefited by the question put by the national court priority which, in principle, it no longer refers, however, those factors do not in my deserved. Hence it had the advantages of view play a rôle in this case.