C-264/86

3 3. By Regulation No 3605/85 the Council, 2. Council Regulation No 3796/81 further acting on the basis of the aforementioned provides, in Article 17, that compensation is provision, fixed the Community producer to be granted if necessary to Community price for yellowfin tuna at ECU 1 479 per producers of tuna in respect of the tuna tonne for the 1986 fishing year. In Regu­ specified in Annex III thereto in order to lation No 1196/76 4the Council had also previously laid down general rules for the * Translated from the German. granting of compensation to producers of 1 — Official Journal 1981, L 379, p. 1. tuna for the canning industry in respect of 2 — Commission Regulation No 293/86 of 10 February 1986 (Official Journal 1986, L 35, p. 7) which was adopted in order to extend the operation of Commission Regulation 3 — Official Journal 1985, L 344, p. 11. No 3150/85. 4 — Official Journal 1976, L 133, p. 1.

OPINION OF MR LENZ — CASE 264/86

Article 4 provides that compensation is to be granted only if an examination reveals that the situation recorded on the Community 'The maximum amount of the compensation market is the consequence of the level of shall be at the level which is necessary to prices on the world market for tuna and ensure that the fall in prices on the that a fall in the price on the Community Community market does not threaten the market has not been caused by an abnormal income which producers of tuna derive from increase in the quantities produced. sale of the quantities produced, be it on the According to Article 5 the compensation for Community market or on that of third all the quantities of tuna delivered to the countries'. canning industry during the three-month period for which prices have been recorded is not to exceed the difference between the Community producer price and the price actually obtained by the Community

Such detailed rules were adopted in Commission Regulation No 2469/86 of 31 5 — Official Journal 1986, L 211, p. 19.

6. As the aforementioned surveillance (1) Contrary to the order in which they measures were insufficient and substantial appear in the application I will begin with imports at low prices were recorded, the the latter set of arguments. Commission adopted Regulation No 2470/86 6 on 31 July 1986 in which compensation for tuna producers was provided for for the first time. The maximum amount of compensation for yellowfin tuna weighing more than 10 kg 9. The essential contention in that regard each was fixed at ECU 170 per tonne and (for details I refer to the Report for the for yellowfin tuna weighing not more than Hearing) is that the Commission regulations 10 kg each at ECU 185 per tonne (whereas are not consistent with Council Regulations the difference between the Community Nos 3796/81 and 1196/76. According to producer price and the quarterly average the provisions laid down by the Council Community market price would have only the price considerations referred to in amounted to ECU 315 per tonne and ECU Article 5 of Regulation No 1196/76 are 344 per tonne respectively). relevant in determining the maximum amount of compensation; the Commission was on the other hand not empowered to limit the amount of compensation in the manner in which it had done so, namely by taking account of the quantities of tuna 7. On 21 October 1986 the French Republic landed, because this amounted to penal­ instituted proceedings before the Court in ization of increases in production. It was respect of those two Commission regu­ submitted that a rule such as that introduced lations seeking a declaration that the regu­ by Regulation No 2469/86 (which was so lations were void and in the alternative — as imprecise that it left the Commission a large regards the first regulation — a declaration degree of discretion) could not be regarded that Article 2 (3) thereof is void (as was as a detailed rule for the application of made clear during the hearing in response Regulation No 1196/76 within the meaning to a question put by the Judge-Rapporteur). of Article 7 thereof. If such a rule had been considered necessary the Council itself should have included it in the general rules laid down in Article 17 of Regulation No 3796/81, as that would have been the only B — Analysis way to comply with the principle of the hierarchy of legal rules as it is applied in Community law.

17 of Regulation No 3796/81, there are in Commission an implementing power of my view no conclusive reasons for appreciable scope. answering the question in the manner regarded as correct by the applicant and the I also refer to the Court's judgment in Case intervener. 57/72 8 in which it was stated that a significant freedom of decision may be left to the Commission which excludes any automatism and which is to be exercised in 11. In that connection it is significant in my the light of the objectives of the economic opinion that Article 155 of the EEC Treaty policy laid down by the basic regulation (as which lays down the Commission's powers is also indicated in the judgment, the refers generally to the exercise of the Commission could exercise the powers powers conferred on it by the Council for necessary to ensure the functioning of a the implementation of the rules laid down given system). by the latter. There is absolutely no differentiation in Article 155 according to I refer in addition to the Court's judgment the relative importance of the legal rules in Case 23/75 9in which it was made clear and it is not implicit in the provision that that the term 'implementation' within the only powers of a very ancillary nature may meaning of Article 155 of the EEC Treaty be conferred on the Commission with must be given a wide interpretation (with precise instructions as to the criteria to be the consequence that wide powers of taken into account. discretion and action may be conferred on the Commission in the sphere of the common agricultural policy); and in which it was emphasized that the management committee procedure enables the Council to 12. It is also significant that there is nothing give the Commission an appreciably wider in the relevant decisions of the Court which power of implementation with extensive supports the applicant's view and that, on competence the limits of which must be the contrary, those decisions contain judged with regard to the basic general substantial indications that the Commis­ objectives of the organization of the market sion's view is correct. and less in terms of the literal meaning of the enabling provision.

objectives of the organization of the market are to be adopted in accordance with the in question. management committee procedure, no inference can, however, be drawn as to the matters which must be attributed to the one or the other set of rules. All that is clear from this provision is that the Council is to 14. (b) If, therefore, there are no objections fix the Community producer price; it does of principle to accepting that the not dictate the inference that the Council is Commission may be granted an extensive prohibited from delegating extensive powers discretion in the application of the compen to the Commission and in particular the sation rules with which this case is power to adopt all rules which — in the concerned (as is often the case — according Commission's words — are necessary for a to the detailed submissions of the correct application of the compensation Commission — in the implementation of the provision. common agricultural policy), the decisive question is whether the regulations referred to by the applicant are to be seen as imposing clear restrictions on the powers 17. (bb) The dispute thus also focused on conferred on the Commission. the interpretation of Regulation No 1196/76 and the question whether the contested Commission regulations were compatible with that regulation. 15. (aa) It is absolutely clear in my opinion that that is not the case with regard to the basic regulation on the common organ ization of the market in fishery products, in 18. As the Court is aware, the applicant regard to which the applicant has moreover took the view (in which it was supported by presented scarcely any argument. the Spanish Government) that in Regulation No 1196/76 the Council gave a detailed definition of the term 'if necessary' which is found in Article 17 of Regulation No 3796/81 (and which was also contained in

actually obtained. The maximum amount of 11 — There is no reference to 'general rules' in the German- compensation must therefore be understood language version — see Amtsblatt 1981, No L 379, p. 10.

as meaning the difference referred to in compensativa é limitato alla differen­ Article 5 of Regulation No 1196/76 which zia . ..'). However, if the applicant's inter­ may not exceed the difference between the pretation were adopted, it would have been Community producer price and the more appropriate to choose a wording such quarterly average market price. When it as that contained in Council Regulation No 1 comes to the maintenance of the income 3117/85 2which provides: 'the indemnity level of tuna producers, it follows that only shall be equal to the difference between the a level corresponding to the Community selling price received by the producer and producer price is to be taken into the guaranteed minimum price'. The fact consideration. In the applicant's view the that such wording has not been used rules laid down by the Commission in justifies the inference that the term 'shall Regulation No 2469/86 amount, however, not exceed' points to some other method of to a penalization of increases in production calculation. Also significant is the fact that because the quantities produced are to be Article 7 of Regulation No 1196/76 states taken into account in fixing the maximum that the maximum amount of compensation amount of compensation, and this could not is to be laid down by means of the have been intended. Those rules are management committee procedure. The unnecessary for the purpose of preventing choice of that procedure and the express the compensation paid amounting to over­ reference to a maximum amount would, compensation, to which the Commission however, not be easily comprehensible if also referred, since that could be achieved merely the relatively simple mathematical by means of Article 4 of Regulation No operation referred to in Article 5 of the 1196/76. regulation were in point (namely the deter­ mination of the difference between the Community producer price and the quarterly average selling price obtained by 19. It seems to me — if I may say so the producer). immediately — that the argument put forward by the applicant and the intervener in this respect should not be upheld and that the Commission has better arguments on its 21. The most important point, side when it says that, in the light of the however — if, in view of the wording of the whole scheme of the rules and their Council provisions, there is no clarity in the objectives, the Commission must have the sense contended for by the applicant — is power to fix the maximum amount of what would appear to be suggested by the compensation by reference to factors other purpose of the rules and what may be than those referred to in Article 5 of Regu­ inferred, at least by implication, from lation No 1196/76. Article 4 of the Council regulation.

mechanism). It is evident, however, that the which I have already considered and which level of income is not determined solely by is apparent in Article 4, according to which prices but also by the quantities landed. The the quantities produced, which inevitably income level may remain unchanged even affect the state of the market and the when prices fall if there is a corresponding economic situation, cannot be ignored. In increase in production. In view of the my opinion, however, the Commission is purpose of the rules it therefore seems correct when it submits that it would plausible that the conception put forward by scarcely be comprehensible if that factor the Commission is inherent in the scheme of came into play only in extreme situations those rules. It is immediately clear that (namely where an abnormal increase in without such a corrective the rules could Community production is recorded and it is exceed their purpose and could result in assumed that a fall in prices is due solely to over-compensation, that is to say could such an increase) and not in circumstances lead, as it were, to the grant of a production where it is to be assumed that both the premium (with all its attendant disad world market and Community production vantages such as encouraging an increase in has influenced the level of prices so that production in the future and thereby endan there is no question of an exclusion of gering the stability of the market and compensation. That would entail — since affecting inter-State trade patterns to the the level of income as a result of an increase detriment of non-member countries). This in the quantities produced would not be would be prevented, in any event on a taken into account — not only accepting literal interpretation of Article 4 of Regu that the grant of compensation may lead to lation No 1196/76, only in the case of an over-compensation, which would be incon exceptional increase in the quantities sistent with the purpose thereof, but also produced since such an increase leads to the subjecting the compensation system to the exclusion of compensation. effects of sudden and drastic changes — on the one hand payment of excessive compen sation in the case of 'normal' increases in production and on the other hand payment of absolutely no compensation in the case of an abnormal increase in production in a subsequent period (as was the case in the subsequent quarters of 1986).

Of of compensation to be fixed at a level essential importance, too, is the conception, different from that which would be derived

25. (cc) There is no need to consider Nevertheless, I wish to make the following further, in this context, the observations brief comments with regard to them. contained in the pleadings since they are limited to the question whether the Commission in determining the maximum amount of compensation is to consider only the price factors referred to in Article 5 of 28. As I see it, the accuracy of the figures Regulation No 1196/76 or whether it may contained in the technical memorandum also have regard to other considerations. produced by the Commission is not disputed. It is apparent from those figures that tuna producers have increased production and that therefore their income has risen (even if the rise — as was stated in 26. At the hearing, however, the applicant the recitals in the preamble to Regulation and the intervener went one step further No 2470/86 — did not reach a level and questioned whether the method justifying the description 'abnormal adopted by the Commission in the contested increase'). regulation actually compensates for losses of income. In that connection it was pointed out that Council Regulation No 1196/76 refers in its essential basic rules merely to a quarterly average Community market price and not to sales figures for three preceding 29. In so far as the applicant and the years. It was also submitted that the real intervener emphasize the need to take into income of tuna producers was the correct account real income and production costs, factor to take into account; the Commission not only may it be objected that there is should therefore not have satisfied itself scope in the term 'maintenance in the level with turnover figures without taking into of income' for a restrictive interpretation in account the fact that when production the interests of a policy of thrift (as has increases costs also increase and that during been suggested to the Commission from all the reference period which the Commission quarters for some time in the sphere of the considered to be significant (1983 to 1985) common agricultural policy), but the the cost of living had also risen. Commission was also able to state without being contradicted that it received from the Member States information solely with regard to the total income of tuna producers and could therefore base its aforementioned 27. With regard to those additional technical memorandum solely on that infor­ arguments, I take the view that according to mation.

30. Finally, as regards the fact that the acknowledges that some criteria may be years from 1983 to 1985 were adopted as deduced from the statement of reasons upon the reference period for calculating average which Regulation No 2470/86 is based, but, income, whilst it must be recognized that a because Regulation No 2470/86 was in level of income which was below the 1985 force for only one quarter, does not level was taken as the level for 1986, never consider it an appropriate statement of theless in the light of the scheme as a whole reasons for the Commission regulation the correctness of that method cannot be which lays down detailed rules of called wholly into question, since according application within the meaning of Article 7 to the basic Council regulation on the of Regulation No 1196/76.

In the light of that consideration, it matters to be found in the technical memo can hardly be said that the Commission has randum to which numerous references have clearly exceeded the bounds of the been made and which were submitted to the discretion conferred on it in this connection. Management Committee. The Spanish Government is in agreement with that view. It, too, is of the opinion that a complete statement of reasons would have required in particular an explanation of the method for 31. (2) Whilst there are, in view of the calculating the maximum amount of foregoing, no serious grounds for doubting compensation and a statement of the factors the substantive correctness of the contested used by the Commission in its calculation Commission regulations, it is still necessary (income, prices, reference period). to consider the question whether the statement of the reasons on which the regu lations are based is as complete as Article 190 of the EEC Treaty requires or whether 33. There is already a substantial corpus of the statement — which is certainly very case-law relating to the relatively frequent brief — indicates that there has been an submission of insufficiency of a statement of infringement of an essential procedural reasons, from which it is certainly possible requirement. to derive valuable guidance also for the purposes of these proceedings.

OPINION OF MR LENZ — CASE 264/86

14 essential elements, that is to say a purpose of the compensation, namely the statement setting forth in essence the maintenance of tuna producers' level of objective pursued, as was stated in income, and it is apparent from Article 17 paragraph 21 of the judgment in Case (4) thereof that the prices during the three 15 108/81. The Court has also emphasized fishing years preceding the fixing of the that it is not necessary to give specific facts Community producer price form the basis of and that a measure need only set out in a the determination of that price (and general form the essential factors and the therefore for the determination of an procedure which formed the background to important criterion for assessing the level of

34. If the provisions with which this case is of a fall in prices and not of an increase in concerned are examined in the light of the the quantities produced. foregoing considerations, it is significant in the first place that the statement of reasons 36. The assembly of all the foregoing points for Regulation No 2469/86 contains a do not represent an ideal statement of reference to the maintenance of tuna reasons for the rules adopted by the producers' level of income and that it is Commission and at issue in this case, in possible to deduce directly from Article 2 of which, one might certainly have thought, the regulation that the income is that some of the material contained in the produced by the sale of all quantities aforementioned technical memorandum produced (whether on the Community could have been incorporated without market or the markets of non-member leading to an excessive inflation of the text of the regulation. Nevertheless, it is difficult M — Judgment of 29 February 1984 in Case 37/83 Rewe- in the light of the foregoing to accept as Zentrale AG v Director of the Landtvirtschafiskammer Rheinland [1984] ECR 1229. valid the complaints made by Member 15 — Judgment of 30 September 1982 in Case 108/81 G. R. States (which participated in the drafting of Amylum v Council [1982] ECR 3107, paragraph 21 of the decision, at p. 3135. the regulations) that the statement of 16 — Judgment of 15 March 1984 in Case 64/82 Tradax Graan- reasons is inadequate and in particular there handel BVw Commission [1984] ECR 1359. can be no question of an infringement of 17 — Judgment of 27 September 1979 in Case 230/78 SpA Eridania- Zuccherifici Nazionali and SpA Società Italiana the duty to state reasons of such seriousness per l'Industria degli Zuccheri v Ministry of Agriculture and as to justify the annulment of the regulation Forestry, Ministry of Industry, Trade and Graft Trades, and SpA Zuccherifici Meridionali [1979] ECR 2749. on that ground.