C-201/87

OPINION OF MR TESAURO —CASE 201/87

OPINION OF MR ADVOCATE GENERAL TESAURO delivered on 14 December 1988 *

Mr President, difference between the world price and the Members of the Court, Community target price for oilseeds; the latter price is fixed, pursuant to Article 33 of Commission Regulation No 2681/83 of 21 September 1983, 4whenever the market situation makes it necessary to do so and in 1. In the present proceedings the national any event at least once a week. court seeks a ruling on:

3. On 22 March 1985 the Netherlands (a) the validity of Commission Regulation undertaking Cargill BV submitted to the No 756/85 of 22 March 1985 1 which national intervention agency ('the suspended the advance fixing of the Produktschap') two applications for advance subsidy for oilseeds; fixing of the subsidy in respect of an aggregate amount of 10 000 tonnes of sunflower seeds purchased in France.

(b) in the event of that regulation being declared invalid, on the consequences thereof regarding the conditions to be On the same day the Commission noted applied by the national intervention that there was an error in Regulation No agency. 735/85. The result of that error, which affected the rate to be applied for converting the final subsidy into the currency of the country where processing was to take place where the latter is not the 2. Before I examine the two questions country of production, was that traders who raised by the national court, it is appropriate purchased oilseeds in one Member State for to consider the following matters. processing in another could receive a final subsidy higher than they would have received if the correct rate for the two currencies had been applied.

6. Cargill BV pointed out that that provision does not allow the Commission to Following that suspension, the Netherlands take — as it in fact did in this intervention agency rejected Cargill's case — preventive measures, that is to say application for certificates showing advance suspension of the advance fixing of the fixing; that rejection was then challenged subsidy where there is merely a risk of an before the national court, which stayed the imbalance in the markets. In other words, proceedings and referred to the Court of the Commission can exercise the power of Justice the two questions which I mentioned suspension granted to it by Article 8 only earlier. where the number of applications for advance fixing submitted by undertakings has already exceeded the volume corre­ sponding to 'normal outlets for seeds The first question harvested in the Community'. Since in the present case the applications submitted on 22 March 1985 related to quantities of oilseeds not exceeding the normal throughput of the market, it must be 5. In its first question, the national court concluded that the Commission did not seeks a ruling on the validity of Regulation comply with the limitations imposed by No 756/85. It asks in particular whether Article 8. that regulation is in conformity with the conditions laid down in the provision on the basis of which it was adopted: Article 8 of Council Regulation No 1594/83. 7. I do not believe that that objection can be upheld. The reason for this is eminently textual. Article 8 of Regulation No 1594/83 It should be borne in mind that according to clearly indicates, by using the expression 'in that provision: particular', that the eventuality of an abnormally high number of applications for advance fixing being lodged is only one of the situations in which the Commission may 'If the situation of the Community seed intervene by suspending advance fixing of market is abnormal, and in particular if the the subsidy. The reason for which an example is thus given in Article 8 seems 6 — OJ 1983, L 163, p 44. moreover to be clear. It is obvious that if the

applications lodged have attained a level is a rush of speculative transactions mani­ disproportionate to the normal throughput fested by an excessive number of of seeds on the market a particularly serious applications for advance fixing. situation has arisen, indicative of movements attributable essentially to speculation, thus calling for prompt action by the Commission. 9. Cargill BV also stated that the Commission was not entitled in this case to decide to suspend advance fixing on the basis of Article 8, since that provision allows 8. However, that does not mean that even it to intervene only in order to remedy when the number of applications is not so abnormal market situations attributable to high the Commission cannot likewise the impact of factors of an economic nature. suspend advance fixing. The power of Article 8, it contends, does not allow the suspension is vested in the Commission in Commission to suspend advance fixing in order to enable it to remedy an abnormal order to remedy the consequences of an situation on the oilseeds market. And it is error which it has itself committed in calcu­ precisely in order to facilitate monitoring of lating the amount of the subsidy. the state of the market that, under Regu­ lation No 1594/83, the certificate showing advance fixing is issued only after a specified period — albeit a short one 10. Two arguments are put forward in (expiring on the afternoon of the following support of that view. First, it is observed working day) — has elapsed since lodgment that Regulation No 1594/83 does not of the application. expressly provide that an error in the deter­ mination of the subsidy will justify exercise of the power to suspend advance fixing. It was only as a result of a later amendment to It seems to me to be consistent with that Article 8, made by the Council in Regu­ aim that the Commission should be able to lation No 935/86 of 25 March 1986, 7that suspend advance fixing whenever there are such a possibility was envisaged. sound reasons for believing that the market situation has changed and that, therefore, the amount of the applicable subsidy no longer corresponds — as it must pursuant to In the second place, it is stated that Article 27 of the basic regulation, Regu­ suspension in the event of an error results in lation No 136/66 — to the difference an unjustified encroachment upon the between the world price and the protection of the legitimate expectations of Community target price for oilseeds. In such the traders who made proper applications circumstances, the fact that the volume of for advance fixing. They are, it is said, applications lodged by traders has not (or deprived of the possibility of obtaining a not yet) attained an abnormal level does not certificate not only when there is an have the effect of 'paralysing' the abnormal market situation but also Commission's power to intervene; I will go whenever the Commission is negligent in further and say that it is not only legitimate calculating the amount of the subsidy. Their but indeed advisable for the Commission to right is thus dependent upon the greater or intervene to remedy an abnormal situation lesser diligence applied by the Commission. even before its immediate effects have become apparent and therefore before there 7 — OJ 1986, L 87, p. 5.

That also gives rise to a precarious situation It must be observed that even if Article 8 which is incompatible with the requirements were not applicable in cases of error that of legal certainty that are essential in order would not mean that the Commission was to ensure the orderly conduct of the not entitled to adopt, in this case, a measure economic relations concerned. containing substantially the same provisions as Regulation No 756/85. In other words, the Commission, as well as being clearly empowered to change the amounts of subsidy erroneously laid down in Regulation 11. In that regard I must observe that it No 735/85 — as it did by means of Regu­ does not seem to me that in fact the lation No 755/85 — could also take action committing of an error by the Commission regarding applications for certificates with in fixing the amount of the subsidy falls advance fixing lodged on 22 March 1985 by within the scope of Article 8 of Regulation preventing the issue of such certificates. No 1594/83. I think that there is a fairly clear difference between an error and a 'situation on the .. . market which is abnormal' envisaged by that provision. The Intervention of that kind is justified by the latter situation should in fact be seen as an principle whereby a measure which is adverse development in the economic irregular as a result of an error may be situation in which the subsidy is intended to withdrawn or amended — even retroac­ operate, a development brought about by tively, within certain limits — by the abnormal evolution of the variables authority which issued it; the purpose is to affecting the market, such as, in particular, protect both the public interest in ensuring the balance of supply and demand and price the legality of administrative action, which levels. may not take the form of a measure of other than the prescribed scope, and subjective legal situations in the area in which the measure is intended to operate. 8I would point out in that connection that in Where there is an error, on the other hand, the judgment of 1 June 1961 in Case 15/60 the situation may also produce distorting Simo» v Court of Justice [1961] ECR 115 the results but it is nevertheless unconnected Court expressly declared that 'if the admin­ with any change in the economic situation istrative authority becomes aware that a and is exclusively attributable to negligence, certain allowance has been granted as a of a greater or lesser degree, on the part of result of a wrong interpretation of a legal the Commission. provision it has the power to amend the previous decision. Even if in certain cases, in

view of vested rights, withdrawal on the ensuring that a subsidy is not granted which ground of unlawfulness does not have retro­ is not in conformity with the basic provision active effect it always takes effect from the and is therefore likely to cause distortion. It present'. In its judgment of 13 July 1965 in is true that the power of suspension under Case 111/63 Lemmerz-Werke [1965] ECR Article 8 relates, as we have seen, to a 677 it stated that 'the High Authority can specific eventuality (a change in the revoke illegal decisions, even retroactively, economic situation); and it is also true that provided that in certain exceptional cases in such an eventuality the expectations of proper consideration is given to the the traders must be considered with greater principle of legal certainty'. I would point care, in so far as the applications for out finally that in the judgments of 3 March advance-fixing certificates are nevertheless 1982 in Case 14/81 Alpha Sreel[1982] ECR based on a proper rule, which explains why 749 and of 26 February 1987 in Case 15/85 Article 8 makes the exercise of the power of Consorzio Cooperative d'Abruzzo [1987] suspension subject to precise conditions. ECR 1005 it was held that 'the withdrawal of an unlawful measure is permissible, provided that the withdrawal occurs within a reasonable time and provided that the Commission has had sufficient regard to But it is also true that that power must be how far the application might have been led regarded as a specific manifestation of a to rely on the lawfulness of the measure'. wider power of intervention which is available to the Commission in any event to enable it to ensure that the subsidy is not diverted from its proper purpose. The Commission is responsible for ensuring that the subsidy in question is not converted In the present case — although, by contrast from something which contributes to market with those cited, it concerns a general equilibrium into something which upsets the measure — I do not believe that there is economic balance and distorts competition. anything to prevent the withdrawal (or So instead it must be concluded that, if on amendment) of the irregular Regulation No the basis of Article 8 the Commission may, 735/85 from including the suspension of the within certain limits, halt the issue of issue of certificates applied for on 22 March certificates relating to amounts of aid 1985. Those applications, which were in any determined correctly, the Commission must, case based on an irregular measure, did not a fortiori, be able to achieve the same in fact confer perfect rights on the persons result — keeping its action within the same concerned but merely rights which remained limits — where the applications submitted sub conditione. Naturally, the right of the by companies relate to amounts which were traders affected to take action to establish incorrect ab initio. the institution's liability for the damage suffered by them was not affected by that fact.

14. However, if only to dispel any uncer­ It seems to me therefore that Regulation No tainty on this point, the matter must be 756/85 must be regarded as invalid in so far considered from another standpoint, which as it does not meet the requirement laid I see as decisive. I refer to the Commission's down in Article 190 of the Treaty and statement of the reasons on which Regu­ consistently clarified by the Court of stating lation No 756/85 is based. It is to be noted the reasons on which it was based. in the first place that reference is made to Article 8 in the first recital in the preamble to that regulation in the partrelating to the possibility of suspension 'if the volume of The second question applications for advance fixing of the subsidy does not appear to be related to normal outlets for seeds harvested in the 15. In its second question the national court Community'; that reference is not only not essentially asks the Court of Justice to state pertinent, as has been stated, but is even whether, in the event of Regulation No misleading in so far as it gives the 756/85, which suspended the advance fixing impression that the Commission's inter­ of the subsidy at issue, being declared vention was in fact prompted by the invalid, the national intervention agency is lodgment of an abnormally large number of obliged to accede to the application for applications, whereas it is undisputed that in advance fixing lodged by the undertaking this case that did not happen. concerned, applying the provisions of the earlier Regulation No 735/85.

OPINION OF MR TESAURO —CASE 201/87

of a certificate with advance fixing relating transactions causing distortion and would to an amount of subsidy not provided for in therefore infringe the rules on the common the legislation in force would give rise to organization of the market.

In conclusion I suggest that the following reply should be given to the national court:

'(1) Commission Regulation No 756/85 of 22 March 1985 is invalid;

(2) Commission Regulation No 735/85, which fixes the amount of the subsidy incorrectly, is invalid and cannot be applied by the competent national inter­ vention agency.'