C-265/87
ECLI:EU:C:1989:160
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OPINION OF MR TESAURO —CASE 265/87
OPINION OF MR ADVOCATE GENERAL TESAURO delivered on 20 April 1989 *
Mr President, my Opinion today), on the basis of various Members of the Court, arguments relating, not to the lawfulness of the levy per se, but rather to the validity of the system for collecting the levy.
1. The present reference for a preliminary ruling is part of the already rather long line Despite that different approach, I believe of cases concerning the lawfulness of that if the Court decides in the abovemen co-responsibility levies. In a series of tioned case to accept the reply proposed in 1 my Opinion (to which I refer), that reply judgments the Court has in substance confirmed that instruments of that kind and would also be relevant to the reply to be their basic rules of application are given to the national court in the present compatible with the Community system, case. although it did criticize them in one respect, as we shall see.
I therefore suggest now that, in the event that the Court considers it appropriate to concur in the Opinion delivered in Case 195/87, the judgment in the present case In the present case (which concerns Council should contain a reference to the judgment Regulation No 1579/86 of 23 May 1986 delivered in Case 195/87. and the Commission's subsequent imple menting regulation, Regulation No 2040/86 of 30 June 1986), Schräder, an undertaking which markets processed cereals, opposes the imposition of the levy and contests its That having been said, the observations validity before the national court, using which follow will be confined to assessing arguments which, in my opinion, the Court the grounds of invalidity raised in the has to a large extent already considered and context of the present case and set out by rejected in previous judgments. the national court in the order making the reference.
The lack of legal basis for Regulation No The validity of the abovementioned regu 1579/86 lations is also being contested in another case, Case 195/87 (in which I will present
'* Original language: Italian. 1 — See the judgments in Case 138/78 Stalling v Hauptzollamt The doubts raised by the national court as Hamburg-Jonas [1979] ECR 713; Case 179/84 Bozzetti v to the validity of Regulation No 1579/86 Invemizzi [1985] ECR 2301; Case 300/86 Van Landschoot v Mera NV[i9M] ECR 3443 and Case 64/87 Versele-Laga concern almost exclusively the alleged v Robegra NV""[1987] ECR 1961. absence of a legal basis. I will therefore
SCHRÄDER v HAUPTZOLLAMT GRONAU
concentrate most of my analysis on that The same conclusion is also arrived at by point. means of a second argument.
The second paragraph of Article 2 of Council Decision 70/243/ECSC, EEC, The national court, adopting as its own the Euratom of 21 April 1970 (Official Journal, plaintiff's argument in the main English Special Edition 1970 (I), p. 224) proceedings, considers that the abovemen- provides that: tioned regulation ought to have been based not just on Article 43 but also on Article 201 of the Treaty. 'In addition, revenue accruing from other charges introduced within the framework of a common policy in accordance with the provisions of the Treaty establishing the European Economic Community or the There are basically two submissions put Treaty establishing the European Atomic forward in support of that view. Energy Community shall constitute own resources to be entered in the budget of the Communities, subject to the procedure laid down in Article 201 of the Treaty estab lishing the European Economic Community or in Article 173 of the Treaty establishing First, it is claimed that, contrary to what is the European Atomic Energy Community stated in Article 1(4), point 4, of Regulation having been followed'. 2 No 1579/86, the co-responsibility levy is, by its very nature, essentially a financial measure, and not an intervention measure of agricultural policy of an economic kind. Since the co-responsibility levy is precisely a That is shown not only by the high rate of charge introduced within the framework of the levy in question but also, and in a common policy, it also follows, according particular, by the fact that the levy is to the plaintiff's interpretation of the actually imposed on processors, who are not provisions cited above, that the Council is those responsible for the surplus production. required to base its measures on Article 201 Thus the charge alleviates the financial diffi and to follow the relevant procedure. culties of the sector in question and yet has no objective relationship to, and conse quently no real effect on, the economic behaviour of those economic operators (producers) who determine supply and In my opinion, those two arguments cannot therefore also any surpluses. Accordingly, as be accepted. the charge in question is a financial one, the Council did not have the power to introduce it on the basis of Article 43 alone. First of all, in Case 179/84 (Bozzetti v 2 — The paragraph in question provides (hat 'lhe levy referred Invemizzi [1985] ECR 2301) the Court, to in this article shall be regarded as one of the intervention measures designed to stabilize agricultural markets and referring to the co-responsibility levy in the shall be allocated to the financing of costs in the cereals sector'. milk sector, stated that that levy:
OPINION OF MR TESAURO —CASE 265/87
'. .. is to be regarded "as forming part of question the sector support mechanisms, the measures to stabilize agricultural seeks to restore the natural balance between markets". Thus the levy serves essentially an supply and demand. economic purpose, inasmuch as it performs the same function as the other types of intervention provided for within the common organization of the market in milk and milk products. The fact that the However, if that, very briefly, is the co-responsibility levy, which is used directly function of the regulation, I cannot see how to cover certain expenses incurred in the it can reasonably be disputed that it is essen context of the common organization of the tially economic, as, moreover, the Court has market in milk, is not included among the explicitly acknowledged in its judgments Community's "own resources" does not concerning the milk sector. affect the way in which it must be defined in so far as it is designed to contribute to stabi lizing the market in question' (paragraph 19 of the decision). Contrary to the plaintiff's assertion, the economic nature of the levy is not belied either by the way in which it is collected (from processors rather than producers) or by the amount of the levy. Those observations can be applied to the levy in the cereals sector, which is entirely comparable to the levy in the milk sector, both structurally — as will be seen below — and, more importantly, func I will have occasion to return to those tionally. points later, but for the moment it is sufficient to state that the arguments in question are based on false premises.
It has already been mentioned that Article 1(4), point 4, of Regulation No 1579/86 With regard to the way in which the levy is provides that the levy in question 'shall be collected, it is not accurate to state that the regarded as one of the intervention burden of the levy falls on processors. At measures designed to stabilize agricultural least in principle, the opposite is true. Even markets'. Moreover, as is evident from the though processors pay the levy, it is preamble to the regulation itself (second compulsorily passed on — by means of a recital), that regulation, which is part of the deduction from the purchase price — as far broader strategy for stabilizing the market, as the producer. Thus it is the producer who also serves the specific purpose of giving is in fact the person who pays the charge, producers an indication of the situation in whereas the processor intervenes only in the the sector concerned. As the Commission guise of a representative. The economic and the Council have stated, the levy measure is always addressed to the producer operates in the same way, albeit with greater since it is precisely his choices which are to flexibility, as a reduction, of the same be conditioned by the existence and the proportion, in the intervention price. It is amount of the levy. The collection therefore a concrete signal intended for mechanism is therefore consistent with the producers which, without calling into levy's distinctive purpose of giving
SCHRÄDER v HAUPTZOLLAMT GRONAU
producers a concrete indication of the cited above. As the Council has rightly market situation. emphasized, whereas the first paragraph of Article 2 is imperative in so far as it makes provision for revenue which necessarily constitutes own resources, the following paragraph is simply indicative, referring to With regard to the amount of the charge, revenue which, depending on circumstances, fixed at 3 % for the first two years, it does may be included in own resources or may not seem excessive as a means of intervening not. In the situation covered by the second in a market which has a structural surplus paragraph, whenever it is decided to enter a by reducing, or at any event containing, particular item in the budget as own demand-side prices. resources, and only in that case, use of the procedure laid down in Article 201 becomes a necessary condition. On the other hand, whenever it is decided that a particular item must not be ascribed to own resources and Moreover, even if the amount of the levy is therefore entered in the general budget of determined by factors of a financial nature the Communities, the procedure laid down (budgetary charges connected with support by Article 201 is clearly superfluous and, of surplus production), it is also always indeed, arbitrary. linked to the fundamental economic rationale of the measure, which is — as has already been stated — to 'give the producers an indication of the market situation' in order to 'achieve, with the utmost urgency, an improved balance' in the market in That is precisely the case with the question and 'to control growth' (the co-responsibility levy. The Court has, second recital in the preamble to Regulation moreover, already reached that conclusion No 1579/86). in its judgment in Case 138/78 Stoking v Hattptzollamt Hamburg-Jonas [1979] ECR 713. On that occasion, the plaintiff in the main proceedings argued that Article 43 could not authorize the Community In my opinion, therefore, it must be pointed institutions to charge a levy on milk out that even though the levy unques production, since the levy was a charge tionably appears to be financial in nature, which could be imposed only under helping to contain the cost of operating the Article 201. However, after having mechanisms in the cereals sector, never discussed the function of the levy, the Court theless in fact it is an intervention measure held that the Council had the power to intended to stabilize the market and is adopt the levy on the basis of Article 43. In therefore essentially economic in nature. doing so the Court followed Advocate That is not a sufficient basis for the General Mayras who had made the submission that the contested regulation following observation: should also be based on Article 201 of the Treaty.
'Article 201 thus constitutes the basis of Nor, in fact, does an obligation of that kind revenue which, without any distinction, is flow from the second paragraph of Article 2 intended to cover the whole of the expen of the Council decision on own resources diture provided for in the budget.
OPINION OF MR TESAURO — CASE 265/87
However, that article in no way deprives the Finally, consistent with that approach is the Council of the power, within the framework provision that the revenue from the levy is of specific rules, and particularly in common not intended to be used 'without distinction agricultural policy matters, to generate to finance all expenditure' of the revenue which by its direct link with Community, as is required for own measures affecting expenditure in the sector resources (Article 5 of the Council Decision at issue reduces the impact thereof'. of 21 April 1970, cited above) in accordance with the principle that the budget is indi visible, but is to be allocated (under Article 1(4) of Regulation No 1579/86) exclusively 'to the financing of costs in the cereals sector'. The Advocate General also pointed out that within the framework of measures designed to regularize agricultural markets, there already existed certain items of revenue which did not constitute own resources, the creation of which would imply use of the Therefore, in my opinion, Regulation No procedure under Article 201 (for example, 1597/86 could have been adopted on the securities and guarantees which are forfeit basis of Article 43 of the Treaty alone and to the Community), and he concluded it is consequently not vitiated by a defect in therefore that Article 201 was not the legal basis. 3 applicable to the co-responsibility levy.
Suitability of the levy for achieving its intended purpose However, it must also be emphasized that, in the case of the levy in question, recourse to Article 201 appears not only superfluous but also inappropriate. Although the levy is designed to remedy structural imbalances, it The plaintiff in the main proceedings claims nevertheless constitutes a measure which is that the levy in question is inappropriate for intended for particular sectors; the levy is achieving the objective of stabilizing the closely adapted to the specific requirements market, referred to in Article 39 of the of those sectors and is virtually contingent Treaty, and is therefore unlawful under upon them, since it remains in force only if Article 40(3). the sector continues to be in a state of imbalance. As the Council has stated, it seems more correct to exclude in principle from the category of own resources any charges which are not of general application or not permanent. The levy is said to be inappropriate for two reasons: 3 — These observations too, made in the context of the levy in the milk sector, may obviously be applied to the levy introduced in the cereals sector. Besides the fact that, as already mentioned, they serve a similar purpose, it should be mentioned that structurally both are calculated on the basis of a single rate (1.5 to 3 % for milk; 3 % in the first two years for cereals) for a uniform basic taxable amount (a) the proportion of agricultural (the target price for milk; the intervention price for cereals). Moreover, in both cases, as has been seen, the production affected by the levy (less burden of the levy falls on the agricultural producer. than 50%) is too small;
SCHRÄDER v HAUPTZOLLAMT GRONAU
(b) the levy can cause a rise in the price of, The Court gave a similar ruling in the and thus a contraction in demand for, judgment in Stölting where a measure's processed cereals. patent unsuitability to the objective which the competent institution seeks to pursue was postulated as a possible ground for invalidity. Therefore, for the purpose of re-establishing a balance between supply and demand on the market in question, the levy is ab initio ineffective, if not directly counterproductive. On the other hand, the mere fact that a measure is ineffective does not per se make that measure invalid and it is relevant only in the context of an assessment of the It must be pointed out, however, that when measure's appropriateness, which lies the Council adopts measures of that kind, outside the Court's jurisdiction (see the and consequenty when it decides how judgment in Biovilac, cited above). appropriate they are, it possesses a wide power of discretion which corresponds to the political responsibilities which Articles 40 and 43 impose on it (see the judgment in However, in the present case it is clear that Staking, cited above, at paragraph 8 of the the institution has not manifestly exceeded decision). its discretionary powers, at least in relation to those aspects which have been raised in the present proceedings.
The selection from the various possibilities open of the one which seems most appro priate for the aim pursued comes within the In fact, in so far as the levy in question scope of the exercise o t that power of seeks to contain supply by exercising real discretion (see the judgment in Bozzetti, pressure on producers, it is consistent, in cited above, at paragraph 30). principle, with the objective of stabilizing the market, laid down in Article 39.
It follows, in that particular regard, that the judicial review ol" legality may be exercised As regards its actual effect, too , it is not in a limited way, only in the event of a disputed that the introduction of the levy manifest error, a misuse of powers or when brought about a reduction, at all levels, in the institution manifestly exceeds the limits the support price for cereals and improved of its discretionary power. the sector's financial situation, freeing the resources which were essential to initiate a strategy for developing new outlets.
Thus, in the judgment in Biovikc,* the Court held that the legality of a measure can be adversely affected only if the measure is manifestly unsuitable for The allegations made by the plaintiff in the achieving the aim referred to in Article 39. main proceedings regarding the effects of the levy on prices and on demand seem 4 — Biovilaci ££C[1984] ECR 4057, paragraph 17. therefore not only insufficient to support a
OPINION OF MR TESAURO — CASE 265/87
finding of invalidity but also to have no economic activity, including such activity basis in fact. within the Community system.
With regard to the measure's limited scope As I have pointed out, that reasoning is as a result of the wide range of exemptions based on an inaccurate premise. The burden provided for, it must be pointed out, first, of the levy paid by the processors is compul- that such a limitation may reduce but sorily passed on to the producers. That is cannot compromise the effectiveness of the laid down by Anicie 1(4), point 6, of Regu measure, as I have just shown. Secondly, the lation No 1579/86 ('the levy shall be passed extension of the exemptions provided for is on to the producer'), and is supported by objectively justified for economic reasons, as the sixth recital in the preamble to, and the Court confirmed in its judgment in Case Article 5(1) of, the Commission's 300/86 Van Landschoot v Mera NV[198Ü] implementing regulation, Regulation No ECR 3443.
Finally, it must be emphasized 5 2040/86. that, in any event, in a context such as the one outlined here, the choice between a greater or lesser substantive scope for the levy is within the limits of the institution's discretionary power and cannot give rise to The person who is liable for the charge is doubts as to its lawfulness. therefore the producer. The processor, who acts as substitute, bears only a modest administrative and accounting charge which may be considered proportionate, and In my view, therefore, the argument that the therefore justified, in view of the fact that levy is unlawful in so far as it is unsuited for that category of economic operators, even achieving its intended purpose is groundless. though not directly responsible for the surpluses, is an integral part of the market in question and certainly also has an interest in its stability. Consequently, the burden of the levy is passed on in order to prevent the Breach of fundamental rights imposition, in principle, of an undue charge on the processor, in breach of fundamental
rights. That does not mean that the manner in which the transfer is effected is neces sarily perfect. That is, however, a different According to the plaintiff's submissions in the main proceedings, the breach in 5 — The sixth recital in the preamble to Regulation No question lies essentially in the fact that the 2040/86 provides that: '. . . one of the objectives of the co-responsibility levy burden of the levy falls on a category of system is to make producers more aware of the realities of persons (processors) which is not the market; .
. . to that end, the burden of the levy should be passed on to them; . . . an invoicing system which takes responsible for the surpluses. account of that requirement should accordingly be introduced; . . . the principle whereby the levy is to be passed on is to apply notwithstanding any contractual clause to the contrary'. Article 5(1) of the regulation provides that: 'Operators who carry out the operations referred to in Article 1(1) shall pass on the co-responsibility levy to their suppliers. The levy shall also be passed on at each trans The charge is, therefore, according to the action prior thereto, as far as supply by the producer. Supporting documents for each of the transactions referred plaintiff, unjustified and consequently to in the first subparagraph shall indicate separately the infringes the principles which regulate amount of the levy deducted'.
SCHRÄDER v HAUPTZOLLAMT GRONAU
problem — one which is the subject-matter Without its being necessary to consider of Case 195/87 — which must be examined individually each of the examples of in the light of very specific considerations discrimination cited, it is sufficient to point (concerning the effect of agricultural out that they all stem, in the plaintiff's conversion rates in transactions between opinion, from the wide exemption laid States) which are wholly unrelated to the down in the second subparagraph of Article present case. 1(2) of Regulation No 2040/86 for cereals intended for use as animal feed on the holding on which they were produced.
With regard to the actual amount of the levy ( 3 % in the first two years of application), it has already been stated that the charge is not disproportionate in a I believe it is sufficient to point out that that market in which supply structurally exceeds question has already been resolved in the demand. Moreover, the guiding principle judgment in Van Landschoot. The Court for calculating the levy is laid down in the held that such an exemption is, in principle, third recital of the preamble to Regulation justified since cereals consumed by the No 1579/86. The institution's discretion in producer are not placed on the market and that particular regard is therefore restricted, thus do not contribute to the creation of at least partly. It follows that, except when surpluses (see in particular paragraph 11 of that criterion is manifestly disregarded, the the decision). rate of levy adopted cannot be considered to be disproportionate.
Indeed, having accepted the rationale of the Consequently, I do not believe that it is exemption, the Court subsequently extended possible to argue that there has been a its scope since it considered it discrimi breach of fundamental rights in the present natory that the exemption should apply only case. to holdings which consume their own cereals processed using their own plant and not to holdings which also consume cereals from their own production but whose cereals were processed by other under takings. The discriminatory nature of the levy scheme
In the proceedings before the national court In the light of the Court's ruling in Van the plaintiff claimed that the system for Landschoot, it is not possible in my opinion collecting the levy laid down in Regulations to share the doubts raised in the present Nos 1579/86 and 2040/86 was discrimi case relating to the discriminatory nature of natory. the levy exemption scheme.
OPINION OF MR TESAURO —CASE 265/87
Consequently, I propose that the Court should reply to the national court as follows :
'Consideration of the question referred for a preliminary ruling has disclosed no factor of such a kind as to affect the validity of Council Regulation No 1579/86 of 23 May 1986 or Commission Regulation No 2040/86 of 30 June 1986.'