C-174/89

OPINION OF MR LENZ —CASE C-174/89

O P I N I O N OF MR ADVOCATE GENERAL LENZ delivered on 2 M a y 1 9 9 0 *

Mr President, 3. Regulations Nos 262/79 and 1932/81 Members of the Court, are designed, respectively, to promote the disposal of intervention butter and market butter through the grant of aid. Contracts are awarded under both regulations by way of standing invitations to tender. On 21 May 1985, the Commission, for reasons of A — Facts market policy, that is to say in order to achieve a significant reduction in stocks of intervention butter, lowered the minimum selling price for intervention butter from ECU 1.15 to 1.05 and raised the costs for butter-processing from ECU 0.14 to 0.16, 1. The case on which I shall give my with the result that the price of butter Opinion today is a reference for a leaving the cold store came to E C U 0.89 preliminary ruling made by the Ver- per kg as opposed to the previous price of waltungsgericht (Administrative Court) ECU 1.01 per kg. 4 This action resulted in a Frankfurt am Main (Federal Republic of considerable disparity between the prices of Germany). It concerns the application and market butter and intervention butter. Even interpretation of provisions of Community taking into account the aid granted for the law designed to promote the disposal of processing of market butter, it became butter under the common organization of 10.65% more expensive than intervention the market in milk and milk products. butter.

5. It was economically more advantageous 7. The plaintiff made use of the opportunity at that time to purchase market butter than to convert. However, in view of the fact intervention butter, in view of the aid that this opportunity only arose in so far as available. However, following the price the processing periods had not expired, the change by the Commission in May 1985, it plaintiff was only partially able to take ceased to be profitable to process market advantage of the opportunity to convert.

storage. As a result, it did not lodge 8. That court takes the view that the processing security in respect of this decisions declaring the security forfeit are quantity of butter. covered by Article 12(1) of Regulation No 1932/81 and that normally it would therefore have no hesitation in dismissing the action. In the present case, however, a special situation has arisen owing to the fact that the risk incurred by every participant in a tendering procedure was, on the adoption

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awarded contracts in individual of a tendering procedure for the grant of tendering procedures Nos 76 to 81, but aid for butter and concentrated butter may instead of lodging processing security be declared forfeit. That provision consists purchased and lawfully processed a of an exhaustive enumeration of three quantity of intervention butter sold grounds for forfeiture, worded as follows: under Commission Regulation (EEC) N o 262/79 of 12 February 1979 equi- valent to the contract quantity, prior to ' 1 . Except in cases of force majeure, the the entry into force of Commission tendering security shall be forfeit in respect Regulation (EEC) N o 2661/85 of 20 of any quantity for which the tenderer: September 1985?

(a) withdrew the tender after the closing If the above question is answered in the date for the submission of tenders, as negative : specified in Article 4(2) and (3),

(b) In the circumstances set out in Question (a), is the application of or Article 12(1) of Regulation (EEC) No 1932/81 suspended in the individual case?' (b) in the case of butter:

9. For details of the procedure before the did not, within the period prescribed, national court and the facts, submissions process the butter into the products and arguments of the parties I would refer referred to in Article 2(l)(a); to the Report for the Hearing.

16. The plaintiff in the main proceedings did not comply with its obligations to 14. That legal consequence could only be process butter into concentrated butter and disproportionate if the means used, here the to lodge processing security. The forfeiture compulsory lodging of security, was out of of the tendering security is thus quite simply proportion to the objective pursued thereby. the penalty imposed for contravening the In this regard it must be assumed that a purpose served by that security. measure is proportionate if the means employed to achieve the objective pursued are appropriate and do not go beyond what is necessary to achieve it. 6 The provisions relating to tendering security are designed to ensure that tenders are made in earnest and to prevent manipulation of the 17. The national court has itself stated that tendering procedure by means of sham it would have had no hesitation 'under tenders. In addition to ensuring that tenders normal circumstances' in dismissing the are serious, provision must also be made to action. The 'particular situation' which make sure that the butter is processed in the makes forfeiture of the security appear manner intended and within the stipulated disproportionate only arose through the periods. That objective is evident in Article adoption of Regulation No 2661/85, whose 12(1) of Regulation No 1932/81. Article provisions go beyond the pricing decisions 12(l)(b) of Regulation N o 1932/81 of the Commission and temporarily call in concerns the immediate processing of butter question the objective behind the processing into the products prescribed by the regu- of market butter, if they do not in fact lation, while Article 12(l)(c) provides for partially suspend it. step-by-step processing.

19. Even considering the particular circum- Question (b) stances of this case, I feel it would be incorrect to rule that Article 12(1) of Regu- lation No 1932/81 is generally invalid. Notwithstanding the procedural possibilities 22. 1. With this question, the Court of open to the Court of Justice to limit the Justice is confronted, and not for the first legal effects of a declaration of invalidity as time, with the issue of whether Community regards its subject-matter or its application law recognizes the existence of a general in time, 7 it would be inappropriate to principle of fairness. The Court of Justice declare Article 12(1) of Regulation N o first decided, in its judgment in Case 1932/81 invalid, since, apart from the situ- 118/76, 9 that a national customs authority ations covered by Regulation N o 2661/85 was not entitled to waive charges due under and the effects on Regulation No 1932/81 Community law on grounds of natural resulting therefrom, there is no doubt as to justice. It went on to rule that there was the present and future validity of Article no basis in Community law for the waiver 12(1) of Regulation No 1932/81. of monetary compensatory amounts on grounds of natural justice.

23. T h e Court of Justice held in a later 20. The above considerations are also valid judgment in Case 299/84 10 that Community in the event that forfeiture of the tendering law does not recognize any general legal security may in certain circumstances be principle to the effect that a Community regarded as a breach of the principle of provision that is in force may not be applied equal treatment. Since such a breach of by a national authority if it causes the superior principles of law would also be the person concerned hardship which the result of the entry into force of Regulation Community legislature would clearly have N o 2661/85, the alleged illegality cannot be sought to avoid if it had envisaged that inherent to the general legal rule and conse- eventuality when enacting the provision. quently cannot lead to its invalidity.

wording of the judgment in that case does security 'in the circumstances' outlined in not exclude such a possibility. The Court the first question. This incorporates a there ruled that: reference to the conditions laid down in Regulation No 2661/85 for release from the obligations assumed under Regulation No 1932/81. The question could therefore also 'A national court which considers that there be framed as follows: is such a case of hardship is, however, always at liberty to refer to the Court for a preliminary ruling any question on the inter- pretation and the validity of the Community measure concerned, the answer to which it 'Can a trader who has been awarded a considers necessary to enable it to give contract under invitations to tender Nos 76 judgment.' to 81 be released at any time from his obli- gations under Regulation No 1932/81, if he satisfies the substantive conditions for release under Regulation No 2661/85?* 25. Thus, although a principle of fairness in Community law has not until now been recognized in individual cases, it does not appear to me entirely implausible that such 28. It is clear from the comments of the a principle could be developed and applied national court itself that it is concerned not by the Court of Justice, particularly if so much with the validity of Article 12(1) of one considers the principle of objective Regulation No 1932/81 as with the legal unfairness to be a facet of the principle of consequences deriving from Regulation No proportionality which is recognized in 2661/85 in respect of obligations arising Community law. " under Regulation No 1932/81. That is clear not only from the way in which the first question is worded, with reference being 26. A conclusive decision as to whether or made to the criteria for the application of not the Court of Justice recognizes a Regulation No 2661/85, but also from the principle of objective unfairness and, if so, grounds of the order, in which it is stated whether it ought to apply it to the present that: case is, however, unnecessary if what the national court considers to be the 'fair outcome' can be derived from legal prin- ciples in the form in which they are now 'In this case, however, there is a special recognized by Community law. It is situation which the Commission created by therefore necessary to examine the facts of adopting Regulation (EEC) No 2661/85 the case. with effect from 21 September 1985. That is so because, in respect of some of the traders, the introduction of the regulation in effect eliminated the risk incurred by every 27. 2. It appears to me appropriate at the participant in a tendering procedure.' outset to clarify the material scope of the questions. The second question in the reference for a preliminary ruling concerns the suspension, in the individual case, of 29. It is therefore necessary to examine the provision governing forfeiture of the whether the forfeiture of the security provided for in Article 12(1) of Regulation 11 — See in this connection Case 299/84, cited above, paragraph 27 of the judgment. No 1932/81 is, in view of the effects of

33. (b) A provision of Community law breaches the prohibition on discrimination 'By the time that the tendering security had and is on that ground illegal if comparable been declared forfeit in the present case, situations are treated differently and however, there was no such aim. On the different situations are treated in the same contrary, it may be seen from Regulation way, unless such treatment can be objec- (EEC) No 2661/85 that the Commission tively justified. This legal principle re- had attached no importance to the cognized by Community law is based on the processing of market butter since 21 M a y general prohibition on discrimination on 1985 but was striving to redirect demand grounds of nationality contained in the first towards intervention butter. In view of that paragraph of Article 7 of the EEC Treaty objective it is quite incomprehensible and no and on specific prohibitions on discrimi- longer justifiable that, in effect, conduct to nation such as the prohibition on discrimi- which the Commission manifestly attaches nation in the agricultural sector laid down no more importance should be penalized.' in the second subparagraph of Article 40(3)

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of the EEC Treaty. ' 2 The latter provision 36. A distinction must be drawn between prohibits any discrimination under the that and the fact that owing to the decisions common agricultural policy between on pricing taken by the Commission and the producers and consumers within the subsequent partial opportunities for release Community. from obligations those processors carried out their processing under conditions which were economically less favourable than those affecting their competitors. We do not have to decide whether the requirement of 34. The national court takes the view that equal treatment makes it necessary to in this case there is breach of the general eliminate those economic disadvantages, legal principle of equal treatment: since in this case we are concerned merely with the forfeiture of security.

12 — Sec judgments of 13 December 1984 in Case 106/83 Sermide v Cassa conguaglio zucchero [19841 ECR 4209, paragraph 28, of 23 February 1983 in Case 8/82 Wagner v 38. It appears to me arbitrary to treat BALM [1983] ECR 371, of 17 lune 1987 in Joined Cases 424 and 425/85 Fuco v Voedselvoorzienmgs In- en participants in this group in different ways Verkoopbureau [1987] ECR 2755 and of 11 March 1987 in Joined Cases 279/84, 280/84, 285/84 and 286/84 Rau v depending on prescribed periods and time- Commission [1987] ECR 1069. limits. All successful tenderers were in an

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42. An interpretation of Regulation No 2661/85 consistent with overriding prin- ciples of law must therefore be that all 39 The general release which I have traders awarded contracts under invitations outlined is subject to the condition that the to tender Nos 76 to 81 pursuant to Regu- operators concerned undertake to acquire lation No 1932/81 who, under the large quantities of intervention butter. For conditions imposed by Regulation No those traders who have expressed their will- 2661/85, undertook to process an increased ingness to fulfil these conditions, there is quantity of intervention butter subject to the no specific or obvious objective reason to conditions laid down in Regulation No refuse them such release. 262/79, must be entitled to take advantage of the possibility of conversion under Regu- lation No 2661/85, irrespective of the date on which the regulation entered into force or the dates on which the periods prescribed 40. Those traders entitled to take advantage for processing expired. of the opportunity of release (or better, the opportunity to convert, since release is linked to the obligation to take an increased amount) are clearly and unmistakably iden- tified, and are exclusively those who were Costs awarded contracts under invitations to tender Nos 76 to 81. 1 4 The requirement of an application under Article 1 of Regulation N o 2661/85 can be equally applicable for 43. Since the reference for a preliminary all concerned only since the entry into force ruling is, in so far as the parties to the main of Regulation N o 2661/85. proceedings are concerned, in the nature of a step in the proceedings before the national 13 — Second recital in the preamble to the regulation, emphasis court, the decision on costs is a matter for added by the present writer; the wording of the regulation in the Romance languages of the Community and in that court. The costs incurred by the Dutch corresponds to that in the German text and therefore does not give rise to any divergent interpretation. Commission are not recoverable. Likewise, the slightly different wording in the English text does not result in any different meaning. 14 — See Article 1 of Regulation (EEC) No 2661/85. 15 — See Article 2(2) of Regulation (EEC) No 1932/81.