C-248/89

CARGILL v COMMISSION

O P I N I O N OF MR ADVOCATE GENERAL M I S C H O delivered on 21 March 1991 *

Mr President, adopted Regulation (EEC) No 756/85 2 Members of the Court, suspending advance fixing of the subsidy.

1. In Case C-248/89, Cargill BV (here- inafter 'Cargill') has brought a direct action 5. The same national court had already seeking the annulment of Commission made a reference to the Court, which, in its Regulation (EEC) No 1358/89 of 18 May judgment in Case 201/87 Cargill [(1989] 1989 amending Regulation (EEC) No ECR 489), ruled as follows: 735/85 fixing the amount of the subsidy on oil seeds (Official Journal 1989 L 135, p. 22). The admissibility of the action is not disputed nor is it open to dispute.

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OPINION OF MR MISCHO — CASE C-248/89

'If the situation on the Community seed 9. The dispute pending before the national market is abnormal, and in particular if the court is still concerned with the obligation volume of applications for advance fixing of for the national body to issue to Cargill the subsidy does not appear to be related to with retroactive effect the advance-fixing normal outlets for seeds harvested in the certificates applied for on 22 March 1985 Community, it may be decided, if the and to pay it the subsidy at the level certificate referred to in Article 4 has not specified in the annexes to Regulation No yet been issued, to alter the amount of the 735/85. subsidy and to suspend the advance fixing of this amount, to the extent necessary to restore the balance between the Community market and the world market.' 10. I consider it appropriate to deal first of all with the question of the validity of Regu- lation No 735/85 (the second question submitted for a ruling), and then to address the question of the validity of Regulation 7. The Court considered that Regulation N o 1358/89. That approach is based on the No 756/85 was invalid for the following concern to observe the chronological order reasons: of events and on the fact that the validity of Regulation No 1358/89 may depend, at least in part, on the possible invalidity of Regulation No 735/85. '. . . the Commission could validly decide to suspend advance fixing only if there was in fact an abnormal situation on the Community market in oil seeds' (paragraph The validity of Regulation No 735/85 17);

13. It is important to bear in mind here that 4. Where seeds are harvested in one Article 33 of Commission Regulation (EEC) Member State and processed in another, the No 2681/83 of 21 September 1983 laying subsidy to be granted shall be equal to the down detailed rules for the application of final subsidy expressed in the currency of the subsidy system for oil seeds (Official the producing Member State as referred to Journal 1983 L 266, p. 1), as amended by in paragraph 2, converted into the currency Commission Regulation (EEC) No 1814/84 of the processing Member State on the basis of 28 June 1984 (Official Journal 1984 L of the bilateral rate derived from the 170, p. 44), imposes the following obli- exchange rates referred to in paragraph 3. gations on the Commission:

'2. The Commission shall publish in the " L " series of the Official Journal of the European The exchange rates to be used shall Communities as soon as they are fixed: be . . . those valid . . . '

15. I can thus begin by assuming that that 'As regards the spot rates for the ECU, the subsidy was in conformity with Article 27(1) figures published on 21 and 22 March in the of the basic regulation, which is worded as " C " Series of the Official Journal of the follows : ¡c European Communities 6 unambiguously highlight the manifest error contained in Annex III to Regulation No 735/85. The rate for converting the ECU into French francs as published, and therefore as known 'Where the target price in force for a species to every trader in the Community, was in of seed is higher than the world market the region of FF 6, 82 per ECU, while the price for that seed determined in accordance rate set out in Annex III was FF 6, 02; in with the provisions of Article 29, a subsidy other words there was an error of more shall be granted for seed of that species than 10%. The loss claimed by Cargill harvested and processed within the follows directly and exclusively from this Community. Subject to exceptions . .. this manifest error in the rate for converting the subsidy shall be equal to the difference ECU into French francs, since the amounts between these prices.' of the subsidy fixed in Annex II were correct. In accordance with the first subparagraph of Article 33(4) of Regulation 2681/83, the amount of the subsidy resulting from the application of that incorrect rate amounts to: 16. On the other hand, when the seed is harvested in one Member State and processed in another Member State, reference is made to the exchange rates established in accordance with Article 33(3) and (4), and published in Annex III to the regulations fixing the amount of the FF 120,69, or HFL 52,04, per 100 kg subsidies. When these rates are fixed incor- (120,69: 6,025 x 2,598150 = 52,04), while rectly, the subsidy obtained by the trader no the application of the correct rate entitles it longer corresponds to the difference to a subsidy of: between the target price and the world market price, and Article 27(1) of the basic regulation is infringed.

19. The Commission adds that, for a firm 23. In that regard, it is appropriate to point such as Cargill, that difference must have out that, in Annex III to the regulation been almost equivalent to the cost of which had immediately preceded Regulation processing the seed in question. Annex III to No 735/85, namely Regulation No 672/85 Regulation No 735/85 was therefore (Official Journal 1985 L 74, p. 79), the spot unlawful and its application would conse- rate for the French franc in relation to the quently have led to subsidies which were ECU had been fixed at 6,799470. The themselves illegal. difference between this rate and the incorrect rate set out in Regulation No 735/85, namely 6,025450, could only be explained if, in the meantime, the French franc had been devalued by approximately 11%. That would have been a 'competitive 20. However, Cargill also claims that even devaluation', much greater than all those if Regulation No 735/85 was invalid, that which had occurred in the course of would be of no consequence in the previous monetary movements. All the proceedings before the national court, since agents of Cargill responsible for making a public authority (here, the Produktschap) purchases and sales must have known that may not rely on the invalidity of rules which there had been no such devaluation of the it has adopted itself or, where appropriate, French franc, or even a lesser devaluation, of rules which are applicable to it, as against since the previous week. It could thus not a person who is asking the authority to have escaped them that Annex III to Regu- comply with those rules. That line of lation No 735/85 contained significant reasoning obviously cannot be accepted, errors, and that its application must neces- since a regulation is necessarily invalid erga sarily have led to the grant of amounts of omties. the subsidy which were incompatible with the criteria laid down by the Community rules relating to that sector. Furthermore, the Commission stated that the represen- tatives of several firms, including an employee of Cargill-Amsterdam, had tele- 21. As far as the second question submitted phoned to point out the errors and to ask it by the College van Beroep is concerned, what action it was proposing to take. In view of the situation, certain other firms therefore, I have come to the conclusion seem to have refrained from applying for an that Annex III to Regulation No 735/85 is advance-fixing certificate on 22 March 1985 invalid and that it cannot therefore and those which did apply appear not to constitute a basis for granting the subsidy have instituted proceedings when they failed applied for by the plaintiff, which would in to receive one. fact have involved the use of the exchange rates set out in that annex.

25. In my view, it follows from the each occasion, MVO publishes a summary foregoing that the serious defects in Annex of the "amounts of net subsidies in the III were so obvious to any trader as to rule Netherlands" calculated by MVO on the out the possibility that any company could basis of the rates of the subsidy and the have been led to rely on the lawfulness of exchange rates referred to in the Official that measure. Journal. Those who carry out accounting tasks rely on that summary. The amounts of the subsidies mentioned in that summary regularly fluctuate to a substantial extent. The amount of the subsidy in HFL published on 22 March 1985 was considerably higher than the amount 26. In addition, every commercial company previously applicable. However, the must have known that the submission of an difference was by no means dramatic or application for an advance-fixing certificate exceptional'. does not of itself confer the right to the subsidy: that right arises only upon the issue of the certificate. Furthermore, the rules expressly provide for the possibility of suspending advance fixing. Thus, no prudent, sensible trader will conclude 28. In that regard, in must be borne in mind contracts of purchase or sale before actually that according to the case-law traders must obtaining the advance-fixing certificate not rely on certain documents, such as the applied for. He will refrain from doing so a customs tariff manual in use in Germany, fortiori where the published rates for the which are published in certain Member ECU are indicative of a massive devaluation States, but are supposed to verify the infor- when none has been reported. mation set out therein by comparing it with that in the Official Journal. 7

31. In its the direct action, Cargill seeks the annulment of Regulation No 1358/89. Furthermore, the first question submitted by 35. It should first of all be borne in mind the College van Beroep is worded as that the first two paragraphs of the new follows : version of Article 8 are worded as follows: 8

'Is Commission Regulation (EEC) No '1. In the case of an abnormal situation 1358/89 of 18 May 1989 invalid in the light which results or could result in a of the considerations set out in this disturbance on the Community market for judgment?' oil seeds, it may be decided to suspend the advance fixing of the subsidy for the period necessary to re-establish the balance in the market. 32. Cargill puts forward three submissions challenging the validity of that regulation, namely infringement of Article 8 of Regu- lation No 1594/83, misuse of powers and infringement of the principles of legal 2. The suspension referred to in paragraph certainty and protection of legitimate expec- 1 may be extended to the advance-fixing tations. parts of the certificate referred to in Article 4 which have been requested and have not yet been issued in the case:

Infringement of Article 8 of Regulation No 1594/83 (a) where there is a material error in the amount of the subsidy which is 33. So far as concerns the arguments put published; forward by Cargill in support of this alle- gation, I would refer to the Report for the Hearing relating to the reference for a preliminary ruling (Case C-365/89, II, (b) where certain factors may create a Question 1, paragraph 1). monetary distortion between Member States;

39. Accordingly, the argument concerning 36. Accordingly, it follows from that the infringement of Article 8 of Regulation provision that, if there is a material error in No 1594/83 cannot be upheld. the amount of the subsidy and if certain other conditions are satisfied, suspension of advance fixing may be extended to certificates applied for and not yet issued. Does this also mean that the Commission is Misuse of powers never entitled to rectify a material error, in particular when the error does not concern the amount of the subsidy as such, but the exchange rates of the ECU published in Annex III? 40. In the second place, Cargill charges the Commission with seeking to maintain, by adopting Regulation No 1358/89, the legal situation which it had created by Regulation No 756/85. In its view, there is absolutely 37. I do not think so. Let me point out first no basis on which the Commission can now of all that the three tables annexed to the attain, by other means, the same result as regulation at issue contain a column headed that which it had sought to attain by the 'Current month' which establishes the regulation suspending advance fixing, which subsidy to be granted or the exchange rate was declared invalid. The conduct of the of the ECU to be used on that same day, Commission thus constitutes nothing other that is in cases where no advance fixing is than an attempt to deprive the judgment of applied for. The suspension of advance the Court in Case 201/87 of its effec- fixing cannot in any circumstances tiveness; hence the Commission is guilty of compensate for the adverse consequences a misuse of powers, as a result of which arising from an error affecting the columns Regulation No 1358/89 is null and void. headed 'Current month'.

to a misuse of powers only if it appears, on lation No 1358/89. In other words, there the basis of objective, relevant and was no difference between the 'ends stated' consistent factors, to have been taken with and the ends actually pursued. the exclusive purpose, or at any rate the main purpose, of achieving an end other than that stated or evading a procedure specifically prescribed by the Treaty for dealing with the circumstances of the case' 45. The question remains whether the (paragraph 24). Commission sought to evade 'a procedure specifically prescribed by the Treaty for dealing with the circumstances of the case' or, in the present case, a procedure speci- fically prescribed by the regulations 42. Let us consider, in the first place, applicable in that sector. In that regard, whether the ends pursued by Regulation No there is no doubt that the Commission 1358/89 are different from those stated. sought to attain, by altering the exchange rates of the ECU, the same end as that which it had pursued by the suspension of advance fixing, namely preventing traders 43. The ends stated are those set down in from being able to obtain a higher subsidy the preamble to that regulation, where the than that to which they were entitled. reasoning is essentially as follows: a substantive error in the conversion rates for the ECU, contained in Annex III to Regu- lation No 735/85, would have led to the granting to certain traders of excessively 46. However, it is untrue to say that in so high subsidies; in order to prevent that doing it deprived the judgment of the Court improper and discriminatory advantage, the in Case 201/87 of its effectiveness. In that Commission adopted the following day judgment, the Court criticized only the Regulation No 756/85 suspending advance measure suspending advance fixing. That fixing and Regulation No 755/85 fixing the measure is and remains null and void. On correct conversion rates; 9 as the latter regu- the other hand, the Court did not rule on lation did not enter into force until 23 the validity or otherwise of Regulation No March 1985, and as Regulation No 756/85 735/85, because that question had not been raised by the national court. The was annulled by the Court, it was necessary Commission was thus entitled to consider to re-establish the correct conversion rates that regulation as (in part) invalid and to for applications lodged on 22 March 1985, make use of the second means available to once again in order to prevent certain it, namely amendment of the measure with traders from obtaining an unwarranted retroactive effect or withdrawal of part of subsidy. the measure and replacement thereof, in order to remedy the defect.

with retroactive effect while taking care not measure to specify a date prior to its publi- to frustrate the legitimate expectations of cation as the date on which it is to take those concerned. effect. It may exceptionally be otherwise where the purpose to be achieved so demands and where the legitimate expec- tations of those concerned are duly 48. The Commission could, moreover, have respected'. 10 given Regulation No 755/85 of 22 March 1985, which rectified Annex III as from 23 March 1985, retroactive effect by one day. The reason why it did not do so remains a 52. In those circumstances, however, mystery. At all events, the fact that it first made use of the possibility of suspending advance fixing did not deprive it of the right to correct the error. By availing itself of the 'decisions having such effect must include in second possibility after the first had proved the statement of the reasons on which they to be ineffectual, following the Court's are based particulars which justify the judgment, the Commission did not 'evade a desired retroactive effect'. 11 procedure', but simply had recourse to another means available to it for the attainment of a lawful purpose. 53. In the preamble to Regulation No 1358/89, the Commission specifically indicated the reasons which led it to confer 49. That brings me to the conclusion that retroactive effect on that regulation. Those the allegation of a misuse of powers must be reasons, namely the need to prevent the rejected. grant of an improper advantage, are entirely convincing.

Infringement of the principle of legal certainty 54. As for the second condition laid down by the Court in the aforesaid case-law, namely fulfilment of the legitimate expec- tations of those concerned, I have already 50. Cargill also disputes the validity of the explained, above, the reasons for which I regulation on the ground that, by taking consider that Cargill cannot have considered effect retroactively, it infringes the principle in good faith that the figures set out in of legal certainty. Annex III to Regulation No 735/85 were correct.

55. There are also grounds for taking the action arose only after the judgment of the view, as the Commission does, that the Court in the first Cargill Case 201/87. It case-law of the Court which is applicable in had, first of all, taken account of the possi- the instant case is that concerning the with- bility, indirectly suggested by the Court drawal of measures, even though that moreover, that the Netherlands court might case-law concerns the withdrawal of admin- submit a further question for a preliminary istrative measures (which are of individual ruling, this time on the validity of Regu- application), and not the withdrawal of lation No 735/85. Since a second reference measures of general application. It follows on that point was not made forthwith, the that Commission itself drew the appropriate conclusions from the judgment declaring that the regulation suspending advance fixing was invalid, and from the error made in connection with the adoption of Regu- 'the withdrawal of an unlawful measure is lation No 735/85, by adopting Regulation permissible, provided that the withdrawal No 1358/89 on 18 May 1989. In the light occurs within a reasonable time and of those circumstances, I am of the opinion provided that the Commission has had that the period to be taken into sufficient regard to how far the applicant consideration is not that which elapsed might have been led to rely on the between Regulations No 735/85 and No lawfulness of the measure'. 12 1358/89, but the period of slightly less than three months — and therefore of an entirely reasonable duration — separating the adoption of the latter regulation from the 56. I would remind the Court that I have judgment of the Court. already come to the conclusion that Annex III to Regulation No 735/85 is invalid. Accordingly, we are indeed dealing with the withdrawal of an unlawful measure. 59. Finally, a word concerning Cargill's argument according to which the Commission was wrong to refer, in the final 57. Cargill asserts that, by not withdrawing recital in the preamble to the regulation at the regulation until four years after it was issue, to the need to prevent traders whose adopted, the Commission has failed to applications for advance-fixing certificates comply with the criterion of a 'reasonable for the subsidy had been suspended period'. pursuant to Regulation No 756/85 from being able to obtain a subsidy which was unwarranted and 'discriminatory with respect to the other operators'.

61. There is a possibility, in theory, that certain traders may have been able to obtain an unwarranted 'subsidy of the day', raising the question of the recovery of undue payments. However, those do not constitute sufficient grounds for extending the same The ancillary claims brought before the improper advantage to a firm which had national court applied for advance fixing in respect of the relatively large quantity of 10 000 tonnes. The Commission has emphasized, moreover — without being contra- dicted— that the subsidy for oil seeds is usually applied for by means of advance fixing. 64. Since, in the proceedings before the national court, Cargill applied for damages together with default interest, the national court has submitted a third question, in two parts, on whether it is for the Court of 62. The Commission has also explained that Justice or the national court to adjudicate the relevant passage in the final recital in on those claims. the preamble was intended to refer to traders who had refrained from applying for an advance-fixing certificate on March 22 1985 and had postponed their applications until the following day because of the errors contained in Regulation No 735/85. Those, to my mind, constitute 65. Both of those questions, however, are sufficient grounds for concluding that that based on the assumption that Regulation passage in the preamble to the regulation is No 1358/89 must be considered invalid. I not vitiated by a manifest error. have just proposed that the Court should come to the opposite conclusion, and I can scarcely imagine the Court doing otherwise.

68. In Case C-365/89, I propose that the Court answer the questions submitted by the College van Beroep voor het Bedrijfsleven as follows:

'(1) Examination of the question raised has not disclosed any factor of such a kind as to call in question the validity of Commission Regulation (EEC) N o 1358/89 of 18 May 1989.

(2) Annex III to Commission Regulation (EEC) No 735/85 of 21 March 1985 is invalid owing to an error in the exchange rate fixed therein, and it cannot therefore constitute a basis for granting the subsidy applied for by the plaintiff.

(3) In the light of the answers given to the first two questions, the third question has become devoid of purpose.'

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