C-296/93

JUDGMENT OF 29. 2. 1996 — JOINED CASES C-296/93 AND C-307/93

J U D G M E N T O F T H E C O U R T (Fifth Chamber) 29 February 1996 *

In Joined Cases C-296/93 and C-307/93,

French Republic, represented by Philippe Pouzoulet, subsequently by Catherine de Salins, both Assistant Directors in the Legal Directorate of the Ministry of For- eign Affairs, and Jean-Louis Falconi, Foreign Affairs Secretary in the same minis- try, acting as Agents, with an address for service in Luxembourg at the French Embassy, 9 Boulevard du Prince Henri,

applicant,

v

FRANCE AND IRELAND v COMMISSION

address for service in Luxembourg at the British Embassy, 14 Boulevard Roosevelt,

intervener,

and

Ireland, represented by Michael A. Buckley, Chief State Solicitor, acting as Agent, and by James O'Reilly SC and Richard Law Nesbitt, Barrister-at-Law, with an address for service in Luxembourg at the Irish Embassy, 28 Route d'Arlon,

applicant,

I-829

JUDGMENT OF 29. 2. 1996 — JOINED CASES C-296/93 AND C-307/93

A P P L I C A T I O N S for the annulment of Commission Regulation (EEC) N o 685/93 of 24 March 1993 amending Regulation (EEC) N o 859/89 laying down detailed rules for the application of general and special intervention measures in the beef and veal sector (OJ 1993 L 73, p. 9),

T H E C O U R T (Fifth Chamber),

composed of: D . A. O . Edward, President of the Chamber, J.-P Puissochet, J. C. Moitinho de Almeida (Rapporteur), C. Gulmann and L. Sevón, Judges,

Advocate General: C. O . Lenz, Registrar: D . Louterman-Hubeau, Principal Administrator,

I-830

FRANCE AND IRELAND v COMMISSION

paragraph of Article 173 of the EEC Treaty for annulment of Commission Regu- lation (EEC) N o 685/93 of 24 March 1993 amending Regulation (EEC) N o 859/89 laying down detailed rules for the application of general and special intervention measures in the beef and veal sector (OJ 1993 L 73, p. 9).

2 By two orders of 16 July 1993, the President of the Court dismissed applications for suspension of the operation of the contested regulation which the applicant Governments in the two main actions had lodged under Article 185 of the EEC Treaty.

3 By order of 22 March 1995, the two cases were joined for the purposes of the oral procedure and the judgment.

4 The common organization of the market in beef and veal was established by Regu- lation (EEC) N o 805/68 of the Council of 27 June 1968 on the common organi- zation of the market in beef and veal (OJ, English Special Edition 1968 (I), p . 187).

2. The intervention measures specified in paragraph 1 may be taken for adult bovine animals and for fresh or chilled meat of such animals presented in the form of carcases, half-carcases, compensated quarters, forequarters or hindquarters, clas- sified in accordance with the Community classification scale provided for in Regu- lation (EEC) N o 1208/81.

3. The Council, acting in accordance with the voting procedure laid down in Arti- cle 43(2) of the Treaty on a proposal from the Commission, may amend the list of products in paragraph 2 which may be the subject of intervention measures.'

6 Article 6 of the same regulation, as amended by Council Regulation (EEC) N o 2066/92 of 30 June 1992 amending Regulation (EEC) N o 805/68 and repealing Regulation (EEC) N o 468/87 laying down general rules applying to the special premium for beef producers and Regulation (EEC) N o 1357/80 introducing a sys- tem of premiums for maintaining suckler cows (OJ 1992 L 215, p. 49), provides as follows:

' 1 . Where the conditions laid down in paragraph 2 are met, buying-in by interven- tion agencies in one or more Member States or in a region of a Member State of one or more categories, qualities or quality groups, to be determined, of fresh or chilled meat falling within C N codes 0201 10 and 0201 20 11 to 0201 20 59 and originating in the Community may be organized under tender procedures arranged with a view to ensuring reasonable support of the market, having regard to sea- sonal developments as regards slaughterings.

I-832

FRANCE AND IRELAND v COMMISSION

2. For each quality or quality group that may be bought in, the tender procedures may be opened as provided in paragraph 8 whenever, in a Member State or in a region of a Member State, the following two conditions are both met for a period of two consecutive weeks:

— the average Community grading market price recorded on the basis of the Community scale for the carcases of adult bovine animals is less than 84% of the intervention price,

— the average market price recorded on the basis of the said scale in the Member State or States or regions of a Member State is less than 80% of the interven- tion price.

The intervention price shall be set before the start of each marketing year in accordance with the procedure laid down in Article 43(2) of the Treaty.

I-833

JUDGMENT OF 29. 2. 1996-JOINED CASES C-296/93 AND C-307/93

5. O n l y offers equal to or less than the average market price recorded in a Member State or a region of a Member State and increased by an amount to be determined

I-834

FRANCE AND IRELAND v COMMISSION

on the basis of objective criteria may be accepted under the buying-in systems referred to in paragraphs 1 and 4.

6. For each quality or quality group eligible for intervention, the buying-in prices and the quantities accepted for intervention shall be determined under tender pro- cedures and may, in special circumstances, be fixed by a Member State or a region of a Member State on the basis of recorded average market prices. The tender pro- cedures must ensure equality of access for all persons concerned. They shall be opened on the basis of specifications to be determined taking commercial struc- tures into account, where necessary.

7. Under the procedure provided for in Article 27:

I-835

JUDGMENT OF 29. 2. 1996-JOINED CASES C-296/93 AND C-307/93

The Commission shall decide on:

— opening intervention as referred to in paragraph 4 and suspending it where one or more conditions laid down in that paragraph no longer apply,

— suspending buying-in as referred to in the first indent of paragraph 3.'

7 Commission Regulation (EEC) N o 859/89 of 29 March 1989 (OJ 1989 L 91, p. 5), enacted pursuant to, in particular, Article 6(7) of Regulation N o 805/68, lays down detailed rules for the application of intervention measures in the beef and veal sec- tor.

FRANCE AND IRELAND v COMMISSION

9 Regulation N o 859/89 was repealed by Commission Regulation (EEC) N o 2456/93 of 1 September 1993 laying down detailed rules for the application of Council Regulation (EEC) N o 805/68 as regards the general and special interven- tion measures for beef (OJ 1993 L 225, p. 4). The contested measure now appears in Article 4(2)(h) of Regulation N o 2456/93.

io In support of their applications, the French and Irish Governments claim that the Commission was not competent to adopt the regulation in issue and that the prin- ciples of proportionality and the protection of legitimate expectation were not observed. The Irish Government further claims that the Commission infringed the right to property, misused its powers and failed to observe substantive procedural requirements.

Lack of competence of the Commission

u The French and Irish Governments submit, first, that Article 6(7) of Regulation N o 805/68, as amended by Regulation N o 2066/92, does not empower the Com- mission to limit the weight of carcases eligible for intervention and that the Com- mission has therefore infringed that provision.

1 2 In their view, the imposition of such a criterion is not within the power of the Commission under the first indent of Article 6(7) to determine the 'categories, qualities or quality groups' of products eligible for intervention. According to the Community grading scale for carcases of adult bovine animals laid down by Coun- cil Regulation (EEC) N o 1208/81 of 28 April 1981 (OJ 1981 L 123, p. 3), to which reference is made in Article 5(2) of Regulation N o 805/68, as amended, which determines the general framework for intervention measures, the term 'category' refers to the sex and age of the animal, whereas the 'quality' of the meat is defined by reference to two criteria: the conformation of the carcase and its degree of fat

is Finally, in the Irish Government's submission, the Commission also acted in breach of Article 155 of the E E C Treaty. By introducing the contested condition, the Commission exceeded its powers and thus failed to ensure, as required by the first indent of Article 155, that the relevant Council legislation was correctly applied. The Commission also failed to exercise the powers conferred on it by the Council for the implementation of the rules laid down by the Council, contrary to the obligation laid down in the fourth indent of Article 155 of the Treaty.

I - 838

FRANCE AND IRELAND v COMMISSION

i6 Those arguments cannot be accepted.

i7 Under Article 6(7) of Regulation N o 805/68, as amended, the Commission is responsible for adopting, under the 'Management Committee' procedure described in Article 27 thereof, the measures necessary for the implementation of the inter- vention mechanism with which Article 6 is concerned. Whereas the first four indents of Article 6(7) make provision for specific kinds of action, the two follow- ing indents delegate to the Commission, in general terms, such powers as are nec- essary to attain the objectives mentioned in the article, and in particular 'to prevent market prices spiralling downward'.

ie A measure limiting the weight of carcases eligible for intervention cannot be regarded as a basic element of the matter to be dealt with and thus one which must be adopted by the Council in accordance with the procedure in Article 43 of the EEC Treaty (see, inter alia, Case 25/70 Einfuhr-und Vorratsstelle für Getreide und Futtermittel v Koster [1970] ECR 1161, paragraph 6). Albeit such a measure may lead to a reorientation of beef and veal production, its aim is to implement in the most appropriate way the intervention mechanism laid down by the Council in order to deal with the structural imbalance which, as is noted in the first recital in the preamble to Regulation N o 2066/92, exists between supply and demand on the Community market for beef and veal.

22 Finally, since in the sphere of the common agricultural policy the Commission alone is able to monitor continually and closely trends on the agricultural markets and to act with urgency if the situation requires, the Council may find it necessary to confer on the Commission wide implementing powers (see, in particular, Case 23/75 Rey Soda v Cassa Conguaglio Zucchero [1975] E C R 1279, paragraph 11). Wide powers of implementation are all the more justified in the present case in that they must be exercised in accordance with the 'Management Committee' pro- cedure, which allows the Council to reserve its right to intervene (Rey Soda, para- graph 13).

23 Since it could validly adopt the contested measure, the Commission did not act in breach of Article 155 of the Treaty.

I - 840

FRANCE AND IRELAND v COMMISSION

24 The plea that the Commission lacked competence and acted in breach of Article 6(7) of Regulation N o 805/68 must therefore be dismissed.

Breach of the principle of proportionality

application of reduction coefficients (Article 11(3) of Regulation N o 859/89), the reduction of buying-in prices, fixed by the Commission (third indent of Article 6(7) of Regulation N o 805/68, as amended) or the exclusion from intervention of certain qualities or categories of carcases (first indent of Article 6(7) of Regulation N o 805/68, as amended).

29 Finally, the Irish Government states that the application of a 340-kg limit on car- cases eligible for intervention only 12 months after those measures were adopted will exclude 6 1 % of Irish steers from buying-in, a further manifest breach of the principle of proportionality.

30 The Court has stated (see, in particular, Joined Cases C-133/93, C-300/93 and C-362/93 Crispoltoni and Others v Fattoria Autonoma Tabacchi and Donatai? [1994] ECR 1-4863, paragraph 41) that the principle of proportionality, which is one of the general principles of Community law, requires that measures adopted by Community institutions do not exceed the limits of what is appropriate and necessary in order to attain the objectives legitimately pursued by the legislation in question; when there is a choice between several appropriate measures, recourse must be had to the least onerous, and the disadvantages caused must not be dis- proportionate to the aims pursued.

3i The Court has also held (see, inter alia, Case 29/77 Roquette Frères v Administra- tion des Douanes [1977] E C R 1835, paragraphs 19 and 20) that where the evalua- tion of a complex economic situation is involved, the Commission and the Man- agement Committee enjoy a wide measure of discretion. In reviewing the legality of the exercise of such discretion, the Court must confine itself to examining whether it discloses manifest error or constitutes misuse of power or a clear dis- regard of the limits of its discretion o n the part of that institution.

36 It is clear from the preamble to the contested regulation that its aims are to reduce overproduction of beef and veal in order to limit buying-in under Article 6(1) of Regulation N o 805/68, as amended. The Commission is thereby also seeking, as it has pointed out in the present proceedings, to signal to producers of heavier

I-843

JUDGMENT OF 29. 2. 1996 — JOINED CASES C-296/93 AND C-307/93

carcases that they should slaughter steers earlier and, in the long term, orient their farming toward lighter breeds.

37 The weight limit on carcases eligible for intervention introduced by Regulation N o 685/93 cannot be held to be manifestly unsuited to those aims.

38 As the Advocate General has shown in points 93 to 96 of his Opinion, that meas- ure is such as to reduce the overall quantity of meat sold to intervention without thereby giving rise, as the Irish Government claims, to a fall in beef and veal prices due to carcases no longer eligible for intervention coming on to the market.

« Secondly, as regards the possibility of progressively reducing buying-in prices with a view to discouraging quantities from being sold into intervention, the Commis- sion could, without manifest error of assessment, reasonably consider that such a measure necessarily entailed, in the event of huge quantities being sold into inter- vention, a considerable drop in market prices for beef and veal.

« Thirdly, as regards the possibility, provided for in the first indent of Article 6(7) of Regulation N o 805/68, as amended, of excluding certain categories and qualities of beef and veal from intervention, it suffices to point out that it has not been estab- lished that the effects of such a measure would be manifestly less restrictive than those of applying the contested measure.

44 Furthermore, the contested weight limit on carcases applies neither to the 'safety- net' intervention measures set up by Article 6(4) of Regulation N o 805/68, as amended, nor to private storage aid, for which general rules were laid down by Regulation (EEC) N o 989/68 of the Council of 15 July 1968 (OJ, English Special Edition 1968 (I), p. 264), so that any harmful effects which might ensue for the producers concerned from the application of the contested regulation could, where necessary, be alleviated by those measures.

I-845

JUDGMENT OF 29. 2. 1996 —JOINED CASES C-296/93 AND C-307/93

45 The plea of breach of the principle of proportionality must therefore be dismissed.

I-846

FRANCE AND IRELAND v COMMISSION

during the year prior to the introduction of the amendment in question. In the present case, however, the Commission did not provide for any transitional measures enabling Ireland to cope with a weight limit excluding approximately 148 000 tonnes of beef and veal from intervention, although in Denmark's case the exclusion concerned only 25 000 tonnes of meat.

•9 The Court has consistently held that the prohibition of discrimination laid down in Article 40(3) of the E E C Treaty is only a specific expression of the general prin- ciple of equality in Community law, which requires that comparable situations must not be treated differently and different situations must not be treated in the same way unless such treatment is objectively justified (see, inter alia, Case C-56/94 SCAC v ASIPO [1995] ECR 1-1769, paragraph 27).

so As noted above, the weight limit on carcases eligible for buying-in seeks to ensure stability on the market for beef and veal, thereby pursuing one of the objectives of the common agricultural policy, set out in Article 39(l)(c) of the E E C Treaty. In the pursuit of that objective all Community producers, regardless of the Member State in which they are based, must, together and in equal measure, bear the con- sequences of the decisions which the Community institutions are led to adopt in exercise of their powers in order to respond to the risk of an imbalance which may arise in the market between production and market outlets (see, inter alia, Case 203/86 Spain v Council [1988] ECR 4563, paragraph 29, and Crispoltoni and Oth- ers, cited above, paragraph 52).

Breach of the principle of the protection of legitimate expectation

54 In the Irish Government's view, the contested measure also fails to observe the principle of the protection of legitimate expectation. Irish beef and veal producers could legitimately expect the buying-in regime to continue to apply to heavier car- cases, inasmuch as Regulation N o 2066/92, which made radical changes to the sys- tem of premiums in the beef and veal sector, brought in special provisions intended specifically to encourage the rearing of heavier breeds.

55 In any event, it adds, a sudden reform such as that effected by the contested regu- lation, which is likely to be interpreted by producers as calling for the production of animals of a different type, is not acceptable unless their rights are respected, which is not the case here.

I-848

FRANCE AND IRELAND v COMMISSION

56 The Irish Government explains that the composition of the national herd has changed, with a move from traditional breeds to continental breeds, in order to provide a product more acceptable to continental taste and marketing require- ments. The decrease in the number of dairy cows, resulting in particular from the introduction of new Community milk levies and the placing of a ceiling on Com- munity milk production, has been accompanied by an increase in the number of suckler cows, most of which are bred to continental bulls and a quarter of which are themselves continental crosses. The changeover from early maturing to conti- nental type cattle and the concomitant improvement in productivity and quality have inevitably been accompanied by an increase in average carcase weights.

>o In the present case, therefore, beef and veal producers cannot justifiably claim to have entertained a legitimate expectation that the buying-in mechanism would remain unchanged.

ÎI That is all the more so in view of the provision made in the contested regulation for gradually limiting the weight of meat eligible for intervention in order, in par- ticular, as is stressed in the second recital in the preamble, to enable producers to adapt their output gradually.

62 The plea that no account was taken of the principle of legitimate expectation must therefore be dismissed.

Infringement of the right to property

63 The Irish Government argues that the contested regulation infringes the right to property in that the beef and veal producers concerned by the weight limit in issue are deprived of the fruits of their labour.

64 The short answer to that argument is that the contested measure does not entail any restriction on the exercise of the right to property guaranteed in the Commu- nity legal order. Its only effect is that the producers concerned may no longer count on intervention as an outlet for meat from carcases of the kind with which

67 The Court has held (see, inter alia. Case C-156/93 Parliament v Commission [1995] E C R 1-2019, paragraph 31) that adoption by a Community institution of a measure with 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 constitutes misuse of power.

68 A s r e g a r d s the r e q u i r e m e n t for t h e aim stated and t h e aim p u r s u e d t o be t h e same, the Irish Government has not put forward any evidence proving that the Commis- sion has pursued an aim other than those stated.

69 As regards the requirement not to evade specifically prescribed procedures, it is clear from paragraphs 17 to 22 of this judgment that the Commission could

I-851

JUDGMENT OF 29. 2. 1996 —JOINED CASES C-296/93 AND C-307/93

properly adopt the contested regulation by the 'Management Committee' pro- cedure provided for in Article 27 of Regulation N o 805/68, to which Article 6(7) of the contested regulation refers.

73 In this case, the reasons which led the Commission to adopt the contested measure are clearly stated in the preamble to Regulation N o 685/93.

74 The first recital starts with the observation that the beef and veal sector continues to be characterized by a major imbalance between supply and demand entailing massive official intervention expenditure. As a result, the progressive reduction in buying-in referred to in Article 6(1) of Regulation N o 805/68, as amended, could be achieved by means of the tender procedure only by using higher and higher reduction coefficients on tenders or by the gradual reduction of buying-in prices. In the Commission's view, such a trend risks leading to a downward spiral in mar- ket prices, to the detriment of beef and veal producers.

75 In the second recital, the Commission explains that the experience of the past few years has shown that overproduction results mainly from an increase in the weight of beef and veal carcases made possible in particular by genetic progress. Fre- quently, there is no market demand for these heavier carcases and this development ultimately encourages production intended for official intervention. The Commis- sion therefore considers it appropriate to limit the weight of carcases which may be bought in and to do so gradually in order to maintain the legitimate confidence of producers and enable them to adapt their output gradually.

76 As regards the arguments concerning alleged errors of assessment in those recitals, the Court has held that such questions relate not to the issue of infringement of essential procedural requirements but to the substance of the case (see, in that regard, Case 49/69 BASF v Commission [1972] ECR 713, paragraph 14). The argu- ments have been examined in relation to the pleas of breach of the principle of proportionality and breach of the principle of protecting legitimate expectation.

O n those grounds,

T H E C O U R T (Fifth Chamber)

hereby:

1. Dismisses the applications;

I-854

FRANCE AND IRELAND v COMMISSION

Registrar President of the Fifth Chamber

I-855