C-285/94

OPINION OF MR RUIZ-JARABO COLOMER — CASE C-285/94

O P I N I O N O F ADVOCATE GENERAL RUIZ-JARABO C O L O M E R delivered on 5 N o v e m b e r 1996

1. In these proceedings the Italian Republic Italy, and therefore infringed the prin- seeks the annulment of Commission Regu- ciple of legal certainty. lation (EC) N o 1840/94 of 27 July 1994 fix- ing the olive yields and oil yields for the marketing year 1993/94 ' (hereinafter 'the Regulation').

— The Regulation does not state the grounds on which it is based, or states totally inappropriate grounds.

2. In essence the issue is whether, when fix- ing those yields, the Commission must rely on the figures supplied by the authorities of each Member State (as argued by the Italian — The Commission misused its powers in Government) or whether, on the contrary, it adopting the Regulation. may depart from them (as claimed by the Commission), as it did in the contested Regulation.

Legislative context

6. Under Article 5(2) of Regulation N o 136/66, 4 aid is granted to olive growers by one of two alternative methods:

(c) later annual regulations specify for each marketing year:

(a) on the basis of the quantity of olive oil actually produced;

— the forecast production and the aid which may be paid in advance;

(b) on the basis of certain yields fixed according to a flat rate. — the yield of olives and olive oil of each production zone from which the final production is derived.

7. The first method (actual production) applies to olive growers whose actual pro- duction was at least 500 kg of olive oil per 5. Regulation N o 136/66 introduced, among marketing year, that is to say, large produc- other measures, a subsidy intended to ensure ers.

3. N o t more than six months after the end of the marketing year, the following shall be ' 1 . The Commission shall determine the determined in respect of that year in accord- average olive yields and oil yields over the ance with the procedure referred to in para- graph 2:

5 — Article 2(4) of Council Regulation (EEC) N o 2261/84, as amended by Council Regulation (EEC) N o 3500/90 of 27 November 1990 (OJ 1990 L 338, p. 3) provides as follows: 'In the case of olive growers whose average production is at least 500 kilograms of oil per marketing year, the aid shall be granted in accordance with the first indent of Article 5(2) of — the quantity actually produced in respect Regulation N o 136/66/EEC in respect of the quantity of oil of which entitlement to aid has been rec- actually produced at an approved mill. în the case of other growers, the aid shall be granted in ognized, accordance with the second indent of Article 5(2) of Regu- lation N o 136/66/EEC and shall be equal to the amount obtained by applying the average olive yields and oil yields over the previous four marketing years, fixed according to a standard method in accordance with Article 18 of this Regu- lation, with regard to the number of olive trees in production and provided tne olives arc processed into oil at an approved mill.' — the unit amount of the production aid 6 — As amended by Regulation N o 3500/90 cited above. provided for under (b) in the fifth

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subparagraph of Article 5(1) of Regu- 12. Council Regulation (EEC) N o 2262/84 lation N o 136/66/EEC, payable to pro- of 17 July 1984 laying down special measures ducers whose average production is at in respect of olive o i l 7 was intended to least 500 kilograms per marketing year, ensure that the production aid scheme was applied correctly and in a uniform manner after experience had shown that the Member States' administrative structures were inade- quate to implement the controls provided for by the Community rules.

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with data on homogeneous production (e) the average oil production per 100 kilo- zones, taking account of: grams of olives.

— the geographical location and the agro- nomic characteristics of the terrain,

3. By 30 April each marketing year at the latest, Member States shall forward the data referred to in paragraph 2(b) to (e) together — the predominant varieties, the most com- with a short report on production conditions mon type of shape pruning and the age of in each zone during the marketing year. 9 the olive trees.

2. For each production zone, the data shall include at least the following: 4. For the purpose of establishing oil yields, producer Member States shall determine, at mills equipped in various ways and represen- tative of pressing capacity in the zone in question at various stages of the harvest, the (a) the geographical limits of the zone; olive-oil yield of each production zone.

15. Commission Regulation (EC) No 1187/94 of 26 May 1994 fixing the estimated production of olive oil and the amount of the unit production aid that may be paid in advance for the 1993/94 marketing year, 10 provided that for the said year: 17. In particular, with regard to the Italian yields, the preamble to the Regulation adds that 'the figures given in Annex I have been adjusted in relation to the information sup- plied by that Member State, in order to bring them into line with production estimated in the estimated production would be 1 283 000 Commission Regulation (EC) N o 1187/94'. tonnes,

18. It is precisely the result of that 'adjust- the unit amount of the production aid that ment' which is challenged by the applicant might be paid in advance would be: State because the Commission's figures reduce those proposed by the Italian authorities by approximately 30%. n

— E C U 51.02 per 100 kilograms for Spain and Portugal,

19. Determination of the average yields (in kilogrammes) of olives for each tree, and of kilogrammes of oil for each 100 kilogrammes of olives, in each of the specified homoge- — E C U 67.82 per 100 kilograms for the other Member States. 11 — The differences between Italy's proposal and the Reguládon relate to determination of the number of kilogrammes of olives obtained from each olive tree. The Commission thus maintained the figures for the olive oil for each 100 kg of 10 — OJ 1994 L 132, p. 4. olives.

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First plea in law: must the Commission necessarily abide by the figures supplied by the Member States? 22. The applicant Government adds that the national agencies or organizations (in Italy's case, Agecontrol Spa) work on the basis of a programme previously approved by the Commission, under the supervision of Com- 20. The first plea in law put forward by the mission officials and in accordance with its Italian Government in support of its applica- instructions: therefore it would be 'contrary tion is that, by virtue of the Community to the most fundamental principles of law rules which in its opinion are applicable (the and common sense' if the Commission were fourth indent of Article 155, of the EC able to disregard their data. Treaty, Article 18 of Regulation N o 2261/84, Article 12 of Regulation N o 3061/84 and Article 1 of Regulation N o 2262/84) and also by virtue of the principle of legal certainty, the Commission is not entitled to depart, as it did from the information supplied by each Member State for the purpose of fixing the average yields of olives and olive oil.

23. O n this point the Italian Government's reply discloses a significant shift of position: although not appearing to admit expressly in 21. It argues that, given that the Council has the original application that this was the case, imposed upon each Member State a duty to in its reply to the Commission's defence it set up a specific agency or organization 12 for acknowledges that the latter has a certain collecting, verifying and processing, at measure of discretion in fixing the average national level, the data required for ascertain- yields. At the hearing too the Italian Gov- ernment representative stated that he was not disputing the Commission's powers to fix 12 — Regulation No 2262/84 so provides. yields, but only the 'method' of doing so.

(i) Discretion of the Community institutions in the area of the Common Agricultural Policy and market organizations in region to information supplied by the Member States 29. For such purposes the Community insti- tutions enjoy a degree of latitude. In Case 138/79 1 5 the Court of Justice held that 'when the implementation by the Council of the agricultural policy of the Community involves the need to evaluate a complex economic situation, the discretion which it 26. The case-law of the Court of Justice has has does not apply exclusively to the nature upheld the Commission's power to adopt and scope of the measures to be taken, but implementing measures in the area of the Common Agricultural Policy and that power must be given a wide interpretation. 13 14 — Sec the Vreugdenhii judgment cited above, paragraph 16; also-Case 61/86 United Kingdom v Commission [1988] ECR 431, paragraph 7; Joined Cases 279/84, 280/84, 285/84 and 286/84 Walter Rau Lebensmittelwerke v Commission [1987] ECR 1069, paragraph 14, and Case C-478/93 Neth- 13 — Case 22/88 Vreugdenhil and another v Minister van Land- erlands v Commission [1995] ECR 1-3081, paragraph 30. bouw en Visserij [1989] ECR 2049, paragraph 16. 15 — Roquette Frères v Council [1979] ECR 3333.

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also to some extent to the finding of the Member States in the collection and trans- basic facts'. mission of information cannot prevent the Commission, which is required to ensure the daily management of the common organiza- tion of the markets, from checking the accu- racy of that information and revising it if there is a danger that the double counting of 30. More recently, in Case C-478/93, cited quantities may distort the basis of the import above, the Court confirmed that the Com- system'. l s mission may verify the accuracy of the infor- mation supplied by the Member States and correct it if necessary.

IS — Paragraph 37. 19 — The Court adds (paragraphs 38 to 40) that the finding that 16 — Sec Commission Regulation (EEC) N o 2920/93 of 22 the Commission has power to check and revise national October 1993 fixing the uniform reduction coefficient for data is not invalidated by the judgment in Joined Cases determining the quantities of bananas to be allocated to C-106/90, C-317/90 and C-129/91 Emerald Meats v Com- each operator in categories A and B in the context of the mission [1993] ECR 1-209, at paragraph 40 of which the tariff quota for the second half of 1993 (OJ 1993 L 264, Court held that the requirements of Community manage- P- 40). ment do not entail that the Commission ought necessarily 17 — Council Regulation (EEC) N o 404/93 of 13 February 1993 to be able to correct wrong decisions taken in specific cases on the common organization of the market in bananas (OJ by the national authorities in connection with management 1993 L 47, p. 1). of the quotas.

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(ii) Interpretation of the régulions in issue action by the Management Committee for Oils and Fats or by the Commission itself and each Member State would have been directly entrusted with definitive determina- tion of the yields.

35. As already mentioned, Article 18 of Regulation N o 2261/84 authorizes the Com- mission to fix the yields of olives and olive oil 'on the hasis of the figures supplied by the producer Member States'. 20 When consid- 38. Examination of the purpose of the provi- ered in the light of any of the usual methods sion leads to the same conclusion. Under the of judicial interpretation, that phrase does management of the common organization of not mean that the Commission is absolutely the market in oils and fats, which the Regu- bound by such figures and cannot therefore lation entrusts to the Commission in coop- depart from them. eration with the Member States, it is advis- able for the former to enjoy a degree of latitude when establishing variable data or factors which, by definition, are to determine the amount of aid to producers.

41. I do not share that view. O n the con- 44. In particular — and this is really the key trary, I consider that it is possible — and the point in the argument — the Commission present case is a good example — for a may legitimately take as its reference basis national organization to determine its pro- the actual situation in the markets over the ducers' yields using the criteria prescribed course of a given marketing year as a factual for that purpose, but at the same time with- indicator which accurately reflects upward out taking into account all the potential fac- or downward variations in production vol- tors which might affect the calculation of the ume. figures.

45. That possibility is expressly provided for 42. Article 12 of Regulation N o 3061/84 in Article 17a(4) of Regulation N o 2261/84, provides that the Member States are to sup- which provides that the Member States must ply the Commission with certain data and to communicate to the Commission their olive determine olive oil and olive yields for each oil production estimates for the current mar- production zone. But neither that provision keting year, and the Commission 'may avail nor any of the others which apply prevents itself of other sources of information and, the Commission, on examining the data sup- where necessary, have studies or surveys car- plied by a Member State in relation to each ried out reding to olive oil production'. 22 of the abovementioned factors, from arriving at conclusions different from those reached by the national authorities. 2I

21 — The controversy on this point has sometimes come close to 46. The Italian Government stresses that a word game: the Italian Government admits that the Com- mission may 'correct' national data, but not 'replace' them. other sources of information may be used The Commission in turn states that it 'adjusts' the data. The three words express the same result in fact: the two sets of only in relation to production estimates for a data differ. The problem, in my opinion, is not quantitative but qualitative in the sense that it relates to the power to change the dau. If it is agreed that such power exists, the only matter which must be assessed is the criteria according to which the new data can be determined. 22 — Emphasis added.

47. I really do not see why the Commission should be able to use information other than that supplied by the Member States only in order to determine the estimated production and not the actual production, the latter being derived from the average yields fixed 50. Regulation N o 1187/94 estimated the for homogeneous zones. 23 global production of olive oil for the Com- munity marketing year 1993/94 at 1 283 000 tonnes, of which 430 000 tonnes would be accounted for by Italy. 24 That figure reduced by almost 200 000 tonnes the forecast sub- mitted by the Italian authorities, prompting a letter of protest dated 2 June 1994 from their 48. On the contrary, I consider that if the Minister for Agriculture, 25 which neverthe- Commission may use such information with less was not followed by any action whatso- regard to a provisional figure (the estimated ever against Regulation N o 1187/94. production), a fortiori it may take it into account in relation to the final figure (the actual production), especially where the lat- ter has a decisive effect on the management of the common organization of the market.

51. In arriving at those figures, the Commis- sion used not only the information supplied 49. The fact that Article 12 of Regulation by the various authorities but also the figures N o 3061/84 is silent on that point does not provided by the producers, manufacturers seem to me a persuasive argument. Further- and dealers concerned, as the Italian Minister more, as Article 17a of Regulation N o for Agriculture conceded in his letter of 2 2261/84 (which post-dates Article 12 of June 1994. Regulation N o 3061/84 since it was amended by Regulation N o 3500/90) refers to both 24 — This is stated in the communication of 28 July 1994 from the E A G G F to the Iulian authorities (Annex 4 to the defence). 23 — See paragraph 19 of this Opinion. 25 — Annex 1 to the defence.

54. There would be little point in making a very short-term estimate or forecast in May 57. In the specific case of Italy, the average 1994 (the date of Regulation N o 1187/94) on difference between the two figures (provi- the basis of market data with the object of sionally estimated production and actual permitting the advance payment of aid to production) was 12% for all years from olive growers and then, in July of the same 1987/88 to 1992/93. To be more precise, the year (the date of the contested Regulation), estimated Italian production for the year calculating the actual yields according to preceding that which is the subject of this completely different figures obtained on the action (namely 1992/93) was only 6% less basis of merely theoretical factors. Only a than the actual figure: the provisional esti- marked change in the course of events in the season from May to July would justify sub- stantial differences between the estimated 26 — 'Study of the margins of error between estimated produc- figures and the actual production figures. tion and actual production', Annex 3 to the defence.

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mate was 385 000 tonnes, whereas the actual 60. The Italian Government did not object production was 410 000 tonnes. 27 to the Commission's statement 2S concerning the date on which Agecontrol finished col- lecting data for drawing up its proposals, which was January 1994. Although in certain regions of southern Italy the olive harvest is normally well under way at the end of Janu- ary, that does not apply to the whole of Ital- ian production. Thus, weather conditions or other circumstances arising after January may have a negative effect on olive produc- tion, as the Commission contends in the present case, alluding to the adverse weather conditions of later months. 29

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Apulia region.' According to the same docu- exceeded the intervention prices, which ment, the olive oil production calculated by was the opposite of what occurred in ISMEA for Italy in the year which is the 1992/93; subject of this action would not exceed 450 000 tonnes.

— in 1993/94 there were no applications for recourse to private storage schemes, in 62. The fact is that, either as a consequence contrast to the position in 1992/93; of climatic or other factors, the economic data relied on by the Commission, which were not adequately rebutted by the Italian Government, prove that production in the 1993/94 marketing year could not corre- spond to the figures proposed by the Gov- ernment. The market situation, as compared — in 1993/94 it was necessary to sell at least with the previous year, shows that the actual 140 000 tonnes of stocks accumulated figures for the preceding year would under during the previous year at prices higher no circumstances be exceeded — quite the than the intervention prices. contrary.

63. O n the assumption that the formation of prices in a market such as that for olive oil of Community origin 30 is a suitable indicator 64. All those factors prove that there was a of supply and demand, the following factors fall in the available quantities of olive oil in show that production for 1993/94 must nec- the 1993/94 marketing year, which could essarily have been less than in the previous under no circumstances have been higher year: than those available in 1992/93.

70. The Italian Government alleges that the contested Regulation does not contain a suf- ficient statement of the grounds on which it is based, a formal defect which justifies its annulment. 67. To sum up, the regulations governing the common organization of the market in the sector of oils and fats authorize the Commis- sion to depart from the production data sup- plied by the Member States where, as in the present case, those data do not correspond to 71. The Court has consistently held that the the true situation in the sector. Under such statement of grounds required by Article 190 circumstances, the Commission may have of the EC Treaty must disclose in a clear and recourse to other information, including that unequivocal fashion the reasoning followed supplied by economic agents, and infor- by the Community authority which adopted mation deriving from market trends them- the measure in question in such a way as to selves, in order to calculate in each marketing make the persons concerned aware of the year the yields of olives and olive oil on the reasons for the measure and to enable the basis of which aid to olive growers is deter- Court to exercise it supervisory jurisdiction. mined.

72. It is not necessary, however, for details of all relevant factual and legal aspects to be given in so far as the question whether the 68. Consequently there is no foundation statement of the grounds for a decision either for the allegations concerning breach meets the requirements of Article 190 of the of the principle of legal certainty, which the Treaty must be assessed not only with regard Italian Government described in its defence to its wording but also to its context and to as 'the taking of a decision in disregard of all the legal rules governing the matter in the rules previously laid down generally for question. 32 its adoption'.

77. The misuse of powers being defined as the use of powers conferred upon an institu- tion, or an authority in general, for a pur- 74. Therefore it cannot be said that the pose different from that laid down by the Regulation fails to state the reasons which measure in question, the Commission would led the Commission to act as it did. The have misused its powers if it had adopted the abovementioned recital makes it clear that Regulation for a purpose other than that of the reduction in yields, as against the pro- contributing to the more efficient manage- posed figures, is based on the link between ment of the aid scheme for olive oil produc- estimated production and actual production. ers. Whether or not the applicant accepts such a criterion and its consequences as legally cor- rect is another matter, but this does not affect the formal requirement of a statement of rea- sons. 78. To have any chance of success, an appli- cation which alleges a misuse of powers by the Commission should at least specify the purpose which it considers appropriate — the purpose pursued by the measure in ques- tion — as well as the improper purpose of which it accuses the Commission.

75. In fact the Italian Government frankly admits in its reply that the Regulation does state the grounds on which it is based, thereby invalidating its second plea in law. The reply actually states: 'since the Regu- 79. That has not been done here. The appli- lation contains a clear, specific statement of cation concludes with the assertion that, in the reason for which the Italian yields have fixing the yields by reference to the esti- been fixed in a significantly different manner mated production, the Commission 'pursued from the national proposal [...]'. and attained the objective, which was not

84. In view of the foregoing, I propose that the Court should;

(1) dismiss the application;

(2) order the Italian Republic to pay the costs.

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