C-1/94

Ministero dell'Agricoltura e delle Foreste and Others

on the interpretation of Council Regulation (EEC) N o 1785/81 of 30 June 1981 on the common organization of the markets in the sugar sector (OJ 1981 L 177, p. 4) and Council Regulation (EEC) N o 193/82 of 26 January 1982 laying down general rules for transfers of quotas in the sugar sector (OJ 1982 L 21, p. 3),

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

composed of: C. Gulmann, President of the Chamber, P. Jann, J. C. Moitinho de Almeida, D. A. O. Edward and L. Sevón, Judges,

* Language of the case: Italian.

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— the Commission of the European Communities, by E. de March, Legal Adviser, acting as Agent, assisted by A. Dal Ferro, of the Vicenza Bar,

having regard to the Report for the Hearing,

after hearing the oral observations of Cavarzere Produzioni Industriali SpA and Saccarifera del Rendina SpA, of ISI — Industria Saccarifera Italiana Agro- industriale SpA, of Eridania — Zuccherifici Nazionali SpA and Industria Sarda Zuccheri SpA, represented by P. Crocetta, of the Genoa Bar, and of the Italian Government and the Commission at the hearing on 6 April 1995,

after hearing the Opinion of the Advocate General at the sitting on 1 June 1995,

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may also be freely marketed in the common market, but without an intervention price guarantee, or exported to non-member countries with export aid. Finally, the C quota is the quantity produced in excess of the 'maximum quota' (quota A plus quota B). It may be marketed only in non-member countries and no export aid may be granted.

4 Article 24 of Regulation N o 1785/81 fixes the A and Β basic quantities for each Member State and provides that they are to allocate, under the conditions laid down in the regulation, an A quota and a Β quota to each sugar-producing under­ taking established in their territory. The quotas relate to a marketing year which runs from 1 July of one year to 30 June of the following year.

5 Under the original version of Regulation N o 1785/81, the quota system applied only to the 1981/82 to 1985/86 marketing years. However, it was extended to the 1986/87 to 1990/91 marketing years by Council Regulation (EEC) N o 934/86 of 24 March 1986 amending Regulation N o 1785/81 (OJ 1986 L 87, p. 1).

6 Article 1(2) of Regulation N o 934/86, replacing Article 23 of Regulation N o 1785/81, provides that 'for the 1986/87 and 1987/88 marketing years, and without prejudice to Article 25, the A and B quotas of sugar-producing undertakings ... shall be those which obtained in the 1985/86 marketing year'. Subsequently, Coun­ cil Regulation (EEC) N o 1107/88 of 25 April 1988 amending Regulation N o 1785/81 (OJ 1988 L 110, p. 20) similarly fixed the quotas for the 1988/89 to 1990/91 marketing years.

The limit of 10% referred to in the first subparagraph shall not apply in Italy ... in cases where the transfer of quotas is made on the basis of restructuring plans in the beet, cane and sugar manufacturing sectors in the region concerned and to the extent necessary to permit such plans to be implemented.

...’

9 Under Article 25(3), the withdrawn quantities of A and Β quotas are to be allo­ cated by the Member States to one or more other undertakings established in their territory.

10 Finally, Article 25(4) provides that the Council is to adopt general rules for the adjustment of quotas, in particular where that results from the amalgamation

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Agriculture and the Minister of Industry on 11 August 1986 and published in the Gazzetta Ufficiale della Repubblica Italiana on 19 August 1986. As is clear from the order for reference, that ministerial order adjusted GSV's sugar production quotas, previously allocated by Ministerial Order of 22 April 1986, talcing into account the sale of some of the GSV group's factories to ISI in July 1986.

15 The second ministerial order, relating to the 1987/88 marketing year, was adopted on 27 February 1987 and published on 16 March 1987. According to the order for reference, that order reduced the production quotas for some producing undertak­ ings and increased them for others, without changing those allocated to GSV for the previous marketing year by the Order of 11 August 1986.

i1 The third ministerial order was adopted on 30 June 1988 and published on 10 August 1988. According to the national court, that order allocated the produc­ tion quotas for the 1988/89 marketing year pursuant to Regulation N o 1107/88 and in the exercise of the power of manoeuvre under Article 25(2) of Regulation N o 1785/81. On that occasion the quotas allocated to GSV were reduced.

17 The three ministerial orders were challenged by the two GSV undertakings in pro­ ceedings before the Tribunale Amministrativo Regionale del Lazio (Lazio Regional Administrative Court) as being contrary to Community law. The Tribunale Amministrativo dismissed the applications against the Ministerial Orders of 11 August 1986 and 27 February 1987, but upheld the application against the Order of 30 June 1988 on the ground that the power of manoeuvre had been exer­ cised after 1 March of that year. That order was thus annulled.

'(2) Where (as in the present case) undertakings or production plants are disposed of, is it the case that, as regards the allocation of quotas, the provisions which govern such transfers (Article 2 of Regulation N o 193/82), based on a strictly proportional division of production capacity, apply exclusively or may the "power of manoeuvre" in respect of the quotas provided for in Article 25(2) of Regulation N o 1785/81 also be exercised?

(3) If such a possibility exists, the problem arises — as it appears to have done in this case — of the circumstances in which the relevant powers were

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(6) Does the existence of "restructuring plans" — which in Italy entails authori­ zation for the limit of 10% to be exceeded — relate to individual undertakings or to the entire production sector in the country as a whole or in a smaller ter­ ritorial unit (the Community regulations under review often refer to "regions" of a smaller area than that of the individual Member State) which includes a number of undertakings? In the first case, the national administrative measure would have no effect on undertakings not covered by the plan; in the second case, there could be repercussions for all the undertakings and it would be

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necessary to consider whether the power may be exercised several times dur- ing the marketing year and how a guarantee could be given to undertakings that their programmes would definitely be implemented.

It is therefore necessary to establish the extent of the restructuring "on the basis" of which the transfer of quotas may be carried out; must it be regarded as linked strictly to a sub-national area (cf. Article 1(4) of Regulation N o 934/86)? Is it sufficient for there to exist plans approved by individual under- takings, irrespective of any national or regional plan? Must the existence of a structuring plan (as in the case of ISI, which purchased a number of produc- tion units from Cavarzere), "on the basis" (cf. Regulation N o 1785/81) of which the transfer of quotas can be carried out, necessarily have the effect of excluding undertakings that have not yet submitted such plans to the compe- tent authorities, not being under an obligation to do so?'

in the sugar sector will have a period of four months in which to plan their activ­ ity, since the marketing year starts on 1 July. They thus need to know, before 1 March, the production quotas they can count on, in order to conclude contracts for the purchase of beet in good time.

22 Moreover, observance of the 1 March time-limit is necessary to ensure the proper functioning of the quota system as a whole. As the Commission notes, Article 30(1) of Regulation N o 1785/81 provides that sugar manufacturers are to inform the Member State concerned of the quantities of beet corresponding to the A quota for which contracts have been signed before sowing, which normally takes place in March or April. Article 30(2) provides that where pre-sowing delivery contracts have not been signed, manufacturers are required to pay at least the min­ imum price for all beet processed into sugar in the undertaking concerned.

23 The mandatory nature of the time-limit is also confirmed by the fact that when the Commission wished to authorize Member States to use their power of manoeuvre after 1 March, it adopted an express derogation in that respect. Thus in 1986 the Council regulation determining the quotas for the 1986/87 marketing year was adopted after 1 March, with the result that, according to information supplied by the Commission, some Member States requested a deferment of the time-limit for that year. The Commission thereupon adopted Regulation N o 1662/86 of 29 May 1986, authorizing Member States, by way of derogation from Article 7 of Regu­ lation N o 193/82, to exercise their power of manoeuvre before 1 July 1986.

27 Contrary to the Italian Government's view, the fact that Member States did not know before the adoption of Regulation N o 1077/88, and hence before 1 March 1988, what quotas were to be allocated or whether they would have a power of manoeuvre, and if so under what conditions, could not in itself enable that power to be exercised after the time-limit.

28 The correct interpretation, by contrast, as submitted inter alia by the GSV under- takings and the Commission, is that while the power of manoeuvre can be exer- cised by Member States for the 1989/90 and 1990/91 marketing years, it cannot be regarded as applicable to the 1988/89 marketing year, in view of the practical impossibility of complying with the 1 March time-limit.

29 In view of the manner in which the Commission acted when the same situation occurred in 1986, it is hardly conceivable that in 1988 the Council intended tacitly to abolish the time-limit and allow Member States to adjust the quotas with no express time-limit being set.

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30 Moreover, the interpretation suggested by the Italian Government would clash with the principle of legal certainty. It follows from that principle that undertak­ ings should be able to rely on the date of 1 March fixed by the Community leg­ islature, so that a derogation from that time-limit, which could have serious con­ sequences for undertakings, cannot be derived from a regulation either tacitly or by implication.

ular, that the allocation of quotas under Article 2 of Regulation N o 193/82 is pro­ portional to the quantities of sugar production absorbed by each undertaking, and that transfers pursuant to Article 25 of Regulation N o 1785/81 take place before 1 March each year.

34 The answer to Questions 2 and 3 must therefore be that the power of manoeuvre conferred on Member States by Article 25 of Regulation N o 1785/81 may be exer­ cised at the same time as an adjustment of quotas pursuant to Article 2 of Regu­ lation N o 193/82 following a transfer of undertakings or factories, provided that the specific conditions governing the application of each of those provisions are complied with.

Question 4

35 B y its fourth question the national c o u r t asks w h e t h e r the 1 0 % m a r g i n of m a n o e u ­ vre laid d o w n b y Article 25(2) of Regulation N o 1785/81 refers t o each of the A and Β quotas, or to the total of the two quotas, or whether a reduction of one quota — even if it is by less than 10% — prevents the other one from being reduced as well.

36 It follows from Article 25(2), which uses the disjunctive conjunction 'or' in the phrase 'of the A quota or of the Β quota, as the case may be', that the 10% margin of manoeuvre must be calculated for the A quota by reference to the A quantity and for the Β quota by reference to the Β quantity, and that the exercise of the power of manoeuvre in respect of one of the two quotas does not preclude its exercise in respect of the other.

37 Moreover, that interpretation must prevail, as the Commission has noted, on the basis of a rational and systematic argument, since the A quota has a function which differs from, and is independent of, that of the Β quota, as explained in paragraph 3 above.

41 It follows, secondly, from the actual wording of the first subparagraph of Article 25(2) of Regulation N o 1785/81 that the A and Β quotas in respect of which the Member State may exercise its 10% margin of manoeuvre are those allocated to the undertaking, within the framework of the quota system in force, by a national decision taken by the Member State on the basis of Article 24 of that regulation, sharing out among the undertakings operating in its territory the basic A and Β quantities allocated to it.

42 It follows that the margin of manoeuvre does not relate to quotas which have been adjusted under Article 2(6) of Regulation N o 193/82 for one or more

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marketing years where it is established that the sugar-producing undertaking in question can no longer ensure that it meets its obligations towards sugar-beet or sugar-cane producers. N o r is the margin of manoeuvre affected by the carrying forward to the next marketing year, under Article 27 of Regulation N o 1785/81, of production in excess of the A quota.

43 The answer to Question 5 must therefore be that the 10% margin of manoeuvre provided for in the first subparagraph of Article 25(2) of Regulation N o 1785/81 relates to the A and Β quotas allocated to an undertaking, within the framework of the quota system in force, by a national decision taken by the Mem­ ber State on the basis of Article 24 of that regulation, sharing out among the undertakings operating in its territory the basic A and Β quantities allocated to it.

47 It follows that exercise of the power of manoeuvre provided for in the second sub­ paragraph of Article 25(2) is conditional on the adoption of a restructuring plan concerning the sugar sector as a whole at national or regional level. Where such a plan has been adopted or approved by the Member State, it can exercise the power of manoeuvre to the extent necessary to enable the plan to be implemented.

48 Specific plans, on the other hand, concerning individual producing undertakings which form part of a sugar sector that also includes other undertakings are neither sufficient nor necessary to enable Member States to exceed the 10% limit. More­ over, the consequences of the submission or non-submission by undertakings of specific plans of that kind are a matter for national law.

49 The answer to Question 6 must therefore be that the term 'restructuring plans' within the meaning of the second subparagraph of Article 25(2) of Regulation N o 1785/81, allowing quotas to be adjusted in Italy without the 10% limit applying, refers to plans concerning the sugar sector as a whole at national or regional level.

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2. The power of manoeuvre conferred on Member States by Article 25 of Regulation N o 1785/81 may be exercised at the same time as an adjustment of quotas pursuant to Article 2 of Regulation N o 193/82 following a transfer of undertakings or factories, provided t h a t the specific conditions governing the application of each of those provisions are complied with.

3. Article 25(2) of Regulation N o 1785/81 must be interpreted as meaning that Member States may reduce the A quota and the Β quota by 10% each.

4. The 10% margin of manoeuvre provided for in the first subparagraph of Article 25(2) of Regulation N o 1785/81 relates to the A and Β quotas allo­ cated to an undertaking, within the framework of the quota system in force, by a national decision taken by the Member State on the basis of Article 24 of t h a t regulation, sharing out among the undertakings operating in its territory the basic A and Β quantities allocated to it.

5. The term 'restructuring plans' within the meaning of the second subpara­ graph of Article 25(2) of Regulation N o 1785/81, allowing quotas to be adjusted in Italy without the 10% limit applying, refers to plans concerning the sugar sector as a whole at national or regional level.

Gulmann Jann Moitinho de Almeida

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