C-248/95

2. Council Regulation (EEC) No 1101/89 of 27 April 1989 on structural improvements in inland waterway transport 1was adopted in 4. Owners of vessels covered by the regu­ response to the structural overcapacity lation are required to pay an annual contri­ 3 which was considered to exist in the fleets bution to the relevant Fund. An owner operating on the linked inland waterway net­ scrapping a vessel receives a scrapping pre­ works of Belgium, France, Germany, mium from the Fund to which his vessel Luxembourg and the Netherlands. The regu­ belongs in so far as the financial means are 4 lation, which is based on Article 75 of the available. The rates of the annual contribu­ Treaty, introduced a scheme for the scrap­ tions and of the scrapping premiums are to 5 ping of inland waterway vessels coordinated be fixed by the Commission. Contributions at Community level but financed by the and premiums are to be calculated on the transport undertakings themselves. Subject basis of either deadweight tonnage for cargo- carrying vessels or motive power for pusher 6 craft. The Commission must ensure that

* Original language: English. 1 — OJ 1989 L 116, p. 25. The Regulation has since been amended by Council Regulations Nos 3572/90, OJ 1990 L 353, p. 12; 844/94, OJ 1994 L 98, p. 1; 3314/94, OJ 1994 2 — Article 3. L 350, p. 8; 2819/95, OJ 1995 L 292, p. 7 and 2254/96, 3 — Article 4. OJ 1996 L 304, p. 1, and by Commission Regulations 4 — Article 5. Nos 2812/94, OJ 1994 L 298, p. 22 and 2310/96, OJ 1996 L 313, p. 8. Those amendments are not directly relevant to 5 — Article 6(1). the present cases. 6 — Article 6(3).

contributions are fixed at a level which the tonnage by which the new vessel exceeds ensures that the Funds have sufficient finan­ that of a scrapped vessel. cial resources to make an effective contribu­ tion to reducing the structural imbalance between supply and demand in the inland waterway transport sector, taking into account the difficult economic position of 7 the sector. Before adopting its decisions the 6. Finally, the regulation required the Com­ Commission is required to consult the Mem­ mission to draw up a report two years after ber States and the organizations representing its entry into force evaluating the effects of inland waterway carriers at the Community the measures adopted in implementation level; its decisions must also take account of thereof and to submit it to the European the results of observation of the transport 10 Parliament and the Council. markets in the Community and of any fore­ seeable changes therein, as well as the need to avoid any distortion of competition to an extent which is contrary to the common 8 interest. 7. Commission Regulation (EEC) No 1102/89 of 27 April 1989, 11as amended by Commission Regulation (EEC) 12 No 3685/89, fixes the annual contribu­ tions, the scrapping premiums and the condi­ tions under which they may be obtained with a view to reducing fleet capacity by 10% in respect of dry cargo vessels and pusher craft and by 15% in respect of tanker 13 vessels. The regulation envisages the need for a total budget of ECU 130.5 million, comprising ECU 81.2 million for dry cargo vessels, ECU 44.3 million for tanker vessels 14 5. The regulation also introduces -what is and ECU 5 million for pusher craft. known as the 'old-for-new' rule, which is Article 3(1) of the regulation, as amended, designed to ensure that the entry of new ves­ sels on to the market does not jeopardize the scheme. Under the rule new vessels may be 9 — Article 8(1). brought into service on inland waterways 10 — Article 10(4). only where the owner of the new vessel 11 — Commission Regulation (EEC) No 1102/89 of 27 April 1989 laying down certain measures for implementing scraps a tonnage of carrying capacity equiva­ Council Regulation (EEC) No 1101/89 on structural lent to the new vessel without receiving a improvements in inland waterway transport (OJ 1989 L 116, p. 30). scrapping premium or, if not, pays a special 12 — Commission Regulation (EEC) No 3685/89 of 8 December contribution to the relevant Fund corre­ 1989 amending Regulation (EEC) No 1102/89 laying down certain measures for implementing Council Regulation sponding to the scrapping premium fixed for (EEC) No 1101/89 on structural improvements in inland waterway transport (OJ 1989 L 360, p. 20). Regulation a tonnage equal to that of the new vessel or No 1102/89 has since been further amended by Regulations Nos 317/91 (OJ 1991 L 37, p. 27), 3690/92 (OJ 1992 L 374, p. 22), 3433/93 (OJ 1993 L 314, p. 10), 3039/94 (OJ 1994 L 322, p. 11), and 2326/96 (OJ 1996 L 316, p. 13). Those amendments are not directly relevant to the present cases. 7 — Article 6(4). 13 — Article 1(1). 8 — Article 6(7). 14 — Article 1(2).

Dry cargo vessels Tanker vessels

— Self-propelled barges: ECU 120 per — Self-propelled barges: ECU 3,00 per tonne tonne

— Push barges: ECU 60 per tonne — Push barges: ECU 1,50 per tonne

— Lighter: ECU 43 per tonne — Lighters: ECU 0,54 per tonne

Tanker vessels Pusher craft:

— Self-propelled barges: ECU 216 per — 0,40 per kW'. tonne

2. If the answer to Question 1 is in the affirmative, can those regulations 15 — Article 6(2). 16 — Article 6(3). become invalid if, subsequently to their 17 — Article 6(4). adoption, they cease to be appropriate

I - 4480

SAM SCHIFFAHRT AND STAPF v GERMANY

within the meaning of Article 75(1 )(c) Article 75(1)(d) of the EC Treaty). By its of the EEC Treaty? final question the national court asks whether the regulations were invalid in so far as the obligation to contribute to a Scrapping Fund was contrary to Community law, in particular general principles.

3. If the answer to Question 2 is in the affirmative, were the regulations still appropriate at the relevant time for the levying of the 1990 contributions to the Scrapping Fund?

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OPINION OF MR JACOBS — JOINED CASES C-248/95 AND C-249/95

structural improvements, preventing distor­ rail and road carriers. The Community regu­ tions of competition and increasing the level lations discriminate in favour of the latter to of freight. SAM, referring to two documents the detriment of the inland waterway trans­ issued by the Federal Minister for Trans­ port industry. They are also unfair to Ger­ 18 port, notes that there has in the period man vessel owners who had already made from 1970 to 1990 been a substantial reduc­ contributions to a national fund before the tion in the number of vessels and tonnage Community scheme was introduced. and yet that has done nothing to prevent the deterioration of the economic situation in the inland waterway transport sector. Mr Stapf notes that the volume of freight and freight rates are significantly lower in 1995 than in 1957. The deteriorating situation has resulted in bankruptcy for many operators whose position is made worse by the obliga­ tion to contribute to the Scrapping Fund.

17. SAM and Mr Stapf advance a number of other detailed arguments and assertions in support of their main contentions:

— A reduction in freight capacity cannot 18. SAM and Mr Stapf contend in the alter­ affect freight rates since the relevant tar­ native that, even if the Council regulation iffs are fixed by the State (SAM). was appropriate within the meaning of Article 75(1)(c) of the Treaty at the moment of its adoption, the Council was under an obligation to repeal it as soon as it became apparent that it was not going to achieve its purpose. They point out that Article 10(4) of the Council regulation itself lays down a — The amount of the contributions is fixed procedure for evaluating the effects of the by reference to carrying capacity and measures taken. takes no account of the capacity utiliza­ tion rates of individual vessels; the proper measure should be the amount of freight carried (SAM).

19. The French and German Governments, the Council and the Commission all take the view that none of the matters raised by SAM and Mr Stapf casts doubt on the validity of — There is no rational ground for excluding the Community regulations. I am also of that towing vessels from the scheme view. (Mr Stapf).

21. Their arguments, it seems to me, boil down to an assertion that the Council has exceeded its legislative powers under 23. In examining the arguments put forward Article 75(1 )(c) of the Treaty by adopting by SAM and Mr Stapf, it is important to bear measures that: in mind the limits of the Court's power to review legislative measures adopted by the Council. Those limits arise from the funda­ mental principle of the separation of powers within the Communities. Where the Treaty has conferred wide legislative powers on the (a) were unnecessary because there was no Council, it is not for the Court to substitute structural imbalance in supply and its own assessment of the economic situation demand (SAM only); or of the necessity or suitability of the mea­ sures adopted for those of the Council. By doing so it would usurp the legislative role of the Council by imposing its own views of the economic policies to be pursued by the 21 Communities. (b) were not appropriate — or ceased to be appropriate — to remedy the structural imbalance;

24. The Court has had occasion to consider (c) discriminated against the inland water­ the limits of its power to review the exercise way sector in favour of other transport by the Community institutions of their leg­ sectors, between different vessel owners islative powers mainly in the sphere of agri­ or against German vessel owners; culture. There it has long been established that 'in determining their policy in this area, the competent Community institutions enjoy wide discretionary powers regarding

27. I can deal briefly with SAM's contention that the scrapping programme was unneces­ 25. It is clear that the same applies to mea­ sary because there was no surplus capacity in sures adopted in the framework of the com­ the inland waterway sector. SAM itself con­ mon transport policy. The Court has held tradicts that assertion in its written observa­ that, 'in giving the Council the task of adopt­ tions by referring to a structural overcapac­ ing [that policy], the Treaty confers wide leg­ ity of 15% to 20%. The Commission claims, islative powers upon it as regards the adop­ without contradiction, that at the moment of 25 tion of appropriate common rules'. As the the adoption of the Council regulation the present cases show, the exercise by the relevant Member States were unanimous in Council of those powers entails the making recognizing the existence of significant struc­ tural overcapacity in the sector, a view shared by the Union Internationale de la Navigation Fluviale. Moreover, the Commis­ 22 — Joined Cases 197/80 to 200/80, 243/80, 245/80 and 247/80 Ludwigshafener Walzmühle v Council and Commission sion, referring to its communication of 26 [1981] ECR 3211, paragraph 37 of the judgment. Sec also, 23 May 1995, claims — again without con­ for example, Case 136/77 Racke v Hauptzollamt Mainz [1978] ECR 1245, paragraph 4; Case 166/78 Italy v Council tradiction — that the inland waterway indus­ [1979] ECR 2575, paragraph 14; and Case 138/79 Roquette Frères v Council [1980] ECR 3333, paragraph 25. See also, try itself estimated that there remained sur­ in relation to measures adopted under the common com- plus capacity of around 15% in May 1995. mercial policy, the Opinion of Advocate General Léger of 26 September 1996 in Cases C-150/94 United Kingdom v That there continued to be surplus capacity Council and C-284/94 Spain v Council, at paragraphs 89 to 93 of the Opinion. 23 — Roquette Frères, paragraph 25 of the judgment. 24 — See, for example, Case 6/54 Netherlands v High Authority [1955] ECR 103. 26 — Communication on a common policy on the organization 25 — Case 97/78 Schumalla [1978] ECR 2311, paragraph 4 of the of the inland waterway transport market and supporting judgment. measures, COM(95) 199 final, paragraphs 14 and 20.

29. As regards the argument that such sur­ plus capacity as existed could have been rem­ 31. I am not persuaded by that argument. A edied by a prohibition on night-time and preliminary point which should be made is weekend operation, the choice of the most that nowhere in its preamble does the Coun­ appropriate policy is, as already noted, in cil regulation state that its aim is to increase principle a matter for the Council. It is in levels of freight. The essential aim of the any event difficult to see how such a prohibi­ regulation is rather to reduce overcapacity in tion would have increased the profitability of the industry in order to bring supply into undertakings in the sector. Moreover, if, as line with demand for inland waterway trans­ SAM and Mr Stapf suggest, inland waterway port. In that regard it does not follow from transport had been in close competition with the mere fact that a Council regulation is other forms of transport, the severe operat­ unsuccessful, or only partly successful, that ing constraints entailed by such a prohibition the Council exceeded its legislative discretion would surely have led to a greater loss of in adopting it. That would be the case only if the Council committed a manifest error in the appraisal of the economic data or chose a policy that was manifesdy unsuitable to rem­ 27 — Report from the Commission on the effect of the structural improvement measures in inland waterway transport, as edy the problem. There is no evidence that introduced by Council Regulation (EEC) No 1101/89 of that was so here. On the contrary, it appears 27 April 1989, COM(93) 553 final. 28 — See note 18. that the scrapping programme met with a

32. In 1992 and 1993 there followed a sud­ 34. I am not persuaded by the argument that den fall in freight prices, which the Commis­ the obligation to contribute to the scrapping sion's report attributes to a recession in the programme made it more difficult for the industries on which the inland waterway sec­ industry to compete with rail and road carri­ tor is particularly reliant, namely construc­ ers leading to a reduction in demand for tion, coal and steel and chemicals. In its writ­ inland waterway transport. For the reasons ten observations SAM also refers to a 30% given below I do not think inland waterway to 60% reduction in the volume of freight. transport is readily interchangeable with According to the abovementioned docu­ other forms of transport, in particular road ments of 8 December 1994 issued by the transport (which, according to the docu­ Bundesminister für Verkehr, there was also a ments issued by the Bundesminister für reduction in freight prices of between 30% Verkehr, accounts for 54.1% of the total and 40% on average and up to 60% for cer­ German market in goods transport). More­ tain goods such as coal. The documents over, it cannot seriously be argued that the attribute the reduction partly to short-term

30 — See the second recital in the preamble to Regulation No 29 — Cited in note 27. 2819/95, cited in note 1.

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OPINION OF MR JACOBS — JOINED CASES C-248/95 AND C-249/95

35. I do not in any event accept that the ves­ sel owners received no advantage in return for the contribution. It may be true that, even without the scrapping programme, less 37. SAM's and Mr Stapf's argument that the efficiënt operators would eventually have procedure for the award of scrapping pre­ been driven out of the market anyway miums is enforced gambling does not seem (although it might equally have been under­ to me to be relevant to the main proceedings, capitalized efficient operators who were which concern the levying of the annual con­ unable to survive). However, it seems rea­ tribution to the Fund. If the award pro­ sonable to assume that the incentive to leave cedure were held to be unlawful, that would the sector provided by the programme lead only to a finding of partial invalidity speeded up the reduction in capacity. More­ and would not affect the obligation to con­ over, it allowed such reduction to occur in an tribute to the Fund. In any event, I find the orderly manner by enabling vessel owners to reasons justifying the choice of method given leave the industry on reasonable financial by the Commission convincing. In particular terms. It is in accordance with the objectives I share its view that the method ensures that of the Treaty, as set out in Article 2 and pur­ the best possible use is made of the limited sued in the framework of the common trans­ port policy, that consideration should be given to the possibilities of public interven­ tion in the market in exceptional situations 31 — See, on a similar issue in relation to the ECSC Treaty, the Opinion of Advocate General Capotorti in Joined Cases in order to moderate the severity of the 154/78, 205/78, 206/78, 226/78 to 228/78, 263/78 and 264/78, 39/79, 31/79, 83/79 and 85/79 Valsabbia v Commis- effects which the free play of the market sion [1980] ECR 907, at paragraph 5 of the Opinion.

funds available. It also has the advantage of was the first year in which the Council allowing those who are particularly keen to regulation applied. Moreover, since as leave the industry to opt for a guaranteed already noted (see paragraphs 27 and 28) minimum premium within the limits of there has continued to be substantial sur­ available funds. plus capacity in the fleet, the Council is justified in maintaining measures designed to reduce that capacity. It may also be noted that, in recently adopting Regulations 34 35 Nos 2819/95 and 2254/96, the Council was evidently of the view that Community action should continue primarily to take the 38. I do not think it necessary in the present form of a scrapping programme based on case for the Court to reply specifically to the solidarity between undertakings and merely national court's second question, which sought to reinforce such action by providing raises the issue of principle whether a Com­ for supplementary financing from national 36 munity regulation valid at the moment of its and Community funds. adoption may subsequently become invalid. I do not think that the present cases provide an appropriate context in which to consider that issue, which merits more detailed con­ sideration than it has been given in the present proceedings. In general, as the Court 32 Alleged breach of the principle of equal has held, the validity of a measure can be assessed only by reference to the situation treatment when it was enacted. It seems to me that there might none the less be circumstances in which the Community legislature is under an obligation to repeal or amend a measure to take account of subsequent developments; that might be so where, for example, after its adoption a measure began to produce dis­ criminatory effects, or had plainly achieved its purpose so that there was no longer any 40. SAM and Mr Stapf contend that the justification for the burden placed on indi­ Council regulation infringes the principle of viduals. equal treatment in several respects. First, it discriminates against German vessel owners because they had already made contributions to a national fund before the Community scheme was set up. That argument is plainly untenable. It would clearly be unworkable to adopt Community rules which had to make allowance for the existence, nature and 39. However, that situation clearly does not arise here. The period in issue in the main proceedings is the financial year 1990, which 33 — Article 10, first paragraph. 34 — Cited in note 1. 35 — Cited in note 1. 32 — See, for example, Joined Cases 15/76 and 16/76 France v 36 — See the second recital in the preamble to Regulation No Commission [1979] ECR 321, paragraph 7 of the judgment. 2819/95.

42. Thirdly, Mr Stapf contends that there are no grounds for excluding towing vessels from the scrapping scheme. However, the Commission explained in its written obser­ vations, without contradiction, that towing vessels have long ceased to play any signifi­ cant role in inland waterway transport and are used mainly as auxiliary vessels in ports. They do not therefore contribute to the sur­ 41. Secondly, Mr Stapf and SAM contend plus capacity in the inland waterway trans­ that the Council regulation discriminates port sector. against the inland waterway sector in favour of rail and road carriers. However, there is no evidence to suggest that the Council erred in coming to the view that undertakings in the inland waterway transport sector were in an objectively different position from those in other transport sectors and that specific action in that sector was necessary. Inland waterway transport is self-evidently not wholly interchangeable with other forms of 43. Fourthly, SAM complains that the transport. It is particularly well suited to the amount of the contribution is fixed by refer­ cost-effective transport of bulky loads over ence to carrying capacity and takes no long distances. Being dependent on the account of the capacity utilization rates of waterway network, it does not on the other individual vessels. I do not find that argu­ hand have the flexibility of rail and in par­ ment persuasive. The contribution is not ticular road carriage. The Council came to fixed at a flat rate but is based on the dead­ the view that there had been structural sur­ weight tonnage of individual vessels. It seems plus capacity in the inland waterway fleets to me that the Council was perfectly entitled for some time and that there was no prospect of any increase in demand over the next few years; on the contrary, the sector's share of the total market was continuing to decline 37 — First and second recitals of the Council regulation.

to consider that a contribution intended to I would add that I fail to see the relevance to finance a reduction in capacity should be the issue of the validity of the scrapping pro­ based on the tonnage which a vessel contrib­ gramme of SAM's claim at the hearing that uted to the total fleet capacity. Moreover, as Netherlands undertakings receive various the Commission points out, calculation of forms of State subsidies. the contribution on the basis of the annual freight utilization rate of each vessel would have given rise to substantial administrative and supervisory difficulties. As regards SAM's argument that the beneficiaries of the scrapping programme are essentially large shipping companies which re-invest the scrapping premiums in building new vessels, I think the Commission's difficulty in fol­ lowing that line of reasoning is entirely understandable. By requiring the owner of new vessels to pay a special contribution to the relevant Fund corresponding to the scrapping premium for a tonnage equal to that of the new vessel the regulation ensures that the entry of new vessels on to the mar­ 45. It is true that Community undertakings 38 ket does not jeopardize the scheme. may be placed at a disadvantage vis-à-vis competitors who are established in a non- member country and operate vessels that are not registered in a Member State and who are therefore not subject to the Community scrapping scheme. It is certainly desirable that the Community should endeavour in appropriate cases to reach agreements with non-member countries so as to ensure that intervention measures such as those in issue are not undermined. Indeed in the last recital in the preamble to the regulation the Council stated that it was desirable for Switzerland to adopt similar measures and noted that it had 44. SAM and Mr Stapf contend finally that expressed its willingness to do so. However, the scrapping programme places them at a it is clear that failure to reach such agreement disadvantage vis-à-vis their competitors from with the relevant non-member countries can­ the Netherlands and Eastern European not render intervention measures taken uni­ countries. It is difficult to see how the scrap­ laterally by the Community invalid. In any ping programme can place German vessel event the documents of 8 December 1994 owners at a disadvantage in relation to com­ issued by the Bundesminister show that the petitors from other Member States since German and Dutch fleets share 88% of the those competitors are also subject to the total trade on German inland waterways. obligation to contribute to a scrapping fund. Dutch undertakings are clearly the most important competitors for German under­ takings, taking 43 % of the market (as against 38 — Article 8(1). 45 % for German undertakings).

39 — See Opinion 2/94 [1996] ECR 1-1759, paragraphs 32 and 33, and my Opinion in Case C-84/95 Bosphorus v Minuter for Transport, Energy and Communications, Ireland and 40 — Case C-280/93 Germany v Council [1994] ECR 1-4973, the Attorney General [1996] ECR I-3953, paragraphs 51 paragraph 78 of the judgment; Case C-84/95 Bosphorus, and 52. cited in note 39, paragraph 21.

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SAM SCHIFFAHRT AND STAPF v GERMANY

Conclusion

50. Accordingly, I am of the opinion that the questions referred by Oberverwal­ tungsgericht Nordrhein-Westfalen should be answered as follows:

Consideration of the matters examined has disclosed no factor of such a kind as to affect the validity of Council Regulation (EEC) No 1101/89 and Commission Regu­ lations (EEC) Nos 1102/89 and 3685/89.