C-309/95

4. In the framework of the common organi- sation of the market in wine, Regulation N o 822/87 provided as financial stabilisation fac- tors and measures for the stabilisation of the market in question inter alia for measures of both preventive distillation (Article 38) and compulsory distillation (Article 39) to be adopted by the Commission under the con- 2. This case provides the Court with an ditions and in accordance with the procedure opportunity to clarify its case-law with laid down by Articles 38 and 39. regard to the third criterion laid down by the fifth paragraph of Article 173 of the Treaty relating to the admissibility of the action. 1 — Council Regulation (EEC) N o 822/87 of 16 March 1987 on the common organisation of the market in wine (OJ 1987 L 84, p. 1). This Regulation replaced Council Regulation (EEC) N o 337/79 of 5 February 1979 on the common * Original language: Greek. organisation of the market in wine (OJ 1979 L 54, p. 1).

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5. With regard to the conditions for preven- 7. Regulation (EC) N o 2028/94 of 8 tive distillation, Article 38(1) of Regulation August 1994 3 provided for the preventive N o 822/87 provides that: distillation of certain quantities of wine for the 1994/95 wine year.

'Where necessary, having regard to harvest 8. The objective of that Commission Regu- forecasts or in order to improve the quality lation was to meet the need for stabilisation of products put on the market, preventive and sound management of the table-wine distillation of table wines and wines suitable market. In particular, the second subpara- for yielding table wines may be decided on graph of Article 1(1) provided that the quan- in each wine year, from 1 September until a tity of wine which producers could cause to date to be determined. be distilled was to be limited to 12 hectoli- tres per hectare ('hl/ha'). For France, this represented a total of 1 403 000 hl.

11. The compulsory distillation price makes this measure into a deterrent for producers. O n application by a Member State, the It fluctuates at around 25% of the guide Council may, acting unanimously, decide price. Producers may deduct the quantity that aid which that State is granting or delivered for preventive distillation from that intends to grant shall be considered to be which must be delivered for compulsory dis- compatible with the common market, in tillation. derogation from the provisions of Article 92 or from the regulations provided for in Article 94, if such a decision is justified by exceptional circumstances. If, as regards the aid in question, the Commission has already initiated the procedure provided for in the first subparagraph of this paragraph, the fact 12. Article 76 of Regulation N o 822/87 pro- that the State concerned has made its appli- vides that the provisions of Articles 92, 93 cation to the Council shall have the effect of and 94 of the Treaty are to apply to the wine suspending that procedure until the Council market. has made its attitude known.

13. Thus an express provision of Regulation If, however, the Council has not made its N o 822/87 provides for the application to attitude known within three months of the the wine market of Article 93 of the Treaty, said application being made, the Commission which in principle gives the Commission 4 shall give its decision on the case. and, exceptionally, the Council 5the task of ensuring that any kind of State aid, whether

4 — See, for example, the judgments in Case 78/76 Steinike und Weinlig [1977] ECR 595, end of paragraph 9, and Joined Cases C-72/91 and C-73/91 Sloman Neptun [1993] ECR 1-887, paragraph 11. 5 — See the judgment in Case C-225/91 Matra v Commission [1993] ECR I-3203, paragraph 41.

17. O n 17 August 1994 the Commission asked to be notified of the aid which France had decided to grant wine producers in con- 22. Under cover of a letter of 27 July 1995, nection with the carrying out of preventive the Director-General (for Agriculture), act- distillation. ing on behalf of the Secretary-General of the

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Council, sent the Commission authentic 26. By a separate document dated 6 Novem- copies of the decision and informed the ber 1995, the Council raised a plea of inad- Commission of the adoption of the con- missibility. By decision of 18 June 1996 the tested decision by the Council, informing it Court decided to reserve its decision for the also that on the same day the President of final judgment. the Council had notified the addressee (i. e. the French Republic) of the decision and that it had taken effect by such notification.

27. In particular, the Council asks the Court: (1) to dismiss the action as inadmissible; (2) 23. The Council decision reached the Com- in the alternative, to dismiss the action as mission on 1 August 1995. unfounded; and (3) to order the Commission to pay the costs. The French Republic has intervened in support of the Council, lodg- ing written statements.

HI — Forms of order sought by the parties

31. Furthermore, the fifth paragraph of Article 173 lays down that proceedings must be instituted within two months of the pub- lication of the measure, or of its notification 34. It further follows from those provisions to the plaintiff, or, in the absence thereof, of that decisions must be notified to the per- the day on which it came to the knowledge sons to whom they are addressed by name of the latter, as the case may be. Under and that such notification means that they Article 81(1) of the Rules of Procedure of take effect. Notification is not a precondition the Court of Justice, the period of time for the validity of the measure, 8 but an allowed for commencing proceedings against extraneous factor. 9 a measure adopted by an institution, where it has been notified, runs from the day follow- ing the receipt by the person concerned of 7 — The Court has repeatedly held that, failing publication or notification, the period for bringing an action can begin to notification of the measure. run only from the moment when the third party concerned acquires precise knowledge of the content of the decision in question and of the reasons on which it is based in such a way as to enable it to exercise its right of action. See the judgments in Case C- 180/88 Wirtchaftsvereinigung Eisen- und Stahlindustrie v Commission [1990] ECR I-4413, para- graph 22; Case 236/86 Dillinger Hüttenwerke [1988] ECR 3761, paragraph 14, and Case C-143/95 P Commission v Socurte and Others [1997] ECR I-1, paragraph 31. 8 — Clarification of that question is necessary because the Com- mission makes a distinction (in paragraph 9 of its written 32. Finally, Article 18(1) and (2) of the observations on the plea of inadmissibility) between the date Council's Rules of Procedure 6 provides, of manifestation of the Council's intended policy, i. e. 22 June 1995, and the date when the addressee was notified of inter alia, that the Secretary-General must the measure which, it maintained, gave it legal effect, i. e. 27 July 1995. notify Council decisions to their addressees 9 — Furthermore, the Court has held that due notification must be given and although irregularities in the procedure for notification of a decision 'are extraneous to that measure' and cannot therefore invalidate it, they may prevent the period within which an application must be lodged from 6 — Council Decision 93/662/EC of 6 December 1993 adopting starting to run. See the judgment in Case 48/69 ICI v Com- the Council's Rules of Procedure (OJ 1993 L 304, p. 1). mission [1972] ECR 619, paragraphs 39 and 40.

35. In the present case the contested Council was the basis of the decision in question, decision of 22 June 1995 designates the which was adopted on 22 June 1995. A addressee as the French Republic and no-one comparison of the text of the draft and the else (Article 2). Therefore, if the French decision shows that the draft was approved Government had wished to institute pro- unanimously, without amendment. More- ceedings, the time-limit for doing so would over, the Commission admits (in paragraph 7 have begun to run only on the date when it of its observations concerning the plea of was notified of the decision. In contrast, inadmissibility) that it was present at the with regard to the Commission, which is not meeting in question of the Agriculture designated by the decision as an addressee, Council from 19 to 22 June 1995. notification is not necessary in order for the time-limit to begin to run; this occurs when the Commission acquires precise knowledge of the measure, if that appears from the documents in the file. Consequently, a copy of the contested decision addressed to the Commission after it acquired such knowl- edge has no effect on the time-limit, which has already begun to run, any more than it 37. The Commission's application is accom- causes a new period to begin to run. panied, in Annex VI, by a document (sum- mary of record) dated 23 June 1995 and pre- pared by the General Secretariat of the Commission on the day after the Agriculture Council held in Brussels from 19 to 22 June 1995. This document, particularly paragraph 9, mentions the terms of the contested decision and states that the Agriculture Council meeting resulted in the unanimous approval (with one abstention) of France's request. This document also describes the 36. The documents in the file show — and discussion which led to the contested this point is not disputed — that from 16 decision, mentions the French Government's June 1995 the members of the Council and arguments and also makes mention of the the Commission were in possession of a fact that certain Member States and the draft decision (document 8100/95 Agri 62) 10 Commissioner responsible, who was present, which was available in the room where the expressed doubts as to whether a favourable meeting in question was held. 1 1This draft response to France's request was justified.

40. It follows that, as the present application was lodged on 29 September 1995, i. e. after the two-month time-limit had expired, the proceedings were instituted outside the time- limit and, on that well-founded ground, the action must be dismissed, as the Council and the French Government rightly contend. 1 3 39. In addition, as already mentioned (in paragraphs 21 to 23 and 35), the contested Council decision was notified to the French Government on 27 July 1995 and sent on the same day to the Commission, where it arrived on 1 August 1995 (it was entered in the register under N o SG(95)A/12870/1 8 1995). The Commission maintains that the V — Alleged grounds for annulment time-limit for instituting proceedings began to run on 27 July 1995, when the decision was notified to the French Republic and when it took effect, and that therefore the application was lodged within the prescribed period on 29 September 1995. However, that view is mistaken, since notification of the decision to the French Republic caused the 41. Regardless of whether the proceedings time-limit to begin to run only in relation were instituted within the prescribed period, to the latter, which was named as the I now wish to consider briefly the grounds addressee of the contested decision. As for annulment which have been raised and regards the Commission, however, which which are very similar to those raised by the was not designated as an addressee and to Commission in Case C-122/94 Commission which notification was unnecessary, under the fifth paragraph of Article 173 of the Treaty, the time-limit began to run on the 13 — It seems to me that this is also the conclusion which appears from the Court's case-law. It has repeatedly been held that 'the strict application of Community rules on pro- cedural time-limits serves the requirement or legal certainty and the need to avoid any discrimination or arbitrary treat- 12 — In accordance with Annex II to the Rules of Procedure of ment in the administration of justice'. See Case 42/85 the Court, containing the decision on extension of time- Cockerill-Sambre v Commission [1985] ECR 3749, para- limits on account of distance if the parties are not habitually graph 10; Case 209/83 Ferriera Valsabbia v Commission resident in the Grand Duchy of Luxembourg, procedural [1984] ECR 3089, paragraph 14; and order in Case 352/87 time-limits for the Kingdom of Belgium are extended by Farzoo and Kortmann v Commission [1988] ECR 2281, two days on account of distance. paragraph 7.

14 — [1996] ECR I-881. See also mv Opinion in that case, deliv- ered on 22 November 1995. The Court dismissed the action 44. In the second ground for annulment, brought by the Commission on 25 April 1994 for the annulment of two Council decisions of 21 February 1994, which was originally raised solely in the which had been adopted under the third subparagraph of alternative, the Commission argues that the Article 93(2) of the Treaty and related to the grant of special aid for the distillation of certain wines in France and Italy. 'exceptional circumstances' which, among In particular, the Council had authorised the grant to other conditions, must exist pursuant to the French wine producers of supplementary aid for the 1993/94 wine year, equal to the difference between FF third subparagraph of Article 93(2) of the 24/% vol/hl, which was the market price during that year, and the minimum Community price of ECU 2.06/% vol/hl for preventive distillation (the difference was approximately FF 8). Consequently the price for preventive distillation was brought into line with the market price during the wine year in question. The Council also authorised the grant to 15 — Cited in footnote 14. Italian wine producers of supplementary aid of not more 16 — In particular, the Court found that 'the power granted to than the difference between the minimum buying-in price the Council by the third subparagraph of Article 93(2) is to for preventive distillation (ECU 2.06/% vol/hl) and that apply in the wine sector within the limits indicated by that laid down for compulsory distillation (ECU 0.83/% vol/ provision, namely the existence of exceptional circum- hi). In other words, the Council brought the price for com- stances'. See the analysis of the first ground for annulment p ulsory distillation into line with that for preventive distil- lation. in paragraphs 46 to 71 of my Opinion in Case C-122/94 Commission v Council, cited in footnote 14.

Treaty before aid which a Member State is implementation by the Council of the Com- granting or intends to grant may be consid- munity's agricultural policy necessitates the ered compatible with the common market, evaluation of a complex economic situation, did not exist in this case. The Commission the discretion which it has does not apply claims that the Council made improper use exclusively to the nature and scope of the of its discretion under the third subpara- measures to be taken, but also to some extent graph of Article 93(2), committing a manifest to the rinding of the basic facts inasmuch as, error in its assessment of the facts when it in particular, it is open to the Council to rely adopted the contested decision. Accordingly if necessary on general findings. In reviewing it seeks the annulment of the decision on the the exercise of such a power, the Court must ground that the statement of reasons is confine itself to examining whether it con- unlawful. tains a manifest error or constitutes a misuse of power or whether the authority in ques- tion did not clearly exceed the bounds of its discretion'. 18 The Court added 19 that 'the very wording of the third subparagraph of Article 93(2) shows that the Council, when deciding that exceptional circumstances jus- tify an aid being considered compatible with 45. Under the third subparagraph of Article the common market, thus derogating from 93(2) the Council has a wide discretion with Article 92, is called upon to carry out an regard to the expediency of adopting certain assessment of a complex economic situation'. measures ('the Council may, acting unani- mously, decide') and it determines when the ‘exceptional circumstances' which constitute the conditio sine qua non for a decision that aid which a State is granting or intends to grant is to be considered compatible with the common market are present. That is so even if, in the framework of the procedure laid down by Article 93(3), the Commission has decided that the aid is not compatible with the common market. 47. In the present case, I consider 20 that the Council was called upon to evaluate a com- plex economic situation and the discretion which it had did not apply exclusively to the nature and scope of the measures to be taken, but also to the findings of the basic

48. In particular, since the common organi- sation of the wine market has for a number of years been characterised by a 'permanent structural imbalance which is in the process of being reformed', as the Court has observed, 21 it was open to the Council not only to rely on the figures for the opening of 49. I certainly do not consider lawful per se the 1994/95 wine year, but also to take the reasoning in the decision (second recital) account of the 1995 figures. That is also clear based on the fact that the sector in question from the third recital in the preamble to the has a regulatory framework which is in the decision in question which, although men- process of being reformed with a view to the tioning that at the time when the decision implementation of measures permitting per- was adopted there was nothing exceptional manent stabilisation of the market, because about the wine market which would justify that type of situation could not be consid- introducing compulsory distillation, states ered an 'exceptional circumstance' within the nevertheless that the proper implementation meaning of the third subparagraph of Article of preventive distillation in all producer 93(2). In my opinion, such a fact cannot countries was essential in a market character- amount to an 'exceptional circumstance' ised by consistent falls in the volumes since if that concept were taken to extremes used. 22 The Council could also have taken it would become null and void through account of the overall figures relating, first, being stretched too far. In other words, its to the situation in the Community and not meaning would be altered, so that this vague only to that in the French market and, sec- legal concept would have only a nominal ondly, to all wines and not merely to the value without any specially compelling scope and in the last resort without any special practical value. 23 21 — See the judgment in Case C-122/94, cited in footnote 14 (paragraph 22). 22 — According to the sixth recital of the decision, the French Government envisaged a grant of special aid to French wine producers in order to compensate them for loss of income 23 — See the similar reservations I expressed in paragraph 94 of and to make preventive distillation more effective. my Opinion in Case C-122/94, cited in footnote 14.

51. Those questions call for the following observations. Firstly, the distillation measure constitutes, if not a conflict, so to speak, between two objectives of equal priority pursued by the common agricultural policy 53. It should be noted that, according to the under Article 39 of the Treaty, then at least a fourth recital of the decision in question, patent attempt to reconcile them. According French wine producers were making consid- to Article 39(1), the objectives of the com- erable efforts to control production by mon agricultural policy are '(b) ... to ensure a reducing their yield of table wine and that fair standard of living for the agricultural consequently they were suffering a consider- community' and '(c) to stabilise markets'. In able drop in income. this connection the Court has repeatedly held that 24 'in pursuing the various aims laid down in Article 39 of the Treaty, the Com- munity institutions must constantly recon- cile any conflicts between those aims taken

54. In addition, according to the fifth recital, 24 — See, for instance, Case C-122/94 Commission v Council, cited in footnote 14 (paragraph 24); Joined Cases C-133/93, the minimum buying-in price received by C-300/93 and C-362/93 Crispoltoni and Others [1994] ECR French wine producers for wine to be deliv- 1-4863, paragraph 32; and Case C-280/93 Germany v Council [1994] ECR I-4973, paragraph 47. ered for preventive distillation was far more

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of a disincentive than that received by wine In other words, the Council attempted to producers in other producer countries. meet the situation with corrective measures the adoption of which was not provided for by the legislative framework existing in the sector concerned (in the framework of Regu- lation N o 822/87).

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a real and lasting disturbance in the function- statement of reasons for the contested ing of the common organisation of the wine decision is inadequate, brief, incomplete and market. 26 erroneous. 27

59. I therefore consider that the matters raised by the Council are ‘exceptional cir- 61. Since the second ground for annulment cumstances' within the meaning of the third of the decision in question, alleging a mani- subparagraph of Article 93(2) of the Treaty. I fest error by the Council in finding that also consider that, in its task of assessing there were exceptional circumstances within complex economic situations, the Council the meaning of the third subparagraph of made proper use of its discretion and com- Article 93(2), has been dismissed, the third mitted no manifest error of assessment of the plea needs to be examined only in so far as it facts. Consequently the second ground for alleges incomplete reasoning. 28 annulment raised by the Commission must be dismissed.

C — Third ground for annulment: inad- 62. I find that the statement of reasons in the equate statement of reasons contested decision, though succinct, shows clearly and unequivocally that, by reason of exceptional circumstances, the aid could, by way of derogation, be considered compatible

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with the common market to the extent and consisted in ensuring a fair income for for the period strictly necessary. 29 That French farmers. Therefore I conclude that statement of reasons shows the essential the third ground for annulment must also be objective pursued by the institution, which dismissed.

VI — C o n c l u s i o n

63. C o n s e q u e n t l y I suggest that the C o u r t should:

(1) dismiss t h e action b r o u g h t b y t h e C o m m i s s i o n ;