C-248/95

JUDGMENT OF 17. 7. 1997 — JOINED CASES C-248/95 AND C-249/95

JUDGMENT OF THE COURT (Fifth Chamber) 17 July 1997 *

In Joined Cases C-248/95 and C-249/95,

REFERENCE to the Court under Article 177 of the EC Treaty by the Oberver­ waltungsgericht für das Land Nordrhein-Westfalen (Germany) for a preliminary ruling in the proceedings pending before that court between

SAM Schiffahrt GmbH,

Heinz Stapf

THE COURT (Fifth Chamber),

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

Advocate General: F. G. Jacobs, Registrar: H . A. Rühi, Principal Administrator,

after considering the written observations submitted on behalf of:

— SAM Schiffahrt GmbH , by Peter Schnitzer, Rechtsanwalt, Ulm,

— Mr Stapf, by Sigwalt von Waldstein, Rechtsanwalt, Mannheim,

having regard to the Report for the Hearing,

after hearing the oral observations of SAM Schiffahrt GmbH , Mr Stapf, the Coun­ cil and the Commission at the hearing on 16 January 1997,

after hearing the Opinion of the Advocate General at the sitting on 27 February 1997,

gives the following

Judgment

1 By orders of 29 May 1995, received at the Court on 19 July 1995, the Oberver­ waltungsgericht für das Land Nordrhein-Westfalen (Higher Administrative Court for the Land of North Rhine Westphalia) referred to the Court for a preliminary ruling under Article 177 of the EC Treaty four questions on the validity of Coun­ cil Regulation (EEC) No 1101/89 of 27 April 1989 on structural improvements in inland waterway transport (OJ 1989 L 116, p. 25; the 'basic regulation') and of Commission Regulation (EEC) No 1102/89 of 27 April 1989 laying down certain measures for implementing Regulation No 1101/89 (OJ 1989 L 116, p. 30), as amended by Commission Regulation (EEC) No 3685/89 of 8 December 1989 (OJ 1989 L 360, p . 20; the 'implementing regulation').

... forecasts show no sign of sufficient increase in demand in this sector to absorb this overcapacity in the next few years; whereas in fact the share of the total trans­ port market taken by inland waterway transport is continuing to decline as a result of progressive changes in the basic industries supplied mainly by inland waterway;

... overcapacity generally affects every sector of the inland waterway transport market; whereas the measures to be adopted must, therefore, be generally appli­ cable and cover all cargo vessels and pusher craft ...

I - 4497

JUDGMENT OF 17. 7. 1997 — JOINED CASES C-248/95 AND C-249/95

... in view of the worrying economic and social situation of the sector involving vessels with a dead weight of less than 450 tonnes and in particular the boat own­ ers' financial situation and limited scope for conversion, specific measures are called for, such as special adjustment coefficients for inland waterway vessels or specific improvement measures for the networks most affected ...'

5 Under Article 2 thereof, the basic regulation applies to cargo-carrying vessels and pusher craft which are registered in a Member State or, if not registered, are oper­ ated by an undertaking established in a Member State.

transport sector, taking into account its difficult economic position (Article 6(4)). Before adopting its decisions, the Commission is to consult the Member States and the organizations representing inland waterways carriers at Community level. The decisions reached by the Commission are also to take account of the results of observation of the transport markets in the Community and of any foreseeable changes therein, as well as of the need to avoid any distortion of competition to an extent which is contrary to the common interest.

9 In order to prevent the gains from the scrapping scheme being cancelled out by extra capacity coming into service at the same time, Article 8(1 )(a) of the basic regulation provides that, for a period of five years from the entry into force of the regulation, newly-constructed vessels may be brought into service on inland water­ ways only where the owner of the vessel to be brought into service scraps tonnage of equivalent carrying capacity without receiving a scrapping premium ('the old for new rule') or, if he does not scrap a vessel, he pays a special contribution to the scrapping fund.

10 Finally, in Article 10(4), the basic regulation requires the Commission, two years after its entry into force, to draw up a report evaluating the effects of the measures adopted and submit that report to the Parliament and the Council.

1 1 According to Article 1(1) thereof, the implementing regulation fixes, inter alia, the annual contributions, the scrapping premiums and the conditions under which they may be granted, having regard to the need to reduce fleet capacity by 10% in respect of dry cargo vessels and pusher craft and by 15 % in respect of tanker ves­ sels. According to Article 1(2), a total budget of ECU 130.5 million is considered necessary for the purpose.

15 As far as scrapping premiums are concerned, Article 6(2) of the implementing regulation provides that an applicant may apply for a rate within a bracket of between 70% and 100% of the maximum rates laid down by Article 5. In order to permit the maximum possible scrapping of tonnage on a limited total budget, the sixth recital in the preamble to the implementing regulation and Articles 6(3) and 8 thereof give priority to applications whose percentages are the lowest within that bracket. Premium applications validly submitted for a percentage of 70% are thus deemed accepted by the fund within the limits of budgetary availability in the vari­ ous accounts, whereas, in the case of applications for a scrapping premium over 70%, the fund authorities inform the applicant whether or not his application has been accepted. Similarly, if applications for scrapping premium exceed the budgets, consideration is given first to applications for the lowest premium-rate percent­ ages.

16 Under Article 7(1) of the implementing regulation, the submission of an applica­ tion for scrapping premium entails an obligation on the owner, in the event that his application is accepted, to proceed either with the scrapping of the vessel or with its permanent immobilization. Under Article 9(1), the scrapping premium is pay­ able where the owner has proved that the vessel has been scrapped or has been immobilized in accordance with Article 7.

I - 4500

SAM SCHIFFAHRT AND STAPF v GERMANY

17 SAM Schiffahrt and Mr Stapf are both owners of motor vessels which they use to transport goods on the Rhine and its tributaries. SAM Schiffahrt also transports goods on the West German canals.

JUDGMENT OF 17. 7. 1997 —JOINED CASES C-248/95 AND C-249/95

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?

4. Does the obligation laid down in the regulations to pay contributions for 1990 infringe fundamental Community rights or other Community law, in particu­ lar the right to property, the right to pursue a trade or profession, the principle of equality and the principle of proportionality?'

Question 1

21 By its first question the national court asks in effect whether the basic regulation should not be declared invalid on the ground that it was not 'appropriate' within the meaning of Article 75(1)(c) of the EEC (now the EC) Treaty.

22 In that connection, Article 74 of the EC Treaty provides that, in relation to trans­ port, the objectives of the Treaty are to be pursued by the Member States within the framework of a common transport policy. Under Article 75, for the purpose of implementing Article 74 and taking into account the distinctive features of trans­ port, the Council is to lay down a number of rules that are specifically described and also 'any other appropriate provisions' [Article 75(1)(c) of the EEC Treaty].

26 In this case, as the Council itself has emphasized, it was called upon, at the time the basic regulation was adopted, to analyse a worrying social and economic situ­ ation, described in the sixth and seventh recitals to the preamble to that regulation, and to make, on that basis, political choices as to the means that seemed to it most appropriate. The Council had to reconcile concerns arising from the overcapacity in the inland waterways sector — and particularly the problems connected with a substantial reduction in that overcapacity — with the appropriateness of social measures in favour of persons working in that sector. As the second recital in the preamble to the basic regulation shows, it did so by taking account of a medium- term forecast of the market's development, in accordance with data provided by the Commission and collected in close collaboration with organizations represent­ ing the sector at European level.

27 It would appear at first sight that, by adopting a regulation for reducing structural overcapacity so as to deal with an undeniably serious economic and social situation

I - 4503

JUDGMENT OF 17. 7. 1997 —JOINED CASES C-248/95 AND C-249/95

in the sector, and by organizing for that purpose a scrapping scheme financed by the sector itself, the Council has not clearly exceeded the bounds of its discretion. The method it chose to deal with the sector's problems would appear to be an appropriate contribution to its structural improvement, and thus to alleviating its problems.

28 Apart from that initial assessment, it needs to be examined whether, as the plain­ tiffs in the main proceedings claim, the rules in question are vitiated by defects capable of rendering them invalid.

33 Thirdly, the plaintiffs argue that the premiss underlying the basic regulation, namely that in order to improve the economic position of inland waterway trans­ port it is sufficient to share a fixed volume of freight between a smaller number of vessels, is erroneous because it does not take account of the fact that river trans­ port is in competition with road and rail transport.

34 The first point to make in that respect, as the Advocate General observes in para­ graph 41 of his Opinion, is that inland waterway transport is not wholly inter­ changeable with other methods of transport since, on account of the very limited network on which it depends, it cannot offer the same flexibility as road transport or even the lesser flexibility of rail transport. Moreover, the reduction of structural overcapacity, which is aimed essentially at aligning supply and demand in the sec­ tor concerned, does not necessarily imply a reduction of the competitive capacity of that sector in relation to others.

35 Fourthly, the plaintiffs argue that the basic regulation has merely resulted in the imposition of an extra charge on competitive operators, by forcing them to finance the scrapping of vessels belonging to uncompetitive operators who would, in any event, have been obliged to withdraw, without receiving any consideration at all.

36 That argument cannot be accepted. The plaintiffs have failed to demonstrate that the annual contributions levied on vessel owners added so significantly to operat­ ing costs as to impair their competitive position and that therefore, in adopting the

40 Finally, the plaintiffs argue that some of the detailed rules concerning the granting of scrapping premiums are arbitrary. They refer in that respect to the rules con­ cerning the priority given to the lowest premium applications, referred to in para­ graph 15 above, and to the rule, referred to in paragraph 14 above, that an applica­ tion for a premium may not be withdrawn.

I - 4506

SAM SCHIFFAHRT AND STAPF v GERMANY

41 As to that argument, Article 6(1) of the basic regulation provides that the condi­ tions under which scrapping premiums may be obtained are determined by the implementing regulation. Therefore, even if the detailed rules for the granting of premiums were to be held illegal, such a defect would not justify a challenge to the validity of the basic regulation or the obligation on owners to contribute to the scrapping funds in accordance with Article 4 thereof.

42 In any event, the plaintiffs have not refuted the Commission's arguments that, first, the system of adjustable premiums ensures the best possible use of financial resources and, second, that the impossibility of withdrawing a premium applica­ tion is necessary in order to prevent speculation as to the amounts of scrapping premiums and thus to implement the premium system in a regular manner.

43 It follows that the line of argument to the effect that the scrapping programme established by the basic regulation did not constitute an appropriate response to the crisis in the sector, and was not therefore 'appropriate' within the meaning of Article 75(1)(c) of the EEC Treaty, must be rejected.

47 Even if the validity of a measure might, in certain cases, be assessed by reference to new factors which arose subsequently to its adoption, the documents before the Court do not permit the conclusion that any such factors exist in this case, as the Advocate General has pointed out in paragraph 39 of his Opinion. First, the period in issue in the main proceedings is the financial year 1990, which was the first year in which the basic regulation applied. Moreover, the information referred to in paragraph 30 of this judgment shows that the structural overcapacity which existed in the inland waterways sector at the time the regulation was adopted has not been entirely reduced in the following years.

48 The reply to the national court must therefore be that examination of Questions 2 and 3 has revealed no factor of such a kind as to affect the validity of the basic regulation.

Question 4

49 By its fourth question, the national court asks in effect whether the legislation in question should not be declared invalid on the grounds that the obligation it imposes to pay contributions for the year 1990 infringes fundamental rights or other rules of Community law, in particular the right to property, the freedom to pursue a trade or business, the principle of equality and the principle of propor­ tionality.

I - 4508

SAM SCHIFFAHRT AND STAPF v GERMANY

I - 4509

JUDGMENT OF 17. 7. 1997 — JOINED CASES C-248/95 AND C-249/95

capacity in the fleets operating on the waterway networks appreciably affects 'the economics of transport services', which, in their submission, means the economics of transport services in general, including those by road and rail.

55 Such an argument presupposes that all transport sectors are in comparable situa­ tions. As the Commission has argued, however, the owners of other means of transport, such as road and rail, are in an objectively different situation, since they are not experiencing overcapacity comparable to that in the inland waterways sec­ tor.

56 There are therefore no grounds for holding that the Council erred in its conclu­ sion, expressed in the ninth recital in the preamble to the basic regulation, that responsibility for structural improvements in a given sector of the economy lay primarily with operators in the sector and that, therefore, the cost of any system introduced had to be borne by inland waterway transport undertakings.

57 Thirdly, the plaintiffs argue that the exclusion of towing vessels from the scope of the basic regulation is unjustified, and constitutes discrimination against the own­ ers of other vessels.

60 In response to that argument, it must be observed that Article 6(3) of the basic regulation provides that contributions are to be calculated on the basis either of deadweight tonnage for cargo-carrying vessels or of the motive power of the vessel for pusher craft. Such a method of calculating contributions, by placing vessels of a given capacity in equal competitive conditions, complies with the injunction in the 10th recital in the preamble to the basic regulation that competition is not to be distorted, whilst at the same time being achievable and verifiable in practice. As the Commission has pointed out, calculation of the contribution on the basis of the individual utilization of more than 10 000 vessels would have given rise to substan­ tial administrative and supervisory difficulties. It cannot therefore be maintained that the Council committed a manifest error of assessment by deciding to calculate contributions on the basis either of deadweight tonnage for cargo-carrying vessels or the motive power of the vessel for pusher craft.

61 Fifthly, the plaintiffs argue that the legislation at issue is discriminatory in its effects, in that the beneficiaries of the scrapping programme are essentially large shipping companies which reinvest the scrapping premiums in building new ves­ sels.

.2 In reply to that argument, it is sufficient to point out that, in accordance with the 11th recital in the preamble to the basic regulation, Article 8(1 )(a) requires the owner of a new vessel either to scrap a tonnage of carrying capacity equivalent to the new vessel without receiving a scrapping premium or, if he does not scrap a vessel, to pay a special contribution equal to the scrapping premium for a tonnage equal to that of the new vessel. In its judgment in Joined Cases C-13/92, C-14/92, C-15/92 and C-16/92 Driessen and Others v Minister van Verkeer [1993] ECR I-4751, paragraph 36, the Court held that that rule was an appropriate way of lim­ iting new investments in a sector characterized by structural overcapacity.

66 The plaintiffs argue that the basic regulation infringes the principle of proportion­ ality, on the ground that it would have been possible to remedy any overcapacity by less stringent measures, such as a prohibition on night-time and week-end navi­ gation.

67 Under the Court's case-law, in order to establish whether a provision of Commu­ nity law complies with the principle of proportionality, it must be ascertained whether the means which it employs are suitable for the purpose of achieving the desired objective and whether they do not go beyond what is necessary to achieve it (judgment in United Kingdom v Council, cited above, paragraph 57; Case C-233/94 Germany v Parliament and Council [1997] ECR 1-2405, paragraph 54).

I-4512

SAM SCHIFFAHRT AND STAPF v GERMANY

68 In this case, as the German Government has pointed out, a prohibition on night­ time and weekend navigation would not be less stringent for each vessel owner than the system of contributions, as it would artificially reduce the capacity of the vessels concerned, thus inevitably worsening their economic position.

69 Therefore, the Council being entitled to base its assessment on findings of a gen­ eral nature, it cannot be maintained that the basic regulation is vitiated by a mani­ fest error, or that the Council manifestly exceeded the bounds of its discretion by adopting a scrapping scheme to improve the structure of the inland waterways sec­ tor.

freedom to pursue a trade or business may be restricted, provided that those restrictions in fact correspond to objectives of general interest pursued by the Community and do not constitute a disproportionate and intolerable interference, impairing the very substance of the rights guaranteed (judgment in Case C-280/93 Germany v Council [1994] ECR I-4973, paragraph 78).

73 In the light of those criteria, the Court finds that the disputed legislation, which is designed to remedy a worrying economic and social situation in the inland water­ ways sector, corresponds to objectives of general interest pursued by the Commu­ nity.

74 Moreover, as has been held at paragraphs 27, 32, 36 and 37 of this judgment, the Council had reasonable grounds for taking the view that the system of contribu­ tions to scrapping funds constituted a solidarity measure that was appropriate and beneficial for the whole sector in the context of its restructuring. Therefore, the obligation to contribute, which is in any event relatively modest, being, as pro­ vided by Article 3(1) of the implementing regulation, between ECU 0.36 per tonne and ECU 3.00 per tonne depending on the type and category of vessel, cannot be regarded as a disproportionate and intolerable interference, impairing the very substance of those rights.

75 Therefore, the line of argument alleging infringement of the right to property and the freedom to pursue a trade or business must be rejected.

76 The reply to the national court must therefore be that examination of the fourth question has revealed no factor of such a kind as to affect the validity of the dis­ puted legislation.

in answer to the questions referred to it by the Oberverwaltungsgericht für das Land Nordrhein-Westfalen by orders of 29 May 1995, hereby rules:

Examination of the questions referred has revealed no factor of such a kind as to affect the validity of Council Regulation (EEC) No 1101/89 of 27 April 1989, on structural improvements in inland waterway transport, and of Commission Regulation (EEC) No 1102/89 of 27 April 1989 laying down certain measures for implementing Regulation No 1101/89, as amended by Commission Regu- lation (EEC) No 3685/89 of 8 December 1989.

Moitinho de Almeida Gulmann Edward

Puissochet Wathelet

Delivered in open court in Luxembourg on 17 July 1997.

R. Grass J. C. Moitinho de Almeida