C-372/96

PONTILLO v DONATAB

OPINION OF ADVOCATE GENERAL MISCHO delivered on 2 April 1998 *

1. In proceedings between Antonio Pontillo cies, which are obliged to buy them in at the and Donatab, the Pretura Circondariale di intervention price, or sell them on the market. Caserta has referred to the Court of Justice for a preliminary ruling two questions con- cerning the validity of Council Regulation (EEC) N o 1738/91 of 13 June 1991 fixing, for the 1991 harvest, the norm and intervention prices and the premiums granted to pur- chasers of leaf tobacco, the derived interven- 3. In order to encourage purchases from pro- tion prices for baled tobacco, the reference ducers at a price which is as close as possible qualities, the production areas and the guar- to the norm price, Regulation 727/70 3 pro- anteed maximum quantities and amending vides that, under certain conditions, a pre- Regulation (EEC) N o 1331/90. 1 mium is to be granted to persons who pur- chase leaf tobacco direct from Community producers and who subject the product thus purchased to first processing and market prep- aration. The premium may also be granted to producers who subject their own leaf tobacco to first processing and market preparation. 4 Legal background Under Article 4(4) of that Regulation, before 1 November each year the Council is to fix the amount of the premium for each variety applicable to the crop of the following cal- endar year.

2. Council Regulation (EEC) N o 727/70 of 21 April 1970 on the common organisation of the market in raw tobacco 2 provides for a 4. In order to curb any increase in the Com- support system based on norm prices and munity's tobacco production and at the same intervention prices fixed by the Council, time to discourage the growing of varieties before 1 August each year, in respect of which are difficult to dispose of, Council Community-grown leaf tobacco for the crop Regulation (EEC) N o 1114/88 of 25 April of the following calendar year. Producers may 1988 5 added a paragraph 5 to Article 4 of either sell their products to intervention agen- Regulation N o 727/70.

The reductions referred to in the third sub- '5. The Council, acting as indicated in Article paragraph shall not exceed 5% for the 1988 43(2) of the Treaty, shall lay down every year, harvest and 15% for the 1989 to 1993 har- for each tobacco variety or group of varieties vests. produced in the Community for which prices and premiums are fixed, a maximum guaran- teed quantity for the following year's harvest, taking into account the market situation and the socio-economic and agricultural situation in the areas concerned. The Council shall set For the purposes of applying this paragraph, the maximum guaranteed quantities for the the Commission shall establish before 31 July 1990 harvest at the same time as for the 1989 whether production exceeds the maximum harvest. The overall maximum guaranteed guaranteed quantity for a variety or group of quantity for the Community is hereby set at varieties. 385 000 tonnes of leaf tobacco for each of the 1988 to 1993 harvests.

Detailed rules for the application of this para- graph shall be adopted in accordance with the procedure laid down in Article 17.'

6. The prices and premiums for the 1991 har- vest were fixed for the Burley I variety by Regulation N o 1738/91. Without prejudice to Articles 12a and 13, for each 1% by which the maximum guaranteed quantity is exceeded per variety or group of varieties, the intervention prices and the pre- miums concerned shall suffer a reduction of 7. By that regulation the Council lowered the intervention price from 2 421 ECU/kg 6 — See Council Regulation (EEC) No 1251/89 of 3 May 1989 (1990 harvest) to 2 102 ECU/kg (harvest amending Regulation (EEC) No 727/70 (OJ 1989 L 129, p. 1991), and the processing premium from 2 16) and Council Regulation (EEC) No 1329/90 of 14 May 1990 amending Regulation No 727/70 (OJ 1990 L 132, p. 25). 103 ECU/kg to 1 748 ECU/kg.

12. The Pretura Circondariale di Caserta then referred a question to the Court of Justice, 8 seeking a preliminary ruling as to the validity 9. Mr Pontillo manages an agricultural under- of Regulation N o 1738/91. The Pretura con- taking in the province of Caserta, Italy. He sidered that the regulation concerned had sold his Burley I tobacco harvested in 1991 to fixed the M G Q for tobacco of the Burley I the tobacco processing company Donatab Sri, variety retrospectively. also located in Caserta. Donatab applied to, and obtained from, the intervention agency (Azienda di Stato per gli Interventi nel Mer- cato Agricolo (AIMA) — Settore Tabacco) payment in advance, against a deposit, of the premium referred to in Article 3(1) of Regu- 13. The Court, in its judgment in that case, lation N o 727/70. ruled that consideration of the question referred to it had not disclosed any factor of such a kind as to affect the validity of the regulation at issue: Regulation N o 1738/91 did not amend the M G Q for tobacco of the Burley I variety harvested in 1991 since the 10. As a consequence of Regulation N o M G Q concerned had already been fixed 2178/92, Donatab was obliged to make refunds in Annex V of Council Regulation (EEC) to reflect the reduction in the rate of the

8 — Joined Cases C-133/93, C-300/93 and C-362/93 Crispokoni and Others [1994] ECR I-4863, hereinafter 'the Crispokoni ll 7 — OJ 1992 L 217, p. 75. judgment'.

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N o 1331/90 of 14 May 1990, 9 that is to say the tobacco crop year that even the most before the growers concerned had had to take prudent and alert growers were left with their decisions regarding the 1991 harvest. no room for manoeuvre?

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had to draw up their plans for the 1991 har- the Italian and Greek Governments, adds vest, that is, in November 1990, or at the time that: when the tobacco had to be planted out, that is, in February 1991'.

'It cannot be accepted that the reduction imposed was one of the usual business risks 18. Since the regulation concerned was dated which any prudent and well-informed p r o - 13 June 1991 but was not published until 26 ducer should normally be able to anticipate. June 1991, the Pretura considers that 'it con- Past conditions on the Burley I tobacco market travenes the principle of the protection of — on which the growers reasonably based legitimate expectations through its retrospec- their decisions regarding production policy at tive effect on production which was already the beginning of the 1991 tobacco crop year under way and organised on the basis of irre- — actually encouraged investment in growing. versible choices'. The prices and premiums for the 1990 harvest were higher than those set for the 1989 har- vest and the M G Q had not been exceeded.'

of the premium, had already been made and 26. Despite all the sympathy which I have recorded. 11 for that argument, I am however obliged to point out that that judgment concerned the introduction of new arrangements during the course of the year, namely the M G Q system. In that instance it was a matter of changing from a system of unlimited guarantees to a system comprising a guarantee which 23. It is therefore surprising to find that the decreased steeply according to the quantity Commission, the guardian of the Treaties, did produced. The producers of the variety con- not submit its price proposals for the 1991 cerned in that case could not foresee at the harvest until April 1991. As a result, the time of planting that the Council would intro- Council was unable to fix the norm prices duce such a quota system towards the end of and intervention prices before 1 August 1990 the year and thus amend the system which and the premiums before 1 November 1990, had previously applied. It was in that context as it was required to do under Regulation N o therefore that the Court enjoined the Council 727/70. to announce in good time any measures affecting producers' investments.

24. There can be no doubt that the dates laid down in Regulation N o 727/70 are intended 27. However, unlike the plaintiffs in the Cri- to enable producers to take decisions regarding spoltoni I case, the producers of the Burley the variety of tobacco they are going to plant (Italian) tobacco variety should have foreseen in full knowledge of the facts. that the Council would adopt a regulation fixing prices and premiums applicable to the 1991 harvest. Regulation N o 1331/90 was, by definition, applicable solely to that particular harvest. Until the adoption of Regulation N o 1738/91 there was a legal lacuna.

A possible reduction in their earnings cannot therefore be contrary to the principle of the protection of legitimate expectations.'

31. First, it is beyond doubt that the Council has a discretion as regards fixing prices and premiums. The Court has consistently so held, as in the Crispoltoni II judgment, 13 which concerned the same regulation: 32. It is clear that, even if guaranteed prices had been rising during the preceding mar- keting years, as the applicant in the main pro- ceedings points out, economic operators could not expect that trend to continue or for prices to be maintained at the level of the most recent 'It should be noted that whilst the protection year. of legitimate expectations is one of the fun- damental principles of the Community, traders cannot have a legitimate expectation that an existing situation which is capable of being altered by the Community institutions in the exercise of their discretionary power will be maintained; this is particularly true in an area 33. The adoption — albeit belated — of Regu- such as the common organisation of the mar- lation N o 1738/91 derives from the Council's kets whose purpose involves constant adjust- obligation to fix prices and premiums annu- ally, and, when discharging that obligation, the Council has a discretion as regards the 13 — Judgment cited above, paragraph 57 et seq. level of prices and premiums.

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34. It is therefore apparent that the legitimate — what prices will ultimately apply in prac- expectations of tobacco producers have not tice if it is found that the M G Q have been been infringed since those producers should, exceeded. in the first place, have been awaiting the adoption of a regulation fixing prices and premiums and, in the second place, they could not legitimately expect a certain level of prices and premiums to be maintained.

14 — Regulation N o 1114/88 was adopted on the following 36. At all events, it is unacceptable for the grounds: 'Whereas in order to curb any increase in the Community's Council and the Commission — now or in tobacco production and at the same time to discourage the the future — to be able to ignore with impu- growing of varieties which are difficult to dispose of, provi- sion should be made for a proportional reduction in the nity the dates laid down in Regulation No prices and premiums if production exceeds a maximum guaranteed quantity fixed for each harvest; whereas certain 727/70 and thus oblige growers to make their costs are added to the intervention price to obtain the derived intervention price; whereas the application of the reduction production choices when faced with the coefficient to the derived intervention price must not affect double uncertainty of: such costs; Whereas the maximum quantity must be established particu- larly in the light of production statistics and the market situ- ation; whereas in order to continue to implement a policy aimed at encouraging the most sought-after varieties and to take account of specific socio-economic and regional fea- tures of tobacco production, a maximum guaranteed quan- tity should be fixed for each variety or group of varieties; whereas provision should be made, for a limited period, for a ceiling on any reduction in the prices and premiums; whereas Regulation (EEC) N o 727/70 as last amended by Regulation (EEC) N o 1974/87 should be amended accord- — what prices will apply in principle; ingly.'

44. By its second question, the national court seeks to ascertain whether Regulation N o 1738/91 constitutes a breach of essential pro- 40. Regulation N o 1738/91 reduced the prices cedural requirements in that it fails to give of all varieties of tobacco: seven of them were any reasons, whether express or implied, for reduced by approximately 13% and nine its provisions concerning Burley I tobacco, others by 6%. which are more strict than those concerning

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other tobacco varieties even though excess 47. In that connection, the Court has ruled production of those varieties had been even that 'as far as concerns general acts, especially higher. regulations, the requirements of Article 190 of the Treaty are satisfied if the statement of reasons given explains in essence the mea- sures taken by the institutions and that a spe- cific statement of reasons in support of all the details which might be contained in such a measure cannot be required, provided such details fall within the general scheme of the measures as a whole'. 17

45. The Greek Government observes that 'the preamble to Regulation N o 1738/91 is gen- eral in scope' and acknowledges that 'it is for- mally similar to the preambles usually con- tained in regulations fixing prices and premiums for tobacco'. It maintains, how- ever, that 'the preamble does not contain a sufficient statement of reasons to disclose the grounds which led to the adoption of the 48. The five annexes to Regulation N o measures concerned or the objectives which 1738/91 give details for each of the 34 tobacco they pursued'. It concludes from this that 'it varieties: is impossible to verify whether the measures adopted were necessary and appropriate'.

52. According to the plaintiff in the main proceedings, the second question referred by — the M G Q for each variety and group of the Pretura not only relates to a breach of varieties. essential procedural requirements as a result of failure to state the grounds on which the regulation is based but also raises the issue of a possible breach of the principle of equal treatment as between the different varieties. It therefore wonders whether 'the growers of Burley tobacco have been subject to discrimi- nation, particularly if it is considered that that 49. Without wishing to detract from the variety was penalised without any explana- importance of prices and premiums, I feel it tion being given'. would be excessive to require the Council to state specific grounds for each of the numerous measures adopted under Regulation N o 1738/91. That would have been impossible in practice.

53. In that connection it should be mentioned that, in the absence of proof of any misuse of

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power, the Council's decision to reduce pre- 54. Thus, consideration of the second ques- miums and prices for Burley I tobacco con- tion likewise discloses no factor of such a stitutes an expression of a policy choice, made kind as to affect the validity of Regulation by virtue of a discretionary power, and that No 1738/91. decision cannot therefore be regarded as a penalty for that variety. Moreover, the choice made by the Council in promoting the pro- duction of certain varieties involves neces- sarily and by definition differentiation between varieties.

Conclusion

55. In the light of the foregoing I propose that the Court give the following answer to the two questions referred by the Pretura Circondariale di Caserta:

Consideration of the two questions submitted has disclosed no factor of such a kind as to affect the validity of Council Regulation (EEC) N o 1738/91 of 13 June 1991 fixing, for the 1991 harvest, the norm and intervention prices and the premiums granted to purchasers of leaf tobacco, the derived intervention prices for baled tobacco, the reference qualities, the production areas and the guaranteed maximum quantities and amending Regulation (EEC) N o 1331/90.