C-27/96

JUDGMENT OF 27. 11. 1997 — CASE C-27/96

J U D G M E N T O F T H E C O U R T (Fifth Chamber) 27 November 1997 *

In Case C-27/96,

R E F E R E N C E to the Court under Article 177 of the EC Treaty by the Länsrätt i Jönköpings Län (Sweden) for a preliminary ruling in the proceedings pending before that court between

Danisco Sugar AB

and

composed of: M. Wathelet, President of the First Chamber, acting as President of the Fifth Chamber, J. C. Moitinho de Almeida, D . A. O. Edward, P. Jann and L. Sevón (Rapporteur), Judges,

Advocate General: A. La Pergola, Registrar: H . von Holstein, Deputy Registrar,

after considering the written observations submitted on behalf of:

— Danisco Sugar AB, by Lars Gildéus, Advokat, Malmö, and Otfried Lie- berknecht, Michael Schütte and Wolfgang Kirchhoff, Rechtsanwälte, Brussels,

— the Swedish Government, by Erik Brattgård, Departementsråd in the Foreign Trade Department of the Ministry of Foreign Affairs, acting as Agent,

— the Commission of the European Communities, by Eugenio De March, Legal Adviser, and Knut Simonsson, of its Legal Service, acting as Agents,

Judgment

1 By order of 26 January 1996, received at the Court on 30 January 1996, the Län- srätt i Jönköpings Län (Jönköping County Administrative Court) referred to the Court for a preliminary ruling under Article 177 of the EC Treaty two questions on the interpretation of Articles 137(2), 145(2), and 149(1) of the Act concerning the conditions of accession of the Kingdom of Norway, the Republic of Austria, the Republic of Finland and the Kingdom of Sweden and the adjustments to the Treaties on which the European Union is founded (OJ 1994 C 241, p. 21; herein- after 'the Act of Accession'), Articles 39 and 40 of the EC Treaty, Council Regu- lation (EEC) N o 1785/81 of 30 June 1981 on the common organization of the mar- kets in the sugar sector (OJ 1981 L 177, p. 4) and Commission Regulation (EC) N o 3300/94 of 21 December 1994 laying down transitional measures in the sugar sector following the accession of Austria, Finland and Sweden (OJ 1994 L 341, p. 39).

2 Those questions were raised in proceedings between Danisco Sugar AB (hereinaf- ter 'Danisco') and the Allmänna Ombudet (Public Attorney), representing the Statens Jordbruksverk (the Swedish Agricultural Board, hereinafter 'the Jordbruks- verk'), concerning the payment of a national levy on sugar stocks, which was adopted by the Swedish Parliament on 20 December 1994 and which entered into force on 31 December 1994, one day before the accession of the Kingdom of Swe- den to the European Union. The levy is charged on sugar which was held in stock in Sweden on 31 December 1994.

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s Article 149(1) provides:

'If transitional measures are necessary to facilitate the transition from the existing regime in the new Member States to that resulting from application of the common organization of the markets under the conditions set out in this Title, such mea- sures shall be adopted in accordance with the procedure laid down in Article 38 of

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JUDGMENT OF 27. 11.1997 — CASE C-27/96

Regulation N o 136/66/EEC or, as appropriate, in the corresponding Articles of the other Regulations on the common organization of agricultural markets. These measures may be taken during a period expiring on 31 December 1997 and their application shall be limited to that date.'

The common organization of the markets in the sugar sector

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DANISCO SUGAR v ALLMÄNNA OMBUDET

that hour, and — pursuant to Article 145(2) of the Act of Accession — to export, without Community intervention, a quantity equal to the difference between the quantity recorded and the quantity of normal carryover stock fixed.

The Swedish law

9 According to Article 1 of the Lag om Lageravgift på Socker och Ris (Law 1994: 1704 imposing a levy on stocks of sugar and rice; hereinafter the 'Lageravgiftslag'), which was adopted by the Swedish Parliament on 20 December 1994 and entered into force on 31 December 1994, any person holding stocks of sugar or rice o n the latter date is liable to pay a levy thereon to the State. Under Article 2 of the Lageravgiftslag, the levy is charged only on the quantity by which the total stock exceeds 3 tonnes. Article 3 sets the levy at SKR 1.80 per kilo of white sugar and SKR 1.65 per kilo of raw sugar.

io According to the preparatory documents on the basis of which the Lageravgiftslag was drafted (proposal of 10 November 1994, Prop. 1994/95: 43), its primary objec- tive was to prevent the accumulation of stocks over and above the quantity which could be regarded as representing normal carryover stock for the purposes of Article 145(2) of the Act of Accession. The levy was also to compensate for the costs which the Kingdom of Sweden might have to bear pursuant to Article 145(2) of the Act of Accession in the event of stocks being abnormally high. Lastly, intro- duction of the levy was justified in view of the profits which would ensue from the application of Community provisions after accession, since before accession the selling price of sugar in the Community was approximately 30% higher than in Sweden. The aim was to charge a levy equivalent to the increase in the market price brought about by accession.

n Pursuant to the Lageravgiftslag, the Jordbruksverk demanded, by decision of 28 June 1995, payment of SKR 434 891 586 by way of the levy on sugar stocks.

M Danisco Sugar challenged that decision before the Länsrätt i Jönköpings Län and, accordingly, sought its annulment. In support of its action, it primarily argues that the decision taken by the Kingdom of Sweden to introduce unilaterally a national sugar tax was an unlawful transitional measure and contrary to the common orga- nization of the markets in sugar in that it gave rise to a distortion of competition between undertakings and discrimination as regards beet growers. Danisco pointed out that, under an agreement entered into with the Swedish Association of Beet Growers, it had undertaken to pass on to the growers more than half the increase in the price of sugar resulting from accession to the European Union.

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DANISCO SUGAR v ALLMÄNNA OMBUDET

is The Länsrätt decided to stay proceedings and refer the following questions to the Court for a preliminary ruling:

' 1 . O n a true construction of the Act of Accession of Sweden, Finland and Aus- tria, in particular of Articles 137(2), 145(2) and 149(1), are decisions taken at national level concerning levies on normal transitional stocks of sugar as set out in the Swedish Sugar Law, as amended, to be regarded as unlawful transitional mea- sures?

the European Union from adopting, on the eve of its accession, legislation introducing a levy on sugar being then held in stock within that State.

i7 Article 149(1) of the Act of Accession concerns the detailed rules governing the adoption by the Community of transitional measures relating to the common agri- cultural policy.

is Since that provision does not concern the allocation of competence between the Community, the Member States and States applying for accession, it has no bear- ing on the main proceedings.

i9 All the other measures referred to by the national court concern the determination of the applicable legislation in matters relating to the common agricultural policy after accession. That being so, there is no ground for drawing any distinction between the provisions of the Act of Accession referred to in Question 1 and those mentioned in Question 2; accordingly, both questions should be considered together.

20 Danisco and the Danish Government maintain that by adopting the Lager- avgiftslag after the Act of Accession had been signed, the Kingdom of Sweden contravened the 'principle of good faith', by virtue of which a State must refrain from acts which would defeat the object and purpose of a treaty, a principle laid down in Article 18 of the Vienna Convention on the Law of Treaties of 23 May 1969. O n that point, they rely on the judgment in Case T-l 15/94 Opel Austria v Council [1997] E C R 11-39, in which it was held that this principle must be respected by the Community institutions and that, since it is the corollary in pub- lic international law to the protection of legitimate expectations, which is a general principle of Community law, an individual could rely on it before that Court in proceedings for judicial review of a Community measure.

23 The Commission, too, points out that the Swedish levy on sugar stocks is a meas- ure prior to the accession of the Kingdom of Sweden to the European Union, which concerns quantities of sugar produced entirely during the period before accession, in accordance with the relevant national arrangements governing the sugar market. Like any other provision of national law, it could be regarded as incompatible with the Treaty provisions on agricultural products and, in particular, with those concerning the common organization of the markets, only if it ran counter to the objectives of the common agricultural policy or impeded the functioning of the mechanisms used to attain those objectives. In so far as it was designed to avoid excessive stocks, that provision complied with the Act of Acces- sion. The objective of 'creaming off' the profit which sugar manufacturers were t o derive from accession is not contrary to the common organization of the markets in the sugar sector, the provisions of which are not supposed to guarantee Swedish

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sugar manufacturers or beet growers a particular level of income in respect of sugar produced before accession.

24 In order to establish whether a law introducing a levy on sugar stocks, such as the Lageravgiftslag, is contrary to the provisions of Community law concerning the common organization of the markets in the sugar sector, it must be determined whether that law concerns an area for which the Community rules make exhaus- tive provision or interferes with the proper functioning of the mechanisms pro- vided by the common organization of the markets, in particular through its influ- ence on price formation or on the structure of agricultural holdings (see Case 222/82 Apple and Pear Development Council v Lewis [1983] E C R 4083, para- graphs 23 and 31, and Case 218/85 Ceratei v Le Campion [1986] E C R 3513, para- graph 13).

28 O n the contrary, failure to charge a levy on sugar stocks at the time of accession would have placed Swedish sugar producers at an advantage compared with C o m - munity sugar producers, since they would have been able to benefit from the higher Community selling prices without, however, having contributed to the self- financing arrangements for the sector. That is why both the Treaty of Accession and Regulation N o 3300/94 contained provisions designed to prevent the constitu- tion of sugar stocks for purposes of speculation. The fact that much of the sugar produced during the 1994/95 marketing year had already been disposed of before 1 January 1995 (third recital in the preamble to Regulation N o 3300/94) was taken into account when it was decided to apply the Community selling price to that sugar without requiring any correlative contribution to the self-financing arrange- ments.

29 However, such a concession on the part of the Community with regard to a quan- tity of sugar regarded as marginal in Community terms does not mean that the Community provisions prohibited the adoption of legislation designed to elimi- nate, before accession, the profit which Swedish sugar producers expected to gain from the fact of accession and the resulting difference in selling price, so long as any legislation such as the Lageravgiftslag does not interfere with the functioning of the mechanisms for the common organization of the markets in the sugar sector.

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30 The subsequent amendment to the Lageravgiftslag, the purpose of which was sim- ply to reduce the rate of the levy, does not invalidate that conclusion.

O n those grounds,

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

in answer to the questions referred to it by the Länsrätt i Jönköpings Län by order of 26 January 1996, hereby rules:

Articles 137(2) and 145(2) of the Act concerning the conditions of accession of the Kingdom of Norway, the Republic of Austria, the Republic of Finland and the Kingdom of Sweden and the adjustments to the Treaties on which the European Union is founded, Articles 39 and 40 of the EC Treaty, Council Regulation (EEC) N o 1785/81 of 30 June 1981 on the common organization of the markets in the sugar sector and Commission Regulation (EC) N o 3300/94 of 21 December 1994 laying down transitional measures in the sugar sector fol- lowing the accession of Austria, Finland and Sweden do not preclude a State acceding to the European Union from adopting, on the eve of its accession, legislation introducing a levy on sugar being then held in stock within that State.

Wathelet Moitinho de Almeida Edward

Jann Sevón