C-289/97

3. It claims that there was no justification for the Council to impose upon Italian sugar producers, by classifying Italy as a deficit area, the obligation to pay a higher price to their beet suppliers and therefore brought proceedings against Agricola before the Guidice di Pace, in which Agricola was ordered to reimburse to it 2. Eridania paid its supplier, as it was the sum of ITL 2 710 672, paid by way of required to do, a price corresponding to the increase which, it argued, had been the minimum price for beet, calculated on unlawfully imposed by Regulation the basis of Article 5(3) of Council Regula- No 1580/96. tion (EEC) No 1785/81 of 30 June 1981 on the common organisation of the markets in the sugar sector 1(the 'basic regulation'), as amended by Council Regulation (EC) No 1101/95 of 24 April 1995. 2 Since Council Regulation (EC) No 1580/96 of 30 July 1996 fixing, for the 1996/97 mar- 4. At this point of the account of the keting year, the derived intervention prices dispute, before even coming to the ques- for white sugar, the intervention price for tions submitted to the Court by the Guidice di Pace for a preliminary ruling, I consider that a brief outline should be given of the * Original language: French. 1 — OJ 1981 L 177, p. 4. 2 — OJ 1995 L 110, p. 1. 3 — OJ 1996 L 206, p. 9.

I - 5412

ERIDANIA

common organisation of the markets in the organisation of the markets: every year, sugar sector, so as to enable the provisions before 1 August, the Council must fix, for which Eridania is challenging to be placed the marketing year commencing the fol- in their context. lowing year, in addition to a target price for sugar, an intervention price for sugar, which the intervention agencies are required to pay for the sugar delivered to them by producers (Article 3 of the basic regulation). 5. The common organisation of the mar- kets in the sugar sector, as laid down in the basic regulation, combines a system of quotas and a system of guaranteed prices.

I - 5413

OPINION OF MR MISCHO — CASE C-289/97

12. A distinction is made between areas areas of Italy classified as deficit areas at where production covers or exceeds con- ECU 65.53 per 100 kg and fixing the sumption and the deficit areas. For the minimum price for A and B beet at latter, the prices are increased in order to ECU 46.72 and ECU 32.42 per tonne improve supplies (Article 3(1) and Arti- respectively. cle 5(3) of the basic regulation).

4 — OJ 1996 L 206, p. 7. 5 — OJ 1996 L 161, p. 142.

I - 5414

ERIDANIA

(f) ECU 65.53 for all the areas in Italy.' classifying Italy as a deficit area and the relevance of that classification.

And Article 3 states that: 19. The second, which arises only if the Court of Justice considers that these doubts are unfounded, concerns the actual princi- ple of differentiation between the deficit and non-deficit areas, commonly referred to by the term 'régionalisation' used in the basic regulation, and hence the validity of ' 1 . The minimum price for A beet applic- the basic regulation in so far as it enshrines able in the Community shall be ECU 46.72 that concept. per tonne.

I - 5415

OPINION OF MR MISCHO — CASE C-289/97

application of régionalisation to Italy for regulation provided for the adoption of the the 1996/97 marketing year than with the derived intervention prices before 1 August fact that régionalisation is one of the of the year preceding that during which the mechanisms for managing the sugar market marketing year in question commences so in the Community. as to enable sugar producers to take their decisions in good time, that is to say before beet-sowing operations are commenced. The Council is therefore, it contends, guilty of a manifest abuse — which must be 22. Thus, as regards the first question, I penalised in terms of the validity of the shall examine in turn, as the Court of adopted measure — where it acts a year Justice has been asked to do by the national after the deadline imposed on it in the basic c o u r t , the legality of Regulation regulation. No 1580/96 in the light of its date of enactment, the grounds on which it was based, and its substance, in so far as it classifies all areas of Italy as deficit areas. 26. The period allowed the Council for fixing the derived intervention prices is, Eridania maintains, just as absolute as that allowed to Member States for making quota transfers between sugar producers, which the Court recognised as such in its The belated nature of the price-fixing judgment in Cavarzere Produzioni Indus- triali and Others. 6

2 3 . Does the fact that Regulation No 1580/96 was adopted by the Council on 30 July 1996 and published in the 27. The Council and the Commission, Official Journal on 16 August 1996, however, consider that the date of 1 August whereas, according to Article 3(4) and of the year preceding that during which the Article 3(5) of the basic regulation, this marketing year opens features in the basic should have been done before 1 August regulation only for purposes of guidance. It 1995, affect its validity? is therefore completely erroneous, they contend, to construe that date as an absolute deadline.

30. The Commission also contends that, in the common organisation of markets in the 34. Such a discrepancy between law and sugar sector, prices are fixed annually so practice blandly acquiesced in by the Com- that, if Regulation No 1580/96 were held munity legislature should not, in my view, to be invalid, this would result not in a be shown the slightest indulgence. situation where a previous price would continue to apply because it had not been validly altered but in a situation where, in the absence of any price, the operation of the organisation would be brought to a complete standstill. 35. An attempt has, admittedly, been made to persuade the Court that the maintenance of the 1 August date acts as a powerful incentive for the Community legislature which is on 2 August already aware that its impending decision cannot be long defer- 31. What are we to make of these argu- red. ments?

36. However, apart from the scepticism 32. I will preface my remarks by saying which may be engendered by such a way that it is, it seems to me, wrong that the of encouraging progress in the delicate basic regulation — which is couched in discussions to which the annual fixing of mandatory terms, since it stipulates that agricultural prices generally gives rise, I '[t]he intervention price for white sugar have to say that the effectiveness of the

I - 5417

OPINION OF MR MISCHO — CASE C-289/97

method remains to be demonstrated, given the question arises of the validity of a that the fixing has never, at any event since regulation that has been adopted belatedly 1991, taken place before 13 June and that, but rather examining with the utmost care in 1996, because the 1996/97 marketing whether, because of the lateness, certain year was about to start without the prices principles protecting individuals have been having been fixed, the Commission had to contravened and, accordingly, the rights of adopt precautionary measures. traders have been adversely affected.

I - 5418

ERIDANIA

43. This finding cannot, however, be inter- 47. It should be borne in mind that the preted as an endorsement of all the argu- third recital of the Regulation is worded as ments put forward by the Council and the follows: Commission. Thus, while I agree that the Council does not forfeit the power to adopt the prices for a particular marketing year if it has failed to use that power by 1 August of the year preceding the start of that marketing year, I do not concur with the 'Whereas a deficit supply situation is to be Commission's argument that a declaration foreseen in the areas of production in Italy, of invalidity on grounds of lateness should Ireland, the United Kingdom, Spain, Portu- in any event be ruled out in view of the gal and Finland'. consequences which might ensue there- from.

48. According to Eridania, the Council certainly cannot justify the fixing of a derived intervention price for a particular 44. In my opinion this argument, which I area simply by referring to a foreseeable consider to be very close to the fait deficit situation in that area. accompli doctrine, is, as such, indefensible.

49. It puts forward two arguments in 45. There are cases where illegality must be support of that view. recognised and penalised, however painful the consequences may be.

50. First, it maintains that the fixing of a derived intervention price must be viewed as the introduction of an exception to the normal arrangements, namely the uniform Statement of the reasons on which Regula- application throughout the Community of tion No 1580/96 is based a single intervention price and, as such, must be justified by specifically stating the reasons on which it is based.

52. The Council and the Commission, on the other hand, argue that the fixing of a derived intervention price cannot be regar- ded as the introduction of an exception. On the contrary, it is mandatory if it is 55. In view of the fact that the common established that a deficit situation is fore- organisation of the markets cannot be seeable, and the obligation to state the intended to bring about a partitioning of reasons on which a measure such as the one markets and that prices in the deficit and in question is based cannot extend so far as non-deficit areas cannot be fixed totally to require the Council to specify all the independently, provision is made for the factors which led it to believe that the intervention price for the deficit areas to be measure was necessary. Simply referring to fixed in light of the price laid down for the the existence of a foreseeable deficit situa- other areas, but there is nothing to suggest tion in Italy is certainly unlikely, as is that one of those prices is the rule and the shown by Eridania's action, to deprive the other the exception. These are simply firms in question — which, owing to their different prices, corresponding to different participation in various technical commit- situations. Moreover, I take the view that, tees, are all perfectly aware of the data under the terms of the basic regulation, the taken into consideration by the Council — fixing of a derived intervention price is not of the right to challenge the adopted in any way an optional matter for the measure before a judicial authority. Council. If an area is in deficit, provision must be made for a derived intervention- price for that area.

57. In the present case it was not necessary for the Council to explain what had led it Was the Council entitled to forecast a to believe that a deficit was foreseeable in deficit? each of the six areas for which a derived intervention price was fixed. Here it was, as we shall see later, the result of an evaluation encompassing a whole series of highly technical factors and data (of which, inci- dentally, those working in the sector were 60. According to the basic regulation there well aware) not needing to be explained in is a deficit if total available production is the recitals of a regulation unless — and lower than consumption. Eridania, on the this was not the case in 1996 — the factors one hand, and the Council and the Com- involved were completely new and thus mission, on the other, agree that available required clarification. production is a legal concept which refers not to physical production but to total production of A sugar and B sugar, plus the amount of C sugar carried forward in accordance with the Community rules.

58. I therefore conclude that the statement concerning a foreseeable deficit contained in the recitals in the preamble to Regulation No 1580/96 constitutes an adequate state- 61. Nor, moreover, does Eridania dispute ment of reasons for fixing a derived inter- the fact that, when evaluating the relation- vention price for Italy for the 1996/97 ship between production and consumption marketing year. for the coming marketing year, the institu- tions have no alternative but to make projections on the basis of the data com- 8 — Case 87/78 Welding [19781 ECR 2457, at paragraph 11; municated to them by the Member States see also Case 230/78 Eridania and Società italiana per l'industria degli zuccheri [1979] ECR 2749 and Case 250/84 Eridania and Others [1986] ECR 117, para- concerning both the current marketing year graphs 35 to 40. and the prospects for the coming marketing

63. According to Eridania, such a figure was consistent with production of/ 1 568 250 tonnes during the 1993/94 mar- keting year and 1 558 687 tonnes during the 1994/95 marketing year. This trend, it To this figure should be added 75 000 claims, proves that the figure of 1 461 670 tonnes carried over from the previous tonnes for the 1995/96 marketing year, marketing year. which was affected by particularly unfa- vourable weather conditions in northern Italy, is not relevant.

65. In order to try to settle this debate concerning the production which could reasonably be forecast on the threshold of the 1996/97 marketing year, I believe that it 64. The Council and the Commission, is necessary to bear in mind the circum- however, explained that, when they took stances in which Regulation No 1580/96 their decision, they had reliable data indi- was adopted. The Commission has cating that production was likely to be explained to us that it is around December or January preceding the opening of the 9 — The A and B quotas allocated to Italy total 1 568 250 new marketing year — that is, as will be tonnes. noted in passing, several months after the

I - 5422

ERIDANIA

71. If it is thus agreed that only the figures available during May and, at the latest, the 68. This explains why the two Regulations beginning of June can be taken into Nos 1579/96 and 1580/96 were not for- account, I think that the Council cannot mally adopted, together with many others, be accused of drawing up arbitrary produc- until 30 July and not finally published until tion forecasts, as there was nothing abnor- 16 August. mal about the forecast supplied to it by the

I - 5423

OPINION OF MR MISCHO — CASE C-289/97

Commission on the basis of sown areas and years show that consumption for the first estimated beet yield in terms of sugar. half of a marketing year can vary between 50, 49 or 48% of overall consumption for the year.

The consumption forecast

75. On the supposition that a method based on extrapolation could have been 72. Eridania criticises the method used by used, the low figure of 48% might equally the Commission for estimating consump- well have been taken into account. This, tion, which uses the consumption figures however, would have resulted in an esti- for the last 12 months for which such mated consumption for the 1995/96 mar- figures exist, and proposes using another, keting year of 1 506 612 tonnes. The which consists of extrapolating on the basis margin of uncertainty inherent in this of the figures for the last six months used method was therefore quite considerable. for drawing up statistics; with this method it could be said that consumption hardly changes from one six-month period to another.

reliable. But it seems to me that the method ing year would turn out to be lower than adopted by the Commission, with the for the 1995/96 marketing year (paragraph endorsement of the Council, appears not 49 of the Council's observations). to be implausible and must therefore be accepted in light of the case-law, which traditionally acknowledges that the Com- munity legislature has a certain amount of discretion when assessing the data on which it bases its decisions. 10 79. F u r t h e r m o r e , the Commission explained that a number of events, such as the increase in the storage levies from ECU 2.5 to ECU 3.5 per 100 kilograms which took place on 1 July 1993 and the abolition of frontier controls, were to lead to rejection of the idea that the large fall in consumption during the 1993/94 market- ing year reflected a clear and sustainable trend towards lower consumption in Italy.

I - 5425

OPINION OF MR MISCHO — CASE C-289/97

82. The final results for the 1996/97 mar- had not pointed to a deficit, to cancel the keting year admittedly show that in actual derived intervention price, since to do so fact there was not a production deficit for would have disrupted the sugar sector in that year but a surplus of 33 525 tonnes. Italy. The Council and the Commission were mistaken about consumption, which a m o u n t e d to 1 4 6 7 6 7 5 and n o t 1 532 500 tonnes, as they had forecast. It should, however, be pointed out that the 1 568 000 tonne production forecast which Eridania criticises the Council for 85. I cannot subscribe to an interpretation not using also turned out to be erroneous, of the basic regulation according to which a because it overestimated production by foreseeable deficit for a particular market- 67 000 tonnes (the actual figure was only ing year is not an essential factor in 1 501 000 tonnes). extending the application in a Member State of derived intervention prices, which was justified in the preceding year. Rightly or wrongly, the basic regulation stipulated that régionalisation should be applied on a year-by-year basis and in no case uses the concept of areas with a structural deficit, in which no significance is attached to the disappearance of the deficit in a given 83. This shows — and it is the only respect marketing year. If the Council is today of in which these figures are of interest with the opinion that annual management, with regard to the question before the Court — the variables which this may entail, ought that in this area it is very difficult to make to give way to multiannual management, it an accurate forecast. Provided that the is for it to amend the basic regulation but competent institution has applied a coher- under no circumstances is it open to it to ent method, it cannot be accused of having interpret it in such a way as to negate the exceeded the bounds of its discretion. principles on which it is based.

87. Eridania criticises the basic regulation in three respects: 89. Similarly, there is no point in their taking part in the invitations to tender for exports because the fact that the refund is calculated on the basis of the intervention price for surplus areas means that they — first, that regulation, it claims, runs cannot compete with producers from those counter to the prohibition of discrimi- areas. nation between producers or consu- mers within a common organisation of markets, as laid down in the second subparagraph of Article 40(3) of the EC Treaty; 90. The Council and the Commission deny the existence of discrimination prohibited by the aforementioned Treaty provision. With regard to the principles involved, they argue first of all that the application of derived intervention prices in cases where — secondly, it introduces restrictions on certain production areas are subject to the free movement of sugar within the deficits while others experience surpluses Community, in contravention of Arti- has been recognised as lawful from the cles 30 and 34 of the EC Treaty; point of view of the Treaty rules in various judgments, in particular that of 11 July 1974. 11

— thirdly, it introduces unjustified assis- tance for beet producers in deficit areas. 91. They go on to point out that the derived intervention price is necessary as a means of attracting to the deficit areas the surpluses from other areas, notwithstand- ing the cost of transportation, and that the derived intervention price is always fixed in such a way that the surpluses directed 88. On the first point, Eridania contends towards the deficit areas genuinely serve that sugar producers in the regions where a to supply the market and are not presented derived intervention price is applied are for intervention in order to benefit from the subject to discrimination, since they have to pay a higher price than other producers for the raw material, namely beet, without 11 — Case 11/74 Union des minotiers de la Champagne [1974] being able to obtain higher prices on the ECR 877.

97. Sugar producers in deficit areas are not 94. With regard, finally, to the disadvan- prevented from exporting to other Member tages allegedly affecting producers in deficit States; they are quite simply not encour- areas when it comes to exporting, either to aged to do so, given that their task, other Member States or to non-member precisely because of the supply shortfall countries, the Council and the Commission on their domestic market, is above all to argue that there is nothing unusual about supply that market, on which the interven- such producers being encouraged to supply tion price has been fixed in the light of that their own markets rather than to export objective. and exacerbate the deficit in view of the demand on their natural markets, and that the less attractive nature of the amount of the refund is offset for them by the production levy.

98. With regard to Eridania's complaint 12 — See, in particular, the Eridania case, cited above. concerning the introduction of aid for beet-

I - 5428

ERIDANIA

growers in deficit areas, solely at the purchase price for beet is merely the expense of sugar producers in those same transposition, to another stage in the sugar areas, I find it difficult to see, in view of the production chain, of the higher interven- rather succinct explanations devoted to this tion price for sugar which, as I already matter by Eridania in its written observa- conceded earlier, cannot be considered tions, how it could refute the Council's unlawful in view of the objectives of the argument that the increase in the minimum common agricultural policy.