C-402/98

OPINION OF MR RUIZ-JARABO — CASE C-402/98

O P I N I O N OF ADVOCATE GENERAL RUIZ-JARABO COLOMER delivered on 10 February 2000 *

1. By the question which it has referred for that sector. The amendment entailed sim- a preliminary ruling under Article 177 of plifying the market management mechan- the EC Treaty (now Article 234 EC), the isms, limiting production in order to adapt Tribunale Amministrativo Regionale del it to the requirements of the market and the Lazio (Regional Administrative Court, demands of the budget, and strengthening Lazio) (Italy) is asking the Court of Justice the means of control in order to ensure that to rule on the validity of certain regulations the management mechanisms fully adopted by the Council and the Commis- achieved the objectives of the COM. sion in connection with the common orga- nisation of the market (hereinafter 'COM') in the raw tobacco sector.

The Regulation retained the system by which premiums were paid by the proces- 1. Community law sor to the traditional tobacco producers at the time of delivery of the tobacco. How- ever, in order to limit Community tobacco production and to discourage the produc- tion of varieties which were not readily disposed of, a maximum global guarantee 2. In order to ensure the stability of the threshold was laid down for the Commu- markets, and also a fair standard of living nity, divided into specific guarantee thresh- for the agricultural community in the raw olds for the respective groups of varieties. tobacco sector, in which supply does not correspond to demand, 1Council Regula- tion (EEC) No 2075/92 2 amended the Community rules governing the COM in

'3. On the basis of the quantities allo- 3. Commission R e g u l a t i o n s (EEC) cated ... , Member States shall distribute Nos 3477/92 4 and 3478/92 5 laid down processing quotas on a transitional basis the rules for implementing Regulation for the 1993 and 1994 harvests among the No 2075/92. Article 20 of Regulation first processors in proportion to the average No 3477/92 provides: quantities delivered for processing during the three years preceding the year of the last harvest, broken down by group of varieties. However, production in 1992 and deliver- ies from this harvest shall not be taken into account. The procedure for allocating pro- cessing quotas for the following harvests shall not be affected by this allocation. 'The Member States shall establish a com- puterised database which shall contain, for each processor and each producer, infor- mation identifying their establishments or their holdings, the quotas or the quantities appearing on the cultivation certificates allocated to them and any other informa- tion which may be useful for monitoring the quota system and for the distribution of quotas direct to producers from the 1995 harvest onwards.' 6 3 — The eighth recital in the preamble to Regulation No 2075/92 states: 'Whereas, to ensure that the guarantee thresholds are observed, a processing quota system must be instituted for a limited period; whereas for a transitional 4 — Commission Regulation (EEC) No 3477/92 of 1 December period the Member States must allocate, within the 1992 laying down detailed rules for the application of the guarantee thresholds, processing quotas to the firms con- raw tobacco quota system for the 1993 and 1994 harvests cerned, the Community rules laid down for the purpose (OJ 1992 L 351, p. 11). being applied to ensure fair allocation on the basis of quantities processed in the past, but disregarding any 5 — Commission Regulation (EEC) No 3478/92 of 1 December abnormal production levels; whereas the necessary mea- 1992 laying down detailed rules for the application of the sures will be taken to permit the quotas to be allocated to premium system for raw tobacco (OJ 1992 L 351, p. 17). the producers subsequently, under satisfactory conditions; 6 — The 17th recital to the Regulation states: 'Whereas Member whereas Member States possessing the necessary data to States must now take appropriate action to equip them- allocate quotas to producers on the basis of past perfor- selves with the means necessary for distributing the quotas mance, should be authorised to do so'. direct to producers from the 1995 harvest onwards'.

8 — Proposal for a Council Regulation (EC) amending Regula- 7—Council Regulation (EC) No 711/95 of 27 March 1995 tion (EEC) No 2075/92 on the common organisation of the amending Regulation (EEC) No 2075/92 on the common market in raw tobacco — COM/94/555 final (OJ 1995 organisation of the market in raw tobacco (OJ 1995 L 73, C 46, p. 6). p. 13). 9 — OJ 1995 C 82, p. 3.

I - 5506

ATB AND OTHERS

lished in the Official journal of the Eur- 6. C o m m i s s i o n R e g u l a t i o n (EC) opean Communities No C 46 of 23 Febru- No 1066/95 1 0lays down, for the 1995, ary 1995, page 6, provides, inter alia, the 1996 and 1997 harvests, detailed rules for distribution of quotas only to producers the allocation of the quotas established in and not to first processors (under the Article 9 of Regulation No 2075/92. As current system, Member States had a regards the distribution of production quo- choice whether to implement a system tas, Article 3 provides: based on distribution of quotas to first processors or producers). For the 1995 harvest these quotas shall be based on the average quantities delivered for processing for the 1990, 1991 and 1993 harvests. '... Once the Council Regulation is amended following the consultation of the European Parliament, the Commission intends to amend its detailed implementing rules in order to take into account the changes Member States shall issue the producers introduced into the Council Regulation. In with quota certificates not later than particular, there will be a switch-over from 31 January of the year of harvest. a system of quotas distributed at the level of first processors to a system of quotas distributed at the level of producers. Crops planted for harvest in 1995 will be affected by this change.

The Regulation was published on 13 May 1995 and, therefore, entered into force on 8. Finally, Council Regulation (EC) 14 May 1995. No 1550/95 12 fixed, for the 1995 harvest, the premiums and guarantee thresholds for leaf tobacco by group of tobacco varieties. It entered into force on 30 June 1995, the day on which it was published in the Official Journal. 7. C o m m i s s i o n R e g u l a t i o n (EC) No 1067/95 11 specifies, inter alia, the essential aspects of the cultivation contract, the premium payment systems, the controls and the sanctions.

II. Facts and main proceedings

Article 2 of the Regulation provides:

9. Agricola Tabacchi Bonavicina snc de Mercati Federica (hereinafter 'ATB') and 23 other tobacco producers from the Veneto area have brought proceedings before the Tribunale Amministrativo 'This Regulation shall enter into force on Regionale del Lazio for the annulment of the day following its publication in the the measures and provisions adopted by the Official journal of the European Commu- competent Italian authorities, which dis- nities. tributed the national quota for tobacco production for the 1995 harvest and allo- cated to the applicants their individual quota. Their actions are founded on the alleged invalidity of Council Regulation No 711/95 and Commission Regulations It shall apply from the 1995 harvest... .' Nos 1066/95 and 1067/95.

11 — Commission Regulation (EC) No 1067/95 of 12 May 12 — Council Regulation (EC) No 1550/95 of 29 June 1995 1995 amending Regulation (EEC) No 3478/92 laying fixing, for the 1995 harvest, the premiums and guarantee down detailed rules for the application of the premium thresholds for leaf tobacco by group of tobacco varieties system for raw tobacco (OJ 1995 L 108, p. 11). (OJ 1995 L 148, p. 39).

10. The national court points out that new regime applying the guarantee thresh- tobacco is sown in February and that the olds but to the fact that the legislation was young plants are planted out in the fields at enacted at an inopportune moment and the end of April. Regulation No 711/95 that it impacted on them when tobacco entered into force in April 1995 and the production for the 1995 harvest had detailed rules for its application contained already entered the final phase. Indeed, as in Commission Regulations Nos 1066/95 regards 1995, the production quotas mark and 1067/95 became known only through a departure from the earlier regime of publication in the Official Journal on processing quotas and represent an irrecov- 13 May 1995. Finally, the global guarantee erable loss for producers amounting to the thresholds for each variety of tobacco for difference between the quantities of the the 1995 harvest — essential for definitive processing quotas and those of the produc- quantification of each individual produc- tion quotas. tion quota — were not determined until the adoption of Council Regulation (EC) No 1550/95 on 29 June 1995. Conse- quently, the tobacco producers had to make their production choices on the basis of the historical production data (essentially the 1993 and 1994 harvests) and began to The failure to introduce transitional adjust- receive the first reliable indications in the ment provisions and the failure to postpone course of the harvest and the definitive until the next harvest (that is to say 1996) indications only after harvesting had been the impact of the new rules on so-called completed. guarantee thresholds based on production quotas bear, in the applicants' view, the hallmarks of an infringement of the funda- mental principles governing the common organisation of the market in tobacco and the principle of the protection of legitimate The referring court infers from this that the expectations, since: tobacco producers who are plaintiffs in the main proceedings were not given an oppor- tunity to adjust their production for the 1995 harvest so as to take account of the criteria laid down by Council Regulation No 711/95 and Commission Regulations (a) it does not appear that the aim pursued Nos 1066/95 and 1067/95 (hereinafter 'the by the introduction of a production contested Regulations'), since the new quota can be achieved by regulations Community rules were adopted when busi- published when the relevant business ness decisions had necessarily already been decisions have already been taken and made and the plants had been transferred implemented; to the fields.

'By introducing innovative arrangements for the rules on premiums for the produc- tion of tobacco when planting had already been carried out and producers had made IV. Analysis of the question referred for a investments in accordance with reasonable preliminary ruling assessment criteria based on the Commu- nity rules in force at the time of sowing and planting out in the fields, do Article 2 of Council Regulation (EC) No 711/95 of 27 March 1995, Article 20 of Commission 13. This is not the first time that the Court Regulation (EC) No 1066/95 of 12 May of Justice has been asked to consider 1995 and Article 2 of Commission Regula- whether the Community legislation regu- tion (EC) No 1067/95 of 12 May 1995, lating the COM in the raw tobacco sector is infringe the principles governing sound invalid as a consequence of the time taken organisation of the agricultural market in by the Community legislature to adopt it. 13 tobacco and the principle of protection of In my view, the case-law of the Court legitimate expectations?' contains all the criteria necessary to come to a decision in the present case.

III. Observations submitted in the preli- 14. ATB takes the view that the application minary ruling proceedings of the contested Regulations, which were

13 — See judgments in Case C-368/89 Crispoltoni I [1991] ECR I-3696; Joined Cases C-133/93, C-300/93 and 12. ATB, the Italian Government, the C-362/93 Crispoltoni II [1994] ECR I-4863; Case C-324/96 Petridi [1998] ECR I-1333, and Case C-372/96 Council and the Commission submitted Pontillo [1998] ECR I-5091.

19. First of all, it must be borne in mind that, as the Court of Justice has pointed out, whilst the protection of legitimate expectations is one of the fundamental principles of the Community, traders can- 16. I wish to point out, first of all, that not have a legitimate expectation that an when, within the framework of a COM, existing situation which is capable of being the applicable rules give the Community altered by the Community institutions in institutions the power to fix the basic the exercise of their discretionary power elements, such as production quotas, for will be maintained; this is particularly true each harvest, the fundamental principles of sound public administration require such 14 — See the Opinion delivered in the Pontillio case, the elements to be adopted and communicated judgment in which is cited in footnote 14 above, point 21. to the parties concerned in good time, in 15 — It is sufficient to point out, in that regard, that, under Article 3(2) of Regulation No 1066/95, the Member States order that they may take them into account must issue quota certificates to the producers by 31 Jan- when making their annual production uary in the year of the harvest, at the latest. 16 — At the hearing, in reply to the question I put to him, the decisions. In such circumstances, any delay Commission's agent explained mat the delay was caused in legislative intervention on the part of the by translation problems (to be precise, in respect of Finnish, which became an official language of the Eur- Community institutions must be regarded, opean Communities as of January 1995).

in an area such as the common organisation 22. By contrast, the adoption of the Reg- of the markets, whose purpose involves ulations whose validity is being challenged constant adjustments to meet changes in in this case, falls into a different context. the economic situation. Accordingly, tra- Indeed, the traders knew that the new ders cannot claim a vested right to the quota allocation rules were necessarily maintenance of an advantage which they going to be applied in 1995. This had derive from the COM and which they b e e n a n n o u n c e d in R e g u l a t i o n enjoyed at a given time. 17 No 2075/92, which fixed a transitional period during which the Member States could continue to allocate quotas to pro- cessors for the 1993 and 1994 harvests. 19 In fact, only Italy and Portugal took advantage of the transitional period; the other Member States producing raw 20. It is true that, in its judgment in tobacco introduced the direct allocation of Crispoltoni 1, 18 invoked by ATB and the quotas to producers in 1993. Therefore, Italian Government, the Court held that the plaintiffs in the main proceedings could Council Regulations Nos 1114/88 and not possibly have been unaware that the 2268/88 were invalid in so far as they laid production quota system was to be applied down a maximum guaranteed quantity for for the first time in Italy for the 1995 tobacco of the 'Bright' variety harvested in harvest. 1988 on the ground that, although the traders concerned must have considered that measures to limit any increase in tobacco production in the Community and to discourage the production of vari- eties which were difficult to dispose of were foreseeable, they were entitled to expect that they would be notified in good time of 23. I should also point out that Regulation any measures affecting their investments. No 711/95 was adopted on 1 April 1995 (and the proposal for a Regulation was published on 23 February 1995), which was before the young tobacco plants were moved out into the fields which, in Italy, takes place at the end of April. This is the most costly operation in the tobacco-grow- 21. However, the judgment in Crispoltoni I ing process; it is, therefore, at the end of concerned the application of the maximum April that the growers must decide how guaranteed quantity, with which the traders large an area to plant. 20 Consequently, at concerned were unfamiliar, both in regard that fundamental stage of the growing cycle to the nature of the new measures for the the Italian producers were already fully organisation of the tobacco market in the aware of the entry into force of the new Community and in respect of the date on scheme. which those measures were to come into effect. 19 — With regard to the transitional nature of the system based on the processing quotas, see the judgment in Joined Cases C-254/94, C-255/94 and C-269/94 Fattoria Autonoma 17 — Judgment in Pontillo, cited in footnote 14 above, para- Tabacchi [1996] ECR I-4235, paragraphs 36 to 38 and graphs 22 and 23. paragraph 44. 18 — Judgment cited in footnote 14. 20 — See Crispoltoni I, cited in footnote 14, paragraph 14.

21 — For example, Regulation No 1066/95 specifies the method for calculating production quotas for new producers 26. As I have already pointed out, under (Article 5(2)); it states, quite logically, that where, as a result of exceptional circumstances, a producer's produc- Article 9(3) of Regulation 2075/92, the tion was abnormally low during a harvest included in his processing quotas were calculated in pro- reference period, the quantities determined by the Member State at the request of the producer may not be greater portion to the average quantities delivered than the quantities entered in the quota certificates or the cultivation certificates allocated to the producer for the for processing during the three years pre- harvest in question (Article 8(4)); it also lays down various criteria which the Member States may use to distribute ceding the year of the last harvest, broken additional quantities, where the guarantee threshold fixed down by group of varieties, but not taking for a group of varieties is higher than the guarantee threshold for the previous harvest (Article 9(1)), and gives into account the 1992 harvest. The same the producers the opportunity, subject to authorisation by the Member State concerned, to exchange among them- system was applied to determine the pro- selves their production quotas for one group of varieties duction quotas in those Member States for a different group of varieties (Article 14).

I - 5513

OPINION OF MR RUIZ-JARABO — CASE C-402/98

29. I think, therefore, that it is also unrea- national court includes it in the question it sonable for .the plaintiffs in the main has referred for a preliminary ruling, the proceedings to claim that they did not parties to the proceedings have not referred know the method which should have been to the procedures for paying the premiums, applied to calculate their quotas. either in their written observations or at the hearing. Indeed, the plaintiffs in the main proceedings focused their criticism on the method of calculating production quotas, although, as I have already mentioned, their arguments were not convincing. 30. This last point has led the Council and the Commission to express doubts as to whether the plaintiffs in the main proceed- ings did, in fact, sustain any loss. 22

I - 5514

ATB AND OTHERS

35. Finally, I wish to mention briefly the 38. I think it is enough to point out that the validity of Commission Regulation guarantee thresholds for 1995, as fixed in No 1550/95 fixing, for the 1995 harvest, Regulation No 1550/95, are identical to the premiums and guarantee thresholds for those which the Commission itself had laid raw tobacco by group of tobacco varieties. down in its Notice to tobacco producers in Both ATB and the Italian Government have the Community, published in the Official cast doubt on the validity of this Regula- Journal on 4 April 1995. 24 I would point tion for the same reasons as those they have out, therefore, that, even as regards the given in respect of the contested Regula- guarantee thresholds, the producers who tions. are plaintiffs in the main proceedings had sufficient information for the purpose of making their production decisions.

I - 5515

OPINION OF MR RUIZ-JARABO — CASE C-402/98

V. Conclusion

40. In the light of the foregoing considerations, I propose that the Court of Justice should reply to the question referred for a preliminary ruling by the Tribunale Amministrativo Regionale del Lazio in the following way:

Consideration of the question raised has disclosed nothing capable of affecting the validity of:

— Council Regulation (EC) No 711/95 of 27 March 1995 amending Regulation (EEC) No 2075/92 on the common organisation of the market in raw tobacco;