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3. The impossibility of such a substitution and its corollary, the need to define care- fully the procedures under which one body of rules is to replace another, are particu- 6. As a general rule, however, those adjust- larly evident in the field of agriculture. ments cannot be made from one day to the next, which is why there is an urgent need for transitional measures to avoid a situ- ation where, for example, the market of the old Member States (in the case of a product subject to production quotas) is seriously 4. Indeed, in order to meet the objectives destabilised by disposal of stocks built up set out in Article 33 EC, the rules on the before accession by a new Member State in common agricultural policy have recourse which production was not restricted in any to a very varied range of measures in many way, or, on the contrary, where products flood onto the market of a new Member State which has no system of production 1 — Original language: French. aids, those products having benefited from

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such aid within the framework of a com- tions and measures having equivalent mon market organisation and, thus, having effect shall be applicable to the new a competitive advantage such that local Member States; producers are unable to sell their stock.

7. As regards the accession of the Republic — the rights and obligations resulting of Austria, the Republic of Finland and the from the common agricultural policy Kingdom of Sweden which took effect on shall be applicable in full in the new 1 January 1995, the Act concerning the Member States.' conditions of accession and the modifica- tions to the Treaties on which the European Union is founded 2(hereinafter 'the Act of Accession') is no exception to the rule.

11. Article 149(1) of the Act states: the new Member States shall tax the holders of surplus stocks at 1 January 1995.

'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 organisation of the markets under the conditions set out in this Title, such meas- ures shall be adopted in accordance with the procedure laid down in Article 38 of Regulation No 136/66/EEC or, as appro- priate, in the corresponding Articles of the 2. In order to determine the surplus stock other Regulations on the common organi- of each holder, the new Member States sation of agricultural markets. These meas- shall take into account, in particular: ures may be taken during a period expiring on 31 December 1997 and their application shall be limited to that date.'

— averages of stocks available in the years preceding accession, 12. On the basis of that article, the Com- mission adopted Regulation (EC) No 3108/94 of 19 December 1994 on transitional measures to be adopted on account of the accession of Austria, Finland and Sweden in respect of trade in agricul- — the pattern of trade in the years preced- tural products. 3 ing accession,

13. Article 4 of that regulation states: — the circumstances in which such stocks were built up.

'1. Without prejudice to Article 145(2) of the Act of Accession, and where stricter legislation does not apply at national level, The notion surplus stocks applies also to agricultural products intended for the mar- 3 — OJ 1994 L 328, p. 42. ket of the new Member States.

— in the case of Austria: 1006, 0806 20, 1702 10, 1509, 1510, 17. On 31 December 1994, part of the olive oil imported by Thakis was in the warehouse of an Austrian wine firm, under the control of A-Bank, the pledgee, and the rest in railway trucks in an Austrian station, under the responsibility of the carrier.

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18. The Austrian authorities considered the course of administrative proceedings by that as at 1 January 1995 Thakis was the Thakis, and later by the receiver in bank- holder of a surplus of 1 091 341 kg of ruptcy. Tunisian olive oil within the meaning of Article 4 of Regulation No 3108/94 and, consequently, on 1 February 1995, served an order on Thakis to secure a surety to guarantee a realisable fiscal credit in 21. The dispute concerned various points, advance for holding surplus stock, before some concerning the application to Thakis serving a taxation notice on 3 April 1995 in of Regulation No 3108/94 and others the the sum of ATS 11 086 683. The amount lawfulness of the regulation. was calculated in accordance with Article 4(3) of the regulation, based on the difference between the tax on imported olive oil applicable as at 31 December 1994 in the Community of Twelve and in Aus- tria. 22. The first concerned the dispute as to the classification of Thakis as 'the holder' of olive oil stock as at 1 January 1995, since Thakis, on account of the pledge to which it had agreed, could not, either in fact or in law, dispose of the goods in any way.

25. The rejection of the administrative action led to the matter being brought 28. There are two grounds underlying the before the Verwaltungsgerichtshof which, question, one relating to the arguments on the basis of the elements in the dispute expounded by Thakis before the national outlined above, considered recourse to the court, and the other to questions raised, in preliminary ruling procedure to be necess- Thakis's view, by Article 149(1) of the Act ary in order to refer a series of questions to of Accession. the Court of Justice on both the interpre- tation and the validity of Regulation No 3108/94.

29. Thakis submitted, before the Verwal- 26. As the questions are extremely detailed, tungsgerichtshof, that the objective of it seems preferable, rather than considering avoiding the deflection of trade established them in full, to outline their substance as I in Regulation No 3108/94 cannot be based deal with each one, in the order in which on the transitional measures referred to in the referring court lists them. It should be Article 149(1) of the Act of Accession; pointed out at this juncture that only the those measures, since they must facilitate Austrian Government and the Commission the transition from the previous system in submitted observations. the new Member States to that resulting from application of the rules of the com- mon market organisations must, in Tha- kis's view, benefit the operators in the new Member States, which is clearly not the case if they are subject to taxation.

First question

27. In its first question, the Verwaltungs- gerichtshof asks whether the levying of 30. The Verwaltungsgerichtshof considers compensatory taxes, as provided for in that it is not evident that that provision

32. Firstly, in the text of the article, there is nothing suggesting that the transitional measures which the Commission is auth- orised to adopt, in accordance with the procedure set out in Article 38 of Regu- lation No 136/66/EEC of the Council of 22 September 1966 on the establishment of 35. Plainly, any solution to the problems a common organisation of the market in cannot fail to take into account the dif- oils and fats 6 or, in certain cases, the ficulties faced by the operators of the new corresponding articles of the other regu- Member States and there is no question of lations establishing a common organisation deliberately sacrificing their interests to the of agricultural markets (known as the complete and immediate application of the 'Management Committee' procedure), full gamut of rules of the common agricul- must necessarily be favourable to the tural policy, but a transition measure, for economic operators of the new Member the purposes of Article 149(1) of the Act of States. Accession, does not necessarily have to seek to restrict the disadvantages for those operators of the application of the rules of 6 — OJ, English Special Edition 1965-1966, p. 221. the common market organisations to them.

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36. Nor is there in the text of Article 149(1) 41. Clearly, the purpose of constituting of the Act of Accession any requirement stock is either to use it or to resell the that the measures adopted by the Commis- stored product, so that the accumulated sion should seek to ensure a transition of stock either means that the holder using minimal duration, nor that they should be that product in the course of a production introduced gradually, or at least cautiously. operation need not purchase the required quantities for his activity over a certain period (varying according to the amount of the stock), or the stock will be put on the market where sales, both in terms of turn- over and profitability, will be governed by 37. The Commission's task is simply to the competitive situation. adopt the necessary transitional measures so that Article 137(2) of the Act of Accession may be applied without ensuing chaos.

45. Inevitably, therefore, there will be a distortion of trade, that is to say precisely the result that a common market organi- sation is intended to avoid. The problem is 49. On the other hand, if that deterrent is then a very real one. insufficient for certain operators who are prepared to take major risks in the hope of uncertain profits, implementation of Regu- lation No 3108/94, that is actually taxing surplus stocks, is such as to remedy, at least partially, the difficulties created in the 46. It remains to consider whether taxing enlarged Community by the presence of surplus stocks in the new Member States on stocks constituted at a low price, by 1 January 1995 appears appropriate and making it impossible in any case for their necessary to deal with that problem. 7 holders to engage in unfair competition vis-à-vis other operators and to distort trade by undermining price-setting mech- anisms.

47. In respect of whether it is appropriate, it is sufficient to observe that Regulation No 3108/94 is entirely legitimate. Indeed, the taxing of surplus stocks for which it makes provision appears entirely judicious. On the one hand, the prospect of being 50. In respect of the need for such taxation taxed such as to remove the considerable and the principles involved, I would begin discounted profits, in itself, constitutes an by recalling the considerable discretionary effective deterrent against operators. power of the Community institutions in adopting measures to fulfil the objectives of the common agricultural policy.

48. What interest then can an operator have in swelling his stocks before accession,

55. Moreover, as the Commission observes, while the planned elimination of stocks will allow a balanced market to be re-established by adjusting supply to '... since the completion of the single demand, it is not sufficient to impede a market, the movement of agricultural prod- short-term trade deflection on the date of ucts has not been subject to any control at accession. the internal borders; ... therefore, system- atic taxation of products which are the subject of deflection of trade, either on their consignment from one Member State to another or on their entry into a Member State from another, does not appear to be 56. In fact, it is a combination of the sufficiently effective; ... trade deflections elimination and taxation of stock which liable to disrupt the market organisations allows a smooth transition towards full often involve products moved artificially application by the new Member States of with a view to enlargement and do not the rules governing the common market form part of the normal stocks of the State organisations. In response to the first concerned; ... provisions should be made question, therefore, it is my opinion that for the taxation of surplus stocks in the new the Commission was competent to adopt Member States.' the measures set out in Article 4 of Regulation No 3108/94.

53. It will be noted, finally, that, contrary Second question to what the national court suggests, the elimination of surplus stocks provided for under Article 145(2) of the Act of Acces- sion and the taxation thereof are not 57. The second question referred by the mutually exclusive. Verwaltungsgerichtshof concerns observ-

59. As regards the second principle, that is the principle of protection of legitimate expectations, the national court questions whether the regulation complies with the requirements of that principle since none of 58. The first principle may be dealt with its provisions distinguishes between holders briefly. It has been seen that, in principle, of surplus stocks according to whether they the taxation of surplus stocks constitutes an were placed in that situation before they appropriate response to the risks created by ought to have known that the tax was surplus stocks in a future Member State planned or before the publication of the before accession. Any operator, on the date regulation, or whether they acted sub- when accession takes place, who holds a sequent to the entry into force of the normal level of stock will not be taxed; regulation. only stocks which, on account of their abnormally high level, may be used specu- latively, will be taxed. Nor do the taxation methods violate the principle of propor- tionality. Indeed, Article 4(3) of Regulation No 3108/94 setting the amount of the taxes 60. In that regard, the regulation did not, provides that it shall 'in the case of a in my opinion, infringe that principle. product from a third country, be the Firstly, it is worth pointing out that the difference between the import charge appli- expectations which merit protection may cable in the Community of Twelve as at only be those which the Community insti- 31 December 1994 and the import charge tutions have created or at least contributed applicable in the new Member State as at to creating. 8 that same date, where the former is greater than the latter.' That means that the tax will do no more than neutralise any advan- tage obtained by the holder of the stock by acquiring the product on conditions (the conditions applicable in the future Member 61. In this case, in fact, the situation is State) which are more favourable than quite different, since, as the Commission those which would apply if, on points out, already from the date of the 31 December 1994, he had imported the signature of the Act of Accession on 26 July product into the Community of Twelve. 1994, economic operators knew that, Thus the principle of proportionality is under Article 149(1), the Commission was fully observed: the unjustified advantage disappears entirely, but the holder of the 8 — See, inter alia, Case C-22/94 Irish Fanners Association and stock is not penalised as such; he is simply Others [1997] ECR I-1809, paragraph 19.

62. On that basis, the date prior to 1 January 1995 when the measures were 65. On this point, it is interesting to note, adopted is immaterial. In view of on the basis of information communicated Article 149(1) of the Act of Accession, it by the national court, that Thakis did not would in my view have been naive to have sufficient storage space to store the imagine that it would be possible to flood olive oil it had imported in December 1994 the common market of the new Commu- and was obliged to rent vats from a wine nity of Fifteen with stock held in larger business. quantities than that normally held in the context of traditional economic activity, and acquired in particularly favourable conditions compared to those applicable to an operator from the Community of Twelve as at 31 December 1994, if he 66. One would almost be tempted to say imported from a third country. that this case is one where the maxim 'no one may be heard to rely on his own misdeed' can be applied. Whatever the case, it should be stressed that, even if (which is not the case) the application of the principle of protection of legitimate expectations did not immediately appear to be ruled out, one would be entitled to 63. Given that the Act of Accession man- question whether Thakis was in a position dated the Community institutions to adopt to rely on it. the measures necessary in order to avoid disturbances in the trade of products covered by a common market organisation, none of the undertakings concerned could reasonably believe that the surplus stock held in the future new Member States 67. I would therefore rule out that the would escape the vigilance of the institu- validity of Article 4 of Regulation tions. On the contrary, they should have No 3108/94 may be called in question on worked on the assumption that the institu- the basis of failure to observe the principle tions would indeed perform the task of proportionality or that of the protection entrusted to them. of legitimate expectations.

72. According to the Commission's expla- nations, that response is governed by the 69. In fact, the national court is asking the need to safeguard the effectiveness of the Court of Justice to apply Community law transitional measure as a whole, which, it to a concrete case. It should be recalled that states, would not be guaranteed if the tax that is not the task of the Court under affected only the owner who might very Article 234 EC. In my view, the Court must well reside in another Member State or in a simply define the concept of 'holder' so that third country and, by virtue of this fact, the national court, in the light of the escape control by the Member State where decision of the Court of Justice, may decide the tax is levied. whether Thakis, and other economic oper- ators as the case may be, is, or is not, the holder of surplus stock subject to the taxation as set out in Article 4 of Regu- lation No 3108/94. 73. In order to eliminate that risk, accord- ing to the Commission, the material defi- nition, as proposed by it, should be actual possession of the stock.

70. That approach is all the more impera- tive in this case as the concept evidently 74. Obviously, I shall not deny the need to presupposes the application of national interpret Community law so as to ensure its law, in particular as regards the con- effectiveness. However, I believe that an

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appeal to effectiveness must not mean whose role is actually to keep shares in its failing to conduct an analysis based on safes, but the legal owner of the shares who the ordinary meaning of the terms used and receives the revenue from them, and who the context in which they appear (which alone is entitled to sell them. would seem indeed to be of primary importance, effectiveness being a matter arising at a subsequent stage) in order to dispel any remaining uncertainties.

76. However, in my view, the scope of the term 'holder' should not be exaggerated. Indeed, in most cases, the description of 'a 80. On that basis, the person with material holder' may overlap with that of 'owner', control of the stock as at 1 January 1995, but on the other hand, the terms 'holder' but who is legally unable to dispose of it, and 'owner' are often used as synonyms, in that is to sell it to a third party and profit French, German and in English. from that sale price, because for example he is simply the holder of the pledge, or because he is responsible only for trans- porting the goods, or even because he has already resold the goods, 9cannot be con- sidered as a holder within the meaning of Article 4 of Regulation No 3108/94. 77. As proof I would point to the fact that the term 'shareholder' in English does not mean the actual holder of the share, which 9 — Which, it appears from the decision to refer and point A of the third question put by the national court, may have been will very often be a financial establishment the case for Thakis.

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81. On the other hand, it would be incon- a lien over a stock of Tunisian olive oil sistent if the term 'holder' were not to have imported before that date by one of its the same meaning throughout Article 4. On clients or the carrier in whose tanks the oil a reading of paragraph 2 of that in issue was being held on that date, to article which states, determine 'surplus stock' for the simple reason that for those persons there is no point of reference which allows a compari- son to be made. The control they exercise at a particular moment over a stock of 'In order to determine the surplus stock of imported Tunisian olive oil is in fact purely each holder, the new Member States shall fortuitous and one cannot consider them to take into account, in particular: be operators on the olive oil market.

88. It is sufficient to reply to that question that, no imports of Tunisian olive oil could 86. This interpretation is not such as to be made by an operator as at 31 December compromise the effectiveness of Regulation 1994 within the framework of the system No 3108/94 which is of concern to the established under Regulation No 287/94. 10 Commission, in so far as, on the supposi- It is apparent from Article 2 of Commission tion that the holder as defined in this way is Regulation (EC) No 548/94 of 10 March not established in the Member State where 1994 laying down detailed rules for the the stock is held, that Member State will application of Council Regulation (EC) evidently have the option of seizing the No 287/94 laying down special measures stock in order to obtain payment of the for the import of olive oil from Tunisia that debt. imports under the special regime of Regu- lation No 287/94 were legally impossible as at 31 December 1994, as referred to in Article 4(3) of Regulation No 3108/94.

Fourth question

89. The import certificates required in order to benefit from that regime could only be issued for the months from March 87. The fourth question put by the national to October. Apart from the fact that if a court concerns the interpretation to be Community importer had made imports of given to Article 4(3) of Regulation Tunisian olive oil on 31 December 1994, he No 3108/94 as regards precisely what would have been charged to the levy at the should be understood, in the context of rate set in Regulation No 3307/94, one the import of Tunisian olive oil covered by cannot but endorse the Commission's argu- CN Code 1509 10, by 'import charge ment when it observes that Article 4(3) of applicable in the Community of Twelve as Regulation No 3108/94, in its wording, at 31 December 1994.' The question is referred because, according to the national court, there coexisted as at 31 December 10 — OJ 1994 L 69, p. 3.

Fifth question 90. I might add, finally, that it would be strange to say the least if, in applying a regulation whose purpose is to fight deflec- tions of trade of a speculative nature, one were, in calculating the tax payable by the holders of surplus stock, to refer to the rate 93. The grounds justifying that reply also set out in Regulation No 287/94, at which form a basis for the reply to the fifth rate no operator in the Community of question by which the referring court Twelve could be sure of benefiting. wishes to ascertain whether application of that levy constitutes a breach, as regards operators in the new Member States, of the principle of equal treatment, thus calling in question the validity of Article 4 of Regu- lation No 3108/94. As the Commission rightly points out, operators in the Com- munity of Twelve who, during a part of 1994 but not after October, were able in certain cases to make imports attracting a 91. That regulation, it will be recalled, as small levy, as part of the preferential regime supplemented by Regulation No 548/94, under the Additional Protocol to the Coop- allows imports of Tunisian olive oil to be eration Agreement between the European made only within the limits of a predeter- Economic Community and the Republic of mined quota. An application for a certifi- Tunisia, signed at Tunis on 25 April cate for a given quantity to be imported 1976, 11 cannot be considered to be in a during one of the months during which situation comparable with that of operators issue was authorised would guarantee, in the new Member States who deliberately therefore, neither issue of the certificate decided, as at 1 January 1995, to store nor of the quantity applied for. Con- surplus stocks of Tunisian olive oil sequently, nothing would justify the oper- imported under a totally different system ators from the new Member States benefit- from that of the common organisation of ing, in the case of unlimited quantities, the market in the sector of oils and fats, a from exceptional conditions granted to certain Community importers for limited quantities. 11 — OJ 1987 L 297, p. 36.

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legitimate expectations, proportionality and equality of treatment, has not disclosed any matters of such a nature as to call in question its validity;

— a holder of surplus stock, within the meaning of Article 4 of Regulation No 3108/94, is an operator who is in a position to put the stored product on to the market and whose assets will directly register the economic result from putting that product on to the market;

— the term 'import charge applicable in the Community of Twelve as at 31 December 1994' in Article 4(3) of Regulation No 3108/94 must be understood as referring, in the case of Tunisian olive oil falling within CN code 1509 10, each time to the levy of ECU 66.31 per 100 kg as provided for in Annex I to Commission Regulation (EC) No 3307/94 of 29 December 1994 fixing the minimum levies on the importation of olive oil and levies on the importation of other olive oil sector products.

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