C-416/01

OPINION OF MR MISCHO — CASE C-416/01

O P I N I O N OF ADVOCATE GENERAL MISCHO delivered on 15 May 2003 1

I — Introduction I I— Legal background

A — The Community legislation

2. In the main proceedings, the applicable Community legislation at the material time consisted of Council Regulation (EEC) No 1785/81 of 30 June 1981 on the common organisation of the markets in the sugar sector 2and Council Regulation 1. The Tribunal Supremo (Supreme Court), (EEC) No 193/82 of 26 January 1982 Spain, is asking the Court to clarify laying down general rules for transfers of whether the Community legislation on the quotas in the sugar sector. 3 common organisation of the markets in the sugar sector allows the competent auth- orities of a Member State to decide that a transfer or reallocation of quotas is to be carried out for value, by means of a public auction procedure, when, under national competition law, the competent authorities of this Member State have taken the view 3. In the meantime, new provisions have that approval of a merger of sugar under- been adopted, and the legislation in force at takings should be subject to redistribution, present is Council Regulation (EC) between the sugar undertakings established No 1260/2001 of 19 June 2001 on the on its territory, of part of the sugar quotas common organisation of the markets in the of the undertaking which results from the sugar sector. 4 merger. 2 — OJ 1981 L 177, p. 4. 3 — OJ 1982 L 21, p. 3. 1 — Original language: French. 4 —OJ2001 L 178, p. 1.

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7. Article 25 of Regulation No 1785/81 ( n o w A r t i c l e 12 of R e g u l a t i o n No 1260/2001) provides: 5. Under Article 24(1) of Regulation No 1785/81 (now Article 11(1) of Regu- lation No 1260/2001), 'Member States shall, under the conditions of this Title, allocate an A quota and a B quota to each sugar-producing undertaking... which either had... a basic quota as defined, as the case may be, in Regulation (EEC) ' 1 . Member States may transfer A quotas No 3330/74 or in Regulation (EEC) and B quotas between undertakings under No 1111/77...'. the conditions laid down in this Article,

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taking into consideration the interests of taking resulting from the merger an A each of the parties concerned and in par- quota and a B quota equal respectively to ticular those of sugar beet producers or the sum of the A quotas and the sum of the sugar cane producers. B quotas allocated prior to the merger to the sugar-producing undertakings con- cerned'.

2. Member States may reduce the A quota and the B quota of each sugar-producing undertaking or each isoglucose-producing undertaking situated in their territories by a total quantity not exceeding... 10% of the 9. However, under Article 2(2) of that A quota or of the B quota, as the case may regulation (now Point II.2 of Annex IV to be, fixed for each of them in accordance Regulation No 1260/2001): with Article 24.

'Where a number of the sugar-beet or cane producers directly affected by one of the operations referred to in paragraph 1 expressly show their willingness to supply 3. The withdrawn quantities of A quotas their beet or cane to a sugar-producing and B quotas shall be allocated by the undertaking which is not party to those Member States to one or more other operations, the Member State may make undertakings, whether or not in possession the allocation on the basis of the produc- of a quota, situated in the same region... as tion absorbed by the undertaking to which the undertakings from which these quan- they intend to supply their beet or cane.' tities were withdrawn.

12. At the time the facts in the main proceedings originated, the sugar sector in Spain comprised four undertakings, and the maximum sugar production quota assigned and to Spain — 1 000 000 metric tonnes for the A and B quotas — was distributed among them on the following basis:

(c) they concern undertakings established in the same region within the meaning of Article 24(2) of Regulation (EEC) No 1785/81.' — Ebro Agrícolas, Compañía de Alimen- tación SA, one of the merged under- takings, 540 786 tonnes; this under- taking had 10 sugar factories (out of the 19 industrial sugar-processing plants operating in Spain); B — National law

11. The act contested in the main proceed- ings, by which the Spanish Council of Ministers approved the merger between — Sociedad General Azucarera de España the companies Ebro Agrícolas, Compañía SA, the other merged undertaking, 241 de Alimentación SA and Sociedad General 688 tonnes; this undertaking com- Azucarera de España SA was based on prised five sites refining sugar from Spanish Law No 16/89 of 17 July 1989 on beet and one factory processing sugar the protection of competition (BOE No 170 cane;

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16. Against this background, the Tribunal 18. I shall examine the different arguments Supremo has referred a three-part question put forward by the plaintiff in the main to the Court for a preliminary ruling. proceedings against the allocation of these quotas for value and, in turn, the observa- tions submitted by the Commission, Azu- carera Ebro and the Spanish Government, before making my own assessment.

IV — Law 1. The limits of Member States' powers to apply their own competition rules on agricultural policy

A — First part of the question

(a) Observations submitted to the Court 17. The first part of the question is formu- lated as follows:

competition to production of and trade in ciple of equal treatment for suppliers agricultural products, 5adopted pursuant resulting from national law on cartels, to Article 42 of the EC Treaty (now Member States are not dispensed from Article 36 EC), provides that the rules on observing the principles and general rules competition are to apply to production of governing the Common Agricultural Pol- and trade in agricultural products only to icy. 7 the extent determined by the Council, having regard to the objectives of the agricultural policy referred to in Article 39 of the EC Treaty (now Article 33 EC). In particular, the third recital in the preamble to this regulation states that, if the rules on competition must in fact be applied to production of and trade in agricultural products, this must be solely 'in so far as 22. ACOR and ARJ also observe that, from their application does not impede the the time when the Community exercises its functioning of... organisations of agricul- power under Article 34 EC to establish a tural markets or jeopardise attainment of COM, this replaces national organisations, the objectives of the Common Agricultural and the Member States no longer have Policy.' competence to regulate the market in question unless a Community regulation expressly provides otherwise. 8 In the absence of such provisions, the Member States have a substituted power which has to be exercised in compliance with Article 10 of the EC Treaty (now, after amendment, Article 24 EC) and the appli- cable secondary legislation. This principle has been confirmed by the case-law of the Court. 9 21. Secondly, ACOR points out that the case-law of the Court has explicitly con- firmed the precedence of the Common Agricultural Policy over aims pursued within the framework of the law safe- guarding competition. 6As regards specifi- cally the market in sugar, the Court has held that although, in the absence of Community provisions on the procedure 23. It follows that, in a sector covered by a for the allocation among sellers of the COM, the powers of Member States are quantities of sugar beet that the manufac- limited. They cannot intervene, through turer is offering to buy within the limits of national provisions adopted unilaterally, in the A and B quotas, Community law does not preclude the application of the prin- 7 — Case C-134/92 Marlins [1993] ECR I-6017, paragraph 17. 8 — Case 16/83 Prantl [1984] ECR 1299, paragraph 13. 9 — See the judgments in Case 51/74 Hulst [1975] ECR 79, 5 — OJ, English Special Edition 1959-1962, p. 129. paragraph 25; Case 111/76 Van den Hazel [1977] ECR 901, 6 — See Case 139/79 Maizena v Council [1980] ECR 3393, paragraph 13; Joined Cases 47/83 and 48/83 Midden- paragraph 23, and Case C-280/93 Germany v Council Nederland and Van Miert [1984] ECR 1721, paragraph 25; [1994] ECR I-4973. and Mörlins, paragraph 17.

29. This is because Article 2 of Regulation No 193/82 provides that, in the event of a merger of sugar-producing companies, the Member State shall allocate to the com- 26. The Commission, for its part, points pany resulting from the merger the sum of out that the COM in the sugar sector forms the quotas allocated in respect of the a complete system, particularly as regards merged companies. The matter of the prices and intervention, of rules on trade relationship between this provision and with non-member countries or for regulat- Article 25 of Regulation No 1785/81 has ing relations between sellers and buyers of been analysed by the Court, which con- cluded that '[t]here is no reason why the power of manœuvre conferred on Member 10 — Case C-61/90 Commission v Greece [1992] ECR I-2407, paragraph 22. 11 —Case 90/86 Zoni [1988] ECR 4285, and Case C-32/89 Greece v Commission [1991] ECR I-1321, paragraph 20. 12 — Prantl, paragraph 13.

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(b) Appraisal

31. The Commission points out that, when 34. It undoubtedly follows from the case- a Member State has recourse to national law quoted by ACOR, ARJ and the Com- rules on competition in an agricultural mission that Member States are not sector covered by a COM, its capacity to empowered to intervene unilaterally in the act is limited by the rules laid down by the mechanisms established under a COM. COM concerned. Their ability to intervene is restricted to two situations: where a specific power has 13 — Case C-1/94 Cavarzere Produzioni Industriali and Others [1995] ECR I-2363, paragraphs 33 and 34. 14 — See, inter alia, Maizena v Council. 15 — Mörlins, paragraphs 16 and 17.

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been delegated to them or where the broad States shall allocate to the undertaking logic of the legislation or a lacuna in the resulting from the merger an A quota and legislation leaves them a residual power. In a B quota equal respectively to the sum of both cases, 'Member States are not dis- the A quotas and the sum of the B quotas pensed from observing the principles and allocated prior to the merger to the sugar- general rules governing the Common Agri- producing undertakings concerned'. cultural Policy' and, in particular, those which govern the organisation of the mar- ket in question. 16

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of the A quota or of the B quota, as the case tities were withdrawn (paragraph 3 of the may be, fixed for each of them in accord- abovementioned articles). ance with Article 24'.

17— OJ 1999 L 252, p. 1. 18 — Cavarzere Produzioni industriali, paragraph 34.

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with the 14th recital to Regulation the COM in the sugar sector. Thus, part of No 1785/81. the press release on this decision reads as follows: '[i]n this highly regulated context, the safeguarding of any remaining degree of competition is of utmost importance for sugar customers and ultimately the con- sumer.... The importance of preserving potential competition is all the greater in highly regulated markets where, by essence, there is little competition and customers are 46. In this context, the referring court hugely dependent on limited suppliers'. The points out that 'in the Government's view, Commission therefore imposed some con- the existence of various factors meant that ditions on Südzucker AG ('Südzucker'), to it would not be prudent to oppose the which I shall return later in this Opinion. merger, and it therefore made the trans- action subject to the fulfilment of certain conditions (which were laid down in the agreement of the Council of Ministers). In short, it was felt that the merger could bring about improvements in the produc- tion and marketing of sugar and in the international competitiveness of the Span- ish sugar industry if it led to an overall restructuring of the sector, a restructuring of the undertakings involved in the merger and a transfer of the gains in efficiency to 48. At this stage, I conclude, therefore, that consumers and users'. the principle of a reduction in the quotas of the merged undertaking and their reallo- cation to one or more other undertakings is not incompatible with the principles gov- erning the COM in the sugar sector.

2. Is the transfer of quotas for value com- 52. ACOR and ARJ find confirmation of patible with the legal nature of quotas? this in the specific provisions of Regulation No 193/82, which provide for all cases of transfer of quotas between undertakings: merger or transfer of undertakings, transfer of factories, closure of one or more fac- tories, lease of a factory or the situation where a sugar-producing undertaking can no longer ensure that it meets its obli- (a) Observations submitted to the Court gations towards sugar-beet or sugar-cane producers. Furthermore, Article 25 of Regulation No 1785/81 gives Member States a great deal of room for manœuvre in transferring quotas, inter alia where the sector is restructured, if they consider it appropriate in order to regulate the market. 50. For ACOR and ARJ, the legal nature of sugar production quotas prevents their being viewed as an asset which would form an integral part of the assets of the under- taking to which they were allocated. Quo- tas are a mechanism in the functioning of the COM, designed to regulate and manage the sugar market. The Community entrusts the distribution of quotas between sugar- producing undertakings to the Member States, but quotas do not belong to Member States or, even less, to undertak- ings. 53. At no time do these provisions refer to an obligation on the part of the undertak- ing receiving the quota to pay a financial consideration to the undertaking which held it. If the Community legislature had taken the view that the undertaking 'dis- possessed' of the quota was subject to some 5 1 . Production quotas, in ACOR and kind of economic loss, it would have ARJ's view, are more in the nature of an introduced an off-setting mechanism act of public authority, an authorisation to intended to compensate it for any possible operate on the market profitably and to pecuniary damage. If some of these cases produce a defined quantity of sugar at a give rise to monetary consideration, the guaranteed price. They are allocated to latter is linked to the financial asset which each enterprise according to the principle is the object of the transfer (such as the of actual production over a defined refer- transfer of a factory or of an undertaking). ence period. It is a matter of, as far as However, the fact that the factory or the possible, adapting production to consump- undertaking acquires a higher value tion within each Member State. Con- because it is associated with a production sequently, the quota as such has no inde- quota does not mean that the quota has a pendent pecuniary or economic value. value in itself.

58. The Commission makes the following two observations. Firstly, the reallocation of sugar production quotas by public 56. ACOR and ARJ then refer to the auction exceeds the power conferred on Court's case-law relating to milk quotas Member States by the Community legis- and point out that the Court has clearly lation, which consists in allocating sugar declared that the marketing of quotas is production quotas to producing undertak- incompatible with the Community legis- ings. In no case has the Community legis- lation relating to transfers of milk quotas. lature granted Member States the power to Thus, ACOR observes that, in its judg- put these quotas on sale. The regulations ments in Von Deetzen 20and Bostock, 21 relating to the COM in the sugar sector do the Court declared that 'the right to not distinguish semantically between oper- property thus safeguarded within the Com- ations consisting in 'allocating' quotas on munity legal order does not comprehend the basis of Article 24 of Regulation the right to dispose, for profit, of an No 1785/81, 'allocating' quantities with- advantage, such as the reference quantities drawn from these quotas on the basis of allocated in the framework of the common Article 25 of Regulation No 1785/81 or organisation of a market, which does not 'allocating' corresponding quotas under derive from the assets or occupational Article 2 of Regulation No 193/82. Even activity of the person concerned'. though the specific objectives of these quota allocation operations may differ, it is certain that their public interest objective 20 — Case C-44/89 Von Deetzen [1991] ECR I-5119, paragraph is identical as far as producers' interests are 27. 21 — Case C-2/92 Bostock [1994] ECR I-955, paragraph 19. concerned.

60. Secondly, not only is the sale of quotas unnecessary for the purpose of their allo- cation by the Member State, but it implies, 62. This alteration to the legal status of the in the Commission's opinion, a change in volume of sugar in question is also likely, in the very nature of this instrument, which is the Commission's opinion, to undermine likely to lead to disruptions that would risk the Member State's capacity to reconsider harming the operation and the efficiency of later, and for the public interest reasons the Community regime. It should be mentioned above, the allocation of the pointed out that the Community legislation quotas. This is because the company mentioned above does not contain any affected by the reallocation could, in this element which establishes a difference of situation, make a compensation claim status between quotas depending on which against the national authorities. Finally, provision has been the basis of their the decision to allocate quotas for value in allocation. Sale by public auction, on the the present case could lead to another other hand, could alter the legal status of undertaking, which was harmed by a these quotas by granting the person who reallocation of quotas, claiming economic holds them a subjective right not provided compensation. for by the legislation.

63. By contrast, Azucarera Ebro, joined party in the main proceedings, takes the 61. The Commission draws attention to view that it does not contravene Commu- Eridania and Società italiana per l'industria nity legislation if, when a Member State, degli zuccheri, 22 in which the Court held for reasons relating to safeguarding com- that the quotas specify the quantities of petition, makes a concentration subject to the condition that part of the quotas are redistributed, this redistribution is made for 22 — Case 230/78 [1979] ECR 2749, paragraphs 21 and 22. value through a public auction. Azucarera

Ebro invokes, to that effect, considerations reallocated in the interest of each party, the relating to compatibility between the legis- reviewing national authority may impose a lation on review of concentrations of transfer for value between sugar producers. undertakings and the COM in the sugar sector, to the wording, objectives and principles of Community legislation con- cerning the COM in the sugar sector, to the case-law of the Court and to the Commis- sion's practice concerning concentrations with a Community dimension between sugar-producing undertakings. 66. Referring to the Südzucker/Saint Louis Decision, 24 Azucarera Ebro asserts that there is nothing to suggest, in respect of the way Südzucker's Belgian sugar production quota is to be transferred, that it will not be for value. Azucarera Ebro points out that, although the case refers to sugar-producing undertakings' production quotas, the Com- mission has taken the exceptional approach 64. Azucarera Ebro first observes that the of not requiring that these transfers be condition of redistribution of quotas for made free of charge. value was not laid down under the Com- munity legislation according to which quo- tas are to be redistributed in order to guarantee the application of the principle of actual production. The condition at issue is in fact the consequence of the review of a concentration of undertakings, pursuant to national law safeguarding competition. 67. Azucarera Ebro concludes from this that there are striking parallels between the precedent established by the European Commission and the concentration review procedure followed by the Spanish auth- orities, which lies at the origin of the present reference. In both cases, there is a concentration which limits effective com- petition on the market, providing a reason 65. In this regard, referring to the Com- why the operation may be authorised only munity legislation (Article 25(1) and (3) of on condition that the body resulting from Regulation No 1785/81) and, again, to the merger gives up part of its sugar Mörlins, 23 Azucarera Ebro takes the view production quota. In neither case have the that, where there is no specific reference to reviewing authorities dictated that the the way in which quotas are awarded or transfer of quotas should be free of charge.

74. The arguments to the contrary invoked by Azucarera Ebro and by the Spanish Government are not convincing. 70. According to the Spanish Government, the reallocation of sugar quotas for value and on grounds relating to safeguarding competition complies with Community law. 75. I should first state that the Südzucker/ Saint Louis Decision does not constitute a 25 — See footnote 13. relevant precedent.

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76. This decision imposed two conditions 80. The Court then made it clear that, on the merger between Südzucker AG and under the relevant regulations, in the Saint Louis Sucre SA. absence of Community rules or agreements concluded within the framework of an agreement within the trade, the Member States were empowered to effect such allocation in accordance with the rules of their own national law. 77. Firstly, Südzucker must sell a 68% share in the Belgian undertaking, Suiker- fabriek van Veurne SA, ensuring that the latter undertaking retains its quota. This is in no way, therefore, a free-standing transfer of quotas for value. 81. The Court concluded from this that Regulation No 1785/81 did not preclude the application of national cartel and com- pany law in connection with the allocation of quantities of sugar beet among sellers 78. Secondly, Südzucker is obliged to sell within the limits of the A and B quotas. to an independent commercial undertaking However, the Court added that, although not a quota, but an annual quantity of they are empowered to apply their national 90 000 tonnes of sugar already produced in law, Member States are not dispensed from its factories, at a price 26 that enables this observing the principles and general rules purchaser to compete with Südzucker when governing the Common Agricultural Pol- reselling this sugar (paragraph B.11 in icy. Annex II to the Decision). Far from being transferred for value, the quota relating to these 90 000 tonnes remains with Süd- zucker.

83. As to the judgment in Cavarzere Pro- 86. Therefore, according to the same duzioni Industriali, 29 also invoked by Azu- recital, 'quota transfers should be made carera Ebro, this merely confirms the broad taking into consideration the interests of all 'room for manœuvre' conferred on the parties concerned and in particular Member States by Article 25 of Regulation those of sugar beet and sugar cane pro- No 1785/81, but provides no ground for ducers' (repeated in Article 25(1) of the inferring anything whatsoever on the sub- same regulation). Similarly, under Article 1 ject of the possibility of transferring quotas of Regulation No 193/82 (now Point I in for value. Annex IV to Regulation No 1260/2001), 'Member States shall adopt such measures as they deem necessary to take account of the interests of sugar-beet and sugar-cane producers in the event of allocation of quotas to a sugar-producing undertaking 84. There remains the Spanish Govern- having more than one factory'. Under ment's argument, according to which any Article 4 of the same regulation, the reallocation of quotas must be made measures taken pursuant to Article 2 and according to market mechanisms and by Article 3 of the Regulation may take effect applying rational economic criteria. only if 'the interests of each of the parties concerned are taken into consideration' and if 'the Member State concerned con- siders them to be such as to improve the structure of the beet, cane and sugar-manu- 85. However, the very concept of 'organi- facturing sectors'. sation of the markets' in sugar is clearly far removed from the 'market mechanisms' of the free market economy. It seeks largely to protect sugar-beet producers and sugar undertakings against the harsh laws of the market. Consequently, it follows from the 87. I am therefore of the opinion, like the 15th recital in the preamble to Regulation Commission, 'that the award of sugar No 1785/81 that 'the production quotas production quotas to the highest bidder, allocated to undertakings constitute a that is to say, according to purely financial means of guaranteeing producers Commu- considerations, does not take account of nity prices' (which are higher than those the abovementioned public interest objec- tives defined by the Community legislation and, in particular, of the protection of the 29 — See footnote 13. interests of sugar-beet and sugar-cane pro-

89. Quota recipients do not have at their (a) Observations submitted to the Court disposal an abstract asset, indefinitely and unconditionally negotiable, with fixed par- ameters, which can, at any time, be valued according to the usual criteria of commer- cial markets. Furthermore, quotas are likely to vary over time. They may be altered or even abolished by the public authority, to 91. ACOR, with which ARJ agreed at the meet the needs of the Common Agricultural hearing, again asserts that the system of Policy. They are not, in any case, the proper transferring a sugar-production quota for value directly contravenes the provisions relating to the COM in the sugar sector, 30 — Under the terms of which, 'as part of the quota reallo- since it has an adverse impact on the cation which is to be conducted in good time by auction,... the government will adopt the measures it judges necessary to prevent any possible negative repercussions for national functioning of quota and intervention price agricultural producers of sugar beet'. arrangements.

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92. This is because, ACOR points out, COM itself that the allocation of quotas, as redistribution of the quota by fixing a price well as their transfer, be free of charge. implies a sale, and this supposes the intro- duction of a cost or an additional charge into the sugar-production line of the under- taking that finally acquires the quota. The payment of this price would have a negative impact on the process of forming 95. ACOR mentions, in this regard, the the goods' final price. judgment in Commission v Greece, 31 a case relating to the COM in the cereals sector:

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from the merger and, furthermore, would 100. The Spanish Government considers have increased the possibilities of effective that the reallocation of quotas for value competition on the Spanish market without cannot in any way harm the good func- transgressing the rules governing the COM tioning of the COM. in the sugar sector.

97. In this regard, ACOR mentions several possibilities and, in particular, the transfer (b) Appraisal of one or more of the factories belonging to the merged undertakings, which would result in the transfer of the quota relating to the factory to the new owner, or else the provision of a certain quantity of sugar, which has already been processed, to an independent dealer, at the intervention 101. ACOR's reasoning, in which it points price, following the example of the con- out that the allocation of quotas for value ditions imposed by the Commission in affects the formation of sugar and sugar- respect of the Südzucker/Saint Louis con- beet prices, concerns, I believe, a major centration. 32 aspect of the problem posed. The rules on price formation constitute the nerve centre of the COM in sugar.

98. For the Commission, the transfer of quotas for value is likely to lead to disruptions which risk harming the oper- ation and efficiency of the Community regime. 102. As the case-law cited by ACOR con- firms, a Member State cannot, therefore, interfere in the way prices are formed without calling into question, ipso facto, the very essence of the Community market system. 99. Azucarera Ebro asserts that, where one sugar producer sells a factory or undertak- ing to another, the national authority is obliged to transfer the quotas immediately and that nothing in the principles or in the objectives of the COM prevents the Member State from ordering that the transfer shall be made for value. 103. This is why I conclude that the basic mechanisms of the COM in the sugar sector are another factor precluding the 32 — See footnote 19. allocation of quotas for value.

108. Furthermore, ACOR asserts that the practical problems are not merely related to accounting. There is also a risk that the 105. ACOR also points out that, if an reallocation of quotas for value would acquisition were made for value, the under- create a quotas market, without the quota taking would have to reflect the cost of the necessarily being associated with actual, quota in its accounts. The undertaking genuine sugar production. This risk could would have had to pay a price for the even extend to the Community level. quota concerned, while the rest of that According to ACOR, the Spanish Govern- undertaking's quotas would have been ment could, for example, act in concert obtained free of charge. with the French Government so that Span- ish undertakings bought quotas allocated to French undertakings (which are all excessive) with the aim of making good the sugar deficit on the Spanish market. That would then lead to a serious distortion 106. Up to now, a production quota could on the Community sugar market and not be entered in an undertaking's balance would make the rules of the COM in the sheet, since it is not a recordable asset. But, sugar sector completely ineffective.

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109. Further, the consequences arising operators, any discrimination with regard from the possibility of transferring a sugar to the company would have a total, quota for value would have future reper- immediate impact on these beet growers. cussions. Production quotas are a tempor- ary instrument for regulating the market, which is renewed by successive regulations. If the quota scheme were repealed in the future, there would be obvious economic damage to undertakings which had acquired quotas for value.

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113. At the hearing, ARJ challenged the producers who depend on the sugar pro- validity of this analysis on the ground that ducer concerned. it had a factory which processed 49.62% of the sugar beet produced in the central region.

116. According to settled case-law of the Court: 114. For Azucarera Ebro, Article 25 of Regulation No 1785/81 must be inter- preted broadly. When the Member States exercise the powers it lays down, they must respect the principle of legal certainty to the advantage of sugar-producing undertak- ings. Azucarera Ebro asserts that quotas are in the nature of a concession and give 'The second subparagraph of Article 40(3) rise to legal interests on the part of sugar- of the Treaty, which prohibits all discrimi- producing undertakings, which the nation in the context of the Common Member States should respect. It relies, in Agricultural Policy, is merely a specific this regard, on the judgment in Cavarzere expression of the general principle of equal Produzioni Industriali. 33 treatment, which requires that comparable situations not be treated differently and different situations not be treated alike unless such treatment is objectively justified (Case 203/86 Spain v Council [1988] ECR 4563, paragraph 25, and Case C-15/95 EARL de Kerlast [1997] ECR I-1961, paragraph 35)'. 34 (b) Appraisal

115. An operation to reallocate sugar quo- 117. In any event, therefore, a measure tas for value undeniably affects the situ- taken by a national authority, which, as in ation of the sugar producer or producers the present case, leads to the creation of a concerned in relation to other operators difference in the treatment of operators whose accounting position is not burdened who are in comparable situations, is by paying to obtain a quota. There is a risk contrary to the principle of equality. that the same could be true of sugar-beet

120. Therefore, the answer to the question raised by the referring court should be that the provisions of Regulation No 1785/81 and of Regulation No 193/82 preclude the authority of a Member State, in the exercise 122. As I am proposing that the Court give of its power of administrative review of a a positive answer to the first part of the merger of undertakings, from stipulating question, an answer to the second part is that such a transfer or reallocation of not, in my opinion, necessary. Therefore, it quotas is for value and, therefore, that the is only in the alternative that I shall recipient undertaking or undertakings must examine the observations submitted in this pay financial consideration. connection.

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1. Observations submitted to the Court rational economic criteria. An auction sale would ensure that the price of the quota would be fixed by the rules of the market and not at the discretion of the authorities.

123. ACOR and ARJ assert that it is obvious that the public auction procedure implicitly includes the fixing of a starting price and that consequently it is a pro- cedure for value. Having regard to the arguments expounded about the first part 126. Moreover, this means of reallocating of the question, ACOR is of the opinion quotas would not be incompatible with any that the provisions of Community law also of the provisions of the Community regu- preclude the price of the quota to be lations. transferred, and the distribution thereof, from being decided by public auction. According to ACOR, any procedure for value, whether it is a public auction or any other procedure including price fixing, is incompatible with the Community legis- lation.

130. Even if effective measures can be taken in order to avoid any adverse effect '(c) Does the entry into force of Council on sugar-beet producers, public auction is Regulation (EC) No 1260/2001 of nevertheless open to all the objections I 19 June 2001 on the common organi- have set out above with regard to the very sation of the markets in the sugar principle of allocation for value. As various sector, which repeals the earlier regu- interveners have pointed out, this method lations, affect the interpretation of of allocation implies an amendment of the Community law and the answers of very nature of the instrument of quotas, the Court?' which is likely to lead to disruptions which would compromise the operation and effi- ciency of the Community regime.

(2) The entry into force of Council Regulation (EC) No 1260/2001 of 19 June 2001 on the common organisation of the markets in the sugar sector does not alter the interpretation of the Community legislation or the Court's answers.'

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