CELEX: 62003CJ0040
Appeal
Arrangements for association of the overseas countries and territories
Imports of sugar and mixtures of sugar and cocoa
Regulation (EC) No 2081/2000
Safeguard measures
Article 109 of the OCT Decision
Commission's power of assessment
Principle of proportionality
Reasons

1       By its appeal Rica Foods (Free Zone) NV (‘Rica Foods’) requests the Court to set aside the judgment of the Court of First
Instance of the European Communities of 14 November 2002 in Joined Cases T-332/00 and T-350/00
Rica Foods and Free Trade Foods
v
Commission
[2002] ECR II-4755 (‘the judgment under appeal’), by which that court dismissed its action for annulment of Commission Regulation
(EC) No 2081/2000 of 29 September 2000 providing for the continued application of safeguard measures for imports from the
overseas countries and territories of sugar sector products with EC/OCT cumulation of origin (OJ 2000 L 246, p. 62) (‘the
contested regulation’).

Legal framework

Common organisation of the markets in the sugar sector
2       By Regulation No 2038/1999 of 13 September 1999 on the common organisation of the markets in the sugar sector (OJ 1999 L 252,
p. 1), the Council of the European Union consolidated Regulation (EEC) No 1785/81 of 30 June 1981, which had established that
common organisation (OJ 1981 L 177, p. 4) and had been amended many times. The purpose of that organisation is to regulate
the Community sugar market in order to increase employment and the standard of living among Community sugar producers.
3       Support for Community production through guaranteed prices is limited to national production quotas (A and B quotas) allocated
by the Council under Regulation No 2038/1999 to each Member State, which then divides them amongst its producers. Quota B
sugar (‘B sugar’) is subject to a higher production levy than quota A sugar (‘A sugar’). Sugar produced in excess of the A
and B quotas is termed ‘C sugar’ and cannot be sold within the European Community unless it is transferred to the A and B
quotas for the following season.
4       Extra-Community exports apart from C sugar benefit from export refunds under Article 18 of Regulation No 2038/1999, to make
up for the difference between the price on the Community market and the price on the world market.
5       The quantity of sugar which can benefit from an export refund and the total annual amount of refunds are governed by the World
Trade Organisation (WTO) Agreements (‘the WTO Agreements’), to which the Community is a party and which were approved by Council
Decision 94/800/EC of 22 December 1994 concerning the conclusion on behalf of the European Community, as regards matters within
its competence, of the agreements reached in the Uruguay Round multilateral negotiations (1986-1994) (OJ 1994 L 336, p. 1).
By the 2000/2001 marketing year at the latest, the quantity of sugar exported with refund and the total amount of refunds
were to be limited to 1 273 500 tonnes and to EUR 499.1 million, which represents a reduction of 20% and 36% respectively
in relation to the figures for the 1994/1995 marketing year.

Arrangements for association of the overseas countries and territories with the Community
6       Under Article 3(1)(s) EC the activities of the Community include the association of the overseas countries and territories
(OCTs) ‘in order to increase trade and promote jointly economic and social development’.
7       The Netherlands Antilles and Aruba form part of the OCTs.
8       The association of the OCTs with the Community is governed by Part Four of the EC Treaty.
9       The Council adopted on the basis of Article 136 of the EC Treaty (now, after amendment, Article 187 EC) several decisions
concerning the association of the OCTs with the Community, including Council Decision 91/482/EEC of 25 July 1991 on the association
of the overseas countries and territories with the European Economic Community (OJ 1991 L 263, p. 1), which, according to
Article 240(1) thereof, is to apply for a period of 10 years from 1 March 1990.
10     Various provisions of Decision 91/482 were amended by Council Decision 97/803/EC of 24 November 1997 amending at mid-term
Decision 91/482/EEC (OJ 1997 L 329, p. 50). Decision 91/482, as amended by Decision 97/803 (‘the OCT Decision’), was extended
until 28 February 2001 by Council Decision 2000/169/EC of 25 February 2000 (OJ 2000 L 55, p. 67).
11     Article 101(1) of the OCT Decision provides:
‘Products originating in the OCTs shall be imported into the Community free of import duty.’
12     Article 102 of the same decision provides:
‘Without prejudice to [Article] 108b, the Community shall not apply to imports of products originating in the OCTs, any quantitative
restrictions or measures having equivalent effect.’
13     The first indent of Article 108(1) of that decision refers to Annex II thereto for a definition of the concept of originating
products and the methods of administrative cooperation relating thereto. Under Article 1 of that annex a product is to be
considered as originating in the OCTs, the Community or the African, Caribbean and Pacific States (‘the ACP States’) if it
has been either wholly obtained or sufficiently processed there.
14     Article 3(3) of Annex II contains a list of types of working or processing which are insufficient to confer the status of
originating products on products coming from the OCTs in particular.
15     Article 6(2) of that annex, however, contains so-called ‘EC/OCT and the ACP/OCT cumulation of origin’ rules. It provides:
‘When products wholly obtained in the Community or in the ACP States undergo working or processing in the OCTs, they shall
be considered as having been wholly obtained in the OCTs.’
16     Under Article 6(4) of Annex II the EC/OCT and ACP/OCT cumulation of origin rules apply to ‘any working or processing carried
out in the OCTs, including the operations listed in Article 3(3)’.
17     Decision 97/803 inserted into the OCT Decision inter alia Article 108b, paragraph 1 of which provides: ‘[t]he ACP/OCT cumulation
of origin referred to in Article 6 of Annex II shall be allowed for an annual quantity of 3 000 tonnes of sugar’. Decision
97/803 did not, however, limit the application of the EC/OCT cumulation of origin rule.
18     Article 109(1) of the OCT Decision authorises the Commission to take ‘the necessary safeguard measures’ when ‘as a result
of the application of this Decision, serious disturbances occur in a sector of the economy of the Community or one or more
of its Member States, or their external financial stability is jeopardised, or if difficulties arise which may result in a
deterioration in a sector of the Community’s activity or in a region of the Community’. Under Article 109(2) of that decision,
the Commission must choose ‘such measures as would least disturb the functioning of the association and the Community’. Furthermore,
‘[t]hese measures shall not exceed the limits of what is strictly necessary to remedy the difficulties that have arisen’.

The safeguard measures taken to counter imports of sugar and mixtures of sugar and cocoa benefiting from the EC/OCT cumulation
of origin rule
19     Commission Regulation (EC) No 2423/1999 of 15 November 1999 introducing safeguard measures in respect of sugar falling within
CN code 1701 and mixtures of sugar and cocoa falling within CN codes 1806 10 30 and 1806 10 90 originating in the overseas
countries and territories (OJ 1999 L 294, p. 11) was adopted on the basis of Article 109 of the OCT Decision.
20     By that regulation, applicable until 29 February 2000, the Commission made imports of sugar qualifying for EC/OCT cumulation
of origin subject to a system of minimum prices and made imports of mixtures of sugar and cocoa (‘mixtures’) originating in
the OCTs subject to the Community surveillance laid down in Article 308d of Commission Regulation (EEC) No 2454/93 of 2 July
1993 laying down provisions for the implementation of Council Regulation (EEC) No 2913/92 establishing the Community Customs
Code (OJ 1993 L 253, p. 1).
21     Commission Regulation (EC) No 465/2000 of 29 February 2000 introducing safeguard measures for imports from the overseas countries
and territories of sugar sector products with EC/OCT cumulation of origin was also adopted on the basis of Article 109 of
the OCT Decision (OJ 2000 L 56, p. 39). That regulation limited the EC/OCT cumulation of origin rule to 3 340 tonnes of sugar
for products falling within CN codes 1701, 1806 10 30 and 1806 10 90 for the period from 1 March 2000 to 30 September 2000.
22     On 29 September 2000 the Commission adopted the contested regulation also on the basis of Article 109 of the OCT Decision.
23     The first, fourth, fifth and sixth recitals in the preamble to the contested regulation read as follows:
‘(1)      The Commission has noted that imports of sugar (CN code 1701) and of mixtures of sugar and cocoa falling within CN codes 1806 10 30
and 1806 10 90 originating in the [OCTs] increased greatly between 1997 and 1999, particularly those imports with EC-OCT cumulation
of origin, which increased from zero tonnes in 1996 to more than 53 000 tonnes in 1999. Such products are imported into the
Community free of import duties and are admitted without quantity limits in accordance with Article 101(1) of the OCT Decision.
…
(4)      In the past few years difficulties have arisen on the Community sugar market, a market in surplus. Sugar consumption is constant
at some 12.8 million tonnes per year, while production under quota is around 14.3 million tonnes per year. Any imports of
sugar into the Community therefore involve a corresponding quantity of Community sugar which cannot be sold on that market
having to be exported. Refunds for that sugar, within the limit of certain quotas are charged to the Community budget (currently
at around EUR 520/tonne). However, exports with refund are limited in volume by the Agreement on Agriculture concluded as
part of the Uruguay round and have been reduced from 1 555 600 tonnes for the 1995/96 marketing year to 1 273 500 tonnes for
the 2000/01 marketing year.
(5)      The operation of the COM in sugar may be greatly destabilised by these difficulties. For the 2000/01 marketing year, the Commission
decided to reduce Community producers quotas by some 500 000 tonnes … . Any further import of sugar or products with a high
sugar content from the OCT will mean a greater reduction in the quota for Community producers and a greater guaranteed income
loss for them.
(6)      As a result of these continuing difficulties, there is a risk that a sector of Community activity will deteriorate.
...’
24     Article 1 of the contested regulation provides:
‘For products falling within tariff headings CN 1701, 1806 10 30 and 1806 10 90, EC/OCT cumulation of origin as referred to
in Article 6 of Annex II to [the OCT Decision] shall be permitted for a quantity of 4 848 tonnes of sugar during the period
of validity of this Regulation.’
For products other than unprocessed sugar, the sugar content of the imported product shall be taken into account for the purposes
of complying with that limit.’
25     The eighth recital in the preamble to the contested regulation indicates that the Commission decided on that quota of 4 848
tonnes taking into account ‘that figure representing the sum of the highest annual volumes of imports of the products in question
recorded in the three years preceding 1999, the year in which imports recorded a sharp rise. In determining the quantities
of sugar to be taken into consideration, the Commission takes note of the position adopted by the President of the Court of
First Instance in his rulings of 12 July and 8 August 2000 in Cases T-94/00 R, T-110/00 R and T-159/00 R, without, however,
recognising it as justified. Consequently, in order to avoid unnecessary procedures and solely for the purposes of adopting
these safeguard measures, the Commission, for sugar falling within CN code 1701 and for 1997, bases itself on the figure of
10 372.2 tonnes for the total imports of sugar from the OCT with EC-OCT and ACP-OCT cumulation of origin, as recorded by Eurostat.’
26     Under Article 2 of the contested regulation, imports of the products referred to in Article 1 are to be subject to the issue
of an import licence, which is to be issued in accordance with the rules contained in Articles 2 to 6 of Commission Regulation
(EC) No 2553/97 of 17 December 1997 on rules for issuing import licences for certain products covered by CN codes 1701, 1702,
1703 and 1704 and qualifying as ACP/OCT originating products (OJ 1997 L 349, p. 26), which are to apply mutatis mutandis.
27     Lastly, under Article 3 thereof, the contested regulation, which entered into force on 1 March 2000, is applicable from 1
October 2000 to 28 February 2001.

Procedure before the Court of First Instance and the judgment under appeal
28     By applications lodged at the Registry of the Court of First Instance on 27 October and 20 November 2000 respectively, Rica
Foods and one other company (‘the applicants’), which are sugar processing undertakings established in the OCTs (Aruba and
the Netherlands Antilles) brought actions, first, for the annulment of the contested regulation and, secondly, for damages
allegedly suffered as a result of the adoption of that regulation (Joined Cases T-332/00 and T-350/00).
29     By orders of 15 March and 30 April 2001 of the President of the Third Chamber of the Court of First Instance, the Kingdom
of the Netherlands was granted leave to intervene in support of the form of order sought by Rica Foods, and the Kingdom of
Spain was granted leave to intervene in support of the form of order sought by the Commission in Joined Cases T-332/00 and
T-350/00.
30     In support of its action, Rica Foods relied in particular on three pleas in law alleging infringement of Article 109(1) of
the OCT Decision, of the principle of proportionality and of the preferential status of the OCTs under the Treaty.
31     By the judgment under appeal, the Court of First Instance, after joining the actions, dismissed them as unfounded.
32     In relation in particular to the three aforementioned pleas in law, the Court of First Instance ruled as follows.

The plea alleging infringement of Article 109(1) of the OCT Decision
33     The Court of First Instance observed that the Community institutions have a wide discretion in the application of Article
109 of the OCT Decision. In cases involving such a discretion the Community Court must restrict itself to considering whether
the exercise of that discretion contains a manifest error or constitutes a misuse of power or whether the Community institutions
clearly exceeded the bounds of their discretion (Case C-110/97
Netherlands
v
Council
[2001] ECR I-8763, paragraph 61 and case-law cited therein) (paragraphs 66 and 67 of the judgment under appeal).
34     In the case before it, the Court of First Instance found that the safeguard measure in question came within the second hypothesis
described in Article 109(1) of the OCT Decision. It also confirmed the correctness of the Commission’s statements, inter alia
in the fourth recital in the preamble to the contested regulation, justifying the adoption of that measure, according to which,
due to the surplus on the market, any additional tonnes of sugar imported would lead to an increase in subsidised exports
which, in turn, would be likely to be in conflict with the ceilings provided for by the WTO Agreements (paragraphs 75 to 86
of the judgment under appeal). It found that those factors, taken together, established that there were difficulties within
the meaning of that provision (paragraphs 89 to 103 of that judgment).
35     Next, the Court of First Instance found that the Commission could have reasonably taken the view, as evidenced by the fifth
recital in the preamble to the contested regulation, that the increased imports of sugar and mixtures under the EC/OCT cumulation
of origin rule might greatly destabilise the common organisation of the markets in sugar (paragraphs 104 to 141 of the judgment).

The plea alleging infringement of the principle of proportionality
36     Several arguments were put forward by the applicants.
37     First, the Council, when it adopted Decision 91/482, should have taken account of the fact that imports of agricultural products
from the OCTs into the Community might lead to additional expenditure chargeable to the budget for the common agricultural
policy. The growth in imports is the direct consequence of the OCT Decision.
38     The Court of First Instance found that the fact that an increase in imports was already foreseeable in 1991 was irrelevant
for determining whether the measure adopted in February 2000 constituted an appropriate and proportionate response to remedy
the difficulties that had arisen within the meaning of Article 109(2) of the OCT Decision (paragraph 147 of the judgment under
appeal).
39     Second, the applicants submitted that the Commission had disregarded the temporary nature of the safeguard measure in question.
40     On this point, the Court of First Instance noted the wide discretion which the Community institutions have in the application
of Article 109 of the OCT Decision and found that the contested regulation, applicable from 1 October 2000 to 28 February
2001, ‘which limited duty-free access to the Community market for sugar originating in the OCTs, within limits compatible
with the situation on that market, whilst retaining preferential treatment for that product in a manner consistent with the
objectives of the OCT Decision …, was a suitable instrument for attaining the objective sought by the Commission and did not
go beyond what was necessary to do so’ (paragraphs 151 to 153 of the judgment under appeal).
41     Third, the applicants complained that the Commission had not stated in the contested regulation the reasons why the introduction
of a minimum price, such as that imposed by Regulation No 2423/1999, was no longer considered appropriate for attaining the
objective pursued.
42     The Court of First Instance stated in this regard that the applicants had not established ‘that the Commission, by restricting
imports into the Community of sugar or mixtures qualifying for EC/OCT cumulation of origin to 4 848 tonnes for the period
during which the contested regulation was in force, adopted measures that were manifestly inappropriate or that it carried
out a manifestly erroneous assessment of the information available to it at the time when the contested regulation was adopted’
and found that, in any event, ‘Regulation No 2423/1999 did not have the effect of reducing imports of sugar under the EC/OCT
cumulation of origin regime, which [cast] doubt on the effectiveness of the measure introduced by the latter regulation, that
is to say, a minimum import price for the product concerned’ (paragraphs 156 and 157 of the judgment under appeal).
43     Fourth, the applicants maintained that the introduction of a ceiling of 4 848 tonnes of sugar for a period of five months
infringed the principle of proportionality because imports made in 1999 were excluded from the calculation of the import quota,
the figure used was incomprehensible, and the import quota was too low to allow for profitable exploitation of even one sugar
processing factory.
44     On that point, the Court of First Instance found that the Commission, which has to reconcile divergent interests, could reasonably
fix, as evidenced by the ninth recital in the preamble to the contested regulation, the quota of 4 848 tonnes on the basis
of the highest annual volumes of imports of the products in question recorded in the three years preceding 1999, in the light
of the exponential rise in imports of sugar and mixtures into the Community under the EC/OCT cumulation of origin regime in
1999, which created a risk of deterioration in the Community sugar sector (paragraphs 164 to 174 of the judgment under appeal).
45     Lastly, the applicants maintained that Article 2(3) of the contested regulation, which provides that ‘applications for import
licences shall be accompanied by a copy of the export licence’, infringes the principle of proportionality.
46     The Court of First Instance rejected that argument on the grounds that ‘that condition makes it possible to ensure that import
applications made in the context of the contested regulation relate to sugar which actually qualifies for EC/OCT cumulation
of origin’ (paragraph 176 of the judgment under appeal).

The plea relating to infringement of the preferential status of products originating in the OCTs
47     On this point the Court of First Instance found that it cannot be inferred from the mere adoption of a safeguard measure under
Article 109 of the OCT Decision that the preferential status of products originating in the OCTs has been infringed, provided
that that measure is such as to iron out or reduce the difficulties which have arisen. It also found that the contested regulation
does not impose any ceiling on imports of sugar originating in the OCTs under the ordinary rules of origin, if such production
were to exist (paragraphs 182 to 190 of the judgment under appeal).

The appeal
48     Rica Foods claims that the Court should:
–       declare its appeal to be admissible;
–       set aside the judgment under appeal and allow its claims put forward at first instance.
49     The Commission contends that the Court should:
–       dismiss the appeal as unfounded;
–       order the appellant to pay the costs.
50     The Spanish Government contends that the Court should dismiss the appeal and order the appellant to pay the costs.
51     In support of its appeal, Rica Foods puts forward five pleas in law:
–       infringement of Article 109(1) of the OCT Decision, in that the Court of First Instance found that the Community institutions
have a wide discretion in the application of that provision;
–       infringement of the obligation to state reasons;
–       infringement of Article 109(1) of the OCT Decision in that the Court of First Instance wrongly found that the circumstances
relied on by the Commission to justify the adoption of the safeguard measure in question were ‘difficulties’ and ‘deterioration’
within the meaning of that provision;
–       infringement of Article 109(2) of the OCT Decision;
–       infringement of the preferential status of the OCTs.

The first plea, relating to infringement of Article 109(1) of the OCT Decision and to the scope of the Community institutions’
discretion
52     By its first plea, Rica Foods complains that the Court of First Instance misconstrued the scope of Article 109(1) of the OCT
Decision by finding, in paragraph 66 of the judgment under appeal, that the Commission has a wide discretion in the application
of that provision. Since that provision is an exception to the principle laid down in Article 101(1) of that same decision,
which provides that products originating in the OCTs are to be imported into the Community free of import duty, it should
have been interpreted narrowly.
53     It must be observed that it is settled case-law of the Court that the Community institutions have been given a wide discretion
in the application of Article 109 of the OCT Decision (see, to that effect, Case C-390/95 P
Antillean Rice Mills and Others
v
Commission
[1999] ECR I‑769, paragraph 48; Case C-110/97
Netherlands
v
Council
, paragraph 61, and Case C-301/97
Netherlands
v
Council
[2001] ECR I‑8853, paragraph 73).
54     In those circumstances, the Community Courts must restrict themselves to considering whether the exercise of that discretion
contains a manifest error or constitutes a misuse of power or whether the Community institutions clearly exceeded the bounds
of their discretion (see
Antillean Rice Mills
, paragraph 48; Case C-110/97
Netherlands
v
Council
, paragraph 62, and Case C-301/97
Netherlands
v
Council
, paragraph 74).
55     The depth of the Court’s review must be limited in particular where, as in the present case, the Community institutions have
to reconcile divergent interests and thus select options within the context of the policy choices which are their own responsibility
(see, to that effect, Case C-17/98
Emesa Sugar
[2000] ECR I-675, paragraph 53).
56     Accordingly, it is evident that the Court of First Instance correctly interpreted Article 109(1) of the OCT Decision in paragraphs
66 and 67 of the judgment under appeal.
57     The status of that provision as an exception, which flows from its very nature, does not in any way diminish the discretion
which the Commission has when it has the difficult task of reconciling divergent interests within the context of the policy
choices which are its own responsibility.
58     Consequently, the first plea must be dismissed as unfounded.

The second plea, relating to infringement of the obligation to state reasons
59     By its second plea, Rica Foods submits that the judgment under appeal is vitiated by a failure to state reasons in that the
Court of First Instance based its ruling on wrong or incomprehensible considerations, namely that:
–       any additional imports of sugar from the OCTs under the EC/OCT cumulation of origin rule would increase the surplus of sugar
on the Community market;
–       those additional imports would entail additional expenditure for the Community budget.
60     First, as to the grounds of the judgment under appeal finding that imports of sugar under the EC/OCT cumulation of origin
rule would increase the surplus of sugar on the Community market, it is settled case-law that the Court of Justice has no
jurisdiction to establish the facts or, in principle, to examine the evidence which the Court of First Instance accepted in
support of those facts. Provided that the evidence has been properly obtained and the general principles of law and the rules
of procedure in relation to the burden of proof and the taking of evidence have been observed, it is for the Court of First
Instance alone to assess the value which should be attached to the evidence produced to it (see, inter alia, Case C‑185/95
P
Baustahlgewebe
v
Commission
[1998] ECR I-8417, paragraph 24). Save where the clear sense of the evidence has been distorted, that appraisal does not
therefore constitute a point of law which is subject as such to review by the Court of Justice (see, inter alia, Case C-8/95
P
New Holland Ford
v
Commission
[1998] ECR I-3175, paragraph 26; Joined Cases C-24/01 P and C-25/01 P
Glencore and Compagnie Continentale
v
Commission
[2002] ECR I‑10119, paragraph 65; and Case C-122/01 P
T. Port
v
Commission
[2003] ECR I-4261, paragraph 27).
61     In the present case, the Court of First Instance found:
–       in paragraph 79 of the judgment under appeal, on the basis of the evidence at its disposal in the file, that there was a surplus
on the Community sugar market;
–       in paragraph 80 of the judgment, that the Community was under an obligation to import a certain quantity of sugar from non-member
countries under the WTO Agreements; and
–       in paragraph 81 of the judgment, that, in those circumstances, ‘if the production of Community sugar is not reduced, any additional
imports of sugar under the EC/OCT cumulation of origin regime will increase the amount of surplus sugar on the Community market
and will lead to an increase in subsidised exports’.
62     The Court of First Instance infers from this, in paragraph 82 of the judgment under appeal, that ‘the Commission was quite
right in stating … that any imports into the Community therefore involve a corresponding quantity of Community sugar which
cannot be sold on that market having to be exported’.
63     It must be held that the Court of First Instance’s assessment of the increase in the surplus on the Community market is a
finding of fact which cannot be the subject-matter of an appeal, and, as noted by the Advocate General in paragraph 59 of
his Opinion, the appellant has not even submitted, much less proven, that the Court of First Instance had distorted the clear
sense of the evidence before it.
64     Second, as regards the alleged additional expenditure for the Community budget caused by the sugar imports qualifying for
EC/OCT cumulation of origin, Rica Foods states that the export refunds for A and B sugars are financed entirely by the producers
through contributions which are passed on to consumers, so that the disputed imports have no impact on the Community budget.
65     Suffice it to note that, in paragraphs 99 to 101 of the judgment under appeal, the Court of First Instance did not in any
way consider that the disputed imports would lead to additional expenditure for the Community budget. In fact, after having:
–       noted, in paragraph 99 of the judgment under appeal, that ‘the difficulties mentioned in the contested regulation are the
fact that imports of sugar or mixtures qualifying for EC/OCT cumulation of origin increased greatly, the surplus on the Community
sugar market giving rise to subsidised exports, and the obligations arising under the WTO Agreements’, and
–       found, in paragraph 100 of the judgment, that ‘in view of the surplus on the Community market, imported sugar of OCT origin
will be substituted for Community sugar, which must be exported in order to maintain the delicate balance of the common organisation
of the markets’,
the Court of First Instance held, in paragraph 101 of the judgment, that ‘even if exports of Community sugar are to a large
extent financed by the Community sugar industry and hence by the consumer, … the WTO Agreements limit export subsidies irrespective
of who ultimately bears the cost of those subsidies, and that each additional import aggravates the situation on a market
which is already in surplus’.
66     In the light of all of the foregoing considerations, the second plea must be rejected.

The third plea, relating to infringement of Article 109(1) of the OCT Decision and relating to the concept of ‘difficulties’
and ‘deterioration’ within the meaning of that provision
67     By its third plea, Rica Foods maintains that the Court of First Instance wrongly found that the circumstances relied on by
the Commission to justify the adoption of the contested regulation safeguard measure in question, namely increased imports
into the Community of sugar and mixtures with EC/OCT cumulation of origin, the surplus Community production in the European
market in sugar, the obligations under the WTO Agreements and the consequences for the common organisation of the market in
sugar, constituted ‘difficulties’ and ‘deterioration’ within the meaning of Article 109(1) of the OCT Decision.
68     Rica Foods submits, first, that the Court of First Instance distorted the reasons put forward by the Commission in finding,
in paragraph 89 of the judgment under appeal, that the Commission had never claimed that each of the difficulties it had identified
could on its own justify the adoption of a safeguard measure, but that, on the contrary, they were closely linked.
69     It must be observed that a reading of the first, fourth and fifth recitals in the preamble to the contested regulation shows
that the Commission considered that the combination of various factors, namely increases in the disputed imports, the surplus
on the Community market and the restriction of export refunds as a result of the WTO Agreements, had caused difficulties within
the meaning of Article 109(1) of the OCT Decision. Accordingly, it cannot be claimed that the Court of First Instance distorted
the reasons put forward by the Commission in support of the safeguard measure in question.
70     Second, Rica Foods maintains that it was foreseeable and even desired by the Community legislature that the OCT Decision lead
to increases in the disputed imports. Moreover, the alleged ‘difficulties’ and ‘deterioration’ relied on by the Commission
and accepted by the Court of First Instance were already present when Decision 91/482 was adopted and, in any event, when
it was amended in 1997. Not only had there been a surplus within the context of the common organisation of the market in sugar
since 1968, but new production and imports had been authorised since then on various occasions.
71     In those circumstances, the Court of First Instance could not have found those factors to be ‘difficulties’ which risked causing
‘deterioration in a sector of the Community’s activity’ within the meaning of Article 109(1) of the OCT Decision.
72     It must be observed that in paragraph 91 of the judgment under appeal, the Court of First Instance found that imports into
the Community of sugar and mixtures with EC/OCT cumulation of origin had increased greatly since 1997, that is, after Decision
91/482 had been adopted in 1991 or even after it had been amended in 1997.
73     Moreover, even if it were established that that considerable increase had been foreseeable or even desired by the Community
when Decision 91/482 was adopted, as the Advocate General observes in paragraph 81 of his Opinion, this could not prevent
the Commission from finding that that increase, in the light of the surplus Community production and the obligations under
the WTO Agreements, constituted a source of ‘difficulties’ within the meaning of Article 109(1) of the OCT Decision.
74     Accordingly, in confirming the Commission’s position in paragraph 91 et seq. of the judgment under appeal, the Court of First
Instance did not disregard the scope of Article 109(1) of the OCT Decision.
75     Third, Rica Foods maintains that, contrary to the Court of First Instance’s ruling in paragraph 106 of the judgment under
appeal, a reduction in the production quotas caused by the disputed imports has not affected the incomes of Community producers.
In fact, the only effect of such a reduction is to encourage Community producers to cultivate other crops which also come
within a guaranteed agricultural scheme.
76     It must be held that, even if the opportunities for Community producers to turn to other crops were such as to cast doubt
on the Court of First Instance’s assessment, in paragraphs 104 to 140 of the judgment under appeal, of the existence of deterioration
or a risk of deterioration in a sector of the Community’s activity, it suffices to find that Rica Foods did not adduce any
evidence before the Court of First Instance in support of its assertions and that, accordingly, the latter was correct in
not taking account of them.
77     Lastly, Rica Foods submits that the quantities of sugar and mixtures imported from the OCTs, which in 1999 accounted for 0.32%
(for sugar) and 0.102% (for mixtures) of Community production, could not present a serious risk of disturbance in the common
organisation of the market in sugar. By accepting the opposite proposition, the Court of First Instance committed an error
of law.
78     The Court notes, as it stated in paragraph 56 of
Emesa Sugar
, that as early as 1997 Community production of beet sugar exceeded the quantity consumed in the Community, cane sugar was
imported from the ACP States to cater for specific demand for that product, and the Community was under an obligation to import
a certain quantity of sugar from non-member countries under the WTO Agreements. Moreover, the Community was also required
to subsidise sugar exports by granting export refunds within the limits laid down in those agreements. In those circumstances
and in the light of the increasing growth in imports of sugar originating in the OCTs since 1997, the Commission was entitled
to take the view, as the Court of First Instance rightly held in paragraphs 93 to 96 of the judgment under appeal, that any
additional quantity of sugar reaching the Community market, even if minimal compared with Community production, would have
obliged the Community to increase the amount of the export subsidies, within the limits mentioned above, or to reduce the
quotas of European producers, and that those measures, which were contrary to the objectives of the common agricultural policy,
would have disturbed the common organisation of the market in sugar, the balance of which was already precarious.
79     In the light of all the foregoing considerations, the third plea must be rejected.

The fourth plea, relating to infringement of Article 109(2) of the OCT Decision
80     By its fourth plea, Rica Foods complains that the Court of First Instance ruled in paragraphs 142 to 177 of the judgment under
appeal that the Commission had not infringed the principle of proportionality laid down in Article 109(2) of the OCT Decision
by limiting imports of sugar and mixtures with EC/OCT cumulation of origin to 4 848 tonnes.
81     The Commission was unable to justify, having regard to the interests it was seeking to protect, the level at which the disputed
imports were limited. That level was negligible compared to Community production, imports or exports and quite insufficient
to offer the sugar industries in the OCTs reasonable prospects for the future. By failing to recognise the arbitrary and unreasonable
nature of the quantitative restriction imposed, which was unrelated to the alleged difficulties and deterioration relied on,
the Court of First Instance disregarded the principle of proportionality.
82     Article 109(2) of the OCT Decision reads as follows:
‘[P]riority shall be given to such measures as would least disturb the functioning of the association and the Community. These
measures shall not exceed the limits of what is strictly necessary to remedy the difficulties that have arisen’.
83     As the Court of First Instance stated in paragraph 143 of the judgment under appeal, the principle of proportionality, which
is one of the general principles of Community law, requires that measures adopted by Community institutions do not exceed
the limits of what is appropriate and necessary in order to attain the legitimate objectives pursued by the legislation in
question; when there is a choice between several appropriate measures recourse must be had to the least onerous, and the disadvantages
caused must not be disproportionate to the aims pursued (Case C-331/88
Fedesa and Others
[1990] ECR I‑4023, paragraph 13; Joined Cases C-133/93, C-300/93 and C-362/93
Crispoltoni and Others
[1994] ECR I‑4863, paragraph 41;
Antillean Rice Mills
, paragraph 52; and Case C-189/01
Jippes and Others
[2001] ECR I‑5689, paragraph 81).
84     As regards judicial review of compliance with that principle, bearing in mind the wide discretionary power enjoyed by the
Commission in particular in matters concerning safeguard measures, as the Court of First Instance observed in paragraph 150
of the judgment under appeal, the legality of a measure adopted in that sphere can be affected only if the measure is manifestly
inappropriate in terms of the objective which the competent institution is seeking to pursue (Case C‑301/97
Netherlands
v
Council
, paragraph 145;
Fedesa
, paragraph 14;
Crispoltoni
, paragraph 42; and
Jippes
, paragraph 82).
85     In paragraph 152 of the judgment under appeal, the Court of First Instance held that ‘it was reasonable for the Commission
to consider that difficulties involving the risk that a sector of Community activity would deteriorate did exist at the time
when the contested regulation was adopted’. It went on to state in paragraph 156 that the applicants ‘have not established
that the Commission, by restricting imports into the Community of sugar or mixtures qualifying for EC/OCT cumulation of origin
to 4 848 tonnes for the period during which the contested regulation was in force, adopted measures that were manifestly inappropriate
or that it carried out a manifestly erroneous assessment of the information available to it at the time when the contested
regulation was adopted’.
86     As regards in particular the disputed quota, the eighth recital in the preamble to the contested regulation states that that
figure represents ‘the sum of the highest annual volumes of imports of the products in question recorded in the three years
preceding 1999, the year in which imports recorded a sharp rise’. After examining, in paragraphs 165 to 166 of the judgment
under appeal, the statistics drawn up by the Statistical Office of the European Communities (Eurostat) and the figures put
forward by the Commission, the Court of First Instance found, in paragraph 168, that it was reasonable for the Commission
to discount 1999 as a reference year for calculating that quota. Such a finding of fact cannot be called into question on
appeal if there has been no distortion of the evidence adduced before the Court of First Instance.
87     The Court of First Instance added, in paragraph 173 of the judgment under appeal, that ‘the Commission took into account the
interests of the OCT sugar producers by not fully suspending imports of sugar under the EC/OCT cumulation of origin regime’
and that ‘it established the quota of 4 848 tonnes in Article 1 of the contested regulation on the basis of the highest level
of imports of sugar and mixtures during the period 1996-1998’.
88     It must be observed that Rica Foods has not adduced any evidence to establish that, in making those findings, the Court of
First Instance disregarded the principle of proportionality, in the light of the limits on judicial review in an area where
the Commission has the difficult task of reconciling divergent interests.
89     Accordingly, the fourth plea must also be rejected.

The fifth plea, relating to infringement of the preferential status of the OCTs
90     By its fifth plea, Rica Foods maintains that, by failing, in paragraphs 178 to 191 of the judgment under appeal, to take account
of the significant difference in treatment introduced by the safeguard measure between, on the one hand, imports of products
originating in ACP States and most favoured nations and even certain other third countries and, on the other, imports of products
originating in the OCTs, the Court of First Instance infringed their preferential status.
91     However, it is clear, from a reading of paragraphs 178 to 190 of the judgment under appeal, that the Court of First Instance
did take account of Rica Foods’ line of argument, because it stated why the contested regulation did not place the ACP countries
and third countries in a competitive position which was more advantageous than that of the OCTs.
92     In particular, in paragraph 183 of the judgment under appeal, the Court of First Instance states that Article 109 of the OCT
Decision expressly authorises the Commission to take safeguard measures in the situations to which it refers. The fact that
the Commission adopted such a measure in respect of certain products originating in the OCTs does not undermine the preferential
status which products originating in those countries enjoy under Article 101(1) of the OCT Decision. A safeguard measure is,
by its very nature, exceptional and temporary.
93     Furthermore, as stated by the Court of First Instance in paragraph 185 of the judgment under appeal, the contested regulation
concerns only sugar and mixtures imported under the EC/OCT cumulation of origin regime. It does not impose any ceiling on
imports of sugar originating in the OCTs under the ordinary rules of origin, if such production were to exist.
94     In its appeal, Rica Foods does not state why the Court of First Instance’s reasoning, as recapitulated here, is vitiated by
an error of law.
95     Since the fifth plea cannot be accepted either, the appeal must be dismissed.

Costs
96     Under Article 69(2) of the Rules of Procedure, which applies to appeals by virtue of Article 118, the unsuccessful party is
to be ordered to pay the costs, if they have been asked for in the successful party’s pleadings. Since the Commission has
asked for costs and Rica Foods has been unsuccessful, it must be ordered to pay the costs. The Kingdom of the Netherlands
and the Kingdom of Spain must be ordered to bear their own costs, pursuant to Article 69(4) of the Rules of Procedure, which
applies to appeals by virtue of Article 118.
On those grounds, the Court (Second Chamber) hereby:
1.
Dismisses the appeal;
2.
Orders Rica Foods (Free Zone) NV to pay the costs;
3.
Orders the Kingdom of the Netherlands and the Kingdom of Spain to bear their own costs.
[Signatures]
*
Language of the case: Dutch.