Opinion of the Advocate General — ECLI:EU:C:2001:196
Date: 2001-04-03
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Agriculture and Fisheries;Cereals
Procedure: Reference for a preliminary ruling
Origin: Italy

Summary 48. The power of the Commission to adopt regulations in this field is characterised by flexibility, that is to say a broad substantive margin of discretion coupled with great speed of action. However, this power is not unlimited. Firstly, it is necessary to consider whether or not there has been a misuse of power, in other words whether or not the regulation is consistent with the objectives of the common agricultural policy. Secondly, it is necessary to consider whether or not the Commission has otherwise clearly exceeded the bounds of its discretion. In this regard there could have been a failure to state reasons. The protection of the legal certainty of the undertakings concerned is of limited relevance. The third and central question: the validity of Regulation No 1521/95 49. In previous cases the Court has always defended the Commission's exercise of its discretion. However, I should stress that the present case referred to the Court by the national court is exceptional. That is because an export refund on the export of compound feedstuffs was paid throughout 1995 save on exports which took place in a short period around 1 July of that year. In such an exceptional case it is not immediately clear as to whether the Commission has remained within the bounds of the very broad discretion which is granted to it. 50. According to Racke, (50) it is evident that the Court subjects the Commission's margin of discretion to limited review. The first criterion laid down in Racke relates to a possible misuse of power or indeed whether or not Regulation No 1521/95 is consistent with the objectives of the common agricultural policy. In my view the relevance of this criterion is of limited relevance to the present case. Even where there is uncertainty as to whether or not a measure may be for the sake of the common agricultural policy, the benefit of the doubt lies with the Commission. I can find no reason in the case-files to examine whether or not the Commission adopted the regulation to attain an objective which is inconsistent with the common agricultural policy. 51. I also assess this case on the basis of the second criterion in Racke, (51) that is to say: has the Commission not otherwise clearly exceeded the bounds of its discretion? 52. It follows from the case-law of the Court that the exercise of the discretion is, albeit to a limited degree, subject to review by the Court. The Court must be able to review the exercise of that power. This imposes requirements on the reasons given for a decision. In my view, the Commission is under a greater obligation to state reasons where it adopts a decision which deviates from normal practice. (52) I consider normal practice to be the consistent policy of the Commission in the light of existing market conditions. The more a Commission decision is consistent with normal practice, the more limited the obligation to state reasons. However, the reverse is also true. The more a decision deviates from normal practice, the more explicit the grounds the Commission must state. If that were not the case, a standard set of reasons could cover any given decision. Judicial review would thus become impossible. I can see from the case-law analysed above that the Court clearly did not wish to draw such a far-reaching conclusion. 53. Furthermore, the importance of the legal certainly of the undertakings concerned requires that explicit and specific reasons be stated for a decision which deviates radically from normal practice. Although the undertakings concerned cannot expect that an export refund will be maintained - they have no right to a refund under the system of the common agricultural policy - the Commission must take account of their legitimate interests in its decision-making. Where no great changes occur in prices or other circumstances, they should not have to - and indeed cannot - make allowances for unexpected and abrupt changes in refunds. (53) 54. Regulation No 1521/95, which reduced refunds from almost ECU 75 to zero, indisputably deviates from the normal practice which the Commission had followed in fixing export subsidies in the cereals sector until the end of June 1995. Consequently, I also place strict requirements on the statement of reasons. They must be discernible and also able to support the decision taken. In the course of the proceedings before the Court - as is also evident from the hearing on 31 January 2001 - the Commission focused its reasons on three factors: (54) 1. the entry into force of the new GATT rules, 2. the movement in prices outside the European Union, 3. the danger of speculation by traders. The Commission contends that these three factors, taken together, led to an exceptional market situation which justifies exceptional measures. 55. The entry into force of the new GATT rules on 1 July 1995, which is the first circumstance that the Commission cites, cannot, in my view, constitute an independent ground for the sudden suspension of the export refund. Even if the entry into force of these rules does result in an adjustment in price levels on the internal market and on the world market, it can in no way lead to an abrupt change in market circumstances. That is because the entry into force is not an unforeseeable event since the new rules were laid down one year earlier and even the date of the entry into force had been known to traders since that time. They would allow for the economic repercussions of the new rules in their market conduct and pricing in the period preceding 1 July 1995. This is bound to be reflected in the movement in price levels well before this date. In that respect I should point out that the traders concerned - and the Commission also emphasises this fact - consist of a limited number of experienced and well-informed undertakings. 56. The second circumstance which the Commission cites - the movement in prices on the world market - is no more convincing. The Commission contends that the prices of some wheat and maize varieties rose sharply. However, this contention is not substantiated by facts. On the contrary, I can only conclude from the facts which the parties have furnished that the price situation was stable. There can be no question of large fluctuations. This relative lull on the market is reflected in the level of the export refunds as in force until 30 June 1995 and again as of 7 July 1995. For the sake of completeness, I should point to Silos' uncontradicted contention that in the relevant period the difference between the price on the Community market and the world market price had in fact gradually increased, thus making the suspension of the refunds all the more difficult to explain. 57. Thirdly, the Commission points to the danger of speculation by traders on account of the uncertain market situation. The Commission argues that two factors made the situation uncertain. One, the period around 1 July each year is one of uncertainty over prices. That is because the transition to the new marketing year for cereals takes place on 1 July. Two, in 1995 this uncertainty was greater than otherwise inter alia on account of the abovementioned new GATT rules. I take the view that the Commission has failed to show that an extreme market situation existed around 1 July. I have already dealt above with the possible effects of the new GATT rules on prices around 1 July 1995. It is likewise not possible to regard the transition to the new marketing year for cereals as an unforeseeable event which can have a sudden effect on prices. The undertakings operating on the international markets in cereals monitor developments in the most important areas of production on a permanent basis. The possible economic consequences of favourable or unfavourable weather or of diseases and epidemics can be seen early on in price movements. (55) In brief, the Commission has by no means shown that an extreme market situation existed. Consequently, there was also no particular danger of speculation. For the sake of completeness, I should also point to the following. At the hearing Silos also noted that the export certificates in this sector expired on 30 June. The undertakings concerned were therefore required to export the amounts covered by the export certificates by 30 June 1995, thus reducing substantially the scope for speculation, such as it was. The Commission did not contest this point. 58. Moreover, if the uncertainties on the market to which the Commission refers were in fact real - which, in my view, is not the case - they would have to have manifested themselves in the course of June 1995. In that case it would have been logical for the uncertainties also to have been reflected in the export subsidy which was fixed in Regulation No 1415/95 on 22 June 1995. However, at that time the export subsidies were increased very slightly to almost ECU 75. In short, if the Commission's argument does stand up to scrutiny, it at most confirms that Regulation No 1415/95 and Regulation No 1521/95 are mutually inconsistent. Under such circumstances the sudden and abrupt suspension of the export subsidy points to a certain arbitrariness. I should also point out, by way of illustration, that on 7 July 1995, that is to say one week later, the export subsidies were reintroduced at a level of ECU 62.51 by a new regulation. (56) 59. This brings me to the following conclusion. Exceptional market situations can result in the suspension of import subsidies. Where there is great uncertainty over price movements on the Community market or on the world market, or on both, the grounds on which the export subsidies could be based may cease to apply. However, the arguments with which the Commission attempts to demonstrate the existence of such an exceptional - uncertain - market situation around 1 July 1995 fall short in every respect. The movements in prices on the markets in cereals in June 1995 specifically reveal a stable picture. The Commission's arguments are not even supported by the facts. If these arguments must nevertheless be regarded as sufficient, they do not support the policy pursued by the Commission in any respect. It is impossible to understand why the Commission adopted a regulation by which it increased the export subsidy in an - according to it - extreme market situation on 22 June and then suspended it by a regulation on 29 June. Such conduct points to a certain arbitrariness. 60. Furthermore, none of the arguments which the Commission put forward in these proceedings to justify the decision set out in Regulation No 1521/95 appear in the preamble to this regulation. Under Article 190 of the Treaty, regulations, directives and decisions must state the reasons on which they are based. These reasons must be discernible from the decision itself. Although the Court has considered, since its judgment in Schwarze, (57) that the obligation on the Commission to state reasons is limited in its implementation of the common agricultural policy, the particular grounds of the Commission must be discernible where there is a deviation from normal practice. In that regard I refer to paragraph 52 of this Opinion. Since Regulation No 1521/95 is completely devoid of such particular grounds, I conclude that this fact alone renders it invalid. 61. However, my objections to the failure to state reasons in Regulation No 1521/95 go even further. Exactly the same reasons were stated for Regulation No 1415/95 of 22 June 1995, by which the export subsidy was raised slightly, and Regulation No 1521/95, by which the export subsidy was abolished. A statement of reasons which is based on two diametrically different decisions does not constitute a statement of reasons but an oracle which an individual can at most believe but not understand. 62. For the sake of completeness, I should also point out that the (standard) statement of reasons given in Regulation No 1521/95 is, in an important respect, in direct conflict with the content of the regulation. That is because the fifth recital in the preamble states: Whereas, however, in fixing the rate of refund it would seem advisable to base it at this time on the difference in the cost of raw inputs widely used in compound feeding-stuffs as the Community and world markets, allowing more accurate account to be taken of the commercial conditions under which such products are exported. In that recital the Commission appears to assume that the differences between the cost level on the world market and that on the Community market can be clearly identified, allowing more accurate account to be taken of the commercial conditions under which such products are exported. However, before the Court the Commission contends that the movement in price levels was so uncertain that the export refund had to be suspended as a result. 63. In this regard I have formed my opinion taking the case-law of the Court in Hoche (58) as a basis. In that judgment the Court rules that traders must themselves assume the risks inherent in such operations, provided that the Commission does not change the economic position or the legislation in force in an unforeseeable and arbitrary manner (59). (60) I take the view that by adopting Regulation No 1521/95 the Commission introduces unforeseeable and arbitrary changes into existing provisions and, furthermore, that not even the slightest reason for these changes is to be found in the regulation. I therefore propose that the Court should answer the third question referred by the national court as follows: Regulation No 1521/95 must be regarded as invalid since the Commission has made clearly improper use of its margin of discretion and because it has stated clearly incorrect or incomplete reasons for this regulation. Answers to the other questions The first question 64. I consider that the answer to this question can be brief. There is no reason to conclude that Regulation No 1576/95 repeals Regulation No 1521/95. My view is based on the following consideration. The Commission has the power, also outside the weekly meeting of the management committee, to adjust the export refund at any time in the intervening period. Where it exercises this power, this does not in principle mean that the previous rule is repealed. Nor do I infer from the preamble to Regulation No 1576/95 that it intended to repeal the previous regulation. On the contrary, I can se no reason to doubt the reasoning which the Commission set out in its written observations to the Court. There was a very specific reason for the introduction of Regulation No 1576/95. A new regulatory framework came into force on 1 July 1995. Reference thereto had to be made in the preamble, as was in fact done. The second question 65. In light of the answer to the third question, this question need not be answered. Only if it has been established that Regulation No 1521/95 is valid does the question arise as to whether or not it may be applied to export operations already underway and already completed on the day on which it was published. However, should the Court give a different answer to the third question, I take the view that the answer must be as follows: Regulation No 1521/95 may be applied to export operations already underway and already completed on the same day on which the regulation itself was published and thus made available to the operators concerned. 66. The decisive factor in answering this question is, in my view, the fact that the direct effect of regulations such as the one in question is established practice, which is also confirmed by the Court. In that respect it is significant that the direct effect of the tariffs - as the Commission also states in its written observations - is an essential element of the system as, moreover, the undertakings concerned are aware. The fourth question 67. Here the national court seeks to ascertain the Court's view on the validity of Regulation No 1576/95. In my view, the nature of this regulation does not differ substantially from that of Regulation No 1521/95. My comments on the latter regulation also apply mutatis mutandis to Regulation No 1576/95. I also propose that the Court should likewise declare this regulation invalid. I would, however, like to clarify two points. 68. Firstly, Regulation No 1576/95 enters into force as of 1 July 1995, as stipulated in Article 2 thereof. The regulation is not given retrospective effect. That means that this regulation - if it is valid - has no effect in respect of the export of compound feedingstuffs which took place on 30 June 1995. 69. Secondly, this regulation contains - unlike Regulation No 1521/95 - a recital of a substantive nature. This recital reads as follows: Whereas, as a result of the market situation refunds are not to be fixed. However, read in conjunction with the preceding recitals - which say nothing about the current market situation - it could just have easily had the opposite content. Moreover, as reasoning for an exceptional measure which assumes an exceptional market situation it is completely insufficient. In its written observations Silos observes that Regulation No 1576/95 seeks to state the reasons which were lacking in Regulation No 1521/95. In the light of the concise nature of the recital, I consider that Silos' view is incorrect and also irrelevant. Furthermore, I consider convincing the Commission's view that there was a very specific reason behind the introduction of Regulation No 1576/95 (see also my answer to the first question at paragraph 59 above). The fifth question 70. The fifth question relates to the legal effect of a ruling declaring Regulation No 1521/95 invalid. This question also need be answered only if the Court decides to declare the regulation invalid in accordance with my opinion. If the Court also decides to declare Regulation No 1576/95 invalid, it would be advisable also to deal with the legal effect of such a ruling in answering the fifth question referred by the national court. 71. I consider that, on the main point, it is necessary to concur with the reasoning of the Commission. (61) If the regulation is declared invalid, it is for the competent Community institution, in this case the Commission, to adopt a new decision. The Commission refers inter alia to the judgment in Van Landschoot, (62) in which the Court rules that it is for the institution concerned to adopt appropriate measures to implement the judgment. In this case that means that the Commission must adopt a regulation which is consistent with the situation which existed on the relevant markets at the end of June 1995. The margin of discretion available to the Commission would thus be respected. 72. There is no need for transitional rules pending the introduction of a new measure. 73. Although neither Silos nor the Commission asks for consideration to be given the other effects of a ruling declaring Regulation No 1521/95 and Regulation No 1576/95 invalid, I consider it appropriate to give them brief consideration. 74. In principle, a judgment of the Court in proceedings for a preliminary ruling declaring a Community act to be invalid takes effect from the date on which the act entered into force, with all the consequences which that entails. The Court may, however, limit in the judgment itself the temporal effects of a ruling declaring a Community regulation invalid, where that is justified by overriding considerations of legal certainty. (63) Significant financial consequences can constitute such overriding considerations. The Court may make an exception in favour of the party to the main proceedings which brought an action before the national court against the national measure implementing the regulation, as in the case of Silos. In its judgment in Lomas and Others, (64) the Court also made an exception in favour of persons entitled who had initiated proceedings or made an equivalent complaint under the applicable national law before that date. In conclusion, I would observe that the Court rarely exercises its power to limit the temporal effects of a ruling. 75. I consider that in this case there is no need to fear such serious financial consequences that the Court has to limit the temporal effect of its ruling. I would point to the following: - only a small number of undertakings are affected, that is to say the undertakings which exported compound cereal-based feedingstuffs during the period from 30 June to 6 July 1995; - the ruling declaring the regulation invalid relates only to the quantities of compound feedingstuffs for which an export declaration was accepted in the abovementioned period. (65) Therefore, the consequences are - certainly having regard to the annual budget of the common agricultural policy - limited in nature. Moreover, in principle the consequences for that budget should not be greater than if the export refund had not been suspended for a short time in 1995. Conclusion In the light of the foregoing considerations, I propose that the Court should answer as follows the questions referred for a preliminary ruling by the Tribunale di Cagliari: (1) First question: There are no grounds for concluding that Commission Regulation (EC) No 1576/95 of 30 June 1995 fixing the export refunds on cereal-based compound feedingstuffs repeals Commission Regulation (EC) No 1521/95 of 29 June 1995. (2) Second question: In light of the answer to the third question, this question need not be answered. However, should the Court give a different answer to the third question, the answer must be as follows: Commission Regulation No 1521/95 of 29 June 1995 fixing the export refunds on cereal-based compound feedingstuffs may be applied to export operations already underway and already completed on the same day on which the regulation itself was published and thus made available to the operators concerned. (3) Third question: Commission Regulation No 1521/95 of 29 June 1995 fixing the export refunds on cereal-based compound feedingstuffs must be regarded as invalid since the Commission has made clearly improper use of its margin of discretion and because it has stated clearly incorrect or incomplete reasons for this regulation. (4) Fourth question: Commission Regulation (EC) No 1576/95 of 30 June 1995 fixing the export refunds on cereal-based compound feedingstuffs must also be regarded as invalid since the Commission has made clearly improper use of its margin of discretion and because it has stated clearly incorrect or incomplete reasons for this regulation. (5) Fifth question: The ruling declaring invalid Regulation (EC) No 1521/95 of 29 June 1995 and Regulation (EC) No 1576/95 of 30 June 1995 fixing the export refunds on cereal-based compound feedingstuffs has the following legal effect. It is for the competent Community institution, in this case the Commission, to adopt a new regulation which is consistent with the situation which existed in June 1995. There is no need for transitional rules pending the introduction of the new regulation. 1: - Original language: Dutch. 2: - OJ 1995 L 147, p. 65. 3: - OJ 1995 L 150, p. 64. 4: - OJ 1992 L 181, p. 21. 5: - The Dutch text erroneously states imported rather than exported as stated in the other language versions. 6: - OJ, English Special Edition 1969 (II), p. 403. 7: - OJ 1994 L 180, p. 19. 8: - OJ 1987 L 351, p. 1. 9: - OJ 1995 L 140, p. 24. 10: - OJ 1995 L 156, p. 38. 11: - Silos refers to the judgment in Case 15/85 Consorzio Cooperative d'Abruzzo v Commission [1987] ECR 1005. 12: - Silos refers to the judgment in Case 158/80 Rewe v Hauptzollamt Kiel [1981] ECR 1805, paragraph 25. 13: - In that respect reference is made to the judgment in Case 98/78 Racke v Hauptzollamt Mainz [1979] ECR 69 and in Case C-370/96 Covita v Greek State [1998] ECR I-7711. 14: - Judgment in Case C-366/95 Landbrugsministeriet - EF-Direktoratet v Steff-Houlberg Export and Others [1998] ECR I-2661 and in Case T-42/96 Eyckeler & Malt v Commission [1998] ECR II-405. 15: - The Commission refers to the judgments in Case 28/74 Gillet v Commission [1975] ECR 463 and Case 1/73 Westzucker v Einfuhr- und Vorratsstelle für Zucker [1973] ECR 723. 16: - Judgment in Joined Cases C-143/88 and C-92/89 Zuckerfabrik Süderdithmarschen and Zuckerfabrik Soest [1991] ECR I-415. 17: - Here the Commission refers to the judgments in Case 78/77 Lührs v Hauptzollamt Hamburg-Jonas [1978] ECR 169, in Case 146/77 British Beef Company v Intervention Board for Agricultural Produce [1978] ECR 1347, and in Joined Cases C-143/88 and C-92/89 referred to above (see footnote 15). 18: - Case 57/72 Westzucker v Einfuhr- und Vorratsstelle für Zucker [1973] ECR 321. 19: - Case 16/65 Schwarze v Einfuhr- und Vorratsstelle für Getreide und Futtermittel [1965] ECR 877. 20: - According to the settled case-law of the Court (inter alia judgment in Case C-300/86 Van Landschoot v Mera [1988] ECR 3443). 21: - A former objective of the common agricultural policy (see, for example, the preamble to Regulation (EEC) No 2727/75 of the Council of 29 October 1975 on the common organisation of the market in cereals), namely to ensure the supply of certain basic foodstuffs within the Community itself, was no longer mentioned in this new market organisation which was established in 1992. 22: - See inter alia Case C-94/91 Wagner v Fonds d'intervention et de Régularisation du Marché du Sucre [1992] ECR I-2765. 23: - See inter alia judgment in Case C-350/88 Delacre and Others v Commission [1990] ECR I-395 and Racke v Hauptzollamt Mainz (cited in footnote 12). 24: - Cited in footnote 12, paragraph 5. 25: - Judgment in Joined Cases C-133/93, C-300/93 and C-362/93 Crispoltoni and Others [1994] ECR I-4863, paragraph 32. In that judgment the Court refers to the judgments in Case 5/73 Balkan-Import-Export v Hauptzollamt Berlin-Packhof [1973] ECR 1091, paragraph 24, and in Joined Cases 197/80 to 200/80, 243/80, 245/80 and 247/80 Ludwigshafener Walzmühle and Others v Council and Commission [1981] ECR 3211, paragraph 41. 26: - Cited in footnote 24, paragraph 27. 27: - Case 263/87 Denmark v Commission [1989] ECR 1081. 28: - In respect of the cereals sector see Article 13 of Regulation No 1766/92. 29: - Cited in footnote 17. 30: - Cited in footnote 12. 31: - According to the Court in its judgment in Westzucker cited in footnote 17. 32: - See inter alia the judgment in Westzucker cited in footnote 17. 33: - See the account given in Barents, R.: The Agricultural Law of the EC, Deventer, 1994, pp. 316-317. He himself speaks of true and false retroactive effect. 34: - Cited in footnote 15, paragraph 52. 35: - See, for example, the judgment in Racke v Hauptzollamt Mainz (cited in footnote 12). Similarly, the abovementioned judgment in Zuckerfabrik Süderdithmarschen and Zuckerfabrik Soest (cited in footnote 15). 36: - Cited in footnote 14, in particular paragraph 5. 37: - Cited in paragraph 15. 38: - See in particular the judgment in Case C-84/94 United Kingdom v Council [1996] ECR I-5755, paragraph 74 and in Case C-244/95 Moskof v Ethnikos Organismos Kapnou [1997] ECR I-6441, paragraph 57. 39: - Cited in footnote 18. 40: - Cited in footnote 37, paragraph 54. In the judgment the Court goes one step further and states that the maintenance of an exception to existing policy requires more detailed reasoning than the discontinuation of the exception. 41: - The Court acknowledged the nature of advanced fixing as a guarantee against subsequent instability on the market in its judgment in Case 74/74 CNTA v Commission [1975] ECR 533. 42: - Council Regulation of 22 December 1994 on the adjustments and transitional arrangements required in the agriculture sector in order to implement the agreements concluded during the Uruguay Round of multilateral trade negotiations (OJ 1994 L 349, p. 105). 43: - Case C-331/88 The Queen v Minister of Agriculture, Fisheries and Food and Secretary of State for Health, ex parte: Fedesa and Others [1990] ECR I-4023, paragraphs 13 and 14. 44: - Case C-174/89 Hoche v Bundesanstalt für Landwirtschaftliche Marktordnung [1990] ECR I-2681, paragraphs 31 to 34. 45: - See paragraphs 24 et seq. of the Opinion in Hoche, cited in footnote 43. 46: - See also Barents, R., loc. cit., in footnote 32, p. 328. 47: - Cited in footnote 24. 48: - Judgment cited in footnote 24, paragraphs 57 and 58. In that judgment the Court also refers to the judgment in Delacre and Others v Commission, cited in footnote 22. 49: - See inter alia the judgment in Case C-120/86 Mulder v Minister van Landbouw en Visserij [1988] ECR 2321. 50: - Cited in footnote 12. 51: - Cited in footnote 12. 52: - I also read this in the judgment in Moskof, cited in footnote 37, paragraph 54. 53: - In this respect I concur with the judgment in Hoche, cited in footnote 43. 54: - In its observations the Commission also refers to reform of the common agricultural policy. However, it does not return to this matter at the hearing. 55: - The actual development of supply and demand relationships on these markets is, as it were, foreshadowed by the conditions in futures contracts. 56: - See paragraph 6 of this Opinion. 57: - Cited in footnote 18. 58: - Cited in footnote 43. 59: - Italics added. 60: - See paragraph 45 of this Opinion. 61: - See paragraph 29 of this Opinion. 62: - Cited in footnote 19. 63: - See inter alia the judgment in Case C-212/94 FMC and Others v Intervention Board for Agricultural Produce and Ministry of Agriculture, Fisheries and Food [1996] ECR I-389. 64: - Judgment in Joined Cases C-38/90 and C-151/90 Lomas and Others [1992] ECR I-1781. 65: - See Article 3 of Regulation No 3665/87, paragraph 5 of this Opinion.