61973C0153
OPINION OF MR ADVOCATE-GENERAL REISCHL
DELIVERED ON 8 MAY 1974 (
1
)
Mr President,
Members of the Court,
There is no need for me to go at length into the facts of the proceedings on which I shall today give my opinion.
We know from Case 134/73, on which judgment was given fairly recently, that since the beginning of last year Firma Holtz & Willemsen, which is also the applicant in the present proceedings, has been engaged in a formal dispute with the Council and the Commission of the European Economic Community.
The subject matter of the dispute is the additional subsidy granted to oil mills located in Italy for the processing of rape and colza seed produced within the Community. That subsidy was first introduced, in application of the common organization of the market in oils and fats (Council Regulation No 136/66 of 22 September 1966, (OJ No 172 of 30. 9. 1966, p. 3025), by Regulation No 876/67 of 20 November 1967 (OJ No 281 of 21. 11. 1967, p. 7) for the 1967/68 marketing year in respect of colza and rape seed and oil processed therefrom. In subsequent years, it was repeatedly continued, albeit with different rates of subsidy, and lastly — as far as we are concerned here — by Regulation No 1336/72 of 27 June 1972 (OJ No L 147 of 29. 6. 1972, p. 7) for the 1972/73 market year, with a subsidy reduced to 0 8 u.a. per 100 kg oil seed.
Firma Holtz & Willemsen considers such rules to be discriminatory. It is of the opinion that other oil mills located at a greater distance from the main production areas (of which it is one, its mill being situated in North Rhine Westphalia) suffered under the same difficulties as those recognized to affect Italian oil mills and as a result of which an additional subsidy was granted.
Firma Holtz & Willemsen sought therefore — unsuccessfully as it turned out — to secure from the Council and the Commission that the rules relating to the subsidy be made to apply to oil mills whose processing- plants are located in North Rhine Westphalia.
At the same time, it endeavoured — and that is the object of the present proceedings — to obtain monetary compensation for the discrimination it suffered from in the past. It notified the Council and the Commission of its intention in a letter to them of 23 January 1973. On 23 July 1973, it started an action for liability for breach of official duty before the Court of Justice, under the second paragraph of Article 215 of the EEC Treaty.
In this, it bases its calculation of the damages on a Commission proposal for the regionalization of the additional subsidy in Italy. It takes a rate of subsidy of 0·6 u.a. for oil mills located in the Venice region. And, since it considers that its oil mill was in a like situation, it multiplies that figure on the basis of the amount of Community seed it processed from 1969 to 1972. This gives a total of 2011·72 u.a. or — calculated at a rate of exchange of DM 3·66 — DM 735924. That is the amount of damages which the Community should pay to it.
When examining the question as to whether the claim, calculated as it is and supported by the arguments given, is valid, the following points arise:
I — First a few remarks should be made on the admissibility of the action
1.
The first concerns the fact that, to start with, the action was lodged against the European Communities, and thus also against the Coal and Steel Community, clearly not an interested party, and against the Atomic Energy Community. When the Commission took the applicant to task on that score, it altered the name of the defendant in its reply and put on record that it regarded as defendant solely the European Economic Community represented by the Council and the Commission.
This matter has therefore been put right, and it does not seem to me necessary to take any action in respect of this wider description of the defendant in the initial action.
2.
Another point is the objection put forward by the Council that the action is for legislative injustice, that is the fact that Community Regulations on the additional subsidy applied in a discriminatory manner only to oil mills located in Italy. This problem has however already been settled in the Judgment in Joined Cases 63 to 69/72 Werhan and others v the Council [1973] ECR 1229. From this it is clear that, under certain conditions, into which we shall go later, actions under Article 215, second paragraph, of the EEC Treaty are in general possible where a legislative act causes damage.
Since in the present proceedings no new arguments have so far been put forward, it is enough here to say that no useful objection to admissibility can be found in the way indicated by the Council.
3.
Another argument presented by the Council is that the action aims at an extension of the Community rules relating to the additional subsidy in the same way as would an action for failure to act, and the findings sought by the applicant in the proceedings for damages would have practically the same effect as a judgment under Article 175 of the EEC Treaty. Since, as has been shown, a private individual cannot directly compel by court action the introduction of such supplementary rules, it would be equally unacceptable to admit an action for damages which had the same effect.
This problem is again not new but has already arisen in a number of earlier cases.
In this respect, it was decided in the Judgment in Case 4/69 (Lütticke v Commission, Judgment of 28 April 1971 (Rec. 1971, p. 325) that an action for damages under Article 178 and under Article 215, second paragraph, was an autonomous form of action with a particular purpose to fulfil within the system of actions and subject to conditions on its use dictated by its specific nature. The inadmissibility of an action cannot be inferred from the fact that ‘the action for damages could in certain cases have an outcome similar to that of an action for failure to act under Article 175’. This view was confirmed in the Judgment in Case 5/71 (Zuckerfabrik Schöppenstedt v Council, Judgment of 2 December 1971 (Rec. 1971, p. 975), in distinguishing an action for annulment. This arose also in the Judgment in Cases 9 and 11/71 (Compagnie d'approvisionnement de transport et de crédit and Grands Moulins de Paris v Commission, Judgment of 13 June 1972 (Rec. 1972, p. 391) and in the Judgment in Case 43/72 Firma Merkur v Commission [1973] ECR 1055.
From this, one must conclude that the Court of Justice does not want to extend the limitation which applies to actions for annulment and for failure to act to other kinds of actions. For the protection afforded by the law to be effective — and this involves the observance of the principle that provisions concerning such legal protection should not be interpreted in a restrictive manner, — the view held is clearly rather that actions for breach of official duty can to a certain extent make up for the fact that the right of legal action enjoyed by private persons under Article 173 and Article 175 of the EEC Treaty is limited.
In my view, there is no justification to depart now from this legal approach. The admissibility of the action can therefore not be questioned from the above mentioned point of view.
4.
The Council then expressed the view that, considered in the light of the existing case law, the claim cannot be accepted; in accordance with such case law — see in particular the Judgment in Case 5/71 — claims for damages in respect of legislative acts which have an economic impact can be admitted only in the case of a clear infringement of a protective norm of superior law. In this case, it has not been conclusively shown — as is necessary for the action to be admissible — that a gross breach of the law has taken place and there is neither proof of a serious competitive disadvantage nor evidence of the far-reaching effects threatening the very existence of the applicant.
To this objection, I would first say that ‘clear infringement of a protective norm of superior law’ in the case law of the Court of Justice simply means that there must have been a flagrant infringement of rules of law. There is in my view no grounds for going beyond this. It is true that in the opinion in Cases 63 to 69/72, mention is made of the effects of the rules in question which threaten the very existence of the applicant; I cannot accept however that my predecessor when he formulated that opinion considered it to be a mandatory requirement for an action and I can find no indication in the case law of the Court of Justice that such yardstick should be applied for actions for breach of official duty in respect of legislative acts.
Apart from this qualifying remark, it must of course be conceded that it is in fact doubtful whether the statement of claim is sufficient to enable examination as to admissibility. Perhaps in order to support to an adequate extent the statement of claim, the applicant should have, in addition to the declaration that it was unjustly deprived of a subsidy of 6 u.a. per metric ton of processed Community colza and rape, made a comparison with its overall production costs and its profit margin and also other facts concerning the production and the sale of colza and rape oil.
Since this is however clearly a delicate question of discretion which cannot be answered lightly, I prefer to leave the matter open. I do not propose therefore to reject the claim as inadmissible on the grounds the statement of claim discloses no prima facie case; I shall rather deal with the problem in hand on the basis of the substance of the claim.
5.
Finally there is yet another point to consider which the Commission raised in its rejoinder. The Commission alleged that in fact it was not a question of damages for the applicant so much as an additional subsidy according to the criteria applied to certain Italian oil mills, and thus a claim under Article 40 (3) of the EEC Treaty in conjunction with Regulation No 876/67.
In respect of a claim of that kind, the national authorities would, in accordance with Community rules, have to make a decision, for the additional subsidy is paid according to the same procedure as the normal subsidy which, under existing Community law, also applies to oil mills in the Federal Republic of Germany. In that light, it would seem right to refer the applicant to the German administrative authorities and, in case of dispute, to the national courts which could then, if appropriate, make a reference for a preliminary ruling under Article 177. Should at the same time an action be allowed under Article 215 before the European Court of Justice, difficult problems could arise as a result — as the Commission has attempted to show in detail.
From this, the Commission has not — if I am right — adduced any formal objection to admissibility; the problem thus raised must however clearly be studied in connexion with the matter of the examination as to admissibility.
On closer examination of the Commission's pleadings, one is reminded of the Judgment in Case 96/71 (Haegeman v Commission, Judgment of 25 October 1972, Rec. 1972, p. 1005). The annulment of a Commission Decision was the subject matter of that case, in which the request by the applicant in the proceedings for relief from the countervailing charge on imports of Greek wine and for a refund of such charge was rejected. Having regard to the fact that, in accordance with the Council Decision of 21 April 1970, Community resources, of which the said countervailing charge forms part, are collected by the authorities of the Member States, the Court of Justice held that disputes on the payment and the refund of such charges by and to private persons were matters to be decided by national authorities and relevant court actions were to be brought before the national courts.
Nevertheless there are two important considerations against the application of such case law to the existing case.
On the one hand, it seems doubtful whether the circumstances of the present case can be compared with those of Case 96/71. This is not a straightforward matter of an action for payment of a subsidy, but an action for damages with an attempt to show that the particular conditions obtain. This Court certainly has jurisdiction in a claim of this kind, whereas, on the other hand, it is doubtful whether, in such a case, the authorities and courts of the Member States can also be regarded as competent with the result which the Commission considers right, that the jurisdiction of this Court of Justice is excluded in the first instance.
Further, we cannot overlook the facts of the more recent judgment in Case 43/72. The argument put forward was that the applicant should be referred to the national administrative authorities and the national courts in respect of the refusal by the customs authorities to grant compensatory amounts; it was held however in the judgment that the Court of Justice of the European Communities was fully competent to deal with the case at issue. The judgment states further that it would not be in keeping with the proper administration of justice and the requirements of procedural efficiency to compel the applicant to have recourse to national remedies and thus to wait for a considerable length of time before a final decision on his claim is made.
Even though it must be conceded that the matter of concurrent competence of the national organs and the European Court of Justice may involve delicate questions (such emerged in a different form in the well-known Kampffmeyer case), it would nevertheless seem quite unsatisfactory to oblige the applicant to go a roundabout way, i.e. to refer the matter to national authorities and
national courts, which could then in turn refer the matter to the Court of Justice under Article 177. And so, the Commission's arguments, interesting though they may be, should not be taken as grounds for regarding the action as inadmissible. This said, we can now proceed to consider the merits of the case.
II — The substance
According to repeated cases in this Court, the first condition for awarding damages in an action for damages is the illegality of the circumstances which, in the opinion of the applicant, led to damage being incurred.
In the present case, the argument put forward was that the grant of an additional subsidy solely in favour of oil mills located in Italy (excluding other oil mills which were also at a greater distance from the colza and rape production areas) constituted an infringement of Article 7 of the EEC Treaty, i.e. a ‘discrimination on grounds of nationality’. Furthermore, this manner of allocating the additional subsidy was not compatible with the principle of equal treatment laid down in Article 40 (3) of the EEC Treaty in respect of the common organization of the agricultural markets.
Before going further into these arguments, I should like to recall once more how it came about that a special subsidy was granted to Italian oil mills.
The common organization of the market in oils and fats introduced by Council Regulation No 136/66 and which, from 1 July 1967, became applicable to rape and colza seed and to the oil produced therefrom, provides like other market organizations for a system of different prices: target prices, which must come close to the market price, and intervention prices which are set at a lower level and guarantee the producers a minimum income; the lowest intervention price is set for the main production area, while higher intervention prices apply in the other production areas and are fixed on the basis of the distance from the main production area and transport costs. Contrary to what applies in the other market organizations, levies at the external frontiers are not provided for, clearly having regard to certain obligations under GATT. Therefore goods from third countries can also enter into the Community free of levy, and in fact, in spite of substantial and increasing home production, considerable quantities are imported. To ensure that the processing industry does not give preference to third country colza and rape over Community products, a subsidy is provided for in favour of processors who process oil from Community seeds; this corresponds to the difference between the target price and the world market price. In this way, there is a certain Community preference simply because the market price in the Community remains usually below the level of the target price.
In Autumn 1967, the manner of fixing prices together with the fact that since there is practically no colza and rape production in Italy, the processing industry is dependent on supplies from other Member States or from third countries led to fear that Italian oil mills would no longer be competitive. This can be explained as follows: if we assume that prices in Community production areas fluctuate around the target prices and in view of the level of transport costs for colza and rape seed to the Italian processing centres, it would seem sensible for the Italian oil mills to process seed from third countries. In the circumstances, Italian oil mills could not enjoy Community preference and the price structure was not able to result in the increasing Community colza production finding an outlet in the processing centres of the Community. On the other hand, should the market prices be in the region of the intervention prices, the advantage enjoyed by the oil mills located in the neighbourhood of colza and rape production areas as a result of their being so located could not but be detrimental to Italian oil mills, for since the carriage of a given quantity of oil involves less costs than the carriage of the quantity of colza required to produce a like quantity of oil, oil mills in the neighbourhood of colza and rape production areas could undercut the Italian oil mills. In both cases Italian oil mills could no longer remain competitive. This, in my view, is convincingly brought out in a Council notice of 22 September 1967 on ‘the difficulties that have arisen in the implementation of the Regulation on oils and fats’ in the Italian market in oils and fats. Illuminating details can also be found in a working document of the Commission services of 1 March 1972. It contains figures relating to the competitive position of oil mills in various Italian cities in respect of the processing of Community colza and rape seed from France and that from third countries, together with comparisons with quotations by French oil mills located closer to production areas.
How right those fears were soon became apparent. In the Autumn of 1967, quotations from French colza and rape oil producers were considerably below the prices quoted by Italian oil mills. And there certainly was a substantial increase in imports of colza and rape oil into Italy. While imports from other Member States were insignificant before the application of the organization of the market in oils and fats to colza and rape — they amounted, in 1966, to about 2000 metric tons — in 1967, they amounted to 24000 metric tons and by 1972 they had risen to over 48000 metric tons. In view of this it could well be expected that Italian oil mills would be completely supplanted in the very important Italian market in colza oil. The Italian oil mills were facing serious economic damage, for they had produced in the 1966/67 marketing year about 77000 metric tons colza oil — a quantity which represented about 25 % of their capacity.
The introduction of the special subsidy in favour of Italian oil mills in the Autumn of 1967 was intended to counter this state of affairs. The measures taken, the justification for which the applicant does not basically dispute, have had the expected results. They led to considerable quantities of Community colza and rape seed being sent to Italy, that is, they favourably affected the pattern of trade in a region assisted by the Community and ensured competitive prices. It can be said that this took place without leading to any competition pressure worth mentioning on the part of Italian oil mills in regard to oil cake and colza oil. In fact, in the course of the proceedings it has been shown that Italy exports practically no colza oil and that the formerly already significant exports of oil cake from Italy have not greatly increased. For exact figures, I would refer to the written particulars given by the Commission in answer to the questions put by the Court of Justice.
If now we ask ourselves whether the failure to apply the additional subsidy to other oil mills located at a distance from the production reas — and in particular to the oil mill of the applicant — must be regarded as discrimination within the meaning of the Treaty, I do not think there is any need for an extensive examination of the legal arguments put forward by the parties in relation to Articles 7 and 40 of the EEC Treaty. The following remarks suffice:
In reply to the reference to Article 7, the defendants have objected that it contains a reservation in favour of other provisions of the Treaty and, in that light, Article 40 constitutes a special provision in the field of agriculture which, in exceptional circumstances, authorizes exception to be made to the principle of equal treatment. Besides, it cannot be said that the additional subsidy is linked with the characteristic of nationality. Any holder of a certificate issued pursuant to the organization of the market in oils and fats can obtain such subsidy when processing colza and rape in an oil mill located in Italy. In fact it is unnecessary to go any further into this point since the applicant does not base its claim solely on a supposed infringement of Article 7, but refers quite generally to a disregard for the principle of equal treatment. It may incidentally be mentioned however that the point made by the defendants does not seem unjustifiable. Indeed it can hardly be said that the additional subsidy was introduced simply on grounds of the nationality of certain oil mills or of their owners. One may just as well speak of differentiation on grounds of locality — that is according to the distance from production areas — or of regionalization as also found elsewhere in the organization of markets. Classification based on the territory of a Member State was advisable because the group of oil mills located in that territory stood out particularly sharply from all other processing mills.
On the other hand, as regards the prohibition on discrimination laid down in Article 40 (3) in respect of the common agricultural policy, the defendants have argued in this connexion that Article 40 (3) contains only one of the principles which stood in a position of interrelationship with other principles such as that of ensuring that the transition from national to common market organization takes place in an economically rational manner. One could therefore not agree that the said principle of equal treatment requires immediate and full application when the common market organization comes into force, and indeed, in spite of Article 40 (3), different treatment is quite possible on a transitional basis. This has been shown with the introduction of other market organizations which have authorized progressive transition with temporary application of different prices. Within the framework of the common organization of the market in oils and fats, transitional provisions were first dispensed with but this was, so to speak, put right as it became clear that direct transition to a common organization in a field formerly strongly protected at the national level — as was the case in Italy
led to economic difficulties. Thus one could not, at least until 31 December 1969, speak of inadmissible discrimination when referring to the special Italian subsidy, while at the same time special rules applicable to part of the Community had to be accepted even after the end of the transitional period. In this respect I shall limit myself to saying that at the beginning this is undoubtedly right. One can further argue that at least in 1969 the application of special rules for Italy could hardly be said to involve inadmissible discrimination. It may nevertheless appear doubtful whether the arguments put forward for the whole period of application of the special subsidy to Italy
even until 1972 — can be described as reasonable. I prefer therefore not to give a definitive opinion on the matter in dispute on the basis of Article 40 (3) of the EEC Treaty, but rather to study the merits of the claim that there was discrimination to see how the situation can be appraised from that point of view.
In accordance with previous case law, it must first be observed — because the cause of damage arises from a legislative act relating to economic policy — that only a flagrant infringement of the rule prohibiting discrimination, that is, as I have already stated, a particularly clear breach of that principle and an obvious and serious disregard of its basic nature is relevant.
An examination of the present case on the basis of such strict criteria leads to a number of considerations which make it appear most questionable whether one should accept that there has been substantial material discrimination against the applicant.
First, it is already significant that, in the course of the proceedings, the applicant itself has abandoned its initial argument to the effect that it was in the same situation as an oil mill located in the region of Venice, in other words that a producing area important to it (that of Northern France) was equally distant from its mills as the Provence producing area was from Venetian oil mill. In fact, this point of view was untenable, for it must be stated that Provence is not a colza producing area of any significance and in particular its colza production is not such as can be of importance for Italy's requirements. The truth of the matter is that more distant French production areas, for instance those in the region of Lyons and Bordeaux, supply Italian mills and it is furthermore equally clear that the applicant was not limited to supplies from Northern France but also obtained colza from neighbouring areas and also, for instance, in Schleswig-Holstein.
It is also important to note that quite generally there existed considerable differences in regard to supply conditions between the Italian oil mills and the mill of the applicant.
First, this is true of colza and rape seed from third countries whose prices in Venice, owing to their coming from further afield, were clearly higher than those at the North Sea ports used by the applicant for its supplies.
This also applies to Community-produced colza and rape. It is indeed a fact that Italy's home production since 1970 is only of some 5000 metric tons, while, over greater distance, 200000 metric tons in 1970 and 376000 metric tons in 1971, — of which 284000 metric tons from the Community — had to be imported. Against this, it has been shown in the course of the proceedings, that the applicant can obtain a substantially higher percentage of its supplies from relatively close supply areas. According to the information it supplied, the applicant processed 30000 metric tons of colza and rape seed in 1969, of which 5000 metric tons came from neighbouring production areas and14000 metric tons came from France, though their exact origin is not given. The picture was the same in 1970; out of 17000 metric tons of seed processed, 7000 metric tons came from neighbouring areas and 5000 metric tons from Schleswig-Holstein. In 1971, the applicant processed 33000 metric tons, of which 7000 metric tons came from neighbouring production areas, in addition to which one can reckon 4000 metric tons of Dutch colza and rape while data as to the origin of 3000 metric tons of French colza is lacking. In 1972, finally, 45000 metric tons were processed, of which 3500 metric tons were from Schleswig-Holstein, 3000 metric tons from the Netherlands and a further 10000 metric tons from production areas equally not far distant. The fact that there is in the proximity of the applicant's oil mill substantial colza and rape seed production is significant both in regard to market conditions generally and to the cost price. That is why — as the Commission explained to us — the region in which the applicant operates was incorporated in the regionalization of intervention prices, which did not apply to Upper Italy having regard to the limited quantities produced in that area.
Finally, the applicant, unlike the Italian oil mills, could not pretend that the Common Market production conditions and price system brought with them the danger of its being supplanted in its usual oil markets by oil mills located closer to the main colza seed production areas. That there is in fact no such danger, the Commission sought to show by means of detailed calculations. In this connexion, it is interesting that there have been well nigh no exports of colza and rape oil from Italy to the Federal Republic. Rather, the applicant could have marketed its products in Italy and, if necessary — as the Commission asserts — in view of the higher Italian oil prices, been somewhat compensated for any prejudice caused by the market organization. Furthermore, it is in no way irrelevant in deciding the matter that the applicant succeeded, over the years in question, in steadily increasing its production even without the additional subsidy it seeks.
These facts are enough in themselves to decide the present proceedings. It does not seem necessary to go further into the details of the figures provided by the parties to the proceedings both in the rejoinder and in a written statement on the situation of Italian oil mills and that of the applicant made in answer to a question put by the Court. I shall nevertheless at least make the following remarks:
One can probably not help admitting — although it is not sufficiently clear from the particulars — that the figures supplied by the Commission should be corrected, as the applicant has pointed out. On the other hand, it will not be possible to follow the applicant entirely in the views expressed in its reply (for instance in respect of transport costs Bordeaux-Venice which it puts at 0·8 u.a. only where the difference in the intervention prices is of 1·12 u.a., or when it bases its own figures solely on colza and rape seed supplies from Kiel). Bearing this in mind, and if one proceeds on the basis of the figures given by the applicant, it cannot even then be concluded that the applicant's handicap in relation to the Italian oil mills was such that there could be said to be a flagrant discrimination.
And so I can summarize my opinion as follows in respect of the allegation of discrimination.
The treatment of the Italian oil mills, on the one hand, and of the applicant's oil mill, on the other, as it appears in the light of all the relevant provisions on the market in oils and fats shows that on the basis of objective, factually relevant and important grounds a distinction was on principle rightly made. The fact that it may be said that the aid given to the Italian oil mills within the framework of the special subsidy went beyond the level that was absolutely necessary or that one may accept that, in certain circumstances a corresponding subsidy could also have been considered for certain German oil mills, does not mean at all that one can speak of a patently mistaken appraisal of the situation or of a serious and flagrant discrimination against the German oil mills. Neither do the rules on the subsidy which have been examined in these proceedings contain a clear infringement of a protective norm of superior law within the meaning of the case law of this Court. The action therefore must be rejected.
Since the conclusions so reached are in my view above any doubt, I need not go further into the conditions of liability for breach of official duty which was discussed in the course of the proceedings, as for instance matters relating to the breach, the cause or the damage.
However on the final point may I yet be allowed to make a short observation. As you know, the defendants complain that the applicant neither stated nor proved any special damage. Against this, the applicant claimed, after dropping the arguments it originally put forward in support of alleged special damage, only general damages and expressed the view that they, too, could be claimed in an action for breach of official duty. It does however seem to me that it is doubtful whether this is so. I refer in this connexion to the statement made by my predecessor on a similar question in Cases 63 to 69/72. Leaving this aside, the impression can be gained in the present proceedings that the applicant did not in fact file an action for damages but simply sought payment of the subsidies provided for in the relevant Community acts on the Italian additional subsidy, in conjunction with the basic principles of the Treaty, i.e. the principle of equal treatment. It is therefore conceivable that the action should be rejected for lack of proof of any special damage resulting from the fact that it did not obtain the requested subsidy. This is a point of view which, having regard to my other views on the matter, I need not stress further here.
III — Accordingly, I can give my opinion as follows:
The action for damages lodged by Firma Holtz & Willemsen must be rejected as not valid. The applicant must be ordered to bear the costs of the proceedings.
(
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