61999CC0155_EN
Opinion of the Advocate-General
Opinion of the Advocate-General
I - Introductory observations
1. In the present case, the Court is requested to answer the questions referred by the Pretore di Treviso, sezione distaccata di Oderzo (Treviso Magistrate - Separate section for Oderzo) (Italy), concerning the validity of a series of provisions governing the scheme for the compulsory distillation of table wine, adopted with a view to stabilising the wine market, and the consequences of this scheme for Italian wine producers.
2. The present case follows on from Case C-375/96 Zaninotto, in which judgment was delivered on 29 October 1998; in that judgment the Court assessed the validity of a series of provisions concerning the compulsory distillation scheme for table wine and, in particular, the provisions in respect of Italy's obligations during the 1993/94 wine year. It concluded that the examination of the issues raised had not disclosed any factors such as to affect the validity of the Community provisions in question in this case.
3. The questions raised in the present case concern solely the allocation to Member States of the quantity of table wine which they were obliged to distil under the regulations in force during the 1993/94 wine year. More specifically, they concern the legality of the adjustment by the Commission in the 1993/94 wine year of the reference percentage of 85% on the basis of which it fixed the quantity to be distilled by each Member State.
II - Legal legislation
A - Community legislation
1. Council Regulation (EEC) No 822/87
4. Council Regulation (EEC) No 822/87 of 16 March 1987 (hereinafter Regulation No 822/87) on the common organisation of the wine market introduced a new codification of the basic provisions concerning the common organisation of the wine market.
5. In accordance with Article 1(6) of Regulation No 822/87, the wine year begins on 1 September each year and ends on 31 August of the following year.
6. Title III of Regulation No 822/87 lays down a price system and rules governing intervention and other measures to improve market conditions. In order to enable the statistical data essential for an accurate reflection of the market situation to be collected, a system of harvest and stock declarations was introduced, in conjunction with the compilation of an annual forward estimate (Article 31).
7. In the context of the common organisation of the wine market, Regulation No 822/87 provides for instruments to balance and stabilise the market in question, including preventive distillation (Article 38), compulsory distillation (Article 39) and support distillation (Article 41), which were adopted by the Commission in accordance with the conditions and procedures provided for in Articles 38, 39 and 41 respectively.
8. The withdrawal from the market of certain quantities of wine (usually of inferior quality) for the purpose of distillation is intended to support prices. However, the purpose of this measure is also to manage or, more specifically, to absorb surpluses and address the serious imbalance in the market. Producers may subtract the quantities of wine delivered to preventive distillation from the quantity to be delivered to compulsory distillation.
9. An analysis of Article 39 of Regulation No 822/87 enables us to distinguish four successive stages in the compulsory distillation process: (a) the Commission decides to embark on compulsory distillation when there is a serious imbalance in the market; (b) the Commission fixes the total quantity to be delivered to compulsory distillation for the purpose of ensuring the absorption/elimination of surpluses and re-establishing a normal market situation; (c) the total quantity to be distilled is divided between the different production regions of the Community, which correspond to the Member States, and, finally, (d) the quantity to be distilled in each production region is divided between the producers in that region.
10. More specifically, under Article 39(1) of Regulation No 822/87:
1. Where, in respect of a given wine year, the market in table wine and wine suitable for yielding table wine is in a state of serious imbalance, compulsory distillation of table wine shall be decided on.
A state of serious imbalance as referred to in the first subparagraph shall be deemed to exist where:
(a) availabilities recorded at the beginning of the wine year exceed the level of normal utilisation by more than four months' supply, or
(b) production exceeds the level of normal utilisation by more than 9%, or
(c) the weighted average of representative prices for all types of table wine remains below 82% of the guide price from the beginning of a wine year for a period to be determined.
11. The allocation between different production regions of the quantities of table wine to be delivered to compulsory distillation, during a given wine year, is effected on the basis of two procedures. First, the quantity to be distilled is fixed, in light of the market situation obtaining, and the situation concerning production and stocks during the wine year in question (Article 39(2) of Regulation No 822/87); then, the quantity to be distilled is shared between the different production regions in accordance with the production achieved in previous reference periods (Article 39(3) of Regulation No 822/87). That distinction between the two procedures is important because the present case concerns the latter procedure.
12. More specifically, in accordance with Article 39(2), (3) and (4):
2. The Commission shall fix the quantities that are to be delivered for compulsory distillation to eliminate production surpluses and thus restore a normal market situation, in particular as regards the levels of foreseeable availabilities at the end of a wine year and prices.
3. The total quantity to be distilled, determined in accordance with paragraph 2, shall be shared between the various wine-growing regions of the Community, grouped together by Member State.
The quantity for distillation for each wine-growing region shall be proportional to the difference between:
- on the one hand, the production of table wine and of products upstream of table wine to be determined, obtained in the region and in the year in question, and
- on the other hand, a uniform percentage of the average quantity of table wine and of products upstream of table wine to be determined, obtained in the region in question over three consecutive reference wine years.
Until the end of the 1993/94 wine year:
- the uniform percentage shall be 85,
- the consecutive reference years shall be 1981/82, 1982/83 and 1983/84.
From 1994/95 onwards, the uniform percentage and consecutive reference years shall be determined by the Commission, which shall fix:
- the uniform percentage on the basis of the quantities that must be distilled in accordance with paragraph 2 in order to eliminate the production surplus for the year in question,
- the consecutive reference years on the basis of the trend of production, and, in particular, the results of the grubbing policy.
4. The quantity for distillation determined in accordance with paragraph 3 shall be shared between table wine producers in each wine-growing region.
For producers subject to the obligation to distil, the quantity for distillation shall be equal to a percentage to be determined of their production, as indicated in their production declarations, of table wine and of products upstream of table wine to be determined.
This percentage shall be obtained from a progressive scale based on the yield per hectare and may vary between regions according to yields obtained in the past ... .
13. Under Article 39(9) of Regulation No 822/87:
The following shall be adopted in accordance with the procedure laid down in Article 83:
...
- the decision to carry out distillation referred to in paragraph 1,
- the criteria for applying paragraph 2 and the total quantity to be distilled referred to in that paragraph,
- the criteria for delimiting wine-growing regions, grouped together by Member State as referred to in paragraph 3, and the delimitation of those regions,
- the fixing of the uniform percentage and the consecutive reference years, and the allocation of the quantities to be distilled among the regions grouped together by Member State, referred to in paragraph 3,
- the progressive scale and the percentages referred to in paragraph 4.
14. Under the first subparagraph of Article 39(11):
If, during the 1987/88 to 1993/94 wine years, difficulties likely to jeopardise the execution or balanced application of the compulsory distillation operation referred to in paragraph 1 occur, the measures necessary in order to ensure effective application of the distillation scheme shall be adopted in accordance with the procedure laid down in Article 83.
15. The second subparagraph of Article 39(11) defines the limits of the competence conferred in principle on the Commission to adopt the necessary measures for the effective implementation of compulsory distillation. The enabling provision allows the Commission to adjust the procedure for allocating between the different production regions in the Community the quantity to be distilled depending on market trends given that normal use, that is to say the consumption of wine, has decreased in recent years, while the reference quantities have increased. More specifically, this provision is formulated as follows:
Such measures:
(a) may relate only to the provisions contained in this Article to the exclusion of those relating to:
- the apportionment between the various regions of production,
- the reference years [i.e. 1981/82, 1982/83 and 1983/84],
- the price to be paid for the distilled wine;
(b) may contain an adjustment to the percentage of 85, referred to in the first indent of the third subparagraph of paragraph 3, only in so far as, for a given wine year, the ratio between the quantities available and normal consumption of table wine differs significantly from that of the reference years referred to in the third subparagraph of paragraph 3 (emphasis added).
16. In accordance with Article 79(1) of Regulation No 822/87, the Member States shall take the measures necessary to ensure compliance with Community provisions in the wine sector.
17. Finally, Articles 82 and 83 lay down the rules governing the establishment, composition and operation of the Management Committee for Wine. Article 83 is worded as follows:
1. Where the procedure laid down in this Article is to be followed, the Chairman shall refer the matter to the Committee, either on its own initiative or at the request of the representative of a Member State.
2. The representative of the Commission shall submit to the Committee a draft of the measures to be adopted. The Committee shall deliver its opinion on the draft within a time-limit which the Chairman may lay down according to the urgency of the matter. The opinion shall be delivered by the majority provided for in Article 148(2) of the Treaty.
3. The Commission shall adopt measures which shall apply immediately. However, if these measures are not in accordance with the opinion of the Committee, they shall forthwith be communicated by the Commission to the Council. In that event the Commission may defer application of the measures which it has adopted for not more than one month from the date of such communication.
The Council, acting by a qualified majority, may take a different decision within one month.
2. Commission Regulations
(a) Commission Regulation (EEC) No 441/88
18. Commission Regulation (EEC) No 441/88 of 17 February 1988 laying down detailed rules for applying compulsory distillation, as referred to in Article 39 of Council Regulation (EEC) No 822/87 (hereinafter Regulation No 441/88), provides in Article 3 that:
When the total quantity of table wine subject to compulsory distillation is being fixed, account shall be taken of the need to ensure a level of foreseeable end-of-year stocks which will guarantee that the availabilities for the following wine year will in any case be sufficient to cover normal utilisation.
19. Article 4(2) of Regulation No 441/88 defines the production regions of the Community: region 1 corresponds to Germany, region 2 to Luxembourg, region 3 to France, region 4 to Italy, region 5 to Greece, region 6 to Spain and region 7 to Portugal.
20. Article 4(3) of Regulation No 441/88 provides that:
Average production of table wine and products upstream of table wine in the regions referred to in paragraph 2 in the three consecutive wine years 1981/82, 1982/83 and 1983/84 was as follows:
- Region 1: 1 341 700 hectolitres
- Region 2: 57 300 hectolitres
- Region 3: 40 182 000 hectolitres
- Region 4: 64 163 000 hectolitres
- Region 5: 4 632 000 hectolitres
- Region 6: 27 500 000 hectolitres
- Region 7: 7 250 000 hectolitres.
(b) Commission Regulation No 343/94
21. It is within this Community regulatory framework that Commission Regulation (EC) No 343/94 (hereinafter Regulation No 343/94) was adopted.
22. Article 1 of Regulation No 343/94 is worded as follows:
1. Distillation as provided for in Article 39(1) of Regulation (EEC) No 822/87 is hereby adopted for the 1993/94 wine year.
2. The total quantity of table wine to be distilled shall be 18 200 000 hectolitres.
3. The quantities to be distilled in the regions as referred to in Article 4(2) of Commission Regulation (EEC) No 441/88 shall be as follows:
- Region 1: -,
- Region 2: -,
- Region 3: 2 550 000 hectolitres,
- Region 4: 12 150 000 hectolitres,
- Region 5: 500 000 hectolitres,
- Region 6: 3 000 000 hectolitres,
- Region 7: -.
B - National legislation
23. Article 4(11) of the Decree-Law of 7 September 1987, which, following amendment, became the Law of 4 November 1987, imposes an administrative fine in the event of failure to comply with the distillation obligation referred to in Article 39 of Regulation No 822/87 and in the other Community legislation implementing that regulation.
III - Facts
24. Mr Guiseppe Busolin is a producer of table wine in the Veneto area. By Decision No 137 of 17 April 1996, the competent Italian administrative authority fined him, as provided for by the relevant national legislation, on the ground that, by failing to deliver 379.47 hectolitres of table wine for compulsory distillation in the 1993/94 wine year, he had infringed the relevant Community legislation.
25. By an appeal lodged on 31 May 1996 with the Pretore di Treviso, sezione distaccata di Oderzo, Mr Busolin contested the aforementioned administrative decision imposing a fine on him. At the same time, by separate actions, brought in due time, other wine-growers challenged similar decisions imposing fines on them.
26. The national court stayed the proceedings pending a ruling by the Court in Zaninotto. However, after the ruling in that case had been handed down, it deemed it necessary, in view of the fact that other questions were also raised concerning the legality of certain provisions of Community legislation, to refer further questions to the Court for a preliminary ruling.
IV - Questions submitted for a preliminary ruling
27. More specifically, the Pretore di Treviso, sezione distaccata di Oderzo, referred to the Court the following six questions for a preliminary ruling relating to the validity of various Community provisions regulating compulsory distillation:
1. Is the Commission's decision to allocate the quantity for compulsory distillation between the various production regions for the wine year 1993/94 (contained in Regulation (EC) No 343/94) invalid for infringement of Article 39(11)(b) of Regulation (EEC) No 822/87 (as amended by Regulation (EEC) No 1972/87) through failure to establish the existence of the prerequisite laid down in that same legislation, namely a "significant difference" in the ratio between "quantities available" and "normal consumption" for 1993/94 compared with the ratio for the reference years 1981/82, 1982/83 and 1983/84?
2. In the alternative to Question 1:
Is the Commission's decision to allocate the quantity for compulsory distillation between the various production regions for the year 1993/94 (contained in Regulation (EC) No 343/94) invalid, inasmuch as it appears to be invalid for infringement of Article 190 of the EC Treaty (or for an "inadequate statement of reasons") in that neither Regulation No 343/94 nor the measures and documents preceding it refer to any assessment as to the existence of the legislative precondition that the ratio between "quantities available" and "normal consumption" for the year 1993/94 should differ significantly from that for the reference years 1981/82, 1982/83 and 1983/84?
3. Is Regulation (EC) No 343/94, requiring Italy to distil 12 150 000 hectolitres, invalid for infringement of the principle of reasonableness, manifest error and inconsistency in relation to the object pursued, in the light of the "system of calculation" used by the Commission as described in its answer of 13 March 1998, on account of the unreasonableness and illogicality of the updating of the figure of 85%, comparing parameters that were entirely divorced from the reality of the wine market in 1993/94?
4. Is Regulation (EC) No 343/94, requiring Italy to distil 12 150 000 hectolitres, unlawful for infringement of Article 39(11)(b) of Regulation (EEC) No 822/87 (as amended by Regulation (EEC) No 1972/87) because the amendment of the percentage by the Commission was determined by the extent to which the ratio between production in 1981/82, 1982/83 and 1983/84 (145 000 000 hectolitres) and normal consumption in 1984/85 for table wine differed in relation to the ratio between production in 1981/82, 1982/83 and 1983/84 (145 000 000 hectolitres) and normal consumption for 1993/94, an approach which does not appear to be in conformity with the provision in question?
5. In the alternative to Questions 3 and 4:
In the event that Article 39(11)(b) of Regulation (EEC) No 822/87 (as amended by Regulation (EEC) No 1972/87) is to be interpreted as authorising such a system of calculation, is Article 39(11)(b), for the reasons and in the light of the calculations set out in the order for reference, unlawful for infringement of the principle of reasonableness, manifest error and inconsistency in relation to the object pursued, and for infringement of the prohibition on discrimination under Article 40 of the Treaty?
6. Are Article 39(3), (4) and (11) of Regulation (EEC) No 822/87, as amended by Regulation (EC) 1566/93, and Regulation (EEC) No 343/94 which implements the former measures, unlawful for infringement of the principle of reasonableness, manifest error, misuse of power and infringement of the principle of proportionality in the light of the matters set out in the order for reference?
V - Replies to the questions submitted
28. In reply to the questions raised by the national court, I think it is useful to recall the reasoning followed by the Court in its reply to the first question referred to it in Zaninotto, cited above (A), before proceeding to examine the questions in two groups. In the first group, I will analyse the first and fourth questions, which raise issues concerning compliance with the basic conditions to be fulfilled in order that the Commission may modify the reference percentage of 85%, then the second and finally the third questions, which in principle raise issues concerning the validity of Commission Regulation No 343/94 (B). Subsequently, I will analyse the fifth and sixth questions, which in principle raise issues concerning the validity of the provisions of Article 39 of Council Regulation No 822/87 (C).
A - Zaninotto judgment
29. In Zaninotto, the Court examined inter alia the problem of the legality of determining the total quantity of wine for the 1993/94 wine year to be delivered by Italy to compulsory distillation, from the perspective of the general principle of non-discrimination, and restated the analysis developed by the Commission in its reply to a written question from the Court concerning the fixing of an improved reference quantity and a new reference percentage (55%), and the allocation between the Member States of the quantity calculated to be delivered to compulsory distillation.
30. More specifically, the Commission first recalled that Community production of table wine in the 1993/94 wine year showed a particularly large surplus until January 1994, so that it was appropriate for compulsory distillation to be undertaken in order to safeguard the price and the quality of table wine. Since Italy's production was much larger than that of any other region, the burden of distillation borne by it had to be proportionate to its overall production.
31. In that regard, the Commission set out its method of calculation in response to a written question put by the Court. Its reply showed that, according to the forward estimate for the 1993/94 wine year, overall Community production of table wine amounted to 98 610 000 hl, of which 91 365 000 hl were intended for winemaking. Table wine production, net of wine deliveries and losses, was assessed at 87 385 000 hl, while normal utilisation was assessed at 79 807 000 hl. Thus, the total surplus for the wine year at issue amounted to 7 578 000 hl (87 385 000 hl - 79 807 000 hl = 7 578 000 hl). Taking into account the stocks at the start of the wine year of 46 886 000 hl and those at the end of the year assessed at 33 253 000 hl, surplus stocks amounted to 13 633 000 hl. The total surplus to be eliminated thus corresponded to the difference between the total quantities available (87 385 000 hl + 46 886 000 hl = 134 271 000 hl) and the total requirements for the wine year (79 807 000 hl + 33 253 000 hl = 113 060 000 hl), that is to say 21 211 000 hl.
32. The Commission stated, next, that the initial reference percentage of 85% laid down in subparagraph (b) of the second subparagraph of Article 39(11) of Regulation No 822/87, as amended by Regulation No 1972/87, had to be adjusted in order to take account of the change in consumption, which had decreased significantly over time.
33. That is why, in the 1993/94 wine year, the ratio had to be determined between normal utilisation of 79 807 000 hl and the total reference quantity for the Community set out in Article 4(3) of Regulation No 441/88, namely 145 069 000 hl. The result was a percentage of 55.01%.
34. That percentage had to be applied uniformly to the reference quantity of each region, as laid down in Article 4(3) of Regulation No 441/88. On the basis of the difference between the annual production of each region and the updated reference quantity, each region's share of the total difference was calculated as follows:
>lt>0
35. The relatively high share of the Italian Republic compared with the other Member States thus resulted from the exceptional volume of the surpluses in Italy.
36. As regards the apportionment of the distillation obligation, the Commission stated that the total surplus of 21 200 000 hl was divided between compulsory distillation (18 200 000 hl) and voluntary support distillation (3 000 000 hl). Thus, the Italian Republic was obliged to distil 14 070 420 hl (77.31% of 18 200 000 hl). Following discussion within the Management Committee for Wine, Italy's quantity for distillation was reduced somewhat, from 14 070 420 hl to 12 150 000 hl, in return for a reduced degree of participation in support distillation.
37. Finally, the Court found, on the basis of those calculations, that the Italian Republic did not suffer from different treatment in relation to other Member States. On the contrary, the Management Committee for Wine even decided to reduce Italy's quantity for distillation (from 14 070 420 hl to 12 150 000 hl). Thus, the fourth indent of Article 1(3) of Regulation No 343/94 did not lead to any discrimination, within the meaning of Article 40(3) of the EC Treaty (now, after amendment, Article 34(2) EC), against the Italian Republic in relation to other Member States.
B - Issues concerning the validity of Commission Regulation No 343/94
1. First and fourth questions: fulfilment of the basic condition of a significant difference
(a) Issues raised
38. In its first question, the national court raises the issue of the validity of Commission Regulation No 343/94, taking the view that it was adopted although the condition laid down in subparagraph (b) of the second subparagraph of Article 39(11) of Regulation No 822/87 was not fulfilled; under that provision there had to be a significant difference in the ratio between the quantities available and normal consumption compared with the ratio for the reference years.
39. In its fourth question, the national court raises the issue of the validity of Regulation No 343/94, requiring the Italian Republic to distil 12 150 000 hl, which is alleged to infringe Article 39(11)(b) of Regulation No 822/87, as amended by Regulation No 1972/87, because it permits the alteration of the new percentage which was determined by amending the ratio between production in 1981/82, 1982/83 and 1983/84 (145 000 000 hl) and normal consumption for 1993/94 compared to the ratio between production in 1981/82, 1982/83 and 1983/84 and normal consumption in 1984/85.
40. According to the national court, the wording of Article 39(11)(b) is clear and determines the extent to which the percentage of 85% may be amended, and the parameters to be taken into consideration in determining the scope of such amendment. Those parameters are, on the one hand, the change in the proportion between the quantities available and normal consumption of table wine in the reference years (1981/82, 1982/83 and 1983/84) and, on the other hand, the same proportion for the wine year in question (1993/94). According to the national court also, it may be inferred from the Commission's reply to the Court's questions put to it in Zaninotto that in order to calculate the uniform reference percentage regard was had to the extent to which the proportion between production in the years 1981/82, 1982/83 and 1983/84 and normal consumption in 1993/94 changed substantially compared to the ratio between production in the years 1981/82, 1982/83 and 1983/84 and normal consumption in the year 1984/85. According to the referring court, this does not comply with the Council's enabling provision with the result that the reduction in the percentage from 85% to 55% is illegal.
41. Having analysed the solution which the Court adopted in Zaninotto I shall examine the points which require more detailed analysis, after summarising the Court's case-law in relation to the Commission's implementing powers.
(b) Commission's implementing powers
42. First, it should be noted that Article 39 of Council Regulation No 822/87 requires the Commission to adopt implementing provisions for the article in question establishing procedures for compulsory distillation.
43. According to the Court's settled case-law, it follows from the context of the Treaty in which Article 155 [now Article 211 EC] must be placed and also from practical requirements that the concept of implementation must be given a wide interpretation. Since only the Commission is in a position to keep track of agricultural market trends and to act quickly when necessary, the Council may confer on it wide powers in that sphere. Consequently, the limits of those powers must be determined by reference to the essential general aims of the market organisation.
44. Further, the Court held that, in the agricultural sector, the Commission is authorised to adopt all the measures which are necessary or appropriate for the implementation of the basic legislation, provided that they are not contrary to such legislation or to the implementing legislation adopted by the Council.
(c) Examination of the issues raised
45. Under the Community legislation in force, the Community reference quantity for table wine is derived from Community production for the 1981/82, 1982/83 and 1983/84 reference years. A fundamental characteristic of the system introduced by the Community legislature in Regulation No 822/87 is the express and unambiguous prohibition on amending these reference years, laid down in the second indent of subparagraph (a) of the second subparagraph of Article 39(11) of Regulation 822/87, as amended by Regulation No 1972/87. The Commission, therefore, was not authorised by the Council under any circumstances to amend those reference years, namely 1981/82, 1982/83 and 1983/84.
46. In order to determine, on the one hand, the total quantity of table wine to be distilled in the Community and, on the other, the quantities to be distilled in the various regions, the Commission relied on objective data and took into consideration total production, stocks and quantities available at the end of the wine year for all producers in the European Union, which led the Commission to adjust the percentage from 85% to 55%.
47. Since the Commission has wide discretion in adopting measures implementing Council decisions, I consider that it did not exceed the limits of its discretion when, on the basis of the objective facts at its disposal, such as the forward estimate for the 1993/94 wine year published in the Official Journal, it considered that the condition that there be a significant difference in the ratio between the quantities available and normal consumption for that year compared with that for the 1981/82, 1982/83 and 1983/84 reference years was fulfilled. Whether a significant difference exists is a matter to be adjudged separately for each wine year on the basis of the forward estimate for that year and the need to balance and stabilise the market.
48. Accordingly, on the basis of that data, and having regard to the imbalance in the wine market, and more specifically to its permanent structural imbalance, the Commission adjusted the percentage of 85% in line with the continuing decline in the consumption of table wine throughout the whole Community, as compared with consumption recorded in previous reference years, and the existence of wine stocks from previous reference years, thereby complying with the framework set out in Article 39 of Regulation No 822/87. Had the Commission not adjusted the percentage figure in question of 85%, on the basis of the new, objectively quantifiable data for 1993/94, it would have meant that, for that wine year (1993/94), which was characterised by considerable surpluses in table wine, no region would have been bound by an obligation to distil, since the quantity determined by the percentage figure of 85% would have been less than the production of each region for that year.
49. Further, I recall that, under Article 39(11)(b), the necessary measures for the effective implementation of compulsory distillation that the Commission is authorised to take may include an adjustment of the percentage figure of 85%, only in so far as, for a given wine year, the ratio between the quantities available and normal consumption for table wine differs significantly from that of the reference years referred to in the third subparagraph of paragraph 3 (emphasis added).
50. In my opinion, the phrase only in so far as, which lays down a condition to be met before the percentage figure of 85% may be adjusted, does not establish any (arithmetical) ceiling for such adjustment, but means that such adjustment may be made only when necessitated by fluctuations in the ratio between production and normal consumption in a given year compared with that of the reference years. In any event, the provision in question does not lay down any restriction on the extent or the arithmetical size of the adjustment, because that adjustment is not made arbitrarily, but on the basis of objective data derived from the forward estimate for each wine year.
51. Further, I consider that the progressive and continuing decrease recorded in table wine consumption, which led to a significant reduction in estimated normal consumption for the 1993/94 wine year, entailed a modification in the ratio between the quantities available and normal consumption of table wine during the wine year in question compared with the ratio for the reference years. As has already been emphasised, that modification warranted the adjustment by the Commission of the percentage figure of 85% in order to restore the conditions originally envisaged so as to determine for the 1993/94 wine year the ratio between normal consumption of 79 807 000 hl and the total Community reference quantity of 145 069 000 hl.
52. Accordingly, the fixing of the quantity of table wine to be delivered to compulsory distillation by the Italian Republic at 12 150 000 hl cannot be regarded as unlawful.
53. Moreover, the alternative solution which appears to be favoured by the reasoning of the referring court cannot be accepted since it is dependent on an amendment to the reference years, whereas, as set out above, such amendment is expressly prohibited by subparagraph (b) of the second subparagraph of Article 39(11) of Regulation No 822/87.
54. Thus, I consider that it is otiose, in the present case, to examine the question whether some other percentage higher (than 55%), determined on the basis of data provided from more recent reference years, would be more compatible with Regulation No 822/87 since that, as I have pointed out, is prohibited under that regulation.
55. Accordingly, the foregoing analysis has revealed no factor of such a kind as to affect the validity of Commission Regulation No 343/94.
2. Second question: infringement of the obligation to provide a statement of reasons
56. In its second question, which is submitted in the alternative, the referring court, basing itself on the fact that Article 39(11)(b) of Regulation No 822/87 constitutes a derogation from the general rule and that the amendment of the percentage figure of 85% constitutes an exception, on the ground that it does not come within the Community regulatory framework in relation to compulsory distillation, raises an issue concerning the inadequacy of the statement of reasons in Commission Regulation No 343/94. According to the referring court, Article 190 of the EC Treaty (now Article 253 EC) required the Commission to state clear and cogent reasons for its decision to amend the relevant percentage figure and to specify the various matters of fact and law underpinning that decision.
57. First, I should recall that, according to the settled case-law of the Court, Although the reasoning required by Article 190 of the EC Treaty must show clearly and unequivocally the reasoning of the Community authority which adopted the contested measure so as to enable the persons concerned to ascertain the reasons for the measure and to enable the Court to exercise its review ..., it is not required to go into every relevant point of fact and law. The question of whether a statement of reasons satisfies those requirements must be assessed with reference not only to its wording, but also to its context and the whole body of legal rules governing the matter in question. Consequently, if the contested measure clearly discloses the essential objective pursued by the institution, it would be excessive to require a specific statement of reasons for each of the technical choices made by the institution.
58. Furthermore, Article 4(3) of Commission Regulation No 441/88 states that average Community production in the three consecutive wine years 1981/82, 1982/83 and 1983/84 amounted in total to 145 069 000 hl. From the Community forward estimate for the 1993/94 wine year, that is to say on the basis of objective data, for that period an imbalance in the market was to be inferred.
59. Thus, I observe that, in adopting Regulation No 343/94, in implementation of Council Regulation No 822/87, the Commission relied on a series of objective data. Reference is made in that regard to the first recital of Regulation No 343/94 which states that whereas the data available at present to the Commission, and in particular those in the forward estimate for the 1993/94 wine year, show that a feature of the current year is an imbalance on the market for table wine and wine suitable for yielding table wine; whereas the conditions laid down in Article 39(1) of Regulation (EEC) No 822/87 for initiating compulsory distillation are therefore fulfilled.
60. Furthermore, the second recital in the preamble to Regulation No 343/94 states that whereas in view of the prices and the desirable level of availability at the end of the year, the distillation of 18 200 000 hl of table wine appears necessary in the Community; ... that quantity is based on the forward estimate to take account of the unbalanced situation, characterised in particular by stocks carried over from one wine year to the next, which are higher than the estimates used as the basis for establishing the financial data for the wine year.
61. On the basis of the settled case-law of the Court and having regard to the first and second recitals of Regulation No 343/94, I emphasised the following point in my Opinion in Zaninotto (paragraph 79): While I consider, on the basis of the explanations given by the Commission, that the statement of grounds for Regulation No 343/94 is not vitiated by any defect ... it was not necessary for the percentage (55%), which was fixed in a perfectly legal manner, to be mentioned in the preamble to that regulation - the Italian Government pointed out its absence ... - in order for the quantity to be distilled to be more easily determined by the reader of that regulation. I therefore consider, in the light also of the recitals in the preamble to Regulation No 343/94 set out above, that no error is to be found in the statement of grounds for the disputed regulation, since the detailed description of the Commission's reasoning constitutes a choice of a technical nature which could have been omitted without prejudicing the grounds of the measure adopted.
62. Accordingly, given the Commission's wide discretionary power to determine what constitutes a significant difference, within the meaning of subparagraph (b) of the second subparagraph of Article 39(11) of Regulation No 822/87, I consider that, since the objective data relating to the situation of the wine market for the 1993/94 wine year and the forward estimate published in the Official Journal demonstrated that it was necessary to adjust the figure of 85%, in light of the alteration of the ratio between the quantities available and normal consumption for this period compared with the ratio for the reference period, no question arises as to invalidity of Regulation No 343/93 on the ground of an inadequate statement of reasons.
3. Third question: infringement of the principles of reasonableness, manifest error and inconsistency in relation to the object pursued
63. By its third question, the referring court seeks to ascertain whether Regulation No 343/94, which imposes on Italy the obligation to distil 12 150 000 hl, is invalid for infringement of the principles of reasonableness, manifest error and inconsistency in relation to the object pursued, owing to the system of calculation of the quantity to be distilled by Italy, applied by the Commission. It is thus calling in question the correctness of the calculation made in order to adjust the percentage figure from 85% to 55%. It considers that, on account of the reduction in normal consumption during 1993/94, the actual ratio between Community production and normal consumption for the period was not 55%, but 73%. It arrives at that conclusion on the basis of the ratio between average production for the last three years preceding the 1993/94 period (108 000 000 hl) and normal consumption for the 1993/94 period (79 807 000 hl), which is 73%.
64. Moreover, according to the referring court, the reference percentage calculated by the Commission not only does not reflect the market situation and the production of different regions or that of Italy, but also constitutes an infringement of the prohibition on discrimination laid down in Article 40 of the EC Treaty.
65. As regards the question of the infringement of the principle of non-discrimination, I refer again to Zaninotto, cited above, in which the Court held that, on the basis of the calculations applied by the Commission in order to determine the quantity that the Italian Republic was to deliver into compulsory distillation, that country suffered no different or unfair treatment in relation to the other Member States.
66. Moreover, it needs only to be pointed out that the reasoning of the national court, under which it arrives at 73% as the figure which should have been taken into consideration in order to determine the corresponding quantity for the Italian Republic, is based on a mistaken assumption. As I noted above, pursuant to the second indent of subparagraph (a) of the second subparagraph of Article 39(11) of Regulation No 822/87, as amended and in force at the material time, the measures which the Commission is authorised to adopt in order to secure the implementation or balanced application of compulsory distillation cannot concern the provisions of that article relating to the wine reference years, that is to say 1981/82, 1982/83 and 1983/84.
67. Accordingly, the calculation carried out by the referring court would require the Commission to amend the reference years, which thus would not be 1981/82, 1982/83 and 1983/84, but the three years immediately preceding the 1993/94 wine year. However, as the Commission correctly points out (paragraph 28 of its written observations), the Council conferred no power in that regard on the Commission.
68. Moreover, the solution arrived at by the Commission is consistent with the objective pursued by the Community legislature, namely the stabilisation of the market. As stated in the 45th recital in the preamble to Regulation No 822/87, ... compulsory distillation appears to be the most effective measure to absorb surpluses of table wine on the market; whereas provision must consequently be made for such distillation to be introduced once it is clear that the market is in a state of serious imbalance and whereas precise criteria may be defined for the assessment of such imbalance.
69. As regards the allocation of the total quantity of wine to be distilled, the 46th recital in the preamble to Regulation No 822/87 states that whereas, because of the weather and the impact of structural measures, the trend in production may vary between the production regions of the Community ....
70. I consider that these objectives, namely the reduction of table wine surpluses on the wine market and measures to combat the serious imbalance on that market by establishing precise criteria for evaluating that imbalance, come within the terms of the common agricultural policy, as enumerated in Article 39(1)(b) and (c) of the EC Treaty (now Article 33(1)(b) and (c) EC). By means of the distillation measure, the Council is seeking to reconcile the different objectives of Article 33 EC, that of stabilising the wine-growing market whilst, at the same time, observing the need to preserve the individual income of producers. Further, I consider that the Commission's adoption of Regulation No 343/94, as may be inferred, moreover, from the recitals to which I have referred above, is consistent with the objectives pursued by the Council and that therefore no question arises concerning the validity of that regulation in that regard.
71. In conclusion, in light of the analysis conducted in order to reply to the first two questions, I consider that the calculation of the percentage figure of 55% arrived at by the Commission is not incorrect, since the assessment of the facts was manifestly not mistaken, nor was the principle of non-discrimination infringed; moreover, the calculation is reasonable in the sense that it is consistent with both the enabling provision and the rationale of Council Regulation No 822/87.
C - Problems concerning the validity of the provisions of Council Regulation No 822/87
1. Fifth question: problems concerning the validity of the provision of subparagraph (b) of the second subparagraph of Article 39(11) of Regulation No 822/87
72. In the fifth question, submitted in the alternative to the third and fourth questions, the referring court raises the question of the validity of Article 39(11)(b) of Regulation No 822/87, as amended by Regulation 1972/87, inasmuch as it authorises the system of calculation for the new reference percentage arrived at by the Commission. It submits that, in this case, Article 39(11)(b) of Regulation No 822/87 is unlawful for infringement of the principles of reasonableness, manifest error and inconsistency in relation to the objective pursued, and for infringement of the prohibition on discrimination laid down in Article 40 of the EC Treaty.
73. Essentially, that means that should the Court rule Regulation No 343/94 to be valid on the ground that it faithfully applies subparagraph (b) of the second subparagraph of Article 39(11) of Regulation No 822/87, the referring court is calling in question the validity of that regulation because it permits the calculation of a uniform percentage based on the ratio between normal utilisation in the wine year in question and production for the reference years 1981/82, 1982/83 and 1983/84.
(a) Admissibility
74. The Council and the Commission raise the issue of the admissibility of this question for lack of precision (paragraph 27 of the Council's written observations and paragraph 39 et seq. of the Commission's written observations). They consider that the referring court does not state the ground on which it might be unlawful, in determining (adjusting) the reference percentage, to apply the figure derived from the ratio between utilisation for the wine year in question and production for the reference years.
75. The Commission, which expresses reservations in general as to the usefulness of the questions, considers the fifth question to be inadmissible on two grounds, in particular. First, the referring court does not explain the grounds on which it might be unlawful to take into account the ratio between utilisation for the wine year in question and production for the reference years. Secondly, should the question be deemed admissible, the reply would not be useful because, if the reference percentage were reduced, the reference quantity for Italy would be reduced, whereas if that percentage were increased, the quantity would be increased. In other words, should that provision be adjudged invalid, that could lead the competent Community bodies to require Italy to distil a greater quantity of table wine in the course of the contested 1993/94 wine year, thus imposing an even greater burden on Mr Busolin and others, the applicants before the national court.
76. I do not consider that the argument of the Council and the Commission can be accepted. The Court is obliged to consider the questions concerning the validity of Community provisions referred to it by the national court, in so far as they are raised in the context of a dispute pending before that court, and are essential to the resolution of that dispute, irrespective of the favourable or unfavourable consequences that a decision declaring the contested provisions invalid might be likely to have for the parties to the main proceedings.
77. The referring court does not give a detailed explanation of the grounds on which it considers the abovementioned provision of Regulation No 822/87 to be invalid. None the less, since it analyses at length the grounds on which it considers Commission Regulation No 343/94 implementing Regulation No 822/87 to be invalid, that is, in my opinion, sufficient to enable this question to be deemed admissible since, in order to give a complete reply to the questions referred, I consider that it would have been necessary to deal with the validity of this provision of Regulation No 822/87, as amended, even if the referring court had not expressly raised the issue.
(b) Substance
78. I consider that many of the issues raised by this question have already been answered during the foregoing analysis of the third and fourth questions in which I concluded that there were no factors such as to affect the validity of Regulation No 343/94.
79. In the present case, I would add that no issue concerning the validity of the provision of subparagraph (b) of the second subparagraph of Article 39(11) of Council Regulation No 822/87 arises. I reach that conclusion on the basis of the settled case-law of the Court to the effect that when implementation by the Council of the Community's agricultural policy necessitates the evaluation of a complex economic situation, its discretion does not apply exclusively to the nature and scope of the measures to be taken but also, to some extent, to the finding of basic facts inasmuch as, in particular, it is open to the Council to rely if necessary on general findings. In reviewing the exercise of such a power the Court must confine itself to examining whether there has been a manifest error or misuse of power or whether the authority in question has clearly exceeded the bounds of its discretion.
80. More specifically, in Regulation No 1972/87, the Council adopted the second subparagraph of Article 39(11) at issue in these proceedings on the basis of the fact that ... on the implementation of these arrangements [laid down in Article 39 of Regulation No 822/87], many serious difficulties arose; ... it was only possible to overcome these difficulties, in order to ensure the effective execution of the distillation operation, by allowing the Commission, on a temporary basis, to waive certain rules; ... in order to apply compulsory distillation in an effective and fair manner, the temporary provisions should be taken again for three wine years which allow the Commission to adopt, without calling into question the essential elements of the arrangements, measures necessary to overcome any difficulties that are likely to jeopardise the execution of the distillation operation.
81. Further, the first subparagraph of Article 39(11) extended until the 1993/94 wine year the possibility of taking the necessary measures for guaranteeing the effective implementation of distillation should difficulties arise that are likely to jeopardise the execution or balanced application of compulsory distillation referred to in paragraph 1 of this article. As explained, the importance of a number of problems for the wine-growing sector, including those concerned with the adoption of structural measures and their relation with compulsory distillation, requires the highest degree of consistency between the solutions to be proposed and when achieving such consistency, the requisite proposals must be drawn up when all data are available and accordingly certain time-limits must be deferred by one wine year and specifically up to 1993/94.
82. The Council's judgment was based on objective data concerning the situation in the wine market and on estimates for its development. In view of the wide discretionary power of the Council in implementing Community agricultural policy, which entails the need to evaluate complex economic situations, I consider that this judgment is not manifestly mistaken. Further, there is nothing in the case-file to suggest that, in the present case, the Council exceeded its discretionary powers in authorising the Commission to amend the figure of 85%, since the situation in the wine market in the course of that wine year called for such a measure, even though that situation had occurred repeatedly during preceding wine years. Accordingly, the assessment of the facts on which the adoption of this measure was based is not manifestly mistaken.
2. Sixth question: issues concerning the validity of the provisions of Article 39(3), (4) and (11) of Council Regulation No 822/87 and of Commission Regulation No 343/94
(a) Issues raised
83. In the sixth question, the referring court raises the issue whether the provisions of Article 39(3), (4) and (11) of Regulation No 822/87, as amended by Regulation No 1566/93 and Regulation No 343/94, which implements the former measures, are unlawful for infringement of the principles of reasonableness, manifest error, misuse of powers and infringement of the principle of proportionality.
84. The argument of the referring court is threefold. (a) First, it contends that, on the basis of the available data, the figure of 85% could never be applied because it was not consistent with the real situation in the wine market. The Commission was authorised by the Council to invoke subparagraph (b) of the second subparagraph of Article 39(11) in order to make it possible in practice to implement the compulsory distillation provided for in Article 39 of Regulation No 822/87. The consequence of that was that Article 39(3) was not applied. It follows therefrom that the assessment is manifestly mistaken and the contested provision is irrational, principally because the Council indicated in Regulation No 1566/93 that the uniform percentage would continue to be 85%. (b) The reinstatement of the figure of 85% in 1993 constituted an infringement of the principle of proportionality, because the Council ought reasonably to have known that the market conditions were not suited to its application. (c) In that context, the maintenance in force of the provision allowing application of the reference figure of 85% further constituted a misuse of power because, in making provision for that percentage which was in practice inapplicable, the Council permitted the Commission to operate, as it wished, the compulsory distillation mechanism by implementing subparagraph (b) of the second subparagraph of Article 39(11) of Regulation No 822/87 which, according to the national court, provides for a derogation from paragraph 3 of that article, which constitutes the normal rule and refers to the reference percentage of 85%, despite the fact that that percentage was not applicable in practice.
(b) General observations
85. In the present case, I consider that the Council's position in reinstating the figure of 85%, whilst conferring on the Commission the power to determine a different percentage depending on the need to balance and stabilise the wine market and to ensure the success of the compulsory distillation measures, cannot be regarded as invalidating the provision in question on the grounds relied on by the referring court. The power conferred on the Commission did not permit it to alter the fundamental principles governing compulsory distillation.
86. First, the Community legislature, assessing a complex economic reality, was entitled to fix the reference years given that, in general terms, as I indicated above, it has broad discretionary power as to the nature and extent of the measures taken. However, that discretionary power must be exercised in full compliance with higher-ranking general principles, including the principle of proportionality.
87. Next, I conclude that, in light of the provisions in Regulation No 822/87, the Council would have committed a manifest error in the exercise of its discretionary power and violated the principle of non-discrimination had it not restricted itself to those reference years (1981/82, 1982/83 and 1983/84), on the basis of which it had to verify whether the Member States had fulfilled their obligation not to exceed their reference quantity, but had taken into consideration the new subsequent reference periods before the necessary provisions were drawn up and without having all the necessary data concerning, for example, the implementation of the grubbing up policy and the reduction of wine-growing areas involved, which only producers in certain regions had carried out. The reason for that is that it would in practice be favouring those regions which had made less effort to adapt to market conditions and penalising those which, by reducing their production, had contributed progressively to stabilising market conditions. The adoption of such provisions could entail the discretionary powers being exceeded and certain producers being treated unfavourably compared to others.
(c) Infringement of the principle of proportionality
88. Furthermore, the Council must fully respect the principle of proportionality in exercising its wide discretionary power to adopt measures implementing the Community's agricultural policy.
89. According to settled case-law, the higher-ranking 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 objectives legitimately 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.
90. Furthermore, as regards judicial review of the application of the principle of proportionality by the Community legislature in the context of the common agricultural policy, the Court has consistently held that the Community legislature has a discretionary power which corresponds to the political responsibilities given to it by Articles 40 to 43 of the Treaty. Consequently, the legality of a measure adopted in that sphere can be affected only if the measure is manifestly inappropriate having regard to the objective which the competent institution is seeking to pursue (emphasis added).
91. In my opinion, the Council, in adopting the provisions of Article 39(3), (4) and (11), does not appear to have infringed the principle of proportionality.
92. More specifically, in exercising that competence, the Council has opted to organise, under certain conditions, compulsory distillation for the purpose of restoring the balance in and stabilising the wine sector. As it transpires from the 45th recital in the preamble to Regulation No 822/87, compulsory distillation to absorb the surplus table wine on the market is the most effective measure, and is triggered, on the basis of certain criteria, when it appears that there is a serious imbalance in the market. As regards the allocation of the total quantity to be distilled, the 46th recital refers to the effect of climatic conditions and the consequences of the structural policy, which can give rise to a different trend in production in the different regions of the Community.
93. Having regard to these objectives, the Council considered that the most appropriate criterion was to designate and maintain the specific wine reference years (1981/82, 1982/83 and 1983/84) so that, on that basis, it could be determined whether Member States had contributed to the effort to restore the balance in and stabilise the wine market. In order to achieve this aim, it opted to authorise the Commission to amend the envisaged figure of 85% whenever necessary in order to achieve the objectives of compulsory distillation.
94. The option exercised by the Council cannot, in my opinion, be regarded as manifestly inappropriate for achieving the aim intended by the adoption of the compulsory distillation measure. Moreover, the referring court does not explain how a change in the reference years or the determination of a new fixed reference percentage, rather than a measure adapted to the situation of each wine year, would constitute a more appropriate and less restrictive measure than the mechanism provided for in the provision in question.
95. In choosing that option, the Council was clearly not able to determine precisely all the future effects of its regulation. With regard to that issue, the Court has consistently held that the legality of a Community act cannot depend on retrospective considerations of its efficacy and that where the Community legislature is obliged to assess the future effects of rules to be adopted and those effects cannot be accurately foreseen, its assessment is open to criticism only if it appears manifestly incorrect in the light of the information available to it at the time of the adoption of the rules in question.
96. Consequently, an issue concerning the invalidity of the provisions of Article 39(3), (4) and (11) of Regulation No 822/87 for infringement of the principle of proportionality would arise only if those provisions were manifestly inappropriate or unnecessary to meet the objectives pursued and their disadvantages outweighed their advantages which, however, according to the foregoing analysis, is not the situation in the present case.
(d) Misuse of powers
97. Misuse of powers as a ground for annulment of a Community act means that the competent body has adopted an act whose exclusive, or at least primary, purpose is other than its officially stated objective. However, I consider that the grounds which the national court invokes, as it describes them, could better be characterised as a misuse of procedure, which, as a ground for annulling an act of a Community institution, constitutes a specific category of misuse of powers. Misuse of procedure occurs where, in adopting a decision, the competent institution circumvents the provisions governing the procedure to be followed for the adoption of a given decision, and follows a different procedure laid down for a different purpose.
98. I consider that, in the present case, there are no grounds for considering that this is a case of misuse of procedure or of powers or that the objective of Article 39 of Regulation No 822/87, as amended, is to enable the Commission to manage compulsory distillation as it wishes and, with it, the allocation between the different regions of the Community of the quantity to be delivered to compulsory distillation under the procedure involving the Management Committee for Wine provided for in Article 83 of Regulation No 822/87, and in contravention of the procedure laid down by Article 43 of EC Treaty (now, after amendment, Article 37 EC). To uphold that argument, advanced by Mr Busolin and restated by the referring court, would be to misconstrue the role played by the Commission, under the EC Treaty, in implementing the Council's acts. This means that the Commission must strictly remain within the framework laid down on each occasion by the Council, while fully observing the conditions laid down by the Council for the adoption of acts by the Commission. Moreover, I analysed that point in the preceding paragraph concerning the strict limits on the Commission's action laid down by Article 39 of Regulation No 822/87 and, above all, by subparagraph (b) of the second subparagraph of paragraph 11, in conjunction with subparagraph (a); I therefore refer to those paragraphs.
99. I should also recall that the Management Committee procedure referred to in Article 83 of Regulation No 822/87 is intended both for the application of subparagraph (b) of the second subparagraph of Article 39(11) and for fixing the uniform percentage and reference years (Article 39(9)). That means that the amendment of the fixed percentage of 85%, provided for in paragraph 3, and the adjustment of that percentage for a given wine year are carried out in accordance with the same procedure.
100. Accordingly, in light of the foregoing considerations, I consider that the Council has not committed a misuse of procedure or of its powers given that it maintained the uniform percentage of 85%, even though it adopted Regulation No 1566/93, amending Regulation No 822/87, whilst at the same time providing for the application of subparagraph (b) of the second subparagraph of paragraph 11 in the 1993/94 wine year; the contentions to the contrary are unfounded.
VI - Conclusion
101. In light of the above considerations, I propose that the Court reply as follows to the questions referred by the Pretore di Treviso, sezione distaccata di Oderzo:
The preceding analysis has disclosed no factor such as to affect the validity of:
- Article 39(3), (4) and (11) of Council Regulation (EEC) No 822/87 of 16 March 1987 on the common organisation of the market in wine, as amended by Council Regulations (EEC) Nos 1972/87 of 2 July 1987 and 1566/93 of 14 June 1993, and
- Commission Regulation (EC) No 343/94 of 15 February 1994 opening compulsory distillation as provided for in Article 39 of Council Regulation (EEC) No 822/87 and derogating for the 1993/94 wine year from certain detailed rules for the application thereof.