61965C0016
OPINION OF MR ADVOCATE-GENERAL GAND
DELIVERED ON 28 OCTOBER 1965 (
1
)
Mr President,
Members of the Court,
The six questions put to you by the Hessisches Finanzgericht will give you an opportunity not only to give your opinion on a problem of great importance for the efficient functioning of the common organization of the markets within the framework of the European Economic Community. They will also induce you to give some precise answers on the position and the effect of Article 177 in the complex of the rules of the Treaty fixing your jurisdiction and the judicial guarantees accorded to the nationals of Member States.
The facts are simple. On 31 January 1964 the Schwarze undertaking of Bremen obtained from the Einfuhr- und Vorratsstelle für Getreide und Futtermittel (EVSt) import certificates for 1100 metric tons of barley to be imported from the Netherlands during the course of February. At this point the EVSt set a rate of DM 96.75 per metric ton for the levy prescribed by Article 2 of Regulation No 19 of the Council, on the progressive establishment of a common organization of the market in cereals. It is known that the levy rate equals the difference between the free-at-frontier price for the exporting Member State calculated and fixed every week by the EEC Commission and the threshold price of the importing Member States calculated each year by that country less a flat rate deduction aimed at facilitating trade between Member States of the Communities.
the objection made to the EVSt that the rate of levy should be reduced by DM 15 per metric ton, and also the proceedings before the Hessisches Finanzgericht, centred entirely on the Commission's decision of 24 January 1964 fixing the free-at-frontier price for barley imports into the Federal Republic of Germany from the Netherlands at 301 guilders per metric ton on the basis of which the EVSt fixed the levy at the disputed rate.
The appeal lodged by Schwarze against this decision, which was addressed to the Federal Republic, was based on objectives both of form and of substance: it was alleged that the decision was not supported by a statement of reasons as Article 190 of the EEC Treaty required, and that it was based upon the price of American barley imported into the Netherlands, not that of barley harvested in that country. This allegedly contravened Regulations Nos 19 and 89. In view of this double defect the decision of 24 January 1964 did not bind the Member States and the EVSt ought not to have taken it into account in fixing the rate of the levy, although the Federal Government had failed to object to this decision within the period prescribed by Article 173.
It is under these circumstances that the Hessisches Finanzgericht, on the joint application of both parties, has put to you the following six questions. In view of the doubts which have been expressed from time to time on whether some of these questions are admissible, having regard to the provisions of Article 177, it is worth setting these questions out in full.
The first problem—this is the subject of Questions 1 and 2—is whether the Commission's decision of 24 January 1964 fixing the free-at-frontier price was one which required a statement of reasons. If it was, must each decision be supported by a statement of the specific reasons enumerated by the Finanzgericht, or is it enough for the Commission to rely on grounds stated in a previous decision?
assuming—and me Commission does not contest this—that it took as its basis barley harvested outside the Netherlands, Question 3 asks you to interpret Articles 2 and 3 of Regulation No 19. Can the free-at-frontier price be determined on the basis of rates relating to cereals originating in countries outside the Community but in circulation in the exporting Member State?
Question 4: if the decision was not supported by an adequate statement of reasons or if basing it upon prices relating to cereals harvested outside the Community is illegal, but if it was nevertheless not challenged by the Federal Republic within the period fixed by Article 173, is the decision absolutely void, voidable or binding upon German importers?
Questions 5 and 6: if the answer to Question 4 is that the decision is neither absolutely void or inapplicable to German importers, can a German importer challenge it under the second paragraph of Article 173 of the Treaty although he is only indirectly affected, on the ground that the rate of levy was calculated on incorrectly fixed quotations? If it is so, is an appeal admissible at any time during the two months following the date on which it was informed as a result of the reference for a preliminary ruling on Question 4 that the decision was binding?
As you can see, those who formulated these questions have omitted none of the aspects or consequences, however remote, of the dispute before them. Some of the questions which they have put to you run the risk of involving you so deeply that it would be worthwhile to consider first whether they are admissible. As the Commission has pointed out, what the Finanzgericht is in effect asking you is whether the decision of 24 January 1964 should be held to be void or binding, and, if binding, whether this is only for the Member States to whom it was addressed, or also for importers. It is this question of the validity of the decision which is, put to you in Question 4, and to which the three earlier questions, presented to you in the form of questions of interpretation of Article 190 and Articles 2 and 3 of Regulation No 19. are merely a prelude.
The question relates to a decision which the Member State to which it was directed has not challenged within the period prescribed by Article 173. It is put by an importer who, under case-law which is now settled, does not fall within the category of persons entitled to rely upon Article 173 (see, for instance, Case 38/64: Getreide-Import Gesellschaft v EEC Commission, [1965] ECR).
It is clear, moreover, from the judgment of the Finanzgericht that the considerations which, in their view, weigh against holding the decision to be valid do not relate to the question of its legal existence but to the question of its legality in the widest sense: was the statement of reasons non-existent or inadequate, did it infringe Regulation No 19 in that the price of barley imported into the Netherlands was taken into consideration?
Is this the context in which subparagraph (b) of the first paragraph of Article 177 of the EEC Treaty gives you jurisdiction to give preliminary rulings on the validity of acts of the institutions of the Community? It would appear from your judgment of 18 February 1964 in Joined Oases 73 and 74/63, Internationale Crediet ([1964] ECR) that the answer is in the affirmative. This case, referred to you by a Netherlands court, dealt in particular with the validity of decisions of the Commission addressed to Member States. After the Government of the Federal Republic had submitted its observations, Mr Advocate-General Roemer made an exhaustive examination of the two aspects of the problem. He considered that the ‘validity’ referred to in Article 177 exceeded the bounds of normal validity and extended to validity in its widest sense, despite the difference in the terms used by this Article and by Article 73 respectively; he also considered that Article 177 permitted the Court to examine the legality of decisions addressed to Member States. The same view can, indeed must be implied from your judgment because, after examining the questions put to you, in particular the extent of the powers of the Commission to authorize a Member State to adopt protective measures under the provisions of Article 226 of the Treaty, powers which it had used in the decisions challenged in that case, you concluded that ‘examination of the questions referred to the Court reveals no factor capable of affecting the validity of the said decisions’. A similar view had already been developed in some of the grounds of your judgment of 14 December 1962 (Joined Cases 31 and 33/62: Milchwerke Heinz Wöhrmann and Lütticke [1962] ECR 501).
The French Government objects that you are being asked to give a ruling on a specific measure emanating from one of the institutions of the Community, and thus to decide whether to annul that measure. This objection would be valid of it were purely a question of interpretation; it cannot, however, be sustained when it is a reference for a preliminary ruling which refers, as allowed by Article 177, to the validity of one of the acts of the Commission.
The final point is that Question 4 is not confined to asking whether the alleged irregularities make the decision‘invalid’ — which is a matter of examining the decision itself; it also refers to the nature of this possible ‘invalidity’ and this is a question of interpretation of the Treaty to which I shall return presently.
After making these observations, I should like to return to the two essential points put to you which have already been set out in full in the written and oral procedures.
A — Was there a duty to support the decision by a statement of reasons and was the statement of reasons given adequate?
1.
In the majority or cases me common organizations of the argicultural markets have replaced all other frontier protective measures by a system of levies with the purpose of making up the difference between the prices prevailing within and outside the importing Member State. In the cereals sector the levy follows the price variation on the markets, daily for cif prices and weekly for free-at-frontier prices. Thus the free-at-frontier price fixed by the Commission is one of the two factors on which the internal levy is based, the other being the threshold price for the importing Member State. The price-fixing is carried out on the basis of the criteria mentioned in Regulation No 89 of the Commission the free-at-frontier price is equal to the most favourable price for the importing Member State on the most representative markets for export into that country plus freight costs.
In fact the prices are fixed by the Commission on the basis of details sent to it by telex by the Member States; this decision is immediately communicated to the permanent representatives of these countries and the relevant authorities are immediately advised by telex. It is not published in the Official Journal, but the Agricultural Supplement to the Journal publishes every week the table annexed to the decision setting out the different prices. This series of operations has to be carried out within the space of about 24 hours, that is to say, swift and frequent price-fixing is one of the necessary conditions for the efficient functioning of the system for a product susceptible to short-term price fluctuations, such as that which concerns us here. It is, however, only an infinitesimal part of the work of the Commission in this field. One has only to look at the Agricultural Supplement to the Official Journal annexed to the file to see that every week hundreds of cif prices, free-at-frontier prices and premiums have to be fixed for an infinite variety of products. This fact must be borne in mind.
2.
Counsel for Schwarze has, for reasons which one can easily understand, raised serious doubts as to the nature of the method by which the Commission fixes the free-at-frontier price. In his submission the binding nature of the levy is derived from Regulation No 19. This alone has legal effect. The actual price-fixing is merely an agreement on a set of facts which can be delegated to a group of independent experts and which in any case cannot create any new rights or obligations. It is, we are told, a measure sui generis; it is not a decision within the meaning of Article 189 of the Treaty. This view is completely contrary to the case-law of this Court and must be rejected. As the Commission has stressed, the effect of Regulation No 19 is to create an obligation to fix a levy, but not a given levy; the amount of the levy can only be fixed by reference to a specific free-at-frontier price, itself fixed by an individual, specific decision. In any case even it it were a measure sui generis which did not fall into the category envisaged by Article 189, what provision of Community law could be relied on to show that such a measure must be supported by a statement of reasons? Article 190, which is the provision upon which the applicant bases the main part of its case, relates only to ‘Regulations, directives and decisions’.
3.
You will find in the file or the case a copy of the decision of 24 January 1964. The statement of reasons in this decision refers to the Treaty and the decision of the Commission of 21 December 1962 fixing the free-at-frontier prices for cereals, flour, groats and meal; it is based—although it does not say this—on the prices known to the Commission.
As far as the decision itself is concerned, it provides that the free-at-frontier prices on the basis of which the intra-Community levy and the refunds on exports to Member States of the products referred to in Article 1 (a), (b) and (c) of Regulation No 19 of the Council are modified according to the table annexed thereto. The prices come into force as from 27 January 1964 until they are modified by a subsequent decision of the Commission. It is stated that the decision is addressed to all Member States.
4.
When Article 190 provides that a decision must be supported by a statement of reasons, it is stating a general rule which must be adapted to the widely differing natures of the measures of the Community's institutions; there are measures in the nature of Regulations, or those which affect only individuals; there are decisions relating to the status of an official, or those taken within the field of the economy; there are authorizations of all kinds granted to Member States within the framework of the Treaty. This obligation, as the Court stated clearly in Case 24/62 (Government of the Federal Republic of Germany v EEC Commission [1963] ECR ‘is not taking mere formal considerations into account but seeks to give an opportunity to the parties of defending their rights, to the Court of exercising its supervisory functions and to Member States and to all interested nationals of ascertaining the circumstances in which the Commission has applied the Treaty’. This means that the decision must contain an indication of the agreed essential facts and the legal considerations which influenced it in taking the action which it did.
Working from these principles, Schwarze tells you that in order to conform to Article 190 of the Treaty the decision under which the free-at-frontier price was fixed must show what were the offers, for what quantities and categories of goods, and the sources of information on the basis of which the Commission made its decision.
It is clear that the decision does not give the answers to these questions. It must not, of course, be considered in isolation but must be interpreted in the light of the decision of 21 December 1962 to which it expressly refers. This last decision, fixing the free-at-frontier prices for the same products and modified periodically to keep pace with the development of the market, can be regarded as the basic decision in this sphere. The statement of reasons is very much more extensive; it sets out all the provisions under which the Commission is entitled to fix free-at-frontier prices; it mentions all the criteria which this institution must take into account in so doing, and it is by applying these criteria to the prices known to it, declares the Commission, that it fixes the free-at-frontier prices mentioned in the decision. The same words, ‘the prices known to the Commission’ appear in the preamble to the decision which we are now discussing.
It can be deduced from these two decisions read together, without too much difficulty, that the draftsmen intended that the criteria enumerated by the Regulations should be applied. The legal considerations on which the decision was based can thus be determined; on the other hand, the reference to prices known to the Commission is not accompanied by any precise indication of figures making it possible to check the basis upon which these calculations were fixed and why the Commission decided on these particular prices and not on any others.
Can it nevertheless be admitted that the decision was supported by an adequate statement of reasons under Article 190 of the Treaty? In asserting this, the Commission is strongly supported by the three Member States which have submitted their observations: the arguments used are essentially practical. They refer, first, to the conditions necessary for the efficient functioning of the common organization of the markets: a very large number of prices has to be fixed in a very short space of time and it is not possible to support all these decisions with the calculations upon which they are based. On this point Schedules 3 and 4 to the Commission's observations are particularly significant.
Above all, however, the system operates and can only operate by relying completely or partially on the information furnished by importers and exporters. These are trade secrets and are only revealed on condition that they will be treated as confidential by the recipients. Quite apart from Article 214 of the Treaty on professional secrets, to divulge this information would inevitably result in the source's drying up. This discretion must be very wide because, as the Commission says, to indicate specific facts on the basis of which the calculation is made makes no sense unless it is complete and proves that the prices fixed are correct. It would therefore be useless to mention the facts without showing who the informant was. The same reasoning applies in the similar field of freight costs which have to be taken into consideration for fixing the free-at-frontier price. A large part of the freight costs, of which the Commission has to have notice, is the object of agreements communicated as confidential information.
Neveretheless the Commission considers that such a system is valid in the field of price-fixing provided that it allows the parties to whom the decision is directed, namely the Member States, to be informed of the reasons for the decisions which cannot be published elsewhere. The criteria of Regulation No 89 were adopted by the members of the Management Committee composed of representatives of the Member States; the facts on the basis of which the free-at-frontier prices are fixed are known to them because it is through them that the necessary data are communicated to the Commission.
As tar as the importers are concerned, the system adopted makes it more difficult for them to regulate their price-fixing. However, the Commission declares that it is prepared to communicate, on their request, the specific facts upon which the calculations are based provided that there is no danger of revealing the identity of the informant. The secret would in any case be revealed before a court.
This Court is obliged to choose between the two opposing viewpoints. Schwarze's view, which is supported by the Finanzgericht, conforms more strictly with the principles and the general case-law of this Court. I would hesitate, however, to adopt it because of the arguments put forward by the Commission and the Member States. If every price decision had to be supported by a statement of reasons setting out the facts which Schwarze demands and which we have just set out, the levy system would be paralysed in its first stage by simple material difficulties, and then in its second stage would be reduced to nothing when the sources of information dried up. One can envisage other forms of market organization in which levies would be fixed independently of daily or weekly price lists; this would make them less precise, even arbitrary, and they would consequently be less satisfactory for the economy and for those who play a part in it. This, however, is not our role; all we can do is place ourselves in the context of the system as it exists and agree that material and psychological reasons militate against the view that price-fixing decisions should in all cases be supported by statements of reasons more complete than those which they now contain. Is this enough to make them comply with Article 190? The Commission's argument that its only duty is to ensure that the parties to whom the decision is directed, the Member States, are fully informed cannot be accepted as it ignores the interests of the importers.
More generally, I reel mat it must be admitted that practical considerations make it impossible to support such decisions with a statement of reasons more extensive than that which I have described. In view of this position I consider that the decision must be treated as valid from this point of view.
B —
Can a decision fixing free-at frontier prices be based on quotations for cereals coming from outside the Community, when the prices are negotiated inside the exporting Member State, or must they be confined to cereals harvested within that country? This is largely a question of interpretation of Articles 2 and 3 of Regulation No 19.
This decision is based on a quotation for American barley which was at the time in the Netherlands. According to the applicant in the main action, the price of this barley during this period would have been more than four units of account lower than that of Netherlands barley; the free-at-frontier price would not therefore have been equal to the price at which a German importer would have been able to import Netherlands barley, and this would have forced up the intra-Community levy.
Schwarze contends that this method of calculation is unlawful. In the first place, it relies upon the wording of Article 2 (1) of Regulation No 19, in the German version, which stipulates that the free-at-frontier price must be the price of a product coming from (“stammend aus”) the exporting Member State and imported free of duty into the importing Member State. This, it alleges, can only apply to cereals harvested in the exporting Member State. Article 3 of the same Regulation confirms this interpretation. But I do not feel that this question can be settled on a purely linguistic basis. If the three other versions of this Regulation refer to products coming from the Member States, this term, if we compare it with the wording of Article 9 (2) of the Treaty, must be contrasted with “products originating in Member States” and thus include imported cereals. Thus the applicants’ first argument must be rejected.
Schwarze's second point is the purpose of the free-at-frontier prices to be fixed under Regulation No 19. According to Article 2, it appears only as a factor helping to determine the intra-Community levy, whereas the cif price in Article 10 is used to fix the external levy. Article 1 of Regulation No 86 expressly confines application of the intra-Community levy to cereals harvested in the exporting Member State; it stipulates that the external levy is imposed when produces are imported from a Member State, if these products are not harvested in the exporting Member State. The logical consequence of this is that free-at-frontier prices are calculated and fixed only for cereals harvested in the exporting Member State, and that, in applying Regulation No 89, which sets the criteria for determining these prices, the Commission must confine itself to quotations for products grown within the Member States.
You know the Commission's reply to this; it is to widen the area of debate. Although Regulation No 19 does not state exactly which imports are subject to the intra-Community levy and which to the external levy, the system of trade with countries inside or outside the Community envisaged by the Regulation must necessarily be the same as that envisaged by the Treaty itself. As far as the elimination of customs duties and quantitative restrictions is concerned, Article 9 subjects products coming from third countries but in free circulation within the Member States to the same system as those originating in the Member States. The goods which are subject to the intra-Community levy are those which would have been subject to the measures which the levy has replaced; thus all cereals in free circulation within the exporting Member States attract the intra-Community levy, whether or not they are harvested within that State. This means again that the free-at-frontier price had to be interpreted to mean the price of cereals ‘coming from’ the exporting Member State, whatever their origin, and that Regulation No 89 does not restrict the operation of Regulation No 19 in any way in this respect.
Up to this point the system is perfectly coherent, and the argument that, in order to explain Regulation No 19, we have to refer to the rules of the Treaty is attractive. But there remains Regulation No 86 which, with the purpose of avoiding distortion of trade, restricts the intra-Community levy to cereals harvested within the exporting Member State. To counter the apparent existence of a logical connexion between the application of the levy and the fixing of the free-at-frontier price, the Commission employs, in effect, two arguments.
The first is the necessity of fixing a free-at-frontier price as a basis for the determination of the rate of the intra-Community levy for processed products under Article 1 (4) of Regulation No 19, even when the primary product is not harvested in the exporting Member State, or if the home crop has already been exhausted. Clearly imported cereal prices must be used for this purpose. This is the apparent effect of the extremely complicated system set up by Regulation No 55, which was replaced by Regulation No 141/64.
Secondly, when home-grown and imported cereals are put on the market in the exporting Member State, it is logical also to take the latter into account when fixing the free-at-frontier price. If the quality is the same, they must have the same price, being interchangeable. Here you will find another, albeit veiled, reference to the idea of unity of the market, about which much was said at the hearing, and which Schwarze has vigorously contested. The argument against this is the alleged existence of two levy rates, one of them after deduction of the lump sum representing the difference in freight costs. It must be added that the effect of Regulation No 86 can only be to reinforce this tendency towards the duality of the markets. Here, however, we enter the realm of hypotheses.
In fact, there does not seem to be any necessary connexion between the application of the levy rate envisaged by Regulation No 86 and the fixing of the free-at-frontier price. These are two questions which can be discussed separately. Up to this point, the points of law and of fact made by the Commission are admissible and one may conclude, replying to the third question referred by the Hessisches Finanzgericht, that the expression ‘coming from’ in Articles 2 and 3 of Regulation No 19 does allow the Commission, in fixing the free-at-frontier price, to base its calculations on figures for cereals imported from third countries but sold at prices negotiated within the exporting Member State.
C —
If you adopt the point of view which I have suggested, you need go no further in replying to the questions put to you by the German court. The others only arise if this decision is not held to be valid.
I must however consider the possibility that you will not follow my reasoning. How then should we answer Question 4? The Finanzgericht asks you not only whether the decision is, or is not, valid; it would also like to know the precise nature of the invalidity should it be declared, and this is a question of interpretation of Article 177 itself. If I have understood the precise nuances of its reasoning, it has a number of possibilities in mind; the invalidity might make it void as against all men, including the German authorities, and in particular the EVSt; alternatively, it would be void as against importers, the only parties who would benefit from its invalidity; finally, although invalid, it would be binding on importers.
It seems that the problem should be formulated as follows: When this Court rules, on a point referred to it by a national court within the frame-work of Article 177 procedure, that a measure is invalid, what are the consequences of the res judicata effect of its judgment? Are they relative, or do they bind all and sundry? Although authorities are divided on this point, I have no hesitation in adopting the first solution. A detailed distinction must be drawn between the extent and the effects of an annulment of a measure on application under Article 173, and a declaration of illegality under Article 177. In the first case, the action is initiated by a person who enjoys a right to appeal; it is covered by a strict time-limit, to avoid prolonging the period of doubt. The wide effects of a successful appeal are balanced by the restrictions on its admissibility. A national court or tribunal, on the other hand, can at any time ask for your opinion on the validity of a measure against which the time for appealing has long since expired. It refers a dispute to you in order to enable it to decide a case before it, and it is sufficient if the effects of your judgment are confined to the framework of that case. Were we to do otherwise and give general effect to the declaration of illegality, we would, in effect, be reviving a right of action time-barred under Article 173 every time a case before a national court raised a question as to the validity of a measure of one of the Community institutions. I therefore consider that a decision which is declared to be unlawful is deprived of its force only in relation to the parties to the principal action; in other words, if you consider the decision of 24 January 1964 not to be valid, Schwarze may rely on your judgment, but not the other importers, who are not parties to the action but who are affected by the same levies. Thus the reply to Question 4 which I would suggest does not fall into any of the categories suggested by the Finanzgericht.
D —
There remain two further questions on the admissibility under Article 173 of an appeal lodged by an importer and of the conditions under which the time-limit for such appeal operates. They need not be considered, in view of the reply which I would give to Question 4 if it arose. This is only one reason for not troubling you with it.
I consider that the replies to the questions put to you should be formulated and limited as follows:
1.
Decisions of the Commission fixing free-at-frontier prices must be supported by a statement of reasons.
2.
Such a decision will satisfy the requirements of Article 190 of the Treaty if it indicates, whether directly or toy reference to a previous decision, the considerations on the basis of which the Commission fixes the price.
3.
Articles 2 and 3 of Regulation No 19 on the progressive establishment of a common organization of the markets in cereals, must be interpreted as meaning that the free-at-frontier price may also be based on quotations for cereals emanating from third countries but in circulation in the exporting Member State.
4.
Examination of the questions put to the Court does not reveal any factor capable of affecting the validity of the decision of 24 January 1964 fixing the free-at-frontier price for barley to be imported into the Federal Republic.
Finally, I consider that the decision as to costs in these proceedings is a matter for the Hessisches Finanzgericht.
(
1
)	Translated from the French.