61973C0151
OPINION OF MR ADVOCATE-GENERAL WARNER
DELIVERED ON 19 FEBRUARY 1974
My Lords,
As is well known the Treaty providing for the accession to the Communities of Denmark, Ireland and the United Kingdom was signed at Brussels on 22 January 1972. Annexed to that Treaty is an ‘Act concerning the Conditions of Accession and the Adjustment of the Treaties’, which is commonly called ‘the Act of Accession’. Article 2 of that Act provides:
‘From the date of accession, the provisions of the original Treaties and the acts adopted by the institutions of the Communities shall be binding on the new Member States and shall apply in those States under the conditions laid down in those Treaties and in this Act.’
That is subject to Article 9 (1) of the Act, which provides:
‘In order to facilitate the adjustment of the new Member States to the rules in force within the Communities, the application of the original Treaties and acts adopted by the institutions shall, as a transitional measure, be subject to the derogations provided for in this Act.’
One of the derogations provided for in the Act consists in the institution for a transitional period of a system of diminishing ‘compensatory amounts’ for certain agricultural products. Article 55 (1) provides in particular that:
‘in trade between the new Member States themselves and with the Community as originally constituted, compensatory amounts shall be levied by the importing State or granted by the exporting State.’
Article 62 (1) confers on the Council, acting by a qualified majority on a proposal from the Commission, authority to adopt the provisions necessary for implementing that part of the Act that relates to agriculture. The dispute in the present case is about the manner in which the Council, in exercise or purported exercise of that authority, fixed the compensatory amounts for tomatoes. It is essentially concerned with whether the Council, in fixing those amounts, was entitled to have regard, as it did, to the difference between tomatoes grown under glass and those grown in the open. It is common ground between the parties that the prices of tomatoes grown under glass are in general higher than those of tomatoes grown in the open, but there is disagreement between them as to why this should be, and also as to whether the difference is relevant to the fixing of compensatory amounts.
It appears to be common ground too that, in the Community, the production of tomatoes on a commercial scale is almost entirely in the open in the South — that is in Southern France and in Italy; almost entirely under glass in the North — that is in Ireland, the United Kingdom, the Netherlands and Denmark; and partly in the open and partly under glass in Northern France, Belgium, Luxembourg and Germany.
In order to understand how the dispute arises, it is necessary to have in mind the state of the Community legislation relating to fruit and vegetables, and to tomatoes in particular, at the time when the Treaty of Brussels was signed.
Regulation No 23 of the Council, of 4th April 1962, provided for the progressive establishment in the then Member States of a common organization of the market in fruit and vegetables. I do not think it necessary to examine the provisions of that Regulation in detail. Indeed many of them were later superseded by those of Regulation No 159/66/EEC of the Council, to which I shall come. But an important feature of Regulation No 23 is that it prescribes common standards covering quality, sizing and packaging for each product or group of products. In Annex II/2 to that Regulation are to be found the ‘Common quality standards for tomatoes’. The significant thing about that Annex, so far as the present case is concerned, is that whilst it classifies tomatoes, by reference to a number of factors, into ‘Extra Class’, ‘Class I’, and ‘Class II’, and lays down a number of general requirements as to their grading, packaging, presentation and marking, it nowhere makes any distinction between tomatoes grown in the open and those grown under glass. Indeed it never mentions the method of production. This is in marked contrast with Annex II/5 which deals with lettuces and contains passim provisions distinguishing between lettuces grown under glass and those grown in the open.
Regulation No 23 was supplemented by Regulation No 211/66/EEC of the Council, of 14 December 1966, which introduced a new class of tomato, namely Class III. In Annex II to that regulation, which prescribes the common quality standards for Class III tomatoes, one finds two references to tomatoes grown under glass. The first is under the heading of ‘Sizing’ where it is provided that:
‘The minimum diameter for Class III tomatoes shall be:
—
20 mm for “elongated” tomatoes, “plum” tomatoes, and tomatoes grown under glass
—
35 mm for other tomatoes.’
The other reference is under the heading of ‘Marking’, where it is provided that, in addition to the requirements of Annex II/2 to Regulation No 23 in this respect, each package of Class III tomatoes must ‘indicate the type with one of the following statements: “ribbed”, “round”,“elongated”, “plum” or “grown under glass”.’
Oddly, in a way, the Regulation that is of the greatest importance in this case is one that is no longer in force. It is Regulation No 159/66/EEC of the Council, of 25 October 1966, which was much amended by Regulation (EEC) No 2515/69 of the Council, of 9 December 1969. There is no authentic English text of either of these Regulations, but unofficial translations of them into English were put in by the Council, and the accuracy of these translations has not been challenged.
Regulation No 159/66 (as so amended) envisaged two stages of intervention in support of the market in, among other products, tomatoes.
The first involved the formation of organizations of producers having among their functions to sell their members' total output. By Article 3 of the Regulation such organizations were authorized to fix ‘withdrawal prices’ below which they would not offer for sale products supplied by their members. The Regulation included of course provisions for indemnifying members whose products thus remained unsold and for the disposal of those products outside normal trade channels.
The second stage of intervention applied when the Commission, on information supplied by Member States, declared that the market in a particular product was in a state of serious crisis. Article 7 provided that in that event Member States were to buy in products of Community origin that were offered to them and that had not been withdrawn from the market pursuant to Article 3.
Both kinds of intervention related only to products complying with the common quality standards to which I have referred.
Both ‘withdrawal prices’ and ‘buying in prices’ were determined by reference to ‘basic prices’, which, by virtue of Article 4 (1), were to be fixed each year by the Council on proposal from the Commission. Article 4 (1) expressly envisaged that different basic prices might be fixed for different times of the year, according to seasonal price trends, and that slack marketing periods at the beginning and end of the year should be disregarded. It is important to observe that, by the combined effect of that Article and of Annex I to the Regulation, the product for which, so far as relevant to this case, basic prices were to be fixed was ‘tomatoes’ simpliciter.
Article 4 (2) of the Regulation provided:
‘The basic price shall be equal to the arithmetic mean of prices recorded on the representative Community market or markets which are situated in the surplus production areas with the lowest prices during the three marketing years immediately preceding the date on which the basic price is fixed for a product with defined commercial characteristics (such as variety or type, quality class, sizing and packaging). In calculating the arithmetic mean, prices which on each representative market could be considered excessively high or excessively low in relation to normal price fluctuations on that market shall be disregarded.
The surplus production areas by reference to which the basic price is fixed shall, taken together, represent for the period in question between 20 % and 30 % of Community output of the relevant product.’
Article 4 (3) provided that, in the case of tomatoes, the buying in price was to be fixed at between 40 % and 45 % of the basic price.
Article 4 (4) (which was added by Regulation No 2515/69) provided:
‘For a product with commercial characteristics different from those of the product by reference to which the basic price is fixed, the price at which the product is bought in pursuant to Article 7 shall be calculated by applying conversion factors to the buying in price fixed by the Council.’
It then prescribed the procedure for fixing conversion factors, which involved consultation of a Management Committee for Fruit and Vegetables which had been established by Regulation No 23.
Paragraph 2 of Article 7 (as substituted by Regulation No 2515/69) provided that the products to be bought in under that paragraph were to be bought in:
‘—
at the buying in price multiplied by the conversion factor for Class II and, as appropriate, by other conversion factors, where they satisfy the requirements of quality and size laid down in the common quality standards for that class or for higher classes,
—
at the buying in price multiplied by the conversion factor for Class III and, as appropriate, by other conversion factors, where they satisfy the requirements of quality and size laid down in the common quality standards for that class.’
Article 6 (1) (again as substituted) provided:
‘Member States shall grant financial compensation to producers' organizations which intervene pursuant to the provisions of Article 3, provided that…
the withdrawal price does not exceed:
—
the price referred to in the first indent of Article 7 (2) plus 10 % of the basic price, in respect of products which have the characteristics laid down in the common standards for Class II or higher classes,
—
the buying in price referred to in the second indent of Article 7 (2) plus 10 % of the basic price, in respect of products which have the characteristics laid down in the common standards for Class III.’
Finally, Article 12 (4) privided that expenditure incurred by the Member States other than Italy (for which there were special provisions):
‘shall be reimbursed under the following conditions:
(a)
For action arising out of the application of Article 6, the amount reimbursed shall be equal to the value of the quantities withdrawn from the market, calculated by multiplying these quantities by the buying in price adopted by the Council, adjusted where appropriate by the conversion factors referred to in Article 7, plus an amount equal to 5 % of the basic price.
(b)
For action arising out of the application of Article 7, the amount reimbursed shall be equal to the value of the quantities withdrawn from the market, calculated by multiplying these quantities by the buying in price adopted by the Council, adjusted where appropriate by the conversion factors referred to in Article 7.’
So Your Lordships see that the function of the basic price was to serve as the starting point of the calculation of withdrawal prices, buying in prices and reimbursements to Member States; that the basic price was to be fixed for a product with defined commercial characteristics (‘un produit défini dans ses caractéristiques commerciales’ in the authentic French text); and that, in calculating withdrawal prices, buying in prices and reimbursements to Member States in respect of products differing in their relevant characteristics from the product by reference to which the basic price had been fixed, conversion factors were to be applied.
In practice the Council has fixed basic prices for tomatoes only for the months of June to November in each year. This is because production in the period from January to May and in December is negligible.
For the year 1971, that is the year immediately before the signing of the Treaty of Brussels, the basic prices for tomatoes were fixed by Article 1 (1) of Regulation (EEC) No 1238/71 of the Council. Article 1 (2) of that Regulation, in a clear albeit implicit reference to the requirement that prices so fixed should be ‘for a product with defined commercial characteristics’, stated that the prices fixed by Article 1 (1) related to packed ‘round’ and ‘ribbed’ tomatoes of Quality Class I, size 57/67 mm, and packed ‘elongated’ tomatoes of Quality Class I, size 40/47 mm. I will, for convenience, call these types of tomatoes the ‘reference types’. If I may anticipate, precisely the same reference types were used by the Council in fixing basic prices for tomatoes for 1972 and for 1973. One observes at once that the method of production does not enter into the definition of the reference types, nor is it suggested that these types are produced only in the open. What is said on behalf of the Council, and not, I think, disputed by Ireland, is that the application of the formula prescribed by Article 4 (2) of Regulation No 159/66 resulted in point of fact in the basic prices being derived from prices for tomatoes grown in the open — because it was for these that the lowest prices were recorded.
Such, then, is the background against which Articles 65 and 66 of the Act of Accession, which are the Articles that the Court is particularly called upon to interpret in this case, must be read.
Article 65 provides:
‘1.
A compensatory amount shall be fixed for fruit and vegetables in respect of which:
(a)
the new Member State concerned applied, during 1971, quantitative restrictions or measures having equivalent effect,
(b)
a common basic price is fixed, and
(c)
the producer price in that new Member State appreciably exceeds the basic price applicable in the Community as originally constituted during the period preceding the application of the Community system to the new Member States.
2.
The producer price referred to in paragraph 1 (c) shall be calculated by applying to the national data of the new Member State concerned the principles set out in Article 4 (2) of Regulation No 159/66/EEC …
3.
The compensatory amount shall apply only during the period for which the basic price is in force.’
Article 66 provides that initially the compensatory amount ‘shall be equal to the difference between the prices referred to in Article 65 (1) (c)’, except in trade between two new Member States in both of which the conditions referred to in Article 65 (1) are fulfilled, where the compensatory amount ‘shall be equal to the difference between their respective producer prices’. Article 66 also provides that those differences ‘shall be adjusted, to the extent necessary, by the incidence of customs duties’. Lastly Article 66 provides for annual reductions of one-fifth in the compensatory amounts as from 1974, resulting in their abolition by 1978.
It is common ground that Ireland applied, during 1971, quantitative restrictions in respect of tomatoes and that its producer price for tomatoes exceeded the Community basic price applicable during the period before accession. So there is no doubt that Articles 65 and 66 apply in relation to Ireland's trade in tomatoes.
In the interval between the signing of the Treaty of Brussels and the date of accession (1 January 1973) the Council adopted three relevant Regulations.
The first was Regulation (EEC) No 1035/72 of 18 May 1972. The purpose and effect of this was to repeal and re-enact, by way of consolidation, most of the previous legislation on the common organization of the market in fruit and vegetables. One of the Regulations that it so repealed was Regulation No 159/66. This is why that Regulation is no longer in force, except of course to the extent that Article 65 (1) of the Act of Accession legislates by reference to it. All the material provisions of Regulation No 159/66 were re-enacted by Regulation No 1035/72. In particular Article 4 of Regulation No 159/66 became Article 16 of Regulation No 1035/72. It is important also to note that Regulation No 1035/72 maintained in force those provisions of Regulation No 23, in particular the Annexes, which prescribed the common quality standards for the various fruit and vegetables concerned, including their classifications. In the upshot Regulation No 1035/72 did not materially alter the law.
By Regulation (EEC) No 1173/72 of 6 June 1972 the Council fixed the basic prices for tomatoes for 1972. As I have mentioned, it used in so doing the same reference types as it had used in 1971.
Then, by Regulation (EEC) No 2454/72 of 21 November 1972, the Council amended Regulation No 1035/72 in a number of respects. In particular it replaced Article 16 (2) of Regulation No 1035/72 (corresponding to Article 4 (2) of Regulation No 159/66) by a new paragraph in the following terms:
‘The basic prices shall be fixed taking particular account of the need:
—
to contribute to the support of the incomes of farmers;
—
to stabilise market prices without leading to the formation of structural surpluses in the Community;
—
to consider the interests of consumers
on the basis of the development of the average of the prices recorded during the preceding three years on the most representative Community production markets, for a product with defined commercial characteristics such as variety or type, quality class, sizing and packaging.’
The preamble to Regulation No 2454/72 explains that the reason for this amendment is that experience had shown that the criteria for fixing basic prices laid down in Article 16 of Regulation No 1035/72 were too rigid and that ‘in order to offset this disadvantage the mathematical criterion for fixing the basic price should no longer be retained’. Certainly the amendment conferred a much wider discretion on the Council: no longer need the basic price be ‘equal to the arithmetic mean of prices recorded on the representative Community market or markets which are situated in the surplus production areas with the lowest prices during the three marketing years immediately preceding the date on which the basic price is fixed’. But Your Lordships observe that the basic price was still required to be fixed ‘for a product with defined commercial characteristics’.
On 31 January 1973, the Council, in exercise of the authority conferred on it by Article 62 (1) of the Act of Accession, adopted Regulation (EEC) No 228/73 laying down general rules for the system of compensatory amounts for fruit and vegetables. This Regulation provides, among other things, that a compensatory amount is to be computed by taking into account two elements, namely (a) a ‘basic amount’ reflecting the ‘differences’ referred to in Article 66 of the Act and (b) the amount of the relevant customs duties. Thus, in the case of an importation into a new Member State from another Member State (whether original or new) the compensatory amount to be levied is to consist of the basic amount less the sum charged by way of customs duties; in the case of an importation from a third country it is to equal the basic amount increased or reduced by the amount of the difference between the duty under the Common Customs Tariff and the duty applicable in the new Member State, according to whether the former is higher or lower than the latter; in the case of an exportation to another Member State the compensatory amount to be granted is to consist of the basic amount plus the sum charged by way of customs duties in that Member State; and in the case of an exportation to a third country it is to be equal to the basic amount. (I should perhaps mention, my Lords, that the authentic English text of Article 1 of Regulation No 228/73 is unhappily worded; what it is meant to mean becomes clear if one reads the French).
Next came Regulation (EEC) No 1343/73 of the Council, of 15 May 1973, which fixed, among other prices, the basic prices for tomatoes for 1973. As I have mentioned it did so for the same reference types as had been used in 1971 and 1972.
Lastly came Regulation (EEC) No 1365/73 of the Council, of 21 May 1973, which was described in its title as ‘supplementing, as regards cauliflowers and tomatoes, Regulation (EEC) No 228/73’. What it in fact did was to prescribe three sets of basic amounts of compensatory amounts for 1973, the first applicable to Denmark's trade in cauliflowers, the second to Denmark's trade in tomatoes, and the third to Ireland's trade in tomatoes.
It is the validity of this Regulation, insofar as it relates to tomatoes, that is challenged by Ireland in this action.
The reason for this challenge can be discerned in the relevant recital in the preamble to the Regulation. That recital reads as follows:
‘Whereas, as regards tomatoes, the prices notified by the new Member States relate to tomatoes grown under glass, which differ in certain respects from the tomatoes grown in the open, to which the basic price relates; whereas, for the purpose of calculating the compensatory amounts, a conversion factor, fixed on the basis of market prices recorded over several years at a standard figure of 0.55 should be applied in respect of the prices for tomatoes grown under glass;’
One of Ireland's complaints is that this recital is so cryptic as not to amount to a proper statement of the Council's reasons for adopting the figures that it did. My Lords, I find myself in sympathy with this complaint, because one has to go to the Council's pleadings in order to ascertain, even in outline, what its reasoning really was.
It was, in essence, that tomatoes grown in the open and those grown under glass were products having different commercial characteristics; that statistics collected in a number of the original Member States evinced that the average of the prices recorded for the former was about 55 % of the average of those recorded for the latter; that the common basic prices for tomatoes were in fact fixed by reference to prices for open air tomatoes; that all tomatoes produced commercially in Ireland were grown under glass; and that it was therefore appropriate, in applying Articles 65 and 66 of the Act of Accession, to apply to Irish producer prices a conversion factor of 0.55.
Whatever one may think of that reasoning, there is no doubt that the result of its adoption by the Council was to defeat, so far as Irish tomato growers were concerned, the object of Articles 65 and 66, which was of course to temper to producers in new Member States who, before accession, were protected by quantitative restrictions, the blow occasioned by the removal, on accession, of those restrictions. The relevant facts and figures are set out in paragraph 12 of Ireland's Application, which has not been controverted by the Council. This states that, before accession, tomato growers in Ireland were protected by a prohibition imposed annually on the importation of tomatoes during a period when home supplies were sufficient to meet demand, i.e. the period between dates normally at the end of April or in early May and mid-November. During this period no tomatoes could be imported into Ireland without a licence issued by the department of Agriculture and Fisheries and for the last three years before accession only about 200 tons of tomatoes annually were imported during this period. Irish tomato growers were further protected for many years by duties on imports of tomatoes between the 1 June and the 31 October in each year and in 1972 this period was extended to cover the months of April and May also. Tomatoes imported from the United Kingdom were subject to a customs duty of £ 3.68 per 100 kg and tomatoes imported from other countries to a customs duty of £5.51 per 100 kg. The basic amount fixed by Regulation No 1365/73 is 7.3 units of account, equivalent to £3.37 per 100 kg, i.e. less than those customs duties. These duties are, under Article 59 of the Act of Accession, reducible over the period 1974-78 at the same proportionate rate as the compensatory amounts and they are, Your Lordships will remember, in the case of imports from other Member States, deductible, by virtue of Regulation No 228/73, from the basic amounts in computing the compensatory amounts. The result is to leave no compensatory amount payable on imports of tomatoes into Ireland, at all events from other Member States.
The Council's reasoning is attacked on behalf of Ireland on a number of grounds, of which the first is that in no circumstances is it permissible to apply conversion factors in fixing compensatory amounts under Articles 65 and 66.
My Lords, I think that this is strictly correct. The Council argues that the reference in article 65 (2) to ‘the principles set out in Article 4 (2) of Regulation No 159/66/EEC’ imports an element of flexibility which enables it to have regard to provisions of Regulation No 159/66 other than Article 4 (2) itself, and in particular to the provisions relating to conversion factors. But what Article 65 (2) in effect requires is that the producer price in the new Member State shall be ascertained on the same principles as the common basic price, and conversion factors do not enter into the calculation of the common basic price. As I have shown they are relevant only to the calculation, from the common basic price, of withdrawal prices, buying in prices and reimbursements to Member States.
I would not however go so far as to accept in full the argument put forward on behalf of Ireland that leads to the conclusion that Articles 65 and 66 prescribe an inflexible mathematical formula that may not be departed from in any circumstances. I prefer the alternative submission put forward on behalf of Ireland, which recognizes that one cannot, in interpreting Articles 65 and 66, ignore the fact that the common basic prices are fixed for ‘reference types’. Like must be compared with like, and it follows, in my opinion, that if it is found in a particular instance that the relevant product of a new Member State differs materially from the reference types for which the common basic prices have been fixed, it is proper for the Council to make an allowance for this difference in fixing the basic amounts of compensatory amounts. Examples were given during the course of the argument of this having in fact happened in relation to cauliflowers, apples and pears.
But to recognize that there has to be this element of flexibility cannot avail the Council in the present case, since the definition of the reference types of tomatoes covers indifferently those types of tomatoes be they grown in the open or grown under glass. To my mind it is neither here nor there that the formula contained in Article 4 (2) of Regulation No 159/66, before it was dropped in 1972, happened to lead to the basic prices for tomatoes being computed from prices for open field tomatoes. This is simply because they are cheaper. It appears that the application of the looser formula introduced by Regulation No 2454/72 has had the same result, but again for the same reason.
That open field tomatoes are cheaper than those grown under glass is, as I have said, common ground. Ireland pleads that this is because the latter are costlier to produce but, on the other hand, can be marketed in times of scarcity. It vigorously denies that the different method of production is otherwise commercially relevant — and adds for good measure that, if, contrary to its primary contention, it is so in some countries, it is not so in Ireland. The Council for its part contends that the difference in price reflects a difference in consumer appeal. It instances markets, particularly the Belgian market, where open field tomatoes and glasshouse tomatoes are sold side by side and where the latter fetch consistently higher prices.
My Lords, we are all consumers, and to those of us who have, had the opportunity of contrasting the succulence of French or Italian tomatoes ripened in the sun with the dreariness of the almost plastic products of our Northern glasshouses, the contention of the Council must seem surprising. I suspect that in truth the position is much more complex than the contentions either of the Council or of Ireland suggest. For one thing it is probable that consumers' tastes tend to differ in different countries. The Council relied on paragraph 6 of the Introduction to an OECD Report published in 1968 (Annex 5 to the Defence). This states that ‘at least in some European countries’ under glass tomatoes (and to a lesser extent also tomatoes grown under plastic film cover) are preferred by many consumers because they have a smoother skin than and a different texture from open field tomatoes. And a Belgian expert called by the Council, by consent, at the hearing said that demand depended on many factors and added ‘Par exemple … en Belgique, on demande une tomate mûre et très mûre, les Allemandes demandent par exemple pour nos tomates des tomates petites et moins colorées, les Français demandent des grosses tomates etc’.
The Council also referred to two regulations of the Commission which expressly acknowledge a distinction between tomatoes produced under glass and those produced in the open, namely Regulation (EEC) No 999/73, relating to the calculation of entry prices for tomatoes grown outside the Community, and Regulation (EEC) No 1624/73 fixing maximum withdrawal price levels. I do not think that perusal of these Regulations carries the matter any further. In the first place, there is no legal nexus between them and Articles 65 and 66 of the Act of Accession. Secondly, there were no such Regulations before 1973. Thirdly, Regulation No 999/73 rather supports Ireland's case, since it contrasts the seasons at which tomatoes are produced mainly under glass and those at which they are produced mainly in the open. Regulation No 1624/73 contains a vague recital that ‘the market in tomatoes grown under glass has different characteristics from those of the market in open-grown tomatoes’, but I do not for my part see how this can be taken as evidence against Ireland.
My Lords, it seemed to me at one time that it might be necessary for the Court to resolve, by means of a preparatory inquiry, the issues of fact thus raised, and in particular the question whether tomatoes grown under glass and those grown in the open are, commercially, different products. But I have come to the conclusion that this is unnecessary, because, if I am right in the view that I take of the law, the only commercial characteristics that are relevant are those that serve to differentiate between tomatoes of the reference types and tomatoes of other types. The relevant question is thus not whether tomatoes grown under glass and those grown in the open have different commercial characteristics in some general sense, but whether the Irish tomatoes for which producer prices are to be fixed under Article 65 have characteristics differing from those by which the reference types are defined.
One can imagine that, applying the principles of Article 4 (2) of Regulation No 159/66 pursuant to Article 65 (2) of the Act of Accession, the Council might have found, for instance, that the Irish producer price fell to be calculated for Class II tomatoes of the ‘plum’ variety. The Council could then, in my opinion, properly have made allowance for the fact that this was a type of tomato different from any of the reference types. But no one suggests that anything of that kind has happened
The question has been argued how such an allowance, in an appropriate case, should be made. On the view I take it is of course not strictly necessary for Your Lordships to decide that question, but since it may be relevant for the future, albeit a limited future, I think it right to express a view on it.
It was submitted on behalf of Ireland that, even if it was permissible for the Council to apply a conversion factor in the present case, it was wrong to apply it to the Irish producer price, for this amounted to fixing a producer price for a non-existent product, namely Irish open field tomatoes. My Lords, I would accept that submission. The course adopted by the Council amounts in effect to deeming Ireland to be able to produce open field tomatoes at 55 % of the cost at which it produces glasshouse tomatoes. But the proper object of applying a conversion factor would be to enable a direct comparison to be made between the actual Irish producer price and what would be the common basic price for glasshouse tomatoes if there were one. I agree therefore with the view put forward on behalf of Ireland that, if any adjustment is to be made, it must be made to the common basic price for tomatoes generally so as to obtain a notional common basic price for glasshouse tomatoes with which the Irish producer price for the same tomatoes can be compared. In paragraph 21 of Ireland's Reply figures are set out which show that if, instead of applying a coefficient of 0.55 to the Irish producer price, the Council had applied the converse coefficient of 1.8 to the common basic price, the basic amount of the compensatory amount for Ireland's trade in tomatoes would have come out at 13.4 u. a., instead of 7.3 u. a. I thus conclude that Ireland is entitled to succeed in this action.
It is suggested by the Council (at page 7 of its Defence) that acceptance of Ireland's contention that no conversion factor should be applied would give Irish tomato growers an unfair advantage over growers in other Member States, and in particular would enable exports of tomatoes from Ireland to be subsidized to such an extent as to undercut tomatoes grown under glass in other Member States. My Lords I think that the answer to this suggestion is to be found in paragraph 14 (a) of Ireland's Reply. Ireland's production of tomatoes, and its exports of them, are infinitesimal in relation to production in the Community as a whole. Any substantial increase in those exports would necessitate investment in new glasshouses and heating plant, which no grower is likely to undertake for the sake of a diminishing return over a very few years.
The question remains whether Ireland should be granted the declaration it seeks relating to the whole of the provisions of Regulation No 1365/73 concerning tomatoes or whether there should be declared void only so much of that Regulation as relates to Ireland's trade in tomatoes, leaving untouched the part relating to Denmark's trade in them. My Lords, although Denmark has not been heard, it was open to it to intervene in the action had it wished to. That being so, I think that it would be proper for Your Lordships to adopt the more logical course of declaring void the whole of the provisions of the Regulation relating to tomatoes.
Neither side has asked the Court, in any event, to exercise its jurisdiction under Article 174 of the EEC Treaty to ‘state which of the effects of the regulation which it has declared void shall be considered as definitive’. Nonetheless, I hardly think that it would be practicable to unscramble now the effects on Ireland's and Denmark's trade in tomatoes in 1973 of the provisions of Regulation No 1365/73 which, if I am right, should be declared void.
Ireland asks for costs and on the view I take it is, of course, entitled to them.
I am therefore of the opinion that Your Lordships should:
1.
Declare void so much of Regulation (EEC) No 1365/73 of the Council as relates to tomatoes:
2.
State that nonetheless the effects of that Regulation on trade in tomatoes in 1973 shall be considered as definitive;
and
3.
Order the Council to pay Ireland's costs of this action.