61979C0138
OPINION OF MR ADVOCATE GENERAL REISCHL
DELIVERED ON 18 SEPTEMBER 1980 (
1
)
Mr President,
Members of the Court,
In the two cases on which I am giving my opinion today, a combined one because of the obviously related nature of their facts, it is a question once again of the new sweetener isoglucose which is already well-known from a number of other cases.
For its characteristics and the relevant Community rules I can therefore refer to the judgments and opinions in Case 101/76 Koninklijke Scholten-Honig NV v Council and Commission [1977] ECR 797; Case 125/77 Koninklijke Scholten-Honig NV and De Verenigde Zetmeelbedrijven “De Bijenkorf” BV v Hoofdproduktschap voor Akkerbouwprodukten [1978] ECR 1991; Joined Cases 103 & 145/77 Royal Scholten-Honig (Holdings) Ltd v Intervention Board for Agricultural Produce and Tunnel Refineries Ltd v Intervention Board for Agricultural Produce [1978] ECR 2037; Joined Cases 116 & 124/77 G. R. Amylum NV and Tunnel Refineries Ltd v Council and Commission [1979] ECR 3497
; and Case 143/77 Koninklijke Scholten-Honig NV v Council and Commission [1979] ECR 3583.
It was pointed out in the judgment of 25 October 1978 in Joined Cases 103 and 145/77 [1978] ECR 2037, at p. 2078 (paragraph 63) and p. 2081 (paragraph 83) that isoglucose manufacturers and sugar manufacturers were treated differently as regards the imposition of the production levy introduced by Regulation No 1111/77 (Official Journal L 134 of 28 May 1977, p. 4) and, because there was no objective justification for it, the regulations offended against the general principle of equality of which the prohibition on discrimination set out in Article 40 (3) of the Treaty was a specific expression. Regulation No 1111/77 was therefore invalid to the extent to which Articles 8 and 9 thereof imposed a production levy on isoglucose of 5 units of account per 100 kg of dry matter for the period corresponding to the 1977/78 sugar marketing year.
The Community institutions responsible had accordingly to concern themselves with the lacuna revealed by that judgment. On 7 March 1979 the Commission submitted a proposal to the Council for the amendment of Regulation No 1111/77. For that purpose it was necessary pursuant to Article 43 of the EEC Treaty to consult the European Parliament. Since it is relevant in considering the case from the legal point of view, particulars will be given later of how that consultation proceeded. Council Regulation No 1293/79 amending Regulation (EEC) No 1111/77 laying down common provisions for isoglucose was adopted on 25 June 1979 (Official Journal L 162 of 30 June 1979, p. 10) and entered into force on 1 July 1979.
Article 2 repealed with effect from 1 July 1977 the provisions of Title II of Regulation No 1111/77, namely the aforementioned levy system.
Article 3 inserted quota arrangements as Articles 8 and 9 in Regulation No 1111/77. They were to apply from 1 July 1979 to 30 June 1980. The arrangements applicable from 1 July 1980 were to be adopted by the Council before 1 January 1980. Let me say at once that that was not done. On the contrary Council Regulation No 1592/80 of 24 June 1980 (Official Journal L 160 of 26 June 1980, p. 12) declared that the quota arrangements laid down in Regulation No 1293/79 should continue to apply during the 1980/81 marketing year which ends on 30 June 1981.
The quota arrangements allot each isoglucose-producing undertaking established in the Community a basic quota. For each such undertaking this is equal to twice its production as determined during the period 1 November 1978 to 30 April 1979. Further, each undertaking having a basic quota is allotted a maximum quota equal to its basic quota multiplied by a coefficient. This is equal to the coefficient for the B sugar quota fixed under the second subparagraph of Article 25 (2) of Regulation No 3330/74 (Official Journal L 359 of 31 December 1974, p. 1) for the period from 1 July 1979 to 30 June 1980. Further, Article 9 (3) of Regulation No 1111/77, as amended by Regulation No 1293/79, provides that the said quota shall, if necessary, be corrected so that the maximum quota determined in accordance with paragraph (2) does not exceed 85 % and is not less than 65 % of the technical production capacity per annum of the undertaking in question. The resulting basic quotas for each undertaking are set out in Annex II to Regulation No 1293/79.
Article 9 (7) and (8) provides:
“7.   The quantity of isoglucose produced during the period referred to in Article 8 (1) which:
—
exceeds the maximum quota of the undertaking,
or
—
was produced by an undertaking not having a basic quota
may not be disposed of on the Community's internal market and must be exported in the natural state to third countries without the application of Article 4.
8.   For the quantity of isoglucose production which exceeds the basic quota without exceeding the maximum quota Member States shall charge a production levy on the isoglucose producer concerned.
For the period referred to in Article 8 (1), the amount of the isoglucose production levy shall be equal to the share of the sugar production levy, as fixed for the 1979/80 sugar year by virtue of Article 28 of Regulation (EEC) No 3330/74, borne by the sugar manufacturers.”
The undertakings Roquette Frères, whose registered office is in France, and whose basic quota according to Annex II to Regulation No 1293/79, is 15887 tonnes, and Maizena GmbH, whose registered office is in the Federal Republic of Germany and whose basic quota according to Annex II to Regulation No 1293/79, is 28000 tonnes, which have been inter alia producing isoglucose for some years, consider themselves adversely affected by those provisions. Accordingly, they brought actions on 31 August and 5 September 1979 before the Court claiming that the Court should:
—
Declare the fixing of the production quota resulting for the applicant from Annex II to Regulation No 1111/77 to be invalid (Case 138/79) and, further,
—
Declare that Regulation No 1111/77 as amended by Regulation No 1293/79 is null and void in so far as by Article 9 (4) it lays down in Annex II thereto a production quota for isoglucose relating to the applicant (Case 139/79).
The Council contends that the claims should be dismissed. Two other institutions of the Community have intervened in the proceedings, namely the European Parliament on behalf of the applicants and the Commission on behalf of the defendant Council.
I — Questions of admissibility
It is necessary first to examine the admissibility of the intervention of the European Parliament in the proceedings and the admissibility of the claims and some of the arguments put forward in their support.
1. The intervention of the Parliament
In its rejoinder of 10 March 1980 and at the hearing the Council voiced reservations regarding the admissibility of the Parliament's intervention. That rather late point of time is to be explained by the fact that the Parliament made its application to intervene in the proceedings only on 24 December 1979, that is after the defence was lodged and that the matter was decided by order of 16 January 1980 evidently without hearing the parties to the proceedings.
(a)
In my opinion these reservations cannot be dismissed simply by reference to the said order. Such an order opens access to the proceedings only provisionally; the admissibility of the intervention is decided if necessary in the judgment as is clear from the previous case-law. In this respect I refer to the judgment in Case 9/61 Government of the Kingdom of the Netherlands v High Authority of the ECSC [1962] ECR 213.
(b)
The Council relates the possibility of intervention in proceedings, if, as under Article 37 of the Statute of the Court of Justice, it is a question of voluntary intervention, to the right to bring an action. Institutions of the Community may therefore, and this accords with the concept expressed in the second subparagraph of Article 4 (1) of the EEC Treaty, intervene in proceedings only if they are entitled to bring an action in respect of the matter in dispute. Since, however, the Parliament, as is apparent in respect of the action for an act to be declared void under Article 173 of the EEC Treaty, has no general power to bring actions and is not concerned with proceedings under Article 177 of the EEC Treaty, it must be inferred that the Parliament has no general power under the system of the Treaty to intervene.
In the alternative, in the event of its being accepted that all institutions of the Community have in principle a right to intervene pursuant to Article 37 of the Statute of the Court of Justice, it must be assumed that contrary to the position of “any other person” referred to in Article 37 (2), that is in particular natural and legal persons in private law, it is not necessary for them to establish “an interest in the result of any case submitted to the Court”. Rather is such an interest presumed, but this does not release the Court from the obligation to determine whether it in fact exists. In this respect an interest in upholding the law cannot be regarded as sufficient, because the Parliament does not have a right to bring an action for an act to be declared void pursuant to Article 173 of the EEC Treaty as a means of reviewing the lawfulness of an act. In the present case, which relates to an action by private undertakings for the annulment of certain measures concerning them, it cannot be overlooked that the Parliament has no interest in supporting that aim and therefore the interests do not coincide as intervention requires. In truth intervention here is pursuing another aim, namely to defend the rights of Parliament against another institution of the Community. If, however, legal proceedings between institutions are superimposed on a dispute between private undertakings and Community institutions, the intervention must be regarded as a misuse of the intervention procedure for the purpose of what is strictly a separate action.
(aa)
In my opinion it must be observed in this respect that Article 37 of the Statute of the Court of Justice gives Member States and institutions of the Community a general and wholly unrestricted freedom to intervene in cases pending before the Court. It does not seem to me that such freedom can be restricted on the basis of the power to bring actions and the powers given to institutions under Article 177 of the EEC Treaty. Evidence to the contrary is already provided by the fact that intervention is possible not only on behalf of the applicant but also on behalf of the defendant. Above all any such attempted restriction must fail because the Protocol on the Statute of the Court of Justice which governs intervention has the same status as the Treaty as is apparent from Article 239 of the EEC Treaty. When therefore certain powers in the Statute, such as intervention, are defined differently from the right of action under Article 173 of the EEC Treaty or the rights to participate in proceedings under Article 177 of the Treaty, that can mean only that they have a different scope and that, because no distinction is made, all the institutions have a general right to intervene. It is not possible to argue against this on the basis of Article 4 of the EEC Treaty, for “Treaty” within the meaning of that provision includes, according to Article 239 of the EEC Treaty, the provisions of the Protocol on the Statute of the Court of Justice.
(bb)
As far as on the other harid the interest of an intervener is concerned, then in my opinion the distinction between the first and second paragraphs of Article 37 of the Statute does not lie in the fact that under the second paragraph an interest has to be established whereas under the first paragraph it is assumed and the correctness of the assumption must if necessary be examined by the Court. On the contrary, interest is irrelevant in the case of the first paragraph. In this respect Article 40 of the Statute, relating to the interpretation of judgments, is strong evidence, for there is mention here of an interest even in the case of institutions which make such an application.
Should, however, the existence of an interest be relevant to the first paragraph of Article 37, then in my opinion cases in which private interveners are involved are no authority where institutions of the Community intervene. According to the case-law, and I refer for example to case 111/63 Lemmerz-Werke GmbH v
High Authority of the ECSC [1965] ECR 677 and Case 58/64 Grundig-Verkaufs-GmbH v Commission of the EEC [1966] ECR 299, the interest in the decision as contained in the operative part of the judgment is the criterion and an interest in the success of particular allegations is not sufficient. In the present case the validity of the contested measures depends also on whether the Parliament properly took part in their adoption. Accordingly, it is very likely that in the judgment of the Court something will be said about the right of the Parliament to be consulted pursuant to Article 43 of the EEC Treaty. In those circumstances, even if such a dispute may be described as a dispute between institutions of the Community, it is not possible reasonably to prevent the Parliament from taking part in settling this question which is important for its functions and at the same time, and this is also a function of intervention, for giving the judgment a firmer basis than would be possible without the participation of the Parliament. Such an interest is sufficient for the purposes of the first paragraph of Article 37 of the Statute. In any event it is not possible here to speak of misuse of the right of intervention, even if the Parliament has no opportunity to bring an action in respect of a measure which is alleged to have been adopted in disregard of its rights.
Contrary to the objections of the Council, the judgment should hold that the Parliament has properly intervened in the present proceedings.
2. Admissibility of the actions and of the particular allegations
As is known, the Council is of the opinion that the actions brought by Roquette and Maizena are inadmissible in view of the legal nature of the contested measures. It is said that Regulation No 1293/79 contains general arrangements and in particular the quota arrangements in Article 9 apply to all undertakings producing isoglucose even those which did not begin production until the arrangements were in force. We are therefore concerned with a genuine regulation and evidence of this moreover is the fact that it was adopted to amend Regulation No 1111/77. Against that it seems wrong to consider in isolation Annex II thereto in which the basic quotas of six undertakings are set out. The annex in fact contains no independent rules; the wording of Article 9 (4) indicates that the annex merely states the effect of Article 9 (1) and (3) as a result of a simple calculation; Since that has involved no assessment of individual cases the said annex does not represent a decision implementing Article 9 (1) and (3). The actions are therefore inadmissible pursuant to Article 173 of the EEC Treaty because persons concerned privately are not able to challenge regulations and because, and this relates in particular to Anaex II, it is a sine qua non for bringing an action that there is an act adversely affecting such persons and having legal effects. Moreover, the undertakings concerned are not without legal remedy. It is possible for them to challenge the arrangements before national courts, which in turn could have objections to the validity of the basic provisions examined pursuant to Article 177 of the EEC Treaty.
What is also open to objection in any event is the fact that the applicants criticize not only the quotas allotted to them but the quota arrangements in themselves and the manner in which the quotas are calculated. It is contended that such arguments relating to general rules may certainly not be regarded as admissible. The applicants may not rely on Article 184 of the EEC Treaty since the plea provided for therein that general acts are unlawful assumes that it is a question of previous acts and such a plea may be put forward, as the wording of Article 184 shows, only after the expiry of certain periods.
(a)
As regards those allegations it must first be said that the admissibility of actions under Article 173 naturally does not depend on whether after contested Community arrangements are applied by the national authorities they may be challenged before a national court which may if necessary make a reference for a preliminary ruling under Article 177 of the EEC Treaty. The Treaty obviously does not recognize any such ancillary relationship between various possibilities of legal recourse. In some cases, such as the present, it would also lead to unwelcome delay in settling important questions of law. I do not, however, have the impression that the Council intended any such thing when it referred to the possiblity of bringing proceedings before the national courts. Rather did it wish to dispel anxiety that those concerned in the present case might be without legal remedy.
(b)
According to Article 173 of the EEC Treaty which alone is relevant here, in actions by private persons who are affected, against acts which bear the description “regulation”, it is important as far as the application for annulment is concerned whether such acts are of a legislative nature or whether in fact they are disguised acts of individual concern. In the case-law it has been repeatedly necessary to take a line on this problem of demarcation, most recently in the judgment of 17 June 1980 in Joined Cases 789 and 790/79 Calpak SpA and Società Emiliana Lavorazione Frutti SpA v Commission. I refer in that respect to the pleadings in the present case in which all the necessary information has been assembled.
In the present case it is significant in my opinion that in Annex II to Regulation No 1293/79 the basic quotas applying for a year to six undertakings referred to by name including the applicants are set out. It does not seem to me plausible to understand that as having purely declaratory value. Against that and as evidence that the annex is of the nature of a decision there is the wording of Article 9 (4) which states:
“The basic quotas established pursuant to paragraphs (1) and (3) are fixed for each undertaking as set out in Annex II.”
It must also be borne in mind that the production capacity is important for those quotas, that is to say, a criterion which required assessment, because the concept, and this is shown by the statements of the applicant Maizena to which I shall come later, is open to various interpretations.
Further, however, I also think, and from this it becomes clear that the argument about the legal nature of Annex II and its relationship to Article 9 is basically unimportant, that Article 9 (1) to (3) is not really of a legislative nature. It determines, and only for a year, the quotas of the undertakings which were in production between 1 November 1978 and 30 April 1979; the quotas are corrected if necessary according to the technical capacities for the year as they existed and were ascertainable on the adoption of the regulation. The application of the arrangements is thus confined to a closed and unvarying group of precisely-known undertakings, namely those set out in Annex II.
Those facts are obviously distinguishable from the facts in the cases cited by the Council. They were concerned, as in Case 101/76, with a change in the arrangements for the production refund for an uncertain future period, for which reason there could be said to be legal effects with regard to categories of persons regarded generally and in the abstract; or there was a question, as in Case 123/77, of making the imports of goods into a Member State subject to authorization and limiting their number in future and nothing was moreover said about the nature of the measure as a regulation. At issue in Joined Cases 103 to 109/78 Société des Usines de Beauport and Others v Council [1979] ECR 17 was the power given to France for three marketing years to reduce the basic sugar quotas for undertakings in overseas departments; the power affected not just individual undertakings but a part of the territory of the Community. At issue in Case 162/78 Wagner v Commission [1979] ECR 3467 was a regulation which applied both in the future and retroactively.
On the other hand it is more relevant here to consider Case 100/74 Société CAM SA v Commission [1975] ECR 1393. There the contested measure applied only to a fixed number of traders identified by reason of the individual course of action which they pursued or were regarded as having pursued during a particular period. Since in addition — the case was concerned with the advance fixing of the refund for specific exports for a known number of cereal exporters — it was found that such a measure, even if it is one of a number of provisions having a legislative function, individually concerns the persons to whom it applies inasmuch as it affects their legal position because of a factual situation which differentiates them from all other persons, then in my opinion it is hard to come to any other conclusion in the present case.
In view of all I have said the obvious conclusion is that, in so far as Article 9 (1) to (3) is concerned, the contested measure is not a genuine regulation but nothing other than a bundle of decisions concerning individuals and is only dressed up as general arrangements. It is moreover of no avail to say, as the Council has done, that Regulation No 1293/79 was intended to amend the genuine Regulation No 1111/77 and other parts of Article 9 are of a legislative nature because they are intended to apply to an unidentified category of persons concerned (undertakings which started production during the course of the marketing year in question). In fact a measure amending a regulation does not necessarily have again the nature of a regulation in its entirety. In the present case it is rather to be observed that after the declaration of the partial invalidity of Regulation No 1111/77 the Community legislature considered it proper to fill for a period of one year the lacuna which thereby arose with arrangements which basically differed from those which obtained previously. Further, it is not possible to infer from the fact that the new arrangements set up a particular category of addressees, the so-called “newcomers”, that their classification must necessarily apply to the quite different category of undertakings already existing at a particular point of time and for which moreover different measures were provided.
(c)
If, in view of the legal nature of the contested measures, which includes the finding that they were of individual concern because of all the characteristics which have been mentioned (regard to the level of individual production and production capacity), the admissibility of the actions cannot be contested, no other conclusion is possible regarding the question of direct concern which is also a condition of Article 173.
In that respect is suffices to say that the arrangements for undertakings such as those of the applicants laid down quotas directly and did not require any further implementation measures and in particular none involving any discretion. The consideration put forward on the other hand by the Council in that connexion to the effect that the quotas were of importance only in the event of a particular level of production being exceeded is irrelevant. Such factors, which were difficult to assess when the actions were brought, can certainly not be decisive. It is more relevant that the legal position of the applicants was affected by the quota arrangements and that meant that their financial arrangements could be so affected that the system of levies no longer applied to them.
(d)
The other objections which now still concern us relate not to the admissibility of the actions but to the particular allegations, namely such as the claim that the quota arrangements are in principle just as open to challenge as the criteria laid down for assessing the quotas. That, in my opinion, does not require any lengthy discussion.
In so far as we are concerned here with matters which are important as regards the arrangements as a whole and the legislative nature of which is indisputable, the applicants rightly rely on the principle that in challenging individual measures they may allege that the general rules on which those individual measures are based are unlawful. That principle is enshrined in Article 184 of the EEC Treaty and has long been recognized as a principle of general import in the case-law where it has to be applied broadly as in the judgment of 6 March 1979 in Case 92/78 Simmenthal SpA v Commission [1979] ECR 777. It is wrong to require, as the Council is doing, that the contested general measure be earlier than the contested individual measure. Obviously if absurd results are to be avoided in the case of measures of a mixed nature, a logical interdependence must suffice, that is to say, it must be clear that in the event of the general rule being found to be inapplicable then the contested individual measure cannot stand. Similarly it can obviously not be inferred from the introductory words to Article 184 that the plea of unlawfulness is possible only after the expiry of the period referred to there. What is meant is simply that the expiry of the period for bringing an action is immaterial and is no bar to the plea of unlawfulness. Finally, it ought also to be clear that is not necessary to show any special interest, just as it is also not necessary, because it is not a question of annulling the general provisions but simply of its inapplicability in the particular case, to show that the contested provisions are of special concern to the applicants.
(e)
To summarize, it is to be observed that the objections of the Council to admissibility, whether they be in respect of the actions or particular allegations, are not valid; therefore it is necessary to consider the substance of the actions.
II — Substance
The applicants have made a number of allegations against the quota arrangements which are provided for. It is expedient to preface their examination with certain general observations.
1. General observations on the Council's discretion and the transitional nature of the contested arrangements
In its defence the Council stressed that it had a wide discretion in the sphere in which the contested arrangements were adopted; it alleged further that it was a matter only of transitional arrangements which had to be made after the judgment of 25 October 1978 had been given and which were intended to apply only until the entry into force of a general organization of the market in sweeteners which was originally planned already for the 1980/81 marketing year.
(a) The Council's discretion
The Council stressed above all that in the case of arrangements of an economic nature and measures within the agricultural policy, such as are in question in the present case, it had in principle a wide discretion and therefore review by the Court of such provisions regulating the market was possible only to a limited extent and in any event it was not possible to review them in every detail.
The applicants do not completely reject those arguments but nevertheless consider that they must to a certain extent be relative in the present case. The applicant Maizena took the view that a wide discretion could in principle be inferred only in relation to the positive obligations to pursue the aims of Article 39 and that even there it was necessary to seek a permanent balance and in the event of conflicts to give precedence only temporarily to one aim. On the other hand there could not be approval for a wide discretion in relation to the observance of negative criteria such as in particular observance of the prohibition on discrimination, the principle of proportionality, the principle of freedom to pursue a trade, occupation or profession and observance of the principle relating to undistorted competition expressed in Article 3 (f) of the EEC Treaty.
It must be observed that in principle and on the basis of the case-law as assembled by the Council on page 17 of the defence in Case 139/79 the Community institutions have wide powers in the sphere of economic policy and the implementation of the common agricultural policy. According to the case-law and, contrary to the view of Roquette, not only in the case of liability under Article 215 of the EEC Treaty, review of the lawfulness of an attempt from now on to integrate in large measure the isoglucose arrangements into the organization of the market in sugar in order to facilitate the transition into the definitive organization of the market in sweeteners, must be confined to establishing whether there has been manifest error or a misuse of powers or whether the bounds of discretion have been exceeded (in this respect see the judgment in Case 136/77 Firma A. Racke v Hauptzollamt Mainz [1978] ECR 1245).
The views of the applicants are in any event not completely convincing when in the present proceedings they try to introduce restrictions on particular grounds.
In so far as the applicant Roquette refers to alleged contradictions between earlier findings of the Community institutions and the present assessments of the trend in isoglucose production and the possibility of quota arrangements, it must be observed that the earlier forecasts of the trend in the production capacity for isoglucose — in Case 116/77400000 tonnes for 1977 was mentioned — were on the basis of the free and unfettered development of that production branch, which could obviously no longer be assumed after the introduction of the system of levies by Regulation No 1111/77. When at the time quota arrangements were said to be impossible, that too does not conflict with the present arrangements because at the time there were no appropriate reference periods.
Likewise incorrect is the argument put forward by the applicant Maizena that in the event of conflict precedence can be given to one of the aims of Article 39 for a short period. It is quite possible for that to be done for longer periods, since according to the case-law such a bias is permissible according to the economic factors which do not necessarily change in the short term. Further, the view to the effect that the exercise of discretion by the Community institutions is in any event strictly confined to the negative criteria set out by the applicant is not completely tenable. The isoglucose judgment of 25 October 1978 however refers to the charge of a levy which is manifestly unequal and this appears to be evidence against a strict application of the prohibition on discrimination in the context of such decisions in relation to economic policy.
(b) The transitional nature of the contested arrangements
As already stated, the Council refers to the fact that the isoglucose arrangements which have to be judged here had to be worked out relatively quickly after delivery of the judgment of 25 October 1978 and that, as is apparent from Article 8 of Regulation No 1293/79, they were regarded only as a transitional provision until the entry into force of a new organization of the market in sweeteners which was intended to apply as from 1 July 1980 and to bring about as uniform as possible a system for isoglucose and sugar.
In my opinion that consideration cannot be disregarded.
It is therefore certainly of no great moment when the applicant Maizena points out that a period of validity of one year is common in the case of agricultural regulations and that such a period is in no way evidence of the transitional nature. It is true that, it cannot be denied that there is a great number of such regulations. In general, however they contain no basic measures in relation to the organization of the market but lay down only certain particular factors such as prices which must naturally be quickly adjusted to the economic trends.
In the same way I do not regard the observation that the quota arrangements for the organization of the market in sugar were also described as transitional but have been in force since 1967. Accordingly the applicant Maizena thinks that in view of the continued sugar surpluses, upon which the Council relies in justification of its measure, it must be contemplated that the quota arrangements for isoglucose will be retained and that the restrictions on production will be definitive. In that connexion, in order to reject the applicants' argument, regard must be had to the Commission's observation that it did not contemplate the quota arrangements as definitive but rather intended to do without them and to achieve a satisfactory settlement for sugar also by way of the price. More important is the fact that, even assuming the retention of the principle of quota arrangements in the foreseeable future, which assumption is supported by the Commission's proposal for an organization of the market in sweeteners, the quotas in the contested regulation are certainly not definitive. In that respect reference may be made to clear observations in the preparatory stage of the contested regulation such as to the stress laid upon the fact that the regulation was not laying down the definitive system or the statement by the member of the Commission, Mr Gundelach, in the parliamentary session of 10 May 1979 to the effect that the problem of isoglucose would be settled by the proposal for a new organization of the market in sweeteners which was intended to apply for five years. Moreover, in the recitals in the preamble to the regulation which we are considering it was stated in reference to the absence of the opinion of the Parliament that new measures might be adopted on the basis of the opinion which the European Parliament might subsequently deliver.
If we must therefore concur with the Council's view that the clearly transitional nature of the measures adopted requires that, in considering them from the legal point of view and having regard to the principle of proportionality, less strict criteria should be applied, then in this connexion again it must be observed that the view of the applicant Maizena, to the effect that the only proper thing as a transitional measure would be to dispense with quota arrangements for isoglucose and to postpone regulating that market until the adoption of a definitive organization of the market in sweeteners, appears untenable. After the annulment of the system of levies as at 1 July 1977 and especially because the Commission did not consider any other efficient system of levies to be possible, that would have meant that for years production of isoglucose could have continued unhindered and could have increased the considerable surpluses on the market in sweeteners thus giving rise to high costs. Against that, as the Commission has stressed, it would seem absurd and economically unreasonable first to allow such a trend and then later possibly to react with rigorous measures to restrict production. It must also be borne in mind that such action could justify the sugar manufacturers in complaining of discrimination. They are subject to restrictions, the effects of which on the market and in particular on the price benefit the isoglucose manufacturers. Moreover, it must be remembered that in the case-law on earlier cases of isoglucose it was made clear that restrictive measures, and even apparently with immediate effect, for isoglucose were quite acceptable and that in this connexion the justification stated probably meant that a system as close as possible to the organization of the market in sugar was appropriate for isoglucose.
2. Infringement of essential procedural requirements
After that, on turning to the particular allegations made by the applicants, I must deal first with the complaint that the contested arrangements were adopted without the European Parliament's giving an opinion thereon as required by Article 43 of the EEC Treaty.
On 13 March 1979 the Council resolved, pursuant to Article 43 of the EEC Treaty, to consult the European Parliament on the proposal put to it by the Commission on 7 March 1979 for a regulation to amend the provisions of Regulation No 1111/77 which had been declared null and void by the Court. In its letter dated 19 March 1979 in which the Council sought an opinion from Parliament the Council stated inter alia:
“This proposal takes account of the position after the judgment of the Court of 25 October 1978 in anticipation of new arrangements for sweeteners which should enter into force on 1 July 1980. The present proposal does not prejudice those new arrangements. Since the regulation is intended to apply as from 1 July 1979, the Council would welcome it if the European Parliament could give an opinion on the proposal at its April session.”
On the basis of that letter received at the Parliament on 22 March 1979 the President put the matter pursuant to Articles 22 and 38 of the Rules of Procedure of the Parliament to the Committee on Agriculture as the Committee responsible and the Committee on Budgets as co-adviser.
Already on 22 March 1979 the Committee on Agriculture appointed the Member of the European Parliament, Mr Tolman, as rapporteur, considered at its meetings on 4 and 5 April 1979 the draft of Regulation No 1293/79 and after the Committee on Budgets had forwarded its opinion on 10 April 1979, adopted on 9 May 1979 the resolution contained in the Tolman report. The Committee on Agriculture proposed therein two amendments to the draft regulation :
—
It rejected the fixing of a maximum quota in addition to a basic quota since a maximum quota served no useful purpose in the case of isoglucose in contrast to the position with sugar production;
—
It rejected the additional increase in the basic quota of 10 % proposed by the Commission since in practice such an increase would have undesirable consequences for isoglucose production.
Finally, it asked the Commission to amend its proposal accordingly.
At its session on 11 May 1979 the Parliament dealt with the Tolman Report and the motion for a resolution adopted by the Committee on Agriculture.
In his address Mr Gundelach, the Vice-President of the Commission, spoke against that proposal and cited the judgment of the Court in support.
Before the vote on the motion for a resolution on 12 May 1979 Mr Hughes, a Member of the Parliament, asked whether the report by the Committee on Agriculture in fact took account of the legal position created by the judgment of the Court. Mr Giolitti, a member ‘of the Commission, stated that he had nothing to add to what his colleague, Mr Gundelach, had said the day before. On being put to the vote the motion for a resolution was rejected by the Parliament and pursuant to Article 22 of the Rules of Procedure was referred back to the Committee on Agriculture for reconsidertion.
The Bureau of the Parliament had decided on 1 March 1979 not to provide for an additional session between the May session and the sitting of the directly-elected Parliament on 17 July 1979. It had, however, added to its resolution:
“[The Bureau] is nevertheless of the view that in so far as the Council or Commission considers it necessary to provide for an additional session they may, pursuant to Article 1 (4) of the Rules of Procedure, call for an extraordinary session of the Parliament; any such session would be for the purpose only of considering reports which had been adopted following urgent consultation.”
The Bureau of the Parliament endorsed that attitude at its meeting on 10 May 1979.
On 25 June 1979 the Council adopted Regulation No 1293/79 although it did not have the opinion of the European Parliament which it had to obtain pursuant to Article 43 of the EEC Treaty.
The applicants and the Parliament take the view that the compulsory consultation of the Parliament provided for in Article 43 (2) of the EEC Treaty is an essential procedural requirement within the meaning of Article 173 of the EEC Treaty, infringement of which must as an infringement of the Treaty lead to the nullity of the regulation adopted. Against that the Council, although admitting that the consultation of the Parliament is an essential procedural requirement within the meaning of Article 173 of the EEC Treaty, thinks that in relation to the question whether infringement of that essential procedural requirement necessarily leads to the nullity of the regulation the Court has a discretion in assessing the special circumstances of the particular case.
In particular, regard must be had for the fact that the Council is not bound by any opinion of the Parliament. The Commission which has intervened in support of the Council upholds that view and suggests that in the alternative the regulation be regarded as provisionally applicable pursuant to the second paragraph of Article 174 of the EEC Treaty.
In my opinion it cannot be denied, nor does the Council do so, that the compulsory consultation of the Parliament as provided for in Article 43 (2) of the EEC Treaty is an essential procedural required within the meaning of Article 173 of the EEC Treaty. It must particularly be borne in mind in this connexion that the advisory and consultative power of the Parliament is at present the most important means of involving the peoples of the Community in the drafting of Community legal measures. It is not at all possible to compare the consultation of the Parliament in the context of the Community legislative process with the consultation of certain interested persons or parties in administrative proceedings as known to the national law of the Member States. In general the parliaments of the Member States, because of their democratic constitutions decisively participate in legislation. When already the Treaties reduce the participation of the European Parliament in Community legislation to a mere advisory and consultative power, then that weakened participation of the peoples of the Member States in legislation, confined as it is to particular cases, may not be rendered practically ineffective by being completely precluded without any legal consequences. For that reason alone I share the view of the applicants and the Parliament that any legal provision adopted without the opinion of the Parliament as compulsorily prescribed is null and void. There is no doubt that both according to the Rules of Procedure of the European Parliament and the parliamentary law of the Member States the opinion of the Parliament can be given only on a decision taken in plenary session.
The Council took the view especially at the hearing that the Parliament in the present case had by its own conduct made delivery of an opinion in due time impossible and had thus forfeited its right to participate in this particular instance. It must be held against the Council that although it submitted the draft of the regulation to the Parliament quite late it made no use of the opportunity afforded to it by Article 14 of the Rules of Procedure of the European Parliament to make an application for consideration in the emergency procedure. All it did, in the letter in which it sought the opinion of the Parliament, was to ask that since the proposed regulation was to apply from 1 July 1979, the proposal might be dealt with during the April session of the Parliament. When, at the last ordinary session of the Parliament on 12 May 1979 no decision in plenary session was taken on the opinion in respect of the draft regulation, the Council, which, as we have heard, is represented in the Bureau of the Parliament, ought to have asked for an extraordinary session of the Parliament in view of the urgent nature of the matter. The Parliament itself had no cause to fix any such session since on the basis of the previous practice of the Council it could assume that the Council would make such regulations retroactive. There can thus be no question of a “forfeiture” of the Parliament's right to participate in the present case.
To summarize I conclude that Council Regulation No 1293/79 amending Regulation No 1111/77 laying down common provisions for isoglucose (Official Journal L 162 of 30 June 1979, p. 10) is null and void for infringement of Article 43 (2) of the EEC Treaty. The provisions of that regulation contested in the present proceedings must therefore be declared void pursuant to the first paragraph of Article 174 of the EEC Treaty. I nevertheless join with the Commission in proposing that those provisions should be declared, pursuant to the provisions of the second paragraph of Article 174 of the EEC Treaty, definitive for the period for which Regulation No 1293/79 was to be in force. I consider this all the less objectionable inasmuch as the European Parliament in paragraph 53 of its Resolution of 26 March 1980. (Official Journal C 97 of 21 April 1980, p. 33) in which it gave an opinion on the Proposal for a Council Regulation on the common organization of the markets in sugar and isoglucose (Official Journal C 60 of 10 March 1980, p. 3) asking for the isoglucose arrangements to be brought into line with the sugar regulations. Since, however, the question whether the contested provisions may be void for other reasons may be relevant to the question whether they should be declared to be definitive I shall consider the other claims below.
3. Breach of the principles of the law on competition in conjunction with the provisions of Articles 39 to 46 of the EEC Treaty
The first claim concerning the scheme of the contested measures relates to the structural principles of the system of competition and was mainly put forward by the applicant Maizena. It assumes that pursuant to Article 38 (2) of the EEC Treaty the agricultural provisions have precedence over the general provisions of the Treaty only to the extent to which there are conflicts. The principle of competition comprising the requirement of effective competition, that is to say adequate structures for competition, and free access to the market, must therefore apply also in the agricultural sector. Since Article 3 (f) is not mentioned in it, this may be inferred from Article 42 of the EEC Treaty; further evidence therefor is Regulation No 26 of 4 April 1962 (Official Journal, English Special Edition 1959-62, p. 129) which basically provides for the application of the rules on competition to the agricultural sector; and relevant also in that respect, in so far as isoglucose in particular is concerned, is the fact that pursuant to Article 16 of Regulation No 1111/77 Articles 92 to 94 of the EEC Treaty apply to the production of and trade in isoglucose. The Community institutions are accordingly bound in adopting provisions in the agricultural sector not to make competition more restrictive than is necessary for the aims of Article 39. The contested measures did not respect that obligation. Of the aims of Article 39 they took account only of stabilization of the market. The measures adopted were not necessary for that purpose because there were no surpluses of isoglucose and because that product had only an insignificant effect upon the sugar market. In any event it must be recognized that the measure was more restrictive with regard to the principle of competition than was necessary for the said aim. In that respect it is significant that as a result of the quota arrangements for isoglucose access to the market for that product is barred in the initial stages of production and so further development is prevented. In that way the market position of sugar is not touched and the market is practically reserved for that product. Moreover, if a trace of competition is to be maintained it is significant that the quotas provided for are not transferable or alterable and moreover are so calculated that the dominant market position of one manufacturer, the Belgian undertaking Amylum, is entrenched.
I agree with the Commission in considering that argument, both as regards its premise and otherwise, as invalid.
(a)
When the applicant Maizena cites Article 3 (f) of the Treaty as authority for the contention that competition is a dominant principle of the Treaty binding the legislature in the agricultural sector as well, it overlooks the fact that the said provision has no independent significance, but on the contrary, as is shown by the introductory words to Article 3, detailed rules therefor are provided in Article 85 et seq. It also overlooks the fact that mention is made in Article 3 (d), which is at least of equal importance, of the adoption of a common policy in the sphere of agriculture. The importance of that sector is apparent from Article 38 (2) of the Treaty. That article lends weight to the precedence of the provisions on agriculture and shows that the general aims of the Treaty apply to that sector only to a limited extent and that they give place to the provisions adopted in pursuit of the aims of Article 39. The judgment of 13 May 1971 in Joined Cases 41 to 44/70 NV International Fruit Company and Others v Commission [1971] ECR 411 is very instructive, especially as regards the present issues; it shows that the Treaty attaches very great importance to the attainment of the objective of Article 3 (d).
Moreover, Article 42 of the Treaty is also evidence of the fact that the principles of competition are relative and of only subsidiary importance in the agricultural sector and in any event cannot be regarded as binding rules on the Community legislature. Further, the precedence for the aims of Article 39 may be inferred from the provisions of Regulation No 26, which moreover are not addressed to the Community institutions, and from the part of the recitals in the preamble thereto in which there is mention of the establishment of a system of competition adapted, to the development of the common agricultural policy. Moreover, in that connexion reference may be made to Article 40 of the EEC Treaty which provides for certain forms of organization and generally states that the common organization established in accordance with paragraph (2) may include all measures required to attain the objectives set out in Article 39.
Thus it cannot be assumed that the principle of competition has the weight and significance in the agricultural sector which the applicants' argument attaches to it.
(b)
The Commission further rightly criticizes the confusion by the applicant of the principle of proportionality with the principles of competition and the exercise of the Community powers in the agricultural sector. The principle of proportionality applies only to measures to which individuals are subject and here it must be borne in mind that the principles of competition are not part of the rights to freedom and property of individuals. Moreover, because the aims of Article 39 are in question, it must be observed at this stage that the contested measures are concerned not only with stabilizing the market and that, since isoglucose may be substituted for liquid sugar, it is in any event wrong to consider the isoglucose market separately from that of the general market for sweeteners. In fact other aims of Article 39 are significant in the isoglucose arrangements, namely to ensure a fair standard of living for the agricultural community concerned with the cultivation of sugar-beet and to assure the availability of supplies. I shall deal with that in more detail in another connexion.
(c)
Even if it were assumed that an element of competition had to be assured in the agricultural sector in any event and that here, too, although there is no evidence for such a principle, the right of access to the market may not be completely precluded, nevertheless, on closer inspection it may be seen that the contested arrangements satisfy such minimum requirements.
(aa)
Undoubtedly the quota arrangements made for isoglucose allow access to the market in sweeteners and by the calculation of the B quotas leave certain opportunities for development open. In this respect it must be borne in mind that isoglucose production in 1978 was only 117-732 tonnes, that the basic quotas together amounted to 138819 tonnes and that the total maximum quotas (A and B isoglucose together) amounted to 176994 tonnes. That sufficiently takes account of the fact that production was in an initial stage of development and possibly restricted by rules of the authorities such as the production levy introduced by Regulation No 1111/77 or the prohibition on use such as existed in Italy in important sectors and in France too until August 1979. Moreover, the arrangements were to last only for a year. It is difficult to conceive that in such a short time a considerable increase would have been possible either by improving production methods or attracting new customers who would have had first to become familiar with the product. This moreover will be shown afterwards by the production of the past marketing year which has in the meantime become known and of which I have still to speak.
(bb)
It certainly also cannot be said that the quota arrangements allow practically no competition between isoglucose manufacturers. Naturally competition, and this was already observed in the case-law on the sugar market, is possible within the quotas in respect of prices, other terms of sale or quality. More flexible terms with the opportunity for transfer of the quotas and their amendment are unnecessary for arrangements intended only for a year. Competition ought also not to be precluded because the applicants received quotas of 20 and 15 % respectively, whereas another manufacturer (Amylum) received a quota of 40 % because of its previous greater production. That does not involve any order of size on the market in sweeteners allowing complete domination of the market.
It does not seem so important for present purposes to consider whether competition is possible outside the quotas in respect of C isoglucose which has to be exported. In fact competition ought not to be completely precluded even if it must be admitted that there are certain obstacles here such as import restrictions in some neighbouring countries or the system of licences established by the Commission in Regulation No 1630/79 (Official Journal L 190 of 28 July 1979, p. 38) which allows export only after the A and B quotas are exhausted. Nevertheless the Community institutions, as far as the technical problems of transport and storage are concerned, could refer to the effective foreign trade by Amylum and Roquette and, apart from the export figures mentioned on page 26 of the reply in Case 139/79, it is necessary to bear in mind the possibility mentioned by the Commission of the lively processing trade to which no restrictions apply.
(cc)
Finally, it is difficult to maintain the view that the effect of the quota arrangements is that isoglucose is in a hopeless position in relation to sugar because a share of only 1.4 % of the sugar market is reserved to it. In that respect it is not so much a question whether isoglucose has in fact an advantage in production costs. As is known the applicants dispute that it has, on the ground that the Commision assumed too low an output for the sugar manufacturers and in assessing the ancillary products in the isoglucose industry did not take account of the special production costs arising in respect thereof. More important is the fact that a considerably larger share of the market is disclosed if consideration is restricted to the liquid sugar market with some 700000 tonnes and even if that market is extended and account is taken of the fact that the drinks industry uses a large amount of liquefied granulated sugar — apparently 1.3 million tonnes for soft drinks. If in addition it is borne in mind that isoglucose is a part of the starch production of financially strong groups and if the competitiveness of the individual undertakings is considered, then, even if it is certain that the average basic quotas of the individual sugar manufacturers are substantially larger, it can scarcely be doubted that a certain minimum amount of competition is assured even in relation to sugar.
(d)
The arguments of the applicants based especially upon Articles 2 and 3 (f) of the Treaty and the principles of competition can therefore certainly not lead to annulment of the quota arrangements.
4. Breach of the principle of proportionality
The applicants further put forward a number of arguments, based on the principle of proportionality, against the quota arrangements made for isoglucose. According to that principle which has often been considered in the case-law, onerous measures must not be out of all proportion to the aim pursued. Interference by the authorities must not go further than is necessary to attain the desired aim and is therefore inappropriate if other less restrictive measures suffice.
In particular it was said that quota arrangements are the severest conceivable means, since they are associated with restrictions on competition and interfere with the right to freedom of action in the economic sphere. The restriction of the maximum quota to 85 % of the annual capacity, by which the basic quota is measured, is particularly serious, for it prevents rational production because it is practically impossible to manufacture C isoglucose. Further if the arrangements are related to the aim pursued of stabilizing the market and preventing disequilibrium on the sugar market from increasing, then the measure is hardly appropriate because isoglucose has only an insignificant effect upon the sugar market and its surpluses and not the effect first feared. Finally, if it is borne in mind that the problem of the disequilibrium in the actual sugar sector itself was caused by Community measures on the fixing of prices and sugar quotas which one-sidedly pursued the aim of Article 39 (b) to increase the income of those engaged in agriculture, the conclusion is clear that less rigorous methods and in particular the restriction of the sugar quotas should be contemplated.
Those questions call in particular for the following observations:
(a)
At the outset it must be stressed, and this weakens the whole of the applicants' arguments in the matter, that the maximum quotas laid down for isoglucose in the Community for the 1979/80 marketing year have not been fully taken up, not even by the applicants. The total maximum quotas for the Community amounted to 177000 tonnes while in fact only 166000 tonnes were produced. The applicant Maizena, subject to a maximum quota of some 37000 tonnes, produced only some 32000 tonnes, while the applicant Roquette, subject to a maximum quota of 20256 tonnes, produced only 19625 tonnes. The applicant Roquette, which came fairly close to the maximum quota, was also unable to show that a greater and genuine demand for its products would have led to increased production, if that had been lawfully possible. That factor itself shows that the Council adopted no disproportionately onerous measure.
It is true that the quotas were wrongly fixed for the applicant Maizena, because in reporting its capacity it had already made a reduction on account of interruptions to production due to annual holidays, public holidays and necessary maintenance work, which according to the concept of annual capacity as interpreted by the Council was not necessary. If accordingly the applicant Maizena is credited with the technical annual capacity which without interruptions of work apparently amounted to 46355 tonnes, 85 % of which makes 39401 tonnes, there would have had to be fixed pursuant to Article 9 (2) a basic quota of 28882 tonnes instead of 28000 tonnes and a maximum quota of 36825 tonnes instead of 35700 tonnes. At least to that extent Annex II to Regulation No 1293/79 is rightly challenged and interest in such action is not lacking, for, although the maximum quota has not been reached, the actual production has exceeded the basic quota and production levies have thus become due.
(b)
I agree with the Council and Commission that it cannot a priori be said that quota arrangements are the severest measure. Which of the several conceivable interventions in the isoglucose sector deserves that description depends certainly on the details thereof and the particular circumstances. It is nevertheless significant in the present case that other isoglucose manufacturers who protested vehemently against the earlier system of levies, which was not challenged by the present applicants, have apparently come to terms with the quota arrangements.
Further the following brief remarks are called for in respect of the right claimed by the applicants to freedom of action in commerce and the question whether the quotas prevent rational production:
(aa)
It is apparent from the case-law that the right to free exercise of an occupation, trade or profession does not have unrestricted priority in the sense of restricting intervention by the authorities. Restrictions must be accepted in the public interest. The said right is restricted by the aims of the Community serving the general welfare. In that respect I refer to the judgments of 14 May 1974 in Case 4/73 Nold v Commission [1974] ECR 491 and 13 December 1979 in Case 44/79 Hauer v Land Rheinland-Pfalz [1979] ECR 3727. In the present case the quota arrangements do not bar access to an activity in the sense of freedom to choose a trade, occupation or profession, quite apart from the fact that it is a question of only a branch of the many-sided starch industry. In that connexion the reference by the Council to Article 36 of the German Law on milk with its prohibition on imitating milk and milk products for use as food and the decision (1 BvR 260/75) of 28 February 1977 of the Bundesverfassungsgericht [Federal Constitutional Court] in relation thereto are of interest. The said prohibition is there described as permissible arrangements for the exercise of a trade, occupation or profession, which are justified by expedient and reasonable considerations of the common weal, namely the maintenance of an efficient agricultural industry. It should not be overlooked that the arrangements we have to consider are not nearly so far-reaching.
(bb)
On the other hand as far as the problem of preventing rational production is concerned because C isoglucose can in practice not be produced, it was already to be observed in another connexion that it can hardly be accepted that exports of that product are wholly excluded for technical and economic reasons. In so far as it was alleged in that respect that an obstacle arises from the fact that pursuant to Commission Regulation No 1630/79 export licences may be issued only after the A and B quotas are exhausted, it should not be forgotten that the present proceedings are concerned only with Council Regulation No 1293/79 which does not provide for any such restrictions.
(c)
Further the applicants must accept that they have not correctly defined the aims of the contested measure; those aims are vitally relevant to the question of the principle of proportionality.
What is in fact at issue is not only or primarily a concern to stabilize the market by demanding from isoglucose producers a contribution towards ridding the sugar market of its surpluses. If the arrangements are considered as a whole — Regulation No 1111/77, which was amended by Regulation No 1293/79, clearly refers to the organization of the market in sugar introduced by Regulation No 3330/74 — then it is apparent that the primary aim of protecting agriculture is to ensure a fair standard of living for the beet growers and that the aim of ensuring the availability of supplies is also relevant. More accurately it must therefore be asked whether those aims would be jeopardized without effective and timely measures in the isoglucose sector.
In that respect the trend which isoglucose production has in fact taken must be borne in mind: after production began in the Community in 1974/75 it increased from 70000 tonnes in 1976 to 81000 tonnes in the 1976/77 marketing year, to 103000 tonnes in the 1977/78 marketing year and to some 139000 tonnes in the 1978/79 marketing year. At the time at which the contested measure was being prepared there were plans in several Member States to create considerable new capacity so that it was generally to be expected that the trend would continue fast. The isoglucose industry itself has earlier assumed that in 1980 there would be a capacity of one million tonnes. Isoglucose had a 13 % share of the market in the USA and in Japan. Further, I refer to the observation in the proceedings that to meet the requirements of Coca-Cola in the Community would require that the maximum quotas of all manufacturers be doubled. It was thus quite likely that if no restrictions were imposed after the system of levies was abolished isoglucose would acquire some considerable share of the market in sweeteners and thus increase the large surpluses then existing and likely in the foreseeable future. This would certainly have had effects — the Commission speaks of political pressure to be feared — on the organization of the market in sugar involving considerable reduction in beet cultivation as a result of the reduction in quotas and prices. Since isoglucose benefits agriculture only marginally, it would have meant a considerable reduction in the income of the agricultural community engaged in beet cultivation for whom there is at present no apparent reasonable substitute production not likewise affected with surpluses. That would also mean that supplies which the organization of the market in sugar also assures in times of scarcity would no longer be assured to the same extent, for it must not be forgotten that isoglucose at present, and no change is in sight, is made largely from imported maize.
On that view of matters, and once again it is to be remembered that balancing the aims of Article 39 is according to the case-law a question of discretion, it cannot in my view be regarded as wrong and extravagant if a threatened increase in surpluses on the sugar market is met not only by measures in the sugar sector but by supporting measures relating to the substitute product especially as such measures do not affect the present position but simply inhibit growth somewhat.
(d)
Since after all those considerations there is certainly no cause to speak of a breach of the principle of proportionality, not much more needs to be said about certain other arguments also put forward by the applicants in that connexion.
(aa)
Thus in adopting the contested measures the aim of Article 39 (d) (assuring supplies) was obviously not disregarded. When the applicants contend that isoglucose has a value which must not be underestimated in the event of structural crises in the sugar market, then it may be argued against them that such considerations certainly did not apply on the adoption of measures to last only for a year and at a time in which further considerable surpluses on the sugar market were to be expected.
(bb)
When the applicants allege that the surpluses have been caused by the Community policy in the sugar sector and therefore less rigorous measures should be contemplated, the assumptions on which their arguments are based are not valid. In fact the Community policy does not lead to chronic sugar surpluses. The quota arrangements have largely justified themselves and led to effective restrictions on production as is shown by the fact that in the years 1974 to 1976 production was maintained in an acceptable relationship to consumption. The fact that recently the surpluses already mentioned have arisen again is due in large measure to the obligations of the Community to import from the African, Caribbean and Pacific countries and also to an unexpected reduction in consumption and an increase in the yield per acre.
Further it should not be forgotten that in fact restrictive measures have been adopted in the sugar sector. Thus the maximum quotas for the 1978/79 marketing year were reduced and only recently the intervention prices were increased so modestly (2 %) as to mean a reduction in income because that does not compensate for inflation. There are important objections, as mentioned, based on the considerations of agricultural policy referred to in Article 39 (b) against more extensive measures which would be necessary if there were provisionally no intervention in the isoglucose sector. It is also important that the B quota in the sugar sector has the special function, which isoglucose certainly does not have, of encouraging regional specialization; determining it is thus important in particular for farmers whose returns are barely profitable. In the case of A sugar quotas, a reduction of which the applicants contemplate, the principle of legitimate expectation prevents a sudden and drastic change before the expiry of the original arrangements which were adopted for a longer period.
(cc)
Finally, as regards details of the calculation of the quotas for isoglucose, it is not apparent that the principle of proportionality might have been breached.
—
The fact of having a reference period is in principle certainly not open to objection but appears reasonable. Elsewhere in Community law, as in the case of the fishing arrangements or the fixing of import quotas, this is customary and undoubtedly from the objective point of view a proper means if it is a question of slowing down the development of a particular activity. As regards the particular choice of the reference period there can hardly be said to have been an error in the exercise of discretion. The applicants allege that unrestricted production was not yet possible at the time because restrictions on the use of isoglucose applied in certain Member States and even after the judgment of 25 October 1978 there was still uncertainty as to the isoglucose arrangements to be expected; they claim also that the reference period was too short because the production of isoglucose fluctuates seasonally. Against that it must be observed on the one hand that the applicants have in no way shown that they had to restrict production because of the system of levies which originally obtained and that in any event after the said judgment was given it was clear that a levy as high as originally provided for was no longer permissible. Further, it is beyond doubt, as is shown by the speedy increase in production, that the reference period beginning in November 1978 was most advantageous for the applicants and that had a longer reference period been chosen it would have led to a less advantageous result because the production of isoglucose in the Community was late in getting under way.
—
In the same way the calculation of the quotas according to the reference periods can give no ground for criticism. In that respect it is sufficient to refer to the fact that in the 1978/79 marketing year the applicants produced 17350 tonnes (Roquette) and 31092 tonnes (Maizena), whereas their maximum quotas amounted to 20256 and 35700 tonnes respectively which would have allowed a certain expansion in production. In so far as the applicants moreover complain of the absence of a certain flexibility in the quota arrangements it must be observed that flexibility in arrangements which are to last only for a year does not seem indispensible.
—
Finally, the taking into account of the annual production capacity cannot be criticized. The consequent limitation was in fact not, as the applicants think, because of the advantage of 15 % of the sugar intervention price which insoglucose had and of which there was mention in earlier proceedings. The purpose of that part of the arrangements was above all to compensate for anything of a fortuitous nature in previous production, that is to say, to prevent favouring undertakings which had begun production earlier and had expanded further. Moreover, it has already been shown that in this way rational production was in no way precluded.
In that connexion the applicant Roquette alleges that the arrangements are to the disadvantage of undertakings which were cautious in developing their capacity and that because the arrangements were based only on available capacity they prevented plans to expand capacity such as it had made following a decision of its board of directors of December 1978 from being taken into account. Against that it may rightly be said that there could scarcely be room for such considerations in arrangements which had to be adopted speedily and were to last for only a year, quite apart from the fact that because it would have been necessary to inquire into internal commercial plans elements of speculation and even of arbitrariness would have entered into the arrangements.
(e)
To summarize it may accordingly be said, and in this the observations in relation to the calculation of the quotas for Maizena are unaffected, that the arrangements in question can certainly not be faulted on the basis of the principle of proportionality.
5. Breach of the principle of equal treatment
After that it is necessary to consider the complaint that the contested measures infringe the prohibition on discrimination between producers as contained in Article 40 (3) of the EEC Treaty which is a general legal principle binding in Community law as well. That involves the questions whether isoglucose manufacturers were discriminated against vis-à-vis sugar producers and whether there can be said to be discrimination against the applicants in relation to other manufacturers of isoglucose.
(a)
First as regards the alleged discrimination in relation to stigar producers it is said that the contested arrangements establish unbalanced competition and prevent competitive efforts affecting the relevant share of the market. The quota arrangements have arisen in relation to sugar as a result of special circumstances which did not apply to isoglucose because the national authorities have always intervened in relation to isoglucose; nevertheless it may be observed that the sugar arrangements were made only after decades of production which allowed productivity to develop fully, whereas corresponding arrangements were made for isoglucose in the initial stage of production with the result that that product was deprived of the possibility of development. Further there is a reference period of five years for sugar; the quotas have from the beginning been higher than the normal production and have been further increased by Regulation No 3330/74. On the other hand the production of isoglucose is limited by the annual capacity. In addition the sugar arrangements have a certain flexibility (transferability of the quotas, possibility of their reduction and other applications by the Member States) which the isoglucose arrangements do not have. Not least of all isoglucose does not have, in contrast to sugar, any compensatory advantages such as sales guarantees and possibilities of export. Since there is no apparent objective legal justification for all those factors which give rise to unequal treatment there must indeed be said to be discrimination.
(aa)
The views referred to in the first place obviously conceal the claim that isoglucose production ought to have been left a free hand to start with in order to be able to win a proper share of the market on a competitive basis. That view had to be rejected in an earlier connexion. It must be remembered that the isoglucose manufacturers are active in a sector in which the strict terms of the Community arrangements have created advantageous conditions of sale for the sugar industry of which isoglucose can easily take advantage for the isoglucose price is based, as we know, on the sugar price. In viewof the production restrictions on sugar and the surpluses of sugar which nevertheless exist the isoglucose manufacturers could not expect to receive completely free access to the market for their substitute product which contributes to increasing the surpluses. Moreover, it is obviously wrong to assume that the purpose of the contested arrangements is to fix the conditions of competition. They do indeed, as we have seen, allow isoglucose a ’ certain possibility of growth. In addition it must not be forgotten that they are transitional arrangements for a year and do not prejudice the definitive system.
The quota arrangements in Regulation No 1293/79 can thus hardly be criticized on the basis of the conditions of competition in conjunction with the principle of equal treatment. For the present the question may remain open whether it is justifiable to retain them unchanged for several years or whether after expiry of the present organization of the sugar market, which for various reasons already mentioned could not be suddenly and drastically altered during the period originally provided for it to remain in force, the arrangements must be duly improved, if necessary at the cost of the sugar sector.
(bb)
The applicants speak of discrimination because quota arrangements have been made for isoglucose similar on the whole to those applying to the sugar market. That involves handling dissimilar situations in the same way.
Against that allegation I shall say only that it is wrong to assume that historical reasons are the sole justification for the quota arrangements for sugar. On the contrary their present function is to contain over-production, which, as we know from other proceedings, would have arisen inescapably on the creation of the common organization of the market because of the choice of the price level in the Community. Since, however, isoglucose has the same effect there is in principle no reason to object to arrangements based on the organization of the market in sugar being made without whose beneficial effects it would probably not have been profitable to manufacture isoglucose at all.
Moreover it will be shown later — I mention now only the catch-phrase “Community preference” used in the judgment in Case 116/77 G. R. Amylum NV and Others v Council and Commission [1979] ECR 3497 — that the fact the arrangements for isoglucose were based on those applying to sugar cannot be regarded as discrimination in spite of the differences in their original positions which cannot be denied. There is nothing to be said for the argument that Community preference to the disadvantage of maize takes effect in the form of the levy and cannot therefore be repeated. The levy is a measure to protect the maize and cereal market and has nothing to do with the fact that one of several agricultural products — the Community institutions speak here in reference to the judgment in Case 166/78 Government of the Italian Republic v Council [1979] ECR 2575 rightly of a choice in which there is a wide discretion — is given a certain preferential treatment in the organization of the market.
(cc)
In so far as the applicants on the other hand speak of discrimination in reference to certain differences already referred to in the arrangements applying to isoglucose on the one hand and to sugar on the other, that is to say, different treatment of similar facts, the following observations are called for:
—
Obviously the choice and calculation of the relevant reference period for isoglucose could not be made as in the case of sugar where the average production of several years was taken. That was simply because isoglucose production in the Community began only in 1974/75 and developed slowly so that the average over several years would certainly have led to a disadvantageous criterion for the applicants and other producers. Even if it has to be admitted that there may have been certain disadvantages in taking the period that was in fact taken for isoglucose, it is just as certain that the period selected was the most favourable of all relevant periods.
—
It must undoubtedly be recognized that the quotas were drawn up to the advantage of sugar when the common organization of the market was established; the reference production was 5.95 million tonnes, the basic quotas for the 1968/69 marketing year 6.48 million tonnes and the B quotas 35 % of the basic quotas. It must moreover be admitted not only that the quotas for the 1974/75 marketing year were increased by Regulation No 3330/74, but also that the arrangements reveal a certain flexibility, which is lacking in the case of isoglucose for they provide for the transfer of the quotas and for their reduction for the purpose of being, allocated to other undertakings.
In this respect, however, the differences in the original position should not be overlooked. Both in 1968/69 and also 1974/75 there was a certain shortage of sugar — in 1974/75 apparently because the African, Caribbean and Pacific countries could not make the deliveries provided for — and that led to encouraging Community production. In 1979 on the other hand when the isoglucose arrangements were made there was a surplus which certainly did not allow similar generosity but rather demanded measures to slow down production. Further it must be borne in mind — and this relates to the restriction of isoglucose production according to production capacity — that a further function of the measure was to correct the influence of the production levy on production and to bring about a certain balance within isoglucose production. Such considerations would obviously have had no justification in the sugar sector.
In so far, moreover, as concerns the flexibility missing in the isoglucose arrangements, it was rightly stressed that the relevant Regulation No 3330/74 was a specific measure tailored to the requirements of the sugar-beet sector; here there are a number of beet growers and sugar factories and provision must be made for necessary regional moves based on the aims of Article 39. In that respect the interests in the isoglucose sector, where there are only six manufacturers in the Community, are different. Moreover the isoglucose arrangements are only a specific transitional measure for one marketing year. In view of such temporal limitation it was not necessary to consider flexibility at the outset. If it should later prove necessary regard can be had thereto, for the Community institutions have given an assurance in the proceedings that the problem of changing factors will be borne in mind in long-term arrangements.
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Finally, the three following considerations are significant on the question of equal treatment as far as the absence of a price and sales guarantee for isoglucose and the problem of export refunds are concerned :
Export refunds are also provided for isoglucose where processed products are involved and it hardly seems convincing, at least as far as concerns the arrangements in question, to say that there is no possibility of export. The Commission has also given an assurance that it is ready to extend the refund arrangements if necessary. The applicant Maizena has referred critically to the fact that a minimum fructose content of 41 % is required for an export refund, whereas under the quota arrangements 10 % is taken into account. We have learnt that the first is the normal concentration occurring in trade whereas the second percentage referred to is intended to prevent any attempted circumvention. There cannot therefore be said to be any requirement making export more difficult.
There is thus, at least indirectly, a kind of price guarantee for isoglucose. Its price, as we know from previous proceedings, is in fact based on the intervention price for sugar and it thus enjoys the advantageous price arrangements applying to sugar.
If, on the other hand there is no sales guarantee for isoglucose, then it must be borne in mind that there is no surplus of isoglucose and obviously no difficulties of sale. Further, it must not be forgotten that there are only indirect guarantees for liquid sugar with which isoglucose is above all to be compared, because the intervention prices apply to granulated sugar. Moreover, the Community institutions have rightly reminded us that intervention is confined to products capable of being stored, that is in the case of isoglucose the raw material and in the case of beet the end product, namely sugar. Further they have stressed that the price and sales guarantees are in fact conceived of for the beet growers. In fact the organization of the market assumes — intervention applies only to sugar made from beet or sugar cane harvested in the Community — that the price guarantee is passed on to the beet farmers whereas on the other hand there is no reason to think that the advantages which the isoglucose manufacturers have benefit the maize producers in the Community.
(dd)
Finally, it must be recognized, and this is ultimately decisive in the present connexion, that in so far as there may be said to be differences which are not completely explicable on the basis of objective differences in the original situation, such differences are quite justifiable.
In saying that I am thinking less of the allegation that isoglucose producers have production costs advantages over sugar manufacturers. The calculations thereon produced by the Commission were contested in detail by the applicants without any clear-cut result being established in the proceedings.
More to the point is the already-mentioned concept of the Community preference which according to the case-law was rightly taken into account in favour of the sugar-beet growers. Isoglucose is made at present from imported maize and will continue to be so made for the foreseeable future because no basic change is discernible. It has advantages which must be taken into account in judging the general situation.
In so far as maize is imported it does not necessarily have a uniform price. It is also significant that isoglucose is produced throughout the whole year and that the supply of raw material can be planned according to the needs of the manufacturers and their costs estimates. Further, isoglucose producers can choose their location as best befits them. There is also an advantage for them in the B quotas allowed them, first because they attract a smaller levy than in the sugar sector and secondly because the B quotas actually have no function in the context of the isoglucose arrangements.
On the other hand in the case of sugar manufacturers it must be borne in mind that the supply contracts are made with beet growers who enjoy minimum prices; the contracts are made before sowing and the normal trade terms are that the whole crop is to be taken without regard to the sometimes considerable fluctuations in yield, which considerably restricts the commercial freedom of manoeuvre. It is also significant that there is a certain compulsion in the choice of location and that the processing period is confined to part of the year, against which it can hardly be said that that is completely compensated for by the fact that isoglucose cannot be stored to the same extent. Finally, sugar manufacturers are subject to an obligation in respect of minimum storage which is a considerable burden from which isoglucose manufacturers are exempt.
(ee)
In my opinion all those considerations taken together do not allow it to be said that there is inadmissible, discriminatory and unequal treatment of isoglucose manufacturers vis-à-vis sugar producers.
(b)
Regarding the view that the applicants are treated unequally in relation to other isoglucose manufacturers, it must first of all be recalled that the main reason for that allegation is that quotas have been fixed which do not reflect the competitive capacity and cannot be changed by competition. In that respect a reference period applied which must be regarded as having been chosen arbitrarily after only three years' production because undertakings which held back in making their plans had been put at a disadvantage. Moreover it is not right to take as the basis production capacity which is the fortuitous result of internal decisions. In the case of the applicant Roquette that had meant that it had not been able to profit from the abolition of the ban on the use of isoglucose in France. The ban had been abolished with effect from August 1979 because of the enzyme Roquette used.
I nevertheless have the impression that those arguments are ultimately not valid.
First in that connexion it must be stressed that the quota arrangements for isoglucose had to be worked out relatively quickly and that their validity was restricted to one marketing year. That shows, contrary perhaps to the rules for the ultimate system, that it was not possible to go into such problematical matters as competitive capacity or investment plans, of which moreover the opinion might basically be held that in so far as such matters were speculative there was the danger of arbitrariness. In my view the contention of the Community institutions is also pertinent to the effect that the reference period was not arbitrary but chosen so that influences restrictive of production would have as little effect as possible. In this case as in respect to the production capacities which had to be taken into account objective factors were taken and these were deduced from the same rule applied to all parties; indeed, the call by the Community to slow down the manufacture of isoglucose of which there was mention in the proceedings was directed to all undertakings to the same extent. In so far as there are indeed differences they may be attributed to chance to the extent to which different commercial arrangements in undertakings may be regarded as fortuitous. In my opinion in any event it is not part of the principle of equal treatment in this connexion to ensure compensation and to prevent undertakings which defer plans from allegedly being put at a disadvantage. Finally, in reference to the ban on the use in France of isoglucose and its abolition with effect from August 1979 it was rightly stressed that there was no cause to regard that as specially affecting the applicant Roquette for the French market was not to be regarded as its preserve. Indeed, that was a matter relevant to the same extent to all undertakings and moreover it is also of interest that the applicant Roquette exported a substantial part of its production even after August 1979 because apparently other markets were more favourable to it.
(c)
Thus, on the whole, it is clear that the contested quota arrangements cannot be challenged from the point of view of the prohibition on discrimination.
III — To summarize I conclude that the applications made by Roquette and Maizena are admissible and well founded because Regulation No 1293/79 infringes Article 43 (2) of the EEC Treaty. I therefore propose that the contested provisions of Regulation No 1293/79 be declared void but that pursuant to the second paragraph of Article 174 of the EEC Treaty the period provided for the application of Regulation No 1293/79 be considered definitive, Annex II thereto nevertheless being corrected to take account of the actual technical annual capacity of the applicant Maizena.
I further propose that the Council be ordered to pay the costs of the applicants and of the European Parliament. The Commission, as intervener on behalf of the Council, must bear its own costs.
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1
)	Translated from the German.