3.

In examining the conditions which must be fulfilled in order to be able to speak of a sufficiently serious breach of a superior rule of law I turn my attention first to the effects of the contested measure, that is to say, of Regulation No 1111/77. (a) In this connexion the applicants refer, first, to the amount of damages they claim, mentioned earlier, and compare them to the sums which were contested in the HNL .proceedings, which were considerably smaller. Secondly, they rely on the statement in the HNL judgment to the effect that the measures which were there under consideration affected very wide categories of traders and point out that, in contrast to that case, in this case only a small group of isoglucose manufacturers, requiring no further description, is affected. I am convinced that these two considerations cannot in themselves lead to any decisive conclusion. (aa) This is certainly true of the second-mentioned point. That the present case concerns a whole branch of industry leads one to conclude that the decisive criterion cannot be the fact that this branch of industry is so structured that the manufacturing plants are to be found in the hands of just a few undertakings. It would also be a misinterpretation of the HNL judgment to infer from it that where the group of parties affected is small, the effects will always be decisive for the purposes of the formula of a sufficiently serious breach. In fact, however, all that that judgment says is that ‘this measure affected very wide categories of traders … so that its effects on individual undertakings were considerably lessened’. Thus a relationship is established between the number of those affected and the type of effect. This does not exclude the possibility, however, that even where a small group is affected the effects may be small, and that naturally the converse may apply. Irrespective of the number of those affected, therefore, the extent of the effects must always be taken into account. (bb) As regards the amount of damages claimed, on the other hand, it cannot be used as if it were a clearly established figure. Numerous objections have been raised against the amount of the claim, in fact; these cannot be automatically rejected as irrelevant and may have to be examined in detail. — I would remind the Court of the observations supplied in the course of the oral procedure at the request of the Court of Justice as to the question what damage may in fact be considered as calling for compensation in the case of a wrong arising from a legislative measure. In this regard it may be important — and here too the judgments in the maize gritz cases are relevant — to know whether the damage is direct, certain and specific; consideration should also be given to the fact — in view of the judgment in Case 74/74 [1976] ECR 797 — whether lost profits must in principle be excluded, at least where the interest which has been injuriously affected is not one protected by the law, and thought must be given to the point whether this affects costs incurred for legal aid, as is the case in certain national legal systems. — Thus I might refer to various objections which have been made to the various items in the calculation of the alleged damage. It was said, for instance, that investment for alternative products could not be counted as an economic disadvantage because it was of lasting value. On the subject of calculating the loss of profit due to the reduction in isoglucose production it was claimed that this had been wrongly calculated on the basis that isoglucose was not subject to any levy, and that this caused the applicant Amylum to reduce its claim for damages in the alternative to BF 55726569. In this respect, also, it was stated that not all the cost factors had been taken into account; these include the reduction in costs, owing to the more intensive utilization of the plant for producing starch. In addition it has been claimed that the applicant Tunnel Refineries wrongly assumed that the production target originally aimed for would have been reached at once. Lastly, doubts were cast on the head of damage referred to by Tunnel Refineries as ‘increased stockholding costs’. — A whole series of objections concerns the causal connexion. Among these is the claim that the production of isoglucose had already been made unprofitable by. the withdrawal (which is not open to doubt) of the production refund and could not in any event cope with the imposition of an additional levy, in whatever form, in particular if in Belgium such production is equated with sugar for the purposes of taxation; thus it is clear that the production levy was not the original cause of the re-organization of production or, at least, that isoglucose would not have produced any profit even if it had been freed of any levy and even if transport costs were left out of the calculation. Moreover, as early as 1975, that is to say prior to the introduction of the production levy, Tunnel Refineries had decided to increase their capacity less than was originally foreseen. Next, the complete halt in production in the case of the applicant Scholten-Honig — as the examples of Tunnel Refineries and Amylum show — is, it is claimed, certainly not a direct consequence of the introduction of the production levy, so that all that it brought in its train — the writing-off of investments, even in experimental factories, the loss of future profit — must be left out of account. — Lastly, it is claimed that the applicants are guilty of contributory negligence. Thus it is said that it must have seemed risky to make large investments in the manufacture of isoglucose at a time when the sugar market was favourable and at a time when there were production refunds available, although the strict controls governing this market, one might even say the rigidity of the market, were known and no-one could be certain that the refunds would be maintained. Tunnel Refineries, in particular, it is claimed, was over-hasty in its decision to make alternative products, since the company, wrongly, did not take seriously the proposal by the Commission to leave the production levy on isoglucose at five units of account, which was in fact adopted in May 1978. Also relevant here, it is claimed, is the fact that just two days prior to the preliminary ruling in Joined Cases 103 and 145/77 investments for plant conversion were approved. In this respect the disadvantage which would have arisen owing to payment of the production levy on the production capacity, which was in any case not fully utilized, during the period from November 1977 to October 1978 is stated to have been appreciably less than the losses claimed in the application. Lastly, the claims submitted by Scholten-Honig met with the objection that it must have appeared particularly risky to construct a special factory for the production of isoglucose instead — as was the case with the other undertakings — of adapting and extending the plant used for the production of starch. In the case of Scholten-Honig it may also be assumed that the difficulties which led them, here too, to adopt over-hasty decisions, were due essentially to other causes — too little capital of its own, poor profits from the production of starch. Above all, it is said that they were guilty of contributory negligence with regard to the arranging of the contracts concerning the acquisition of the patent rights and the sale of the factory in Tilbury, at a price well below the construction price. The possibility cannot therefore be excluded that considerations of this kind — subject to liability on the part of the Community — may lead to a considerable reduction in the damages claimed, so that, under certain conditions, as the example of Amylum alone has already shown, much of their credibility will disappear. However, we do not need to make a definitive examination of this point; as the file on the case now stands, that is to say without further inquiries and perhaps evidence from experts, this would in fact be very difficult. In fact it may be thought that the HNL judgment in so far as it states that the effects of an unlawful measure are the definitive criterion, should be understood differently. Accordingly, consideration need not be given to all the possible disadvantageous effects of a contested rule, even those which are not immediate; rather, in deciding the question whether a sufficiently serious breach of a rule of law has occurred one need only look at the direct effects on production costs and profitability. (b) If such a principle is to be applied in the present case, the point of departure must be that the contested production levy accounted for roughly 15 % of the value of the isoglucose. It amounted in fact to 15 % of the intervention price for sugar, to which, as we know, the market price for sugar was very close owing to the existing surpluses, whilst the price of isoglucose, as being a partly interchangeable product, in its turn depended on that. Of course it must be admitted at this point that this relationship is hardly justification itself for saying that the production levy had purely ancillary effects. If I understand the HNL judgment aright, however, that is not the only point to be considered, for these effects must also be regarded in the light of the economic risks which are known to be inherent in this kind of activity. Thus, according to the explanations furnished by the defendant institutions, which appeared to me to be convincing, one must consider first the price fluctuations on the relevant market and secondly the special risks proper to that market, which arise from the rules to which it is subject under the common organization of the sugar market. (aa) As far as the first point is concerned the figures originally supplied by the Commission and the Council concerning the development of the world market price for sugar during the period 1974 to 1977 — with values of around 103 units of account per 100 kg on the one hand, and approximately 12 units of account per 100 kg on the other hand — cannot be considered as decisive because isoglucose, which according to the case-law is to be equated with Community sugar, is not produced for the world market. It is equally certain, however, that the result cannot depend solely on the fluctuations in the world market price for maize, the raw material for making isoglucose, quoted by the applicants, or on the development of the Community price for that product, which is subject to much narrower limits, precisely because the price for isoglucose is not determined by these factors alone, but also by the make-up of the sugar price. If on the other hand one takes a look at the development of sugar price in the Community, that is to say, on the market to the risks of which the applicants are exposed, at the time in question, the picture that emerges is quite striking, starting with the shortage years 1974 and 1975 in which under the influence of high prices on the world market prices rose above the intervention price to the vicinity of the threshold price or — in some Member States — even higher, whilst on the other hand in surplus years such as 1978 the market price was based on the intervention price. Thus it is possible to speak of price fluctuations of the same order of magnitude as the contested production levy, or even — if we compare the intervention price of 1974 to the threshold price of 1978 — of the order of magnitude of approximately 14 units of account per 100 kg. Compared to this the production levy can certainly not be considered as exorbitant; in fact it is more or less in line with the normal risks present in the sugar market. (bb) The same may also be said of the second observation made by the defendants, which relates to the possibility of alignment with the production levy applicable to B sugar. At the time in question this levy was limited to 30 % of the intervention price for sugar, and thus amounted to 9.85 units of account per 100 kg. But the losses incurred in financing the exportation of surplus sugar would have justified a levy amounting to 19.5 units of account per 100 kg. In the case of such large amounts as these it is not inappropriate to speak of a real risk; indeed in times of surplus sugar production the levy no longer needed to be restricted. In the case of such a levy on B sugar, however, and the spreading of such a levy over the total production of A and B sugar the result would have been a burden of 3.54 units of account per 100 kg on the sugar producer in the economic year 1977/78. Accordingly, on a strict comparison of charges the same charge would have been permissible for isoglucose, that is to say, we may speak of a corresponding risk for isoglucose almost of the same order of magnitude as the contested production levy. So there, too, there would be an appropriate relationship between the levy which was introduced and risks inherent in that sector of the economy. The applicant's objection that the Council's calculations set out above contain an error in that no account was taken of the possibility of passing on 60 % of the burden to the beet farmers is difficult to maintain. That percentage relates in fact to a charge of 9.85 units of account per 100 kg and is calculated having regard to the minimum prices actually in force at that time for A and B beet. It therefore did not represent an immutable value; in view of the objective of the agricultural policy, that of safeguarding agricultural incomes, it is by no means certain that a rise in the production levy would also have brought about a reduction in the minimum price for beet, just as it may be regarded as equally uncertain — and this is sufficient as regards the assessment of the risks to be arrived at here — that an increase in the levy of the amount accepted by the Council would have led to complete abandonment of the production of B sugar, that is to say, would in fact have had the result that as far as the sugar producers were concerned no levy would have been paid. (cc) In my opinion an assessment of the effects of the disputed measure in the light of the economic relationships, such as the HNL judgment appears to suggest, does not lead to the conclusion that the Community institutions have been guilty of a sufficiently serious breach of rules of law.