3.

Conceding that the circumstances which resulted in the licence applications being submitted late do not amount to force majeure, Man Sugar puts forward two arguments to establish the invalidity of the provision. The first relates to the nature of the obligation to apply for an export licence. According to Man Sugar, that obligation represents an administrative formality of little importance. The penalty prescribed for failure to comply with it cannot therefore be equal to the penalty — forfeiture of the entire security — which is imposed for breach of the obligation to export the goods. It is that obligation and only that obligation which constitutes the justification for the system of export licences. That is proved by the history of the development of that system. In the early stages of the common agricultural policy the sum to be deposited as security to ensure compliance with the obligation to apply for a licence was one unit of account per hundred kilograms of sugar. After the tenders had been accepted, however, that security was immediately replaced by a new security of four units of account, whose purpose was to ensure that the sugar was actually exported within the period of validity of the licence. Thus, if the price of sugar on the world market fell by more than one unit of account during the week preceding the application for a licence or more than four units of account in the period within which the export should have Deen effected, the exporter could contain his losses either by not applying for the licence in the week following the tender, or, if he had already applied for the licence, by not making use of it. In both cases, the loss was limited to the security. By Regulation No 3274/80 (which was later replaced by Regulation No 1880/83), the Commission sought to simplify that procedure in two ways. First, it established that the obligation to export arises as soon as the tender is accepted. Secondly, it raised the amount of the security to be lodged on submission of the tender to 9 ECU per hundred kg, subject to the possibility of increasing it if, during the period of validity of the licence, the price on the world market fell by more than 9 ECU. Those reforms were intended to make the tenderer fully responsible for the exportation as soon as his tender had been accepted. As Man Sugar points out, the result achieved by such reforms was undeniably positive; indeed until the present case not a single security had been forfeited. Man Sugar states further that, since under the new rules the obligation to export or to lodge the entire security arises as soon as the tender is accepted and is not altered by the subsequent application for a licence, the importance of that application is greatly reduced. The reason is clear. In the first place, the application does not serve to ensure that the obligation to export is complied with, since that obligation is guaranteed by the security, which, according to Article 6, must be lodged when the tender is submitted and is not released until after exportation. In addition, the application does not help to prevent speculation by the traders concerned, since the successful tenderer who does not export the goods loses the security and must, in certain cases, pay an additional amount. Finally, the obligation to apply for an export licence adds nothing of importance to the information which is in the Commission's possession at the time of the tender. The application confirms the exporter's name, the obligation to export and the obligation to lodge a security, but it contains only one piece of information which was not provided with the tender: the tenderer states whether he wishes the monetary compensatory amounts to be fixed at the rate prevailing on the date of the application for a licence (in which case the country to which he is exporting must be indicated) or whether he prefers the rate prevailing in the exporting country on the date of exportation. However, that decision is purely commercial and has no effect on the quantity of sugar which will be exported. It is therefore of no importance for the purpose of monitoring the market. Thus Man Sugar's first argument consists in portraying the obligation to apply for an export licence as little more than a superfluous anachronism. In introducing its second argument, the undertaking concedes, however, that there is still some justification for it. The forfeiture of the entire security for failure to fulfil the obligation to apply for a licence is nevertheless, in its view, incompatible with the principle of proportionality. In the first place, that forfeiture is not intended to make good any loss suffered by the Community or by the national authority; it is in the nature of a penalty, pure and simple, and moreover an allpurpose one. According to Article 6, it is exacted both for failure to fulfil the principal obligation (to export surplus sugar from the Common Market) and for breach of the ancillary obligation (to apply for the licence). As the Court held in its judgment of 20 February 1979 in Case 122/78 (Buitoni v FORMA, [1979] ECR 677), the principle of proportionality prohibits such a situation. In addition, the penalty is excessive in relation to what must undoubtedly be regarded as a minor infringement; as everyone knows, a Community regulation must make it possible to adapt the penalty to the seriousness of the infringement for which it is imposed (see judgment of 21 June 1979, Case 240/78, Atalanta v Produktschap voor Vee en Vlees, [1979] ECR 2137). Moreover, the Commission has itself recognized that state of affairs. In July 1984 it proposed that Regulation No 1880/83 should be amended by limiting the amount of the initial security forfeited to 3 ECU per hundred kg in the case of failure to apply for a licence within the prescribed period. That proposal was abandoned following Mr Justice Glidewell's decision to refer the matter to the Court for a preliminary ruling. However, that proves that the obligation to apply for a licence can be satisfactorily guaranteed by less severe penalties, in particular when, as is the present case, the failure to fulfil the obligation was not intentional and the delay in submitting the application was minimal.