4.

The problems raised by Questions 1 and 4 (a) and (c) must be regarded as the central issues of the proceedings. They require consideration of whether the rate of levy applied to the importation in question in the main action is correct or, as the plaintiff thinks, too high. This involves considering the question whether there was an obligation on the Community institutions to increase the minimum prices of products falling within tariff subheadings 04.04 E I (b) (3) and (4) to at least 150 and 135 u.a. respectively and accordingly to increase the amount to be deducted to 150 u.a. for the 1976/77 milk year. It must also be decided whether the plaintiff is entitled to claim such an alignment or whether the latter occurs, only in agreement with interested third countries. Finally, it must be considered whether, although minimum prices and the amount to be deducted were not aligned on the actual free-at-frontier offer prices, the plaintiff is entitled to claim that the levy demanded of it be calculated on the basis of the threshold price less an amount of 150 u.a. In the plaintiff's view, even in the context of the special rules of Article 8 of Regulation No 823/68, the basic principle of every levy system applies, namely that alignment of prices may be undertaken only at the level which is considered necessary for the protection of Community production. This, however, namely an approximation to the level of the threshold price, was not reflected in the levy rate fixed in 1976 for Bulgarian cheese of sheep's milk. It was in truth so calculated that, if the additional burden as a result of monetary compensation, to which the minimum prices are also relevant, is borne in mind, there is an excessive protection of Community production, which in any case is not considerable. This and the decline in imports associated with it is, moreover, not in accordance with the principle of the furtherance of trade contained in Article 110 of the Treaty, which also has to be respected in the context of the common organization of the market in milk and milk products, as appears from Article 33 of Regulation No 804/68. More correctly, the Community institutions should have had regard to actual movements in offer prices on the representative markets, that is, as regards cheese of sheep's milk, to the offer prices of Bulgarian cheese of sheep's milk. Such offer prices were at the time in question 160 u.a. and even 200 u. a. for kashkaval. If it is borne in mind that according to the system referred to the minimum prices applying to kashkaval are relevant also to cheese of sheep's milk, the basic amount for the levy regulation should certainly have been at least 150 u.a. instead of only 130 u. a. In the plaintiffs view, not the least significant element in this connexion was the movement in the threshold prices. The standing practice since 1970 had been to align the minimum prices on those prices, and this was last done in 1975 by an increase of 20 u.a. Moreover, according to the levy system, no agreement with the relevant exporting country was necessary for such an alignment. Since as regards its right of proposal the Commission is bound by Regulation No 1073/68 and accordingly must have regard to all information available, it ought, as ought also finally the Council, to have reacted to comments and representations such as the plaintiff had made in October 1975 and April and June 1976 to the Commission. The Council and the Commission emphatically reject this. They point out in particular that the basic regulation contains no substantive conditions for the special levy rules and that according to Article 8 of Regulation No 823/68 the offer prices are irrelevant in this connexion, even though the fixed amount to be deducted is based on the minimum prices for kashkaval. In actual fact, the Council has a wide discretion in this sphere, the exercise of which is governed by the general objectives pursued by the basic regulation, the Treaty provisions and considerations of trade policy. It cannot be shown that that discretion was not correctly exercised in the present case. Inter alia, it is significant in this respect that previously also the levy applying to cheese of sheep's milk has not automatically been aligned with the amended price rules and that there have been sound considerations of trade policy for not maintaining the preferential status quo of 1975 in relation to cheese of sheep's milk. In any case it is not possible to deduce from the relevant provisions that the Community institutions were required to fix the levy for cheese of sheep's milk at the amount claimed by the plaintiff. In my view this dispute calls for the following observations. The Community institutions have rightly pointed out that in the basic regulations by which the market organization for milk and milk products was created there is only quite general mention made of special provisions on the levy, without any criteria being laid down therefor. From this it follows that there is no duty to create such special rules but that the Council has a discretion in this respect. If special rules are introduced they represent unilateral independent concessions. In particular, in so far as their extent is concerned there is no provision for consultation with third countries; in any case, as far as Bulgarian cheese of sheep's milk is concerned there is no trade agreement which could require particular preferential rules to be adopted and appropriate adjustments made. In the same way, interested economic sectors have no right of claim, but that certainly does not mean that they cannot submit important economic data to the Commission in an endeavour to influence the structure of the special levy. As far as special levy rules are concerned, it follows further from the way in which the basic regulation is drafted that in calculating that levy, that is, its divergence from the general levy, there is a very much wider discretion because substantive conditions have not been laid down. As the Council has rightly stressed, the guidelines here are the principles of the organization of the market in milk and the objectives of the Treaty and perhaps also considerations of trade policy. If in the light of this basic factor we consider whether the validity of the levy in question in the main action may be criticized on the ground that the discretion was wrongfully exercised and, further, whether it may be said precisely which levy rate reflects a correct exercise of that discretion, the answer, in a word, can scarcely accord with the views of the plaintiff. In so far as the plaintiff casts doubt on the need to protect Community production on the ground that there is no such production worth mentioning, answer may be made to this and to the related argument that the rate of levy applied is too high that in this connexion the figures supplied by the plaintiff with regard to imports of cheese of sheep's milk from Italy into the Federal Republic of Germany do not carry conviction. Moreover, reference may be made to corresponding statements by the Community institutions in previous cases (they are in part reflected in the judgment of 22 January 1976 in Case 55/75, Balkan-Import-Export GmbH v Hauptzollamt Berlin-Packhof[1976] ECR 19), to their observations regarding the increase in Community production and also to the fact that the scope of the protection must naturally relate to the production of comparable kinds of cheese in the Common Market. When the plaintiff complains that no regard was had to the increase in the free-at-frontier. offer prices for Bulgarian cheese of sheep's milk, then (apart from the fact that offer prices are irrelevant to the system of special levy rules, for which reason Regulation No 1073/68 of the Commission may be disregarded) it must not be overlooked that in state-trading countries such information is of little importance from the outset. In addition, it must not be forgotten that an additional preferential factor arises in respect of cheese of sheep's milk in that the amount which has to be deducted is related to the (higher) minimum price for kashkaval. Moreover, and this is certainly of special importance in the present connexion, we were assured during the proceedings, and this was uncontested, that Bulgaria has shown no interest in a reduction in the levy on cheese of sheep's milk since 1975 (when the last steps were apparently taken). With regard to the plaintiff's contention that no account was taken of the increase in threshold prices which took place in 1976, it is significant that in previous years also there had been no automatic adjustment of the amounts to be deducted which are relevant to the special levy. There is therefore certainly no such standard practice. On the other hand, it has also been shown that as far as the margin with relation to the normal levy is concerned there was no change in 1976 and that that margin has greatly increased since 1971. Further, no criticism appears to me to be appropriate in connexion with considerations of trade policy, in which the area of discretion is possibly even more extensive. In my view, sound considerations were revealed on this point, even if it is true as the plaintiff has alleged that its imports have declined by some 30 % as a result of the amount of levy. The Commission has stated that the situation on the market in milk products has not improved; increasing restrictions are being met with on the markets of third countries and, on the other hand, keener competition with Bulgarian cheese of sheep's milk in particular is discernible here. This could well be borne in mind in considering whether the entry into the Common Market of Bulgarian cheese of sheep's milk should be facilitated. Further, it also seems to me appropriate to have regard to the fact that Bulgaria refuses to recognize the Community in terms of commercial policy. This can certainly be significant in considering whether the commercial interests of the Community in granting concessions to a country have become greater or smaller and whether the preferential status quo of 1975 should be maintained. Finally, nothing can be made of the plaintiff s argument referring to statements made by the Commission in a previous case concerning the rules governing monetary compensatory amounts for Bulgarian cheese of sheep's milk. The case in question was Case 55/75, in which in justification of the monetary compensation the Commission referred to the rules concerning minimum prices contained in Article 16 of Regulation No 1463/73 and explained that whenever a claim was justified an adjustment was made to the minimum prices. The plaintiff deduces from this that the Commission is accordingly obliged to ensure that the minimum prices accord approximately with the offer prices. To this it was rightly countered that the said statement reflected only the practice current until that time, and that there could be no question of the recognition of a corresponding legal obligation. Further, it is not now necessary to discuss whether the failure to align minimum prices upon the actual movement in prices is of any consequence with regard to monetary compensatory amounts. With regard to the central issue of the action it can thus be said that no errors are apparent in the fixing of the special rate of levy applicable to cheese of sheep's milk and that it certainly cannot be said that because the plaintiff could show that offer prices were higher it therefore has a claim under the basic rules governing the levy to a reduction in the levy to the extent demanded by it.