(b)

The applicants also contend in support of their application that the Commission misused its discretion in cancelling the sale on the ground that it would result in serious disturbance of the market. In the first place, market conditions did not develop in an unforeseeable way and in the second place there was in fact no disturbance on the market after the second sale by tender. Even if it is accepted that proceeding with the sale on the basis of Regulation No 71/81 would have led to disturbance of the market, the contested measures were not of such a nature as to eliminate such disturbances and were in contradiction to the Commission's earlier position. The applicants are therefore of the opinion that the sale in question was cancelled not in the overriding general interest, as stated in the preamble to Regulation No 2238/81, but solely for the purpose of reducing their profit margins. (aa) In reply the Commission reiterates its view that the way in which the olive oil market would develop could not be foreseen when Regulation No 71/81 was adopted. Because of the increase in prices the applicants, who arc among the largest undertakings in the olive oil market, would have made vast profits at the expense of the taxpayer and, because of the large lots which had been allocated to them, would be in a position to exclude their competitors from the market. The Commission was thus obliged to exercise its power to regulate the market and to intevene in the procedure to cancel the sale. It should first of all be noted in regard to this point that even though the Commission has a broad discretion in the exercise of its functions in regard to the supervision and management of the market, the proper and appropriate exercise of that discretion must be subject to review by the Court of Justice. In particular, the exercise of that discretion is wrongful if a measure ought to have been taken under other circumstances or on other grounds but not under the circumstances which actually existed or on the grounds or for the motives which were actually relied upon. Consequently, consideration must first be given to the question whether, as the Commission states, conditions on the olive oil market had in fact actually and unforeseeably developed in such a way that if the sale had taken place, serious disturbance of the marked would have been likely to result. The Commission states in particular that when Regulation No 71/81 was adopted in January, an above-average olive harvest, and consequently a relatively high yield of lampante grade oil, was being forecast. However, the harvest proved to be smaller than expected. The lower production of lampante grade oil as a result, the relative shortage of that oil on the world market and the devaluation of the green lira led to an unforeseeable increase in prices. By contrast, Mr Guida explained in his evidence that the price of lampante grade oil in the 1980/81 marketing year rose only by about 15%. That rise could be explained, inter alia, by the monthly increases in the intervention price, by the devaluation of the green lira and by the devaluation of the Italian currency. The price increase could also be explained by the fact that demand for olive oil is usually greater in the summer. The development of prices during the period in question must therefore be considered “normal”. The witness also explained that during the period in question, and contrary to the Commission's view, there was no “shortage” of lampante grade oil in the sense that the needs of the refineries or of the consumer could not be met. The fact that very little lampante grade oil was offered to the intervention agencies merely proved that the producers were able to dispose of that product on the market. It follows that when the Commission adopted Regulation No 71/81 on 12 January 1981 it should have already been able to predict the development of market conditions and the “normal” price increase by taking the ordinary degree of care. The fact that 60 undertakings, some of which had only just been created, had apparently made a correct assessment of the state of the market, such that they were prepared, on the very first day on which offers were accepted, to tender all the available lots, also tends to support that conclusion. As regards the expected yield and the alleged shortage of lampante grade oil, it should also be recalled in this connection that, according to the information supplied by the Commission, the olive oil harvest takes place in Italy between November and April. The greater part of the crop is harvested in December, January and Februaiy and is more or less immediately processed into olive oil. Thus the Commission should already have been able to determine the actual size of the olive crop and the expected quantity of lampante grade oil when Regulation No 71/81 was adopted on 12 January 1981, or at the latest by the end of February. Even if that had not been possible, the Commission could have learned at the latest from the weekly report on olive oil (No 323) of the Advisory Committee for the period from 9 to 14 February 1981 that olive oil production was likely to be less than the expected 640000 tonnes. It also appears from the telex sent by the Italian Ministry of Agriculture on 4 April 1981 that according to information supplied by the Italian Statistical Office (Istat), olive oil production in Italy was likely to be 610000 tonnes. In a telex dated 12 February 1981 AIMA had asked, in the meantime, that the sale be suspended so as to enable it to verify the regularity of the offers. The competent director at the Commission indicated his agreement with the proposed suspension by a telex of 18 February 1981 and expressly stated that there was no need to amend Regulation No 71/81. (bb) By a letter of 16 May 1981, AIMA informed the President of the Commission and the competent Member of the Commission, Poul Dalsager, that the investigations were complete. It also informed them that the situation in the olive market had changed radically since the regulation in question had been adopted in that there had been a steep increase in price, which had in the meantime reached LIT 250250 per 100 kg. Since the fixed price of LIT 210000 per 100 kg laid down in Regulation No 71/81 was therefore insufficient, the sale to be carried out under that regulation should be cancelled and a new sale by tender, corresponding to real market conditions, should take place. Thus at that point, at the very latest, the Commission knew definitively of the changed market conditions and ought therefore to have cancelled the sale forthwith. Such a measure was not taken. Instead, as is clear from a telex sent by the Italian Ministry of Agriculture on 5 June 1981, the purchasers were designated by the drawing of lots. The Minister referred once again in this telex to the political and economical consequences, which, it was feared, the sales would provoke and called upon the Commission not to proceed with the sale. However, the drawing of lots identified the purchasers individually. Because the Commission, though fully aware of the market situation, did not stop the drawing of lots, it gave those taking part the impression that it saw no reason at that time to stop the sale on account of the changed market conditions. As a result of the drawing of lots the purchasers acquired an unassailable right, in the form of an individual right in public law to acquire certain assets. Their legal position as regards those assets is a result of the fact that Regulation No 71/81 did not permit the Commission to cancel the allocation of lots without consulting the applicants once the drawing of lots had taken place. As may be seen from the preamble to Regulation No 2238/81 and Regulation No 2239/81, the Commission was quite obviously acting on the basis that the applicants had such an unassailable right to acquire assets. The preamble states, inter alia, that the consignments put up for sale had been “allotted” to tenderers by drawing lots pursuant to Article 6 (1) of Regulation No 71/81 and that on the grounds which have already been stated, it was necessary to cancel “the sale in question” while taking “account of the situation of [those] operators”. In particular, the unassailable claim in public law vested in the applicants by the drawing of lots is independent of whether or not contract of sale in civil law was concluded between the intervention agency and the designated undertakings in connection with the drawing of lots, or even whether or not there was in fact an agreement to transfer title in rem. Contrary to the Commission's view, therefore, no significance is to be attached to the fact that the intervention agency did not immediately inform the tenderers, by registered letter with acknowledgement of receipt, of the result of their participation in the invitation to tender, as required by Article 10 of Regulation No 2960/77 as amended by Regulation No 883/79 (Official Journal L 111, 4.5.1979, p. 16). As the applicants correctly point out, the intervention agency has, in particular, no discretion as to whether or not the goods will be sold but is responsible solely for ensuring that the sale is properly conducted. To sum up, therefore, it may be said that it was not the changed market conditions which created the risk of serious disturbance of the market but at most the Commission's intervention in the tendering procedure provided for in Regulation No 71/81, which came so late as to amount to a misuse of discretion. (cc) It must further be stated that the Commission has not succeeded in demonstrating conclusively that proceeding with the sale on the original conditions would actually have led to serious disturbance of the market. It is generally not clear in what way the marketing of several fairly large lots of oil at relatively favourable prices could have led to direct disturbance of the market when, according to the information supplied by the Commission, there were shortages and prices were rising. As may be inferred from the preambles to the regulations in question, the truth is that the Commission feared that the six undertakings, because of the high profit they would make, would achieve an economically dominant position which would enable them to disrupt the market by means of selling prices fixed by them alone. In other words, what the Commission feared was not a direct disturbance of the market, but the possibility of indirect disturbance. Moreover, Mr Guida's evidence does not support the Commission's argument that serious disturbances of that kind or the exclusion of other operators from the market was to be feared. In any case the actual possibility of exercising influence of that kind on the market is dependent upon a number of hypotheses which are difficult to prove. Such a possibility would only exist, for example, if the undertakings in question had, by means of the purchase they had made, acquired a dominant market position. Because of the lack of transparency in the olive-oil market, we do not know precisely what proportion of the total quantity of lampante grade oil on the Italian market was represented by the quantities which were sold. According to the applicants, that proportion was only 8%, while the Commission speaks of 30%. It must also be borne in mind that the Commission is itself the cause of any risk, if that is the right word, that might exist of such a dominant position being acquired, by virtue of the fact that it organized the sale of fairly large lots at a fixed price under the terms of Regulation No 71/81. The applicants are also correct in their view that the provisions of Regulation No 2239/81, under which the same lots were reserved for the same tenderers at a slightly higher, but none the less still favourable, price, were to a certain extent in contradiction with the sale which had been cancelled in that they did not directly eliminate the danger of exercising an influence on the market of the kind associated with a dominant position. As proof of the disturbance of the market which was allegedly to be expected, the Commission has produced only several telex messages referring to such a risk, sent by competing undertakings after the lots had been drawn. However, the Commission could not tell us how many undertakings and which categories of economic operators — cooperatives, the refining industry, the manufacturers of equipment, wholesalers, retailers, etc. — would have been threatened by a sale under the original conditions. Clearly, it had also failed to ascertain the stocks held by the individual undertakings before it adopted the contested regulations. Finally, the Commission could not say with certainty that the undertakings in question would relinquish their profit margins in order to exclude their competitors from the market or that they would use their profits to disturb the market. It must therefore be concluded that in cancelling the sale, the Commission allowed itself to be influenced purely by an abstract, hypothetical risk of disturbance of the market which, moreover, was attributable solely to its own breach of duty. However, such a risk as will be shown, is not sufficient to justify depriving the applicants of their right to acquire assets.