Opinion of Mr Advocate General Gulmann delivered on 29 June 1994. - Kingdom of the Netherlands v Commission of the European Communities. - Overseas countries and territories - Originating products - Derogations. - Case C-430/92.



European Court reports 1994 Page I-05197



Opinion of the Advocate-General

++++

Mr President,

Members of the Court,

1. This case concerns a Commission decision refusing a request from the Netherlands Antilles for a derogation from the definition of "origin of goods" laid down in the Council Decision of 25 July 1991 on the association of overseas countries and territories with the European Economic Community (1) (hereinafter referred to as "the OCT Decision").

2. The rules on the definition of the concept of "Originating products" are to be found in Annex II to the OCT Decision. According to Article 1 thereof a product is considered to have originated in the OCT "if it has been either wholly obtained or sufficiently worked or processed there".

The products at issue in this case ° pre-recorded video-cassettes ° are prepared from materials imported into the Netherlands Antilles. They are products falling under heading No 8524 of the Harmonized System (records, tapes and other recorded media for sound or other similar recorded phenomena ...), which under Annex II have originating status if in their manufacture the value of all the materials used does not exceed 40% of the ex-works price of the product, on the understanding that within that limit the materials of heading 8523 (prepared unrecorded media for sound recording or recording of other phenomena) may be used only up to a value of 10% of the ex-works price of the product.

3. Article 30 of Annex II provides for the possibility of derogations, on application, from the general criteria on the originating status of products. The basic conditions are that the interests of the OCT country concerned justify derogations ("where the development of existing industries or the creation of new industries justifies them"), "when substantial processing or working is carried out in the requesting OCTs" and when the derogation "cannot cause serious injury to an established Community industry".

4. In this case the Netherlands Government has asked for a declaration that the Commission refusal of the Netherlands Antilles' request for a derogation is void. The government claims primarily that the refusal was given after the time-limit laid down in the said Article 30 for dealing with the request had expired, and that in accordance with the express provisions of Article 30 the request must therefore be deemed to have been accepted. The government claims in the alternative that the refusal is unjustified in fact and that moreover the statement of the reasons on which it is based is insufficient.

The time-limit for dealing with the matter

5. Article 30(8)(a) provides that "the Council and the Commission shall take all the necessary measures to ensure that a decision is taken promptly and in any case not later than 60 working days after receipt of the request".

Article 30(8)(b) provides that "if a decision is not taken within the time-limit referred to in subparagraph (a) the request shall be considered as accepted".

6. In this case it is common ground that the Commission decision was adopted after the expiry of the 60-day time-limit, counting from the date of receipt of the request. However, it is also established that whilst the matter was being dealt with the Commission asked the Netherlands Government for further information and in that connection the Commission informed the government that the 60-day period would begin to run from the date on which it received the relevant information. Finally it may be stated that the refusal was given within the 60-day period counting from the receipt of that information.

The question at issue is therefore whether the Commission was justified in altering as it did the date on which the period began to run.

7. To answer that question it is necessary to give an account first of the relevant procedural rules to be followed in deciding upon a request for a derogation and secondly of the specific circumstances relating to the request in this case.

8. According to Article 30 requests for a derogation are submitted to the Chairman of the special Committee on Origin set up under Article 12 of Regulation (EEC) No 802/68 of the Council of 27 June 1968 on the common definition of the concept of the origin of goods. (2) The request may be made by the Member State concerned or where appropriate the competent authorities of the OCT concerned. Article 30(2) states that "the fullest possible information" shall be furnished, in particular with regard to a number of points listed in detail and that a special form given in Annex 9 to Annex II is to be used for the request. The form specifies in detail in 21 points what information is to be given in respect of the request, for example the anticipated annual quantity of exports to the Community, the value of the materials used which originate in third countries, the finished product' s value ex-works, the reasons why the rule of origin for the finished product cannot be fulfilled, the value of the materials to be used originating in ACP countries, the EEC or OCT, the value of the firm' s investments and the possible developments in the future to overcome the need for a derogation.

9. It may be seen, moreover, from Article 30(8)(a) that the case is to be treated in accordance with Council Decision 90/523/EEC on the procedure concerning derogations from the rules of origin set out in Protocol No 1 to the Fourth ACP-EEC Convention. (3) According to that decision it is the Commission which takes the decision with regard to a derogation, but in collaboration with the aforesaid Committee on Origin. The Commission' s draft common position is to be submitted to the committee within 20 working days after the receipt of the request and the committee is to deliver an opinion within a period laid down by its chairman. The Commission is required to inform the Council forthwith if its final decision is not in accordance with the committee' s opinion.

10. In this case the request for a derogation was received on 1 June 1992. The request, drawn up by the Government of the Netherlands Antilles, was submitted through the Netherlands Permanent Representation to the European Communities. The abovementioned form, completed, accompanied the request. It was stated that the application was submitted "in the interest of industrial development and on behalf of a potential investor", that the proposed production of pre-recorded video-cassettes was to be undertaken by the firm TVTEC in Curaçao by means of materials imported from Korea, Japan and the USA, and that in the opinion of the government "such an industry could make a significant contribution to diversify its economy, strengthen its export structure and reduce unemployment". It was further stated that "given the anticipated volume of exports from Curaçao and the scale of the EC market for pre-recorded video-cassettes, no serious injury should be expected to be caused to an established EC industry. On the other hand, the establishment of TVTEC is regarded as a substantial contribution to the development of export-orientated industries in the Netherlands Antilles".

11. From the form it appeared that the anticipated annual export to the Community was 1.5 million pre-recorded video-cassettes, since the remaining production was destined for the American market. In addition all the materials used in the manufacture were listed on the form together with their tariff classification, number and price.

Point 12 of the form, regarding the production planned was filled in as follows: "A master tape, supplied by the client, is copied on a number of mirror masters. The master tape is returned to the client. The mirror masters are recorded on to blank magnetic tape rolls (pancakes) on high-speed duplicators. The quality of the recorded pancakes is checked. The recorded pancakes are loaded into the empty VHS video-cassettes on a video tape loader. The pre-recorded cassettes are shipped to the client for distribution."

With regard to the origin of the materials mentioned, the government stated as follows in point 8 of the form: "The rules of origin for the finished product cannot be fulfilled because the Netherlands Antilles has no production of pancake, V-zero, master-copy material or packaging material. With the possible exception of packaging material the required investment in starting such industries is prohibitively high and not realistic."

The duration for the derogation requested was given as 1 January 1992 to 1 January 2002. Production was to entail the creation of 49 jobs and to necessitate investments amounting to US (5) million.

Under point 19 on other possible sources of supply for materials it was stated: "Pancake and master copy material can be sourced from Germany, the Netherlands, inter alia, with comparable quality but at substantially higher cost. India is also a possible source of pancake. V-zeroes can be sourced inter alia from Portugal. The best price/quality however can be obtained in the U.S. Packaging material can be sourced from many different countries."

Point 20 on "Possible developments to overcome the need for a derogation" was filled in as follows: "The possible import of pancake and V-zeroes at competitive prices from Europe shall be investigated".

12. On 5 June 1992 the relevant Commission office sent the request to the members of the Committee on Origin. The accompanying memorandum stated that the 60-day period for replying to the request had started to run on 1 June 1992.

In its observations on the request the Commission pointed out that the derogation requested related to video-cassettes, a sensitive product, and that the Community had been compelled to adopt anti-dumping measures against them, that the operations in the Netherlands Antilles (copying master tapes and assembling of cassettes) were relatively minor and that it was not to be expected that TVTEC would try to comply with the rules on origin by cumulation, that is, by using materials from the Community, ACP countries or other OCT countries. Reference was also made to the fact that the use of cheap ASEAN materials would be harmful to the interests of Community producers, who were already under competitive pressure, and that the operations planned would represent an annual importation of 1.5 million video-cassettes resulting in only 49 new jobs which in the Commission' s view was "all in all, very modest".

13. It appears from the documents that the request was discussed by the Committee on Origin at its meeting in June. After that meeting the Netherlands Permanent Representative to the EC sent a letter on 9 July 1992 to the responsible Member of the Commission "as a contribution to the discussion" in the Committee on Origin since the Commission had "drawn the delegation' s attention to a number of negative considerations".

In that letter the Netherlands authorities stressed that the Commission had not produced any further arguments for its statement that the manufacture would not involve any essential processing or working and that it could not be regarded as proved that the derogation "would simply add to the injury which was found in the anti-dumping proceedings against Korea and Hong Kong".

The letter continued as follows:

"... if the Commission services feel that duty-free imports of pre-recorded video tapes from the Netherlands Antilles as a result of the requested origin derogation will inflict severe injury, it is up to them to table the evidence showing that the non-imposition of the 5.1% CCT duty rate vis-à-vis third countries can indeed be expected to create considerable loss of market shares, jobs, decrease of prices etc.

In this respect, the Kingdom wishes to point out that direct consignments of Korean and Hong Kong exporters to the Community of pre-recorded video tapes ... are not subject to anti-dumping duties and are entitled to a (limited) zero rate of duty by virtue of the GSP ...".

Finally it was stated that although pancakes and V-zeroes from the Community might be used in the manufacture, they would be some 50% dearer than corresponding products from Korea or the USA.

14. The request was discussed afresh at the meeting of the Committee on Origin on 13 to 15 July 1992 and the Commission director general responsible sent a letter to the Netherlands Permanent Representative to the EC. The letter began with the following observation: "The Commission services have examined the request and noted that the following problems need to be addressed before a decision on it can be taken". Then a number of questions were mentioned, to which I shall refer later and the letter ended as follows: "I should therefore be most grateful to receive at your earliest convenience clarification of these vital matters. The period of sixty working days laid down in Article 30 of Annex II will start on the date on which I receive satisfactory information concerning the abovementioned points".

15. The Netherlands Permanent Representation to the EC answered the letter on 18 August 1992. It stated that at that time it would lead to too high costs if the production planned were to use materials from the Community, but that the undertaking concerned would naturally follow price developments. As regards the question whether the production might cause harm to the Community industry it was stated that "it must be noted that that question cannot be answered by the requesting authorities. It is assumed that the attendant exercise will be conducted by the Commission' s services. As far as concerns the risks for the intellectual property rights of Community nationals or companies, it must be recalled that the services to be provided by TVTEC will not require the transfer of intellectual property rights to the Antillean company. Those rights will remain with their legal owners ... Moreover the Netherlands Antilles legislation protects intellectual property rights including copyrights on cinematographical products." Finally the government stated that since production concerned pre-recorded video-cassettes there was no risk of evasion of anti-dumping duties, which applied only to unrecorded video-cassettes. As regards the Commission' s calculation of the 60-day period the letter stated that that point would be answered separately.

16. That answer was given by the Netherlands representative on the Committee on Origin for the purpose of its consideration of the request, who made a statement on 1 October 1992, from which it appeared that the Netherlands Government regarded the request as accepted since the Commission had not taken a decision before the expiry of the 60-day period laid down in Article 30(8).

17. By decision of 6 November 1992 the Commission, as stated, refused the request. The statement of the reasons on which the decision was based will be examined later.

18. It may be accepted that the 60-day period under Article 30(8)(a) had expired on 21 August 1992 if it had started to run from receipt of the request on 1 June 1992 but that it had not expired on the date of the Commission decision if it started to run only when the Commission received the answer from the Netherlands to its request for further information contained in its letter of 31 July 1992.

19. It seems to me that the Commission is undoubtedly right when it claims that the 60-day period in Article 30 does not necessarily start to run as soon as a request for a derogation is submitted. Even though it is to be calculated on the basis of working days, the period is relatively short. Decisions have to be taken on questions which may be complicated and sensitive and consideration of the case entails collaboration between the Commission' s officers and the Committee on Origin.

20. It seems right and acceptable ° and as far as may be seen, the point is not in principle contested by the Netherlands Government ° for the Commission to be able to require the applicant to amplify the request so that it contains the necessary basis for a decision to be taken. One may say that the application submitted must satisfy certain minimum requirements if it is to be regarded as a request within the meaning of Article 30.

21. It seems to me equally clear that strict limits must be placed on the Commission' s ability to postpone the date at which the period starts to run by means of requests for further information.

Article 30(8)(a) requires the relevant decisions to be taken "promptly and in any case not later than 60 working days after receipt of the request".

That period, which is not referred to in the earlier Council decisions on the association of the overseas countries and territories with the Community, is undoubtedly intended to ensure that the matter is dealt with as speedily as possible so that the relevant authorities and undertakings in the OCT may have a clear basis for their further measures.

22. In the first place it is clear that the Commission cannot use its essential authority to demand further information simply in order to have more time for a decision to be taken. (4) The Commission must be able to show a real need for the information requested in order to be able to take a decision on a proper basis.

23. Secondly it must be a question of factual information of clear relevance to the decision to be taken by the Community institution ° the Commission cannot without the applicant' s agreement decide to extend the time-limit with a view to further arguments for the material justification for the request ° and it must be information which may most appropriately be furnished by the applicant, that is, it may not be information with regard to circumstances which the Community institution itself is best placed to procure.

24. Thirdly the Commission must be expected to decide as quickly as possible whether it needs additional information. It must decide as speedily as possible whether the request complies with the requirement in Article 30(2) that it should contain "the fullest possible information" with regard to the points set out in that provision and in the application form or whether in view of the specific circumstances of the case there may be a need for additional information.

25. The Commission contends that the information for which it asked in its letter of 31 July 1992 was of essential importance for its decision and that it therefore justified postponing the date on which the prescribed period started to run.

26. It is accordingly appropriate to consider in greater detail the information for which the Commission asked. It will be remembered that the Commission stated by way of introduction in its letter "that the following problems need to be addressed before a decision ... can be taken" and that it ended its letter with the remark that it wished for a "clarification of these vital matters".

27. The Commission mentions as the first of the relevant problems:

"As is indicated in the request itself, Community industries could supply the materials which the Netherlands Antilles intend to import from third countries. If Community materials are used, the final products would comply with the normal rules and a derogation would not be necessary at all. Article 30(4) of the OCT rules of origin (Annex II to Decision No 91/482/EEC) expressly requires that such opportunities should be taken to avoid the need for derogations."

28. The information thus required or rather the comment on the problem mentioned is not of such a nature as to justify extending the time-limit. The Government of the Netherlands Antilles had already explained in its application of 27 May 1992 that certain of the necessary raw materials might be obtained in the Community but that they were of lower quality or dearer, or both, than corresponding goods from third countries, so that application of the rules on cumulation of origin could not solve the problem either qualitatively or economically. Moreover that question was also discussed in the letter of 9 July 1992 from the Netherlands authorities. The view expressed by the Commission in connection with its request for supplementary information is naturally relevant to a decision on the request, but is not an expression of a real need for additional factual information but rather of a wish on the part of the Commission to obtain from the Netherlands authorities more convincing arguments for their request.

29. The same is true as regards the second problem mentioned by the Commission, expressed as follows:

"Secondly, derogations are intended to provide a solution only to temporary problems, while in the long term the beneficiary territories are required to take the necessary steps to fulfil, in due course, the normal rules of origin, thus overcoming the need for a derogation.

In the present case, there is no indication that the company involved will in future comply with the normal rules."

30. In the last section of its letter the Commission states:

"Finally, in accordance with Article 30(1), the question of whether the requested derogation would not cause an injury to an established Community industry should be answered.

The kind of products in question (pre-recorded video-cassettes) can, in fact, put at risk intellectual property rights of Community nationals or companies.

Therefore it is essential to know what protection will be afforded to the Community intellectual property rights involved in the context of these products in the Netherlands Antilles.

I also note in this respect that the Community has introduced anti-dumping duties on video-cassettes from certain third countries and a derogation gives rise to the risk that these duties may be circumvented."

31. Neither can the fact mentioned in that section justify a postponement of the time at which the period should start to run. Naturally it is right to take account of whether the derogation would harm Community industry. But quite apart from the fact that no request is made for specific information, this is a situation in which it would be most natural for the Community institutions themselves to procure any further information required.

32. As regards the information requested on protection of copyright, it appeared from point 12 of the form accompanying the request that the master-tape delivered by the customer and used for copying is returned to the customer and that the pre-recorded video-cassettes are sent to the customer for distribution. The Commission' s doubts about the relevance of the protection of copyright of the recorded works by Netherlands Antilles legislation could have been more speedily and more simply answered than in fact they were. The answer to that question could in any case not in itself have justified extending the 60-day period in Article 30(8) for two months after the request had been received.

33. Finally the Commission' s reference to the existing anti-dumping measures cannot be regarded as the expression of a wish for further information, (5) but is rather a statement of the Commission' s views on this point.

34. The Commission' s request in its entirety must in my view be regarded in the first place as an attempt ° justifiable in itself ° to obtain from the Netherlands Government more detailed arguments for an acceptance of its request.

The circumstances referred to in the letter do not provide a sufficient basis for an extension of the time-limit. That is confirmed by the fact that the majority of the problems raised by the Commission in its letter of 31 July 1992 ° at a late stage in the consideration of the request as normally envisaged ° had already been identified by the Commission in its memorandum of 5 June 1992 to the members of the Committee on Origin.

35. It follows that in accordance with the provisions of Article 30(8)(b) of the Annex, the request must be deemed to have been accepted and that the Netherlands Government' s application for a declaration that the decision is void must be upheld if only for that reason.

36. In case the Court does not agree I shall briefly consider the government' s other arguments.

The Commission decision of 6 November 1992

37. According to Article 131 of the EC Treaty the purpose of the association of overseas countries and territories is to promote the economic and social development of those countries and territories. Accordingly it follows for example from the provisions on freedom from customs duties that products originating in the OCT benefit, on importation into the Community, from the abolition of customs duties under Community law, whereas the countries and territories "may ... levy customs duties which meet the needs of their development and industrialization or produce revenue for their budgets". (6)

38. Article 30 of the Annex concerning the definition of the concept of "originating products" must be interpreted in the light of the purpose of the rules of the association and may moreover in its specific wording be regarded as an expression of the Community' s basic readiness to accommodate the OCT. Derogations may be adopted "where the development of existing industries or creation of new industries justifies them" and "the Community shall respond positively to all requests which are duly justified ..., in particular when substantial processing or working is carried out in the requesting OCTs, and which cannot cause serious injury to an established Community industry".

39. The Netherlands Government contends that in its decision of 6 November 1992 the Commission did not have sufficient regard to the situation in the Netherlands Antilles and the Community' s basic accommodating attitude towards the OCT. In addition the Netherlands Government claims that the statement of the reasons on which the Commission decision is based is insufficient.

40. Even though the government must be regarded as right in stating that a decision on a request for a derogation must be approached in a basically accommodating spirit, one must agree with the Commission that the conditions which must be met under the rules for a request to be accepted are discretionary and involve appraisal of complex economic situations. That is important, as it follows from the Court' s case-law that in such cases the Court will limit its judicial review to verifying whether the facts on which the contested choice is based have been accurately stated and whether there has been a manifest error of appraisal thereof. (7)

41. That review must take place on the basis of the statement of the reasons on which the decision is based and which under Article 190 of the EC Treaty the Commission is required to make.

42. In this case the Commission, after referring to the relevant rules, states that the request does not explain whether the necessary basic materials may be procured from neighbouring (non-associated) developing countries, and further observes that the relevant materials are sensitive and subjected to protective measures on the world market. Here the Commission is probably referring to the provisions of Article 30(6) of the Annex, according to which, in the examination of requests, special account is to be taken in each individual case of the possibility of conferring originating status on products which include in their composition materials originating in neighbouring developing countries or least-developed countries.

It seems unclear to me what weight may be attached to the fact that the form does not expressly explain whether materials may be procured in such countries. However, it does not seem unreasonable to regard the express information in the request regarding the countries from which the materials used will come as indicating that it is not possible to procure the necessary materials from neighbouring countries.

If that was the reason for assuming that the implied information on this must be incorrect or uncertain, the Commission ought to have said so expressly.

43. Next in its statement of reasons the Commission states:

"... the fact that such components, materials or parts may be obtained cheaper in third countries is not generally a justification for the non-application of normal rules of origin, especially when there might be a strong presumption that world prices are not the result of normal market prices".

In that respect the Commission states:

"... apparently no real effort is envisaged by the company to buy the materials in the Community, the OCT or in the ACP countries, thus fulfilling the rules of origin by cumulation".

With that the Commission is referring to the fact that under Article 30(4) of the Annex "in every case an examination shall be made to ascertain whether the rules relating to cumulation of origin do not provide a solution to the problem", that is, whether the necessary materials cannot be obtained in the Community, ACP countries or other OCT countries, since under Article 6 of the Annex working or processing in those countries is to be considered as having been carried out in the relevant OCT country.

44. Presumably the Commission is stating in this way that the refusal is based inter alia on the fact that the relevant materials could be purchased in the Community and that in that respect it is not significant that the reason given in the request is that the materials in question may be purchased more cheaply in the countries where it was proposed that they should be bought. Presumably a crucial point for the Commission here was that it does not regard the world price level as determined by the free play of market forces.

Naturally it is not possible to criticize the Commission for basing its decision on the idea that a request may be refused on the ground that the applicant has made insufficient use of the real existing opportunities for buying materials in the Community or the like. However, it must be regarded as basic in this respect that the Commission may refuse a request on those grounds only in so far as the relevant materials from the Community or the like are genuinely competitive as regards price and quality as compared with the corresponding materials from third countries which the applicant is planning to use in the manufacture.

45. In addition the Commission includes the following in the reasons on which its decision was based:

"... the activities carried out in the Netherlands Antilles appear to constitute a relatively minor operation resulting in a minimal added value and not really leading to the creation of a durable and substantial new economic activity;" and

"... the planned activities represent the annual importation into the Community of 1 500 000 pre-recorded video-cassettes originating in third countries, for a duration of ten years, while derogations are aimed at solving temporary problems of OCT industries in dealing with the rules of origin and not at providing a (semi-)permanent non-application of those rules".

That refers to the provisions of Article 30 to the effect that the development of existing industries or the creation of new ones should justify the derogation and that there should be substantial processing or working in the relevant OCT.

46. The Netherlands Government denies that the Commission could assess the planned production as being relatively minor, that it would result in minimal added value and would not lead to the creation of a durable new economic activity. It refers to the information supplied and in particular to the fact that the added value was 50%.

The Commission, for its part, claims that the government should have provided information indicating that the planned production would contribute to an extension of the economy and would improve the balance of payments in the Netherlands Antilles.

47. It is hard to understand how the Commission could describe the added value as minimal when it is considered that the figures in the request, which moreover were uncontested, show that the added value is 50%.

48. In that respect it may be appropriate to refer to Article 30(7)(a) of the Annex, worded as follows:

"Without prejudice to paragraphs 1 to 6, the derogation shall be granted where the value added to the non-originating products used in the country or territory concerned is at least 45% of the value of the finished product, provided that the derogation is not such as to cause serious injury to an economic sector of the Community or of one or more Member States".

It may presumably be deduced from that provision that when the added value is at least 45% the Commission is precluded from stating as a reason for refusal that there will not be any substantial processing or working. In any case it does not seem convincing when the Commission claims that the opening words of the subparagraph "without prejudice to paragraphs 1 to 6" give the opportunity to continue to have regard to the amount of the added value in spite of the percentage stated.

49. As regards the Commission' s observation with regard to the duration of the requested derogation I think there can be no objection to the Commission' s finding that a 10-year derogation was not justifiable and that the duration in itself might be an indication of problems relating to a long-term execution of the project planned.

50. The Commission gives the following as the final reason for its refusal:

"... the Community video-cassette industry has recently suffered injury from dumping practices by major foreign competitors, such practices having also taken place on third country markets, and ... anti-dumping measures can only redress injury on specific markets but cannot restore fair competition on a world level, thus leaving the EC industry open to attack both in third country markets and in its own market as a result of the importation of low-price downstream products;

... the EC pre-recorded video-cassette duplicating industry is itself undergoing pressure from abnormally low-priced imports made possible by low-cost base materials and often lower copyright expenses whether legally justified or not."

51. The Netherlands Government claims that the Commission has not shown that the derogation might cause serious injury to the Community industry.

52. It cannot be right ° nor has it been claimed by the Commission ° that that alone should put the onus on the applicant to prove that the derogation will not cause the Community industry serious injury. Quite apart from the obvious difficulty of adducing such proof, it is rather for the Commission, which in this case can seek the support of the Committee on Origin, to assess possible injury to the Community. It is therefore clear that the Commission cannot give as a reason for refusing the request that the applicant has not established that such damage will be no more than minor. The Commission must at least make it seem probable that there is a firm basis for the assumption that such serious injury may result.

53. In this connection the Commission has referred to the fact that this is a sensitive sector of products for which the Community has adopted anti-dumping measures ° though not for the pre-recorded video-cassettes in question but for unrecorded video-cassettes ° and that in addition special factors distorting competition may arise as regards the pre-recorded video-cassettes in relation to the differences in protection of copyright.

54. It is not possible to state on that basis whether the Commission has adopted a materially incorrect decision. The factors concerning competition to which the Commission refers mean that it is not impossible that the Commission was in fact entitled to assume that the derogation would lead to serious injury to the Community industry and to refuse the request on those grounds. It would however have been better if the Commission had linked its observations more clearly to the specific request for a derogation so that it was made clear that it could in fact lead to serious injury to the Community industry.

When this uncertainty as to the tenability of the Commission' s reasons for its assessment of the extent to which the derogation might lead to serious injury is regarded in conjunction with the inadequacy of the statement of reasons previously mentioned ° including in particular the Commission' s erroneous assessment of the scale of the processing or working ° my conclusion is, though not without a certain doubt, that there are sufficient grounds for declaring the decision void as a result of an inadequate statement of the reasons on which it was based.

Opinion

On those grounds I shall propose that the Court:

° declare the Commission decision of 6 November 1992 void; and

° order the Commission to pay the costs of the Kingdom of the Netherlands.

(*) Original language: Danish.

(1) ° Decision 91/482/EEC, OJ 1991 L 263, p. 1.

(2) ° OJ, English Special Edition 1968 (I), p. 165.

(3) ° OJ 1990 L 290, p. 33.

(4) ° In a similar case the Court refused to accept such an attempt to avoid the consequences of a time-limit (Case 148/87 Frydendahl Pedersen v Commission [1988] ECR 4993). In that case the Court disapproved the Commission' s practice of asking the national authorities in applications for refund of import duties to withdraw their requests and to re-submit them later, where the time-limit of four months within which the Commission had to take a decision under the contested regulations was not found long enough to investigate the case fully. The Court found that the real purpose of the practice complained of was to avoid the legal consequences provided for should no decision be taken within the prescribed period and that the Commission thereby committed a misuse of procedure.

(5) ° The Netherlands Government had already stated in its letter of 9 July 1992 that it did not think that those measures would be evaded since they affected unrecorded video-cassettes whereas the intended production concerned pre-recorded video-cassettes.

(6) ° Article 133(3) of the EC Treaty.

(7) ° Judgment in Case C-174/87 Ricoh v Council [1992] ECR I-1335, paragraph 68.