IX —

However, the decisive issue in the present cases appears to me to be a balance between the ‘economic reality’ referred to by the applicants and the existence, alleged by the Commission, of a matter of overriding public interest preventing the legitimate interests of the applicants from being taken into account. The Commission claims that the tonnage represented by the taking out of the export licences exceeded at all times that of the exports actually carried out. The applicants maintain, on the other hand, that the Commission artificially inflated the number of licences taken out and reduced exports to a minimum. That point might possibly form the subject of an investigation. However, I do not think that an expert assessment of the question is necessary, as although, as regards the applicants, the difference is only 2 % for the years 1975/1976, there is a disparity of 10 % at Community level, even if this is the result of speculations by certain dealers other than the French maltsters. At all events, the fact remains that the refunds granted in June/July 1975 were out of all proportion to world prices as from the spring of 1976. In addition, the Commission observes that the maltsters conclude their export contracts at dates which are too distant from the dates of issue of their export licences fixing the refund in advance and, at all events, from actual exportation from the warehouse. For example, the contract concluded on 29 December 1975 between Union Malt and a Sudanese brewery provided for deliveries to take place between February 1976 and July 1977. It is difficult to pass judgment on that practice. I can only say that although there actually exists in law a Community year for barley which runs from 1 August to 31 July and may be modified in the course of the year, there is no Community year for the malt industry even if in fact, in the trade, such a year runs from 1 May to 30 April. I wonder, however, whether the same technical and commercial requirements referred to by the applicants compel them to bring their contracts with the brewers of the Common Market forward to the same extent and whether the ‘general scheme for the malt industry’ in the Common Market is the same as that which applies to customers in third countries. Faced as we are with those points of view I think that we must take a cool look at the issue. There is no question of criticizing French industrialists for having used the system of pre-financing the refunds to extend improperly the period of validity of their advance-fixing certificates. Furthermore, in reply to a written question from Mr Hougardy, the Commission itself acknowledged on 24 September 1976 that it regarded ‘the accusation’ against European maltsters ‘of fraud and miscalculation as ill-advised and unwarranted’. Put more simply, the question is whether the circumstances surrounding the adjustment of rules which, in the light of experience, no longer appeared to be economically justified are such as to call the liability of the Community in question. It is true that the Community regulations enabled traders — in particular, dealers — to execute licences for the purposes of resale and that that transaction was in itself perfectly lawful. Although the obligations deriving from licences are not transferable, the rights deriving therefrom are during the period of validity of the licence (Article 3 (1) of Regulation No 193/75). In fact, certain of the licences produced by the applicants were transferred to other maltsters in the Common Market (as happened in Cases 44 & 45/77). Finally, the maltsters could themselves resort to the inward processing system. The applicants maintain that it has not been possible to show that at any time a European maltster, especially a French maltster, imported barley in order to reexport it later in the form of malt with a higher refund. However, that was in fact done for up to 10 % of the exports of barley, since only about 90 % of the barley for brewing supplied to the Community malt-houses, whose capacity has been extended in the light of the boom in the beer industry in the third world, is of Community origin. Consequently, certain people were able to turn the balance maintained between the import levies and export refunds to advantage. Even if the applicants are not involved the result has been a trade in licences, as in the sugar market, as well as possibilities of substitution or exchange (‘duplication’) and disturbances on the market. At all events, if the speculation made possible by the bonded warehouse procedures was, in principle, lawful in nature, there was still express provision for adjustments to be made to that procedure. It must be open to the legislature to modify at any time a law which allows such speculations to take place: it is the terms of the contract which must be in accordance with the rules and not vice versa. Consequently, if the system of advance fixing of the refunds was indissolubly linked in the minds and practice of the applicants to that of payment of the refund before the products were placed in the warehouse and if they have adjusted their contracts in reliance on the length of the period of warehousing, the link thus established between the two systems is the result of their trading practice but it is not rendered in any way sacrosanct by the fact that, in the words of the applicants, ‘they are connected by the performance of a single contract’. The applicants have perhaps been encouraged in that view by a practice which has lasted for seven years but a matter of overriding public interest could legitimately justify an amendment. If, relying on the period of three or six months by which they were in practice permitted by Regulations Nos 441/69 and 1957/69 to overrun the period of validity of their export licences, the maltsters believed themselves able ‘to implement their export contract over 15 to 18 months by recovering, at the end of the malt year, the period of three to six months which they had been compelled to devote at the beginning of the marketing year to the negotiation of their contracts and to the final formulation of their conditions of sale’, that was not the aim of the system of prefinancing the processing or the storage. The conviction that the former procedure would not be modified during the 1975/1976 malt year thus appears to me to be subjective, which is of course of the nature of any conviction, and the issue of the export licences to the applicants has not created any relationship of public law between them and the Community of the sacrosanct nature attributed to it by the applicants. By way of a matter of overriding public interest the Commission refers to the fact that the practice led to dumping at the expense of the maltsters of certain third countries and to threats of retaliation by certain of those countries (Switzerland, Australia…) against other sectors of the common market in agriculture. The applicants claim that the measure adopted by the Commission in no way benefited the maltsters of the third countries. However, in so far as the contracts concluded with the European maltsters have been terminated or modified their advantage over the other suppliers to brewers in third countries has been reduced and the maltsters in those countries have drawn the necessary inferences from it for the future. Whilst maintaining that it had not wished to fix any quota for the refunds the Commission also invokes the need to set a ceiling on them, in accordance with the general policy followed by the Community in the fight against inflation. I consider that that is also an ‘overriding’ consideration which must call to mind the one leading to the abolition of the production refund on starch and connected with the Council's undertaking to amend the agricultural regulations in such a way as to fix a ‘real, rather than a target’, ceiling for the undertakings entered into by the EAGGF (European Agricultural Guidance and Guarantee Fund). In fact, the expenses arising from the fixing of the refunds at an excessive level have been assessed at almost 37 million units of account. The truth is that in the light of the possible duration of the bonded warehouse procedure the refund on malt had been fixed in June/July 1975 with the agreement of the competent Management Committee at a level which bore no relation to the market conditions existing at the time when, in the absence of any modification of the system, the licences could have been discharged. According to the chairman of the Subcommittee on Control of the Committee on Budgets of the European Parliament ‘much remains to be verified and explained’ in that area. I believe, however, that I can accept the statement concerning the export refund for malt made by the Audit Board of the European Communities in its report drawn up on 24 October 1977 in relation to the accounts for the financial year 1976: ‘it is clear that a large number of those licences have been requested for speculative reasons, without any real contracts to support the applications, and that they have led the Commission to pay considerable export refunds … It is clear that at that period the malt exporters anticipated the development of the market with a greater degree of accuracy than did the Commission; they therefore reacted more quickly to their own advantage, thereby imposing excessive burdens on the Commission …’. For my part I find therein an illustration of the ‘game of cat and mouse’ analysed so well by Mr Advocate General Alain Dutheillet de Lamothe in his opinion delivered on 10 February 1971 in the Tradax case ([1971] ECR 1 158) and it is a fresh example of the time lag between the appearance of the market trend which is quickly turned to advantage by particularly well-informed traders and the reactions of an administrative body which is subject to complex procedures. Placed in that situation it is possible, as the applicants state, that on 5 February 1976 the Commission put before the Management Committee the alternative of a reduction in the periods during which the products remain in the warehouse or of a reduction in the periods of validity of the licences. For its part the Commission did not wish to alter the period of validity of the advance fixing of the refund (as it had done, for example, as regards the import licences for durum wheat by means of Regulation No 2607/75 of 14 October 1975) which in fact constitutes an established right and there was in the Management Committee a majority in favour of approving the modification of the system for pre-financing the refund to which producers became entitled when the products were placed in the warehouse, even if at the following meeting that majority regretted the position which it had adopted. Finally, the Commission is not alone in not having wished to recognize the ‘scheme for the malt industry’ praised by the applicants. In its Regulation No 1381/76 of 16 June 1976 the Council stated that ‘experience has shown that speculative use may be made of a long period of validity’ (of export licences) and took up again the essential points of measures drawn up by Regulation No 1157/76 of the Commission of 17 May 1976, which had not been in accordance with the opinion of the Management Committee for Cereals. Although it acknowledges that ‘in accordance with international practice, a large proportion of delivery contracts are concluded for at least a year’, the Council did not wish to extend the validity of the export licences beyond 12 months. Its regulation requires that entry of the destination of the products exported shall be made not later than two months following the day of issue of the licence. The security is only released on production of proof that the product has been imported into the sub-zone or the European non-Member country of destination concerned. The transfer of the rights deriving from long-term export licences has been prohibited for malt since August 1976 (Commission Regulation (EEC) No 2088/76 of 24 August 1976). As it was required to make an assessment of a complex economic situation the Commission, with the support of the Management Committee, enjoyed a large measure of discretion. In the exercise of that discretion it did not commit any gross error, or misuse its powers, or manifestly exceed the limits of that discretion but, to express it in a positive way, it decided between the interests in question in accordance with the aims of the Common Agricultural Policy as defined by the Treaty. I am therefore of the opinion that the application should be dismissed and that costs should be borne by the applicants.