Judgment of the Court of 14 July 1994. - Hellenic Republic v Council of the European Union. - Action for annulment - Council Regulation (EEC) Nº 1765/92 of 30 June 1992 establishing a support system for producers of certain arable crops - Obligation to observe a final date for sowing and for lodging an application for a compensatory payment. - Case C-353/92.



European Court reports 1994 Page I-03411



Summary

Parties

Grounds

Decision on costs

Operative part



Keywords

++++

1. Acts of the institutions ° Statement of reasons ° Obligation ° Scope ° Regulations

(EEC Treaty, Art. 190)

2. Agriculture ° Common organization of the markets ° Discrimination between producers or consumers ° Fixing of a final date for sowing and for lodging applications for compensatory payments under the support system for producers of certain arable crops ° Fixing on the basis of objective criteria adapted to the operational requirements of the common organization ° Different repercussions on producers ° No discrimination

(EEC Treaty, Art. 40(3), second subpara.; Council Regulation No 1765/92, Art. 10(2))

3. Agriculture ° Common agricultural policy ° Objectives ° Harmonization ° Discretion of the institutions ° Stabilization of markets, ensuring of availability of supplies and reasonable standard of living for producers ° Reform of the support system for producers of certain arable crops

(EEC Treaty, Art. 39; Council Regulation No 1765/92)

4. Community law ° Principles ° Protection of legitimate expectations ° Limits ° Amendment of the rules relating to a common organization of the markets ° Discretion of the institutions ° Change, with sufficient notice, in the final date for lodging applications for Community financial aid ° Breach ° None

(Council Regulation No 1765/92)

5. Agriculture ° Common agricultural policy ° Principle of Community preference ° Scope ° Limits

Summary

1. The statement of reasons required by Article 190 of the Treaty must be appropriate to the nature of the measure in question. It must show clearly and unequivocally the reasoning of the institution which enacted the measure so as to inform the persons concerned of the justification for the measure adopted and to enable the Court to exercise its powers of review. The statement of the reasons for a measure is not, however, required to specify the matters of fact or of law dealt with, provided that it falls within the general scheme of the body of measures of which it forms part.

2. The common agricultural policy requires the adoption of common rules which may affect producers differently according to the individual orientation of their production or local conditions; but they may not be regarded as constituting discrimination prohibited by the second subparagraph of Article 40(3) of the Treaty if they are based on objective rules formulated to meet the needs of the general common organization.

Such is the case of Article 10(2) of Regulation No 1765/92 establishing a support system for producers of certain arable crops which makes grant of compensatory payment subject to compliance with a final date for sowing and lodging applications. The introduction of such a final date is intended to ensure that the system of such payments is monitored and is effective, does not, in principle, exclude producers from any Member State, and, finally, allows for adaptation according to climatic conditions.

3. In pursuing the objectives of the common agricultural policy, the Community institutions must secure the permanent harmonization made necessary by any conflicts between the various objectives set by Article 39 of the Treaty, taken individually, and, where necessary, allow any one of them temporary priority in order to satisfy the demands of the economic factors or conditions in view of which their decisions are made.

Accordingly, the establishment of a new support system for producers of certain arable crops which might lead to a reduction of Community production and of income for certain producers does not constitute a breach of Article 39 since, by approximating Community prices to the prices of the world market, such a reform aims to stabilize the markets and ensure availability of supplies, which is not the same as self-sufficiency, and losses of income are offset by compensatory payments for which producers may qualify.

4. Traders cannot have a legitimate expectation that an existing situation which is capable of being altered by the Community institutions in the exercise of their discretionary power will be maintained. That is true in an area such as the common agricultural policy and the common organization of the markets, whose purpose involves constant adjustments to meet changes in the economic situation. It follows that traders cannot claim a vested right to the maintenance of an advantage which they derive from the establishment of the common organization of the markets and which they enjoyed at a given time.

That applies with greater force where the innovation introduced by a new regulation amounts merely to a fortnight' s change in the date by which applications for Community financial aid were to be lodged and the producers concerned had sufficient time for adjustment to the new rules.

5. Whilst the principle of Community preference should be taken into account by Community institutions as an element in the common agricultural policy, it nevertheless cannot affect their decision until all the economic factors influencing world trade have been evaluated. Community preference is not in any case a legal requirement the violation of which would result in the invalidity of the measure concerned.

Parties

In Case C-353/92,

Hellenic Republic, represented by Fokion Georgakopoulos, Assistant Legal Adviser, acting as Agent, with an address for service in Luxembourg at the Greek Embassy, 117 Val Ste Croix,

applicant,

v

Council of the European Union, represented by Jean-Paul Jacqué, Director of the Legal Service, and Sofia Kyriakopoulou, of the same service, acting as Agents, with an address for service in Luxembourg at the office of Xavier Herlin, Manager of the Legal Directorate of the European Investment Bank, 100 Boulevard Konrad Adenauer,

defendant,

supported by

Commission of the European Communities, represented by Xenophon A. Yataganas, Legal Adviser, acting as Agent, with an address for service in Luxembourg at the office of Georgios Kremlis, of its Legal Service, Wagner Centre, Kirchberg,

intervener,

APPLICATION for the annulment of Council Regulation (EEC) No 1765/92 of 30 June 1992 establishing a support system for producers of certain arable crops (OJ 1992 L 181, p. 12),

THE COURT,

composed of: O. Due, President, G.F. Mancini (Rapporteur), D.A.O. Edward (Presidents of Chambers), C.N. Kakouris, R. Joliet, F.A. Schockweiler, G.C. Rodríguez Iglesias, P.J.G. Kapteyn and J.L. Murray, Judges,

Advocate General: F.G. Jacobs,

Registrar: L. Hewlett, Administrator,

having regard to the Report for the Hearing,

after hearing oral argument from the Hellenic Republic, the Council and the Commission at the hearing on 18 January 1994,

after hearing the Opinion of the Advocate General at the sitting on 9 March 1994,

gives the following

Judgment

Grounds

1 By application lodged at the Court Registry on 10 September 1992, the Hellenic Republic brought an action under Article 173 of the EEC Treaty for the annulment of Council Regulation (EEC) No 1765/92 of 30 June 1992 establishing a support system for producers of certain arable crops (OJ 1992 L 181, p. 12).

2 That basic regulation introduced a system of compensatory payments for producers of cereals, protein crops and oil seeds, including soya beans.

3 According to Article 2(5) of that regulation, "The compensatory payment shall be granted under: (a) a 'general scheme' , open to all producers, or (b) a 'simplified scheme' open to small producers". The latter, defined in Article 8(2), may opt for the general scheme or the simplified scheme.

4 Under Article 2(5), producers applying for the compensatory payment under the general scheme are required to set aside part of the land of their holding and receive compensation in return. According to Article 8(3), no set-aside requirement is imposed under the simplified scheme but the compensatory payment is paid at the rate applicable for cereals, whatever the crops actually produced. As is apparent from Articles 4 and 5, the rate for cereals is significantly lower than that for oil seeds.

5 According to the seventeenth recital in the preamble to the basic Council regulation, compensatory payments should be paid once a year for a given area.

6 Article 10(1) and (2) of the basic Council regulation lay down the conditions for the payment of compensatory payments in the following terms:

"1. The compensatory payments for cereals and protein crops, as well as the compensation for the set-aside obligation, shall be paid between 16 October and 31 December next following the harvest.

2. In order to qualify for the compensatory payment, a producer must, at the latest by 15 May preceding the relevant harvest:

° have sown the seed,

° have lodged an application.

..."

It is the latter provision that is at issue in these proceedings.

7 Finally, the seventh indent of the first paragraph of Article 12 indicates the procedure for the adoption of detailed rules for the application of the basic regulation and, in particular, "those allowing the dates in Articles 10(2) ... to be varied in certain areas where exceptional climatic conditions render the normal dates inapplicable".

8 Commission Regulation (EEC) No 2294/92 of 31 July 1992 on detailed rules for the application of the support system for producers of the oil seeds referred to in Council Regulation (EEC) No 1765/92 (OJ 1992 L 221, p. 22, hereinafter referred to as "the implementing regulation"), which became applicable as from the 1993/1994 marketing year, provides (Article 2(1)):

"1. The compensatory payment provided for in Article 5(1) and (2) of Regulation (EEC) No 1765/92 shall be allocated solely to areas under oil seed crops:

...

(b) included in a 'general scheme' as referred to in Article 2(5) of Regulation (EEC) No 1765/92;

(c) covered by an application including a cultivation plan and lodged with the competent authority by the date set by the Member State for that seed and region in question, which may not be later than the date mentioned in Annex I;

(d) entirely sown by that date at the latest with rape, sunflower or soya ...

...

2. In the event that climatic conditions prevent the oil seeds from being sown prior to the date mentioned in Annex I, the area satisfying the conditions referred to in paragraph 1 above shall not be eligible until confirmation of sowing is lodged with the competent authority. The zones to which this provision shall apply and the time-limits for lodging the confirmation of sowing shall be fixed in accordance with the procedure laid down in Article 38 of Council Regulation (EEC) No 136/66/EEC" (OJ, English Special Edition 1965-1966, p. 221).

Annex I, to which that provision refers, sets the final date by which the application must be lodged and the land sown as "15 May prior to the marketing year".

9 It is common ground that Greek soya producers are "small producers" within the meaning of the basic regulation and that, by virtue of Article 8(1) of the basic regulation, they are therefore entitled to choose between the general scheme and the simplified scheme for the payment of compensatory payments.

10 It is also apparent from the documents before the Court that soya beans may be grown in two ways: as a main crop and as a secondary crop, the latter either preceding or following the main crop.

11 The applicant states that, in the Hellenic Republic, the best period for growing soya beans is between 20 April and 15 July and that small producers usually do not sow soya beans as a secondary crop until after 15 May. Since Article 10(2) of the basic regulation specifies that date as the final date for sowing, in practice it excludes small producers from the benefit of compensatory payments for their secondary crops.

12 For that reason, the Greek Government claims that the Court should annul the basic regulation. Its action is based on five pleas in law, alleging breach of the obligation to state grounds, of the principle of non-discrimination, of Article 39 of the Treaty, and of the principles of the protection of legitimate expectations and of the protection of Community preference.

Admissibility

13 The Council, supported by the Commission, considers that the application is inadmissible because Article 10(2) of the basic regulation does not apply to compensatory payments for crops of soya beans, the only crops at issue in these proceedings. Paragraph 2 should be read in conjunction with paragraph 1, which mentions only cereals and protein crops. Payments for oil seeds, and therefore for soya, are therefore, in their view, governed by the implementing regulation, a measure not at issue in the present proceedings.

14 On that point it is sufficient to note that, by virtue of Article 2(1)(b) of the implementing regulation, the compensatory payment is available only in respect of areas under oil seed crops included in the general scheme. In contrast, as the Advocate General points out in paragraph 21 of his Opinion, compensatory payments to small soya producers who have opted for the simplified scheme remain subject to the basic regulation, the annulment of which is sought in these proceedings.

15 The objection of inadmissibility raised by the Council must therefore be rejected.

Substance

The plea alleging an inadequate statement of reasons

16 In support of this plea in law, the Greek Government refers, first, to the second recital in the preamble to the basic regulation, which indicates that the new support system, to be applied with effect from the 1993/1994 marketing year, was established in order to ensure better market balances and that, in pursuit of that objective, it is necessary to approximate the Community prices of certain arable crops to the prices of the world market and to compensate the loss of income caused by the reduction of the institutional prices by a compensatory payment for producers who sow such products.

17 The Greek Government goes on to say that soya producers who sow after 15 May, a category that includes above all small producers in Greece who sow a secondary crop, are, contrary to the fundamental objective of the regulation just referred to, excluded from the benefit of compensatory payments whereas, under the previous rules, they received financial support. However, the basic regulation does not give any specific reasons for that exclusion. The basic regulation should therefore be declared invalid for inadequacy of the statement of the reasons on which it is based.

18 That plea cannot be upheld. As the Council rightly stated, sufficient reasons are given for every aspect of the basic regulation.

19 As the Court has consistently held, the statement of reasons required by Article 190 of the Treaty must be appropriate to the nature of the measure in question. It must show clearly and unequivocally the reasoning of the institution which enacted the measure so as to inform the persons concerned of the justification for the measure adopted and to enable the Court to exercise its powers of review. It has also been held that the statement of the reasons for a measure is not required to specify the matters of fact or of law dealt with, provided that it falls within the general scheme of the body of measures of which it forms part (see the judgment in Joined Cases C-63 and C-67/90 Portugal and Spain v Council [1992] ECR I-5073, paragraph 16).

20 In this case, the eighteenth recital to the basic regulation refers expressly to the need "to determine certain conditions for applying for compensatory payments and to specify when producers shall be paid". The setting of a final date for sowing and for lodgment of the application is not therefore excluded.

21 Moreover, the regulation in question merely repeats the requirement of a final date already laid down, for the 1992/1993 marketing year, by Council Regulation (EEC) No 3766/91 of 12 December 1991 establishing a support system for producers of soya beans, rape seed and colza seed and sunflower seed (OJ 1991 L 356, p. 17). The fact that that final date (15 May) was different from the previous one (30 May) did not need to be specifically explained, as the Advocate General observed in paragraph 44 of his Opinion.

22 Finally, the date referred to in Article 10(2) of the contested regulation is not immutable since the seventh indent of the first paragraph of Article 12 of the regulation lays down the procedure to be followed for it to be varied in certain areas where exceptional climatic conditions render it inapplicable.

23 In view of the foregoing, it must be held that in so far as it makes the payment of compensatory payments conditional upon the seed being sown and an application being lodged before 15 May, the basic regulation sufficiently states the reasons on which it is based for the purposes of Article 190 of the Treaty, as interpreted by the Court. The plea as to an inadequate statement of reasons must therefore be rejected.

The plea as to breach of the principle of non-discrimination

24 According to the Greek Government, small producers in Greece are treated less favourably than their counterparts in the other Member States. Small producers in Greece sow soya as a secondary crop after 15 May because, in view of the soil and climatic conditions in the Hellenic Republic, the period from 20 April to 15 July is the best for sowing soya. In the other Member States, the sowing period is shorter and sowing generally takes place well before 15 May. Since the contested date is imposed without distinction on producers whose circumstances are objectively different, the principle of equal treatment laid down in the second subparagraph of Article 40(3) of the Treaty is infringed.

25 It must be borne in mind that the agricultural policy requires the adoption of common rules which may affect producers differently according to the individual orientation of their production or local conditions; but they may not be regarded as constituting discrimination prohibited by Article 40(3) of the Treaty if they are based on objective rules formulated to meet the needs of the general common organization (see in particular the judgment in Case 179/84 Bozzetti v Invernizzi [1985] ECR 2301, paragraph 34).

26 Article 10(2) of the basic regulation comes within that category of rules.

27 According to the sixteenth recital, "producers applying for [the simplified] scheme have to accept certain procedures to facilitate controls". It follows from that recital, combined with the eighteenth recital, mentioned above, that the obligation to observe a final date for sowing and for lodging an application for a compensatory payment reflects, in particular, a concern to ensure that the system of such payments is monitored and is effective.

28 It must therefore be held that the fixing of the contested date is in conformity with the needs of the general operation of the common organization of the market.

29 Moreover, that date cannot be regarded as discriminatory. Since, according to the Greek authorities themselves, the best period for sowing soya beans begins on 20 April, small producers in Greece are able, like their counterparts in the other Member States, to sow their land and lodge applications for compensatory payments before 15 May.

30 Finally, as the Council has observed, the final date of 15 May is not immutable and may, by virtue of the seventh indent of the first paragraph of Article 12 of the basic regulation, be varied in certain areas according to the climatic conditions.

31 It follows from the foregoing that the plea as to breach of the principle of equal treatment is unfounded.

The plea as to breach of Article 39 of the Treaty

32 The Greek Government maintains that Article 10(2) of the basic regulation undermines two objectives of the common agricultural policy.

33 First, soya producers who sow their land after 15 May are not assured of a fair standard of living within the meaning of Article 39(1)(b) of the EEC Treaty. Since that crop fails to qualify for compensatory payments as a result of Article 10(2), the income of those growers is reduced.

34 Secondly, producers are discouraged from growing soya after 15 May, so that the availability of supplies to the Community mentioned in Article 39(1)(d) is no longer guaranteed.

35 The Greek Government then refers to Article 39(2) by virtue of which, in working out the common agricultural policy, account is to be taken of "the particular nature of agricultural activity, which results from the social structure of agriculture". Social policy in that sector should therefore seek to reduce inequalities between large and small producers. In the present case, the producers who sow soya as a secondary crop after 15 May are above all small producers ° the large producers confine themselves to a single main crop. Since Article 10(2) of the basic regulation prevents the former from receiving compensatory payments, the differences between small and large producers are accentuated.

36 In that regard, the Court has consistently held that, in pursuing the objectives of the common agricultural policy, the Community institutions must secure the permanent harmonization made necessary by any conflicts between the various objectives set by Article 39 of the Treaty, taken individually, and, where necessary, allow any one of them temporary priority in order to satisfy the demands of the economic factors or conditions in view of which their decisions are made (see in particular the judgment in Case 203/86 Spain v Council [1988] ECR 4563, paragraph 10).

37 According to the second recital in the preamble to the basic regulation, referred to above, the new support system was established to ensure better market balances by approximating the Community prices of certain arable crops to the prices of the world market and compensating the loss of income caused by the reduction of the institutional prices by a compensatory payment for producers who sow such products.

38 As rightly contended by the Council, that objective itself helps to stabilize the markets and ensure availability of supplies within the meaning of Article 39(1)(c) and (d), even if there is a concomitant reduction of Community production and of income for certain producers.

39 Those reductions are not such as to affect the legality of the basic regulation. The losses of income are offset by the compensatory payments for which small soya producers in Greece may qualify. Moreover, there is nothing in the documents before the Court to indicate that it is absolutely impossible for those producers to complete sowing by 15 May. Furthermore, it is common ground that the Greek authorities have not made any approach to the Community authorities to vary the date provided for in Article 10(2) of the basic regulation, as allowed under certain conditions by the seventh indent of the first paragraph of Article 12.

40 It must also be noted that Article 39(1)(d) seeks to ensure the availability of supplies in the Community but does not require, as the Greek Government contends, self-sufficiency.

41 In those circumstances, it cannot be considered that, by fixing 15 May as the final date, the Council infringed Article 39 of the Treaty.

42 The plea as to infringement of that provision must therefore be rejected.

The plea as to breach of the principle of the protection of legitimate expectations

43 The Greek Government claims that none of the numerous Community regulations adopted in the 1970s in order to provide financial support for soya production made observance of the date for sowing of the land in question a precondition for the payment of financial aid. The legitimate expectations of the producers arising from that continuity were frustrated by the fact that the basic regulation requires them to observe the final date of 15 May in order to qualify for the compensatory payments.

44 The Court has consistently held that, whilst the principle of the protection of legitimate expectations is one of the fundamental principles of the Community, traders cannot have a legitimate expectation that an existing situation which is capable of being altered by the Community institutions in the exercise of their discretionary power will be maintained (see the judgment in Joined Cases C-258 and C-259/90 Pesquerías de Bermeo y Naviera Laida v Commission [1992] ECR I-2901, paragraph 34). That is true in an area such as the common agricultural policy and the common organization of the markets whose purpose involves constant adjustments to meet changes in the economic situation (see the judgment in Case C-350/88 Delacre and Others v Commission [1990] ECR I-395, paragraph 33).

45 It follows that traders cannot claim a vested right to the maintenance of an advantage which they derive from the establishment of the common organization of the markets and which they enjoyed at a given time (see Case C-350/88 Delacre, cited above, paragraph 34).

46 That applies with greater force in the present case in view of the fact that Regulation No 3766/91, applicable to the 1992 harvests, already required, in Article 4(7), the observance of a final date (30 May) for the lodgment of an application for financial support for soya as a secondary crop. Accordingly, Article 10(2) of the basic regulation did not constitute an innovative departure from the previous regulation except in so far as it set the final date as 15 rather than 30 May.

47 Furthermore, the new system introduced in 1992 by the basic regulation applies only with effect from the 1993/1994 marketing year. It follows that soya producers had sufficient time to adjust their sowing of secondary crops to the new rules, which merely brought forward by 15 days the final date laid down in the previous regulation.

48 It follows from the foregoing that the plea as to breach of the principle of the protection of legitimate expectations must also be rejected.

The plea as to breach of the principle of Community preference

49 According to the Greek Government, by adopting Article 10(2) of the basic regulation, the Council infringed the principle of Community preference. Community producers, being unable to qualify for the compensatory payments for soya beans from land sown after 15 May, are, it claims, placed in a less competitive position than producers in non-member countries, who are able to place their products on the Community market at lower prices.

50 It is sufficient to note in that regard that whilst the principle of Community preference may be taken into account by Community institutions as an element in the common agricultural policy, it nevertheless cannot affect their decision until all the economic factors influencing world trade have been evaluated. As the Advocate General rightly observes in paragraphs 78 to 82 of his Opinion, Community preference is not in any case a legal requirement the violation of which would result in the invalidity of the measure concerned.

51 Consequently, there are no grounds for the Greek Government to claim that the Council infringed the principle of Community preference.

52 Since none of the pleas in law put forward has been upheld, the Greek Government' s action must be dismissed in its entirety.

Decision on costs

Costs

53 Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party' s pleadings. Since the Hellenic Republic has been unsuccessful, it must be ordered to pay the costs. Pursuant to Article 69(4), the Commission should bear its own costs.

Operative part

On those grounds,

THE COURT

hereby:

1. Dismisses the application;

2. Orders the applicant to pay the costs and the Commission to bear its own costs.