5.

I turn now to the objections of substance raised by the defendants in their written pleadings. The first is founded on the so-called “passing on” to customers of the higher costs with which the undertakings were faced when the Community refunds to which they were entitled were abolished. The Council and the Commission rely primarily on a general principle of liability which cannot be disputed, namely the rule according to which compensation is only payable in respect of losses actually sustained. On the basis of that premise the defendants maintain that, in the present case, the applicant must establish that it did not pass on the losses resulting from the nonpayment of the refunds in the prices charged to its own customers. If such a transfer had in fact taken place, the loss would have been borne by the customers and not by the producer. In other words, only by furnishing documentary evidence that there was no passing on can it be proved that there is actual damage and therefore entitlement to appropriate compensation. Let me say at once that I cannot accept that reasoning. Passing on has been linked to the concept of compensatio lucri cum damno; alternatively it may be seen as a duty of fairness which requires the party sustaining loss to mitigate his loss, thereby protecting the author of the unlawful act from more serious consequences. Whichever theory is adopted, only one conclusion is possible. The idea that losses may be passed on and the principles which govern noncontractual liability are as a general rule irreconcilable. On the first point I fully agree with the view of Mr Advocate General Capotorti, expressed in his Opinion delivered on 12 September 1979 in Case 238/78, Ireks-Arkady v Commission and Council. According to him the passing on of the loss could cancel out or reduce the damage recoverable only if the principle were applicable “that against the damage must be set off any benefit flowing from the same unlawful act”. The applicability of that principle must be excluded (or at least it was excluded in the Ireks-Arkady case which is on all fours with this one) because “the benefit which is presumed to be connected with the increase in prices could never be said to have been caused by the abolition of the production refunds: it is ... the result of an independent decision of the producers. In other words: the balancing of the damage against the gain presupposes that both are direct and automatic consequences of the unlawful act, whereas ... the abolition of the Community aid did not directly give rise to any benefit for the undertakings sustaining damage” ([1979] ECR 2976 at p. 3005). No better results are achieved by “seeking refuge in general clauses”, as J. W. Hedemann would have said. Honesty, fair dealing, solidarity between private and public operators are noble concepts and do not lack a legal aspect even outside the contractual sphere. However, they have scarcely any part to play as regards governing and clarifying the situation in this case. Passing on, in the sense of a duty to spare the perpetrator of the unlawful act more serious consequences, is subject to insurmountable limitations by virtue of the effects of free competition. When undertakings fix prices, they do not, indeed they cannot, take into account only their own costs and the profits which they desire; their behaviour is determined by the conditions on the market. If the market situation enables the price to be set at a certain level without affecting the volume of sales, the undertaking will fix upon that level and not on others, whether it likes it or not and whether or not it has received Community aids. And that is not all. Let us assume that the conceptual objections upon which, in my opinion, the passing-on theory founders, may be overcome. Even in that , case I could not share the view, put forward by the Council and the Commission, that the negative burden of proving that the loss has not been passed on in prices falls on the person sustaining the losses in support of that view the defendant institutions rely on the case-law of the Court, albeit in general terms. That reliance is misplaced. Among the many judgments in which the Court has considered the question of the passing on of losses there is not one which deals directly or indirectly with the problem of the onus of proof. On the other hand there are arguments of considerable force which may be ranged against that proposition. The first of these is the well known and universal rule which governs the sharing of the burden. I would express it in these terms : he who asserts a claim must prove the matters which he asserts; he who contests the claim must establish the facts which disprove it in whole or in part. In the present case, passing on clearly constitutes a ground which extinguishes the obligation to pay compensation. It is a supervening factor in relation to the unlawful act which gave rise to the obligation and has the effect of cancelling out that act or limiting its scope. In those circumstances, the burden of proving that factor cannot be said to rest on Pauls Agriculture Limited. All that the latter is required to establish, in addition to the unlawful conduct of the adverse party and the causal connection between that conduct and the loss, is that it has sustained an economic loss. More specifically, it is sufficient that the undertaking establishes that it has, in a given period, produced a certain quantity of gritz intended for use in the brewing industry. The Community, on the other hand, if it wishes to be discharged from the obligation to pay compensation, must prove that it has paid the refunds or, should the device of passing on be regarded as valid, furnish documentary evidence that the higher costs have been passed on. In the course of the oral proceedings, in any case, the representatives of the defendant institutions, whilst reaffirming in principle that the onus of proving the passing on of the loss rests on the parties who have sustained it, acknowledged that in fact there had been no passing on in this case. At least on that point, therefore, the argument in defence which I have discussed seems to be unfounded.