2.

The question now arises whether the Commission in ascertaining and evaluating the facts forming the basis of the Decision made mistakes, namely in its appraisal of the situation in the fruit market, the development of its principal trends, the causes of this development and the possibility of influencing this development in the future. This investigation of the facts is permissible, as I have already shown. It will be carried out within the limits prescribed by the applicant's complaints. The essential considerations of the Commission are to be found in the statement of the reasons for its Decision and in its statements during the proceedings. It says: The Community produces in more than sufficient quantities apples, pears and peaches (for the purpose of these proceedings hereinafter called ‘other fruit’). It is always very difficult to sell them. On the other hand an increase in the consumption of citrus fruit is evident. This increase is at the expense of other varieties of fruit. If it is curbed, the existing difficulties in selling other fruit will be reduced. Therefore the increase in the customs duty on oranges intended by the Treaty cannot be suspended. In the first place therefore it is necessary to examine whether it is in fact necessary to protect other varieties of fruit of which there is continuing overproduction. On being asked by the Court, the Commission stated that statistical proof of the alleged overproduction could not be produced, because not even the total production of fruit was statistically recorded in every Member State. It put forward instead a volume of evidence to justify the starting-point of its argument. In most of the Member States, it says ( 3 ), the processing of fruit into alcohol is encouraged by state subsidies; consumption of their own fruit by the producers, which is not indeed statistically recorded everywhere, is ‘terribly high’ (in Germany about 50 % of the fruit crop); in most of the Member States (except in the Netherlands and Italy) systems of minimum prices are in force which enable imports to be blocked for long periods in each year; in addition there is every reason to believe that there is overproduction from the fact that Regulation No 23 of the Council excepts fruits of low quality from free circulation. If it cannot be denied that these facts, to the extent to which they are facts, (within three of the six Member States there is still no assistance given for the processing of fruit into alcohol) do have some evidential value in calculating the total production of fruit, they are not in any way sufficient to assess the extent of overproduction of high quality table fruits. It is conceivable and can be assumed that a considerable proportion of low quality fruit is consumed by the producers themselves. It can also be assumed that, as is well known, it is this quality of fruit which is converted into alcohol, and that varieties of fruit, which are not suitable for direct consumption as fresh fruit, are cultivated in considerable quantities for the express purpose of being processed (apple juice, cider). In this case it would be valuable to know what the market prospects are for fruit, which, having regard to its quality, can compete with oranges. If we are to avoid an additional explanation, all we can do for the time being is to assume provisionally, for the purpose of our further examination, that there is a need to protect those varieties of fruit, the protection of which the Commission had in mind in its Decision. It is therefore a vital point mat in the Commission's view the difficulties in selling other varieties of fruit are due to the increase in the consumption of citrus fruit. In fact the statistics show a steady increase in the consumption of oranges in the Federal Republic since the year 1950. We must therefore consider whether any causal connection can be established. The Commission reasons as follows: apples, pears, peaches and oranges all satisfy the same needs. When the proportion of one variety of fruit used in satisfying these needs increases, the proportion of the other varieties decreases. This conclusion would be cogent if it were clear that the total consumption of fruit has reached the limits of its opportunities for expansion. But there is no indication that this is correct. On the contrary it is rather to be inferred from the statements of the Commission that fruit consumption in the Federal Republic during the post-war period has increased considerably. Similarly the Commission's tables (rejoinder, schedule XII) of the total amount of fruit coming on to the market from the home crop and from imports show an upward trend. It follows that a decline in the consumption of apples, pears and peaches cannot yet be inferred solely from the increase in the consumption of citrus fruit. The Commission tries to prove, also with the help of statistics, over the interpretation of which the parties have exhaustively argued, that the increase in the consumption of oranges in the Federal Republic is at the expense of other fruits. It must first of all be noted that there are no accurate statistics for the quantities of fresh fruit consumed, so that no exact data concerning the trend of per capita consumption is available. The Commission therefore endeavoured to draw conclusions a posteriori from other figures. It first compares the increase in imports of oranges, with reference to the pre-war average (295 %), with the increase in the available quantities of homegrown and imported fruit. It finds that the latter amounted only to 162 % and that a rising trend has not been apparent since 1950. In addition it looks at the proportion of the German apple crop coining on to the market and — although the statistics are neither reliable nor complete — at the proportion of the crop sold as fresh fruit in order to read into these figures a declining trend. In fact the percentages of the proportions of the crops coming on to the market since 1955 are: 49, 57, 40, 46, 54 and 47 %. The percentages of sales of fresh fruit in the crop for the years since 1953 give the following picture: 36, 36, 33, 32, 28, 30, 30, 28 and 31 %, in absolute figures: 447000, 581000, 257000, 505000, 113000, 691000, 272900, 696000 and 233000 metric tons. A declining trend in sales of apples in the Federal German market cannot in my opinion be deduced from these figures. A declining trend in per capita consumption cannot either be proved with certainty by taking into account the population increase, because it is not known how much of producers' own fruit consumption finds its way direcdy to private consumers. In fact the figures supplied by the Commission itself concerning the history of the proportion of stone fruit in the total consumption of fruit do not support a rising trend; for the years 1950, 1955, 1956, 1957, 1958, 1959 and 1960 these figures were: 57, 44, 45, 41, 45, 42 and 45 %. The particulars submitted by the applicant concerning the amounts spent per capita by a worker's family in the Federal Republic each year on the consumption of stone fruit in the years 1957, 1958, 1959, 1960 (DM 13, DM 21, DM 19, DM 24), contradict the Commission's argument as, finally, does the trend of the prices of Grade I apples which the Commission sets out in its reply in respect of the years 1950, 1952, 1956, 1957, 1958, 1959 and 1960 (—.98 Pfg., DM 1,05, DM 1,17, DM 1,33, DM 1,36, DM 1,12, DM 1,29 per kilo). A falling off in prices cannot be extracted from these figures, as would be expected, if there were a decline in demand. But even if one had to proceed on the basis that the per capita consumption of other fruits was stagnant or had declined a little, that would not prove that the increase in the consumption of citrus fruit could be considered as the cause and that, if this increase came to an end, there would be an increase in the consumption of apples. The Commission itself has argued that during the years immediately following the end of the war there was a considerable increase in the consumption of fruit in the Federal Republic and that in particular the consumption of apples as fresh fruit was extended to include low quality varieties of apples. If this is true, and there is no reason to doubt it, having regard to the tables showing the per capita consumption of fruit in the Member States contained in the proposals of the Commission for the establishment of a common agricultural policy ( 4 ), then it is reasonably clear that the consumption of apples in the Federal Republic may have reached a certain saturation point, which must lead to the additional consumption of other varieties of fruit. I would like therefore to conclude that the figures before us rather disprove the Commission's argument that there has been an increase in the consumption of citrus fruit at the expense of other varieties. In any case only a detailed analysis of consumers' habits and their reasons for choosing a particular fruit, which an expert would have to carry out, can provide us with any accurate and reliable information relating to the connection between the trends referred to. I am indeed of the opinion that in this case it will not be necessary. There is in fact a number of guiding factors which will yet make it possible to evaluate the facts. It is first of all necessary to grasp the idea of the coincidence in time of the supplies of the different kinds of fruit, for one variety of fruit can only displace another on the market if it arrives there at the same time as the other. The applicant has in this connection compiled figures showing the average quantities of imports over a period of ten years. The Commission on the other hand relies on an examination of the figures for recent years, because the improvements in storage facilities and changes in cultivation have made it possible for other varieties of fruit to be supplied over a longer period of time. If we select the information supplied by the Commission for the year 1960, the following picture emerges: Pears: The months of July to October must be taken as the principal period for imports. During this period approximately 90000 metric tons were imported as against only 24000 metric tons during the remaining months of the year. On the other hand only 66000 metric tons of the entire imports of apples (approximately 700000 metric tons) were imported in the months July to October. Peaches: Here the proportions are much clearer. The months June to October with imports of 160000 metric tons are the principal importing period. During the remaining months of the year a total of only 42 metric tons are imported. These 42 metric tons should be compared with the bulk of orange imports of about 600000 metric tons. It follows from this that the peak periods of imports are clearly separated in time. To the extent to which the periods of imports overlap, the quantities concerned are only of minor importance compared with the total volume of imports. The picture is not so clear in the case of apples. If only imports are considered, 250000 metric tons of apples arrive during the period from November to June, that is, during the principal period of orange imports (altogether 640000 metric tons). During the rest of the year 60000 metric tons of oranges are imported compared with 110000 metric tons of apples. But a true understanding of the market conditions and the volume of the supplies of fruit is only obtained if account is also taken of the part of the home-grown crop which is consumed as fresh fruit, which should moreover be done in the case of pears and peaches, with the result that the picture we already have would be even clearer. If a calculation is made on this basis (cf. schedule XII to the rejoinder) for the period when imports of apples are at their lowest, such imports are shown to be about 110000 metric tons and supplies of home-grown apples about 600000 metric tons (assuming that a certain percentage of the home crop reaches the market at later periods). Seven-tenths of the entire supply of apples in the Federal Republic arrive on the market at the same time as one-tenth of the entire supply of oranges. Thus, in the case of apples too, the peak periods of sales clearly occur at different times. It is legitimate to ask whether the Commission has not made in this respect a mistake of fact, because it is reasonable to assume, that by referring in the statement of the reasons for its decision to the frustration of the agricultural policy for other fruit, it took a different view of the simultaneous arrival of supplies on the market. The system of related factors which has been demonstrated gives no grounds whatever for fearing, so far as pears and peaches are concerned, and indeed virtually none as regards apples, that the agricultural policy in respect of these products will be frustrated if imports of oranges are not to some slight extent restricted. Let us now consider the trends in the supply of apples and the imports of oranges in the different financial years since 1955/56 from which the Commission — leaving aside the periods when supplies overlapped — seeks to show how far the markets in apples and oranges influence each other. If we make a comparison in each case with the previous financial years the following picture emerges: increase in supply of apples in the financial year 1956/57 27000 metric tons, decline in imports of oranges 80000 metric tons; decline in supply of apples 420000 metric tons, increase in imports of oranges 230000 metric tons; increase in supply of apples 600000 metric tons, decline in imports of oranges 30000 metric tons; decline in supply of apples 270000 metric tons, increase in imports of oranges 150000 metric tons; increase in supply of apples 270000 metric tons, decline in imports of oranges 30000 metric tons; decline in supply of apples 150000 metric tons, increase in imports of oranges 80000 metric tons. It follows from this that supplies clearly do not produce a complete reciprocity of effects. The decline in the supply of the one fruit is not linked with a corresponding compensation effected by means of the supply of the other. In fact a large increase in the supply of apples has only ever led to a limited decline in the supply of oranges, which shows us either that supplies correspond to different categories of consumers or that the demand is at least very flexible. If, conversely, the increase in the supply of oranges coincides with a larger decline, as a rule twice as great, in the sales of apples, it would be a mistake to conclude that oranges have the capacity to drive apples off the market. This would presuppose that for every given amount of oranges consumed twice that amount of apples must be left unconsumed, which does not correspond to the comparison in prices. It is more reasonable to attribute the large decline to other causes (a bad harvest) and to conclude that oranges are not an entirely suitable substitute for apples. It must also be established to what extent the trend which has been demonstrated was influenced by artificial measures, because in fact the national organization of markets allowed measures to be taken to restrict imports for the benefit of home production. We cannot therefore extract from the above-mentioned table a reliable picture of the extent of the reciprocal effects produced on each other by the supplies of apples and oranges, that is to say of the degree to which they can be substituted for each other. But there is one more argument which lends weight to the conclusion that the Commission has exaggerated the possible interchangeability of apples and oranges. At the request of the Court the Commission submitted in full the observations of the Italian and French Governments on the application by the Federal Republic for a quota. These observations mention only the market in oranges, and make no reference at all to the market in apples and the possible negative repercussions of the grant of a quota on the sales of apples. This fact should be carefully considered. If the Member States which are principally affected, so far as both the production of oranges and of apples is concerned, did not mention, in what were undoubtedly carefully prepared statements, any effect which the quota applied for would have on the sales and production of apples, we can assume that they do not consider any such effect exists or is of any importance. It is a fact (which can be inferred from the statistics produced) that imports of apples into the Federal Republic are in no way declining but — apart from some unimportant variations — show a steady increase. In 1962, when a tariff quota was refused, imports of apples, as we are told by the applicant, also increased in the same way as imports of oranges. But it cannot be proved that in previous years, when the impact of the supply of oranges was reduced, imports of apples were much greater, all the more so because it is clear that the volume of these imports was not determined by market conditions but could be influenced by measures of market organization taken toy states. Faced with the figures for the trends in the importation of apples the Commission stated that it had to take account of the sales difficulties encountered by the German fruit producers when making its decision on the quota and, having regard to the interests of these producers, had to prevent any increase in the consumption of oranges in the Federal Republic. ( 5 ) This shows in my opinion that there is another important defect in the statement of the reasons for its Decision. The Federal Republic is better placed than the Commission to evaluate the need to protect German fruit farmers. In particular it is the task of a national government, within the framework of its economic policy, to balance the need for this protection against the interests of the consumer. I therefore agree with the applicant that the Commission must not incorporate in its Decision considerations concerning national agricultural requirements, if the national government principally concerned denies that such requirements exist. There is one of the many questions of fact which must finally be considered. Assuming, as the Commission does, the existence of reciprocal effects produced on each other by the supplies of apples and oranges, it is then necessary to examine whether the Decision in question in these proceedings could have a favourable effect on the sales of apples, in other words whether in fact the upward trend in the consumption of oranges could be appreciably reduced for the benefit of apple consumption. we have been told that the refusal of the request for a quota was to lead to an increase in apple prices ‘of an average of almost 2 Pfg.’ per kilo to the consumer (statement of defence, p. 18). If we consider the relationship between the prices for grade I apples and grade I oranges (statement of defence, schedule 7) and the fact that as a general rule the impact of such small differences in price on consumer habits is practically nil, it must be accepted that the intended effect, as the applicant claims, does not in fact exist, that is to say, that the measures taken by the Commission do not in any relevant way alter the trend which has hitherto been apparent in the demand for fruit. The statement of the reasons for the Decision itself expresses the same view when it states that the development of trade with third countries will not be appreciably restricted by the decision on the request for a quota. This assumption is in particular also confirmed by the actual trend in the importation of apples in the year 1962, which in spite of the small increase in customs duties showed the same increase as before. That seems to me to prove that the measure taken by the Commission could not fulfil the protective function which was assigned to it. In fact the only effect remaining — which even if negligible is in principle undesirable — is an increase in the cost of living. To sum up, it is my opinion that the Court cannot answer in their entirety the questions of fact which have arisen without the assistance of an expert, but that in the final analysis a preparatory inquiry is not necessary, because some of the basic considerations of fact essential for the purposes of the Decision have been proved in the course of the proceedings to be wrong with the result that they do not provide a justification for the Decision. The Decision must also be annulled for this reason.