1.

The question referred by the German administrative court concerned the validity of Regulation (EEC) No 849/70 of the Commission of 11 May 1970, which revoked the increase in the denaturing premium for common wheat having a specific weight exceeding 77 kg/hi provided for by Regulation (EEC) No 1403/69 of the Commission of 18 July 1969. This involves establishing whether Regulation No 849/70 is invalid owing to: (a) inadequacy of the statement of reasons for it; or (b) its lack of legal basis; and, if the answer is in the negative, whether the first two articles of the regulation should not in any case be treated as without effect in as much as they also apply to common wheat purchased by a denaturer before the regulation came into force. In times like those we live in, when there is a scarcity of wheat on the world market, an undertaking which objects to the withdrawal of an increase in the premium designed to encourage wheat to be used for purposes other, than human consumption is liable to evoke a spontaneous and unfavourable reaction. But we must not forget that the application which the firm of Deuka is making in the case pending before the German court refers to the 1969/70 marketing year for cereals, a period which was certainly not marked by any scarcity of wheat and the world market. The application is also the result of the fact that the mechanism of denaturing premiums for wheat continued to exist and to be applied even after the period which witnessed the events which are the underlying cause of the dispute before the German court. Before considering the questions from the German court, let me briefly remind you of the Community instruments on the denaturing of wheat which may be relevant in these proceedings. The power to grant a denaturing premium for common wheat, provided for originally under Article 7 (3) of the EEC Regulation No 120/67 of the Council of 13 June 1967 on the common organization of the market in cereals, was based on ground rules set out in Regulation No 172/67/EEC of the Council of 27 June 1967. The first recital of this regulation expressed the need for methods of denaturing to be effective enough to prevent the denatured cereal from being placed again on the market for human consumption. The purpose of denaturing is, in fact, to maintain a market for products which cannot find a natural outlet by diverting some of them from their normal use. In the case with which we are concerned, wheat rendered unfit for human consumption is normally used for the production of fodder. Under Article 5 of the regulation the amount of a denaturing premium shall be fixed at such a level as not to cause disturbances on the barley and maize markets. Under Article 5 of Regulation No 242/67 of the Commission of 30 June 1967, laying down detailed rules for the application of the aforesaid provisions, the denaturing premium shall consist of a component allowing for the differences between the prices for common wheat and for barley and another allowing for the technical costs of denaturing. Considering the expense which this method of maintaining the market means for the public, it is clear that its use must be confined to what is strictly necessary for the pursuit of its legal purpose. The rules concerned ensure that the premium is paid only in respect of cereals which meet given standards of quality (Article 2 of Regulation No 242/67). Moreover, provision is made in Article 7 (2) for the premium to be reduced in the case of cereals having a specific weight less than that fixed for the standard quality. No provision is however made for any mechanism to ensure an overall limit of quantity. However, under Article 7 of Regulation No 172/67, to qualify for the premium, denaturing must be effected with the prior agreement of the intervention agency and under its supervision. The Community legislators were also concerned to safeguard the interests of undertakings engaged in denaturing operations. The third recital of the Council regulation referred to accordingly provides that the existence of the premium should be known to possible beneficiaries from the beginning of the marketing year, in order to enable them to plan a suitable use for denatured common wheat. Article 4 (1) of the regulation therefore provides that the premium shall be fixed before the beginning of and for the duration of each marketing year. The provision in Article 4 for the amount of the premium to be varied refers both to the fixing of a different basic premium for different periods of the year (as, for example, under Regulation No 957/68 of the Commission of 12 July 1968) and the power to fix increases or reductions in the premium according to variations in the marketability of the various types of common wheat. The Commission made use of this power in Regulations No 956/68 and No 1403/69 of 18 July 1969, which provide that, when common wheat to be denatured has a specific weight exceeding 77 kg/hi, the denaturing premium shall be increased by applying certain percentages to the basic intervention price for common wheat valid at the beginning of the marketing year. Moreover, in order to make it, generally speaking, still easier to dispose of wheat on the internal market, the Commission, in Regulation No 1404/69, granted a further incentive for denaturing by making provision for a fixed sum of 2.50 units of account to be added to the first of the two components of which the premium consists, i. e., for the sole purpose of calculating the premium, artificially increasing the price difference between common wheat and barley. Finally, in view of the increased quantities of stocks and the difficulty of storing them, the Commission, in Regulation No 1583/69 of 8 August 1969, provided for a further increase of 2 units of account in the amount of the premium.