7.

It is now necessary to ascertain whether the conditions are present on which, according to the case-law of the Court, depends the possibility of the Community's being held liable towards individuals for legislative acts involving of economic policy. In this regard I will say at the outset that I do not share the doubts expressed by the French undertakings about the regulations abolishing refunds for quellmehl and gritz being classed as acts involving choices of economic policy; it seems clear to me that, even if the aim pursued by the Council was to make economies to the detriment of a group of undertakings, it was in any case a question of a choice concerning certain instruments of the Community agricultural policy, which obviously comes within the wider ambit of economic policy. The conditions governing the non-contractual liability of the Community for acts of the type indicated may be summarized in an expression repeated in numerous judgments of the Court: there must have occurred a “sufficiently serious breach of a superior rule of law for the protection of the individual” (see the judgments, already cited, of 2 December 1971 in Case 5/71, of 13 June 1972 in Joined Cases 9 and 11/71, of 24 October 1973 in Case 43/72, of 2 July 1974 in Case 153/73; also the judgments of 14 May 1975 in Case 74/74 CNTA [1975] ECR 534, of 31 March 1977 in Cases 54 to 60/76, Compagnie Industrielle et Agricole du Comté de Loheac [1977] ECR 645, and of 25 May 1978 in Joined Cases 83 and 94/76, 4, 15 and 40/77, Bayerische HNL and Others [1978] ECR 1209). In delivering my opinion in the last two cases I had occasion to analyse the distinctive characteristics of a “serious breach”; and at the end of that analysis I expressed the opinion that it is necessary to take account of the importance of the rule infringed in the Community legal system, that it is superfluous to examine whether or not the choice made by the Community institutions was “excusable”, and that the extent of the damage is irrelevant. However, taking account of the possibility that the Court might take the view that the gravity of the breach should be related to the extent of the damage, I wanted to define the limits of the damage tolerable by means of a general formula. The judgment subsequent to that opinion accepted by implication, I think, the test of the importance of the provision infringed, where it stated that “the prohibition on discrimination laid down in the second subparagraph of the third paragraph of Article 40 of the Treaty and infringed by Regulation No 563/76 is in fact designed for the protection of the individual, and that it is impossible to disregard the importance of this prohibition in the system of the Treaty” (paragraph 5 of the decision). At the same time, however, that judgment was influenced by the “restrictive view” taken by the legal systems of the Member States concerning the liability of the public authorities for damage caused to individuals by legislative measures; whilst the conviction which I expressed in my opinion on that the more rigorous solution concerning the liability of the Council should be adopted, since it “has the twofold capacity of legislature and administration without having the democratic mandate and the power to express the sovereignty of the people which may justify exempting the legislature from the general rules on liability”. None the less the judgment added two more criteria to that of the importance of the provision infringed: namely that the institution must have “manifestly and gravely disregarded the limits on the exercise of its powers” and that the damage must exceed the “reasonable limits” within which the individual must accept certain harmful effects on his economic interests as a result of a legislative measure (paragraph 6 of the decision). However, the limits of tolerable damage were not sufficiently clarified; even though, in the most specific part of the decision (paragraph 7) the judgment provides some additional indications, referring to the number of persons affected — as a factor which may lessen the damage sustained by individual undertakings —, to the effects on the production costs, to the comparison between the increase in prices brought about by the regulation and the increase due to other due to other causes and, finally, to the effects on the profit-earning capacity of the undertakings, in relation to the bounds of the economic risks inherent in the activities concerned. In this case it is beyond dispute that there has been a breach of a superior rule of law for the protection of individuals of fundamental importance in the system of Community law. We know that we are concerned with the prohibition on discrimination, and it might therefore be sufficient to refer to paragraph 5 of the decision of 25 May 1978 in the joined cases Bayerische HNL and Others (even though that judgment concerns the infringement of the second subparagraph of Article 40 (3) of the EEC Treaty, whilst here it is the general principle of non-discrimination which has been infringed). But I think it necessary to emphasize that the situation which led to the present applications is of a more serious nature. In fact, in the milk-powder cases the infringement of the said* Article 40 (3) had been committed by imposing on producers and importers of vegetable feeding-stuffs an obligation to purchase, and so was only indirectly of concern to the users, who were asking for compensation for the damage caused by the increase in costs. As regards those users there was a possibility of indirect discrimination, caused by the increased costs of feeding-stuffs; so it is doubtful whether there was in that case a genuine infringement of individual rights (we have seen that paragraph 5 of the said decision mentioned the prohibition on discrimination as a means of protecting the interests of individuals). On the other hand, in the cases with which we are now concerned there is direct discrimination; there has been an infringement of the applicants' fundamental individual right to equality of treatment in the granting of Community aids, with respect to producers of maize starch, with whom they are in competition. In view of the specific nature of that infringement, it is incorrect to object (as does the Commission) that any damage sustained by a category of persons as a result of a measure taken by the public authorities represents a form of discrimination, and that it is therefore impossible to accept that persons affected by such a measure are entitled to compensation on grounds of discrimination. The truth, is that it is one thing to speak generally of discrimination, and another thing to identify a specific infringement of the rule of non-discrimination; in this case the Court has already found for such an infringement, and it is on the basis of that finding that the applications for compensation have been brought. The position adopted in the judgment of 25 May 1978 in the milk-powder cases leads me to ask whether in this case the two further conditions governing the liability of the Community for legislative measures according to that judgment are satisfied; and this in spite of the fact that, in my opinion, the considerations examined so far regarding the infringement of the applicants' individual right to equality of treatment are sufficient to demonstrate the existence of a ‘serious breach’ and therefore give rise to the Community's non-contractual liability. That the unlawful act committed by the Council is in the nature of a ‘manifest and grave’ disregard for the provision infringed is, I think, clear both from the nature of that provision (it is useful to repeat that it ‘is one of the fundamental principles of Community law’, as the judgments of 19 October 1977 declared), and from the form of the unlawful act. It was not a question of the adoption of a measure favourable to some and of the failure to adopt an equivalent provision beneficial to other competing undertakings, but rather of an amendment to the previous system, which had brougtht about equality of treatment precisely for the purpose of protecting the competitive capacity of two categories of producers in relation to a third category. It may therefore be said that the Council knew what it was doing, and the Court emphasized that the decision abolishing the refunds was taken in the absence of objective circumstances which could have justified altering the previous system (see paragraph 10 of the decision in Joined Cases 117/76 and 16/77 and paragraph 22 of the decision in Joined Cases 124/76 and 20/77. both of 19 October 1977). Finally, one may add, in confirmation of the manifest character of the infringement, that the Court was able to ascertain its existence mainly because the defendant institutions did not provide technical and economic data or evidence of factors on the basis of which the new policy adopted in 1974 and 1975 towards the producers of quellmehl and gritz might be validly explained. That is equivalent to saying that, in itself, that new line of conduct appeared arbitrary. It is more difficult to adopt a position at this stage on the question of the extent of the damage sustained by each of the applicants in order to establish whether it remained within the ‘reasonable limits’ which every undertaking exposed to market risks must accept. It is clear that, if one regards serious damage as a condition of the Community's liability for unlawful legislative measures, the question of the existence of such liability may be resolved only after clarification of the nature of the damage to be compensated and the extent thereof. Subject to that reservation, I believe that it is possible to make the following observations for the moment: (a) As regards the number of persons affected, the situation this time is appreciably different form the situation in the milk-powder cases. The unlawful conduct of the Council affected two categories, clearly defined and not numerous, of traders, namely producers of gritz intended for the brewing of beer and of quellmehl used for human consumption: in essence, a part of the undertakings comprising the sector, itself limited in size, which is involved in the processing of maize and common wheat. (b) The effect of the measures abolishing the refunds on the level of the production costs of the undertakings under consideration appears greater than the effect of the measures concerning the compulsory purchase of milk-powder for mixing with vegetable feeding-stuffs. In this regard I note that, according to the evidence of the Council in Case 238/78, the abolition of the refunds for quellmehl benefited starch, in relation to quellmehl, at the rate of between 6.3 an 8.6 %. In Case 261/78 the applicant (Interquell Stärke-Chemie) openly states that as a result of the abolition of the refunds production costs increased by 20 %. (c) The comparison with price increases due to other causes which, as I have recalled, was among the factors emphasized in the milk-powder judgments, is irrelevant here, since the individuals affected are producers and not purchasers, as occurred in those cases. (d) Different answers could be given to the question whether the effect of the abolition of the refunds on the profit-earning capacity of the undertakings producing gritz and quellmehl did or did not exceed the bounds of the economic risks inherent in the activities of those undertakings. On the one hand, it could be said that a public subsidy to a private undertaking is not usually permanently guaranteed; thus an undertaking should be able to face the risk of losing it. On the other hand, however, it might be pointed out that in an activity objectively capable of affecting the competitiveness of another activity (quite apart from any system of refunds, the production of gritz and quellmehl competes with the production of maize starch), the ordinary commercial risks do not include the possibility of the conditions of competition suddenly being upset and artificially distorted as a result of a decision by the public authority to maintain its aid to the competing undertakings and to abolish it for the activity concerned. In my opinion, this observation has greater weight than the previous one; however I consider that the test of assessing the damage in relation to the bounds of the risks inherent in business activity inevitably leads to uncertain results, in view of the fact that the extent of the risks which ‘normally’ accompany a particular economic activity is uncertain and arguable. In accordance with the reasoning developed so far it may be said that, applying to these cases the criteria laid down in paragraph 7 of the decision of 25 May 1978 in the joined cases Bayerische HNL and Others, there do not appear to he grounds for excluding the Community's liability. Of course that leaves open the question of the extent of the damage, which it is also necessary to ascertain in order to decide whether it was ‘tolerable’.