Case T-324/05

Republic of Estonia

v

Commission of the European Communities

‛Agriculture — Common organisation of the markets — Transitional measures to be adopted by reason of the accession of new Member States — Regulation (EC) No 832/2005 laying down transitional measures in the sugar sector — Action for annulment — Collegiality — Concept of ‘stocks’ — Circumstances in which stocks were built up — Statement of reasons — Sound administration — Good faith — Non-discrimination — Right to property — Proportionality’

Judgment of the Court of First Instance (First Chamber), 2 October 2009 II ‐ 3688

Summary of the Judgment

Neither the fact that the documents in question may be confidential nor the fact that they may have been obtained unlawfully precludes their remaining in the file. This is because there is no provision that expressly prohibits evidence obtained unlawfully from being taken into account and because it cannot be ruled out that even internal documents may, in certain cases, be lawfully placed in a case-file. In certain situations, it is not necessary for the party which produces a document to show that it has obtained by lawful means the confidential document relied on in support of its argument. By balancing the interests to be protected, the Community Court may find it necessary to consider whether particular circumstances, such as the decisive nature of the production of the document for the purposes of reviewing the lawfulness of the procedure leading to the adoption of the contested measure or of determining whether there has been a misuse of powers, constitute grounds for not withdrawing that document. (see paras 51, 52, 54, 55)

The Commission must, while complying with the principle of collegiality, be granted the power to entrust to some of its Members the task of carrying out an accounting exercise, no matter how complex, in order to determine the quantities of a given agricultural product existing on the territory of certain Member States, so as not seriously to compromise its ability to manage effectively the common agricultural policy, a field requiring simultaneous and rapid management of information on production, reserves and other variables resulting from calculation exercises such as those carried out in the context of Regulation No 832/2005 on the determination of surplus quantities of sugar, isoglucose and fructose for the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia. (see para. 78)

The principle of eliminating surpluses that Regulation No 60/2004, laying down transitional measures in the sugar sector by reason of the accession to the European Union of the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia, is designed to implement is established by a rule of primary law – point 4(2) of Annex IV to the Act concerning the conditions of accession of those States – to which recital 7 in the preamble to Regulation No 60/2004 refers and in which the term ‘stocks’ occupies a central place. It must therefore be considered that the concept of ‘stocks’, as referred to in Regulation No 60/2004, derives from that referred to in point 4(2) of Annex IV to the Act of Accession, the purpose of which is, primarily, so far as sugar is concerned, to prevent any disruption to the proper functioning of the mechanisms provided for by the common organisation of the markets (CMO) in sugar and, in particular, disruption affecting price formation and arising as a result of the accumulation of abnormal quantities of sugar in the new Member States before their accession to the European Union. In order to define the concept of ‘stocks’, it is therefore necessary to examine whether the build-up of substantial household reserves in the new Member States before accession is a potential source of disruption of the mechanisms of the CMO in sugar. The possible substitution, after the accession of the new Member States to the European Union, of household reserves in the Member States, where they exist, for quantities that would have been purchased by households on the Community market would have detrimental effects on the stability and financing of the CMO in sugar and would seriously disrupt it. If household reserves were to be excluded from the concept of ‘stocks’ within the meaning of Regulation No 60/2004, the citizens of the new Member States where the price of sugar is significantly below the Community price would have an interest in building up as large a reserve as possible in order to delay the price consequences of the application of the CMO in sugar in their State of residence. To the extent that, in the new Member States as a whole, the price of sugar was below or well below the Community price, such an exclusion would create an environment conducive to the build-up of massive household reserves, which would cause sugar consumption in those States to decrease significantly – or even, in some cases, to dry up completely – during the period immediately after their accession to the European Union. Moreover, calculating the Community quotas on the basis of abnormally reduced demand would, in essence, only delay the full application of the CMO in sugar in the new Member States to the detriment of manufacturers, whose employment and standard of living the CMO in sugar is intended to maintain. It follows from Articles 2 and 10 of the Act of Accession 2003 that that measure is based on the principle that the provisions of Community law apply ab initio and in toto to new Member States, derogations being allowed only in so far as they are expressly laid down in transitional provisions. It follows that the term ‘stocks’, as used in Regulation No 60/2004 and in point 4(2) of Annex IV to the Act of Accession, must not be construed as excluding household reserves as a matter of principle. (see paras 106, 119, 120, 129, 130, 134, 136)

Regulation No 60/2004, laying down transitional measures in the sugar sector by reason of the accession to the European Union of the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia, is not intended solely to combat speculation linked to trade but also to prevent disruption to the mechanisms provided for by the common organisation of the markets (CMO) in sugar and to remedy any harmful effects on the stability of the latter owing to the existence of abnormal quantities of sugar accumulated in the new Member States before their accession. The disruption to the market in sugar that may be caused by the existence of abnormal household reserves does not stem from the sale of sugar for less than the price guaranteed by the CMO in sugar but from the possible fall in consumption in the Member States in which such reserves were accumulated, which would lead to a discrepancy between the quotas granted in the framework of the CMO in sugar and Community consumption, to the detriment of manufacturers and possibly to the detriment of the Community budget. (see paras 163, 167)

Article 6(2) of Regulation No 60/2004, laying down transitional measures in the sugar sector by reason of the accession to the European Union of the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia, provides that the new Member State concerned is to ensure the elimination from the market of a quantity of sugar or isoglucose, without Community intervention, equal to the surplus determined by the Commission. Accordingly, the Member State is not required to eliminate the sugar considered surplus at 1 May 2004, but a quantity of sugar – even sugar bought or produced before that date – equal to the quantity considered surplus by the Commission. It follows that the elimination obligation on the new Member States for which the Commission ascertained surpluses does not relate to the surplus sugar accumulated at 1 May 2004 but simply to a quantity equal to it. As a consequence, even if part of the surplus ascertained for a new Member State were stockpiled in the form of abnormal household reserves and if those reserves could not be eliminated by the methods referred to in Article 6(2) of Regulation No 60/2004, the Member State concerned could still meet its elimination obligation by acquiring a quantity of sugar equal to that of its household reserves in order to eliminate it by those methods. In so doing, the Member State concerned would generate an increase in Community demand equal to the artificial reduction caused by its household reserves and would offset the adverse effect of their existence on the stability of the common organisation of the markets in sugar. (see paras 171, 177, 178)

The protocols and annexes to an act of accession constitute provisions of primary law which, save where the act of accession provides otherwise, may not be suspended, amended or repealed otherwise than in accordance with the procedures established for review of the original Treaties. As a matter of principle, the scope of a provision of primary law cannot be interpreted in the light of provisions of secondary law that the institutions may have adopted for its implementation. On the contrary, when it is necessary to interpret a provision of secondary law, it is the secondary law which must be interpreted, as far as possible, in a manner which renders it consistent with the provisions of primary law. (see paras 207, 208)

The objectives of the common agricultural policy laid down in Article 33 EC must be designed in such a way as to enable the Community institutions to fulfil their responsibilities by taking account of the necessary mechanisms, to prevent disruption of the markets and to ensure that personal income is as considered appropriate for those working in the sector. Under Article 34(2) EC, the common organisation in one of the forms laid down in Article 34(1) EC may include all measures required to attain the objectives set out in Article 33 EC: in particular, regulation of prices; aid for the production and marketing of the various products; storage and carryover arrangements; and common mechanisms for stabilising imports or exports. Thus, control of the abnormally high reserves of sugar in the new Member States before their accession to the European Union, including household reserves, is an essential condition for preventing any disruption of the common organisation of the markets in sugar owing in particular to the foreseeable artificial fall in demand caused by the substitution of those reserves for the quantities that would have been bought in the market, to the detriment of the income of Community manufacturers and the Community budget. It follows that the taking into account of household reserves for the purposes of calculating the total surpluses in the new Member States, which is necessary to prevent the problems referred to above, is one of the measures to be adopted under the common agricultural policy. (see paras 220-224)

Under Article 6(1)(c) of Regulation No 60/2004, laying down transitional measures in the sugar sector by reason of the accession to the European Union of the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia, in order to determine the surpluses of the new Member States, the Commission is to take account in particular of the circumstances in which stocks were built up. The taking into account of the circumstances in which stocks were built up, the purpose of which – in the light of the aim of that regulation – is to prevent disruption of the Community market in sugar to the detriment of the Community budget and producers, must not have the effect of creating a risk of market disruption. This means that Article 6(1)(c) of Regulation No 60/2004 makes it possible to exclude from the calculation of the surpluses only certain stocks, which would have to be taken into account for the purposes of the surpluses in accordance with the other criteria mentioned in Article 6(1) of that regulation but which do not pose a risk of market disruption in the circumstances of the case under consideration. (see paras 241, 246, 247)