Opinion of Mr Advocate General Sir Gordon Slynn delivered on 16 December 1986. - Federal Republic of Germany v Commission of the European Communities. - Representative rates - Cereals - Sugar - Potato starch - Transitional measures. - Case 278/84.



European Court reports 1987 Page 00001



Opinion of the Advocate-General

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My Lords,

By an application lodged at the Registry of the Court on 23 November 1984 the Federal Republic of Germany asks that the Court should declare void Articles 1, 2 and 3 of Commission Regulation No 2677/84 "on transitional measures in readiness for the revaluation of the representative rate for the German mark on 1 January 1985" ( Official Journal 1984, L*253, p.*31 ).

The matter arises in this way .

Council Regulation ( EEC ) No 855/84 of 31 March 1984 ( Official Journal 1984, L*90, p.*1 ) provided for the dismantlement of monetary compensatory amounts (" MCAs ") in three stages . The first stage ( Article 1 of the regulation ) consisted of changes in the method of calculation of the MCAs and came into effect when the Regulation was published on 1 April 1984 . As far as the Federal Republic was concerned the second stage ( Article 2 and the annexes to the regulation ) consisted of a revaluation of the representative rate ( otherwise known as the "green rate ") of the German mark to take effect on 1 January 1985, which so far as relevant read as follows : "1 ECU = 2.38516 German marks . This rate shall apply from 1*January 1985 . However ... with regard to the cereals sector the following rate shall apply from 1 January 1985 : 1 ECU = 2.39792 German marks ". The third stage ( Article 5*(1 ) of the regulation ) consisted of a requirement that any positive MCAs remaining after 1 January 1985 should be abolished by the beginning of the 1987/88 marketing year at the latest . The first and second stages were to be accompanied by transitional measures . By Article 7 of the regulation,

"Transitional measures necessary for :

( i ) easing the passage from one system for calculating monetary compensatory amounts to the other,

( ii ) avoiding disturbances following the revaluation of the representative rates of the German mark and the Dutch guilder as at 1*January*1985,

may be adopted according to the procedure provided for in Article 6 of Regulation ( EEC ) No 974/71 ."

The first indent of this Article relates to changes in the calculation of the MCAs, and the second indent refers to the revaluation of the green rate of the German mark on 1 January 1985 .

The revaluation of the green rate of the German mark on 1 January 1985 resulted in a decrease in the prices of agricultural products in the Federal Republic in national currency, which meant a drop in revenue for German agricultural producers . To offset that drop, special aid to German farmers was provided for by Articles 3 and 4 of Regulation No 855/84 ( as extended by Council Decision 84/361 of 30 June 1984; Official Journal 1984, L*185, p.*41 ).

Article 6 of Regulation No 974/71 ( Official Journal, English Special Edition 1971 ( I ), p . 257 ) provided that detailed rules for the application of that regulation, which might include other derogations from the regulations on the common agricultural policy, were to be adopted in accordance with the procedure laid down in Article 26 of Council Regulation No 120/67/EEC of 13 June 1967 which was replaced by Council Regulation No 2727/75 ( Official Journal 1975, L 281, p . 1 ).

Article 26 of Regulation No 2727/75 lays down the procedure to be followed by the Management Committee for Cereals . That article ( as amended by the Greek Act of Accession ( Official Journal 1979, L 291, p . 17 ) provides that where the procedure laid down in that article is to be followed and the matter is referred to the committee, the representative of the Commission is to submit a draft of the measures to be adopted . The committee shall deliver its opinion on the draft within a time-limit set by the chairman according to the urgency of the matter . An opinion shall be delivered by a majority of 45 votes .

Article 41 of Council Regulation No 1785/81 on the common organization of the markets in the sugar sector ( Official Journal 1981, L 177, p . 4 ), in the version in force at the material time, was in similar terms .

In addition to these provisions the Management Committee for Cereals has its own internal regulation, which was adopted at a joint meeting of Agricultural Management Committees on 22 July 1965 . That is an unpublished document, Article 3 of which provides :

" The convening of the meeting, the agenda, the draft measures for which the opinion of the committee is requested and any other working papers shall be communicated by the chairman to the representatives of the Member States on the committee ... These documents must reach the permanent representations of the Member States no later than eight days before the date of the meeting .

In emergencies, at the request of a representative of a Member State or on his own initiative, the chairman may reduce the minimum period for communication referred to in the preceding paragraph to two clear days that are not public holidays before the date of the meeting ...

In cases of the greatest urgency, at the request of a representative of a Member State or on his own initiative, the chairman may include the matter on the agenda of a meeting in the course of that meeting ."

In the minutes of the meeting at which these Rules of Procedure were adopted it is stated that this provision shall not allow either the Commission or the Member States to introduce questions the absolute necessity for which is not clear, and that the determination of the urgency of an item to be placed on the agenda is ultimately subject to the decision of the chairman .

Article 4 of the Rules provides, inter alia, that where an opinion is requested, if a draft the subject of which is included on the agenda has been submitted during the meeting, the chairman, at the request of a representative of a Member State, shall postpone the vote to the end of the meeting; in the event of particular difficulties, he shall extend the meeting to the following day .

In relation to this provision, it is stated in the minutes : "It is agreed that the purpose of postponing the vote to the end of the meeting or of extending the meeting to the following day is to allow the delegations to obtain instructions ".

The rules of procedure which apply to the Cereals Management Committee, the Court has been told, have also been applied to the other Management Committees .

By a notice published by the Commission on 14 September 1984 ( Official Journal 1984, L 244, p . 45 ) it was stated : "Interested parties are hereby informed of the Commission' s intention to adopt in the cereals sector measures under Article 7 of Regulation ( EEC ) No 855/84, in order to avoid abnormally high intervention purchases due to the modification of the representative rate for the Deutschmark and the Dutch guilder on 1 January 1985 . These measures may be applied to quantities offered to an intervention agency from the day of publication of this notice ."

Pursuant to Article 7 of Council Regulation No 855/84, the Commission adopted those transitional measures by Regulation No 2677/84, the regulation the validity of which is now challenged . The first recital in the preamble to Regulation No 2677/84 states the purport of that regulation as follows :

"Whereas the modification of the representative rates for the German mark and the Dutch guilder to be undertaken on 1 January 1985 in accordance with the provisions of Regulation ( EEC ) No 855/84 entails a corresponding fall in buying-in prices expressed in national currency in the Member States concerned; whereas, given this prospect and the present state of the markets, the scale of the monetary alteration in the Federal Republic of Germany threatens to disturb the cereals and sugar markets in particular; whereas appropriate transitional measures should therefore be taken to avoid such disturbances ."

It is plain from this recital and the title that the transitional measures concerned only the second stage of dismantling of MCAs, i.e . the revaluation of the green rate for the German mark on 1 January 1985 .

In the preamble to Regulation No 2677/84, the Commission identifies four areas of concern :

( i ) So far as the intervention system for cereals is concerned, abnormally high deliveries into intervention before 1 January 1985 may lead to disturbances on the market and a disruption of the intervention system in the Federal Republic and that, in order to avoid this, the amount of cereals which could be bought into intervention at the old green rate should be limited to the amount which would have been bought in up to 31 December 1984 under normal conditions, estimated at 2*500*000 tonnes; beyond that amount, quantities offered to the German intervention agency after 14 September 1984 should be made subject to the new green rate .

( ii ) So far as the intervention system for sugar is concerned, the application of the new green rate from 1 January 1985 may empower manufacturers to deliver into intervention quantities of sugar normally marketed after that date, whereas in normal market circumstances there would be no deliveries into intervention, and that therefore the new green rate for the German mark should enter into force for buying-in operations in the Federal Republic from the entry into force of Regulation No*2677/84 .

( iii ) In relation to the purchase of sugarbeet a problem arose from the fact that sugar manufacturers were obliged by the common market rules to pay certain minimum prices to beet producers, but the beet was to be harvested between October and December whilst the sugar produced from it was to be marketed for some time thereafter; thus, in the absence of transitional measures, the minimum prices for the beet would result from the old green rate of the German mark but the sale price of the sugar would be subject to the new green rate of the German mark and hence lower . In order to avoid placing on sugar manufacturers the entire burden of the lower prices expressed in national currency resulting from the revaluation of the green rate of the German mark, on 1 January 1985, and in order to ensure fair treatment as between them and the beet producers, the Commission stated that it was necessary to apply to those minimum prices neither the old green rate nor the new one but an average conversion rate between the two .

( iv ) A similar problem existed in relation to the purchase of potato starch; a similar solution in order to share the risk fairly between starch manufacturers and potato producers in the Federal Republic was accordingly considered necessary .

Articles 1, 2 and 3 gave detailed effect to these aims respectively for cereals, sugar and sugarbeet and potato starch, the regulation to enter into force on the date of its publication in the Official Journal, namely 21 September 1984 .

Their effect broadly was that : ( i ) for the intervention purchasing of cereals in the Federal Republic the new green rate was to apply from 14 September to 31 December 1984 subject to the prior purchase into intervention of 2*500*000 tonnes of the 1984 harvest ( Article 1 ); ( ii ) for the intervention purchasing of sugar in the Federal Republic the new green rate for the German mark was to apply from 21 September to 31 December 1984 ( Article 2 ); ( iii ) for the obligatory minimum prices which sugar manufacturers were obliged to pay for sugarbeet for the entire 1984/85 marketing year, an average green rate was to be applied part-way between the old and the new one ( Article 3(1 )*); and ( iv ) for the minimum price which starch manufacturers were obliged to pay to potato producers for the entire 1984/85 marketing year an average green rate was to be applied falling between the old and the new one ( Article 3(2 )*).

In support of its claim for the annulment of Articles 1, 2 and 3 of Regulation No 2677/84, the Federal Republic makes six submissions .

The first is that the essential procedural requirements of the Management Committee procedure were infringed . It appears that the Commission sent a telex message at 12.28 on 18 September 1984 inviting the representatives of the Member States to a meeting of the Agri-monetary Management Committee ( Cereals and Sugar Sectors ) to be held at 10.00 on 20 September 1984 . The telex was received by the German permanent representation at 12.36 on the same day . The telex stated that the first point on the agenda for the meeting was a draft Commission regulation relating to transitional measures regarding the revaluation of the representative rate of the German mark and the guilder on 1*January 1985, but no draft of that proposal was included with the notice of the meeting . The draft Commission regulation was distributed as a meeting document at the meeting of 20 September 1984 . According to the minutes of the meeting this was followed by a broad exchange of views . Then the meeting was adjourned from 12.30 until 15.00, according to the minutes in order to allow the delegations to contact their respective capitals . A modified draft, taking account of certain points raised in the discussions, was put at the disposal of the delegations when the meeting resumed in the afternoon . The final vote was taken at 16.00, and the minutes state that the result was 38 votes in favour of the proposed regulation and 25 against . The majority being 45, this meant that no opinion was delivered, a fact stated in the last recital in the preamble to Regulation No 2677/84 . Immediately after the record of the vote, the minutes state, the German delegation challenged the measures themselves and the validity of Article 7 of Regulation No 855/84 as a basis for measures adversely affecting German traders .

The Federal Republic of Germany alleges that the Management Committee was not properly consulted inasmuch as its members were unable to give adequate consideration to the proposal submitted to them since it was only brought to their attention at the committee meeting, whereas in the Federal Republic' s submission there was no question of urgency in view of the fact that the Commission had taken no action for several months, i.e . since the adoption of Regulation No 855/84 on 31 March 1984 .

As to the alleged irregularity of the Management Committee procedure the Commission makes two contentions : first, when Regulation No 2677/84 was adopted the situation was one of "the greatest urgency" within the meaning of the third paragraph of Article 3 of the internal regulation of the Management Committee, contrary to the Federal Republic' s views; secondly, since the Federal Republic participated in the committee' s meeting of 20 September 1984 without expressing any reservations, it has lost the right to complain of any procedural irregularity .

I do not accept the Commission' s second contention . The Management Committee procedure is an administrative one; it should not be treated as a technical legal proceeding in which failure to take a point may preclude a party from taking it later on . The failure of the representatives of the Federal Republic to object at the meeting to the short notice at which they had received the proposal cannot be taken to exclude the Federal Government' s right to allege a breach of the Rules of Procedure in the present proceedings .

On the other hand, I am not satisfied that the short time which they had to consider the proposal actually prevented the German representatives from giving it adequate consideration . There is evidence before the Court of exchanges between the German Government and the Commission on the question of transitional measures at least from 20 July 1984 to the time of the meeting of the Management Committees . The correspondence put in evidence before the Court shows that both the Commission and the German authorities had appreciated that transitional measures were desirable as well as the constraints on any transitional measures which would be adopted, and that they had understood each other' s position . The German Government had stressed the need to protect German farmers and purchasers of agricultural products from the effects of the forthcoming revaluation of the German mark, but it had also made clear that it was not prepared to finance any aid out of its national funds . Both sides were aware of the prospect of a record harvest in 1984 and both sides had stressed the need to maintain stable market conditions and safeguard the intervention system . The Commission for its part had also stressed its lack of funds . Whilst it is clear that the German authorities would have preferred the transitional measures to take the form of payments of aid out of Community funds to purchasers of agricultural products in the Federal Republic, the likelihood of a record harvest in 1984 and the serious budgetary difficulties which the Community was suffering at that time were facts which could not be altered by a longer period of reflection on the Commission' s proposals . It seems to me, therefore, that even if there had been an infringement of the Management Committee' s internal regulation, it would not have made any substantial difference to the outcome and therefore would not constitute a ground for annulment .

The distribution of the proposed regulation at the meeting itself is permissible if the situation comes within the third paragraph of Article 3 of the Rules of Procedure as being a case of "the greatest urgency ". The decision as to whether a case is of "the greatest urgency" is for the chairman of the Management Committee to decide; the Court can, however, review his decision to see whether he has misdirected himself as to its meaning or if he has acted in a way which on the material before him was unreasonable or arbitrary . The Commission' s case is that between 17 and 20 September 1984 43*000 tonnes of sugar had been sold into intervention in the Federal Republic . Although this is not in itself a large quantity, no such intervention purchase had taken place in the Federal Republic for more than seven years . In those circumstances the Commission could legitimately fear that it was only the beginning of large-scale selling into intervention, all the more so as substantial quantities were being offered for intervention purchase throughout the day of 20 September 1984, the actual day of the Management Committee meeting . In the cereals market, it is common ground that the Commission' s notice published on 14 September 1984 had led to great uncertainty . As a result a large number of traders had sought to offer cereals to the German intervention agency, which had provisionally refused to accept the offers pending the definitive adoption of measures by the Commission . Substantial falls in price took place . Moreover, the Community' s budgetary difficulties had at that time reached a point which made it urgent to take action to protect the EAGGF Guarantee Fund . These three factors were sufficient in my view for it to be decided that the case was one of the greatest urgency; it cannot be said that the decision was unreasonable or based on a misdirection in law .

At the hearing, counsel for the Federal Republic suggested that the urgency was induced by the Commission' s notice so that the Commission cannot rely on it . In my view that would be a valid argument if the Commission could be said to be at fault in publishing its notice at that stage and if that were the sole cause of the urgency . I am not satisfied that any fault has been shown or that the timing and terms of the notice were the sole cause of the extreme urgency . I consider that the Commission has established that the case came within the third paragraph of Article 3 of the internal regulation of the Management Committee, and therefore that it was entitled to distribute, and the chairman to accept, the draft of its proposed regulation only on the morning of the meeting concerned . Accordingly, the submission of infringement of essential procedural requirements in my view fails .

The second submission is that there was no legal basis for the contested provisions .

This falls into two parts . First it is said that Article 7 of Regulation No 855/84 was intended to enable the giving of compensation for the losses suffered by traders at the processing and marketing stages as a result of the fall in prices . Transitional measures involving the application of the new conversion rate could not be adopted under this article if they were detrimental to traders at the processing and marketing stages . Second, it is said that since the financing of MCAs had been incorporated in the agricultural market since 1972, when Regulation No 974/71 was adopted, the powers conferred by Article 7 of Regulation No 855/84 could only be exercised in such a way as to make it clear that the Community was responsible for any losses sustained as from 1 January 1985 in the marketing and processing stages as a result of the fall in prices .

There has been much reference to the background to the adoption of Regulations No 855/84 and No 2677/84 . This, in my view, should only be looked at if the provisions of Article 7 are not clear .

In my view, it is plain, from the regulation as a whole, that Articles 1, 2 and 3 of Regulation No 2677/84 were adopted pursuant to the second indent of Article 7 to avoid "disturbances following the revaluation of the representative rates of the German mark and the Dutch guilder as at 1 January 1985 ". They are not concerned with "easing the passage from one system for calculating monetary compensatory amounts to the other" in the first indent of that article . The second indent is not capable of being read in the way suggested by the Federal Republic . Its object is to avoid disturbances and not necessarily to maintain the income level of traders in agricultural products or processors of those products in the Federal Republic . In Articles 1, 2 and 3 the Commission is seeking, within the margin of appreciation conferred on it, to avoid those disturbances in respect of cereals and sugar and to spread the financial burden resulting from the revaluation more evenly between producers and purchasers of sugarbeet and of potatoes for making starch .

As regards the Community' s alleged responsibility to finance losses sustained in the marketing and processing stages on the same basis that it is required to finance monetary compensatory amounts ( MCAs ), Council Regulation No 729/70 on the financing of the common agricultural policy ( Official Journal, English Special Edition 1970 ( I ), p . 218 ) provides that the EAGGF Guarantee Section shall finance refunds on exports to third countries and intervention intended to stabilize the agricultural markets . By itself this does not cover MCAs, but it was extended to cover them by Council Regulation No 2746/72 ( Official Journal, English Special Edition 1972 ( 28-30 December ), p.*64 ), which provided for MCAs on trade with third countries to be treated as part of the expenditure on refunds granted on exports to third countries and for the MCAs on trade between Member States to be treated as part of the expenditure on intervention intended to stabilize the agricultural markets . This deeming provision is the express legal basis on which the financing of MCAs falls on the budget of the Communities . However, the judgment in Case 18/76 Germany v Commission (( 1979 )) ECR 343 makes it clear that the EAGGF may only be charged with sums paid in accordance with the rules laid down in the various sectors of agricultural production while the Member States have to bear the burden of any other sum paid . There is no express provision for charging to the Communities the losses suffered in the marketing and processing stages as a result of the fall in prices consequent upon the revaluation of the German mark on 1 January 1985, and it seems to me impossible - even on the widest interpretation - to extend the provisions of Regulation No 2746/72 on the financing of MCAs to cover such losses . In my view the change in the representative rate of the German mark is a different matter not covered by those provisions, and therefore the Community is not responsible for financing its effects . Accordingly, in my opinion, the Federal Government' s second submission fails in both parts .

The Federal Republic' s third submission is that the Commission purported unlawfully to amend Regulation No 855/84 by the alteration of the periods fixed therein for the application of the new representative rates for the German mark . This is said to infringe in particular the fourth indent of Article 155 of the EEC Treaty which provides : "In order to ensure the proper functioning and development of the common market, the Commission shall : ... exercise the powers conferred on it by the Council for the implementation of the rules laid down by the latter", the relevant powers in the present case being those conferred by Article 7 of Council Regulation No 855/84 . The Federal Republic argues that Articles 1, 2 and 3 of Commission Regulation No 2677/84 partially bring forward by over three months the date on which the adjustment of the representative rates for the Federal Republic was to take effect and substantially amend the provisions and economic scope of the currency measures contained in Council Regulation No 855/84 .

The Commission, it is said, could not amend the provisions of the Council Regulation by adopting implementing rules unless expressly authorized to do so by the Council . It was here not so authorized .

As a general rule, I would accept that implementing powers conferred on the Commission by the Council cannot be used to amend the basic provisions of a Council Regulation unless the Commission is empowered by the Council expressly or impliedly to do so . In this case the Commission was, however, expressly empowered to adopt transitional measures "necessary for avoiding disturbances" following the revaluation of the German mark . The power conferred to ensure this transition was, in my view, wide enough to enable the Commission to apply the new rates in respect of cereals and sugar and to apply a rate part-way between the old and the new rates in respect of sugarbeet and potatoes for starch-making prior to the coming into effect of the Council' s regulation, so long as the measures adopted were transitional and were necessary for avoiding disturbances .

It is obvious that the measures adopted here were transitional . In my view they have been shown to be necessary for avoiding disturbances in respect of particular products; in respect of cereals it is indeed provided that the quantity of cereals which the Commission estimated would under normal circumstances have been brought into intervention at prices resulting from the old green rate are excluded from the transitional provisions . What was done accordingly, in my view, falls within the powers conferred by Article 7 of Regulation No 855/84 .

The fourth submission is that there was infringement of the overriding prohibition on discrimination ( a ) by Article 1 in relation to cereals and ( b ) by Article 3*(2 ) in relation to potato starch . As regards the former, the Federal Republic alleges that Article 1*(1 ) of Regulation No 2677/84 is void for infringement of the prohibition on discrimination laid down in the second subparagraph of Article 40*(3 ) of the EEC Treaty . The Federal Republic argues that the rules relating to the cereals sector take no account of the fact that regional differences in harvesting, due in particular to different climatic conditions, benefit traders who sold their produce to the intervention agency before these rules entered into force .

As to the complaint of discrimination against late cereal harvests, the Commission contends that it is unfounded for the simple reason that the quota opened by the Commission for interventions at the old price in the Federal Republic was not fully used up . That contention is not made out . In answer to questions by the Court, the Federal Republic has supplied statistics which show that the quota opened by the Commission for interventions at the old price was largely exceeded by quantities offered to the German intervention agency : the quota was 2*500*000 tonnes, whereas 3*739*529 tonnes were offered to the German intervention agency up to the time-limit set by the German legislation adopted pursuant to Article 1*(3 ) of Regulation No 2677/84 . Even allowing for the fact that some part of the quantities offered for intervention may not have been of sufficient quality to satisfy the conditions for intervention, it would seem from these figures that the quota set by the Commission was exceeded by the quantities offered for intervention purchasing .

At the hearing, the Commission also argued that if for climatic reasons the harvest in certain parts of the Federal Republic was so late that it could not come within the preferential conditions for intervention, then that was the responsibility of the German authorities pursuant to Article 1(3 ) of Regulation No 2677/84 . No evidence has actually been given of any harvest excluded from the preferential quota because it came in late for climatic reasons, but if that is a real problem the terms of Article 1(3 ) of Regulation No 2677/84 plainly put it upon the German authorities to "adopt the procedures required" to deal with it . Accordingly, in my opinion the submission of discrimination against the Commission in this respect fails .

It is also alleged that Article 3*(2 ) of Regulation No 2677/84 is invalid because it is contrary to the principle of non-discrimination laid down in the second subparagraph of Article 40*(3 ) of the EEC Treaty . The Federal Republic submits that the rules embodied in Article 3*(2 ) discriminate against manufacturers of potato starch in relation to manufacturers of other starch, in particular maize or cereal starch .

As to the complaint of discrimination between potato starch and other kinds of starch, the Commission replies that in the second half of 1984 starch manufacturers were able to obtain supplies of cereals at prices close to those applicable on 1 January 1985 whilst Article 3*(2 ) averaged out prices for potatoes over the whole marketing year with a weighting of 3 to 9 ( 3 months for the old prices and 9 months for the new prices ), so that neutrality of competition was not affected to the detriment of manufacturers of potato starch .

Annex III to Regulation No 855/84 laid down a different green rate with regard to the cereals sector from the rate generally applicable . As I understand the German Government' s argument on the present point, it alleges that the application of these different rates upset the balance which had previously existed between the price of starch made from potatoes and starch made from maize and cereals, which are in competition with each other . The German Government does not challenge Regulation No 855/84 in the present proceedings, but it says that Article 3*(2 ) of Regulation No 2677/84 is not sufficient to remedy this disturbance .

To my mind it has not been shown that Regulation No 2677/84 brought about the discrimination alleged . On the one hand, the German Government accepts that Article 3*(2 ) spreads the effect of the revaluation by averaging it out over the whole marketing year; on the other hand, the Commission' s argument that the situation of the two groups of starch producers was approximately the same as regards supplies of the basic products is borne out by the statistics which have been supplied in answer to questions by the Court, which show that in the Federal Republic the producer price for potatoes and market prices for cereals were both falling in the last quarter of 1984 . I conclude that the Federal Republic has failed to make out a submission of discrimination against Article 3*(2 ) of Regulation No 2677/84 . Accordingly, in my view, both parts of the submission of a breach of the prohibition on discrimination fail .

By its fifth submission, the Federal Republic argues that Article 3*(1 ) of Regulation No 2677/84 is invalid because it contains an internal contradiction, in infringement of Article 190 of the EEC Treaty . The Federal Republic argues that the rules embodied in the said Article 3*(1 ) are contradictory in themselves since the defendant has overlooked the fact that, as a result of the rules contained in Article 2 of Regulation No 2677/84, the original market price, which is determined by the buying-in price, can no longer be obtained on the market .

In this respect the Commission points out that the German sugar price was maintained until 31 December 1984 at a level higher than the former intervention price . It contends that the German Government' s argument that a 5% reduction in the intervention price automatically brings about a corresponding drop in the market price is thus shown to be manifestly mistaken .

The figures supplied to the Court in answer to questions which it put seem to me to confirm the assertions of the Commission : in the months of September, October, November and December 1984 the market price for sugar in the Federal Republic was well above the intervention price, even including in the latter charges for storage costs . Thus the calculation underlying Article 3*(1 ) holds good, and the Federal Republic' s submission fails .

Finally, the Federal Republic submits that Article 3*(1 ) and ( 2 ) of Regulation No 2677/84 are invalid in that they are contrary to the principle of the protection of legitimate expectation . The Federal Republic argues that the rules contained in the said Article 3(1 ) and ( 2 ) take effect retrospectively as regards agreements which had been concluded and had in part already been performed .

The Commission rejects the complaint of infringement of the principle of the protection of legitimate expectation allegedly resulting from a retroactive effect on existing contracts, on the ground firstly that almost all contracts of the type concerned are expressed in ECU and prices in ECU were unaffected by the revaluation of the green rate of the German mark and secondly that, even if there were some contracts expressed in German marks, the interests of the sugarbeet or potato producers did not call for any special protection since other measures had entitled them to special aid of 5 %.

It is established that, although in general the principle of legal certainty precludes a Community measure from taking effect from a point in time before its publication, it may exceptionally be otherwise where the purpose to be achieved so demands and where the legitimate expectations of those concerned are duly respected : Case 98/78 Racke v Hauptzollamt Mainz (( 1979 )) ECR 69, at p . 86, and Case 84/81 Staple Dairy Products v Intervention Board for Agricultural Produce (( 1982 )) ECR 1763, at p . 1777 . The question therefore arises whether the legitimate expectations of those concerned are duly respected . This does not concern the purchasers under the contracts mentioned, because the transitional measures operate to their benefit . As regards the producers selling the sugarbeet or potatoes for starch-making, it could be said that by accepting contracts denominated in ECU they have accepted the exchange rate risk . On the other hand, if the Commission considered the impact of prices expressed in German marks to be sufficiently real to necessitate the adoption of the transitional measures in Article 3*(1 ) and ( 2 ), it seems to me that the Commission cannot ignore the impact of prices in German marks on the producers of sugarbeet and potatoes for starch-making sold under long-term contracts .

On the other hand, producers of sugar-beet and potatoes, along with all other German agricultural producers, benefited from special aid measures under Articles 3 and 4 of Regulation No 855/84 . That aid was raised from 3 to 5% by Council Decision 84/361 of 30 June 1984 ( Official Journal 1984, L 185, p . 41 ), which also brought application of the aid forward to 1 July 1984 . Those measures were in operation when the Commission adopted Regulation No 2677/84, and in my opinion the Commission was entitled to have regard to them, in particular to avoid granting compensation twice over, once through market prices and once through the aid mechanism . On the facts of the present case I consider that the legitimate expectations of those concerned have not been shown to be disregarded and that the Federal Republic' s criticism of Article 3*(1 ) and ( 2 ) of Regulation No 2677/84 on this ground is unfounded .

Accordingly, I am of the opinion that the application should be dismissed and the Federal Republic of Germany ordered to pay the costs of the case, including those relating to the proceedings for interim measures .