1 BY AN ORDER DATED 28 MARCH 1983 , WHICH WAS RECEIVED AT THE COURT REGISTRY ON 6 JUNE 1983 , THE TRIBUNALE DI GENOVA ( DISTRICT COURT , GENOA ) REFERRED TO THE COURT FOR A PRELIMINARY RULING UNDER ARTICLE 177 OF THE EEC TREATY THREE QUESTIONS CONCERNING THE VALIDITY OF ARTICLE 7 ( 2 ) OF REGULATION ( EEC ) NO 700/73 OF THE COMMISSION OF 12 MARCH 1973 LAYING DOWN CERTAIN DETAILED RULES FOR THE APPLICATION OF THE QUOTA SYSTEM FOR SUGAR ( OFFICIAL JOURNAL 1973 , L 67 , P . 12 ) AND OF ARTICLE 1 OF COMMISSION REGULATION ( EEC ) NO 3358/81 OF 25 NOVEMBER 1981 FIXING THE AMOUNTS OF THE PRODUCTION LEVY IN THE SUGAR SECTOR FOR THE PERIOD 1 JULY 1980 TO 30 JUNE 1981 AND THE AMOUNT PAYABLE BY SUGAR MANUFACTURERS TO THOSE WHO SELL SUGAR BEET ( OFFICIAL JOURNAL 1981 , L 339 , P . 17 ).
2 THOSE QUESTIONS WERE RAISED IN PROCEEDINGS INITIATED BY SERMIDE SPA , NOW IN LIQUIDATION ( HEREINAFTER REFERRED TO AS ' ' SERMIDE ' ' ), AN ITALIAN PRODUCER OF WHITE SUGAR , AGAINST THE CASSA CONGUAGLIO ZUCCHERO AND THE MINISTERS FOR FINANCE AND FOR THE TREASURY ( HEREINAFTER REFERRED TO AS ' ' THE DEFENDANTS ' ' ). IN THE PROCEEDINGS PENDING BEFORE THE NATIONAL COURT , SERMIDE WAS JOINED BY THE CONSORZIO NAZIONALE BIETICOLTORI AND THE ASSOCIAZIONE NAZIONALE BIETICOLTORI , AND BY M . BIANCHINI AND C . MERCIAI , AS INTERVENERS .
3 THE DISPUTE IS CONCERNED WITH THE QUESTION WHETHER THE CASSA CONGUAGLIO ZUCCHERO IS ENTITLED TO RECOVER THE SUM OF LIT 321 008 350 ( REDUCED IN THE COURSE OF THE MAIN PROCEEDINGS TO LIT 261 515 085 ) BY WAY OF PRODUCTION LEVIES ON THE SUGAR PRODUCED BY SERMIDE DURING THE 1980/81 SUGAR MARKETING YEAR IN EXCESS OF THE BASIC QUOTA ALLOCATED TO IT . THE UFFICIO RICEVITORIA ( COLLECTOR ' S OFFICE ) OF THE GENOA CUSTOMS AUTHORITY HAD ISSUED A NOTICE OF ASSESSMENT IN RESPECT OF THAT SUM , WHICH WAS SERVED ON 10 MAY 1982 .
4 THE LEVY HAD BEEN CALCULATED IN ACCORDANCE WITH COMMISSION REGULATION NO 3358/81 , WHICH WAS ADOPTED ON THE BASIS OF ARTICLE 48 OF COUNCIL REGULATION ( EEC ) NO 1758/81 OF 30 JUNE 1981 ON THE COMMON ORGANIZATION OF THE MARKETS IN THE SUGAR SECTOR ( OFFICIAL JOURNAL 1981 , L 177 , P . 4 ), AND IN ACCORDANCE WITH ARTICLE 7 OF REGULATION NO 700/73 OF THE COMMISSION , AS AMENDED BY ARTICLE 1 ( 2 ) OF COMMISSION REGULATION ( EEC ) NO 1573/76 OF 30 JUNE 1976 ( OFFICIAL JOURNAL 1976 , L 172 , P . 52 ).
5 IN THE PROCEEDINGS BEFORE THE NATIONAL COURT SERMIDE CONTENDED THAT THE TWO AFORESAID PROVISIONS WERE UNLAWFUL INASMUCH AS THEY DISCRIMINATED AGAINST IT AND WERE THEREFORE CONTRARY TO THE EEC TREATY AND TO CERTAIN OTHER PROVISIONS OF COMMUNITY LAW .
6 TAKING THE VIEW THAT THE DOUBTS EXPRESSED BY SERMIDE AS REGARDS THE VALIDITY OF THE PROVISIONS IN QUESTION WERE LEGITIMATE , THE TRIBUNALE DI GENOVA REFERRED THE FOLLOWING QUESTIONS TO THE COURT FOR A PRELIMINARY RULING : ' ' 1 . IS ARTICLE 7 ( 2 ) OF REGULATION NO 700/73 OF THE COMMISSION - WHICH PROVIDES THAT THE TOTAL LOSSES RESULTING FROM THE DISPOSAL OF THE QUANTITY OF SUGAR PRODUCED IN THE COMMUNITY ARE TO BE CALCULATED ON THE BASIS OF A WEIGHTED AVERAGE OF LOSSES RESULTING FROM THE DISPOSAL OF SUGAR DURING THE PERIOD FROM 1 OCTOBER OF THE RELEVANT SUGAR MARKETING YEAR TO 30 SEPTEMBER OF THE FOLLOWING YEAR - UNLAWFUL ON THE GROUND THAT IT IS CONTRARY TO ( A ) THE PROHIBITION OF DISCRIMINATION LAID DOWN IN THE FIRST PARAGRAPH OF ARTICLE 7 OF THE EEC TREATY , ( B ) THE PROHIBITION OF DISCRIMINATION LAID DOWN IN ARTICLE 40 ( 3 ) OF THE EEC TREATY , ( C ) ARTICLE 2 OF COUNCIL REGULATION NO 1785/81 , WHICH PROVIDES THAT THE SUGAR MARKETING YEAR IS TO BEGIN ON 1 JULY AND IS TO END ON 30 JUNE OF THE FOLLOWING YEAR , OR ( D ) ARTICLE 28 OF COUNCIL REGULATION NO 1785/81 , WHICH PROVIDES THAT THE LEVY ON THE SUGAR PRODUCED IN EACH MARKETING YEAR IS TO BE BASED , INTER ALIA , ON THE AVERAGE LOSS RESULTING FROM EXPORT OBLIGATIONS TO BE FULFILLED DURING THE SAME MARKETING YEAR? 2.IF THE FIRST QUESTION IS ANSWERED IN THE AFFIRMATIVE , DOES IT FOLLOW THAT ARTICLE 1 OF COMMISSION REGULATION NO 3358/81 - WHICH FIXES THE AMOUNT OF THE SUGAR PRODUCTION LEVY FOR THE 1980/81 MARKETING YEAR AT 3.407 ECU PER 100 KG OF WHITE SUGAR - IS ALSO UNLAWFUL? 3.EVEN IF THE FIRST TWO QUESTIONS ARE BOTH ANSWERED IN THE NEGATIVE , IS ARTICLE 1 OF COMMISSION REGULATION NO 3358/81 - WHICH FIXES THE AMOUNT OF THE SUGAR PRODUCTION LEVY FOR THE 1980/81 SUGAR MARKETING YEAR AT 3.407 ECU PER 100 KG OF WHITE SUGAR - UNLAWFUL ON THE GROUND THAT IT IS CONTRARY TO ( A ) ARTICLE 27 ( 2 ) OF REGULATION NO 3330/74 OF THE COUNCIL , WHICH PROVIDES THAT THE PRODUCTION LEVY FOR THE 1980/81 MARKETING YEAR IS TO BE CALCULATED ON THE BASIS OF THE QUANTITY OF SUGAR ACTUALLY EXPORTED TO NON-MEMBER COUNTRIES , OR ( B ) ARTICLE 28 OF COUNCIL REGULATION NO 1785/81 , WHICH PROVIDES THAT ONLY AS FROM THE 1981/82 MARKETING YEAR IS THE PRODUCTION LEVY ON SUGAR TO BE CALCULATED ON THE BASIS OF THE QUANTITY OF SUGAR WHICH IS MERELY THE SUBJECT OF AN EXPORT OBLIGATION? ' ' THE RELEVANT PROVISIONS
7 IN ORDER TO ANSWER THE QUESTIONS SUBMITTED BY THE TRIBUNALE DI GENOVA , IT IS APPROPRIATE TO RECALL IN THE FIRST PLACE THOSE FEATURES OF THE SYSTEM OF PRODUCTION QUOTAS AND OF THE METHOD OF CALCULATING THE SUGAR PRODUCTION LEVY WHICH ARE RELEVANT TO THIS CASE .
8 THE BASIC REGULATION - REGULATION ( EEC ) NO 3330/74 OF THE COUNCIL OF 19 DECEMBER 1974 ON THE COMMON ORGANIZATION OF THE MARKET IN SUGAR ( OFFICIAL JOURNAL 1974 , L 359 , P . 1 ) - MAINTAINED THE SYSTEM OF PRODUCTION QUOTAS ESTABLISHED BY THE FORMER BASIC REGULATION - REGULATION NO 1009/67/EEC OF THE COUNCIL OF 18 DECEMBER 1967 ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1967 , P . 304 ). THAT SYSTEM DISTINGUISHES BETWEEN THREE CATEGORIES OF WHITE SUGAR PRODUCED DURING A GIVEN SUGAR MARKETING YEAR , THAT IS TO SAY BETWEEN 1 JULY AND 30 JUNE OF THE FOLLOWING YEAR : ( A ) THE QUANTITY WHICH MAY BE FREELY MARKETED WITHIN THE COMMON MARKET AND THE DISPOSAL OF WHICH IS GUARANTEED BY THE INTERVENTION PRICE . THIS IS KNOWN AS THE A QUOTA . ( B)THE QUANTITY IN EXCESS OF THE A QUOTA BUT BELOW A SPECIFIED MAXIMUM QUANTITY ( KNOWN AS THE ' ' MAXIMUM QUOTA ' ' AND EQUAL TO THE A QUOTA PLUS WEIGHTING ). THIS QUANTITY , KNOWN AS THE B QUOTA , MAY ALSO BE FREELY MARKETED WITHIN THE COMMON MARKET OR EXPORTED , WHEREUPON IT QUALIFIES FOR AN EXPORT AID . THE MEMBER STATES COLLECT IN RESPECT OF THAT QUANTITY FROM THE SUGAR MANUFACTURERS IN QUESTION A PRODUCTION LEVY INTENDED TO FINANCE THE EXPORT AID GRANTED IN RESPECT OF B SUGAR . ( C)THE QUANTITY WHICH EXCEEDS THE MAXIMUM QUOTA AND WHICH MAY NOT BE DISPOSED OF WITHIN THE COMMON MARKET BUT MUST BE EXPORTED IN THE NATURAL STATE BEFORE 1 JANUARY FOLLOWING THE EXPIRY OF THE MARKETING YEAR IN QUESTION , WITHOUT THE BENEFIT OF AN EXPORT AID . THIS IS KNOWN AS THE C QUOTA .
9 ACCORDING TO ARTICLE 3 OF REGULATION NO 3330/74 , AN INTERVENTION PRICE FOR WHITE SUGAR IS TO BE FIXED EACH YEAR BY THE COUNCIL FOR THE COMMUNITY AREA HAVING THE LARGEST SURPLUS AND DERIVED INTERVENTION PRICES ARE TO BE FIXED FOR OTHER AREAS , TAKING ACCOUNT OF THE REGIONAL VARIATIONS IN THE PRICE OF SUGAR .
10 ARTICLE 19 OF REGULATION NO 3330/74 PROVIDES THAT , TO THE EXTENT NECESSARY TO ENABLE WHITE SUGAR TO BE EXPORTED ON THE WORLD MARKET , AN EXPORT REFUND MAY BE GRANTED WHICH COVERS THE DIFFERENCE BETWEEN PRICES ON THE WORLD MARKET AND PRICES WITHIN THE COMMUNITY AND WHICH IS THE SAME FOR THE ENTIRE COMMUNITY . THE TOTAL AMOUNT PAID IN EXPORT REFUNDS CONSTITUTES THE ' ' LOSSES INCURRED IN DISPOSING OF SUGAR ' ' REFERRED TO IN ARTICLE 7 ( 2 ) ( B ) OF REGULATION NO 700/73 .
11 THE PRODUCTION LEVY WHICH THE MEMBER STATES COLLECT FROM SUGAR MANUFACTURERS IN RESPECT OF B QUOTA SUGAR IS TO BE CALCULATED , IN ACCORDANCE WITH ARTICLE 27 ( 2 ) OF THE BASIC REGULATION , BY DIVIDING TOTAL LOSSES INCURRED IN MARKETING THE QUANTITY PRODUCED IN THE COMMUNITY OUTSIDE THE GUARANTEED QUANTITY ( CORRESPONDING AT LEAST TO THE A QUOTA ) BY THE SUM OF THE QUANTITIES PRODUCED OUTSIDE THE A QUOTA BY COMMUNITY UNDERTAKINGS BUT NOT IN EXCESS OF THE MAXIMUM QUOTA . THE LEVY MAY NOT , HOWEVER , EXCEED 30% OF THE INTERVENTION PRICE .
12 THE DETAILED RULES FOR IMPLEMENTING THE SYSTEM OF PRODUCTION QUOTAS WERE ESTABLISHED BY REGULATION NO 700/73 OF THE COMMISSION , WHICH WAS ADOPTED ON THE BASIS OF REGULATION NO 1009/67 AND REMAINED IN FORCE , WITH CER- TAIN AMENDMENTS , IN PARTICULAR THOSE EFFECTED BY COMMISSION REGULATION NO 1573/76 , UNTIL IT WAS REPEALED BY COMMISSION REGULATION ( EEC ) NO 1443/82 OF 8 JUNE 1982 ( OFFICIAL JOURNAL 1982 , L 158 , P . 17 ), WHICH ENTERED INTO FORCE ON 10 JUNE 1982 .
13 IT IS CLEAR FROM ARTICLE 7 ( 2 ) OF REGULATION NO 700/73 , AS AMENDED BY ARTICLE 1 ( 2 ) OF REGULATION NO 1573/76 , THAT THE TOTAL LOSSES REFERRED TO IN ARTICLE 27 ( 2 ) OF REGULATION NO 3330/74 ARE TO BE CALCULATED BY REFERENCE TO TWO FACTORS , KNOWN AS THE QUANTITATIVE FACTOR AND THE FINANCIAL FACTOR . THE QUANTITATIVE FACTOR CONSISTS OF THE TOTAL WHITE SUGAR PRODUCED DURING THE MARKETING YEAR IN QUESTION , LESS THE GUARANTEED QUANTITY VALID FOR THAT MARKETING YEAR , ANY QUANTITIES PRODUCED IN EXCESS OF THE MAXIMUM QUOTA AND ANY QUANTITIES PRODUCED WITHIN THE MAXIMUM QUOTA AND CARRIED FORWARD BY UNDERTAKINGS TO THE FOLLOWING SUGAR MARKETING YEAR . THE FINANCIAL FACTOR CONSISTS OF THE WEIGHTED AVERAGE OF THE LOSSES INCURRED IN DISPOSING OF SUGAR DURING THE PERIOD FROM 1 OCTOBER OF THE RELEVANT MARKETING YEAR TO 30 SEPTEMBER OF THE FOLLOWING YEAR ( LESS THE EXPORT LEVIES CHARGED DURING THE SAME PERIOD ).
14 IT FOLLOWS THAT THE QUANTITATIVE FACTOR IS CALCULATED BY REFERENCE TO PRODUCTION DURING THE SUGAR MARKETING YEAR , THAT IS TO SAY THE PERIOD FROM 1 JULY TO 30 JUNE OF THE FOLLOWING YEAR , WHEREAS THE FINANCIAL FACTOR IS CALCULATED BY REFERENCE TO A PERIOD COMMENCING THREE MONTHS AFTER THE OPENING OF THE SUGAR MARKETING YEAR .
15 ALTHOUGH ARTICLES 24 TO 31 OF REGULATION NO 3330/74 , WHICH CONCERN THE SYSTEM OF PRODUCTION QUOTAS , INCLUDING THE PRODUCTION LEVY , WERE INITIALLY APPLICABLE ONLY TO THE MARKETING YEARS FROM 1975/76 TO 1979/80 INCLUSIVE , THEIR VALIDITY WAS EXTENDED SO AS TO APPLY TO THE 1980/81 MARKETING YEAR ( WITH THE EXCEPTION OF THE SECOND SUBPARAGRAPH OF ARTICLE 31 ( 1 )) BY ARTICLE 1 ( 1 ) OF COUNCIL REGULATION ( EEC ) NO 1592/80 OF 24 JUNE 1980 ( OFFICIAL JOURNAL 1980 , L 160 , P . 12 ).
16 REGULATION NO 3330/74 WAS REPEALED WITH EFFECT FROM 30 JUNE 1981 BY ARTICLE 49 ( 3 ) OF THE NEW BASIC REGULATION ( REGULATION NO 1785/81 ), WHICH PROVIDES IN ARTICLE 23 ( 1 ) THAT ARTICLES 24 TO 32 , CONCERNING THE SYSTEM OF PRODUCTION QUOTAS , ARE TO APPLY IN RESPECT OF THE SUGAR MARKETING YEARS FROM 1981/82 TO 1985/86 .
17 THE NEW BASIC REGULATION RETAINED IN PRINCIPLE THE SYSTEM OF PRODUCTION QUOTAS BUT AMENDED IT SIGNIFICANTLY , PARTICULARLY AS REGARDS THE PRODUCTION LEVY , WHICH , IN ACCORDANCE WITH ARTICLE 28 ( 3 ), IS NO LONGER TO BE IMPOSED ON MANUFACTURERS EXCLUSIVELY IN RESPECT OF THEIR PRODUCTION OF B SUGAR BUT IN RESPECT OF THEIR PRODUCTION OF A AND B SUGAR . HOWEVER , THE BASIC LEVY MAY NOT EXCEED AN AMOUNT EQUAL TO 2% OF THE INTERVENTION PRICE . WHERE THE MAXIMUM PERMITTED LEVY DOES NOT FULLY COVER THE TOTAL LOSS , AN ADDITIONAL LEVY IS TO BE PAID BY MANUFACTURERS IN RESPECT OF THEIR PRODUCTION OF B SUGAR , WHICH LEVY MAY NOT EXCEED AN AMOUNT EQUAL TO 30% OF THE INTERVENTION PRICE ( OR , IN CERTAIN CIRCUMSTANCES , AN AMOUNT EQUAL TO 37.5% OF THAT PRICE ).
18 ACCORDINGLY , ARTICLE 28 ( 3 ) OF REGULATION NO 1785/81 PROVIDES THAT THE BASIC LEVY IS TO BE CALCULATED BY DIVIDING THE ESTIMATED TOTAL LOSS BY THE ESTIMATED PRODUCTION OF A AND B SUGAR ATTRIBUTABLE TO THE CURRENT MARKETING YEAR . ACCORDING TO ARTICLE 28 ( 1 ) ( D ), THE ESTIMATED TOTAL LOSS IS TO BE CALCULATED BY REFERENCE TO THE ESTIMATED AVERAGE LOSS FOR EXPORT OBLIGATIONS TO BE FULFILLED DURING THE CURRENT MARKETING YEAR .
19 THE RATE OF THE SUGAR PRODUCTION LEVY FOR THE 1980/81 MARKETING YEAR WAS FIXED AT 3.407 ECU PER HUNDRED KG OF WHITE SUGAR BY ARTICLE 1 ( 1 ) OF COMMISSION REGULATION ( EEC ) NO 3358/81 OF 25 NOVEMBER 1981 ( OFFICIAL JOURNAL 1981 , L 339 , P . 17 ). THAT REGULATION WAS ADOPTED PURSUANT TO ARTICLE 48 OF REGULATION NO 1785/81 , WHICH AUTHORIZED THE COMMISSION TO ADOPT TRANSITIONAL MEASURES WHERE NECESSARY TO FACILITATE THE TRANSITION TO THE SYSTEM ESTABLISHED THEREBY , IN PARTICULAR IF THE INTRODUCTION OF THE NEW SYSTEM ON THE DATE PROVIDED FOR GAVE RISE TO SUBSTANTIAL DIFFICULTIES . SUCH MEASURES WERE TO BE APPLICABLE ONLY UNTIL 30 JUNE 1982 AT THE LATEST .
20 IN FIXING THE RATE OF THE PRODUCTION LEVY FOR THE 1980/81 MARKETING YEAR , THE COMMISSION APPLIED , IN ACCORDANCE WITH THE PREAMBLE TO REGULATION NO 3358/81 , THE CRITERIA ESTABLISHED BY ARTICLE 7 ( 2 ) OF REGULATION NO 700/73 AND TOOK ACCOUNT , WHEN CALCULATING THE FINANCIAL FACTOR , OF THE WEIGHTED AVERAGE OF THE LOSSES INCURRED IN DISPOSING OF SUGAR DURING THE PERIOD FROM 1 OCTOBER 1980 TO 30 SEPTEMBER 1981 . FIRST QUESTION
21 THE FIRST QUESTION RAISES TWO SEPARATE ISSUES : ( A ) WHETHER OR NOT THE FACT THAT BY VIRTUE OF ARTICLE 7 OF REGULATION NO 700/73 THE REFERENCE PERIOD FOR THE CALCULATION OF THE AVERAGE LOSSES INCURRED IN DISPOSING OF SUGAR , WHICH RUNS FROM 1 OCTOBER OF THE CURRENT MARKETING YEAR TO 30 SEPTEMBER OF THE FOLLOWING YEAR , DIFFERS FROM THE SUGAR MARKETING YEAR , WHICH RUNS FROM 1 JULY TO 30 JUNE OF THE FOLLOWING YEAR , CONSTITUTES DISCRIMINATION PROHIBITED BY ARTICLES 7 AND 40 ( 3 ) OF THE EEC TREATY ; AND ( B ) WHETHER THOSE RULES ARE CONTRARY TO ARTICLES 2 AND 28 OF REGULATION NO 1785/81 . THE ALLEGED BREACH OF THE PRINCIPLE OF NON-DISCRIMINATION
22 THE NATIONAL COURT CONSIDERS THAT THE FAILURE TO SYNCHRONIZE THE REFERENCE PERIODS IS , AT LEAST AS REGARDS THE 1980/81 MARKETING YEAR , TANTAMOUNT TO A DISCRIMINATORY MEASURE : IT ADVERSELY AFFECTS ITALIAN UNDERTAKINGS , WHICH ARE SITUATED IN AREAS THAT PRODUCE INSUFFICIENT SUGAR TO MEET DEMAND AND SO EXPORT RELATIVELY LITTLE , AND IT BENEFITS UNDERTAKINGS IN NORTHERN EUROPE , WHERE THERE IS A SURPLUS AND EXPORTING IS TRADITIONAL .
23 THAT DISCRIMINATION IS SAID TO STEM FROM THE FACT THAT THE INCREASE IN THE COMMUNITY INTERVENTION PRICE AS FROM 1 JULY 1981 , THE DATE ON WHICH THE NEW MARKETING YEAR BEGAN , AND THE CONCOMITANT FALL IN THE WORLD SUGAR PRICE RESULTED IN A SHARP INCREASE IN THE AMOUNT PAID OUT IN THE FORM OF EXPORT REFUNDS ( WHICH WAS BENEFICIAL TO NORTH EUROPEAN UNDERTAKINGS ) AND CONSEQUENTLY IN AN ABNORMAL INCREASE IN THE LEVY ON B SUGAR PRODUCED IN THE 1980/81 MARKETING YEAR ( WHICH WAS DETRIMENTAL TO ITALIAN UNDERTAKINGS ).
24 SERMIDE AND THE ITALIAN GOVERNMENT CONTEND THAT IT IS DISCRIMINATORY NOT TO CALCULATE THE PRODUCTION LEVY EXCLUSIVELY ON THE BASIS OF THE ACTUAL LOSSES INCURRED IN DISPOSING OF SUGAR DURING THE MARKETING YEAR IN WHICH THE SUGAR WHICH IS SUBJECT TO THE LEVY IS PRODUCED . THEY POINT OUT THAT THE NEW COMMUNITY INTERVENTION PRICE COMES INTO FORCE EACH YEAR AT THE BEGINNING OF THAT PERIOD , WHICH COINCIDES PRECISELY WITH THE NATURAL CROP CYCLE FOR SUGAR BEET IN SOUTHERN EUROPE . HOWEVER , AT THE END OF THE SUGAR MARKETING YEAR , ONLY NORTH EUROPEAN UNDERTAKINGS HAVE AT THEIR DISPOSAL , AS A RESULT OF THE CROP CYCLE FOR SUGAR BEET IN THE NORTH , SUFFICIENT QUANTITIES OF SUGAR PRODUCED BEFORE THAT DATE TO ENABLE THEM TO BENEFIT FROM THE HIGHER EXPORT REFUNDS .
25 FURTHERMORE , SERMIDE AND THE ITALIAN GOVERNMENT CONTEND THAT , WHEN THE PRODUCTION LEVY WAS CALCULATED FOR BOTH THE 1980/81 AND 1981/82 MARKETING YEARS , THE REFUNDS FOR SUGAR PRODUCED IN THE 1980/81 MARKETING YEAR AND EXPORTED IN THE THIRD QUARTER OF 1981 WERE TAKEN INTO CONSIDERATION TWICE , THUS LEADING TO CONSIDERABLE AND UNJUSTIFIED COSTS FOR PRODUCERS .
26 THE COMMISSION , HOWEVER , DENIES ALL CHARGES OF DISCRIMINATION AND EMPHASIZES THAT , IN CHOOSING THE PERIOD FROM 1 OCTOBER TO 30 SEPTEMBER ( INSTEAD OF THE SUGAR MARKETING YEAR ) AS THE REFERENCE PERIOD FOR THE CALCULATION OF THE LOSSES INCURRED IN DISPOSING OF SUGAR , IT TOOK ACCOUNT ONLY OF THE NATURAL CROP CYCLES AND OF ECONOMIC REALITIES , THAT IS TO SAY COMMON COMMERCIAL PRACTICES AND TRADITIONAL PATTERNS OF TRADE . THE COMMENCEMENT OF THE SUGAR MARKETING YEAR WAS FIXED AS 1 JULY PRECISELY IN ORDER TO ENABLE ITALIAN PRODUCERS TO TAKE ADVANTAGE OF THE NEW INTERVENTION PRICES FOR NEW SUGAR . FURTHERMORE , PART OF THE SUGAR PRODUCED IN NORTHERN EURPE DURING A PARTICULAR SUGAR MARKETING YEAR IS TRADITIONALLY NOT EXPORTED UNTIL THE PERIOD BETWEEN 1 JULY AND THE EXPIRY OF THE REFERENCE PERIOD .
27 FINALLY , THE COMMISSION MAINTAINS THAT TO COMPEL ALL UNDERTAKINGS WHICH PRODUCE SUGAR IN EXCESS OF THE A QUOTA TO CONTRIBUTE TOWARDS THE FINANCING OF EXPORT REFUNDS DOES NOT CONSTITUTE DISCRIMINATION SINCE ONLY THE DISPOSAL OF SURPLUS SUGAR TO NON-MEMBER COUNTRIES MAKES IT POSSIBLE TO MAINTAIN WITHIN THE COMMON MARKET A BALANCE BETWEEN SUPPLY AND DEMAND , THE EFFECT OF WHICH IS TO SUPPORT THE DOMESTIC PRICE IN THE INTERESTS OF ALL PRODUCERS , INCLUDING ITALIAN UNDERTAKINGS .
28 IT IS APPROPRIATE IN THE FIRST PLACE TO POINT OUT THAT UNDER THE PRINCIPLE OF NON-DISCRIMINATION BETWEEN COMMUNITY PRODUCERS OR CONSUMERS , WHICH IS ENSHRINED IN THE SECOND SUBPARAGRAPH OF ARTICLE 40 ( 3 ) OF THE EEC TREATY AND WHICH INCLUDES THE PROHIBITION OF DISCRIMINATION ON GROUNDS OF NATIONALITY LAID DOWN IN THE FIRST PARAGRAPH OF ARTICLE 7 OF THE EEC TREATY , COMPARABLE SITUATIONS MUST NOT BE TREATED DIFFERENTLY AND DIFFERENT SITUATIONS MUST NOT BE TREATED IN THE SAME WAY UNLESS SUCH TREATMENT IS OBJECTIVELY JUSTIFIED . IT FOLLOWS THAT THE VARIOUS ELEMENTS IN THE COMMON ORGANIZATION OF THE MARKETS , SUCH AS PROTECTIVE MEASURES , SUBSIDIES , AID AND SO ON , MAY NOT BE DIFFERENTIATED ACCORDING TO REGION OR ACCORDING TO OTHER FACTORS AFFECTING PRODUCTION OR CONSUMPTION EXCEPT BY REFERENCE TO OBJECTIVE CRITERIA WHICH ENSURE A PROPORTIONATE DIVISION OF THE ADVANTAGES AND DISADVANTAGES FOR THOSE CONCERNED WITHOUT DISTINCTION BETWEEN THE TERRITORIES OF THE MEMBER STATES .
29 THE COURT ' S FINDING , IN THAT REGARD , IS THAT THE RULES SET OUT IN ARTICLE 7 ( 2 ) OF REGULATION NO 700/73 CONCERNING THE CALCULATION OF THE PRODUCTION LEVY ARE OBJECTIVELY JUSTIFIED NOTWITHSTANDING THEIR USE OF DIFFERENT REFERENCE PERIODS , NAMELY THE SUGAR MARKETING YEAR , WHICH IS USED TO ESTABLISH THE RELEVANT QUANTITY OF WHITE SUGAR PRODUCED ( KNOWN AS THE QUANTITATIVE FACTOR ), AND THE PERIOD FROM 1 OCTOBER OF THE RELEVANT MARKETING YEAR TO 30 SEPTEMBER OF THE FOLLOWING YEAR , WHICH IS USED TO ESTABLISH THE AVERAGE LOSSES INCURRED IN DISPOSING OF SUGAR ( KNOWN AS THE FINANCIAL FACTOR ).
30 AS REGARDS THE ARGUMENT TO THE EFFECT THAT THAT METHOD OF CALCULATION IS ARBITRARY INASMUCH AS IT PLACES SOUTH EUROPEAN PRODUCERS AT A DISADVANTAGE IN RELATION TO NORTH EUROPEAN PRODUCERS , IT MUST BE NOTED FIRST OF ALL THAT THE RULES IN QUESTION APPLY ONLY TO SUGAR ACTUALLY PRODUCED DURING THE SAME SUGAR MARKETING YEAR . THERE IS OBJECTIVE JUSTIFICATION FOR TAKING INTO CONSIDERATION THE REFUNDS GRANTED IN RESPECT OF QUANTITIES OF SUGAR EXPORTED AFTER THE END OF A PARTICULAR SUGAR MARKETING YEAR SINCE THOSE QUANTITIES WERE PRODUCED DURING THAT MARKETING YEAR . IT IS THEREFORE PERFECTLY LOGICAL , WHEN CALCULATING THE TOTAL LOSSES AND , HENCE , THE PRODUCTION LEVY FOR A PARTICULAR SUGAR MARKETING YEAR , TO TAKE ACCOUNT OF THE LOSSES INCURRED IN DISPOSING OF WHITE SUGAR PRODUCED DURING THAT MARKETING YEAR , BUT DISPOSED OF AFTER ITS EXPIRY .
31 THE COURT IS UNABLE TO TAKE INTO CONSIDERATION THE FACT THAT , OWING TO THE NATURAL CROP CYCLE FOR SUGAR BEET , SOUTH EUROPEAN PRODUCERS , UNLIKE NORTH EUROPEAN PRODUCERS , NO LONGER HAVE AT THEIR DISPOSAL , AFTER THE END OF THE SUGAR MARKETING YEAR , ANY SUGAR PRODUCED BEFORE THAT DATE AND CANNOT THEREFORE TAKE ADVANTAGE OF THE NEW INTERVENTION PRICE APPLIED AS FROM THE COMMENCEMENT OF THE NEW MARKETING YEAR , WHEREAS THE LEVY IMPOSED ON THE SUGAR PRODUCED BY THEM DURING THE PREVIOUS MARKETING YEAR TAKES ACCOUNT OF TOTAL LOSSES INCURRED DURING THAT PART OF THE REFERENCE PERIOD WHICH EXTENDS BEYOND THE MARKETING YEAR . THAT LINE OF REASONING CALLS IN QUESTION THE COUNCIL ' S CHOICE OF DATES FOR THE COMMENCEMENT OF THE SUGAR MARKETING YEAR AND FOR THE ENTRY INTO FORCE OF THE NEW INTERVENTION PRICE , A CHOICE WHICH MAY BE CHALLENGED ONLY BY CONTENDING THAT IT CONSTITUTES A MISUSE OF POWERS . HOWEVER , NO SUCH CONTENTION HAS BEEN ADVANCED IN THE PRESENT CASE .
32 MOREOVER , AS REGARDS THE ARGUMENT TO THE EFFECT THAT THE FAILURE TO SYNCHRONIZE THE REFERENCE PERIODS PRODUCED ARBITRARY EFFECTS IN RELATION TO THE AMOUNT OF THE REFUNDS , AND HENCE IN RELATION TO THE AMOUNT OF THE LEVY , AT LEAST FOR THE 1980/81 SUGAR MARKETING YEAR , HAVING REGARD TO THE PARTICULARLY HIGH INTERVENTION PRICE WHICH CAME INTO FORCE ON 1 JULY 1981 , IT MUST BE POINTED OUT THAT THE REFUNDS ARE INTENDED , AS IS CLEAR FROM THE FIFTH RECITAL IN THE PREAMBLE TO REGULATION NO 3330/74 , TO STABILIZE THE COMMUNITY MARKET BY PREVENTING PRICE FLUCTUATIONS ON THE WORLD MARKET FROM AFFECTING PRICES WITHIN THE COMMUNITY . IT FOLLOWS THAT ADJUSTMENTS IN THE AMOUNT OF THE REFUNDS ARE AN INHERENT FEATURE OF THE RULES ON EXTERNAL TRADE WHICH FORM PART OF THE COMMON ORGANIZATION OF THE MARKET IN SUGAR .
33 AS REGARDS THE ARGUMENT TO THE EFFECT THAT THE APPLICATION OF A REFERENCE PERIOD FOR THE CALCULATION OF THE LOSSES INCURRED IN DISPOSING OF SUGAR WHICH EXTENDED BEYOND THE END OF THE 1980/81 SUGAR MARKETING YEAR WAS INCOMPATIBLE WITH THE FACT THAT FAR-REACHING AMENDMENTS WERE MADE TO THE RULES GOVERNING SUGAR PRODUCTION LEVIES WITH EFFECT FROM 1 JULY 1981 , IT MUST BE NOTED THAT THE COMMISSION APPLIED THE CONTESTED LEGISLATION ONLY TO THE DISPOSAL OF SUGAR PRODUCED BEFORE 1 JULY 1981 . THE FACT THAT THE AMENDED RULES CONTAINED CERTAIN FEATURES NOT PRESENT IN THE PREVIOUS SYSTEM CANNOT IN ITSELF CONSTITUTE DISCRIMINATION , INASMUCH AS THE MEASURE ADOPTED DID NOT EXCEED THE SCOPE OF THE BROAD DISCRETION ENJOYED BY THE COMMUNITY LEGISLATURE IN THIS AREA .
34 AS REGARDS THE ARGUMENT THAT CERTAIN REFUNDS WERE TAKEN INTO CONSIDERATION TWICE - ONCE IN THE CALCULATION OF THE LEVY FOR 1980/81 AND AGAIN IN THE CALCULATION OF THE LEVY FOR THE 1981/82 - THE COURT NOTES THAT , IN TAKING INTO CONSIDERATION FOR THE CALCULATION OF THE AVERAGE LOSS FOR THE 1980/81 MARKETING YEAR THE LOSSES RESULTING FROM THE REFUNDS FIXED AT REGULAR INTERVALS FOR SUGAR PRODUCED DURING THE 1980/81 MARKETING YEAR AND DISPOSED OF DURING THE THIRD QUARTER OF 1981 , THE COMMISSION MERELY APPLIED THE LEGISLATION HITHERTO IN FORCE . IN VIEW OF THE REASONS PUT FORWARD BY IT , IN PARTICULAR THE CONSIDERABLE ADMINISTRATIVE DIFFICULTIES INVOLVED , THE COMMISSION WAS UNDER NO OBLIGATION TO SET UP , SOLELY FOR THE 1980/81 REFERENCE PERIOD , A SYSTEM FOR CHARGING THOSE LOSSES TO ONE OR OTHER OF THE SUGAR MARKETING YEARS CONCERNED . THE FACT THAT THE COMMISSION ADHERED , EVEN IN RESPECT OF THE TRANSITIONAL PERIOD IN QUESTION , TO THE LEGISLATION WHICH HAD BEEN IN FORCE FOR A NUMBER OF YEARS , NAMELY REGULATION NO 700/73 , IS NOT CONTRARY TO THE PROHIBITION OF DISCRIMINATION LAID DOWN IN THE SECOND SUBPARAGRAPH OF ARTICLE 40 ( 3 ) OF THE EEC TREATY .
35 HOWEVER , AS REGARDS THE FACT THAT THE COMMISSION ALSO TOOK THE SAME LOSSES INTO CONSIDERATION WHEN CALCULATING THE AVERAGE LOSS FOR THE 1981/82 MARKETING YEAR , IT MUST BE POINTED OUT THAT TO IMPOSE A BURDEN TWICE ON THE BASIS OF THE SAME FACTS WOULD BE CONTRARY TO THE PRINCIPLE OF PROPORTIONALITY . IN THAT REGARD , THE COMMISSION MAINTAINS THAT IN THIS CASE THE TAKING INTO CONSIDERATION OF THOSE LOSSES A SECOND TIME HAD NO UNFAVOURABLE CONSEQUENCES FOR PRODUCERS IN THE SUGAR MARKETING YEAR IN QUESTION , SINCE IN REALITY IT SERVED ONLY TO REDUCE THE AVERAGE LOSS AND THEREFORE TO REDUCE , ALBEIT TO A VERY LIMITED EXTENT , THE AMOUNT OF THE LEVY FOR THAT PERIOD . SERMIDE , HOWEVER , OBSERVES THAT SUCH ' ' GENEROSITY ' ' ON THE PART OF THE COMMISSION IN ITS CALCULATIONS COST ITALIAN PRODUCERS ' ' APPROXIMATELY LIT 7 000 MILLION FOR THE 1980/81 MARKETING YEAR ALONE AND PROBABLY THE SAME AMOUNT FOR THE 1981/82 MARKETING YEAR ' ' . BUT SERMIDE DOES NOT PROVIDE ANY DETAILS OF THE LOSS WHICH IT CLAIMS TO HAVE SUFFERED OR ANY EVIDENCE OF A CAUSAL CONNEXION BETWEEN THAT LOSS AND THE COMMISSION ' S CALCULATIONS .
36 IN THOSE CIRCUMSTANCES THE ARGUMENT PUT FORWARD BY THE COMMISSION APPEARS TO BE SUFFICIENTLY SOUND TO RULE OUT A BREACH OF THE PRINCIPLE OF PROPORTIONALITY IN VIEW OF THE FACT THAT THE SHARP INCREASE IN THE LOSSES SUSTAINED WAS DUE TO PRICE FLUCTUATIONS ON THE WORLD MARKET .
37 IT FOLLOWS FROM THE FOREGOING CONSIDERATIONS THAT ARTICLE 7 ( 2 ) OF REGULATION NO 700/73 DOES NOT INFRINGE THE RULE OF NON-DISCRIMINATION BETWEEN COMMUNITY PRODUCERS WHICH IS EMBODIED IN THE SECOND SUBPARAGRAPH OF ARTICLE 40 ( 3 ) OF THE EEC TREATY . THE ALLEGED INFRINGEMENT OF ARTICLES 2 AND 28 OF REGULATION NO 1785/81
38 THE NATIONAL COURT ALSO ASKS WHETHER ARTICLE 7 ( 2 ) OF REGULATION NO 700/83 IS UNLAWFUL ON THE GROUND THAT IT IS CONTRARY TO ARTICLES 2 AND 28 OF REGULATION NO 1785/81 , WHICH PROVIDE THAT THE REFERENCE PERIOD FOR THE CALCULATION OF THE AVERAGE LOSS INCURRED IN DISPOSING OF SUGAR IS TO COINCIDE WITH THE SUGAR MARKETING YEAR .
39 IN THAT RESPECT , IT MUST BE NOTED THAT THE PROVISIONS OF REGULATION NO 1785/81 CONCERNING THE CALCULATION OF THE PRODUCTION LEVY WERE TO APPLY , ACCORDING TO ARTICLE 23 OF THAT REGULATION , ONLY AS FROM THE COMMENCEMENT OF THE 1981/82 MARKETING YEAR AND WERE THEREFORE NOT APPLICABLE TO THE PRODUCTION LEVY CHARGED ON SUGAR PRODUCED DURING THE 1980/81 MARKETING YEAR . SINCE THE LEVY COULD NOT BE FIXED UNTIL SOME TIME AFTER THE EXPIRY OF THE MARKETING YEAR , THAT IS TO SAY AFTER THE ENTRY INTO FORCE OF THE NEW BASIC REGULATION , THE COUNCIL AUTHORIZED THE COMMISSION IN ARTICLE 48 OF REGULATION , THE COUNCIL AUTHORIZED THE COMMISSION IN ARTICLE 48 OF REGULATION NO 1785/81 TO ADOPT THE NECESSARY TRANSITIONAL MEASURES ON THE BASIS OF REGULATION NO 700/73 , WHICH REMAINED IN FORCE EVEN AFTER THE REPEAL OF REGULATION NO 3330/74 .
40 IT FOLLOWS THAT ARTICLE 7 ( 2 ) OF REGULATION NO 700/73 IS NOT CONTRARY TO ARTICLES 2 AND 28 OF REGULATION NO 1785/81 . SECOND QUESTION
41 THE SECOND QUESTION , WHICH WAS SUBMITTED ONLY IN THE EVENT OF THE FIRST QUESTION ' S BEING ANSWERED IN THE AFFIRMATIVE , HAS BECOME DEVOID OF PURPOSE . THIRD QUESTION
42 IN ITS THIRD QUESTION THE NATIONAL COURT WISHES TO ASCERTAIN WHETHER ARTICLE 1 OF COMMISSION REGULATION NO 3358/81 IS UNLAWFUL ON THE GROUND THAT IT IS CONTRARY TO ARTICLE 27 ( 2 ) OF REGULATION NO 3330/74 AND TO ARTICLE 28 OF REGULATION NO 1785/81 , INASMUCH AS THE PRODUCTION LEVY FOR THE 1980/81 MARKETING YEAR IS TO BE CALCULATED ON THE BASIS OF THE QUANTITY OF SUGAR WHICH IS THE SUBJECT OF AN EXPORT OBLIGATION AND NOT ON THE BASIS OF THE QUANTITY ACTUALLY EXPORTED .
43 SERMIDE CONTENDS THAT REGULATION NO 3358/81 IS UNLAWFUL SINCE , BY TAKING INTO ACCOUNT , IN THE CALCULATION OF THE LEVY FOR THE 1980/81 MARKETING YEAR , NOT ONLY THE QUANTITIES OF SUGAR ACTUALLY EXPORTED BUT ALSO THE EXPORT OBLIGATIONS WHICH WERE NOT IN FACT FULFILLED DURING THE SAME MARKETING YEAR , THE COMMISSION EXCEEDED THE LIMITS SET TO ITS POWERS BY THE PROVISIONS OF THE RELEVANT COUNCIL REGULATIONS . SIMILARLY , THE ITALIAN GOVERNMENT CONSIDERS THAT IT IS NOT APPROPRIATE TO TAKE ACCOUNT OF EXPORT OBLIGATIONS , AT LEAST NOT FOR THE 1980/81 MARKETING YEAR . IN REPLY , HOWEVER , THE COMMISSION STATES THAT SINCE THE INCEPTION OF THE COMMON ORGANIZATION OF THE MARKET IN SUGAR IT HAS CONSISTENTLY FOLLOWED THE INTERPRETATION APPLIED IN THIS CASE .
44 AT THE HEARING THE ITALIAN GOVERNMENT EXPRESSED CERTAIN RESERVATIONS AS REGARDS THE VALIDITY OF REGULATION NO 3358/81 ON THE GROUND THAT ITS LEGAL BASIS , NAMELY ARTICLE 48 OF REGULATION NO 1785/81 , IS NOT SUFFICIENT FOR THE PURPOSE OF FIXING A LEVY TO BE BORNE BY SUGAR MANUFACTURERS .
45 SINCE THE PRODUCTION LEVY FOR THE 1980/81 MARKETING YEAR COULD NOT BE FIXED UNTIL AFTER 1 JULY 1981 , THE DATE ON WHICH REGULATION NO 3330/74 WAS REPEALED , AND SINCE THE TRANSITION FROM ONE SYSTEM TO THE OTHER WOULD HAVE BEEN CALLED IN QUESTION IF SUPPLEMENTARY MEASURES HAD NOT BEEN ADOPTED , THE COMMISSION WAS ABLE TO ADOPT REGULATION NO 3358/81 ON THE BASIS OF THE AFORESAID PROVISION IN ORDER TO ENSURE , IN ACCORDANCE WITH THE WISHES OF THE COUNCIL , THE CONTINUITY OF THE ARRANGEMENTS GOVERNING THE MARKET IN SUGAR . THE COURT CONSIDERS THAT THE VERY PURPOSE OF ARTICLE 48 OF REGULATION NO 1785/81 , AUTHORIZING THE ADOPTION OF THE TRANSITIONAL MEASURES NEEDED TO FACILITATE THE TRANSITION TO THE NEW SYSTEM GOVERNING THE MARKET IN SUGAR , WAS TO RESOLVE PROBLEMS OF THE KIND WHICH HAS ARISEN IN THIS CASE .
46 AS FAR AS THE CONCEPT OF DISPOSAL IS CONCERNED , IT IS TRUE THAT ARTICLE 27 ( 2 ) OF REGULATION NO 3330/74 REFERS , WITH REGARD TO THE CALCULATION OF THE PRODUCTION LEVY , TO THE LOSSES RESULTING FROM DISPOSAL WITHOUT MENTIONING EXPORT OBLIGATIONS , WHILST ARTICLE 28 OF REGULATION NO 1785/81 REFERS EXPRESSLY TO THE LOSSES RESULTING FROM EXPORT OBLIGATIONS TO BE FULFILLED DURING THE CURRENT MARKETING YEAR . HOWEVER , NEITHER REGULATION NO 3330/74 OF THE COUNCIL NOR REGULATION NO 700/73 OF THE COMMISSION DEFINES THE CONCEPT OF DISPOSAL . THOSE REGULATIONS THEREFORE LEAVE TO THE COMMISSION THE TASK OF INTERPRETING THAT CONCEPT ACCORDING TO THE OBJECTIVE PURSUED AND BY REFERENCE TO THE CONTEXT IN WHICH THE PROVISION IN QUESTION IS SET .
47 AS THE COURT HAS RECOGNIZED ON A NUMBER OF OCCASIONS , THE COMMISSION MAY , IN ORDER TO QUANTIFY THE VOLUME OF IMPORTS AND EXPORTS , USE AND RELY ON INFORMATION DERIVED FROM IMPORT AND EXPORT LICENCES , WHICH IMPOSE AN OBLIGATION ON THE LICENSEES TO CARRY OUT OPERATIONS SUBJECT TO THE PROVISION OF SECURITY .
48 IN THIS CASE , THE COMMISSION ' S INTERPRETATION OF THE CONCEPT OF DISPOSAL AS ENCOMPASSING EXPORT OBLIGATIONS WAS JUSTIFIED IN VIEW OF THE FACT THAT , IN THE FIRST PLACE , THE MEMBER STATES DO NOT BRING INTO ACCOUNT ACTUAL EXPORTS OF SUGAR BY REFERENCE EITHER TO THE SUGAR MARKETING YEAR OR TO THE REFERENCE PERIOD FOR THE CALCULATION OF THE AVERAGE LOSS AND , SECONDLY , SUGAR EXPORTED UNDER A STANDING INVITATION TO TENDER IS SUBJECT TO THE PROVISION OF SECURITY .
49 CONSIDERATION OF THE THIRD QUESTION HAS THEREFORE DISCLOSED NO FACTOR OF SUCH A KIND AS TO AFFECT THE VALIDITY OF ARTICLE 1 OF REGULATION NO 3358/81 .
50 IN THE LIGHT OF THE FOREGOING CONSIDERATIONS , THE ANSWER TO THE QUESTIONS SUBMITTED BY THE NATIONAL COURT MUST BE THAT CONSIDERATION OF THE QUESTIONS RAISED HAS DISCLOSED NO FACTOR OF SUCH A KIND AS TO AFFECT THE VALIDITY OF ARTICLE 7 OF REGULATION NO 700/73 OF THE COMMISSION OF 12 MARCH 1973 OR OF ARTICLE 1 OF COMMISSION REGULATION NO 3358/81 OF 25 NOVEMBER 1981 .