1 BY APPLICATION OF 27 MAY 1975 THE FEDERAL REPUBLIC OF GERMANY SEEKS ANNULMENT OF THE DECISION OF THE COMMISSION , COMMUNICATED BY LETTER OF 20 MARCH 1975 , IN WHICH IT REJECTED THE REQUEST OF THE FEDERAL REPUBLIC FOR AN ACKNOWLEDGMENT THAT THE TRANSPORTATION OF CERTAIN CEREALS WAS MADE NECESSARY WITHIN THE MEANING OF ARTICLE 4 ( 1 ) ( G ) OF REGULATION ( EEC ) NO 787/69 ( OJ L 105 ENGLISH SPECIAL EDITION 1966-1972 , P . 14 ).
2 IN EACH YEAR , FROM 1971 TO 1974 , AN AVERAGE OF 2.5 MILLION TONNES OF CEREALS WERE , IN THE FEDERAL REPUBLIC OF GERMANY , STORED IN PRIVATE WAREHOUSES ON THE BASIS OF PRIVATE CONTRACTS , FOLLOWING PURCHASES OF CEREALS CARRIED OUT BY THE GERMAN INTERVENTION AGENCY IN FULFILMENT OF THE OBLIGATION PLACED UPON IT BY THE MAIN REGULATION FOR CEREALS , NO 120/EEC . OF THESE AMOUNTS , AN AVERAGE OF 12 500 TONNES PER YEAR HAD TO BE TRANSPORTED FROM ONE WAREHOUSE TO ANOTHER FOR THE REASON THAT THE OWNER OF THE FIRST WAREHOUSE LAWFULLY DETERMINED THE STORAGE CONTRACT AFTER GIVING SIX MONTHS ' NOTICE . THESE NOTICES WERE , AS A GENERAL RULE , DUE TO ECONOMIC CONSIDERATIONS WHICH , IN PARTICULAR , CONCERNED THE AMOUNT TO BE EARNED BY USING WAREHOUSE SPACE TO CAPACITY .
3 AFTER COMPLETING THE TRANSFERS OF STOCKS , THE GOVERNMENT OF THE FEDERAL REPUBLIC OF GERMANY APPLIED FOR THE COMMISSION TO ACCEPT RESPONSIBILITY FOR THE COSTS OF TRANSPORTATION OF THE STOCKS IN ACCORDANCE WITH ARTICLE 4 ( 1 ) ( G ) OF REGULATION NO 787/69 . IT WAS ONLY BY LETTER OF 20 MARCH 1975 THAT THE FEDERAL REPUBLIC OF GERMANY WAS FINALLY INFORMED OF THE COMMISSION ' S DECISION TO REFUSE TO RECOGNIZE THE NEED FOR THESE TRANSPORTATIONS WITHIN THE MEANING OF SUBPARAGRAPH ( G ): 1 . BECAUSE THESE TRANSPORTATIONS CONSTITUTED ROUTINE ADMINISTRATIVE ACTS ON THE PART OF THE INTERVENTION AGENCIES AND THE COSTS INVOLVED WERE INCLUDED IN THE STANDARD AMOUNT PROVIDED FOR UNDER SUBPARAGRAPH ( E ) OF ARTICLE 4 ( 1 ); 2 . BECAUSE THE APPLICATION FOR RECOGNITION OF THE NEED FOR THE TRANSPORTATION SHOULD HAVE BEEN SUBMITTED BEFORE TRANSPORTATION TOOK PLACE .
4 ACCORDING TO THE WORDING OF THE PREAMBLE TO REGULATION NO 787/69 A STANDARD METHOD SHOULD BE ESTABLISHED FOR TAKING OVER ANY LOSSES ARISING FROM INTERVENTION , TAKING INTO ACCOUNT THE DEGREE OF DISCRETION WHICH MEMBER STATES HAVE UNDER COMMUNITY RULES AND THE FACT THAT A CERTAIN NUMBER OF COSTS ARE NOT HARMONIZED . IT IS PROVIDED , UNDER ARTICLE 2 ( A ) OF THE REGULATION , THAT NET LOSSES BORNE BY INTERVENTION AGENCIES SHALL BE CHARGEABLE TO THE GUARANTEE SECTION OF THE EUROPEAN AGRICULTURAL GUIDANCE AND GUARANTEE FUND . UNDER ARTICLE 3 ( 1 ) ( A ) IT IS PROVIDED THAT , IN ORDER TO APPLY ARTICLE 2 ( A ), THE AGENCIES SHALL DRAW UP , FOR EACH MARKETING YEAR , AN ACCOUNT WHICH SHALL BE DEBITED WITH THE ITEMS MENTIONED IN ARTICLE 4 ( 1 ). THESE ITEMS , SEVEN IN ALL , ARE : ( A ) THE VALUE OF THE QUANTITIES IN STOCK AT THE BEGINNING OF THE MARKETING YEAR ; ( B ) THE EXPENDITURE ON BUYING- IN DURING THE MARKETING YEAR IN QUESTION ; ( C ) THE COSTS INCURRED , DURING BUYING-IN AND SELLING , BY PLACING IN AND REMOVING FROM STORAGE ; ( D ) THE COSTS OF ANY DRYING WHICH BECOMES NECESSARY ; ( E ) THE COSTS OF STORAGE ; ( F ) ANY DENATURING COSTS ; ( G ) THE COSTS OF TRANSPORTATION MADE NECESSARY AFTER THE TAKING OVER OF CEREALS BY THE INTERVENTION AGENCY .
5 THESE ARRANGEMENTS MAKE IT CLEAR THAT EACH STAGE IN THE INTERVENTION PROCEDURE BETWEEN BUYING-IN AND THE FINAL AVAILABILITY OF THE CEREALS IS INTENDED TO BE COVERED BY THE STANDARD OR ACTUAL AMOUNTS CORRESPONDING TO THESE SEVEN ITEMS . BY THE USE OF A STANDARD AMOUNT , OF THE CRITERION OF WHETHER THE EXPENDITURE IS NECESSARY OR OF A COMBINATION OF THE TWO , THE REGULATION TRIES TO ENSURE THAT , NOTWITHSTANDING THE DEGREE OF DISCRETION ENJOYED BY THE MEMBER STATES , THE FUND DOES NOT HAVE TO BEAR FINANCIAL CONSEQUENCES WHICH ARE TO BE ASCRIBED TO BAD MANAGEMENT OF THE INTERVENTION BY A MEMBER STATE .
6 SUBPARAGRAPH ( G ) READS AS FOLLOWS : ' THE TOTAL AMOUNT OF THE COSTS INCURRED THROUGH TRANSPORTATION MADE NECESSARY AFTER THE TAKING OVER OF GOODS BY THE INTERVENTION AGENCY , AND CARRIED OUT UNDER CONDITIONS CONCERNING , IN PARTICULAR , THE NEED FOR TRANSPORTATION TO BE DETERMINED ACCORDING TO THE ( SO-CALLED MANAGEMENT COMMITTEE ) PROCEDURE . . .; THIS AMOUNT SHALL INCLUDE THE COSTS OF PLACING IN AND REMOVING FROM STORAGE ARISING FROM SUCH TRANSPORTATION , CALCULATED AS PROVIDED FOR UNDER ( C ). ' TO ENABLE THE EXPENDITURE TO BE CLASSIFIED UNDER ( G ), THE FIRST REQUIREMENT IS THAT TRANSPORTATION IS MADE NECESSARY AND THE SECOND IS THAT THE TRANSPORTATION MADE NECESSARY SHALL BE CARRIED OUT UNDER CONDITIONS TO BE DETERMINED BY THE COMMISSION AFTER HEARING THE OPINION OF THE MANAGEMENT COMMITTEE .
7 IN SO FAR AS THE TRANSPORTATION DOES NOT FULFIL THESE TWO CONDITIONS , THE COSTS OF TRANSPORTATION CARRIED OUT AFTER THE TAKING OVER BY THE INTERVENTION AGENCY ARE NOT TO BE BORNE BY THE AGRICULTURAL GUIDANCE AND GUARANTEE FUND . ITEM ( E ), WHICH IS INTENDED TO COVER THE STORAGE COSTS OF ALL QUANTITIES OF CEREALS STORED BY THE INTERVENTION AGENCY IS NOT CAPABLE , EITHER BY ITS WORDING OR BY THE METHOD OF CALCULATION DESCRIBED BY THE COMMISSION , OF COVERING THE COSTS OF TRANSPORTATION WHICH DOES NOT FULFIL THE CONDITIONS IN SUBPARAGRAPH ( G ). TO ENABLE A MEMBER STATE TO SUBMIT TO THE COMMISSION , PURSUANT TO ARTICLE 5 ( 2 ) OF THE REGULATION , INFORMATION NECESSARY FOR CALCULATION OF THE STANDARD AMOUNT USED FOR ITEM ( E ), WHICH ALSO INCLUDES THE INCIDENTAL COSTS OF TRANSPORTATION WHICH IS NOT MADE NECESSARY WITHIN THE MEANING OF SUBPARAGRAPH ( G ), THE MEMBER STATE MUST BE ABLE TO FORECAST THE AVERAGE QUANTITY OF CEREALS TO BE TRANSPORTED , THE NUMBER OF TRANSPORTATIONS , THE ROUTE FOLLOWED AND THE COST . IN STATING , IN THE CONTESTED DECISION , THAT THE TRANSPORT COSTS CONCERNED WERE MET BY PAYMENT OF THE STANDARD AMOUNT REFERRED TO IN SUBPARAGRAPH ( E ) AND , DURING THE PROCEEDINGS , THAT IT WAS THE DUTY OF THE FEDERAL REPUBLIC OF GERMANY TO INCLUDE THESE COSTS IN THE INFORMATION WHICH IT SUPPLIED TO THE COMMISSION UNDER ARTICLE 5 ( 2 ), THE COMMISSION PLACED AN ERRONEOUS INTERPRETATION ON THIS PROVISION .
8 NOTWITHSTANDING THIS ERRONEOUS GROUND FOR ITS DECISION , REGARD MUST BE PAID TO THE GROUND , ADVANCED BY THE COMMISSION IN THE COURSE OF THE PROCEEDINGS , THAT ONLY ' TRANSPORTATION ARISING FROM MEASURES CONNECTED WITH THE COMMON MANAGEMENT OF THE MARKET OR WHICH ARISE FROM OBJECTIVE CHANGES IN THE MARKET SITUATION ' IS CAPABLE OF BEING REIMBURSED UNDER ITEM ( G ).
9 IT IS CLEAR BOTH FROM THE WORDING OF SUBPARAGRAPH ( G ) AND FROM THE STATEMENT MADE BY THE COMMISSION WHEN THE REGULATION WAS ADOPTED , THAT THE INTENTION WAS THAT , AFTER CONSULTATION WITH THE MANAGEMENT COMMITTEE , THE COMMISSION SHOULD PROMULGATE GENERAL RULES ' DETERMINING IN ADVANCE THE CASES IN WHICH THE TRANSPORTATION IN QUESTION COULD BE EFFECTED ' .
10 ALTHOUGH IT IS WITHIN THE POWERS OF THE COMMISSION , AFTER CONSULTATION WITH THE MANAGEMENT COMMITTEE , TO PROMULGATE , ON THE BASIS OF THE OBJECTIVE WHICH IT HAS SET ITSELF , GENERAL RULES PRESCRIBING THE CASES COMING UNDER SUBPARAGRAPH ( G ), IT MUST DO SO IN ADVANCE TO ENABLE THE MEMBER STATES , IF NEED BE , TO REVISE THEIR ARRANGEMENTS . IN THE ABSENCE OF GENERAL RULES , IT CANNOT HOLD THAT TRANSPORTATION IS NOT MADE NECESSARY SOLELY BECAUSE IT WAS THE RESULT OF THE DETERMINATION OF LEASES IF , GIVEN THE PARTICULAR CIRCUMSTANCES OF INTERVENTION AND OF ITS CONNEXION WITH THE MONETARY SITUATION , THE STORAGE SYSTEM OPERATED IN A STATE WHERE SUCH DETERMINATION IS ALLOWED IS ECONOMICALLY SOUND .
11 THE COMMISSION IS ALSO UNDER A DUTY , AFTER CONSULTATION WITH THE MANAGEMENT COMMITTEE , TO DETERMINE WHETHER THE SECOND CONDITION IN SUBPARAGRAPH ( G ) IS FULFILLED , IN PARTICULAR WHETHER THE MODE OF TRANSPORT CHOSEN FOR THE CEREALS AND THE ROUTE FOLLOWED INVOLVE THE FUND IN NECESSARY COSTS ONLY .
12 IT DOES NOT FOLLOW FROM THE WORDING OF SUBPARAGRAPH ( G ) THAT THE REQUEST FOR RECOGNITION OF THE NEED FOR THE TRANSPORTATION MUST BE SUBMITTED BEFORE TRANSPORTATION TAKES PLACE .
13 IF THE REQUEST IS MADE AFTER TRANSPORTATION , THE MEMBER STATE RUNS THE RISK THAT , AFTER CONSULTATION WITH THE MANAGEMENT COMMITTEE , THE COMMISSION WILL DECIDE THAT THE TRANSPORTATION OF THE CEREALS IN QUESTION EITHER WAS NOT NECESSARY OR COULD HAVE BEEN EFFECTED MORE ECONOMICALLY . ALTHOUGH THERE WAS NOTHING TO PREVENT THE COMMISSION FROM DECIDING , AFTER CONSULTATION WITH THE MANAGEMENT COMMITTEE , THAT , AS A GENERAL RULE , IT WAS ESSENTIAL TO OBTAIN ADVANCE AUTHORIZATION FROM IT , NO SUCH RULE HAD BEEN PROMULGATED ; IT COULD NOT , THEREFORE , REJECT A REQUEST MERELY BECAUSE IT WAS MADE AFTER TRANSPORTATION , PARTICULARLY IN VIEW OF THE FACT THAT , IN ENCOURAGING THE FEDERAL REPUBLIC OF GERMANY TO SEND IN ITS REQUESTS TOGETHER ONCE A QUARTER OR , WHERE APPROPRIATE , HALF YEARLY , IT CREATED AT LEAST THE IMPRESSION THAT IT WAS POSSIBLE TO GRANT A REQUEST MADE AFTER TRANSPORTATION , FOR THE COSTS TO BE TAKEN OVER . FURTHERMORE , ON 14 MAY 1971 , THE COMMISSION ADOPTED A DECISION RECOGNIZING , AFTER TRANSPORTATION OCCURRED , THAT IT WAS MADE NECESSARY BY THE DETERMINATION OF A LEASE ; IT IS , THEREFORE , POSSIBLE , AFTER TRANSPORTATION HAS TAKEN PLACE , TO CHECK THE ITEMS OF EXPENDITURE IN ORDER TO DECIDE WHETHER THE EXPENDITURE WAS NECESSARY .
14 THE CONTESTED DECISION MUST , THEREFORE , BE ANNULLED .
15 UNDER ARTICLE 69 ( 2 ) OF THE RULES OF PROCEDURE , THE UNSUCCESSFUL PARTY SHALL BE ORDERED TO PAY THE COSTS . SINCE THE DEFENDANT HAS FAILED IN ITS CONCLUSIONS IT MUST BE ORDERED TO PAY THE COSTS .