1 By order of 4 August 1992, received at the Court on 13 August 1992, the Verwaltungsgericht (Administrative Court) Frankfurt am Main referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty a question on the validity of Article 5 of Council Regulation No 1594/83 of 14 June 1983 on the subsidy for oil seeds (OJ 1983 L 163, p. 44) and Article 23(2) of Commission Regulation No 2681/83 of 21 September 1983 laying down detailed rules for the application of the subsidy system for oil seeds (OJ 1983 L 266, p. 1).
2 That question was raised in proceedings between ADM OElmuehlen GmbH, OElwerke Spyck (hereinafter "ADM") and the Bundesanstalt fuer landwirtschaftliche Marktordnung (hereinafter "the BALM") concerning forfeiture of a security paid by ADM in the context of the subsidy system for the processing of colza, rape and sunflower seeds.
3 Under that system, the amount of the aid is equal to the difference between the target price applicable and the world market price.
4 The second subparagraph of Article 3(2) of Regulation No 1594/83, as most recently amended by Council Regulation (EEC) No 2180/88 of 18 July 1988 (OJ 1988 L 191, p. 11), lays down that the amount of the subsidy is that which is applicable on the day on which the Member State concerned identifies the seeds, either at the oil mill where they are processed or at the feed mill where they are incorporated into feedingstuffs.
5 In accordance with the third subparagraph of Article 3(2), as amended by Council Regulation (EEC) No 935/86 of 25 March 1986 (OJ 1986 L 87, p. 5), the amount of the subsidy may, however, be fixed in advance, at the request of the party concerned, on the basis of the amount of subsidy applicable on the day on which the application was lodged, adjusted in accordance of Article 7(1) of the regulation, once again as amended by Regulation No 935/86, on the basis of "the difference between the target price valid on that same day and that valid on the day on which the seeds are identified" and, "if necessary, a corrective amount." The third paragraph of Article 5, as amended, of Regulation No 1594/83 provides that "the issue of the advance-fixing part of the certificate shall be subject to the provision of a security to guarantee the obligation to request identification of the seeds in an oil mill or a feed mill situated within the Community during the period of validity of that part of the certificate. That security shall be forfeited in whole or in part if, during that period, such a request is not made or is made only for a part of the quantity concerned."
6 The certificate in question was introduced by Article 4 of the regulation, as amended by Regulation No 935/86, the detailed rules for the application of that provision being laid down in particular by Article 5 of Regulation No 2681/83 of 21 September 1983, cited above. It consists of two parts: one part, designated ID, is intended to provide proof that the seed harvested in the Community has been identified at an oil mill or a feed mill, while the other, designated AP, is intended to certify, where such is the case, that the amount of the subsidy has been fixed in advance.
7 Article 23(2) of Regulation No 2681/83 provides that: "... if the obligations referred to in Article 10(2) are not fulfilled the security shall be forfeited in respect of a quantity equal to the difference between: (a) 93% of the net quantity shown on the certificate, and (b) the quantity identified at the undertaking, determined in accordance with the method defined in Annex I. However, if the quantity identified amounts to less than 7% of the net quantity shown in the certificate, the whole security shall be forfeited ...".
8 According to Article 10(2) of that regulation: "The AP part of the certificate makes it obligatory to place the seeds specified therein under the control referred to in Article 2 of Regulation (EEC) No 1594/83, during the period of validity of the certificate ..."
9 On 21 January 1991, after it had made an application for the oil seed subsidy to be fixed in advance and lodged the sum of DM 565 200 by way of security, ADM was issued by the BALM with an AP certificate for 4 000 000 kg of sunflower seed from the 1990 harvest. The certificate stated that the seed in question was to be placed under control no later than 31 May 1991.
10 Following an inspection, the BALM established that the goods had not been placed under control within the period of validity of the certificate, and so declared the security forfeit.
11 ADM objected to that decision on the ground that the failure to place the seed under control within the time-limit set was the result of a serious oversight, the employee responsible having forgotten to lodge the certificate.
12 That objection was dismissed by decision of 12 November 1991, whereupon ADM brought an action before the Verwaltungsgericht Frankfurt am Main. That court decided to stay proceedings and referred to the Court of Justice the following question for a preliminary ruling: "Are Article 5 of Council Regulation (EEC) No 1594/83 of 14 June 1983 on the subsidy for oil seeds (OJ L 163 of 22 June 1983) and Article 23(2) of Commission Regulation (EEC) No 2681/83 of 21 September 1983 laying down detailed rules for the application of the subsidy system for oil seeds (OJ L 266 of 28 September 1983) valid?"
13 According to the national court, the validity of the provisions at issue is in doubt having regard to the principle of proportionality. It raises the question whether it is necessary for the security to be forfeited in order to ensure compliance with the obligation to undertake identification of the seed within the time-limit, or whether the aim of preventing speculative operations can be achieved through other, less restrictive means, in particular by reducing the amount of the subsidy. Moreover, it points out that the security is not intended to guarantee payment and that the trader' s capital is diminished even though, in cases such as this, he does not benefit from unjust enrichment.
14 Reference is made to the Report for the Hearing for a fuller account of the facts and the legal background to the case, the procedure and the written observations submitted to the Court of Justice, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court.
15 In order to establish whether the provision forming the subject-matter of the question submitted for a preliminary ruling is compatible with the principle of proportionality, it is necessary to ascertain whether the means which it employs are appropriate to achieve the objective pursued and do not go beyond what is necessary to achieve it (Case 137/85 Maizena [1987] ECR 4587, paragraph 15).
16 According to the sixth recital in the preamble to Regulation No 1594/83, the purpose of the requirement concerning the lodging of security, which is forfeited by way of penalty if the request for identification is not made within the limit-limit set by the certificate, is to prevent speculative operations.
17 As the Commission was right to point out, world market prices are subject to substantial fluctuations. If market prices fall, the subsidy is higher than if it is fixed in advance, which, if there were no penalty at all, might induce the party concerned to allow the time-limit to expire and thereby forego advance-fixing so as to obtain a higher subsidy based on actual price trends on the world market.
18 It follows that the measure at issue is appropriate in order to achieve the objective of combating speculative operations by processing undertakings. The first condition for compliance with the principle of proportionality is therefore met.
19 The next question is whether the measure at issue goes beyond what is necessary to achieve that aim, that is to say whether the objective linked to the penalty of forfeiture of the security could be achieved through measures less financially burdensome for traders.
20 The amount of the security referred to in Article 5 of Regulation No 1594/83 is set at 6 ECUs per 100 kilograms by Article 21(1) of Regulation No 2681/83. According to the Commission, experience has shown that this amount corresponds to the difference that may exist between the subsidy fixed in advance and the subsidy that would have been payable on the date on which the seed was identified, had it not been fixed in advance.
21 The principle of proportionality does not require a penalty to be imposed consisting in a reduction of the subsidy, as suggested by the national court.
22 Admittedly, a system of that kind would be likely to diminish the penalty imposed on traders who have failed to observe the time-limit provided for in Article 11(1) of Regulation No 2681/83 and who, under the present system, not only receive, where appropriate, a subsidy lower than that fixed in advance, because of price trends on the world market, but also forfeit the security in whole or in part.
23 However, there is no reason why that loss should be taken into consideration. Where, for speculative purposes, a trader has not undertaken identification of the seed within the statutory time-limit, he cannot reasonably expect the penalty to be diminished if, contrary to his expectations, the world market price rose at the time when the seed was identified.
24 It would be possible to consider taking account of the subsidy actually granted if the failure to identify the seed within the statutory time-limit were not the result of a speculative operation.
25 However, a system that relies on analysing the conduct of those concerned would entail administrative problems and difficulties in assessing evidence, bound up with the controls needed to adjust the penalty to individual cases. The system at issue avoids those difficulties and has the twofold advantage of being simple and effective.
26 Moreover, the decision of the Community legislature to opt for the method of lodging security reflects the voluntary nature of the system of advance-fixing (Case 11/70 Internationale Handelsgesellschaft [1980] ECR 1125, paragraph 9), which allows those concerned to take decisions without exposing themselves to the risk of a lower subsidy if the world market price rises.
27 Furthermore, forfeiture of the security is sufficiently differentiated by Article 23(2) of Regulation No 2681/83, since it is forfeited in proportion to the quantity of oil seed that has not been identified. Finally, Article 24 of that regulation allows the security to be released or the validity of the certificate to be extended where the time-limit for identification has not been complied with owing to circumstances constituting force majeure.
28 Accordingly, the system in question is not in breach of the principle of proportionality.
29 The answer to be given to the national court must therefore be that consideration of the question has not disclosed any factor of such a kind as to affect the validity of Article 5 of Regulation No 1594/83 or Article 23(2) of Regulation No 2681/83.