1 By order of 26 January 1996, received at the Court on 30 January 1996, the Länsrätt i Jönköpings Län (Jönköping County Administrative Court) referred to the Court for a preliminary ruling under Article 177 of the EC Treaty two questions on the interpretation of Articles 137(2), 145(2), and 149(1) of the Act concerning the conditions of accession of the Kingdom of Norway, the Republic of Austria, the Republic of Finland and the Kingdom of Sweden and the adjustments to the Treaties on which the European Union is founded (OJ 1994 C 241, p. 21; hereinafter `the Act of Accession'), Articles 39 and 40 of the EC Treaty, Council Regulation (EEC) No 1785/81 of 30 June 1981 on the common organization of the markets in the sugar sector (OJ 1981 L 177, p. 4) and Commission Regulation (EC) No 3300/94 of 21 December 1994 laying down transitional measures in the sugar sector following the accession of Austria, Finland and Sweden (OJ 1994 L 341, p. 39).
2 Those questions were raised in proceedings between Danisco Sugar AB (hereinafter `Danisco') and the Allmänna Ombudet (Public Attorney), representing the Statens Jordbruksverk (the Swedish Agricultural Board, hereinafter `the Jordbruksverk'), concerning the payment of a national levy on sugar stocks, which was adopted by the Swedish Parliament on 20 December 1994 and which entered into force on 31 December 1994, one day before the accession of the Kingdom of Sweden to the European Union. The levy is charged on sugar which was held in stock in Sweden on 31 December 1994. The Community legislation The Act of Accession
3 Article 137(2), second indent, of the Act of Accession lays down that, except where the Act provides otherwise, `the rights and obligations resulting from the common agricultural policy shall be applicable in full in the new Member States'.
4 Article 145(2) governs the situation of agricultural products which were held in stock at the time of accession: `Any stock of products in free circulation within the territory of the new Member States on 1 January 1995 and exceeding the quantity which could be regarded as constituting a normal carryover of stock must be eliminated by these Member States at their cost under Community procedures to be specified and within deadlines to be determined in accordance with the procedure referred to in Article 149(1). The concept of normal carryover stock shall be defined for each product on the basis of criteria and objectives particular to each common market organization.'
5 Article 149(1) provides: `If transitional measures are necessary to facilitate the transition from the existing regime in the new Member States to that resulting from application of the common organization of the markets under the conditions set out in this Title, such measures shall be adopted in accordance with the procedure laid down in Article 38 of Regulation No 136/66/EEC or, as appropriate, in the corresponding Articles of the other Regulations on the common organization of agricultural markets. These measures may be taken during a period expiring on 31 December 1997 and their application shall be limited to that date.' The common organization of the markets in the sugar sector
6 The common organization of the markets in the sugar sector is governed by Regulation No 1785/81, which has undergone a number of amendments, the most recent occasion prior to the material time being the Act of Accession. That Regulation makes arrangements, in Articles 28 and 28a (the latter inserted by Council Regulation (EEC) No 1107/88 of 25 April 1988, OJ 1988 L 110, p. 20), for the producers themselves, through a system of production levies and additional levies, to bear all the costs of disposing of the Community's surplus production in relation to internal consumption.
7 Regulation No 3300/94, which lays down transitional measures entailed by the accession of three new Member States, notes in the third recital in its preamble that for the 1994/95 marketing year, the entire sugar output of Austria, Finland and Sweden was produced under national arrangements and much of the sugar they produced was disposed of before 1 January 1995. Accordingly, there are grounds `for not applying the provisions on self-financing laid down in Articles 28 and 28a of Regulation (EEC) No 1785/81 to sugar produced before 1 July 1995'.
8 Article 5(1) of Regulation No 3300/94 fixes the normal carryover stock for Sweden in respect of sugar, expressed as white sugar, at 304 792 tonnes as of 00.00 hours on 1 January 1995. In addition, Articles 6 and 7 of that Regulation, respectively, require each of the new Member States to undertake a survey of sugar and isoglucose stocks in free circulation in their respective territories on that date and at that hour, and - pursuant to Article 145(2) of the Act of Accession - to export, without Community intervention, a quantity equal to the difference between the quantity recorded and the quantity of normal carryover stock fixed. The Swedish law
9 According to Article 1 of the Lag om Lageravgift på Socker och Ris (Law 1994:1704 imposing a levy on stocks of sugar and rice; hereinafter the `Lageravgiftslag'), which was adopted by the Swedish Parliament on 20 December 1994 and entered into force on 31 December 1994, any person holding stocks of sugar or rice on the latter date is liable to pay a levy thereon to the State. Under Article 2 of the Lageravgiftslag, the levy is charged only on the quantity by which the total stock exceeds 3 tonnes. Article 3 sets the levy at SKR 1.80 per kilo of white sugar and SKR 1.65 per kilo of raw sugar.
10 According to the preparatory documents on the basis of which the Lageravgiftslag was drafted (proposal of 10 November 1994, Prop. 1994/95:43), its primary objective was to prevent the accumulation of stocks over and above the quantity which could be regarded as representing normal carryover stock for the purposes of Article 145(2) of the Act of Accession. The levy was also to compensate for the costs which the Kingdom of Sweden might have to bear pursuant to Article 145(2) of the Act of Accession in the event of stocks being abnormally high. Lastly, introduction of the levy was justified in view of the profits which would ensue from the application of Community provisions after accession, since before accession the selling price of sugar in the Community was approximately 30% higher than in Sweden. The aim was to charge a levy equivalent to the increase in the market price brought about by accession.
11 By an amendment to the Lageravgiftslag, which was adopted by the Swedish Parliament on 30 March 1995 (1995:329) and which entered into force on 1 April 1995, further provisions were inserted in Article 3 of that Law. By virtue of that amendment, where the levy for storage costs provided for by Article 8 of Regulation No 1785/81 is paid, a reduction of SKR 0.15 per kilo may be obtained on the levy payable on stocks of white sugar and a proportionate reduction in respect of raw sugar. The purpose of that provision is to avoid the charging of two levies on sugar stocks. The main proceedings and the questions referred
12 Danisco Sugar is the only sugar producer in Sweden.
13 Pursuant to the Lageravgiftslag, the Jordbruksverk demanded, by decision of 28 June 1995, payment of SKR 434 891 586 by way of the levy on sugar stocks.
14 Danisco Sugar challenged that decision before the Länsrätt i Jönköpings Län and, accordingly, sought its annulment. In support of its action, it primarily argues that the decision taken by the Kingdom of Sweden to introduce unilaterally a national sugar tax was an unlawful transitional measure and contrary to the common organization of the markets in sugar in that it gave rise to a distortion of competition between undertakings and discrimination as regards beet growers. Danisco pointed out that, under an agreement entered into with the Swedish Association of Beet Growers, it had undertaken to pass on to the growers more than half the increase in the price of sugar resulting from accession to the European Union.
15 The Länsrätt decided to stay proceedings and refer the following questions to the Court for a preliminary ruling: `1. On a true construction of the Act of Accession of Sweden, Finland and Austria, in particular of Articles 137(2), 145(2) and 149(1), are decisions taken at national level concerning levies on normal transitional stocks of sugar as set out in the Swedish Sugar Law, as amended, to be regarded as unlawful transitional measures? If not: 2. On a true construction of the European Community organization of the market in sugar, in particular of Articles 39 and 40 of the EEC Treaty, Council Regulation (EEC) No 1785/81 and Commission Regulation (EC) No 3300/94, are decisions taken at national level concerning levies on normal transitional stocks of sugar as set out in the Swedish Sugar Law, as amended, to be regarded as unlawful interference in the organization of the market?' The questions
16 By its questions, the Länsrätt essentially asks the Court whether Articles 137(2), 145(2) and 149(1) of the Act of Accession, Articles 39 and 40 of the EC Treaty, Regulation No 1785/81 and Regulation No 3300/94 preclude a State acceding to the European Union from adopting, on the eve of its accession, legislation introducing a levy on sugar being then held in stock within that State.
17 Article 149(1) of the Act of Accession concerns the detailed rules governing the adoption by the Community of transitional measures relating to the common agricultural policy.
18 Since that provision does not concern the allocation of competence between the Community, the Member States and States applying for accession, it has no bearing on the main proceedings.
19 All the other measures referred to by the national court concern the determination of the applicable legislation in matters relating to the common agricultural policy after accession. That being so, there is no ground for drawing any distinction between the provisions of the Act of Accession referred to in Question 1 and those mentioned in Question 2; accordingly, both questions should be considered together.
20 Danisco and the Danish Government maintain that by adopting the Lageravgiftslag after the Act of Accession had been signed, the Kingdom of Sweden contravened the `principle of good faith', by virtue of which a State must refrain from acts which would defeat the object and purpose of a treaty, a principle laid down in Article 18 of the Vienna Convention on the Law of Treaties of 23 May 1969. On that point, they rely on the judgment in Case T-115/94 Opel Austria v Council [1997] ECR II-39, in which it was held that this principle must be respected by the Community institutions and that, since it is the corollary in public international law to the protection of legitimate expectations, which is a general principle of Community law, an individual could rely on it before that Court in proceedings for judicial review of a Community measure.
21 Danisco next argues that the Lageravgiftslag has an impact on the Community legislation relating to sugar, since it produced its effects only after accession. It constitutes unlawful interference by the Kingdom of Sweden in the common organization of the markets in the sugar sector, which, pursuant to Article 28 of Regulation No 1785/81, falls within the exclusive competence of the Community.
22 According to the Swedish Government, the Lageravgiftslag governs exclusively a situation existing before the accession of the Kingdom of Sweden to the European Union, since it concerns sugar produced from beet grown under the national arrangements in force before 1 January 1995. It is therefore a national measure which does not fall within the purview of the common organization of the markets in the sugar sector. The Swedish Government also points out that the purpose of the Lageravgiftslag was to prevent the accumulation of excessive stock and, accordingly, it complied with the Act of Accession.
23 The Commission, too, points out that the Swedish levy on sugar stocks is a measure prior to the accession of the Kingdom of Sweden to the European Union, which concerns quantities of sugar produced entirely during the period before accession, in accordance with the relevant national arrangements governing the sugar market. Like any other provision of national law, it could be regarded as incompatible with the Treaty provisions on agricultural products and, in particular, with those concerning the common organization of the markets, only if it ran counter to the objectives of the common agricultural policy or impeded the functioning of the mechanisms used to attain those objectives. In so far as it was designed to avoid excessive stocks, that provision complied with the Act of Accession. The objective of `creaming off' the profit which sugar manufacturers were to derive from accession is not contrary to the common organization of the markets in the sugar sector, the provisions of which are not supposed to guarantee Swedish sugar manufacturers or beet growers a particular level of income in respect of sugar produced before accession.
24 In order to establish whether a law introducing a levy on sugar stocks, such as the Lageravgiftslag, is contrary to the provisions of Community law concerning the common organization of the markets in the sugar sector, it must be determined whether that law concerns an area for which the Community rules make exhaustive provision or interferes with the proper functioning of the mechanisms provided by the common organization of the markets, in particular through its influence on price formation or on the structure of agricultural holdings (see Case 222/82 Apple and Pear Development Council v Lewis [1983] ECR 4083, paragraphs 23 and 31, and Case 218/85 Cerafel v Le Campion [1986] ECR 3513, paragraph 13).
25 On that point, it should first be noted that the Lageravgiftslag applied to an objective factual situation existing before accession to the European Union. It is the fact of holding sugar stocks on 31 December 1994 that gives rise to liability to pay the levy to the Swedish State. It is only in so far as that tax could affect the situation of agricultural products in stock on 1 January 1995 that its compatibility with the provisions of Community law applicable in the sugar sector falls to be examined.
26 As regards the sugar forming part of the normal carryover stocks, Regulation No 3300/94 provides that the provisions of Regulation No 1785/81 concerning the self-financing of the sector or the system of export refunds are not to apply to quantities of sugar produced before 1 July 1995 in the new Member States, since the entire sugar output of those States was produced under national arrangements and much of the sugar produced had already been disposed of before 1 January 1995.
27 As regards pricing, the levy on sugar stocks could not have had any effect on the position of sugar producers whose storage costs, including taxes, undoubtedly rose because of the levy, but whose selling price for the product increased commensurately by reason of accession, to come into line with the higher Community selling price for sugar. The impact of the levy on such persons was therefore neutral.
28 On the contrary, failure to charge a levy on sugar stocks at the time of accession would have placed Swedish sugar producers at an advantage compared with Community sugar producers, since they would have been able to benefit from the higher Community selling prices without, however, having contributed to the self-financing arrangements for the sector. That is why both the Treaty of Accession and Regulation No 3300/94 contained provisions designed to prevent the constitution of sugar stocks for purposes of speculation. The fact that much of the sugar produced during the 1994/95 marketing year had already been disposed of before 1 January 1995 (third recital in the preamble to Regulation No 3300/94) was taken into account when it was decided to apply the Community selling price to that sugar without requiring any correlative contribution to the self-financing arrangements.
29 However, such a concession on the part of the Community with regard to a quantity of sugar regarded as marginal in Community terms does not mean that the Community provisions prohibited the adoption of legislation designed to eliminate, before accession, the profit which Swedish sugar producers expected to gain from the fact of accession and the resulting difference in selling price, so long as any legislation such as the Lageravgiftslag does not interfere with the functioning of the mechanisms for the common organization of the markets in the sugar sector.
30 The subsequent amendment to the Lageravgiftslag, the purpose of which was simply to reduce the rate of the levy, does not invalidate that conclusion.
31 In those circumstances, it is unnecessary to address the argument put forward by Danisco and the Danish Government that, by adopting the Lageravgiftslag after the Act of Accession had been signed, the Kingdom of Sweden contravened the principle of good faith, by virtue of which a State must refrain from acts which would defeat the object and purpose of a treaty, a principle laid down in Article 18 of the Vienna Convention on the Law of Treaties of 23 May 1969.
32 It should therefore be stated in reply that Articles 137(2) and 145(2) of the Act of Accession, Articles 39 and 40 of the Treaty, Regulation No 1785/81 and Regulation No 3300/94 do not preclude a State acceding to the European Union from adopting, on the eve of its accession, legislation introducing a levy on sugar being then held in stock within that State.