1 BY JUDGMENT OF 12 DECEMBER 1978 , WHICH WAS RECEIVED AT THE COURT ON 2 JANUARY 1979 AND WAS AMENDED AND SUPPLEMENTED BY A JUDGMENT OF 2 MAY 1979 , RECEIVED AT THE COURT ON 15 MAY 1979 , THE TRIBUNAL ADMINISTRATIF ( ADMINISTRATIF COURT ), CHALONS-SUR-MARNE , REQUESTED THE COURT TO DELIVER A PRELIMINARY RULING UNDER ARTICLE 177 OF THE EEC TREATY ON THE VALIDITY OF REGULATION ( EEC ) NO 2744/75 OF THE COUNCIL OF 29 OCTOBER 1975 ON THE IMPORT AND EXPORT SYSTEM FOR PRODUCTS PROCESSED FROM CEREALS AND FROM RICE ( OFFICIAL JOURNAL 1975 , L 281 , P . 65 ), OF COMMISSION REGULATIONS ( EEC ) NOS 1910/76 OF 30 JULY 1976 ( OFFICIAL JOURNAL 1976 , L 208 , P . 1 ) AND 2466/76 OF 8 OCTOBER 1976 ( OFFICIAL JOURNAL 1976 , L 280 , P . 1 ) ALTERING THE MONETARY COMPENSATORY AMOUNTS TO BE CHARGED OR GRANTED , AS THE CASE MAY BE , ON THE IMPORT OR EXPORT OF CERTAIN CEREAL PRODUCTS AND OF THOSE REGULATIONS WHICH SUBSEQUENTLY ALTERED THE SAID AMOUNTS IN THE CIRCUMSTANCES HEREINAFTER CONSIDERED .
2 THE QUESTION IS RAISED , FIRST , WHETHER REGULATION NO 2744/75 OF THE COUNCIL IS NOT INVALID IN THAT IT IS IN BREACH OF ' ' THE PRINCIPLE OF FREE COMPETITION AND THE PRINCIPLE OF EQUALITY OF TREATMENT BETWEEN UNDERTAKINGS WITHIN THE COMMUNITY ' ' . THE QUESTION PUT THEREAFTER IS WHETHER , BY EMPLOYING THE COEFFICIENT 1.8 , WHICH IS LAID DOWN IN REGULATION NO 2744/75 OF THE COUNCIL IN CONNEXION WITH LEVIES AND REFUNDS , IN ORDER TO FIX THE RATE OF THE MONETARY COMPENSATORY AMOUNTS FOR MAIZE GROATS AND MAIZE MEAL , THE COMMISSION REGULATIONS REFERRED TO DID NOT CONTRAVENE REGULATION NO 974/71 OF THE COUNCIL , IN PARTICULAR ARTICLE 2 ( 2 ) THEREOF , AS WELL AS THE PRINCIPLE OF NON-DISCRIMINATION BETWEEN PRODUCERS WHICH IS LAID DOWN IN ARTICLE 40 ( 3 ) OF THE TREATY OF ROME .
3 THESE QUESTIONS HAVE BEEN SUBMITTED IN THE CONTEXT OF A DISPUTE BETWEEN THE PLAINTIFF IN THE MAIN ACTION AND THE OFFICE NATIONAL INTERPROFESSIONNEL DES CEREALES , THE FRENCH INSTITUTION ENTRUSTED WITH IMPLEMENTING COMMUNITY PROVISIONS ON THE COMMON ORGANIZATION OF THE MARKET IN CEREALS . BETWEEN 10 AUGUST 1976 AND 28 JULY 1977 THE PLAINTIFF EXPORTED QUANTITIES OF MAIZE GROATS AND MAIZE MEAL AND THE OFFICE NATIONAL INTERPROFESSIONNEL DES CEREALES THEREUPON CLAIMED PAYMENT FROM IT OF THE MONETARY COMPENSATORY AMOUNTS FIXED , IN IMPLEMENTATION OF REGULATION NO 974/71 OF THE COUNCIL , BY VARIOUS COMMISSION REGULATIONS .
4 DURING THE PERIOD IN WHICH THE EXPORTS IN QUESTION TOOK PLACE THE MONETARY COMPENSATORY AMOUNTS TO BE CHARGED ON THE EXPORTATION OF MAIZE ( SUB-HEADING 10.05 B OF THE COMMON CUSTOMS TARIFF ) AND OF MAIZE GROATS AND MAIZE MEAL ( SUBHEADINGS 11.02 A V ( A ) ( 1 ) AND 11.02 A V ( A ) ( 2 ) OF THE COMMON CUSTOMS TARIFF ) BY FRENCH EXPORTERS WERE SUCCESSIVELY FIXED BY THREE COMMISSION REGULATIONS AT THE AMOUNTS PER TONNE SET OUT BELOW : - COMMISSION REGULATION ( EEC ) NO 1910/76 OF 30 JULY 1976 ( OFFICIAL JOURNAL 1976 , L 208 , P . 1 ): MAIZE : FF 39.82 MEAL : FF 71.67 ( WHICH IS EQUAL TO 39.82 BY 1.8 ) - COMMISSION REGULATION ( EEC ) NO 2466/76 OF 8 OCTOBER 1976 ( OFFICIAL JOURNAL 1976 , L 280 , P . 1 ): MAIZE : FF 79.64 MEAL : FF 143.35 ( WHICH IS EQUAL TO 79.64 BY 1.8 ) - COMMISSION REGULATION ( EEC ) NO 938/77 OF 29 APRIL 1977 ( OFFICIAL JOURNAL 1977 , L 110 , P . 6 ): MAIZE : FF 110.61 MEAL : FF 199.09 ( WHICH IS EQUAL TO 110.61 BY 1.8 )
5 THE FIXING OF THE MONETARY COMPENSATORY AMOUNT ON ONE TONNE OF MAIZE MEAL AT AN AMOUNT EQUAL TO THE MONETARY COMPENSATORY AMOUNT ON ONE TONNE OF MAIZE MULTIPLIED BY THE COEFFICIENT 1.8 IS IN IMPLEMENTATION OF ARTICLES 1 AND 2 OF REGULATION ( EEC ) NO 974/71 OF THE COUNCIL OF 12 MAY 1971 ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION , 1971 ( I ), P . 257 ) IN THE VERSION IN FORCE AT THE TIME . - ACCORDING TO ARTICLE 1 ( 2 ) OF THAT REGULATION , WHERE THE CONDITIONS SPECIFIED IN ARTICLE 1 ( 1 ) AND ( 1A ) ARE FULFILLED COMPENSATORY AMOUNTS ARE TO BE APPLIED : ( A ) TO PRODUCTS COVERED BY INTERVENTION ARRANGEMENTS UNDER THE COMMON ORGANIZATION OF AGRICULTURAL MARKETS AND ( B ) TO PRODUCTS WHOSE PRICE DEPENDS ON THE PRICE OF THE PRODUCTS REFERRED TO UNDER ( A ) AND WHICH FURTHERMORE ARE EITHER THEMSELVES GOVERNED BY THE COMMON ORGANIZATION OF THE MARKETS OR ARE THE SUBJECT OF A SPECIFIC ARRANGEMENT UNDER ARTICLE 235 OF THE TREATY . MAIZE FALLS UNDER HEADING ( A ) AND GROATS AND MEAL FALL UNDER HEADING ( B ). - PARAGRAPH ( 1 ) OF ARTICLE 2 OF THE REGULATION PRESCRIBES THE METHOD OF CALCULATING THE MONETARY COMPENSATORY AMOUNTS ON PRODUCTS COVERED BY INTERVENTION ARRANGEMENTS ( HEREINAFTER REFERRED TO AS ' ' BASIC PRODUCTS ' ' ). PARAGRAPH ( 2 ) PROVIDES THAT IN THE CASE OF PRODUCTS WHOSE PRICE DEPENDS ON THE PRICE OF BASIC PRODUCTS ' ' THE COMPENSATORY AMOUNTS SHALL BE EQUAL TO THE INCIDENCE , ON THE PRICES OF THE PRODUCT CONCERNED , OF THE APPLICATION OF THE COMPENSATORY AMOUNT TO THE PRICES OF THE PRODUCT REFERRED TO IN PARAGRAPH ( 1 ), ON WHICH THEY DEPEND ' ' .
6 IT IS THE INCIDENCE OF THE APPLICATION OF THE MONETARY COMPENSATORY AMOUNT ON MAIZE ( THE BASIC PRODUCT ) ON THE PRICE OF MEAL ( THE DEPENDENT PRODUCT ) WHICH THE COEFFICIENT 1.8 IS INTENDED TO REPRESENT IN THE REGULATIONS IN QUESTION . THAT IS ON THE VIEW THAT 1.8 TONNES OF MAIZE ARE REQUIRED IN ORDER TO PRODUCE 1 TONNE OF MEAL AND THAT ACCORDINGLY , IN ORDER TO AVOID DISTORTION OF COMPETITION AND DEFLECTION OF TRADE BOTH IN TRADE BETWEEN MEMBER STATES AND WITH NON-MEMBER COUNTRIES , A MONETARY COMPENSATORY AMOUNT EQUAL TO THAT CHARGED OR GRANTED ON 1.8 TONNES OF MAIZE MUST BE CHARGED OR GRANTED , AS THE CASE MAY BE , ON ONE TONNE OF MEAL .
7 THE COEFFICIENT 1.8 - THE SO-CALLED ' ' PROCESSING COEFFICIENT ' ' - WAS TAKEN BY THE COMMISSION FROM THE IDENTICAL COEFFICIENT PRESCRIBED BY REGULATION ( EEC ) NO 2744/75 OF THE COUNCIL OF 29 OCTOBER 1975 ON THE IMPORT AND EXPORT SYSTEM FOR PRODUCTS PROCESSED FROM CEREALS AND FROM RICE ( OFFICIAL JOURNAL 1975 , L 281 , P . 65 ). THAT REGULATION IMPLEMENTS IN ITS TURN REGULATION ( EEC ) NO 2727/75 OF THE COUNCIL OF THE SAME DATE ON THE COMMON ORGANIZATION OF THE MARKET IN CEREALS ( OFFICIAL JOURNAL 1975 , L 281 , P . 1 ), ARTICLE 14 OF WHICH PROVIDES THAT A LEVY MAY BE CHARGED NOT ONLY ON IMPORTS FROM THIRD COUNTRIES OF THE CEREALS LISTED IN ARTICLE 1 ( A ) OF THAT REGULATION ( SO-CALLED BASIC PRODUCTS ) BUT ALSO ON IMPORTS OF PRODUCTS PROCESSED FROM BASIC PRODUCTS . ARTICLE 14 ALSO PROVIDES THAT ALTHOUGH THE VARIABLE COMPONENT IN THAT LEVY MAY BE FIXED ON A FLAT-RATE BASIS , IT MUST NEVERTHELESS CORRESPOND , ' ' IN RESPECT OF PRODUCTS PROCESSED FROM BASIC PRODUCTS LISTED IN ARTICLE 1 ( A ), TO THE INCIDENCE ON THEIR PRIME COST OF THE LEVIES ON THOSE BASIC PRODUCTS ' ' .
8 UNDER COMMON CUSTOMS TARIFF SUBHEADINGS 11.02 A V ( A ) ( 1 ) AND ( 2 ), ANNEX I TO REGULATION NO 2744/75 GIVES , IN ACCORDANCE WITH ARTICLE 14 ( 1 ) OF REGULATION NO 2727/75 , THE INCIDENCE ON THE PRIME COST OF THE PROCESSED PRODUCT ( GROATS AND MEAL ) OF THE LEVIES FIXED ON THE BASIC PRODUCT ( MAIZE ). THAT INCIDENCE IS EXPRESSED BY THE COEFFICIENT 1.8 WHICH MEANS THAT THE VARIABLE COMPONENT OF THE LEVY ON 1 TONNE OF MAIZE MEAL IS EQUAL TO THE LEVY ON 1.8 TONNES OF MAIZE . IT IS THAT SAME COEFFICIENT WHICH THE COMMISSION HAS TRANSPOSED FROM THE FIELD OF LEVIES TO THAT OF MONETARY COMPENSATORY AMOUNTS .
9 THAT TRANSPOSITION IS CRITICIZED BY THE PLAINTIFF IN THE MAIN ACTION . THE PLAINTIFF ' S ARGUMENT IS THAT , WHILST IT IS TRUE THAT IF MAIZE IS PROCESSED INTO GROATS OR MEAL ( THE PRINCIPAL DERIVED PRODUCTS ) 1.8 TONNES OF MAIZE ARE REQUIRED IN ORDER TO OBTAIN 1 TONNE OF MEAL , OTHER SECONDARY DERIVED PRODUCTS , ON WHICH MONETARY COMPENSATORY AMOUNTS ARE CHARGED OR GRANTED AS THE CASE MAY BE , ARE ALSO OBTAINED FROM THAT QUANTITY OF MAIZE . SINCE , BY REASON OF THE FACT THAT IT REPRESENTS A PURELY QUANTITATIVE RELATIONSHIP , THE COEFFICIENT 1.8 IMPOSES ON A SINGLE PRODUCT DEPENDENT ON MAIZE , IN THIS CASE THE PRINCIPAL DERIVED PRODUCT , THE ENTIRE INCIDENCE OF THE MONETARY COMPENSATORY AMOUNT ON THE BASIC PRODUCT , IT NECESSARILY FOLLOWS THAT THE SUM OF THE MONETARY COMPENSATORY AMOUNTS CHARGED OR GRANTED ON THE VARIOUS PRODUCTS DERIVED FROM THE BASIC PRODUCT IS GREATER THAN THE MONETARY COMPENSATORY AMOUNT ON THAT BASIC PRODUCT . ACCORDING TO THE PLAINTIFF , THAT RESULT IS INCOMPATIBLE BOTH WITH THE SIXTH RECITAL IN THE PREAMBLE TO REGULATION NO 974/71 , WHICH STATES THAT THE COMPENSATORY AMOUNTS TO BE APPLIED ' ' SHOULD BE LIMITED TO THE AMOUNTS STRICTLY NECESSARY TO COMPENSATE THE INCIDENCE OF THE MONETARY MEASURES ON THE PRICES OF BASIC PRODUCTS COVERED BY INTERVENTION ARRANGEMENTS AND . . . IT IS APPROPRIATE TO APPLY THEM ONLY IN CASES WHERE THIS INCIDENCE WOULD LEAD TO DIFFICULTIES ' ' , AND WITH THE RULE SET OUT IN PARTICULAR IN ARTICLE 2 ( 2 ) OF THE SAME REGULATION WHICH STATES THAT ' ' FOR THE OTHER PRODUCTS REFERRED TO IN ARTICLE 1 ( THAT IS TO SAY , PRODUCTS WHOSE PRICE DEPENDS ON THAT OF A BASIC PRODUCT ) THE MONETARY COMPENSATORY AMOUNTS SHALL BE EQUAL TO THE INCIDENCE , ON THE PRICES OF THE PRODUCT CONCERNED , OF THE APPLICATION OF THE COMPENSATORY AMOUNT TO THE PRICES OF THE PRODUCT REFERRED TO IN PARAGRAPH ( 1 ), ON WHICH THEY DEPEND ' ' .
10 THE METHOD EMPLOYED BY THE COMMISSION THUS RESULTS , IT IS MAINTAINED , IN OVER-COMPENSATING FOR THE INCIDENCE OF THE MONETARY COMPENSATORY AMOUNT OF THE BASIC PRODUCT ON THE PRICE OF THE PRINCIPAL DERIVED PRODUCT . IT FOLLOWS THAT EXPORTERS OF MEAL IN MEMBER STATES WITH ' ' SOFT ' ' CURRENCIES PAY MONETARY COMPENSATORY AMOUNTS ( CHARGES ) WHICH ARE TOO LARGE WHILST THOSE IN MEMBER STATES WITH ' ' HARD ' ' CURRENCIES RECEIVE MONETARY COMPENSATORY AMOUNTS ( SUBSIDIES ) WHICH ARE ALSO TOO LARGE . SUCH OVER-COMPENSATION CONSTITUTES AN OBSTACLE TO THE FREE MOVEMENT OF THE PRODUCT IN QUESTION WITHIN THE COMMON MARKET AND DISCRIMINATION BETWEEN PRODUCERS AS IT ENTAILS A DEGREE OF PROTECTION OF EXPORTERS IN CERTAIN MEMBER STATES AND A HANDICAP ON EXPORTERS IN OTHER MEMBER STATES .
11 ACCORDING TO THE PLAINTIFF IN THE MAIN ACTION , THE AMOUNT OF THE MONETARY COMPENSATORY AMOUNTS WHICH IT HAS BEEN CHARGED SHOULD BE REDUCED IN SUCH A WAY THAT THE TOTAL OF THE VARIOUS COMPENSATORY AMOUNTS FIXED FOR THE VARIOUS PRODUCTS DERIVED FROM A GIVEN QUANTITY OF MAIZE DOES NOT EXCEED THE COMPENSATORY AMOUNTS ON THAT SAME QUANTITY OF MAIZE . IN THAT CONNEXION IT PUTS FORWARD THE FOLLOWING ARGUMENT : 1 . 1.8 TONNES OF MAIZE PRODUCES : 1.00 TONNE OF MEAL AND GROATS 0.27 TONNE OF HIGH-QUALITY FLOUR ( FARINE PREMIERE ) 0.242 TONNE OF GERM 0.27 TONNE OF FLOUR FOR FODDER AND THE REMAINDER CONSTITUTES WASTE . 2 . THE COMMISSION REGULATIONS AT ISSUE FIX MONETARY COMPENSATORY AMOUNTS ON : ( A ) MAIZE ( COMMON CUSTOMS TARIFF HEADING 10.05 B ) ( B)MAIZE GROATS AND MEAL ( COMMON CUSTOMS TARIFF HEADING 11.02 A V ( A ) ( 1 ) AND ( 2 )) ( C)HIGH-QUALITY FLOUR ( COMMON CUSTOMS TARIFF HEADING 11.01 E II ) ( D)MAIZE GERM ( COMMON CUSTOMS TARIFF HEADING 11.02 G II ) ( E)FLOUR FOR FODDER ( COMMON CUSTOMS TARIFF HEADING 23.02 A I ( A ) AND ( B )). 3.THE MONETARY COMPENSATORY AMOUNT WHICH THE PLAINTIFF WAS CHARGED FOR 1 TONNE OF GROATS AND MEAL OUGHT TO BE REDUCED BY THE MONETARY COMPENSATORY AMOUNTS PAID ON THE QUANTITIES OF THE OTHER THREE PRODUCTS OBTAINED FROM 1.8 TONNES OF MAIZE . THE PLAINTIFF FINALLY STATES ITS POSITION IN THE FOLLOWING EQUATION : MONETARY COMPENSATORY AMOUNT ON 1 TONNE OF GROATS AND MEAL EQUALS MONETARY COMPENSATORY AMOUNT ON 1.8 TONNES OF MAIZE REDUCED BY : MONETARY COMPENSATORY AMOUNT ON 0.27 TONNE OF HIGH-QUALITY FLOUR MONETARY COMPENSATORY AMOUNT ON 0.242 TONNE OF GERM MONETARY COMPENSATORY AMOUNT ON 0.27 TONNE OF FLOUR FOR FODDER .
12 THE FOREGOING CONSIDERATIONS SHOW THAT THE POINT WITH WHICH THE QUESTIONS SUBMITTED ARE ESSENTIALLY CONCERNED IS WHETHER THE SUM OF THE MONETARY COMPENSATORY AMOUNTS APPLIED TO THE VARIOUS PRODUCTS OR SECONDARY PRODUCTS PROCESSED FROM A GIVEN QUANTITY OF A BASIC PRODUCT MAY EXCEED THE MONETARY COMPENSATORY AMOUNT APPLICABLE TO THAT BASIC PRODUCT .
13 HOWEVER , BEFORE THOSE QUESTIONS ARE CONSIDERED , ATTENTION SHOULD BE DRAWN TO CERTAIN SPECIAL FEATURES OF THE SYSTEM OF PROCESSING COEFFICIENTS EMPLOYED IN CALCULATING THE MONETARY COMPENSATORY AMOUNTS ON PRODUCTS OTHER THAN THOSE COVERED BY INTERVENTION ARRANGEMENTS . ( A ) THE INQUIRY IN THIS CASE AND AN ANALYSIS OF THE ANNEXES TO REGULATION NO 2744/75 REVEAL THAT THE PROCESSING COEFFICIENTS ADOPTED IN THAT REGULATION FOR CALCULATING THE LEVIES ON PROCESSED PRODUCTS ARE NOT ALL OF A QUANTITATIVE NATURE AS IS THE CASE WITH THE COEFFICIENT 1.8 FOR THE RELATION BETWEEN MAIZE AND MAIZE MEAL . IN ITS REPLY TO THE QUESTIONS ASKED BY THE COURT ON THE RE-OPENING OF THE ORAL PROCEDURE THE COMMISSION EXPLAINED THAT THE CHOICE OF A PROCESSING COEFFICIENT MAY EQUALLY WELL BE BASED EITHER ON QUALITATIVE DIFFERENCES BETWEEN THE VARIOUS PROCESSED PRODUCTS OR ON THE RELATION BETWEEN THE PRICE OF THE PROCESSED PRODUCT AND THAT OF PRODUCTS COMPETING WITH THE LATTER . IN GENERAL , SO THE COMMISSION STATES , A COEFFICIENT WAS INITIALLY CHOSEN ' ' NOT ON A QUANTITATIVE BASIS BUT BY TAKING ACCOUNT OF THE ECONOMIC PROTECTION NECESSARY TO STABILIZE THE PRICE OF SUCH PRODUCTS ' ' AND EVEN , IN CERTAIN CASES , IN ORDER ' ' TO PROVIDE MAXIMUM PROTECTION ' ' . SUBSEQUENTLY , ACCOUNT WAS EVEN TAKEN ' ' OF FACTORS PECULIAR TO CERTAIN SECONDARY PRODUCTS ' ' IN FIXING THE PROCESSING COEFFICIENTS . IT IS SELF-EVIDENT THAT THAT DIVERSITY IN THE CHOICE OF PROCESSING COEFFICIENTS RECURS WITH SIMILAR EFFECTS WHEN THESE COEFFICIENTS ARE TRANSPOSED AS THEY STAND INTO THE SPHERE OF MONETARY COMPENSATORY AMOUNTS . ( B)THE COMMISSION HAS NOT MAINTAINED IN ALL CIRCUMSTANCES THE PARALLEL BETWEEN THE PROCESSING COEFFICIENT WHICH IT APPLIED IN THE CALCULATION OF THE LEVIES AND THE COEFFICIENT WHICH IT APPLIED IN THE CALCULATION OF THE MONETARY COMPENSATORY AMOUNTS . FROM 3 OCTOBER 1977 THE LATTER COEFFICIENT WAS REDUCED FROM 1.8 ( MAIZE/MEAL ) TO 1.6 BY REGULATION NO 1881/77 OF 29 JULY 1977 ( OFFICIAL JOURNAL 1977 , L 193 , P . 1 ) AND FROM 28 MAY 1979 IT WAS REDUCED TO 1.5 BY REGULATION NO 746/79 OF 11 APRIL 1979 ( OFFICIAL JOURNAL 1979 , L 95 , P . 3 ) WHILST THE PROCESSING COEFFICIENTS REMAINED UNALTERED SO FAR AS LEVIES ARE CONCERNED . THE SAME APPLIES IN THE CASE OF THE OTHER SECONDARY PRODUCTS OF MAIZE WITH WHICH THIS DISPUTE IS CONCERNED ( HIGH-QUALITY FLOUR , GERM AND FLOUR FOR FODDER ). ( C)UNDER BOTH THE SYSTEM OF LEVIES ( ARTICLE 14 ( 1 ) ( A ) ( C ) OF REGULATION NO 2727/75 ) AND THAT OF MONETARY COMPENSATORY AMOUNTS ( ARTICLE 2 OF REGULATION NO 964/71 ) IT IS POSSIBLE TO INTRODUCE LEVIES AND MONETARY COMPENSATORY AMOUNTS ON PRODUCTS PROCESSED FROM A BASIC AGRICULTURAL PRODUCT WHICH IS NOT , AND MAY NOT LAWFULLY BE , ITSELF SUBJECT TO MONETARY COMPENSATORY AMOUNTS BECAUSE IT IS NOT COVERED BY INTERVENTION ARRANGEMENTS UNDER THE COMMON ORGANIZATION OF AGRICULTURAL MARKETS . IN SUCH A CASE THE RELATIONSHIP OF ' ' DEPENDENCE ' ' UPON A BASIC PRODUCT SUBJECT TO MONETARY COMPENSATORY AMOUNTS IS DEEMED TO ARISE FROM THE FACT THAT THE PRODUCT IN QUESTION IS IN DIRECT COMPETITION WITH A PRODUCT WHICH IS ITSELF PRODUCED THROUGH THE PROCESSING OF A BASIC PRODUCT . IT IS WITH THESE THREE SPECIAL FEATURES IN MIND THAT THE QUESTIONS SUBMITTED SHOULD BE ANSWERED . FIRST QUESTION : THE VALIDITY OF REGULATION NO 2744/75 OF THE COUNCIL
14 THE PLAINTIFF IN THE MAIN ACTION AND THE INSTITUTIONS WHICH HAVE SUBMITTED OBSERVATIONS CONCUR IN THE VIEW THAT THE COMPATIBILITY WITH COMMUNITY LAW OF THE CHOICE OF PROCESSING COEFFICIENTS IN REGULATION NO 2744/75 , THAT IS TO SAY FOR THE CALCULATION OF THE LEVIES , IS NOT AT ISSUE IN THIS CASE . THIS APPLIES IN PARTICULAR TO THE COEFFICIENT 1.8 ( MAIZE/MEAL ). WHAT IS AT ISSUE IS THE TRANSPOSITION OF SUCH COEFFICIENTS TO THE FIELD OF MONETARY COMPENSATORY AMOUNTS IN SO FAR AS THAT HAS THE RESULT THAT THE SUM OF THE COMPENSATORY AMOUNTS APPLIED TO THE VARIOUS PRODUCTS PROCESSED FROM A BASIC PRODUCT IS RENDERED GREATER THAN THE MONETARY COMPENSATORY AMOUNT APPLIED TO THE QUANTITY OF THE BASIC PRODUCT FROM WHICH THE VARIOUS PROCESSED PRODUCTS ARE OBTAINED .
15 ALTHOUGH , WITHIN THE FRAMEWORK OF THE DISTRIBUTION OF TASKS BETWEEN THE NATIONAL COURTS AND THE COURT OF JUSTICE FOR THE IMPLEMENTATION OF ARTICLE 177 OF THE TREATY , IT IS FOR THE NATIONAL COURTS TO DECIDE THE RELEVANCE OF THE QUESTIONS WHICH ARE REFERRED TO THE COURT OF JUSTICE , IT IS HOWEVER RESERVED TO THE COURT OF JUSTICE TO EXTRACT FROM ALL THE INFORMATION PROVIDED BY THE NATIONAL COURT THOSE POINTS OF COMMUNITY LAW WHICH , HAVING REGARD TO THE SUBJECT-MATTER OF THE DISPUTE , REQUIRE INTERPRETATION , OR WHOSE VALIDITY REQUIRES APPRAISAL .
16 THE FOREGOING CONSIDERATIONS SHOW THAT THE QUESTIONS AS A WHOLE CONCERN THE VALIDITY OF THE APPLICATION OF THE PROCESSING COEFFICIENT 1.8 IN THE CALCULATION OF THE MONETARY COMPENSATORY AMOUNT ON MEAL AND GROATS AND THAT CONSEQUENTLY NO SPECIFIC REPLY TO THE FIRST QUESTION IS REQUIRED . SECOND QUESTION : THE VALIDITY OF REGULATIONS NOS 1910/76 , 2466/76 AND 938/77 OF THE COMMISSION IN SO FAR AS THEY FIX THE MONETARY COMPENSATORY AMOUNTS ON MAIZE MEAL BY APPLYING THE PROCESSING COEFFICIENT 1.8 A - GENERAL CONSIDERATIONS
17 THE REPLY TO THE QUESTIONS SUBMITTED MUST BE CONSIDERED IN THE LIGHT OF THE OBJECTIVES WHICH PROMPTED THE INTRODUCTION , BY REGULATION NO 974/71 , OF MONETARY COMPENSATORY AMOUNTS WITHIN THE FRAMEWORK OF THE COMMON AGRICULTURAL POLICY AND OF THE PROVISIONS OF THE TREATY ON THAT POLICY , IN PARTICULAR ARTICLES 39 , 40 AND 43 .
18 MONETARY COMPENSATORY AMOUNTS WERE INTRODUCED BY REGULATION NO 974/71 IN ORDER TO PREVENT , WITHIN THE COMMON ORGANIZATION OF THE MARKETS , DISRUPTION OF THE INTERVENTION SYSTEM LAID DOWN BY COMMUNITY RULES AND ABNORMAL MOVEMENTS OF PRICES CAUSED BY FLUCTUATIONS IN THE CURRENCIES OF CERTAIN MEMBER STATES . THE RECITALS IN THE PREAMBLE TO REGULATION NO 974/71 STATE THAT THE COMPENSATORY AMOUNTS TO BE INTRODUCED SHOULD BE LIMITED TO THE AMOUNTS STRICTLY NECESSARY TO COMPENSATE FOR THE INCIDENCE OF THE MONETARY MEASURES ON THE PRICES OF BASIC PRODUCTS COVERED BY INTERVENTION ARRANGEMENTS AND THAT IT IS APPROPRIATE TO APPLY THEM ONLY IN CASES WHERE THIS INCIDENCE WOULD LEAD TO DIFFICULTIES .
19 UNDER ARTICLE 1 ( 2 ) OF REGULATION NO 974/71 , THE CHARGING OR GRANT OF COMPENSATORY AMOUNTS APPLIES TO PRODUCTS COVERED BY INTERVENTION ARRANGEMENTS UNDER THE COMMON ORGANIZATION OF AGRICULTURAL MARKETS AND TO PRODUCTS WHOSE PRICE DEPENDS ON THE PRICE OF THE PRODUCTS IN THAT FIRST CATEGORY AND WHICH ARE GOVERNED BY THE COMMON ORGANIZATION OF THE MARKET OR AT THE SUBJECT OF A SPECIFIC ARRANGEMENT UNDER ARTICLE 235 OF THE TREATY . ARTICLE 2 ( 2 ) STATES THAT FOR PRODUCTS OTHER THAN THOSE COVERED BY INTERVENTION ARRANGEMENTS , THE COMPENSATORY AMOUNTS SHALL BE EQUAL TO THE INCIDENCE , ON THE PRICES OF THE PRODUCT CONCERNED , OF THE APPLICATION OF THE COMPENSATORY AMOUNT TO THE PRICES OF THE PRODUCT COVERED BY INTERVENTION ARRANGEMENTS ON WHICH THEY DEPEND .
20 THESE PROVISIONS SHOW THAT IN RELATION BOTH TO BASIC PRODUCTS AND TO DEPENDENT PRODUCTS , THE INTRODUCTION OF MONETARY COMPENSATORY AMOUNTS IS INTENDED TO CORRECT THE EFFECTS OF UNSTABLE VARIATIONS IN THE RATES OF EXCHANGE WHICH , WITHIN A SYSTEM OF ORGANIZATION OF THE MARKETS IN AGRICULTURAL PRODUCTS BASED ON COMMON PRICES , ARE CAPABLE OF CAUSING DISTURBANCES IN TRADE AND IN PARTICULAR OF JEOPARDIZING THE SYSTEM OF INTERVENTION LAID DOWN IN RESPECT OF SUCH PRODUCTS . THE INTRODUCTION OF MONETARY COMPENSATORY AMOUNTS IS THUS ESSENTIALLY INTENDED TO MAINTAIN THE SYSTEM OF SINGLE PRICES WITHIN THE COMMON ORGANIZATION OF AGRICULTURAL MARKETS , SINCE THAT SYSTEM OF SINGLE PRICES , HAVING REGARD TO THE OBJECTIVES OF SUCH ORGANIZATIONS , THAT IS , TO MAINTAIN THE STANDARD OF LIVING OF AGRICULTURAL PRODUCERS AND TO STABILIZE THE MARKETS , CONSTITUTES THE FOUNDATION OF THE FREE MOVEMENT OF AGRICULTURAL PRODUCTS WITHIN THE COMMUNITY . ITS OBJECTIVE IS NOT AND CANNOT BE TO PROVIDE ADDITIONAL PROTECTION FOR THE MARKETS IN RESPECT OF THE LEVEL OF AGRICULTURAL PRICES OF ONE PARTICULAR STATE IN RELATION TO THE OTHERS , WHICH WOULD BE INCOMPATIBLE WITH THE UNIFORMITY SOUGHT .
21 WITH REGARD IN PARTICULAR TO DEPENDENT PRODUCTS IT MUST BE OBSERVED THAT , AS THE COURT FOUND IN ITS JUDGMENT OF 12 NOVEMBER 1974 IN CASE 34/74 ROQUETTE ( 1974 ) ECR 1217 , ALTHOUGH IN PURSUANCE OF ARTICLE 2 OF REGULATION NO 974/71 MONETARY FLUCTUATIONS SHOULD BE ENTIRELY COMPENSATED FOR BASIC PRODUCTS , THIS DOES NOT APPLY TO DEPENDENT PRODUCTS . IN THE CASE OF THE LATTER PRODUCTS THE WORD ' ' INCIDENCE ' ' IN ARTICLE 2 ( 2 ) MERELY PERMITS THE COMMISSION TO TAKE INTO ACCOUNT , IN FIXING THE MONETARY COMPENSATORY AMOUNTS , THE EFFECT ON THE PRICE OF THE DEPENDENT PRODUCT OF THE MONETARY COMPENSATORY AMOUNTS APPLIED TO THE BASIC PRODUCT .
22 THE SYSTEM OF MONETARY COMPENSATORY AMOUNTS , WHICH MUST THUS NEUTRALIZE TEMPORARILY AND SO FAR AS POSSIBLE THE HARMFUL EFFECT WHICH SHORT-TERM FLUCTUATIONS IN THE RATES OF EXCHANGE OF THE CURRENCIES OF THE VARIOUS MEMBER STATES IN RELATION TO THE REPRESENTATIVE RATE OF SUCH CURRENCIES EXPRESSED IN AGRICULTURAL UNITS OF ACCOUNT HAVE ON THE SYSTEM OF SINGLE PRICES , AND THEREFORE ON THE OPERATION OF THE ORGANIZATION OF THE MARKETS , CONSEQUENTLY DIFFERS FUNDAMENTALLY FROM THE SYSTEM OF LEVIES AND REFUNDS IN TRADE IN AGRICULTURAL PRODUCTS WITH NON-MEMBER COUNTRIES . BY VIRTUE OF THE PRINCIPLE OF COMMUNITY PREFERENCE THAT LATTER SYSTEM MAY AND IN FACT DOES CONTAIN A CERTAIN DEGREE OF PROTECTION OF COMMUNITY AGRICULTURE AS A WHOLE . IN THE CASE OF THE CALCULATION OF LEVIES ON PROCESSED PRODUCTS , AS IT IS REGULATED BY REGULATION NO 2727/75 OF THE COUNCIL , SUCH PROTECTION DOES NOT RESIDE SOLELY IN THE FIXED COMPONENT BUT ALSO , AS THE COMMISSION FURTHERMORE CONCEDES , IN THE VARIABLE COMPONENT OF THE LEVY PRECISELY BECAUSE PROCESSING COEFFICIENTS ARE USED WHICH HAVE BEEN CALCULATED WITH A VIEW TO PRODUCE THAT EFFECT .
23 IT MUST UNDOUBTEDLY BE OBSERVED THAT MONETARY COMPENSATORY AMOUNTS ARE CHARGED OR GRANTED NOT ONLY IN INTRA-COMMUNITY TRADE BUT ALSO IN TRADE WITH NON-MEMBER COUNTRIES . NEVERTHELESS THAT FACT DOES NOT JUSTIFY THE INCORPORATION INTO THEIR AMOUNT OF A PROTECTIVE COMPONENT TAKEN FROM THE SYSTEM OF LEVIES , THE MORE SO SINCE BY REASON OF THE IDENTITY SOUGHT IN THE AMOUNT OF THE MONETARY COMPENSATORY AMOUNTS FOR BOTH INTRA-COMMUNITY TRADE AND TRADE WITH NON-MEMBER COUNTRIES THAT PROTECTIVE COMPONENT AUTOMATICALLY EXTENDS TO INTRA-COMMUNITY TRADE .
24 IT IS TO THAT DIFFERENCE BETWEEN THE SYSTEM OF LEVIES AND REFUNDS ON THE ONE HAND AND THE SYSTEM OF MONETARY COMPENSATORY AMOUNTS ON THE OTHER THAT THE REQUIREMENT OF THE STRICT NEUTRALITY OF MONETARY COMPENSATORY AMOUNTS CORRESPONDS . THAT REQUIREMENT IS EMPHASIZED , FIRST , IN THE SIXTH CONSIDERATION OF THE PREAMBLE TO REGULATION NO 974/71 WHICH STATES THAT SUCH AMOUNTS ' ' SHOULD BE LIMITED TO THE AMOUNTS STRICTLY NECESSARY TO COMPENSATE THE INCIDENCE OF THE MONETARY MEASURES ON THE PRICES OF BASIC PRODUCTS COVERED BY INTERVENTION ARRANGEMENTS AND . . . IT IS APPROPRIATE TO APPLY THEM ONLY IN CASES WHERE THIS INCIDENCE WOULD LEAD TO DIFFICULTIES ' ' . IT IS FURTHER EMPHASIZED BY THE RESTRICTIVE NATURE OF ARTICLE ( 1A ) AND ARTICLE 3 AND BY THE WORDING OF ARTICLE 2 ( 2 ), WHICH APPLIES TO DEPENDENT PRODUCTS AND WHICH STATES THAT THE MONETARY COMPENSATORY AMOUNTS ON THE SAID PRODUCTS ' ' SHALL BE EQUAL TO THE INCIDENCE , ON THE PRICES OF THE PRODUCT CONCERNED , OF THE APPLICATION OF THE COMPENSATORY AMOUNT TO THE PRICES OF THE PRODUCT REFERRED TO IN PARAGRAPH ( 1 ), ON WHICH THEY DEPEND ' ' . FINALLY , THE REQUIREMENT OF STRICT NEUTRALITY IS IN ACCORDANCE WITH THE BASIC REQUIREMENT OF THE FREE MOVEMENT OF AGRICULTURAL PRODUCTS WHICH MONETARY COMPENSATORY AMOUNTS ARE INTENDED TO PROMOTE DESPITE THE EFFECTS OF SHORT-TERM VARIATIONS IN EXCHANGE RATES RESULTING FROM THE FLOATING OF THE CURRENCIES OF MEMBER STATES .
25 MONETARY COMPENSATORY AMOUNTS FIXED AT A LEVEL WHICH CLEARLY OVER-COMPENSATES FOR THE MARGIN BETWEEN THE PRICES EXPRESSED IN NATIONAL CURRENCY AND THOSE EXPRESSED IN UNITS OF ACCOUNT BY THE APPLICATION OF REPRESENTATIVE RATES OF EXCHANGE ( GREEN RATES OF NATIONAL CURRENCIES ) WOULD BE CONTRARY TO THE NATURE OF MONETARY COMPENSATORY AMOUNTS AS A TEMPORARY EXPEDIENT AND THE REQUIREMENT THAT THEIR INTRODUCTION SHOULD BE STRICTLY NECESSARY , WHICH IS A CONDITION OF THEIR LAWFULNESS . INSTEAD OF CONSTITUTING A MEANS OF MAINTAINING SO FAR AS POSSIBLE THE SYSTEM OF SINGLE PRICES AND THUS THE FREE CIRCULATION OF AGRICULTURAL PRODUCTS , THEY BECOME OBSTACLES TO SUCH FREE CIRCULATION WHICH MAY BE COMPARED TO CHARGES HAVING AN EFFECT EQUIVALENT TO CUSTOMS DUTIES AND WHICH ARE INCOMPATIBLE WITH THE OBJECTIVE WHICH ARTICLE 43 ( 3 ) ( B ) ASSIGNS TO THE COMMON ORGANIZATION OF THE MARKETS , NAMELY THAT OF ENSURING CONDITIONS FOR TRADE WITHIN THE COMMUNITY SIMILAR TO THOSE EXISTING IN A NATIONAL MARKET .
26 THIS APPLIES WITH EVEN GREATER FORCE AS THE CONTINUED MAINTENANCE OF MONETARY COMPENSATORY AMOUNTS MUST BE APPRAISED HAVING REGARD TO THE CHANGES WHICH HAVE TAKEN PLACE IN THE MONETARY CONDITIONS WHICH GAVE RISE TO THEIR INTRODUCTION . TO A CONSIDERABLE EXTENT , EARLIER VARIATIONS IN THE CURRENCIES OF THE MEMBER STATES HAVE BECOME CONSOLIDATED IN THE MEANTIME AND THEIR EFFECTS HAVE MOSTLY BEEN ABSORBED BY THE NATIONAL ECONOMIES . THAT CIRCUMSTANCE , TOGETHER WITH THE DECISION OF A NUMBER OF MEMBER STATES TO CONTAIN FLUCTUATIONS BETWEEN THEIR OWN CURRENCIES AT ANY GIVEN MOMENT WITHIN A BAND OF 2.25% , AND HAVING REGARD TO THE POWER CONFERRED UPON THE COUNCIL BY REGULATION NO 129 , AS AMENDED BY REGULATION NO 2543/73 OF THE COUNCIL ( OFFICIAL JOURNAL 1973 , L 263 , P . 1 ) TO FIX THE REPRESENTATIVE RATES OF EXCHANGE ( GREEN RATES ) OF THE NATIONAL CURRENCIES , RENDERS THE REQUIREMENT OF NEUTRALITY DESCRIBED ABOVE EVEN MORE IMPERATIVE .
27 THE COURT ACCEPTS THAT THE CALCULATION OF THE INCIDENCE ON THE PRICES OF DEPENDENT PRODUCTS OF THE MONETARY COMPENSATORY AMOUNT FIXED FOR A BASIC PRODUCT CAUSES DIFFICULT TECHNICAL AND ECONOMIC PROBLEMS WITH REGARD TO A LARGE NUMBER OF PRODUCTS WHOSE MANUFACTURING PROCESS AND COMPOSITION MAY VARY IN THE VARIOUS REGIONS OF THE COMMUNITY . IT IS FOR THE COMMISSION TO RESOLVE THESE PROBLEMS WHILST MAINTAINING A DEGREE OF CONSISTENCY AND CLARITY IN THE SYSTEM OF MONETARY COMPENSATORY AMOUNTS WHICH IT IS REQUIRED TO ESTABLISH IN THAT SECTOR . FOR THIS PURPOSE IT MUST HAVE A WIDE MARGIN OF DISCRETION IN PARTICULAR WITH REGARD TO THE EXISTENCE OR THE THREAT OF DISTURBANCES IN TRADE , THE NUMBER OF DEPENDENT PRODUCTS TO WHICH A COMPENSATORY AMOUNT MUST BE APPLIED AND THE INCIDENCE ON THE PRICE OF THE DEPENDENT PRODUCT OF THE COMPENSATORY AMOUNT APPLIED TO THE BASIC PRODUCT . THE FIXING OF THE COMPENSATORY AMOUNT ON A PROCESSED PRODUCT CANNOT BE CHALLENGED ON THE SOLE GROUND THAT , FOR A PARTICULAR UNDERTAKING OR GROUP OF PRODUCERS , THE CALCULATION OF THE INCIDENCE OF THE COMPENSATORY AMOUNT APPLICABLE TO THE BASIC PRODUCT IS NOT ENTIRELY APPROPRIATE , AS IT MAY BE ESSENTIAL TO MAKE GENERAL ASSESSMENTS .
28 THE DISCRETION WHICH THE COMMISSION MUST BE RECOGNIZED TO HAVE NEVERTHELESS HAS LIMITS . IF THE RESULT OF THE METHOD OF CALCULATION EMPLOYED IS PERSISTENTLY TO APPLY TO PROCESSED PRODUCTS COMPENSATORY AMOUNTS THE BURDEN OR , AS THE CASE MAY BE , THE BENEFIT OF WHICH CONTINUALLY EXCEEDS THE AMOUNT NECESSARY TO TAKE ACCOUNT OF THE INCIDENCE OF THE COMPENSATORY AMOUNT APPLICABLE TO THE BASIC PRODUCT , THE OBJECTIVE OF THE PROVISIONS ESTABLISHING THESE AMOUNTS MAY NO LONGER BE DEEMED TO NEUTRALIZE THE EFFECTS OF THE CURRENCY FLUCTUATIONS BETWEEN THE MEMBER STATES . IN THAT CASE THE COMMISSION NO LONGER ACTS WITHIN ITS POWERS UNDER REGULATION NO 974/71 .
29 THE QUESTION WHETHER THE PROCESSING COEFFICIENT IN DISPUTE IS COMPATIBLE WITH A HIGHER RULE OF COMMUNITY LAW MUST NOW BE EXAMINED IN THE LIGHT OF THOSE CONSIDERATIONS . B - THE CONTESTED PROCESSING COEFFICIENT
30 THE COMMISSION DOES NOT DISPUTE THAT THE APPLICATION OF THE PROCESSING COEFFICIENTS LAID DOWN FOR THE CALCULATION OF THE MONETARY COMPENSATORY AMOUNTS IN THE PRODUCTION SEQUENCE IN QUESTION IN THIS CASE - MAIZE ( BASIC PRODUCT ), MEAL AND GROATS ( PRINCIPAL DERIVED PRODUCTS ), GERM , HIGH-QUALITY FLOUR AND FLOUR FOR FODDER ( SECONDARY DERIVED PRODUCTS ) - RESULTS IN FIXING FOR THE QUANTITIES OF THE VARIOUS DERIVED PRODUCTS , PRINCIPAL OR SECONDARY , WHICH ARE OBTAINED FROM A GIVEN QUANTITY OF MAIZE MONETARY COMPENSATORY AMOUNTS THE SUM OF WHICH CLEARLY EXCEEDS THE MONETARY COMPENSATORY AMOUNT FIXED FOR THE QUANTITY OF MAIZE FROM WHICH THEY ARE OBTAINED .
31 IT FOLLOWS THAT DURING THE PERIOD IN WHICH THE EXPORTS IN QUESTION TOOK PLACE THE INCIDENCE OF THE MONETARY COMPENSATORY AMOUNT FIXED FOR THE BASIC PRODUCT ON THE PRICE OF THE DERIVED PRODUCTS WAS OVER-COMPENSATED . FOR REASONS INHERENT IN THE SYSTEM OF MONETARY COMPENSATORY AMOUNTS THAT INCIDENCE MAY NOT IN FACT EXCEED THE COMPENSATORY AMOUNT ON THE BASIC PRODUCT .
32 UNDOUBTEDLY IT IS DIFFICULT IN CERTAIN CASES TO DETERMINE THE PRECISE INCIDENCE WHICH THE MONETARY COMPENSATORY AMOUNT FIXED ON THE BASIC PRODUCT HAS ON THE PRICE OF EACH OF THE DERIVED PRODUCTS WHOSE PRICE DEPENDS ON THAT OF THE BASIC PRODUCT AND IN THIS RESPECT , AS HAS BEEN STATED , THE COMMISSION ENJOYS A WIDE DISCRETION . ONE OF THE LIMITS TO THAT DISCRETION , HOWEVER , IS THE CEILING WHICH PREVENTS THE SUM OF THE MONETARY COMPENSATORY AMOUNTS ON THE PRODUCTS DERIVED FROM A CERTAIN QUANTITY OF A BASIC PRODUCT FROM EXCEEDING THE MONETARY COMPENSATORY AMOUNT OF THE QUANTITY OF THE BASIC PRODUCT FROM WHICH THEY ARE OBTAINED .
33 IT SHOULD , HOWEVER , BE NOTED THAT IN ORDER TO CHECK WHETHER THE CEILING HAS NOT BEEN EXCEEDED IT IS NECESSARY THAT THE ADDITION OF THE COMPENSATORY AMOUNTS ON DERIVED PRODUCTS SHOULD EMBRACE ONLY THE PRODUCTS WHICH MAY BE OBTAINED FROM A GIVEN QUANTITY OF THE BASIC PRODUCT BY MEANS OF THE SAME MANUFACTURING SEQUENCE . SUCH IS THE CASE IN THE MANUFACTURING SEQUENCE MAIZE/MEAL AND GROATS/HIGH-QUALITY FLOUR/GERM/FLOUR FOR FODDER . IN GENERAL A MANUFACTURING SEQUENCE COVERING A PRINCIPAL DERIVED PRODUCT AND A CERTAIN NUMBER OF SECONDARY DERIVED PRODUCTS WILL BE INVOLVED BUT THAT IS NOT NECESSARILY THE CASE . ON THE OTHER HAND , MONETARY COMPENSATORY AMOUNTS FIXED ON DERIVED PRODUCTS WHICH PERTAIN TO DIFFERENT MANUFACTURING SEQUENCES MAY NOT BE ADDED TOGETHER . THUS THE MANUFACTURING SEQUENCE MAIZE/MEAL/HIGH-QUALITY FLOUR/GERM/FLOUR FOR FODDER MUST BE DISTINGUISHED FROM THE MANUFACTURING SEQUENCE MAIZE/STARCH/GLUTEN/GERM .
34 IT IS ALSO NECESSARY TO TAKE ACCOUNT OF THE CASE WHERE A MONETARY COMPENSATORY AMOUNT IS FIXED FOR A PRODUCT OBTAINED BY PROCESSING A BASIC PRODUCT FOR WHICH NO COMPENSATORY AMOUNT IS FIXED , THE PRODUCT IN QUESTION MERELY BEING IN DIRECT COMPETITION WITH A PRODUCT WHICH ITSELF IS OBTAINED BY PROCESSING A BASIC PRODUCT FOR WHICH A MONETARY COMPENSATORY AMOUNT HAS BEEN FIXED ( SUCH IS THE CASE WITH POTATO STARCH ). IN THAT CASE PRACTICAL REASONS PRECLUDE TAKING THAT ASSIMILATED PRODUCT INTO ACCOUNT IN THE CALCULATION WHICH MUST BE MADE IN ORDER TO SEE WHETHER THE CEILING HAS BEEN EXCEEDED . IN SUCH A CASE THE ESTABLISHMENT OF A LINK BETWEEN THAT PRODUCT , WHICH DOES NOT BELONG TO THE MANUFACTURING SEQUENCE , AND THE BASIC PRODUCT IS , IF NOT IMPOSSIBLE , AT LEAST VERY DIFFICULT AND UNCERTAIN . IN THAT CASE IT IS SUFFICIENT , AS IS SHOWN BY THE JUDGMENT DELIVERED ON THE SAME DATE AS THIS JUDGMENT ( 15 OCTOBER 1980 ) IN CASE 145/79 ROQUETTE , IF THE MONETARY COMPENSATORY AMOUNT ON THE ' ' ASSIMILATED ' ' PRODUCT DOES NOT EXCEED THE AMOUNT FIXED ON THE COMPETING PRODUCT WHICH IN FACT FORMS PART OF THE MANUFACTURING SEQUENCE AS RESPECTS WHICH IT IS POSSIBLE TO ADD THE MONETARY COMPENSATORY AMOUNTS TOGETHER .
35 THE COMMISSION HAS CLAIMED THAT THE PURELY MATHEMATICAL APPROACH , WHICH IS REQUIRED BY THE ABOVE-MENTIONED CEILING , FAILS TO TAKE ACCOUNT OF ECONOMIC REALITY . THE COMMISSION RELIES IN PARTICULAR UPON THE FACT THAT THE QUANTITY OF VARIOUS PROCESSED PRODUCTS WHICH MAY BE OBTAINED FROM A GIVEN QUANTITY ( 1.8 TONNES ) OF MAIZE DIFFERS FROM MEMBER STATE TO MEMBER STATE AND THE ADOPTION OF A CEILING ' ' WITH REFERENCE TO ONE MEMBER STATE ' ' , THAT IS TO SAY ON THE BASIS OF THE QUANTITIES OF DERIVED PRODUCTS OBTAINED BY THE INDUSTRY IN THAT STATE , WHERE SUCH QUANTITIES DIFFER FROM THOSE OBTAINED BY THE INDUSTRY IN ANOTHER MEMBER STATE , ' ' CONFERS AN UNDUE ADVANTAGE ' ' ON THE INDUSTRY IN ONE OF THOSE MEMBER STATES .
36 THAT ARGUMENT MUST BE REJECTED . IT IS TRUE , AS THE COMMISSION MAINTAINS , THAT THE COMMISSION MAY NOT BE CONSTRAINED TO ADOPT THE PURELY QUANTITATIVE METHOD PROPOSED BY THE PLAINTIFF IN THE MAIN ACTION IN VIEW OF THE FACT THAT RECOURSE MAY BE HAD TO PROCESSING COEFFICIENTS BASED ON NON-QUANTITATIVE CRITERIA AS WELL AS PROCESSING COEFFICIENTS BASED ON QUANTITATIVE CRITERIA ( 1.8 TONNES OF MAIZE : 1 TONNE OF MEAL ). IT IS ALSO TRUE THAT THE COMMISSION MUST BE ABLE TO TAKE ACCOUNT OF DIFFERENCES BETWEEN THE CONDITIONS OF PRODUCTION IN THE VARIOUS MEMBER STATES . IN THIS CONNEXION , AS THE COURT HAS RECOGNIZED , IT ENJOYS A DISCRETION WHICH MAY ENTAIL GENERAL APPRAISALS . NEVERTHELESS , THAT CIRCUMSTANCE DOES NOT STAND IN THE WAY OF EITHER ITS DUTY OR ITS ABILITY TO KEEP WITHIN THE ABOVE-MENTIONED CEILING , WHICH CONSTITUTES ONE OF THE LIMITS TO THE COMMISSION ' S DISCRETION .
37 THE COMMISSION FURTHER CONTENDS THAT IT IS IMPOSSIBLE TO DISREGARD ' ' THE UNAVOIDABLE LINKS WHICH EXIST BETWEEN MONETARY COMPENSATORY AMOUNTS AND LEVIES ' ' . THE MONETARY COMPENSATORY AMOUNTS INTRODUCED IN TRADE WITH NON-MEMBER COUNTRIES ARE , ACCORDING TO IT , ' ' INTENDED PRECISELY TO COMPENSATE FOR THE INSUFFICIENT AMOUNT OF THE LEVY OR OF THE REFUND ' ' AND IT FOLLOWS THAT THE DESIRED NEUTRALITY OF THE COMPENSATORY AMOUNTS MUST BE ' ' WEIGHED AGAINST THE REQUIREMENTS OF PROTECTION ARISING FROM THAT IMPORTANT CONNEXION ' ' .
38 THAT ARGUMENT MUST ALSO BE REJECTED . AS HAS BEEN INDICATED , MONETARY COMPENSATORY AMOUNTS ARE NOT INTENDED TO SUPPLEMENT THE PROTECTION PROVIDED BY LEVIES AND REFUNDS IN TRADE WITH NON-MEMBER COUNTRIES . THEIR OBJECTIVE , WHICH IS UNRELATED IN ANY WAY TO PROTECTION , IS TO MAINTAIN THE SYSTEM OF SINGLE AGRICULTURAL PRICES WITHIN THE COMMON MARKET BY NEUTRALIZING DISTORTION ARISING BETWEEN ONE MEMBER STATE AND ANOTHER FROM THE FACT THAT THE COMMON PRICES ARE CALCULATED ON THE BASIS OF A RATE OF CONVERSION OF CURRENCIES ( THE GREEN RATE ) WHICH DOES NOT CORRESPOND TO THOSE CURRENCIES ' TRUE RATE OF EXCHANGE .
39 THE COMMISSION EMPHASIZED IN THE COURSE OF THE ORAL PROCEDURE THAT THE FACT THAT IT IS DESIRABLE THAT THE BASIS FOR CALCULATING MONETARY COMPENSATORY AMOUNTS SHOULD BE IDENTICAL FOR INTRA-COMMUNITY TRADE AND TRADE WITH NON-MEMBER COUNTRIES ( A REQUIREMENT WHOSE LEGITIMACY IS NOT CHALLENGED IN PRINCIPLE ), IN CONJUNCTION WITH THE FACT THAT MONETARY COMPENSATORY AMOUNTS ' ' IN PRACTICE OPERATE , IN REGARD TO NON-MEMBER COUNTRIES , AS A SUPPLEMENT TO THE LEVY ' ' , BRINGS ABOUT ' ' CERTAIN IMPERFECTIONS IN RELATION TO INTERNAL TRADE ' ' IN THE SENSE THAT ' ' ONLY RELATIVE NEUTRALITY ' ' IS ENSURED IN INTRA-COMMUNITY TRADE .
40 THIS LINE OF ARGUMENT CANNOT BE UPHELD . BY ESCHEWING THE MAXIMUM POSSIBLE NEUTRALITY OF MONETARY COMPENSATORY AMOUNTS IN INTRA-COMMUNITY TRADE - WHICH IS A FUNDAMENTAL OBJECTIVE OF THE SYSTEM - IN FAVOUR OF THE OBJECTIVE OF PROTECTION WHICH IN CERTAIN TRADING RELATIONS WITH NON-MEMBER COUNTRIES IT IS SOUGHT TO ASCRIBE TO THE SAME MONETARY COMPENSATORY AMOUNTS , THE COMMISSION HAS EXCEEDED THE DISCRETION WHICH IT IS RECOGNIZED TO ENJOY IN THIS FIELD AND HAS DISREGARDED NOT ONLY THE PRINCIPLES WHICH FORM THE BASIS OF REGULATION NO 974/71 BUT ALSO THE RULE SET OUT IN ARTICLE 43 ( 3 ) OF THE TREATY , ACCORDING TO WHICH THE COMMON ORGANIZATION OF THE MARKETS MUST ENSURE CONDITIONS FOR TRADE WITHIN THE COMMUNITY SIMILAR TO THOSE EXISTING IN A NATIONAL MARKET .
41 THE REPLY TO THE QUESTION SUBMITTED SHOULD THEREFORE BE THAT BY ADOPTING IN VARIOUS SUCCESSIVE IMPLEMENTING REGULATIONS , IN PARTICULAR REGULATIONS NOS 1910/76 , 2466/76 AND 938/77 , A SYSTEM FOR THE CALCULATION OF THE MONETARY COMPENSATORY AMOUNTS ON PRODUCTS PROCESSED FROM MAIZE AND WHOSE PRICE DEPENDS ON THAT OF MAIZE , WHICH RESULTS IN ESTABLISHING FOR THE VARIOUS PRODUCTS OBTAINED BY PROCESSING A GIVEN QUANTITY OF MAIZE IN A SPECIFIC MANUFACTURING PROCESS MONETARY COMPENSATORY AMOUNTS THE SUM OF WHICH AMOUNTS TO A FIGURE CLEARLY IN EXCESS OF THAT OF THE MONETARY COMPENSATORY AMOUNT FIXED FOR THAT GIVEN QUANTITY OF MAIZE , THE COMMISSION HAS INFRINGED THE BASIC REGULATION , REGULATION NO 974/71 OF THE COUNCIL OF 12 MAY 1971 , AND ARTICLE 43 ( 3 ) OF THE TREATY . C - CONSEQUENCES OF THE INVALIDITY
42 IT SHOULD NEVERTHELESS BE NOTED THAT THE INVALIDITY FOUND TO EXIST DOES NOT LEAD TO THE CONCLUSIONS WHICH THE PLAINTIFF IN THE MAIN ACTION SEEKS TO DRAW REGARDING THE REDUCTION IN THE SUMS WHICH IT WAS CHARGED BY WAY OF COMPENSATORY AMOUNTS ON THE EXPORTS OF MEAL WHICH IT EFFECTED DURING THE AFOREMENTIONED PERIOD . THE PLAINTIFF IN FACT PROCEEDS ON THE MISTAKEN ASSUMPTION THAT REDUCING THE MONETARY COMPENSATORY AMOUNTS ON THE VARIOUS PROCESSED PRODUCTS IN SUCH A WAY THAT THEIR TOTAL DOES NOT EXCEED THE MONETARY COMPENSATORY AMOUNT ON THE QUANTITY OF MAIZE FROM WHICH THEY ARE PRODUCED MUST OPERATE FOR THE BENEFIT OF MAIZE MEAL ALONE OR IN ANY EVENT BE EFFECTED IN ACCORDANCE WITH A FORMULA WHICH REPRESENTS THE PROPORTIONS OF DERIVED PRODUCTS WHICH , ACCORDING TO THE PLAINTIFF , ARE OBTAINED IN FRANCE FROM 1.8 TONNES OF MAIZE . IT HAS BEEN STATED ABOVE THAT SUCH A PURELY QUANTITATIVE APPROACH , BASED ON TECHNICAL INFORMATION WHICH IS PECULIAR TO A SINGLE MEMBER STATE - AND WHICH IS FURTHERMORE OPEN TO QUESTION SINCE THE GOVERNMENT OF THAT MEMBER STATE PUTS FORWARD DIFFERENT FIGURES - CANNOT BE ACCEPTED . IN OBSERVING THE ABOVE-MENTIONED CEILING THE COMMISSION IN FACT ENJOYS A DISCRETION IN THE ALLOCATION OF THE COMPENSATORY AMOUNTS ON THE VARIOUS PROCESSED PRODUCTS WHOSE PRICES DEPEND ON THAT OF THE BASIC PRODUCT .
43 SECONDLY , THE COMPLICATED NATURE OF THE FACTORS WHICH MAY DETERMINE THE ALLOCATION , WITHIN THE ABOVE-MENTIONED CEILING , OF THE INCIDENCE OF THE MONETARY COMPENSATORY AMOUNT FIXED ON THE BASIC PRODUCT AMONGST THE VARIOUS DEPENDENT PRODUCTS REQUIRES AN EXAMINATION , WITHIN THE CONTEXT OF THESE PROCEEDINGS , OF THE EFFECTS OF THE INVALIDITY OF THE SYSTEM OF CALCULATION ADOPTED BY THE COMMISSION .
44 ALTHOUGH THE TREATY DOES NOT EXPRESSLY LAY DOWN THE CONSEQUENCES WHICH FLOW FROM A DECLARATION OF INVALIDITY WITHIN THE FRAMEWORK OF A REFERENCE TO THE COURT FOR A PRELIMINARY RULING , ARTICLES 174 AND 176 CONTAIN CLEAR RULES AS TO THE EFFECTS OF THE ANNULMENT OF A REGULATION WITHIN THE FRAMEWORK OF A DIRECT ACTION . THUS ARTICLE 176 PROVIDES THAT THE INSTITUTION WHOSE ACT HAS BEEN DECLARED VOID SHALL BE REQUIRED TO TAKE THE NECESSARY MEASURES TO COMPLY WITH THE JUDGMENT OF THE COURT OF JUSTICE . IN ITS JUDGMENTS OF 19 OCTOBER 1977 IN JOINED CASES 117/76 AND 16/77 ( RUCKDESCHEL AND HANSA-LAGERHAUS STROH ( QUELLMEHL ) ( 1977 ) ECR 1753 ) AND IN JOINED CASES 124/76 AND 20/77 ( MOULINS ET HUILERIES DE PONT-A-MOUSSON AND PROVIDENCE AGRICOLE DE LA CHAMPAGNE ( MAIZE GROATS AND MEAL ) ( 1977 ) ECR 1975 ) THE COURT HAS ALREADY REFERRED TO THAT RULE WITHIN THE CONTEXT OF A REFERENCE TO IT FOR A PRELIMINARY RULING .
45 IN THIS CASE IT IS NECESSARY TO APPLY BY ANALOGY THE SECOND PARAGRAPH OF ARTICLE 174 OF THE TREATY , WHEREBY THE COURT OF JUSTICE MAY STATE WHICH OF THE EFFECTS OF THE REGULATION WHICH IT HAS DECLARED VOID SHALL BE CONSIDERED AS DEFINITIVE , FOR THE SAME REASONS OF LEGAL CERTAINTY AS THOSE WHICH FORM THE BASIS OF THAT PROVISION . ON THE ONE HAND THE INVALIDITY OF THE REGULATION IN THIS CASE MIGHT GIVE RISE TO THE RECOVERY OF SUMS PAID BUT NOT OWED BY THE UNDERTAKINGS CONCERNED IN COUNTRIES WITH DEPRECIATED CURRENCIES AND BY THE NATIONAL AUTHORITIES IN QUESTION IN COUNTRIES WITH HARD CURRENCIES WHICH , IN VIEW OF THE LACK OF UNIFORMITY OF THE RELEVANT NATIONAL LEGISLATION , WOULD BE CAPABLE OF CAUSING CONSIDERABLE DIFFERENCES IN TREATMENT , THEREBY CAUSING FURTHER DISTORTION IN COMPETITION . ON THE OTHER HAND , IT IS IMPOSSIBLE TO APPRAISE THE ECONOMIC DISADVANTAGES RESULTING FROM THE INVALIDITY OF THE FIXING OF THE MONETARY COMPENSATORY AMOUNTS UNDER THE SYSTEM OF CALCULATION ADOPTED BY THE COMMISSION WITHOUT MAKING ASSESSMENTS WHICH THAT INSTITUTION ALONE IS REQUIRED TO MAKE UNDER REGULATION NO 974/71 , HAVING REGARD TO OTHER RELEVANT FACTORS , FOR EXAMPLE THE ALLOCATION OF THE MAXIMUM PERMISSIBLE AMOUNT AMONGST THE VARIOUS DERIVED OR DEPENDENT PRODUCTS .
46 FOR THESE REASONS IT MUST BE HELD THAT THE FACT THAT THE FIXING OF THE MONETARY COMPENSATORY AMOUNTS WHICH RESULT FROM THE SYSTEM OF CALCULATING THOSE COMPENSATORY AMOUNTS ON PRODUCTS PROCESSED FROM MAIZE CONTAINED IN REGULATIONS NOS 1910/76 , 2466/76 AND 938/77 HAS BEEN FOUND INVALID DOES NOT ENABLE THE CHARGING OR PAYMENT OF MONETARY COMPENSATORY AMOUNTS BY THE NATIONAL AUTHORITIES ON THE BASIS OF THOSE REGULATIONS TO BE CHALLENGED AS REGARDS THE PERIOD PRIOR TO THE DATE OF THIS JUDGMENT .