Opinion of Mr Advocate-General
Mr President,
Members of the Court,
The present case will lead the Court to give a ruling on the validity of various Community acts taken consequent upon the revaluation of the German Mark in October 1969.
To clarify the matter I think it best to review briefly for the Court the chronological order both of the facts and of the decisions taken, to the extent to which they are relevant to the present case.
I shall not consider the measures which the German Government was led to take in order to check the speculation which took place at the end of the summer and the beginning of autumn of 1969 in connexion with the Mark and which, especially with regard to agriculture, was beginning to pose extremely grave problems.
In fact the Court will certainly recall Sunday 5 October 1969 when, at the request of the German Government, the Court was required to give a ruling on an application for suspension of the execution of a decision taken by the Commission which, in the view of the Government of the Federal Republic, was inadequate.
At the time Mr Advocate-General Gand said that the dispute in the main action before the Court would perhaps be rendered irrelevant in a few days; events have proved him right.
In fact on 24 October 1969 the Federal Government announced its decision to revalue the Mark by 8.5 % from 27 October 1969. Such a measure of necessity affected the various prices laid down in provisions relating to the common organization of agricultural markets—target prices, threshold prices and intervention prices—since such prices are expressed in units of account but paid in national currency and thus, without appropriate correcting factors, the automatic result of a revaluation is a fall in those prices in terms of national currency, that is to say, a fall in the income of German agricultural producers.
The first Community measure was thus clearly a temporary measure: suspension of the application of the value of the unit of account was immediately decided on 24 October and made applicable from 19.30 hours on the same date.
However on 27 October the Council of Ministers met in Luxembourg to take extremely important decisions of principle which may be summarized thus:
In future:
As a transitional measure the suspension of the application of the value of the unit of account had to be maintained, but the Commission was to terminate this as soon as possible.
Until the introduction of a system of aids for German producers, appropriate transitional measures had to be taken in order to maintain the level of prices in Germany.
Finally, the Commission noted that in this connexion the Federal Government applied for authorization under Article 226 of the Treaty to take the necessary protective measures.
At the request of the Federal Republic of Germany the Commission took two series of decisions:
Gradually everything returned to normal.
From 4 or 6 November 1969 as appropriate the suspension of the application of the unit of account was terminated.
With the consent of the Council which was given by means of a regulation of 9 December 1969, on 23 December the Federal Government passed a law granting aid to German agricultural producers in compensation for the effects of the revaluation.
Finally, the protective measures taken by the Federal Republic in implementation of the decisions of 30 October, 31 October and 3 November 1969 were abolished from 31 December and so, to repeat the Commission's phrase, from 1 January 1970 the German market was reintegrated without reservations (or almost) into the common agricultural market.
However, the protective measures in force between 24 October and 31 December 1969 involved the levy during this period by the Federal Government of a tax, known as a countervailing charge, on imports.
Various importers considered themselves unlawfully prejudiced by this charge and when they were requested to pay it they brought the matter before the German tax courts.
This was so in the case of the company which is the plaintiff in the main action.
In October and December 1969 this import company introduced large quantities of cheese and of milk products from the Netherlands; it disputed before the Finanzgericht Düsseldorf the lawfulness of the countervailing charge which it was asked to pay by the German customs.
That court referred to you a number of questions bearing essentially on the validity of the decisions of the Commission dated 30 October 1969 (that authorizing the protective measures) and 17 November 1969 (prolonging the period of application of those measures). I shall not reread to you the text of those questions which you already have before you; their precision and comprehensiveness, I am almost tempted to say over-comprehensiveness, are evident.
I
The Finanzgericht asks first of all a preliminary question which was that discussed at greatest length by the parties to the main action as well as by the Commission and by the Government of the Federal Republic.
This question may be briefly summarized as follows:
Was Article 226 of the Treaty still applicable to agricultural matters in October 1969?
The plaintiff in the main action maintains that both ratione temporis and ratione materiae (the two questions are moreover closely related), at the time when the contested decisions were taken on the basis of that provision the latter was no longer applicable.
In fact it is maintained that, on the one hand, the introduction of the common market in agriculture with regard to a certain number of products resulted in the termination of the transitional period throughout which Article 226 of the Treaty was applicable and that, on the other hand, the introduction through Community agricultural regulations of special protective measures for the markets organized by them had as its object and effect to render Article 226 void or repeal it to some extent, in any event within the sphere of those organizations of the market.
The argument is skillful but is not, in my view, convincing. The submission that, with regard to agricultural products subject to a Community organization of the market, the transitional period was terminated as from the introduction of that organization of the market will not, in my opinion, withstand scrutiny either of the general scheme of the Treaty or of its specific provisions.
First let us consider the general scheme of the Treaty: the length of the transitional period, fixed at 12 years, which only expired on 1 January 1970, and the various stages it involved was laid down in Article 8 of the Treaty, that is to say in Part One headed Principles. It is therefore clear that only an express provision of the particular terms of the Treaty could in certain cases have reduced the duration of that period.
With regard to agriculture there is no express provision to this effect. On the contrary, Article 38 (2) expressly directs that, save as otherwise provided in Articles 39 to 46, the rules laid down for the establishment of the common market shall apply to agricultural products. None of the provisions of Articles 39 to 46 provides for exceptions from the rules established in Article 8. Article 40 on the other hand provides in particular that the Member States shall develop the common agricultural policy by degrees during the transitional period and shall bring it into force by the end of that period at the latest, which in my view constitutes an oblique reference to the aforementioned Article 8 of the Treaty.
As the Commission has remarked, in my opinion very correctly, from the legal point of view there is only one transitional period, that established by Article 8 of the Treaty; it alone governs the period during which Article 226 is to apply and this transitional period must not be confused with the progressive introduction at different periods of particular market organizations.
There thus remains the second submission, which is based on the fact that the introduction by Community agricultural regulations of protective measures appropriate to the various markets resulted in the annulment or partial repeal of Article 226, which made general provision for various protective measures. It appears that this submission must be rejected for what seems to me a fundamental reason.
If the protective measures provided for by the Community regulations on the various agricultural markets had the scope imputed to them they would be void and in my view the Court would be obliged to bring a finding to this effect, of its own motion is necessary.
If the Court were to concur with the plaintiff in the main action it would be obliged to concede in fact that Community regulations could legally have had as their object and effect to render void or to repeal, partially at any rate, the provisions of Article 226 of the Treaty. Like all other provisions of the Treaty, Article 226, to the extent to which it is applicable, can be nullified wholly or in part only under the conditions laid down in Article 236 for the amendment of the Treaty, that is to say, at the instigation of a Member State or the Commission after consultation with the Assembly and in pursuance of an opinion of the Council in favour of calling a conference of representatives of the Member States; following agreement by the latter on the wording of the amendment the text must be signed by the appropriate governments and ratified by the Member States in accordance with their respective constitutional requirements.
This seems to me sufficient reason to reject the argument of the plaintiff in the main action to the effect that Article 226 of the Treaty was inapplicable in this case.
I consequently consider that it will be unnecessary for the Court to give a ruling on the validity of an argument submitted in defence by the Commission, based on the fact that the protective measures introduced by the regulations concerning the market only covered trade with third countries, whilst Article 226 sanctions the taking of protective measures in intra-Community trade.
In the present case this line of argument could perhaps lead to the very solution which I have just suggested to the Court for other reasons, but it involves, by implication at least, consequences which I consider are inadmissible at law.
If in fact the Court were to concede that Article 226 remains applicable in all cases where the protective measures laid down in respect of a market organization apply only to trade with third countries, in my opinion this would by implication but of necessity involve a decision that the protective measures for which Article 226 provides are applicable only within the framework of intra-Community trade and that consequently, even before the end of the transitional period, the scope of Article 226 would be restricted.
For my part, for the reasons which I have just expounded, I do not think this argument is well-founded.
In my opinion it is better to assert generally that the introduction of special protective clauses laid down by the regulations organizing the agricultural markets has neither the object nor the effect of removing from the Commission all or part of the powers which it held during the transitional period of Article 226 of the Treaty and moreover could not lawfully have had such an object or effect.
II
If the preliminary question referred by the Finanzgericht Düsseldorf is answered as I have just advocated, that is to say, if the Court concedes that in October 1969 Article 226 was still applicable even with regard to the protective measures concerning agricultural products subject to a market organization, it will thus have to reply to three other lines of questioning put to it by the German tax court:
A —. With regard to the first point, the lawfulness of the contested decisions in relation to the provisions of Article 226 of the Treaty, two submissions are made by the plaintiff in the main action on which the German court seeks your opinion:
(1). Has there not been a failure to observe the provisions of Article 226 (1), under which that article is applicable only if difficulties arise which are serious and liable to persist in a sector of the economy or if such difficulties could bring about serious deterioration in the economic situation of a given area?
(2). In the present case has there been observance of the provisions of the last sentence of Article 226 (3) according to which, with regard to measures derogating from the rules for the common market which the Member States may be authorized to take: Priority shall be given to such measures as will least disturb the functioning of the common market ?
Those two submissions require me to make an initial comment on the extent of the Court's power of review.
The Advocates-General have already had occasion to draw the attention of the Court to this question: Mr Advocate-General Roemer did so in Cases 2 and 3/62 ([1962] ECR 425—gingerbread), as did Mr Advocate-General Lagrange with regard to Case 13/63 ([1963] ECR 165) and Mr Advocate-General Gand in Case 50/69 of which I have just spoken.
Considering those opinions in conjunction with your judgments it seems to me that the following points may be deduced:
In fact I consider that in so difficult a matter, regarding the application of what may really be called emergency measures introduced by the Treaty, solely for the transitional period, as a kind of safety valve intended to prevent, at the cost of certain Community sacrifices, general explosions harmful to everyone, these two concepts, material error and clear error, must form the basis of the Court's review if it is to avoid the risk of allowing the review of legality to degenerate into a review of expediency.
Considered in the light of the considerations which I have just put forward, the weight of the two submissions which have been advanced, based on an alleged infringement of Article 226 of the Treaty, appears very slight.
It is maintained in the first place that the difficulties created for German agriculture by the revaluation of the Mark were neither serious nor liable to persist.
On the contrary, in my opinion the seriousness of those difficulties is incontestable and the figures which were read before the Court the other day and which were not disputed appear to me sufficient to prove this.
With regard to the risk that these difficulties might persist, the agent for the plaintiff company put forward an argument which was indeed subtle but which, on further examination, appears to me somewhat artificial.
In fact according to him the circumstance that the measures granting aid adopted by the German Government succeeded in avoiding a grave crisis is sufficient to show that the difficulties created by the German revaluation were not liable to persist. However, this argument meets with various objections which I consider invalidate it.
First, the lawfulness of a decision is to be assessed at the date when it was taken. When the contested decisions were taken, although measures granting aid had already been accepted in principle by the Council, such measures were unknown and it was thus impossible to anticipate their effects or assess the consequences which they might have.
Secondly, and most important, the temporary protective measures authorized by the Commission were precisely intended to allow German agriculture to await the introduction of the system of aids without excessive difficulties.
To deduce from the success of this system that the difficulties caused by the revaluation were not liable to persist, is in my opinion a little like maintaining that a blood transfusion administered to a patient was superfluous because in the end the latter was cured by appropriate medical treatment.
Finally, I should like to add that the fact that those measures of aid were authorized and laid down for four years is in my view sufficient of itself to show that the difficulties which, in the wake of the emergency measures, they were intended to alleviate, were indeed liable to persist.
I thus consider that the Court must concede that in estimating that the difficulties encountered by German agriculture after the revaluation of the Mark were serious and liable to persist, at the very least the Commission did not rely on materially incorrect facts nor was its appraisal of the situation clearly wrong.
It seems to me that the second submission, based on an alleged infringement of Article 226, should also be dismissed.
In fact it is maintained that three types of measure derogating less radically from Community law could have been taken instead of those authorized by the contested decision and in particular instead of the introduction of a countervailing charge on imports.
1. First, according to the plaintiff in the main action, it would have been sufficient to require the German Government to give the aids to be decided retroactive effect.
2. The Court is told that it would also have been sufficient to alter the unit of account under the conditions laid down in Regulation No 653/68.
3. Finally, it is asserted to the Court that it would have been sufficient to authorize Germany to take measures of the same type as those which France was authorized to take following the devaluation of the Franc in August 1969.
B — The second point
Another series of submissions relates to the unlawful nature of the same decisions with regard to Article 190 of the Treaty.
As the Court is aware, that article enunciates the principle that decisions of the Commission shall state the reasons on which they are based.
It is maintained that the contested decisions contain contradictory and inadequate statements of reasons.
Although, as the Commission emphasizes, it may appear a priori somewhat paradoxical to maintain those two submissions simultaneously, I shall nevertheless comment on each of them.
The submission regarding the contradictory nature of the statement of reasons lacks any factual foundation. The plaintiff in the main action considered that it could discern this defect in the fact that the statement of reasons for the decision of 30 October includes a reference to the Council's decision enunciating the principle that the situation must be restored without introducing charges on intra-Community trade, together with a paragraph on Germany's need temporarily to introduce a countervailing charge on imports.
Nevertheless, consideration of the wording shows that there is no contradiction. On the contrary, the recitals to the Council's decision outline its substance very clearly: the situation resulting from the revaluation must be rectified by the establishment of a system of aids and not by taxing intra-Community trade, but (and this is the part of the sentence which the plaintiff in the main action seems to overlook) until that system of aids is established protective measures are necessary.
Nor do I think that the submission regarding the inadequacy of the statement of reasons is well-founded.
In fact the Court has already ruled that the degree of precision of a statement of reasons for a decision must be weighed (here I quote) against practical realities and the time and technical facilities available for making that decision (cf. Judgment of the Court of 1 December 1965 in Case 16/65, Schwarze v Einfuhr- und Vorratsstelle für Getreide und Futtermittel, [1965] ECR 888).
In the present case the circumstances and the time available for the Commission to take its decision of 30 October 1969, three days after the date when the revaluation of the Mark took effect and two days after the decision of the Council, in my view fully justify a relative succinctness in the statement of reasons for this decision, which it should be noted in passing was solely directed to the German Government.
Despite such succinctness this statement of reasons seems to me adequate since, as is required by the case-law of the Court, it contains the details and specifications necessary for the Court to carry out its review.
It notes the procedure followed and summarizes the decision of the Council.
It sets out the reasons for which the Commission considers that Article 226 of the Treaty may be applied, together with those justifying the measures it authorizes, amongst which appear arrangements for a charge on imports.
Consequently I consider that none of the submissions based on an alleged infringement of Article 190 of the Treaty is well-founded.
C —. There thus remains the third point of which I have just spoke to you: the period of validity of the contested decisions.
(a). With regard to retroactivity. It is indeed true that Article 6 of the contested decision provides that the authority granted by this decision shall take effect from 27 October 1969, which, bearing in mind the date of publication, involves retroactivity, to employ the term used by the plaintiff in the main action, of a little more than four days at least.
(b). There then remains the extension of the period of application of that decision by the decision of 17 November 1969.
III
It now remains for me in conclusion to consider briefly the problems raised by the last point which the Finanzgericht Düsseldorf put to the Court as an alternative question.
That court in fact asks whether, in the event of the Court's considering that the contested decisions could not lawfully be taken in implementation of Article 226 of the Treaty, they could be based on another provision of that Treaty, and what would result from this substitution of legal basis with regard to the legality of the implementing measures taken by the Government of a Member State whose constitution does not provide for the existence of any independent legislative power.
In my view, there are two reasons why it is unnecessary for the Court to reply to this question:
Article 21 (2) (4) of the German Customs Code (Zollgesetz) in fact expressly authorized the Government of the Federal Republic to adopt legislation solely for the issue of provisions authorized by the Commission under Article 226 of the Treaty.
The Finanzgericht is really asking the Court to rule whether this provision must be interpreted restrictively, or whether it must be understood widely, as authorizing the Federal Government to issue any provisions which could be based on a Community measure.
It is quite clear that this is a question which only the German courts are competent to settle.
I am thus of the opinion that the Court should rule :
1 Translated from the French.