JUDGMENT OF 11. 2. 1971 — CASE 37/70 REWE-ZENTRALE v HAUPTZOLLAMT v EMMERICH

Reference to the Court under Article 177 of the EEC Treaty by the Fourth Senate of the Finanzgericht Düsseldorf, for a preliminary ruling in the action pending before that court between

THE COURT composed of: R. Lecourt, President, A. M. Donner and A. Trabucchi (Rapporteur), Presidents of Chambers, R. Monaco, J. Mertens de Wilmars, P. Pescatore and H. Kutscher, Judges, Advocate-General: A. Dutheillet de Lamothe Registrar: A. Van Houtte

gives the following

JUDGMENT

Issues of fact and of law

I — Summary of facts and of procedure

II — Written observations submitted to the Court

Question I

Question II (1)

Question II (2)

Question III

Question IV

Question V

Grounds of judgment

The first question

The second question

The third question

The fourth question

The fifth question

Costs

I —. Summary of facts and of procedure

(I). Are the Decisions of the Commission of the EEC of 30 October 1969 (69/375/EEC), 31 October 1969 (69/377/EEC), 3 November 1969 (69/392/EEC) and 17 November 1969 (69/410/EEC) invalid in that they authorize the levying of a countervailing charge in connexion with the revaluation of the German Mark because Article 226 of the EEC Treaty on which they are founded was not applicable, having regard to the special protective measures for the organizations of agricultural markets and to Regulations of the Council Nos 804/68 of 27 June 1968 and 653/68 of 30 May 1968?

(II). If a negative reply is given to Question I, do the said decisions of the Commission constitute illegal authorizations to levy the said countervailing charge because:

(III). If a negative reply is given to Questions I and II, are the said decisions illegal to the extent to which they were given retroactive effect with regard to the period before their publication in the Official Journal of the European Communities?

(IV). If a negative reply is given to Questions I and II, is the Decision of the Commission of 17 November 1969 illegal because it extended the authorization beyond 7 December 1969, although the conditions in Article 226 of the EEC Treaty were not satisfied at that time, that is to say, for the period after 7 December 1969?

(V). (1) In the event of the abovementioned decisions of the Commission being valid, even if they may not be based on Article 226 but solely on some other enabling provision of Community law, can they in turn, from the point of view of the Community, directly provide the necessary internal authority for provisions of the executive bodies? (2) If so, does this apply even if under national law the executive does not have legislative powers?

II —. Written observations submitted to the Court

1. By order of 15 July 1970, received at the Court Registry on 23 July 1970, the Finanzgericht Düsseldorf referred to the Court several preliminary questions under Article 177 of the EEC Treaty on the validity or, alternatively, on the interpretation of the Decisions of the Commission of 30 and 31 October 1969 (69/375 and 69/377 ECC) and of 3 and 17 November 1969 (69/392 and 69/410 EEC) on the authorization of preventive measures with regard to agriculture for the benefit of the Federal Republic of Germany.

2. The Court is asked to rule whether those decisions, in so far as they authorize the Federal Government, owing to the revaluation of the German Mark, to levy a countervailing charge on agricultural products, are invalid because of the fact that Article 226 of the Treaty on which they are based does not apply in agricultural matters, having regard to the safeguarding clauses specifically concerned with the organizations of the agricultural markets and to Regulations of the Council Nos 804/68 of 27 June 1968 and 653/68 of 30 May 1968.

3. In accordance with Article 226 of the Treaty, during the transitional period prescribed in Article 8 protective measures may be taken if difficulties arise which are serious and liable to persist in any sector of the economy. In accordance with the principle set out in Article 38 (2) of the Treaty, the provisions of Article 226 apply to agricultural products. The scope of Article 226 cannot be affected by the insertion of safeguarding clauses in agricultural regulations, taking account of the specific nature of those protective mechanisms and in particular of the fact that they relate to trade with third countries.

4. The circumstance that a regulation, in this case Regulation No 804/68, prohibits the levying of any customs duty or charge having equivalent effect with regard to agriculture cannot restrict the application of a general provision of the Treaty such as Article 226. Likewise, Regulation No 653/68, relating to the difficulties arising for the agricultural markets from the alteration of the parity of the currency of a Member State, cannot exclude the application of Article 226 of the Treaty. Although this regulation lays down measures in anticipation of situations of the type which led the Commission to implement Article 226 of the Treaty, this fact does not deprive it of the power to authorize on the basis of Article 226 the protective measures necessary to provide an initial remedy for the economic difficulties arising for the agriculture of a Member State from the alteration in the parity of its currency. Since this provision remained applicable in the exceptional situations which it has in view until the expiry of the transitional period laid down in Article 8 of the Treaty, the fact that Regulation No 804/68 terminated the transitional arrangements laid down by other regulations for particular agricultural sectors is not capable of limiting the period of the validity of Article 226.

5. The validity of the decisions of the Commission is consequently unaffected by the fact that they are based on Article 226 of the Treaty.

6. In the event of a negative reply being given to the first question the Court is asked to rule whether the decisions in question are invalid either because the factual conditions for the application of Article 226 of the EEC Treaty were not fulfilled or because the Commission did not fulfil or failed sufficiently to fulfil the duty to provide a statement of reasons which is incumbent on it under Article 190 of the EEC Treaty.

7. In its decision of 30 October 1969 the Commission finds that the revaluation of the German Mark by 8.5 % would involve a decrease in German agricultural prices, which are fixed in units of account but expressed in German Marks, and therefore a loss of income for German agricultural producers.

8. Owing to its extent and unexpectedness such a decrease in income would have constituted per se a serious difficulty liable to persist in a sector of the economy justifying the adoption of protective measures to rectify the situation.

9. The German court referred in addition to the argument put forward by the plaintiff in the main action, according to which the difficulties which the revaluation of the German Mark might have caused for German agriculture could have been avoided by an increase in intervention prices exclusively for German products so as to compensate for the loss of income of agricultural producers.

10. However, even supposing that this system were as effective as that of the Commission it has not been shown that such an arrangement would have involved less serious difficulties for the operation of the Common Market. In making its choice as it did the Commission did not exceed the discretion allowed it by Article 226.

11. The plaintiff in the main action has furthermore maintained that it would have been sufficient for the German Government to give retroactive force to the systems of aids established by it.

12. However it is clear from the oral procedure that such a solution would have encountered serious practical difficulties and could not have had the protective effect desired, at least not to the extent necessary to avoid the threat of serious and persistent difficulties for German agriculture. It does not therefore appear that the contested decisions infringed the conditions laid down by Article 226 (1) and (3). It may be concluded that the objections which have been raised do not affect the validity of the contested decisions.

13. In the event of a negative reply being given to Questions I and II, the German court asks whether the said decisions are invalid to the extent to which they were rendered retroactive for the period before their publication in the Official Journal of the European Communities.

14. This question relates to the fact that the decision of 30 October 1969 (Article 6), published in the Official Journal of 31 October 1969, authorized the Federal Republic of Germany to take protective measures with effect from 27 October 1969.

15. Until a system of aids for German agricultural producers was established it was necessary to avoid any interruption in the maintenance of the level of agricultural prices existing in Germany at the time of the revaluation of the German Mark.

16. It was thus proper to fix at this same date the point when the protective measures authorized could take effect. The decision of the Commission of 30 October 1969 and those of 31 October and 3 November 1969 which supplemented it are consequently not invalid to the extent to which they have retroactive effect.

17. The question is then asked whether the disputed decision of the Commission of 17 November 1969 is invalid because it extended the authorization beyond 7 December 1969.

18. It is clear from the foregoing considerations that the aim in authorizing protective measures under Article 226 could have been attained only if agricultural prices prevailing in Germany at the time of the revaluation were maintained until the German Government could establish a system of aids. Despite the best endeavours of the German authorities it was only possible for this system to enter into force on 1 January 1970.

19. The Commission was consequently justified in extending the effect of the initial exceptional authorizations. Consequently their validity is unaffected on these grounds.

20. In view of the reply given to the first question the fifth question is devoid of object.

21. The cost sincurred by the Commission and by the Government of the Federal Republic of Germany, which have submitted observations to the Court, are not recoverable. As these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the national court, the decision on costs is a matter for that court.

On those grounds, Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the oral observations of the plaintiff in the main action, the Commission of the European Communities and the Government of the Federal Republic of Germany; Upon hearing the opinion of the Advocate-General; Having regard to the Treaty establishing the European Economic Community, especially Articles 8, 38, 177 and 226; Having regard to the Decisions of the Commission of 30 and 31 October 1969 (69/375 and 69/377 EEC) and of 3 and 17 November 1969 (69/392 and 69/410 EEC); Having regard to the Protocol on the Statute of the Court of Justice of the European Economic Community; Having regard to the Rules of Procedure of the Court of Justice of the European Communities, THE COURT in answer to the questions referred to it by the Finanzgericht Düsseldorf by order of that court of 15 July 1970, hereby rules: