C-13/72

JUDGMENT OF 11. 1. 1973 — CASE 13/72 NETHERLANDS v COMMISSION

CELEX: 61972CJ0013
Datum: 1973-01-11
Källa: eur-lex.europa.eu

THE COURT composed of: R. Lecourt, President, R. Monaco and P. Pescatore, Presidents of Chambers, A. M. Donner and H. Kutscher (Rapporteur), Judges, Advocate-General: H. Mayras Registrar: A. Van Houtte

gives the following

JUDGMENT

Issues of fact and of law

I — Facts and procedure

II — Submissions of the parties

III — Pleas and arguments of the parties

1. Generally

2. First plea: Infringement of essential procedural requirements

3. Second plea: Infringement of Regulation No 17/64 and of Article 14 (2) of Regulation No 13/64

Grounds of Judgment

On the first plea (Infringement of essential procedural requirements)

On the second plea (Infringement of Regulation No 17/64 and Article 14 (2) of Regulation No 13/64)

Costs

I —. Facts and procedure

1. (a) By Article 1 of Regulation No 25 of 4 April 1962, on the financing of the common agricultural policy (OJ p. 991) the Council set up the European Agricultural Guidance and Guarantee Fund (hereinafter called the Fund). Under Article 3 (1) of that Regulation, as amended by Article 8 (1) of Regulation No 130/66/EEC of the Council of 26 July 1966 (OJ No 165, p. 2965), the following expenditure shall be eligible for aid from the Fund: (a) Refunds on exports to third countries, calculated in accordance with the provisions laid down in the Regulations on individual products on the basis of (i) the rate of refund of the Member State whose average refund is the lowest, and (ii) the net quantities exported up to and during the accounting period 1966/67 and the gross quantities exported subsequently; (b) to (d) … (b) On the basis of the said Regulation, the Council, on 5 February 1964, adopted Regulation No 17/64/EEC on the conditions for granting aid from the said Fund (OJ p. 586). Under Articles 9 and 10 of that Regulation — to which several amendments not affecting the present case were subsequently made — the Member States concerned shall, once a year, submit to the Commission an application for reimbursement of the expenditure incurred as a result of the above-mentioned refunds, which is to be taken over by the Guarantee Section of the Fund, while the Commission shall decide, again annually, the aid to be granted from the Fund on the basis of those applications and after consultation with the Fund Committee (hereinafter called the Committee). Under the terms of Articles 24 et seq. of Regulation No 17/64, this Committee shall consist of representatives of the Member States and of the Commission (Article 25 (1)). (c) With particular reference to the sector of milk and milk products, the Council, on 5 February 1964, adopted Regulation No 13/64/EEC on the gradual establishment of a common organization of the market in this sector (OJ p. 549). Under the terms of Article 14 (2) of that Regulation, in order to permit of exports to third countries on the basis of prices ruling on the world market, the difference between those prices and the prices of the exporting Member State may be covered by a refund.

2. (a) In 1966, when examining the accounting period 1963/64, the Committee discussed for the first time the question of whether expenditure incurred by a Member State, as a result of refunds on exports, in food aid programmes to third countries are eligible for aid from the Fund. It was then decided that this was so, taking into account the smallness of the amounts claimed and without, prejudice to any further decision on the subject in the future. (b) In 1968 and 1969, however, the opposite conclusion was reached concerning the accounting periods 1964/65 and 1965/66. In the Commission's report on the first of those periods, it is stated in particular on the subject of gifts of cereals made by France: It is for the Council to decide whether France may take this expenditure into account as ranking for refunds. During the present negotiations on food gifts of cereals within the framework of the implementation of the Kennedy Round, an opinion was expressed in favour of the financing of refunds FOB from the date of the entry into force of the agreement. On the other hand, expenditure ranking for refunds for the periods prior to that date are not eligible under the EAGGF without the sanction of a decision of the Council. Consequently, these refunds and quantities have been deducted from the respective figures for refunds and for trade submitted for the basic products non-durum wheat and maize. During the Committee meeting dealing with the period 1964/65, the Chairman stated that the provisions in force only allowed the granting of refunds for commercial operations. At the meeting dealing with the period 1965/66, the representative of the Commission again explained the Commission's point of view. (c) In a letter dated 9 February 1970 addressed to Mr Mansholt, then Vice-President of the Commission, the Permanent Representative of the Netherlands, Mr Spierenburg, criticized this point of view and invited the Commission to reconsider its position in the light of the Netherlands attitude, as set out in a memorandum annexed to the said letter. By letter dated 2 April 1970, Mr Mansholt replied: that the Commission reserved the right to submit the problem to the Council; only the Council has the power in law to pronounce on the question of financing deliveries under food aid programmes, as such deliveries cannot be considered as a trade export within the meaning of the organization of the Community market; that, further, such financing by the Fund would result in certain Member States such as the Netherlands benefiting financially while others were placed at a disadvantage, because of the divergent administrative practices in the Member States. In a letter in reply to Mr Mansholt, dated 24 June 1970, Mr Spierenburg maintained his point of view.

3. (a) On 1 August 1969, the Netherlands Government submitted to the Commission an application for reimbursement of expenditure incurred by the Netherlands during the accounting period 1966/67, in particular as a result of refunds on exports to third countries. The explanatory statement accompanying that application contained the following remarks under point 5: The Netherlands have… donated certain sums to the World Food Programme. Through the medium of the export trade, that organization has with these sums bought on the Netherlands market and despatched to developing countries the following quantities of products covered by the common organizations of the market existing at the time: … The exporters were granted a refund in respect of these exports in the normal way. The amounts of such refunds have been included in this statement. (b) At the Committee meeting of 16 December 1971, dealing with the period 1966/67, the Chairman called attention to a working paper drawn up by the Commission's staff forming an addendum to the report on the conditions for granting aid from the European Agricultural Guidance and Guarantee Fund — Guarantee Section — for the accounting period 1966/67; (Doc. No VI/4640/71 + addendum). The authors of the addendum considered in particular that a food gift by its very nature constituted a gratuitous act which, as it was not a commercial operation, did not necessitate any refund for it to be completed; that such a gift did not fall within the definition contained in the Regulations on the common organization of the market; that, in view of this, the financing of expenditure equivalent to refunds could only be undertaken by the Commission on the basis of an act of the Council. So far as the above-mentioned report is concerned, it includes in respect of each State concerned, including the Netherlands, the details of food gifts which have been deducted from the applications for reimbursement, as to both the tonnage and the amount of the refunds. In the minutes of the above-mentioned meeting, the Netherlands delegation was recorded as stating that it cannot agree with the opinion held by the Commission in this matter. (c) On 26 January 1972, the Commission adopted the following two decisions: Decision No 72/120/EEC, on the application of the Netherlands Government referred to in (a) above (hereinafter called the aid decision), determining the amount to be reimbursed to the Netherlands by the Fund, in particular as a result of refunds on exports to third countries, for the accounting period 1966/67 (OJ No L 61, p. 15); under the fifth consideration, it is stated that the quantities exported by way of food gifts are not eligible for aid from the Fund, as expenditure on noncommercial operations cannot be considered as refunds on exports to third countries within the meaning of the Community rules, and that quantities and expenditure in relation to such gifts are therefore to be excluded from net exports and from the calculation of rates of refunds; Decision No 72/115/EEC, addressed to all the Member States, published in OJ No L 61 (p. 1) and hereinafter called the average refunds decision; this decision determines, for the above-mentioned period and in accordance with Article 3 (1) (a) of Regulation No 25, the amounts of the lowest average refunds for the various agricultural products taken into account; refunds in relation to food aid programmes were ignored for the purposes of this calculation. On 19 April 1972, the Netherlands Government commenced the present action for annulment of these decisions.

4. The written procedure has been duly completed. On the report of the Judge Rapporteur, and after hearing the Advocate-General, the Court decided to open the oral procedure without a preparatory inquiry. The Netherlands Government was requested however to submit further and better particulars on the manner in which the operations in question were carried out in their various stages and, in particular, on who paid the purchase price and, where appropriate, on whose behalf this price was paid. The Commission was requested to place on file the working papers VI/4639/71 and VI/4640/71, drawn up by its staff for the purpose of preparing the contested decisions. The parties have complied with these requests.

II —. Submissions of the parties

(a). that the aid decision should be annulled, insofar as the quantities of exports under the heading of food gifts and the expenditure thereby incurred have not been taken into consideration for the calculation of the rate of reimbursement of refunds on exports;

(b). that the average refunds decision should be annulled, in the case where, and to the extent that, the amounts to be reimbursed to the applicant by virtue of the decision under (a) above are influenced by the fact that, in determining the lowest average refunds, the quantities of exports under the heading of food gifts were not taken into account in (the average refunds decision);

III —. Pleas and arguments of the parties

1. Generally

2. First plea: Infringement of essential procedural requirements

3. Second plea: Infringement of Regulation No 17/64 and of Article 14 (2) of Regulation No 13/64

1. This application by the Government of the Kingdom of the Netherlands under Article 173 of the EEC Treaty is firstly for the annulment of Decision No 72/120/EEC of the Commission of 26 January 1972 (OJ No L 61, p. 15) (hereinafter called the aid decision), insofar as that decision refused the grant of aid from the European Agricultural Guidance and Guarantee Fund (hereinafter called the Fund) in respect of expenditure incurred by the Kingdom of the Netherlands as a result of refunds on exports to third countries under the heading of food gifts during the accounting period 1966/67.

2. The application is further for the annulment of Decision No 72/115/EEC of the Commission, of the same date, (OJ No L 61, p. 1) (hereinafter called the average refunds decision) — in the case where, and to the extent that, the amounts to be reimbursed to the applicant by virtue of the (aid decision) are influenced by the fact that, in determining the lowest average refunds — the basic factor in the calculation of refunds on exports to third countries eligible for aid from the Fund, in accordance with Article 3 (1) of Regulation No 25 of the Council of 4 April 1962 (OJ p. 991), — 'the quantities of exports under the heading of food gifts … were not taken into account'.

3. The Netherlands Government asserts that the disputed elements of these decisions are vitiated by infringement of essential procedural requirements, in that they have not been sufficiently reasoned, as required by Article 190 of the Treaty.

4. With regard to the aid decision, the Netherlands Government alleges that in order to explain the exclusion of the quantities of exports under the heading of food gifts, the stated reasons for that decision are restricted to the statement that those quantities are not eligible for aid from the Fund, as expenditure on non-commercial operations cannot be considered as refunds on exports to third countries within the meaning of the Community rules.

5. As to the theory that the expenditure in dispute is not eligible for aid from the Fund, the stated reasons for the decision set out succinctly, but clearly, the reasoning which guided the Commission.

6. The Netherlands Government could not be in doubt as to the scope of the reference to Community rules, as this expression obviously concerned the provisions authorizing the Member States to grant refunds on exports to third countries — thus, in the sector of milk and milk products, Article 14 (2) of Regulation No 13/64/EEC of the Council of 5 February 1964 (OJ p. 549/ — and Article 3 (1) of Regulation No 25 under the terms of which those refunds are eligible for aid from the Fund.

7. The reasoning of the decision did not differ substantially from the arguments previously advanced by the Commission.

8. With regard to the amounts deducted by the Commission from the sum applied for by the Netherlands Government, these were set out, together with the quantities of products to which they referred, in the Commission's report of 7 December 1971.

9. It is established by the Minutes of the 62nd Meeting of the Fund Committee that this report was included in the working papers submitted to those present at that Meeting, including the representatives of the said Government which thus had full knowledge of the figures involved.

10. Further, the Netherlands Government has not contested the accuracy of these figures.

11. The extent of the duty to state reasons, laid down by Article 190 of the Treaty, depends on the nature of the act in question and on the context in which it is adopted.

12. In the present case, it is not disputed that the Netherlands Government was closely involved in the process of making the contested decision and was therefore aware of the reason why the Commission did not consider that it should accede to the demand for reimbursement by the said Government, insofar as it referred to expenses incurred under a food aid programme.

13. In these circumstances, the contested decision must be held to be sufficiently reasoned.

14. With regard to the average refunds decision, the Netherlands Government alleges that it does not indicate whether and, if so, how the Commission, in determining the lowest average refund, took into account the quantities of products exported under the heading of food gifts, and in what manner it amended the information from the Member States on which the decision is based.

15. Under the terms of Article 3 (1) of Regulation No 25, The following expenditure shall be eligible for aid from the Fund … refunds on exports to third countries calculated, inter alia,on the basis … of the rate of refund in the Member State whose average refund is the lowest.

16. Since the Commission felt that certain expenditure could not be considered as refunds on exports, it could not then include this expenditure when calculating the lowest average refund.

17. The plea is therefore unfounded.

18. The Netherlands Government considers that the Commission has infringed the combined provisions of Regulation No 17/64/EEC of the Council of 5 February 1964 (OJ p. 586) and Article 14 (2) of Regulation No 13/64, by deciding that, since the expenditure incurred by the Netherlands Government under the heading of food gifts during the accounting period 1966/67 did not constitute refunds on exports within the meaning of those provisions, it did not confer a right to reimbursement from the Fund.

19. Under the terms of Article 3 (1) of Regulation No 25, The following expenditure shall be eligible for aid from the Fund … refunds on exports to third countries.

20. Under Article 9 (1) of Regulation No 17/64, on the conditions for granting aid from the Fund, the Member States concerned shall, once a year, submit to the Commission an application for reimbursement of the expenditure incurred as a result of refunds on exports to third countries … relating to the period from 1 July to 30 June and which is to be taken over by the Guarantee Section of the Fund, whilst under Article 10 of the same Regulation, the Commission shall decide annually … after consultation with the Fund Committee, the aid to be granted from the Fund, which it did for the accounting period 1966/67, by the contested aid decision.

21. With regard to the sector of milk and milk products, which alone concerns this case, Article 14 (2) of Regulation No 13/64 lays down that in order to encourage exports to third countries on the basis of prices ruling on the world market, the difference between those prices and the prices in the exporting Member State may be covered by a refund.

22. Regulations Nos 25 and 17/64 must be taken, in respect of the scope of the expression refunds on exports to third countries as referring to the basic Community Regulations authorizing Member States to grant such refunds.

23. The question to be answered therefore is whether the expenditure in dispute constitutes refunds on exports to third countries, within the meaning of Article 14 (2) of Regulation No 13/64.

24. The Commission considers that this is not the case, since the objective of that provision is to encourage exports to third countries on the basis of prices ruling on the world market.

25. It follows from this wording (it is contended) that this provision is only concerned with making possible transactions made for valuable consideration, that is operations which, without a refund, could not have taken place because the price in the exporting Member State was not competitive on the world market.

26. It is true that Article 14 (2) of Regulation No 13/64 envisages first of all operations consisting in an exporter delivering milk or milk products to an importer in a third country, subject to payment by the latter of the world market price, and that this is confirmed by the fourteenth consideration of the same Regulation, whereby the grant of refunds must be allowed in order to safeguard the participation of Member States in world trade in milk products.

27. However, as this provision makes no distinction based on the legal nature of the underlying transactions for the deliveries to third countries, expenditure intended to compensate for the difference between the prices in the exporting Member State and the prices ruling in world trade cannot be excluded from the expression refunds, even though, as in this case, that State bought the products in question on the domestic market in order to deliver them, by way of gift, to the importing country or its nationals.

28. Further, the transactions thus entered into by the said State and the sellers constitute commercial operations.

29. Moreover, as Regulation No 13/64 was adopted on the basis of Articles 38 et seq. of the Treaty dealing with agriculture, it must be interpreted in the light of the objectives stated in Article 39, and in particular those which aim to ensure a fair standard of living for the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture, and to stabilize markets.

30. Article 14 (2) of Regulation No 13/64 must therefore be interpreted as encouraging all exports to third countries which contribute to the realization of those objectives.

31. Such was the case with the exports in dispute, as they comprised a preliminary purchase of the products in question on the domestic market and, therefore, contributed in maintaining or increasing sales possibilities for the farmers of the Member State concerned.

32. The fact that the Netherlands Government took the place of the importing country or its importers as buyer is not relevant, as the economic effect of creating and maintaining outlets to third countries for the said farmers is the same in either case.

33. Finally, the overall interpretation of Regulation No 13/64 cannot be distorted by considerations taken from Community acts deciding food aid programmes to be undertaken within the framework of the common organization of the agricultural markets, subsequently to the period under consideration.

34. It follows from this that the expenditure in dispute constitutes refunds on exports, within the meaning of Article 14 (2) of that Regulation, eligible for aid from the Fund under Article 3 (1) of Regulation No 25.

35. The application is therefore well-founded.

36. Under the terms of Article 69 (2) of the Rules of Procedure the unsuccessful party shall be ordered to pay the costs.

37. The Commission has failed in its pleas.

38. It must therefore be ordered to pay the costs.

On those grounds, Upon reading the pleadings; Upon hearing the report of the Judge Rapporteur; Upon hearing the oral arguments of the parties; Upon hearing the opinion of the Advocate-General; Having regard to the Treaty establishing the European Economic Community, especially Articles 38, 39, 173 and 190; Having regard to Regulation No 25 of the Council on the financing of the common agricultural policy (OJ of 4 April 1962, p. 991/62), especially Article 3; Having regard to Regulation No 13/64/EEC of the Council on the gradual establishment of a common organization of the markets in the sector of milk and milk products (OJ of 27 February 1964, p. 549/64), especially Article 14; Having regard to Regulation No 17/64/EEC of the Council on the conditions for granting aid from the European Agricultural Guidance and Guarantee Fund (OJ of 27 February 1964, p. 586/64), especially Articles 9 and 10; 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, especially Article 69; THE COURT hereby

1 Annuls Decision No 72/120/EEC of the Commission of 26 January 1972, on the granting of aid from the European Agricultural Guidance and Guarantee Fund — Guarantee Section — in respect of expenditure incurred by the Kingdom of the Netherlands as a result of refunds on exports to third countries (OJ No L 61, p. 15), to the extent that, in determining the amount of aid to be granted from the Fund in respect of those refunds, it did not take into account expenditure relating to products exported under the heading of food gifts.

2 Annuls Decision No 72/115/EEC of the Commission of 26 January 1972, on the determination of the lowest average refunds for financing refunds on exports to third countries for the accounting period 1966/67 (OJ No L 61, p. 1), to the extent that, in determining the lowest average refunds referred to in Article 3 (1) of Regulation No 25 of the Council of 4 April 1962 (OJ p. 991), it did not take into account the expenditure referred to in 1 above.

3 Orders the Commission of the European Communities to pay the costs.