JUDGMENT OF 8.11.1972 — CASE 17/72 GETREIDEHANDEL v EINFUHR- UND VORRATSSTELLE GETREIDE

In Case 17/72 Reference to the Court of Justice under Article 177 of the EEC Treaty by the Hessisches Finanzgericht (Vllth Senate) for a preliminary ruling in the action pending before that court between

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

gives the following

JUDGMENT

Issues of fact and of law

I — Facts and procedure

II — Observations submitted under Article 20 of the Statute

A — Observations of the Commission of the European Communities

1. The method of calculating the free-at-frontier price

2. The application of the method of calculation to the case in dispute

(a) The price of maize on the most representative export market

(b) Transport costs

(c) The profit margin of the trader

3. The exchange rates

B — Observations of the plaintiff in the main action

The method for calculating the free-at-frontier price in the present case

Grounds of Judgment

(a) The method of calculating the free-at-frontier price

(b) The price of FF 523.50

(c) The price of FF 515.61

(d) The effect of the exchange rates

Costs

I —. Facts and procedure

1. Regulation No 19 of the Council of 20 April 1962 (JO No 30 of 20.4.1962, p. 933) on the progressive establishment of a common organization of the market in cereals provided for the imposition of an intra-Community levy on imported cereals equal to the difference between the price of the product coming from the exporting

2. The dispute before the national court relates to the question whether the Commission properly determined the free-at-frontier price in force on 28 January 1966 for imports of French maize into the Federal Republic of Germany.

3. Since the Finanzgericht considered that the outcome of the dispute depended on the validity of the decision of the Commission of 21 January 1966 fixing at FF 508.86 the free-at-frontier price for maize imported from France into the Federal Republic for the week from 24 to 30 January 1966, it submitted the following question to the Court:

4. The order referring the matter was received at the Court Registry on 2 May 1972. The plaintiff in the main action and the Commission of the European Communities submitted written observations; the defendant in the main action declared that it waived its right to submit written observations.

5. On 14 July 1972 there arrived at the Court Registry a copy of an application addressed on 5 July 1972 by the plaintiff in the main action to the Hessisches Finanzgericht requesting that court to supplement the order of reference so that the Court might also consider the following point

II —. Observations submitted under Article 20 of the Statute

A —. Observations of the Commission of the European Communities

1. The method of calculating the free-at-frontier price

(a). When the Community legislature established a system of general levies it repudiated determination of the free-at-frontier price of each individual consignment and restricted itself to drawing a general comparison between the most favourable current price for the cereals in question in the exporting Member State and the threshold price which reflects the level of the domestic price within the importing Member State, the two prices being related uniformly to a specific standard of quality. The free-at-frontier price is thus the theoretical price resulting from a generalized calculation at which the cereal could, under the most favourable purchasing opportunities, have been offered free-at-frontier in Germany.

(b). In this price there may be included only the marketing and transport costs before crossing the frontier.

(c). In calculating the free-at-frontier price account must be taken of the nature and amount of the costs obtaining with regard to the most favourable purchasing opportunities in the importing country. Account is not taken of the costs incurred because of the particular details of a transaction.

(d). Finally, the generalizing nature of the system requires the cost factors which make up the free-at-frontier price — especially the profit margin of the exporter — to be calculated at a flat rate.

2. The application of the method of calculation to the case in dispute

(a). The price of maize on the most representative export market

(b). Transport costs

(c). The profit margin of the trader

3. The exchange rates

B —. Observations of the plaintiff in the main action

(a). First, the most favourable prices ruling on the most representative market of the exporting Member State for the importation to the importing Member State of the relevant cereals (Regulation No 89, Article 2). The parties agree that this market is Bayonne and that the initial price is FF 463.80 per tonne.

(b). The transport costs up to the marketing centre of the area have the largest deficit in the importing Member State, calculated up to the frontier crossing point, in the present case Emmerich (Regulation No 89, Articles 4 and 5).

(c). The marketing costs up to the frontier crossing point, including a sufficient profit margin.

1. By an order of 9 March 1972, which was received at the Registry on 2 May 1972, the Hessisches Finanzgericht requested the Court to give a preliminary ruling on the validity of the decision of the Commission of the EEC of 21 January 1966 fixing at FF 508.86 per metric ton the free-at-frontier price on 28 January 1966 for French maize imported into the Federal Republic of Germany (Supplément Agricole No 3 of 26.1.1966, p. 85).

2. By letter of 10 July 1972, which was received at the Registry on 14 July 1972, the Hessisches Finanzgericht submitted to the Court an additional request from the plaintiff in the main action asking whether the validity of the decision in dispute was affected by the failure of the Commission to authorize the Federal Republic of Germany, as it is empowered to do by Article 2(2) of Regulation No 129/62 (OJ, Special Edition, 1959-1962, p. 274), to apply the actual exchange rate instead of the exchange rate communicated to the International Monetary Fund. Since this contains an argument in addition to the question of validity submitted by the court making the reference, it may be inferred from the wording employed in the letter that it expects a reply to this question too.

3. It is alleged that the illegality arises from the fact that the free-at-frontier price was fixed too low, and that the Commission failed to include in its calculation certain costs, particularly transport, insurance and financing costs assessed at FF 6.75 per tonne so that the free-at-frontier price must be increased to FF 515.61 per tonne. The plaintiff in the main action maintained before the Court that this price should have been fixed at FF 523.50, the amount communicated to the Commission by the Office National Interprofessionnel des Céréales (ONIC) in accordance with Article 7 of Regulation No 89 of the Commission (JO No 66 of 28.7.1962, p. 1899) fixing the criteria for determining the free-at-frontier prices for cereals, flour, cereal groats and cereal meal.

(a). The method of calculating the free-at-frontier price

4. Regulation No 89 of the Commission, adopted in implementation of Regulation No 19 of the Council (JO No 30 of 20.4.1962, p. 933) on the progressive establishment of a common organization of the market in cereals, fixes the criteria for determining the free-at-frontier prices for cereals, flour, cereal groats and cereal meal. It is clear from Articles 2 and 4 of that regulation that the free-at-frontier price shall be determined on the basis of the most favourable prices for the importing Member State from the prices ruling on the most representative markets for exports to that State and taking account of the transport costs. The most favourable price is that which, taking account of the prices ruling on the most representative markets, adjusted in accordance with Article 6, and taking account of the costs of transport and of marketing not already included in those prices, results in the lowest figure.

5. By establishing a system of general levies, the Community legislature has foregone individual investigation of the price of each transaction, preferring to draw a comparison between the most favourable current price for maize in the exporting Member State and the threshold price reflecting the level of the domestic price in the importing Member State, with both prices relating uniformly to a specific standard of quality.

6. Consequently the free-at-frontier price must not be calculated on the basis of the costs actually incurred by an exporter in a specific transaction but must becalculated at a flat rate from the costs which all exporters must inevitably incur up to the frontier.

(b). The price of FF 523.50

7. Under Article 7 of Regulation No 89 of the Commission the exporting Member States shall calculate and communicate each week to the Commission the data for calculating the free-at-frontier price and the price obtained therefrom. Nevertheless, under Articles 8 and 9 of the same regulation the Commission is obliged to check this price, taking account of any data which may be communicated to it by the importing Member States.

8. The data which the Commission did not accept include part of the heads transport costs and profit margin and marketing costs. With regard to the transport costs ONIC put forward a figure of FF 37.70, the basis of which, as it has in fact been set out by the plaintiff in its observations, takes account of circumstances which correspond neither to the general and fixed nature of the price to be communicated nor to the requirement that such price must be the lowest. With regard to the profit margin and the marketing costs, the amount of which is assessed by ONIC at FF 22, it is clear from the explanations of the parties that that agency has agreed to correct its assessment by substituting for it the amount of FF 10 which it accepted with the Management Committee having competence in this sphere.

9. It further appears that the communications of ONIC did not take sufficient account of fluctuations on the freight market.

10. Thus, when the Commission rejected the figure communicated to it and proceeded to amend it, it did not exceed its powers.

(c). The price of FF 515.61

11. Before the national court the applicant put forward a free-at-frontier price of FF 515.61. The divergence between this figure and the figure of FF 508.86 accepted by the Commission, that is to say, FF 6.75 per tonne, consists of various items which may be grouped under two headings: the first—transport insurance: FF 0.50, supervision of unloading: FF 0.50 and costs free-out Rotterdam: FF 2 — relates to transport costs whilst the second concerns marketing costs—interest: FF 2.50, agency commission: FF 1 and bank charges: FF 0.25.

12. With regard to the transport costs, it must first of all be stated that the insurance costs up to FF 0.50 were expressly taken into account by the Commission in its calculation. Furthermore it is clear from Internal Document No 8596/VI/64-F that for the relevant period the unloading costs at Rotterdam, estimated at FF 4.32, include all the costs of trans-shipment from ship to barge. Furthermore, as the plaintiff in the main action itself has admitted, the free-out costs are merely contingent on transport by coaster and on a disputed interpretation of the fob clause and consequently do not correspond to the acceptation of the most favourable price as prescribed by Articles 2 and 4 of Regulation No 89 of the Commission. With regard to the marketing costs the Commission has stated that these were included under the item of FF 10 included by it under the group heading profit margin and marketing costs. This assessment, which, furthermore, has been accepted in the Management Committee by the representatives of the relevant interests, leaves a profit margin of FF 6.25 per tonne which has not been shown to be insufficient.

13. Moreover, the accuracy of the Commission's calculations is confirmed by the fact that the free-at-frontier price determined by it corresponded to the prices actually ruling in the trade at the same time.

14. Consequently it has not been established that in fixing the free-at-frontier price at FF 508.86 the Commission failed to consider data which it ought to have taken into account.

(d). The effect of the exchange rates

15. The question submitted gives rise in addition to the point whether the Commission infringed Article 2(2) of Regulation No 129 of the Council of 23 October 1962 by failing to authorize—as it is empowered to do by the said article—the Federal Republic of Germany to apply, in calculating in Deutschemarks the free-at-frontier price determined in French francs, the actual exchange rate instead of the exchange rate communicated to the International Monetary Fund.

16. Under that provision the intervention for which it provides is subordinated to the condition that the variations in the exchange rate in relation to the rate which corresponds to the parity communicated to the International Monetary Fund might, in exceptional circumstances, be capable of jeopardizing the implementation of the common agricultural policy.

17. The existence of exceptional circumstances in which the fluctuations in the exchange rate impair the effectiveness of the machinery of the common organization of the market or the implementation of the agricultural policy has not been established in this case. The applicant claims that, pursuant to Regulation No 67 of the Commission (JO of 28.7.1962, p. 1860) fixing the criteria for modifying levies imposed on cereals, flour, cereal groats and cereal meal, the existence of fluctuations in excess of 0.75 u.a. must be considered as evidence of a disturbance of the market. With the aim of simplifying administration, Regulation No 67 of the Commission fixes the limits of fluctuation of the exchange rates within which, in any case, no review of the rate of the levy will be carried out. It may not be inferred from this that any fluctuation beyond those limits by itself constitutes evidence of a serious disturbance capable of impairing the effectiveness of the machinery of the common organization of the market or the implementation of the common agricultural policy.

18. The costs incurred by the Commission of the European Communities, which 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 Hessisches Finanzgericht, 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 and the Commission of the European Communities; Upon hearing the opinion of the Advocate-General; Having regard to the Treaty establishing the European Economic Community, especially Article 177; Having regard to Regulations Nos 19 and 129 of the Council of the European Economic Community of 20 April 1962 and 23 October 1962 respectively; Having regard to Regulations Nos 67 and 89 of the Commission of the European Economic Community of 11 July 1962 and 25 July 1962 respectively; Having regard to the Protocol on the Statute of the Court of Justice of the European Economic Community, especially Article 20; Having regard to the Rules of Procedure of the Court of Justice of the European Communities, THE COURT in answer to the question submitted to it by the Hessisches Finanzgericht by an order of 9 March 1972, hereby rules: