JUDGMENT OF 24. 10. 1973 — CASE 43/72 MERKUR v COMMISSION
In Case 43/72
THE COURT composed of: R. Lecourt, President, A. M. Donner and M. Sørensen, Presidents of Chambers, R. Monaco, J. Mertens de Wilmars, P. Pescatore, H. Kutscher (Rapporteur), C. Ó Dálaigh and Lord Mackenzie Stuart, Judges, Advocate-General: H. Mayras Registrar: A. Van Houtte
gives the following
JUDGMENT
Issues of fact and of law
I — Facts and procedure
I — Submissions of the parties
II — Pleas and arguments of the parties
1. Admissibility
A — Evasion of the plea of nullity
B — Protection of legal rights
2. Merits
A — General
B — Alleged illegality of the contested Regulations of the Commission
a) Infringement of Regulation No 974/71 of the Council
b) Discrimination
C — Culpability
D — Damages
Grounds of judgment
Admissibility
On the Substance
The first submission
The second submission
Costs
I —. Facts and procedure
1. A — On 12 May 1971, the Council, on the basis, in particular, of Article 103 EEC Treaty, issued Regulation (EEC) No 974/71 (OJ L 106, p. 1). This Regulation was amended on certain points by Regulation No 2746/72 of the Council of 19 December 1972 (OJ L 291, p. 148) with effect from 1 July 1972. Since the events material to the case all took place before this date, the following is based solely on the original version of Regulation No 974/71. Article 1 (1) of Regulation No 974/71 authorizes Member States in accordance with the conditions referred to in the further provisions of the Regulation to charge on imports from Member States and third countries and to grant on exports to Member States and third countries compensatory amounts if for the purposes of commercial transactions, a Member State allows the exchange rate of its currency to fluctuate by a margin wider than the one permitted by international rules. Under paragraph 2 of the same Article this authorization applies (a) to products covered by intervention arrangements under the common organization of agricultural markets; (b) to products whose price depends on the price of the products referred to under (a) and which are governed by the common organization of market or are the subject of a specific arrangement under Article 235 of the Treaty. Moreover it is stated in the last sentence of this paragraph: This option shall be exercised only where application of the monetary measures referred to in paragraph 1 would lead to disturbances in trade in agricultural products. Article 2 governs the calculation of the compensatory amounts; paragraphs 1 and 2 thereof provide: 1. The compensatory amounts for the products covered by intervention arrangements shall be equal to the amounts obtained by applying to the prices the percentage difference between: the parity of the currency of the Member State concerned declared to and recognized by the International Monetary fund, on the one hand, and the arithmetic mean of the spot market rates of this currency against the US dollar during a period to be determined. 2. For the other products referred to in Article 1, 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. Article 4 reads: 1. No compensatory amount shall be fixed where, in any Member State, the percentage referred to in Article 2 (1) does not exceed 2.5 %. 2. No compensatory amount shall be fixed for products for which the amount calculated in accordance with Article 2 is negligible in relation to their average value. Article 6 requires the Commission to adopt detailed rules which may include other derogations from the regulations in the common agricultural policy and are to cover in particular the fixing of the compensatory amounts. Article 7 reads: Partial or temporary use may not be made of the authorization provided for in this Regulation. Under Article 8 the Regulation was applicable with effect from 12 May 1971; it remains valid until the Member States concerned again apply the international rules on margins of exchange rate fluctuation around official parity. The Regulation was essentially to deal with the following matters in the last few weeks preceding its issue certain foreign exchange markets within the Community have been disturbed by speculative movements involving an abnormal influx of short-term capital which was such as to provoke … dangerous economic effects for economic development; the Council in order to put an end to abnormal movements of capital, was prepared to envisage that in certain circumstances Member States may, for a limited period, widen the margins of fluctuation for the exchange rates of their currencies in relation to their present parities; serious difficulties may arise as a result of such measures as regards the proper functioning of the common market because trade to which the current rate of exchange applies may then be effected at a price, in national currency, lower than the intervention or buying-in prices laid down by Community rules on the basis of the official parity which in turn may entail a disruption of the intervention system laid down by Community rules and abnormal movements of prices jeopardizing a normal trend of business in agriculture. B — The Commission issued various regulations to implement this, among them Regulation No 1014/71 (OJ L 110, p. 10) on 17 May 1971 applicable from 12 May 1971. In the Annexes to this Regulation the compensatory amounts provided for in Article 1 of Regulation No 974/71 were fixed for a number of products, inter alia for products processed from cereals (Annex 1, B); the list however contained no products processed from barley. The compensatory amounts applied only to the foreign trade of the Federal Republic of Germany and of the Kingdom of the Netherlands because according to the statements in the Recitals in the Regulation the power as declared in Article 1 (1) of Regulation No 974/71 affects only these Member States. C — By its Regulation No 1687/71 of 30 July 1971 (OJ L 173, p. 1) which came into force on 2 August 1971, the Commission replaced the Annexes of Regulation No 1014/71 with fresh Annexes. The rubric Products processed from cereals (Annex I, B) now includes also barley groats and meal (No 11.02 A III of the Common Customs Tariff). D — The applicant is concerned principally with the export of barley groats, barley meal and barley flakes. Between 12 May and 27 July 1971 the applicant delivered many products of this kind to customers in third countries and asked the competent German Head Customs Office on each occasion to grant it compensatory allowances for these products. The Head Customs Office rejected these claims on the grounds that products processed from barley were not mentioned in Regulation No 1014/71 and there was thus no provision for compensatory allowances on export of products of this kind. The applicant raised an objection to this; the Head Customs Office has postponed a decision on this matter until the present proceedings are concluded. Between 13 July and 21 September 1971 there was an exchange of correspondence between the applicant and the Commission. The applicant threatened the Commission with a claim for damages unless by formulating more precisely or amending Regulation No 1687/71 it included products processed from barley in the scheme of compensatory allowance — as it was legally obliged to do — with retrospective effect, and gave directions in the proper quarters for the sum of DM 198448.18 to be paid to the applicant, this sum being due to the applicant in respect of exports made between 12 May and 27 July 1971. The Commission refused to comply with this request.
2. The present action was started on 10 July 1972. The written proceedings took their normal course. The Court has decided, on the report of the Judge-Rapporteur, having heard the Advocate-General, to proceed without any preparatory inquiry.
I —. Submissions of the parties
II —. Pleas and arguments of the parties
1. Admissibility
A —. Evasion of the plea of nullity
B —. Protection of legal rights
2. Merits
A —. General
B —. Alleged illegality of the contested Regulations of the Commission
a). Infringement of Regulation No 974/71 of the Council
b). Discrimination
1. The applicant claims that the provisional non-inclusion of products processed from barley in the compensatory system is incompatible with Article 40 (3) EEC Treaty because it discriminates against German exporters of these products and indeed against exporters of other Member States as well, which had taken no measures of currency policy of the kind described in Regulation No 974/71, as well as against those German undertakings concerned with the export of products already brought into the compensatory system by Regulation No 1014/71.
2. The applicant claims that the non-inclusion of products processed from barley in the compensatory system put the German exporters at a disadvantage in relation to those from other Member States which did not float their exchange rates. The German exporters had to demand a higher price for their goods than their foreign competitors and thus became uncompetitive. Such discrimination inevitably leads — contrary to the spirit of Regulation No 974/71 — to disturbances and dislocations of trade.
3. In the view of the applicant the scheme originally adopted by the Commission contains a further discrimination vis-à-vis other German exporters. This applies in the first place in relation to those firms who export products processed from other cereals for example meal and groats of common wheat as well as other residues of cereals which from the outset were included in the compensatory scheme.
C —. Culpability
D —. Damages
1. In this action, filed on 10 July 1972, the applicant seeks payment from the Commission of 50000 DM by way of compensation for the damage suffered by the applicant owing to the Commission's failure to fix compensatory amounts, as envisaged by Article 1 of Regulation No 974/71 of the Council of 12 May 1971 (OJ L 106, p. 1), for exports of products processed from barley for the period from 12 May to 2 August 1971.
2. Thereby, it is alleged, the Commission infringed both the above Regulation and the rule against discrimination contained in Article 40 of the EEC Treaty, and these infringements involve the Community in liability under the second paragraph of Article 215 of the Treaty.
3. While it has made no formal objection on the point, the Commission has expressed doubt as to whether a claim for damages can be admissible, as the Court has already decided, when, by challenging the legality of a Community regulation, it seeks a financial result, identical or similar to that which would arise from the annulment of the regulation, although an application by the applicant for such an annulment would not itself be admissible.
4. However, the action for damages provided for in Articles 178 and 215 of the Treaty was included as an autonomous form of action, with a particular purpose to fulfil within the system of actions, and subject to conditions on its use by its specific nature.
5. The Commission then maintains that the applicant should be sent back to pursue its claim before the administrative and judicial authorities in the Federal Republic of Germany, on the grounds that the event giving rise to the present dispute was the refusal by the competent customs office in that Member State to grant the applicant compensatory amounts on the exports it had made to third countries.
6. But the Court already has the case before it and within its jurisdiction, and is therefore bound to see whether or not these regulations are tainted with the alleged irregularities.
7. The action is therefore admissible.
8. Since the disputed actions are of a legislative nature and constitute measures taken in the sphere of economic policy, the Community is not liable for any damage suffered by individuals as a consequence of those actions under the provisions of Article 215, second paragraph, of the Treaty, unless a sufficiently flagrant violation of a superior rule of law for the protection of the individual has occurred.
9. Regulation No 974/71 was amended by Council Regulation (EEC) No 2746/72 of 19 December, 1972 (OJ L 291, p. 248), which came into force as from 1 July 1972.
10. 1. The applicant maintains that the Commission was under a duty in principle to fix compensatory amounts for all the products listed in Article 1 (2) of Regulation No 974/71; this was by virtue of Article 7 of the same Regulation which states partial … use may not be made of the authorization provided for in this Regulation. The above provision, it is maintained, is addressed to the Commission, as well as to Member States.
11. According to Article 1 (1) of Regulation No 974/71, any Member State which adopts particular monetary measures is authorized to grant on exports to Member States and third countries compensatory amounts.
12. By virtue of the last sentence in Article 1 (2) of Regulation No 974/71, the option of granting compensatory amounts on exports shall be exercised only where application of the monetary measures referred to in paragraph 1 would lead to disturbances in trade in agricultural products.
13. From the sense and purpose of Regulation No 974/71 it is apparent that any decision in this respect is to be made by the Commission and not by Member States.
14. For those reasons it follows that the Commission is under no duty to fix compensatory amounts for every product listed in Regulation No 974/71.
15. 2. The argument that the Commission was under a duty to fix ab initio compensatory amounts for exports of the products concerned is also supported, in the applicant's view, by the practice followed by that institution in applying Article 4 (2) of the Regulation, whereby no compensatory amount shall be fixed for products for which the amount calculated in accordance with Article 2 is negligible in relation to their average value. According to the applicant the Commission itself omitted to fix compensatory amounts only when those would come to less than 1 % of the average value of the product. Having thus voluntarily limited its discretionary powers, the Commission was obliged to fix compensatroy amounts whenever that limit was surpassed, which was so, on the Commission's own admission, in the case of products processed from barley.
16. However, it is clear from the Commission's explanation that, far from observing this tenet strictly, the Commission regarded it from the start as no more than a guide and reserved the right to derogate from it whenever it considered, in its discretion, that special circumstances in the particular instance so required.
17. Accordingly, the submission based on a breach of a Regulation No 974/71 is unfounded.
18. The applicant claims that by not fixing compensatory amounts for exports of products processed from barley the Commission practised discrimination between German exporters of such products and, on the one hand, exporters from other Member States which had not adopted the monetary measures referred to in Regulation No 974/71 and, on the other hand, German traders exporting products which had benefited from the compensatory system introduced by this provision from the beginning.
19. 1. As regards the comparison made with exporters from other Member States the adoption of Regulation No 974/71, introduced by virtue of Article 103 of the EEC Treaty and forming the basis of Regulations Nos 1014/71 and 1687/71, was prompted by the fact that some of the Member States, including the Federal Republic of Germany, had widened the margins of fluctuation for the exchange rates of their currencies in relation to their official parities.
20. If this widening makes the situation of importers and exporters in the country concerned different from that of their counterparts in other Member States, the disparity is to be attributed not to Community intervention but to the decision taken by this Member State.
21. While the powers conferred on Community institutions by the Treaty, and by Article 103 (2) in particular, include the option of mitigating some of the effects of such national measures, as a matter of the common concern referred to in Article 103 (1), it does not follow that these institutions are bound to compensate for all the effects insofar as these are disadvantageous to importers and exporters in the Member States concerned.
22. 2. As regards the comparison made with German exporters of goods which had had the benefit of this compensatory system from the start, the different treatment of which the applicant complains would not be a violation of the principle of non-discrimination unless it appeared to be arbitrary.
23. It should be noted that in applying the last sentence of Article 1 (2) of Regulation No 974/71, the Commission has wide powers of appraisal in judging whether the monetary measures contemplated by the said regulation could lead to disturbances in trade in agricultural products.
24. Moreover, Regulation No 974/71 is evidently an emergency measure, considering the events leading up to its adoption; consequently the Commission was compelled to draw up the rules for its implementation within a very short space of time, yet at the same time considering, for each of the numerous products concerned, whether its exclusion from the compensatory scheme would lead to disturbances in trade in that product.
25. Accordingly the submission based on an alleged discrimination is not well-founded.
26. The net result of the above considerations is that Regulations Nos 1014/71 and 1687/71 are not tainted with the illegality alleged.
27. According to Article 69 (2) of the Rules of Procedure, the unsuccessful party shall be ordered to pay the costs.
On those grounds, Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the parties; Upon hearing the opinion of the Advocate-General; Having regard to the Treaty establishing the European Economic Community, especially Articles 40, 103, 178 and 215; Having regard to Regulation No 974/71 of the Council on certain measures of conjunctural policy to be taken in agriculture following the temporary widening of the margins of fluctuation for the currencies of certain Member States (OJ L 106 of 12 May, 1971, p. 1), especially Articles 1, 6 and 7, having regard to the Protocol on the Stature of the Court of Justice of the European Communities; Having regard to the Rules of Procedure of the Court of Justice of the European Communities; THE COURT hereby:
1 Dismisses the action as unfounded.
2 Orders the applicant to pay the costs.