JUDGMENT OF 12. 11. 1974 — CASE 34/74 ROQUETTE v FRANCE

In Case 34/74 Reference to the Court under Article 177 of the EEC Treaty by the Tribunal d'instance of Lille for a preliminary ruling in the action pending before that court between

THE COURT composed of: R. Lecourt, President, C. Ó Dálaigh and Lord Mackenzie Stuart, Presidents of Chambers, A. M. Donner, J. Mertens de Wilmars, P. Pescatore (Rapporteur) and H. Kutscher, Judges, Advocate-General: A. Trabucchi Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts

I — Facts and procedure

II — Observations submitted to the Court

A — As regards the first question

B — As regards the second question

Law

Costs

I —. Facts and procedure

1. Must the charge on products imported from third countries referred to in Article 4 a (2) of Regulation No 974/71, amended in particular by Regulation No 509/73 of 22 February 1973, be understood, in respect of the products referred to in Article 1 (2) (b) of the aforementioned Regulation No 974/71 whose price depends on the price of the products covered by intervention arrangements under the common organization of agricultural markets,

2. If the Court replies to question 1 (a) in the affirmative and given that there is no compensatory amount in respect of maize, being a basic product, is the application, at the same time, of compensatory amounts of different rates to amyloid products whose price depends on that of maize consistent

II —. Observations submitted to the Court

A —. As regards the first question

(a). In the realm of principle it should be stated that the system for monetary compensatory amounts was inaugurated in order that fluctuations of currencies beyond the margins permitted by international rules should not involve a disruption of the intervention system laid down by Community rules or abnormal movements of prices jeopardizing a normal trend of business in agriculture. In view of these objectives it is clearly apparent from Regulation No 974/71 that the application of monetary compensatory amounts essentially concerns basic products and is only marginally concerned with products of first or second stage processing, whose prices should, in any event, bear only a compensatory amount equivalent to the incidence of the compensatory amount applied to basic products. In this case, no monetary compensatory amount could be applied to maize: the CIF price at Rotterdam for maize coming from third countries is higher than the Community threshold price, so that the import levy, and therefore the charge on imports from third countries, insofar as they relate to this primary product, are equal to zero.

(b). In the realm of practical consequences the contrary interpretation put forward by the Commission would create serious distortions in trade with third countries and in the competitive situation of French industry in relation to that of the other Member States, which would be contrary to the spirit of the EEC Treaty and in particular to Article 40.

B —. As regards the second question

(a). As for whether, by reason of the rule for abatement, the application of a compensatory amount to a processed product in the absence of any application of the compensatory amount to the basic product is in conformity with Article 2 (2) of Regulation No 974/71, it should be noted that the provision in question does not prohibit the Council from limiting the effective application of a compensatory amount on the basic product without limiting, to the same extent, the effective application of the compensatory amount on the processed product. Article 2 (2) contains the rules governing the method of calculation of the compensatory amount for the product when, as in this case, the conditions requiring the fixing of compensatory amounts are present. It does not lay down a further condition, according to which a compensatory amount can be fixed or applied to the processed product only if a compensatory amount has been applied to the basic product. The final recital to Regulation No 974/71 in fact indicates that the compensatory amounts should be limited to the amounts strictly necessary to compensate the incidence of the monetary measures on the prices of basic products.

(b). The assertion made by the plaintiff in the main action, according to which its competitive position has suffered and competition has been distorted, can easily be countered by observing that the solution which it proposes could also lead to disturbance. The non-application of compensatory amounts on processed products is also likely to create difficulties in intra-Community trade.

1. By judgment of 30 April 1974, registered at the Court on 16 May, the Tribunal d'instance of Lille referred, pursuant to Article 177 of the EEC Treaty, two questions on the interpretation of Articles 2 (2) and 4 a (2) of Regulation No 974/71 of the Council of 12 May 1971 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, p. 1), as amended in particular by Regulation No 509/73 of 22 February 1973 (OJ L 50, p. 1), for the purpose of ascertaining the conformity with that Regulation of the application of compensatory amounts to exports of amyloid products, as laid down by Regulation No 218/74 of the Commission of 25 January 1974 (OJ L 24, p. 1), fixing the monetary compensatory amounts in implementation of Regulation No 974/71.

2. The first question asks whether the charge on products imported from third countries, referred to in paragraph 4 a (2) of Regulation No 974/71, as amended in particular by Regulation No 509/73, must be understood, in respect of the products referred to in Article 1 (2) (b) of Regulation No 974/71, whose price depends on the price of the products covered by intervention arrangements under the common organization of agricultural markets:

3. In the event of the Court giving an affirmative answer to question 1 (a) the Court is asked to state whether, given that there is no compensatory amount for maize, which is a basic product, the simultaneous application of compensatory amounts of different rates to amyloid products whose price depends on that of maize is consistent

4. These questions have arisen in the context of an action brought before the Tribunal d'instance by the plaintiff in the main action against the French Customs Administration for the purpose of obtaining restitution of compensatory amounts which it was obliged to pay on exports of amyloid products derived from maize, at a time when, according to the uncontested statements of the parties to the proceedings before the Court, no compensatory amount was due under the provisions of Regulation No 974/71 on imports of that basic product, following a rise in prices on the world market.

5. The Government of the French Republic stated at the hearing that by charging compensatory amounts on export of the product in question the French authorities merely undertook a precise application of Regulation No 218/74 of the Commission, although, fundamentally, they considered that Regulation to be contrary to the principles of Regulation No 974/71 of the Council.

6. In order to neutralize the effect, on the working of agricultural markets, of the widening of the margins of fluctuation for the currencies of certain Member States, Regulation No 974/71, as supplemented subsequently, introduced compensatory amounts, to be charged on imports of agricultural products and granted on exports.

7. According to Article 2 (1) of that Regulation the compensatory amounts shall be fixed, in relation to the currency fluctuations recorded, for basic products covered by intervention arrangements under the common organization of agricultural markets.

8. According to Article 2 (2), compensatory amounts for derived products 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 basic product on which they depend.

9. Regulation No 509/73, which supplemented Regulation No 974/71, contains an Article 4 a which paragraph (2) provides that in trade between the Member States and with third countries, the compensatory amounts applicable due to the decrease in value of the currency concerned may not be higher than the charge on products imported from third countries.

10. The compensatory amounts applicable at the time of the exports in question were fixed by Regulation No 218/74 of the Commission and, more particularly, by Annex I to that Regulation.

11. It is clear from information given during the proceedings that, in implementing Article 4 a of Regulation No 974/71, the Commission interpreted the term charge on products imported to refer to the levies laid down by Regulation No 120/67 of 13 June 1967 on the common organization of the market in cereals (OJ p. 2269), Article 13 of which provides that a single levy shall be charged on imports of basic products, fixed by reference to the difference between prices on the world market and prices within the Community, whereas Article 14 provides that a levy shall be charged on the importation of derived products, consisting of two components, that is to say a variable component corresponding to the incidence, on the prime cost of processed products, of the levies on the basic products and a fixed component, designed to protect the processing industry.

12. As a consequence of this interpretation, in spite of an economic situation in which no levy was imposed on the basic product involved, that is to say maize, Regulation No 218/74 of the Commission nevertheless maintained, on derived products, and in particular amyloid products, a compensatory amount corresponding to the fixed component laid down by Article 14 of Regulation No 120/67.

13. The interpretation of the. concept charge on products imported, taken by the Commission as the basis of Regulation No 218/74, is not in conformity with the provisions of Articles 2 (2) and 4 a (2) of Regulation No 974/71, as interpreted in the light of the objective sought by that Regulation.

14. In fact, the sole objective of the introduction of compensatory amounts was to neutralize the effect of disturbances arising in agricultural trade provoked by the fluctuation of exchange rates for the currencies of certain Member States, as emphasized in the final recital of the preamble to Regulation No 974/71, according to which the compensatory amounts should be limited to the amounts strictly necessary to compensate the incidence of the monetary measures on the prices of basic products.

15. In pursuance of Article 2 of Regulation No 974/71 the fluctuations should be entirely compensated for basic products, whereas under paragraph (2) of the same Article, for derived products, the compensation should be in proportion to the incidence, on the prices of the product concerned, of the application of the compensatory amount to the basic product.

16. This provision therefore imposes a parallelism between the application of compensatory amounts to basic products and their application to derived products.

17. However, with a view to avoiding, in the case of a fall in value of the currency of a Member State, the application of excessive compensatory amounts, likely to disturb markets within the Community, Article 4 a (2), first paragraph, imposed an upper limit upon compensatory amounts, at the level of the charge on products imported from third countries.

18. The result of the application of this provision, following the increase in price of cereals on the world market, was the abolition of compensatory amounts in respect of trade in maize from the moment when the cif price reached the threshold price fixed pursuant to Regulation No 120/67.

19. In such a situation, it was contrary to the objective of Regulation No 974/71 to take account, by way of a charge on products imported, of the fixed component of the import levy on products derived from cereals, fixed by reference to considerations — the protection of the processing industry — which were totally extraneous to the objective of Regulation No 974/71.

20. The result of taking account of this factor in calculating the rates fixed in Annex I to Regulation No 218/74 was to impose on exporters of derived products a charge which bore no relation to monetary fluctuations and, in consequence, worsened their competitive position.

21. The first question should therefore be answered to the effect that the charge on products imported from third countries, referred to in Article 4 a (2) of Regulation No 974/71, as amended by Regulation No 509/73, must be understood — in respect of the products referred to in Article 1 (2) (b) of the same Regulation, whose price depends on the price of the products covered by intervention arrangements under the common organization of agricultural markets — as consisting solely of the variable component intended to take account of the prices of basic products.

22. Since the answer to question 1 (a) referred by the Tribunal d'instance is therefore answered in the negative the second question does not require an answer.

23. The costs incurred by the Government of the Kingdom of Denmark, the Government of the French Republic and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable.

24. Since these proceedings are, insofar as the parties to the main action are concerned, a step in the action pending before the Tribunal d'instance of Lille, costs are a matter for that court.

On those grounds, THE COURT, in answer to the questions referred to it by the Tribunal d'instance of Lille by judgment of 30 April 1974, hereby rules: