JUDGMENT OF 12. 7. 1977 — CASE 2/77 HOFFMANN'S STÄRKEFABRIKEN v HAUPTZOLLAMT BIELEFELD

In case 2/77 Reference to the Court under Article 177 of the EEC Treaty by the Finanzgericht Münster for a preliminary ruling in the action pending before that court between

THE COURT composed of: H. Kutscher, President, A. M. Donner and P. Pescatore, Presidents of Chambers, J. Mertens de Wilmars, M. Sørensen, Lord Mackenzie Stuart, A. O'Keeffe, G. Bosco and A. Touffait, Judges, Advocate-General: H. Mayras Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts and issues

I — Facts and procedure

First Question (Question 1 (a))

Second Question (Question 1 (b))

Third Question (Question 1 (c)).

B — Observations submitted by the Commission

First Question (Question 1 (a))

Second Question (Question 1 (b))

Third Question (Question 1 (c))

Decision

I — The validity of Article 1 (1) of Regulation No 3113/74 of the Council of 9 December 1974

6 As to (a)

II — The interpretation of the second subparagraph of Article 40 (3) of the EEC Treaty and of Regulation No 1132/74

Costs

I —. Facts and procedure

1. Regulation No 120/67/EEC of the Council of 13 June 1967 on the common organization of the market in cereals (OJ English Special Edition 1967, p. 33) lays down in Article 11 (1) that A production refund shall be granted:

2. From the end of 1972 the world rates for maize rose constantly, gradually approaching the threshold price which, indeed, they almost always exceeded between August 1973 and October 1974. This appreciable and persistent variation in the prices of the basic products on the world market led the Council to review the supply price which had been fixed at 68 u.a. since 1967. For the marketing year 1974/75 the price was successively fixed at:

B —. Observations submitted by the Commission

(1). The fact that producers of starch from potatoes have a vested right is not sufficient to justify the unequal treatment meted out to producers of starch from maize even if it is assumed that the latter did not possess a vested right.

(2). Nor does the fact that this inequality of treatment was merely temporary provide any ground for declaring it of no account from the legal point of view. For the plaintiff maintenance of the inequality of treatment would have meant something like an extra 1000000 DM in refunds.

(3). Finally, the unequal treatment cannot be justified by relying upon different conditions of production since Article 2 of Regulation No 1132/74 is particularly clear on this point. The principle that amounts of the refunds shall be the same infers that it is essential to avoid differences in the refunds even by reason of differences in the conditions of production.

1. By an order of 20 December 1976 which reached the Court Registry on 4 January 1977 the Finanzgericht Munster referred to the Court, pursuant to Article 177 of the EEC Treaty, two questions, the first of which relates to the validity of Article 1 (1) of Regulation No 3113/74 of the Council of 9 December 1974 (OJ L 332 of 12. 12. 1974) amending Regulation No 1132/74 on production refunds in the cereals and rice sectors, and the second, referred as an alternative, concerns the interpretation of the second subparagraph of Article 40 (3) of the EEC Treaty in relation to the methods of calculating the production refund on potato starch and maize starch.

2. Article 11 of Regulation No 120 of the Council of 13 June 1967 on the common organization of the market in cereals (OJ English Special Edition 1967, p. 33), as amended with effect from 1 August 1974 by Article 5 of Regulation No 1125/74 of the Council of 29 April 1974 (OJ 128 of 10. 5. 1974, p. 12), provides that a production refund shall be granted:

3. Pursuant to Article 11 (3), Article 1 of Regulation No 371/67 of the Council of 25 July 1967 fixing production refunds on starches and quellmehl, laid down that the production refund on maize for the manufacture of starch should be equal to the difference per 100 kg between the threshold price of maize and a supply price, a fixed sum of 68 u.a. per metric ton corresponding to the price at which it was considered desirable and usual for manufacturers of maize starch to acquire maize, taking account of their competitive position with regard, on the one hand, to producers of synthetic starches and, on the other hand, to producers of potato starch.

4. After the 1974/1975 marketing year the Council, or the Commission in implementation of a regulation of the Council, successively increased the supply price, bringing it to 82 u.a. per metric ton in August 1974 by Regulation No 1132/74 (OJ L 128 of 10 May 1974), to 87.45 u.a. per metric ton in October 1974 by Regulation No 2518/74 (OJ L 270 of 5 October 1974) and to 103.10 u.a. per metric ton from 1 April 1975 by the regulation the validity of which is called in question, whilst also reducing the amount of the refund, except in the second instance, where the increase in the supply price was matched by a like increase in the threshold price.

I —. The validity of Article 1 (1) of Regulation No 3113/74 of the Council of 9 December 1974

5. The first question asks whether: Article 1 (1) of Regulation No 3113/74 of the Council is invalid or inapplicable

6. As to (a)

7. After the beginning of 1973 and until the beginning of November 1974 world prices, of maize rose constantly, and the figures produced by the plaintiff in the main action show that they increased from US$87.20 to US$167.25 and subsequently fell gradually to US$124.80 in June 1975 and then rose again to US$141 in August 1975, returning to US$120 in January 1976.

8. It is clear from those considerations that the appreciable and persistent variations in the price of basic products referred to in Article 2 of Regulation No 371/67, which was replaced by Article 7 of Regulation No 1132/74, do not constitute the sole legal basis for an alteration of the supply price and that alterations of the supply price based on other reasons are justified in law by Article 11 (3) of Regulation No 120/67.

9. Furthermore the two earlier alterations in the supply price were not adopted because of the existence of appreciable and persistent variations in the price of maize on the world market in relation to the supply price but, in the first case (Regulation No 1132/74 of the Council of 29 April 1974), in view of a precise assessment of the situation resulting from the level of common prices and from the competition between, on the one hand, maize starch, rice starch, potato starch and, on the other, the substitute chemical products …, and, in the second case by the Commission (Regulation No 2518/74 of 4 October 1974, OJ L 270/1 of 5. 10. 1974) in implementation of Regulation No 2496/74 of the Council of 2. 10. 1974 raising from 7 October 1974 all prices applicable in the agricultural sector for the 1974/1975 marketing year.

10. Nevertheless the plaintiff in the main action claims that in the first recital in the preamble to the contested measure, Regulation No 3113/74, the Council has referred to Article 7 of Regulation No 1132/74 by its reliance, in order to justify increasing the supply price to 103.10 u.a. per metric ton, on the circumstance that: … prices of these products [inter alia maize] have become very high and are likely to remain so.

11. World prices of maize, which from 1967 to the end of 1972 had never reached US$87.20, varied between July 1973 and July 1975 as follows, according to the information supplied by the plaintiff in the main action:

12. If world prices remained at such a high level this would inevitably have affected the fixing of the supply price since this level did away with all justification for the refund in that the refund was intended to compensate for the handicap entailed for maize-starch producers by the fact that their raw material was unobtainable at prices approaching those on the world market.

13. As to (b)

14. In accordance with Article 40 of the Treaty common organizations of the market can only include the allocation of aids for production in so far as such aids are necessary to attain the objectives set out in Article 39.

15. As to (c)

16. Whilst the annual fixing of agricultural prices indeed constitutes a basic economic feature of the common agricultural policy as it is at present implemented such fixing implies neither that those prices cannot be changed in any circumstances nor, in consequence, does it prohibit the Council from adjusting them in the course of the marketing year, when such adjustments are justified.

17. For all those reasons the reply must be that consideration of the first question has disclosed no factor of such a kind as to affect the validity of Article 1 (1) of Regulation No 3113/74.

II —. The interpretation of the second subparagraph of Article 40 (3) of the EEC Treaty and of Regulation No 1132/74

18. The national court then asks: If Question 1 is answered in the negative must the prohibition on discrimination in the second subparagraph of Article 40 (3) of the EEC Treaty and the requirement laid down in Regulation No 1132/74 that the production refunds on potato starch and maize starch shall be the same be interpreted as meaning that, by analogy with the method of calculation of the production refund on potato starch under Article 1 of Regulation No 231/75 of the Commission of 30 January 1975 (OJ L 24/42 of 31. 2. 1975), Article 1 (1) of Regulation No 3113/74 shall not be taken into account in the calculation of the production refund on maize starch?

19. In accordance with the second subparagraph of Article 40 (3) of the Treaty, the common organizations of the market must exclude any discrimination between producers or consumers within the Community.

20. Nevertheless, unlike the refund for maize-starch producers, the refund pursuant to Article 3 of Regulation No 1132/74 is only paid to potato-starch manufacturers when they furnish proof that the producer has been paid the amount of the refund.

21. There are thus objective grounds for the difference between the treatment accorded potato-starch producers and that accorded maize-starch producers so that the transitional measure enacted in connexion with the production refund for potato starch does not constitute a discrimination against maize-starch producers.

22. The costs incurred by the Council and by the Commission of the European Communities which submitted observations to the Court are not recoverable.

On those grounds, THE COURT in answer to the questions submitted to it by the Finanzgericht Munster, by an order of 20 December 1976, hereby, rules:

(1) Consideration of the first question has disclosed no factor of such a kind as to affect the validity of Article 1 (1) of Regulation No 3113/74.

(2) There are objective grounds for the difference between the treatment accorded potato-starch producers and that accorded maize-starch producers so that the transitional measure enacted in connexion with the production refund for potato starch does not constitute a discrimination against maize-starch producers.