JUDGMENT OF 23. 2. 1978 — CASE 92/77 AN BORD BAINNE v MINISTER FOR AGRICULTURE

In Case 92/77 REFERENCE to the Court under Article 177 of the EEC Treaty by the High Court of Ireland for a preliminary ruling in the action pending before that court between

THE COURT (First Chamber) composed of: G. Bosco, President of Chamber, A. M. Donner and A. O'Keeffe, Judges, Advocate General: H. Mayras Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts and issues

I — Facts and written procedure

II — Written observations submitted under Article 20 of the Protocol on the Statute of the Court of Justice of the EEC

III — Oral procedure

Decision

Costs

I —. Facts and written procedure

1. Article 6 (2) of Regulation No 804/68 of the Council of 27 June 1968 on the common organization of the market in milk and milk products (Official Journal, English Special Edition 1968 (I), p. 176) established, within the framework of the intervention scheme, a system of aid for the private storage of butter and cream produced in the Community.

2. Wherever transactions to be carried out within the framework of the common agricultural policy require that the currencies of the new Member States should be converted into another currency or into units of account, the rate of exchange to be applied for the purposes of that conversion is established by Community regulations.

3. An Bord Bainne Co-operative Limited (The Irish Dairy Board) is a cooperative society with limited liability incorporated under Irish law. It carries on the business of purchase, marketing and sale of milk and milk products, including butter and cream.

4. The dispute was brought before the High Court of Ireland, which found that the determination of the issues between the parties requires an interpretation of Community law. Thus by an order of 13 July 1977, it decided to stay the proceedings and refer the following questions to the Court of Justice for a preliminary ruling under Article 177 of the EEC Treaty:

5. A copy of the order for reference was received at the Court of Justice on 25 July 1977.

II —. Written observations submitted under Article 20 of the Protocol on the Statute of the Court of Justice of the EEC

A —. An Bord Bainne accepts for the purpose of the present proceedings that the aids payable to it under the contracts in question had to be diminished by the increase in the buying-in price of butter which was effected by Regulation No 2496/74 of the Council. However it claims that it is only through that regulation that the buying-in price for butter could lawfully be changed during the milk marketing year concerned, and that there is no legal basis for contending that that price has also been changed incidentally and indirectly by the operation of Regulation No 2498/74. The reference in Regulation No 1064/69 to the buying-in price means the buying-in price for butter, as expressed in units of account, and as determined by special act of the Council in each milk marketing year, subject only to the right of the Council to alter such buying-in price by an act passed after due deliberation, during the marketing year for which such price was fixed. It is claimed that Regulation No 2498/74 has no effect on the buying-in price for butter: that price, as expressed in units of account, is not affected by the alteration of the representative conversion rate for the Irish pound.

B —. In his written observations, the Irish Minister for Agriculture refers to the arguments put forward in the main action. He contends in particular that the alteration in the rate of exchange for the Irish pound, enacted by Regulation No 2498/74 of the Council, resulted in an increase in the buying-in price of butter expressed in Irish currency which was applied by the intervention agencies; and that the result of this increase, added to the increase brought about by Regulation No 2496/74 of the Council fixing for Ireland a new buying-in price for butter expressed in units of account, is that no aid for the private storage of butter and cream is payable to An Bord Bainne under the storage contracts concluded.

C —. The Commission of the European Communities first of all sets out the features of the system of aid for the private storage of butter and cream, which is intended to counteract seasonal price fluctuations by a temporary withdrawal from the market, and which is to be contrasted with the system of purchase by intervention agencies.

III —. Oral procedure

1. By an order dated 13 July 1977, received at the Court on 25 July 1977, the High Court of Ireland has referred to the Court under Article 177 of the EEC Treaty questions concerning the interpretation of Regulation No 685/69 of the Commission of 14 April 1969 on detailed rules of application for intervention on the market in butter and cream (Official Journal, English Special Edition 1969 (I), p. 194), and on the validity of Regulation No 2514/74 of the Commission of 3 October 1974, which entered into force on 1 October 1974, amending Regulation No 685/69 as regards the adjustment of private storage aid for butter to take account of changes in the buying-in price (Official Journal 1974, L 269, p. 24).

2. These questions have been referred in the context of proceedings brought by an Irish co-operative society with limited liability, carrying on the business of marketing milk and milk products, against the Minister for Agriculture and Fisheries, who is the intervention agency in Ireland for the purposes of the Common Agricultural Policy.

3. The dispute between the pames concerns the amount of aid which should have been paid for certain quantities of butter and cream which the plaintiff co-operative society had stored privately, under Article 6 of Regulation No 804/68 of the Council of 27 June 1968 on the common organization of the market in milk and milk products (Official Journal, English Special Edition 1968 (I), p. 176), and which had not yet been removed from storage on 7 October 1974.

4. The said co-operative society claims that although the amount of the aid has been reduced owing to the new buying-in price for butter expressed in units of account laid down by Regulation No 2469/74 of the Council of 2 October 1974 (Official Journal 1974, L 268, p. 1) as from 7 October 1974, that does not mean that the said amount has been affected by the alteration of the representative exchange rate for the Irish green pound enacted by Regulation No 2498/74 of the Council of 2 October 1974 (Official Journal 1974, L 268, p. 6) also as from 7 October 1974.

5. On the other hand, the intervention agency contends that the buying-in price for butter in Ireland, as applied before 7 October 1974, has undergone a double increase, as its level has been raised both in units of account and in Irish national currency, through the combined effect of the two Council regulations aforementioned.

6. It contends that, owing to that increase and in accordance with the second paragraph of Article 29 of Regulation No 685/69 of the Commission, as supplemented by Regulation No 2517/74 of the Commission, no aid is due to the plaintiff co-operative society in respect of the quantities of butter and cream still in storage on the aforementioned date.

7. In the first two questions, the High Court asks whether Regulation No 2498/74 of the Council, which altered the exchange rate between the Irish pound and the unit of account, had the effect of increasing the buying-in price for butter within the meaning of that expression as used in Article 29 of Regulation No 685/69 of the Commission, as amended by Regulations No 1064/69 and No 603/70 of the Commission, and whether such increase took place independently of or by virtue of the provisions of Regulation No 2517/74 of the Commission.

8. Regulation No 2498/74 altering the representative conversion rate for the Irish green pound which had been fixed by Regulation No 222/73 of the Council of 31 January 1973 (Official Journal 1973, L 27, p. 4), applies, according to Article 1 thereof, to transactions to be carried out in pursuance of intruments relating to the common agricultural policy.

9. The Annex to Regulation No 1134/68 of the Council of 30 July 1968 (Official Journal, English Special Edition 1968 (II), p. 396) to which the fourth recital in the preamble to Regulation No 2498/74 refers, does not mention the buying-in price applied by the intervention agencies among the amounts to be adjusted in the case of an alteration of the parity of the national currency of a Member State in relation to the unit of account.

10. Therefore Regulation No 2498/74, considered solely in relation to the regulations within the framework of which it was adopted, cannot have had the effect of bringing about an increase in the buying-in price for butter expressed in Irish national currency.

11. On the other hand, a change in the buying-in price due to a change in the parity between the unit of account and a national currency is expressly provided for by Article 29 of Regulation No 685/69, as supplemented by Regulation No 2517/74 of the Commission.

12. The aforesaid Article 20 lays down that the amount of aid for the private storage of butter shall be increased or decreased by reason of any corresponding change in the buying-in price expressed in units of account, and goes on to provide in the last subparagraph that

13. Regulation No 2517/74, providing for the addition of this last subparagraph to Article 29, entered into force on 1 October 1974 and was therefore applicable when Regulation No 2498/74, adopted on 7 October 1974, entered into force.

14. Therefore the appropriate answer to the first two questions is that Regulation No 2498/74 of the Council of 2 October 1974 brought about an increase in the buying-in price for butter expressed in Irish pounds, by virtue of the provisions of Article 29 of Regulation No 685/69 of the Commission of 14 April 1969, as supplemented by Regulation No 2517/74 of the Commission of 3 October 1974.

15. In its third question, the High Court asks whether, if Regulation No 2498/74 of the Council is to be interpreted as having brought about an increase in the intervention price for butter, by the effect of the provisions of Regulation No 2517/74 of the Commission, the latter regulation is to be regarded as valid and binding in relation to private storage contracts entered into before its entry into force.

16. The system of aid for the private storage of butter provided for by Article 6 (2) of Regulation No 804/68 of the Council of 27 June 1968 is one of the intervention measures introduced by that regulation in order to attain the objectives of the Common Agricultural Policy which are referred to in Article 39 of the Treaty.

17. The sixth and the last recitals in the preamble to Regulation No 985/68 of the Council of 15 July 1968 (Official Journal, English Special Edition 1968 (I), p. 256) state that such measures must take account of the development of the market situation and, in the case of private storage in particular, must contribute to the attainment of a balanced market.

18. To that end, Article 10 of the regulation provides that the amount of private storage aid may be altered if, at the time of removal from store, the state of the market has developed unfavourably under conditions which could not be foreseen.

19. Like that provision, the first version of Article 29 of Regulation No 685/69 of the Commission provided that, Should the buying-in price for butter decrease …, the aid specified in Article 24 shall be increased by an amount equal to that decrease, in respect of quantities of butter covered by a contract and taken into store before the date on which the change in the buying-in price became effective.

20. Regulations Nos 880/69 (Official Journal, English Special Edition 1969 (I), p. 218), 1064/69 (Official Journal, English Special Edition 1969 (I), p. 235) and 603/70 (Official Journal, English Special Edition 1970 (I), p. 169) of the Commission supplemented the system thus introduced by providing that the amount of private storage aid may also be altered if the buying-in price for butter applied by the intervention agencies should increase.

21. Those rules are the result of the Commission's concern to ensure that the implementation of the arrangements for aid for private storage of butter should take account of the development of the market, so as to ensure that, as intended by the basic Regulation No 804/68, the amount of aid granted should correspond to the level of actual prices at the end of the period of storage.

22. Such an objective would not be attained if a change in the buying-in price were to result in a loss or, conversely, in an unjustified profit for a trader removing goods from storage by comparison in particular with traders who had sold into intervention in the same marketing year.

23. Treating a change in the buying-in price expressed in national currency in the same way as a change in that price expressed in units of account, Regulation No 2517/74 merely supplements those rules on the adjustment of private storage aid.

24. Since every decrease or increase in the buying-in price, whatever its origin, is reflected in the market price, particularly in the case of a market with a surplus such as the market in milk products, such treatment in fact allows the amount of private storage aid to be adjusted to the real and justified needs of storers.

25. The plaintiff in the main action claims that Regulation No 2517/74 interferes with its rights under private storage contracts entered into before its entry into force with the competent national intervention agency, and is therefore contrary to the principle of respect for vested rights.

26. The mere fact of entering into private storage contracts as referred to in Article 9 of Regulation No 985/68 of the Council, and the placing of goods in private storage cannot in themselves suffice to confer any right to payment of a specific amount of aid.

27. The person concerned acquires such a right only if the quantities of butter covered by the storage contracts have remained in storage for a specified minimum period, in accordance with the detailed rules laid down by Regulation No 685/69, and if they have been taken out of store in accordance with any conditions laid down in those contracts, which did not occur in this instance.

28. Moreover, on the grounds of public interest mentioned above, the grant of aid for private storage of butter is subject at all times to the provisions of the Community rules relating thereto.

29. Hence, the complaint of infringement of vested rights and also that of failure to have regard to legitimate expectation cannot be upheld in the present case, and it is to be concluded that Regulation No 2517/74 of the Commission applies to storage contracts entered into before the entry into force of Regulation No 2498/74 of the Council, in respect of quantities of butter not yet removed in the proper manner from storage on that date, namely 7 October 1974.

30. The plaintiff in the main action also claims that the Commission was not competent to enact the rules at issue, as only the Council had the power, under Article 6 (6) of Regulation No 804/68, to alter the amount of private storage aid in response to a change in the representative rate of the Irish green pound.

31. In that connexion, the plaintiff in the main action points out that it was by a regulation of the Council (Regulation No 3141/73, Official Journal 1973, L 321, p. 1) that in November 1973 the Netherlands were authorized to grant for stocks of butter and of cream, which at the date of the decision by the Netherlands authorities to revalue the guilder by 5 % were subject to storage contracts, a special aid intended to counteract the loss of value which resulted from the application of the raised agricultural exchange rate for the guilder.

32. According to Article 6 (7) of Regulation No 804/68, Detailed rules for the application of this article, and in particular the amount of aid for private storage, shall be adopted in accordance with the procedure laid down in Article 30.

33. Characterized by the presence of the Management Committee for Milk and Milk Products, that procedure confers rule-making powers on the Commission which enable it to adopt legislative measures in such fields as the arrangements for aid for private storage of butter.

34. Since Regulation No 2517/74 relates precisely to those arrangements, the complaint of lack of competence raised in the present case is without any legal foundation.

35. Finally, the plaintiff in the main action complains that there is no adequate statement of the reasons on which Regulation No 2517/74 is based.

36. The reasons on which a piece of legislation is based may appear not only from its own wording, but also from the whole body of the legal rules governing the field under consideration.

37. Situated in the context of the rules governing intervention arrangements laid down by Regulations No 804/68 and No 985/68 of the Council, and more particularly in that of private storage aid, Regulation No 2517/74 makes it possible to discern the reasons justifying the addition of the last subparagraph to Article 29 of Regulation No 685/69.

38. For those reasons, the appropriate answer is that consideration of the third question raised has disclosed no factor of such a kind as to affect the validity of Regulation No 2517/74 of the Commission.

39. In view of this answer, there is no need to consider the fourth question raised.

40. The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable.

41. As these proceedings are, in so far as the parties to the main action are concerned, a step in the action pending before the national court, costs are matter for that court.

On those grounds, THE COURT (First Chamber) in answer to the questions referred to it by the High Court of Ireland by an order of that court dated 13 July 1977, hereby rules:

1 Regulation No 2498/74 of the Council of 2 October 1974 brought about an increase in the buying-in price for butter expressed in Irish pounds, by virtue of the provisions of Article 29 of Regulation No 685/69 of the Commission of 14 April 1969, as supplemented by Regulation No 2517/74 of the Commission of 3 October 1974.

2 Consideration of the third questions raised has disclosed no factor of such a kind as to affect the validity of Regulation No 2517/74 of the Commission.

3 Regulation No 2517/74 of the Commission applies to storage contracts entered into before the entry into force of Regulation No 2498/74 of the Council, in respect of quantities of butter not yet removed in the proper manner from storage on that date, namely 7 October 1974.