JUDGMENT OF 5. 12. 1979 — JOINED CASES 116 AND 124/77 AMYLUM v COUNCIL AND COMMISSION
In Joined Cases 116/77 and 124/77,
THE COURT, composed of: H. Kutscher, President, A. O'Keeffe and A. Touffait (Presidents of Chambers), J. Menens de Wilmars, Lord Mackenzie Stuart, G. Bosco and T. Koopmans, Judges, Advocate General: G. Reischl Registrar: A. Van Houtte
gives the following
JUDGMENT
Facts and Issues
I — Facts and procedure
1. The product at issue
2. Community legislation
3. The applications
(a) In Cases 116/77 and 143/77
(b) In Case 124/77
II — Conclusions of the parties
1. In Case 116/77
2. In Case 124/77
III — Submissions and arguments of the parties
A — In Case 116/77
1. Violation of the principle of non-discrimination
2. The discrimination against isoglucose producers as compared with sugar producers is contrary to the objectives set out in Article 39 of the Treaty
3. Infringement of the right to the free exercise of an industrial activity
4. Violation of the principle of proportionality
— Assessment of the damage
— Causal connexion between the wrongful legislation and the damage suffered
Facts
Economic context of the dispute
The legislative context
Law
The admissibility of the application
1. Lack of certainty of the damage alleged
2. Lack of directness of the damage
The substance of the question
1. Disregard of the objectives laid down in Article 39 (1) of the Treaty
2. Violation of the fundamental right of freedom to pursue an economic activity
3. Violation of the principle of nondiscrimination embodied in the second subparagraph of Article 40 (3) of the Treaty
4. Violation of the principle of proportionality
B — In Case 124/77
C — Defence of the Council in both cases
D — The replies in both Cases
— Case 116/77
Admissibility of the application
(a) Certainty of the damage alleged
(b) Directness of damage alleged
(c) Special character of the damage alleged
The merits of the application
1. Disregard of the objectives laid down in Article 39 (1) of the Treaty
2. Violation of the right of freedom to pursue a business activity
3. Violation of the principle of non-discrimination
4. Violation of the principle of proportionality
— Case 124/77
Facts
1. Isoglucose
(a) The role of isoglucose and the potential market for the product
(b) Production costs of isoglucose
2. Sugar
3. Alleged justification for the levy on the production of isoglucose
Law
1. The principle of proportionality
2. Objectives of the common agricultural policy
3. Damages
E — The Council's rejoinder relating to Joined Cases 116/77, 124/77 and 143/77
— Causal nexus
— Serious breach of a superior rule of law
1. Potential production of isoglucose and the extent to which that product may he substituted for sugar
2. The question of acquired rights to continuance of regulations
3. Infringement of Article 39 of the Treaty
4. The complaints of discrimination, disproportionality and misuse of powers
6. Violation of legal certainty by the absence of transitional measures
F — The Commission's rejoinder relating to the three cases
— Facts
1. Extent to which isoglucose may be substituted for sugar
2. Production costs
3. Raw materials
— Law
1. Violation of the principle of nondiscrimination
2. Violation of the principle of proportionality
IV — Questions put by the Court
First question (to the Council and the Commission):
The Council's answer
The Commission's answer
Second question (to the Council and the Commission):
The Council's answer
The Commission's answer
Third question (to the Council):
The Council's answer
Request for additional information addressed to the Commission
The Commission's answers
Points 1 and 3
Point 2
Point 4
Supplementary question put to the Commission
The Commission's answer
V — Further procedure and related events
A — Oral procedure
B — Requests submitted after the closure of the oral procedure
C — The Court's judgment of 25 October 1978 in Joined Cases 103 and 145/77
D — Resumption of the written procedure in Joined Cases 116, 124 and 143/77 and disjoinder of Case 143/77
E — Re-opening of the oral procedure
VI — Conclusions of the parties in Case 116/77
VII — Summary of the observations of the parties
A — In Case 116/77
1. The damage
2. The illegality of the act giving rise to the damage
(1) The breach of a superior rule of law for the protection of the individual
(2) The sufficiently serious nature of the breach of the superior rule of law
3. Abnormal damage
4. The causal connexion
5. The damage suffered by the applicant (Annex I to its observations)
(1) Loss of direct profit margin by reason of the replacement of sales of isoglucose by sales of alternative products
(2) Loss of margin owing to the reduction in grinding
— Commission's observations
1. Act giving rise to the damage
(a) The behaviour of the Community legislature
(b) Nature of the damage
2. The damage and the causal connexion
B — In Case 124/77
— Applicant's observations
1. The losses
(a) Lost factory production
(b) Lower alternative return
(c) Starch stockholding costs
(d) Higher unit cost owing to reduced isoglucose production
(e) Subsequent alternative investments
(f) Additional bank interest
(g) Loss of goodwill
(h) Improved purchasing terms
— Summary
2. The causal connexion between those losses and the actions of the Community
3. Liability of the Community
(a) Character of the infringement
(b) Effects of the infringement
4. Conclusion
— Observations of the Commission
1. Liability
2. Causal connexion
3. Losses
C — Observations of the Council relating to both cases
1. Introduction
2. Manifest and grave disregard of the limits on the exercise of powers.
As to Point (i)
As to Point (ii)
Economic impact of the levy of 5 units of account
3. Causal connexion
4. Alleged damage
VIII — Request from the Court for information from the applicant Tunnel Refineries Ltd. and the latter's reply
Answer
Answer
Answer
Answer
Answer
IX — Oral procedure
Decision
Costs
I —. Facts and procedure
1. The product at issue
2. Community legislation
3. The applications
(a). In Cases 116/77 and 143/77
(b). In Case 124/77
II —. Conclusions of the parties
1. In Case 116/77
2. In Case 124/77
III —. Submissions and arguments of the parties
A —. In Case 116/77
1. Violation of the principle of non-discrimination
(a). The production levy on sugar is only on such quantities as are included Quota B, that is such quantities exceed the basic quota (Quota A) of the undertaking concerned but do not exceed the maximum quota (Quota A Quota B) of that undertaking (Articles 24 and 25 of Regulation No 3330/74). The maximum quota amounts to 135 % of the basic quota (Article 5 of Council Regulation (EEC) No 1112/77 of 17 May 1977, Official Journal 1977, L 134, p. 9). It follows that the levy is due at most only on 35/135, or slightly less than 26 %, of the total production within the maximum quota.
(b). Under Article 4 (2) of Council Regulation No 1113/77 of 17 May 1977 (Official Journal 1977, L 134, p. 11) the minimum price for beet outside the basic quotas was fixed at 70 % of the minimum price for beet. If the value of the beet is expressed in terms of the value of the sugar obtained from it, the result is a 60 % reduction in the amount of the production levy.
(c). Within the limit of the maximum quota, a sugar manufacturer is guaranteed disposal of his goods at the intervention price. No similar guarantee exists for isoglucose.
2. The discrimination against isoglucose producers as compared with sugar producers is contrary to the objectives set out in Article 39 of the Treaty
(a). The effect of such discrimination is not to increase the productivity of agriculture by fostering technical progress. Quite on the contrary, the technological advance achieved by the isoglucose producers risks being lost for ever if those undertakings have to cease their production of isoglucose.
(b). The tax burden imposed does not contribute to improving the standard of living of the agricultural population. In fact, the applicant has always striven to produce isoglucose from Community cereals to the extent to which they were available. Furthermore, if Regulation No 1111/77 indirectly protects sugar beet growers, it is important to point out that such protection is afforded at the expense of Community producers of wheat and maize.
(c). The discrimination to which isoglucose is subject runs counter to the objective of stabilization of markets. In fact, isoglucose manufacturers contribute to the stabilization of markets as they shelter the markets from price fluctuations which might result from circumstances affecting the production of the raw materials used in the manufacture of sugar, such as a bad harvest or a natural disaster.
(d). The discrimination against isoglucose also hinders the pursuit of the objective of ensuring the availability of supplies, as the isoglucose producers ensure greater diversification, and hence greater security, of supplies.
(e). The isoglucose levy increases the production cost of that product, to the detriment of the European consumer.
3. Infringement of the right to the free exercise of an industrial activity
4. Violation of the principle of proportionality
—. Assessment of the damage
—. Causal connexion between the wrongful legislation and the damage suffered
(i). The quota system consists on the one hand of a form of support for sugar producers situated in the regions least suited to the cultivation of sugar beet (A Quota) and on the other hand of a means of encouraging regional specialization through the B Quota which enables the more competitive Community producers to increase their production beyond the basic quota under price conditions less favourable than the basic price. If such a system of quotas had not been introduced to limit the guarantee of prices and disposal — with all its consequences on production — it is generally accepted that sugar prices on the Community market would have been 15 % lower than the prices which have been fixed since the existence of the common organization. The Commission contends that this difference of 15 % between the common prices which have been able to prevail owing to the quota system and the free market price which would have prevailed in the absence of the said system is strictly speaking the economic advantage which sugar producers enjoy in return for the limitation on the guarantee of prices and disposal which has been imposed on their production.
(ii). Being a function of the costs resulting for the Community from sugar surpluses on the market, the production levy has the role of discouraging production of B sugar (for the less efficient producers) and ultimately of controlling Community sugar production.
1. Lack of certainty of the damage alleged
2. Lack of directness of the damage
1. Disregard of the objectives laid down in Article 39 (1) of the Treaty
2. Violation of the fundamental right of freedom to pursue an economic activity
3. Violation of the principle of nondiscrimination embodied in the second subparagraph of Article 40 (3) of the Treaty
4. Violation of the principle of proportionality
B —. In Case 124/77
(1). the costs of writing off plant and of convening the remainder of the plant to other uses;
(2). the losses on production of isoglucose for the year 1977/78 and loss of profit thereafter.
C —. Defence of the Council in both cases
D —. The replies in both Cases
—. Case 116/77
(a). Certainty of the damage alleged
(b). Directness of damage alleged
(c). Special character of the damage alleged
1. Disregard of the objectives laid down in Article 39 (1) of the Treaty
2. Violation of the right of freedom to pursue a business activity
3. Violation of the principle of non-discrimination
4. Violation of the principle of proportionality
—. Case 124/77
1. Isoglucose
(a). The role of isoglucose and the potential market for the product
(b). Production costs of isoglucose
2. Sugar
3. Alleged justification for the levy on the production of isoglucose
1. The principle of proportionality
2. Objectives of the common agricultural policy
3. Damages
E —. The Council's rejoinder relating to Joined Cases 116/77, 124/77 and 143/77
—. Causal nexus
—. Serious breach of a superior rule of law
1. Potential production of isoglucose and the extent to which that product may he substituted for sugar
2. The question of acquired rights to continuance of regulations
3. Infringement of Article 39 of the Treaty
4. The complaints of discrimination, disproportionality and misuse of powers
5. The Council considers that it has said enough on the system of Regulation No 1111/77 to dispense it from making further justification of having violated freedom of trade and industry, or even basic liberties.
6. Violation of legal certainty by the absence of transitional measures
F —. The Commission's rejoinder relating to the three cases
—. Facts
1. Extent to which isoglucose may be substituted for sugar
2. Production costs
3. Raw materials
—. Law
1. Violation of the principle of nondiscrimination
2. Violation of the principle of proportionality
IV —. Questions put by the Court
(a). The Council and the Commission are asked to produce the figures and calculations on which the rate of the production levy for isoglucose was initially proposed by the Commission and subsequently fixed by the Council.
(b). The Council and the Commission are asked to produce the information available to them at the material times as regards the capacity for isoglucose to be used as a substitute for sugar and the future production possibilities of isoglucose.
(a). The Commission states that its examination of the rate of the production levy for isoglucose provided in Regulation No 1111/77 was not based on specific calculations. The Commission approached the question in the following manner: isoglucose being a product which could be substituted for liquid sugar, it was appropriate to include it in the management of the sugar market. Given the existing forecasts of the situation of the sugar market in the Community and of the costs in the form of refunds following from exports, the Commission proposed that the production of isoglucose should be subjected to the same levy system as that existing for the production of sugar, which had the object of causing producers to share to a certain extent in the financial losses of the Community resulting from the putting of sugar on to the market. The parallelism referred to in the Commission's proposal between the rate of the levy for isoglucose and that for sugar can be explained, then, by this decision to treat in an identical fashion two competing products which were interchangeable in certain of their applications.
(b). In appendices to its answer the Commission submits the relevant information in its possession at the time of the preparation of Regulation No 1111/77 as regards the capacity for isoglucose to be used as a substitute for sugar and the future production possibilities of isoglucose.
(i). Example: Regulation No 1696/71 of 26 July 1971 (Official Journal, English Special Edition 1971 (II), p. 634) on the common organization of the market hops (see in particular the third recital the preamble thereto). In fact, the smooth functioning of this market would have been jeopardized if broade speaking interchangeable products with hops, namely the essence and vegetable extract of hops had not been subject to the common organization in question. In order to establish a balance between hops and these two products, the Community authorities extended the common organization in question to these products and thus subjected their producers to the obligations flowing from this organization.
(ii). Another example: Regulation No 2783/75 of 29 October 1975 on the common system of trade for ovalbumin and lactalbumin (Official Journal L 282 of 1 November 1975) the first five recitals in the preamble to which show the absolute necessity of such links between products by reason of their competitive use, that is to say their interchangeability.
1. In the observations submitted by the Commission in Case 103/77 there is a reference to page 27 (French version) to a report which is being prepared on the competitive capacity of isoglucose as compared with sugar. If this investigation has already been concluded the Court would be obliged if the report could be made available to it.
2. In the reply in Case 116/77 there is a reference on page 7 (French version) to an investigation by the Commission's Directorate-General III into the costs of production of isoglucose. The Court would be glad to be informed of the results of this investigation.
3. In Case 124/77 there is a reference in the Commission's defence on page 27 (French version) to a report to be drawn up by experts on the production costs on isoglucose and sugar. If this report is yet in existence the Court would be glad to receive a copy.
4. The Commission is asked to provide detailed information with regard to the quantities of B and C sugar produced by the individual sugar producers during recent sugar marketing years (for example from 1974).
V —. Further procedure and related events
A —. Oral procedure
B —. Requests submitted after the closure of the oral procedure
C —. The Court's judgment of 25 October 1978 in Joined Cases 103 and 145/77
D —. Resumption of the written procedure in Joined Cases 116, 124 and 143/77 and disjoinder of Case 143/77
E —. Re-opening of the oral procedure
VI —. Conclusions of the parties in Case 116/77
VII —. Summary of the observations of the parties
A —. In Case 116/77
1. The damage
(a). Direct loss of profit as a result of the replacement of sales of isoglucose by alternative sales
(b). Interest on (a)
(c). Loss of profit arising from the reduction in milling
(d). Interest on (c)
(e). Securities paid to the Société Générale de Banque
(f). Expenses incurred by the applicant in defending its interests against the Belgian authorities
2. The illegality of the act giving rise to the damage
(1). The breach of a superior rule of law for the protection of the individual
(2). The sufficiently serious nature of the breach of the superior rule of law
(a). The applicant states that it shares the opinion expressed by Mr Advocate General Capotorti according to which the concept of serious breach is absorbed by that of the breach of a principle of Community law or simply becomes a superfluous adjunct since it has already been specified that liability presupposes the breach of a superior rule of law which confers personal rights on individuals (opinion in the Bayerische HNL Vermehrungsbetriebe case). The applicant has proved that the Community institutions have failed to observe a principle fundamental to the proper functioning of the Community so that it is necessary to conclude that it is therefore entitled to obtain compensation from the Community.
(b). However, in its opinion it may also be thought that the nature of a sufficiently serious breach attaches not to the nature and importance of the superior rule of law which has been breached but to the seriousness of the fault in the sense of the obvious and manifest nature thereof.
(c). In the HNL judgment, in order to arrive at an appreciation of the manifest and serious nature of the manner in which the institution concerned had exceeded its powers, the Court considers the harmful effects suffered by the applicant. Thus it stated that individuals may be required … to accept within reasonable limits certain harmful effects on their economic interests as a result of a legislative measure without being able to obtain compensation from public funds even if that measure has been declared null and void (paragraph 6).
3. Abnormal damage
4. The causal connexion
5. The damage suffered by the applicant (Annex I to its observations)
(1). Loss of direct profit margin by reason of the replacement of sales of isoglucose by sales of alternative products
(2). Loss of margin owing to the reduction in grinding
—. Commission's observations
1. Act giving rise to the damage
(a). The behaviour of the Community legislature
(b). Nature of the damage
2. The damage and the causal connexion
B —. In Case 124/77
—. Applicant's observations
1. The losses
(a). Lost factory production
(b). Lower alternative return
(c). Starch stockholding costs
(d). Higher unit cost owing to reduced isoglucose production
(e). Subsequent alternative investments
(f). Additional bank interest
(g). Loss of goodwill
(h). Improved purchasing terms
—. Summary
(a). Lost factory production:
(b). Lower alternative return:
(c). Starch stockholding costs:
(d). Higher unit costs:
(e). Subsequent alternative investments:
2. The causal connexion between those losses and the actions of the Community
3. Liability of the Community
(a). Character of the infringement
(b). Effects of the infringement
4. Conclusion
—. Observations of the Commission
1. Liability
2. Causal connexion
3. Losses
C —. Observations of the Council relating to both cases
1. Introduction
2. Manifest and grave disregard of the limits on the exercise of powers.
3. Causal connexion
4. Alleged damage
VIII. — Request from the Court for information from the applicant Tunnel Refineries Ltd. and the latter's reply
IX —. Oral procedure
1. The applicants in these cases are claiming that the European Economic Community, represented by the Council and the Commission, should be ordered to pay them compensation under the second paragraph of Article 215 of the EEC Treaty for the damage which they claim to have suffered as a result of the imposition of a production levy on isoglucose in pursuance of Council Regulation No 1111/77 of 17 May 1977 laying down common provisions for isoglucose (Official Journal L 134, p. 4).
2. It may be recalled that the following reasons were given in the seventh recital in the preamble to that regulation for the setting up of a production levy system for isoglucose :
3. According to the ninth recital, the aforesaid levy system is complementary to that established for sugar by Council Regulation No 3330/74 of 19 December 1974 on the common organization of the market in sugar (Official Journal 1974, L 359, p. 1) and the envisaged levy on the production of isoglucose is analogous to that provided for in Article 27 of Regulation No 3330/74, namely to the levy on a percentage of the production of sugar manufactured in excess of the basic quota.
4. The production levy system for isoglucose was established by Articles 8 and 9 of Regulation No 1111/77 and applied to the 1977/78 and 1978/79 sugar years. Article 9 (1) of the regulation provided that Member States were to charge a production levy on manufacturers of isoglucose and the first subparagraph of Article 9 (2) provided that the amount of the levy per 100 kg of dry matter should be equal to the amount of the production levy provided for in Article 27 of Regulation No 3330/74 for the same period to which the latter amount applied. However, under the second subparagraph of Article 9 (2), for the period from 1 July 1977 to 30 June 1978 the amount of the levy referred to in paragraph (1) might not exceed the amount of five units of account per 100 kg of dry matter.
5. In its judgment of 25 October 1978 given in answer to a reference for a preliminary ruling from the High Court of Justice, Queen's Bench Division, Commercial Court, in Joined Cases 103 and 145/77, Royal Scholten-Honig (Holdings) Limited v Intervention Board for Agricultural Produce; Tunnel Refineries Limited v Intervention Board for Agriculural Produce ([1978] ECR 2037), the Court ruled that Regulation No 1111/77 was invalid to the extent to which Articles 8 and 9 thereof imposed a production levy on isoglucose of five units of account per 100 kg of dry matter for the period corresponding to the sugar marketing year 1977/78. The Court had found that the provisions of that regulation establishing the production levy system for isoglucose offended against the general principle of equality of which the prohibition on discrimination set out in Article 40 (3) of the Treaty was a specific expression. However, it had added that its answer would leave the Council free to take any necessary measures compatible with Community law for ensuring the proper functioning of the market in sweeteners.
6. Following that judgment the Commission, by letter dated 8 January 1979, informed the Member States that, pending measures to be adopted by the Council to ensure the proper functioning of the market in sweeteners, it was appropriate to suspend all collections of the isoglucose production levy and that, similarly, the establishment, accounting and allocation to own resources of the amounts concerned should be provisionally suspended by Member States.
7. On 25 June 1979 the Council adopted Regulation No 1293/79 (Official Journal 1979, L 162, p. 10) amending Regulation No 1111/77 in the light of the judgment of the Court of 25 October 1978. Since the most appropriate means for avoiding inequality of treatment between producers of sugar and producers of isoglucose was to subject isoglucose production to rules analogous to those applying to sugar production until 30 June 1980, Regulation No 1293/79 in particular established, on a transitional basis until that date, a temporary system of production quotas for isoglucose. It was also provided that for the quantity of isoglucose produced which exceeded the basic quote without exceeding the maximum quota Member States were to charge a production levy on the isoglucose producer concerned, the amount of which was to be equal to the share of the sugar production levy as fixed for the 1979/80 sugar year by virtue of Article 28 of Regulation No 3330/74, borne by the sugar manufacturers. As regards the production levy established by Regulation No 1111/77 and declared invalid by the above-mentioned judgment, it was abolished by Article 2 (1) of Regulation No 1293/79 with effect from 1 July 1977.
8. In the course of the oral procedure in these cases the applicant Tunnel Refineries Limited (hereinafter referred to as Tunnel), stated that it had not paid the isoglucose production levy established by Regulation 1111/77. In fact, as soon as the levy was established Tunnel took immediate steps to contest the legality of the levy before the High Court and informed the national intervention agency, which refrained from collecting the until the outcome of the proceedings instituted by Tunnel. The applicant G. R. Amylum N. V. (hereinafter referred to as Amylum) stated, for its part, that it refused to pay the levy to the Belgian intervention agency and was sued for payment by the agency. Having regard to the proceeding pending before the Court in Joined Cases 103 and 145/77, an arrangement was arrived at between Amylum and the intervention agency under which Amylum, to guarantee payment of the levy, provided a bank guarantee. The intervention agency for its part desisted from its active pursuit of the action for payment which had. been undertaken before the national court and withdrew its action after delivery of the Court judgment of 25 October 1978 in the aforementioned joined cases.
9. Thus the applicants are not claiming from the national authorities reimbursement of the production levies overpaid but are seeking to obtain compensation from the Community for losses resulting in particular from the reduction in sales of isoglucose and from operating deficits and other losses which they claim to have suffered as a result of the introduction of the levy of five units of account per 100 kg of dry matter laid down by Regulation No 1111/77 and declared invalid by the Court in its judgment of 25 October 1978.
10. According to Amylum the damage caused to it by the entry into force of Regulation No 1111/77 consists, for the most part, on the one hand in the reduction in its profit margin resulting from the replacement of sales of isoglucose by alternative sales of starch and glucose and, on the other hand, in the loss of its profit margin resulting from the reduction in grinding during the early months following the establishment of the levy, a step made necessary by the absence during that period of outlets for the alternative products. Amylum is also claiming the cost of the bank guarantee referred to above and the expenditure in which it claims to have been involved in the defence of its interests before the Belgian authorities.
11. According to Tunnel the damage for which it is claiming compensation and which is attributable to the isoglucose production levy established by Regulation No 1111/77 consists in the loss of production of its factory, the loss of profits resulting from the production of dry starch instead of isoglucose, additional costs for storage and handling of starch as well as losses incurred by reason, on the one hand, of higher unit costs in its undertaking due to reduced isoglucose production and, on the other hand, of supplementary investments effected to increase production of substitute products.
12. Since the Court has already established in its judgment of 25 October 1978 that the imposition of an isoglucose production levy of five units of account per 100 kg of dry matter was incompatible with the principle of equality, the first question which arises in these cases is whether that illegality is such as to involve the Community in liability under the second paragraph of Article 215 of the Treaty.
13. A finding that a legal situation resulting from legislative measures by the Community is illegal is insufficient by itself to involve it in liability. The Court has already stated this in its judgment of 25 May 1978 in Joined Cases 83/76 and Others, Bayerische HNL & Others v Council and Commission ([1978] ECR 1209). In this connexion the Court referred to its consistent case-law in accordance with which the Community does not incur liability on account of a legislative measure which involves choices of economic policy unless a sufficiently serious breach of a superior rule of law for the protection of the individual has occurred. Having regard to the principles in the legal systems of the Member States, governing the liability of public authorities for damage caused to individuals by legislative measures, the Court has stated that in the context of Community legislation in which one of the chief features is the exercise of a wide discretion essential for the implementation of the common agricultural policy, the liability of the Community can arise only exceptionally in cases in which the institution concerned has manifestly and gravely disregarded the limits on the exercise of its powers.
14. This is confirmed in particular by the fact that, even though an action for damages under Articles 178 and 215 of the Treaty constitutes an independent action, it must nevertheless be assessed having regard to the whole of the system of legal protection of individuals set up by the Treaty. If an individual takes the view that he is injured by a Community legislative measure which he regards as illegal he has the opportunity, when the implementation of the measure is entrusted to national authorities, to contest the validity of the measure, at the time of its implementation, before a national court in an action against the national authority. Such a court may, or even must, in pursuance of Article 177, refer to the Court of Justice a question on the validity of the Community measure in question. The existence of such an action is by itself of such a nature as to ensure the efficient protection of the individuals concerned.
15. These considerations are of importance where, as in these cases, the Court, within the framework of a reference for a preliminary ruling, has declared a production levy to be illegal and where the competent institution, following that finding, has abolished the levy concerned with retroactive effect.
16. It is appropriate to inquire in the light of these considerations whether, in the circumstances of these cases, there has been, on the part of the Council and the Commission, a grave and manifest disregard of the limits which they are required to observe in exercising their discretion within the framework of the common agricultural policy.
17. In this respect it must be recalled that the Court did not declare invalid any isoglucose production levy but only the method of calculation adopted and the fact that the levy applied to the whole of the isoglucose production. Having regard to the fact that the production of isoglucose was playing a part in increasing sugar surpluses it was permissible for the Council to impose restrictive measures on such production.
18. Although, in its judgment of 25 October 1978, giving a preliminary ruling within the framework of a consideration of the validity of Regulation No 1111/77, the Court found that the charges borne in pursuance of that regulation by isoglucose producers by way of production levy were manifestly unequal as compared with those imposed on sugar producers, it does not follow that, for the purposes of an assessment of the illegality of the measure in connexion with Article 215 of the Treaty, the Council has manifestly and gravely disregarded the limits on the exercise of its discretion.
19. In fact, even though the fixing of the isoglucose production levy at five units of account per 100 kg of dry matter was vitiated by errors, it must nevertheless be pointed out that, having regard to the fact that an appropriate levy was fully justified, these were not errors of such gravity that it may be said that the conduct of the defendant institutions in this respect was verging on the arbitrary and was thus of such a kind as to involve the Community in non-contractual liability.
20. It must also be recalled that Regulation No 1111/77 was adopted in particular to deal with an emergency situation characterized by growing surpluses of sugar and in circumstances which, in accordance with the principles set out in Article 39 of the Treaty permitted a certain preference in favour of sugar beet, Community production of which was in surplus, whilst Community production of maize was to a considerable extent deficient.
21. It follows from these considerations that the Council and the Commission did not disregard the limits which they were required to observe in the exercise of their discretion in the context of the common agricultural policy in such a serious manner as to incur the non-contractual liability of the Community.
22. The applications must be dismissed as unfounded.
23. Under Article 69 (2) of the Rules of Procedure, the unsuccessful party shall be ordered to pay the costs.
24. As the applicants have been unsuccessful they must be ordered to pay the costs.
On those grounds, THE COURT hereby:
1 Dismisses the applications;
2 Orders the applicants to pay the costs.
1 Since the investment was planned, the withdrawal of production restitution has reduced expected profit by £ 13.75 per tonne
3 Since the investment was planned, the withdrawal of production restitution has reduced expected profit by £13.75 per tonne.