JUDGMENT OF 17. 12. 1981 — JOINED CASES 197 TO 200, 243, 245 AND 247/80 LUDWIGSHAFENER WALZMÜHLE v COUNCIL AND COMMISSION

In Joined Cases 197 to 200, 243, 245 and 247/80,

THE COURT (Second Chamber) composed of: O. Due, President of Chamber, P. Pescatore and F. Grévisse, Judges, Advocate General: P. VerLoren van Themaat Registrar: H. A. Rühl, Principal Administrator

gives the following

JUDGMENT

Facts and Issues

I — Facts

Marketing year 1978/79

II — Written procedure

III — Conclusions of the parties

IV — Submissions and arguments of the parties in the course of the written procedure

A — Admissibility

B — Substance

Certain matters of fact

Legal considerations

1. Breach of superior rules of law

2. Liability of the Community

3. Damage

4. Causal relationship

V — Oral procedure

Decision

Admissibility

Objection as to the misuse of the procedure under the second paragraph of Article 73

Objection as to failure to exercise rights of action before the national courts

Objection regarding a document submitted by the intervening parties Soubry and Coppens

Substance

Objections regarding the fixing of the threshold price for durum wheat for the year 1979

Damage and causal relationship

Costs

I —. Facts

(a). The single intervention prices are to be fixed for the Ormes intervention centre, which is the centre of the Community area having the greatest surplus for all cereals, at the wholesale stage, goods delivered at warehouse, before unloading. They are valid for all Community intervention centres designated for each cereal.

(b). The reference price for common wheat of bread-making quality is to be calculated by adding to the common single intervention price for that product an amount reflecting the difference in return between the production of common wheat of minimum bread-making quality and that of common wheat of non-breadmaking quality.

(c). The target prices are to be fixed for Duisburg, which is the centre of the Community area having the greatest deficit for all cereals, at the wholesale stage, goods delivered at warehouse, before unloading.

II —. Written procedure

III —. Conclusions of the parties

IV —. Submissions and arguments of the parties in the course of the written procedure

A —. Admissibility

(a). The applicants have clearly regarded the Community threshold price system for durum wheat as illegal since the 1974/75 marketing year, their reasoning in respect of the 1979/80 marketing year being applicable to the prices for every year since 1973. According to the case-law of the Court, an action for damages which are foreseeable but not yet quantifiable is admissible as being a way to prevent even greater damage. The conduct of the applicants is in outright conflict with that case-law; it disregards the principle of legal certainty, by virtue of which commercial transactions which have been definitively concluded and carried out in accordance with the contested system must not be called in question.

(b). The Court has held, in particular in its judgments of 5 December 1979 (Joined Cases 116 and 124/77, Amylum. [1979] ECR 3497; Case 143/77, Scholten-Honig [1979] ECR 3583) that, 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 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; that court may, or even must, in pursuance of Article 177 of the Treaty, refer to the Court of Justice a question on the validity of the Community measure concerned. The procedure under Article 177 constitutes an effective means of protection for the individual; recourse to Article 215 is therefore not necessarily appropriate, or even available.

(c). The actions are artificial in character — the applicants have put together claims for damages for the purposes of these proceedings whereas in reality they do not seek compensation but a total change in the price policy for the durum wheat sector. They intend securing cancellation of certain prices fixed by regulation and even the fixing of new prices; they call in question the whole price policy applied by the Council and the Commission.

(d). The regulations mainly objected to by the applicants are those by which the Commission fixed the threshold prices for common wheat and durum wheat. Logically therefore the action for damages should have been brought only against the Commission; at the very least, the applicants should have stated the reasons for which their actions are brought also against the Council.

(e). The applicants are attemping, by means of Article 215 of the EEC Treaty, to secure a right of action not conferred on them by Article 173. An action for damages instituted in such circumstances is inadmissible.

(a). The true object of the actions is to change the ratio between the threshold prices of common wheat and durum wheat, which is regarded as incorrect. The applicants do not seriously seek to obtain from the Community compensation for any damage; in reality they seek only to bring pressure to bear on the Community to induce it to change the existing provisions. They are thus effectively committing an abuse of legal process.

(b). Although such a course was open to them, the applicants did not attack the decisions on levies adopted by the national authorities on the basis of the threshold price of the durum wheat fixed by the Community, which affected them directly. By availing themselves of the procedure under Article 177 of the EEC Treaty, they could have brought about a review of the compatibility of the threshold price for durum wheat with the superior rules of Community law; they could even, had their argument been upheld, have prevented the occurrence of the damage which they claim to have suffered.

(c). According to the case-law of the Court, it is not possible to claim directly from the Community reimbursement of charges which have been collected by national authorities on the basis of Community regulations whose applicability is contested. That, however, is the aim of these actions, since the applicants have submitted their claims merely in the guise of an action for compensation whereas in fact, albeit indirectly, they are prosecuting an action for reimbursement.

(a). The applications are genuinely intended to secure rectification of an incorrect ratio between the threshold price of common wheat and that of durum wheat in the Community; the applicants are not however to be reproached for hoping that, in addition to compensation, by the award of damages, for loss suffered in the past, the loss should not be repeated in the future. Future rectification of the incorrect price ratio is a logical consequence of a judgment ordering the Community to pay damages.

(b). The loss for which the applicants seek compensation was not incurred by reason of a decision of national authorities but exclusively by measures adopted by Community institutions, namely the incorrect fixing by the Council of the target price for durum wheat and the threshold price which the Commission based on it. When fixing the levies, the national authorities could not derogate from those measures.

(c). In its judgment of 4 October 1979 (the so-called quellmehl and maize gritz cases [1979] ECR 2955, 3017, 3045 and 3091) the Court held that the applicants' claims did not constitute claims for the payment of amounts due but claims for compensation for the loss resulting from an unlawful act and that a national court could not have heard an action for payment, in the absence of any provision in Community regulations authorizing national agencies to pay the amounts claimed. The same applies to the present cases.

(d). The applicants did not in fact have an opportunity to contest before their national courts the decisions on the levies based on the Community regulations fixing the threshold price of durum wheat. The applicant milling companies do not themselves import the durum wheat which they process; the applicant in Case 247/80, which uses durum wheat meal for the manufacture of pasta products, likewise does not import durum wheat.

B —. Substance

1. Breach of superior rules of law

(a). The basic Regulation No 2727/75 provides that the ratio existing normally on the world market between durum wheat and common wheat prices should be respected so far as possible in the Community because of the interchangeability of these two products.

(b). The fixing of the threshold price for durum wheat at an excessive level involves a breach of the prohibition of discrimination contained in the second subparagraph of Article 40 (3) of the Treaty.

(c). The fixing of the threshold price for durum wheat at an excessive level is in breach of the principles laid down with regard to the fixing of prices in the third subparagraph of Article 40 (3) of the EEC Treaty.

(d). The contested fixing of the threshold price for durum wheat also breaches the principle of proportionality recognized by the case-law of the Court.

(a). The applicants' decision to attack the threshold prices for durum wheat and common wheat on the basis of the price levels for the 1978/79 and 1979/80 marketing years is totally arbitrary; the variance to which the applicants object was much greater during the 1974/75 marketing year and the difference between the two prices has gradually diminished.

(b). Any discrimination against the applicants in relation to the French or Italian durum wheat processing industry is not in any case attributable to the common organization of the market in the cereals sector, at least since the substantial change made to that organization in 1976, or to the rules relating to prices or aid for durum wheat for implementation thereof. The common organization of the market in cereals is based on two essential factors: the free movement of cereals and Community preference. The simultaneous application of those two principles must guarantee free access to all Community traders, on the same terms, both to durum wheat produced in the Community and to durum wheat imported from nonmember countries. If the millers in the north of the Community did not in fact have access to the cereals market of the south, that situation could only have arisen in consequence of the conduct of the producers of durum wheat, and not as a result of the common organization of the market; such conduct is contrary to the Community system and moreover constitutes infringement of the rules of the Treaty on competition.

(c). The Council's refusal to increase aid for durum wheat is justified by the case-law of the Court, according to which the use of Community aids is unlawful when it is not necessary for the attainment of the objectives laid down in Article 39 of the Treaty; this applies in the case of aid granted to all producers and for all qualities and quantities of products. The applicants do not demonstrate the economic justification for a reduction in the level of protection, entailing increased competition from durum wheat from nonmember countries, for the introduction of generalized aid or for a substantial reduction of the intervention price.

(a). Regulation No 2727/75 does not impose upon the Community institutions specific substantive criteria on the basis of which the various regulated prices must be fixed; in particular, it does not lay down any rule limiting the discretion of the legislature, by virtue of which the ratio between the threshold price of durum wheat and that of common wheat must correspond to the ratio between those two varieties of wheat on the world market.

(b). The ratio between the prices of durum wheat and common wheat is not a source of discrimination. It is the same in all Member States, including France and Italy; in view of the extensive import requirements of these two producer countries too, the effects of the price difference between durum wheat and common wheat are not fundamentally different from those found in the other Member States.

(c). The progressive reduction, since the 1975/76 cereal marketing year, in the variance between the price of durum wheat and that of common wheat was reasonable and rational, as also was the decision, in view of the differences between the cost prices of durum wheat and common wheat in the Community, not automatically to adopt the price ratio existing between those two varieties of wheat on the world market.

(d). The principle of proportionality, as a criterion for assessing legislative measures, does not preclude a power of discretion on the part of the legislature regarding the evaluation of objectives and the choice of means and procedures. In this case, the course of action followed by the Community institutions in fixing threshold prices for durum wheat, combined with a revised aid system, has been correct. Regionalization of the threshold price would have compromised the achievement of a single market, called in question the principle of free movement and involve a degree of partitioning of the national wheat markets. An increase in direct aid to producers would have involved an extra and disturbing burden upon the Community budget and have endangered the stability of the Community market in durum wheat; aids cannot, or can only with great difficulty, compensate for the disappearance or reduction of the protective function of the threshold price for durum wheat. The unfavourable effects of the aid system on the flexibility of the market have been known to the Court since the earlier cases brought before it.

(a). The production costs of durum wheat are undeniably 20 % higher than those of common wheat; on that basis alone, the determination of the world-market ratio as 110 : 100 is without any foundation.

(b). The very wording of the preamble to Regulation No 2727/75 clearly shows that respect for the ratio between the prices of durum wheat and common wheat on the world market is only a desirable condition and not an obligation on the competent Community institutions. Regulation No 2727/75 does not impose upon the Community legislature any rigid criteria or, still less, absolute rules of superior law, which must be respected when the various cereals prices are fixed; the Council is certainly under no obligation to bring the ratio between the Community threshold prices for durum wheat and common wheat, fixed by various supplementary Community regulations for each marketing year, totally into line with the fluctuating ratio, which is susceptible of manipulation, between the prices of those products on the world market or, alternatively, to ensure that Community durum wheat production is maintained by means of the grant of aids to producers. On the contrary, the Community legislature is invested with discretionary powers for the fixing of threshold and intervention prices.

(c). The aim of increasing Community production of durum wheat having been achieved, the Commission considered that it was appropriate to amend its policy by changing from generalized production aid for all Community growers to specialized aid for specified areas, within the framework of a true regional policy, and therefore to introduce territorially limited and selected aids constituting productivity aids. The considerable variance in the Community ratio between the prices of durum wheat and common wheat and that ratio on the world market is a consequence of the acute drop in prices recorded on the world market during the years 1973/74. Considerations of a financial nature precluded a reduction of the ratio of prices between common wheat and durum wheat achieved by reducing the price of durum wheat and still less one achieved by increasing production aid.

(d). In any event, it should be noted that Regulation No 2727/75 is manifestly devoid of any rules, and a fortiori of any superior rules of law, which protect durum wheat millers and manufacturers of pasta products as such; the fixing of threshold prices for durum wheat is designed, in the interests of the Common Market, to afford a minimum level of protection for producers.

(a). The applicants' arguments are, in their entirety, based on a false premise: the ratio between the prices of durum wheat and common wheat on the world market is not 110 : 100.

(b). The disputed provisions concerning the price of wheat do not infringe Article 40 of the Treaty; in particular they do not disregard the objective of stabilizing the markets. Such stabilization is inseparable from orientation of production. In that respect, it should be noted that Community policy with regard to durum wheat is intended to ensure the Community's self-sufficiency, that the production costs for durum wheat are considerably higher than those for common wheat and that it is therefore necessary to set a higher price for durum wheat in order to expand and maintain its production and that the prices on the world market fluctuate to a very great degree. The aim of the Common Agricultural Policy is to protect the Community market from such fluctuations; agricultural prices should not therefore reflect them.

(c). The difference between threshold prices and intervention prices is not intended solely to protect Community production but also to ensure free circulation of the products.

(d). Differential threshold prices detract from the principle of free movement of products within the Community and from the principle of Community preference.

2. Liability of the Community

3. Damage

(a). The applicants in Cases 197, 198, 199, 200, 243 and 245/80 consider that the damage they suffered in 1979 is a result of the difference between the correct threshold price and the excessively high threshold price fixed by the Community institutions; from that difference should be deducted the sums which the applicants were able to pass on to their purchasers by increasing the price of durum wheat meal produced by them.

(b). The applicant in Case 247/80 is of the opinion that the loss for which it should be compensated consists of the difference between, on the one hand, the correct price for durum wheat meal, which may be deducted from the correct threshold price for durum wheat, account being taken of the yield rate and of the processing costs, and, on the other hand, the actual prices of durum wheat meal which the applicant had to pay to the German durum wheat mills.

(c). All the applicants state that, according to the judgments of the Court of 4 October 1979 (Joined Cases 241, 242, 245 to 250/78 DGV and Others [1979] ECR 3017), a claim for interest in connection with non-contractual liability of the Community must be considered in the light of the principles common to the legal systems of the Member States; accordingly, a claim for interest is in general admissible. The obligation to pay interest arises on the date of the Court's judgment; the rate of interest which it is proper to apply is 6%.

4. Causal relationship

V —. Oral procedure

1. By applications received at the Court Registry on 7 October 1980, 30 October 1980, 5 November 1980 and 6 November 1980 respectively, the companies Ludwigshafener Walzmühle Erling KG, Park-Mühlen GmbH, Mühle Rüningen AG, Pfälzische Mühlenwerke GmbH, Kurt Kampffmeyer Mühlenvereinigung KG and Wilhelm Werhahn KG, durum wheat millers, and also the company Schwaben-Nudel-Werke B. Birkel Söhne GmbH & Co., a manufacturer of pasta products in the Federal Republic of Germany, brought actions pursuant to Article 178 and the second paragraph of Article 215 of the EEC Treaty seeking the award of the sums hereinafter specified as compensation for the damage caused them by the Council and the Commission as a result of the fixing of the threshold price for durum wheat imported from nonmember countries during 1979 by comparison with the price fixed for common wheat.

2. It appears from the file on the case that the measures which, according to the applicants, have given rise to the alleged damage are four regulations fixing the price of cereals for the 1978/79 and 1979/80 marketing years, namely:

3. The Council and the Commission, supported by the Italian Government, contest the admissibility of the actions on various grounds. In substance, they accuse the applicants of a misuse of procedure by reason of the fact that, on the one hand, they seek to evade, by means of actions for damages, the restrictive conditions applicable to actions by the individual in connection with the review, imposed by the second paragraph of Article 173 of the Treaty, of the legality of regulations and that, on the other hand, by bringing the matter before the Court by direct action they have failed to avail themselves of the rights of recourse open to them before their national courts.

4. As to this objection, it is sufficient to note that, in a consistent line of decisions, the Court has held that the action for damages under Article 178 and the second paragraph of Article 215 of the Treaty was established as an autonomous form of action with a particular purpose to fulfil within the system of actions and the exercise of it is subject to conditions imposed in view of the specific objective thereof. That form of action is different from an action for annulment in that it does not seek the cancellation of a specified measure but compensation for damage caused by the institutions in the exercise of their functions; the conditions for actions for damages are laid down with that objective in mind and accordingly are different form those for an action for annulment (see judgment of 2 July 1974 in Case 153/73 Holtz & Willemsen [1974] ECR 675, paragraphs 2 to 5 of the decision).

5. It follows from the foregoing that, in order to be successful, any party who chooses to pursue an action for damages is obliged to establish fulfilment of all the conditions which must be fulfilled, pursuant to the second paragraph of Article 215 of the Treaty, if the liability of the Community is to be incurred. The fact that some of those conditions may coincide with those applicable to an action for annulment is not therefore a sufficient reason to describe an action by a party in reliance upon Article 178 and the second paragraph of Article 215 as a misuse of procedure.

6. That objection must therefore be dismissed.

7. The defendant institutions draw attention, in the second place, to the fact that the applicants could have defended themselves against the alleged damage by bringing an action before the competent national courts in connection with the levies charged on durum wheat imported by them into the Community. It was in fact the collection of those levies, on the basis of the threshold price fixed by the Community, which gave rise to the financial burden in respect of which the applicants claim damages. Such an action, brought before, the national courts, could have led to a preliminary question under Article 177, thus enabling the Court of Justice to examine the validity of the regulations contested by the applicants.

8. It appears from the preliminary examination of the case that such a form of action was not open to the applicants before their national courts. It seems, in fact, from the statements of the applicants, which are not contested, that none of them actually imported the durum wheat themselves; the applicant companies operating durum wheat mills made use of importers who paid the levies; as regards Birkel, it is not contested that, as a manufacturer of pasta products, it obtained its raw material from the mills.

9. In the circumstances, the applicants were not in a position to bring an action before the national courts regarding the levies collected on the imports of durum wheat intended for them. Accordingly no objection of inadmissibility may be based on their failure to avail themselves of a form of action in the national courts which was not in fact open to them.

10. The second objection of inadmissibility must therefore also be dismissed.

11. The Council also alleges inadmissibility on the ground that the applicants have claimed damages only for 1979, stating that the amounts claimed constitute only a fraction of the damage actually suffered by them. Having regard to the possibility that the applicants were thus preparing to extend their claims at a later stage, particularly to periods before 1979, the Council takes the view that the applications are inadmissible in so far as they relate only to possible damages.

12. It does not seem necessary to examine this argument of the Council regarding the admissibility of the actions. The Council's objections in fact concern one of the substantive preconditions for liability on the part of the Community, namely the existence of damage. They will therefore be considered when the substance of the case is examined.

13. At the hearing, the Commission objected to production by the intervening parties Soubry and Coppens, as an annex to their statement as intervening parties, of a document entitled Report to the Council on durum wheat. According to the Commission, it is an internal document which was improperly obtained and should therefore be removed from the file on the case; in fact, that document is merely a draft report prepared by the officers of the Commission at that time and, ultimately, the Commission did not approve it; moreover it was never transmitted to the Council.

14. According to the intervening parties, the document was distributed at a meeting of the Advisory Committee on Cereals set up within the Commission, which includes the representatives of the various industrial and trade sectors involved. It came into the possession of the interveners through one of the participants at that meeting.

15. That explanation was contested by the Commission which stated that, at the meeting in question, the participants were given an oral report on the subject; the contested document had not at that time even been submitted to the Commission for examination and was not therefore distributed. The Commission further noted that the copy placed before the Court had no outer cover, which normally indicates the origin of the document and the date and type thereof. When questioned by the Court, the representative of the intervening parties was unable to specify the person by whom the document had been made available or to explain why it was incomplete.

16. The Court finds that there exists thus a doubt both as to the actual nature of the contested document and as to whether the interveners obtained it by proper means. In the circumstances, the document must be removed from the file, together with the quotations from it included in the intervening parties' statement.

17. Before examining the applicants' arguments, it is appropriate to indicate the principles which, according to the case-law of the Court, govern the non-contractual liability of the Community.

18. In its judgment of 28 April 1971 (Case 4/69 Lütticke [1971] ECR 325), which has since been confirmed on numerous occasions (see in particular the judgment of 2 July 1974, Holtz & Willemsen, cited above, paragraph 7 of the decision), the Court made clear that under the second paragraph of Article 215 and the general principles to which that provision refers, Community liability depends on the coincidence of a set of conditions as regards the unlawfulness of the acts alleged against the institutions, the fact of damage and the existence of a direct link in the chain of causality between the wrongful act and the damage complained of.

19. The measures which, according to the applicants, gave rise to the alleged damage are legislative measures. With regard to such measures, according to a similarly consistent series of decisions of the Court, the Community does not incur liability unless a sufficiently serious breach of a superior rule of law for the protection of the individual has occurred (judgment of 2 December 1971, Case 5/71 Zuckerfabrik Schöppenstedt[1971] ECR 975).

20. Regard must be had to these requirements when the actions are examined. Accordingly, it is appropriate to examine separately, on the one hand, the question whether the fixing, by measures adopted by the Council and the Commission, of the threshold price for durum wheat for the period in question is vitiated by illegality in the light of the criteria indicated above, and on the other hand, whether the applicants are able to prove damage causally related to the contested measures.

21. The applicants put forward with regard to this subject a number of economic and legal considerations intended to demonstrate that the Council and the Commission breached the rules of Community law in various ways by fixing the threshold price for durum wheat at the time in question on the basis of a comparison with the price of common wheat.

22. They state that, in the past, the import price for durum wheat was close to the price of common wheat until, in 1974, a considerable price rise on the world market led the Council to raise the threshold price for durum wheat considerably, the ratio between the price of common wheat and that of durum wheat being at that time 100 : 151.2. Despite the fact that the prices have since drawn closer on the world market, the ratio between them not exceeding approximately 100 : 110, the Council has reduced only very slowly the gap between the two prices which, at the time in question, was 100 : 138.5 in the Community. This disparity of prices gave rise, in the manufacture of pasta products, to a tendency to substitute common wheat for durum wheat, leading in consequence to a considerable reduction in the volume of production of durum wheat mills and a deterioration in the quality of pasta products, resulting in a weakening of the competitive position of the German manufacturers in the market. This tendency was accentuated by the fact that the German manufacturers encountered increasingly strong competition in their market from pasta manufacturers of other Member States, and in particular Italian manufacturers, whose production centres, being near to the growing areas of durum wheat in the Community were able to obtain the supplies at prices close to the intervention price, whereas the German manufacturers obtained supplies of durum wheat meal of exclusively American origin, imported at the threshold price.

23. From the legal point of view, the applicants rely upon four grounds, namely disregard of the price policy embodied in the basic Regulation (EEC) No 2727/75 of the Council of 29 October 1975 on the common organization of the market in cereals (Official Journal 1975, L 281, p. 1), breach of the principle of nondiscrimination embodied in the second subparagraph of Article 40 (3) of the Treaty, breach of the principles for the fixing of agricultural prices as laid down in the third subparagraph of Article 40 (3) and, finally, breach of the principle of proportionality.

24. In the first place, the applicants draw attention to the fact that, in the basic Regulation No 2727/75 the Council recognized, in the eighth recital in the preamble thereto, that it was necessary to respect so far as possible within the Community the ratio existing normally on the world market between durum wheat and common wheat prices, because of the interchangeability of those two products. That policy was indeed followed for a long period and it was only after the 1974 price rise caused by short-term economic factors, which in the meantime was reabsorbed on the world market, that the Council followed a new policy, consisting in maintaining an abnormal variance between the two prices in question, thus provoking a substitutional effect regarded as abnormal in the terms of the regulation. The applicants are of the view that the Council was obliged to make every effort to eliminate that abnormal variance.

25. According to the applicants, the Court recognized the justification of that reasoning in its judgment of 13 November 1973 (Joined Cases 63 to 69/72, Werhahn and Others [1973] ECR 1229), in which it stated:

26. What is required in this case, in accordance with the above statements of the Court, is to define the fair price ratio between durum wheat and common wheat; according to the principles recognized in the recitals in the preamble to the basic Regulation No 2727/75, that ratio should, as far as possible, be set at the level of the ratio ascertained on the world market.

27. In the second place, the applicants state that the fixing of the threshold price for durum wheat at an excessive level involves an infringement of the second subparagraph of Article 40 (3) of the Treaty, in the terms of which the common organization of the market shall exclude any discrimination between producers or consumers within the Community. By fixing the threshold price for durum wheat at an excessively high level, the Council has created such discrimination against millers and against manufacturers of pasta-products in the Member States which do not produce durum wheat; those producers have had to import all their durum wheat requirements from nonmember countries, whereas the millers of durum wheat and the manufacturers of pasta-products in the countries which grow that wheat, France and Italy, are able to obtain their raw material locally, at a considerably lower price.

28. In the third place, the applicants state that the fixing of the threshold price for durum wheat at an excessively high level breaches the principles governing the fixing of prices, as laid down in the third subparagraph of Article 40 (3) of the Treaty, in the terms of which in the common price policy shall be based on common criteria and uniform methods of calculation. They also refer, in that context, to Article 39 (1) (c), which states that the object of the common agricultural policy is, inter alia, to stabilize markets. Those provisions place an obligation on the Council to fix the prices in accordance with rational views and not to determine them in an arbitrary fashion on the basis of purely political considerations with the aim of favouring certain groups of producers within the Community at the expense of other groups, such as that which includes the applicants.

29. Finally, the applicants consider that the Council has breached the principle of proportionality, in so far as it had the opportunity, instead of fixing an artificially high threshold price, to attain its objective by other means which were less disadvantageous to the applicants, such as for example regionalization of threshold prices or indeed an extension of aid to producers in the Community, so as to diminish the effect on them of a reduction in the threshold price.

30. The Council and the Commission, supported by the Italian Government, emphasize in general the wide discretionary powers vested in the Community institutions in the matter of agricultural policy and adaptation of that policy to the circumstances, in the light of all the guidelines laid down in Article 39 of the Treaty.

31. In response to the first submission made by the applicants, the defendant institutions emphasize that there is a fundamental difference between the world market and the Community market, in so far as the world market is governed by the unrestricted interaction of supply and demand, whereas the Community market has a common organization which is intended to maintain price levels in conformity with the policy objectives laid down by the Community institutions within the framework of the Treaty. In this case, it is appropriate to have regard to the fact that the Community market has chronic overproduction of common wheat and that there is a shortfall of durum wheat. The policy followed by the institutions consists therefore in favouring development of durum wheat production, by an appropriate price policy, whilst maintaining the production of common wheat to a reasonable extent.

32. As regards the complaints of discrimination and infringement of the rules relating to the fixing of agricultural prices, laid down in the second and third subparagraphs of Article 40 (3), the defendant institutions draw attention to the fact that the fixing of cereal prices takes place within the context of free circulation both of raw materials and of secondary products and that therefore, from the Community point of view, there is nothing to prevent German producers from obtaining supplies in other Member States of the Community. They draw attention to the fact that neither the French market nor the Italian market is self-sufficient and that producers in those States must also, to a considerable extent, use durum wheat imported from nonmember countries, a circumstance which has given rise to a tendency in the producing States for the prices of the indigenous product to move towards the threshold price and not, as asserted by the applicants, towards the interventions price.

33. As regards the alleged breach of the principle of proportionality, the institutions draw attention to the fact that the options proposed by the applicants are impracticable; regionalization of threshold prices would be in direct conflict with unity of the Common Market, whereas extension of the aids system would impose new and intolerable burdens upon the Community budget.

34. Finally, the defendant institutions emphasize that the legal rules relied upon by the applicants are not in any case classifiable as superior rules of law for the protection of the individual, a condition imposed by the case-law of the Court in cases of actions for damages in respect of legislative measures adopted by the Community.

35. The French associations, intervening in support of the Council and the Commission, lay particular stress on the fact that the statements made by the applicants regarding price ratios on the world market are not based on correct information; the development of the world market is in fact influenced by a multiplicity of diverse factors, of a structural and conjunctural nature. In particular, they criticize applicants for choosing representative prices for common wheat and durum wheat arbitrarily with a view to arriving at the price ratio of 100 : 110 which they describe as justified.

36. The Court is of the opinion that the arguments expounded by the applicants are not of such a nature as to raise any doubt as to the lawfulness of the measures adopted by the Council and the Commission in respect of which the actions have been brought.

37. It should be remembered that, in determining their policy in this area, the competent Community institutions enjoy wide discretionary powers regarding not only establishment of the factual basis of their action but also definition of the objectives to be pursued, within the framework of the provisions of the Treaty, and the choice of the appropriate means of action.

38. As regards the applicants' first submission, it should be noted that the developments in the state of the world market and of the Community market provide no grounds for inferring that there is a manifest error in the assessment made by the Commission and the Council of, on the one hand, the relevant world-market data and, on the other, the production conditions peculiar to the Community market. In particular, there are no grounds for regarding as a constant factor the Court's finding in its judgment of 13 November 1973, regarding the comparative production costs of common wheat and durum wheat for the period under consideration.

39. As regards the economic objective pursued by the Council in fixing the variance between the threshold price for durum wheat and the price for common wheat, there is likewise nothing to indicate that the institutions have overstepped the limits of their discretionary powers in determining that variance, if it is borne in mind that there is chronic overproduction of common wheat and a need to stimulate Community production of durum wheat. This choice having been made by the Council, in the legitimate exercise of its powers of discretion, its repercussions must be accepted by the manufacturers of secondary products, as they must by the various groups of producers concerned.

40. The fact that before the changes in the world-market conditions occurred in 1974 the Council applied a different policy for a long period does not confer upon the producers and processing undertakings involved any entitlement to preservation of such advantages as the established policy may have allowed them; nor does that fact impose any limitation on the freedom of the Commission and the Council to adjust their policy in step with data reflecting the evolution of the market and with the objectives pursued. In this connection it is sufficient to refer to the judgments of 13 November 1973 (cited above, paragraph 12 of the decision) and 2 June 1976 (Joined Cases 56 to 60/74 Kampffineyer and Others [1976] ECR 711, paragraph 13 of the decision). In particular, the intention evinced in the eighth recital in the preamble to Regulation No 2727/75 is not to be regarded as the expression of a rule of law of which observance is therefore mandatory for the institutions.

41. With regard to the argument based on Article 39 (1) (c) of the Treaty, it should be pointed out in the first place that according to a consistent line of decisions of the Court, the institutions must reconcile the various objectives laid down by Article 39, a fact which precludes the isolation of any one of those objectives, such as the stabilization of certain situations which have become established, in such a way as to render impossible the realization of other objectives such as, in this case, the rational development of agricultural production and security of supplies, where, as in the case of durum wheat, there is a shortfall of the product concerned.

42. As regards the second and third submissions, relating to the principle of nondiscrimination and to rules for the formation of agricultural prices laid down in Article 40 (3), the arguments are unacceptable in the context of a common organization of the market based on freedom of trade within the framework of a common production-price system. That organization enables all users of durum wheat to obtain supplies on equal terms, in the case both of the raw material and of secondary products such as meal, subject to the Community preference which is reflected in the variance between the intervention price and the threshold price. It should be noted that the latter question is not contested in these proceedings.

43. The applicants' fourth submission, alleging disregard of the so-called principle of proportionality, is based on the fact that, in determining the means of regulating the market, the Council has chosen a method — the fixing of the price of durum wheat at the level stated — which has put them at an undue disadvantage.

44. It should be pointed out in this connection that, in itself, recourse to differentiation of the various prices administered by the Community seems to be a method particularly well-suited to the general machinery of the market organization and to the objective pursued in this case, namely development of durum wheat growing with a view to improving the structure of Community production as a whole. The defendant institutions have stated correctly that the courses of action advocated by the applicants are unacceptable, since one — namely differentiation of the threshold price as between the south and the north of the Community — is incompatible with unity of the market and the other — namely extension of aid for durum wheat growing — is contradictory in a market-economy system and, moreover, excessively onerous for everybody.

45. It is therefore appropriate to conclude that, far from having proved a serious breach of a superior rule of law for the protection of the individual, the applicants have not succeeded in demonstrating any unlawful act whatsoever on the part of the Council or the Commission.

46. The applicants claim the following sums from the Community by way of damages:

47. They calculate the damages claimed by multiplying the tonnages of meal sold to the manufacturers of pasta products by the difference between what they regard as the fair price for drum wheat and the import price resulting from application of the Community regulations, after deduction of the margin which they acknowledge having passed on to their purchasers. They emphasize that this calculation takes no account either of their loss of profit or of the decrease in their business.

48. The applicant Birkel makes a similar calculation, drawing attention also to the fact that it has not been in a position to pass on to the purchasers of its products that part of the price which exceeds the fair price.

49. The defendant institutions regard this method of calculation as unacceptable because it is based on a factor — the fair price of durum wheat — which is chosen arbitrarily by the applicants. Moreover, and this point has been developed in greater detail by the associations which intervened in their support, they deny the existence of any causal relation between the alleged damage and the fixing of the prices by the Council and the Commission. They state that the true cause of any losses suffered by the applicants is to be found in the fact that unlike other Member States, in particular France and Italy, whose legislation prohibits the use of common wheat for the manufacture of pastas (the so-called Law on purity requirements), such prohibition is unknown in the Federal Republic of Germany, so that the German manufacturers are free to substitute at will common wheat for durum wheat in the manufacture of pasta products. Since this substitution has the effect of lowering the quality of pasta products, as is recognized in a study produced by the applicants themselves, the effect of the absence of such legislation in the Federal Republic of Germany is to reduce the German industry's capability for competing with pasta products originating in countries where a Law on purity requirements exists.

50. The Court is of the opinion that the applicants have indeed failed to provide any convincing evidence as to the actual occurrence of the damage which they claim to have suffered. It is sufficient to state that the method of calculation adopted by them is based on one factor — the fair price of durum wheat — at which they have arrived on the basis of purely subjective economic considerations, glossing over the fact that they operate within an economic framework determined by a common organization of the market and not in the context of the world market. The calculations they have made on the basis of that initial factor moreover incorporate magnitudes which are dependent, for each of them, upon the individual conduct of their business, and as such cannot be verified.

51. As far as causality is concerned, the applicants have not succeeded in establishing the existence of a relationship between, on the one hand, the measures adopted by the Council and the Commission which, they allege, gave rise to the losses they have recorded and, on the other hand, the damage they claim to have suffered. Two observations are appropriate on this matter.

52. In the first place, the data furnished by the applicants themselves with a view to establishing that they effectively suffered damage show that the financial result they have obtained from their business is conditional upon a series of factors which depend on the way they conduct their industrial and commercial activity and which, apart from not being verifiable, as has just been stated, are not attributable, as such, to the Community.

53. Furthermore, it has become clear from the explanations given in response to questions put by the Court that the real cause of the difficulties suffered by the applicants is in the first place the absence of legislation in the Federal Republic of Germany requiring the use of only durum wheat in the manufacture of pasta products. It should be recalled that a directive to that effect was proposed to the Council by the Commission as early as 1968 but that the proposal was not acted upon (see Journal Officiel 1968, C 136, p. 16).

54. The adoption of a common rule of that kind by all the Member States would no doubt have ensured that all producers of durum wheat meal had a more steady outlet for their goods. In the Federal Republic of Germany and in other Member States where there is no such provision, substitution of a proportion of common wheat for durum wheat in the manufacture of pasta products, with the consequential reduction in the activity of durum wheat millers, is an unavoidable result of the legislative position in those States. The Community has no obligation, in determining its cereals price policy, to fix the comparative level of durum wheat and common wheat prices so as to prevent such substitution in those places where it is legally permitted. Only by harmonization of national legislation would it be possible to remedy the difficulty referred to by the applicants.

55. The foregoing considerations are sufficient to show that the applicants have not established a relationship of cause and effect between the policy pursued by the Community institutions in fixing wheat prices, as embodied in the contested regulations, and the deterioration of their position on the durum-wheat or pasta-products markets.

56. It is evident from the foregoing analysis that the applicants have not substantiated any of the conditions set out above upon fulfilment of which the liability of the Community depends. The applications must therefore be dismissed.

57. Pursuant to Article 69 (2) of the Rules of Procedure, the unsuccessful partyis to be ordered to pay the costs.

58. The applicants and the interveners Soubry and Coppens, which supported the applicant Schwaben-Nudel-Werke B. Birkel Söhne GmbH & Co. are therefore jointly and severally ordered to pay the costs of the proceedings.

On those grounds, THE COURT (Second Chamber) hereby:

1 Dismisses the applications.

2 Orders the applicants and the intervening parties who supported the applicant in Case 247/80 jointly and severally to pay the costs, including the costs of the intervening parties who supported the defendants.