Opinion of Mr Advocate General Reischl

Mr President,

Members of the Court,

Article 6 of Regulation (EEC) No 804/68 of the Council on the common organization of the market in milk and milk products (Official Journal, English Special Edition 1968 (I), p. 176) provides that special measures may be taken for butter held in public storage which cannot be marketed on normal terms during a milk year. According to Article 7 (a) of Regulation (EEC) No 985/68 of the Council (Official Journal, English Special Edition 1968 (I), p. 256), which was inserted in that regulation by Regulation (EEC) No 750/69 of the Council (Official Journal, English Special Edition 1969 (I), p. 204) such measures are to be adopted in accordance with the so-called Management Committee procedure laid down in Article 30 of Regulation (EEC) No 804/68.

As a result of those provisions the Commission adopted on 16 June 1972 Regulation (EEC) No 1259/72 on the disposal of butter at a reduced price to certain Community processing undertakings (Official Journal, English Special Edition 1972 (II), p. 559), which was subsequently amended a number of times. Article 6 of that regulation provided that those taking part in the invitation to tender — the means whereby butter from intervention stocks is disposed of — are to give a written undertaking to process the butter which has been made available into concentrated butter and to incorporate certain substances into it, in addition to having the results processed into specified, products. Processing in the Community was initially to be completed within a period of 120 days from the removal of the butter from storage (four months under Regulation (EEC) No 2815/72 of the Commission (Official Journal, English Special Edition 1972 (30-31 December), p. 5); that period was extended to six months by Regulation (EEC) No 677/73 (Official Journal, 1973, L 65, p. 16)). Article 18 of Regulation No 1259/72 provided that the security lodged by the prospective buyer, which represented the difference between the market price of butter and the minimum price (all that is paid initially) fixed by the Commission on the basis of the prices of competing fats was to be released only for the quantities in respect of which the successful tenderer had furnished proof that the conditions referred to in Article 6 had been met.

That legislation was replaced with effect from 1 February 1975 by Regulation (EEC) No 232/75 of the Commission on the sale of butter at reduced prices for use in the manufacture of pastry products and ice-cream (Official Journal, 1975, L 24, p. 45). Article 6 of that regulation, in so far as it is relevant to this case, was broadly the same as Article 6 of Regulation No 1259/72. Similarly, the provisions on the release of the security was reproduced in Article 18 (2), which specified, in addition, the nature of the proof to be furnished. Article 19 (2), which is referred to in Article 18 (2), provided further that:

That article was repealed by Regulation (EEC) No 1687/76 laying down common detailed rules for verifying the use and/or destination of products from intervention (Official Journal, 1976, L 190, p. 1). Article 2 of that regulation provides that the products are to be subject to customs or equivalent administrative control from the time of their removal from intervention stock until the use or the destination specified has been verified. Article 3 stipulates that the products are to be considered as having complied with the prescribed use or destination when it is established that the products which are to be processed or to have other products incorporated in them have been processed and that the prescribed time-limits have been observed. Under Article 12 proof that the requirements of control laid down in Article 2 have been complied with is to be furnished by the production of specified documents, and according to Article 13 (4) the security lodged before the removal of the butter from the intervention stocks is to be released subject to the production of the proof referred to in Article 12.

Finally, since it is not clear which period of time is the relevant one for the purposes of the main proceedings (reference is made on the one hand to invitations to tender issued between September 1973 and September 1977 and on the other hand to the sale of butter by the applicant in the main proceedings to a French purchaser between March and June 1980), it should be noted that Regulation (EEC) No 262/79 on the sale of butter at reduced prices for use in the manufacture of pastry products, icecream and other foodstuffs (Official Journal, 1979, L 41, p. 1) has been in force since 5 March 1979. Article 8 of that regulation provides that according to the type of processing operation concerned, the periods within which the butter must be processed are respectively three months and eight months calculated from the final day for submission of tenders. Under Article 22 the processing security is to be forfeited if the proof required by Regulation No 1687/76 is not provided within a specified period and if all the conditions laid down in Article 5, which specifies the details of processing, have not been complied with in their entirety. In addition it is stated in Article 23 (2) that:

Between 1973 and 1980, after having taken part in tendering procedures the applicant in the main proceedings acquired butter for processing from French intervention stocks at reduced prices and lodged the required securities. Some of the butter purchased and apparently denatured by the applicant itself was resold to Italian purchasers, and some was resold to buyers in France. The securities were forfeit when the processing took place after the expiry of the period prescribed for the purpose by Community law, when the precise date on which the butter was processed was uncertain and when the butter was not processed because it had gone astray after it had been dispatched by the applicant. Those facts were noted in a letter from the French intervention agency of 21 January 1981 rejecting an application submitted by Fromançais for the release of the securities.

The applicant challenged the decision before the Tribunal Administratif, Paris. It claimed that the securities should be released at least in those cases where the date of the processing could not be established by the Italian authorities and where the butter which had been purchased had gone astray after it had been dispatched by the applicant. Those circumstances must be regarded as cases of force majeure. In addition, as the purpose of the security was to ensure that the processing took place, and because observance of the processing time-limit was not a decisive element in achieving that aim, it must be contrary to the principle of proportionality for the same penalty to be applicable when the time-limit has not been observed as when the processing has not been carried out. The relevant Community provisions should therefore be declared void inasmuch as they provide that the security is forfeit even when the processing has taken place after the expiry of the prescribed period.

As regards the first point, the Tribunal Administratif refused to accept the argument of force majeure when the precise time of processing was uncertain or when the butter to be processed had gone astray. The Tribunal Administratif found, however, that a genuine question arose as to the validity of the relevant Community provisions in relation to the principle of proportionality in cases where the entire security was forfeit despite the fact that the processing, although late, was actually carried out. In the view of the Tribunal, that question was not dealt with by the judgment in Joined Cases 99 and 100/76, on which the defendant French intervention agency relied. By its judgment of 26 January 1982 the Tribunal stayed its proceedings and requested a ruling on the validity of Article 18 (2) of Regulation No 1259/72, Articles 18 (2) and 19 of Regulation No 232/75 and Article 13 (4) of Regulation No 1687/76 with regard to the principle of proportionality.

My opinion on that question is as follows.

1. As regards the reference in the question to Article 13 (4) of Regulation No 1687/76, the Commission has expressed the opinion that the provision is not directly concerned with the subject-matter of these proceedings, namely the rule that the security should not be released when the processing period is exceeded, and that therefore the abovementioned provision should not have been included in the discussion of validity.

2. The Commission submits further that the problem raised in this case has already been dealt with in Cases 99 and 100/76 with the result that there is now no need for special discussion of the issue. Those proceedings, too, were concerned with the question of the compatibility of Article 18 (2) of Regulation No 1259/72 with the principle of proportionality. The Commission submits that as the conditions contained in that provision include the proceessing time-limit and as it may be inferred from the facts of the earlier proceedings that they were concerned with the forfeiture of the security where the processing period had been exceeded, that is sufficient to indicate that the affirmative answer given on that occasion applies equally to the present case. Nevertheless, on that point too, I hesitate to follow the Commission's opinion.

3. When a question arises on the principle of proportionality and the observance thereof the object which the measure seeks to attain must first be ascertained, as the applicants rightly submit, in order to establish whether the means which are used to ensure its attainment are excessive or not.

4. Some additional comments are necessary with reference to Article 19 of Regulation No 232/75, which is likewise cited in the question referred to the Court by the Tribunal Administratif, Paris. That article relaxed the penalties to a certain extent.

5. In conclusion I propose that the question referred to the Court by the Tribunal Administratif, Paris, should be answered as follows:

1 Translated from lhe German.

2 Judgment of 11 May 1977 in Joined Cases 99 and 100/76 NV Roomkoterfabriek De Beste Boter and Firma Josef Hoche, Butterscbmelzwerk v Bundesanstalt für landwirtschajtliche Marktordnung [1977] ECR 861.

3 Judgment of 20 February 1979 in Case 122/78 SA Btiitoni v Fonds d'Orientation et de Régularisation des Marchés Agricoles [1979] ECR 677,