Opinion of Mr Advocate General Lenz

Mr President,

Members of the Court,

A —. On 5 September 1978 the plaintiff in these preliminary ruling proceedings, on which I am to give my Opinion today, applied for the release into free circulation of a consignment of whole-milk powder with a fat content of 24.5% imported from France (and classified under subheading 04.02 A II (b) 2 of the Common Customs Tariff). Monetary compensatory amounts were payable on that consignment at the rate laid down in Annex 1 to Regulation (EEC) No 1036/78 (Official Journal 1978, L 133, p. 1), namely DM 16, plus DM 0.65 for each 1% of fat content, per 100 kg.

B —. My opinion on those questions, in the light of all the information at the Court's disposal, is as follows:

1. Question 1

According to Regulation No 974/71, monetary compensatory measures for products which, like whole-milk powder, are not covered by intervention arrangements under the common organization of agricultural markets may be adopted only in so far as the products fall within a common organization of agricultural markets (which is the case as regards whole-milk powder, according to Article 1 of Regulation No 804/68) and if their price is clearly dependent on the price of products covered by intervention arrangements under the common organization of agricultural markets. Another criterion for the application of monetary compensatory amounts is that the application of the monetary measures referred to in paragraph 1 of Regulation No 974/71 would lead to disturbances in trade in agricultural products.

It has to some extent already become apparent that in the plaintiff's view those requirements are not met in the case of whole-milk powder. In particular, the plaintiff maintains that monetary compensatory amounts are by no means necessary in order to prevent disturbances in trade in products covered by intervention arrangements. On the contrary, it is clear in its view that the levying of monetary compensatory amounts on whole-milk powder leads to disturbances in trade. The plaintiff has sought to illustrate that contention by means of a worked example allegedly showing the adverse effects on imports from France at the material time (see page 19 of its written observations). The Commission, however, maintains that the plaintiffs calculation is based on incorrect information (I shall return to this point in due course). In its view, the plaintiff's interpretation of Regulation No 974/71 is, in any event, too restrictive. In reality, price dependence does not have to be seen in terms of a mathematical relationship but only in terms of clearly identifiable market interrelationships in accordance with Article 1 (2) (b). If that is borne in mind, it precludes the finding that the regulation under consideration in these proceedings is incompatible with the basic regulation on monetary compensation (No 974/71) and the case-law thereon.

As regards that first point I find the Commission's arguments the more persuasive.

2. Question 2 is concerned with the fact that monetary compensatory amounts for whole-milk powder as fixed by the contested regulation include the costs inherent in the manufacture of two products covered by intervention arrangements, namely skimmed-milk powder and butter, because the calculation of those amounts was based on the intervention prices of the said products, according to the proportionate composition (at the material time, however, as has already been stated at the outset, those costs were taken into account only to a limited extent).

The plaintiff, as the Court is aware, takes the view that those costs should not have been taken into account. It contends that, in principle, monetary compensatory amounts may be fixed only for basic agricultural products and not for processed products. It points to the fact that, in the preamble to Regulation No 974/71, emphasis is laid on the fact that compensatory amounts should be limited to the amounts strictly necessary to compensate for the incidence of the monetary measures on the prices of basic products, from which it infers that, if processed products were to be taken into account none the less, only the incidence on the prices of such products could be considered, which evidently resulted from the application of compensatory amounts to the basic products (excluding manufacturing costs).

In 1984 the Commission amended the contested rules in order to take that point of view into account, whereupon processing costs were excluded from the calculation altogether because the Commission had come to the conclusion that the difference between the representative rates and the market rates affected only basic agricultural products and that processing costs were subject to normal currency fluctuations. However, the Commission thought at first that it could and should take a different course; it still considers that it was right to adopt a different approach only gradually, in the light of experience acquired in closely monitoring the market, and to eliminate the processing costs from the calculation in stages, as has been explained in the summary of the facts of the case.

I have a number of comments to make.

C —. In the light of all the foregoing considerations, I suggest that the answer to the questions submitted by the Bundesfinanzhof should be that the proceedings have disclosed no factor of such a kind as to call in question the validity of Regulation No 1036/78 in so far as Annex I to the regulation fixes the monetary compensatory amounts for whole-milk powder classified under subheading 04.02 A II (b) 2 of the Common Customs Tariff.

ANNEX

1 Translated from the German.

2 Judgment of 23 November 1976 in Case 28/76 Milac v Hauptzollamt Freiburg [1976] ECR 1639.

3 Judgment of 13 July 1978 in Case 8/78 Milac v Hauptzollamt Freiburg [1978] ECR 1721.

4 Judgment of 3 February 1981 in Case 95/80 Dervieu-Delahais v Directeur général des douanes et droits indirects [1981] ECR 317.

5 Judgment of 3 May 1978 in Case 131/77 Milac v Hauptzollamt Saarbrücken [1978] ECR 1041.

6 Judgment of 23 November 1976 in Case 28/76 Milac v Hauptzollamt Freiburg [1976] ECR 1639.

7 Judgment of 13 July 1978 in Case 8/78 Milac v Hauptzollamt Freiburg [1978] ECR 1721.

8 Judgment of 3 February 1981 in Case 95/80 Dervieu-Delahais v Directeur général des douanes et droits indirects [1981] ECR 317.

9 Judgment of 20 October 1977 in Case 29/77 Roquette v france [1977] ECR 1835.

10 Judgment of 10 May 1979 in Case 12/78 Italy v Commission [1979] ECR 1731.

11 Judgment of 13 July 1978 in Case 8/78 Milac v Hauptzollamt Freiburg [1978] ECR 1721.

12 Sec Annex.

13 Judgment of 3 July 1985 in Case 39/84 Maizena v Hauptzollamt Hamburg-jonas [1985] ECR 2115.

14 Judgment of 3 October 1985 in Case 46/84 Nordgetreide y Hauptzollamt Hamburg-Jonas [1985] ECR 3127.

15 Judgment of 15 October 1980 in Case 4/79 Providence agricole de la Champagne v ONIC [1980] ECR 2823.

16 Judgment of 25 September 1985 in Joined Cases 71 and 72/84 Surcouf and Vidou v European Economic Community [1985] ECR 2925.