Report for the Hearing delivered in Case C-281/87
Summary of the facts
By Circular Letter 41032 of 7 July 1982 the Greek Ministry of Agriculture asked KYDEP, an association of producers' cooperatives, to purchase inferior-quality durum wheat from the 1982 harvest. The circular, which was sent for information to all provisional agricultural administrations, set out the minimum standards of durum wheat suitable for processing and for durum wheat unsuitable for processing and intended exclusively for animal feed and the price increases and reductions to be applied to the price (DR 19856.63 per tonne) for processable durum wheat. The circular provided that quality increases or reductions are not to be applied to the price (DR 15.50 per kilo) or to the weight in the case of non-processable durum wheat intended exclusively for animal feed.
The circular also stated:
The Commission took the view that, by asking KYDEP to purchase inferior-quality durum wheat at prices fixed officially, the Greek authorities had in reality adopted a national intervention measure incompatible with the rules of the common organization of the market in cereals.
The Commission considered that it was not impossible that the national intervention measures might have caused financial losses in respect of which the Greek authorities would have had to compensate KYDEP, thereby giving rise to further infringements.
Furthermore, the Commission feared that inferior-quality durum wheat purchased under the national intervention mechanisms was delivered into Community intervention by KYDEP as agent of the EAGGF in the context of the implementation of the common procedures in the cereals sector.
The Commission considered that the rules relating to the quality of durum wheat delivered into Community intervention by the Greek authorities in respect of the 1981/82 and 1982/83 marketing years had not been complied with. Therefore, in Commission Decision 86/441 of 20 June 1986 on the clearance of the accounts presented by the Hellenic Republic in respect of the European Agricultural Guidance and Guarantee Fund, Guarantee Section, expenditure for 1982, the Commission took the view that expenditure incurred by the Hellenic Republic on the basis of Community intervention for durum wheat could only be financed up to 20385.918 tonnes out of a total of 700000 tonnes. By an application registered at the Court on 8 August 1986 the Hellenic Republic brought an action for the annulment of that decision, which was dismissed by judgment of 21 February 1989 (Case 214/86 [1989] ECR 367).
In order to determine whether the inferior-quality durum wheat concerned had in fact been delivered into Community intervention, the Commission asked the Greek Government, by letter dated 24 February 1986, to provide full information concerning the purchase price, quantities purchased, the periods in which the wheat was put up for sale and details concerning the quantities sold and the destination of all the inferior-quality durum wheat.
The Commission also requested the Greek Government to submit its observations on the question whether the intervention measure was incompatible with Community law and at the same time to inform it of the legal powers on the basis of which it could give instructions to KYDEP and to send copies of all the relevant legal and administrative provisions in the matter.
By letter dated 3 June 1986, the Greek Permanent Representation of the Hellenic Republic to the European Communities replied that the circular letter of 7 July 1982 did not give binding instructions but only information. Consequently, the Greek authorities were unable to acknowledge that in 1982 they had applied a national system of intervention in the case of inferior-quality durum wheat.
The Commission then delivered, on 23 December 1986, a reasoned opinion under Article 169 of the Treaty to the Hellenic Republic requiring it to adopt the necessary measures within one month.
On 17 March 1987 the Greek authorities replied that they considered that the circular letter at issue had been sent simply for the purposes of information and explanation and was not intended to establish a parallel system of national intervention in respect of inferior-quality wheat.
Written procedure and conclusions of the parties
By application registered at the Court on 22 September 1987 the Commission brought this action under Article 169 of the Treaty.
Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory inquiry. However, the Court decided to put certain questions to the parties.
The Commission, the applicant, claims that the Court should:
The Hellenic Republic, the defendant, contends that the Court should:
Submissions and arguments of the parties
A — Subject-matter of the proceedings
The Commission stresses that the subject-matter of the action for the annulment of Decision 86/441 of 20 June 1986, mentioned above, brought by the Hellenic Republic (Case 214/86) is manifestly different from the subject-matter of this case brought under Article 169. Apart from its financial implications, this action involves the entire modus operandi of KYDEP.
B — Admissibility
The Hellenic Republic submits that the Commission's application is inadmissible inasmuch as it is based on three confidential documents which did not lawfully come into the Commission's possession, that is to say Circular Letter 41032 of 7 July 1982 of the Ministry of Agriculture, the report of 4 November 1985 from the legal department of KYDEP and the internal note of 6 June 1985 from the general administration of KYDEP.
The Commission, on the other hand, considers that the contested evidence came into its possession properly and even received an entry number.
C — Substance
1. The circular letter from the Ministry of Agriculture
The Commission submits that in Circular Letter 41032 of 7 July 1982 the Greek Ministry of Agriculture instructed KYDEP to purchase on the national market all quantities of inferior-quality durum wheat from the 1982 harvest from producers and threshing undertakings at prices fixed officially. The conditions of purchase fixed by the circular letter are not limited to aspects of concern to the producers, such as the prices, but also extended to the method of dealing with the wheat purchased.
The circular letter was not intended for the producers, that is to say the possible sellers, but for the purchaser, that is to say KYDEP. Moreover, the formulation of the circular letter is clear since it does not mention any information to be passed on to producers and their organizations in the case of sale but specifically asks KYDEP to purchase all quantities of inferior-quality durum wheat.
Thus, the only possible interpretation to be given to the circular letter is that it gives detailed instructions to KYDEP regarding the procedures for purchasing the wheat. The order to make the purchase in question had already been given by decisions of 23 June and 2 July 1982 which are alluded to in the circular letter; however, the Commission does not have the text of those decisions in its possession.
The inferior-quality durum wheat mentioned by the circular letter does not meet the standards fixed for Community intervention and had a lower commercial value which would normally have had to be fixed on the basis of market conditions.
The Hellenic Republic submits that the circular letter in issue was not binding in nature. Upon request by the producers' organizations the Greek State had limited itself to informing them, through the intermediary of KYDEP, of the quality criteria and standards allowing durum wheat suitable for processing to be distinguished from that suitable for animal feed and of the methods and factors used in drawing up target prices and guide prices.
The problem experienced by the affiliated producers was that dealers had purchased durum wheat which was inferior in quality owing to the unfavourable climatic conditions of the 1981/82 marketing year. The dealers had paid the price appropriate to the product when it is used as animal feed but had resold it to manufacturers at a higher price. Under pressure from their members, producers' organizations had then asked the Greek authorities for information on the quality standards differentiating durum wheat suitable for supply to industry from wheat intended for animal feed and for the detailed rules and coefficients relevant in the formation of target prices and guide prices.
2. KYDEP's intervention
The Commission submits, in the light of the three abovementioned documents, that KYDEP is used and was used by the Greek Government in this case as an implementing body.
Whatever may be the precise links between KYDEP and the Greek Government and the method of selling the wheat purchased by KYDEP, the Greek Government instructed it to purchase the inferior-quality durum wheat concerned on certain terms; KYDEP carried out that instruction.
Consequently, KYDEP infringed Community law by applying in practice national intervention measures not provided for by Community legislation with the consequence that the mechanisms of the common organization of the cereals market were distorted.
The Hellenic Republic does not deny that when KYDEP acts on Greek territory as the supervisor of intervention measures in the cereals sector it does so pursuant to orders and instructions from the Greek Ministry of Agriculture. For KYDEP, it is irrelevant that the orders and instructions which it receives from that ministry result from Community provisions.
However, the fact that KYDEP carries out instructions from the Greek State in the cereals sector does not, of itself, prove the existence of national intervention mechanisms which set aside the corresponding mechanisms of Community intervention.
3. Delivery of the inferior-quality durum wheat into Community intervention
The Commission submits that, as has been shown to be true, and as it feared was the case, KYDEP, acting as agent for the EAGGF for the purpose of implementing the common procedures in the cereals sector, delivered the inferior-quality durum wheat into Community intervention. It is, moreover, for that reason that the Commission asked the Greek authorities for full information as to the quantities purchased and the prices paid by KYDEP. Its request, however, remained unanswered.
Article 2(4) of Commission Regulation (EEC) No 1569/77 of 11 July 1977 fixing the procedure and conditions for the taking over of cereals by intervention agencies provides for the possibility of exceptions to certain quality standards in the event of particularly unfavourable climatic conditions. However, the Greek Government never had recourse to this derogation procedure but clearly elected to adopt unilateral national measures incompatible with Community rules.
The Hellenic Republic replies that in the 1982 harvest 101433 tonnes of inferior-quality durum wheat suitable for processing were produced and were sold by KYDEP on the free market for the account of the producers or their organizations, as attested by copies of sales invoices. Consequently, the Hellenic Republic wonders what evidence the Commission relies on for its statement that the whole quantity of durum wheat was presented for Community intervention.
The inferior-grade durum wheat at issue in this case has characteristics which are completely different from the wheat admitted into Community intervention in 1982 in respect of which the proceedings in Case 214/86 arose.
Finally, the Hellenic Republic submits that in so far as the inferior-quality durum wheat was marketed, it was not necessary to have recourse to the derogation provided for by Article 2(4) of the abovementioned Regulation No 1569/77.
Information supported by the parties upon request by the Court
1. In reply to the questions in which the Court in substance asked the Commission to give further details of its arguments and evidence, the Commission states as follows.
2. The Hellenic Republic was requested to supply the Court with the following:
1 Language of the case: Greek.
2 OJ 1986, L 256, p. 24.
3 OJ 1977, L 174, p. 15.