Report for the Hearing delivered in Joined Cases C-181/88, C-182/88 and C-218/88
I — Facts and procedure
A — The main proceedings
Mr Deschamps and the Groupement agricole d'exploitation en commun des Champs Fleuris (GAEC), in the cases pending before the tribunal administratif de Dijon, and the Groupement agricole d'exploitation en commun Lambert, in the case pending before the tribunal administratif d'Amiens, are seeking the annulment of decisions adopted by the director of the Office national interprofessionnel des viandes, de l'élevage et de l'aviculture (Ofival) rejecting applications in which the plaintiffs in the main proceedings contested the amount of the income compensation premium received for the 1986 marketing year.
The income compensation premium was granted to the plaintiffs in the main proceedings pursuant to Article 5(2) of Council Regulation (EEC) No 1837/80 of 27 June 1980 on the common organization of the market in sheepmeat and goatmeat (Official Journal L 183, p. 1), as amended by Council Regulation (EEC) No 871/84 of 31 March 1984 (Official Journal L 90, p. 35) and Commission Regulation (EEC) No 953/87 of 1 April 1987 (Official Journal L 90, p. 25). The plaintiffs in the main proceedings consider that the contested decisions are void. In their view, they are based on a regulation which is itself unlawful inasmuch as Article 9 thereof gives the United Kingdom a choice between a compensatory premium and a variable slaughter premium whereas Article 5 thereof imposes a compensatory premium on the other Member States of the European Economic Community. That difference of treatment is, both in principle and in its effects, contrary to the principles of non-discrimination between Member States, equal treatment and the free movement of goods contained in the Treaty establishing the European Economic Community.
Since the national courts considered that the outcome of the case depended on the reply to that question, they stayed the proceedings and asked the Court of Justice to rule on
B— Written Procedure
1. The decisions of the tribunal administratif de Dijon were received at the Court Registry on 7 July 1988 (Cases C-181/88 and C-182/88) and that of the tribunal administratif d'Amiens on 3 August 1988 (Case C-218/88).
2. Pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the European Communities, written observations were submitted on 26 September and 21 October 1988 by the Council of the European Communities, represented by Arthur Bräutigam, Principle Administrator in its Legal Department, on 27 September 1988 by the Commission of the European Communities, represented by Patrick Hetsch, a member of its Legal Department, acting as Agent, on 29 September and 3 November 1988 by the plaintiffs in the main proceedings, represented by Lise Funck-Brentano and Christian E. Roth, of the Paris Bar, on 29 September and 13 October 1988 by the Government of the French Republic, represented by Edwige Belliard and Marc Giacomini and on 5 October and 4 November 1988 by the United Kingdom, represented by J. A. Gensmantel, Treasury Solicitor's Department, acting as Agent.
II — The Community rules applicable
(a) Community market
The common organization of the market in sheepmeat and goatmeat is the subject of Council Regulation No 1837/80 of 27 June 1980. That regulation provided for three forms of market support (the annual ewe premium, intervention measures and the variable slaughter premium) in five regions of the Community (region 1, Italy; region 2, France; region 3, Denmark, Benelux, Federal Republic of Germany; region 4, Ireland; region 5, United Kingdom).
The annual ewe premium is intended to compensate producers for any loss of income resulting from the setting up of the new scheme, represented by any difference there may be between the reference price for a region and the forseeable market price for that region (Article 5(2)).
Intervention measures may be taken in the form of private storage aid or purchases by the intervention agencies. The latter take place at the request of one or more Member States if it is found that during the period from 15 July to 15 December of each year, the price recorded on the Community market and on the market of a given region is equal to, or less than, an intervention price corresponding to 85% of the seasonally adjusted basic price (Articles 6 and 7).
The variable slaughter premium covers the difference between the guide level (85% of the seasonally adjusted basic price) and the market price recorded in the Member State or Member States concerned. That premium may be paid only if no intervention measures are applied (Article 9).
Where the variable slaughter premium is applied, producers are liable, when they export, to pay an equivalent amount (claw-back). According to Commission Regulation (EEC) No 3191/80 of 9 December 1980 (Official Journal L 332, p. 14), as amended by Regulation No 1558/82 of 17 June 1982 (Official Journal L 172, p. 21), the variable premium is not recovered when the products in question are exported outside the Community.
That scheme was modified and completed by Council Regulation No 871/84 of 31 March 1984.
According to that regulation, the variable slaughter premium may be granted only by the United Kingdom, in region 5 (new version of Article 9 of Regulation No 1837/80). Where that premium is applied, the weighted average of the variable premiums actually granted is deducted from the loss of income (new version of Article 5(6) of Regulation No 1837/80).
A new definition of the regions was laid down (1, Italy and Greece; 2, France; 3, Belgium, Denmark, Federal Republic of Germany, Luxembourg, Netherlands; 4, Ireland; 5, Great Britain; 6, Northern Ireland) and the reference prices, which varied from region to region, were abolished. The loss of income is calculated for the entire Community on the basis of any difference there may be between the single basic price and the actual market price in each region.
(b) Trade with non-member countries
Having regard to the consolidation of rates in GATT in respect of the products in question, the system of agricultural levies applicable to imports from non-member countries proved to be largely insufficient as a means of ensuring protection of the Community market. Voluntary restraint agreements were concluded, in return for a reduction to 10% of the ad valorem duty as consolidated in GATT (20%), supplemented by other agreements containing an undertaking on the part of the contracting parties to respect traditional patterns of trade.
III — Written observations submitted to the Court
(a) The infringement of the principle of equal treatment
The plaintiffs in the main proceedings consider that the removal of the Member States' right, except in the case of the United Kingdom, to choose between the application of the variable slaughter premium and intervention measures infringes the principle of equal treatment.
Since the variable slaughter premium is calculated on a weekly basis and paid very rapidly, producers whose production is out of season, such as the plaintiffs in the main proceedings, can be compensated for the actual difference between the guaranteed price and the market price at the time when they market their lambs. Since the compensatory premium for region 2 (France) is calculated on the basis of the annual arithmetical mean of the weekly national quotations, a French out-of-season producer, who has sold his production in a week in which the quotation is much below the basic price, will end up with an income below the level guaranteed by the seasonally adjusted basic price as fixed by the Community authorities. Consequently, if they had been paid compensation on the conditions applied in Great Britain, the plaintiffs in the main proceedings would have received compensation greater than that granted to them by Ofival (14% higher in Case C-181/88, 13% in Case C-182/88 and 5% in Case C-218/88).
According to the judgment of the Court of 15 September 1982 in Case 106/81 Julius Kind v EEC [1982] ECR 2885, the variable premium is compatible with the principle of equal treatment only in so far as each Member State has the right to choose the form of intervention most appropriate to its national market. Since the adoption of Regulation No 871/84, that choice no longer exists.
The suspension of the claw-back arrangement for British exports to non-member countries places other Community producers in an unfavourable competitive position since penetration of the markets of non-member countries is rendered de facto impossible by the very low level of prices offered by British producers, which is the consequence of a measure of that sort, which is contrary to the principle of equal treatment.
The French Government takes the same view. It considers that the difference of treatment constitutes, on the one hand, the only important residual element reflecting the failure to complete the development of the common organization of the market, since reference prices have been unified, and, on the other, a clear advantage for British producers only. By withdrawing the choice, the new Community rules, not justified by the existence of objective differences of a certain significance, infringe the principle of non-discrimination as laid down in the Court's case-law, in particular, in its judgment of 4 February 1982 in Case 817/79 Buyl v Commission [1982] ECR 245.
The Council, the Commission and the United Kingdom consider that the difference in the applicable rules is justified.
The British market is different from the markets in the other regions. As a result of imports from non-member countries which correspond to traditional patterns of trade, the prices paid to British producers are lower than those in other markets. Those special characteristics of the British market make it possible to explain why only the United Kingdom has applied the variable premium since its introduction in Regulation No 1837/80.
Regulation No 871/84 merely reinforced that practice. By limiting to region 5 the possibility of applying the variable premium, as was required by the characteristics of the market, a step was taken in the direction of unifying the relevant common organization.
Although the methods of intervention are different, the price level which brings them into operation is the same. Although the market may be supported, during the marketing year, either by the grant of variable premiums in Great Britain or by purchases into intervention in the other Member States, the amounts thus paid are determined on the basis of an identical value, namely, the guide level and the intervention price respectively, both corresponding to 85% of the Community basic price. It was the fact that the threshold triggering the two forms of intervention was identical which led the Court of Justice to consider that in view of the discretion enjoyed by the Council in implementing a common market organization which was still developing and taking into account the responsibilities entrusted to it by Articles 39 and 40 of the Treaty, the fact that intervention methods varied from region to region in the Community did not amount to discrimination (judgment in Kind, cited above).
Intervention purchasing, which all the Member States are entitled to employ, is as effective for the purposes of supporting producers' income as is the variable premium. However, before 1984, only France had made use of intervention, which it was not called upon to put into operation during the 1986 marketing year.
The payment, during the marketing year, of the variable premium solely to producers in Great Britain constitutes in a way advance payment of the premium for ewes. Producers in less-favoured areas may also receive an advance payment in the form of a payment on account of 75 % of the loss of income, a scheme which applied in France during the 1985/86 marketing year. Moreover, that country was authorized to make the same payment on account to producers in areas which are not less-favoured areas until the end of the same marketing year by way of national aid, justified by the circumstances which affected the sheepmeat market in France during that period: two consecutive periods of drought in the summers of 1985 and 1986, which obliged farmers to slaughter a large proportion of their flocks and to incur debts to buy fodder, and the considerable fall in the value of the pound sterling, permitting sheepmeat to be supplied at relatively low prices in France (Council Decision 86/648 of 16 December 1986, Official Journal L 382, p. 3).
In the light of the foregoing, it must be concluded that Community producers of sheepmeat receive the same support in terms of income and that, therefore, the principle of equal treatment has not been infringed.
The Commission also adds that the application of claw-back to British exports to non-member countries would have compromised traditional patterns of exports from Great Britain on to the world market on which prices are lower than on the Community market. The purpose of that suspensory measure, in accordance with Article 33 of Regulation No 1837/80 and pending the adoption by the Council of a Community policy on export refunds, is to facilitate the transition from the system in force before 1980 in the United Kingdom — deficiency payments — to the system established by the common organization. The extension of that measure was dictated by the need, if a significant reduction in traditional British export patterns was to be avoided, to compensate for the failure to adopt a refund scheme.
The measure at issue was thus adopted for objective reasons and, therefore, is not contrary to the principle of non-discrimination laid down in the second subparagraph of Article 40(3) of the Treaty, which constitutes a specific expression of the general principle of equality.
The Council and the United Kingdom therefore consider that the suspension of claw-back is justified.
(b) The infringement of the principle of free movement
According to the plaintiffs in the main proceedings and the Government of the French Republic, the payment of the variable slaughter premium exclusively to British producers infringes the principle of free movement.
Those producers find themselves in a favourable financial position (equivalent to an interest-free loan) and can continue to take advantage of the adjustment of prices to the level of the guide price, which gives them advantages not available to farmers in the other regions. Consequently, prices on the British market are lower, which leads to the partitioning of that market in regard to exports from other Member States and favours British exports to non-member countries. To support their argument the plaintiffs in the main proceedings rely on statistics concerning imports and exports of sheepmeat into France and the United Kingdom during 1985 and 1986.
The Council considers that the rules at issue do not infringe the principle of free movement. The variable slaughter premium cannot be regarded as an export subsidy, having regard to the fact that claw-back is applied in intra-Community trade. The Council makes the following remarks concerning the question whether the rules on trade with non-member countries produce effects contrary to the free movement of goods originating in non-member countries but which are in free circulation.
Those rules are characterized, on the one hand, by the need to honour international undertakings under GATT and, on the other hand, by the need to reconcile that situation with the need to protect the income of the Community producers concerned. In that regard, the Council refers to the rules mentioned above (11(b)), which are transitional and likely to change, in particular as a result of agreements with non-member countries providing for a minimum import price for the meats concerned, which would permit the Community to waive the voluntary restraint undertakings.
The Commission dealt with that question in its observations concerning a possible infringement of the principle of equal treatment owing to the suspension of claw-back (see (a) above) and the United Kingdom dealt with the two questions together.
IV — Conclusions
On the basis of the observations summarized above, the parties propose that the Court should reply to the question referred to it as follows.
The plaintiffs in the main proceedings
The French Government
The Council
The Commission
The United Kingdom
The United Kingdom also considers that if the removal in respect of France and other Member States of the option of implementing a variable premium scheme is unlawful, the Court should apply Article 174 of the Treaty by analogy and declare that that choice should be extended to other Member States until amendment of the Community rules to bring them into line with the Court's judgment.
1 Language of the case: French.
2 As a result of the accession of Spain and Portugal, a further region, region 7, consisting of those countries, was added.