CJEC, September 15, 1982, No 106-81

THE COURT

1 By application lodged at the court registry on 4 may 1981 Julius Kind KG, a supply butcher established in grevenbroich in the federal republic of germany, brought an action under article 178 and the second paragraph of article 215 of the eec treaty for compensation for the loss suffered by its business as a result of the provisions of article 9 (3) of council regulation (eec) no 1837-80 of 27 june 1980 on the common organization of the markets in ' ' sheepmeat ' ' and goatmeat (official journal l 183, p. 1) in the case of lamb imported from the united kingdom and as a result of the provisions contained in article 1 of commission regulation (eec) no 3191-80 of 9 december 1980 on transitional measures concerning non-recovery of the variable slaughter premium for ' ' sheepmeat ' ' and goatmeat products exported from the community (official journal l 332, p. 14) in the case of its exports or opportunities for exports to non-member countries.

2 The applicant seeks compensation amounting to dm 375 000, the loss which it considers it incurred between 20 october 1980, the date of the entry into effect of the common organization of the markets in mutton and lamb and goat ' s meat, and 31 march 1981, together with interest at 10% to run from the date on which its application was lodged. Finally, it requests from the court a declaration that it is also entitled to compensation for losses incurred by it after 31 march 1981.

3 The action based on non-contractual liability brought by Julius Kind KG is founded upon the alleged unlawfulness of article 9 of council regulation no 1837-80 and commission regulation no 3191-80.

4 Before the entry into force of regulation no 1837-80 the markets in mutton and lamb in the community differed widely from one member state to another. According to the applicant, that situation enabled it to import from the united kingdom mutton and lamb at prices which were commercially attractive by reason of the agricultural policy of the united kingdom and, in particular, by reason of the subsidies (hereinafter referred to as ' ' deficiency payments ' ') paid by it to its producers.

5 The common organization of the markets introduced in 1980 is intended to assimilate the markets in the different community regions gradually in order to achieve a uniform market and a uniform system of prices. Regulation no 1837-80 divides the states of the community into five regions, now six, following the accession of greece, by virtue of regulation no 3446-80, for each of which there has been fixed a different reference price. This reference price is used to calculate a premium payable per ewe under article 5 of the regulation, which is intended to ' ' offset the loss of income which may result from the establishment of the common market organization ' '. Article 3 (4) (ii) provides, however, for the establishment of a single community reference price by the end of a transitional period of four years.

6 Regulation no 1837-80 fixes a seasonally adjusted basic price uniform throughout the community. It is in relation to that basic price that intervention measures provided for in articles 6 to 9 may be adopted. Apart from private storage aid member states may choose between two intervention schemes: the purchase of fresh mutton and lamb by intervention agencies, and the payment of a variable slaughter premium.

7 Finally, subject to certain conditions article 17 of the regulation empowers the council to draw up general rules for granting export refunds which are to be the same for the whole community.

8 Within the general context of those regulation the provisions challenged by Julius Kind KG may be described as follows:

9 Article 9 (1) of regulation no 1837-80 provides that in the regions where there are no purchases by intervention agencies ' ' the member state or member states concerned may pay a variable slaughter premium for sheep when the prices recorded on the representative market or markets of the member state or member states concerned are below a ' guide level ' corresponding to 85% of the basic price. The guide level shall be seasonally adjusted in the same way as the basic price ' '. According to article 9 (2) the amount of that premium is to be equal to the difference between the guide level and the market price recorded in the member state or member states concerned. Article 9 (3), to which Julius Kind KG takes particular objection, provides that the necessary measures are to be taken to ensure, in the event of payment of the premium referred to in paragraph (1), that an amount equivalent to that premium is charged for the mutton and lamb products referred to in article 1 (a) when those products leave the territory of the member state concerned. The amount equivalent to the slaughter premium, which is charged on exports, is commonly known as the ' ' claw-back ' '. Lastly, by virtue of article 9 (5) expenditure incurred under those arrangements is to be deemed to form part of intervention for the purpose of regularizing agricultural markets.

10 Commission regulation (eec) no 3191-80, for its part, provides in essence that from 10 december 1980 until 31 march 1981, by way of derogation from article 9 (3) of regulation no 1837-80, there is to be no claw-back in respect of the export of the products in question from the community.

11 Those are the provisions which, in the applicant ' s view have altered its economic situation. The introduction of the claw-back and the amount thereof, have increased export prices for meat from the united kingdom. The applicant maintains that its turnover has thereby been reduced and its costs have had to be spread over a smaller number of transactions since some of its clients are no longer prepared to continue to buy from it in view of the trends in prices. The applicant also criticizes the commission for failing to suspend the claw-back in respect of exports to member states of the community and for having practically barred it from the market in non-member countries which, as a result of regulation no 3191-80, find it more advantageous to obtain their supplies of mutton and lamb direct from the united kingdom.

12 As, in this case, a choice of economic policy which is reflected in legislative measures adopted by community institutions is being challenged, it should be borne in mind that the court has consistently held that the community does not incur liability on account of such measures unless a sufficiently serious breach of a superior rule of law for the protection of the individual has occurred. Taking into consideration the principles in the legal systems of the member states governing the liability of public authorities for damage caused to individuals by legislative measures, the court has declared that in the case of community legislative measures characterized by the exercise of a wide discretion which is essential for the implementation of the common agricultural policy, the community does not incur liability otherwise than, exceptionally, where the institution has manifestly and gravely disregarded the limits on the exercise of its powers.

The conclusions in the application based on the alleged unlawfulness of the council regulation

The statement of the reasons on which the regulation in based

13 Julius Kind KG claims that the council failed to provide an adequate statement of the reasons upon which its decision to introduce the intervention system described in article 9 of regulation no 1837-80 and, in particular, the claw-back system, was based.

14 That submission must be rejected. As far as the system of legal remedies is concerned the requirement of a statement of the reasons upon which measures adopted by the institutions are based is designed to enable the court to exercise its powers of review of the legality of such measures in the context of article 173 for the benefit of individuals to whom that remedy is made available by the treaty. Nevertheless, any inadequacy in the statement of the reasons upon which a measure contained in a regulation is based is not sufficient to make the community liable.

15 In this instance, moreover, the statement of the reasons upon which regulation no 1837-80 is based satisfies the requirements of article 190 of the treaty. The second recital in the preamble to the regulation indicates clearly, with reasons, the various forms which the intervention measures in favour of producers of mutton and lamb may take. The same recital states expressly that in order to avoid ' ' all disturbance in competition ' ' an amount equivalent to the variable slaughter premium is to be recovered in the case of export of meat and animals from the territory of the member state in which producers are paid that premium.

The other submissions

16 In its three further submissions Julius Kind KG claims that the provisions contained in article 9 of regulation no 1837-80, and in particular those contained in article 9 (3) which lay down the claw-back system:

Are in breach of the prohibition, laid down in articles 9, 12, 13 and 16 of the treaty, of the introduction in trade between member states of charges having an effect equivalent to customs duties;

Fail to meet the requirement, laid down in the second subparagraph of article 40 (3) of the treaty, that the common organization of agricultural markets must exclude any discrimination between producers or consumers within the community;

And, finally, are in breach of the rule set out in article 43 (3) (b) of the treaty which requires the common organization to ensure conditions for trade similar to those existing in a national market.

17 While those criticisms are expressed in various ways and are based on different provisions of the treaty they all challenge, on similar grounds, the machinery of the common organization of the market in mutton, lamb and goat ' s meat established by council regulation no 1837-80. A few general observations serve to illustrate the extent of the alleged breaches of law relied upon by the applicant, and hence the replies to be given to its criticisms.

18 The council ' s intention of ' ' attaining the objectives of article 39 of the treaty and, in particular,... Stabilizing the markets and ensuring a fair standard of living for the agricultural community concerned ' ', and to achieve ' ' a single market based on a common price system ' ', which is set out in the recitals in the preamble to regulation no 1837-80, is expressed in the fixing of a uniform basic price for fresh or chilled sheep carcases. The intervention price which was adopted for purchases by the intervention agencies, and the guide level used in calculating the variable slaughter premium, each correspond to 85% of the basic price. Consequently, although, in order to take into account the different market situations in the member states prior to the entry into force of the regulation, intervention methods may differ, the price level which causes them to come into operation remains the same.

19 It is true that because of the disparities in prices on the mutton and lamb markets in the member states before its entry into force regulation no 1837-80 makes provision for reference prices which differ between the five (and later six) regions into which the member states are divided and that those reference prices are used in order to calculate the premiums payable per ewe. However, in the first place that situation is a temporary one because article 3 (4) (ii) of the regulation provides for the achievement of a single community reference price by the convergence of national reference prices in equal annual steps over four years and because article 24 (1) provides that after the commission has submitted a report and a proposal, the council is to take before 1 april 1984 such appropriate measures as are required to ensure the functioning of the common organization of the market and in particular of the intervention and premium systems. In the second place, far from precluding any form of gradual approach in achieving the common organization of agricultural markets article 39 (2) of the treaty provides inter alia that ' ' in working out the common agricultural policy and the special methods for its application, account shall be taken of... Structural and natural disparities between the various agriculture regions ' ' and of ' ' the need to effect the appropriate adjustments by degrees ' '.

20 It is in the light of those observations that each of the three submissions made by Julius Kind KG and analysed above must be examined.

21 First, within the framework of a regulation, namely regulation no 1837-80, the provisions of which, according to article 34 thereof, are to be reviewed before 1 april 1984, the charge on exports provided for by article 9 (3) of that regulation is inseparable in principle from the intervention system which is made up of payment of the variable slaughter premium in community regions where buying-in is not practised by the intervention agencies. Therefore, the charge does not constitute, as the applicant maintains, a charge having an effect equivalent to a customs duty but is in reality intended to offset exactly the effects of the slaughter premium, thereby enabling products from the member states or regions in which the premium is paid to be exported to other member states without disturbing their markets. If there were no claw-back, offers emanating from a member state which applies the slaughter premium might be made on markets in other member states at prices appreciably lower than those obtaining in the latter and might bring, through a fall in prices, the intervention measures which the community would thus in fact be called upon to finance for a second time, albeit perhaps in another form.

22 Secondly, as regards the submission alleging discrimination it should be recalled that different treatment may not, as pointed out in the judgment of the court of 13 june 1978 (case 139-77 denkavit (1978) ecr 1317), be regarded as discrimination prohibited by article 40 (3) of the treaty unless it appears to be arbitrary, or in other words, as stated in other judgments, devoid of adequate justification and not based on objective criteria.

23 The analysis set out above of the common organization of the markets in mutton and lamb shows that the intervention methods provided for in regulation no 1837-80, the introduction pursuant to article 9 of that regulation of a slaughter premium and of the claw-back, and the rules for determining the amount of that premium, are based on objective criteria. The intervention price, in the case of purchases made by a body authorized for the purpose and the guide level, in the case of payment of a slaughter premium, are identical. As already stated, each member state chooses from the intervention methods provided for by the regulation the one which appears to it to be the most appropriate.

24 In those circumstances and in view of the discretion enjoyed by the council in implementing a common organization of the markets which is still developing and taking into account the responsibilities which are entrusted to it by articles 39 and 40 of the treaty in order to determine which methods appear to it most suited for the purpose of ensuring the gradual achievement of a uniform market, the fact that intervention methods vary from region to region in the community, and the consequences of such variation do not amount to discrimination.

25 Furthermore, as far as the discrimination of which the applicant claims to have been the object is concerned it must be remembered that its business benefited, until the entry into effect of the common organization, from the differences which existed between the situations on the various markets in the community and that this enabled it, because the deficiency payments system did not include any compensatory payment on export, to import lamb from the united kingdom at a relatively low price, at least when economic circumstances were favourable. However, although article 39 of the treaty designates in particular the stabilization of markets as an objective of the common agricultural policy, the concept of stabilization does not extend to the maintenance of positions established under previous market conditions, as the court has already stated in its judgment of 13 november 1973 (joined cases 63 to 69-72 wilhelm werhahn hansamuhle and others (1974) ecr 1229).

26 In its last submission Julius Kind KG raises the objection that article 9 of regulation no 1837-80 fails to meet the requirement, set out in article 43 (3) (b) of the treaty, that the common organization of agricultural markets must ensure conditions for trade within the community similar to those existing in a national market.

27 As already stated, regulation no 1837-80 aims to achieve, by degrees, a uniform market for the community, and the council may not be criticized for adopting this gradual approach in view of both the differences which characterized the national markets before the introduction of the common organization and the means adopted by the community institution to achieve its aim. More precisely, the introduction of the claw-back is designed to ensure the harmonization of prices in trade between member states and to prevent artificial disparities between the prices of products in the exporting member state and those in the importing member state from creating distortions in this trade and obstructing the machinery for regulating and unifying the markets which has been established by the regulation. Thus the regulation, and in particular article 9 thereof, is designed to ensure conditions for trade within the community similar to those existing in a national market.

28 The submission is therefore no more well-founded than the preceding ones.

The conclusions in the application relating to the alleged unlawfulness of the commission regulation.

29 The applicant claims that the commission offended against the principles of community preference and non-discrimination by suspending, in the case of exports to non-member countries, by means of regulation no 3191-80 of 9 december 1980 (official journal l 332, p. 14), collection of the amount referred to in article 9 (3) of regulation no 1837-80 without at the same time suspending collection of that amount in trade between member states.

30 It is stated in the recitals in the preamble to commission regulation no 3191-80 that it has been found that the charging of an amount equivalent to the variable slaughter premium for sheep on exports from the territory of the member state concerned ' ' gives rise to appreciable difficulties for export of the products in question from the community ' '. Pursuant to article 33 of council regulation no 1837-80, which provides that ' ' the commission may adopt appropriate measures to facilitate the transition from the system in force in each member state before the application of this regulation to the system established by this regulation ' ', article 1 of regulation no 3191-80 provides as has been stated, that notwithstanding article 9 (3) Of regulation (eec) no 1837-80, the amount referred to therein is not to be charged on export of the products in question from the community.

31 Inasmuch as Julius Kind KG complains that a similar suspensory measure has not been adopted for exports from one member state to another, its application is unfounded. There is no provision in the treaty and no general principle of community law which requires measures based on the needs of exports to non-member countries to be extended to trade between member states. On the contrary, for the reasons already indicated suspension of the claw-back in respect of exports from a member state in which producers are paid the variable slaughter premium to another member state where that premium is not paid could disturb the community markets in mutton, lamb and goat ' s meat which regulation no 1837-80 is designed to stabilize.

32 In so far as Julius Kind KG seeks to argue that the commission ' s suspension of the claw-back on exports from the community damaged its exports to non-member countries, inasmuch as regulation no 3191-80 made it more advantageous for such countries to obtain their supplies directly from a country such as the united kingdom in which the slaughter premium and, therefore, the claw-back were applied, it must be noted that one of the conditions governing liability on the part of the community is that the applicant seeking compensation must have actually suffered damage.

33 In this instance the applicant ' s allegations to the effect that the suspension of the claw-back on exports to non-member countries deflected trade to its detriment since its customers - the swiss, in particular - transferred their custom to british suppliers, are devoid of substance.

34 An examination of both the file on the case and the statements made by the applicant at the hearing show that it had not built up any firmly established market in the countries which were not members of the community. In the case of the swiss market, in particular, which is the sole concrete example given of the expansion of its business outside the community, the applicant has acknowledged that it did not seek to penetrate the swiss market until september 1980. Nor has it been established, or even, in fact, maintained, that the applicant had acquired regular customers there before the introduction of regulation no 3191-80. As a result it must be held that the applicant has failed to furnish even the beginnings of proof in support of its allegations that the commission ' s conduct caused it to incur a loss and that it is not necessary to determine whether the other conditions governing liability on the part of the community are met.

35 As a result of the foregoing the application for compensation for damage made by Julius Kind KG must be dismissed.

Costs

36 Article 69 (2) of the rules of procedure provides that the unsuccessful party is to be ordered to pay the costs. Since the applicant has failed in its submissions, it must be ordered to pay the costs, including those of the intervener in support of the defendant.

On those grounds,

The court

Hereby:

1 Dismisses the application;

2 Orders the applicant to pay the costs, including those of the intervener.