Court of Justice 13-10-1971 ECLI:EU:C:1971:96

I

When the question is raised whether the Council in adopting Regulation No 769/68 (OJ 1968 L 143, p. 14) on the implementation of Regulation No 1009/67 (OJ 1967 308, p. 1) was guilty of a wrongful act or omission—as we know this is the applicant's view — it must first be considered whether the implementing regulation must be considered illegal. Illegality is, in general, the first prerequisite for a claim based on the liability of the administration even though on its own it is naturally not sufficient. In the applicant's view the illegality arises on two grounds. On the one hand Article. 37 of Regulation No 1009/67 is infringed; on the other the Council has created a discriminatory rule which disregards the principle of equal treatment.

1. First let us look closer at the first objection. As I have already explained in my opinion of 13 July 1971, an authorization to make compensatory payments to sugar factories was made under Article 2 of Regulation No 769/68 only in the case where the national price of white sugar calculated in a particular manner was on 30 June 1968 above the target price valid from 1 July 1968. At least it can be so stated summarily as regards the territory of the Federal Republic. It would have been right in the applicant's view on the other hand to take the intervention price and not the target price as the criterion.

To this objection it must be said immediately that its validity is not supported by the wording of Article 37 of Regulation No 1009/67. This provision states simply as follows: ‘The Council, acting in accordance with the voting procedure laid down in Article 43 (2) of the Treaty on a proposal from the Commission, shall, in respect of sugar in stock on 1 July 1968, adopt provisions concerning the measures needed to offset the difference between national sugar prices and prices valid from 1 July 1968.’ Mention is made quite generally of ‘measures necessary’ which properly understood refers to a discretion on the part of the legislature. The prices, too, are not stipulated; it is not stated which of the various prices applicable with their price margins under the market organization (target prices, intervention prices, derived intervention prices, etc.) comes into consideration. This also appears reasonable because at the time Regulation No 1009/67 was adopted (18 December 1967) the prices for the marketing year beginning on 1 July 1968 had not yet been fixed. This was done only later namely on 9 April 1968 in Regulations Nos 430 and 432 (OJ 1968 L 89, p. 2 and p. 4) and on 18 June 1968 in Regulation No 767 (OJ 1968 L 143, p. 11). There is accordingly no support from the wording of Article 37 of Regulation No 1009/67 for the correctness of the applicant's view.

Further, and here I come to a second point, it cannot be said in my view that a compelling indication that the intervention prices should be the criteria may be derived from Regulation No 769/68 itself, since in Article 2 (2) thereof the intervention price is mentioned in connexion with the determination of the compensatory amount. On the other hand there is the clear wording of Article 2 (1) which refers to the difference between the national prices and the target prices. Further, it should not be overlooked that in Article 2 (2) it is simply stated: ‘The amount of this compensatory payment … shall be calculated on the basis of the difference …’. It is thus not said that the compensatory amount should be equal to this difference. Seen in this light it appears more reasonable to see the function of the said paragraph, as does the Council, as determining the conditions of calculating the intervention price, that is, as one of the factors mentioned in paragraph 1.

Similarly there is no merit in the applicant's argument which refers to the relationship between the minimum price of beet and the sugar price. It was stated, as you know, that previously, that is under the national organization, a fixed relationship existed between the minimum, price of beet which was guaranteed to beet-growers and the fixed price of white sugar; the fixed price was so calculated that the minimum price of beet could be paid out of it. Now this function has been taken over by the intervention price; the minimum price of beet stands, as may be seen from various Community regulations, in a particular relationship to the intervention price and it must accordingly appear obvious in the context of a compensation system to compare the previous national price with the intervention price of the common organization of the market. To this, at first sight impressive inference, the Council has nevertheless objected that in truth the function of the intervention price is not identical to the previous German fixed price simply because it provides only the lower limit of a price margin within which the sugar price should be determined by the market (I shall return to this fact in a later connexion). Moreover, the beet price represents only one of several cost factors. Had in fact compensation with regard to the various beet prices been intended then the relevant provisions would certainly have been worded accordingly. In my opinion the validity of these objections can scarcely be questioned and therefore indeed the viewpoint just dealt with fails as a basis of the application.

Finally, it is clear that no support can be derived from the applicant's reference to the system of compensation for losses resulting from revaluation which was laid down in a decision of the Commission of 4 December 1969 and which took the intervention price as a basis. As the Council rightly stresses it is here a question of a different kind of rule for a different kind of problem. Moreover, it would have easily been possible to base this compensation, with another percentage rate, on the target price, because this is laid down at a fixed relationship to the intervention price.

Further and in particular, the essential characteristics of the common organization of the market in sugar militate against the applicant 's argument (compensation on the basis of the intervention prices). These include the already-mentioned fact that they have no fixed prices but seek to allow the market laws to prevail within the margins formed by the target and intervention prices: to this extent the prices should vary freely on the market. Prices have obviously followed the corresponding trend after the coming into force of the organization of the market in sugar. This may be inferred from the declarations of the Council according to which the actual prices for white sugar in the Federal Republic in the months after the coming into force of Regulation No 1009/67 were higher than even the previous national fixed price. A similar picture appears from the observations of the applicant even when it stresses that the slight increase in the average price of white sugar in the months of July to November 1968 did not apply in North Germany where the prices in the months of July to October 1968 were less than the old fixed price. This drop in the price was in fact to only a quite small extent (DM 0,21 per 100 kg⁽²⁾. Had the compensation in view of this situation, as the applicant considers right, been allowed on the basis of the intervention price, then an additional profit would obviously have been provided for those in receipt of the compensation (namely to the amount of the difference between the actual prices and the intervention price). This could however certainly not be the intention of the compensatory measures in question here and thus it is clear that the intervention price was not the appropriate criterion. It is in my view likewise clear that compensation on the basis of the prices actually obtained could not come into question. To this extent the fact is significant that Article 37 of Regulation No 1009/67 speaks of the prices valid, that is fixed by the law. Moreover, such a rule would probably have led to the sugar factories concerned making no special efforts to obtain prices for their old stock higher than the intervention prices. The price structure would thus not have developed, as the basic principles of the organization of the market in sugar, provide, on the basis of the laws of the market and above the level of the intervention prices and this would have been at the expense of the public purse, that is, the taxpayer who finally had to provide the compensation.

I therefore think — no other conclusion is possible—that it was quite justified according to the intention and objective of the organization of the market to provide for any price compensation for the so-called countries with high prices on the basis of the target price, that is the upper limit of the price margin in Community law, as the contested regulation has done. In any case there is nothing which would appear invalid according to the basic Regulation No 1009/67 by reason of the introduction of this system and the failure to introduce the system which the applicant considers right.

For the sake of completeness it could moreover be observed in this connexion that compensation was intended only for considerable differences in price. This appears from the recitals to Regulation No 769/68 and this cannot be challenged because it is both economically reasonable and in accordance with the principles of the rule of law. If the figures are compared it must however appear extremely questionable whether the difference between the former raw sugar price and the intervention price may be said to be considerable. The intervention price of raw sugar (converted to the price of white sugar) was in fact 20,11 u.a., whereas the former national price (according to the applicant's calculation) was 20,76 and (according to the calculations of the Council) 20,55 u.a. Regarded thus, the view does not in fact seem unreasonable that even taking the intervention price as the basis of the compensation it would not necessarily have led to the result desired by the applicant. This represents, however, I can say quite clearly, only an additional and not a conclusive consideration in deciding the present case.

2. The illegality or Reguiation No 769/68 is alleged to arise, you will recall, from disregard of the principle of equality of treatment, that is, the violation of a general legal principle as well as the principle contained in Article 40 (3) of the EEC Treaty and which certainly applies also to derived Community law. I will now examine the position with regard to this complaint.

In this respect the applicant claims, as is known, that the rules which have been established discriminate against the raw sugar producer in the Federal Republic of Germany because the payment of compensation is made dependent on the trends in the price of white sugar and because different points of reference applied according to whether a charge was due or compensation could be paid (in the first case, that is, for the countries with low prices, the criterion was that of the intervention price; in the second case the target price, as is known, was the criterion).

Let us begin by turning to the first point of this criticism. It may be dealt with, in my view, relatively simply. Relating the rules governing compensation to the trends in the price of white sugar as regards raw sugar producers, too, does not in fact appear open to challenge, and this is so simply because, apart from the lack of transparency in the market for raw sugar, having regard to the roughly equal level of processing costs in the Member States, it can be assumed that essentially the price trends in respect of white sugar follow parallel lines to those in respect of raw sugar. Thus in the event of an increase in the price of white sugar, the price of raw sugar will increase and vice-versa. A situation in which only one of these prices increases while the other falls must in fact appear theoretical and improbable. In any case it was not shown that such a position existed. In particular it did not exist in the Federal Republic of Germany, for here both prices, taken on average, obviously increased. The same is true of the assumption that the relationship between the old and new prices was possibly different, with regard to raw sugar, to that with regard to white sugar, that is, there was perhaps a situation in which both prices were above the level of the Community prices, but in one country the compensation was not available because only the raw sugar price and not the price of white sugar was above the level of the target price, whereas in another country payments of compensation for raw sugar were possible, because both prices were above the level of the target price. In this respect, too, the applicant could indeed point to no case of actual different treatment. The objection on the ground of discrimination can accordingly certainly not be described as valid from the aspect I have just dealt with. It should be added, moreover, that the Council has shown that on the basis of the trends in the price of raw sugar under the criteria laid down in Regulation No 769/68, the validity of which has so far not been doubted, compensation could not have come into question in the Federal Republic of Germany. In this connexion it is true some difficulties have emerged in deriving the former national price of raw sugar which was not fixed by law from the price of white sugar (namely with regard to the question whether the basis was the price valid for larger quantities of white sugar and what packing costs were to be deducted). Ultimately they are not important, for even if one does not share, in this respect, the persuasive view of the Council (according to which the basis should have been the price valid for larger quantities of white sugar, because the comparable intervention price as a rule, apparently without exception, applied only to quantities in excess of 300 metric tons) and even if one disregards the fact that with regard to the packing costs the applicant has so far been unable to produce any uncontestable evidence on the basis of jobbing contracts concluded with the refineries, the result is in any case such that the criteria of Regulation No 769/68 were not fulfilled. The former price of raw sugar, in terms of white sugar, was either DM 82,23 per 100 kg according to the Council or DM 83,06 according to the applicant, whereas according to Community law a raw sugar price DM 84,92 applied, that is, a price which was not under the level of the previous German price. Relating the compensation rule to the trends in the price of white sugar accordingly offers, from whatever point of view, no cause for criticism.

With regard to the second point of the objection on the ground of discrimination, that is, the fact that for countries with low prices both with regard to the question whether charges had to be levied and also their calculation, the difference between the former national price and the intervention price was the basis, whereas for countries with high prices it depended on the target price, the following has to be said. In my opinion it is of great significance that both sets of rules had different functions: on the one hand (in the case of the countries with low prices) unjustified profit was to be prevented, and on the other hand (in the case of countries with high prices) considerable loss of profits were to be prevented. This alone is substantial justification for the differing structure and the selection of different criteria. It was moreover shown that it was not possible to choose a uniform criterion, that is, applicable both in respect of the compensation and the intervention price. On the other hand, it must have appeared just as unreasonable and inadmissible to assess the charge for undertakings in countries with low prices on the basis of the prices actually obtained. Quite apart from objections based on the wording, this would have removed any spur to obtain prices above the level of the intervention price, that is, prices would have been at the level of the intervention prices or thereabouts. However, as already stated, this is scarcely compatible with the aim and objective of the organization of the market in sugar which provides for a free price formation, as far as possible above the level of the intervention prices.

Having regard to the structure or the organization of the market and its characteristics in harmony with the objectives of the common agricultural policy (free price formation within certain limits) the rules laid down for the transition from the former national organization of the market to the common organization of the market, which provide no special measures for the case where the previous national prices were within the price structure laid down by the Community, in spite of the absence of uniform criteria for charges and compensation and in spite of certain various economic effects, which the Council also admits, is not to be regarded as discriminatory but ultimately as economically justified. Accordingly the principle of equality of treatment was not disregarded, whether from the point of view of general legal principles or of Article 40 (3) of the EEC Treaty. In consequence, looked at in this light, Regulation No 769/68 cannot be said to be invalid.

II

This conclusion clearly removes the ground from the claim for damages, since the existence of a wrongful act or omission is alleged to arise from the two complaints dealt with and other infringements of the law cannot be discerned. It is therefore superfluous to go into further questions arising within the framework of the liability of the administration such as that of misconduct, contribution to misconduct, assessment of the damage and the causal link between the conduct of the Council and the alleged damage. To this extent it should in any case be said that one may doubt whether there is sufficiently substantial evidence of the additional qualifying factor of misconduct necessary under Community law (which in any case in the case-law on Article 40 of the ECSC Treaty⁽³⁾ and which may probably also be regarded as a general principle under the legal systems of the Member States⁽⁴⁾. The applicant has limited itself to stating that the problem of the raw sugar factories in countries with high prices was known to the Council but beyond this the applicant has not produced any factors such as a clear infringement of a duty to take care, disregard of economic facts⁽⁵⁾ or the disregard of important interests of the sectors of the economy concerned. Further it should be observed that there are objections with regard to the calculation of the extent of the damage, since the plaintiffs stocks on 30 June 1968 consisted in part not of raw sugar but of white sugar (12 853,00 kg), that is, a product for which compensation for raw sugar did not come into question. The profits allegedly obtained by the applicant from its sales can scarcely be described as appropriate having regard to the general price trends set out by the Council (which would raise the question of perhaps the joint liability of the applicant). Finally the chain of causation from the Council's conduct appears questionable. Only an authorization to compensate is provided in Regulation No 769/68. Having regard to the conduct of another Member State which was granted such authorization but which made no use of it and having regard to the fact that the representatives of the Federal Republic in the Council apparently did not emphatically plead for an extension of the authorization, it may appear quite doubtful whether effective use would have been made of such extensive authorization (as the applicant considers proper).

It is not however necessary to go further into all this, because the rules adopted by the Council, as we have seen, offer no cause for criticism under the Treaty and derived Community law. Therefore it is not necessary to accede to the applicant's request and to go into the question what other forms of regulating compensation were discussed by the Commission and other parties when Regulation No 769/68 was being drawn up.

III

To summarize, my opinion is:

The principal claim in the application by the sugar factory Schöppenstedt must be regarded as admissible (with regard to the alternative claim I refer to my opinion of 13 July 1971). It must however be dismissed as unfounded, because no wrongful act or omission on the part of the Council can be discerned, with the further consequence that the applicant must bear the costs of the proceedings.