Court of Justice 02-07-1974 ECLI:EU:C:1974:70

Illegality and discriminatory character of the additional subsidy

The applicant claims that the Regulation granting an additional subsidy exclusively to Italian oil mills is an infringement of Article 7 of the EEC Treaty which prohibits any discrimination on grounds of nationality.

According to the Council, the applicant misunderstands the meaning of the prohibition of any discrimination as laid down in Article 7 which in fact only becomes effective where a different treatment constitutes an actual discrimination.

Furthermore, the applicant was not able to provide any proof whatsoever to show that the Council was guilty of a ‘sufficiently flagrant’ violation of a superior rule of law for the protection of the individual. In support of its argument, the applicant states that the reason warranting the grant of an additional subsidy is that its oil mills are located far from the production areas, and that it should therefore enjoy the same treatment as that accorded to Italian oil mills, since it is located as far as they are from the Community production areas. However, reference to the criterion of distance from the production areas does not in itself show that the applicant is in the same position as Italian oil mills.

The difficulties encountered by Italian oil mills in obtaining supplies of colza and rape at prices taking into account conditions of competition, had arisen and become known only after the entry into force of the organization of the market in fats, and led the Community to adopt corrective measures forthwith. The Commission's refusal to take a decision under Article 226 of the EEC Treaty in no way shows that there was no difficulty as the application was rejected because it was then already intended to grant an additional subsidy to Italian oil mills.

Even if Regulation No 876/67 had adverse consequences for the applicant, this was not the ‘odious case’ or the ‘serious discrimination’ referred to by Mr Advocate-General Roemer in his opinion in the Joined Cases 63 to 69/72. At most the applicant lost certain advantages which it felt should have been granted it. Such loss could be required of it in order to attain Community objectives. Besides, it had never been claimed that German oil mills had encountered difficulties similar to those clearly encountered by Italian oil mills.

According to the Commission, a right to compensation under Article 215, second paragraph, arises only where the institutions of the European Economic Community, within the framework of their non-contractual liabilities and their sovereign acts, commit a sufficiently flagrant breach of an obligation in respect of the applicant and where, by way of normal consequence, serious financial loss, corresponding exactly to the amount of compensation sought, results for the applicant.

In accordance with the provisions of Article 1 and Article 3 (2) of Regulation No 876/67, the additional subsidy would be paid, without reference to nationality, to anyone processing Community-produced seed in an oil mill located in the Italian territory. German undertakings processing seed in Italy could be granted that subsidy.

The special prohibition against any discrimination laid down in Article 40 (3) of the EEC Treaty is a limitation which applies only at the end of the transitional period provided for in Article 8, that is 31 December 1969. The additional subsidy was in fact a transitional measure. Unlike the measures taken in other agricultural sectors, the aim of the basic Regulation No 136/66 was to establish directly a common system in regard to prices, without in the first place going through a special transitional stage. Immediate application of such a strict regulation had adverse effects on the competitiveness of Italian oil mills, which were subsequently remedied by means of an additional subsidy. Unconditional exclusion of transitional measures did not, in any event, meet the objective of Article 40 (3).

Even if the existing system of subsidy were held to be discriminatory, the applicant's right to compensation could a priori be based on an infringement of Article 40 (3) only from 1 January 1970.

Only a sufficiently flagrant infringement can give rise to an action for damages under the second paragraph of Article 215 of the EEC Treaty, for the legislative action of the legislator in respect of rules governing market organs means that he should have a wide margin of discretion, and that he should be bound and entitled to set priorities and to put certain interests before others.

In Case 5/71 mentioned above the Court limited infringement of the discrimination rule to infringements of a protective norm of superior law, at the very limit of discretionary powers. Such discrimination must be completely unfair from a factual point of view and irrational in its objectives. What must be ascertained is whether the applicant had suffered from a discriminatory treatment between 1970 and 1972, and to that end it would be desirable that the applicant supports its case by arguments and documentary evidence.

There would be discrimination within the meaning of Article 40 (3) had the Community legislator provided, in substance and not merely formally, for different rules in regard to identical situations or had the same rules been applied to completely different situations. The applicant would thus be at a disadvantage in relation to others where such different treatment is not warranted by the existence of fairly substantial objective differences.

The applicant retorts that the Commission's claim that the additional subsidy would be paid without any discrimination on grounds of nationality to anyone processing seeds in an oil mill located in the Italian territory, is purely a matter of form and irrelevant, since the additional subsidy is of benefit ‘essentially’ to Italian oil mills.

Furthermore, it was the Council which decided not to introduce a transitional system similar to the system operating for other market organizations. It could therefore not unilaterally set up a transitional system in favour of one Member State by means of a regulation made under pressure by that State. In any case, Article 8 (1) of the Treaty provides that the transitional system may extend over a total period of 12 years, and the action for damages would in any event be justified in so far as it relates to the period after 1 January 1970.

The Council, in its rejoinder, states that Regulation No 876/67 does indeed form part of the common organization of the market in oils and fats, owing to its having been adopted on the basis of Article 36 of Regulation No 136/66. In the applicant's view, the recitals of Regulation No 136/66 show that additional subsidies granted on a national basis or having regard to national criteria are not compatible with the Treaty nor with the organization of markets. But it should be noted that Regulation No 876/67 does not provide for a national subsidy but for a Community subsidy which must not be regarded as being different from the basic subsidy provided for in Regulation No 136/66.

The prohibition laid down in Article 7 of the EEC Treaty is applicable ‘without prejudice to any special provisions contained therein’. Special situations arising while implementing the common market could warrant a minor and temporary discrimination on grounds of nationality.

The Commission, in its rejoinder, claims that the additional subsidy in question aims at making good the economic drawbacks which affect, or might affect colza processing mills in Italy when the, until then national, markets become the common organization of the market provided for by Regulation No 136/66.

In the field of the common agricultural policy the prohibition of any discrimination found particular expression in Article 40 (3) of the EEC Treaty, and is the only standard of protection and the only instrument whereby the degree of legality of Community acts can be measured.

The prohibition of any discrimination contained in that Article is only one of the fundamental tenets of the common agricultural policy and is dependent on and interacting with other requirements, e.g. the need for merging existing national markets into a common market organization, and the need to effect this change in an economically rational manner, so as to avoid causing serious and lasting damage to those concerned.

To some extent then, the prohibition of any discrimination must be relative.

Situation of the applicant in relation to its competitors in Italy

The applicant claims that, since it is located far from the production areas, it is largely in the same position as an Italian oil mill situated at a distance of 350 km. from the main colza cultivation areas in Southern France. As it is, when granting a different treatment to Italian oil mills the basic criterion used in the regulations relating to the additional subsidy is that of distance between the oil mills and colza producing areas.

The Council declares that it devolves upon the applicant to specify the reason why it processed oil seeds both from third countries, and from Community countries; under what terms it purchased oil seeds produced in the Community; in which areas of the Community the oil seeds were bought; and what were the transport costs involved. It was not possible to establish, on the basis of the theoretical figures supplied by the applicant, whether and to what extent it had been in the same situation as Italian oil mills.

The applicant was mistaken when it stated that the additional subsidy had enabled an oil mill in Ravenna which processed colza seed produced in Germany to sell in that country oil cake DM , cheaper than the applicant could have done. If the applicant had sold its oil in Italy where the market price is much higher (DM , against DM , per 100 kg) rather than in Germany, it would have made a sizeable profit, even after deducting transport cost of the oil from its oil mill to Italy (approximately DM , per 100 kg), the reason being that 400 kg of oil is much cheaper to carry than the 1000 kg of seeds needed to produce 400 kg of oil. With the profit thus made, it could have made still more profit than its Italian competitor even though it might have sold its oil cake at a lower price in Germany.

The applicant answers that it is indeed in the same situation as an oil mill in Venetia, not only having regard to the distance from production areas, but also to transport costs. Colza seed from Schleswig-Holstein and Lower Saxony are carried partly by rail or truck and partly by ship up to the mouth of the Rhine and thence upstream by barge.

As to actual transport means in respect of colza for oil mills located in Venetia, it devolves upon the Commission or the Council to specify what they are since they state that, although distances are the same, transport costs are different. In fact, Italian oil mills enjoy cheaper means of transport.

It is true that Italy is one of the biggest colza oil consumers in the Community, but there is also sizeable consumption of rape oil — i.e. oil extracted from colza seed — in the Federal Republic of Germany. Until 1967, the Italian market was practically an exclusive domain for the Italian oil industry. This however cannot be brought forward as an argument in support of a different treatment within the common market. If ‘domains’ existed at the national level, they had to accept competition. The Italian oil industry was dependent on imports of oil seeds coming from third countries and from French production areas. The applicant was in the same situation: it could cover only about 12 % of its colza requirements within North Rhine-Westphalia, and must also import either from far distant Community production areas such as Schleswig-Holstein or Northern France, or from third countries.

But, owing to an additional subsidy of 9 u.a. per metric ton, Italian oil mills are now able to pay, within the Community, prices notably higher than German oil mills. Thus, before the introduction of the additional subsidy, colza exports from Schleswig-Holstein to Italy were practically non-existent, while they are now very substantial. This change in the pattern of trade was caused by a distortion of competition resulting from the additional subsidy.

As to ascertaining whether the effects of the subsidy placed the applicant in a difficult position as regards supplies of colza the applicant points out that its share in the Community production figure fell from about 4 % in 1969 to under 1 % in 1972. During that period, Italian oil mills accounted for an enormously increased percentage. The applicant did not benefit from the Community preference resulting from the fixing of an intervention price lower than the target price, since Community colza which, could and should normally go towards supplying its oil mill, was redirected towards Italy as a result of the additional subsidy.

It does not devolve upon the applicant to answer the Council's questions. As regards the handicap suffered from the point of view of competition which is assessed at , u.a./100 kg, the terms under which the applicant bought seeds, the areas from which it bought them and the prices obtained are of little consequence. What does matter is first the conditions looked at in the abstract which resulted in the applicant being unable to obtain oil seed produced in the neighbouring areas, and the overall market conditions.

Tha additional subsidy of DM , for the purchase of colza in Schleswig-Holstein exceeds by far the freight cost differential (DM 13) between transport to Germany from North-Krefeld and transport to Germany from North-Ravenna. This suffices to show that there is in fact marked discrimination.

The Council's contention that, having regard to market prices, the applicant could have sold its oil in Milan at DM , per 100 kg instead of DM 99 in Germany, is based on transport cost Krefeld/Italy of DM , per 100 kg; this figure however is incorrect. In fact, freight cost is DM , per 100 kg, and incidental expenses absorb most of the DM , difference.

The Council retorts that the applicant should not base its calculation on selling prices applicable in the Châteauroux area, which is indeed at the same distance from Ravenna and from Uerdingen, as this would not be the nearest area where either the applicant or Italian oil mills would normally get their supplies.

Furthermore, during the years from 1969 to 1972, the applicant processed less and less Community oil seeds. In absolute terms however the quantity of colza processed by the applicant increased by by nearly 50 %:

• 1969: 31 000 metric tons

• 1972: 45 800 metric tons

It therefore had no supply difficulty and no loss of profit. What it in fact expects is not a compensation for losses incurred, but payment by the Community of a special subsidy which it claims and which would consequently increase its profit margin.

In its rejoinder, the Commission points out that the applicant's submission, based exclusively on the grounds of distance and comparison between transport costs, does not paint a true picture of its competitive position.

The introduction in Italy of the additional subsidy which is the subject of the dispute was the result of two competitive disadvantages:

• the fundamental disadvantage in regard to prices when purchasing Community seeds (problem of supply),

• and the resulting unfavourable price position when marketing the oil processed from Community seeds (problem of competitiveness).

Guaranteed purchase associated with intervention prices for colza seed means that such prices have an effect equivalent to minimum market prices. Furthermore they are ‘regionalized’, since their level is set differently according to the production area and the consumption area involved. In fixing lower prices for production areas than for consumption areas and deficit areas, it was hoped to help the latter. But the main result of the structure selected for intervention prices was higher free factory cost prices for Italian oil mills than for competitor oil mills closer to production areas. The subsidy paid for the processing of such seeds sould not make up for that disadvantage and would furthermore be likely to worsen it by helping to make more competitive those oil mills situated close to production areas.

To ascertain wheter the applicant should have been granted the additional subsidy, one should first ascertain how it could transport the Community colza it processes.

The Commission notes that the applicant refused to divulge what its position was. On the basis of figures for the 1973/74 marketing year, it compares the free factory cost price applied for Community colza (supply position):

1. As regards the applicant:

   The intervention price applicable to the applicant, i.e. the price for Düsseldorf, is derived from the price applicable to the Dijon production area, which is , u.a. at Dijon and , u.a. at Düsseldorf per 100 kg colza (Regulation (EEC) No 1704/73, OJ L 175 of 29 June 1973, p. 1.).

   The applicant would then be able to buy the colza it needs in the Dijon — Strasbourg area on terms identical with those existing in Düsseldorf itself. It would then be in the same position as an oil mill of the Dijon — Strasbourg area close to the production areas.

   Furthermore, the prices actually paid for colza on the market are higher than the intervention prices by about , u.a. per 100 kg (Commission's calculation) and, consequently, the applicant's cost price would be , + , = , u.a. per 100 kg of Community colza. That price is lower by , per 100 kg than the target price (calculated in accordance with Regulation No 1360/73, OJ L 141).

2. As regards an oil mill situated in the Venice area:

   The Rhone valley is the nearest production area. The lowest transport cost from Lyons to Venice would be of , u.a. per 100 kg. Also on the basis of the market price plus an average of , per 100 kg, the cost price would be , + , + , = , u.a. per 100 kg.

This shows an advantage of , u.a. per 100 kg for the applicant. Also, the price of , u.a. per 100 kg being higher than the target price, the price of colza purchased on the world market would, for a Venetian oil mill, be lower than the price of Community colza. And, instead of enjoying, as does the applicant, a preferential price when buying Community seeds in comparison with colza for processing bought at world price, a Venetian oil mill would be obliged to buy on the world market.

The initial conditions created by the common organizations of the market would then, when buying Community colza, be fundamentally different and more favourable for the applicant than for an oil mill in the Venice Region.

The Commission then compares the competitive position in the sale of oil processed from Community colza. According to its calculation, the oil from Community seeds is offered at the following prices by oil mills situated near production areas:

Offer price quoted at Venice for 41 kg of oil obtained from 100 kg of colza seeds processed at

• Hamburg: , u.a./100 kg colza,

• Bordeaux: , u.a./100 kg colza,

• Dunkirk: , u.a./100 kg colza,

• Venice: , u.a./100 kg colza.

These quotations show that an oil mill located near Venice would be clearly worse off as regards price by comparison with sellers having equal capacity but situated close to production areas. The applicant is not in that position, for a similar calculation would give at Düsseldorf an offer price equal to , u.a. for 41 kg of oil obtained from 100 kg of seed.

The applicant is therefore basically not in the same position as an oil mill in the Venice region and its claim for equal treatment is unfounded.

With regard to transport, the applicant could without difficulty get supplies by ship from the Dijon — Strasbourg — Chalons s/M region and also from Schleswig-Holstein. But Venetian oil mills can only get their supplies from the Rhone Valley which involves rail transport over about 1 000 km. and by ship from the region of Bordeaux, Northern France and Schleswig-Holstein which involves transport cost between , and , u.a. per 100 kg colza.

In any event, the full significance of transport costs in regard to the competitiveness of each oil mill only emerges if related to possible cost prices of Community colza; therefore even a similarity in transport costs does not automatically mean, in the existing context, that there is a discrimination detrimental to the applicant.

The applicant claims that ruling prices prevented it from getting an adequate supply of Community colza. Even so, the defendant could be held responsible only if intervention prices fixed by it had an incidence on prices and conditions of competition on the colza market. It was however shown by the Commission that a Venetian oil mill was generally at a disadvantage from the point of view of competition; this is not true of the applicant which thus finds itself in a much more favourable position.

Furthermore, the common organization of the market in oil seeds allows effective market price developments and existing demand to depend freely on supply and demand trends, and it is therefore quite possible that at a given moment the applicant was unable to find the quantity of Community colza it wanted at the place and at the price that it hoped for. But an Italian oil mill could have been in the same position, since the granting of an additional subsidy gives no absolute guarantee of supplies.

The fact that the applicant mainly processed colza coming from third countries is no evidence in itself that it could not buy Community colza as a result of the Community price structure since it may have decided not to buy colza within the Community for various reasons it may very well not have revealed.

Actual Loss Incurred

The applicant maintains that the damage involved consists in the fact that it did not receive any subsidy corresponding to the distance between its oil mill and production areas. The loss it incurred is then equal to the total quantity of EEC colza used by it as follows:

• 1969: 21 700 metric tons,

• 1970: 12 metric tons,

• 1971: 3 900 metric tons,

• 1972: 7 900 metric tons,

that is a total of 33 512 metric tons for the four years, that figure being multiplied by a subsidy amounting to , u.a. per 100 kg.

The Council points out that for the 33 512 metric tons of Community colza seed it processed between 1969 and 1972, the applicant calculated a subsidy of , u.a. per 100 kg, or a loss of 201 072 u.a., or DM 735 924, while in its letter of 29 January 1973, it stated that the loss incurred was of 20 072 u.a., that is about 10 times less.

Furthermore, it did not produce any evidence that it had actually processed 33 512 metric tons of Community seeds. The figure of , u.a. per 100 kg, was worked out on the assumption that the distance between its own oil mill and a given Italian oil mill in relation to a given point constituted sufficient proof. But, in the absence of any other evidence, it would be impossible simply to assume that the loss for which compensation is sought was in fact incurred.

The Commission, for its part, states that as long as the applicant, in spite of the additional subsidy granted to Italy, was able to market on Community or world markets products obtained by processing Community-produced seeds under normal conditions and making a profit; and as long as developments in that industrial sector did not bring about any loss either in turnover or in profits made, it should be accepted that it incurred, as a result of the discrimination which it claims was practised against it, no actual loss which it could recover in an action for damages. In any event, it could prove the point only by showing its books so as to enable a meaningful comparison to be made between its present position and its previous position. The particulars given in its application are quite inadequate, and the attempt to assess colza oil cake has no probative value at all.

The application for a subsidy of , u.a. per 100 kg of processed colza is unsupported. The applicant did not indicate the transport cost used in that respect, neither did it take into account the fact that the compensation offered to Italian oil mills corresponds only to transport costs from the Italian frontier.

Another point to consider, since Italian oil mills worked mainly for the Italian market, is to what extent the granting of an additional subsidy in Italy was actually the cause of the supposed loss to the applicant, and to what extent its losses were abnormal. It would finally be advisable to examine whether the applicant did not itself help to bring about certain losses since it waited until the beginning of 1973 to draw the Commission's attention to that state of affairs, although the applicant was aware of the whole problem since 1967.

The applicant answers that apparently there was a misunderstanding as to its assessment of the damage, the reason for the damage lying in fact in a marked discrimination.

In its assessment of the damage caused, it used as a basis for reference the recitals of the Regulations introducing an additional subsidy. The conclusive question when assessing the damage is not to find out how losses should be calculated but only whether its arguments are well founded.

None of the questions put by the Council and by the Commission is relevant apart from the question: ‘Has the applicant taken into account the fact that the compensation offered to Italian oil mills corresponds solely to the transport costs by rail from the Italian frontier?’ to which the answer had to be ‘no’. Indeed, the proposal by the Commission to the Council in respect of the 1972/73 marketing year provided for an additional subsidy different according to the region involved (, u.a. per 100 kg colza for Venetia), and the Commission should admit that it is bound by this mode of calculation.

That the compensation offered to the Italian oil mills ‘corresponds only to the transport costs by rail from the Italian frontier’ is something new. The Commission should then explain on what basis that average amount was paid differently to the various oil mills. This would in any case contradict the statement that the Ravenna oil mill ‘is granted a flat rate repayment corresponding approximately to the cost of transport by sea from seaports in Northern France’.

In its letter of 29 January 1973, the applicant did in no way put forward losses amounting to 20 072 u.a., but did indeed mention the figure of 201 072 u.a.

Finally, the applicant furnished evidence concerning the processing in its mills of 33 512 metric tons of Community seeds.

The Council retorts that it is not admissible that the applicant should seek to confine itself to an abstract calculation of the damage caused.

Mr Advocate-General Roemer, in his opinion in the Joined Cases 63 to 69/72, stated that the concept of an abstract calculation of a damage did not exist in international law. The subsidy equal to , u.a. per 100 kg of processed oil seeds results from a theoretical calculation. It is for the Community organs competent in the field of economic policy to work out the amount of the additional subsidy. As to the Commission's proposal for a Council Regulation providing for the granting of a subsidy of , u.a. per 100 kg of oil seeds to oil mills located in the region of Trentino-Alto Adige. This provides for the regionalization of the additional subsidy only in respect of Italy. Equal distances as the crow flies from an oil mill and the applicant's mill respectively to a given French production area can in no way be used as a basis to assume that, apart from the distance as such, transport conditions, which are of great importance, are the same for the applicant and for the Italian oil mills under consideration.

The Commission points out that the determining factor for a ruling in this dispute would therefore be whether the loss in respect of which the applicant asks for compensation must be looked upon as a particularly heavy loss.

The applicant considers that the loss incurred results solely from the fact that it has until now been deprived of an additional subsidy to which it should be entitled by virtue of the principle of equal treatment. One cannot however automatically equate discrimination with loss. There could well be rules providing for subsidies which, though discriminatory, cause absolutely no loss when paid to oil mills working for another market and obtaining colza supplies from other markets. In similar claims for damages formerly dealt with by the Court, the applicants always put forward a specific loss (e.g. Cases 63 to 69/72: loss of parts of the market).

The applicant does not do so, but refers to alleged losses incurred as a result of higher colza prices in Northern Germany or of inadequate proceeds from the sale of oil cake in Southern Germany, and then stresses that it does not wish to rely on them. The sole purpose of this case is to obtain that an additional subsidy should be paid to it in respect of past activities. The purpose of the action is therefore to secure recognition of its right to the additional subsidy and not to obtain damages. A so-called ‘abstract’ calculation of the loss incurred would in no way change matters, as it concerns solely the amount of such loss, supposing that a real loss was actually incurred. Under Community law, no other provision is applicable. The applicant is not bound to have recourse to the expedient of Article 215, second paragraph, to give a specific legal basis to the right to a subsidy as claimed by it. That Article only covers damages which, on the one hand, go beyond a straightforward right to receive a subsidy allegedly due and on the other hand, in cases like the present one, which can also be described as being exceptional and particularly serious.

From a procedural point of view, it can be added that only the administrative authorities of Member States can decide in regard to a person who may be entitled thereto, the existence and the amount of a given subsidy, in accordance with Community law. The applicant could have claimed that the amount of aid granted to it was not sufficiently high, and instituted proceedings before the competent national courts. This Court would then have been able to consider under Article 177 of the EEC Treaty whether the application was valid. With this action for damages, the applicant by-passed these two stages.

Finally, the Commission disputes that a subsidy calculated on the basis of , u.a. per 100 kg was needed to compensate the applicant fully for any disadvantages it may have suffered as regards competition. It is for the applicant and not the defendants to prove that the Venetian oil mills always received an additional subsidy of that order. In fact, the additional subsidy paid to the receiving oil mills was paid in such a way that the actual cost of transport from the frontier was reimbursed almost in full, while the total amount paid in Italy did not exceed the authorized amount of the subsidy.

Culpability

The applicant maintains the Community authorities were culpable — this in the law of most Member States is a prerequisite for claiming damages in cases where the authorities fail to carry out their duties. This culpability can be ascertained by finding objectively that certain rules of law were not observed, while the Community authorities concerned should have been able to recognize and avoid such disregard since in the circumstances what was involved was an infringement of the rule prohibiting any discrimination and since the Community authorities were themselves aware of the discriminatory character of the subsidy granted.

The Commission says in answer that the Community institutions should then have been made aware in good time of the particular commercial situation of the applicant and of its supposedly exceptional losses, so as to be able to ascertain whether or not limiting the additional subsidy to Italy was an arbitrary act.

The applicant had not so far shown the existence of a right resulting from a breach of duty committed by the European Economic Community.

The applicant says in reply that the Council made no comment on the question of culpability. In any event, it is of little importance to know its particular commercial situation, but it should be ascertained whether the Community institutions were or could have been aware of the fact that the additional subsidy constituted an infringement of the prohibition against discrimination, and thereby caused damage to oil mills in the same position as Italian oil mills. Such a conclusion emerged from the minutes of the meeting of the Advisory Committee on Oils and Fats and from the statements made by the Commission.

Finally in view of the reaction which met the applicant's letter to the Council of 29 January 1973, it could be assumed that, even if such action had been taken during the previous years, it would not have brought about any alteration in the illegal practice. In any case, trade groups had every year made approaches in this respect and the applicant always believed the Commission's unequivocal statement that any further extension of the exceptional measure was out of the question.

After the closing of the written procedure, the Court in a letter of 24 January 1974, put a number of questions to the parties, and the answers given are briefly set out below.

The Commission supplies statistics showing that exports of colza seed from Germany to Italy went from 1 000 metric tons in 1969 to 34 000 metric tons in 1972, while, during the same period, German production increased from 158 000 metric tons to 246 000 metric tons. Exports from France to Italy were of 31 000 metric tons in 1967 and 223 000 metric tons in 1972. Exports of oil to Italy increased very much during the same period while there were practically no exports from Italy.

A map drawn up for the Commission indicates the various production centres and the patterns of trade in 1971/72. It is clear that imports from the Community into Italy, whose seed production is practically nil, are effected in a proportion of , by sea to 1 by land. The Federal Republic whose production is close to 250 000 metric tons, imports 119 000 metric tons from third countries and exports 68 000 metric tons to Italy. France, whose production is the Community's largest with near to 600 000 metric tons, has two major seed crushing centres — one in Dunkirk, one in Dieppe — and imports 236 000 metric tons from third countries while exporting 82 000 metric tons to Italy.

The applicant gives details of its purchases, and corrects the figures quoted in its application. In 1969, it bought 31 000 metric tons colza of which 20 000 were from the Community, mainly from Germany (5 700) and France (13 600). In 1970, it bought 17 000 metric tons colza, of which 14 000 were within the Community and solely within Germany. In 1971, it bought 33 000 metric tons of colza of which 19 000 were from the Community, as follows: Germany (10 500), Holland (4 000) and France (4 000). In 1972, it bought 46 000 metric tons of colza, of which 24 000 were from the Community as follows: Germany (nearly 20 000), Holland (3 000) and France (1 000).

The applicant was not able to obtain adequate supplies from France owing to particularly large purchases of French colza made by Italian buyers, ‘… in spite of their partly less favourable position from the point of view of transport costs, they offered higher prices than the market situation and cost price costing enabled them to pay’.

As regards the calculations worked out by the Commission in its rejoinder, the applicant considers them as being unusable because they are based on intervention prices for 1973, and the transport costs to Italy were assessed at too high a level. According to its own calculations, the applicant concludes that the cost price for 41 kg of oil produced from 100 kg of colza seed by an oil mill located in Düsseldorf is lower only by between , u.a. and , u.a. than that of the oil produced by a Venetian oil mill, and that the competitive advantage the latter enjoys is between 7/8 and half the additional subsidy (, u.a.).

Oral arguments took place on 6 March 1974. The applicant was represented by Dr Jürgen Gundisch, of the Hamburg Bar, the Council of the European Communities by its Legal Adviser, Daniel Vignes, acting as agent, assisted by Hans-Jürgen Rabe, of the Hamburg Bar, and the Commission of the European Communities by its Legal Adviser, Peter Kalbe, acting as agent.

During the oral argument, the parties put forward the following new points:

The Council claimed that the proportion of Community colza in relation to the total quantity of colza crushed by the applicant is the same for all the Community oil mills (about 70 %); furthermore, when the frontiers were opened in 1967, a quantity from Germany and France equal to one third of the annual national production was put on the Italian market over a period of a few weeks. Finally, the Council announced that the rules in question would not be extended for the forthcoming marketing year, and that it intended to study a new and completely different regulation to restructure all the provisions in respect of colza and colza oil.

The applicant pointed out that, contrary to the information given in its application, the production area closest to the oil mills situated in the Venice region is not the Rhone, but the Garonne whence seeds are carried to it by sea.

The Advocate-General delivered his opinion on 8 May 1974.