Court of Justice 12-07-1990 ECLI:EU:C:1990:309

Facts

The case with which I shall be dealing today concerns a Commission decision adopted on 30 November 1988 under Article 93 of the EEC Treaty and addressed to the Italian Republic.

I shall confine myself to outlining the background to the case (for further details I would refer to the Report for the Hearing).

Article 45 of Council Regulation (EEC) No 822/87 of 16 March 1987 on the common organization of the market in wine^(*) introduced an aid scheme in respect of, inter alia, rectified concentrated grape must produced in the Community and used in order to increase alcoholic strength in accordance with Article 18 of the regulation. This scheme was supplemented for the 1987/88 wine year by Commission Regulation (EEC) No 2287/87 of 30 July 1987,^(*) Article 2 of which fixes the relevant amounts of aid.

The Italian Government did not consider this scheme to be sufficient. It expressed its dissatisfaction in a memorandum sent to the Commission on 12 September 1987, in which it requested additional aid, possibly financed out of the national budget (it appears that this solution was rejected by the management committee which was involved in the adoption of the aforementioned Commission regulation).

Furthermore, Italian Decree-Law No 370/87 of 7 September 1987 (which was converted into Law No 460 on 4 November 1987) provided that during wine years in which permission was granted under Article 18 of Regulation No 822/87 to increase the alcoholic strength of (inter alia) fresh grapes, producers of rectified concentrated must, obtained from grapes grown in Italy and in respect of which a maximum selling price had been fixed by Ministerial Decree, might qualify for aid. To this end, a decree was issued on 21 November 1987 fixing the amount of aid in question.

The Commission was informed of the first decree-law by letter of 14 September 1987 (which was apparently not registered in its offices until 14 October 1987). The Commission took the view that the Italian aid measures were incompatible with the common market and that there was no question of a derogation from Article 92 of the EEC Treaty. It therefore informed the Italian Government by letter of 11 December 1987 that it had initiated the procedure provided for in Article 93(2) of the EEC Treaty.

This procedure resulted in the Commission decision mentioned above, which found essentially that the aid was unlawful because it infringed Article 93(3) of the EEC Treaty, that it was also incompatible with the common market and that it consequently had to be abolished (the Commission was to be informed within a period of two months of measures taken in this regard).

It is now necessary to examine in detail whether this decision can be allowed to stand or whether it must be set aside on grounds of illegality.

Opinion

The applicant claims above all that reliance has incorrectly been placed on Article 92(1) of the Treaty, which states that:

‘Save as otherwise provided in this Treaty, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the common market.’

According to the Italian Government, the contested Italian measure does not in fact favour Italian producers or affect trade between the Member States. It is designed to offset distortions of competition as between areas where alcoholic strength is increased by the addition of sucrose and other areas where such enrichment can be carried out only using rectified concentrated musts, which are more expensive. Admittedly, because of this, Community aid has been introduced for producers who use rectified concentrated musts, but that aid is not sufficient to cover the difference in costs. The Community aid, which fails to take sufficient account of the difference in costs within the meaning of Article 45(3) of Regulation No 822/87, therefore does not make it possible to maintain patterns of trade in concentrated must and coupage wines for wine-growing zones C III, as provided for in Article 45(2). On the contrary, having regard to the fact that rectified concentrated grape musts are obtained principally from wine-growing zones C III, exports from this zone have decreased since the introduction of the Community aid. It is also significant that the level of Community aid was increased for the 1988/89 wine year (it was almost equal to the sum of the Community aid granted for the previous year and the Italian national aid), as a result of which it was not necessary to grant any additional national aid.

My impression — after all that has been stated in this connection during the proceedings — is that the Commission decision cannot be set aside for that reason.

1. It does not appear necessary in this connection to express a view on the Commission's argument that the contested decision was primarily adopted — as is apparent from Article 1 thereof — on the basis of Article 93(3) of the EEC Treaty, which states that:

   ‘The Commission shall be informed, in sufficient time to enable it to submit its comments, of any plans to grant or alter aid. If it considers that any such plan is not compatible with the common market having regard to Article 92, it shall without delay initiate the procedure provided for in paragraph 2. The Member State concerned shall not put its proposed measures into effect until this procedure has resulted in a final decision.’

The Commission considered therefore that, because Article 93(3) (which is directly applicable according to the case-law of the Court) was not complied with and the national aid measures were introduced before the procedure initiated by the Commission was concluded, the aid was contrary to the Treaty and could not be validated. Furthermore, it does not appear necessary to consider the criticism set out by the applicant in its reply to the effect that the grounds on which the contested decision is based do not mention the question of the premature implementation of the national aid, but focus solely on the compatibility of such aid under Article 92(3), and that no mention is made of the aid's being illegal for infringing Article 93(3) until the very end of the decision.

1. The starting point for my examination is first the fact that the applicant's main criticism is directed at the level of aid provided for by the Community as fixed in Commission Regulation No 2287/87. It is, however, necessary to point out that this question was manifestly dealt with under the management committee procedure when the regulation was adopted by the Commission. The proper action would therefore have been to contest that Community measure. Once the period for bringing an action has expired, however, a Member State which is fully entitled to act can definitely no longer claim that the aid measure decided on by the Community is not in order. In particular a Member State cannot claim that it is insufficient having regard to the objective pursued under Article 45 of Regulation No 822/87 and that that objective could therefore be achieved only through the help of a national measure.

Neither do I consider that it is possible to argue that the problem at issue was urgent in so far as in Italy enrichment measures were only possible between 1 September and 31 December 1987 and that a decision therefore had, if possible, to be taken before the beginning of this period. In view of the date of Commission Regulation No 2287/87 (30 July 1987), judicial proceedings could have been brought at an early date, and it should also be borne in mind that interim measures may be ordered under Article 36 of the Statute of the Court of Justice, a possibility which is being used to an increasing degree and with satisfactory results.

1. Moreover, the Italian measure — as is expressly emphasized in the contested decision — refers to a product which is the subject of a common organization of the market governed by comprehensive Community rules. In this connection, the Court has long ruled that where comprehensive Community rules exist (in this case I would mention in particular Commission Regulation No 2287/87, to which repeated reference has already been made), it is no longer possible unilaterally to adopt national measures, in particular in so far as such measures have an effect on a system of common prices, since this would amount to interference in an area in which the Community alone is competent. Without going into the details of the cases concerned, I would refer to the judgments delivered in the fairly recent past in Cases 255/86,^(*) 127/87,^(*) 212/87^(*) and C-281/87.^(*)

1. If we make the assessment in the context of the Treaty provisions dealing with aid, on which, after all, the decision is based, the Commission is correct in its view that the additional Italian aid favoured Italian production and must be regarded not only as distorting competition but also as affecting trade between Member States.

The applicant was wrong to put the emphasis on a comparison between the position of Italian wine producers and that of producers in other Member States who rely on sucrose to increase alcoholic strength (purportedly in order to achieve equal treatment between the latter and the Italian producers). The Commission has shown that it is not only in Italy that rectified concentrated grape must is used to that end, and that wine-growing zones C III, which I have already mentioned, also include areas in France and Greece (according to Annex IV to Regulation No 822/87). However, in so far as the applicant maintained that the use of sucrose was possible in most regions in France and that it was only recently that must was also used in some regions to a limited extent, and that in Greece alcoholic strength was only rarely increased and then only by means of concentrated grape must (that is to say, not by means of rectified concentrated grape must), the Commission has cogently shown in the rejoinder that even in France — as can be seen from the aid applications produced — rectified concentrated grape must is very extensively used (the figures quoted by the Commission also show that, during the 1987/88 wine year, there was in Italy a sharp increase in the quantities of rectified concentrated grape must used for the purpose of increasing alcoholic strength, a development which may very likely be attributable to the additional national aid granted).

The Commission was therefore quite correct in taking the view that the Italian aid measure in question did lead to a distortion in competition (at least in relation to those States in which alcoholic strength is increased by the same method). It also correctly pointed out that this finding was unaffected by the applicant's reference to prices on the kalian market (in which there was no variation during the six-month period before and after the adoption of the decree on 21 November 1987), since this has no bearing on any effects on Greek and French producers and does not show what the price situation would have been in Italy in the absence of the national aid.

The Commission is also justified in its view — as regards the second element required under Article 92 of the EEC Treaty — that the national measure in question did affect trade between Member States. As the applicant has not presented anything of substance on this point, it is sufficient in my view to refer to Part V of the contested decision, which clearly shows how much wine is produced in Italy, how much is exported to other Member States, how much is imported into Italy and, finally, how much grape must is exported from Italy.

The applicant's criticism of the decision (on the assumption that Article 92 of the EEC Treaty is applicable) for having wrongly refused to grant a derogation from that article — in so far as it argues that Article 92(3)(c) could have been applied on the ground that the national measure was designed to assist areas with a heavy surplus of wine — cannot be accepted either.

For its part, the Commission rightly points out that the national aid must be regarded as a mere operating aid, since it was granted solely in proportion to the quantities used. Such a measure, since it was not accompanied by any restructuring measures, must be the subject of particularly strict appraisal. The Commission also correctly pointed out that, under Article 92(3)(c), trading conditions must not be adversely affected to an extent contrary to the common interest. This, however, must be the case, first because the national measure has to be regarded as amounting to an infringement of the common organization of the market in wine, and secondly because the national aid measure gave rise to increased production of must and wine, which in turn placed an additional burden on the common agricultural policy. Furthermore, the Commission has also rightly pointed out that, according to the case-law of the Court (see, for example, the judgment in Case 730/79^(*)), the Commission has a wide discretion in the application of Article 92 and the applicant has not claimed that the Commission committed a manifest error or that it based its decision on incorrect information, which it is necessary to show in such cases.

For the sake of completeness, I would add that it is unnecessary to examine the applicant's criticism (it is not clear whether or not this is intended to be a separate submission) to the effect that the alleged infringement of Article 30 of the EEC Treaty (which is mentioned in the third subparagraph of paragraph 3 of Part VI of the decision) ought properly to have been raised in the context of a separate procedure.

That argument is of no significance, because the passage referred to clearly does not constitute a determinant ground for the decision. While the claim as to an infringement of Article 30 does appear in the decision, it has no effect whatever on its legal validity in view of the other reasons given for the decision (it is, moreover, clear that its content cannot be disputed in view of the fact that aid was granted only for must obtained from Italian grapes and that national products thereby obtained a unilateral advantage).

Conclusion

In view of the whole of the foregoing, I can only propose that the Court dismiss the application as unfounded and order the applicant to pay the costs of the proceedings in accordance with the application.