Important legal notice

61985C0424

European Court reports 1987 Page 02755

Opinion of the Advocate-General

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Mr President, Members of the Court, 1 . The College van Beroep voor het Bedrijfsleven ( administrative court of last instance in matters of trade and industry ) has asked the Court whether Article 24 ( 3 ) of Regulation ( EEC ) No 685/69 of the Commission, ( 1 ) as amended by Regulation ( EEC ) No 1746/84, ( 2 ) is invalid in so far as it provides that the annual interest rate for the calculation of private-storage aid is to be 7% in the case of butter stored in the Federal Republic of Germany and 9.5% in the case of butter stored in the United Kingdom, whereas the rate is to be 10.5% for butter stored in the other Member States .

2 . The Netherlands court would like to know in particular whether any or any combination of the following provisions or principles have been infringed :

( a ) Article 10 ( 1 ) of Regulation ( EEC ) No 985/68 of the Council ( 3 of 15 July 1968 laying down general rules for intervention on the market in butter and cream;

( b ) Article 40 ( 3 ) of the EEC Treaty;

( c ) Article 30 of the EEC Treaty;

( d ) the principles of the single market and uniform prices which underlie the common organization of the market in milk products;

( e ) Article 190 of the EEC Treaty, for failure to state sufficient or correct reasons;

( f ) the principle of legal certainty;

( g ) one or more other provisions of the EEC Treaty or one or more of the principles underlying the EEC Treaty .

3 . I propose to examine the arguments based on the principles of the single market and uniform prices ( Question ( d )*) with the other arguments to which they relate ( questions ( a ) and ( c )*) and after that to deal with the question of the statement of reasons ( question ( e )*).

1 . The validity of the provision in question examined in the light of Article 10 ( 1 ) of Regulation ( EEC ) No 985/68 of the Council and the principle of uniform prices

4 . Before examining this submission it is necessary to recall briefly the rationale of the aid for the private storage of butter .

( a )* Rationale of the aid for the private storage of butter

7 . It was undoubtedly in order to attain those aims that it was provided that butter may be taken into store only in the months of high milk production, namely between 1 April and 15 September of the same year . Removal from storage must take place in the autumn and winter . The main aim of private-storage aid is therefore to offset the seasonal fluctuations in production and prices and to enable some of the surplus butter to be withdrawn temporarily from the market .

8 . In the preamble to Regulation ( EEC ) No 985/68 it is also stated that the intervention policy "must ... enable stocks to be held on the most effective basis possible" ( third recital ) and that "Community rules should be provided to ensure the orderly function of this form of storage" ( last recital ).

9 . The second paragraph of Article 10 ( 1 ) of Regulation ( EEC ) No 985/68 provides that : "In cases where, at the time of removal from store, the market has developed unfavourably under conditions which could not be foreseen, the amount of aid may be increased ".

10 . Article 10 ( 2 ) of that regulation provides that : "If the state of the market so requires, the amount of aid may be amended for future contracts ".

11 . Through Article 29 of Regulation ( EEC ) No 685/68 on detailed rules of application for intervention on the market in butter and cream, as amended by Regulation ( EEC ) No 704/83, ( 6 ) the Commission made the complementary or interdependent nature of public and private storage still more definite to the point of establishing between those two systems a mechanism which is reminiscent of "communicating vases ".

12 . That article provides in effect that private-storage aid is to be increased or reduced in the event that the buying-in price of butter by the intervention agencies is changed whilst the butter is in storage .

13 . The Court has held such changes in the period of storage to be valid on the ground that the intended aim of the basic regulation, Regulation ( EEC ) No 804/68, namely that "the amount of aid granted should correspond to the level of actual prices at the end of the period of storage", would not be attained "if a change in the buying-in price were to result in a loss or, conversely, in an unjustified profit for a trader removing goods from storage by comparision in particular with traders who had sold into intervention in the same marketing year".(7 )

14 . The conclusions which can be drawn are therefore quite clear :

( a ) the entire mechanism of the private-storage scheme is designed so as to take account of market developments as closely as possible, and

( b ) it must not lead to unjustified profits for traders .

15 . It follows from those principles that the rate of interest provided for in Article 24 ( 3 ) ( d ) of Regulation ( EEC ) No 685/69 of the Commission must be periodically adjusted to the situation prevailing on the financial markets . That conclusion is not contested by the plaintiffs in the main proceedings who seek the application in their case of the "standard" rate of 10.5% laid down in the regulation in question, No 1746/84, amending Article 24 of Regulation ( EEC ) No 685/69, and not the 11% rate or even the 13% rate which were in force previously .

16 . It remains to ascertain whether the principle that economic circumstances should be taken into account as much as possible can also lead to the introduction of different interest rates for each Member State, which the plaintiffs dispute .

A priori it would seem that if the Commission is under a duty to adjust the amount of the aid to the changing situation of the market in butter and to changes in storage costs and to change it according to fluctuations in the intervention price, it is also under a duty to fix the amount of the aid with reference to the "real" storage costs which a trader must incur depending on the country in which he stores the butter if those costs vary considerably .

However, against that proposition the plaintiffs raise a number of objections which must now be examined .

( b )* The arguments put forward

19 . The plaintiffs in the main proceedings rely first of all on the wording of Article 10 ( 1 ) of Regulation ( EEC ) No 985/68 which provides that : "The amount of private-storage aid shall be fixed for the Community with reference to storage costs and foreseeable price trends for fresh butter and stored butter ".

20 . I will admit that the use of the singular - "the amount of private-storage aid" - and the words "shall be fixed for the Community" may suggest that the Council had in mind a single amount of aid valid for all the Member States . In fact, that has been the practice for many years ( see, for example, Article 24 of the original version of Regulation ( EEC ) No 685/69 ).

21 . But although the third recital in the preamble to Regulation ( EEC ) No 804/68 of the Council envisages "a system comprising a single target price for milk, a single threshold price for each of the pilot products, and a single intervention price for butter", there is no question of a single amount of private-storage aid in Regulation ( EEC ) No 804/68 or in Regulation ( EEC ) No 985/68 .

22 . The ninth recital in the preamble to Regulation ( EEC ) No 985/68 reads as follows :

"Whereas aid for the private storage of butter and cream provided for in Article 6 ( 2 ) of Regulation ( EEC ) ( EEC ) No 804/68 should be granted in accordance with Community provisions laying down in particular the precise conditions for granting such aid; whereas to ensure uniformity in the Community provisions should be made for a Community form of storage contract and a uniform method of calculating the amount of aid according to the cost of storage and market developments ."

23 . The emphasis in that preamble is indisputably on uniformity in the Community and on a uniform method of calculating the amount of aid and there is no obligation to infer that the result of that calculation must be uniform throughout the Community, especially since express reference is made to storage costs and there is no reason why those costs should not be understood as actual costs .

24 . Moreover, it is interesting to note that the taking into account of interest rates was introduced into the system in 1973 ( 8 ) at the time of the first enlargement of the Community . The Commission stated at that time that "because of the differences in the buying-in prices applied by the intervention agencies in the new Member States, finance costs in respect of stored butter vary according to the level of the price applied; ... a distinction should, therefore, be made between storage costs as such, applicable throughout the Community, and finance costs, to be calculated on the basis of the buying-in price for butter applying in each Member State ".

25 . Historically, finance costs therefore varied at first according to the different levels of intervention prices in the new Member States . Only later did they vary according to the different levels of interest rates .

Confirmation of the principle that finance costs must be reimbursed by taking into account their actual level is to be found in the recital quoted above .

27 . However, the plaintiffs claim that, once a single target price and a single intervention price exists in the Community, a single amount for private-storage aid must also be fixed because "both public intervention and private storage contribute equally towards attaining the target price ".

28 . In this regard the following observations must be made :

( a ) I have already pointed out that nowhere in the relevant regulations is there any mention of a single amount of private-storage aid but only of a uniform system and a uniform method of calculating the amount of the aid with reference to storage costs and the changing market situation .

( b ) The single intervention price is in any event taken as the basis for calculating butter storage costs in the form of the "buying-in price for butter, expressed in national currency, applied by the intervention agency of the Member State concerned ". ( 9 )

The intervention price may therefore fully play its role of floor price in the case of private storage as well .

( c ) It is never possible to be sure whether the target price will be reached because this depends on many factors which vary in time and space ( for example, production in a region, supply on the market/storage, demand, imports ). It is the reduction in the supply of butter, achieved either through intervention purchasing or through private storage, which is meant to enable the market price to climb back towards the target price . The amount of private-storage aid has no direct effect on the target price .

30 . It may therefore be concluded that neither the principle of uniform prices nor Article 10 ( 1 ) of Regulation ( EEC ) No 985/68, to which it has been necessary to give a teleological interpretation, precludes the introduction of different rates . This accords entirely with the rationale of the system .

31 . However, the question remains whether such a difference was justified in this case, that is to say whether the statement of reasons for Commission Regulation ( EEC ) No 1746/84 was sufficient and correct .

2 . Was the statement of reasons for Regulation ( EEC ) No 1746/84 sufficient and correct?

32 . In the preamble to Regulation ( EEC ) No 1746/84 the Commission gives the following reasons :

( a )* " ... in the light of the increase in butter production and stocks, it is not advisable to provide a further incentive to send products into storage; ... interest rates are, in real terms, falling in the Member States where there are large quantities in storage ".

That reasoning applies to the linear decrease as well as to the differentiated decrease in the interest rates taken into account .

( b )* " ... in certain Member States, interest rates are, in real terms, lower than elsewhere in the Community; ... the rates laid down as regards the Community contribution towards the storage costs in those countries should be appreciably lower, to : avoid unjustified profits for the operators concerned; and to discourage artificial and speculative movements of products from regions where disposal on the market would otherwise have been possible, to Member States where interest rates are among the lowest ".

33 . It is to be noted first of all that none of those reasons is contrary to the principles according to which stocks should be held on the most effective basis possible ( third recital in the preamble to Regulation ( EEC ) No 985/68 ) in order to contribute to the attainment of a balanced market ( tenth recital in the preamble to Regulation ( EEC ) No*985/68 ). The requirement that private storage should function in an orderly way ( ninth recital in the preamble to Regulation ( EEC ) No 985/68 ) excludes any idea of speculative transactions producing unjustified enrichment . The fixing of the amount of the aid with reference to the costs of storing butter and foreseeable price trends ( Article 10 of the same regulation ) implies that factors as significant as the variation in the volume of butter produced and stored and the variation in "real" interest rates on the financial market are taken into account .

34 . The parties are in fact agreed that there has been a general increase in the quantity of butter produced and stored ( see paragraph 13 of the plaintiffs' observations and paragraphs 26 and 27 of the Commission' s observations ).

35 . Nor do the plaintiffs in the main proceedings dispute that interest rates have generally fallen in real terms in the Community because they do not question the linear reduction adopted by the Commission .

36 . They also admit that "real" rates are lower in the Netherlands than in the other Member States ( see paragraph 43 of their written observations ).

37 . On the other hand, the plaintiffs do not agree that :

( i ) the measures adopted by the Commission are likely to reduce the incentive to store butter;

( ii ) there can be any question of unjustified enrichment;

( iii ) speculative movements of butter have occurred .

38 ( a )* They contend first of all that the Commission wrongly assumed that a uniform interest rate stimulates storage in certain Member States ( paragraph 62 of their written observations ).

39 . In my view, however, it cannot be disputed that, if private storage enables a trader to obtain the payment of interest at rates higher than the market rates, he may be encouraged to store butter solely in order to obtain the financial advantage which that difference in rates may bring him and which he could not obtain by selling butter on the market or to the intervention agency .

40 . The artificial incentive to store butter will be particularly great in those Member States in which the difference is greatest .

(b)43. (b)* It is not, however, at all unreasonable to conclude that the excess reimbursement of financial costs is likely to lead to unjustified unrichment or, to use the words in the Court's judgment of 23 February 1978, "unjustified profits" for traders who have stored butter privately, since they would receive an amount greater than the costs they had actually incurred. They could either pocket that profit or use it to reduce the sale price of their butter, in which case they would obtain a competitive advantage at the expense of the Community, which would not be acceptable either.

(c)44. (c)* As regards the question of speculative movements, it appears from the answer given by the plaintiffs in the main proceedings that they accept that such movements take place but that they do not agree that they are "speculative". In their view, the increase in the quantities of butter in private storage in the Member States with relatively low interest rates (the Netherlands, Federal Republic of Germany, United Kingdom) is the result of a deliberate decision taken by traders after weighing up the following factors:

the number of cold stores,

the distance to cold stores and transport costs,

the price of butter at the time of entry into store,

storage and removal costs,

sale transactions linked to the storage,

insurance premiums,

finance costs during storage,

the risk of deterioration in the quality of the butter,

the currency in which the storage operation will be financed,

the aid to be received from the EEC, which reduces costs.

"It is appropriate in the first place to point out that under the principle of non-discrimination between Community producers or consumers, which is enshrined in the second subparagraph of Article 40 (3) of the EEC Treaty and which includes the prohibition of discrimination on grounds of nationality laid down in the first paragraph of Article 7 of the EEC Treaty, comparable situations must not be treated differently and different situations must not be treated in the same way unless such treatment is objectively justified. It follows that the various elements in the common organization of the markets, such as protective measures, subsidies, aid and so on, may not be differentiated according to region or according to other factors affecting production or consumption except by reference to objective criteria which ensure a proportionate division of the advantages and disadvantages for those concerned without distinction between the territories of the Member States."

(a)57. (a)* The plaintiffs in the main proceedings maintain, however, that discrimination exists because in actual fact there is no difference of situation between traders storing butter in countries with low interest rates and other traders. Companies which store butter privately in countries with high interest rates are free to choose the currency. They have no difficulty in borrowing money in a currency with a relatively low interest rate and have their financial costs reimbursed on the basis of the high rate in force in the country in which the butter is stored.

(b)* The plaintiffs in the main proceedings also maintain that the new system introduced a distortion of competition which could in fact be avoided under the old system.

68They point out that the market price of butter tends to be determined by the gross intervention price less the finance costs arising from the delay in payment by the intervention agency calculated on the basis of the "real" interest rate for short-term credit in the Member State concerned. At the time of the facts in question, the delay in payment was between at least 120 days and at the most 140 days after the butter was taken over by the intervention agency.

(c)* Finally, the plaintiffs maintain that the application of different interest rates is incompatible with the second paragraph of Article 40 (3) of the Treaty because it introduces discrimination between butter producers on the one hand and producers of other agricultural products on the other. They point out that differential aid for private storage has not in fact been introduced in any other sector.

(a)* They consider that the application of different interest rates offends the principle of the single market because such a practice does not conform to one of its necessary premises, namely the application of a system of uniform prices.

(b)* Next, the plaintiffs argue that the differentiation in question could influence a trader's choice of country for storing his goods and that it could thus create artificial patterns of trade which must be regarded as a distortion of the common market.

(c)* Finally, the plaintiffs maintain that the introduction of different interest rates is to be regarded as "a measure of equivalent effect prohibited by Article 30 of the EEC Treaty because it impedes imports".

88. It follows from all the foregoing that there is no convincing evidence that exports of butter from Member States with low interest rates to Member States with high interest rates are impeded by the measure adopted by the Commission.

89. However, for the sake of completeness, I should also like to examine whether the application of different interest rates constitutes a measure impeding exports to countries with low interest rates. In my view, that cannot be the case, for the following reasons.

90. A French producer of butter will find a higher market price in the Netherlands, which should encourage him to export to that country. If he wishes to store butter privately in the Netherlands, the operation will be neutral for him: he will pay less interest but will also receive less aid in consequence. If he has stored his butter in France and financed the storage in guilders, he could have a competitive advantage in the Netherlands similar to that enjoyed by the Netherlands trader storing his butter in France. At all events, it is difficult to see how imports of butter into the Netherlands would be impeded by the measure adopted by the Commission.

91. The fact that a French exporter cannot put his butter into public intervention in the Netherlands is the result of the absence of a Community inspection mark (Article 8(4) of Regulation (EEC) No 985/68 of the Council) and consequently has nothing to do with the application of different interest rates.

92. The question may be asked why private storage in another Member State, which was also prohibited at the outset, is now permitted. That difference is probably justified by the fact that products which have been in private storage cannot be sold into intervention but must be put on the market. Consequently, a prohibition on private storage in another Member State would, to a certain extent, represent an obstacle to trade.

93. At all events, I consider that it must be concluded from the foregoing that the submission that the principle of a single market and Article 30 have been contravened cannot be accepted.

(a)* Butter already in storage

94. The principles of legal certainty and the protection of legitimate expectation could not be in point unless the Commission had made the new rates applicable to butter which was already in storage. However, that is not the case because Regulation (EEC) No 1746/84 expressly provides in Article 2 that it applies only in respect of butter sent into storage as from the entry into force of that regulation.

95. The CNTA judgment of 15 May 1975 quoted by the plaintiffs cannot be regarded as a relevant precedent because the traders concerned in that case had committed themselves in so far as they had already received export certificates and provided security. They had entered into firm commitments with the intervention agency and could not get out of them except by losing the securities which they had provided. In the present case, some of the plaintiffs in the main proceedings had admittedly concluded contracts with other traders for the sale of the butter, but they had not yet put the butter into storage nor a fortiori submitted an application for storage aid nor signed a contract with the intervention agency.

(b)* Sale contracts concluded before the change in the regulations

96. As I have just pointed out, the plaintiffs in Case 425/85 An Bord Bainne and J. Wijffels BV had concluded contracts for the sale of butter, apparently at a fixed price.

97. Before delivering the butter they intended to store it for a period in the Netherlands (which is what they actually did). When the sale price was fixed in May 1984 they presumably took into account the excess reimbursement of their financial costs which they could anticipate owing to the difference then existing between the interest rate on the Netherlands financial market and the uniform flat rate applied under the Community regulations.

99. Nevertheless, that was a prospect they should have reckoned with because Article 10(2) of Regulation (EEC) No 985/68 of the Council provides that "if the state of the market so requires, the amount of aid may be amended for future ((private storage)) contracts".

100. The circumstance that in the present case the reduction in interest rate was not only linear but also differentiated does not alter the fact that a possible reduction in that rate was one of the possibilities with which prudent traders ought to have reckoned.

101. Moreover, the Court has made it clear in its decisions that:

"The application of the principle of respecting legitimate expectation cannot be extended to the point of generally preventing new rules from applying to the future effects of situations which arose under the earlier rules, particularly in a sphere such as the common organization of the markets the purpose of which entails precisely a constant adaptation in the light of fluctuations in the economic situation in the various agricultural sectors."

102. In the light of that statement of the Court it is inconceivable that an answer given by the Commission to a written question in the European Parliament could induce an individual to hold "reasonable hopes", especially when that answer was given seven months before the publication of the contested measure.

103. It must also be pointed out once more that the Commission could have adopted the same measure by extending it to the entire Community, in which case the economic interests of the plaintiffs would have been affected in the same way. This submission must therefore be rejected as well.

104. It is indisputable that Regulation (EEC) No 1746/84 is implicitly based on the assumption that traders who store butter in a given Member State cover their financial costs by borrowing in the currency of that Member State at the most favourable interest rate applied in that currency for that kind of transaction.

105. However, the regulation does not in any way prohibit a trader from borrowing in another currency at another interest rate.

106. The free movement of capital is not therefore called in question and the submission alleging a breach of Article 67(1) must therefore also be rejected.

107. Before coming to my conclusion I would venture to express the opinion that the taking into account of different rates of interest in the calculation of aid the purpose of which is to reimburse the costs incurred by traders and which forms part of a mechanism for regulating markets is not of such a nature as to call in question the method of determining the interest rates imposed by the Community institutions in other spheres (in particular, interest on fines which remain unpaid).

Conclusion

108. For all the reasons explained above I conclude that consideration of the questions raised by the College van Beroep voor het Bedrijfsleven has disclosed no factor of such a kind as to affect the validity of Article 24(3) of Regulation (EEC) No 685/69 of the Commission, as amended by Regulation (EEC) No 1746/84.

(*) Translated from the French.

(1) Regulation (EEC) No.685/69 of the Commission of 14 April 1969 laying down detailed rules of application for intervention on the market in butter and cream (OJ, English Special Edition 1969 (I), p. 194).

(2) Commission Regulation (EEC) No 1746/84 of 21 June 1984 amending Regulation (EEC) No 685/69 (OJ 1984, L 164 of 22 June 1984, p. 32).

(3) OJ, English Special Edition 1968 (I), p. 256.

(4) Regulation (EEC) No 804/68 of the Council of 27 June 1968 on the common organization of the market in milk and milk products (OJ, English Special Edition, 1968 (I), p. 176).

(5) Judgment of 23 February 1978 in Case 92/77 An Bord Bainne Cooperative Limited v Minister for Agriculture ((1978)) ECR 497, paragraphs 16 and 17 at p. 512.

(6) Commission Regulation (EEC) No 704/83 of 28 March 1983, OJ L 82, p.*13.

(7) Judgment of 23.2 1978 in Case 92/77 ((1978)) ECR 497 at p. 513, paragraphs 21 and 22.

(8) Regulation (EEC) No 982/73 of the Commission of 9 April 1973 amending Regulation (EEC) No 685/69, OJ L 97, p. 33, second recital.

(9) Article 24(3)(c) of Regulation (EEC) No 685/69 of the Commission of 14 April 1969, as amended by Commission Regulation (EEC) No 704/83 of 28 March 1983.

(10) See in particular the judgment of 22 January 1986 in Case 250/84 Eridania Zuccherifici Nationali SpA and Others v Cassa Conguaglio Zucchero and Others ((1986)) ECR 117, paragraphs 37 and 38 at p.134.

(11) Case 106/83 Sermide SpA v Cassa Conguaglio Zucchero and Others ((1984)) ECR 4209, paragraph 28 at p.4231.

(12) Case 50/73 Holtz & Willemsen GmbH v Council and Commission ((1974)) ECR 675, paragraph 13 at p. 695.

(13) Article 2(d) of Commission Regulation (EEC) No 1328/84 of 14 May 1984 introducing private-storage aid for Kefalotyri and Kasseri cheeses, OJ L 129 of 15.5.1984, p. 19.

(14) Article 8(4) of Regulation (EEC) No 985/68.

(15) Case 74/74 CNTA v Commission ((1975)) ECR 533.

(16) Judgment of 14 January 1987 in Case 278/84 Federal Republic of Germany v Commission ((1987)) ECR, paragraph 36 at p..

Judgment of 16 May 1979 in Case 84/78 Angelo Tomadini Snc v Amministrazione delle Finanze dello Stato ((1979)) ECR 1801.

(17) Judgment of 11 March 1987 in Case 265/85 Van den Bergh en Jurgens and Van Dijk Food Products v EEC ((1987)) ECR, paragraph 44 at p..

(18) Answer given on 21 October 1983 to Written Question No 731/83 of Mr Pol Marck, OJ C 335 of 12.12.1983, p. 6.