Mr President, Members of the Court,
and a split-up of the group is apparently under way. Isoglucose is also manufactured by the Belgian company G. R. The cases which concern us today are about a product known as "isoglucose" which we have already encountered in Case 101/76 (Koninklijke Scholten-Honig N.V. v Council and Commission of the European Communities, judgment of 5 May 1977 [1977] ECR 797).
Amylum N.V., the applicant in one of the actions for damages (Case 116/77) with which I have to deal in my opinion which follows this one. This company also commenced production early on, in February 1972, and likewise enlarged its plant. In addition Royal Scholten-Honig (Holdings) Limited, a subsidiary of Koninklijke Scholten-Honig N.V., decided in 1973 to build a plant for manufacturing isoglucose with an annual capacity of 85 000 tonnes and commenced building at Tilbury in October 1974. Lastly the English company Tunnel Refineries has in recent years invested a considerable amount of capital in the manufacture of isoglucose in connexion with an existing starch factory. Part of the capacity thus created has apparently been in use since January 1976.
Isoglucose is a new sweetener in liquid form which originated in the United States at the beginning of the seventies, 100 kilograms of which are approximately equivalent to 71 kilograms of white sugar. It is manufactured from starch which has been obtained from maize or wheat or potatoes. In the Community the relevant raw material is principally maize and to a lesser extent other cereals and the recorded isoglucose processing figures vary between 70 % and 85 % in the case of maize and 15% to 30% in the case of other cereals. However from the autumn 1977 onwards — as we were assured — only maize was used as the raw material 50 % of which had to be imported because Community production falls short of requirements. Isoglucose is used in the industrial production of foodstuffs where it can replace liquid sugar.
In the Community isoglucose is manufactured on the one hand by the Netherlands company Koninklijke Scholten-Honig which, after obtaining a licence in 1972 and building an experimental plant, commenced production in September 1973 and increased it in September 1975 after enlarging its factory. However in the meantime the Scholten group, as we heard during the oral procedure, has become insolvent as from 7 March 1978 and a split-up of the group is apparently under way. Isoglucose is also manufactured by the Belgian company G. R. Amylum N.V., the applicant in one of the actions for damages (Case 116/77) with which I have to deal in my opinion which follows this one. This company also commenced production early on, in February 1972, and likewise enlarged its plant. In addition Royal Scholten-Honig (Holdings) Limited, a subsidiary of Koninklijke Scholten-Honig N.V., decided in 1973 to build a plant for manufacturing isoglucose with an annual capacity of 85 000 tonnes and commenced building at Tilbury in October 1974. Lastly the English company Tunnel Refineries has in recent years invested a considerable amount of capital in the manufacture of isoglucose in connexion with an existing starch factory. Part of the capacity thus created has apparently been in use since January 1976.
1 — Translated from the German
market in cereals provides that a production refund may be granted: (a) for maize and common wheat used in the Community for the manufacture of starch; (b) for potato starch; (c) for maize groats and meal used in the Community for the manufacture of glucose by direct hydrolosis.
The organization of the market in sugar contains rules relating to quotas which must first of all be recalled, since isoglucose has to be assigned to tariff headings 17.02 D and 17.05 D which are specifically mentioned in Article 1 of Regulation No 3330/74 of 19 December 1974, L 359, p.1).
Article 11 of Regulation (EEC) No 2727/75 of the Council of 29 October 1975 (Official Journal 1975, L 281, p. 1) on the common organization of the market in cereals provides that a production refund may be granted: (a) for maize and common wheat used in the Community for the manufacture of starch; (b) for potato starch; (c) for maize groats and meal used in the Community for the manufacture of glucose by direct hydrolosis.
Article 11 (3) provides that the Council, acting by a qualified majority on a proposal from the Commission, shall apply rules for the application of this article and fix the amount of the production refund. The Council did so by means of Regulation (EEC) No 2742/75 of 29 October 1975 (Official Journal 1975, L 281, p. 57) on sugar: production refunds in the cereals and rice sectors which was amended by Council Regulation (EEC) No 1862/76 of 27 July 1976 (Official Journal 1976, L 206, p. 3) which entered into force on 1 August 1976. The latter regulation provided for an increase of production levies for the 1976/77 marketing year because the threshold price for maize had been increased. However in the case of starch products intended for the manufacture of isoglucose — and this is one of the issues in the present cases — the rates of the refund for the 1975/76 marketing year were maintained and refunds were no longer granted with effect from 1 August 1977. This was done in such a way that the refund paid by the competent authorities of the Member States to all starch manufacturers was recovered to the extent to which isoglucose was extracted from the starch. Commission Regulation (EEC) No 2158/76 of 31 August 1976 (Official Journal 1976, L 241, p. 21) lays down the rules for the application of Regulation (EEC) No 2742/75. By virtue of Article 4 of Regulation (EEC) No 2158/76 those rules entered into force on 3 September 1976 and were to be applied as from I August 1976. Sugar produced which exceeds the maximum quota (C sugar) may in principle — except when there is a shortage in the Community as there was in 1974 and 1975 — only be sold on the world market at world prices.
Isoglucose was taken out of the organization of the market in sugar because special provisions were laid down for it by Council Regulation (EEC) 1110/77 of 17 May 1977 (Official Journal 1977, L 134, p.1). Common provisions for isoglucose, which amounted virtually to a mini-market organization, were laid down in Council Regulation (EEC) No 1111/77 of 17 May 1977 (Official Journal 1977, L 134, p.4) which was adopted on the same day. It contains provisions on trade with third countries, import levies and export refunds. But its most important provisions, which have special relevance in the present cases, introduced a production levy for isoglucose. In principle the amount of this levy is the same as that applicable to B sugar. However for the 1977/78 marketing year commencing on 1 July 1977 it is limited to five units of account per 100 kilograms of dry matter; and this amount shall only apply if the production levy for B sugar exceeds five units of account for every 100 kilograms of white sugar for the same period. The Council has in the meantime extended this limitation to five units of account until the expiry of the rules relating to quotas, that is until 1980. Implementing rules for applying the production levy were laid down in Commission Regulation (EEC) No 1468/77 of 30 June 1977 (Official Journal 1977, L 162, p. 7). Under this regulation the same method of calculation applies to isoglucose as to sugar beet.
These provisions have caused several actions to be brought in the national courts. Before the High Court of Justice in England the plaintiff in the main action in Case 103/77 asked for a declaration that the United Kingdom Government is not empowered to implement Regulations Nos 1862/76, 1110/76 and 1111/77, because they are invalid; the plaintiffs in the main action in Case 145/77 asked for a declaration that Regulation 1111/77 is invalid and the plaintiffs in the main actions in Cases 116, 124, 143 and 153/77 have commenced proceedings for damages against the Council and the Commission. In these proceedings — the cases in question are Cases 116, 124, 143 and 153/77 — the same rules are at issue, namely those concerned with the lapse of the production refund for isoglucose and the introduction of a production levy on isoglucose. I therefore think it would be right for me to consider also the arguments put forward in those proceedings which are relevant to the question of the validity of the regulations to be dealt with in the cases now before us in the proceedings for a preliminary ruling; I am dealing with these cases in my present opinion.
II. Case 125/77: 5. Must Article 4 of Commission Regulation (EEC) No 2158/76 be interpreted as meaning that, taking account of the provisions of Regulation (EEC) No 1862/76, those refunds in respect of the manufacture of glucose with a high fructose content which were granted in the period from 1 August to 3 September 1976, on which latter date the regulation entered into force, may be recovered on the basis of the provisions of the said regulation and those of Regulation (EEC) No 1862/76, and if so, must it follow that Regulation (EEC) No 2158/76 is not binding in whole or in part, namely in so far as it makes provision for the recovery of refunds as mentioned above?
II — As far as the content of the questions referred to the Court is concerned I would like first of all to deal with the lapse of the production refund relating to the manufacture of isoglucose.
I — I must preface my argumentation with a brief observation on a question of admissibility raised by the Council in Case 145/77. The Council doubts whether this reference for a preliminary ruling is admissible, because the court making the reference has simply reiterated the plaintiff's complaints, that is to say, it has not made any selection from them having regard to the arguments put forward by the parties, and also has not stated clearly which facts in this case may be assumed to have been established. Even if in fact the impression might thus be given that these proceedings closely resemble proceedings under Article 173 of the EEC Treaty, which because of the regulatory nature of the acts of the Community which have to be reviewed could not have been instituted by the individuals affected, I do not in the final analysis see any convincing objection. It must certainly be regarded as desirable that a request for a preliminary ruling should deal thoroughly with the circumstances of the case and the position reached in the dispute and if possible give the reasons why the questions are raised by the national court and that it has subsequently made the questions raised its own. The absence of any analysis of the parties' submissions should not therefore give us cause for declaring the reference for a preliminary ruling in Case 145/77 — and perhaps the reference framed in the same way in Case 103/77 — to be inadmissible.
(a) The formal validity of the regulation is called in question on the grounds that the statement of reasons upon which it is based is inadequate, that it makes no reference to the opinion of the European Parliament
which is required under Article 43 (2) of the EEC Treaty and that isoglucose manufacturers were not properly consulted before its adoption. The following are my detailed observations (aa) The plaintiff in the main action, which led to the reference in Case 125/77, takes the view that the statement of reasons cannot be said to be adequate even on the basis of the requirements of the judgment of 13 March 1968 in Case 5/67 W. Beus GmbH & Co. v Hauptzollamt München [1968] ECR 83, according to which in the case of a regulation more cannot be expected than an indication of the general situation and of the general objectives which it seeks to attain. It cannot also be said in the present case that the objectives are to be inferred from the rules relating to the refund, contained in Regulation No 2742/75, since Regulation No 1862/75 does not refer to the said regulation but is intended to amend it. Furthermore it is important to note that the refund policy has since 1967 applied indiscriminately to all starch manufacturers and that it can be inferred neither from the recitals in the preamble to Regulation No 2727/75 — reference is made in this preamble to the particular situation of the starch market — nor from Article 11 thereof that a distinction can be made according to the end products. Having regard to this situation the reasons for the abrupt change in the refund policy, which occurred when Regulation No 1862/76 was adopted, ought to have been given and full particulars should have been supplied to explain why isoglucose had been made an exception and why in this connexion even the complete abolition of the production levy was deemed to be right. In answer to this the Council and the Commission call attention to the fact inter alia by referring to the opinion in Case 78/74Deuka, Deutsche Kraftfutter GmbH B.J. Stolp v Einfuhr- und Vorratsstelle für Getreide und Futtermittel [1975] ECR 421, at p. 435 — that in the case of legislative measures the requirements for carrying out the duty to give a statement of reasons are stringent if part of an entire system is under consideration. On this point it is important to bear in mind that Regulation No 1862/76 is one of a series of regulations. However the objectives of that regulation, in so far as they can be inferred from basic Regulation No 2727/75 and Regulation No 2742/75, make it immediately clear why there is no question of a production refund for the manufacture of isoglucose. Furthermore it must not be forgotten — and this refers to the argument that the Community has abruptly altered its consistent refund policy — that isoglucose is a new product, which only appeared on the market in appreciable quantities in 1976, and that since 1974 there have been indications of efforts to abolish the refunds or at least to reduce them considerably. With reference to this argument it must first of all be conceded that the recitals in the preamble to Regulation No 1862/76 are not in fact drawn up in great detail; they actually contain the following: "whereas however, given the objectives of the production refund system, such an increase should not be retained in the case of products used in the manufacture of glucose having a high fructose content." However on the one hand I am of the opinion that what was said in connexion with the decision not to increase the refund must naturally apply to its lapse, that the reasons in the preamble therefore form a logical entity. On the other hand I take the view that the reference to the objectives of the rules relating to the refund is sufficient if one follows the arguments in the Advocate General's opinion in Case 78/74 and the relevant case-law to date (judgment of 13 March 1968 in Case 5/67 W. Bern GmbH & Co. v Hauptzollamt München [1968] ECR 83; judgment of 20 June 1973 in Case 80/72 N.V. Koninklijke Lassiefabrieken v Hoofdproduktschap voor Akkerbouwprodukten, [1973] ECR 635; judgment of 18 March 1975 in Case 78/74 Deuka, Deutsche Kraftfutter GmbH B.J. Stolp v Einfuhr- und Vorratsstelle für Getreide und Futtermittel [1975] ECR 421 and judgment of 23 February 1978 in Case 92/77 An Bord Bainne Co-operative Limited v The Minister for Agriculture, not yet published). In this connexion both the basic Regulation No 2727/75 and Regulation No 2747/75 have a role and it notes the absence in Regulation No 1862/76 of any reference to an opinion of the European Parliament to be given in accordance with Article 43 (2) of the EEC Treaty. It considers that such an opinion is necessary because the said regulation is not to be regarded as a rule for the application of Article 11 of Regulation No 2727/75 within the meaning of that Article. In fact it has exceeded the limits of the authorization granted in that article, since Article 11 mentions production refunds for specific products quite generally, and does not provide that the Council may adopt different rules according to the use for which the starch was intended. The preamble to Regulation No 2742/75 is even clearer. It states that there is a special situation on the market in starches and that the starch industry must ensure that its prices are competitive with those of substitute products. In this connexion special reference is made to competition between maize starch, rice starch, potato starch and substitute chemical products. However if the creation of the capacity to compete with the products of the chemical industry, especially the petrochemical industry, which can buy raw materials cheaply on the world market, can be found to be the principal justification for the rules relating to refunds, it must accordingly follow that refunds for isoglucose, which is not exposed, or not yet exposed, to a large extent to such competition, were not included in the system established by the rules. In these circumstances the exclusion of isoglucose from the rules relating to refunds did not in fact call for any special justification and the validity of Regulation No 1862/76 can therefore scarcely be called in question with reference to the requirements of Article 190 of the EEC Treaty. (bb) Furthermore one of the plaintiffs must be regarded as immaterial that the objectives of the rules relating to refunds are mainly indicated in Regulation No 2747/75, which had to be amended by Regulation No 1862/76, the one relevant in these proceedings. The preamble to Regulation No 2727/75 refers to the special market situation for starch, which might make the production refund appear to be appropriate. It can no doubt be inferred from this that refunds for the manufacture of isoglucose have not been included in the objectives of the rules, since isoglucose, even if it is obtained from starch, being a sweetener in the proper sense of that word, does not form part of the starch market. It is however scarcely possible to accept this line of thought either. In the first place within the framework of optional rules relating to the levy, as in Regulation No 2727/75, it seems quite obvious that the Council must be able within the context of the implementing rules which it has to adopt to differentiate between end products. This refer inter alia to the judgment of 30 October 1975 in Case 23/75 Rey Soda Caisa Conguaglio Zucchero [1975] ECR 1279 — be regarded as a fundamental change of policy in the field of refunds on which the other Community institutions had to be consulted. Furthermore reference can be made to what has already been stated about the meaning and purpose of the rules relating to refunds. Thus it emerges from the recitals in the preamble to Regulation No 2727/75 that the rules relating to refunds have been laid down with due regard to the special situation which is a feature of the starch market. That seems to justify completely the exclusion from the rules of products further processed, which are not included in this market. Such a formulation of the rules relating to the refund in other words accords with their objectives and for that reason must fall within the category of what are to be regarded as rules for the application of Article 11 of Regulation No 2727/75. Since no provision has been made for consulting Parliament on the implementing rules within the meaning of Article 11 of Regulation No 2727/75 and of Article 9 of Regulation No 1418/76 — these provisions laid the foundation for the adoption of Regulations No 2742/75 and No 1862/76 — the fact that Parliament's opinion was not obtained does not conduce to the invalidity of Regulation No 1862/75. (cc) Finally the same applies the argument that the Community institutions wrongly failed to consult the glucose manufacturers before adopting the regulations which are criticized. On this particular point it suffices to point out that the Treaty does not provide for such consultation and that there is no corresponding legal principle — at all events when legislative measures are being taken. Furthermore that there cannot therefore be said to be discrimination against the interested parties. It was stated during the proceedings, without being challenged, that since June 1976 there has been an exchange of views with the starch manufacturers and mention was made of a visit by officials to an isoglucose factory. This thereby ensured that some effect at least was given to the interests of the parties concerned before the new rules relating to the refund were settled. and a split-up of the group is apparently under way. Isoglucose is also manufactured by the Belgian company G. R. Amylum N.V. which is the applicant in one of the actions for damages (Case 116/77) with which I have to deal in my opinion which follows this one. This company also commenced production early on, in February 1972, and likewise enlarged its plant. In addition Royal Scholten-Honig (Holdings) Limited, a subsidiary of Koninklijke Scholten-Honig N.V., decided in 1973 to build a plant for manufacturing isoglucose with an annual capacity of 85 000 tonnes and commenced building at Tilbury in October 1974. Lastly the English company Tunnel Refineries has in recent years invested a considerable amount of capital in the manufacture of isoglucose in connexion with an existing starch factory. Part of the capacity thus created has apparently been in use since January 1976.
and implementing rules laid down pursuant to Article 11 of Regulation No 2727/75, which in the final analysis has its origin in Article 43 of the Treaty, are such measures — it must be considered lawful to take into account the effect on sectors other than those directly considered, and in the present cases even the fact that the retention of the production refund in the case of isoglucose would have amounted to discrimination against sugar manufacturers. Finally the Community institutions could in justification of their assertion also refer to the case-law of the Court and in particular to the judgment of 21 December 1954 in Case 1/54 Government of the French Republic v High Authority of the European Coal and Steel Community (Rec. 1954-55, p. 7). In that case it was held in connexion with the concept "misuse of powers" that where a decision pursues more than one aim, even if an unjustified ground is included among the valid ones, this would not make it invalid for misuse of powers, provided that it does not abandon attainment of the main aim. It is my impression that this is at least the case in these proceedings. This regulation. This is conclusive in deciding the matter and as against this the question how the recovery is to be effected technically in law is of minor importance.
(c) All things considered I can accordingly state that none of the arguments put forward during the proceedings warrants the conclusion that Regulation No 1862/70 and as a result Regulation No 2158/76 are invalid. Nos 1110/77 and 1111/77. These regulations took isoglucose out of the organization of the market in sugar and introduced a production levy on it. In this connexion it is important to note that the levy fixed in the first instance for a period of one year for isoglucose at a lower level than for B sugar — namely five units of account per 100 kg —, pursuant to a recently adopted decision of the Council, shall apply until the expiry of the rules relating to quotas of the organization of the market in sugar, that is until 1980.
1.In this connexion it is, I feel sure, appropriate first to assemble some economic facts which could not be considered at the outset and which are of importance in examining the arguments put forward by the plaintiffs in the main actions against the validity of the said regulations. Community institutions and the starch manufacturers at 150 000 tonnes and at the end of 1977 by the plaintiffs at 160 000 tonnes and 380 000 tonnes respectively, by the Community institutions at 400 000 tonnes. The Community institutions also expect a further increase of about 700 000 or even 1 000 000 tonnes by 1980, in answer to which the plaintiffs express the opinion that the expansion of production capacities is already slowing down because of the lapse of the production levy. In fact from the middle of 1976 to the middle of 1977 75 000 to 88 000 tonnes of isoglucose were produced — calculated on the basis of the dry matter — which corresponds to about 2 to 3 % of the entire production of starch. One plaintiff gave as its production capacities, expressed in white sugar equivalents, at the end of 1976 have been estimated by one plaintiff at 70 000 tonnes, by the Community institutions at 400 000 tonnes and at the end of 1977 by the plaintiffs at 160 000 tonnes and 380 000 tonnes respectively, by the Community institutions also expect a further increase of about 700 000 or even 1 000 000 tonnes by 1980, in answer to which the plaintiffs express the opinion that the expansion of production capacities is already slowing down because of the lapse of the production levy. In fact from the middle of 1976 to the middle of 1977 75 000 to 88 000 tonnes of isoglucose were produced — calculated on the basis of the dry matter — which corresponds to about 2 to 3 % of the entire production of starch. One plaintiff gave as its production capacities, expressed in white sugar equivalents, at the end of 1976 have been estimated by one plaintiff at 70 000 tonnes, by the Community institutions at 400 000 tonnes and at the end of 1977 by the plaintiffs at 160 000 tonnes and 380 000 tonnes respectively, by the Community institutions also expect a further increase of about 700 000 or even 1 000 000 tonnes by 1980, in answer to which the plaintiffs express the opinion that the expansion of production capacities is already slowing down because of the lapse of the production levy. In fact from the middle of 1976 to the middle of 1977 75 000 to 88 000 tonnes of isoglucose were produced — calculated on the basis of the dry matter — which corresponds to about 2 to 3 % of the entire production of starch. One plaintiff gave as its
plaintiff at 70 000 tonnes, by the Community institutions at 400 000 tonnes and at the end of 1977 by the plaintiffs at 160 000 tonnes and 380 000 tonnes respectively, by the Community institutions also expect a further increase of about 700 000 or even 1 000 000 tonnes by 1980, in answer to which the plaintiffs express the opinion that the expansion of production capacities is already slowing down because of the lapse of the production levy. In fact from the middle of 1976 to the middle of 1977 75 000 to 88 000 tonnes of isoglucose were produced — calculated on the basis of the dry matter — which corresponds to about 2 to 3 % of the entire production of starch. One plaintiff gave as its production capacities, expressed in white sugar equivalents, at the end of 1976 have been estimated by one plaintiff at 70 000 tonnes, by the Community institutions at 400 000 tonnes and at the end of 1977 by the plaintiffs at 160 000 tonnes and 380 000 tonnes respectively, by the Community institutions also expect a further increase of about 700 000 or even 1 000 000 tonnes by 1980, in answer to which the plaintiffs express the opinion that the expansion of production capacities is already slowing down because of the lapse of the production levy. In fact from the middle of 1976 to the middle of 1977 75 000 to 88 000 tonnes of isoglucose were produced — calculated on the basis of the dry matter — which corresponds to about 2 to 3 % of the entire production of starch. One plaintiff gave as its
sugar market is confronted with stagnant or even falling sugar consumption which at about 9.3 million tonnes per year is in the region of the basic quota. Consequently the 1976/77 marketing year produced surpluses of 1.7 million tonnes in spite of small yields per hectare attributable to the drought. In the 1977/78 marketing year, with the production of white sugar reaching 11.086 million tonnes — not counting C sugar — and taking account of ACP sugar imported into the Community, a surplus of 2.6 to 2.7 million tonnes is to be expected. In such circumstances and in view of the fall in world prices considerable sums of money are needed to finance exports: thus in the 1977/78 marketing year the cost was first calculated at 240 to 250 units of account per tonne and recently at 220 units of account per tonne. The effect of the surplus is also that market prices are approximately the same as the intervention prices or only slightly above them. As far as isoglucose is concerned the production capacities, expressed in white sugar equivalents, at the end of 1976 have been estimated by one plaintiff at 70 000 tonnes, by the Community institutions at 400 000 tonnes and at the end of 1977 by the plaintiffs at 160 000 tonnes and 380 000 tonnes respectively, by the Community institutions also expect a further increase of about 700 000 or even 1 000 000 tonnes by 1980, in answer to which the plaintiffs express the opinion that the expansion of production capacities is already slowing down because of the lapse of the production levy. In fact from the middle of 1976 to the middle of 1977 75 000 to 88 000 tonnes of isoglucose were produced — calculated on the basis of the dry matter — which corresponds to about 2 to 3 % of the entire production of starch. One plaintiff gave as its
2.If I next turn to the examination of the regulations mentioned just now — Regulation No 1110/77 which took isoglucose out of the organization of the market in sugar has no significance in this connexion on its own — the first question which might be raised is whether the production levy on isoglucose affects the manufacturers concerned at all. There are grounds for doubting whether it does in view of the assertion of some of the plaintiffs that the lapse of the production levy itself is making the manufacture of isoglucose unprofitable and forcing them to stop production. If this were the case, if isoglucose therefore were no longer being manufactured because of the lapse of the production refund, the rules relating to the levies would in fact not apply and consequently the questions relating thereto would be irrelevant. Nevertheless it seems to me that for various reasons there is no justification for breaking off the examination at this point on that ground. One such reason is that it has not so far been clearly established that the consequence indicated — cessation of production — is bound to flow solely from the lapse of the refund. The plaintiff Amylum has not adduced any evidence to this effect and the plaintiff Tunnel Refineries only mentions a decline in profits due to the lapse of the production refund. Finally no circumstances exist which threaten an immediate cessation of production; if the worst came to the worst this would only be something to be feared in the future, should long term market conditions without a refund not allow isoglucose to be manufactured profitably. If however it cannot thus at the present time be said for certain that the consequence indicated — cessation of production — is bound to flow solely from the lapse of the refund. The plaintiff Amylum has not adduced any evidence to this effect and the plaintiff Tunnel Refineries only mentions a decline in profits due to the lapse of the production refund. Finally no circumstances exist which threaten an immediate cessation of production; if the worst came to the worst this would only be something to be feared in the future, should long term market conditions without a refund not allow isoglucose to be manufactured profitably. If however it cannot thus at the present time be said for certain that the consequence indicated — cessation of production — is bound to flow solely from the lapse of the refund. The plaintiff Amylum has not adduced any evidence to this effect and the plaintiff Tunnel Refineries only mentions a decline in profits due to the lapse of the production refund. Finally no circumstances exist which threaten an immediate cessation of production; if the worst came to the worst this would only be something to be feared in the future, should long term market conditions without a refund not allow isoglucose to be manufactured profitably. If however it cannot thus at the present time be said for certain that the
consequence indicated — cessation of production — is bound to flow solely from the lapse of the refund. The plaintiff Amylum has not adduced any evidence to this effect and the plaintiff Tunnel Refineries only mentions a decline in profits due to the lapse of the production refund. Finally no circumstances exist which threaten an immediate cessation of production; if the worst came to the worst this would only be something to be feared in the future, should long term market conditions without a refund not allow isoglucose to be manufactured profitably. If however it cannot thus at the present time be said for certain that the consequence indicated — cessation of production — is bound to flow solely from the lapse of the refund. The plaintiff Amylum has not adduced any evidence to this effect and the plaintiff Tunnel Refineries only mentions a decline in profits due to the lapse of the production refund. Finally no circumstances exist which threaten an immediate cessation of production; if the worst came to the worst this would only be something to be feared in the future, should long term market conditions without a refund not allow isoglucose to be manufactured profitably. If however it cannot thus at the present time be said for certain that the consequence indicated — cessation of production — is bound to flow solely from the lapse of the refund. The plaintiff Amylum has not adduced any evidence to this effect and the plaintiff Tunnel Refineries only mentions a decline in profits due to the lapse of the production refund. Finally no circumstances exist which threaten an immediate cessation of production; if the worst came to the worst this would only be something to be feared in the future, should long term market conditions without a refund not allow isoglucose to be manufactured profitably. If however it cannot thus at the present time be said for certain that the
3.When examining the reasons put forward to establish the invalidity of Regulations No 1110/77 and No 1111/77 I will first of all consider once again the formal complaints. (a) Thus one of the plaintiffs drew attention to the opinion of the European Parliament (Official Journal 1977, C 93, p. 14) which shows that Parliament thought it advisable to extend to isoglucose the treatment applicable to sugar. In the view of this plaintiff the Community legislature is obliged according to Article 190 of the EEC Treaty to give a statement of the reasons why it has not acted upon the opinion. There is no such statement of the reasons in the present cases. In my view we cannot accept this argument. The predominant reason for this is not so much the fact that the Council has not completely disregarded the opinion of the European Parliament; the decisive factor on the contrary is that, although the duty to consult is laid down by Article 43 of the Treaty, it certainly does not follow that the opinion given must be considered or that if it is disregarded specific reasons for this must be stated. This point was settled early on by the case-law of the Court in similar circumstances in the context of the Treaty establishing the European Coal and Steel Community (cf. Case 4/54 Associazione Industrie Siderurgiche Associate (I.SA.) v High Authority of the European Coal and Steel Community (Rec. 1954-55, p. 177)). Regulations Nos 1110/77 and 1111/77 cannot therefore be said to be vitiated by any formal and procedural defects.
4.The examination of the substantive arguments submitted concerning the validity of the two said regulations is more difficult and covers a wider area. (a) In this connexion I turn first of all to the question whether the Council could adopt Regulation No 1111/77, which is expressly based on Articles 42 and 43 of the Treaty and refers to the objectives of Articles 39, as a measure relating to agricultural policy or whether it can be said against this that isoglucose is not an agricultural product within the meaning of the Treaty. In this connexion one of the plaintiffs relies on the opinion of the European Parliament which has already been mentioned and which describes isoglucose as an industrial product. It also refers to the definition of agricultural products in Article 38 of the Treaty which only includes products of first-stage processing. Isoglucose which is produced by second-stage processing does not fall within this definition and Article 235 of the Treaty ought to have been adopted, that the Community institutions could safely have recourse to Article 43 of the Treaty. In any case the Council's contention that it must be possible to introduce a charge under Article 43 if there is already a charge of this kind on competing products seems to me to be tenable in this connexion. It must be noted in connexion with the view put forward by one plaintiff, namely that in the case of processed products the procedure prescribed by Article 43 does not fall within this definition and Annex II to the Treaty provides no help either, for a wide interpretation of this Annex cannot turn agricultural products into industrial products. When considering this question it is in my view important to bear in mind that isoglucose falls within tariff headings 17.02 and 17.05 of the Common Customs Tariff. No problems arise on this account in the case of the first tariff heading because from the very beginning it was set out in Annex II. As far as concerns tariff heading 17.05 it is true that it was not inserted in the list in Annex II until the adoption of Regulation No 7a of the Council of 18 December 1959. However in my view Article 38 is to be interpreted in such a way that paragraph (3) thereof as well as Annex II to the Treaty are invariably considered in the version from time to time in force. Furthermore it has been established by the case-law of the Court (judgment of 29 May 1974 in Case 185/73 Hauptzollamt Bielefeld v Offene Handelsgesellschaft in Firma H. C. König (1974] ECR 607) that the number of operations is not the criterion for determining the concept "first-stage processing" and that the ratio between the cost of the basic product and the processed product is a material factor. However since in the case of isoglucose, relating to agricultural policy or whether it can be said against this that isoglucose is not an agricultural product within the meaning of the Treaty. In this connexion one of the plaintiffs relies on the opinion of the European Parliament which has already been mentioned and which describes isoglucose as an industrial product. It also refers to the definition of agricultural products in Article 38 of the Treaty which only includes products of first-stage processing. Isoglucose which is produced by second-stage processing does not fall within this definition and Article 235 of the Treaty ought to have been adopted, that the Community institutions could safely have recourse to Article 43 of the Treaty. In any case the Council's contention that it must be possible to introduce a charge under Article 43 if there is already a charge of this kind on competing products seems to me to be tenable in this connexion. It must be noted in connexion with the view put forward by one plaintiff, namely that in the case of processed products the procedure prescribed by Article 43 does not fall within this definition and Annex II to the Treaty provides no help either, for a wide interpretation of this Annex cannot turn agricultural products into industrial products. When considering this question it is in my view important to bear in mind that isoglucose falls within tariff headings 17.02 and 17.05 of the Common Customs Tariff. No problems arise on this account in the case of the first tariff heading because from the very beginning it was set out in Annex II. As far as concerns tariff heading 17.05 it is true that it was not inserted in the list in Annex II until the adoption of Regulation No 7a of the Council of 18 December 1959. However in my view Article 38 is to be interpreted in such a way that paragraph (3) thereof as well as Annex II to the Treaty are invariably considered in the version from time to time in force. Furthermore it has been established by the case-law of the Court (judgment of 29 May 1974 in Case 185/73 Hauptzollamt Bielefeld v Offene Handelsgesellschaft in Firma H. C. König (1974] ECR 607) that the number of operations is not the criterion for determining the concept "first-stage processing" and that the ratio between the cost of the basic product and the processed product is a material factor. However since in the case of isoglucose, relating to agricultural policy or whether it can be said against this that isoglucose is not an agricultural product within the meaning of the Treaty. In this connexion one of the plaintiffs relies on the opinion of the European Parliament which has already been mentioned and which describes isoglucose as an industrial product. It also refers to the definition of agricultural products in Article 38 of the Treaty which only includes products of first-stage processing. Isoglucose which is produced by second-stage processing does not fall within this definition and Article 235 of the Treaty ought to have been adopted, that the Community institutions could safely have recourse to Article 43 of the Treaty. In any case the Council's contention that it must be possible to introduce a charge under Article 43 if there is already a charge of this kind on competing products seems to me to be tenable in this connexion. It must be noted in connexion with the view put forward by one plaintiff, namely that in the case of processed products the procedure prescribed by Article 43 does not fall within this definition and Annex II to the Treaty provides no help either, for a wide interpretation of this Annex cannot turn agricultural products into industrial products. When considering this question it is in my view important to bear in mind that isoglucose falls within tariff headings 17.02 and 17.05 of the Common Customs Tariff. No problems arise on this account in the case of the first tariff heading because from the very beginning it was set out in Annex II. As far as concerns tariff heading 17.05 it is true that it was not inserted in the list in Annex II until the adoption of Regulation No 7a of the Council of 18 December 1959. However in my view Article 38 is to be interpreted in such a way that paragraph (3) thereof as well as Annex II to the Treaty are invariably considered in the version from time to time in force. Furthermore it has been established by the case-law of the Court (judgment of 29 May 1974 in Case 185/73 Hauptzollamt Bielefeld v Offene Handelsgesellschaft in Firma H. C. König (1974] ECR 607) that the number of operations is not the criterion for determining the concept "first-stage processing" and that the ratio between the cost of the basic product and the processed product is a material factor. However since in the case of isoglucose,
apply. However I do not consider that one need have any qualms about invoking Article 2 (a) with reference to the levy on isoglucose. In this article appears the very wide-ranging expression "within the framework of 39 (e)". However it has not been shown in each case that disregarding these objectives in order to pursue another — even a very close actual connexion with this organization of the market should suffice. In this context one point of interest is that isoglucose was included originally in the organization of the market in sugar and taken out of it because a special set of rules was adopted for it. Furthermore the levy on isoglucose, as can be inferred from the recitals in the preamble to Regulation No 1111 /77, is specifically designed to finance exports of surpluses which come onto the sugar market. Accordingly the levy on isoglucose should be treated as "own resources" within the meaning of the Council decision, and it is therefore plain that its use for the said purpose certainly does not come up against any legal obstacles arising out of the financial system.
(c) In the third place the argument that the rules relating to the levies on isoglucose are incompatible with the objectives of Article 39 of the Treaty must be examined. The plaintiffs' main submission in support of this argument is that the levy leads to the production of isoglucose being stopped, technical progress within the meaning of Article 39 (a) of the Treaty is impeded, and by no means the least of the consequences of this is that the effect both on the work force in isoglucose factories and on that part of the agricultural Community which produces the necessary raw materials for the manufacture of isoglucose has not been taken into consideration. The measure also runs counter to the objective in Article 39 (d) of the Treaty since isoglucose can help to assure the availability of maize which alone is used the decisive factor however is that in spite of considerable expansion the production of maize in the Community presents no problems at all since it does not yet meet Community demand by a long way. In addition Community maize is clearly less suitable for the manufacturer of starch and isoglucose than it is for use as fodder. Consequently only less than 100 000 tonnes of the Community maize used for the manufacture of starch — about 1 000 000 tonnes per year — are supplied for the manufacture of isoglucose and imported maize is mainly used for this. The plaintiffs' reference to Article 39 (d) — the assurance of the availability of supplies — cannot in my opinion stand because, as has been explained to us, the rules relating to quotas of the organization of the market in sugar have provided for a sufficiently large safety margin. Furthermore for some years there has been a surplus in the Community — which amounted to 2.7 million tonnes for the marketing year 1977/78 — and this situation is expected to continue both in the Common Market and on the world market for the foreseeable future. Finally the plaintiffs' reference to Article 39 (e) — supplies reaching consumers at reasonable prices — would not seem to hold good. In this respect isoglucose can indeed achieve nothing for the foreseeable future because in the main it follows the sugar price. The point to bear in mind about the sugar price is that owing to the existing intervention system and the present surplus its movements are in any case close to the lower Community price limit, namely the intervention price. It does not drop below that price if an additional sweetener appears on the market. The price of isoglucose regulation, which in fact increases prices, has disregarded the objective of ensuring that supplies reach consumers at reasonable prices (Article the organization of the markets in sugar) according to which I imagine even a very close actual connexion with this organization of the market should suffice. It is in my view advisable at the beginning of the examination of this complaint to recall that the decided cases of the Court have repeatedly stressed that all the objectives of Article 39 cannot be pursued at the same time and with equal effect and it is therefore permissible to give one or other of them priority (cf. for example judgment of 13 March 1968 in Case 5/67 W. Bern GmbH & Co. v Hauptzollamt München [1968] ECR 83; judgment of 24 October 1973 in Case 5/73 Balkan-Import-Export GmbH v Hauptzollamt Berlin-Packof [1973] ECR 1091; judgment of 2 July 1974 in Case 153/73 Holtz & Willemsen GmbH v Council and Commission of the European Communities [1974] ECR 675). The Community institutions have a wide discretion in this matter. They exercise it according to the economic circumstances. On the other hand the case-law of the Court nowhere indicates that giving preference to one objective requires evidence that in the interest of that objective it is essential to disregard other objectives. As far then as the individual objectives referred to by the plaintiffs are concerned the following are my observations on the alleged disregard of them.
With reference to Article 39 (a) it is certainly of importance that it uses the expressions "agricultural productivity" and "rational development of agricultural production". This provision can scarcely be invoked if the effects of a rule on new methods in the processing industry are at issue. To this must be added that it has not so far been established that the rules relating to the levies for the time being in force make it impossible to manufacture isoglucose. In support of this the figures produced so far, on which the Community institutions have registered some doubts and have not as yet gone into sufficient depth, are probably inadequate. There is the further point that the plaintiff in Case 125/77 only says that because of the levy isoglucose has to a great extent been eliminated from the market and that the plaintiff Tunnel Refineries nevertheless began to produce isoglucose in 1978 even if the scale of production was smaller than originally planned. The plaintiffs' reference to Article 39 (d) — the assurance of the availability of supplies — cannot in my opinion stand because, as has been explained to us, the rules relating to quotas of the organization of the market in sugar have provided for a sufficiently large safety margin. Furthermore for some years there has been a surplus in the Community — which amounted to 2.7 million tonnes for the marketing year 1977/78 — and this situation is expected to continue both in the Common Market and on the world market for the foreseeable future. Finally the plaintiffs' reference to Article 39 (e) — supplies reaching consumers at reasonable prices — would not seem to hold good. In this respect isoglucose can indeed achieve nothing for the foreseeable future because in the main it follows the sugar price. The point to bear in mind about the sugar price is that owing to the existing intervention system and the present surplus its movements are in any case close to the lower Community price limit, namely the intervention price. It does not drop below that price if an additional sweetener appears on the market. The price of isoglucose regulation, which in fact increases prices, has disregarded the objective of ensuring that supplies reach consumers at reasonable prices (Article the organization of the markets in sugar) according to which I imagine even a very close actual connexion with this organization of the market should suffice. It is in my view advisable at the beginning of the examination of this complaint to recall that the decided cases of the Court have repeatedly stressed that all the objectives of Article 39 cannot be pursued at the same time and with equal effect and it is therefore permissible to give one or other of them priority (cf. for example judgment of 13 March 1968 in Case 5/67 W. Bern GmbH & Co. v Hauptzollamt München [1968] ECR 83; judgment of 24 October 1973 in Case 5/73 Balkan-Import-Export GmbH v Hauptzollamt Berlin-Packof [1973] ECR 1091; judgment of 2 July 1974 in Case 153/73 Holtz & Willemsen GmbH v Council and Commission of the European Communities [1974] ECR 675). The Community institutions have a wide discretion in this matter. They exercise it according to the economic circumstances. On the other hand the case-law of the Court nowhere indicates that giving preference to one objective requires evidence that in the interest of that objective it is essential to disregard other objectives. As far then as the individual objectives referred to by the plaintiffs are concerned the following are my observations on the alleged disregard of them.
organization of the market in sugar. At even C sugar, since there is in fan therefore no restriction of their production. Therefore I do not see how the disadvantage at which sugar manufacturers are placed by the rules relating to quotas can be quantified at 15 % of the intervention price, as the Commission has assumed, and why accordingly in the case of isoglucose there was said to be a similar competitive advantage, which could as it were be creamed off. For this reason I prefer to centre the examination on a comparison of the charges applicable, on the one hand, to isoglucose and, on the other hand, to sugar.
In doing so there certainly seems to me to be no justification for proceeding as the applicants have suggested, that is to say, ascertaining the average charge of the entire sugar industry by means of which — allowing for the lower price of sugar beet in the case of B and C sugar — with the B quotas being completely used up one then arrives at a charge of about one unit of account per 100 kg, and what is more, if account is taken of the fan that in the years 1971 to 1976 production of B sugar only amounted to between 11 and 19 % of the production of A sugar, that is taking as a basis the anual average production of B sugar, a charge of only one half of a unit of account is arrived at. In my view this method of calculation fails to appreciate two essential aspens. In the first place the history of the establishment of the organization of the market in sugar reveals that A quota sugar is intended in principle to support producers in unfavourable regions and that B quota sugar is designed to encourage production where it is more competitive and where if need be C sugar could also be produced. From this angle the idea suggests itself of forming a group of sugar producers for whom first and foremost B quota sugar is meant. On the other hand it is of importance that isoglucose manufacturers have large modern factories which have much lower labour costs than sugar factories. It is therefore natural to compare them with corresponding modern sugar manufacturers who are favourably located and also work efficiently. They are unquestionably manufacturers who also produce C sugar in large quantities and for whom therefore the production restrictions of the rules relating to quotas are in practice of as little importance as they are for isoglucose manufacturers.
The Commission also took this as a suiting point when it gave us the example of a modern sugar factory which produces a great deal of C sugar in the year 1976/77 87 % of the A quota. In the case of this undertaking it calculated on the basis of the production figures of the 1976/77 marketing year an average charge on sugar of 11 units of account, by applying the actual production figures for the year 1976/77 which became known later, a charge of 8.71 units of account and for the year 1977/78 a charge of 13.80 units of account per 100 kg. However in my view such an example can scarcely be satisfactory, especially as we were told during the hearing that in the factory in question a very large amount of C sugar was produced, that a large increase of its quota and of its production was effected, but that it ran at a loss in the rather less for four undertakings and at even more than five units of account for four undertakings. However, on that basis and the Commission considers it is appropriate to do so — that frequently more than the minimum price, sometimes even the A price, was paid for B sugar beet, it can be said that the average charge on such sugar manufacturers on the whole corresponds to the charge which isoglucose manufacturers have to bear. We should in the main stick to this method since the Commission has told us on being asked to do so what kind of a picture emerges. According to that picture it has to be assumed that sugar manufacturers bear a charge which is between 3.81 and 13.52 units of account per 100 kg. However I also consider — and on this point I agree with the applicants — that it is proper as far as concerns this calculation to bear in mind that other restrictions of the rules relating to quotas are in practice of as little importance as they are for isoglucose manufacturers. They are unquestionably manufacturers who also produce C sugar in large quantities and for whom therefore the production restrictions of the rules relating to quotas are in practice of as little importance as they are for isoglucose manufacturers.
In the final analysis this means that the production levy fixed for isoglucose, which from now until the end of 1980 is to be five units of account per 100 kg does not in fan discriminate against isoglucose manufacturers, and accordingly it is unnecessary to go further into the question whether placing isoglucose at a disadvantage might not even be justified on the ground that we are only concerned with transitional rules applicable for a few years, that the sugar manufacturers might be said to have well established rights, that there might be a certain Community preference for sugar extracted from sugar beet produced in the Community as against isoglucose left out of account. Furthermore the fan has to be faced that the production levy does not slow down the growth of isoglucose but makes discontinuance of its production unavoidable.
On this issue the following brief observations have in my view to be made. In so far as the applicants mention exaggerated fears concerning sugar exports — they themselves give a figure of about 500 000 tonnes for the current marketing year — it must be borne in mind that they have not succeeded in questioning the figure of 2.7 million tonnes give by the Community institutions. It is apparent that the applicants have simply carried forward the production figures of A and B sugar of the 1976/77 marketing year to the following marketing year and deducted from them the presumed consumption. However, when they did this — apart from the fan that it is necessary to proceed on the basis of higher production values — they overlooked in particular the quantities in respect of which there are obligations to import under the ACP-EEC Convention of Lomé. If the values of the Community institutions are taken as a basis and if which I mentioned just now when I dealt with the economic dau, were considered it is hardly possible to talk of isoglucose manufacturers being required to make an excessive contribution. In fact they only bear less than 3 % of all export costs: in relation to the rate of the refund per tonne (220 units of account) their share (50 units of account) amounts to less than one quarter. If on the other hand only 3 % of the total costs which sugar and isoglucose producers bear were imposed upon the applicants in accordance with their market share, which they consider to be the appropriate method, then the other objective which has been mentioned, the slowing down of the growth of isoglucose, would hardly be attained.
I am unable in addition to accept that according to the contentions of the Community institutions the level of the production levy has not been fixed on the basis of isoglucose's potential share of the market. Likewise the production levy did not serve as a guide-line for determining the levy. On the contrary the main idea for this was to charge isoglucose and sugar in the same way. It is my impression that the figures which have so far come to light are insufficient to support such an assumption. Likewise a charge which modern sugar factories seem to be able to bear can also be borne in the same way by the less labour intensive manufacturers of isoglucose. However, in principle this viewpoint can least of all have any decisive significance when all other considerations point to the charge being fair. If the position were as the applicants consider it to be then it would only be evident that the manufacture of this new product, in which it was decided to invest when the economic situation was entirely different, just cannot be carried on economically under existing circumstances and in such a way as to maintain the conditions of competition which apply to sugar.
(f) The applicants also submit that the Community institutions have wrongly failed to provide for any transitional rules and derogations for existing capacities and the argument put forward in the proceedings relating to the liability of public authorities that the applicants have been frustrated in their legitimate expectations is connected with this. The applicants point out that isoglucose has for some time benefited from production refunds, that is to say, from certain measures to promote it. The Community institutions were aware of the efforts to develop isoglucose in the Community and also knew about the consequent decisions to invest in it. Nevertheless they did not at any time draw the attention of the applicants to the fan that in view of a threat to the sugar market caused by isoglucose production measures might be adopted and that the system of financing exports would also be extended to substitute products as soon as they arrived on the isoglucose market in considerable quantities, and by no means the least reason for this was that an amendment of the rules relating to quotas and the import regulations for the ACP sugar was not to be expected before 1980.
For that reason and especially because the preparatory work in connexion with the measures has been carried out in such good time that existing contracts were scarcely affected by them there was no occasion to adopt special transitional measures which might have frustrated the effen of the rules. If however isoglucose manufacturers nevertheless got into unexpected difficulties that was their own fault, because when they made their decisions to invest they did so on the basis of specific forecasts of the economic trend — a continuing sugar deficit and rising prices — which now turn out to be wrong. The fact that isoglucose manufacturers benefited for a time from the rules relating to the refund does not establish any legitimate expectation of further encouragement and preferential treatment.
(g) The other argument which has now still to be dealt with — it also originates in the proceedings relating to the liability of public authorities — namely that the rules to which
exception is taken contravene the right to carry on a business freely, which can be numbered among the principles which the Community institutions also have to observe, is in a certain way connected with the principle of proportionality which has already been dealt with. On this point the applicants once again submit that the production levy renders the manufacture of isoglucose impossible, in fact even at the level of five units of account per 100 kg which was originally limited to one year and now applies until 1980. The capital invested in isoglucose has therefore been lost; the Community institutions should in each case have provided for compensation for this "expropriation". On this I can first of all only repeat that it has not been proved that this economic consequence is inevitable even if the calculations produced by the Community institutions have not so far been acknowledged to be conclusive. It also appears to be in principle unlikely — and the conduct of the applicant, Tunnel Refineries, supports this view — that transitional rules could give rise to such a drastic step as the closing down of a factory.
For the rest the effect of the apprehended discontinuance of isoglucose production, if the worst comes to the worst, is the disappearance of one branch of the starch manufacturing industry so that the existence of the undertaking concerned as such is not endangered. But such a state of affairs can scarcely be said to be an interference in the business amounting to expropriation. By no means the least of the arguments of the Community institutions in this connexion is their reminder that to take according to the case-law of the Court (judgment of 14 May 1974 in Case 4/73 J Sold, Kohlen- und Baustoffgroßhandlung v Commission of the European Communities [1974] ECR 491) rights such as those which are asserted in these cases can be restricted in the public interest. On this point it must be borne in mind in these proceedings that the applicants operate in a field in which considerations of agricultural policy are very important and for that reason freedom of manoeuvre is in any case very restricted. I therefore assume that the legality of the rules upon which judgment has to be passed cannot be seriously called in question by relying on the right to carry on a business freely.
(h) It only remains for me to consider the complaint of a misuse of powers which the applicants make on the ground that a set of rules relating to levies such as those involved in these cases may only be adopted under Article 40 of the EEC Treaty in connexion with an organization of the market. But there is no real organization of the market for isoglucose, because the advantages to accrue to isoglucose under Council Regulation (EEC) No 1111/77 have not as yet been realized. Furthermore the rules relating to levies pursue illegal objectives such as neutralization of the competition offered by isoglucose and slowing down its growth, protection of the sugar industry which is running less economically and lightening the burden of the Community budget. On this point I have already acknowledged in another connexion that the advantages which isoglucose was expected to derive from the organization of the market are not at the moment of any real significance. However that naturally does not mean that the organization of the market in isoglucose is mere show. The course of which further development is expected to take is entirely in foreign trade although perhaps not so much with overseas countries as with European countries bordering on the Community. I simply recall that the large French share of isoglucose production has to be exported because of the prohibition of its use which applies in France. Furthermore, even if the rules relating to in this connexion the aim of slowing down the growth of isoglucose in the interest of stabilizing the market has played a part — the Community institutions refer specifically to this in answers to Parliamentary questions — this would be just as lawful as the other subsidiary concern, namely to protect the Community budget from burdens which are too heavy. I therefore find that there is no basis for the complaint that there has been a misuse of powers.
As for the rest nothing has come to light to show that the real aim of the rules is only the neutralization of the competition offered by isoglucose and the protection of the sugar industry. As we have been shown the rules aim — in provisions adopted by the Commission in order to avoid discrimination against sugar — at nothing else but the extension of the rules on contributions applicable to this product to substitute products which have considerable importance on the market. If however the levies are perhaps seldom applicable in practice, the rules relating to the refund, which indeed also apply to isoglucose in processed products, have to be borne in mind. I do not therefore consider that the introduction of a production levy on isoglucose is inadmissible because there is no real organization of the market in isoglucose. Quite apart from that, the imposition of production levies on substitute products under Article 43 of the EEC Treaty can in any case be regarded as lawful, if a corresponding levy within the framework of an organization of a market — in these cases the organization of the market in sugar — is imposed on agricultural processed products.
I therefore submit that the questions referred for a preliminary ruling be answered as follows:
1.During the proceedings no reasons have become apparent which might justify the assumption that Council Regulation (EEC) No 1862/76 in so far as it has added an Article 5 (a) to Regulation (EEC) No 2742/75 of the Council and Council Regulations (EEC) No 1110/77 and (EEC) No 1111/77 are invalid.
2.Article 4 of Commission Regulation (EEC) No 2158/76 is to be interpreted as meaning that it also applies to the recovery of refunds, which have been granted in respect of the production during the period from 1 August to 3 September 1976 of glucose having a high fructose content.