Important legal notice

61998C0064

European Court reports 1999 Page I-05187

Opinion of the Advocate-General

1 This matter arises out of the appeal lodged by Odette Nicos Petrides Co. Inc. (hereinafter `Petrides') against the judgment of the Court of First Instance of 17 December 1997 (1) dismissing the action for compensation brought by that company in respect of certain aspects of the Commission's management of the common organisation of the market in raw tobacco.

Facts

2 I shall now summarise the statement of facts contained in the contested judgment, in so far as it is relevant to this appeal.

3 The applicant is a Greek company whose main business is processing and dealing in tobacco in Greece and abroad. At the material time it had a tobacco processing and storage centre. Depending on its needs, it also rented various small factories and offices. It worked with intermediaries in Greece and abroad.

4 The period to which these proceedings relate extends from April 1990 to the end of 1991. During that period, the Commission organised three tendering procedures for tobacco held by the Greek intervention agency and a fourth procedure for tobacco held by three intervention agencies of Member States, including the Greek intervention agency. On 15 October 1991 the Commission increased the amount of security which each tenderer was required to lodge with the intervention agency concerned.

5 The first tendering procedure at issue was organised by Commission Regulation (EEC) No 899/90 of 5 April 1990 which opened an invitation to tender for the sale for export of baled tobacco held by the Greek intervention agency, (2) and involved four lots of baled raw tobacco from the 1986 and 1987 harvests, divided by varieties and totalling 5 271 428 kg. The first lot comprised 1 805 903 kg of tobacco and was made up of the varieties Mavra, Kaba Koulak Classic and Elassona, Kaba Koulak Non-Classic, Katerini, Burley EL and Basmas. The second lot comprised 1 519 836 kg of tobacco and was composed of the same varieties, with the exception of Basmas. The third lot comprised 1 519 991 kg of tobacco and was made up of the same varieties as the second lot. The fourth lot comprised 425 698 kg of tobacco and was made up of the Mavra and Basmas varieties only. The applicant submitted a tender for the first and second lots (bidding GRD 76.11 and GRD 63.11 per kilogram respectively). However, on 14 June 1990 the Commission decided not to accept any of the tenderers' bids on the ground that, in view of the prices offered, there was a risk that the market might be disturbed.

6 The second tendering procedure at issue was organised by Commission Regulation (EEC) No 1560/90 of 8 June 1990 opening an invitation to tender for the sale for export of baled tobacco held by the Greek intervention agency. (3) It related to the same four lots of baled raw tobacco. The applicant submitted a bid for the first and fourth lots (bidding GRD 91.11 and GRD 101.11 per kilogram respectively). On 7 August 1990 the Commission accepted the bid from another tenderer for the second lot (of GRD 102 per kilogram), but rejected all bids for the first, third and fourth lots, on grounds of risk of disturbance of the market.

7 The third tendering procedure at issue was organised, for the three remaining lots, by Commission Regulation (EEC) No 2610/90 of 10 September 1990 opening an invitation to tender for the sale for export of baled raw tobacco held by the Greek intervention agency. (4) The applicant submitted a bid for all three lots (of GRD 152.26, GRD 132.26 and GRD 121.26 per kilogram respectively). On 16th November 1990 the Commission decided, once again, not to accept the tenderers' bids on the ground that the prices offered were liable to give rise to abnormal developments on the market.

8 The fourth tendering procedure was organised by Commission Regulation (EEC) No 2436/91 of 7 August 1991 opening an invitation to tender for the sale of baled tobacco held by the German, Greek and Italian intervention agencies. (5) The total quantity of 105 486 276 kg was made up of 11 lots, divided into four groups. Each group of lots could be put up for sale only when a contract for the previous group of lots had been awarded. The aim was to obtain bids for all the varieties of tobacco, and dealings were to commence with the least popular varieties on the market. Each lot comprised tobaccos of a given variety held by the various intervention agencies of the various Member States concerned. The applicant took part in a number of sales in that series. Its bids, which were for a quantity lower than that fixed for the lots in question, were rejected as not fulfilling the tendering conditions.

9 After writing, on 13 September 1991, to the Member of the Commission responsible for agricultural matters, seeking suspension of Regulation No 2436/91 but without receiving what it regarded as a satisfactory response, the applicant brought an action before the Court of Justice for the annulment of that regulation and of Notice of invitation to tender No 91/C/213/04 issued by the Commission under that regulation. (Case C-232/91). The applicant also applied for suspension, by way of interim measure, of the operation of the contested regulation (Case C-232/91 R). Since the applicant was not individually affected by the contested measures, its main application was declared inadmissible by order of 14 November 1991 in Petridi and Kapnemporon Makedonias v Commission. (6) Its application for interim measures was also rejected, by order of 10 January 1992.

10 By Commission Regulation (EEC) No 162/92 of 24 January 1992, amending Regulation (EEC) No 2436/91, (7) the Commission divided into ten lots the three last lots of the fourth tendering procedure, on the ground that a distinction based on the harvest year would enhance the value.

Applicable legislation

11 On 21 April 1970 the Council adopted Regulation (EEC) No 727/70 on the common organisation of the market in raw tobacco. (8) The principal mechanisms of that common market organisation include the obligation of the intervention agencies of the Member States to purchase, at the intervention price, leaf tobacco harvested in the Community and not disposed of through normal commercial channels. The tobacco so purchased is to be marketed in such a way as to avoid any disturbance of the market and to ensure equal access to goods and equal treatment of purchasers (second subparagraph of Article 7(2)).

12 Article 3 of Regulation (EEC) No 327/71 of the Council of 15 February 1971 laying down certain general rules relating to contracts for first processing and market preparation, to storage contracts and to disposal of tobacco held by intervention agencies, (9) provides that the tobacco will be marketed on the basis of the price terms fixed for each case, taking particular account of the changes in market requirements.

13 Article 1 of Commission Regulation (EEC) No 3389/73 of 13 December 1973 laying down the procedure and conditions for the sale of tobacco held by intervention agencies, (10) a regulation which has been amended several times, provides:

`1. Baled tobacco held by intervention agencies shall be remarketed by invitation to tender or by sale by public auction.

14 With regard to the conduct of tendering procedures, Article 6(1) provides:

`Within 15 days following the closing date for submission of tenders, a decision shall be taken, on the basis of the tenders received and under the procedure laid down in Article 17 of Regulation (EEC) No 727/70, either fixing a minimum selling price for each lot or awarding no contract'.

15 Originally, Article 5(1) provided:

`Every tenderer shall provide the intervention agency concerned with security in an amount of 0.28 unit of account per kilogram of raw tobacco.'

The amount of the security was raised to ECU 0.339 per kilogram by Commission Regulation (EEC) No 3263/85 of 21 November 1985 amending Regulation No 3389/73. (11) By way of derogation from Article 5(1) of Regulation No 3389/73, it was raised to ECU 0.7 per kilogram of baled tobacco by Commission Regulation (EEC) No 3040/91 of 15 October 1991 amending Regulation (EEC) No 2436/91. (12)

Proceedings before the Court of First Instance

16 By application lodged at the Registry of the Court of First Instance on 24 July 1995, the applicant brought proceedings against the Commission for compensation under the second paragraph of Article 215 of the EC Treaty.

17 By judgment of 17 December 1997 the Court of First Instance declared the action inadmissible as regards the first tendering procedure and dismissed it as regards the other three tendering procedure, ordering the applicant to pay the costs.

Grounds of appeal

18 The appeal is based on the following grounds:

- inadequate statement of reasons regarding achievement of the objective of `avoiding any disturbance of the market' in relation to the second and third tendering procedures;

- incorrect assessment of the facts for the purpose of applying the principle of proportionality in relation to the second tendering procedure;

- distortion of the clear sense of the evidence produced in considering whether the principle of equal treatment had been observed in relation to the second tendering procedure;

- infringement of Articles 1 and 6 of Regulation No 3389/73 and 7(2) of Regulation No 727/70;

- breach of the principle audi alteram partem and the principle of equality of arms;

- incorrect assessment of the appellant's allegations concerning the principle of equal treatment and the increase of the amount of the guarantee in relation to the fourth tendering procedure;

- infringement of Regulation No 3389/73.

Before examining these various grounds of appeal, I should point out that I shall take into account only those which were stated in the original application and the arguments put forward in the reply in so far as they develop or clarify the grounds of appeal.

19 By this ground of appeal the appellant seems to allege that the contested judgment failed to explain to what extent the Commission's conduct in relation to the second and third tendering procedures was appropriate for achieving the objective of `avoiding disturbance of the market'. According to Petrides, such an explanation is important for assessing whether the principle of proportionality was observed during those tendering procedures.

20 The Commission considers that this ground of appeal is merely an assertion and therefore expresses doubts regarding its admissibility. The Commission points out that it was for the applicant to prove the alleged infringement of the principle of proportionality before the Court of First Instance, and that, in view of the indeterminate nature of Petrides' claims, the Court first of all stated that failure to adhere to the objective of not disturbing the market was liable to lead to the annulment of the acts of the administrative institution (paragraphs 50 and 51 of the contested judgment); it then specified what might constitute evidence of that failure, namely, an unawareness of market prices or - which amounts to the same thing - disposal of the merchandise at prices which were too low in relation to prevailing market prices. Finally, the contested judgment found that, in respect of the third tendering procedure, the Commission prompted the operators to tender prices which were higher than those tendered in relation to the second tendering procedure; the Court therefore held that the allegation that the Commission was unaware of market prices was unfounded. According to the Commission, the Court of First Instance was guided by similar considerations in relation to the third tendering procedure.

21 It should be pointed out that it was for the applicant to plead the unlawful conduct of the defendant institution before the Court of First Instance; this is an essential requirement for establishing the liability of the Community because, in an action for compensation, the illegality of the conduct of an institution is not presumed nor can it be investigated at the motion of the Court. The Court's task is to determine whether such allegations are substantiated.

Therefore, with regard to the alleged failure, on the part of the Commission, to fulfil its obligation to avoid any disturbance of the market when selling the tobacco held by the intervention agencies, it was the responsibility of the Court of First Instance not to establish that the Commission's conduct had been true to that objective but to assess whether the evidence before the Court led to the conclusion that the institution had not fulfilled its obligation and, depending on the circumstances, whether it had acted illegally. So it was for the appellant to produce evidence - even if it was only circumstantial - that by rejecting its tenders in the second and third tendering procedures, the Commission had acted illegally, not for the Court of First Instance to prove otherwise. This is the interpretation which must be given, with regard to the second tendering procedure, to paragraph 52 of the contested judgment, which merely states that the allegation that the Commission had been unaware of the market prices is inconsistent with the facts. Since the allegation of illegality has failed, the claim must be dismissed. Also, with regard to the third tendering procedure, the Court states, in paragraph 64 of the contested judgment, that `the applicant has produced no evidence to show that by deciding on 16 November 1990 to reject all the tenders in order not to disturb the market, the Commission failed to take account of market requirements [...]. Unless proof to the contrary is produced, the fact that the Commission sought not to disturb the market indicates that it took account of changes in market requirements, at least as it saw them at the time'.

For the above reasons this ground of appeal must fail, in so far as it concerns an allegation which, even if upheld, could not lead to the annulment of the ruling at first instance. It should therefore be rejected.

22 This ground of appeal comprises two parts. Petrides maintains, first, that the Court of First Instance infringed the principle of proportionality in taking the view that the Commission decision of 7 August 1990 in relation to the second tendering procedure was appropriate to the aim of not disturbing the market. That decision - the appellant goes on - embodied two contradictory measures: on the one hand acceptance of the bid for the second lot, and, on the other, rejection of the bid for the fourth lot. Also, the second measure is contrary to the terms of the notice of invitation to tender and to Article 1(2) of Regulation No 3389/73, which provides that the contract is to be awarded to the person making the best offer (see point 13 above).

Secondly, the appellant criticises the Court of First Instance for saying that the Commission's refusal of the bids received in the second tendering procedure prompted operators to tender higher prices in the next procedure in order to show that the decision rejecting the bids was appropriate to the aim of not disturbing the market. The appropriateness of a measure must, in its view, be assessed by reference to the information available at the time the decision was taken, not a posteriori.

23 So far as the first part of this ground of appeal is concerned, the Commission has pointed out that the arguments on which it is based are new ones and that it should therefore be rejected. I, for my part, think that, although it is true that the specific arguments are new, the ground of appeal itself is not; however, it should be rejected, for the reasons I shall explain.

In fact, the appellant had already complained, before the Court of First Instance, that the Commission had failed to observe the principle of proportionality in the second tendering procedure. After restating the constituent elements of the notion of proportionality, the Court came to the conclusion that the appellant had not specified the objective in relation to which the Commission's action should be considered pointless and inappropriate. Nevertheless, it proceeded to consider whether the Commission's action was consonant with the objective of not disturbing the market, and concluded that the argument put forward by the appellant, namely the Commission's alleged ignorance of prices, did not support the allegation that the decision of 7 August 1990 was contrary to that objective.

In short, in this ground of appeal, the appellant is merely hoping that the Court of Justice will assess the evidence in a different way from the Court of First Instance, which this Court must refuse to do unless the evidence has been distorted or the documents in the case reveal factual inaccuracies in the findings of the Court of First Instance.

As neither of those conditions is fulfilled, the first part of this ground of appeal must be declared inadmissible.

24 With regard to the second part of this ground of appeal, it is evident that when the Court of First Instance referred to the higher bids received by the Commission in the third tendering procedure, after it had rejected the offers made in the second procedure, it sought not to show that the Commission's decision was consonant with the objective, prescribed by the regulations, of not disturbing the market but, more modestly, to refute Petrides' argument that the failure to comply with that objective could be attributed to ignorance of the prices on the part of the Commission. A person who rejects one bid and then receives a more favourable one does not seem ignorant of market prices.

In any event, this whole question falls entirely within the scope of the unappealable assessment of the facts, which is a matter for the Court of First Instance. It cannot, therefore, be raised on appeal.

Consequently, the second part of the second ground of appeal must also be declared inadmissible.

25 In this ground of appeal the appellant company maintains that, in rejecting the allegation of a breach of the principle of equal treatment in the second tendering procedure, the Court of First Instance distorted the clear sense of the information contained in the minutes of the Tobacco Management Committee and in the Court of Auditors' Special Report regarding the fact that Petrides' bid was significantly higher. It was clear from those minutes that the appellant's bid for the fourth lot, which was rejected, represented 75% of the value of the tobacco, while a competitor's bid for the second lot, which was accepted, represented only 23% of the actual value of the product. The Court of Auditors reached a similar conclusion in its report (points 4.53 to 4.55).

26 According to the Commission, the aim of this ground of appeal is to secure a review of facts already established by the Court of First Instance and it should therefore be declared inadmissible.

27 Evidently, the `distortion of the clear sense' invoked by the appellant with regard to those two documents does not even amount to an assertion that the Court of First Instance denied their probative value, either in whole or in part. What is contended is that, on the basis of that evidence, the Court did not reach the conclusions for which the appellant was hoping. One of the grounds put forward before the Court of First Instance was thus, quite literally, reproduced, relying on the same facts on which that Court rejected it. Therefore this plea is, in effect, a request that the Court of Justice review an original allegation, which exceeds the jurisdiction conferred on it by Article 49 of its Statute.

The third ground of appeal should therefore be declared inadmissible.

28 According to the appellant, Articles 1 and 6 of Regulation No 3389/73 and 7(2) of Regulation No 727/70 have been breached by the contested judgment which, in paragraphs 58 and 66, acknowledges that the Commission has considerable latitude when managing the common organisation of the market in raw tobacco. Petrides is of the opinion that the Community institutions, although they may have to be accorded this degree of latitude when making choices of economic policy, should not enjoy the same privilege when making ordinary decisions for management of the agricultural sector concerned, such as those at issue here. Moreover - the appellant continues - although Regulation No 3389/73 grants the Commission the power not to award a contract in respect of a specific lot and, depending on the circumstances, to fix a minimum price for that lot, it also imposes the obligation to apply the same minimum price to the lots in the next tendering procedure.

29 It must be said, first of all, that the tendering procedures carried out by the Commission in the course of managing the common organisation of the market in raw tobacco call for an appraisal of a complex financial situation. As the Commission says, the question whether or not there is a risk of disturbing the market is, by its very nature, complex and never a simple and mechanical administrative operation. This opinion was stated by the Court of Justice in its judgment of 7 April 1992 (13) concerning the Commission's management of the market in vinous alcohols. In fact, Regulation No 3877/88, (14) which governs certain aspects of the common organisation of the sector, establishes a tendering procedure similar to the one in this case and giving the Commission powers similar to those at issue in these proceedings. Regulation No 3877/88 also imposes on the Commission the obligation to ensure, in any tendering procedure, that various objectives, among them that of `avoiding any disturbance of the market', are observed. When assessing the legality of a Commission decision not to award a contract because of the risk of disturbance of the market, the Court specifically stated that `Regulation No 3877/88 confers on the Commission a wide power for the assessment of complex economic situations'. (15)

The same must be true in this case. Therefore, in areas in which the institutions have considerable latitude, even decisions which may subsequently prove to be open to criticism do not necessarily cause the Community to incur liability in the absence of a manifest error of assessment on the part of the institution. (16)

30 As far as the alleged infringement of Articles 1 and 6 of Regulation No 3389/73 is concerned, the appellant's allegations are new ones and must, therefore, be rejected. In fact, `to allow a party to put forward for the first time before the Court of Justice a plea in law which it has not raised before the Court of First Instance would be to allow it to bring before the Court, whose jurisdiction in appeals is limited, a case of wider ambit than that which came before the Court of First Instance. In an appeal, the Court's jurisdiction is thus confined to review of the findings of law on the pleas argued before the Court of first Instance.' (17)

31 Furthermore, not only can the particular interpretation of the provisions of Regulation No 3389/73 suggested by the appellant not be specifically inferred from their terms but such an interpretation leads to manifestly absurd results. In fact, it makes no sense for the minimum price fixed by the Commission for a specific lot necessarily to apply to all the other lots offered in the same tendering procedure when the quality and other features of the product may vary considerably, as happens in practice and did happen, more particularly, in the third tendering procedure at issue.

The fourth ground of appeal must therefore suffer the same fate as the three previous grounds of appeal and be rejected.

32 In this ground of appeal Petrides submits that the Court of First Instance, in rejecting the appellant's pleas concerning the illegality of the fourth tendering procedure and the increase of the amount of the guarantee, should not have relied solely on the documents cited by the Commission in its reply to the written questions. According to the appellant, in view of the timing of the production of those documents and their complexity, the requirements of the principle audi alteram partem and the principle of equality of arms had not been observed, because the appellant had not had an opportunity of verifying the information provided in them. Moreover, the Commission's reply was lodged at the Registry of the Court of First Instance one day after the prescribed deadline.

33 It is not necessary to ascertain whether the period which elapsed between notification to the appellant of the Commission's reply, which was lodged at the Registry of the Court of First Instance on 15 April 1997, and the hearing of 2 May was long enough for Petrides' lawyers to acquaint themselves with its content and, if necessary, to dispute it; it need merely be pointed out that the appellant had an opportunity to make any observations on that reply which it considered necessary, at the very latest during the hearing. As it did not do this, nor request an adjournment to enable it to analyse the Commission's reply at length, nor, as a last resort, express any reservation or make any protest, it must be considered to have acquiesced to the relatively short time at its disposal and to have waived any possible procedural safeguard which it might have had, essentially, in proceedings inter partes.

The delay in the lodging of the reply (which the appellant attributes to the Commission and which the Commission disputes - in so far as it has not been established that this has any impact on the appellant's rights - or, as Article 51 of the EC Statute of the Court of Justice says, is detrimental to the interests of the appellant party) is a purely procedural matter which lies exclusively within the jurisdiction of the Court of First Instance. Therefore it cannot be a basis for quashing the decision of the Court of First Instance.

For all the above reasons, the fifth ground of appeal must also be rejected.

34 The appellant maintains that the Court of First Instance, by reviewing separately the legality of each of the measures adopted by the Commission, failed to have regard to the appellant's submissions that the institution's illegal conduct stemmed from those measures taken as a whole.

35 The Commission contends that the Court of First Instance is permitted, under its Rules of Procedure, to structure its judgments as it considers appropriate. It also considers that the appellant has not shown justification for taking an overall view of the various acts which are the subject of this appeal, nor has it explained the nature of the loss it has suffered as a result of the failure to take an overall approach.

36 In my opinion, the appellant is confusing illegal conduct with damage. As the Commission reminds us, a combination of legal acts cannot produce an illegality; this is not necessarily the case when an accumulation of acts causes damage. In fact, an act which is not, in itself, harmful may become so when in it takes effect in conjunction with others. However, as the Court of First Instance merely considered the question of the legality of the Commission's conduct and did not need to consider whether the other conditions of Community non-contractual liability were fulfilled, (18) this line of argument cannot be put forward in an appeal on a point of law.

37 Furthermore, at no point does Petrides produce new evidence to prove the illegality of the conduct of the Community institution, which an overall assessment of the operations at issue would have revealed.

38 For these reasons the sixth ground of appeal must also be rejected.

39 In the last ground of appeal the appellant maintains that - in its opinion - the Court of First Instance erred in law when it accepted, in paragraph 91 of the contested judgment, that the Commission was entitled to reduce from 45 to 20 days the period between the notice of invitation to tender and the date for submitting tenders. According to Petrides, Regulation No 3389/73, which lays down the procedures and conditions for the sale of tobacco held by the intervention agencies, is an essential measure which ranks high in the hierarchy of norms.

40 There is no basis for this allegation. Article 3 of Commission Regulation No 3389/73 established a period of 45 days between the notice of invitation to tender and the date for submitting tenders. In preparation for the fourth tendering procedure, this period was reduced to 20 days by an amendment to Article 3 of Regulation 3389/73 under Commission Regulation (EEC) No 395/90 of 15 February 1990, a regulation of the same rank in the hierarchy of norms. Lex posterior derogat anterior. Furthermore, as the Court of First Instance pointed out, the amendment was made for objective, not discriminatory, reasons (the need to sell the lots quickly before establishing the new common organisation) and fell within the wide discretion enjoyed by the Commission with regard to the Common Agricultural Policy.

This ground of appeal must therefore be considered unfounded and must be rejected.

Costs

41 Under Article 69(2) of the Rules of Procedure, applicable to this appeal pursuant to Article 118, the unsuccessful party is to be ordered to pay the costs. Consequently, if the grounds of appeal put forward by the appellant are rejected or declared inadmissible, as I propose, the appellant should be ordered to pay the costs of the case.

Conclusion

42 In the light of the foregoing arguments, I propose that the Court of Justice declare that the second and third grounds of this appeal are inadmissible, reject all the others and order the appellant to pay the costs.

(1) - Case T-152/95 Petrides v Commission [1997] ECR II-2427.

(2) - OJ 1990 L 93, p. 7.

(3) - OJ 1990 L 148, p. 7.

(4) - OJ 1990 L 248, p. 5.

(5) - OJ 1991 L 222, p. 23.

(6) - Joined Cases C-232/91 and C-233/91 [1991] ECR I-5351.

(7) - OJ 1992 L 18, p. 16.

(8) - OJ, English Special Edition, 1970 (I), p. 206.

(9) - OJ, English Special Edition, 1971 (I), p. 78.

(10) - OJ 1973 L 345, p. 47.

(11) - OJ 1985 L 311, p. 22.

(12) - OJ 1991 L 288, p. 18.

(13) - Case C-358/90 Compagnia Italiana Alcool v Commission [1997] ECR I-2457.

(14) - Council Regulation No 3877/88 of 12 December 1988 which lays down general rules concerning the release on to the market of alcohols obtained in accordance with the distillations for which provision is made in Articles 35, 36 and 39 of EEC Regulation No 822/87 and which are held by the intervention agencies (OJ 1988 L 346, p. 7).

(15) - Paragraph 42 [1992] ECR I-2503 (emphasis added).

(16) - Case 27/85 Vandemmoortele v Commission [1987] ECR 1129, paragraphs 31 to 34.

(17) - Case C-136/92 P Commission v Brazzelli Lualdi and Others [1994] ECR I-1981, paragraph 59.

(18) - See paragraph 109 of the contested judgment.