Gesellschaft für Getreidehandel AG v Einfuhr- und Vorratsstelle für Getreide und Futtermittel (55/72)

I —Facts and Procedure

The facts and procedure may be summarized as follows:Between January and March 1966, the defendant in the main action issued to the applicant in the main action a certain number of import authorizations for forward contracts for the import of maize from Italy which the applicant wished to carry out between January and June 1966. The defendant fixed the levy rates in the import licences both for the imports carried out within the time allowed and for those carried out after its expiration.The case concerns the intra-Community levy provided for by Article 2 of Regulation No 19 in order to compensate for the differences existing between the prices of cereals in the Member States at the time when the common market for agricultural products was in its transitional stage. The amount of the levy corresponded to the difference between the price of maize from Italy delivered free-at-frontier in Germany and the German threshold price, after deduction of a flat-rate amount. It devolved on the Commission to determine the free-at-frontier price in accordance with the detailed rules laid down by Article 3 of Regulation No 19 of the Council of 4 April 1962 on the gradual establishment of a common organization of the market in the cereals sector (OJ p. 933/62).According to Regulation No 89 of the Commission of 25 July 1962 laying down criteria for determining free-at-frontier prices for cereals, flour, groats and meal (OJ p. 1899/62), the free-at-frontier price was to be determined on the basis of the most favourable price ruling on the most representative Italian markets for exports to Germany, taking freight charges into account (Article 2). By representative markets was meant the Italian markets from which maize could be exported to Germany at the most favourable price (Article 3). The most favourable price was that which, taking into account the price ruling on the most representative markets together with freight charges and marketing costs not already included in such prices, worked out at the lowest figure in relation to the standard of quality (Article 4 (1)). Freight charges were defined in Article 5 of Regulation No 89.These data were regularly prepared by the Italian authorities, who calculated the free-at-frontier price and then supplied the Commission with such data (Article 7). After checking the data, the Commission determined the free-at-frontier prices each Friday (Articles 8 and 9). The competent German authorities then calculated the amounts of the intra-Community levies in accordance with the provisions of Article 15 of Regulation No 19.The applicant in the main action appealed to the Hessisches Finanzgericht against the fixing of the levies in the import licences. It considers that the Commission incorrectly based the free-at-frontier price on the market price of maize imported from the United States and not on the higher price of maize produced in Italy. Further, the market price taken by the Commission as the basis of calculation was not the price ruling in the most representative markets for exports of maize from Italy to Germany. Finally, the applicant to the main action maintains that the Commission should have applied the effective exchange rate in calculating in DM the free-at-frontier price determined in lire, instead of the exchange rate declared to the International Monetary Fund.The Hessisches Finanzgericht, considering that the determining of the free-at-frontier price is a decision emanating from an institution of the European Communities, has, by order dated 28 June 1972 received at the Court Registry on 3 August 1972, decided to refer for a preliminary ruling the following question:‘Are the decisions of the EEC Commission published in the EEC Official Journal (Agricultural Supplement) No 1 of 12 January 1966, page 16/66 B; No 4 of 2 February 1966, page 118/66 B; No 7 of 23 February 1966, page 214/66 B; No 8 of 2 March 1966, page 250/66 B and No 9 of 9 March 1966, page 285/66 B, determining the free-at-frontier price for the import of maize from Italy to the Federal Republic of Germany, valid?’By order dated 18 October 1972, the Court decided to join Cases 41/72 and 55/72 for the purposes of the oral proceedings.The applicant in the main action and the Commission submitted their written observations in accordance with the provisions of Article 20 of the Protocol on the Statute of the Court of Justice of the EEC.After hearing the report of the Judge Rapporteur and the opinion of the Advocate-General, the Court decided to proceed without a preparatory inquiry. The oral observations of the applicant in the main action and the Commission were made at the hearing on 16 November 1972. F. Modest of the Hamburg Bar appeared for the applicant in the main action, and the Commission's Legal Adviser, P. Kalbe, for the Commission.The Advocate-General delivered his opinion at the hearing on 6 December 1972.

II —Observations presented under Article 20 of the Protocol on the Statute of the Court of Justice of the EEC

The observations presented under Article 20 of the Statute of the Court of Justice of the EEC may be summarized as follows:1. The plaintiff submits that following the judgment of the Court in Case 16/65 (Judgment of 1 December 1965 in Case 16/65, Fa. C. Schwarze v Evst., Recueil 1965, p. 1081), the Commission took the price of imported maize sold in Padua (US — Yellow Corn 2) as the basis for calculating the free-at-frontier price, and not the price of home-grown maize.As the price of imported maize was about 3000 lire less than the price of home-grown maize, the free-at-frontier prices were lowered from 10 December 1965 by a corresponding amount, leading to an increase in the levies collected on the import of maize from Italy to Germany.The applicant maintains that several distinctions exist between the Italian maize market and the Netherlands barley market referred to in the judgment of the Court in Case 16/65. The ratio decidendi of that judgment cannot be applied directly to the present case. In the first place, the Court based its decision on the supposition that home-grown cereals and imported cereals of the same quality, and therefore interchangeable, must command the same price. In the present case, it is established that the price of imported maize was lower than that of the home-grown product. Therefore the conclusion must be drawn that the imported maize was of inferior quality to the maize produced in Italy. In these circumstances, the Commission must act in accordance with the provisions of Article 6 of Regulation No 89, that is to say, to define the quality of US — Yellow Corn 2 and to compare it with the standard of quality in respect of which the Italian target price for maize is fixed. It must then correct the price of imported maize by applying the coefficients in force in Italy for determining the target prices and intervention prices.When there is a difference between the standard of quality in respect of which the Italian target price is fixed and the standard of quality in respect of which the threshold price is fixed, the price resulting from the first correction must be adapted by applying the coefficients of equivalence under the terms of Article 11 of Regulation No 61 of the Commission of 25 June 1962 fixing standards of quality for cereals and coefficients of equivalence between those standards and the standards of quality in respect of which national target prices are fixed (OJ p. 1671/62).It may be assumed, for reasons explained by the applicant, that the prices for maize produced in Italy ruling on the most representative markets reflected the Italian target price. The imported maize ‘US — Yellow Corn 2’ must therefore be of an inferior quality to that of the Italian standard of quality, that is of home-grown maize. The first correction under Article 6 of Regulation No 89 must therefore result in bringing up the price of ‘US — Yellow Corn 2’ to the same level as the price obtained for Italian maize. The second correction deals with the possible differences between the standard of quality for the threshold price and the standard of quality for the Italian target price, differences which, according to the applicant, did not exist. If the Commission had proceeded as indicated above, the free-at-frontier price determined by it would correspond to the prices ruling for home-grown maize, even if the Commission had taken the price of imported maize as the basis for calculation.In this connection the plaintiff invites the Court to ask the Commission to submit all the data taken into account in calculating the free-at-frontier prices determined by it in the disputed decisions.If it appears that the differences between the prices of imported maize and home-grown maize cannot be explained by differences in quality, it must be presumed, at least for 1965/66, that there was a division in the Italian maize market. The principle according to which cereals of the same category, of equal quality, command the same price ceases therefore to apply.In these circumstances, the application of the ratio decidendi of the judgment in Case 16/65 would have results quite contrary to the objectives of Regulation No 19.The primary objective of Regulation No 19 is the promotion of intra-Community trade in cereals. It is to this end that Article 2 provided for the flat-rate amount to be deducted from the intra-Community levy. Thus, by Regulation No 86 of the Commission of 25 July 1962 embodying provisions to prevent diversion of trade in cereals (OJ p. .1894/62), the Commission limits preference to cereals harvested in the exporting Member State. Moreover, the Regulation lays down that, on the import of cereals in circulation in the exporting Member State but harvested in another country, not only is the preference resulting from the deduction of the flat-rate amount to be withdrawn, but the levy applicable in the case of third countries must be charged. In these circumstances, the c.i.f. price of cereals coming from third countries is the basis on which the levy is calculated.From the above considerations, it must be concluded that by Article 1 of Regulation No 86 the principle of the interchangeability of cereals of the same category and quality was excluded in intra-Community trade.The application of the ratio decidendi of Case 16/65 would be liable to create market disturbances in the intra-Community trade in cereals. It would therefore be impossible to. import into a Member State cereals harvested in another Member State when cereals coming from third countries in circulation in that other Member State are sold at prices more favourable than those paid for the home-grown product. This result would be contrary to the objectives of Regulation No 19. The plaintiff concludes from this that, in the event of a division in the market, the free-at-frontier price must be calculated on the basis of the price of the home-grown product.2. Further, the plaintiff raises an objection to the choice of Padua as the most representative market for the export of maize from Italy to Germany. The volume of transactions in maize there (it is contended) is minimal compared to that of Milan. The differences in price on these markets — in 1965/66 the prices on the Milan market were consistently about 2000 lire higher than those on the Padua market — can only be explained by the lack of importance of the Padua market in dealings in imported maize. It is evident, therefore, that the Commission should have chosen Milan as the most representative market.3. Finally, the plaintiff submits that the Commission should have seen to it that, in converting the free-at-frontier price determined in Italian lire, the defendant to the main action applied the effective exchange rate of lire into DM instead of the exchange rate declared to the International Monetary Fund (IMF).During the 1965/1966 winter, the effective rates varied from 64-34 DM to 64-37 DM for 10000 lire. On the other hand the rate declared to the IFM was exactly 64 00 DM for 10000 lire.So far as the disputed free-at-frontier price is concerned, there is a resultant difference in price of 1-71 DM to 1-84 DM per metric ton of maize. It is true that by Article 2 (1) of Regulation No 129 of the Council of 23 October 1962 on the value of the unit of account and the exchange rates to be applied within the framework of the common agricultural policy (OJ p. 2553/62), the Member States must convert the free-at-frontier price expressed in units of account by applying the exchange rates declared to the IMF.Nevertheless, in cases where the difference between the two exchange rates jeopardises the functioning of the common organizations of the market or the implementation of the common agricultural policy, the Council and the Commission may authorize the application of the effective exchange rate (Article 2 of Regulation No 129). Market disturbance was all the more probable as the Federal Republic of Germany fixed the limit referred to in Article 1 of Regulation No 67 of the Commission of 11 July 1962 laying down criteria for amending the amounts of the levies imposed on cereals, flour, groats and meal (OJ p. 1860/62) at 0-75 u.a.According to the applicant's calculations, the difference resulting from the two variations in the basic factors for determining the levy amounted tobetween 4-71 DM and 4-84 DM per metric ton of maize. The Commission was therefore abusing its discretionary powers by failing to apply the provisions of Article 2 (2) of Regulation No 129.4. The Commission states that at first it based its calculation of the free-at-frontier price on the lowest prices for Italian maize ruling at the time at Padua, in accordance with the provisions of Regulation No 89. This method corresponded in principle to that generally followed by the Commission with regard to other Member States. If there were no prices for home-grown cereals available in the exporting State, or when such prices were higher, free-at-frontier prices were determined on the basis of the prices fixed for imported cereals, a method which the Court held to be permissible in its judgment in Case 16/65.The Italian maize market was different from the markets of the other Member States in that the prices of home-grown produce on the one hand and the prices of imported maize on the other hand were fixed independently, so that the price of ‘US — Yellow Corn 3 (sic)’ was more often than not from 1500 to 3000 lire less than the prices ruling for the home-grown hybrid maize. The problem of calculating the free-at-frontier price appeared therefore in these terms: calculation either on the basis of the absolute minimum price, that is of imported maize, or on the basis of the lowest price of the home-grown product. Initially the Commission chose the second solution, as it considered that the levies derived from the free-at-frontier price were only applicable to cereals harvested in the exporting Member State.Towards the end of 1965, however, more and more indications came to light that maize coming from third countries and falsely declared as merchandise harvested in Italy was being exported to Germany.Since the introduction of the common organization of the market in the cereals sector, exports to Germany of maize allegedly harvested in Italy had increased out of all proportion compared tp normal quantities. (Exports of maize to Germany increased from a total of 211 metric tons in 1962 to 503738 metric tons in 1965, and fell to 13346 metric tons in 1967 after amendment of the method of calculating free-at-frontier prices.)In the circumstances, the Commission considered it necessary to fill the gap in the application of the levy system in Germany by basing the calculation of the free-at-frontier prices for exports of maize from Italy to Germany on the prices ruling for ‘US — Yellow Corn 3 (sic)’ as from 10 December 1965.5. The plaintiff's objections to the choice of Padua as ‘the most representative market’ are without foundation.According to the definition in Article 3 of Regulation No 89, it must be considered as ‘the market from which the product can be exported at the most favourable price to the importing Member State’. The Lombardy markets are taken into consideration merely for commercial reasons. In this respect, Ravenna is one of the most important ports for importing maize from North America. The nearest cereal exchange is Padua, which forms a model market for estimating the price of maize, as offers of imported and home-grown maize coincide there.Similar conditions exist in Milan, but because of its more inland position prices are higher than at Padua. Under the clear terms of Article 3 of Regulation No 89, the choice of Padua is obligatory.Further, the Commission refutes the applicant's allegation in the main action that the offer price for imported maize was higher in Padua than the threshold price then in force.6. With regard to the exchange rate to be applied when calculating the free-at-frontier price, the Commission maintains that it must apply the official parity declared to the IMF. Although the Commission may apply the effective exchange rates in exceptional cases, it did not do so in this case as the prescribed conditions for doing so were not present.

The first ground of complaint

The second ground of complaint

The third ground of complaint

Costs