Judgment_paragraph 2. · Albert Ruckdeschel & Co. and Hansa-Lagerhaus Ströh & Co. v Hauptzollamt Hamburg-St. Annen ; Diamalt AG v Hauptzollamt Itzehoe (C-117/76, C-16/77)

2.(a) The Council and the Commission point out in the first place that, in Case 117/76, the plaintiff in the main action lodged its application on 22 July 1975, that is to say, during the 1974/75 marketing year, while in Case 16/77 the application was lodged on 15 August 1975 and therefore during the 1975/76 marketing year.In consequence, any entitlement to the refunds and the amounts of the refunds depend, in Case 117/76, on Regulations (EEC) Nos 1125/74, 1132/74 and 3113/74 of the Council and on Regulation (EEC) No 2518/74 of the Commission of 4 October 1974 (OJ L 270, p. 1) and, in Case 16/77, on Regulations (EEC) Nos 1125/74, 665/75 and 1955/75 of the Council.(b) According to the Council, quellmehl and pre-gelatinized starch are to some extent interchangeable in particular when used as baking materials in the manufacture of rye bread. However because of its different properties quellmehl is more useful than pre-gelatinized starch. It has a greater capacity to absorb water; apart from starch it contains other raw material constituents which are of nutritional value; the process enabling it to be extracted from the raw material is a relatively simple physical operation whereas the manufacture of starch employs a technique which involves relatively more work; and the raw material extraction level is higher. The effect of these advantages is to make quellmehl from 15 to 20 % cheaper than pre-gelatinized starch, which is far more than the amount of the refund which pre-gelatinized starch continued to receive until the 1975/76 marketing year.Thus the abolition of the subsidy would not have abolished the advantages as regards price and quality which quellmehl enjoys in terms of the manufacture of cooking agents.(c) As the result of the oil crisis, prices of products competing with starch went up and in consequence did not compete so strongly against starch which, in turn, became a weaker competitor against quellmehl. The competitive pressure of imported processed products was also weaker. Moreover the maize market itself felt the repercussions of the world increase in the prices of cereals and there was less need to protect the processing industries of the Community. Again, the fact that the manufacture of starch is much more costly and complex than that of quellmehl also resulted in making the production costs of starch markedly more sensitive to the increase in investment costs and in labour costs. Finally, the Community realized that quellmehl was no longer put solely to its traditional use, baking, but that, owing to the refund, it was used as a constituent of animal feed. But these developments, which arose from the refund, do not fall within the objectives of the common agricultural policy for the purposes of which the refund was introduced.It was because it was aware of this state of affairs that the Council reduced the refund for starch (in Regulations (EEC) Nos 1132/74, 3113/74 and 1955/75), made it discretionary (in Regulation (EEC) No 665/75) and abolished it for quellmehl (in Regulations (EEC) Nos 1125/74 and 1132/74).(d) To grant a refund for starch is consistent with the provisions of Article 39 (1) (c) and (d) of the Treaty. Conversely, because of the use of quellmehl as animal feed, the abolition of the refund for this product furthers the objective designed to limiting the common agricultural policy ‘to pursuit of the objectives set out in Article 39’ (second subparagraph of Article 40 (3) of the Treaty).(e) With regard to the alleged infringement of the rule against discrimination, the Council contends that to treat dissimilar situations differently does not amount to discrimination. The grant of a production refund for starch is justified by the state of the market in this product and by its key position between the common agricultural market and the common industrial market. Quellmehl, however, is in a different position. The grant of a refund for quellmehl is in the first place unnecessary as protection for its traditional outlets since the refund granted for pre-gelatinized starch has on several occasions been considerably reduced and, secondly, unjustified inasmuch as it helps to create an unintended outlet by way of animal feed. This different position justifies different treatment despite the fact that the two products concerned are to some extent in competition.(f) The Council also states that even if, in the past, quellmehl and starch have in general received the same treatment this does not constitute a right to the same treatment, as claimed by the plaintiffs in the main actions. In this connexion the Council refers to the various grounds which it has already given and which, it declares, have now ceased to exist, however much they may have justified this identity of treatment in the past.This is clear from the fourth recital in the preamble to Regulation (EEC) No 1125/74 which gives grounds for the abolition of the payment of a refund for quellmehl and begins to reduce it for starch. The reduction to 10 u.a. per tonne of the refund for starch restored the natural superiority of quellmehl as a cooking agent.(g) In terms of law, the Council refers to the decisions of the Court since its judgment of 17 July 1963 in Case 13/63 Italy v Commission [1963] ECR 165 which laid down that it is not discriminatory to treat dissimilar situations differently. The Council also refers to paragraph 22 of the judgment of the Court of 11 July 1974 in Case 11/74, Union des Minotiers de la Champagne v France [1974] ECR 877, according to which difference in treatment cannot be regarded as constituting discrimination which is prohibited unless it appears arbitrary.In the Council's view it appears to be clear from the facts which it has set out, especially from those relating to the natural superiority of quellmehl from the competitive point of view and its use in the manufacture of animal feed, which is contrary to the original object of the subsidy, that it was not guilty of arbitrary discrimination in Regulation (EEC) No 1125/74 (1974/75 marketing year, Case 117/76) or in Regulations (EEC) Nos 665/75 and 1955/75 (1975/76 marketing year, Case 16/77). The same applies to Regulation (EEC) No 2727/75, which was effective only from 1 November 1975.