law://eu/cjeu/1976/c-99-76/hd_1_1_2@2026-11-13The Bundesanstalt fur landwirtschaftliche Marktordnung, the defendant in the main action, is of the opinion that in both cases the processing deposit was rightly forfeited under the first subparagraph and second subparagraph down to the end of indent (a) of Article 18 (2) of Regulation No 1259/72. This provides that the processing deposit shall be released only for quantities in respect of which the successful tenderer has furnished proof that the conditions referred to in Article 6 have been met.(a) The essential factor is not the forwarding by the successful tenderer of the quantities intended for processing to the undertaking concerned nor the proper processing of the butter into concentrated butter but the production of proof of proper processing of the butter sold at a reduced price into concentrated butter.The objective of Regulation No 1259/72 is to encourage the disposal of surplus stocks by the sale of butter at a reduced price for the purpose of processing. The deposit is a guarantee that the processing of the butter will be carried out and there is no reduction in price when this condition is not fulfilled. The successful tenderer is then in exactly the same position as the purchaser of butter at a non-reduced price and is free to use it as he pleases; he is then bound to pay the difference between the normal market price and the minimum purchasing price in accordance with the guarantee referred to as the processing deposit. Where the butter is properly used the successful tenderer has the benefit of the reduction in price provided for; otherwise he pays only the market price by losing the processing deposit. The same results follow where the time-limits for processing are not respected.(b) Article 18 (2) of Regulation No 1259/72 does not infringe the principle of proportionality.By paying the purchase price corresponding to the market situation as a result of the loss of the processing deposit where the butter bought at a reduced price is not duly processed, undertakings simply pay the equivalent of the non-reduced price of butter in accordance with market conditions. There is no question of any penalty in this respect: the deposit is only a guarantee of the performance of an obligation freely entered into.Since they know the terms of the contract, undertakings are presumed to obtain contractual guarantees from their purchasers or other contracting parties requiring them to indemnify the undertakings in the event of refund of the processing deposit being refused.The Commission of the European Communities states that Regulation No 232/75, cited by the plaintiffs in the main action, does not apply in the present case: the applicable regulation is therefore Regulation No 1259/72 as consolidated by Regulation No 2815/72.With regard to the questions raised the Commission has the following observations on the interpretation of the applicable provisions of Regulation No 1259/72 taking account of its objectives:
Article 18 (2) of the regulation gives an unequivocal answer to the question whether the processing deposit must be refunded to the successful tenderer even where, although all the other requisite conditions have been fulfilled, the butter has not been processed into the products provided for within the period laid down: release of the product is subject in all cases to the butter being processed into the prescribed products within the periods provided for.The first sentence of Article 18 (2) provides that except in cases of force majeure the processing deposit shall be released ‘only for quantities in respect of which the successful tenderer has furnished the proof that the conditions referred to in Article 6 have been met.’ There is no exception to this; the terms which it imposes thus include processing into the products referred to in Article 6 (1) (c) within the periods specified.In the same way the provisions of Article 18 (2) (a), (b), (c) and (d) relating to the proof to be furnished to obtain the release of the deposit leave no doubt: whatever the manner of processing the controls relate always to the question whether the butter purchased and the intermediary products obtained from it have been finally processed into the products prescribed by Article 6 (1) (c) within the periods specified. The certificates supplied by the Member States do not bring about the release of the processing deposit unless they confirm that the processing has in fact taken place.Contrary to the opinion of the plaintiffs in the main action the definitive processing within the periods stipulated and in accordance with the provisions of Article 6 (1) (c) is imperative.If the condition provided for in Article 6 (1) (c) is not fulfilled the action undertaken cannot attain its objective and there is no reason to grant the tenderer the reduction of price requested by releasing the deposit.
Article 6 of Regulation No 804/68 and Article 7a of Regulation No 985/68 constitute the legal basis of the rules established by Regulation No 1259/72. The fact that these provisions do not expressly refer to the processing deposit is irrelevant: it is true that the processing deposit is in the nature of a financial guarantee but it is not an independent guarantee of performance in addition to the other obligations entered into by the successful tenderer. On the contrary it is part of the conditions agreed for payment of the selling price: the butter obtained by the successful tenderer represents consideration exactly in accordance with the market situation. The purchase price to be paid is thus the market price less a reduction if the purchaser fulfils the conditions laid down in Article 6 of Regulation No 1259/72. When taking over the butter the purchaser pays the minimum part of the purchase price which he will in any event have to pay. He provides a guarantee to cover the difference between this minimum price and the agreed market price and this allows the intervention agency to obtain the part of the selling price not yet paid if the processing operations agreed upon are not carried out.The rules provided by Article 18 (2) of Regulation No 1259/72 are not incompatible with superior rules of law and in particular with the principle of proportionality.In declaring the processing deposit forfeit the intervention agency claims from the successful tenderer no more than the price in accordance with the market situation; there is nothing inequitable in this.The successful tenderer is not penalized by the loss of the deposit; the intervention agency is simply insisting on its contractual rights to payment of the whole purchase price. The plaintiffs in the main action are claiming a considerable price-reduction representing the consideration for processing within the agreed period whereas this processing has not taken place. It is not unjust but in accordance with the principles of the law of contract that the intervention agency should refuse the consideration due from it whilst the successful tenderer does not fulfil his own obligations.In accordance with the rules of commercial and civil law generally applied the successful tenderer is responsible for the acts of his agents in breach of contract.The plaintiffs in the main action and not the purchasers from them contracted with the intervention agency duly to process the butter within the specified period; it is vis-à-vis them that the purchasers from them are contractually bound to carry out the processing. The intervention agency is not in a position to require the various purchasers to do the processing which the plaintiffs in the main action have contracted to do; only the plaintiffs themselves are able to do this. As regards the reduction of price claimed it is therefore just that the plaintiffs should also bear vis-à-vis the intervention agency the risk of non-fulfilment by their agents.
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