Ditta Angelo Tomadini Snc v Amministrazione delle finanze dello Stato (84/78)

C —Observations submitted by the Commission

The Commission argues that it was right in fearing disturbances in trade (difficulties and deflections of trade) due to the level of prices expressed in national currency, which differed widely from one Member State to another. The existence of those disturbances is proved by the following considerations:— Imports of durum wheat by traders into Italy were meeting with ever-increasing difficulties. The c.i.f. price of durum wheat was higher than the threshold price: owing probably to the moderating effect on prices of the sales carried out by the public authorities (the AIMA), durum wheat was sold in Italy at a price close to the intervention price and hence much lower than the target price.— Regardless of their destination within the Community, imports of durum wheat were passing through the United Kingdom. Belgian, Netherlands and German importers in particular made substantial profits by means of these deflections of trade, because the levy expressed in units of account and converted into pounds sterling at the so-called green rate allowed a profit of approximately 30 % to be made, having regard to the charge for which Belgian, Netherlands and German importers would have been liable if the imports had been carried out directly. In this way imports of durum wheat from France were penalized. Information supplied by the United Kingdom reveals that from January to November 1977 some 112000 tonnes of durum wheat had been imported into that State, of which some 53000 were re-exported to other Member States. In the preceding years there had been no such re-exports.— Italy was in a special situation: On the one hand, imports of durum wheat suffered from the absence of monetary compensatory amounts, and importers had no choice but to give up imports or make them at a loss. On the other hand, the AIMA's sales of durum wheat imported from non-member countries amounted to almost 200000 tonnes in the first half of 1977. The Italian Government also bought 300000 tonnes of durum wheat in July 1977 on the world market and 200000 tonnes in October 1977. The absence of monetary compensatory amounts went so far as to cause durum wheat from producer Member States to be offered for intervention buying in the north of the Community (it was a question of 3500 tonnes of wheat from Italy warehoused in Ghent).The circumstances described as regards durum wheat had consequences on the market in pasta. In 1976 Italian exports increased by 50 % over 1975, and would have increased even more in 1977. A crisis would thus have been provoked in the competing sectors of the other Member States.Once the disturbances pertaining to the durum wheat market had been verified, the Commission was under a duty to turn its attention to the derived products, in particular pasta, whose value is primarily determined by the cost of the wheat used in their manufacture. This problem is not new and was examined in Case 29/77 Roquette [1977] ECR 1835, in which the Court held that ‘the Commission may assess the risks of disturbance either for trade in basic products or for trade in both basic and derived products’.The Commission points out that the reintroduction of monetary compensatory amounts in the sector at issue was not decided lightly, but on the contrary as the result of extensive examination and thorough discussions, as is shown by the laborious evolution of the contested measure.The distortions of competition which affected the market in pasta within the Community were caused:— By the considerable depreciation of the lira, making pasta producers in the other Member States unable to contend with competition from Italian producers;— By the low level of the price of durum wheat in Italy, which was close to the intervention price. When production of that product within the Community is in deficit, prices ought to be close to the target price. The decision to intervene in the durum wheat market was determined by the Italian authorities' intention to freeze the maximum retail selling price of pasta;— By the particularly favourable conditions enjoyed by. exports, from the Member States with a weak currency, of pasta manufactured from common wheat and not subject to compensatory amounts, when imports of the basic product benefited from those amounts.It is Italian importers of durum wheat who have reason to complain that monetary compensatory amounts were not reintroduced in due time. Pasta exporters, for their part, profited from this delay, just as they benefited for a number of years from the existence of monetary compensatory amounts on common wheat whilst they were exempt from payment of those amounts on pasta which was, however, manufactured in whole or in part from the same common wheat.The introduction of monetary compensatory amounts is justified when the differences between the green rates and the actual rates give rise to risks of disturbance. In the present case, the Commission proved the actual existence of disturbances and at the same time demonstrated the seriousness of them.In the field of monetary compensatory amounts, it is not possible to speak of a legitimate expectation that certain rules will be retained in force when those rules are no longer justified by the monetary situation prevailing in a specific Member State (cf. case-law of the Court, in particular Case 74/74 cited above).The argument to the effect that the derived products taken as a reference for the assessment of possible disturbances must exclusively be agricultural products and that account must not be taken of disturbances affecting products covered by Regulation No 1059/69 of the Council of 28 May 1969 laying down the trade arrangements applicable to certain goods resulting from the processing of agricultural products (Official Journal, English Special Edition 1969 (I), p. 240) is unacceptable for the following reasons:— Regulation No 974/71 is also based on Article 235, and its provisions apply ‘to products … which … are the subject of a specific arrangement under Article 235 of the Treaty’.— Disturbances affecting the basic product and the derived agricultural products have a direct incidence on the products covered by Regulation No 1059/69. To maintain that as regards these latter products there is no need to take account of disturbances to which they are subject, even if trade in those products is precisely disturbed by the inequality of the cost of the agricultural products from which they are made, leads to blind application of the machinery provided. The following dilemma would then be posed:— automatically to apply the monetary compensatory amounts on the products covered by Regulation No 1059/69 whenever the conditions required for the application of such amounts to the basic agricultural products are fulfilled;— or, having missed the opportunity of automatic extension at the time when monetary compensatory amounts were introduced on the basic agricultural products, never again to be able to apply them.Regulation No 2792/77 deals with operations carried out under cover of a certificate fixing the export refund or the import levy in advance. The reasons against extending the exemption to exports to the other Member States may be summarized as follows:— The Commission's intention was well known to traders, who were not taken by surprise and consequently were able to take adequate steps.— There is also a mandatory requirement of supervision: in order not to leave too much scope for fraud, the measure was not made applicable to intra-Community trade, in respect of which, in the absence of refunds or levies, there can clearly be no advance fixing.— Since no advance fixing certificates could be obtained, it would not have been advisable to stop applying compensatory amounts and thus give unjustified advantages. In this connexion it suffices to think of pasta manufactured from, common wheat, a product which has always benefited from compensatory amounts upon importation.— Exemption from the payment of compensatory amounts would not have been justified if the products were exported to a Member State with a weak currency which was obliged, as is well known, to grant compensatory amounts on imports.By Regulation No 2917/77, the Commission intended to prevent speculation giving rise to deflection of trade and distortion of competition.The Commission submits that the Court can reply that consideration of the questions raised has disclosed no factor of such a kind as to affect the validity of Regulations Nos 2604/77, 2792/77 and 2917/77.Tomadini and the UIPI, represented by G.M. Ubertazzi and F. Capelli, Advocates of the Milan Bar, the Italian Government, represented by O. Fiumara, Avvocato dello Stato, and the Commission of the European Communities, represented by its Legal Adviser, C. Maestripieri, acting as Agent, presented oral argument at the hearing on 13 December 1978.The Advocate General delivered his opinion at the hearing on 31 January 1979.