J.A. van Walsum BV v Produktschap voor Vee en Vlees (124/79)

I —Facts and written procedure

In the context of the General Agreement on Tariffs and Trade (GATT) the Community undertook to open annually, at a consolidated rate of duty of 20%, a Community tariff quota for frozen beef and veal falling within subheading 02.01 A II (b) of the Common Customs Tariff for importation from nonmember countries. Expressed in terms of boned or boneless meat, the amount of this quota came to 22000 tonnes in 1962 and as from 1973 was increased to 38500 tonnes. The Community quota is imported exempt from levy and subject to a uniform consolidated duty under the Common Customs Tariff of 20%.By Regulation No 3063/78 of 18 December 1978 opening, allocating and providing for the administration of a Community tariff quota for frozen beef and veal falling within subheading 02.01 A II (b) of the Common Customs Tariff (Official Journal L 366, p. 6) the Council opened the Community tariff quota of 38500 tonnes for 1979 and proceeded to allocate it amongst the Member States.Article 2 (1) of Regulation No 3063/78 provides that the Community tariff quota shall be divided into two parts, one totalling 22000 tonnes and the other 16500 tonnes, of which 2423 and 1817 tonnes respectively are allocated to the three Member States forming and represented by the Benelux Economic Union.Of the sub-quota of 4240 tonnes reserved to the Benelux countries a quota share of 65% amounting to 2756 tonnes was apportioned to the Netherlands in accordance with an internal scale of apportionment used by the Benelux countries.Under Article 3 (1) of Regulation No 3063/78 the Member States shall take all appropriate steps to guarantee all persons concerned established within their territories free access to the quota shares allocated to them.The annual sub-quota allocated to the Netherlands is divided amongst the persons concerned by the Produktschap voor Vee en Vlees.Under the scale of apportionment used by the Produktschap since 1977, the allocation to Netherlands undertakings is made on the basis of their average share of the imports of beef and veal taken into account in the period of three calendar years immediately preceding the relevant quota year. The Produktschap takes into account only importations from nonmember countries which are subject to a full or partial levy or for which a Community quota has been opened and it excludes importations which have benefited from a total suspension of levy.On 11 July 1979 the Produktschap decided in future to take into account for the division of the national quota amongst the undertakings concerned also those imports which had been effected under application of Article 14 (1) (b) of Regulation No 850/68 of the Council of 27 June 1968 on the common organization of the market in beef and veal (Official Journal, English Special Edition 1968 (I), p. 187) as amended by Article 3 of Council Regulation No 425/77 (Official Journal L 61, p. 1). That provision stipulates, in effect, that meat intended for the processing industry for the manufacture of preserved food which does not contain characteristic components other than beef and jelly shall qualify for a total or partial suspension of levy. Those imports have actually been subject to a levy of 55% of the full rate as from 1 July 1979.J. A. van Walsum B.V., a company having its registered office at Rotterdam, considered itself to have been adversely affected by the Produktschap's decision of 11 July 1979 in that the decision reserved one half of the national quota to the processing industry and reduced the opportunities for importing under preferential tariff arrangements open to undertakings which do not carry on processing.Consequently, J. A. van Walsum B.V. instituted proceedings before the College van Beroep voor het Bedrijfsleven in The Hague for annulment of the Produktschap's decision and requested that court to order the adoption of interim measures. In support of its application it submitted, in particular, that the decision to include imports falling within Article 14 (1) (b) of Regulation No 425/77, amending Regulation No 805/68, was not compatible with Article 3 (1) of Regulation No 3063/78 and the obligation thereby imposed on the Member States of guaranteeing all persons concerned established within their territories free access to the quota shares allocated to them.By order of 31 July 1979 the President of the College van Beroep voor het Bedrijfsleven ordered the suspension until final judgment of the Produktschap's decision of 11 July 1979 and, pursuant to Article 177 of the EEC Treaty, stayed the proceedings until the Court of Justice has given a preliminary ruling on the following question:Is it incompatible with the provision in Article 3 (1) of Council Regulation (EEC) No 3063/78 of 18 December 1978 opening, allocating and providing for the administration of a Community tariff quota for frozen beef and veal falling within subheading 02.01 A II (b) of the Common Customs Tariff (1979), or indeed with the principle which underlies that provision, and which in accordance with that provision is normally formulated in the Council regulations in which the GATT quotas are opened annually, or with any other provision of the Treaty or with any other binding Community rule or legal principle, for the national authority, in the allocation of the GATT quota, the administration of which is entrusted to that authority, to use methods whereby:(a) entitlement to a considerable part of the GATT quota is reserved to the processing industry if and so far as that industry has imported frozen beef and veal in application of the favourable system contained in Article 14 (1) (b) of Regulation (EEC) No 805/68 of the Council as last amended and(b) traders to whom this favourable system does not apply are denied access to a considerable part of the GATT quota in the event of no share in that considerable part of the GATT quota being allocated to them by the national authority?The order of the President of the College van Beroep voor het Bedrijfsleven was received at the Registry of the Court on 6 August 1979.In accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the EEC, written observations were submitted on 11 October 1979 by the Commission of the European Communities, represented by H. Bronkhorst, a member of its Legal Department; on 22 October 1979 by J. A. van Walsum B.V., the appellant in the main action, represented by J. H. Koolschijn, Advocate of The Hague; and on 24 October 1979 by the Produktschap voor Vee en Vlees, the respondent in the main action, represented by J. P. Pluim Mentz, the director of its Legal Department.After hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory inquiry.By order of 30 January 1980 the Court resolved to assign the case to the Second Chamber, in accordance with Article 95 (1) and (2) of the Rules of Procedure.

II —Written observations submitted to the Court

J.A. van Walsum B.V., the appellant in the main action, submits that the decision of the Produktschap which is in dispute has the effect of reserving a significant part of the GATT quota to a specific group of importers, namely those forming the meat processing industry, while access to the remainder of the quota is open to all importers, including the processing industry.(a) Article 3 (1) of Regulation No 3063/78 is of general scope and is not subject to any qualification. “Traditional importers” are just as much “persons concerned” as the processing industry. A significant part of the GATT quota having been reserved by the Produktschap's decision to the processing industry, the “traditional importers” have access only to the remaining quota share, and that in competition with the processing industry. The decision under attack is therefore incompatible with the wording of Article 3 (1) of Regulation No 3063/78.(b) That provision is based upon the principle, expressed in the second recital of the preamble to Regulation No 3063/78, that equal and continuous access to the quota should be ensured for all persons concerned until the quota is used up. All persons concerned are therefore entitled to equal access to the whole of the quota; however, by reason of the decision in dispute the traditional importers do not have access to the significant part of the quota which is reserved to the processing industry. The Produktschap's decision accordingly offends also against the principle expressed in Regulation No 3063/78.(c) Moreover, the decision in dispute is contrary to Article 40 (3) of the EEC Treaty under which, in the establishment of a common organization of agricultural markets, any discrimination between producers or consumers shall be excluded. By favouring in important respects one finite group of importers in comparison with another group of importers, the Produktschap's decision constitutes discrimination.(d) The Member States do not have power to adopt, at a national level, complementary implementing measures in regard to products covered by a common organization of the market, especially when those measures may affect the price-formation mechanism. In the present case, since a large part of the GATT quota is reserved to the processing industry and since meat imported under that quota may be freely sold, the processing industry is placed in the position of being able to play a decisive role in fixing the price of the product in question. Accordingly, the principle flowing from Article 40 of the Treaty has been contravened.(e) The answer to all the points in the question referred to the Court for a preliminary ruling should therefore be in the affirmative.The Produktschap voor Vee en Vlees, the defendant in the main action, sets forth details of the way in which the annual sub-quota allocated to the Netherlands is divided and administered and it reminds the Court, in particular, that imports effected under exemption from levy are excluded, in order to avoid the giving of a double benefit. Since imports effected under application of Article 14 (1) (b) of Regulation No 805/68 as amended by Regulation No 425/77 were again subjected to a partial levy as from 1 July 1979 they had to be taken into consideration. By Commission Regulation No 1136/79 of 8 June 1979 (Official Journal L 141, p. 10) adopted following the judgment of the Court of 6 March 1979 in Case 92/78, Simmenthal [1979] ECR 777, the benefit of that system was restricted to persons who have been engaged in the meat processing industry for at least a year. Under that system, importers who are not processors, such as the appellant company, can no longer apply for an import licence in their own name; but they may acquire import licences indirectly by assignment. The effect of the Produktschap's decision of 11 July 1979 was to make only about 12% of the GATT quota for 1980 inaccessible to importers who are not processors: processors avail themselves to a relatively substantial extent of the power to assign the “import opportunities” represented by an import licence under application of Article 14 (1) (b) of Regulation No 805/68, with the result that a significant portion of the GATT quota remains accessible to importers who are not processors. Moreover, the final part of the question referred to the Court proceeds upon a premise which is not accurate: “traders to whom this favourable system [under Regulation No 805/68] does not apply” enjoy rights of importation obtained by assignment and the Produktschap allocates to them, on that basis, a portion of the GATT quota on a footing of absolute equality with processors who carry out their own importation. According to the forecasts, the decision of the Produktschap in dispute appears to make hardly any alteration in the share of the 1980 GATT quota which every party involved in the market will obtain.The question put to the Court ought therefore to be formulated as follows: May an authority charged with the administration of a GATT quota bring into account, in allocating the quota, imports carried out under the system of 14 (1) (b) of Regulation No 805/68 as amended by Regulation No 425/77 where, consequent upon Community measures, a specific group of traders may indeed no longer apply for licences under that system with the result that they may no longer acquire directly, under that system, rights which would be taken into account in the allocation of the GATT quota, but where that group is not however precluded from importing under that system and thus acquiring such rights, by reason of their having the possibility of obtaining a licence by way of assignment?The Community rules leave to the Member State concerned the discretion of selecting a method of administration, but require it to proceed to an allocation which is appropriate from an economic point of view. Those rules enshrine two principles, that of equality and the “economic principle”. The Produktschap has not acted in contravention of those rules and has not acted unlawfully in regard to Community law in deciding to include the system under Article 14 (1) (b) of Regulation No 805/68 in the basis of allocation of the 1980 GATT quota.Since the principles of equality and of economic logic could be in opposition to each other, the seeking of a fair balance between them is a matter of policy. The Produktschap has achieved that balance in the system which it applies consistently and which provides for the sub-quota allocated to the Netherlands to be shared amongst the persons concerned on the basis of the average imports of frozen beef and veal carried out in their own name during a reference period of three years and subject to a full or partial levy on importation.Having regard to the opportunities available in the trade of arranging importations in the framework of the system under Article 14 (1) (b) of Regulation No 805/68 the continuance of the present policy does not involve any serious affront to the principle of equality. On the other hand, any alteration of that policy would conform less with the economic principle confirmed by the Commission.

IIII —Oral procedure

J. A. van Walsum B. V., the appellant in the main action, represented by A. J. Sandberg, of the Bar of The Hague, the Produktschap voor Vee en Vlees, the respondent in the main action, represented by J. P. Pluim Mentz, and the Commission of the European Communities, represented by Peter Kuyper, a member of its Legal Department, submitted oral argument and replied to questions from the Court at the sitting on 28 February 1980.The Advocate General delivered his opinion at the same sitting.

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