Criminal proceedings against Petrus Suys and others (32/82)

II —Written observations submitted to the Court

The appellants in the main proceedings, Jozef Guldentops and PVBA Corditrans, claim that the parity fixed by law at 1 :9, whilst the actual parity was 1 :6.85, entailed unacceptable discrimination against Belgian carriers and a distortion of the conditions of competition. That discriminatory situation is in direct breach of the EEC Treaty, in particular Article 75 thereof. It is incompatible with Regulation No 1174/68, the object of which is to avoid abuse of dominant positions and damaging competition. Maintenance of the parity provided for in the Royal Decree of 17 November 1978 has precisely the opposite effect, namely the collapse of the Belgian transport market.Since it contains no provisions to counter the effects of the disparity between the currencies of the Member States, Regulation No 1174/68 is incompatible with Article 75 of the EEC Treaty. It disregards one of its own essential aims. Instead of achieving harmonization it creates discrimination between citizens of the various Member States. It breaches the principles of proportionality and equality and does not conform to Article 2 of the EEC Treaty.The appellants in the main proceedings, Jan Flour and NV Translev, observe that Regulation No 1174/68 was no longer applicable when the events giving rise to the main proceedings occurred. It is appropriate however to examine its validity on the twofold ground that Regulation No 2831/77 repeated the provisions of Regulation No 1174/68 and that it provides for the laws, regulations and administrative provisions adopted by the Member States in order to implement it to be maintained in force.(a) Regulation No 1174/68 is contrary to the objectives of the Treaty, as set forth in Articles 74 and 75, in so far as, whilst imposing upon Member States the obligation to fix common transport tariffs, it conuins no provision enabling the problem of fluctuations in currency exchange rates to be dealt with.Since 1971, and more particularly since 1974, developments in the monetary system have led to very considerable and noticeable discrepancies when the fixed exchange rates based on the 1968 rates are applied. The lack of any provision in Regulation No 1174/68 to neutralize the affects of fluctuations between currencies is an intolerable deficiency and a breach of the principle of equality between the nationals of Member States in so far as it enables some of them to apply transport tariffs lower than the minimum tariffs which must be complied with by nationals of other Member States.When the Community institutions adopted Regulation No 2831/71, they were informed that the fluctuations in monetary parities between the various Member States had brought about, to a considerable extent, a distortion of the bracket-tariff system, they are guilty of neglecting to impose upon Member States the obligation to adapt their tariffs to take account of developments in the international monetary system.(b) The case-law of the Court, in particular the judgments of 3 June 1980 in Case 135/79 Gedelfi [1980] ECR 1713 and of 3 February 1982 in Case 248/80 Glunz [1982] ECR 197, confirms the obligation of the Community legislature to be mindful of developments in the international monetary system and the finding that a regulation which gives rise to the application of different tariffs for the carriage of the same goods by the same means, depending upon which currency is used, does not conform to the Community aim of ensuring equality. Regulation No 1174/68 is therefore void, by reason of default on the part of the legislature, if it appears that it cannot be interpreted in such a way as not to infringe Community law.(c) In any event the question arises whether or not the Belgian legislature was under an obligation to provide for a system to adapt transpon tariffs to monetary fluctuations and whether, in such circumstances, the Royal Decree of 17 November 1971 is incompatible with the principle of equality between nationals of the Member States.The Royal Decree is open to three different interpretations.According to the judgment of the Politierechtbank, Ghent, of 15 April 1980, the Royal Decree of 17 November 1971 fixes the tariff solely in Belgian currency, without any reservation or basis for amendment or adjustment. For the transpon of identical goods by the same means, French carriers therefore fix their prices in French francs and Belgian carriers fix theirs in Belgian francs. The schedules for the fixed tariffs, in Belgian francs and French francs, date from 1971 and incorporate a fixed parity of FF 1 : BFR 9. They have not been amended, even though at the date of the events at issue the parity used in the schedules was rendered completely irrelevant by the fall in value of the French franc and despite the fact that the exchange rate was in the region of FF 1 : BFR 6.85, that is to say a difference of almost 25%.The fact that Belgian carriers are obliged, bv the Royal Decree, to express their tariffs in Belgian francs involves considerable discrimination, of such a nature as to entail a wholesale distortion of competition: Belgian carriers, obliged to fix their transpon rates in Belgian francs, are unable to compete with their French colleagues.The fact that the Royal Decree of 17 November 1971 contains no provision to deal with the consequences of the monetary disparities is contrary to Community law and, more specifically, to the principle of equality between nationals of the various Member States. At the very least, the Royal Decree should have provided for the possibility of limiting monetary disparities between the French and the Belgian franc.If it had to be interpreted in such a manner that it was impossible to make allowance for fluctuations in the exchange rates, the Royal Decree of 17 November 1971 would be incompatible with the principle of treatment and of fair competition in the Community.The decree may be interpreted as allowing carriers the choice of fixing their tariffs in Belgian francs or in French francs, with die obligation, once the choice is made, to abide by the tariff expressed in the currency adopted.In such a case, the minimum tariff, expressed in the weaker currency, would always be lower than the minimum tariff expressed in the stronger currency and the maximum tariff expressed in the stronger currency would always be higher than the maximum tariff expressed in the weaker currency. The upper and lower limits would therefore differ depending on whether the rates were expressed in Belgian francs or in French francs.Moreover, depending on whether the minimum or maximum rate is fixed, on the basis of the present exchange rates, in Belgian francs or in French francs, and vice versa, sanctions may or may not be applicable. Such a consequence is totally irrelevant, devoid of any economic reality and contrary to the principle of equality.Moreover, there is not one transport tariff expressed in two currencies but rather two tariffs.Such an interpretation of the Royal Decree of 17 November 1971 is also therefore contrary to Community law.The only interpretation of the Royal Decree which conforms to Community law is to the effect that carriers have the option of expressing the transport rate in Belgian francs or in French francs, provided that they comply with the maximum and minimum tariffs fixed by the decree, having regard to the exchange rate ruling on the date in question; the carrier applies the prescribed tariff, but has the choice of charging a rate expressed in the other currency, taking into account the real monetary situation.This interpretation is the only one compatible with the aims of the regulation and with the common transport policy. By applying the same bracket tariffs to all carriers, regardless of nationality or the currency habitually used by them, it ensures equality as between carriers and the existence of fair conditions of competition between them.(d) It is appropriate to answer the questions submitted by the Rechtbank van Eerste Aanleg, Ghent, as follows:1. Regulation No 1174/68 of the Council of 30 July 1968 is not compatible with Community law in so far as it contains no provision to eliminate the effects of the disparity in currencies between the Member States, an omission which results in considerable discrimination between the inhabitants of the various Member States when fixed transport rates are applied to the carriage of goods by road.2. If a national law, regulation or administrative provision adopted in implementation of Regulation No 1174/68 must be interpreted as meaning that Belgian carriers (or carriers who express their rates in Belgian francs) are obliged to comply with maximum and minimum rates different from those which must be observed by carriers in other Member States (or carriers who express their rates in the currency of other Member States), such law, regulation or provision is contrary to Community law.The Government of the Kingdom of Belgium considers the reference for a preliminary ruling to be inadmissible or devoid of purpose. It contends that the questions submitted concern events which all occurred on a date when Regulation No 1174/68 was no longer in force. That regulation, with which the judgment making the reference was exclusively concerned, was replaced by Regulation No 2831/77 which entered into force on 1 January 1978, whilst the events which gave rise to the main proceedings occurred in January 1979.In any event, it should be held, in the alternative, that Regulation No 2831/77, as applied in Belgium, prevents, on the one hand, any abuse of a dominant position and damaging competition and, on the other, any discrimination between Member States.During the period in question, Belgian carriers and customers were permitted and had the opportunity to agree rates as low as those of their French colleagues, by fixing those rates in French francs. The Royal Decree of 17 November 1971 does not impose the obligation to stipulate rates in a specified currency. It is clear m particular from Article 6 (3) and (4) and from the penultimate subparagraph of Article 4 (2) that it allows the stipulation of rates in French francs and that the possibility of doing so is not reserved to French carriers and customers.The general schedules appearing in Pan IV of the Royal Decree indicate the upper limit of the transport rates both in Belgian francs and in French francs. Accordingly, if Belgian carriers or customers wish to extend the bracket downwards, they may do so in a totally legal manner by stipulating the price in French francs.The Council also points out that Regulation No 1174/68 was no longer in force when the offences in respect of which proceedings were brought before the national court were committed.The validity of the regulation depends, in the first place, on whether it embodies a provision which takes into account the fluctuations of exchange rates between the currencies of the Member States.In that regard, it should be noted that neither Regulation No 1174/68 nor Regulation No 2831/77, which replaced it, fixes the tariffs which must be applied to carriage between two Member States or prescribes the currency in which they must be expressed. It is clear, in particular, from Article 11 (1) and Article 10(1) of Regulation No 2831/77 (Article 4 (1) and Article 3 (1) of Regulation No 1174/68) that the Member States were in a position to react to currency movements affecting the carriage operations with which they were concerned. That possibility is specifically provided for in Article 11 (3) of Regulation No 2831/77. Since the regulation entered into force on 1 January 1978, that possibility was clearly open to every Member State as from that date.Regulation No 1174/68 incorporated (in Article 4) a procedure for settling differences regarding the fixing of transport tariffs, failing agreement between the Member States concerned. Pursuant to that provision, an application was referred to the Commission by a Member State concerning the raising of its bilateral tariff with another Member State, on the basis, in particular, of the movements of the two currencies involved (Commission Decision of 12 June 1978, Official Journal, L 188, p. 24).Regulations Nos 1174/68 and 2831/77 therefore included provisions intended to take account of currency movements.In such circumstances it is no longer necessary to consider whether, in the absence of such provisions, Regulation No 1174/68 is to be regarded as valid in the light of its legal basis and purpose.The questions submitted by the national court should be answered as follows:1. In so far as Regulation No 1174/68 contains provisions on the basis of which disparities between the currencies of Member States can be eliminated, the question whether it is compatible with Article 75 of the EEC Treaty in the absence of such provisions requires no answer.2. The compatibility of the regulation with its purpose, namely that the tariffs must be drawn up so as to avoid both abuse of a dominant position and damaging competition, is not to be considered in the light of the entirety of the system which it adopts for the fixing of tariffs but rather in the light of the possibility of preventing such effects in so far as they may result from currency fluctuations. Since the regulation contains provisions intended to take account of such fluctuations it is compatible with its purpose.3. The fact that the regulation provides for currency fluctuations to be taken into account does not involve discrimination between the inhabitants of the various Member States and that question need not therefore be answered.The Commission too points out that whilst the measures implementing Regulation No 1174/68 were in fact still in force in Belgium when the infringements giving rise to the main proceedings were esublished, that regulation had in the meantime been replaced by Regulation No 2831/77. Moreover, the questions referred to the Court relate to the validity of Community law whilst the criminal proceedings concern an infringement not of Community law but of the national measures by which the transpon tariff had been fixed. It is for the Court of Justice to provide the national court with such information falling within the scope of Community law as will enable the national court to adjudicate upon the national implementing measures.(a) As regards the validity of Regulation No 1174/68 (and of Regulation No 2831/71) in the light of Article 75 of the EEC Treaty, it is appropriate to emphasize that the mere fact that measures are adopted under that article does not mean that they must necessarily contain a provision relating to the risks connected with fluctuations in exchange rates. Nevertheless, a measure which did not contain a provision of that kind might produce results incompatible with Article 75 or with certain general provisions of the Treaty.Fluctuations in the exchange rate between two or more currencies result from inadequacies in the harmonization of the economic and monetary policies of the Member States. Until satisfactory harmonization is achieved, no provisions of Community law will be capable of eliminating fluctuations in exchange rates.It is nevertheless possible to prevent or palliate any effects of such fluctuations which are harmful or are indeed contrary to Community law. However, the regulations in question not only offer every possibility in that regard but even require the Member States to keep a close watch on changes in exchange rates and, if such changes so require, to adjust the tariffs.Thus, Article 3 of Regulation No 1174/68 (Article 10 of Regulation No 2831/77) provides that each tariff is to be drawn up by reference to a base-rate, which is the middle point of the bracket and is itself fixed “having regard ... to the average costs of the transpon operation concerned”. A change in that average cost gives rise to an adjustment of the tariff. This occurs particularly where there is a change in the exchange rates. In strict terms, there is then no longer just one tariff expressed in two currencies but two different tariffs, in the same way as there is no longer one base-rate but two different base-rates.Article 2(2) of Regulation No 1174/68 (Article 9 (2) of Regulation No 2831/71) fixes the bracket spread at 23% of the maximum rate of the tariff. In fact, currency fluctuations give rise to wider brackets if the tariffs are expressed in two currencies. Thus, a fall in value of the French franc in relation to the Belgian franc gave rise to a difference between the conversion rate applied for the fixing of the tariff and the rate quoted from day to day, so that the minimum and maximum rates expressed in French francs and converted into Belgian francs at the rate ruling on the day in question were lower than the minimum and maximum rates of the official tariff in Belgian francs. In this case, the question is whether a rate invoiced in Belgian francs must exceed the minimum rate expressed in Belgian francs taken direct from the tariff or whether it is sufficient if it exceeds the exchange value in Belgian francs, at the rate ruling on the day in question, of the minimum expressed in French francs. Conversely must a rate invoiced in French francs be lower than the maximum expressed in French francs according to the tariff or may it go as high as the exchange value in French francs, at the rate ruling on the day in question, of the maximum rate expressed in Belgian francs?One approach is strict adherence to the tariff so that if an invoice expressed in Belgian francs is used, the rate must then fall within the bracket expressed in that currency according to the tariff. Likewise, if the rate is invoiced in French francs, it must fall within the bracket expressed in that currency. This approach involves the fewest difficulties of verification. It also appears to be the most acceptable according to the letter of the regulation. It is not discriminatory since it allows undertakings to choose freely in which currency they wish to invoice the rate, having regard to the consequences of that choice as far as the tariff is concerned. However, it displays the clear disadvantage of being extremely formalistic.According to another view, it is possible freely to convert the rates at the parity ruling on the day in question so that, regardless of the currency in which the invoiced rate is expressed, it must fall between the maximum in the strong currency and the minimum in the weak currency.Owing to the possibility of choosing whether to invoice in Belgian francs or in French francs, it is in fact possible to agree upon any rate falling between the lowest minimum and the highest maximum. This is moreover the main argument in favour of the second point of view.The court making the reference did not deal with that problem and since the two approaches lead ultimately to a practically identical result it is not necessary to choose one or the other. In any event, both give rise to a real bracket wider than the spread of 23 % laid down in the regulations.In such cases, it is incumbent upon the Member States, by virtue of the regulations, to review and adjust the tariff in accordance with the variations in the exchange rates so as to re-establish a real spread of 23%. That obligation is not affected by the right, provided for in Article 11 (3) of Regulation No 2831/77, of a Member State in such a situation unilaterally to “carry out an upward revision of price schedules expressed in its currency”. Moreover, equilibrium could also be restored by a reduction of the rates expressed in the strong currency or by such a reduction together with an increase in the rates expressed in the weak currency.The obligation to review the tariffs in the event both of changes in average costs and of currency fluctuations involving a change in bracket spread must not, however, give rise to a review on the occasion of the slightest variations.(b) As regards the compatibility of Regulation No 1174/68 with its aims, it should be noted that the preamble contains a clear statement of the reasons for which, pursuant to Article 3 thereof (Article 10 of Regulation No 2831/77), the tariffs must be drawn up by reference to a base-rate, having regard to the average cost of transport operations. It is also made clear that the upper limit of the bracket is intended to prevent abuse of a dominant position and the minimum to prevent damaging competition.The requirement contained in Article 190 of the Treaty that the reasons upon which a measure is based must be stated is thereby satisfied.If it were established practice that the Franco-Belgian tariff nevertheless gives rise to abuse of a dominant position or to damaging competition either because the base-rate no longer reflects the costs or because by reason of currency fluctuations the spread extends beyond 23 %, such a situation would entail the obligation to adjust the tariff.(c) As regards the problem of discrimination, it should be recalled that Regulation No 1174/68 introduced a bracket-tariff system which was in principle compulsory for all carriage of goods by road between Member States and that that system, and also the exceptions to it, apply to those concerned with such carriage without distinction as to nationality or residence.(d) Consideration of the questions raised by the Rechtbank van Eerste Aanleg, Ghent, has disclosed no factor of such a kind as to effect the validity of Regulation No 1174/68 or of Regulation No 2831/77.