II —Written observations submitted to the Court
The plaintiff in the main proceedings claims that when the Commission adopted Regulation No 851/76 it clearly regarded Article 46 of the EEC Treaty as the only possible legal basis for that regulation. However, it disregarded the fact that Article 46 of the EEC Treaty became redundant on the expiry of the transitional period. The application of Article 46 presupposes that the competitive situation of similar products in another Member State is affected by a national market organization which is itself still authorized. In this instance, in accordance with the decisions of the Court, the market organization ought to have been adapted so as to conform to the rules laid down for the establishment of the common market before the end of the transitional period.Moreover, the Commission ought to have instituted proceedings for breach of the Treaty under Articles 155 and 169 of the EEC Treaty against France, whose actions had clearly been contrary to the Treaty. It is true that from a strictly economic point of view there are certain advantages in the purely practical approach, according to which the adoption of a countervailing charge neutralizes with immediate effect the consequences of the subsidy granted contrary to the Treaty, whereas proceedings to establish a breach of the Treaty require a considerably longer period, during which the conduct contrary to the Treaty could be perpetuated with discriminatory effect. However, the Treaty does not provide any basis for such an approach. The only course of action which might have provided a quick solution would have been an application for the adoption of interim measures.The United Kingdom considers, on the other hand, that Regulation No 851/76 was lawfully adopted pursuant to Article 46 of the EEC Treaty, for the following reasons :(i) Article 46 is not expressly limited to the transitional period, in which respect it differs from Articles 44 and 45 of the Treaty. Article 46 is closely linked to the existence of national market organizations, which are not required to be totally abolished by the end of the transitional period.(ii) Article 46 continues to perform an important function where no common organization of the market exists. Until a common organization is established, Member States may grant aid of such a kind as is compatible with the provisions of the Treaty (judgment of 25 September 1979, Case 232/78 Commission v France [1979] ECR 2729). Thus the Treaty provisions on State aids have only limited application pending the establishment of the common organization of the market (Article 42 of the Treaty and Article 4 of Regulation No 26 of the Council (Official Journal, English Special Edition 1959-1962, p. 129)).Moreover, the Court has recognized that, even after the expiry of the transitional period, special measures to protect producers may be necessary and desirable prior to the setting-up of a common organization of the market, provided that such measures are taken by the Community, and not unilaterally by the Member States concerned (judgment of 25 September 1979, Commission v France cited above).(iii) Whilst it is true that the Community may not impose charges having an effect equivalent to customs duties in trade within the Community (judgment of 20 April 1978, Joined Cases 80 and 81/77 Ramel [1978] ECR 927), that is so only if a common organization of the market exists. In that case, Articles 39 to 46 of the Treaty do not contain any exception to the application of the general rule prohibiting charges having an effect equivalent to customs duties. On the other hand, in the present circumstances Articles 38 (2) and 46 of the Treaty authorize the levying of countervailing charges in view of the absence of a common organization of the market.(iv) Furthermore, there are no grounds for considering that, by implication, Article 46 became “spent” after the expiry of the transitional period since that provision still performs an independent function.(v) Article 37 cannot be regarded as a substitute for Article 46 in all cases. Thus Article 46 may be applicable where aid is granted in States in which there is no monopoly of a commercial character. Moreover, even if such a monopoly exists, the measure is not necessarily contrary to Article 37. Finally, it is not inconsistent for the Commission to take immediate protective measures under Article 46, whilst, at the same time, instituting proceedings to establish a breach of Article 37.(vi) Article 46 enables quick and effective action to be taken, whilst the procedure under Article 169 is time-consuming and may involve complex questions of fact and of law.The Commission of the European Communities puts forward arguments which are similar to those advanced by the United Kingdom, in particular as regards the wording of Article 46 and the interpretation of the judgment of the Court of 25 September 1979 (Commission v France, cited above). In addition, it maintains that:(i) The Court has so far only dealt with Article 46 summarily and the reference which it has made to the transitory character of the provision must not be overestimated (judgments of 20 April 1978 in Joined Cases 80 and 81/77 Ramel [1978] ECR 927, and of 29 March 1979 in Case 231/78 Commission v Uni/ed Kingdom [1979] ECR 1460).(ii) The economic interests of the agricultural producers concerned in certain regions of the Community require imperatively that they should not suffer as a result of the Council's inability to create a common organization of the market with due expedition. Further, Member States may not be prevented from adopting domestic measures granting aid. In those circumstances, Article 46 is the only solution which permits the attainment of maximum free movement of goods, without adversely affecting the economic interests of the producers. It must be permissible to adopt domestic measures granting aid, if the safeguards for the employment and the standard of living of the producers concerned, offered by Article 43 (3), are not to be rendered meaningless. Indeed it is precisely as a result of the unrestricted application of rules relating to the free movement of goods that an increased need for national aid might make itself felt.Moreover, the Court of Justice has acknowledged that even within the framework of a common organization of the market, it is possible in principle to create appropriate mechanisms for the neutralization of trade between Member States, when, as a result of the different agricultural structures, it proves necessary to establish different intervention measures in certain regions of the Community (judgment of 15 September 1982, Case 106/81 Kind v Council and Commission [1982] ECR 2885).(iii) If the provisions of Articles 92 to 94 were fully applicable to agriculture even in the absence of special provisions, any measure implementing Article 46 would be deprived of its legal basis, inasmuch as it is only reasonable to have recourse to that provision with a view to neutralizing lawful measures adopted by Member States. It would be very dangerous to apply Article 46 in the event of unlawful national measures, because that would help to consolidate such measures.Nevertheless, it is clear from Article 42 of the Treaty that the rules relating to aid are applicable to agriculture only to the extent determined by the Council. In the absence of a decision making all the rules relating to aid applicable to ethyl alcohol of agricultural origin, the Commission, at this stage, merely has the right to be informed of aid which has been granted but not to compel the Member State to abolish or to modify the aid (Article 4 of Regulaton No 26 applying certain rules of competition to production of and trade in agricultural products, Official Journal, English Special Edition 1959-1962, p. 129). Article 5 of the Treaty cannot deprive Member States of the discretion which the Council has expressly left them.(iv) In his Opinion in Case 91/78 (Hansen II, [1979] ECR 935, at p. 959) Mr Advocate General Capotorti considered that, after the end of the transitional period, Articles 92 to 94 of the EEC Treaty also apply in their entirety to agricultural products for which a market organization has yet to be introduced. If the rules on the free movement of goods are fully applied to products for which no common organization of the market exists, it is scarcely possible to suggest that Member States should be left complete discretion to grant aids, in view of the fact that such a state of affairs might result in dangerous and reciprocal disturbances of the markets. However, it is only necessary to resolve the problem of the full application of Articles 92 to 94 if it is not possible to have recourse to Article 46.In its judgment of 29 October 1980 (Case 139/79 Maizena [1980] ECR 3393, at p. 3421) the Court emphasized that the agricultural policy takes precedence over the general aims of the Treaty in relation to competition and it recognized that the Council has “a wide discretion” in the exercise of its powers in pursuance of Article 42.If the Court of Justice were to hold that Article 46 is no longer applicable after the end of the transitional period, which, in the Commission's view, would be quite possible from a legal point of view, although, in the light of the wording of Artcile 42, it would represent a far-reaching step, it should then also acknowledge that Articles 92 to 94 of the Treaty apply, after the end of the transitional period, to all agricultural products.As regards the second question submitted for a preliminary ruling, relating to the consequences which might arise if Regulation No 851/76 were declared void, the Commission takes the view that if the Court considers the regulation invalid, it should at least, by analogy, apply the second paragraph of Article 174 of the EEC Treaty and declare that the legal effects of the regulation are definitive, despite its invalidity. As, in any event, the regulation is no longer in force, such a decision would only have an effect on the past. In fact, a considerable number of arguments now support the validity of the regulation. Moreover, the levying of the charge, in the final analysis, merely removed an unjustified competitive advantage for importers. In that respect, since the Member States and the Commission considered Article 46 applicable, no serious attempt was made to find an alternative means of removing the unjustified advantage accorded to French alcohol exports. Finally, the Commission does not know how many actions for the repayment of charges levied under Regulation No 851/76 are pending or may still be brought in Member States.
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