71/84 · GlobalLawDB

Contents

Judgment of the Court (Fourth Chamber)25 September 1985^noteIn Joined Cases 71 and 72/84Robert Surcouf, a pig-farmer of Tertre-Pin, Le Tronchet, Miniac-Morvan,andJean Vidou, a pig-farmer of Maison-Lamarque, Castelnau-Magnoac,both represented by Bertrand Favreau, of the Bordeaux Bar, with an address for service in Luxembourg at the Chambers of Guy Harles, 34 Rue Philippe-II,vEuropean Economic Community,represented by:Council of the European Communities, represented by Antonio Sacchettini, an Adviser in its Legal Department, and by Arthur Brautigam, an Administrator in that department, acting as Agents, with an address for service in Luxembourg at the office of Jörg Käser, the Director of the Legal Affairs Directorate at the European Investment Bank, 100 Boulevard Konrad-Adenauer,andCommission of the European Communities, represented by François Lamoureux, a member of its Legal Department, acting as Agent, with an address for service in Luxembourg at the office of Manfred Beschel, Jean Monnet Building, Kirchberg,THE COURT (Fourth Chamber),composed of: G. Bosco, President of Chamber, P. Pescatore, T. Koopmans, K. Bahlmann and T. F. O'Higgins, Judges,Advocate General: C. O. LenzRegistrar: P. Heimafter hearing the Opinion of the Advocate General delivered at the sitting on 14 May 1985,gives the following

Judgment

(The account of the facts and issues which is contained in the complete text of the judgment is not reproduced)

Decision

1By applications lodged at the Court Registry on 14 March 1984, Robert Surcouf and Jean Vidou, pig-farmers established in France, brought an action under Article 178 and the second paragraph of Article 215 of the EEC Treaty seeking an order that the European Economic Community, represented by the Council and Commission, should make good the damage which they claim to have suffered as a result of the monetary compensatory amounts (hereinafter referred to as ‘m.c.a.s’) applicable to pigmeat.

2In their applications the applicants assert that the defendant institutions have, by keeping m.c.a.s in force in the pigmeat sector, infringed a number of superior rules of law which protect individuals. In that connection they refer, first, to Article 7 of the EEC Treaty, which, within the scope of the Treaty, prohibits any discrimination on grounds of nationality. Secondly, they rely on Article 39 (1) (b) and (c) thereof, under which the objectives of the common agricultural policy are to ensure a fair standard of living for the agricultural community and to stabilize markets.

3In the applicants' view the breach of those higher rules of law is constituted by the fact that the m.c.a.s applicable to the pigmeat market have for years caused imbalances in trade within the Community, to the detriment of French producers in particular, and have thereby given rise to distortion in competition and to discrimination between producers from different Member States, to the benefit of producers in the Federal Republic of Germany and the Netherlands, which both have positive m.c.a.s.

4The applicants further maintain that the basis for the calculation of m.c.a.s in the pigmeat sector, which was adopted by the Commission in 1971 and ratified by the Council in 1983, is fixed illegally inasmuch as it represents a fraction of the basic price fixed by the Council every year.

5The applicants claim to have suffered damage to their pig-farming business as a result of the breach of those higher rules, and they estimate that damage as being equivalent to the actual m.c.a.s collected on exportation by Netherlands producers for every 80-kilogram pig carcase — that figure being multiplied by the number of pigs produced by each of the applicants over the five years before proceedings were commenced. They also argue that they suffered consequential damage on account of the m.c.a.s, in that they were prevented from improving their financial standing, their plant and their productivity. They estimate the consequential damage at 35% of the direct damage.

6In conclusion, Mr Surcouf claims that the defendant institutions should be ordered to pay him the sum of FF 70541 by way of compensation, whilst Mr Vidou demands FF 74136. Both applicants further ask that the defendant institutions be ordered to bear the costs.

7The defendant institutions oppose the applicants' claims for compensation, arguing that they are not guilty in this respect of any breach of a higher rule of law for the protection of individuals, that the alleged damage is merely notional, and that the applicants have not established any causal link between the supposedly illegal conduct of the institutions and the damage for which the applicants seek compensation.

8The defendants therefore contend that the application should be dismissed and that the applicants should be ordered to bear the costs.

9Before considering the substance of the applicants' claims, it should be noted that the Court has consistently held (see in particular the judgment of 17 December 1981, Joined Cases 197 to 200, 243, 245 and 247/80 Ludwigshafener Walzmiiblev Council and Commission [1981] ECR 3211) that the Community cannot incur liability within the meaning of the second paragraph of Article 215 of the Treaty unless a set of conditions is fulfilled as regards the unlawfulness of the acts alleged against the institutions, the fact of damage and the existence of a direct link in the chain of causality between the wrongful act and the damage complained of.

10Dealing with the first of those conditions the Court held, inter alia, in its judgment of 25 May 1978 (Joined Cases 83 and 94/76, 4, 15 and 40/77 HNLv Council and Commission [1978] ECR 1209), that the Community does not incur liability on account of a legislative measure which involves choices of economic policy unless a sufficiently serious breach of a superior rule of law for the protection of the. individual has occurred.

11It is not disputed that in this case the measures adopted by the defendant institutions which allegedly caused the damage of which the applicants complain are legislative in character and involve choices of economic policy. It is therefore necessary to begin by considering whether the conditions postulated in the Court's case-law in order for the Community to be held liable in such circumstances are fulfilled.

12In that connection the applicants' contention that Article 7 of the Treaty has been infringed should immediately be ruled out. As the defendant institutions have rightly contended, in applying the system of m.c.a.s no distinction is made between traders on grounds of nationality. Thus Article 7 and the principle of nondiscrimination on grounds of nationality contained therein are not relevant to this dispute.

13As for the allegation of an infringement of Article 39 (1) (b) and (c) of the Treaty, the applicants assert that the application of m.c.a.s to the pigmeat sector is contrary to the objectives of the common agricultural policy set forth in that article, namely to ensure by the implementation of that policy a fair standard of living for the agricultural community and to stabilize markets.

14The applicants argue, first, that the maintenance of m.c.a.s for pigmeat had the effect of upsetting the markets by causing distortions in competition and discrimination between producers in different Member States. The applicants emphasize that, since m.c.a.s have been applied, producers in the Federal Republic of Germany and the Netherlands — countries with positive m.c.a.s — have considerably increased their share of the Community market, thereby harming French producers.

15The defendant institutions begin by observing that Article 39 does not contain higher rules of law protecting individuals for whose breach the Community may incur non-contractual liability. The Council points out that, in its judgments, the Court has recognized that the institutions enjoy a broad margin of discretion in the implementation of the objectives set forth in Article 39, and has conceded that it is in some circumstances permissible to give one of those objectives priority over the others.

16Furthermore, the Commission denies that the maintenance of m.c.a.s for pigmeat has brought about the disruption alleged by the applicants. It contends that pigmeat production has increased substantially, not only in Member Sutes where the m.c.a.s are positive but also in those where they are negative. Whilst agreeing with the applicants that there was an increase in the market share held by producers from Member States having positive m.c.a.s, the Commission takes the view that the phenomenon is attributable to factors other than the application of m.c.a.s, and in that connection points to pig-breeding cycles, the introduction of new breeds, the development of the processing industries and the use by Netherlands breeders of feeds such as manioc which are not subject to m.c.a.s.

17As far as France is concerned, the Commission submits that, whilst the share of the national market held by French producers fell sharply in 1981, the situation did not result in an increase in imports from countries having positive m.c.a.s — such as the Netherlands — but was due to the fact that the increased consumption of pork in France was not matched by a corresponding increase in production.

18The plausibility of those explanations is borne out by statistics supplied by the Commission and not contested by the applicants, showing that the main suppliers of pigmeat to France are the countries of the Belgo-Luxembourg Economic Union, and not countries having positive m.c.a.s such as the Netherlands and the Federal Republic of Germany. It also appears from the statistics that although exports to France of pigs originating in the Netherlands have increased in quantitative terms, they have remained steady during recent years at around 14% of total Netherlands exports of that product.

19Thus the conclusion to be drawn is that it has not been demonstrated that the maintenance of m.c.a.s in the pigmeat sector has led to an imbalance in the markets in that sector.

20In the second place, by way of demonstrating that the defendant institutions have infringed Article 39 (1) (b) and (c), the applicants claim that the method adopted by those institutions for calculating the m.c.a.s is illegal.

21It should be recalled that under Article 1 (2) of Regulation (EEC) No 974/71 of the Council of 12 May 1971 (Official Journal, English Special Edition 1971 (I), p. 257) m.c.a.s apply:(a) to products covered by intervention arrangements under the common organization of agricultural markets;(b) to products whose price depends on the price of the products referred to under (a) and which are governed by the common organization of [the] market or are the subject of a specific arrangement under Article 235 of the Treaty’.

22Under Article 2 (1) and (2) the basis for calculating m.c.a.s varies according to whether the products in question are covered by Article 1 (2) (a) (hereinafter referred to as ‘basic products’) or by Article 1 (2) (b) (‘derived products’).

23In the case of pigmeat, even since the introduction of m.c.a.s, the Commission has regarded it as a basic product for the purpose of applying those amounts. Indeed, Council Regulation (EEC) No 2759/75 of 29 October 1975 (Official Journal 1975, L 282, p. 1), on the common organization of the market in pigmeat, which is applicable to this case, provides in Article 4 (2) that ‘Intervention measures may be taken when the Community market price for pig carcases ... is, and is likely to remain, at less than 103% of the basic price’.

24Under Article 3 of the regulation, intervention measures may consist of aid for private storage or of buying-in by intervention agencies. With reference to the latter measure, Article 5 (1) provides that the buying-in price may not be more than 92% or less than 85% of the basic price. That minimum threshold was changed to 78% by Council Regulation No 1423/78 of 20 June 1978 (Official Journal 1978, L 171, p. 19).

25The parties are, however, agreed that ever since 1971 — a year in which it launched a buying-in operation (see Commission Regulation No 641/71 of 26 March 1971, Journal Officiel L 73, p. 10) — the Commission has fixed no buying-in price but has confined its measures in that sector to awarding aid for private storage.

26In those circumstances the Commission decided to base its calculation of m.c.a.s for pigmeat on the minimum buying-in price laid down by Article 5 (1) of Regulation No 2759/75 — that is to say, first 85% and later 78% of the basic price (see Regulations Nos 2630/76 of 29 October 1976, Official Journal 1976, L 301, p. 28, and 1517/78 of 30 June 1978, Official Journal 1978, L 178, p. 65).

27The Council later decided, in Regulation No 2025/83 of 18 July 1983 (Official Journal 1983, L 199, p. 11), to insert in Article 2 of Regulation No 974/71 a new paragraph, numbered 3a and worded as follows:‘The monetary compensatory amounts for products in the pigmeat sector shall be calculated on the basis of 90% of the lower limit of the buying-in price applicable to pig carcases.’

28Following that amendment, m.c.a.s for pigmeat have been calculated on the basis of approximately 70% of the basic price.

29It should also be noted that a later amendment to Article 2 of Regulation No 974/71, introduced by Council Regulation No 855/84 of 31 March 1984 (Official Journal 1984, L 90, p. 1) — which does not apply to the present facts — provided that, from 1 January 1985 onwards, pigmeat was to be treated for the purposes of applying m.c.a.s as a product derived from cereals. Consequently, m.c.a.s for pigmeat are equal to the incidence on the price of pigmeat of the application of m.c.a.s to cereal prices.

30The applicants maintain that, since no buying-in price has been fixed for pigmeat since 1971, the defendant institutions could not apply to pigmeat m.c.a.s calculated on the basis of a fraction of the basic price — that is, on a fictitious buying-in price. According to the applicants, m.c.a.s may not be applied except within a system of prices guaranteed by intervention measures.

31The applicants further maintain that, in the absence of a buying-in price capable of affording a basis for calculating m.c.a.s, those amounts should have been fixed in accordance with Article 2 (2) of Regulation No 974/71; they should therefore have been equal to the incidence on pigmeat prices of the application of m.c.a.s to the price of the basic product on which pigmeat depends, namely cereals. The applicants point out that the levy on pigmeat imports from nonmember countries is calculated, in part, on the basis of the quantity of feed grain required for the production in the Community of one kilogram of pigmeat (Article 9 (1) (a) of Regulation No 2759/75, mentioned above). The same method was adopted in Article 75 (1) of the Accession Treaty of 1972, with reference to ‘accession’ compensatory amounts.

32The applicants submit lastly that the validity of that method for the calculation of m.c.a.s is borne out by the adoption of Regulation No 855/84, mentioned above, by virtue of which pigmeat was thereafter treated as a product derived from cereals for the purpose of applying m.c.a.s.

33In this connection it should be observed that, as may be seen from Regulation No 2759/75 on the common organization of the market in pigmeat, pigmeat is a product for which intervention measures are prescribed. There can therefore be no doubt that pigmeat was covered by Article 1 (2) (a) of Regulation No 974/71, and hence could be subject to m.c.a.s as a basic product, provided that the other requirements for the introduction of such amounts were fulfilled.

34The fact that intervention measures for pigmeat at the material period consisted solely of aid for private storage in no way invalidates that conclusion. Nowhere does Regulation No 974/71 require that, in order to be regarded as a basic product for the purposes of the application of m.c.a.s, a product must actually be the subject of public buying-in operations, nor does it indicate that the initiation of a series of private-storage aid operations is not sufficient.

35On the other hand, it must be recognized that, even in the absence of any public buying-in operations, pigmeat was and is subject to an intervention scheme. As the Commission has rightly argued, that scheme is governed by the basic price, since it is not until the Community market price is, and is likely to remain, at less than 103% of the basic price that intervention measures, whether in the form of buying-in by intervention agencies or of aid for private storage, may be taken pursuant to Article 4 (2) of Regulation No 2759/75.

36The connection between the basic price and the triggering of intervention measures also demonstrates that the basic price, far from being artificial in character, corresponds to a factor of the utmost importance to the management of the common organization of the market in question — with the consequence that first the Commission and then the Council were entitled to decide that m.c.a.s for pigmeat should be calculated by reference to a proportion of the basic price corresponding to the minimum buying-in price laid down by Regulation No 2759/75 or, once Regulation No 2025/83 entered into force, 90% of that price.

37It should be added that the fact of choosing the minimum buying-in price and, later, 90% thereof as a point of reference for the calculation of m.c.a.s had the' effect of progressively reducing the basis for calculating m.c.a.s for pigmeat; the basis declined from 92% to around 70% of the basic price. That result is in keeping with the policies which have long been expressed by the defendant institutions, of progressively dismantling m.c.a.s.

38The adoption in pursuance of those aims of a new method of calculating m.c.a.s for pigmeat, as prescribed by Regulation No 855/84, and the consequent reduction of those amounts, may not in any event serve to cast doubt on earlier decisions, which were adopted in compliance with the provisions prevailing at that time.

39It is similarly irrelevant in the context of this dispute to point — as the applicants have done — either to the method of calculating the import levy or to the ‘accession’ compensatory amounts prescribed by Article 75 (1) of the 1972 Accession Treaty.

40Indeed, as the Court held in its judgment of 21 February 1979 (Case 113/78 Schouten [1979] ECR 695), the aim of the agricultural levy is to compensate for the difference between the price on the world market and the higher Community price, so as to protect and stabilize the Community market whilst preventing price fluctuations on the world market from having repercussions within the Community.

41As regards the ‘accession’ compensatory amounts, the Court has had occasion to point out in its judgment of 11 July 1978 (Case 6/78 Union française des céréales [1978] ECR 1675) that their function was to compensate for any difference which may have persisted during the transitional period, between the prices fixed for the new Member States and the common prices, and thereby to facilitate the transition of those States from their previous status as nonmember countries to their new status as Member States.

42The objectives pursued by import levies, on the one hand, and ‘accession’ compensatory amounts, on the other, do not therefore coincide with the function performed by m.c.a.s, namely to counteract the difficulties which might arise for the proper working of the common organization of the market as a result of currency instability and — as matters now stand — divergences between the representative rates used in the common agricultural policy and the conversion rates on the market.

43Consequently, no importance may be attached to the fact that m.c.a.s for pigmeat were for a long time calculated in a manner which differed from the method of calculating import levies and ‘accession’ compensatory amounts applicable to the same product.

44It must therefore be concluded that the arguments brought by the applicants have not disclosed any infringement of Article 39 (1) (b) and (c) of the EEC Treaty.

45That being so, it is not necessary to consider whether the other conditions postulated in the Court's case-law in order for the Community to incur non-contractual liability under the second paragraph of Article 215 of the Treaty are fulfilled.

46The application must therefore be dismissed.

Costs

47Under Article 69 (2) of the Rules of Procedure the unsuccessful party is to be ordered to pay the costs. Since the applicants have failed in their submissions they must be ordered to pay the costs.

Operative part

On those grounds,THE COURT (Fourth Chamber)hereby:

(1).Dismisses the application;

(2).Orders the applicants to pay the costs.

Delivered in open court in Luxembourg on 25 September 1985.