JUDGMENT OF 13. 3. 1968 — CASE 5/67 BEUS v HAUPTZOLLAMT MÜNCHEN

In Case 5/67 Reference to the Court under Article 177 of the EEC Treaty by the Finanzgericht (Finance Court), Munich, for a preliminary ruling in the action pending before that court between

THE COURT composed of: R. Lecourt, President, A. M. Donner and W. Strauß (Rapporteur), Presidents of Chambers, A. Trabucchi and R. Monaco, Judges, Advocate-General: J. Gand Registrar: A. Van Houtte

gives the following

JUDGMENT

Issues of fact and of law

I — Facts

1. Origin of the reference

A —. On 4 April 1962, on the basis in particular of Articles 42 and 43 of the Treaty, the Council of the EEC adopted ‘Regulation No 23 on the progressive establishment of a common organization of the market in fruit and vegetables’ (Official Journal of 20 April 1962, p. 965; hereinafter referred to as ‘Regulation No 23’).

B —. Article 1 of Regulation No 65/65/EEC of the Council of 13 May 1965 (Official Journal No 86 of 20 May 1965, p. 1458; hereinafter referred to as ‘Regulation No 65/65’) amended Article 11 (2) of Regulation No 23 ‘with a view to making it possible to maintain the preferential treatment for Member States arising out of application of the Treaty’ (the reason expressed in the recitals of the preamble to Regulation No 65/65). The essentials of the new rules (hereinafter described by the expression ‘Article 11(2) (as amended) of Regulation No 23’) may be summarized as follows: For products of Community origin ‘reference prices applicable to the whole Community’ are to be fixed annually. For this purpose ‘each year may be divided into several periods’. ‘The reference price shall be equal to the arithmetic mean [increased by an inclusive sum which takes into account marketing costs] of the producer price in each Member State’. The method of calculating these producer prices is also laid down. For products imported from third countries, ‘entry prices’ (‘Einfuhrpreise’) are to be fixed ‘on the basis of the lowest prices recorded on the representative import markets … less customs duty arising from application of Article 23 of the Treaty and less other taxes on imports (“Eingangsabgaben”) as well as transport costs from those markets to the Community frontier crossing points’. In cases where the entry price of a given product is less than the reference price, the import of this product is to give rise to the collection of a Community countervailing charge (‘Ausgleichsabgabe’) of the same amount for all Member States and equal to the difference between two prices.

C —. By Regulation No 99/65/EEC (Official Journal of 8 July 1965, p. 2109; hereinafter referred to as ‘Regulation No 99/65’), the Commission specified the methods of calculation of the reference price and the entry price. This regulation provides in particular as follows: For each product originating in third countries, 'an entry price [‘ein oder mehrere Preise frei Grenze’] shall be calculated on each market day and for each country of origin'. ‘The prices to be taken for calculating [the entry price] … shall be the prices recorded on the representative wholesale markets’; each of these prices must have deducted from it customs duties, ‘other taxes on imports’ (‘Einfuhrabgaben’) and transport costs (cf. B above). The following markets are to be considered as ‘representative wholesale markets’ for the Federal Republic of Germany: Hamburg, Munich, Frankfurt and Düsseldorf.

D —. By Regulation No 104/65/EEC (Official Journal of 8 July 1965, p. 2116; hereinafter referred to as ‘Regulation No 104/65’), the Commission fixes reference prices for outdoor table grapes (hereinafter referred to as ‘table grapes’) according to the month of the year. The reference price which it fixed for Octo- for October 1965 was 15.9 units of account (u.a.).

E —. In Regulation No 138/65 (Official Journal of 6 October 1965, p. 2650; hereinafter referred to as ‘Regulation No 138/65’), which was applicable from 9 to 16 October, the Commission stated that the entry price of table grapes from Bulgaria, Romania and Yugoslavia was settled at 12.9 u.a. and ordered the collection of a countervailing Community charge of 3 u.a. (15.9-12.9).

F —. By Regulation No 144/65/EEC (Official Journal No 172 of 18 October 1965, p. 2720, hereinafter referred to as ‘Regulation No 144/65’), the Commission reimposed, for the period from 21 to 31 October 1965, a countervailing Community charge on the importation of table grapes from Bulgaria and Romania, the amount of which was fixed this time at 2 u.a. In the recitals of the preamble, it took account mainly of the following facts: for the month of October, the reference price was 15.9 u.a.; the prices, corrected in accordance with Article 11(2) (as amended) of Regulation No 23, were ‘for several days on certain markets at a level lower than the reference price’; ‘the entry price to be used as a flat rate for fixing the amount of the countervailing charge, calculated on the basis of the lowest prices, less customs duties, other taxes on imports and transport costs, is fixed at 13.9 u.a…’. The prices in question referred particularly to the period from 11 to 15 October and had been recorded on the Hamburg, Düsseldorf, Frankfurt and Munich markets. For the other representative markets of the Community, no prices had been given during that period for the products in question. Regulation No 144/65 provided further that the Commission should re-examine it before 31 October should the provision of a charge of 2 u.a. ‘no longer fulfil the conditions [specified in Article 11(2) (as amended) of Regulation No 23]’.

G —. The Beus company imported fresh table grapes from Bulgaria on 25 and 27 October 1965 and had them cleared at the customs office of Munich-Grossmarkthalle. On the basis of Regulation No 144/65 the customs office levied a Community countervailing charge of DM 8 (or 2 u.a., in accordance with the figures of Regulation No 144/65) per 100 kg. The Beus company took proceedings before the Finanzgericht (Finance Court), Munich, asking for this levy to be annulled and pointing out that, for the reasons set out below (III, 1, A to D), Regulation No 144/65 was invalid.

2. Terms and reasoning of the reference

On 25 January 1967 the Finanzgericht, Munich, decided to refer to the Court for a preliminary ruling the question ‘whether Regulation No 144/65/EEC of the Commission … is valid’.

In its order referring the matter, after summarizing the arguments of the parties to the main action, the Finanzgericht states in particular that, although under the terms of Article 177 of the EEC Treaty it is not obliged to refer to the Court since it is not a court from which no appeal lies, it has nevertheless decided to do so for the reasons which it sets out as follows:

‘The reference … has the effect of giving the plaintiff the opportunity of having the validity of the Regulation reviewed, an opportunity of which it would otherwise be deprived as a consequence of the narrow limits which the second paragraph of Article 173 of the EEC Treaty gives to the right of appeal. The doubts of the plaintiff as to the legality of the regulation do not appear a priori to be unfounded. For the proper conduct of the proceedings it is appropriate for the Court to decide upon the question of the validity of the regulation as soon as possible after the proceedings have begun.’

II — Procedure

The order referring the matter was received at the Court Registry on 8 February 1967.

(1). The Beus company and the Commission of the European Communities submitted written observations under Article 20 of the Protocol on the Statute of the Court of Justice of the EEC and presented oral argument at the hearing on 1 June 1967. The Advocate-General delivered his reasoned, oral opinion at the hearing on 22 June 1967.

(2). By order of 6 July 1967, the Court decided to reopen the oral procedure and set the Commission a time-limit expiring on 31 August 1967 to complete its explanations on certain points in writing (calculation, on the one hand, of the reference price and, on the other, of the entry price and the ‘other taxes on imports’) and allowed the Beus company the option of submitting before 30 September 1967 written observations on the explanations which the Commission was requested to provide. The Commission and the Beus company lodged statements of case within the time-limits which had been given to them and presented further oral observations at the hearing on 8 November 1967. The Advocate-General delivered a further reasoned, oral opinion at the hearing on 30 November 1967.

(3). The Beus company was represented by Oskar Mohring, Rolf Beisswingert, Dietrich Reimer, Detlef Wunderlich, Wolfgang Pohle and K. Zimmermann, all Advocates of the Munich Bar, and the Commission of the European Communities was represented by its Legal Adviser, Mr Ehlermann.

III — Summary of the arguments of the Beus company and of the Commission

1. Arguments put forward before the reopening of the oral procedure

The Commission and the Beus company are agreed that the order referring the matter should be understood to apply only to imports from Bulgaria and not to imports from Romania.

A — Insufficient reasoning of Regulation No 144/65

The Beus company alleges that, since the recitals in the preamble to Regulation No 144/65 do not enable the prices obtained for Bulgarian table grapes on any particular day and at any particular market to be known, it is impossible to verify the correctness of the criteria on which it is based, in particular the statement that the entry prices were lower than the reference prices for the period in question. After pointing out that the case-law of the Court requires in principle that the preamble must be all the more explicit when the measure in question is of a more individual nature, it maintains that this concept supports its complaint because, as Regulation No 144/65 instituted a Community countervailing charge for the purpose of correcting a particular disturbance of the market, the existence of this disturbance must be capable of being established from its preamble.

The Commission replies to this argument with the following points:

Regulations need not be reasoned in such a detailed manner as decisions.

Under the terms ot Article 11(2) (as amended) of Regulation No 23, the amount of the Community countervailing charge must be ‘equal to the difference between the reference price and the entry price’. It was enough consequently that Regulation No 144/65 should mention this principle and indicate the reference price and the entry price. There was no reason to set out the method of calculating the entry price, as the correctness of the calculation is capable of being demonstrated and established during the legal proceedings.

The importers knew the criteria on the basis of which Regulation No 144/65 stated that the entry price was lower than the reference price, that is to say, the markets, the prices of which were recorded, those prices themselves, the customs duties and other taxes on imports to be deducted from those prices and the transport costs from the Community frontier crossing points to the markets in question.

It was not necessary for the preamble to the disputed regulation to indicate on the basis of what considerations the Commission had finally fixed the entry price at 13.9 u.a., because those considerations come within the wide area of discretion which the Commission has in this sphere and which cannot be subject to review except from the point of view of misuse of powers.

B — The method of calculation of the entry price

(a) Deduction of the German turnover equalization tax (‘UASt’) as well as the Community countervailing charge collected before the entry into force of Regulation No 144/65

The Beus company complains that the Commission, while calculating the entry prices (‘Preise frei Grenze’) for the days prior to the entry into force of Regulation No 144/65 (cf. above I, 1, C), regarded the German turnover equalization tax (‘Urnsatzausgleichssteuer’) and the Community countervailing charge (‘Ausgleichsabgabe’) of 3 u.a. in force at that time, as ‘other taxes on imports’ within the meaning of Article 11(2) (as amended) of Regulation No 23 and that it consequently deducted them from the prices recorded on the representative markets, which amounted, it states, to fixing the entry price at a level which was artificially low.

In this connexion the Beus company sets out the following arguments:

As to the German turnover equalization tax (‘UASt’), its only purpose is to compensate for the disadvantages resulting for domestic goods from the fiscal burden which they bear by way of turnover tax. It does not amount consequently to a ‘charge having equivalent effect’ (to that of customs duties) within the meaning of Article 12 of the EEC Treaty. By using the expression ‘other taxes on imports’, Article 11(2) (as amended) of Regulation No 23 can only have been referring to ‘charges having equivalent effect’.

As to the Community countervailing charge previously collected, it cannot be referred to by the expression ‘other taxes on imports’ which extends only to taxes collected under national legislation. That follows a contrario from the expression used by Article 11(2) (as amended) of Regulation No 23 in respect of customs duties in the enumeration of the factors in respect of which prices should be reduced: ‘customs duties arising from the application of Article 23 of the Treaty’. Furthermore the Commission's argument would lead to a ‘cumulative effect’: the deduction of the Community countervailing charge previously collected considerably lowers the prices which may have the effect of justifying a new countervailing charge.

The Commission replies that the concept of ‘other taxes on imports’ was intentionally formulated in wide terms distinct from the expression ‘charges having equivalent effect’, so that it would include taxes like the German turnover equalization tax (‘UASt’), which it is difficult to describe in relation to the EEC Treaty.

It maintains that in respect of the Community countervailing charge the argument of the Beus company would have unacceptable results. The Commission attempts to demonstrate this by taking as examples the figures being used in the present case and by showing what results. If the entry price were simply maintained at 13.9 u.a., it would be necessary to abolish the Community countervailing charge of 2 u.a., since the entry price increased by that charge is no longer less than the reference price (15.9 u.a.); but then as the entry price has fallen below the reference price, it would immediately be necessary to reestablish it; in this way, with the offer price of third countries remaining the same, it would be necessary continually to bring into force and then abolish the contervailing charge of 2 u.a.

(b) The taking into account of prices recorded on the representative markets

The Beus company considers that it is a ‘weighted average price’ which the Commission is required to calculate on the basis of the lowest prices recorded on the representative markets by taking into account the total of the various imports effected. It maintains that if the Commission had acted in this way it would necessarily have found that there was not a single day when the entry price was not lower than the reference price before 18 October 1965. It adds that even if, contrary to its argument, it is considered necessary to take prices in isolation, Regulation No 144/65 is based on incorrect assumptions of fact, since during the days in question the entry price is lower than the reference price only on one market, that of Munich.

The Commission replies that the argument of ‘average weighted prices’ is contrary to the letter and spirit of the provisions applicable in the matter, which speak of ‘the lowest prices’ and which are intended to protect producers everywhere in the Community against imports at prices lower than the reference price.

It points out further that it follows from the said provisions that it has a wide area of discretion in fixing the entry price. It states that it has to take account in particular of the probable development of prices as well as the relative importance of the markets in question, this latter reason having required it to give particular attention to the Munich market (which plays a very important role in respect of imports from Eastern Europe). From this the Commission deduces that the fixing of the disputed entry price at 13.9 u.a. is correct. It adds that if it had taken the lowest prices as the sole basis it would even have been entitled to fix the price at a lower level. It endeavours to prove its assertions by producing supporting figures.

(c) Absence of revocation or amendment of Regulation No 144/65

The Beus company sees another reason for saying that Regulation No 144/65 is invalid in the fact that the Commission did not revoke or amend it although it was required to do so under the very terms of that regulation. It maintains that neither between publication and the entry into force of the Regulation nor on the days when it was applicable was the entry price less than the reference price on any market. It claims that there is thus an infringement of Article 11(2) (as amended) of Regulation No 23, according to which imports can only be subject to a Community countervailing charge when the entry price is less than the reference Drice.

The Commission replies by pointing out, with the support of figures, that the entry price was clearly less than the reference price during the period when Regulation No 144/65 was in force.

(d) Illegality of Regulation No 23

The Beus company alleges that Article 11(2) (as amended) of Regulation No 23, which constitutes the basis of Regulation No 144/65, is contrary to Articles 39 and 110 of the EEC Treaty.

In support of this allegation it advances the following arguments:

Article 11(2) (as amended) of Regulation No 23 does not take into account the objective set out in Article 39(l)(e) which consists in ensuring that supplies reach consumers at reasonable prices. Automatically to collect the Community countervailing charge as soon as the entry price is less than the fixed reference price amounts to taking into account only the interests of producers. This is tantamount to establishing new partitions in international trade and to obstructing the harmonious development of world trade, instead of acting so as to ‘contribute … to the … progressive abolition of restrictions on international trade and the lowering of customs barriers’, as is provided for in Article 110 of the EEC Treaty, to which Article 16(a) of Regulation No 23 expressly refers.

The Commission replies by referring to the origin of Article 11(2) (as amended) of Regulation No 23 and points out that the old rules, which only allowed the institution of a countervailing charge where the market was threatened with disturbances, did not take sufficient account of the interests of the producers of the Community and consequently had to be abolished.

It emphasizes that, on the other hand, the new wording no longer allows, as formerly, the suspension of imports from third countries.

It concludes its line of argument on this point by advancing the following considerations :

Articles 39 and 110 of the EEC Treaty do not set out objectives which are perfectly consistent. According to the case-law of the Court, in such circumstances the institution required to act must do its best to reconcile the objective by giving, where necessary, priority to one or other qf them. The decision which it then makes depends on its discretion and cannot consequently be vitiated by illegality unless there is an abuse of powers, which is not the case in the present circumstances.

2. Arguments put forward after the reopening of the oral procedure

A — The calculation of the reference price

The Commission explains, with detailed figures in support, how in application of Article 11(2) (as amended) of Regulation No 23 it fixed the reference price at 15.9 u.a. for the period in question.

It appears in particular from its statement that, in order to calculate the Italian ‘producer price’ it took the Regina and Ohanez varieties of grape and placed them on the same footing.

Following these explanations, the Beus company states that it is led to make a further complaint against the validity of Reulation No 144/65, by pointing out that Regulation No 104/65 incorrectly fixed the reference price which serves as the basis of the disputed Community countervailing charge.

It tries to show, with the support of figures, that production of the Ohanez variety amounts to only 1/135 of that of Regina grapes, a cheaper variety.

It maintains that, considering that the Ohanez variety amounted also to ‘a considerable (“wesentlich”) part of the marketed output’ (Article 11(2) (as amended) of Regulation No 23) and by equating the Italian ‘producer price’ to the average price of the two varieties, the Commission arbitrarily fixed the reference price at too high a level.

It declares that these facts can only reinforce the complaints which it made previously, since it appears in particular that:

Regulation No 104/65 is also insufficiently reasoned, as its wording does not show that varieties of such different importance have been put on the same footing:

if the reterence price is calculated correctly, it can be seen once more that Regulation No 144/65 should have been revoked as soon as possible.

During the oral part of the proceedings the Commission alleged that these new complaints should be rejected as inadmissible, since the Beus company had not pointed them out before the Munich Finanzgericht, although it could have done so. It points out furthermore that these complaints do not stand up under examination, since the recitals of the preamble to Regulation No 104/65 mention the Ohanez variety. It emphasizes that the Ohanez grape belongs to the category of late varieties of high quality which deserve to be specially developed and protected.

When replying on this point at the hearing, the Beus company stated in particular that it was only following the new explanations by the Commission that it had reason to raise the criticism which it pointed out then and which constituted no more than an invitation to the Court to consider these points of its own motion.

B — The calculation of the entry price and the question whether the reference price are comparable

The Commission provides the details of the figures which served as the basis of the calculation of the ‘entry prices’ (‘Preise frei Grenze’) for the market days from 11 to 29 October 1965 (the lowest prices on the representative markets, rates of customs duties and of other ‘taxes on imports’ and transport costs from the Community frontier crossing points to those markets).

It points out that it follows from this that it was not until 20 October that the lowest corrected prices were higher than the reference price.

On the question whether the reference price and the entry price are comparable, it makes the following points:

The reference price is the wholesale purchase price in the production areas where prices are lowest, whilst the entry price is the purchase price of the wholesaler at the Community frontier. Consequently the reference price and the entry price do not refer to the same market.

The reference price includes in fact certain charges which bear indirectly upon the products in question; these charges exist in all the Member States, but they are not at the same level everywhere. On the other hand, only Germany (through the ‘Umsatsausgleichssteuer’ or turnover equalization tax) and Italy collect a tax on imported products intended to compensate for the said charges. If the reference price were calculated only for Germany and Italy (continues the Commission) the Beus company might be right in saying that it is not permissible to deduct the ‘Umsatzausgleichssteuer’ when calculating the entry price. But in fact it happens frequently (and it is so in the present case) that the reference price is calculated on the basis of producer prices of Member States other than Germany.

Having regard to the fact that several Member States have no taxes like the German turnover equalization tax, the non-deduction of that charge would prevent the prices in these States from being used to decide the entry price. In fact:

on the one hand, an entry price decided on the basis of those prices would not be comparable with the reference price;

on the other hand, an entry price fixed in this manner could not be compared either with the entry price calculated on the basis of German or Italian prices.

The Beus company replies that in the present case only the prices recorded on the German markets were used to determine the entry price and that consequently the considerations intended to show how it is possible to take into account the prices in other Member States are of a purely hypothetical nature.

It maintains that, if certain States have no turnover equalization tax, it is clear that it is not possible to deduct a charge of this type in order to calculate the entry price, but that this situation does not justify in any way the deduction of the German equalization tax.

It adds that the new allegations of the Commission strengthen the view that it is not permissible either to deduct the Community countervailing charge in order to calculate the entry price.

It appears that the figures which were produced show that the days on which the prices increased on the German markets are precisely those on which the Community countervailing charge was not collected, which shows that the market alone decides prices and not the existence or the nonexistence of a charge or its amount.

It states, producing a detailed demonstration, that the Commission's argument leads in general to fixing the reference, price artificially at too high a level and the entry price at too low a level.

The Beus company adds finally that if the interpretation which the Commission gives to Article 11(2) (as amended) of Regulation No 23 and which is set out above (A and B) were correct, it would follow precisely from that fact that this provision itself cannot be in accordance with the Treaty.

Grounds of judgment

By an order of 25 January 1967, which arrived at the Court on the following 8 February, the Finanzgericht, Munich, under Article 177 of the Treaty establishing the EEC put a preliminary question concerning the validity of Regulation No 144/65/EEC of the Commission introducing a countervailing charge on imports of outdoor table grapes from Bulgaria and Romania.

It is appropriate to consider first of all whether this regulation is in itself invalid by reason of the fact that it is allegedly based on errors committed in the calculation of the entry price or because it is insufficiently reasoned.

There must then be considered the validity of certain provisions which form the basis of Regulation No 144/65, that is to say, of Regulation No 104/65/EEC of the Commission as well as Article 11(2) of Regulation No 23 of the Council as this paragraph, hereinafter referred to as ‘Article 11(2) (as amended)’, was worded by Regulation No 65/65/EEC of the Council.

Finally it will be considered whether the Commission was required to amend or revoke Regulation No 144/65 before the date laid down for its expiration.

I — The validity of Regulation No 144/65

1. The calculation of the entry price

A — The deduction of the German ‘Umsatzausgleichssteuer’ (turnover equalization tax) and of the Community countervailing charge

The Commission wrongly interpreted the sixth subparagraph of Article 11(2) (as amended) of Regulation No 23, by considering that the concept of ‘other taxes on imports’, specified by that provision, included, on the one hand, the German turnover equalization tax and, on the other hand, the Community countervailing charge of 3 u.a. applicable prior to the entry into force of Regulation No 144/65/EEC.

a) According to the sixth subparagraph mentioned above, the entry price is fixed, in respect of products from third countries, ‘on the basis of the lowest prices recorded on the representative import markets [of the Member States], less the customs duties arising from the application of Article 23 of the Treaty, and of other taxes on imports’, as well as transport costs from those markets to the Community frontier crossing points. The expression ‘other taxes on imports’ does not appear in the provisions of the Treaty which concern duties collected because of or at the time of importation and which mention ‘customs duties’, ‘charges having equivalent effect’, ‘customs duties of a fiscal nature’ and ‘internal taxation’ (Articles 9, 12 et seq., 18 et seq. and 95 et seq.). By choosing this vocabulary the authors of the said sixth subparagraph obviously intended to give a wide scope to this concept, so as to make it include, in addition to the customs duties specifically mentioned by the provision in question, all duties imposed upon a product from third countries by reason of the fact that it crosses the frontiers of the Community, without its being necessary to ascertain whether the duty in question was introduced by the Community or by a Member State, whether it falls under the Treaty or, if so, how it must be classified with regard to the Treaty. This interpretation is corroborated by the expression ‘entry price’ which refers to the purchase price of the product as it is at the actual moment when it arrives at the Community frontier and, consequently, has not yet become subject to the duties which will be imposed upon it at the time of or because of importation.

b) It is alleged that the reference price includes certain taxes levied upon national trade in Community products, taxes against which such a charge as the turnover equalization tax is precisely intended to countervail. Consequently, in order to ensure comparability between reference prices and entry prices, the latter must include the turnover equalization tax. According to the first subparagraph of Articles 11(2) (as amended) or Regulation No 23, the fixing of a reference price is intended to ‘avoid disturbances due to offers from third countries at abnormal prices’. This protection of Community products must clearly act upon any market in which these products are in competition with products from third countries. This consideration is particularly important for the product, the markets and the period in question in the present case. In fact, in the month of October considerable quantities of table grapes originating in other Member States are offered on the German markets. However, it is clear, on the one hand, that these imports are subject to the turnover equalization tax and, on the other hand, that that charge cannot be included in the reference price, which is fixed on the basis of prices recorded in the producer Member States. Consequently, if this charge were accepted as a part of the entry price, products from third countries would be placed, on the German markets, in a situation more favourable than would the products originating in other Member States, which would be diametrically opposed to the objective of Regulation No 23. The deduction of the turnover equalization tax is thus compatible with Regulations Nos 23 and 65/65.

c) The objection is raised, in addition, that the deduction of the Community countervailing charge collected during the previous period has a ‘cumulative effect’ and that by reducing the entry price to an artificially low level, it can be used precisely to justify the introduction of a new countervailing charge. It follows from the combined provisions of the fifth to seventh subparagraphs of Article 11(2) (as amended) of Regulation No 23, and of Article 2(1) of the said Regulation No 99/65/EEC of the Commission that before deciding on the principle amount of a countervailing charge to be introduced or retained for a particular period the Commission is required to observe the representative markets and to calculate an entry price daily. Consequently the data collected during the observation period must enable the Commission to evaluate as precisely as possible the movement of prices to be expected for the period to come. On the other hand, the prices to be evaluated clearly cannot include a countervailing charge, as the evaluation is intended precisely to discover whether, and if so to what extent, the introduction or retention of such a charge proves to be necessary for the period to come. Consequently, the prices calculated on the basis of data relating to the observation period must, for their part, be decided after a deduction has been made in respect of the countervailing charge in force during that period.

B — The prices recorded on the representative markets

The regulation is alleged to be invalid because of the manner in which the Commission, in fixing the countervailing charge, took into consideration the prices recorded on the representative markets during the market days prior to the entry into force of that charge. In particular the complaint is made that the Commission referred essentially to the Munich market where the prices were particularly low, instead of acting on the basis of the quantities of Bulgarian table grapes sold on each representative market and thus of arriving at a ‘weighted average’.

Under the terms of the sixth subparagraph of Article 11(2) (as amended) of Regulation No 23 the entry price is to be fixed ‘on the basis of the lowest prices recorded on the representative import markets’, less the amount of customs duties, other taxes on imports and transport costs. It follows from this that the Commission must take into account the lowest prices ruling on each market during the observation period.

It is accepted that, during the period from 11 to 15 October 1965, prices for Bulgarian table grapes were only able to be recorded on four representative markets of the Community, namely Düsseldorf, Frankfurt, Hamburg and Munich. During that period and for each of the said markets the lowest prices, less the deductions which have been mentioned, amounted respectively to 12, 4, 14.8, 15.6 and 10.7 u.a. All these prices were thus lower than the reference price of 15.9 u.a. and with regard more particularly to the markets at Diisseldorf and Münich, this difference amounted to 3.5 and 5.2 u.a. respectively, thus exceeding to an appreciable extent the amount of 2 u.a. at which figure the disputed countervailing charge was fixed.

It must be added that during the entire period from 11 to 15 October inclusive the prices on the Munich market, which is without doubt of particular importance in trade in the product in question, were at least 4.8 u.a. lower than the reference price.

It is not possible therefore to complain that the Commission disregarded the limits of its discretion by considering that, in view of the data relating to the period from 11 to 15 October 1965, it was necessary, for the period to come, to fix the entry price at 13.9 u.a. and consequently to introduce for that period a countervailing charge equal to the difference between 15.9 and 13.9, that is, 2 u.a.

2. The statement of reasons for Regulation No 144/65

It is alleged that the disputed regulation did not enable the criteria or the facts which led to the fixing of the entry price at 13.9 u.a. to be ascertained. The Commission did not specify whether it regarded both the German turnover equalization tax and the Community countervailing charge as ‘other taxes on import’, within the meaning of the sixth subparagraph of Article 11(2) (as amended) of Regulation No 23. Furthermore the preamble to the disputed regulation failed to indicate the days and the markets in respect of which prices lower than the reference price had been recorded. Finally the said preamble did not indicate to what extent, in respect of the period in question, there existed ‘disturbances due to offers from third countries at abnormal prices’ (first subparagraph of Article 11(2) (as amended) of Regulation No 23).

The extent of the requirement laid down by Article 190 of the Treaty to state the reasons on which measures are based, depends on the nature of the measure in question.

It is a question in the present case of a regulation, that is to say, a measure intended to have general application, the preamble to which may be confined to indicating the general situation which led to its adoption, on the one hand, and the general objectives which it is intended to achieve on the other.

Consequently, it is not possible to require that it should set out the various facts, which are often very numerous and complex, on the basis of which the regulation was adopted, or a fortiori that it should provide a more or less complete evaluation of those facts.

It cannot be complained, further, that this regulation did not indicate to what extent, for the period in question, there were ‘disturbances due to offers from third countries at abnormal prices’ (first subparagraph of Article 11(2) (as amended) of Regulation No 23). In fact, in the system established by this paragraph such ‘disturbances’ do not constitute a distinct condition for the adoption of a countervailing charge, but they are considered to come into existence as soon as the entry price, properly calculated, is lower than the reference price.

II — The validity of Regulation No 104/65

1. The jurisdiction of the Court

The Beus company has emphasized to the Court that Regulation No 104/65 infringed the provisions of Article 11(2) (as amended) of Regulation No 23 and that its statement of reasons is insufficient.

The Commission raises the objection that these complaints are inadmissible on the ground that they go beyond the purpose of the reference, as Beus did not raise them before the Finanzgericht, Munich.

According to the wording of the operative part of the decision referring the matter, the Court is asked simply to say ‘whether Regulation No 144/65/EEC… is valid’.

The Court may thus consider this complaint.

2. The substance of the complaint

A —. It is alleged that in calculating the reference price the Commission wrongly took into consideration the prices recorded for the Italian variety Ohanez and that that variety holds only an insignificant place in comparison with the Regina variety, the only other Italian variety considered by the Commission for the purpose of calculating the reference price. Under the terms of the second subparagraph of Article 11(2) (as amended) of Regulation No 23, the reference price is to be determined on the basis of the producer prices of each Member State. Under that provision the latter prices are calculated on the basis of the prices recorded ‘for the products or varieties which represent a considerable part of the marketed output throughout the year or during a part thereof’. It follows from the expression ‘considerable part of the … output’ that the Commission has a certain area of discretion as to the choice of varieties to be considered. The Court must therefore confine itself to considering whether or not the choice made by the Commission is of an arbitrary nature. It is appropriate first to note that the reference price on the basis of which the countervailing charge was calculated and that charge itself were only in force in the month of October, so that an examination may be limited to the data relating to that month. Under the terms of the aforementioned provision of Regulation No 23, the prices to be considered for the purpose of calculating the producer price, which is the principal factor in fixing the reference price, are those recorded ‘during the three years prior to the date of fixing the reference price’, thus in the present case in 1962, 1963 and 1964. It is true that the production of Ohanez amounted in those years only to 1.2 %, 1.4 % and 1.3 % respectively of total Italian production. However the Ohanez variety was taken into account as representative of the production of late grapes which, although it amounts to a maximum of only 4.5 % of total Italian production, nevertheless includes distinct varieties of early grapes and grapes described as those of the second and third periods, which constitute the great majority of total production. From a qualitative point of view it is thus possible to accept in respect of a late variety that it forms a ‘considerable part of the … output’, in any case in relation to the months of October and November during which these varieties appear on the market and play a role which must be taken into account. It appears that the Ohanez grapes form part of the most important late varieties and are sold at relatively low prices. Consequently to take into account the Ohanez variety for the fixing of the reference price in respect of the month of October does not appear to be arbitrary. Under the aforementioned provision of Regulation No 23, the producer price of each Member State is to correspond ‘to the average of the prices recorded’ for the varieties considered. The expression ‘average’ used without qualification normally means the arithmetical average and nothing in the said provision leads to the conclusion that by the use of this vocabulary a weighted average is meant. Consequently the respective quantities of the relevant varieties available cannot have any effect on the calculation of the ‘average’ in question. Although this fact must make the Commission careful in the choice of varities which it considers to constitute a considerable part of the marketed output, the circumstances mentioned above make it impossible to complain of a lack of care likely to affect the validity of Regulation No 144/65.

B —. It is alleged that the preamble to Regulation No 104/65 fails to mention that for the purposes of calculating the reference price the Ohanez variety was treated on an equal footing with varieties which were much more important such as the Chasselas du Midi, Gros vert and Regina. That statement is incorrect, as the second recital of the preamble to Regulation No 104/65 sets out these varieties without distinction as ‘appearing among the most important cultivated in the Community’, and stating that the data relating to them ‘allow the fixing of the arithmetical average of producer prices in accordance with the criteria laid down in Article 11(2) of Regulation No 23 and in Article 1 of Regulation No 99/65/EEC’.

III — The validity of Article 11(2) (as amended) of Regulation No 23

It is alleged that Regulation No 144/65 is invalid because the provisions of Article 11(2) (as amended) of Regulation No 23 are incompatible with the Treaty; this paragraph no longer makes the introduction of a countervailing charge subject to the condition that ‘the Community markets experience or are threatened with serious disturbances resulting from imports from third countries at prices lower than the reference price’, but only to ‘the entry price of a product imported from third countries being lower than the reference price’. It is further alleged that in moving thus to a purely automatic system, the new drafting of Article 11(2) gave a unilateral preference to the interests of Community producers of fruit and vegetables and thus infringed Articles 39(d) and (e) and 110 of the Treaty.

As appears from its title, Regulation No 23 is to be found within the framework of measures intended to establish a common organization of the agricultural markets.

Further, it follows from Article 40(2) and (3) of the Treaty that these measures must be adopted: ‘In order to attain the objectives set out in Article 39’ and may ‘include all measures required’ for that purpose. These objectives, which are intended to safeguard the interests of both farmers and consumers, may not all be simultaneously and fully attained. In balancing these interests, the Council must take into account, where necessary, in favour of the farmers the principle known as ‘Community preference’, which is one of the principles of the Treaty and which in agricultural matters is laid down in Article 44(2).

Looked at in the light of these considerations, it does not appear that Article 11(2) (as amended) of Regulation No 23 infringed the requirements of the Treaty. In fact, that provision, considered as a whole, indicates a desire to ensure protection for Community producers only within reasonable limits. It is sufficient to mention that the reference price is based on the markets of producer countries ‘where the prices are lowest’ and that it will normally be lower than the prices at which the products of a Member State are sold in other Member States, as these prices also include the transport costs from one State to another and any import duties collected by the importing State. Although Article 11(2) (as amended) no longer makes the introduction of a countervailing charge dependent upon the threat of serious disturbances, it must be considered that this criterion allows very different applications, even though the new rules lay down more objective criteria.

IV — The failure of the Commission to amend or revoke Regulation No 144/65

The complaint is made that the Commission did not revoke or amend Regulation No 144/65 before 31 October 1965, as provided for in Article 2 of that regulation should the introduction of a countervailing charge of 2 u.a. no longer fulfill the conditions specified in Article 11(2) (as amended) of Regulation No 23 and that taking into account the later movement of prices recorded on the representative markets, this condition was actually fulfilled.

Under the terms of Article 2 of Regulation No 144/65, together with Article 13 of Regulation No 23, the Commission was required to hear the Management Committee for Fruit and Vegetables before amending or revoking the first regulation. Taking into account the experience which has been gained from the implementation of Regulation No 144/65, it is possible to put the lapse of time which would have occurred between consulting the said Committee and the entry into force of a regulation amending or revoking the said regulation at a minimum of three days. The present complaint amounts therefore to stating that the Commission should have commenced the consultative procedure at the latest on 24 October 1965. Consequently, taking into account the fact that the markets were closed on 23 and 24 October, it is appropriate to consider whether the situation of the representative markets as it appeared from 18 to 22 October inclusive, the period immediately following the observation period preceding the adoption of Regulation No 144/65, required the revision of the forecasts previously made.

During the period in question, the prices recorded on the representative markets, corrected in accordance with the sixth subparagraph of Article 11(2) (as amended) of Regulation No 23, showed a sufficiently marked rise in comparison with the previous situation, and even the lowest of the prices mentioned above were lower than the reference price by less than 2 u.a. However, as was established above, the countervailing charge must take effect each time, not during the observation period which precedes the adoption of the regulations relating to that charge but during the period which follows it. The Commission was thus entitled to retain the disputed charge since it could reasonably suppose that that charge would be appropriate for the days to follow. In this connexion, it may be stated that after 24 October 1965 on the representative market at Munich the difference between the corrected prices and the reference price varied between 2.2 and 1.9 u.a. The forecasts made by the Commission were not therefore contradicted by later developments.

Generally, the time-lag between observation periods and implementation periods, which is inherent in any system such as the one in question, has the necessary consequence that, as increased by the countervailing charge, the entry prices for each day and each representative market are sometimes slightly higher and sometimes slightly lower than the reference price. It is not therefore proved that in the present case the Commission neglected its duty.

It follows from all the foregoing considerations under I to IV above that an examination of the question submitted to the Court by the Finanzgericht, Munich, has not revealed any facts likely to cast doubt on the validity of Regulation No. 144/65/EEC.

V — Costs

The costs incurred by the Commission of the EEC, which submitted observations to the Court, are not recoverable and as these proceedings are, in so far as the parties to the main action are concerned, a step in the action pending before the Finanzgericht, Munich, the decision on costs is a matter for that court.

On those grounds, Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the oral observations of the plaintiff in the main action and the Commission of the EEC; Upon hearing the opinion of the Advocate-General; Having regard to the Treaty establishing the EEC, especially Articles 9, 12 et seq., 18 et seq., 39, 40, 44, 95 et seq., 177 and 190; Having regard to the Protocol on the Statute of the Court of Justice of the EEC, especially Article 20; Having regard to Regulation No 23 of the Council of the EEC on the progressive establishment of a common organization of the market in fruit and vegetables (Official Journal of 20 April 1962, p. 965 et seq.), especially Articles 11(2) and 13; Having regard to Regulation No 65/65/EEC of the Council amending Article 11(2) of Regulation No 23 (Official Journal of 20 May 1965, p. 1458 et seq.); Having regard to Regulation No 99/65/EEC of the Commission on procedure for giving effect to Article 11(2) of Regulation No 23 (Official Journal of 8 July 1965, p. 2109 et seq.), especially Article 2; Having regard to Regulation No 104/65/EEC of the Commission fixing reference prices for outdoor table grapes (Official Journal of 8 July 1965, p. 2116); Having regard to Regulation No 144/65/EEC of the Commission introducing a countervailing charge on imports of outdoor table grapes from Bulgaria and Romania (Official Journal of 18 October 1965, p. 2720 et seq.); Having regard to the Rules of Procedure of the Court of Justice of the European Communities, THE COURT in answer to the question referred to it by the Finanzgericht, Munich, by order of that court of 25 January 1967, hereby rules: