JUDGMENT OF 8.11.1972 — CASE 17/72 GETREIDEHANDEL v EINFUHR- UND VORRATSSTELLE GETREIDE

In Case 17/72 Reference to the Court of Justice under Article 177 of the EEC Treaty by the Hessisches Finanzgericht (Vllth Senate) for a preliminary ruling in the action pending before that court between

THE COURT composed of: R. Lecourt, President, R. Monaco and P. Pescatore, Presidents of Chambers, A. M. Donner, A. Trabucchi, J. Mertens de Wilmars (Rapporteur) and H. Kutscher, Judges, Advocate-General: K. Roemer Registrar: A. Van Houtte

gives the following

JUDGMENT

Issues of fact and of law

I — Facts and procedure

The facts and the course of the procedure may be summarized as follows:

1) Regulation No 19 of the Council of 20 April 1962 (JO No 30 of 20.4.1962, p. 933) on the progressive establishment of a common organization of the market in cereals provided for the imposition of an intra-Community levy on imported cereals equal to the difference between the price of the product coming from the exporting Member State delivered in the importing Member State free-at-frontier and the threshold price of the importing Member State reduced by a fixed amount. Under Article 3 of the said regulation the free-at-frontier price shall be determined on the basis of the prices ruling on the most representative markets of the exporting Member State for exports to the relevant importing Member State. In accordance with this same provision such price shall be determined by the Commission in accordance with criteria laid down after consulting the Management Committee established by Article 25 of the same regulation. Those criteria were denned by Regulation No 89 of the Commission of 25 July 1962 (JO No 66 of 28.7.1962, p. 1899). The free-at-frontier price shall be determined every Friday for the succeeding week (Article 9). In determining this price, the most favourable price for the importing Member State must be taken into consideration (Articles 2 and 3) on the basis of the most representative prices for exports to that State (Articles 2 and 4) and taking account of the lowest marketing and transport costs up to the frontier crossing point towards the marketing centre of the area with the largest deficit in the importing Member State (Articles 2. 4 and 5). Article 7 of Regulation No 89 further provides that the Member States concerned shall determine every Thursday the data for calculating the free-at-frontier price and shall calculate the price arising therefrom and communicate such data and such price to the Commission. According to Article 8 of the regulation the Commission, in determining the free-at-frontier price, shall ‘also have recourse to any data which may be communicated to it by the importing Member States’.

2. The dispute before the national court relates to the question whether the Commission properly determined the free-at-frontier price in force on 28 January 1966 for imports of French maize into the Federal Republic of Germany. After the plaintiff in the main action, the Gesellschaft für Getreidehandel, received on 28 January 1966 from the defendant in the main action, the Einfuhr- und Vorratsstelle fur Getreide und Futtermittel, a licence to import 614250 kg of French maize, it imported during February 579600 kg of maize with a levy fixed in advance of DM 11.59 per tonne calculated on the basis of a free-at-frontier price of FF 508.86. The plaintiff in the main action disputed this calculation and, on its complaint being unsuccessful, applied to the Hessisches Finanzgericht to have the levy reduced by DM 10.57 to DM 1.02. At this stage of the procedure it claimed that the free-at-frontier price of FF 508.86 fixed by the Commission by a decision of 21 January 1966 (Supplement Agricole No 3 of 26.1. 1966, p. 85) did not take into account certain costs, particularly transport and insurance costs and financing charges estimated by it at FF 6.75 per tonne; when these are taken into account the free-at-frontier price is decreased from FF 508.86 to FF 515.61, thus reducing the levy to the extent indicated above.

3. Since the Finanzgericht considered that the outcome of the dispute depended on the validity of the decision of the Commission of 21 January 1966 fixing at FF 508.86 the free-at-frontier price for maize imported from France into the Federal Republic for the week from 24 to 30 January 1966, it submitted the following question to the Court:

‘Is the decision of the Commission of the European Economic Community fixing at FF 508.86 per tonne the free-at-frontier price on 28 January 1966 for French maize imported into the Federal Republic of Germany valid?’

4. The order referring the matter was received at the Court Registry on 2 May 1972. The plaintiff in the main action and the Commission of the European Communities submitted written observations; the defendant in the main action declared that it waived its right to submit written observations. Upon hearing the report of the Judge-Rapporteur and the views of the Advocate-General the Court decided to dispense with a preparatory inquiry.

5. On 14 July 1972 there arrived at the Court Registry a copy of an application addressed on 5 July 1972 by the plaintiff in the main action to the Hessisches Finanzgericht requesting that court to supplement the order of reference so that the Court might also consider the following point In transmitting this request the national court declared that it relied on the wisdom of the Court of Justice with regard to the question whether the facts cited by the plaintiff should be taken into consideration, since the Court will give a ruling on the validity of the contested decision of the Commission. The plaintiff in the main action and the Commission presented oral argument at the hearing on 26 September 1972. At that hearing the Gesellschaft fur Getreidehandel was represented by Mr Festge, of the Hamburg Bar, and the Commission of the European Communities by its Legal Adviser, Mr Kalbe. The Advocate-General delivered his opinion at the hearing on 17 October 1972.

‘Is the levy which the Office for the Importation and Stocking of Cereals and Fodder calculated for 28 January 1966 on the basis of the free-at-frontier price fixed by the Commission for French maize imported into the Federal Republic of Germany null and void because the Commission omitted to authorize the Federal Republic of Germany, in accordance with Article 2(2) of Regulation No 129 of the Council of 23 October 1962, to apply the actual exchange rate for the French franc against the Deutschmark instead of the exchange rate communicated to and recognized by the International Monetary Fund?’

II — Observations submitted under Article 20 of the Statute

The observations submitted under Article 20 of the Statute of the Court may be summarized as follows:

A — Observations of the Commission of the European Communities

1. The method of calculating the free-at-frontier price

The Commission explains first of all the method of calculation followed by it in accordance with Regulation No 19 of the Council and Regulation No 89 of the Commission in order to determine the free-at-frontier price.

a) When the Community legislature established a system of general levies it repudiated determination of the free-at-frontier price of each individual consignment and restricted itself to drawing a general comparison between the most favourable current price for the cereals in question in the exporting Member State and the threshold price which reflects the level of the domestic price within the importing Member State, the two prices being related uniformly to a specific standard of quality. The free-at-frontier price is thus the theoretical price resulting from a generalized calculation at which the cereal could, under the most favourable purchasing opportunities, have been offered free-at-frontier in Germany.

b) In this price there may be included only the marketing and transport costs before crossing the frontier.

c) In calculating the free-at-frontier price account must be taken of the nature and amount of the costs obtaining with regard to the most favourable purchasing opportunities in the importing country. Account is not taken of the costs incurred because of the particular details of a transaction.

d) Finally, the generalizing nature of the system requires the cost factors which make up the free-at-frontier price — especially the profit margin of the exporter — to be calculated at a flat rate.

2. The application of the method of calculation to the case in dispute

(a) The price of maize on the most representative export market

The Commission chose the prices ruling m Bayonne, that is FF 463.80. This price included all the costs incurred by the producer up to Bayonne, including brokerage, insurance, transport and financing.

(b) Transport costs

On the basis of the most favourable transport costs the Commission calculated the following costs up to the German frontier (Emmerich)

This amount corresponds to the actual costs of transport calculated on 12 January 1966. On 19 January the cost of maritime freight, according to the Commission, fell by FF 1.03 per tonne, so that by adopting the price of FF 35.06, the Commission had favoured the importer, as the French authorities had communicated an unaltered transport tariff. The Commission further maintains that as it made its estimations on the basis of the costs of transport actually incurred the costs of insuring the transportation, supervision of the unloading and the ‘free out’ costs further incurred by the plaintiff, are included in its calculation.

(c) The profit margin of the trader

In calculating the free-at-frontier price account must be taken of the amount representing the profit margin of the trader and a sum to cover his marketing costs. The Commission fixed this amount at FF 10 per tonne, which is perfectly correct even if it is further necessary—and this is denied—to deduct from it FF 3.75 for miscellaneous costs not included in the Commission's calculations (brokerage, financing).

The Commission thus arrives at a free-at-frontier price of: 463.80+35.06 + 10=FF508.86 pertonne. Alter adding the costs from Emmerich to Duisburg this price corresponds to the most favourable prices actually ruling at the time for French maize cif Duisburg, thereby confirming the accuracy of the calculations of the Commission.

3. The exchange rates

Pursuant to Article 2 of Regulation No 129 of the Council (OJ, Special Edition, 1959-1962, p. 274) the Commission employed the official par value of DM 81.02 = FF 100 communicated to the International Monetary Fund in converting the free-at-frontier price, expressed in French francs, into Deutschemarks.

Articles 2 and 3 of the said regulation doubtless permit the application in exceptional circumstances of the actual exchange rates ruling on the most representative markets. The Commission did not do so because, according to it, the conditions laid down as to limits in this sphere were not fulfilled but principally because the fluctuations in the exchange rates in relation to their official parity did not impair either the functioning of the common organization of the market or the implementation of the common agricultural policy. Furthermore, the observations submitted to the national court on this point by the plaintiff are based on a complete misconception of Regulation No 67 of the Commission (JO No 66 of 28.7.1962, p. 1860).

The Commission concludes by requesting the Court to reply in the affirmative to the question submitted by the national court.

B — Observations of the plaintiff in the main action

In the first place the plaintiff in the main action requests the Court to order the Commission to produce the data forming the basis of its calculation of the price in dispute.

The method for calculating the free-at-frontier price in the present case

The plaintiff in the main action sets out three factors which, according to it, must be taken into consideration in determining the free-at-frontier price.

a) First, the most favourable prices ruling on the most representative market of the exporting Member State for the importation to the importing Member State of the relevant cereals (Regulation No 89, Article 2). The parties agree that this market is Bayonne and that the initial price is FF 463.80 per tonne.

b) The transport costs up to the marketing centre of the area have the largest deficit in the importing Member State, calculated up to the frontier crossing point, in the present case Emmerich (Regulation No 89, Articles 4 and 5).

c) The marketing costs up to the frontier crossing point, including a sufficient profit margin. With regard to the transport costs, the Commission has, according to the plaintiff in the main action, failed to take into consideration the fact that according to established commercial usage in France vendors of maize sell cif free out, which means that neither the charge for hold-space at Bayonne nor for trans-shipment by lighter at Rotterdam are included in the freight from Bayonne to Rotterdam. With regard to the marketing costs the plaintiff alleges that the Commission failed to take into consideration the interest which exporters must pay for the financing of the purchase price of cereals, bank commission and collection charges, the expenses relating to supervision of the unloading and of the insurance of the transportation. According 10 the plaintiff, me Commission described in Case 16/65, Firma C. Schwarze v Einfuhr- und Vorratsstelle für Getreide und Futtermittel (Judgment of 1 December 1965 [1965] ECR 877), the method and the documents which form the basis for its determination of the free-at-frontier price. It requests the Member States to communicate to it by telex, on the basis of the data at their disposal, their suggestions with regard to the free-at-frontier price to be determined. In France the relevant authority is the Office National Interprofessionnel des Céréales (ONIC) (the ‘National Cereals Trade Board’) which communicated for the week from 24 to 30 January 1966 a free-at-frontier price (Emmerich) of FF 523.50 per tonne which took into account the abovementioned costs and exceeds by FF 14.64 per tonne the price arrived at by the Commission. Since ONIC is the institution having the best knowledge of the actual conditions on the French market, the figures put forward by it must be accepted unless the Commission justifies the reasons which induced it to depart from these figures. The plaintiff in the main action consequently requests the Court to take into consideration the figure proposed by ONIC in place of the Commission's figure and also in place of the figure of FF 515.61 per tonne which it advocated before the national court at a time when it had not yet learned of the calculations of ONIC. In accordance with the information supplied by ONIC, the suggested price may be broken down as follows: FF per tonne Market price for Frence maize free at Bayonne 463.80 Costs fob Bayonne 11.00 Costs fob Bayonne to Rotterdam 18.20 Freight Rotterdam to Emmerich 8.50 Marketing costs, including profit margin and embracing the costs of unloading the cereals from the hold of the ship up to the ship's rail and trans-shipment to the barge 22.00 523.50

The plaintiff in the main action requests the Court to reply to the Hessisches Finanzgericht that the decision in question is invalid and that the free-at-frontier price must be fixed at FF 523.50 per tonne. In the course of the oral procedure the plaintiff in the main action indicated that it was unable to determine with absolute certainty what costs were included under the head ‘Trans-shipment Bayonne FF 11.00 per tonne’, which accounts for the difference of FF 4.40 from the figure obtained by the Commission. It submitted that this point should be raised with ONIC.

With regard to the head ‘profit margin and marketing costs FF 22.00 per tonne’ arrived at by ONIC, this head may be broken down as follows:

The Commission, for its part, produced, first, the telex messages from ONIC on the calculation of the free-at-frontier price for the relevant goods and, secondly, various documents from its departments specializing in this field, from which it is clear that the free-at-frontier price arrived at corresponds to the price actually ruling on the market at that period.

With regard to the additional question which was submitted by the court making the reference, the Commission doubts whether it is admissible in the circumstances in which it was communicated to the Court.

Grounds of Judgment

1. By an order of 9 March 1972, which was received at the Registry on 2 May 1972, the Hessisches Finanzgericht requested the Court to give a preliminary ruling on the validity of the decision of the Commission of the EEC of 21 January 1966 fixing at FF 508.86 per metric ton the free-at-frontier price on 28 January 1966 for French maize imported into the Federal Republic of Germany (Supplément Agricole No 3 of 26.1.1966, p. 85).

2. By letter of 10 July 1972, which was received at the Registry on 14 July 1972, the Hessisches Finanzgericht submitted to the Court an additional request from the plaintiff in the main action asking whether the validity of the decision in dispute was affected by the failure of the Commission to authorize the Federal Republic of Germany, as it is empowered to do by Article 2(2) of Regulation No 129/62 (OJ, Special Edition, 1959-1962, p. 274), to apply the actual exchange rate instead of the exchange rate communicated to the International Monetary Fund. Since this contains an argument in addition to the question of validity submitted by the court making the reference, it may be inferred from the wording employed in the letter that it expects a reply to this question too.

3. It is alleged that the illegality arises from the fact that the free-at-frontier price was fixed too low, and that the Commission failed to include in its calculation certain costs, particularly transport, insurance and financing costs assessed at FF 6.75 per tonne so that the free-at-frontier price must be increased to FF 515.61 per tonne. The plaintiff in the main action maintained before the Court that this price should have been fixed at FF 523.50, the amount communicated to the Commission by the Office National Interprofessionnel des Céréales (ONIC) in accordance with Article 7 of Regulation No 89 of the Commission (JO No 66 of 28.7.1962, p. 1899) fixing the criteria for determining the free-at-frontier prices for cereals, flour, cereal groats and cereal meal.

(a) The method of calculating the free-at-frontier price

4. Regulation No 89 of the Commission, adopted in implementation of Regulation No 19 of the Council (JO No 30 of 20.4.1962, p. 933) on the progressive establishment of a common organization of the market in cereals, fixes the criteria for determining the free-at-frontier prices for cereals, flour, cereal groats and cereal meal. It is clear from Articles 2 and 4 of that regulation that the free-at-frontier price shall be determined on the basis of the most favourable prices for the importing Member State from the prices ruling on the most representative markets for exports to that State and taking account of the transport costs. The most favourable price is that which, taking account of the prices ruling on the most representative markets, adjusted in accordance with Article 6, and taking account of the costs of transport and of marketing not already included in those prices, results in the lowest figure.

5. By establishing a system of general levies, the Community legislature has foregone individual investigation of the price of each transaction, preferring to draw a comparison between the most favourable current price for maize in the exporting Member State and the threshold price reflecting the level of the domestic price in the importing Member State, with both prices relating uniformly to a specific standard of quality.

6. Consequently the free-at-frontier price must not be calculated on the basis of the costs actually incurred by an exporter in a specific transaction but must becalculated at a flat rate from the costs which all exporters must inevitably incur up to the frontier.

(b) The price of FF 523.50

7. Under Article 7 of Regulation No 89 of the Commission the exporting Member States shall calculate and communicate each week to the Commission the data for calculating the free-at-frontier price and the price obtained therefrom. Nevertheless, under Articles 8 and 9 of the same regulation the Commission is obliged to check this price, taking account of any data which may be communicated to it by the importing Member States.

8. The data which the Commission did not accept include part of the heads ‘transport costs’ and ‘profit margin and marketing costs’. With regard to the transport costs ONIC put forward a figure of FF 37.70, the basis of which, as it has in fact been set out by the plaintiff in its observations, takes account of circumstances which correspond neither to the general and fixed nature of the price to be communicated nor to the requirement that such price must be the lowest. With regard to the profit margin and the marketing costs, the amount of which is assessed by ONIC at FF 22, it is clear from the explanations of the parties that that agency has agreed to correct its assessment by substituting for it the amount of FF 10 which it accepted with the Management Committee having competence in this sphere.

9. It further appears that the communications of ONIC did not take sufficient account of fluctuations on the freight market.

10. Thus, when the Commission rejected the figure communicated to it and proceeded to amend it, it did not exceed its powers.

(c) The price of FF 515.61

11. Before the national court the applicant put forward a free-at-frontier price of FF 515.61. The divergence between this figure and the figure of FF 508.86 accepted by the Commission, that is to say, FF 6.75 per tonne, consists of various items which may be grouped under two headings: the first—transport insurance: FF 0.50, supervision of unloading: FF 0.50 and costs free-out Rotterdam: FF 2 — relates to transport costs whilst the second concerns marketing costs—interest: FF 2.50, agency commission: FF 1 and bank charges: FF 0.25.

12. With regard to the transport costs, it must first of all be stated that the insurance costs up to FF 0.50 were expressly taken into account by the Commission in its calculation. Furthermore it is clear from Internal Document No 8596/VI/64-F that for the relevant period the unloading costs at Rotterdam, estimated at FF 4.32, include all the costs of trans-shipment from ship to barge. Furthermore, as the plaintiff in the main action itself has admitted, the free-out costs are merely contingent on transport by coaster and on a disputed interpretation of the fob clause and consequently do not correspond to the acceptation of the most favourable price as prescribed by Articles 2 and 4 of Regulation No 89 of the Commission. With regard to the marketing costs the Commission has stated that these were included under the item of FF 10 included by it under the group heading ‘profit margin and marketing costs’. This assessment, which, furthermore, has been accepted in the Management Committee by the representatives of the relevant interests, leaves a profit margin of FF 6.25 per tonne which has not been shown to be insufficient.

13. Moreover, the accuracy of the Commission's calculations is confirmed by the fact that the free-at-frontier price determined by it corresponded to the prices actually ruling in the trade at the same time.

14. Consequently it has not been established that in fixing the free-at-frontier price at FF 508.86 the Commission failed to consider data which it ought to have taken into account.

(d) The effect of the exchange rates

15. The question submitted gives rise in addition to the point whether the Commission infringed Article 2(2) of Regulation No 129 of the Council of 23 October 1962 by failing to authorize—as it is empowered to do by the said article—the Federal Republic of Germany to apply, in calculating in Deutschemarks the free-at-frontier price determined in French francs, the actual exchange rate instead of the exchange rate communicated to the International Monetary Fund.

16. Under that provision the intervention for which it provides is subordinated to the condition that the variations in the exchange rate in relation to the rate which corresponds to the parity communicated to the International Monetary Fund might, in exceptional circumstances, be capable of jeopardizing the implementation of the common agricultural policy.

17. The existence of exceptional circumstances in which the fluctuations in the exchange rate impair the effectiveness of the machinery of the common organization of the market or the implementation of the agricultural policy has not been established in this case. The applicant claims that, pursuant to Regulation No 67 of the Commission (JO of 28.7.1962, p. 1860) fixing the criteria for modifying levies imposed on cereals, flour, cereal groats and cereal meal, the existence of fluctuations in excess of 0.75 u.a. must be considered as evidence of a disturbance of the market. With the aim of simplifying administration, Regulation No 67 of the Commission fixes the limits of fluctuation of the exchange rates within which, in any case, no review of the rate of the levy will be carried out. It may not be inferred from this that any fluctuation beyond those limits by itself constitutes evidence of a serious disturbance capable of impairing the effectiveness of the machinery of the common organization of the market or the implementation of the common agricultural policy.

Costs

18. The costs incurred by the Commission of the European Communities, which submitted observations to the Court, are not recoverable. As these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the Hessisches Finanzgericht, 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 European Communities; Upon hearing the opinion of the Advocate-General; Having regard to the Treaty establishing the European Economic Community, especially Article 177; Having regard to Regulations Nos 19 and 129 of the Council of the European Economic Community of 20 April 1962 and 23 October 1962 respectively; Having regard to Regulations Nos 67 and 89 of the Commission of the European Economic Community of 11 July 1962 and 25 July 1962 respectively; Having regard to the Protocol on the Statute of the Court of Justice of the European Economic Community, especially Article 20; Having regard to the Rules of Procedure of the Court of Justice of the European Communities, THE COURT in answer to the question submitted to it by the Hessisches Finanzgericht by an order of 9 March 1972, hereby rules: