JUDGMENT OF 15. 1. 1974 — CASE 134/73 HOLTZ v COUNCIL

In Case 134/73

THE COURT composed of: R. Lecourt, President, A. M. Donner and M. Sørensen, Presidents of Chambers, R. Monaco, J. Mertens de Wilmars, P. Pescatore, H. Kutscher, C. Ó Dálaigh Dálaigh (Rapporteur), and Lord Mackenzie Stuart, Judges, Advocate-General: G. Reischl Registrar: A. Van Houtte

gives the following

JUDGMENT

Issues of fact and of law

The facts of the case, the subject matter of the request and the views of the parties may be summarized as follows.

I — Facts and procedure

1. By its Regulation No 136/66/EEC of 22 September 1966 (OJ L 172 of 30 September 1966, p. 3025), the Council established a common organization of the market in oils and fats which applies inter alia to the products which are the subject of the present dispute, colza and rape seed and the oils produced from these products. An additional subsidy was set up for colza and rape seed processed in Italy by Regulation No 876/67/EEC of the Council of 20 November 1967 (OJ L 281 of 21 November 1967, p. 7), for the 1967/69 marketing year. This subsidy was continued from that time on and, recently, extended to the 1972/73 marketing year by Regulation No 1336/72 of the Council of 27 June 1972 (OJ L 147 of 29 June 1972, p. 7) a piece of legislation which the applicant contests, and to the 1973/74 marketing year by Regulation No 1357/73 of the Council of 15 May 1973 (OJ L 141 of 28 May 1973, p. 30). To justify the additional subsidy the Council in the preamble to Regulation No 876/67 considered that ‘certain difficulties (had) been encountered in Italy in the oil seed crushing industry’ and, of late, that ‘an examination of the causes of these difficulties and of production conditions in the Community (showed), account being taken of the development prospects of the market in seeds, that the additional subsidy should be maintained for the 1972/73 marketing year, but at a different rate’.

2. The applicant, the firm of Holtz & Willemsen, GmbH, operates an oil mill in Krefeld-Uerdingen, in the Land of North Rhine-Westphalia. One of its activities consists of producing oil from colza and rape seed. It considers that the grant of an additional subsidy to Italian oil mills constitutes discrimination on the grounds of nationality infringing Article 7 of the EEC Treaty, and that the difficulties of Italian oil mills result not from the fact that they are situated on Italian territory but because of their distance from the production areas, that its own installations are no nearer such areas and consequently if the treatment granted was different not by reason of nationality but because of a situation of fact, then it, like all the other oil mills of North Rhine-Westphalia, must benefit from the same subsidy. For this reason, the applicant wrote on 29 January 1973 to the Secretariat of the Council of the European Communities calling upon it, in conformity with the provisions of the second paragraph of Article 1975 of the Treaty, to enact ‘a regulation for an additional subsidy for colza or rape seed processed in oil mills far from the production areas’; a subsidy no longer intended solely for oil mills situated in Italy but calculated on the basis of the distance between the oil mill and the production areas. At the same time it asked the Commission to make use of its right of initiative under Article 43 of the EEC Treaty by submitting a proposal to the Council to this effect. The Commission assured the applicant that its question would be examined in detail, and the Council let it be known in a letter of 23 March 1973 that it considered that the Regulations granting the subsidy to the Italian oil mills were in conformity with the Treaty. The appellant adduces several arguments in support of its action. The Council, by failing to enact a regulation by virtue of which the applicant would have obtained, according to objective criteria and in the same manner as the Italian oil mills, a subsidy for colza processed in regions far from the production areas, and the Commission, by failing to propose to the Council a regulation to that effect, have both violated the principle prescribed by Article 7 of the EEC Treaty that discrimination shall be prohibited. According to Article 7 nationality must not be treated as a distinguishing characteristic and the nationals of Member States must be subject to the same rules. In this case the Council and the Commission have committed an act of discrimination on grounds of nationality, though the Treaty contains no special provision authorizing it. In the second place, Regulation No 1336/72/EEC of the Council of 27 June 1972, the piece of legislation contested by the applicant, only invokes ‘certain difficulties encountered in Italy in the oil seed crushing industry’, but does not indicate in any manner in its recitals what those difficulties are; however, it appears that these difficulties exist because of the distance from the production areas. The applicant points out moreover that the Commission has since put forward a system for additional subsidies which discriminates in favour of certain regions of Italy.

3. The Holtz firm commenced this action on 16 May 1973. By statements lodged on 22 June and 9 July 1973 the Commission and the Council of the European Communities raised several preliminary objections relating to inadmissibility, in accordance with Article 91 of the Rules of Procedure of the Court of Justice of the European Communities. On 22 August 1973 the applicant lodged its observations with regard to those preliminary objections. The Court, having herad the report of the Judge-Rapporteur and the opinion of the Advocate-General, decided to open the oral procedure in respect of the claims as to inadmissibility without any preparatory inquiries.

II — Conclusions of the parties

1. The applicant claims that the Court should: (a) declare that the Council, in infringement of the Treaty, has failed to enact a regulation for an additional subsidy for colza and rape seed processed in oil mills far from the production areas and providing, inter alia, in the case of an oil mill situated in the Federal Republic of Germany in the Land of North Rhine-Westphalia, for the payment on an additional subsidy of 0.60 u.a. per 100 kg of colza and rape seed; (b) declare that the Commission, in infringement of the Treaty, has failed to submit a proposal to the Council to this effect: (c) order the defendants to bear the costs.

2. The Council of the European Communities, a defendant, (applicant with regard to the preliminary objection), contends that the Court should: (a) pronounce judgment on the various preliminary objections relating to inadmissibility which appear to it to vitiate the action, without dealing with the substance of the case; (b) declare the action inadmissible; (c) order the applicant to bear the costs.

3. The Commission of the European Communities, a defendant, (applicant with regard to the preliminary objection), contends that the Court should: (a) pronounce judgment on the admissibility of the action on a preliminary basis and without dealing with the substance of the case in pursuance of Article 91 of the Rules of Procedure; (b) declare the action inadmissible and consequently dismiss it; (c) order the applicant to bear the costs.

4. The applicant (defendant with regard to the preliminary objection) claims that the Court should: dismiss the applications for a preliminary decision relating to the admissibility of the action in pursuance of Article 91 of the Rules of Procedure.

III — Submissions and arguments of the parties on the admissiblity of the action

1. The Council, a defendant, (applicant with regard to the preliminary objection) points out that the action prescribed by the second paragraph of Article 175 is admissible only if the Community institution, after having been called upon to act, has not defined its position within two months of being so called upon. The Council, given notice to replace the existing system by ‘a scheme of a Community nature’ replied within the time limit allowed that ‘the existing system was in conformity with the Treaty’. These words constitute without dispute a definition of its position. The case law of the Court is clear on this matter: judgments of 1 March 1966(Lütticke v Commission,48/65, Rec. 1966, 1, p. 28-40) and 8 March 1972(Nordgetreide v Commission,42/71 Rec. 1972, 2, p. 105-110). A second preliminary objection relating to inadmissiblity arises from the fact that an action for failure to act against a Community institution can only relate to the adoption of an act which must be addressed to the person bringing the action. But, the regulation which the applicant called upon the Council to enact has not that character. This question was dealt with in Case 15/71, Mackprang v Commission (26 October 1971, Rec. 1971, p. 797). The act called for in the applicant's ‘request’ would be as general in character as the decision whose adoption, according to the Mackprang judgment, cannot be obtained by means of an action for failure to act. The applicant's request to ‘enact a regulation’ suffices to show that the act requested is not of the type envisaged in the third paragraph of Article 175 of the Treaty, namely a measure ut singuli in favour of the applicant, but a ‘policy decision’ which would set up a ‘scheme of a Community character’ from which all the oil mills in the Community would benefit ‘according to their distance from the production areas.’ In order to cast doubt on the general character of the Council's Regulation, the applicant had attempted to demonstrate subsequently that it was directly concerned because, if the Regulation was extended to all the Community oil mills, it would have a direct right to benefit from the subsidy and that it was individually concerned by the particularly disadvantageous situation which it shared with only six of the German oil mills. The Council points out a paradox: the applicant calls upon the Council to adopt an act having a general scope in order to satisfy interests which the applicant itself recognizes to be individual. Admittedly, the Court had never decided the question of the admissibility of an action for failure to act in the case of an act enacted in the form of a regulation but of direct and individual concern to the applicant (the Mackprang judgment concerned a decision addressed to all the Member States). On the other hand, it has on many occassions given judgment on the admissibility of an action for annulment (second paragraph of Article 173) with regard to a regulation whose general character was questioned. One would be justified in transposing this case law to the present case on the footing that a natural or legal person cannot, by an action for failure to act, require a Community institution to enact an act which, by reason of its general character, could not be the subject of an action for annulment. In Judgment 106 and 107/63 (Rec. 1965, p. 525-533), the Court had declared the action admissible because the number and the individuality of those concerned was determined ne varietur and could no longer be altered, but in the case of permanent legislation the Court did not accept that it could be considered as of direct and individual concern to the applicants if in the future new persons could claim to join the initial beneficiaries of the legislation (Judgment 6/68, Rec. 1968, p. 596). In this case the creation of new legislation relating to subsidies for the crushing of colza and rape seed would amount in fact to a major revision of the existing system. This revision would itself be of a general legislative nature, for the Council would have to examine the position of the Community market as a whole and legislate accordingly on the basis of general and abstract data. This legislation, by applying according to an abstract criterion, namely the crushing of colza and rape seed and the distance from the production areas, would apply to situations determined objectively, and the beneficiaries, who at present number seven in the Land of North Rhine-Westphalia, could see their circle enlarged in the future. The applicant thus wishes to see the Court compel the Council to commit an abuse of law and a misuse of procedure by establishing, in the form of a regulation, a ‘false regulation’ which would in reality be an individual decision. The Council finally points out that the applicant, by indicating that its action can be considered as one for annulment, is rendering the object of its claim ambiguous. But as this new description of the action does not appear in the conclusions it is inadmissible. Moreover, it applies to the Council's reply, which is not an act having a legal effect but whose sole aim is to confirm the validity of the regulations relating to the additional subsidy. Besides, the applicant does not ask for the suppression of the subsidy in question but only its extention, a fact which proves that its application for annulment is contradictory.

2. The Commission, a defendant, (applicant with regard to the preliminary objection) observes that by bringing this action the applicant wants to force it to submit to the Council a proposal under Article 43 of the EEC Treaty for the adoption of a regulation; the contents of such a proposal would be imposed on it without any possibility of alteration, which would reopen the question of the exclusive right of initiative which the Commission holds under the said Article 43, and consequently also its institutional position within the framework of the Treaties. The applicant is attempting thereby to assert a personal right of initiative which is contrary to the Treaty. But above all the action for a failure to act does not satisfy the conditions of admissibility specified in the third paragraph of Article 175 of the Treaty. As regards the request made on 29 January 1973 for the submission to the Council of a proposal for a regulation as demanded in this action, the Commission has replied that it will have a detailed study carried out. In the meantime it has submitted a proposal to the Council whose aim is to maintain the disputed Italian subsidies in force for the 1973/74 marketing year. The Commission thus in fact did act, even if it was not in the direction desired by the applicant. Having regard to the provisions of the third paragraph of Article 175 of the Treaty the terms of the action are not conclusive. In no respect does the applicant assert that the Commission has failed to address to it a particular act. Nor has it established what obligation, based on Community law, the Commission infringed by not complying with its request. Not only do the Treaty and the secondary law contain no provision supporting the applicant, but such a provision would be absolutely at variance with Article 43. If, then, the Commission has no such obligation, neither its refusal nor its failure to act can be attacked on the basis of the provisions of Article 175. But above all, as much from the procedural point of view as from that of the legal nature of the matter, the submission by the Commission to the Council of a proposal for a regulation constitutes an internal method of operation arising under Article 43 and not an act which can be attacked on the basis of the third paragraph of Article 175 and which is capable, of affecting, directly and individually, the legal position of the applicant. By its very nature a proposal for a regulation does not constitute an act which can be addressed to the applicant as an individual. As Community law cannot be altered in any way by such a proposal the legal position of the applicant cannot be ‘directly’ affected by this proposal or by the absence of any such proposal. Nor could the submission of a proposal for the regulation requested concern the applicant individually, since such a regulation applies to a circle of persons defined in a general and abstract manner and is without doubt of a regulatory nature. In no respect is there any question of a decision within the meaning of Article 189 of the Treaty. Within the framework of the new legislation requested the number of those to whom it is addressed could only be determined in an abstract manner as the number of oil mills in operation in the region may vary. Moreover, the extension of partial regionalization of subsidies consequently involves modification of the scheme in force and requires an examination of the position of all the oil mills operating in this sector. But if the Council regulation could not be obtained by the expedient of Article 175 of the Treaty as it does not concern the applicant ‘individually’ it is the same for the Commission's prior proposal.

3. The applicant (defendant with regard to the preliminary objection) submits its observations on the claims in respect of the preliminary objections relating to inadmissibility raised by the Council and the Commission.

(a) Council's claim

The applicant claims that by asserting that ‘the regulations referred to are in harmony with the EEC Treaty’, the Council did not define its position, since it had ignored the request made by the applicant, who had not disputed the validity of the regulations establishing an additional subsidy but had requested that the system applying to Italian oil mills should also apply to it. The Council had at best impliedly rejected the request.

This implied refusal does not constitute definition of a position within the meaning of Article 175 but, according to the opinion of the Advocate-General in Case 6/70 (Borromeo v Commission, Rec. 1970, p. 815), it is the type of case for which the action for failure to act was created.

As for the second preliminary objection against the admissibility of the action, according to which the regulation postulated could not be addressed to the applicant, the latter points out that the above-cited Mackprang judgment did not give a ruling on whether the third paragraph of Article 175 imposed, as regards the person to whom the decision is addressed, stricter conditions than those for actions for annulment under Article 173. The solution may depend on the purely formal question whether the person to whom the solicited decision would be addressed is the applicant. On the other hand, a national of the Community may thereby be able, by the action for failure to act, to attack the failure to adopt a regulation when this is of direct and individual concern to him within the meaning of the second paragraph of Article 173.

The letter sent to the Council on 29 January 1973 must be understood in the light of the application to the Court, in which the request for the enactment of a non-discriminatory regulation has been put in a more complete and concrete form. The decision solicited thus does not have the same general character as the decision whose adoption, according to the Mackprang decision, could not be obtained by the action for failure to act.

The applicant's argument that there exists only one suitable measure to eliminate the discriminatory effect of the additional subsidy granted to Italian oil mills, namely the adoption of a nondiscriminatory regulation, may be questioned by the defendants. But the latter thereby invoke an issue concerning the substance of the matter and not the admissibility of the application, which cannot be cleared up by a decision made in pursuance of Article 91 of the Rules of Procedure. One cannot, when examining admissibility, raise the objection that one is not concerned with an ut singuli measure but with a policy decision.

The real question in the examination of admissibility is whether the scheme of additional subsidies is of direct and individual concern to the applicant. If the Council's argument is correct it would mean that the second paragraph of Article 173 of the Treaty is of no effect. In fact, that paragraph starts precisely from the basis that acts adopted in the form of a regulation can themselves be of direct and individual concern to a natural or legal person. This means that in order to determine whether the condition required for the commencement of an action is fulfilled, one must undertake an examination of the contents of the scheme the institution of which is challenged or requested. The applicant only desires that an additional subsidy be granted to it in accordance with the same principles which apply to the grant of a subsidy to oil mills situated in Italy. It could ask for a direct and individual decision on its own account, but does not do so because in addition to itself several other oil mills, which can also be particularized, are in the same position as itself, and the applicant does not want, for its part, to request a nondiscriminatory scheme for its sole advantage.

As for the Council's rebuttal of the argument taken from the judgment delivered in Joined Cases 106 and 107/63 on the grounds that in this case we are confronted with a scheme applying to persons whose identity may change in the future, there is a misunderstanding of the application, whose only aim is to obtain a declaration of failure to act contrary to the Treaty and which does not contemplate any factor subsequent to this action. It is on the basis of criteria existing at the present time that it must be considered who is affected by the scheme whose establishment is requested. If in the future other oil mills were to be set up in the Land of North Rhine-Westphalia, that would in no way affect the decision requested.

The Council points out with justification that the Court of Justice has never decided on the admissibility of an action for failure to act with regard to an act which, even though enacted in the form of a regulation is nevertheless of direct and individual concern to the applicant. Thus the Court must apply by analogy its case law relating to the admissibility of actions for annulment brought against regulations. The applicant nevertheless asks the Court to examine once more the question of admissibility in the light of the special characteristics of actions for failure to act, since the case law on annulment can only be applied by analogy.

In the case of an action for annulment there is less need for a citizen of the Community to see the protection of his rights guaranteed, since regulations serve as a basis for the adoption of administrative actions which the citizen can contest either before national tribunals or before the Court of Justice. In the case of failure to act by the institutions of the Community the position is completely different, as no administrative act has been carried out. In the present case, if the applicant suffers damage it is not because an act imposing a burden on him has been carried out, but rather that a competitor is an identical position has received an advantage through discrimination.

(b) Commission's claim

The Commission's letter of 8 March 1973 does not constitute the definition of a position, for the same reasons as those mentioned above in respect of the Council (Judgment 6/70, Borromeo, Rec. 1970, p. 815).

Moreover, a proposal by the Commission is not a mere ‘internal phenomenon’. In fact, since the Council enacts its regulations in accordance with the third subparagraph of Article 43 (2) ‘on a proposal from the Commission’, infringement of the Treaty by the Council implies at the same time infringement of the Treaty by the Commission.

In conclusion, the applicant considers that the question of its legal title to claim the scheme requested relates to the merits and not the admissibility of the claim. Several of the objections traised by the defendants in their statements — including the one which asserts that the applicant has no right to demand the adoption of the regulation whose enactment it requests — concern not the admissibility but the merits of this claim.

Furthermore, as to the claim for damages lodged on 23 July 1973 by the applicant, the latter points out that a preliminary decision on the admissibility of the action for failure to act would not spare the Court the task of having to examine the facts or the issues of substance relating to the claim for compensation.

The oral argument took place on 21 November 1973. The applicant was represented by Dr Jürgen Gündisch, of the Hamburg Bar, the Council of the European Communities by its Legal Adviser, Daniel Vignes, acting as agent, assisted by Hans-Jürgen Rabe, of the Hamburg Bar, and the Commission of the European Communities by its Legal Adviser Peter Kalbe, acting as agent.

The Advocate-General delivered his opinion at the hearing on 5 December 1973.

Grounds of judgment

1. By an action commenced on 16 May 1973, based on Article 175 of the EEC Treaty, the applicant complains that the Council has failed to enact a regulation relating to an additional subsidy for colza and rape seed processed in oil mills far from the production areas. In addition, the applicant complains that the Commission has failed to submit a proposal to the Council to this effect. As the Council and the Commission requested the application of Article 91 of the Rules of Procedure the Court decided to give a ruling on the admissibility of this action without dealing with the substance of the case.

2. In addition to the aid granted within the framework of the common organization of the market in oils and fats, there was set up, as from the 1967/68 marketing year, an additional subsidy whose purpose was to lessen certain difficulties encountered by Italian oil mills and which was renewed for the 1972/73 marketing year by Regulation No 1336/72 of 27 June 1972 (OJ L 147 of 29 June 1972, p. 7). Contending that this additional subsidy constitutes a discrimination prohibited by Article 7 of the EEC Treaty, the applicant, by a letter of 29 January 1973, called upon the Council ‘in accordance with the second paragraph of Article 175 of the EEC Treaty to enact a regulation concerning an additional subsidy for colza and rape seed processed in oil mills far from the production areas’. The applicant added that ‘this regulation should no longer take account of the fact that an oil mill is situated on the territory of a particular Member State’ but ‘instead should grant this additional subsidy in progressive slices according to the distance between the oil mill and the production areas’. By letter of the same date the applicant informed the Commission of the contents of the one it sent to the Council and it begged the Commission ‘to make use of its right of initiative and to submit an appropriate proposal to the Council’.

3. By a letter of 23 March 1973 the Council replied to the applicant that it was of the opinion that the Regulations establishing an additional subsidy for colza and rape seed processed in Italy were in conformity with the EEC Treaty. By a letter of 8 March 1973 the Commission replied to the applicant that its application was being examined closely by its departments.

4. In its action the applicant drew attention to the fact that ‘the Council, in infringement of the Treaty, has failed to enact a regulation for an additional subsidy for colza and rape seed processed in oil mills far from the production areas and providing, inter alia, in the case of an oil mill situated in the Federal Republic of Germany in the Land of North Rhine-Westphalia, for the payment of an additional subsidy of 0.60 u.a. per 100 kg of colza and rape seed’.

5. By the third paragraph of Article 175 any natural or legal person may, under the conditions laid down in the first and second paragraphs of the same Article, complain to the Court of Justice that the Council or the Commission has, in infringement of the Treaty, ‘failed to address to that person any act other than a recommendation or an opinion’. It appears that the action commenced by the applicant has the object of procuring a provision of a general regulatory character having the same legal scope, as Regulation No 1336/72, and not an act concerning it directly and individually. Such a regulation cannot be described, by reason either of its form or of its nature, as an act addressed to the applicant within the meaning of the third paragraph of Article 175. The same applies in respect of that part of the action directed against the Commission, as the proposal demanded from the latter is an intrinsic part of the procedure for preparation of the regulation and is thus not capable of falling in the category of acts which by the third paragraph of Article 175 can be addressed to the applicant.

6. The action must therefore be dismissed as inadmissible.

Costs

7. By Article 69 (2) of the Rules of Procedure the unsuccessful party shall be ordered to pay the costs. The action has been declared inadmissible. The applicant must therefore be ordered to pay the costs of the proceedings.

On those grounds, Upon reading the pleadings; Upon hearing the report of the Judge Rapporteur; Upon hearing the parties with regard to the preliminary objection; Upon hearing the opinion of the Advocate-General on the preliminary objection; Having regard to the Treaty establishing the European Economic Community, especially Article 175; Having regard to the Protocol on the Statute of the Court of Justice of the European Economic Community; Having regard to the Rules of Procedure of the Court of Justice of the European Communities, especially Articles 69 and 91; THE COURT hereby:

1 Dismisses the action as inadmissible.

2 Orders the applicant to pay the costs of the proceedings.