judgment of 18. 3. 1975 — case 78/74

In Case 78/74 Reference to the Court under Article 177 of the EEC Treaty by the Hessischer Verwaltungsgerichtshof for a preliminary ruling in the action pending before that court between

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

gives the following

JUDGMENT

Facts

The facts and procedure and the observations presented under Article 20 of the Protocol on the EEC Statute of the Court may be summarized as follows:

I — Facts and written procedure

Article 7 (3) of Regulation No 120/67 of the Council of 13 June 1967 on the common organization of the market in cereals (OJ p. 2269) provides that the intervention agencies designated by the Member States may, within the framework of the general rules laid down by the Council, grant a denaturing premium for common wheat.

Under the provisions of Article 4 (1) of Regulation No 172/67 of the Council of 27 June 1967 on general rules governing the denaturing of wheat and rye of bread-making quality (OJ p. 2602) the denaturing premium for common wheat, the amount of which may vary, shall be fixed before the beginning of and for the duration of each marketing year.

The first fixing of the denaturing premium for common wheat, in respect of the marketing year 1967/68, was the subject of Regulation No 241/67 of the Commission of 30 June 1967 (OJ p. 2961).

Since it considered that denaturing aims at maintaining the market in products which are unable to find their natural outlets and that it ought only to be applied to the extent necessary for maintaining the market in cereals of bread-making quality, the Commission decided in particular, by its Regulation No 242/67 of 30 June 1967 containing detailed rules on the application of the provisions relating to the denaturing of common wheat and rye of bread-making quality (OJ p. 2963) the qualitative conditions that justify denaturing. Pursuant to Article 2 of this Regulation, common wheat denatured by the intervention agencies or the subject of a denaturing premium must have a specific weight greater than a fixed weight, which varies between 70 and 73 kg/hi according to the region, it must have a humidity content not exceeding between 14 % and 18 % according to the region, and contain a percentage of various impurities, and of germinated grains, lower than 10 %.

Article 5 (2) of Regulation No 242/67 provides for a reduction in the denaturing premium, particularly for common wheat, having a specific weight lower than that determined for the standard quality.

By its Regulation No 644/68 of 29 May 1968, amending Regulation No 172/67 (OJ L 122, p. 3) the Council recited, inter alia, that inability to bring about during the course of the marketing year a change in the denaturing premium — Article 4 (1) of Regulation No 172/67 provides that the premium is fixed before the beginning of and for the duration of each marketing year — could, when the factors on which it was based changed considerably during the year, reduce or increase the incentive to denature cereals, thus disturbing the balance of the market, in particular where the market situation obliged intervention agencies to buy in large quantities. It therefore considered that although it was necessary to publish the amount of the premium before the beginning of the marketing year, adjustments should be allowed where the balance of the market was likely to be disturbed; consequently it supplemented Article 4 (1) of Regulation No 172/67 by adding a second paragraph which provides that the denaturing premium may be adjusted during the marketing year where the balance of the Community cereal market is likely to be disturbed.

By its Regulation No 956/68 of 12 July 1968, on new detailed rules for applying the provisions on the denaturing of common wheat and rye of breadmaking quality (OJ L 164, p. 9), the Commission on the one hand maintained the reduction in the denaturing premium for common wheat having a specific weight inferior to that determined for the standard quality and on the other hand, by the second paragraph of Article 4 (2) thereof, provided for an increase in the denaturing premium for common wheat having a specific weight in excess of 77 kg/hi; the amount of this increase in premium results from the application of the percentages indicated in Annex III of the Regulation, in relation to the differences in specific weight per hectolitre which range from 77 to more than 80 kg/hi, to the basic intervention price applicable at the beginning of the marketing years.

Regulation No 956/68 was replaced by Regulation No 1403/69 of the Commission of 18 July 1969 (OJ L 180, p. 3), which did not modify the provisions relating to the increase in the denaturing premium.

Giving effect to Regulation No 1403/69, the amount of the denaturing premium for common wheat for the marketing year 1969/70 and the amount of the increases to be applied to this premium were fixed by Regulation No 1404/69 of the Commission of 18 July 1969 (OJ L 180, p. 5).

With a view to facilitating the disposal of wheat on the market in fodder cereals and so as to encourage denaturing, Regulation No 1404/69 added to the first component of the premium — intended to take into account the difference between the prices of common wheat and of barley — a fixed supplementary amount of 2.50 units of account.

By its Regulation No 1583/69 of 8 August 1969, amending the denaturing premium in respect of common wheat for the marketing year 1969/70 (OJ L 200, p. 25), the Commission found that the stocks of common wheat available within the Community at the end of the marketing year 1968/79 were substantially in excess of those involved at the time when the denaturing premium was fixed by Regulation No 1404/69, in particular by reason of the developments that had meanwhile occurred on the world market, so that in order to avoid disturbances on the Community cereal market it was necessary to take the necessary measures to facilitate the marketing of these stocks.

The Commission considered that an increase of the denaturing premium by 2 units of account would contribute to achieving this object.

Since it considered that the conditions which at that time prevailed on the market in cereals of bread-making quality and in particular the satisfactory progress made in the disposal of surpluses of common wheat of a high specific weight involved a risk of disturbances on the market in this cereal if denaturing was still encouraged, the Commission by its Regulation No 849/70 of 11 May 1970, amending Regulations Nos 1403/69 and 1404/69 as regards the denaturing of common wheat (OJ L 102, p. 7) discontinued as from 1 June 1970 the increase in the denaturing premium granted on common wheat having a specific weight in excess of 77 kg/hi and limited the validity of these increases to 31 May 1970.

During the months of June and July 1970, the Deuka company denatured 8920342 kg of common wheat of a specific weight in excess of 77 kg/hi.

The German intervention agency, the Einfuhr- und Vorratsstelle fur Getreide und Futtermittel, paid to the Deuka company in respect of these operations the denaturing premium provided for under the Community regulations but, applying the provisions of Regulation No 849/70, refused to allow it the benefit of the increases in premium for denaturing common wheat of a specific weight in excess of 77 kg/hi.

The appeal which was brought by the Deuka company on 25 November 1970 against the refusal of the Einfuhr- und Vorratsstelle was, by judgment of 24 February 1971, rejected by the Verwaltungsgericht of Frankfurt-on-Main, as unfounded.

Upon appeal dated 5 April 1971, the Hessischer Verwaltungsgerichtshof (Vlth Senate) by order dated 8 July 1974, decided to suspend its decision under the provisions of Article 177 of the EEC Treaty until the Court of Justice had given a preliminary ruling on the following questions:

1) Whether Regulation (EEC) No 849/70 of the Commission of 11 May 1970 (OJ L 102 of 12. 5.1970, p. 7) was invalid

a) by reason of an insufficient statement of reasons, or

b) by reason of the non-fulfilment of the conditions of Article 4 (1), second sentence, of Regulation No 172/67/EEC of the Council of 27 June 1967 (OJ No 130 of 28. 6. 1967, p. 2602/67), added by Article 1 of Regulation (EEC) No 644/68 of the Council of 29 May 1968 (OJ L 122 of 30. 5. 1968, p. 3).

2) In the event of Question 1 being answered in the negative: whether Articles 1 and 2 of Regulation (EEC) No 849/70 were in any case invalid, in so far as they laid down that the increased denaturing premium should be discontinued even in respect of common wheat with a specific weight exceeding 77 kg/hi which had already been purchased by the denaturer before that Regulation came into force.

The order of the Hessischer Verwaltungsgerichtshof was received at the Court Registry on 17 October 1974.

Written observations were lodged on 17 December 1974 by the Commission of the European Communities and on 20 December 1974 by the plaintiff in the national proceedings in accordance with the provisions of Article 20 of the Protocol on the Statute of the Court of Justice of the EEC.

After hearing the report of the Judge-Rapporteur and the opinion of the Advocate-General the Court decided to open the oral procedure without any preparatory inquiry.

II — Observations submitted to the Court

A — As to the statement of reasons in Regulation No 849/70 (Question 1(a))

Deuka, the plaintiff in the national proceedings, recalls that Article 190 of the EEC Treaty obliges the Commission, when dealing with a regulation, to indicate at least all the circumstances leading to its adoption and the general objectives which it seeks to achieve. In the present case Regulation No 849/70 ought therefore to have set out the factual circumstances capable of establishing that to maintain the supplementary denaturing premium in respect of common wheat of a high specific weight would result in a disturbance of the Community cereal market. Since Regulation No 644/68 of the Council had set out the circumstances under which a threat of disturbance of the market might exist, in the sense that the factors on which the denaturing premium was based must change so considerably that the incentive to denature is reduced or increased, the recitals of Regulation No 849/70 of the Council ought at least, in relation to the variations in these factors, to contain indications that would allow both the Court and the parties involved to verify them and, if necessary, their tendency to bring about a disturbance of the market.

However, the only factual element referred to by the Regulation in question consists in the satisfactory progress made in the disposal of surpluses of common wheat of high specific weight; a ‘satisfactory’ progress in disposal certainly does not permit of a finding that the continuance of such progress threatens to disturb the market in common wheat. The Regulation contains no justification for discontinuing only the increase in premium for common wheat of a specific rate in excess of 77 kg/hi. It gives no reason why the attraction of the supplementary premium should involve a risk of disturbance, nor how its discontinuance would prevent this.

Neither the Court nor the interested parties therefore have the possibility of checking the necessity and the relevance of Regulation No 849/70. This regulation is null and void because it is insufficiently reasoned.

The Commission refers to the Court's case-law in matters of reasoning of regulatory acts and argues that an enterprise whose business it is to purchase cereals of bread-making quality, to denature them and to sell them as animal fodder necessarily knows and is able precisely to appreciate the system of denaturing premiums, or for that matter the purposes and justification of the particular measures decreed in this field. To the plaintiff in the national proceedings, the circumstances and the motivation which governed the adoption of Regulation No 849/70 ought therefore to have been self-evident. The adaptation of the amounts of the denaturing premium to the real situation of the market constitutes one of the essential elements of this system; since certain difficulties of obtaining supplies had arisen at the end of the marketing year 1969/70 and since the particular reasons for the increase of the denaturing premium by Regulation No 158/69 had disappeared, the Commission had been obliged to remedy the situation by appropriate measures, which in the field of denaturing could only have been by reducing the level of the premium.

It cannot therefore be argued that, from the factual as well as from the legal point of view, the statement of reasons in Regulation No 849/70 is insufficient to such a degree that the applicant has been unable to discern its reasons and objectives, or that the Court, having at its disposel the same knowledge of the economic and circumstances, is not in a position to make an objective appraisal.

B — As to the existence of a threat of disturbance (Question . (b))

Deuka considers that the disturbance of the market relied upon by the Commission could only have consisted of a generalized insufficient supply of common wheat of bread-making quality to the Community mills and of an inability to obtain a sufficient supply of this kind of wheat on the Community market.

The data as to stocks available on 31 July 1970 show that to continue denaturing without change during the month of June could not have resulted in a disturbance of the market.

Besides, the market can only be disturbed where the target price is exceeded for a long time. At the beginning of the month of May 1970 prices in fact evolved normally and became stabilized above the intervention price.

If there really had been the threat of disturbance the Commission would have had to terminate completely its denaturing operations, reducing to zero the denaturing premium for all kinds of common wheat of bread-making quality. Common wheat having a specific weight in excess of 77 kg/hi has no market of its own; on the contrary, types of common wheat having different specific weights are interchangeable.

In fact the Commission did not intend to avoid disturbances of the market but to save itself applying the increase in the denaturing premium as soon as the threat represented by the existence of surpluses of common wheat had been removed. The Community regulations do not however allow the denaturing system to be restricted for such reasons.

On any account the discontinuance by Regulation No 849/70 of the supplementary denaturing premium in respect of common wheat of a specific weight in excess of 77 kg/hi infringes the principle of proportionality. Article 4 of Regulation No 172/67, amended by Regulation No 644/68, recognizes the necessity of providing the parties involved with the opportunity of making long-term arrangements in advance; the possibility of putting an end to the denaturing system can therefore only be used in case of absolute necessity and only to the extent strictly necessary to avoid the threat of a disturbance of the market. It would for this purpose have sufficed to ensure that the intervention agencies ceased to sell wheat of bread-making quality for denaturing. To discontinue the supplementary denaturing premium in respect of common wheat of a high specific weight is all the more unjustifiable since on the one hand the parties involved had already before the publication of Regulation No 849/70 purchased from the intervention agencies common wheat for denaturing on the basis of their invitations to tender and clearly with their consent; on the other hand this wheat could no langer be made available to mills for the manufacture of flour for bread-making.

The Commission considers that the concept of ‘disturbance’ of the market within the meaning of Article 4 (1), second sentence of Regulation No 172/67 arises from the general principles pursued by the system of denaturing premiums within the framework of the policy of organizations of the markets as well as the particular reasoning of Regulation No 644/68.

Denaturing and the expense involved are only justified if one is faced with considerable surpluses exceeding the absorption capacity of the food sector, and with a view to avoiding repercussions on the market in fodder cereals likely to compromise the price guarantees in this sector. The denaturing premium must therefore necessarily be adapted to the situation of the market. As regards the market in cereals for bread-making, or indeed that in fodder cereals, a ‘threat of disturbance’ exists when one may fear that the equilibrium of the market might be endangered by the denaturing of excessively large quantities of wheat. This finding applies in particular to wheat of superior quality, of which the Community production is not normally sufficient to cover the requirements and for which the Community market normally offers sufficient marketing possibilities.

Regulation No 644/68 has the purpose of allowing the Commission preventively to adapt the amounts of the premium to short-term developments on the cereal market and the concept of ‘threat of disturbance’ has no other use than as a reserve for the purpose of limiting the grant of increases, as of the basic premium, to situations involving an excess of quality wheat as compared with the absorption capacity of the sector of food for human consumption.

The Commission obviously has a certain discretionaty power in relation to whether there exists a threat of disturbance of the balance of the market and as to whether one ought to encourage or put a brake on denaturing by modifying the amount of the premium. In particular, the legality of Regulation No 849/70 could only be put in doubt if the Commission had manifestly committed a grave error of judgment in its assessment of the market situation at that period or if it had been guilty of a misuse of power. At the end of the 1969/70 marketing year signs of a reduction in the supply of common wheat on the Community market had multiplied it would seem that the bottle-neck in the supply of wheat of superior quality could disappear sponaneously and at short notice. In these circumstances the Commission had not only the right but the duty to take preventive measures, particularly by way of adaptation of the amounts of the denaturing premium so as to direct such reserves of quality wheat as were still available within the Community to the sector of food for human consumption.

The reduction in the denaturing premium had to be both sufficiently efficient and proportionate to the purpose to be attained; this is why the Commission refrained from making a general reduction of premiums and limited itself to dicontinuing those increases which were calculated on the basis of differences in quality.

C — As to the protection of the legitimate confidence of the citizen (Question 2)

Deuka points out that the parties involved who had made advance purchase and sale arrangements for the months of May, June and July 1970 were not in a position to change them during the short period between 12 May, the date of publication of Regulation No 849/70, and 31 May, the date when it came into force. Not only would they have had to make unreasonable financial sacrifices but also the operation would have been practically incapable of implementation. The cereals purchased with a view to denaturing could no longer be used to supply mills for bread production; Article 1 of Regulation No 849/70 could not have taken effect in relation to common wheat that was the subject of contracts concluded before 12 May 1970. These contracts therefore needed protection, failing which the parties involved would have suffered a damage not compensated by an advantage accruing to the common organization of the market.

Articles 1 and 2 of Regulation No 849/70 are therefore null and void in not having exempted common wheat of specific weight in excess of 77 kg/hi purchased before the coming into force or the publication of this Regulation from the removal of the increase of the denaturing premium.

The Commission points out that in fact from 23 April 1970 the trade press had made reference to the request which the Federal Ministry of Food addressed to the Commission with a view to removing the increases granted in respect of wheat having a high specific weight and to the probability of a quick decision to that effect on the part of the Commission. The request for a preliminary ruling ought therefore to be limited to purchases that took place prior to 23 April 1970.

The regulations relating to the denaturing premium did not provide for the fixing in advance of the amount thereof; Article 4 (1) of Regulation No 172/67 does not allow the parties involved to claim an entitlement to the permanent grant of a constant and unchanging amount.

Nor can the plaintiff in the national proceedings claim a right to special protection. Besides, in the light of the circumstances it had sufficient time to denature its reserves of wheat of a high specific weight under the old conditions; it cannot ask for more under the heading of protection of legitimate confidence.

III — Oral procedure

Deuka, the plaintiff in the national proceedings, represented by Fritz Modest and Barbara Festge, Advocates, of Hamburg, and the Commission of the European Communities, represented by its Legal Adviser, Peter Kalbe, made their oral observations at the hearing of 5 February 1975 when they submitted the new factors which are hereinafter summarized:

Deuka insists that high specific weight in no way constitutes a criterion of quality for common wheat; the quality depends rather on suitability for milling and baking.

As regards the reasoning, it must be said that the decision in question does not show why the mills had been unable to fall back on common wheat of a lesser specific weight, nor why the action of intervention agencies or recourse to importation could not have prevented the disturbance of the market referred to; besides, the Commission had not explained how the discontinuance of the increase in premium could avoid disturbances when it maintained the denaturing premium itself, which was a sum ten times higher.

The Commission's appraisal of the market situation at the time when it made Regulation No 849/70 is clearly tainted by error and misuse of powers: Article 4 (1) of Regulation No 172/67, as amended by Regulation No 644/68, does not enable the Commission to change the denaturing premium during a marketing year unless there are exceptional circumstances; in fact the Commission had only alleged a slight disturbance and had clearly erred when assessing the real situation of the market; it used an excessive instrument of intervention which was neither necessary nor even suited to attaining the objective intended.

The Commission — basing itself in particular on the cereal balance for the 1969/70 marketing year, the data as regards quantities of cereals brought into intervention, the evolution of the market prices and of intervention prices and the quantitative evolution of denaturing — argues that the market at the time of the decision in question had been characterized by a substantial increase in denaturing and a reduction in the quantity of common wheat available. Of the different courses of action available to it the Commission had after mature reflection chosen the least radical intervention.

The denaturing premium is not a support measure for the fodder industry; no guarantee was given for its stability and the discontinuance of the increase in the premium occurred at a moment when it was possible both to ensure the efficacy of the measure and to limit the disadvantages to undertakings.

The Advocate-General delivered his opinion on 26 February 1975.

Law

1. By order dated 8 July 1974, received at the Court Registry on 17 October 1974, the Hessischer Verwaltungsgerichtshof referred two questions on the validity of Regulation No 849/70 of the Commission of 11 May 1970, amending Regulations No 1403/69 and No 1404/69 on the denaturing of common wheat (OJ L 102, p. 7).

On the first question (statement of reasons and material justification of Regulation No 849/70)

2. The Court is asked by the first question whether Regulation No 849/70 is invalid (a) by reason of an insufficient statement of reasons, or (b) by reason of the non-fulfilment of the conditions of Article 4 (1), second sentence, of Regulation No 172/67 of the Council of 27 June 1967 on the general rules governing the denaturing to wheat (OJ p. 2602), amended by Article 1 of Regulation No 644/68 of the Council of 29 May 1968 (OJ L 122, p. 3).

3. Article 7 of Regulation No 120/67 of the Council of 13 June 1967 on the common organization of the markets in cereals (OJ 1967, p. 2269) provides, within the framework of intervention measures, the possibility of the grant of a denaturing premium for common wheat. Under the same article the Commission is instructed to adopt general rules governing the conditions for the grant of denaturing premiums and the amount thereof, in accordance with the general rules adopted by the Council. These rules are the subject-matter of Regulation No 172/67. Article 4 (1) of that Regulation provides that ‘the denaturing premium for common wheat, the amount of which may vary, shall be fixed before the beginning of and for the duration of each marketing year …’. Since the application of this rule had caused market disturbances as a result of short-term changes that had occurred during the marketing year, Regulation No 644/68, by Article 1 thereof, supplemented Article 4 (1) of Regulation No 172/67 by adding that the denaturing premium ‘may be adjusted during the crop year where the balance of the market in cereals is likely to be disturbed’. Finally, the procedures for the grant of these premiums were laid down in respect of the period in question by Regulation No 1403/69 of the Commission of 18 July 1969 (OJ L 180, p. 3).

4. Under the provisions of Article 3 of Regulation No 172/67 ‘cereals for denaturing must be of a minimum quality and quantity to be determined’. Giving effect to this provision, Regulation No 1403/69 adopts a certain number of qualitative criteria connected with, inter alia, the specific weight of the goods to be denatured. More particularly, for the purpose of encouraging the marketing of common wheat having a specific weight in excess of 77 kg/hi, the second Article 4 (2) in conjunction with Annex II of that Regulation provides for an increase in the denaturing premium ranging from 0.5 % to 2 % of the basic intervention price depending on the specific weight. Regulation No 849/70 discontinued this increase with effect from 1 June 1970 by repealing Article 4 (2) and Annex II of Regulation No 1403/69.

5. Before the national court the validity of this regulation was disputed on the grounds of insufficient statement of reasons and that the condition laid down by Regulation No 644/68 — that ‘the balance of the market in cereals is likely to be disturbed’ — was not in fact fulfilled.

6. The statement of reasons in Regulation No 849/70 must be considered and assessed in the context of the compley of regulations of which this act is an integral part. The preambles to Regulation No 172/67 and 644/68 bring out both the general objective of the denaturing operations — to sustain the price of cereals of bread-making quality — and the more specific need for taking into account the qualitative characteristics of the goods subjected to denaturing, linked to the wish to avoid disturbing by the operations the balance of the whole cereals market. In this connexion the second recital of the Regulation in question, viz. No 849/70, refers to the fact that ‘present circumstances in the market in cereals of bread-making quality, and in particular the satisfactory progress made in the disposal of surpluses of common wheat of a high specific weight, may disturb the market in that cereals where denaturing is still encouraged’. When considered in the context of the system in which it took effect, the discontinuance of the increase in the premium obviously has the purpose, by discontinuing the inducement to denature certain qualities of wheat of bread-making quality, of avoidin the disturbances which the Council Regulation has in mind. Being thus specifically linked to the criterion which, under Article 1 of Regulation No 644/68, allows an adjustment of the denaturing premium during the marketing year, Regulation No 849/70 fulfills the requirement of statement of reasons laid down by Article 190 of the Treaty. Its validity cannot therefore be attacked under this heading.

7. The question is therefore limited to its second part, viz. whether Regulation No 849/70 is materially justified in the light of the requirement under Article 1 of Regulation No 644/68 which permits an adjustment of the amount of the premiums during the crop year only ‘where the balance of the market in cereals is likely to be disturbed’. In order to determine whether such a threat exists, the Commission had to consider — bearing in mind the objectives which the Council assigned to the system of denaturing premiums — both the evolution of the market in cereals of bread-making quality and the effect of denaturing operations on the evolution of the market in fodder cereals. In subordinating the modification of premiums to the existence of a ‘likelihood of disturbance’, Article 1 of Regulation No 644/68 limits itself in this respect to a reasonable forecast on the part of the Commission without requiring — as was alleged by the plaintiff in the national proceedings — that there should be a present and even grave disturbance.

8. In order to deal with such a likelihood the Commisson is free to use different means having the purpose of influencing the evolution of the market, such as the modification of the basic amount of the denaturing premium, the modification or discontinuance of the increases in that premium, restricting or stopping deliveries of wheat for denaturing by the intervention agencies or a change in the conditions of trade with third countries. Thus the Commission enjoys a significant freedom of evaluation both as regards the taking into account of possible factors of disturbance and in choosing the means for dealing with them, which must be exercised in the light of the objectives of the economic policy laid down by Regulation No 120/67 in the framework of the common agricultural policy.

9. When examining the lawfulness of the exercise of such freedom, the courts cannot substitute their own evaluation of the matter for that of the competent authority, but must restrict themselves to examining whether the evaluation of the competent authority contains a patent error or constitutes a misuse of power. The allegations of the plaintiff in the main action have revealed no indication of such an error or such a misuse of power. It is not in dispute that at the time of the measure in question there existed on the market a certain tension as regards the supply of cereals of bread-making quality belonging to the type of goods the denaturing of which gave rise to payment of an increased premium under Article 4 (2) and Annex II of Regulation No 1403/69. In the choice of means for the purpose of dealing with the situation, the Commission was entitled to prefer the discontinuance of an increase in the premium rather than a modification of the amount of the basic premium or, as was suggested by the plaintiff in the main action, favouring the importation of goods of the same type from third countries.

10. Accordingly, it appears that the validity of Regulation No 849/70 cannot be questioned from the point of view of the criterion of ‘likelihood of disturbance’ to which Regulation No 644/68 subordinated the modification of the amount of the denaturing premiums during the course of the cereal marketing year.

On the second question (the effect of the discontinuance of the increase of premiums on pending contracts)

11. As a subsidiary question the Court was asked whether Articles 1 and 2 of Regulation No 849/70 were in any case invalid in so far as they laid down that the increased denaturing premium should be discontinued even in respect of common wheat with a specific weight exceeding 77 kg/hi which had already been purchased by the denaturer before that Regulation came into force.

12. The Regulation in question is dated 11 May 1970, it was published in the Official Journal of 12 May 1970, under the provisions of Article 3 thereof, it came into force on the third day following its publication and under Article 1 the discontinuance of the increase in premium came into force on 1 June 1970. Accordingly, it falls to be examined whether the period intervening between publication of the Regulation and the discontinuance of the premium was sufficient to allow an enterprise under normal conditions to complete the denaturing operations which it had already undertaken in reliance on the previous Regulations.

13. Article 4 of Regulation No 172/67, in its original version, suggests that it is normal for denaturing operations to be determined in the context of the cereal marketing year. This view was not fundamentally changed by Regulation No 644/68, Article 1 of which treats adjustments in the denaturing system during the crop year as exceptional, bearing in mind that they can only occur in the event of a likelihood of disturbance on the market. It cannot therefore be considered abnormal for a denaturing undertaking to arrange its projects in the light of the entire crop year.

14. Accordingly, for the sake of legal certainty, Regulation No 849/70 had to be applied in such a way that there might still benefit from the system under Article 4 (2) of Regulation No 1403/69 those quantities of goods in respect of which it was established that they were purchased before the coming into force of Regulation No 849/70, provided the request under Article 4 (2) of Regulation No 172/67 was made to the intervention agency before the expiry of the time-limit arising from Regulation No 849/70, i.e. before 1 June 1970. Interpreted in this way, Regulation No 849/70 contains no provision the validity of which could be doubted.

Costs

15. The costs incurred by the Commission of the European Communities, which has 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 national court, costs are a matter for that court. On those grounds,

THE COURT in answer to the question referred to it by the Hessischer Verwaltungsgerichtshof (VIth Senate) by order of 8 July 1964, hereby rules:

1 Translator's Note. The authentic English text of Regulation No 644/68 uses the term ‘crop year’, but this is clearly identical with the year described in the other relevant Regulations as the ‘marketing year’.