JUDGMENT OF 25. 6. 1975 — CASE 5/75 DEUKA v EINFUHR-UND VORRATSSTELLE GETREIDE

In Case 5/75 Reference to the Court under Article 177 of the EEC Treaty by the Verwaltungsgericht (Administrative Court), Frankfurt-am-Main 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 of the case, the procedure and the observations submitted under Article 20 of the Protocol of the Statute of the Court of Justice of the EEC 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 intervention agencies designated by the Member States may, within the terms of the general rules laid down by the Council, grant a denaturing premium for common wheat.

Under 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, is fixed before the beginning of and for the duration of each marketing year.

The Council, in Regulation No 644/68, of 29 May 1968, amending Regulation No 172/67 (OJ L 122, p. 3), considered, in particular, that the inability to adjust the premium during the crop year can, when the factors' on which it is based change considerably during the year, reduce or increase the incentive to denature cereals, thus disturbing the balance of the market, in particular when the market situation obliges intervention agencies to buy in large quantities of cereals. It therefore considered that although it was necessary to publish the amount of the premium before the beginning of the crop year, adjustments should be allowed where the balance of the market was likely to be disturbed; as a result it supplemented Article 4 (1) of Regulation No 172/67 by a second paragraph providing that the denaturing premium might be adjusted during the crop year where the balance of the market in cereals is likely to be disturbed.

The Commission, in accordance with its Regulation No 1403/69 of 18 July 1969 laying down detailed rules for the application of the provisions concerning denaturing of common wheat and rye of bread-making quality (OJ L 180, p. 3), by Article 1 of Regulation No 1897/73 of 11 July 1973 (OJ L 193, p. 25), fixed the denaturing premium for common wheat for the 1973/1974 marketing year at 10-50 units of account per ton, which amount was increased by the difference between the monthly increases applicable respectively to the intervention price of common wheat and that of barley.

During October 1973 the Commission felt it possible to discern that the world market in common wheat had moved rapidly towards a tight situation and that this had brought about successively the limitation of the duration of validity of export certificates, the termination of import levies and the introduction of an export levy. In view of the development of such a situation, it appeared to it proper that the incentive for the denaturing of common wheat should be further reduced because such wheat, owing to a premium which was excessive in the prevailing circumstances, competed in particular with barley for which the market situation gave rise to fears of large-scale intervention. Since it considered that collectively these elements threatened to disturb the market and therefore the denaturing premium should be reduced, the Commission by Regulation No 2859/73 of 19 October 1973, amending Regulation No 1897/73 (OJ), decided that as from 1 November 1973 the amount of the denaturing premium for common wheat, including the increases resulting from the application of the provisions of the second paragraph of Article 1 of Regulation No 1897/73, should be reduced to an amount varying between 7 units of account per metric ton for November 1973 and 8-32 units of account per metric ton for July 1974.

In November 1973, the plaintiff, which has its registered office in Düsseldorf, proceeded to denature 10324-223 metric tons of wheat, for which it requested the defendant German intervention agency to pay the denaturing premium of 12-01 units of account per metric ton under Regulation No 1897/73.

The defendant, relying on Regulation No 2859/73, granted the plaintiff a premium of only 7 units of account per metric ton.

At the beginning of 1974 the Commission considered that the pressure on the world market for common wheat had further increased and that the indications of the supply situation on this market were continually worsening and in so doing risked causing further increases in prices; this situation, according to the Commission, had led successively to a new limitation on the period of validity of export licences and to the increase of the export levy. Since the increase in demand for common wheat on the Community market had caused considerable price increases and, as a result of an increased demand for cereals for animal feed, it appeared that the denaturing premium should be reduced to zero, the Commission, by Regulation No 175/74 of 23 January 1974, amending Regulation No 1897/73 (OJ L 20, p. 28) fixed the denaturing premium at zero as from 10 February 1974.

In February 1974 the plaintiff proceeded to denature two lots of wheat, respectively 1922-085 and 153853 metric tons, for which it requested the payment of the denaturing premium provided for in Regulation No 1897/73 (respectively 12-67 and 12-89 units of account per metric ton) or at least the premium provided for in Regulation No 2859/73.

The defendant, applying Regulation No 175/74, refused to pay any denaturing premium.

The plaintiff objected to the defendant's decisions and on 12 February and 24 May 1974 applied to the Verwaltungsgericht (Administrative Court) Frankfurt-am-Main.

The latter, by order dated 17 December 1974 under Article 177 of the EEC Treaty, stayed the proceedings until the Court of Justice had given a preliminary ruling on the following questions:

1) Is Regulation (EEC) No 2859/73 of the Commission of 19 October 1973 amending Regulation (EEC) No 1897/73, fixing the denaturing premium for common wheat for the 1973/74 marketing year (OJ L 293, p. 31) compatible with the second sentence of Article 4 (1) of Regulation EEC No 172/67 of the Council of 27 June 1967 as amended by Regulation EEC No 644/68 (OJ L 122, p. 3)?

2) If Question (1) is answered in the affirmative, is Regulation EEC No 2859/73 of 19 October 1973 applicable also to denaturing which was notified to the intervention agency in the form prescribed by it before1 November 1973 but for which the technical admixture was carried out only after 1 November 1973 although still within the prescribed time limit?

3) Is Regulation EEC No 175/74 of the Commission of 23 January 1974 (OJ L 20, p. 28), which fixed the denaturing premium as from 10 February 1974 at zero, compatible with Regulation (EEC) No 172/67 of the Council of 27 June 1967 as amended by Regulation EEC No 644/68 of the Council (OJ L 122, p. 3)?

4) If Question (3) is answered in the affirmative, is Regulation (EEC) No 175/74 applicable also to denaturing which was notified to the intervention agency before 10 February 1974 in the form prescribed by it, but for which the technical admixture was carried out only after 10 February 1974 although still within the prescribed time limit?

The order of the Verwaltungsgericht Frankfurt-am-Main was registered at the Court on 16 January 1975.

Written observations were submitted under Article 20 of the Protocol on the Statute of the Court of Justice of the EEC on 21 March 1975 by the Commission of the European Communities and on 1 April by the plaintiff in the main action.

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

II — Written observations submitted to the Court

A — On the validity of Regulations Nos 2859/73 and 175/74

The plaintiff in the main action stresses that the use of wheat of bread-making quality to feed animals is basically to avoid a surplus arising; denaturing is neither illegal nor immoral nor to be condemned: it involves no destruction but serves to process wheat via the stomach of animals; it contributes to removing certain quantities of bread-grains from the market and to transferring them to the market in feed grains, which has recourse to import.

The third recital of Regulation No 172/67 states that the existence of the denaturing premium should be known to possible beneficiaries from the beginning of the marketing year, in order to enable them to plan a suitable use for denatured common wheat. The system of the denaturing premium is the subject of an annual plan relating to the whole marketing year (from 1 August to 31 July). The Commission is in a position to fix the denaturing premium before the beginning of each marketing year for its duration: on the basis of serious estimates of the harvest and having regard to the needs of domestic and foreign comsumers it can decide whether denaturing operations are necessary for the following marketing year; it likewise has the duty to make known in advance what the premium is to be, since those concerned make as from August of each marketing year long-term delivery contracts for the supply of raw material for the production of mixed fodder. It follows from these two considerations that the Commission is not entitled to revoke or amend the denaturing premium at any time it pleases during the marketing year; the only exception would be where there was the threat of an unforeseeable disturbance in the market in maize and barley, in particular when the factors on which the premium had been fixed at the beginning of the year change greatly during the course of the year.

The denaturing premium for wheat comprises both compensation for the costs arising from the difference in price between wheat and barley (or maize) and the denaturing process itself and financial encouragement to denature. This encouragement is in fact the regulating factor making it possible, during the course of the marketing year, to arouse the interest of operators in cooperating in the annual programme of denaturing; alteration of the premium therefore should be limited to an alteration of this ‘incentive’ amount, without affecting the compensation for the costs.

a) As regards the validity of Regulation No 2859/73, it is right to observe that the Commission seeks to justify the reduction in the denaturing premium by stating that on the one hand the world market in common wheat had moved rapidly towards a tight situation and on the other hand the possibility of replacing barley by wheat gave rise to fears of large-scale intervention. The first point has no logical or objective connexion with the second. The temporary increase in prices on the world market in wheat at the end of the 1972/73 marketing year could not have had any effect on the level of Community prices and could have been controlled by means of the normal instrument of the organization of the markets constituted by the levy; moreover the situation of the world market was already known to the Commission at the time the denaturing premium was fixed by Regulation No 1897/73. The other finding of the Commission that since denatured wheat competed with barley in the fodder sector it could involve large-scale intervention in respect of barley, does not justify a reduction in the encouragement to denature wheat by a reduction in the premium. The quantities of wheat and barley from the 1973 harvest offered for intervention in the Federal Republic of Germany up to 31 October 1973 were some 45000 tons less than that offered during the same period of the previous year in spite of a much larger harvest. On 25 October 1973, the Commission found a surplus of common wheat representing more than 50 % of the annual requirements of the Community; this surplus could have been reduced only by denaturing. Moreover a reduction of the processing of wheat into fodder would necessarily have involved a corresponding increase in the purchase of wheat of bread-making quality by the intervention agencies, with financial results identical to those of denaturing. Finally, the factors on the basis of which the denaturing premium had been fixed in July 1973 had not changed in any way up to October 1973. The legal conditions allowing a reduction in the denaturing premium during the marketing year had obviously not been fulfilled at the time Regulation No 2859/73 was adopted; on the contrary, there is cause for thinking that the reduction was made basically for subjective reasons, in particular to effect savings. On this account the Commission is guilty of a misuse of powers.

b) As for Regulation No 175/74, it is proper to find that when it was issued there was no objective ground for abolishing the denaturing premium; it appears, on the contrary, that the Commission has been guided by considerations of an emotional and completely subjective nature giving rise to a misuse of powers. Legally, it is proper to bear in mind that Regulation No 175/74 does not simply alter the rate of the premium, which is alone lawful, but abolishes it, that is to say abolishes the whole of the annual programme of denaturing during the course of the marketing year. The legal terms of the authority provided for by the basic Regulation No 172/67 were thus exceeded. The reduction of the premium to zero constitutes excessive intervention in the arrangements which producers must necessarily make in the context of long-term planning as regards the composition of the various special fodders and the supply of the constituents of the mixture and the prices of the mixed fodder. To remove the industry's interest in denaturing during the 1973/1974 marketing year, the Commission should have been content with abolishing the ‘incentive’; the complete abolition of the premium, including the difference in prices and the compensation for the costs, exceeded the limits of the legal authority. The Commission thus violated the general principle of proportionality. While the annual plan was still in progress, the Commission could not put an end to it so brusquely, ignoring the arrangements made and putting the costs on the industrial undertakings. In a planned system of economic intervention, the public authority accepts, with regard to the industry affected by the planning and exposed to certain risks, the obligation of guaranteeing the implementation, execution and orderly development of the plan.

The Commission observes that as regards the concept of ‘threat of disturbance’ Article 4 (1) of Regulation No 172/67 authorizes preventative intervention and the concept of ‘disturbance’ cannot be equated with that of ‘serious and persistent difficulties on the markets’. The meaning of the concept of ‘disturbance’ of the cereal market in the context of the system of denaturing premiums appears from the general objective pursued, with regard to the organization of the market, from the denaturing premium and from the particular grounds for Regulation No 644/68. The denaturing of cereals of bread-making quality is not in itself an objective of the common organization of the cereal market; the denaturing premium is an exceptional intervention justified as a supplementary measure of alleviation where there are surpluses which cannot be disposed of by other means. Moreover the denaturing premium destines wheat of bread-making quality to an exceptional use which brings it into competition with other feed grains; the level of the premium influences the cost price of wheat used as fodder and determines its competitive position in relation to competing feed grains; from the financial point of view the subsidy for denaturing wheat must be limited. Finally, the denaturing premium must, by its nature and function, adapt to the situation of the market.

To determine whether in a particular case there is a ‘threat of disturbances’, the Commission must make a thorough analysis of the changing factors of the cereal market and make a forecast of its probable future state. In both cases it necessarily has a wide discretion; applying the case-law of the Court, the Regulations in issue in the main action would cease to be covered by the authority of Article 4 of Regulation No 172/67 only if the Commission had manifestly made a serious mistake in judging the position of the market or been guilty of an abuse of power.

a) The world wheat market during the 1972/1973 marketing year was characterized by limited supply in the face of a considerable growth in demand, large increases in price and serious reduction of stocks; this situation was aggravated still further during the 1973/1974 marketing year by international monetary problems, the oil crisis and insufficient shipping capacity. The grant of premiums for denaturing cereals fit for human consumption is subject to the existence of surpluses; on this point the Commission was obliged to revise its statement of resources and to limit the forced reduction of wheat stocks, carried out until then with the assistance of a relatively high denaturing premium, to go over to a policy of increased stocking. Moreover, the fact that Community prices of wheat had been overtaken by world prices and the increase in demand on the world market had largely deprived the denaturing premium of its other justification, that is of being a better and less onerous means than the other possibilities of disposal: Finally, the figures available at the time showed since the beginning of the marketing year a significant increase in denaturing in comparison with the previous year. All these considerations taken together justify the decision taken by the Commission, on the basis of the information which it had at the time, to reduce, by Regulation No 2859/73, the denaturing premium to an amount which, while still encouraging the denaturing of wheat, prevented the denatured quantities from taking on exaggerated proportions and menacing both the market in feed grains and the supply of wheat of bread-making quality.

b) The situation of the world wheat market, characterized by growing scarcity, uncertain supply possibilities and constantly increasing prices, became rapidly more serious until mid-January 1974: wheat prices reached record levels and the uncertainty of meeting the needs of imports was increased by reason of the cereal market being divided between cartels and the transport difficulties resulting from the lack of fuel. The Commission had therefore as a priority to endeavour to reserve wheat stocks in the Community for human consumption. Moreover, the relative prices of wheat, barley and maize had appreciably altered in relation to those of October 1973: wheat prices had greatly increased and this increase would have been even more marked by a reduction in the supply of wheat by denaturing; since the prices of barley and maize likewise greatly increased, and the difference between them and the price of wheat appreciably diminished, it was no longer necessary to apply to wheat the artificial means provided by the denaturing premium to make it competitive as a feed grain. In this situation the Commission decided not only to increase the restrictive measures on exporting wheat but also to abolish the denaturing premium after having found that even after the reduction of the premium in October 1973 large quantities of wheat had still been denatured. Regulations No 175/74 and No 2859/73 thus respected the conditions laid down in the enabling provision of Article 4 (1) of Regulation No 172/67.

B — Scope of Regulations Nos 285 9/73 and 175/74

The plaintiff considers that in any event the reduction in the premium by Regulation No 2859/73 could apply only to denaturing which has been formally notified to the intervention agency after 1 November 1973 and that the abolition of the premium by Regulation No 175/74 could affect only denaturing notified to the intervention agency after 10 February 1974.

Denaturing is not only a technical process; it must be regarded as a complex economic, commercial and industrial fact, which embraces a set of considerations and decisions relating in particular to animal feed, to the alteration of existing preparations, to co-operation with customers and to programming the manufacture and sale. This is the reason why Regulation No 172/67 considered that the existence of the premium must be known to possible beneficiaries as from the beginning of the marketing year to allow them to provide for the reasonable use of denatured common wheat. It is therefore right to take into account the steps taken by the beneficiaries; if such steps of a general nature should be protected, this applies particularly to such as relate especially to the individual operation of denaturing.

In addition to the provision of Regulation No 172/67, numerous national provisions, emanating from the German intervention agency, are applicable to the particular denaturing operation. The result is in particular that the denaturing undertaking is entitled as from formal notice to the intervention agency of the denaturing operation, to use the period comprised between the month in which the application is made and the end of the following month to do the technical mixing, since such mixing cannot be done until the time of sale.

The plaintiff in the main action satisfied the conditions laid down in Articles 2, 3 and 7 of Regulation No 172/67 to qualify for the denaturing premium. To refuse it to the plaintiff would be to infringe the prohibition against applying the law retrospectively.

Suddenly to reduce, indeed to abolish, the denaturing premium in respect of denaturing which has been completed or is still in progress is not objectively well-founded and the only result it has is to prejudice the undertakings concerned without furthering the public interest.

The Commission considers that the entitlement to the premium arises at the time when the denaturing has been duly completed and the amount to be paid is that applicable on the day when the denaturing has been effected; no derogation from these principles is provided for.

The Regulations purposely do not provide for fixing in advance the amount of a premium which would be applicable for a certain period and not subject to subsequent alteration: long-term guarantees, to be met even when the position of the market requires the abolition of the premium, cannot be justified in respect of an extremely sensitive market such as that of cereals.

Notification to the competent intervention agency of its intention to denature a certain quantity of wheat at a particular time and to receive the premium does not guarantee the denaturer a right to a particular premium; the intervention agency's agreement on the date on which the denaturing is to be carried out does not mean that the premium is fixed in advance: the sole purpose is to ensure official control of the operation and in any event Community rules adopted intentionally cannot be deprived of effect by a national measure.

The interpretation of the rules of Community law applicable to denaturing thus permits the inference, first, that the plaintiff was not entitled to an unaltered premium except for the quantities of wheat properly denatured under supervision before the entry into force of Regulations Nos 2859/73 and 175/74 respectively, and, secondly, that no importance can be attached to the fact that before the dates on which the said Regulations took effect the plaintiff notified its intention of carrying out a particular denaturing to the intervention agency for the purpose of checking and that the plaintiff received the agency's agreement.

As for the principle of the protection of the confidence of subjects, the Commission does not fully share the views expressed by the Court of Justice in its Judgment of 18 March 1975 in Case 78/74 (Deuka v Einfuhr- und Vorratsstelle für Getreide und Futtermittel); request for a preliminary ruling by the Hessischer Verwaltungsgerichtshof). No doubt it is right to take account as far as possible of the legitimate interests of the denaturer in the event of alteration of the premium; this is precisely why the Commission allowed a delay of several weeks between the publication of the Regulations in question and their entry into force, so as to allow a denaturing in progress to be completed on the original conditions. Moreover, contrary to what it appears the Court accepted, the rules with regard to the denaturing premium in no way allow the denaturer to count in the long term on the maintenance of the premium at an amount previously determined. Since the denaturing premium is an exceptional intervention measure, its grant and its amount can be altered according to the state of the market; protection of confidence cannot be invoked against alterations arising from the correct application of provisions made in accordance with established rules. Article 4 (1) of Regulation No 172/67 expressly states that the amounts of the premium may be adjusted at any time; the amount is, as far as the denaturer is concerned, an essentially variable factor so long as he has not proceeded to denature. The national intervention agency cannot assume obligations going beyond those in accordance with Community rules. Finally, there can be no question of legitimate confidence on the part of the denaturer in the payment of an unaltered premium when, as appears to be the case in the main action, the national intervention agency is requested to fix the date of checking at a time when it is already known that the original amount of the premium will no longer be granted at the anticipated date of denaturing.

The denaturer is not without protection. The principle of legality requires the Commission to respect the legal conditions provided for on an alteration of the amount of the premium and not to alter these amounts except in the event of a threat of disturbance; the legality of its action is subject to judicial control.

Additional protection for the denaturer should be contemplated only in cases where the premium is altered for reasons not anticipated under the rules in force and in particular when there are substantial alterations of the system of premiums itself.

The conditions laid down in the Judgment in Case 78/74 as not allowing the Commission to reduce the amounts of the premium in fact depend only on the convenience of the denaturer and are so easy to bring about that the Commission is no longer in practice in a position to fulfil its task or organizing the markets. Moreover every alteration of the premium is subject to legal control by the Court with regard to the date that it takes effect; the principle of proportionality requires the Commission to take account both of the general interests in as speedy a reduction as possible of the premium and of the legitimate interests of operators and to provide for a transitional period as a result. In the present case, in this spirit, the Commission has provided for transitional periods of several weeks.

The reductions in the premium made by Regulations Nos 2859/73 and 175/74 are therefore applicable without exception to all amounts of wheat denatured after the entry into force of these regulations.

III — Oral procedure

The plaintiff in the main action, represented by Karl Hinrichs, advocate of Duisburg, and the Commission of the European Communities, represented by its Legal Adviser, Peter Kalbe, submitted oral observations and replied to questions put by the Court at the hearing on 7 May 1975.

The Advocate-General delivered his opinion on 28 May 1975.

Law

1. By order dated 17 December 1974, filed at the Registry of the Court on 16 January 1975, the Verwaltungsgericht Frankfurt am Main put under Article 177 of the EEC Treaty four questions on the validity and, as a subsidiary question, the scope in point of time of Regulations No 2859/73 of the Commission of 19 October 1973 and No 175/74 of the Commission of 23 January 1974 amending Regulation No 1897/73 fixing the denaturing premium for common wheat for the 1973/1974 marketing year (OJ 1973, L 293, p. 31 and 1974, L 20, p. 28).

Questions 1 and 3 (substantive justification of Regulations Nos 2859/73 and 175/74)

2. The first question asks whether Regulation No 2859/73 reducing the denaturing premium on common wheat originally fixed for the 1973/74 marketing year is compatible with the second sentence of Article 4 (1) of Regulation No 172/67 of the Council of 27 June 1967 on general rules governing the denaturing of wheat (OJ p. 2602) as amended by Article 1 of Regulation No 644/68 of the Council of 29 May 1968 (OJ L 122, p. 3). The third question asks whether Regulation No 175/74 of the Commission of 23 January 1974, which fixes the amount of the denaturing premium at zero as from 10 February 1974, is compatible with the same provision.

3. It appears from the order of reference that the Verwaltungsgericht has doubts on the justification of the Regulations of the Commission with regard to the system established by the basic Regulation of the Council. In its opinion the power of amending the amount of the premium, fixed as a rule for the duration of the marketing year, must be exercised sparingly to allow the undertakings concerned to make their denaturing plans in a reasonable way. Further, the grounds of the Regulations of the Commission first of all reducing and then completely abolishing the premium during the marketing year are debatable.

4. Under Article 4 of Regulation No 172/67 of the Council as amended by Article 1 of Regulation No 644/68, the Commission may adjust the denaturing premium during the course of the marketing year ‘where the balance of the market in cereals is likely to be disturbed’. In order to meet the threat of disturbance, the Commission has wide discretion both as regards the possible factors of disturbance which it considers and the choice of means intended to meet it, which must be exercised in the light of the objectives of economic policy laid down by the basic Regulation in the matter, that is Regulation No 120/67 of the Council of 13 June 1967 on the common organization of the market in cereals (OJ p. 2269), in the context of the common agricultural policy. The discretion allowed to the Commission includes the power completely to suspend payment of the premium if the economic circumstances require. 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 powers.

5. The doubts raised by the national court reveal no evidence of such an error or misuse of powers. It is right to observe more particularly in this respect that in the grounds of the measures which it has taken, the Commission has been able to refer pertinently to the movement of the world cereal market, on which the Community market is largely dependent, having regard to the freedom of external trade. In the grounds of the Regulations challenged the Commission has referred to a growing pressure on the world market, particularly marked at the time of Regulation No 175/74. This pressure, according to the preamble to Regulation No 175/74, caused growing difficulties of supply and a tendency to increased prices. This movement involved the disappearance of import levies and required even the introduction of an export levy. In these circumstances it could appear as particularly contra-indicated artificially to cause quantities of wheat to move into the market in feed grains at a time when, because of the increased demand, the feed grain market offered more favourable sales possibilities for true feed grains, in particular barley, as is mentioned in the grounds of the Regulations challenged.

6. The examination of the questions raised has thus not revealed any factor capable of affecting the validity of Regulations Nos 2859/73 and 175/74.

Questions 2 and 4 (determination of the scope in point of time of Regulations Nos 2859/73 and 175/74)

7. The second question asks whether Regulation No 2859/73 applies also to denaturing which has been notified to the intervention agency in the form prescribed before 1 November 1973 — the date on which, under Article 1 of the Regulation, the alteration of the denaturing premium took effect — but in respect of which mixing was not done until a later date, albeit within the period prescribed for this purpose. The same question is raised in respect of Regulation No 175/74 as regards denaturing notified to the intervention agency before 10 February 1974 — the date from which, under Article 1 of the Regulation, the premium was abolished — but in respect of which the mixing was not done until a later date, albeit still within the period prescribed for this purpose.

8. The order of reference stresses in this respect the fact that, since all the arrangements had been made by the plaintiff in the main action for the purpose of the denaturing and the sale of the denatured wheat at the time the application was made to the intervention agency, the payment of a reduced premium and the total abolition of the premium would no longer in any have been able to achieve the objective aimed at by the Regulations in question. Further, the protection of confidence requires that the calculations of commercial operators based on the level of the premium in force at the time when the denaturing was begun, should not be upset without compelling reasons.

9. Article 4 of Regulation No 172/67 of the Council in its original form shows it as normal that denaturing operations should be determined on the basis of the annual cereal marketing year. This perspective was not fundamentally altered by Regulation No 644/68, Article 1 of which gives alterations of the denaturing system during a marketing year an exceptional character, since such alterations cannot be made except where there is a threat of disturbance in the market. It cannot therefore be considered abnormal for a denaturing undertaking to arrange its projects for the entire cereal marketing year.

10. Where, therefore there has been a commitment to denaturing before the expiry of the periods stipulated in Regulation Nos 2859/73 and 175/74 — respectively 1 November 1973 and 10 February 1974 — by the submission to the intervention agency of the application provided for by Article 4 (2) of Regulation No 172/67, relating to quantities of goods bought before the entry into force of one or the other of the Regulations referred to according to the case, it is right to apply, in the interests of legal certainty, for the computation of the amount of the denaturing premium, the provisions in force at the time the application was lodged, even if the technical mixing is not done until a subsequent date, albeit within the period prescribed by the intervention agency.

11. It is therefore right to reply to the second question that Regulation No 2859/73 cannot be applied to denaturing which has been notified to the intervention agency before 1 November 1973 in the form prescribed by it, but in respect of which the technical mixing has not been done until after 1 November 1973, albeit within the period prescribed for this purpose. It is right to say in answer to the fourth question that Regulation No 175/74 does not apply, in the same circumstances, to denaturing which has been notified to the intervention agency before 10 February 1974.

Costs

12. 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 Verwaltungsgericht Frankfurt-am-Main, costs are a matter for that court.

On those grounds, THE COURT in answer to the questions referred to it by the Verwaltungsgericht Frankfurt am Main by order dated 17 December 1974, hereby rules:

1 Examination of the questions raised has not revealed any factor capable of affecting the validity of Regulations No 2859/73 of the Commission of 19 October 1973 and No 175/74 of 23 January 1974, amending Regulation No 1897/73 of 11 July 1973 fixing the denaturing premium for common wheat for the 1973/74 marketing year.

2 Regulation No 2859/73 cannot be applied to denaturing which has been notified to the intervention agency before 1 November 1973 in the form prescribed by it, but in respect of which the technical mixing has not been done until after 1 November 1973, albeit within the period prescribed for this purpose.

3 Regulation No 175/74 does not apply, in the same circumstances, to denaturing which has been notified to the intervention agency before 10 February 1974.