JUDGMENT OF 25. 10. 1978 — CASE 125/77 KONINKLIJKE SCHOLTEN-HONIG v HOOFDPRODUKTSCHAP VOOR AKKERBOUWPRODUKTEN
In Case 125/77 REFERENCE to the Court under Article 177 of the EEC Treaty by the College van Beroep voor het Bedrijfsleven for a preliminary ruling in the action pending before that court between
THE COURT, composed of: H. Kutscher, President, J. Menens de Wilmars and Lord Mackenzie Stuart (Presidents of Chambers), A. M. Donner, P. Pescatore, M. Sørensen, A. O'Keeffe, G. Bosco and A. Touffait, Judges, Advocate General: G. Reischl Registrar: A. Van Houtte
gives the following
JUDGMENT
I — Facts and procedure
The facts, the procedure and the written observations submitted in pursuance of Article 20 of the Protocol on the Statute of the Court of Justice of the EEC may be summarized as follows:
1 The product at issue
Glucose having a high fructose content (‘isoglucose’) is a new natural sweetener made from starch of any origin but most frequently obtained from maize. This product, which appeared on the market in the Community countries in 1976, has sweetening properties comparable to those of sugar. However, in the present state of technical knowledge, isoglucose cannot be crystallized. It follows that its markets at the present time are limited to the food industries using sugar in liquid form: refreshing drinks, jams, biscuits, ice-creams etc. In these respects it competes with liquid sugar.
The plaintiffs in the main action in this case are starch manufacturers who have made heavy investments to allow them to produce isoglucose.
2. Community legislation
Council Regulation (EEC) No 2727/75 of 29 October 1975 on the common organization of the market in cereals (Official Journal 1975, L 281, p. 1) stated, in the preamble, that ‘in view of the special market situation for cereal starch, pou to starch and glucose produced by the “direct hydrolysis” process it may prove necessary to provide for a production refund of such a nature that the basic products used by this industry can be made available to it at a lower price than that resulting from the application of the system of levies and common prices’, and provided in Article 11 that:
‘1 . A production refund may be granted : (a) for maize and common wheat used in the Community for the manufacture of starch; (b) for potato starch; (c) for maize groats and meal used in the Community for the manufacture of glucose by direct hydrolysis; 2 … 3. The Council, acting by a qualified majority on a proposal from the Commission, shall adopt rules for the application of this article and fix the amount of the production refund.’
In application of that provision, the Council, by means of Regulation (EEC) No 2742/75 of 29 October 1975 (Official Journal L 281, p. 57), adopted implementing rules and fixed the various amounts of the production refunds.
By Regulation (EEC) No 1862/76 of 27 July 1976 (Official Journal 1976, L 206, p. 3) the Council amended Regulation No 2742/75, it being stated in the recital in the preamble to that regulation that: ‘… in view of the situation which will exist as from the beginning of the 1976/1977 marketing year, particularly as a result of the application for that marketing year of common prices for cereals and rice, it is necessary to increase the production refunds; … however, given the objectives of the production refund system, such an increase should not be retained in the case of products used in the manufacture of glucose having a high fructose content; … the best method of implementing a measure of this type is to provide for recovery from the manufacturers concerned of the amount of the increase in production refunds according to the product used.’
Under Article 1 the refunds are increased.
However, under Article 2 of that regulation a new article, Article 5 a, is added to Regulation (EEC) No 2742/75, reducing the production refund for only one product processed from starch, glucose having a high fructose content. In fact the amount of the refund for starch processed into that product is maintained at the level of that of the previous marketing year and is totally abolished as from the 1977/1978 marketing year.
Under Article 5 a (3) the Member States must recover from manufacturers of glucose having a high fructose content the difference between the amount of the production refund for starch processed into glucose having a high fructose content and the amount for starch used for any other purpose.
By Regulation (EEC) No 2158/76 of 31 August 1976 (Official Journal 1976, L 241, p. 21) laying down rules for the application of Regulation (EEC) No 2742/75, the Commission adopted implementing provisions.
3. The main action
Koninklijke Scholten-Honig N.V. and De Verenigde Zetmeelbedrijven De Bijenkorf B.V. companies incorporated under Netherlands law, appealed to the College van Beroep voor het Bedrijfsleven, The Hague, from a decision of the Hoofdproduktschap voor Akkerbouwprodukten, the Netherlands intervention agency, by which that agency claimed from the companies, in pursuance of the provisions of Council Regulation (EEC) No 1862/76 and its implementing regulation, Commission Regulation (EEC) No 2158/76, the amount of Fl. 36135.06 by way of levy relating to the processing, carried out during the period from 1 August to 31 October 1976 inclusive, of maize starch into glucose having a high fructose content.
By decision of 12 October 1977 the College van Beroep voor het Bedrijfsleven stayed the proceedings on appeal pending a preliminary ruling from the Court of Justice on the following questions:
‘1. Must it be held that the reasons on which Article 2 of Council Regulation (EEC) No 1862/76 is based are not stated in accordance with the requirements of Article 190 of the Treaty and if so does it follow that Article 2 — Article 5a of Council Regulation (EEC) No 2742/75 — is not binding? 2. Is the said Article 2 incompatible with the principle of non-discrimination which is fundamental to the Treaty and which is set out, in particular, in Article 40 of the Treaty and is Article 2 not binding for that reason? 3. Does Regulation (EEC) No 1862/76 contain an amendment to the system of granting refunds to the starch industry, which amendment, either of itself or because of the fact that it was suddenly introduced into the aforementioned system which has been applicable since 1967, is incompatible with the principle of legal certainty fundamental to the Treaty and if so is that regulation not binding in whole or in part, namely in so far as it makes provision for the said amendment? 4. Have the Council and the Commission, by adopting Regulation (EEC) No 1862/76 and Regulation (EEC) No 2158/76 respectively, misused their powers in that, in adopting those regulations, they pursued objectives other than those inherent in Regulation (EEC) No 2727/75, particularly because by those regulations they introduced the aforementioned change in the system of production refunds with the aim of helping the sugar industry which aim was not and is not proper to Regulation (EEC) No 2727/75 on the common organization of the market in cereals? 5. Must Article 4 of Commission Regulation (EEC) No 2158/76 be interpreted as meaning that, taking account of the provisions of Regulation (EEC) No 1862/76, those refunds in respect of the manufacture of glucose with a high fructose content which were granted in the period from 1 August to 3 September 1976, on which latter date the regulation entered into force, may be recovered on the basis of the provisions of the said regulation and those of Regulation (EEC) No 1862/76, and if so, must it follow that Regulation (EEC) No 2158/76 is not binding in whole or in part, namely in so far as it makes provision for the recovery of refunds as mentioned above?’
The decision for reference was registered at the Court on 19 October 1977.
On hearing the repon of the Judge-Rapporteur and the views of the Advocate General the Court decided to open the oral procedure without any preparatory inquiry.
II — Summary of the observations submitted under Article 20 of the Protocol on the Statute of the Court of Justice of the EEC
Koninklijke Scholten-Honig N.V., one of the plaintifs in the main action, takes the view that in adopting Regulation No 1862/76 and Regulation No 2158/76 the Council and the Commission committed a breach of the following principles of Community law:
a) the duty to state the reason on which regulations are based (Article 190 of the Treaty);
b) the prohibition of any discrimination between producers within the Community (second subparagraph of Article 40 (3) of the Treaty);
c) the principle of legal certainty;
d) the prohibition of abuse of powers.
1. Failure to state sufficiently the reasons on which the regulations are based
With reference in particular to the judgment of the Court in Case 5/67 — Beus v Hauptzollamt München [1968] ECR 83 — the plaintiff in the main action points out that although the requirements are less strict than in the case of decisions, the statement of the reasons on which a regulation is based must at least indicate, on the one hand the general situation which led to its adoption and, on the other hand, the general objectives the attainment of which it proposes.
The plaintiff points out that Regulation No 1862/76 makes a distinction between isoglucose and the other end products of starch manufacture. It thus marks a departure from the policy which the Council and the Commission had hitherto consistently followed from 1967 onwards inasmuch as no distinction was made as regards the application of production refunds in respect of any of the products of starch manufacture.
The system of production refunds goes back not only to competition with substitution products within the Common Market but also and above all to competition with starch manufacture outside the Common Market. The distinction made in the substitution system according to the end product of starch manufacture thus constitutes a policy change of great importance for the industry.
However, the reasons for this change do not emerge either from the preamble to Regulation No 1862/76 or from the recitals in the preamble to or the provisions (in particular those of Article 11 (3)) of Regulation No 2727/75 to which the recitals of Regulation No 1862/76 refer.
The plaintiff draws the conclusion that Regulation No 1862/76 does not sufficiently sute the reasons on which it is based since it does not set out the whole of the circumstances which led to its adoption.
As regards Commission Regulation No 2158/76 the plaintiff points out that the regulation is not an independent piece of legislation. The system laid down by the regulation would as a matter of substance lose all meaning if Regulation No 2742/75 were not amended by Anide 2 of Regulation No 1862/76. Hence the fact that Commission Regulation No 2158/76 thus depends on Council Regulation No 1862/76 means in the plaintiffs submission that it is unnecessary to sute separate reasons for which the Commission regulation is hull and void.
2. Breach of the principle of equality of treatment for all Community citizens
The plaintiff states that apart from the fact that it is recognized as a general principle of law, the rule of non-discrimination is inter alia enshrined in the Treaty, as far as agriculture is concerned in Article 40 (3), which provides that any discrimination between producen or consumers within the Community shall be excluded.
In his opinion on the milk-powder cases (Cases 83 and 94/76, 4 and 15/77, 114, 116, 119 and 120/76) Mr Advocate General Capotorti expressed himself as follows as regaras discrimination referred to in the second subparagraph of Article 40(3):
‘The question of discrimination within the meaning of that provision concerns the relationship between persons who, apart from belonging to the same category (that of producers or that of consumers) are engaged in the same activity or in similar or competing activities’ ([1977] ECR 1230).
The distinction made by Regulation No 1862/76 between starch producers by placing starch producers manufacturing isoglucose in a special category, constitutes a discrimination within the meaning of Article 40 (3) of the Treaty. All starch producers are in fact part of the same category and carry on the same activities or at least similar or competing activities.
3. The principle of legal certainty
The plaintiff points out that the sudden change of policy revealed in Regulation No 1862/76 is a breach of the principle of legal certainty. In fact it emerges from an analysis of the policy of the Council and of the Commission in the matter of production refunds for starch production that the production refund system already figured in the first regulation in 1967 on the organization of the markets in cereals and that the system has remained in force without modification until the summer of 1976 without any indication to the starch industry that it was possible for the system to be modified in a discriminatory manner.
4. Misuse of powers
According to the plaintiff the modification in the system of production refunds effected by Regulation No 1862/76 was intended to be of assistance to the sugar industry. This may be clearly deduced from Regulation No 1111/77 which imposes a production levy on isoglucose manufacturen.
If the Council and the Commission felt it necessary to adopt measures for the protection of the sugar industry they could have done so in all sorts of ways by modifying the system applicable to sugar. On the other hand they had no right to interfere in a discriminatory manner with the production refunds system applicable to starch products and thus to commit a breach of legal certainty.
The plaintiff takes the view that the questions referred to the Court by the College van Beroep voor het Bedrijfsleven call for the following answers:
1) The statement of the reasons on which Article 2 of Council Regulation No 1862/76 are based is not in conformity with Article 190 of the Treaty, with the result that Article 2 — Article 5a of Regulation No 2742/75 of the Council — has no binding effect.
2) Anide 2 of Council Regulation No 1862/76 is contrary to the principle of non-discrimination which is one of the foundations of the Treaty and which finds expression in particular in Article 40 thereof.
3) The modification of the system for the grant of refunds as regards starch production, as effected by Regulation No 1862/76 is contrary to the principle of legal certainty which is one of the foundations of the Treaty.
4) In adopting Regulation No 1862/76 and Regulation No 2158/76 the Council and the Commission respectively were guilty of a misuse of powers.
5) Commission Regulation No 2158/76 of 31 August 1976 laying down rules for the application of Regulation (EEC) No 2742/75 is not an independent regulation. If Article 2 of Regulation No 1862/76 has no binding effect the Commission regulation by the same token loses all meaning.
Observations submitted by the Council
The Council limits its observations to the questions relating to the validity of Regulation No 1862/76.
1. Lack of statement of reasons
As this regulation is part of a complex of regulations the statement of the reasons on which it is based must be assessed, according to the Council, in the context of that complex (cf. Case 78/74, Deuka v Einfuhr- und Vorratsstelle Getreide [1975] ECR at p. 431.
The complex of which Regulation No 1862/76 forms part is principally constituted by the basic cereals Regulation No 2727/75, the basic rice Regulation No 1418/76 and Regulation No 2742/75 on production refunds in the cereals and rice sectors. It appears from the statement of the reasons on which this complex of regulations is based that the primary objective of production refunds is to eliminate the disadvantages in respect of the cost price relating to the raw material which as far as the starch production industry is concerned is the result of the common agricultural policy, so as to permit that industry to maintain competitive prices as against the prices for chemical substitution products.
The Council therefore took the view, when it expressed as it did the reasons on which Regulation No 1862/76 was based, that isoglucose was a product not in competition with chemical substitution products and that hence the reason for the application of refunds for the prod ucts in question, in so far as such products were intended for the manufacture of isoglucose, no longer existed.
2. Breach of the rule of non-discrimination
The Council refers to the judgment of the Court in Joined Cases 124/76 and 20/77 of 19 October 1977 ([1977] ECR at p. 1811) and points out in. particular that the above-mentioned rule requires that similar situations shall not be treated differently unless differentiation is objectively justified (paragraph 17 of the decision). Comparability of situations might appear in particular from the fan that the products, one of which has the benefit of a Community aid whilst the other does not, may be substituted one for the other for the purposes of their application (paragraph 18 of the decision). It is common ground that the two products (isoglucose and glucose) which the plaintiffs claim are being subjected to discriminatory treatment under Regulation No 1862/76, are not products which may be substituted one for another for the purposes of their application.
Even if it were possible for isoglucose and certain other products of the starch industry to be substituted one for another, the different treatment of isoglucose is justified in particular by the objective fact that that product does not suffer competition from chemical substitution products and that hence there is no ground for subsidizing the raw materials on which the product is based.
3. Breach of the principle of legal certainty
The Council claims that it is quite impossible to take the view that the above-mentioned principle requires that an advantage once granted can never be eliminated or even modified so that, for example, account could never be taken of a change in the conditions and circumstances on the basis of which the advantage was granted. In this connexion and having regard to the optional nature of refunds and the discretion vested in the Council by virtue of Regulation No 2742/75, a review by the Court should be limited to an appreciation of whether an overt error or a misuse of powers was to be imputed to the Community authorities. It is only in this context that the concept of an ‘acquired right’ or of the protection of legitimate expectation could play a part, namely to afford protection by virtue of the principle of legal certainty.
First of all it should be noted that an acquired right in the maintenance of a set of rules has never been recognized by the Court. On the other hand, a legitimate expectation in the maintenance of the system of refunds is countered by the optional nature of the system and the margin of discretion which the system vests in the Council.
4. Misuse of powers
The production refund as far as isoglucose is concerned does not comply with the principal objective of the refund system. According to the Council misuse of powers might rather be found if such refunds were to be maintained in any conceivable circumstances.
In conclusion the Council suggests that the Court should reply to the College van Beroep voor het Bedrijfsleven that consideration of the questions raised has disclosed no well-founded objections to Regulation No 1862/76.
Observations submitted by the Commission
1. Defective statement of reasons (first question)
2. Breach of the principle of nondiscrimination (second question)
The Commission's observations with regard to the above-mentioned submissions are essentially the same as those which it submitted with regard to the same submissions in Case 103/77 (Royal Scholten-Honig (Holdings) Ltd, v Intervention Board for Agricultural Produce).
3. Breach of the principle of legal certainty (third question)
The Commission points out in particular that Regulation No 2727/75, the basic regulation for cereals, does not grant starch producen the right to continue to benefit from production refunds. In fact, Article 11 of the said regulation is limited to declaring that such a refund may be granted. Regulation No 1862/76 cannot therefore amount to disregard either of acquired rights on the pan of starch producen to the maintenance of the system in favour of starch processed into isoglucose or of the legitimate expectation of such traden that the said system would be maintained.
4. Misuse of powers (fourth question)
Referring to the case-law of the Court (in particular its judgment in Case 1/54, Government of the French Republic v High Authority [1954-1956] ECR) the Commission points out that there is a misuse of powers when an authority uses its legal powers to attain an objective other than that for which the powers were granted.
It would be difficult to criticize the Council on the ground that, when it adopted the implementing provisions for Article 11 of Regulation No 2727/75 and the amounts of the refunds it had eliminated the refunds when it thought that they were not necessary to attain the objective aimed at by the system. Furthermore even if the Council also based the steps which it took on a further reason, namely that it was important to avoid any disturbance in the sugar market, the regulation in question cannot be considered as being vitiated by misuse of powers.
5. Fifth question
This question clearly relates to the question of the retroactive nature of Regulation No 2158/76. The regulation is not retroactive in itself. In fact Article 5a (3) of Regulation (EEC) No 2742/75, as amended by Article 2 of Regulation No 1862/76, which entered into force on 1 August 1976, states that the Member States shall recover the difference between the production refunds for starch paid in 1976/77 and the unmodified refunds for 1975/76 applicable to starch intended for the manufacture of isoglucose.
Conclusion
The Commission submits that the questions referred to the Court by the College van Beroep call for the following answer:
‘Consideration of the questions raised has disclosed no factors of such a kind as to affect the validity of Regulations Nos 1862/76 and 2158/76.’
III — Oral procedure
At the hearing on 24 May Koninklijke Scholten-Honig N.V., represented by D.J. Gijlstra of the Amsterdam Bar and M. Waller, the Council of the European Communities, represented by its Agent, Daniel Vignes, assisted by A. Brautigam and D. G. Lawrence, members of its Legal Department, and the Commission of the European Communities, represented by its Agents, J. H. J. Bourgeois and R. Wainwright, assisted by H. Bronkhorst and J. Delmoly, members of its Legal Department, presented oral argument.
The Advocate General presented his opinion at the hearing on 20 June 1978.
Decision
1. By a decision of 12 October 1977, which was received at the Court on 19 October 1977, the College van Beroep voor het Bedrijfsleven, pursuant to Article 177 of the Treaty, referred to the Court of Justice various questions concerning the validity of Council Regulation (EEC) No 1862/76 of 27 July 1976 amending Regulation (EEC) No 2742/75 on production refunds in the cereals and rice sectors (Official Journal 1976, L 206, p. 3) and also the validity and interpretation of Commission Regulation (EEC) No 2158/76 of 31 August 1976 laying down rules for the application of Regulation (EEC) No 2742/75 (Official Journal 1976, L 241, p. 21).
2. The reference by the national court shows that the plaintiff companies in the main action appealed against a decision of the Hoofdproduktschap voor Akkerbouwprodukten, the Netherlands intervention agency, by which that agency claimed, in pursuance of the provisions of Council Regulation (EEC) No 1862/76 and of Commission Regulation (EEC) No 2158/76 payment of a levy applicable to the processing, carried out during the period from 1 August to 31 October 1976 inclusive, of maize starch into glucose having a high fructose content.
3. The file shows that the plaintiffs before the national court are starch producers who manufacture isoglucose, a glucose syrup having a high fructose content, the sale of which on the Community market in appreciable quantities goes back only to 1976 and which is manufactured from starch obtained from various cereals but most frequently from maize, a substantia] part of which is imported from non-member countries.
4. Although isoglucose has in many respects the same characteristics as cane or beet sugar it differs in certain respects from the two latter products especially inasmuch as, in the present sute of technical knowledge, it cannot be crystallized and at present can only compete with sugar in industries using sugar in a liquid from.
5. In order to assess the validity of Regulations Nos 1862/76 and 2158/76 it is appropriate to examine in the first place the legal situation as it existed prior to the entry into force of those regulations in the matter of the system of production refunds in the cereals sector.
6. According to the ninth recital in the preamble to Regulation (EEC) No 2727/75 of the Council of 29 October 1975 on the common organization of the market in cereals (Official Journal 1975, L 281, p. 1): ‘In view of the special market situation for cereal starch, potato starch and glucose produced by the “direct hydrolysis” process it may prove necessary to provide for a production refund of such a nature that the basic products used by this industry can be made available to it at a lower price than that resulting from the application of the system of levies and common prices’.
7. Article 11 (1) of the regulation provides that a production refund ‘may be granted : (a) for maize and common wheat used in the Community for the manufacture of starch; (b) for potato starch ; (c) for maize groats and meal used in the Community for the manufacture of glucose by direct hydrolysis.’
8. Under Article 11 (3) the Council, acting by a qualified majority on a proposal from the Commission, is to adopt rules for the application of the article and fix the amount of the production refund.
9. In pursuance of that provision the Council adopted Regulation No 2742/75 of 29 October 1975 on production refunds in the cereals and rice sectors (Official Journal L 281, p. 57) by which, on the basis in particular of ‘an assessment of the situation resulting from the level of common prices and from the competition between, on the one hand, maize starch, rice starch and potato starch and, on the other, the substitute chemical products’ (second recital in the preamble to the regulation), it fixed the amounts of the production refund for those products.
10. By Regulation (EEC) No 1862/76, which entered into force on 1 August 1976, the Council amended Regulation (EEC) No 2742/75 having regard to the fact that ‘in view of the situation which will exist as from the beginning of the 1976/77 marketing year, particularly as a result of the application for that marketing year of common prices for cereals and rice, it is necessary to increase the production refunds; … however, given the objectives of the production refund system, such an increase should not be retained in the case of products used in the manufacture of glucose having a high fructose content; … the best method of implementing a measure of this type is to provide for recovery from the manufacturers concerned of the amount of the increase in production refunds, according to the product used’.
11. Although, in pursuance of Article 1 of that regulation, production refunds were increased, Article 2, which added a new Article 5a to Regulation No 2742/75, laid down special rules as regards the production refund for only one product processed from starch, glucose having a high fructose content.
12. According to that article the amount of the refund for starch processed into that product is maintained at the level of that of the previous marketing year and is abolished as from the 1977/78 marketing year.
13. Under the new Article 5a (3) the difference between the amount of the production refund for starch processed into glucose having a high fructose content and the amount for starch used for any other purpose is to be recovered by Member States from manufacturers.
14. Therefore, in the case of products used subsequently for the manufacture of glucose having a high fructose content, Article 2 of Regulation No 1862/76 by using the expedient of ‘recovery’ in fan refused the increase in the production refund for the 1976/77 marketing year and abolished it as from the following marketing year.
15. The Commission by enacting Regulation No 2158/76 adopted certain provisions for implementing the new Article 5a of Regulation No 2742/75.
16. Pursuant to Article 4 of Regulation No 2158/76 those provisions entered into force on 3 September 1976 and were applicable as from 1 August 1976.
17. The national court by its first question asks whether Article 2 of Regulation No 1862/76, which adds Article 5a to Regulation No 2742/75 is invalid because there is no statement of the reasons upon which it is based.
18. The reasons on which Article 2 of Regulation No 1862/76 in based, in so far as they emerge from the preamble to that regulation, are limited to the mere statement that, ‘given the objectives of the production refund system, such an increase should not be retained in the case of products used in the manufacture of glucose having a high fructose content’.
19. However, the statement of reasons, laconic as it is, even omitting to mention the abolition of refunds for the manufacture of that product, must nevertheless be examined and assessed in the context of the whole of the rules of which Regulation No 1862/76 forms an integral part.
20. The statements quoted above from the preambles to Regulations Nos 2727/75 and 2742/75 show that the primary objective of production refunds, as regards the market in starches, is to abolish the disadvantage to which the starch industry is subjected by reason of the application of common prices for the raw materials used by the industry and to enable it to maintain competitive prices in comparison with the prices of substitute chemical products.
21. When considered in the context of the system in which they took effect, the refusal to increase the refund and its subsequent elimination for starch intended for the manufacture of isoglucose, a product which is not or is hardly in competition with substitute chemical products, may be explained by the nature of the above-mentioned objectives of the system of production refunds to which reference is made in the preamble to Regulation No 1862/76.
22. That reference to the purposes of the refund system, which moreover are well known to the circles concerned, satisfies the requirement under Article 190 of the Treaty for a statement of reasons and thus the validity of Regulation No 1862/76 cannot be challenged on those grounds.
23. The national court in its second question asks whether Article 2 of Regulation No 1862/76 is incompatible with the principle of non-discrimination which is fundamental to the Treaty and which is set out in particular in Article 40 of the Treaty and whether Article 2 of the regulation is for that reason invalid.
24. Koninklijke Scholten-Honig N.V., the only one of the plaintiffs which has submitted observations, lays particular stress on the fan that when Regulation No 1862/76 puts manufacturers of starch for the production of isoglucose into an exceptional situation, it discriminates between the latter and the manufacturers of starch for other purposes.
25. The second subparagraph of Article 40 (3) of the Treaty provides that the common organization of agricultural markets ‘shall exclude any discrimination between producers or consumers within the Community’.
26. The prohibition of discrimination laid down in the above-mentioned provision is mereley a specific enunciation of the general principle of equality which is one of the fundamental principles of Community law.
27. This principle requires that similar situations shall not be treated differently unless the differentiation is objectively justified.
28. It must therefore be ascertained whether isoglucose is in a situation comparable to that of other products of the starch industry, in particular in the sense that they can be substituted for isoglucose in the specific use to which the latter product is normally put.
29. It is clear that there is no competition between starch and isoglucose or between isoglucose and the other products derived from starch except possibly glucose.
30. It emerges from the file that the considerable differences in the sweetening powers of isoglucose on the one hand and glucose on the other mean that the two products have different applications so that they cannot be in a comparable competitive situation with regard one to the other.
31. Furthermore as isoglucose is a product which is at least partially interchangeable with sugar, the maintenance of the production refund in favour of manufacturers of isoglucose might at a subsequent stage have constituted discrimination against manufacturers of sugar who, for their pan, do not enjoy an equivalent advantage.
32. Hence Article 2 of Regulation No 1862/76 does not infringe the rule of non-discrimination between Community producers set out in the second subparagraph of Article 40 (3) of the Treaty.
33. The national court asks in the third question whether the alteration effected by Regulation No 1862/76 in the system of granting refunds to the starch industry is incompatible with the principle of legal certainty, and, if so, whether the said regulation is in whole or in part invalid, in so far as it makes provision for the said alteration.
34. The plaintiff company referred to above lays particular stress on the fact that the sudden change of policy effected by Regulation No 1862/76 conflicts with the principle of legal certainty.
35. It claims that in fact the system of production refunds dates back as far as Regulation No 120/67 of the Council of 13 June 1967 (Official Journal, English Special Edition 1967, p. 33), which was the first regulation on the common organization of the market in cereals, and that it has remained in force without being amended until the adoption of Regulation No 1862/76 without the Community authorities' having given any indication that there might be a change of policy as far as the granting of refunds is concerned.
36. It is stated that some of the starch manufacturers, relying with legal justification on the maintenance of this policy, have invested capiul in the manufacture of isoglucose even before Regulations Nos 2727/75 and 2742/75 were adopted.
37. According to a generally accepted principle the laws amending a legislative provision apply, unless otherwise provided, to the future consequences of situations which arose under the former law.
38. It is necessary to call attention in the first place to the fact that isoglucose, a product which moreover was not in existence at the time of the adoption of Regulation No 120/67, which brought into force a compulsory system of production refunds, does not fall within the category of products which this system is designed to help.
39. Furthermore when isoglucose appeared in appreciable quantities on the Community market the system of refunds, as may be seen from Article 11 of Regulation No 2727/75, was only optional.
40. Moreover, as far as concerns the complaint that the change in the system of production refunds was introduced suddenly, it is advisable to bear in mind that pursuant to the provisions of Article 2 of Regulation No 1862/76 the amount of the refund for starch processed into isoglucose was retained but not increased for the 1976/77 marketing year before being abolished as from the following marketing year.
41. The arguments with regard to legitimate expectation therefore have no foundation.
42. The national court asks in the fourth question whether the Council and the Commission, by adopting Regulations Nos 1862/76 and 2158/76 respectively, have misused their powers by altering the system of production refunds with a view to helping the sugar industry — which was not one of the objectives of Regulation No 2727/75 on the common organization of the market in cereals.
43. In formulating the Common Agricultural Policy the institutions are entitled to take account of the interplay of different markets.
44. Therefore the Council and the Commission could lawfully take into consideration the risk that production refunds in respect of starch for the manufacture of isoglucose might disturb the sugar market, although the said refunds did not appear to be necessary for attainment of the objectives of the organization of the market in cereals.
45. There can therefore be no question of a misuse of powers on the pan of the Council or the Commission.
46. Commision Regulation No 2158/76, pursuant to Article 4 thereof, entered into force on 3 September 1976 but was applicable as from 1 August 1976.
47. The fifth question asks whether, having regard to this fact, Article 4 of Commission Regulation No 2158/76 must be interpreted as meaning that, taking account of the provisions of Regulation No 1862/76, those funds in respect of the manufacture of glucose with a high fructose content which were granted in the period from 1 August to 3 September 1976 may be recovered on the basis of the provisions of Regulation No 2158/76 and of those of Regulation No 1862/76, and, if so, whether it must follow that Regulation No 2158/76 is invalid in whole or in part, namely in so far as it makes provision for the recovery of refunds as mentioned above.
48. The duty of Member States to recover the difference between the production refunds for starch paid in the 1976/77 marketing years and the refunds applicable to starch for the manufacture of isoglucose is derived from the provisions of Article 2 of Regulation No 1862/76 which entered into force on 1 August 1976.
49. The detailed rules for the application of Regulation No 1862/76 were adopted by Regulation No 2158/76.
50. Regulation No 2158/76 which entered into force on 3 September 1976 but which was applicable as from 1 August 1976, the date on which, in pursuance of Regulation No 1862/76, the Member States' duty to recover the above-mentioned difference took effect, means that the detailed rules for the taking effect of that duty correspond to it in point of time.
51. The first pan of the fifth question should therefore be answered in the affirmative and the answer to the second pan should be that the validity of Regulation No 2158/76 cannot be called in question on the ground that the regulation takes effect as from 1 August 1976.
Costs
52. The costs incurred by the Council of the European Communities and the Commission of the European Communities which have submitted observations to the Court are not recoverable.
53. As these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the national court, the decision as to costs is a matter for that court.
On those grounds, THE COURT in answer to the questions referred to it by the College van Beroep voor het Bedrijfsleven by a decision of 12 October 1977, hereby rules:
1 Consideration of the questions raised has disclosed no factor of such a kind as to affect the validity of Council Regulation (EEC) No 1862/76 of 27 July 1976 and Commission Regulation (EEC) 2158/76 of 31 August 1976.
2 By virtue of Article 4 of Regulation (EEC) No 2158/76 in conjunction with Articles 2 and 3 of Regulation (EEC) No 1862/76 the provisions of Regulation (EEC) No 2158/76, which lay down detailed rules for the recovery of production refunds paid for the manufacture of isoglucose, apply to refunds paid in the period from 1 August 1976 to 3 September 1976.