JUDGMENT OF 29. 3. 1979 — JOINED CASES 131 AND 150/78 BECHER v BUNDESANSTALT FÜR LANDWIRTSCHAFTLICHE MARKTORDNUNG

In Joined Cases 131/78 and 150/78

THE COURT (Second Chamber) composed of: Lord Mackenzie Stuart, President of Chamber, P. Pescatore and A. Touffait, Judges, Advocate General: G. Reischl Assistant Registrar: J. A. Pompe

gives the following

JUDGMENT

Facts and Issues

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

I — Facts and procedure

A — Case 131/78

Under the first subparagraph of Article 5 (1) of Regulation No 120/67/EEC of the Council of 13 June 1967 on the common organization of the market in cereals (Official Journal, English Special Edition 1967, p. 33), a threshold price is fixed in respect of common wheat in such a way that the selling price for the imported product on the Duisburg market is the same as the target price, differences in quality being taken into account. The target prices of the cereals were fixed for the 1975/76 marketing year by Regulation No 666/75 of the Council of 4 March 1975 (Official Journal L 72, p. 16). The target price in respect of common wheat was fixed at 139.44 units of account per tonne.

According to the first recital of the preamble to Regulation (EEC) No 1173/75 of the Council of 28 April 1975 fixing the threshold prices for cereals for the 1975/76 marketing year (Official Journal L 117, p. 6), the objective of Article 5 (1) of Regulation No 120/67/EEC is attained by deducting from the target price the most advantageous transport costs between Rotterdam and Duisburg, transhipment charges at Rotterdam and a trading margin.

Under the Sole Article of Regulation No 1173/75, the threshold price of common wheat was fixed at 136.45 units of account per 1000 kilograms for the 1975/76 marketing year.

According to a working document drawn up by the services of the Commission for the purpose of its proposal for the fixing of the threshold prices submitted to the Council, the threshold price is made up as follows:

1) Basic target price: 139.44

2) Freight rate from Rotterdam to Duisburg Ø of the two most favourable months: 1.30

3) Import margin: 1.20

4) Transhipment charges (sea-going vessel/river vessel): 0.50

5) Threshold price calculated: 136.44

6) Threshold price fixed: 136.45

The marketing costs (which are equal to the difference between the target price and the threshold price) were therefore fixed at a standard rate of 2.99 units of account for the 1975/76 marketing year.

In August 1975 Firma Kurt A. Becher, Bremen, obtained from the Bundesanstalt für Landwirtschaftliche Marktordnung, the German intervention agency in matters concerning the common agricultural policy, an import licence for 300 tonnes of common wheat. In this licence the rates of the levy for the import months of August, September and October 1975 had been fixed in advance.

Firma Kurt A. Becher brought an action before the Seventh Senate of the Hessisches Finanzgericht [Finance Court for the Land of Hesse] in Kassel against the amount of the rates of the levy fixed in advance. It claimed that the levy was fixed at too high a level because the threshold price in Regulation No 1173/75 had been fixed at too high a level in infringement of the objectives of Regulation No 120/67/EEC owing to the fact that insufficient account had been taken of ‘preliminary costs’.

By order of 3 May 1978 the Seventh Senate of the Hessisches Finanzgericht decided to stay the proceedings and to refer to the Court of Justice under Article 177 of the EEC Treaty the following question for a preliminary ruling:

‘Is Regulation (EEC) No 1173/75 of the Council of 28 April 1975 fixing the threshold prices for cereals for the 1975/76 marketing year (Official Journal 1975 L 117, p. 6) invalid and therefore inapplicable in so far as it relates to common wheat because it infringes Article 5 (1) of Regulation No 120/67/EEC of the Council of 13 June 1967 (Official Journal, English Special Edition 1967, p. 33), as last amended by Regulation (EEC) No 85/75 (Official Journal 1975 L 11, p. 1)?’

The order was entered on the Court Register on 9 June 1978.

B — Case 150/78

There is no target price in respect of sorghum and the other products listed in Article 1 (a) of Regulation No 120/67/EEC. The threshold price is fixed in accordance with Article 5 (2) of the regulation in such a way that the price for those cereals mentioned in paragraph (1) which are in competition with the products listed in Article 1 (a) reaches the target price on the Duisburg market.

As regards sorghum, which is not a cereal indigenous to Europe, Article 5 (2) of Regulation No 120/67/EEC indicates that the threshold price of that product must be fixed in such a way that the products which are in competition, in other words maize and barley, reach the target price on the Duisburg market.

Under the Sole Article of Regulation No 1427/74 of the Council of 4 June 1974 fixing the threshold prices for cereals for the 1974/75 marketing year (Official Journal L 151, p. 1), the threshold price of sorghum was fixed for that marketing year at 105.55 units of account per 1000 kilograms.

In July 1974, Firma Kurt A. Becher obtained from the Bundesanstalt für landwirtschaftliche Marktordnung an import licence for 6500 tonnes of sorghum. In that licence the rates of levy applicable to the months of July, August and September, which had been planned for the import transactions, were fixed in advance.

By an action brought before the Seventh Senate of the Hessisches Finanzgericht, that undertaking contested the amount of the rates of levy fixed in advance. It claimed that the levy had been fixed at too high a level since Regulation No 1427/74, on the basis of which the rates of levy were calculated, had fixed the threshold price incorrectly. In fact, by taking insufficient account of the preliminary costs (Vorkosten) the threshold price was fixed in breach of the objectives of Regulation No 120/65/EEC. If adequate account had been taken of those costs the threshold price should have been fixed at a lower level which would have resulted in a smaller levy.

By order of 6 June 1978, the Seventh Senate of the Hessisches Finanzgericht decided to stay the proceedings and to refer to the Court of Justice under Article 177 of the EEC Treaty the following question for a preliminary ruling:

‘Is Regulation (EEC) No 1427/74 of the Council of 4 June 1974 fixing the threshold prices for cereals for the 1974/75 marketing year (Official Journal 1974 L 151, p. 1) invalid and therefore inapplicable in so far as it relates to sorghum because it infringes Article 5 (1) of Regulation No 120/67/EEC of the Council of 13 June 1967 (Official Journal, English Special Edition 1967, p. 33), as last amended by Regulation (EEC) No 1125/74 (Official Journal 1974 L 128, p. 12)?’

The order was entered on the Court Register on 26 June 1978.

C — Procedure

In accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the EEC, written observations were submitted in the two cases by the plaintiff in the main action, the Council of the European Communities and the Commission of the European Communities.

By separate orders of 25 October 1978, the Court referred the two cases to the Second Chamber.

By order of the same date the Court (Second Chamber) joined the cases for the purposes of the oral procedure and the final judgment.

The Court (Second Chamber), after hearing the report of the Judge-Rapporteur and the views of the Advocate General and having asked for certain information from the Commission (see under III below), decided to open the oral procedure without any preparatory inquiry.

II — Written observations submitted under Article 20 of the Protocol on the Statute of the Court of Justice of the EEC

In Case 131/78

According to the plaintiff in the main action, the marketing costs fixed by the Council at a standard rate of 2.99 units of account (that is, DM 10.7) per tonne for the 1975/76 marketing year were determined inaccurately and on the basis of a mistaken appraisal. In fact, when the cost factors were calculated and fixed for the purpose of fixing the threshold price for the 1975/76 marketing year (transport costs, transhipment charges and trading margin), insufficient account was taken of the actual facts and of the foreseeable inflationary development in costs. Regulation No 1173/75 of the Council of 28 April 1975 fixing the threshold prices for cereals for the 1975/76 marketing year is therefore invalid and inapplicable in so far as it concerns common wheat because it conflicts with the provisions of Article 5 (1) of Regulation No 120/67/EEC of the Council of 13 July 1967 and moreover involves a mistaken appraisal.

In the opinion of the plaintiff, it is necessary to take into account the marketing costs for the 1975/76 marketing year as follows:

a) It is necessary to adopt an amount of 2.47 units of account (that is, DM 8.86) per tonne as transport costs between Rotterdam and Duisburg, as the defendant has already stated in its application in the main action. The plaintiff supplies the details of the calculation of that amount which are based, it states, as regards the section of the route lying within foreign territory, on the Directives of the Federal Minister for Food on the grant of freight aid to cereals of 9 June 1971, together with subsequent amendments, and as regards the section of the route lying within the Federal Republic, on fixed rates of charge (see No 17 of the Frachten- und Tarifanzeiger der Binnenschiffahrt [Inland Navigation Freight and Carriage Rates Gazette] of 20 June 1975). If, contrary to this argument, objections must be raised to the calculation of the transport costs which must be taken into consideration the plaintiff claims as a precaution that the transport costs amounting to 1.30 units of account per tonne calculated by the Commission for the 1975/76 marketing year are in no way realistic. In fact, at the beginning of 1975 — at the time of the Commission's calculations — such transpon costs were nowhere foreseeable. In the case of annual contracts for the transpon of cereals from Rotterdam to Duisburg it was possible to foresee at the beginning of 1975 that the ship's freight rates for cargoes of 300 to 500 tonnes (the customary unit) would amount to at least DM 4.80 per tonne (that is, 1.4 units of account per tonne) in the case of a contract from February 1975 to January 1976. In support of this argument the plaintiff annexes to its observations the letter from Rhenus-WTAG Aktiengesellschaft of 9 August 1978.

b) The transhipment charges should have been fixed at exactly DM 3.15, as shown by a table produced by the plaintiff on the cost of transhipment ‘Reeling Seeschiff his Schiffsraum Binnenschiff’ (charges for transhipment from sea-going vessels to river vessels). The plaintiff annexes to that table the rates of charge of the Vereniging van Nederlandse Graanfactors en Graanexpediteurs.

c) As regards the trading margin it is necessary to adopt an amount of DM 4.55 (that is, 1.3 units of account per tonne), as follows from the table produced by the plaintiff (Annex 3 to its observations) in which the plaintiff has already taken into account the following items: customs formalities, inspection of plant species, cost of the obligatory import deposit and the cost of the inspection on receipt. It is also necessary to take into account the cost of the loss in weight incurred during transport and the costs of insurance and interest.

The Council recalls the case-law of the Court (in particular the judgment of 12 July 1973 in Case 11/73, Getreide Import GmbH v Einfuhr- und Vorratsstelle für Getreide und Futtermittel [1973] ECR 919 and the judgment of 5 December 1973 in Case 119/73, Deutsche Getreide- und Futtermittel-Handelsgesellschaft v Einfuhr- und Vorratsstelle für Getreide und Futtermittel [1973] ECR 1369) on the fixing of the threshold price of cereals and states that when fixing the threshold prices for the 1975/76 marketing year it based itself on the principles enshrined in the decisions of the Court, in other words: a standard calculation of the costs which every imponer must inevitably bear, including the normal transport costs.

The Council then gives an account of the procedure for the fixing of the threshold prices for the 1975/76 marketing year and refers to the numbered working documents drawn up by the services of the Commission for the purposes of the proposal for the fixing of the prices which it submitted to the Council and on the basis of which the Council adopted Regulation No 1173/75.

Considering that its document, together with the Commission's figures, contains sufficient information for the Court to be able to deliver judgment, the Council suggests that it should find that consideration of the question raised has disclosed no factor of such a kind as to affect the validity of Regulation No 1173/75.

The Commission points out that the plaintiff bases its application before the national court solely on the allegation that the Community fixed the threshold price applicable to common wheat for the 1975/76 marketing year taking as a starting-point false information relating to the various cost factors. It therefore puts forward a comparison between the costs taken into consideration by the Community and the costs which the plaintiff considers to be correct. This comparison shows the following cost factors and amounts:

It follows from this table that no appreciable difference can be found between the cost factors taken into consideration for the purpose of the calculation of the threshold price for the 1975/76 marketing year and the cost factors indicated by the plaintiff as regards the transhipment and transport costs.

As regards the transhipment charges, the Commission states that it followed the official port rates of charge at Rotterdam according to which those costs are at least Hfl 1.43 per tonne, that is 0.42 units of account. For the purpose of the fixing of the threshold price this amount was rounded up to 0.50 units of account per tonne, that is, Hfl 1.72 per tonne or DM 1.83 per tonne.

The transport costs between Rotterdam and Duisburg were calculated on the basis of the average amount of the two most favourable months of the reference period. For this purpose the Community based its calculations on the information which it had itself collected relating to transport of that type and to the figures which had been made known to it by the Netherlands and German agencies which are competent as regards the organization of the markets (Annex 3 to the Commission's observations). The difference of Hfl 4.48 per tonne or DM 4.76 per tonne as against the amount of 8.86 indicated by the plaintiff is far higher than the highest freight rates paid at that time for transport between Rotterdam and Duisburg. Even the rates applicable in the spring of 1978 were DM 4 per tonne lower than the amount indicated by the plaintiff.

In addition to the transhipment and transport charges, the plaintiff claims as separate cost factors charges for customs formalities, costs of lodging a security and of inspection on receipt and a certain trading margin whereas the Community included all these costs in a standard amount called the trading or import margin. However, the difference between the total amount indicated by the plaintiff and the standard amount calculated by the Community is negligible.

In view of the foregoing it is impossible to perceive any indications which might validly be relied upon for the purpose of claiming that the threshold price fixed for common wheat in Regulation No 1173/75 was calculated in breach of the prescribed criteria for calculation.

In Case 150/78

The plaintiff claims that in so far as sorghum is concerned, Regulation No 1427/74 of the Council fixing the threshold prices for cereals for the 1974/75 marketing year is invalid and is inapplicable because it conflicts with the provisions of Article 5 (1) of Regulation No 120/67/EEC and moreover involves a mistaken appraisal. In fact, when the cost factors were calculated and fixed for the purpose of establishing the threshold price for the above-mentioned marketing year (transport costs, transhipment charges and trading margin), insufficient account was taken of the actual facts and of the foreseeable inflationary development in costs.

In the opinion of the plaintiff it is necessary to take into account marketing expenses for the 1974/75 marketing year as follows:

a) As transport costs between Rotterdam and Duisburg it is necessary to adopt an amount of 2 units of account (that is, DM 7.33) per tonne, as follows from the table which was produced to the national court and forms Annex 2 to the observations of the plaintiff. The calculation of this amount is described in detail in Annex 3 to those observations and was carried out according to the same method and on the basis of the same documents as those used for the calculation of the costs of the transport of common wheat within the context of Case 131/78. If, contrary to this argument, objections must be raised to the calculation of the transport costs which must be taken into consideration, the plaintiff claims as a precaution that the transport costs amounting to 1.25 units of account per tonne calculated by the Commission for the 1974/75 marketing year are in no way realistic. At the beginning of 1974 — at the time of the Commission's calculations — such transport costs were nowhere foreseeable. In the case of annual contracts for the transport of cereals from Rotterdam to Duisburg it was possible to foresee at the beginning of 1974 that the ship's freight rates for cargoes of 300 to 500 tonnes (the customary unit) would amount to at least DM 6 per tonne (that is, 1.64 units of account per tonne) in the case of a contract from February 1974 to January 1975. In support of this argument, the plaintiff annexes to its observations a letter from Rhenus-WTAG Aktiengesellschaft of 9 August 1978.

b) The transhipment charges should have been fixed at exactly DM 2.72, as follows from the documents relating to those charges produced by the plaintiff in the context of Case 131/78.

c) As regards the trading margin, it is necessary to adopt an amount of DM 6.52 (that is, 1.78 units of account) per tonne, in the calculation of which the plaintiff has already taken into account (see Annex 2 to its observations) customs formalities, inspection of plant species, cost of the obligatory import security and the cost of the inspection on receipt.

The Council observes that the national court is mistaken in wishing the Court to examine the compatibility of the fixing of the threshold price of sorghum with Article 5 (1) of Regulation No 120/67/EEC. In fact, sorghum is not among the cereals referred to in the first paragraph. Sorghum is not a cereal indigenous to Europe and must be classified under tariff heading 10.07 of the Common Customs Tariff (for 1974, in the version contained in Regulation (EEC) No 1/74 of the Council of 17 December 1973 amending Regulation (EEC) No 950/68 on the Common Customs Tariff, Official Journal L 1 of 1 January 1974, p. 1, at p. 54). Sorghum is therefore one of the products referred to in Article 1 (a) of Regulation 120/67/EEC (now Regulation (EEC) No 2727/75). It is necessary to apply to sorghum Article 5 (2) of Regulation No 120/67/EEC (now Regulation (EEC) No 2727/75) which provides as follows:

‘For a standard quality of each of the products listed in Article 1 (a) which are not mentioned in paragraph 1 above, a threshold price shall be fixed for the Community in such a way that the price for those cereals mentioned in paragraph 1 which are in competition with these products shall reach the target price on the Duisburg market’.

It follows that the threshold price of sorghum cannot be fixed in the same way as the threshold price of common wheat. There is no target price for sorghum. In the case of sorghum it is necessary to fix the threshold price in such a way that the competing products reach the target price on the Duisburg market. In the case of sorghum, these competing products are in particular maize and barley (the nutritive value of sorghum is comparable to that of maize). In the contested regulation, the Council fixed the threshold prices of maize and barley respectively at 106.60 and 107.70 units of account per 1000 kilograms, whereas it fixed the threshold price of sorghum at 105.55 units of account per 1000 kilograms, an amount which is more favourable. The levy to be paid is therefore lower. Moreover, the Council refers in the present case to the Commission's statement for supplementary information. It is impossible to state that the Council may have acted wrongly in any way at all in fixing this price.

In conclusion, the Council suggests that the Court should find that consideration of the question raised has disclosed no factor of such a kind as to affect the validity of Regulation No 1427/74.

The Commission also points out that the national court is mistaken in considering that the threshold price of sorghum is fixed as in the case of wheat in application of Article 5 (1) of Regulation No 120/67/EEC and recalls that the threshold price of sorghum must be fixed in such a way that the price of the indigenous fodder cereals which are in competition with sorghum reaches the amount of the target prices on the Duisburg market. This method of calculation does not place the Council under a duty to calculate the threshold price mathematically on the basis of the market and guidance data available to it but leaves it the power to find the necessary relationship between the threshold price of sorghum and that of the competing indigenous fodder cereals, in particular barley and maize.

The Council judged that the conditions of competition of sorghum in relation to barley were reflected in the prices on the world market. As regards the 1973/74 marketing year, the prices of sorghum fluctuated between 83 % and 107 % of the price of barley and of maize, mostly reaching more than 90 % and on average more than 92 % and 95 %.

In view of the objective of the levy on sorghum, in other words the stabilization of the competitive position of Community barley and maize, the fixing of the threshold price in question at a level below that of the threshold price of the competing products cannot be criticized.

Regulation No 1427/74 is valid and applicable also to the threshold price of sorghum.

III — Information requested from the Commission (Case 131/78)

Following a request by the Court, the Commission lodged the transhipment rates of Grainwave BV of Rotterdam on which it based its estimate of the transhipment costs of wheat and indicated the source of the information regularly communicated to it on the transport costs from Rotterdam to Duisburg as stated in Annex 3 to its observations.

IV — Oral Procedure

The plaintiff in the main action, represented by W. Mielke, Advocate at the Hamburg Bar, the Council of the European Communities, represented by its Agent, B. Schloh, and the Commission of the European Communities, represented by its Agent, P. Kalbe, presented oral argument at the hearing on 1 February 1979.

Within the context of Case 131/78, the Commission in particular contested the accuracy of the amount of DM 8.86 per tonne which, according to the written statements of the plaintiff in the main action, should have been adopted as the transport costs between Rotterdam and Duisburg. According to the Commission, this figure does not correspond to the actual freight rates but is the result of a national calculation made by carriers in the Federal Republic of Germany to obtain a transport subsidy. The actual transport costs, the characteristic feature of which is ‘fierce’ competition, are very low, in particular because of the dumping by Eastern European countries and because of the excess cargo capacity on the Rhine, and were not affected by an inflationary increase.

In reply to a question put during the hearing the plaintiff in the main action conformed that the calculation of the above-mentioned amount is notional in nature.

The Advocate General delivered his opinion at the hearing on 8 March 1979.

Decision

1. By separate orders of 3 May and 6 June 1978 which were received at the Court on 9 and 26 June 1978 respectively the Seventh Senate of the Hessisches Finanzgericht [Finance Court of the Land of Hesse] referred to the Court of Justice under Article 177 of the EEC Treaty the following questions for a preliminary ruling: (In Case 131/78) (In Case 150/78)

‘Is Regulation (EEC) No 1173/75 of the Council of 28 April 1975 fixing the threshold prices for cereals for the 1975/76 marketing year (Official Journal 1975 L 117, p. 6) invalid and therefore inapplicable in so far as it relates to common wheat because it infringes Article 5 (1) of Regulation No 120/67/EEC of the Council of 13 June 1967 (Official Journal, English Special Edition 1967, p. 33), as last amended by Regulation (EEC) No 85/75 (Official Journal 1975 L 11, p. 1)?’

‘Is Regulation (EEC) No 1427/74 of the Council of 4 June 1974 fixing the threshold prices for cereals for the 1974/75 marketing year (Official Journal L 151, p. 1) invalid and therefore inapplicable in so far as it relates to sorghum because it infringes Article 5 (1) of Regulation No 120/67/EEC of the Council of 13 June 1967 (Official Journal, English Special Edition 1967, p. 33), as last amended by Regulation (EEC) No 1125/74 (Official Journal L 128, p. 12)?’

2. These questions have been raised within the context of two actions in which the plaintiff in the main action contested the rates of levy fixed in advance for the months of August, September and October 1975 and for the months of July, August and September 1974 by the German intervention agency, the defendant in the main action, in licences which it issued relating to the importation into the Community of certain quantities of common wheat (in 1975) and sorghum (in 1974).

3. Both before the national court and before the Court of Justice, the plaintiff has claimed that the levies in question were fixed at too high a level because the above-mentioned regulations, on the basis of which the rates of levy were calculated, fixed the threshold price inaccurately because the marketing costs borne by the importer were not taken into sufficient consideration in infringement of the objectives of Regulation No 120/67/EEC of the Council of 13 June 1967 on the common organization of the market in cereals.

The first question

4. The common organization of the market in cereals established by Regulation No 120/67/EEC aims in particular to ensure a fair standard of living for Community producers by stabilizing the prices on the domestic market in the Community for certain products, particularly common wheat, at the level of a target price. Under Article 2 (3) of Regulation No 120/67/EEC this target price is fixed for ‘Duisburg at the wholesale stage, goods delivered to warehouse, not unloaded’.

5. Under Article 5 (1) of that regulation a threshold price derived from the target price is fixed inter alia for common wheat in such a way that the selling price on the Duisburg market is the same as the target price, differences in quality being taken into account. This threshold price, which is calculated for Rotterdam according to Article 5 (4), is intended to fix by means of levies the level to which the price of the imported product must be raised to preclude its being offered for sale on the market in question at a price lower than the target price. To meet this condition the price of the imponed product after crossing the frontier must be the same as the target price and thus the threshold price must be equal to the target price less the marketing costs incurred by the imponer between the stage of the c.i.f. price for Rotterdam and the wholesale stage at Duisburg for which the target price has been fixed. Under Article 13 (1) of the regulation, the levy imposed on imports into the Community is equal to the threshold price less the c.i.f. price on the world market for Rotterdam.

6. Marketing costs include those expenses inherent in the procedures and formalities of impon which every imponer must inevitably incur as well as the normal expense of transporting the imponed goods to the wholesale stage at Duisburg. Moreover, in accordance with the general system of levies introduced by Regulation No 120/67/EEC, marketing costs should not be calculated on the basis of costs actually incurred by the imponer for a specific delivery which are largely dependent upon decisions made by the imponer but should be calculated at a flat rate in relation to those expenses which an imponer of the products in question must inevitably incur in respect of the importation.

7. The target price for common wheat was fixed by Regulation No 666/75 of the Council of 4 March 1975 (Official Journal L 72, p. 14) at 139.44 units of account per tonne for the 1975/76 marketing year. Under the Sole Article of Regulation No 1173/75, the threshold price of common wheat and mesiin was fixed at 136.45 units of account per tonne for the same marketing year. It follows from the first recital of the preamble to that regulation that this price was obtained by deducting from the target price as marketing costs the most advantageous transpon costs between Rotterdam and Duisburg, transhipment charges at Rotterdam and a trading margin.

8. The plaintiff in the main action considers that for the purpose of fixing the threshold price for common wheat for the 1975/76 marketing year by means of Regulation No 1173/75, the marketing costs, calculated at a fiat rate of 2.99 units of account (that is, DM 10.70) per tonne, were calculated on the basis of incorrect information and that the foreseeable inflationary development in the various cost factors was not taken into sufficient consideration.

9. It is therefore necessary to examine the validity of that regulation having regard to each of these factors by referring on the one hand to the costs adopted by the Commission for the purpose of its proposal for the fixing of the threshold prices which was submitted to the Council and on the basis of which the Council adopted Regulation No 1173/75 and on the other to the costs which the plaintiff considers correct.

The transport costs between Rotterdam and Duisburg

10. It follows from the figures supplied by the Commission that the values determined for transport costs since the 1969/70 marketing year have risen slightly, in particular from the 1974/75 to the 1975/76 marketing year, for which an amount of 1.30 units of account (that is, DM 4.76) per tonne was adopted. According to the statements made by the Commission at the hearing these figures are the result of permanent contacts with economic circles active in this field. The Commission moreover explained without being contradicted on this point that the actual transport costs, which are influenced by fierce competition in particular because of dumping by certain third countries and excess cargo capacity on the Rhine, have not been affected by inflationary increases.

11. According to the plaintiff, the figure of 2.47 units of account (that is, DM 8.86) per tonne should have been adopted for the marketing year in question; the calculation of that figure is based, as regards the section of the route lying within the Federal Republic of Germany, on the Frachten- und Tarifanzeiger der Binnenschiffahn [Inland Navigation Freight and Carriage Rates Gazette] of 20 June 1975 and, as regards the section of the route lying within foreign territory, on the rates of charge per kilometre indicated for the 1975/76 marketing year by the directives of the Federal Minister for Food relating to the grant of aid to freight rates for cereals. However, according to the oral statements made by the Commission this figure does not correspond to the actual freight rates but is the result of a ‘notional’ calculation made by carriers in the Federal Republic of Germany so as to obtain a transpon subsidy. In reply to a question put by the Court, the plaintiff confirmed that the calculation of the above-mentioned amount is theoretical in nature.

12. Moreover, according to an assessment put forward by the plaintiff itself and made by a German shipping undertaking, the ship's freight rates applied as regards the transpon of consignments of 300 to 500 tonnes of cereals from Rotterdam to Duisburg were of the order of DM 4.80 per tonne for a contract from February 1975 to January 1976. The difference between that figure and the figure of DM 4.76 adopted by the Commission, which moreover refers, according to the Commission's explanations, to consignments of 500 to 1500 tonnes, is trifling.

13. It follows from all the foregoing facts which were verified after both parties had put forward their arguments at the hearing that the criticisms made by the plaintiff of the assessment of the transpon costs by the Community authorities are unfounded.

The transhipment charges at Rotterdam

14. As regards the charges for transhipment from sea-going vessels to river vessels at Rotterdam, the Commission based its calculations for the purpose of its proposal for the fixing of the threshold price on the transhipment rates of Grainwave BV, Rotterdam, according to which the amount adopted in the case of common wheat rose from Hfl 1.43 per tonne on 1 July 1974 to Hfl 1.64 per tonne on 1 May 1975. On the basis of that information the Commission adopted an amount of Hfl 1.72 (DM 1.83) whereas the plaintiff, relying upon the rates of charge of the Vereniging van Nederlandse Granfactors en Granexpediteurs, considers that the amount should have been fixed at a figure of DM 3.15 per tonne.

15. It is necessary however to observe that the prices listed in the rates of charge upon which the plaintiff relies are fixed including ‘weighing, receipt and inspection, evening, night and week-end work’. It is clear from the file that the Commission took into consideration the factors of weighing and inspection within the context of the trading margin. Moreover, special costs resulting from night work and week-end work cannot be considered as costs which an importer must inevitably bear and which the Community authorities must take into account in the assessment of the marketing costs.

16. On account of these considerations, it may be stated that the plaintiff has not succeeded in establishing that the Community authorities underestimated the transhipment charges in the port of Rotterdam.

The trading margin and other costs

17. The difference between the flat rate amount adopted in this respect by the Community authorities (DM 4.40) and the figure quoted by the plaintiff (DM 4.55) is negligible; it cannot therefore constitute an indication of a mistaken appraisal by the Community authorities when fixing the marketing costs.

18. It follows from all the foregoing statements that consideration of the first question has disclosed no factor of such a kind as to affect the validity of Regulation No 1173/75 of the Council in so far as it relates to common wheat.

The second question

19. In the second question the national court asks whether Regulation No 1427/74 of the Council fixing the threshold prices for cereals for the 1974/75 marketing year is invalid in so far as it relates to sorghum because it infringes Article 5 (1) of Regulation No 120/67/EEC.

20. Sorghum, the production of which is almost non-existent within the Community, is not one of the cereals listed in Article 5 (1) of Regulation No 120/67/EEC but comes within Article 5 (2) of that regulation according to which a threshold price is fixed for that product for the Community in such a way that the price for those cereals mentioned in paragraph 1 which are in competition with sorghum reaches the target price on the Duisburg market. It is therefore necessary to reply to the question referred to the Court by examining the validity of Regulation No 1427/74 in relation to Article 5 (2) of Regulation No 120/67/EEC.

21. Under the Sole Article of Regulation No 1427/74, the threshold price for sorghum was fixed at 105.55 units of account per tonne for the 1974/75 marketing year. The plaintiff claims that for the purpose of fixing the threshold price the Community authorities did not take adequate account of the marketing costs incurred by importers of sorghum, with the result that that price was fixed at too high a level. In support of this argument the plaintiff relies upon arguments and documents analogous to those which it put forward for the purpose of contesting the validity of the fixing of the threshold price for common wheat for the 1975/76 marketing year.

22. It follows however from the wording of Article 5 (2) of Regulation No 120/67/EEC that the threshold price for sorghum, which is a product for which there is no target price, cannot be fixed in the same way as the threshold price for common wheat. Therefore the arguments put forward by the plaintiff rest on erroneous premises because they are based essentially on the extent of the deductions from the target price which in its view should have been made as marketing costs. It is in fact necessary to fix the threshold price for sorghum in such a way that the prices of Community products which are in competition because of their similar nutritive value, in other words maize and barley, reach the target price fixed for the latter products on the Duisburg market.

23. According to the explanations given by the Council and the Commission the Community authorities based their calculations for the purposes of fixing the threshold price of sorghum for the 1974/75 marketing year on the conditions of competition of that product in relation to barley and maize as reflected in the prices on the world market converted to the c.i.f. Rotterdam prices for a period corresponding to the previous marketing year. According to a list of those prices supplied by the Commission, the accuracy of which has not been contested by the plaintiff, the prices of sorghum fluctuated between 83 % and 107 % of the prices of maize and barley. The Council fixed by Regulation No 1427/74 the threshold prices of maize and barley for the 1974/75 marketing year at 106.60 and 107.70 units of account per tonne respectively and the threshold price of sorghum at 105.55 units of account per tonne, an amount which is consequently more favourable for that product. In these circumstances, having regard to the objective of Article 5 (2) of Regulation No 120/67/EEC, there is nothing to suppose that by fixing the threshold price of sorghum at the above-mentioned amount the Council went beyond the limits of the proper exercise of its discretion in the matter.

24. It is therefore necessary to conclude that consideration of the second question submitted to the Court has disclosed no factor of such a kind as to affect the validity of Regulation No 1427/74 in so far as it relates to sorghum.

Costs

25. The costs incurred by the Council and Commission of the European Communities which submitted observations to the Court are not recoverable. As the proceedings are, in so far as the parties to the main action are concerned, a step in the action pending before the national court, the decision on costs is a matter for that court.

On those grounds, THE COURT (Second Chamber), in answer to the questions referred to it by the Hessisches Finanzgericht (Seventh Senate) by orders of 3 May and 6 June 1978, hereby rules: