JUDGMENT OF 27. 11. 1984 — CASE 264/81 SAVMA v COMMISSION
In Case 264/81
THE COURT (Fifth Chamber) composed of: O. Due, President of Chamber, C. Kakouris, U. Everling, Y. Galmot and R. Joliét, Judges, Advocate General: C. O. Lenz Registrar: H. A. Rühi, Principal Adminstrator
gives the following
JUDGMENT
Facts and Issues
The facts of the case, the course of the procedure, the conclusions and the submissions and arguments of the parties may be summarized as follows:
I — Facts and procedure
By Regulation No 71/81 of 12 January 1981 (Official Journal L 11, p. 5) the Commission decided that the Italian intervention agency, Azienda di Stato per gli Interventi sul Mercato Agricolo (hereinafter referred to as “AIMA”), should put up for sale some 33000 tonnes of virgin olive oil from intervention purchases made during the 1977/78 olive marketing year.
The oil had been put up for sale by tender as extra virgin olive oil on several occasions but had not been sold. The Commission was of the opinion that the market situation on 12 January 1981 appeared to be suitable for offering the oil for sale again.
The oil was put up for sale in six lots of about 5500 tonnes each (Article 2) and the selling price was fixed at LIT 210000 per 100 kg (Article 4).
On 2 February 1981, the first day on which applications to purchase could be submitted, 60 untertakings made offers, each for the total six lots of 5500 tonnes.
Regulation No 71/81 provided that in such circumstances lots should be drawn (second paragraph of Article 6 (1)). The drawing of lots did not take place immediately. Certain undertakings contested the admissibility of the applications submitted by other companies, in particular those which had been formed specially for the purpose of taking part in the sale.
The Commission agreed to suspend the sale until such time as the necessary verifications had been carried out. The lots were not drawn until 1 June 1981, when the five applicants in Case 232/81 and the applicant this case were each allocated one lot.
On 3 August 1981, the Commission adopted Regulation No 2238/81 (Official Journal L 218, p. 27) which repealed Regulation No 71/81 with effect from 13 January 1981. In the preamble to Regulation No 2238/81 the Commission declared that as a result of the delay in carrying out the sale caused by consideration of the abovementioned complaints, conditions on the olive oil market had altered so that to make the sale on the conditions originally laid down would result in serious disturbance on the market. The Commission considered accordingly that it was necessary to cancel the sale in the overriding general interest.
On the same day, the Commission adopted Regulation No 2239/81 (Official Journal L 218, p. 28) reopening the sale by tender of the same quantity of olive oil held by the Italian intervention agency. The sale was restricted to the six undertakings designated by the drawing of lots (Article 3). However, the sale was no longer to take place at a fixed price but on the basis of the best tender received and on condition that the price offered was at least equal to the minimum selling price to be fixed not later than 31 August 1981 in accordance with the procedure set out in Article 38 of Regulation No 136/66, on the basis of the tenders received (Article 6). Applications to purchase had to be submitted not later than 24 August 1981 at 2 p.m. (local time) (Article 4). Withdrawal of the oil was to begin on 15 September 1981 and the purchaser was required to withdraw, in each period of 30 days, at least 10% and at most 20% of the purchased quantity (Article 9).
At the request of the applicants in Case 232/81 the President of the Court made an order on 21 August 1981 partially suspending the application of Article 10 of Regulation No 2239/81. The applicants who submitted tenders in the new sale were required to pay only the amount which they would have had to pay under the terms of the sale pursuant to Regulation No 71/81. Payment of the remainder was suspended until the Court had given judgment in the main proceedings.
The applicant brought the present proceedings by an application lodged at the Court Registry on 2 October 1981. Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General, The Court initially decided to open the oral procedure without any preparatory inquiry. However, it invited the parties to reply to certain questions and to furnish some information.
The Commission replied to those questions and furnished the information in a letter dated 15 June 1982. The applicant replied by a letter of 4 June 1982.
In the light of those replies, the Court decided to order a preparatory inquiry to be carried out by the Third Chamber. The Chamber asked the parties to provide it with the names of witnesses best placed to inform it about the state of the olive oil market in Italy in 1981. It invited the applicants to comment on the Commission's replies to the questions put to it by the Court.
The Chamber also put certain questions to the Italian Government pursuant to Article 21 of the Protocol on the Statute of the Court of Justice.
The applicants commented on the information supplied by the Commission in a letter received by the Court on 19 October 1982.
The Chamber then requested the Italian Central Statistics Institute for information pursuant to Article 21 of the Protocol on the Statute of the Court of Justice, and sent a second series of questions to the Commission.
On 19 May 1983 the Third Chamber heard evidence from Mario Guida, Secretary-General of Fedoliva (Euopean Federation of Olive Oil Industries) and Director-General of Assitol (Italian Association of Olive Oil Industries).
After closure of the preparatory inquiry, and after hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to assign the case for judgment to the Fifth Chamber.
II — Conclusions of the parties
The applicant claims that the Court should:
i) With regard to the action brought by the applicant for a declaration that Commission Regulations Nos 2238 and 2239/81 of 4 August 1981 (Official Journal, 4. 8. 1981) are void: Declare the same to be admissible and well founded; Consequently, annul those regulations and order the Commission to pay the costs;
ii) With regard to the action for compensation brought by the applicant supplementing the action for annulment: Declare the same to be admissible and well founded; Consequently, order the Commission to pay the applicant the sum of LIT 268420000, subject to the right to amend the claim, together with interest thereon at a rate to be fixed by the Court, and order the Commission to pay the costs;
iii) With regard to the action for compensation brought by the applicant in the alternative, in the event of dismissal of its action for annulment: Declare the same to be admissible and well founded; Consequently, order the Commission to pay the applicant the sum of LIT 1342100000, subject to the right to amend the claim, together with interest thereon to be fixed by the Court, and order the Commission to pay the costs.
The Commission contends that the Court should:
Dismiss the application for annulment as possibly inadmissible and in any event unfounded;
Dismiss the application for damages as unfounded;
Order the applicant to pay the costs.
III — Submissions and arguments of the parties
A — Admissibility
The Commission expresses serious doubts as to the admissibility of the application. Regulation No 2238/81 repealed Regulation No 71/81, which was a regulation in the proper sense of the term. Regulation No 2238/81 is a management measure relating to the olive oil market which takes no special account of the relatively few traders who might consider themselves directly concerned. Moreover, the applicants have not acquired individual rights.
Since the Commission is convinced that its action is well founded from the economic and legal points of view, it does not wish to insist on this aspect of the case which is a procedural matter and which the Commission submits for the Court's consideration.
The applicant states that the undertakings to which lots were allocated under the procedure laid down in Regulation No 71/81 are directly and individually concerned by the measure the purpose of which is to repeal that regulation, even if Regulation No 71/81 was of a general nature at the time of its adoption.
The Commission itself has recognized that by restricting the new sale by tender to those traders.
The Commission maintains that the content of the contested regulations is of a general and abstract nature. Their effects are in no way limited to the applicants but directly affect all other traders in the olive oil sector, who play in active role in the market in an agricultural product subject to a common organization which the Commission has the power and the obligation to manage in the general interest.
B — Application for annulment
1. Infringement of Article 189
The applicant points out that regulations and decisions must be necessary in order to carry out the task assigned to the institution adopting the measure, and must satisfy the conditions laid down in the Treaty.
The contested measures were not adopted in order to carry our the Commission's tasks, nor were they adopted in accordance with conditions laid down in the Treaty. The Commission announced that it had cancelled the sale in the overriding general interest because it would, if carried out, have caused serious disturbance on the market. However, the Commission's role as defined by Article 155 of the Treaty and by Regulation No 136/66 certainly does not include protection of the overriding interest to the detriment of the individual rights of undertakings and private persons.
Regulation No 136/66 does not empower the Commission to cancel the sale of olive oil because of subsequent changes in the market price. Neither the Treaty nor the regulations implementing it permit the Commission to take a decision the purpose of which is to annul a transfer of property.
The Commission relies on Regulation No 136/66 as subsequently amended (see in particular Council Regulation No 1562/78 of 29 June 1978, Official Journal L 185, p. 1), which fixes a target price intended to ensure that producers obtain a fair income. To achieve that end, stabilizing machinery is provided for, which includes the purchase of oil by intervention agencies and its sale in the Community under conditions which do not disturb the market (Articles 8 and 12).
The Commission points out that intervention has the double purpose of supporting the market price by withdrawing surplus quantities and of putting the product back on the market when that appears to be appropriate, great care being taken to avoid disturbing the market. The purchases and sales carried out by the intervention agency do not mereley constitute successive transfers of ownership. They must be regarded as “public law relationships” which permit the public authorities to withdraw from contractual obligations if the situation changes in such a way that the public interest can only be served if the contract is rescinded or amended.
At Community level, the Commission considers that it has an obligation to ensure that the common organizations of the market continue to function correctly, and to that end to adopt any measures which may be necessary to avoid disturbances.
The Commission considered it essential to cancel the sale of the olive oil because the procedure had taken longer than could have been foreseen and this led to the sale taking place at a time when market conditions were radically different from what they had been initially, with the result that the sale would have seriously disturbed the olive oil market. The Commission exercised the discretion which the Court has held it to have in regard to the management of difficult and complex economic matters.
At the time of the sale at LIT 210000 per 100 kg, the intervention price (December 1980) was about LIT 200000. The market price for refined oil was approximately LIT 220000, which would have permitted a substantial profit to be made.
After the delays in the tendering procedure, conditions on the market had radically changed. On the one hand, the 1980-81 harvest was much smaller than expected, and on the other, prices had increased to an unforeseeable degree, because of the lower production, the limited quantities of lampante grade olive oil available on the world market and, partly, because of the devaluation of the green lira.
The conditions of sale, which were already favourable, thus became unreasonably so, and that situation would have permitted a limited number of traders not only to make enormous profits at the expense of the European taxpayer, but also to dominate the olive oil market in Italy by excluding from that market all other traders, who could obtain that type of oil only on much less favourable terms.
The Commission disputes the contention that ownership was transferred. The drawing of lots transferred no right of property. The sale procedure laid down in Regulation No 71/81 consisted of several phases, followed by the allocation of the goods by means of a registered letter signed by the Director-General of AIMA. That letter of allocation closes the procedure and declares the person to whom the lot has been allocated owner of it. It is also from the date of receipt of that letter that the person to whom the lot has been allocated becomes bound by the obligations arising from that allocation, that is, he must provide a guarantee and be present when the containers are sealed.
Only then is the contractual relationship complete, since the public authorities have decided definitively that the operation, which constitutes an act of management of the olive oil market and not simply a sale which has no other purpose, is appropriate.
It must be recognized that the Commission has the power and the duty (confirmed by Article 12 (2) of Regulation No 136/66) to ensure, in the exercise of its discretion in economic matters, that agricultural management measures are appropriate, particulary when, as in this case, the applicant had no right of ownership.
The applicant replies that the effect of Article 42 of the Treaty is to exempt production of and trade in agricultural products from the provisions governing competition except in so far as the Council has decided otherwise.
The relevant provision is Article 12 (2) of Regulation No 136/66 of the Council in its amended version, which provides that the intervention agencies are to sell olive oil under conditions such that the market at the production stage is not disturbed.
The Commission's task is thus limited to protecting the market, and therefore to protecting competition at the productionstage. It is sufficient to read the contested regulations to see that the Commission did not take account of competition at the production stage, but only of the market and competition at the marketing stage.
The Commission has said that its aim is to protect other traders operating on the market at the latter stage against what it regards as a serious disturbance brought about by the prices at which the successful tenderers, acting as traders and not as producers, could sell their lots. Those regulations are intended to influence only the marketing stage, and the circumstances relied on by the Commission regarding the production of olive oil, in particular the harvest, which were the main considerations underlying the adoption of Regulation No 71/81, are not relevant.
The fact that the successful tenderers were obliged to refine the oil is also not relevant because, on the one hand, the oil could have been sold without being refined outside the Greek or Italian markets and, on the other, because that obligation was not altered by Regulation No 2239/81.
With regard to the defendant's assessment of the situation, which was made between December 1980 and January 1981, the applicant considers that the Commission judged the development of the market incorrectly. Either the factors on which the Commission based its assessment at that time appeared to it to be certain and it cannot oblige others to suffer the consequences of its errors of judgment, or it was aware of the uncertainties for the future and it should have provided in the conditions of sale for possible corrective measures (at the risk of making the sale as unattractive as the earlier attempts).
With regard to the situation in June and July 1981, the applicant does not accept the Commission's claims regarding “radical” changes in the situation. Even if proved, such changes do not constitute a case of force majeure. The development of the market and the size of the harvest are of their very nature uncertain. The devaluation of the green lira was carried out by the Community authorities themselves.
As for the Commission's entitlement to withdraw from the operation, the applicant points out that if the situation had been the reverse and the operators had been likely to suffer loss, the Commission would not have been willing to reduce the purchase price. It would have relied on the argument that risks are inherent in all economic activities. If the fact that the uncertainties of the economy turned out to be favourable to the successful tenderers was sufficient to call any operation into question, the element of legal certainty would disappear.
The parties exchanged observations regarding the applicant's participation in the application for the adoption of interim measures.
The applicant contests the Commission's argument that there is a new category of individual rights not provided for in the Treaty and subject to a right of intervention on the part of the authorities. There are constitutional and legislative rules which provide expressly for ways in which the public authorities may encroach upon the rights of the individual. Unless utter arbitrariness is to rule, the public authorities cannot be permitted to call into question, in the name of the general interest, withoui a legislative basis, any legitimatei) acquired right of individuals.
There is nothing in the basic legislative provisions which permits the defendant to call purchases or sales into question. Once it has determined the conditions of sale in the exercise of its discretion, the Commission cannot evade the rules governing the intervention machinery and cause persons who are entirely blameless to suffer the consequences of an error of judgment.
With regard to the right of ownership acquired by it, the applicant points to the use of the words “sell” and “sale” in Regulations Nos 136/66 and 2238/81. Even if the successful tenderers did not acquire ownership, they acquired a certain and irrevocable right to obtain the oil allocated to them. The fact that the second sale was restricted to the six tenderers who had taken part in the first sale constitutes the clearest possible proof that those rights were certain in the defendant's eyes.
The concept of “public law relationship”, which is peculiar to Italian law, cannot override the principle clearly laid down by the Court that measures must not be retroactive, and that acquired rights and legitimate expectations must be respected.
The Court has decided that a limited retroactive effect is legitimate in certain circumstances in the case of a general regulation. In this case, what is at issue is the calling into question, under the guise of a general provision, of individual situations governed by an earlier rule.
In its rejoinder, the Commission observes that the rules on competition referred to in Article 42 of the Treaty are those contained in Article 85 and the following articles, applied to agriculture almost in their entirety by Regulation No 17/62 of the Council. Any lacunae were filled as the common organizations of the market were established, by ad hoc provisions such as the one contained in Article 33 of Regulation No 136/66. The rules on competition laid down in the Treaty are thus applicable, but have no connection with Article 12 (2) of Regulation No 136/66.
The distinction which the applicant seeks to make between competition at the production stage and competition at the marketing stage is meaningless. A market is a unit the various stages of which influence one another. It is consequently necessaiy for the competent authorities to have a wide discretion in the economic sphere to adopt essential measures. Article 12 (2) of Regulation No 136/66 is only one example of the power and duty of the Commission to manage the market in the general interest.
As to the accuracy of its economic assessment, the Commission denies that there was an error of judgment on its part. It has been shown that the market situation had altered in an entirely unforeseeable way. It is tendentious to say that the green lira was devalued by the Community authorities themselves.
To illustrate its arguments and prove that its fears were well-founded, the Commission gives the following information. The market price for lampante grade olive oil was about LIT 235000-236000 and was rising (it had reached about LIT 240000 in March 1982) because of the persistent shortage on the market, whilst the intervention price had increased rapidly, reaching LIT 242000 in March 1982. On the other hand, the market price for refined oil has fallen regularly since the oil purchased by the applicants in this case and in Case 232/81 was placed on the market.
For that reason, other traders are in difficulties. Because they are obliged to obtain supplies on the market at. a higher price, they have had to reduce the price of their refined products and thus reduce their profit margins.
Those difficulties would have been even greater if the market price for lampante grade oil had been closer to the intervention price instead of moving away from it, a phenomenon which is totally unwarranted in a healthy market.
The Commission continues to maintain that the contractual relationship is not complete until the “letter of allocation” has been sent and until the other formalities, namely payment of the guarantee and sealing of the containers, has been completed.
The Commission considers that it had no alternative other than to repeal Regulation No 71/81. The repal of the regulation did not prejudice the rights of individuals; it simply halted a chain of events which would have led to ownership of the oil being transferred.
Even if Regulation No 71/81 conferred a right of ownership on the applicant, and even if Regulation No 2238/81 effected an expropriation, the Commission is of the opinion that the applicant's rights were adequately taken into account in relation to the public interest.
It was offered compensation in a special form based, on the one hand, on the public interest which was protected by virtue of the higher selling price and, on the other, the private interest of the applicant, which was not to be paid enormous sums of money as compensation but rather to obtain considerable quantities of olive oil on favourable terms so as to carry on its own production. The Commisson could have offered the oil for sale again to a larger number of traders, which would have further reduced the opportunities open to the applicant.
The applicant received fair compensation in that it was given the first opportunity of acquiring the olive oil, at a price which was, to be sure, above earlier price but which still left it a more than sufficient profit margin. If, for one reason or another, the applicant had not obtained one of the lots, the Commission would have granted it appropriate compensation in another form.
2. Infringement of Article 190; infringement of essential procedural requirements
The applicant claims that the opinion of the Management Committee for Oils and Fats was not obtained prior to the adoption of the decision as required by Article 38 of Regulation No 136/66. In those circumstances, the contested regulations are void for breach of Article 190 of the Treaty.
The Commission replies that that claim is wholly without foundation. The applicant is no doubt victim of a misapprehension, which it could have avoided by a careful reading of Article 38 of Regulation No 136/66. The wording of the last recital in the preamble to Regulation No 2238/81 indicates that no majority either for or against the regulation emerged from the consultation of the Management Committee.
The applicant observes that the Commission has produced no evidence to show that it sought the opinion of the Management Committee and it does not indicate the period within which the Committee was invited to give its opinion. That makes it impossible to see whether the Committee was in fact able to inform itself about the request for an opinion and to deliberate on it.
3. Infringement of Article 222 of the Treaty and of the principle that measures must not be retroactive
The applicant is of the opinion that whilst the Commission has the right to organize sales of olive oil, their conditions of validity and their effects, particulary the transfer of ownership, are none the less governed by the relevant national legislation. The Commission cannot, without infringing Article 222 of the Treaty, attempt to call into question rights of ownership which have been properly acquired or transferred in accordance with Italian law.
Moreover, it can be seen from the case-law of the Court that the Commission was bound to respect the prohibition against the adoption of retroactive measures and the principle of legitimate expectation.
The Commission replies that Article 222 is not relevant. The Commission has not prejudiced the right of Member States to organize the law of property. It has simply taken market management measures.
The applicant replies that even if the transaction of sale carried out by intervention agencies were of a “public law” character, this could not give rise to a new type of private ownership, subject to a sort of tacit condition subsequent at the discretion of the authorities.
The Commission has no powers of expropriation. An attempt to terminate a right of private property duly transferred under the law of a Member State, even if it is described as a market management measure, constitutes a direct and flagrant attack on the law of private property, which is within the exclusive jurisdiction of the Member States.
In its rejoinder the Commission maintains its view that Article 222 of the Treaty is not relevant.
C — Application for compensation
1. Application supplementing the application for annulment
The applicant claims that it has suffered a substantial commercial loss because of the uncertainty over the final price to be paid for the olive oil. That loss has been provisionally assessed at 20% of the loss which would result from the maintenance in force of the constested regulations, that is to say, LIT 268420000.
The Commission replies that even if the Court were to declare the contested regulations void, it has not been proved that the Commission has manifestly and gravely disregarded the limits on the exercise of its powers. The Commission considers that it has not infringed any superior rule of law for the protection of the individual. In any event, any infringement that there might be is not sufficiently serious, because no right, and in particular no right of property, has been prejudiced, and even if such had been the case, the applicant's interests were taken into account by the sale at a favourable price of oil which it was able to obtain relatively quickly.
The applicant cannot rely on the uncertainty created in the present case because its behaviour on the market was guided by the purchase price actually paid. The actual damage suffered as a result of supposed commercial uncertainty has not been proved. In any event, the sums involved would have to be thoroughly verified.
2. Application in the alternative
a) If the Court dismisses the application for annulment on the ground that the applicant is not entitled to bring such an action, the applicant contends that the contested regulations are not merely unlawful but also defective since their adoption constitutes a grave and manifest breach of a superior rule of law for which the Commission is liable in accordance with the second paragraph of Article 215 of the Treaty. The applicant assesses the loss by reference to the difference between the price fixed for the earlier sale (LIT 210000 per 100 kg) and the price fixed for the new sale (LIT 235000 per 100 kg), that is, LIT 25000 per 100 kg, a total of LIT 1342100000. The Commission declares that if the Court holds the application for annulment to be inadmissible, the application in the alternative would encounter the objections as to substance raised above. The applicant replies that even if the Court accepts the Commission's argument and regards the contested measures as regulations, the applicant is none the less entitled to claim compensation, in accordance with the second paragraph of Article 215 of the Treaty, for damage caused by an act of the defendant even if it relies on the unlawful and defective character of the regulation. To do so, the applicant relies on the same complaints that it made in the application for annulment which show that the defendant has committed a grave and manifest breach of superior rules of law, constitutive of a voie de fait, or gross fault on the part of the administration. According to the Commission, the same objections can be made to that head of the claim as were raised in relation to the application for annulment and it must therefore be dismissed. The conditions for an application for compensation, namely a sufficiently serious breach of the law by the Commission and actual damage, have not been met.
b) If the application for annulment is found to be admissible but unfounded, the applicant maintains that it is still entitled to demand compensation for the loss that it suffered even if no fault is implied in the contested measures. That view is supported by the working documents preceding the adoption of the Treaty and the reference made in the second paragraph of Article 215 of the Treaty to the general principles common to the laws of the Member States. In fact, the most advanced legal systems in the Member States recognize the liability of the State to pay compensation for damage caused by a quasi-expropriation for reasons of public utility, a concept of German law to which the Commission referred during the proceedings for the adoption of interim measures. The Commission finds that argument startling. The applicant has overlooked the recent case-law of the Court on the matter. If non-contractual liability on the part of the Community does not necessarily arise even when a Community measure has been declared invalid or even void, because a series of other conditions has to be met, such liability cannot, a fortiori, arise when an application for annulment has been dismissed as unfounded. The applicant considers that it does not necessarily follow from the case-law of the Court that the Community never incurs non-contractual liability where there is no unlawful measure implying the existence of fault. The applicant considers that the Community might incur non-contractual liability if there was grave and exceptional damage leading to inequality before the law in regard to the burdens to be borne in the public interest. That principle finds support both in the wording of the second paragraph of Article 215 of the Treaty and in the case-law of the Court, as well as in the national laws of the Member States. With regard to the second paragraph of Article 215 of the Treaty, the absence of the word “fault” is not fortuitous. It was the initial version and was deliberately removed when the final version was drafted. The purpose of the Treaty was to allow the Court to determine, by reference to the principles common to the laws of the Member States, the conditions under which the public authorities would be liable in the absence of fault. The applicant refers to the case-law of the Court, and in particular to the judgment of 13 June 1972 (Joined Cases 9 and 11/71 Compagnie d'Approvisionnement, de Transport et de Crédit and Grands Moulins de Paris v Commission [1972] ECR 391, paragraph 46). That case clearly established the principle that the Community could be liable on the basis of a lawful legislative measure. Moreover, the constested measures are in fact administrative, though improperly designated as legislative. With regard to the national laws of the Member States, they are sufficiently similar to support the view that the public authorities are liable for measures, even those of a normative or legislative character, the adoption of which does not involve any fault, where there is grave and exceptional special damage. In particular, that principle is recognized in French, German, Belgian and Italian law. There is no need for the Member States to be unanimous for the principle to be accepted in Community law. The applicant is aware of the restrictive conditions under which the Court recognizes the non-contractual liability of the Communities in connection with legislative measures, but emphasizes that account must be taken of all the circumstances of public or private interest. The existence of grave and exceptional damage to a private interest must suffice, though under conditions which may perhaps be strict, to found liability in the case of lawful legislative measures, and in any event, for lawful administrative measures. The damage suffered by the applicants is special. The amount of that damage is certain. The causal relationship between the alleged damage and the contested measures is not disputed. The applicant points out that question of liability without fault has already been submitted to the Court in Case 26/81, Oleifici Mediterranei. The Commission replies that the Court does not appear to have accepted that the Community may be liable in the absence of fault. The Commission refers to the case-law of the Court (in particular the judgment of 25 May 1978 in Bayerische HNL v Council and Commission [1978] ECR 1209, at p. 1224). The Court held that individuals may be required to accept within reasonable limits certain harmful effects on their interests as a result of a legislative measure even if that measure has been declared null and void. It must therefore be admitted a fortiori that individuals must accept, not a loss, but a mere loss of opportunity, in the case of a lawful measure.
IV — Examination of a witness
When examined, the witness, Mr Guida, stated that prices were the best barometers of the market. Between October 1980 and October 1981 the price of lampante grade oil increased by about 15%. That increase could be explained by various factors: first, the application of the monthly increases in the intervention price, secondly, the devaluation of the green lira and thirdly, inflation in Italy. Moreover, it was normal for prices to increase in the summer, when olive oil consumption was higher and therefore created a demand which exceeded the supply. The way in which prices had developed must be regarded as normal.
It was also incorrect to say that there was a shortage in the sense that the product was not to be had at all. The fact that very little lampante grade oil was offered to the intervention agency meant simply that it was possible to dispose of it on the market, and that there was therefore a sufficient quantity to meet the needs of consumers. With regard to the refineries, they had been working at a loss for some time because the margin between their cost price and their selling price was inadequate. However, the witness was not aware that the refineries had had difficulty in obtaining supplies of lampante grade oil.
V — Oral Procedure
At the sitting on 19 June 1984, oral argument was presented on behalf of the applicant by M. Mahieu and on behalf of the Commission by G. Berardis.
In reply to a question put by the Court, the Commission stated that what it meant by “risk of disturbance” on the olive oil market was the danger that the applicant would get control of a share of the market to which it was not entitled, and thus exclude other traders from that market.
The Advocate General delivered his Opinion at the sitting on 25 September 1984.
Decision
1. By application lodged at the Court Registry on 2 October 1981, SpA Savma, of Milan, brought an action under the second paragraph of Article 173 of the EEC Treaty for a declaration that Commission Regulation No 2238/81 of 3 August 1981 repealing Regulation No 71/81 on the sale of olive oil held by the Italian intervention agency (Official Journal L 218, p. 27), and Commission Regulation No 2239/81 of 3 August 1981 reopening the sale by tender of olive oil held by the Italian intervention agency (Official Journal L 218, p. 28), are void. In addition, or in the alternative if the application for annulment is dismissed, it is seeking damages under Article 178 and the second paragraph of Article 215 of the Treaty in the amounts of LIT 268420000 and LIT 1342100000 respectively.
2. Article 12 of Regulation No 136/66 on the establishment of a common organization of the market in oils and fats (Official Journal, English Special Edition 1965—1966, p. 221), as amended by Council Regulation No 1562/78 of 29 June 1978 (Official Journal L 185, p. 1), obliges the intervention agencies designated by the producer Member States, as a means of stabilizing the olive oil market, to buy in, under certain conditions and at the intervention price fixed for the marketing year involved, olive oil of Community origin which is offered to them by producers. According to the second paragraph of that article, the intervention agencies are to sell within the Community the olive oil bought in by them under conditions such that the market at the production stage is not disturbed.
3. The sale of the olive oil held by the intervention agencies was governed by Commission Regulation No 2960/77 of 23 December 1977 on detailed rules for the sale of olive oil held by intervention agencies (Official Journal L 348, p. 46) and Council Regulation No 2754/78 of 23 November 1978 on intervention in the olive oil sector (Official Journal L 331, p. 13). The preambles to those two regulations emphasize that the sale is to take place without any discrimination between Community purchasers and on the most favourable economic terms, and that sale by tender appears to be the most appropriate system for that purpose. For that reason, Article 2 (1) of both regulations provides that another selling procedure may be used only where special conditions so warrant. Finally, the preamble to Regulation No 2960/77 expressly declares that where there is a risk of market disturbance, provision is to be made for limiting the quantity which may be awarded to any one tenderer.
4. By Regulation No 71/81 of 12 January 1981 (Official Journal L 11, p. 5), the Commission decided that the Italian intervention agency (AIMA) should put up for sale some 33000 tonnes of virgin olive oil from intervention purchases made during the 1977-78 olive marketing year, divided into six lots of about 5500 tonnes each, at a fixed price of LIT 210000 per 100 kg. It was stated in the preamble to the regulation that the olive oil purchased by the Italian intervention agency during the said marketing year had been put up for sale by tender on several occasions but it had only been possible to sell a small proportion of that oil. The preamble also stated that the existing market situation was suitable for putting the oil up for sale again and that production of olive oil in the 1980/81 marketing year was expected to be plentiful. However, so as not to interfere with the normal sale of'production from that marketing year, it was stated that the purchasers of the oil should be obliged to refine it or market it outside the Italian and Greek markets.
5. The regulation provided that sales were to commence on the tenth day following posting of the notice of sale and that lots were to be awarded in the order of submission of applications to purchase, until the lots puţ up for sale had all been disposed of. If applications to purchase were submitted on the same day for the same lot, AIMA was to designate as purchaser the applicant who submitted applications to purchase several lots or, where that was impossible, AIMA was to determine the purchaser by drawing lots. Finally, the oil was to be withdrawn every 30 days from 15 March 1981, in quantities equal to at least 10% and at most 20% of the purchased quantity. The purchaser was to pay the purchase price for each lot of oil withdrawn not later than the end of the fifth month following that in which the quantity concerned was withdrawn.
6. On 2 February 1981, the first day on which applications to purchase could be submitted, 60 undertakings submitted such applications, each being for all of the lots put up for sale. The award of lots was delayed, with the agreement of the Commission, because certain traders contested the admissibility of applications submitted by other undertakings. The drawing of lots provided for in the regulation did not take place therefore until 1 June 1981, and designated the applicant in the present case and five other undertakings (the applicants in Case 232/81) as purchasers of one lot each.
7. On 3 August 1981, the Commission adopted the first of the regulations which the applicant seeks to have declared void, namely Regulation No 2238/81 repealing, with effect from 13 January 1981, the aforementioned Regulation No 71/81. In the preamble to Regulation No 2238/81 the Commission stated that the sale had been delayed as a result of the inquiry undertaken into the abovementioned complaints, but that the consignments put up for sale had finally been allotted to tenderers in accordance with the provisions of Regulation No 71/81. The Commission went on to say: “... meanwhile, the conditions on the olive oil market have altered so that to make the sale on the conditions originally laid down would result in serious disturbance on the market; ... in particular, quantities could be sold by these operators at prices which would shut other operators out of the market”, and accordingly “it is necessary, in the overriding general interest, to cancel the sale in question”. Finally, measures were to be taken in parallel in order to take account of the situation of the operators to whom lots had been allocated.
8. Those measures were the subject of Regulation No 2239/81 of the same date, which is the second of the regulations at issue, and by virtue of which the olive oil referred to in Regulation No 71/81 was to be put up for sale by tender in six lots, the sale being “reserved for tenderers designated pursuant to ... Regulation (EEC) No 71/81”. The oil was to be sold not later than 10 September 1981 and withdrawn in lots commencing on 15 September 1981. The purchaser was to pay the purchase price for each of those lots at the time of withdrawal.
9. On the application of the applicants in Case 232/81, the President of the Court made an order on 21 August 1981 ([1981] ECR 2193) partially suspending application of Regulation No 2239/81 inasmuch as the applicants were, in respect of the lot which had been allocated to each of them on the basis of their tenders, to be required to pay only so much of the price tendered as was equal to the amount which they would have had to pay under the terms of the sale undertaken under Regulation No 71/81. Payment of the remainder was suspended until the Court had given judgment in the main action.
Application for a declaration that Regulations Nos 2238 and 2239/81 are void
Admissibility ofthat applicationio
10. The Commission expresses doubt as to the admissibility of the action. It points out that the provisions in the regulations at issue are of a general and abstract character and that they are therefore not of direct and individual concern to the applicant within the meaning of the second paragraph of Article 173 of the Treaty. The Commission states that when those regulations were adopted, AIMA had not yet sent a letter to the applicant allocating the lot at issue to it. It is that letter of allocation which closed the sale procedure and declared the applicant owner of the lot.
11. In that connection, it should be emphasized that Regulation No 71/81 fixes unconditionally not only the price and the quantities of oil put up for sale, but also all the other conditions of sale, leaving no place for additional contractual stipulations. The applications to purchase could not be withdrawn and the regulation provided that designation of the purchasers from among those who submitted applications was to be by the drawing of lots, without the effect of the latter being subject to any “letter of allocation” being sent. Thus from the time when lots were drawn, at the very latest, the situation as between the parties to the sale was determined. Regardless of when ownership was transferred, it follows that any intervention on the part of the Community institutions preventing AIMA from carrying out its obligations to the tenderers designated by the drawing of lots necessarily constitutes a measure of direct and individual concern to them. Consequently, the application is admissible.
Substance
12. The applicant contends essentially that in adopting Regulations Nos 2238 and 2239/81 the Commission exceeded the powers conferred upon it by the Treaty and by the rules of secondary law relating to the organization of the market in question, which provide that the Commission may act to protect competition only at the production stage and not at the marketing stage. Moreover, the Commission has misused its power of discretion. On the one hand, the development of the market was not unforeseeable and on the other, there was no risk of disturbance. Furthermore, the contested regulations infringe Article 222 of the Treaty, the general principles of legal certainty and, in particular, the principle of legitimate expectation.
13. The only reason given by the Commission to justify the retroactive repeal of Regulation No 71/81 is that canying out the sale on the conditions originally laid down would have resulted in serious disturbance of the olive oil market. It states that during the period which elapsed between the adoption of the first regulation and that of the second the conditions on that market had radically altered. On the one hand, the 1980/81 harvest was much below what had been predicted, and on the other, prices had increased beyond what had been predicted because of the fall in production and the limited quantities of lampante grade oil available on the world market, as well as the devaluation of the green lira.
14. In those circumstances; the conditions of sale, which were already favourable, became unreasonably so and would have permitted a limited number of traders not only to make enormous profits at the expense of the European taxpayer but also to dominate the olive oil market in Italy by excluding from that market all the other traders, who could only obtain that type of oil on much less favourable conditions.
15. With regard to those arguments, it should first be emphasized that the very number of applications to purchase submitted on the first day of the sale should have made the Commission realize that the conditions of sale were, even then, extremely favourable compared to normal market conditions. Moreover, the means of observing market conditions at the disposal of the Commission should have permitted it to revise its forecasts regarding the 1980/81 harvest long before the contested regulations were adopted.
16. Furthermore, the information which the Court has obtained in no way confirms the proposition that the changes relied upon were of as radical a nature as the Commission states. Thus, a witness whose competence was recognized by all the parties stated that it would be wrong to say that during the period in question there was a real shortage, and that he was not aware that the refineries had had any difficulty in obtaining supplies of lampante grade oil. As regards prices, the witness declared that there had been an increase of about 15% in the price of lampante grade oil between October 1980 and October 1981, and that that development should be regarded as normal having regard to seasonal fluctuations, the monthly increases in the intervention price, the devaluation of the green lira and the rate of inflation in Italy.
17. Moreover, the Commission has not explained how a market on which there is a shortage and on which prices are tending to rise could be disturbed solely by the arrival on that market, at regular intervals, of additional quantities of the product likely to be sold at moderate prices. The Commission admitted, in particular during the oral procedure, that the disturbance that it feared was of a more indirect nature in the sense that the profits to be made by the undertakings who had been successful in the drawing of lots would have allowed those undertakings to obtain control of a share of the market to which they were not entitled, thus excluding other traders from the same market.
18. The mere fact that the conditions on which the Commission permitted the national agency to put the products up for sale proved to be favourable, and even extremely favourable, to the purchasers, does not entitle the Commission to prevent that agency from carrying out the contract which had been concluded in accordance with the said condition. With regard to the possibility of an abusive use of those profits, it should be pointed out that the quantity put up for sale was divided between six independent undertakings. The Commission has not even tried to show how and why one of those undertakings would have used the profits so as to exclude, or to have the effect of excluding, other traders from the market.
19. It appears, therefore, that the only ground relied upon by the Commission to justify the repeal of Regulation No 71/81 is vitiated by errors of fact. It is therefore unnecessary to consider whether, in other circumstances, the Commission would have been entitled to repeal the said regulation retroactively and what would have been the consequences of such a repeal as regards the right of the undertakings to compensation. Regulation No 2238/81 repealing Regulation No 71/81 must be declared void, and consequently Regulation No 2239/81 must also be declared void.
20. With that possibility in mind, the Commission asked the Court to apply the second paragraph of Article 174 and to declare that the repeal of the periods of time for payment laid down in Regulation No 71/81 should be regarded as definitive. The Commission emphasized that those periods tend to lower the real price even further, whereas the nominal price is already very favourable.
21. That application cannot be accepted. The said periods for payment are part of the general conditions of sale laid down in Regulation No 71/81. In the circumstances of this case, the Court does not consider that it is necessary to treat that condition any differently from the condition regarding price.
Application for compensation
22. The application for compensation brought by the applicant in the alternative is without purpose as a result of the declaration that Regulations Nos 2238 and 2239/81 are void.
23. With regard to the supplementary application for compensation, to be considered in the event that the application for annulment is not sufficient to obtain compensation for all the loss which the applicant claims to have suffered, it should be stated that the declaration that Regulation No 2238/81 is void entails, in principle, completion of the sale in accordance with the conditions of sale laid down in Regulation No 71/81. If AIMA fails to abide by those conditions to the letter, the applicant has a claim in contract in accordance with national legislation and, if appropriate, may bring proceedings on that basis before the national courts. Only if the applicant can prove the existence of additional loss of a non-contractual nature, therefore, it may bring an application for compensation before this court.
24. The applicant does in fact claim to have suffered a substantial commercial loss because of the uncertainty regarding the final price to be paid for the olive oil, but it has entirely failed to prove that such a loss actually exists.
25. It follows that the supplementary application for compensation must be dismissed.
Costs
26. Article 69 (2) of the Rules of Procedure provides that the unsuccessful party is to be ordered to pay the costs. Since the Commission has failed in its principal submissions it must be ordered to pay the costs.
On those grounds, THE COURT (Fifth Chamber) hereby:
1 Declares Commission Regulation No 2238/81 of 3 August 1981 repealing Regulation No 71/81 on the sale of olive oil held by the Italian intervention agency void:
2 Declares Commission Regulation No 2239/81 of 3 August 1981 reopening the sale by tender of olive oil held by the Italian intervention agency void;
3 Dismisses the remainder of the application;
4 Orders the Commission to pay the costs.