Conclusions
OPINION OF ADVOCATE GENERAL
MISCHO
delivered on 3 June 2003 (1)
Case C-239/01
Federal Republic of Germany
v
Commission of the European Communities
((Partial annulment of Commission Regulation (EC) No 690/2001 of 3 April 2001 on special market support measures in the beef
sector – Power of the Commission to provide for compulsory co-financing by the Member States in an implementing regulation – Compatibility with certain financial provisions of the EC Treaty (Articles 268 EC to 270 EC) – Obligation to state reasons for Community acts))
1. The Federal Republic of Germany has asked the Court to annul Article 5(5) of Commission Regulation (EC) No 690/2001 of 3 April
2001 on special market support measures in the beef sector
(2)
(
the contested regulation), in so far as that provision requires each Member State concerned to finance 30% of the price of the meat purchased under
that regulation.
I ─ Legal context
A ─
The EC Treaty
2. Under Article 202, third indent, EC: To ensure that the objectives set out in this Treaty are attained the Council shall, in accordance with the provisions of
this Treaty:...
- ─
confer on the Commission, in the acts which the Council adopts, powers for the implementation of the rules which the Council
lays down. ...
confer on the Commission, in the acts which the Council adopts, powers for the implementation of the rules which the Council
lays down. ...
3. Under Article 211, fourth indent, EC: In order to ensure the proper functioning and development of the common market, the Commission shall:...
- ─
exercise the powers conferred on it by the Council for the implementation of the rules laid down by the latter.
exercise the powers conferred on it by the Council for the implementation of the rules laid down by the latter.
4. The first paragraph of Article 268 EC provides:All items of revenue and expenditure of the Community, including those relating to the European Social Fund, shall be included
in estimates to be drawn up for each financial year and shall be shown in the budget.
5. The first paragraph of Article 269 EC reads:Without prejudice to other revenue, the budget shall be financed wholly from own resources.
6. Article 270 EC provides:With a view to maintaining budgetary discipline, the Commission shall not make any proposal for a Community act, or alter
its proposals, or adopt any implementing measure which is likely to have appreciable implications for the budget without providing
the assurance that that proposal or that measure is capable of being financed within the limit of the Community's own resources
arising under provisions laid down by the Council pursuant to Article 269.
B ─
Regulations concerning the financing of the common agricultural policy
1. Regulation No 25
7. Regulation No 25 of the Council of 4 April 1962 on the financing of the common agricultural policy,
(3)
last amended by Regulation (EEC) No 728/70 of the Council of 21 April 1970 on additional provisions for the financing of
the common agricultural policy
(4)
(
Regulation No 25), established the European Agricultural Guidance and Guarantee Fund (EAGGF,
the Fund), which forms part of the general budget of the European Communities, and laid down the principles applying to the financing
of the common agricultural policy.
8. Article 2(2) of Regulation No 25 reads:
2. Since at the single market stage price systems will be standardised and agricultural policy will be on a Community basis,
the financial consequences thereof shall devolve upon the Community. The Fund shall accordingly finance:
(a) refunds on exports to third countries;
(b) intervention aimed at stabilising markets;
(c) common measures adopted in order to attain the objectives set out Article 39(1)(a) of the Treaty ... .
2. Regulation (EEC) No 1883/78
9. Pursuant to Article 2 of Council Regulation (EEC) No 1883/78 of 2 August 1978 laying down general rules for the financing
of interventions by the European Agricultural Guidance and Guarantee Fund, Guarantee Section,
(5)
last amended by Council Regulation (EC) No 1259/96
(6)
of 25 June 1996 (
Regulation No 1883/78):Where, within the framework of a common organisation of the market, a sum per unit is determined for an intervention measure,
the resulting expenditure shall be met entirely by Community funds.
10. Article 3 of Regulation No 1883/78 provides as follows:Where, within the framework of a common organisation of the market, a sum per unit is not determined in respect of an intervention
measure, the measure concerned shall be financed by the EAGGF, Guarantee Section, in accordance with the provisions contained
in Articles 4 to 8.
11. Articles 4 to 8 of Regulation No 1883/78 lay down the rules for calculating the intervention expenditure to be met from the
Community budget and the arrangements for payment of such expenditure.
3. Regulation (EC) No 1258/1999
12. The second recital in the preamble to Council Regulation (EC) No 1258/1999 of 17 May 1999 on the financing of the common agricultural
policy
(7)
reads: [w]hereas at the single market stage, in view of the fact that price systems are standardised and the agricultural policy
is a Community policy, the financial consequences devolve upon the Community; whereas, in accordance with that principle as
laid down in Article 2(2) of Regulation No 25, refunds on exports to third countries, intervention aimed at stabilising agricultural
markets ... should be financed by the
Guarantee section of the Fund in order to achieve the objectives set out in Article 33(1) of the Treaty.
13. Article 1 of Regulation No 1258/1999 provides:
1. The European Agricultural Guidance and Guarantee Fund (hereinafter called the
Fund) shall form part of the general budget of the European Communities.It shall comprise two sections:─ the Guarantee Section,─ the Guidance Section.
2. The Guarantee Section shall finance:
(a) refunds on exports to third countries;
(b) intervention intended to stabilise the agricultural market[s];
(c) rural development measures outside Objective 1 programmes except the rural development Community initiative;
(d) the Community's financial contribution towards specific veterinary measures, inspection measures in the veterinary field and
programmes for the eradication and monitoring of animal diseases (veterinary measures) as well as towards plant health measures;
...
4. Expenditure relating to administrative costs and personnel borne by Member States and by recipients of aid from the Fund shall
not be taken over by the Fund.
14. Article 2(2) of Regulation No 1258/1999 provides:2. Intervention intended to stabilise the agricultural markets, undertaken in accordance with Community rules within the framework
of the common organisation of agricultural markets, shall be financed under Article 1(2)(b).
C ─
Regulations on the common organisation of the markets in the beef and veal sector
1. Regulation (EC) No 1254/1999
15. The 31st recital in the preamble to Council Regulation (EC) No 1254/1999 of 17 May 1999 on the common organisation of the
market in beef and veal
(8)
reads:[w]hereas it is appropriate to provide for measures to be taken when a substantial rise or fall in prices disturbs or threatens
to disturb the Community market; whereas these measures may also include ad hoc intervention buying-in.
16. In the words of the 36th recital in the preamble to Regulation No 1254/1999:[w]hereas expenditure incurred by the Member States as a result of the obligations arising out of the application of this
regulation should be financed by the Community in accordance with Council Regulation (EC) No 1258/1999 of 17 May 1999 on the
financing of the common agricultural policy.
17. Pursuant to Article 38 of Regulation No 1254/1999:
1. When a substantial rise or fall in prices is recorded on the Community market and this situation is likely to continue, thereby
disturbing or threatening to disturb the market, the necessary measures may be taken.
2. Detailed rules for the application of this article shall be adopted by the Commission in accordance with the procedure laid
down in Article 43.
18. Under Article 45 of Regulation No 1254/1999:Regulation (EC) No 1258/1999 and the provisions adopted in implementation thereof shall apply to the products listed in Article
1.
2. Regulation (EC) No 2777/2000
19. On the basis of Article 38(2) of Regulation No 1254/1999, the Commission adopted Regulation (EC) No 2777/2000 of 18 December
2000 adopting exceptional measures for the beef market,
(9)
amended by Commission Regulation (EC) No 111/2001 of 19 January 2001,
(10)
which provided for a purchase scheme, from 1 January 2001 to not later than 30 June 2001, for the purpose of the destruction
of animals more than 30 months old and mainly of animals not subject to screening for bovine spongiform encephalopathy (BSE)
when being slaughtered.
20. Article 4(2) of Regulation No 2777/2000 provided that, for each fully destroyed animal, the Community should co-finance 70%
of the expenditure on purchasing the animal at a flat rate, leaving 30% to be financed by the national authorities.
3. The contested regulation
21. The contested regulation was adopted on the basis of Article 38(2) of Regulation No 1254/1999.
22. It introduces a special new purchase scheme for meat from certain categories of bovine animals aged more than 30 months which
have been tested for BSE, enabling Member States to store the meat instead of destroying it. The scheme is applicable in any
Member State, except the United Kingdom, from 1 July 2001 to 31 December 2001.
23. In the words of the fifth recital in the preamble to the contested regulation:In view of the extent of the BSE crisis and in particular of its probable duration, and consequently of the magnitude of the
efforts needed to support the market, it would be appropriate for such efforts to be shared between the Community and the
Member States especially in view of the large number of animals expected to be purchased under the scheme as well as the limited
nature of the budgetary resources available for Community financing.
24. Article 1(1) of the contested regulation provides:1. Member States shall purchase chilled carcasses or half carcasses from bovine animals over 30 months of age of the following
categories ...
25. Pursuant to Article 2 of the contested regulation:
1. The purchase price for chilled carcasses to be bought in a Member State under this regulation shall be determined following
a tender procedure.
2. Tendering shall be opened in a Member State which for two consecutive weeks [has] recorded the average market price for the
reference class of category D equal to or below the trigger price listed in Annex I in respect of the Member State concerned
...
26. Article 3(1) of the contested regulation reads: 1. In the light of the tenders received under each individual invitation to tender and in accordance with the procedure laid
down in Article 43 of Regulation (EC) No 1254/1999 a maximum buying-in price relating to the reference class shall be fixed.
A different price may be set per Member State.The maximum price shall not exceed the trigger price plus EUR 14 per 100 kg carcass weight.
27. Pursuant to Article 5 of the contested regulation:
1. The competent authority shall pay successful tenderers the price quoted in their tenders no later than 65 days after completion
of take-over of the products concerned.
2. Only the quantity actually delivered and accepted shall be paid for within the limit of the quantity awarded....
5. The Community shall finance 70% of the price of the meat purchased under this regulation.The Member State concerned shall finance the remaining 30% as well as all costs related to the operations under Articles 6,
7, 8 and 9.
II ─ Written procedure and forms of order sought by the parties
28. In the application received by the Court Registry on 14 June 2001, the Federal Republic of Germany claims that the Court should:
- ─
annul Article 5(5) of the contested regulation in so far as it requires each Member State concerned to finance 30% of the
cost of the meat purchased pursuant to the said regulation;
annul Article 5(5) of the contested regulation in so far as it requires each Member State concerned to finance 30% of the
cost of the meat purchased pursuant to the said regulation;
- ─
order the Commission to pay the costs.
order the Commission to pay the costs.
29. The applicant observes that, if its application is granted, the effects of the contested regulation should be maintained so
as not to frustrate the legitimate expectation of the beneficiaries of support measures and also to meet the requirements
of the principle of legal certainty.
30. The Commission contends that the Court should:
- ─
dismiss the application;
dismiss the application;
- ─
order the Federal Republic of Germany to pay the costs.
order the Federal Republic of Germany to pay the costs.
31. The Commission states that, should the application be granted, it supports the applicant's suggestion that the effects of
the contested regulation be maintained pursuant to the second paragraph of Article 231 EC.
32. By order of 8 November 2001, the President of the Court gave the Kingdom of Denmark leave to intervene in support of the form
of order sought by the Federal Republic of Germany.
III ─ Analysis
A ─
Admissibility of the application
33. The Court put questions to the parties on the admissibility of the application in the light of the Court's case-law to the
effect that the partial annulment of a Community act is possible only if the elements whose annulment is sought may be severed
from the remainder of the act.
(11)
1. Observations of the parties
34. According to the
German Government, the annulment of Article 5(5) of the contested regulation, in so far as it requires each Member State concerned to finance
30% of the price of meat purchased under that regulation, in no way affects the special measures taken pursuant to the contested
regulation, which was in force for a limited period up to 31 December 2001. Such partial annulment would have consequences
only for the relationship between the Community and the Member States. In particular, partial annulment would lead to the
application of the general rules concerning the financing of the common agricultural policy and therefore the Community would
have to reimburse the Member States for the portion of the finance which they had hitherto been (wrongly) charged.
35. The German Government considers that, in those circumstances, the disputed element of the contested regulation can be severed
from the remainder. The government adds that it has not been shown that the Commission would not have adopted the contested
regulation if it had not been able to rely on co-financing. Finally, the German Government refers to the judgment in
Lomas and Others,
(12)
which, according to that government, confirms the severable nature of provisions concerning the calculation of an agricultural
intervention measure, as compared with the provisions governing the actual application of the measure.
36. The
Commission considers that, from a purely legal viewpoint, the element of the contested regulation of which the German Government seeks
annulment is severable from the remainder of the regulation. If the Court granted the partial annulment in question, that
would not compel the Community legislature to adopt a new regulation requiring the Community to meet the cost of purchasing
beef carcasses because, without specific legislation, the general financial rules of Regulations Nos 1254/1999 and 1258/1999
would be applied.
37. However, the Commission observes that, in substance, there is a very close connection between the co-financing provision and
the remainder of the contested regulation.
38. First, the Commission is very doubtful whether, if co-financing had not been possible, it would have adopted the contested
regulation as it stands, by charging to the Community budget all the costs arising from the measures which were adopted.
39. Second, the Commission contends that the co-financing rule cannot be severed from the rule laid down by Article 10 of the
contested regulation, which provides that
proceeds from sales of products in conformity with this regulation shall belong to the Member State concerned. According to the Commission, there would be no reason for giving the Member States the benefit of the proceeds of sale if
the Community had provided 100% of the finance for the measures.
40. Because of this substantive and objective connection, the Commission considers that the co-financing rule is not severable
from the remainder of the contested regulation. The Commission claims that its position is confirmed by the Opinions of Advocate
General Fennelly in
Germany v
Parliament and Council
(13)
and Advocate General Geelhoed in
Commission v
Parliament and Council.
(14)
41. According to the Commission, if the Court finds that the co-financing rule is not actually severable from the remainder of
the contested regulation, the application for partial annulment must be ruled inadmissible.
42. According to the
Danish Government, the question of finance can be separated from the remainder of the regulation. The government observes that the annulment
of Article 5(5) of the regulation would only mean that the financing of the beef purchases provided for by the regulation
would follow the normal rules, namely that purchases would be 100% financed by the Community. The Member States which had
purchased beef and had financed 30% of the price would, in that case, be reimbursed for that expenditure by the Community.
2. Assessment
43. I think it would he helpful to take as a starting point the reasoning of the judgment in
Commission v
Council, cited above. The Commission brought an action for the partial annulment of the unpublished Council decision of 7 December
1998 approving the accession of the European Atomic Energy Community to the Nuclear Safety Convention. In reply to the Council's
plea of inadmissibility on the ground that the decision was indivisible, the Court held as follows:
45
It follows from the Court's case-law that the partial annulment of a decision is possible if the elements whose annulment
is sought may be severed from the remainder of the decision (see, to that effect, Case 17/74
Transocean Marine Paint v
Commission [1974] ECR 1063, paragraph 21, and Joined Cases C-68/94 and C-30/95
France and Others v
Commission [1998] ECR I-1375, paragraph 256). That is the situation in the present case.
46
The elements whose omission would render the decision unlawful are not, by definition, set out therein and are accordingly
separable from its provisions. The annulment of the third paragraph of the declaration for failure to refer to certain articles
of the Convention would in no way affect the legal scope of the provisions on which the Council has already taken a view.
Such an annulment would therefore not alter the substance of the contested decision. Accordingly, those elements may be severed from the remainder of the contested decision.
(15)
44. Like the German Government, I consider that the aspect of the contested regulation which the government seeks to have annulled,
namely 30% financing by the Member States, required by the second paragraph of Article 5(5), is severable from the remainder
of the regulation in the sense that the annulment of that element would not alter the substance of the contested regulation.
45. The substance of the regulation consists in the introduction of a special purchase scheme for beef in order to meet the BSE
crisis, as confirmed by the first
(16)
and fourth
(17)
recitals in the preamble to the contested regulation.
46. The partial annulment of the regulation would leave its substance completely intact. Moreover, it has been implemented for
several years and would give rise only to financial compensation from the Community to the Member States concerned, as confirmed
by the German and Danish Governments and also the Commission, in so far as the Community would have to reimburse the Member
States for their expenditure under the co-financing obligation, assuming it to be unlawful.
47. In addition, the Commission's argument that it would probably not have adopted the contested regulation as it stands if co-financing
had not been possible does not mean that the co-financing provision cannot be regarded as severable from the remainder of
the regulation.
48. A similar argument of the Council in
Commission v
Council, cited above,
(18)
did not prevent the Court from holding that the aspect of the Council decision which the Commission sought to have annulled
was severable from the remainder of the decision. The reason was that the criterion arising from that judgment, namely the
effect of partial annulment on the substance of the regulation in question, was not a subjective criterion but an objective
one
(19)
connected with the political intention of the authority which had adopted the contested act. Furthermore, a subjective criterion
would not be feasible in that it would be difficult to establish for certain what position would have been adopted by the
institution in question if a financial contribution by the Member States had been excluded from the beginning.
49. Likewise, the connection which, according to the Commission, exists between co-financing and the fact that the revenue from
sales reverts to the Member States does not seem to me sufficient to conclude that co-financing is inseparably connected with
the remainder of the contested regulation.
50. This is a connection with a very limited aspect of the contested regulation, and that aspect itself does not concern the substance
of the regulation. In addition, in the framework of the measures which it would have to take under Article 233 EC in the event
of partial annulment, it would not be impossible for the Commission to enact provisions with the object of preventing unjustified
enrichment of the Member States.
51. Finally, let me add that the complete annulment of the contested regulation, which is not sought in this case, could even
be considered disproportionate to the objective which is to be attained, which is, for the German Government, the elimination
of compulsory co-financing. Complete annulment would create a situation of legal uncertainty for business firms which have
benefited from intervention under the regulation in question, which would not be the case if the application for partial annulment
were granted.
52. Therefore I consider that the application, as worded by the Federal Republic of Germany, is admissible.
B ─
First plea in law: no legal basis
1. Arguments of the parties
53. With regard to the substance of the case, the
German Government contends, as its first plea in law, that the contested regulation has no valid legal basis at all. The Commission had no
power to provide for compulsory co-financing by the Member States in an implementing regulation like the one in question.
54. Under Article 38(2) of Regulation No 1254/1999, which is the legal basis for the contested regulation, the Commission has
power only to adopt detailed rules for the application of Article 38(1), which provides for the necessary measures to be taken
when a substantial rise or fall in prices disturbs or threatens to disturb the Community market.
55. According to the German Government, the Council, in empowering the Commission to adopt implementing measures, did not give
the Commission power to adopt measures which disregard the basic legislation on an essential point by introducing compulsory
co-financing.
56. Regulation No 1254/1999 provides for the exclusive financing by the Community of all the necessary support measures on the
beef market. This follows from the fact that, according to the 36th recital in the preamble to and Article 45 of Regulation
No 1254/1999, expenditure incurred by the Member States as a result of the obligations arising from the application of the
regulation in question is to be financed by the Community in accordance with Regulation No 1258/1999.
57. Article 1(2)(b) of Regulation No 1258/1999 does not provide for the co-financing by Member States of intervention intended
to stabilise the agricultural markets. In addition, it is clear from the second recital in the preamble to that regulation
(20)
that the cost of Community intervention measures is met entirely from the Community budget.
58. The German Government adds that this conclusion is confirmed by Articles 2 and 3 of Regulation No 1883/78 which, although
they distinguish between intervention measures for which a sum per unit is fixed and those for which it is not fixed, provide
in both cases that the expenditure on intervention measures is to be met entirely by the Community.
(21)
59. According to the German Government, the introduction of compulsory co-financing by the contested regulation also interferes
with the institutional balance between the Council and the Commission provided for by Articles 202 EC and 211 EC. The compulsory
contribution of 30% imposed on the Member States by Article 5(5) of the contested regulation does not constitute implementation,
but a modification, of an essential rule of Regulation No 1254/1999.
60. On this point, the German Government observes that, although the Commission is in principle authorised to provide for buying-in
measures (as in the present case) by means of an implementing regulation, where that is required by changes in the price structure
of beef markets, it cannot modify one of the foundations of the Community beef markets, namely the 100% financing of support
measures of that kind from the Community budget resources, as laid down by Regulation No 1254/1999.
61. Finally, according to the German Government, it follows from Article 2(2)(b) of Regulation No 25, which is still in force,
that the financial consequences of standardised price systems and of the common agricultural policy devolve upon the Community,
particularly in the case of intervention aimed at stabilising markets, that is to say, measures such as those of the contested
regulation.
62. The
Commission for its part contends, first, that Article 38 of Regulation No 1254/1999 authorises it to take all the necessary measures
when a substantial rise or fall in prices disturbs or threatens to disturb the Community market. The Commission observes that
this provision lays down no condition other than the need for the measures in question. In the present case, the beef purchases
ordered by the contested regulation were undoubtedly appropriate for contributing to the stabilisation of the Community beef
market, which had been affected by the BSE crisis.
63. Moreover, according to the Court's settled case-law, the legality of a measure adopted in the area of the common agricultural
policy can be affected only where the measure is manifestly inappropriate or where the institution enacting it has manifestly
exceeded its discretionary power.
64. In those circumstances, the Commission considers that Article 38 of Regulation No 1254/1999, which gave the Commission an
exceptional power in order to resolve crisis situations, necessarily authorised it to derogate from the other provisions of
that regulation, particularly those concerning financing, if that was found to be absolutely essential.
65. In addition, the Commission notes that the Court has consistently held that the concept of
implementing powers conferred upon the Commission must be construed broadly.
66. Secondly, the Commission claims that, in adopting Article 5(5) of the contested regulation, it did not infringe the financial
rules laid down by the Council.
67. The Commission adds that, although it is true that intervention to stabilise the agricultural markets is generally financed
entirely by the Guarantee Section of the Fund, that was a matter of practice and not a legal obligation. In particular, Article
1(2)(b) of Regulation No 1258/1999 could not be interpreted as establishing any such obligation because it did not provide
expressly for finance to be provided entirely by the Community.
68. According to the Commission, Article 2 of Regulation No 1883/78 must also be taken into account. An
a contrario interpretation of that provision shows clearly that there is no legal obligation for the entire finance to be provided by
the Community in the case of intervention measures not covered by such provision. That was the situation with regard to the
measure laid down by the contested regulation because it provided that the meat purchase price was to be determined on the
basis of an invitation to tender, not by reference to a sum per unit fixed in advance.
69. Should the Court not agree with the Commission and consider that the Guarantee Section of the Fund must finance agricultural
intervention measures in their entirety, the Commission contends in the alternative that the derogation from the legal obligation
arising from Article 5(5) of the contested regulation was necessary in the present case and was therefore covered by Article
38 of Regulation No 1254/1999. For timetable reasons, the additional costs caused to the Community by the new BSE crisis could
not be taken into account when the budget for the 2001 financial year was prepared. The funds originally earmarked for financing
agricultural expenditure were therefore likely to be insufficient.
70. Third, the Commission claims that the applicant is mistaken in asserting that Article 5(5) of the contested regulation is
an essential rule which, according to the Court's case-law, is reserved for the Council alone and which therefore cannot be
adopted by the Commission on the basis of its implementing powers.
71. The abovementioned provision, it argues, is not a rule expressing a fundamental aim of the common agricultural policy in the
beef sector, but only a one-off measure applying for six months.
72. Furthermore, according to the Commission, in the area of financial rules, as in any other, the Council has only to regulate
the general basic elements of the subject-matter and may properly delegate the power necessary for implementing them to the
Commission.
73. The
Danish Government indicates that, like the German Government, it does not dispute that, in the framework of its legislative function, the Council
has power to adopt a measure derogating from the principle that the Community should provide the entire finance for measures
for the stabilisation of agricultural markets.
74. This fundamental principle had been made explicit already by Regulation No 25, which established the Fund and is still in
force to this day, as confirmed by Article 1(2)(b) of Regulation No 1258/1999 and Article 2 of Regulation No 1883/78.
75. Regarding the Commission's argument that the measures covered by Article 3 of Regulation No 1883/78 may be financed by the
Member States, the Danish Government submits that this must be dismissed. Even if it were accepted that Article 3 applied
in the present case, it did not give details of the method of financing the measures falling within its scope. Consequently,
there was nothing to support the argument that the Council intended, by means of that measure, to modify the principle that
the Community should provide the entire finance for intervention in the framework of the common organisations of markets.
76. The Danish Government adds that, if the Commission's arguments were accepted, the Commission could theoretically have established
a financing system whereby the Member States would have had to pay 95% and the Community 5% of the expenditure on buying-in
operations imposed on the Member States by the contested regulation.
77. In the opinion of the Danish Government, if the Commission had any such power to disregard the fundamental principle of Community
financing within the common organisations of markets, the effect would be, first, to upset the institutional balance within
the Community and, second, to render the limit on common agricultural expenditure illusory, because the Community budget would
no longer reflect the expenditure connected with the common agricultural policy.
78. According to the Danish Government, if the Community budget does not provide for funds which can finance intervention measures
such as those provided for by the contested regulation, the Commission must seek to establish the financial basis necessary
for financing the expenditure in conformity with the financial provisions of the EC Treaty.
2. Assessment
79. I find the arguments of the German and Danish Governments more persuasive than those of the Commission.
80. The Court has consistently held that implementing measures adopted by the Commission must not be contrary to the basic legislation
adopted by the Council,
(22)
which is nothing other than an expression of the fundamental principle that a legal rule of a particular level must respect
and implement those of a higher level (
hiérarchie des normes).
(23)
81. The Commission contends that, in providing for compulsory co-financing in the contested regulation, it did not derogate from
the basic legislation, which in this case was constituted by Regulation No 1254/1999 and Regulation No 1258/1999 (by reason
of the reference to the latter in Article 45 of the former).
82. I am not persuaded by this.
83. It is true that Article 38 of Regulation No 1254/1999, on which the contested regulation is based, does not specify the detailed
rules for financing the
necessary measures adopted pursuant to that provision. However, other provisions of the basic legislation indicate that measures within the
scope of that regulation must be financed entirely by the EAGGF.
84. In this connection, I would mention, first, the 36th recital in the preamble to Regulation No 1254/1999, which states that
... expenditure incurred by the Member States as a result of the obligations arising out of the application of this regulation
should be financed by the Community in accordance with Council Regulation (EC) No 1258/1999 ....
(24)
85. Next, it must be observed that the Commission's argument amounts to saying that the
conventional intervention purchases provided for by Article 27 of Regulation No 1254/1999 must be entirely financed by the Guarantee Section
of the Fund, but that does not apply to
ad hoc intervention buying-in
(25)
permitted by Article 38, if the Commission so decides in the framework of the Management Committee procedure. I consider
that, at the very least, all measures which constitute intervention buying-in should be financed in the same way.
86. Neither should the second recital in the preamble to Regulation No 1258/1999 be overlooked. It states that
... at the single market stage, in view of the fact that price systems are standardised and the agricultural policy is a Community
policy, the financial consequences devolve upon the Community; whereas, in accordance with
that principle as laid down in Article 2(2) of Regulation No 25 ....
(26)
87. Furthermore, the difference in the wording of points (b) and (d) of Article 1(2) of the same regulation confirms, in my opinion,
that measures covered by point (b), including the measures referred to by the contested regulation, are to be financed entirely
by the Community.
88. Under Article 1(2)(b),
[t]he Guarantee Section shall finance ... intervention intended to stabilise the agricultural market[s]. On the other hand, Article 1(2)(d) provides that
[t]he Guarantee Section shall finance ...
the Community's financial contribution towards specific veterinary measures ....
(27)
89. The phrase
the Community's financial contribution indicates that, in the cases referred to by point (d), the Community merely finances part of the expenditure. This implies
that other financial contributions exist and that consequently there is co-financing. The same phrase precisely does not appear
in Article 1(2)(b) of the regulation in question which, in my view, confirms that the Community provides the entire finance
for the intervention referred to by that provision.
90. In my opinion, this conclusion cannot be refuted by the Commission's reference, in its pleadings, to Council regulations and
decisions which provide for compulsory co-financing in the area of the common agricultural policy.
(28)
As I see it, there is no doubt the Council has such a power, but the question is whether it delegated it to the Commission,
which, in my opinion, is not the case. Alternatively, it should also be noted that none of the measures referred to by the
Commission relates to intervention purchases.
91. Furthermore, I agree with the German Government that the rules concerning the question of principle as to who finances measures
relating to the common agricultural policy are
rules essential to the subject-matter in question which, as the Court has previously held,
(29)
are reserved for the Council. Such rules do not relate to this or that technical detail but form part of the fundamental
aims of a policy.
92. It follows that, in my opinion, the Commission did not have power in this case to lay down rules concerning co-financing.
93. The Commission's argument that Article 5(5) of the contested regulation, which provides for co-financing, was not an
essential rule on the ground that it was a one-off measure for a limited period cannot be accepted either.
94. First of all, it is wrong to put the question in those terms. Whether the principle of Community financing of intervention
measures is an essential rule depends on the substance of the rule, and the adoption of a measure derogating temporarily from
that rule does not mean that it becomes non-essential. To accept the Commission's argument would amount to permitting it to
frustrate the principle that the adoption of essential rules cannot be delegated by means of renewing derogation measures
for successive six-month periods.
(30)
95. Furthermore, the Court's settled case-law stating that the concept of implementation must be given a wide interpretation
(31)
does not justify the conclusion that the Commission had power to provide for co-financing in the present case.
96. The reason is that those cases do not permit the Commission to adopt rules which are contrary to the basic legislation and
which, furthermore, are reserved for the Council.
97. The judgment in
France and Ireland v
Commission, cited above, to which the Commission refers, does not contradict this conclusion.
98. At paragraph 21 of that judgment the Court observed that:if the Commission were empowered under the fifth indent of Article 6(7) of Regulation No 805/68, as amended, only to adopt
measures already authorised under other provisions, the power thus conferred would essentially be ineffective in pursuing
the aim of preventing market prices from spiralling downward ....
99. That case concerned the legality of a limit, laid down by the Commission, on the weight of carcasses which were eligible for
intervention.
(32)
Such a measure seems to me to be of a completely different order of importance from the introduction of compulsory co-financing
by the Member States. Moreover, it has not been shown that Article 38 of Regulation No 1254/1999 would have been rendered
ineffective if the Commission had abided by the principle of Community financing for the measures adopted under that provision.
100. Furthermore, in view of the European Parliament's and the Member States' awareness of the BSE problem, the Commission would
probably have had no difficulty in obtaining the Parliament's consent to a new supplementary and amending budget. The Member
States' contributions could also have taken the form of advances to be repaid in the framework of the budget for the following
year.
101. The Commission adds that Article 38 of Regulation No 1254/1999 gives it an emergency power (
Notkompetenz) for dealing with crisis situations.
102. Whilst that is undoubtedly the case, such a power does not justify the conclusion that the basic principles of the delegation
of authority, in particular the principle that measures adopted by the Commission must not derogate from the basic legislation
adopted by the Council, no longer apply.
103. Finally, with regard to the fact that Germany did not bring an action against Regulation No 2777/2000, it is sufficient to
observe, as the German Government rightly does, that the fact that the Commission acted in a certain way in the past does
not preclude a judicial review of a similar or identical measure adopted at a later date.
104. For all the reasons I have mentioned, I think the Commission had no power to provide for co-financing in the contested regulation.
Consequently, I consider the first plea to be well founded and I propose that the application by the Federal Republic of Germany
be granted.
C ─
Second plea in law: breach of Articles 268 EC to 270 EC
105. Because of the conclusion I reached in connection with the first plea in law, I shall examine the German Government's second
and third pleas only in the alternative.
1. Arguments of the parties
106. In its second plea in law, the
German Government submits that the imposition of compulsory co-financing on the Member States in the framework of the common organisation of
the beef and veal markets is contrary to various financial provisions of the Treaty.
107. Notwithstanding partial financing from national budget resources, the support measures provided for by the contested regulation
constitute Community aid and are therefore
expenditure of the Community within the meaning of the first paragraph of Article 268 EC. By using the adjective
all (items of revenue and expenditure), the said provision establishes the basic principle of the unity of the budget, as well
as the basic conditions for the political weighting of revenue and expenditure in the budgetary procedure and for the democratic
control of implementation of the budget.
108. According to the German Government, the (partial) financing of Community expenditure by virtue of a compulsory rule of secondary
Community law, by means of funds which do not form part of the Community budget plan is not compatible with the principle
of the unity of the Community budget.
109. For the same reasons, Article 5(5) of the contested regulation is said to be contrary to the budgetary provision of the first
paragraph of Article 269 EC. The
other revenue to which that provision refers means only the revenue occasionally paid to the Commission in connection with its administrative
work (such as fines and penalties) and which therefore does not originate from the budgetary resources of the Member States.
Compulsory co-financing by the Member States, as provided for by the Commission, is in any case contrary to the principle
of the Community's financial independence of the Member States, as provided for in the first paragraph of Article 269 EC,
because such co-financing is not an authorised source of
own resources within the meaning of that article.
110. In addition, the German Government contends that, if the Commission had power to organise Community expenditure without it
being financed entirely from the Community budget, the limit on own resources laid down by Articles 269 EC and 270 EC would
not establish an effective limitation of Community expenditure.
111. The
Commission replies that the German Government's argument is based on the mistaken premiss that the portion of the expenditure on the
purchase of meat which must be borne by the Member State in question pursuant to Article 5(5) of the contested regulation
is Community aid, like the portion financed by the Community, and is therefore an item of Community expenditure within the
meaning of the first paragraph of Article 268 EC.
112. First, according to the Commission, the German Government is mistaken in treating Community aid as Community expenditure.
In reality, the Commission argues, it is clear from the Court's case-law
(33)
that expenditure incurred directly by the Member States, as in the present case, does not constitute Community expenditure
which has to be shown in the Community budget, even if it is based on a legal act of the Community.
113. Secondly, it argues, the German Government has forgotten that the funds which the Member States pay out of their national
budgets in order to co-finance a measure under the common agricultural policy retain the nature of State aid.
114. Consequently, Articles 268 EC and 269 EC do not apply to funds which Member States must provide for co-financing imposed by
the contested regulation and the Commission cannot therefore have breached those articles by adopting Article 5(5) of the
regulation.
115. The Commission adds that, if the German Government's argument were accepted, it would be not only the Commission, but also
the Council and the Parliament which would be unable to impose compulsory co-financing of certain Community measures because
none of the institutions can breach the financial provisions of the Treaty.
2. Assessment
116. I consider the German Government's second plea in law unfounded.
117. Articles 268 EC to 270 EC relate to
revenue and expenditure
of the Community,
(34)
as is clear from the beginning of Article 268 EC. Therefore they do not by their very nature apply to funds which, in the
framework of co-financing, are from a source other than a Community source.
118. Furthermore, the fact that co-financing by the Member States is made compulsory by a Community rule does not alter the nature
of the funds contributed by the Member States. Such an obligation does not affect the source of the finance which, in my view,
is the only factor which determines whether finance is Community finance or not.
119. I think this is also confirmed by the judgments cited above in
Parliament v
Council and Commission and Case C-316/91
Parliament v
Council, to which the Commission has drawn attention and in which, in both cases, the Court, in finding that the expenditure in question
was not expenditure of the Community, was guided essentially by the fact that the finance in question was directly provided
by the Member States.
(35)
D ─
Third plea in law: breach of Article 253 EC
1. Arguments of the parties
120. The
German Government submits that the statement of reasons of the contested regulation does not fulfil the requirements of Article 253 EC with
regard to the statement of reasons concerning the imposition of compulsory co-financing on the Member States. In this connection
the fifth recital in the preamble to the contested regulation merely states that the Community's own resources are limited.
Therefore the contested regulation does not show by what right the Commission claims to be able to modify, by a compulsory
co-financing measure, the principle of the 100% financing of support measures on the beef and veal market from Community budget
resources. Likewise, the contested regulation does not state the reason for choosing a cost-sharing formula of 70% ─ 30% for
financing the support measures.
121. The
Commission contends that, according to settled case-law, it is not necessary for the statement of reasons required by Article 253 EC
to specify all the relevant elements of fact and of law. In the case of measures intended to have general application, the
statement of reasons may be confined to indicating the general situation which led to its adoption, on the one hand, and the
general objectives which it is intended to achieve, on the other.
122. The contested regulation met those requirements with regard to its Article 5(5), which imposes the co-financing in question.
First, the preamble to the contested regulation, which refers to Regulation No 1254/1999, leaves no doubt that the whole of
the contested regulation, including Article 5(5), is based on Article 38 of the said basic regulation. Second, the fifth recital
in the preamble to the contested regulation contains a brief, but complete, outline of the considerations which led the Commission
to introduce compulsory co-financing. As the contested regulation was a measure having general application, it was not necessary
in the preamble to give details of the calculations which resulted in the cost-sharing formula of 70% ─ 30%.
123. The Commission adds that it is unnecessary to state reasons where the persons to whom an act is addressed have been associated
with the drafting of the measure, which was true of the Member States represented on the Management Committee for Beef and
Veal, which had been asked to deliver an opinion on the draft regulation.
2. Assessment
124. The Court has consistently held that
the scope of the obligation to state reasons depends on the nature of the measure in question and that, in the case of measures
of general application, the statement of reasons may be confined to indicating the general situation which led to its adoption,
on the one hand, and the general objectives which it is intended to achieve, on the other. If the contested measure clearly
discloses the essential objective pursued by the institution, it would be excessive to require a specific statement of reasons
for the various technical choices made (see,
inter alia, Case C-150/94
United Kingdom v
Council [1998] ECR I-7235, paragraphs 25 and 26).
(36)
125. It seems to me that, so far as compulsory co-financing is concerned, the contested regulation meets the requirement to show
the Commission's essential objective. The fifth recital in the preamble to the regulation reads:In view of the extent of the BSE crisis and in particular of its probable duration, and consequently of the magnitude of the
efforts needed to support the market, it would be appropriate for such efforts to be shared between the Community and the
Member States especially in view of the large number of animals expected to be purchased under the scheme as well as the limited
nature of the budgetary resources available for Community financing.
126. Therefore the Commission explains in the contested regulation itself the reasons why, in its opinion, co-financing is necessary.
127. On the other hand, with regard to the cost-sharing formula for co-financing, I consider that to be a
technical choice within the meaning of the case-law cited above, in relation to which it would be excessive to require a specific statement
of reasons.
128. Therefore the German Government's third plea in law seems to me unfounded.
E ─
The parties' request to maintain the effects of the contested regulation
129. The German Government asks that the effects of the contested regulation be maintained if it is annulled by the Court. The
Commission joins in this request.
130. The mere fact that both parties to the dispute request that the effects be maintained does not oblige the Court to grant the
request. Under the second paragraph of Article 231 EC, the Court is to decide whether such a measure is necessary.
131. I am not persuaded that it is necessary to grant the parties' request.
132. As the foregoing discussion concerning the admissibility of the present action has shown, the partial annulment of the contested
regulation would have no effect on the measures already adopted under it. However, the German Government is not seeking the
annulment of the provision of the contested regulation which creates rights for economic entities, namely, essentially, Article
5(1), which provides that
the competent authority shall pay successful tenderers the price quoted in their tenders no later than 65 days after completion
of take-over of the products concerned.
133. Regarding financial compensation from the Community to the Member States, to which partial annulment would give rise,
(37)
I think there is no reason for preventing this by finding that the effects of the contested regulation must be maintained.
Any lack of the necessary resources in the Community budget for the current year in which the Court's judgment in this case
is delivered cannot, in itself, justify maintaining the effects of an unlawful situation. The necessary amounts can be provided
for in the budget for the following year. Moreover, although it is only a question of principle which is at issue, and not
the repayment of the amounts appropriated by the Member States, there is nothing to prevent the Council from adopting a regulation
stipulating that expenditure by the Member States under the contested regulation will remain to be defrayed by them.
134. Finally, as the contested regulation produces no effect at present, the maintenance of the effects as requested by the parties
would mean that annulment by the Court has not the slightest effect for the past or for the future. Consequently, the action
brought by the German Government would amount to seeking the Court's opinion on the legality of the contested regulation,
which cannot be the meaning of an application for annulment as provided for by Article 230 EC.
IV ─ Conclusion
135. In view of the foregoing observations, I propose that the Court should:
- ─
annul Article 5(5) of Commission Regulation (EC) No 690/2001 of 3 April 2001 on special market support measures in the beef
sector, in so far as that provision requires each Member State concerned to finance 30% of the price of the meat purchased
under that regulation;
annul Article 5(5) of Commission Regulation (EC) No 690/2001 of 3 April 2001 on special market support measures in the beef
sector, in so far as that provision requires each Member State concerned to finance 30% of the price of the meat purchased
under that regulation;
- ─
dismiss the request to maintain the effects of the annulled provision;
dismiss the request to maintain the effects of the annulled provision;
- ─
order the Commission to pay the costs.
order the Commission to pay the costs.
- 1 –
- Original language: French.
- 2 –
- OJ 2001 L 95, p. 8.
- 3 –
- OJ, English Special Edition 1959-1962, p. 126.
- 4 –
- OJ, English Special Edition 1970 (I), p. 214.
- 5 –
- OJ 1978 L 216, p. 1.
- 6 –
- OJ 1996 L 163, p. 10.
- 7 –
- OJ 1999 L 160, p. 103.
- 8 –
- OJ 1999 L 160, p. 21.
- 9 –
- OJ 2000 L 321, p. 47.
- 10 –
- OJ 2001 L 19, p. 11.
- 11 –
- See, most recently, Case C-29/99
Commission v
Council [2002] ECR I-11221, paragraphs 45 and 46.
- 12 –
- Joined Cases C-38/90 and C-151/90 [1992] ECR I-1781, paragraph 34.
- 13 –
- Case C-376/98 [2000] ECR I-8419. See point 126 of the Opinion.
- 14 –
- Case C-378/00 [2003] ECR I-937. See points 134 to 137 of the Opinion.
- 15 –
- Emphasis added.
- 16 –
- The Community beef market is currently going through a deep crisis due to a lack of consumer confidence in beef created by
the appearance of new cases of bovine spongiform encephalopathy (BSE). Consumption as well as production have recently fallen
to unprecedented levels followed by substantial reduction of producer prices ....
- 17 –
- ... it is appropriate to provide for a new special purchase scheme for meat from tested animals which would allow Member States
to store meat as an alternative to destruction as of 1 July 2001 at the latest ....
- 18 –
- Paragraph 43.
- 19 –
- The objective nature of the criterion is also confirmed in Case 37/71
Jamet v
Commission [1972] ECR 483, in which the Court held, in paragraph 11, that
the elements of the contested decision which are the subject of the application for annulment are inseparable from the whole
of the decision, so that,
without them, the disputed measure would not be capable of producing legal effects (emphasis added).
- 20 –
- See point 12 above.
- 21 –
- See point 9 above.
- 22 –
- See Case 121/83
Zuckerfabrik Franken [1984] ECR 2039, paragraph 13; Case C-478/93
Netherlands v
Commission [1995] ECR I-3081, paragraph 31; and Case C-159/96
Portugal v
Commission [1998] ECR I-7379, paragraph 41.
- 23 –
- See, for example, Case C-303/94
Parliament v
Council [1996] ECR I-2943, paragraph 23, at the end.
- 24 –
- Emphasis added.
- 25 –
- See the 31st recital in the preamble to Regulation No 1254/1999.
- 26 –
- Emphasis added.
- 27 –
- Emphasis added.
- 28 –
- Namely Regulation (EEC) No 1975/69 of the Council of 6 October 1969 establishing a scheme for cow-slaughter premiums and premiums
for non-marketing of milk and milk products (OJ, English Special Edition 1969 (II), p. 38); Council Regulation (EC) No 1257/1999
of 17 May 1999 on support for rural development from the European Agricultural Guidance and Guarantee Fund (EAGGF) and amending
and repealing certain regulations (OJ 1999 L 160, p. 80), and Council Regulation (EC) No 1259/1999 of 17 May 1999 establishing
common rules for direct support schemes under the common agricultural policy (OJ 1999 L 160, p. 113), and also Council Decision
90/217/EEC of 25 April 1990 on financial aid from the Community for the eradication of African swine fever in Sardinia (OJ
1990 L 116, p. 24) and Council Decision 90/424/EEC of 26 June 1990 on expenditure in the veterinary field (OJ 1990 L 224,
p. 19).
- 29 –
- Case C-240/90
Germany v
Commission [1992] ECR I-5383, paragraph 41, and Case C-104/97 P
Atlanta v
European Community [1999] ECR I-6983, paragraph 76.
- 30 –
- See, to that effect, Case C-106/96
United Kingdom v
Commission [1998] ECR I-2729, paragraph 36.
- 31 –
- Case 23/75
Rey Soda and Others [1975] ECR 1279. See also Joined Cases 279/84, 280/84, 285/84 and 286/84
Rau and Others v
Commission [1987] ECR 1069, paragraph 14; Case 27/85
Vandemoortele v
Commission [1987] ECR 1129, paragraph 14; Case 265/85
Van den Bergh en Jurgens and Van Dijk Food Products (Lopik) v
Commission [1987] ECR 1155, paragraph 14; Joined Cases 133/85 to 136/85
Rau and Others [1987] ECR 2289, paragraph 31; Case 167/88
Association générale des producteurs de blé et autres céréales [1989] ECR 1653, paragraph 15; Case 22/88
Vreugdenhil and Van der Kolk [1989] ECR 2049, paragraph 16; Joined Cases C-296/93 and C-307/93
France and Ireland v
Commission [1996] ECR I-795, paragraph 22; and Case C-369/95
Somalfruit and Camar [1997] ECR I-6619, paragraph 62, and also
Netherlands v
Commission, cited above, paragraph 30, and
Portugal v
Commission, paragraphs 40 and 41.
- 32 –
- See
France and Ireland v
Commission, cited above, paragraph 11.
- 33 –
- Joined Cases C-181/91 and C-248/91
Parliament v
Council and Commission [1993] ECR I-3685, paragraphs 29 and 30, relating to special aid granted to Bangladesh in the framework of collective action
by the Member States and financed directly by them, and Case C-316/91
Parliament v
Council [1994] ECR I-625, paragraphs 38 and 39, relating to the financing of aid granted directly by the Member States in the framework
of the Fourth ACP-EEC Lomé Convention.
- 34 –
- Emphasis added.
- 35 –
- Paragraphs 29 and 38 respectively.
- 36 –
- See Case C-168/98
Luxembourg v
Parliament and Council [2000] ECR I-9131, paragraph 62.
- 37 –
- See point 46 above.
