Facts

Legal consideration

I — Admissibility of the applications

1. Individual interest

2. Direct Interest

II — On the substance of the case

1. nfringement of essential procedural requirements

2. Infringement of the Treaty

(a) Definition of the conditions necessary for applying Article 22 of Regulation No 19

(aa) Can Article 22 only be applied when there is a disaster?

(bb) Can Article 22 be applied to rectify a defect in a decision of the Commission

(b) Are the conditions required for applying Article 22 fulfilled in the present case?

(aa) The relevant prices of maize

(bb) Was it right to allow for an excess of maize on the German market for the month of January 1964?

(cc) Was it right to fear repercussions on the market in barley in the Federal Republic?

(dd) What were the amounts of barley expected on the market in the Federal Republic in January 1964?

(c) Other points at issue

(aa) Breach of the second subparagraph of Article 22 (2)

(bb) Is a retroactive halt imposed on imports permissible or not?

(cc) Has the Commission disregarded the principle of proportionality?

3. Misuse of powers

III — Summary and conclusion

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Is the contested decision of individual concern to the applicants?

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Is it of direct concern to them?

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The assertions put forward by the applicants include complaints which in my opinion fall without any possible doubt within the concept of infringement of the Treaty. I do not wish to go into any more detail on this here and I shall simply examine the corresponding submissions when I get to the complaint of breach of the Treaty.

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Under the heading “Infringement or essential procedural requirements” the applicants have also raised complaints which relate to a failure by the authorities of the Federal Republic of Germany to observe certain rules of form and of procedure. They say that these rules should be examined in the light of national administrative and public law. In doing so the conclusion would be reached that in giving its authorization the Commission adopted as its own a State measure which, according to national law, is void.

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Was the national protective measure in fact taken by the German Government or by other authorities who did not have capacity to act under German law? (As the Commission rightly stresses, it is enough for the Commission to observe that notice of the protective measure has been given to it by a competent national authority.)

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Was the protective measure taken in the appropriate legal form with respect to national law (namely in the form of a “Rechtsverordnune”)?

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Did the Federal Government give reasons for and publish the protective measure in due form?

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Did the Federal Government state the exact time of the entry into force of the protective measure and the exact time when it was notified to the Commission of the EEC?

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First, it must be considered whether, from the legal point of view, the Commission correcdy interpreted the conditions required for applying the protective measure laid down in Article 22.

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It will then be necessary to consider whether the conditions required for applying Article 22 were fulfilled in fact.

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Finally it will be appropriate to make a number of remarks on the choice of the means which are to be taken into account as possible protective measures, and on the limits on the scope of those means.

(aa)

Under Article 22 of Regulation No 19, if as a result of the adoption of measures concerned with the progressive establishment of a common organization of the market in cereals, the re suiting imports should cause or threaten to cause serious disturbances to the said market in one or more Member States, which might endanger the objectives laid down in Article 39 of the Treaty, the Member State or States concerned may, during the transitional period, take the necessary protective measures as regards the importation of the products in question.

The applicants wish this provision to be strictly interpreted, in view of the fact that it is a provision for exceptional circumstances. In their opinion it must only be applied where there is a disaster.

However — the Commission has given a convincing demonstration of this — it will appear that this interpretation of the words “serious disturbance” would in practice make Article 22 inapplicable.

We should proceed on the basis of the following considerations:

The disturbances must be due to imports and these imports must threaten to jeopardize the objectives laid down in Article 39 of the Treaty. Amongst these objectives, those enumerated in subparagraphs (d) and (e) (to assure the availability of supplies; to ensure that supplies reach consumers at reasonable prices) need not be taken into account, as the Commission rightly points out, for imports at low prices, far from making it less likely that these objectives will come about, tend rather to further their cause. Therefore the only objectives to be considered are the ones directed at stabilizing markets and ensuring a fair standard of living for the agricultural community by means of reasonable production prices. —On the other hand, in accordance with the system laid down by Regulation No 19, it is a fact that for the main kinds of cereals (including barley, in respect of which a disturbance was feared) the national intervention agencies must buy in national cereals when production prices fall below the level of intervention prices. The Commission rightly concludes that producers of these kinds of cereals can never run any other risk than that the prices might fall to the level of the intervention prices. Therefore it must be admitted that serious disturbances within the meaning of Article 22 exist where there is a threat of a slump in prices of this sort which might affect considerable quantities of cereals.

I think this opinion is correct and it cannot be undermined by the reference to Article 22 (5) and the attempt to base upon it an argument to the contrary for the other paragraphs of this provision. In fact, if it be admitted that, after the expiry of the transitional period, the need for the intervention agencies to make substantial purchases at a time of considerable imports from third countries constitutes a serious disturbance, this is a fortiori the case during the transitional period in the course of which there are to be expected from the agricultural community efforts towards adjustment linked with a number of financial burdens. In these circumstances it seems impossible to reserve the application of Article 22 only to cases of disaster. A lesser risk and a weaker disturbance — I say no more about this for the moment — must be sufficient.

(bb)

Still dealing with the question of the legal interpretation of Article 22, the applicants ask if its application can be entertained for rectifying some side-effects of an erroneous decision made by the Commission (here the inaccurate fixing of the free-at-frontier price for French maize).

I think the Commission is right on this point also. The provision in Article 22, according to which the application of measures concerning the progressive establishment of a common organization of the market in cereals must have given rise to serious disturbances, is drafted in a completely general way. One can interpret it to include cases where the information given for the levy system is inaccurate because of mistakes made in the calculation of prices by the national or supranational authorities, which leads to an increase in imports at noticeably lower prices. As the Commission rightly points out, it is not impossible for such cases to occur, particularly in the complicated system of common organizations of the market. If the application of Article 22 were to be ruled out here it would not in fact be possible to succeed in giving enough protection to national agricultural markets which are only partly integrated at the present time. Therefore Article 22 can also be used where an error or a failing has occurred in the operation of the mechanisms of the market. This makes it unnecessary for me to consider whether such an error was given as a cause of possible disturbances in this case.

(aa)

Thus the first point at issue is whether imports of maize into the Federal Republic did in fact take place during the month of January 1964 at a price which, according to the information given by the Commission, was about 70 DM below the German threshold price for that month (434.50 DM, cf. Annex 2 to the Regulation amending the second “cereals” implementing Regulation of 19 July 1963). This point includes the question whether these imports were made by means of the licences requested on 1 October 1963, by the applicants amongst others.

In support of its view the Commission relies on information furnished by the E.V.St on 1 October 1963; on some quotations, of which it became aware, for French maize c.i.f. Duisburg, made by some Hamburg importers on 30 September 1963 for consignment in November and December 1963; on quotations for French maize by Hamburg importers starting on 8 October 1963 for consignment in December 1963; and on the arbitration award produced by the second applicant, made after a failure to perform a contract of sale, which includes similar figures.

As against this the applicants rely on their own agreements (offering to prove them) on prices, some of which were noticeably higher. They also rely on figures supplied by the Deutsches Getreidekontor (German cereals office) and also on the fact that, since there was a strong demand for French maize on 1 October 1963, a rise in prices was felt (to which the Commission replies by saying that there was a record harvest in France in 1963 and a surplus of French exports which was likely to lead to a fall in the price later on).

The arguments put forward during the case .perhaps give the impression that as regards the amounts of maize concerned the prices stated by the (Commission are at least not very wide of the mark. However, it does not seem to me to be possible to make an exact assessment of this disputed question, which is indeed an important one in this case. An expert's report on prices would be needed to elucidate this point. Nevertheless I shall not interrupt my examination here, and from now on I shall suppose, as the Commission has done, that the prices for maize imported in January 1964 would have been substantially below the German threshold price if the requests for import licences had been accepted.

(bb)

The second point at issue is whether it was reasonable to take the view that if the imports of maize requested on 1 October 1963 had been authorized in January 1964 supply would exceed demand for maize in Germany. This means that quantities would have been involved likely to have an effect on the barley market.

The Commission's thinking starts with the normal demand for imported maize, which is between 80000 and 90000 metric tons per month. It compares these with the imports which in fact took place from July to September 1963 (419000 metric tons) and to the fart that for the period from October to December 1963 import licences representing a total quantity of 133000 metric tons were in existence. These facts as a whole made it seem probable that normal needs would be met until the end of the year 1963. According to the Commission, there must also be taken into account the facts that during the months October to December 1963 unused import licences were still in circulation and that the lodging of new requests for licences for this period had to foe expected. All told, therefore, it had to be accepted that there would be a very heavy supply not only because of the 125000 metric tons or so to foe imported on the basis of the licences requested on 1 October 1963, but also because of supplementary imports of maize during the month of January 1964.

On the other hand the applicants think that it is wrong to start with an average figure for imports of between 80000 and 90000 metric tons per month, given that these figures are taken from a period (before the financial year 1961/1962) during which imports were still kept in check by quantitative restrictions at national level. They say that after this provision was repealed to make way for the Common Market a marked rise in imports was felt, which can be explained by the increase in the consumption of meat, particularly poultry, in the Federal Republic.

In my opinion it is not possible to dispute the fundamental validity of this objection. Therefore the Court should adhere to the import figures for the financial year 1961/1962 and the following ones. The tables produced for this purpose by the Commission show that the imports of maize during the course of the financial year 1963/1964 were of the order of 1.7 million metric tons, which gives a monthly average of 140000 metric tons. They also show that no harmful effect was felt on the market in home-produced barley during this time. The figures relating to the year 1964/1965 even show a monthly average of about 170000 metric tons for imports of maize. For the financial year 1961/1962 the monthly averages are also noticeably higher than the figures put forward by the Commission (about 120000 metric tons). All these figures make it possible to conclude first of all that the 125000 metric tons of imports or thereabouts (in the official notice only 85000 metric tons are mentioned) which could be anticipated for the month of January 1964 on the basis of the requests lodged on 1 October 1963 are not of an order of magnitude such as to justify the fears felt by the Commission.

There is a further point to be made. As the applicants stress, it is definitely not right simply to add to the licences requested on 1 October 1963 the imports normally made each month into the Federal Republic. In fact the situation on the market in cereals is very clear, thanks in particular to the monthly publication of the total of import licences requested, to information provided by the cereals exchange and to information from private sources. This makes it possible for importers to arrange their own transactions over a period of time and to bring them in line with the transactions of their competitors. It is to be supposed that that would also have been the case after the granting of the licences requested for the month of January 1964 because, according to the figures put forward by the Commission, the importers who lodged their requests on 1 October 1963 are responsible for about two thirds of the total imports of cereals into the Federal Republic. Financial common sense would have led them to retain the favourable commercial conditions, which were created by their obtaining licences free of duty on 1 October 1963, by limiting any supplementary imports they might make for the month of January 1964 to reasonable amounts. It may also be assumed that the pressure of supply would have been reduced, if necessary, by putting certain amounts into storage. This is not felt as an insufferable burden when favourable terms of buying in France can be used to the full.

All of this is authority, in my opinion, for being extremely doubtful about the correctness of the Commission's argument that the granting of the import licences requested on 1 October 1963 would have made likely a noticeable excess in the supply of maize in the Federal Republic during the month of January 1964.

(cc)

But supposing the prognostications of the Commission to have been correct, it would then be necessary to examine whether dangerous repercussions on the market in barley in the Federal Republic could be feared, along with an appreciable reduction in prices for home-grown barley as a consequence.

The reply to this question depends in the first place on the greater or lesser interchangeability of maize and barley as feeding-stuffs. In principle it seems that this interchangeability cannot be called in question; even the applicants do not dispute it. It is shown in the proportions contained in cereal fodder and in feeding-stuffs, which vary perceptibly in the different countries of the Community, as the Commission has shown. If the figures quoted by the Commission at page 26 of its rejoinder are examined, it cannot be denied that in the Federal Republic the part played by maize in feeding-stuffs for livestock, as a whole, is much lower than it is in the neighbouring countries, Belgium and the Netherlands. From this it may be concluded that in the Federal Republic maize, in its capacity as a cereal for fodder, is indeed in a position where it can to a large extent be used as a substitute for other kinds of fodder.

But on the other hand the applicants show clearly that too much weight should not be given to this view in the present case. They point out that when maize is used as a cereal for fodder it is usually processed, that is to say transformed into a mixed fodder. However, in fact, according to the applicants, relatively constant amounts go into the manufacture of fodder over a fairly long period of time, as the German law on fodder contains provisions to this effect. ( 2 ) Thus an unexpected short-term excess of maize could not bring about an appreciable decline in the proportion of barley in mixed fodder.

The significance of this as regards the view put forward by the Commission is that, even if imports of maize had increased considerably during the month of January 1964, the fear that the national market in barley would be affected by this increase could only be slight.

(dd)

Finally this study would not be complete if it did not give some idea of the amounts of barley expected on the market of the Federal Republic of Germany in January 1964 for which there could at most be a risk that a substitute might be used instead.

The controversy on this point is less about quantities than about strains. The applicants claim that at that time of year the barley offered on the market is still mainly barley intended for the brewing of beer. It does not lend itself to the feeding of livestock or, at least, it is not used as such by reason of its price, and therefore to this extent it is not interchangeable with maize. The Commission thinks that on the contrary the barley offered on the market during the month of January is mainly winter barley (which means barley for fodder), and moreover that up to 50 per cent of summer barley, meaning barley intended for the brewing of beer, is itself also used for the feeding of livestock. It does not seem possible to resolve this question on the basis of the few facts which are to hand.

But this does not seem to be indispensable. Even if the Commission's figures be taken, it is not possible to accept the idea that the market in barley was under threat. The Cornmission only declares that a home-produced supply of about 300000 metric tons of barley was still anticipated on 1 January 1964. It follows that only a fraction of this tonnage and not the whole of it would have been offered on the market in January 1964 (perhaps about 40000 metric tons, a figure which the applicants consider to be correct, taking into account the monthly reports of the Bundesernährungsministerium). Moreover, if one takes into account (as the applicants have put forward without being contradicted) that the production of home-grown barley is not sufficient to meet German needs but that it is necessary to have recourse to substantial imports (about 400000 metric tons per year), a fact which tends to produce a rise in the price of barley, and that therefore the imports of maize in January 1964 would have put pressure on the market not only in home-grown barley but also in imported barley, there then results, taking account of the fact that the total sales of home-grown barley are about 2 million metric tons, a “threatened” portion in respect of which there could be no question of a “serious disturbance to the market” within the meaning of Article 22.

Let me sum up the factual points.

Even if in the present state of the dispute it is not possible to come to a conclusion on the basis of precise figures, nevertheless the worth of the assessment made by the Commission raises so large a number of objections that the application of the protective clause found in Article 22 must be considered as unjustified for reasons relating to the facts. It would at least appear impossible to approve it on the basis of the information to hand. Thus if the Court were not to share my point of view on the factual elements, an expert's report would appear to be necessary.

(aa)

The fact that the Commission did not invite the Member State benefiting from the authorization given to it to enter into negotiations with the exporting state concerned cannot be used as a means of raising objections directed at the legality of the contested decision. The second subparagraph of Article 22 (2) does indeed provide that a Member State which applies protective measures must be prepared to enter into negotiations immediately so as to try to make temporary arrangements which will save the exporters from excessive or avoidable losses. However, the terms of this provision impose at most an obligation on the Member States, and, in truth, it is an obligation which only exists in certain circumstances and with a view to reducing the effects of a protective measure.

In my opinion it is not possible to say that in this case the Commission must act in an almost automatic way. I think that such a statement is all the less tenable when it is certain in fact that neither the exporters nor the Member State of which they are nationals have lodged complaints against the refusal of the Federal Republic to negotiate.

(bb)

Again, contrary to the opimon of the applicants, I have nothing in principle against imports being suspended in the context of Article 22 (1) of Regulation No 19 (which is what happened on 1 October 1963 towards 3 p.m.), nor have I anything against this measure's being given a certain retroactive effect having regard to the date on which the national measure was adopted. This opinion is not affected by the third subparagraph of Article 22 (2) under which the Commission shall take its decision bearing in mind the importance of not increasing the level of protection between Member States, because this provision clearly refers not to the standard rules laid down in Regulation No 19, but to national systems applied before it came into force (let me say by the way that the former German market organizaton for cereals, through its system of sluice-gate prices and quotas, resulted in a higher degree of protection than that achieved in this case by applying the protective clause). My opinion is not contradicted by Article 22 (5) either. This paragraph only envisages a suspension of the grant of import licences in cases where disturbances of the market of a particular kind have arisen after the expiry of the transitional period by reason of imports from third countries. This is because this provision is clearly not intended to establish for general purposes particular rules for imports from third countries. It does no more than make it clear that after the expiry of the transitional period protective measures will no longer be available except in relation to third countries. Finally, in so far as Article 18 of Regulation No 19 provides that the imposition of quantitative restrictions or measures having equivalent effect as regards trade between Member States is incompatible with the application of the system of levies within the Community, it does not contradict my opinion. In fact Article - 18 governs the normal case, whereas the protective clause in Article 22 applies when there is a crisis.

Nevertheless I think that measures of such a radical and sweeping nature as calling a halt to imports on a retroactive basis must be limited to extreme cases in which every other measure appears ineffective. After everything I have said on the conditions of fact for applying Article 22, it definitely seems that the present case cannot be described as an emergency situation.

(cc)

Having said this, I have now come to the complaint that the Commission violated the principle of proportionality when it authorized the German protective measure. As the applicants righdy point out this principle follows from the words of Article 22 (1) on ‘necessary’ protective measures, and from the general precept that exceptions from a normal case should always be limited to what is strictly necessary.

To tell the truth I do not see how the observance of this principle in this case had necessarily to lead to averting the supposed threat to the market in maize and in barley in January 1964 by means of agreements between the Einfuhr- und Vorratsstelle and the importers on the maintenance of a given sale price. This threat was inferred in the first place from the fact that no levy was to be made for the import licences requested on 1 October 1963. Agreements of this kind are in fact an unusual way of proceeding from the point of view of administrative practice. Moreover, the effective guarantee that they will be kept, upon which their preventive value ultimately depends, could give rise to difficulties.

However, according to the view which we are able to form of the economic situation, one cannot rule out the possibility that other measures, less radical than a halt to imports, such as, for example, sharing out the import licences applied for, or purchases of maize by the Vorratsstelle would have been sufficient to prevent the risk that the market might be disturbed.

Thus it is possible to see an additional reason for annulling the Commission's decision in the choice of means adopted for applying the protective measure and in the definition of its scope. I have limited myself to giving a brief view of this here.