(1)

The marketing year for dairy products begins on 1 April each year and ends on 31 March in the following year. Generally speaking the decisions concerning the ‘common’ prices and the ‘differential’ prices and amounts for the new Member States in each marketing year are taken in March. This was the case in March 1974 (Regulation (EEC) No 663/74 of the Council of 28 March 1974); the ‘differential’ intervention price for butter in Ireland was fixed at 163.40 units of account per 100 kg, that is to say — at the ‘green rate’ applicable as from 1 February 1973 — £75.49 Irish per 100 kg (Regulation (EEC) No 222/73 of the Council of 31 January 1973).

In Regulation (EEC) No 2496/74 of 2 October 1974 the Council, exceptionally and by way of derogation from the principle of the annual fixing of prices, prescribed a further general increase in agricultural prices for the 1974/75 marketing year or for the remainder of that year; the ‘differential’ intervention price applicable to butter in the case of Ireland with effect from 7 October 1974 was fixed at 170.43 units of account per 100 kg, representing an increase of 4.3 % on the previous price.

In reality on account of the ‘representative exchange rate’ to be applied in agriculture to the Irish pound, the increase was very much greater in actual national currency because Regulation (EEC) No 2498/74 of the Council, at the same date, laid down that the rate of exchange to be applied for the conversion of the prices and other amounts referred to in enactments concerning the Common Agricultural Policy would, again with effect from 7 October 1974, be £ 1 per 1.9485 units of account whereas it had previously been £ 1 per 2.1644 units of account.

The result, in terms of national currency, was an increase of 15.9 % in the intervention price for butter in Ireland, which rose from £ 75.49 to £ 87.47 per 100 kg (or 4.3 % representing the increase in the intervention price in units of account and 11.6 % representing the devaluation of the ‘green’ pound).

On 3 October 1974, the day after adoption of the two above-mentioned regulations, the Commission adopted Regulation (EEC) No 2517/74 on the adjustment of private storage aid for butter to take account of the changes in the buying-in price; it entered into force on 1 October 1974.

The first comment which I must make is that these enactments form a whole and cannot be interpreted separately. The Commission was aware of what the Council had decided because it was the Commission which had submitted the drafts which became Regulations (EEC) Nos 2496/74 and 2498/74, and the Council knew of Regulation (EEC) No 2517/74 of the Commission because its own regulations did not enter into force until 7 October.

(2)

Before describing the effect of these alterations on the private storage system for butter I must again briefly refer to the objectives and detailed rules of this system at the material time.

Regulation (EEC) No 804/68 of the Council of 27 June 1968 on the common organization of the market in milk and milk products which, although amended on many occasions is still in force, provides for an intervention system tor those products. In addition to intervention by the official agencies (in Ireland, the Department of Agriculture) which (under conditions laid down pursuant to Article 6 (6)) buys in at the intervention price Community-produced butter offered to them (public storage), Article 6 also provides that aids shall be granted for the storage in private cold storage depots (private storage) of Community-produced butter and cream, again under conditions laid down pursuant to paragraph (6), which reads:

‘General rules governing the intervention measures provided for in this article and in particular the conditions under which such measures may be applied shall be determined by the Council in accordance with the same procedure’ (that is to say, on a proposal from the Commission and in accordance with the voting procedure laid down in Article 43 (2) of the Treaty).

But paragraph (7) prescribes concurrent powers for the Commission, by providing as follows:

‘Detailed rules for the application of this article, and in particular the amount of aid for private storage, shall be adopted in accordance with the procedure laid down in Article 30’, that is to say in accordance with the procedure of the Milk and Milk Products Management Committee.

This rather vague wording was such as to give rise to different interpretations and it is in pan the cause of the main action.

The general rules governing the intervention measures on the market in butter and cream, referred to in paragraph (6) were laid down by Regulation (EEC) No 985/68 of the Council of 15 July 1968.

Article 9 of that regulation prescribes the basic provisions for storage contracts concluded between holders of butter and private concerns.

Article 10 contains general rules for calculating the amount of the aids granted for private storage of butter and cream. The second subparagraph of Anide 10 (1) provides that ‘In cases where, at the time of removal from store, the market has developed unfavourably under conditions which could not be foreseen, the amount of aid may be increased’, that is to say, taking this provision in conjunction with Article 6 (7) of Regulation (EEC) No 804/68, the Commission, with the assistance of the Management Committee, is empowered to effect this increase.

According to the recitals in the preamble to Regulation (EEC) No 804/68, ‘intervention measures [including those for butter and fresh cream] must be such that the proceeds of aggregate milk sales tend to correspond to the common target price for milk delivered to dairy’ and, according to Regulation (EEC) No 985/68 of the Council, ‘intervention arrangements must take account of the development of the market situation … provisions should be made for … a uniform method of calculating the amount of aid according to the cost of storage and market developments ... private storage must contribute to the attainment of a balanced market’. When the aid is split up into its component parts as set out in the regulations of the Commission, it is clear that, apart from the factors intended to compensate for the loss of quality of the product resulting from its being in store, all the other factors relate to that of the ‘buying-in price’ applied by the intervention agency on the date when the contract is concluded.

The detailed rules for the application of the interventions on the market in butter and cream provided for in Article 6 (7) of Regulation (EEC) No 804/68 were adopted in Regulation (EEC) No 685/69 of the Commission of 14 April 1969 which has itself also been repeatedly amended.

Where a storage contraa is sought, the butter or cream involved must have been produced during the 14 days preceding the date on which such butter or cream is taken into storage (Article 23). The storage contraa shall not be concluded before the butter is stored (Article 2 of Regulation (EEC) No 603/70 of the Commission of 31 March 1970). Such aid for the private storage of butter (and of cream) may be paid in the form of payment on account (Article 24 (2)). Under Article 26, aid for private storage may be granted only if the duration of storage is at least four months. Under Article 28 the storage period shall begin on 1 April and end on 15 September of the same year. The period for removal from storage shall begin on 16 September and end on 31 March of the following year. These dates applied at the time when the events which gave rise to the main action took place but in the course of time they have frequently been changed.

As amended by Article 2 of Regulation (EEC) No 1064/69 of the Commission of 10 June 1969 and by Article 2 of Regulation (EEC) No 603/70 of the Commission of 31 March 1970, Article 29 of Regulation (EEC) No 685/69 provides as follows: ‘Should the buying-in price for butter change, the aid specified in Article 24 [that is to say, the aid for private storage provided for under Article 6 (2) of Regulation (EEC) No 804/68] in respect of quantities of butter and of cream expressed as butter equivalent covered by a storage contract and taken into store before the date on which the change in the buying-in price became effective and remaining in storage when the price changes shall be:

In consequence, the Commission is empowered not only to increase but also to reduce the amount of aid.

(3)

Regard was paid to these general rules in a series of contracts concluded between the plaintiff in the main action, a company comprising farmers' cooperatives whose business is to market milk and milk products, and the Irish Minister for Agriculture. The contracts covered a very large tonnage of butter and cream; these products had been placed in store between 1 June and 14 September 1974 and the removal from store, which can begin on 16 September, actually took place before 6 February 1975.

Under paragraph 10 of these contracts, the amounts of aid were fixed on the basis of a parity of 2.1644 units of account per Irish pound; they were subject to adjustment in the event of any variation in the exchange rate of the unit of account (this ‘green’ rate was 100 units of account per £ 46.2023 from 1 February 1973). Paragraph 12 of the contracts reproduced the wording of Article 29 of Regulation (EEC) No 685/69 of the Commission.

Under paragraph 13, the amount of aid. must not be paid until the quantities in respect of which the aid was provided have left the store. Despite this, it was possible to make a payment on account for the periods of storage actually completed.

Since aid may be granted only if the duration of storage is at least four months and the plaintiff in the main action sought to withdraw his goods after 1 October 1974, the tonnages in question were still in store on 7 October 1974, the date of entry into force of the new buying-in intervention price.

(4)

The measure of which the plaintiff in the main action complains is the decision of the Irish Minister for Agriculture that no aid was due under Reguladon (EEC) No 2517/74 of the Commission for stocks of butter and cream kept in store between 10 June 1974 and 5 February 1975. While, until then, under Article 29 of Regulation (EEC) No 685/69 the only situation envisaged was that of a change in the amount of aid due to the effect of an alteration during the marketing year of the intervention price expressed in units of account, the Commission's regulation, which was based on Article 6 (7) of Regulation (EEC) No 804/68, laid down the principle of an adjustment of the amount of aid granted for private storage abo in the event of this amount being changed as the result of an alteration in the representative rate for converting the intervention price into national currency (or in the exchange rate referred to in Article 2 of Regulation No 129 of the Council). In circumstances where the combination of these two changes (rise in the ‘differential’ intervention price in units of account and an additional rise in price as the result of the new representative rate) produces an increase in the intervention price which is greater than the amount of aid, no aid is to be granted.

The plaintiff in the main action does not dispute that the amount of aid should be reduced in accordance with the provisions of Article 29 of Regulation (EEC) No 685/69 on account of the increase in the intervention price expressed in units of account but it refuses to accept that account should be taken of the additional increase in the intervention price as the result of its conversion into national currency at the new rate for the ‘green’ pound or that the amount of aid which it legitimately expected to receive when storage began should be thus ‘skimmed off’. It accordingly claims the payment of £ 457475.87 Irish (at the level in force with effect from 7 October 1974); we have no precise breakdown of this figure.

(a)

In the first place, the mere fact of placing in storage does not in itself confer any specified right to payment of a specific amount of aid. This right is created only if the butter, or cream, has remained in private storage for a specified minimum period and if it has been taken out of store, which can only be effected after notice in writing has been given to the intervention agency (paragraph 8 of the contracts).

In any event, the plaintiff cannot argue on the basis of acquired rights or legitimate expectation in relation to that part of the aid which corresponds to a rise in the intervention price and which has no connexion whatever with the objectives of the Council's regulations; this is so because the rise could not be foreseen when the aid was ‘fixed in advance’ by storage contract and which, in consequence, could not conceivably have formed one of the reasons which induced the plaintiff to place its goods in private storage.

Although the contested regulation makes it impossible for advantage to be gained from an increase in the intervention price expressed in national currency, it also eliminates the possibility of loss in the event of a reduction in that price. The amendment of a provision which, because of its inflexibility, was liable to act to the detriment or to the advantage of those concerned, can scarcely be regarded as undermining their established rights. The Court will be aware of similar situations in connexion with advance-fixing certificates for export refunds.

(b)

The plaintiff complains not of a loss but of failure to profit as a result of being deprived of the additional profit which a devaluation of the ‘green’ rate provides for traders; it knew that the Irish ‘green’ pound had been going down in value ever since the accession of Ireland to the European Communities and it is conceivable that it bore this trend in mind when it stored its products. The Commission has clearly demonstrated that, even when its regulation is applied to the plaintiff in the main action, the latter will make a net gain of £4.10, representing the difference between the amount of the increase in the intervention price which occurred on 7 October 1974, on the one hand, and the amount of aid at the rate in force until 7 October 1974, on the other hand, which broadly covers the necessary costs of storage properly so-called.

(c)

A prominent feature of the milk market in the Community is a chronic and inherent surplus which, in the past, has compelled the Community to adopt substantial intervention measures relating to butter and skimmed-milk powder. Since 1973 butter stocks have risen to approximately 300000 tonnes (not to mention skimmed-milk powder) and these stocks were still as high as 164000 tonnes in December 1974. The contribution made by European taxpayers to the cost of these surpluses is steadily increasing.

The close relationship which exists between the selling price of fresh butter on the market, or of butter stored in public or privat depots, and the minimum buying-in price paid by the intervention agencies has been clearly demonstrated; as in the case of sugar, it is the intervention price which ‘makes’ the price on the market, whether its influence is felt as the price rises or falls, with the result that even butter which holders prefer to store in private depots conforms to the rates on the market on the basis of the price of the butter bought in.

The object of the whole machinery is to ensure that the holder who makes use of private storage receives, at the end of the storage, a price at least equal to that which he would have obtained if, at the time when he stored his butter or his cream, he had preferred to sell to the intervention agency or directly on the market. Anything else is merely an additional gain.

To uphold the claims of the plaintiff in the main action would be tantamount to treating it differently from holders of butter who made use of public storage. Those concerned do not, apparently, make use of this mode of storage in Ireland, but the regulation applies to all the new Member States and not merely to Ireland.

In these circumstances, there is no need to answer the fourth question.