61979J0072

1 . AGRICULTURE - COMMON ORGANIZATION OF THE MARKETS - AIDS GRANTED BY STATES - PROHIBITION - APPRAISAL OF THE COMPATIBILITY OF AN AID WITH THE RULES OF THE COMMON ORGANIZATION - PROCEDURE TO BE FOLLOWED

( EEC TREATY , ARTS 93 AND 169 )

2 . AGRICULTURE - COMMON ORGANIZATION OF THE MARKETS - SUGAR - SYSTEM OF COMPENSATION FOR STORAGE COSTS - FLAT-RATE REFUND FOR WHOLE COMMUNITY - EXHAUSTIVE NATURE - APPRAISAL BY THE COUNCIL ALONE OF THE JUSTIFICATION FOR ANY AMENDMENTS

( REGULATION NO 3330/74 OF THE COUNCIL , ART . 8 )

3 . AGRICULTURE - COMMON ORGANIZATION OF THE MARKETS - SUGAR - SYSTEM OF COMPENSATION FOR STORAGE COSTS - MATERIAL SCOPE - SUGAR CARRIED FORWARD TO FOLLOWING MARKETING YEAR - EXCLUSION

( REGULATION NO 3330/74 OF THE COUNCIL , ARTS 8 AND 31 ( 2 ))

1 . THE COUNCIL IS ENTITLED TO LAY DOWN , WITHIN THE CONTEXT OF THE REGULATIONS ESTABLISHING THE COMMON ORGANIZATION OF THE MARKETS IN AGRICULTURAL PRODUCTS , PROVISIONS PROHIBITING WHOLLY OR PARTIALLY CERTAIN FORMS OF NATIONAL AIDS FOR THE PRODUCTION OR MARKETING OF THE PRODUCTS IN QUESTION AND INFRINGEMENT OF SUCH A PROHIBITION MAY BE DEALT WITH WITHIN THE SPECIFIC FRAMEWORK OF SUCH AN ORGANIZATION . IN FACT THE EXISTENCE OF THE SPECIAL PROCEDURE LAID DOWN IN ARTICLE 93 OF THE EEC TREATY FOR APPRAISING THE COMPATIBILITY OF NATIONAL SYSTEMS OF AID WITH THE COMMON MARKET CANNOT AFFECT THE NECESSITY FOR MEMBER STATES TO OBSERVE THE RULES ON THE COMMON ORGANIZATION OF THE MARKET OR PREVENT THE COMPATIBILITY OF SUCH SYSTEMS WITH SUCH RULES FROM BEING APPRAISED IN ACCORDANCE WITH THE PROCEDURE LAID DOWN BY ARTICLE 169 OF THE TREATY .

2 . THE SYSTEM OF COMPENSATION FOR STORAGE COSTS FOR SUGAR LAID DOWN BY REGULATION NO 3330/74 WAS CONCEIVED IN ORDER TO ATTAIN THE OBJECTIVES OF THAT REGULATION WHICH INCLUDE INTER ALIA THE STABILIZATION OF THE MARKET IN SUGAR . BY ESTABLISHING A UNIFORM FLAT-RATE REFUND FOR THE WHOLE COMMUNITY , THE AMOUNT OF WHICH IS FIXED ANNUALLY BY THE COMMUNITY INSTITUTIONS , THE REGULATION HOWEVER STATES THAT THESE OBJECTIVES MUST BE ATTAINED IN THE SAME WAY IN ALL MEMBER STATES . IT FOLLOWS THAT ARTICLE 8 OF THE REGULATION LAYS DOWN EXHAUSTIVELY THE PROVISIONS APPLICABLE TO THE REIMBURSEMENT OF STORAGE COSTS AND IT IS FOR THE COUNCIL ALONE TO APPRAISE WHETHER THE SPECIAL ECONOMIC CIRCUMSTANCES OBTAINING IN ONE OF THE MEMBER STATES JUSTIFY ADJUSTMENTS TO THE COMMUNITY SYSTEM .

3 . ARTICLE 31 ( 2 ) OF REGULATION NO 3330/74 , ACCORDING TO WHICH STORAGE COSTS INCURRED BY SUGAR UNDERTAKINGS FOR SUGAR CARRIED FORWARD TO THE FOLLOWING MARKETING YEAR ARE NOT TO BE REIMBURSED ON THE FLAT-RATE BASIS LAID DOWN BY ARTICLE 8 OF THE REGULATION MUST BE UNDERSTOOD AS PROHIBITING THE MEMBER STATES FROM REIMBURSING SUCH STORAGE COSTS .

IN CASE 72/79

COMMISSION OF THE EUROPEAN COMMUNITIES , REPRESENTED BY GIANLUIGI CAMPOGRANDE , A MEMBER OF THE LEGAL DEPARTMENT OF THE COMMISSION , ACTING AS AGENT , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICE OF MARIO CERVINO , JEAN MONNET BUILDING , KIRCHBERG ,

APPLICANT ,

V

ITALIAN REPUBLIC , REPRESENTED BY ITS AMBASSADOR , ADOLFO MARESCA , ACTING AS AGENT , ASSISTED FY IVO MARIA BRAGUGLIA , AVVOCATO DELLO STATO , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE ITALIAN EMBASSY ,

DEFENDANT ,

APPLICATION UNDER ARTICLE 169 OF THE EEC TREATY FOR A DECLARATION THAT THE ITALIAN REPUBLIC , BY DECIDING TO REIMBURSE SUGAR MANUFACTURERS CERTAIN STORAGE COSTS FOR THE 1976/77 AND 1977/78 MARKETING YEARS , HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER ARTICLES 8 AND 31 ( 2 ) OF REGULATION ( EEC ) NO 3330/74 OF THE COUNCIL OF 19 DECEMBER 1974 ON THE COMMON ORGANIZATION OF THE MARKET IN SUGAR ( OFFICIAL JOURNAL 1974 , L 359 , P . 1 ),

1 BY AN APPLICATION RECEIVED AT THE COURT REGISTRY ON 2 MAY 1979 THE COMMISSION APPLIED TO THE COURT UNDER ARTICLE 169 OF THE EEC TREATY FOR A DECLARATION THAT THE REPUBLIC OF ITALY HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER THE TREATY BY DECIDING TO REIMBURSE PRODUCERS OF SUGAR CERTAIN STORAGE COSTS FOR THE 1976/77 AND 1977/78 MARKETING YEARS IN BREACH OF ARTICLES 8 AND 31 ( 2 ) OF REGULATION NO 3330/74 OF THE COUNCIL OF 19 DECEMBER 1974 ON THE COMMON ORGANIZATION OF THE MARKET IN SUGAR ( OFFICIAL JOURNAL 1974 , L 359 , P . 1 ).

2 THE COMMISSION COMPLAINS THAT THE ITALIAN REPUBLIC HAS COMMITTED TWO DISTINCT INFRINGEMENTS OF REGULATION NO 3330/74 : ON THE ONE HAND INASMUCH AS IT HAS ENACTED AND IMPLEMENTED A MEASURE PROVIDING SUPPLEMENTARY REIMBURSEMENT OF THE STORAGE COSTS FOR SUGAR PRODUCED IN ITALY , IN BREACH OF ARTICLE 8 OF THE REGULATION , AND ON THE OTHER INASMUCH AS IT HAS ENACTED AND IMPLEMENTED A MEASURE PROVIDING PARTIAL REIMBURSEMENT OF THE STORAGE COSTS FOR SUGAR CARRIED FORWARD TO THE SUCCEEDING SUGAR-MARKETING YEAR IN BREACH OF ARTICLE 31 ( 2 ) OF THE REGULATION .

3 ARTICLE 8 ( 1 ) OF REGULATION NO 3330/74 PROVIDES THAT , SUBJECT TO ARTICLE 31 ( 2 ), STORAGE COSTS FOR WHITE SUGAR , RAW SUGAR AND CERTAIN SYRUPS PRODUCED PRIOR TO THE CRYSTALLIZING STAGE , MANUFACTURED FROM BEET OR CANE HARVESTED IN THE COMMUNITY , SHALL BE REIMBURSED AT A FLAT RATE BY THE MEMBER STATES AND THAT THE AMOUNT OF THE REIMBURSEMENT SHALL BE THE SAME FOR THE ENTIRE COMMUNITY . ARTICLE 8 ( 2 ) ADDS THAT THE AMOUNT OF THE REIMBURSEMENT SHALL BE FIXED EACH YEAR IN ACCORDANCE WITH THE PROCEDURE LAID DOWN IN ARTICLE 36 OF THE REGULATION , THE SO-CALLED MANAGEMENT COMMITTEE PROCEDURE .

4 THE COMMISSION CLAIMS THAT THROUGH DECISION NO 24/1976 OF THE COMITATO INTERMINISTERIALE DEI PREZZI ( INTER-DEPARTMENTAL PRICE COMMITTEE , HEREINAFTER REFERRED TO AS ' ' THE PRICE COMMITTEE ' ' ) ( GAZZETTA UFFICIALE NO 264 OF 4 OCTOBER 1976 , P . 7201 ) THE ITALIAN GOVERNMENT DECIDED TO GRANT TO THE SUGAR-PROCESSING INDUSTRY A COMPENSATORY ALLOWANCE CORRESPONDING TO THE DIFFERENCE BETWEEN THE FINANCIAL CHARGES BORNE BY THAT INDUSTRY FOR THE STORAGE COSTS OF SUGAR PRODUCED IN ITALY AND THE AMOUNT OF THE REIMBURSEMENT FIXED BY THE COMMUNITY PROVISIONS . THE ABOVE-MENTIONED DECISION STATES THAT ANY ADJUSTMENT OF THAT LATTER AMOUNT IS TO ENTAIL A CORRESPONDING ADJUSTMENT OF THE COMPENSATORY ALLOWANCE . THAT DECISION , WHICH APPLIED TO THE 1976/77 MARKETING YEAR , WAS REPLACED BY A SIMILAR DECISION FOR THE 1977/78 MARKETING YEAR ( DECISION NO 37/1977 OF THE PRICE COMMITTEE , GAZZETTA UFFICIALE NO 207 OF 29 JULY 1977 , P . 5678 ).

5 ACCORDING TO THE COMMISSION THESE DECISIONS INFRINGE ARTICLE 8 OF REGULATION NO 3330/74 . ON THE ONE HAND THEY FAIL TO OBSERVE THE PRINCIPLE OF FLAT-RATE REIMBURSEMENT SINCE THE COMPENSATORY ALLOWANCE FOR WHICH THEY MAKE PROVISION IS CALCULATED IN TERMS OF VARIATIONS IN THE FINANCIAL BURDENS OF THE PROCESSING INDUSTRY . ON THE OTHER HAND THEY ARE CONTRARY TO THE RULE THAT THE REIMBURSEMENT SHALL BE THE SAME FOR THE ENTIRE COMMUNITY SINCE THE COMPENSATORY ALLOWANCE IS IN ADDITION TO THE COMMUNITY REIMBURSEMENT .

6 ARTICLE 31 ( 1 ) OF REGULATION NO 3330/74 PROVIDES THAT , IN CERTAIN CASES , UNDERTAKINGS MAY CARRY FORWARD A SPECIFIED PART OF THEIR PRODUCTION WHICH IS OUTSIDE THE BASIC QUOTA TO THE FOLLOWING MARKETING YEAR , TO BE TREATED AS PART OF THAT YEAR ' S PRODUCTION . ARTICLE 31 ( 2 ) ADDS THAT THE QUANTITY CARRIED FORWARD MUST BE KEPT IN STORE FROM 1 FEBRUARY TO 31 JANUARY OF THE FOLLOWING YEAR AND THAT STORAGE COSTS FOR THAT PERIOD SHALL NOT BE REFUNDED UNDER THE PROVISIONS OF ARTICLE 8 .

7 THE COMMISSION CONSIDERS THAT THAT LATTER PROVISION EXPRESSLY PROHIBITS ALL REFUNDS OF THE STORAGE COSTS OF SUGAR CARRIED FORWARD . IT COMPLAINS THAT THE ITALIAN GOVERNMENT HAS DECIDED TO GRANT TO THE SUGAR PRODUCERS CONCERNED , THROUGH THE INTERMEDIARY OF THE CASSA CONGUAGLIO ZUCCHERO ( THE SUGAR EQUALIZATION FUND , HEREINAFTER REFERRED TO AS ' ' THE FUND ' ' ) FOR THE STORAGE COSTS OF ALL THE QUANTITIES OF SUGAR CARRIED FORWARD TO SUBSEQUENT YEARS , AN AMOUNT CORRESPONDING TO 60% OF THE MONTHLY AMOUNT OF THE COMMUNITY REIMBURSEMENT WHICH IS FIXED ONLY WHERE SUGAR IS NOT CARRIED FORWARD .

8 THE ABOVE-MENTIONED DECISION NO 24/1976 OF THE PRICE COMMITTEE PROVIDES THAT THE FUND SHALL GRANT THAT AMOUNT TO THE SUGAR MANUFACTURERS CONCERNED UP TO THE LIMITS OF A CREDIT WHICH THE FUND IS AUTHORIZED TO PAY OUT OF THE ADAPTATION AIDS GRANTED TO BEET PRODUCERS IN ACCORDANCE WITH ARTICLE 38 OF REGULATION NO 3330/74 . FOR THE 1977/78 MARKETING YEAR DECISION NO 37/1977 OF THE PRICE COMMITTEE AUTHORIZES THE FUND TO RESERVE A SPECIAL FUND TO BE SET AGAINST THE ADAPTATION AIDS GRANTED TO BEET PRODUCERS AND TO MAKE THE PARTIAL REIMBURSEMENT OF THE STORAGE COSTS OF SUGAR CARRIED FORWARD PAYABLE OUT OF THAT SPECIAL FUND .

9 THE ITALIAN GOVERNMENT DOES NOT DISPUTE THE FACTS ALLEGED BY THE COMMISSION . IN ITS DEFENCE IT RELIES FIRST OF ALL UPON THE INADMISSIBILITY OF THE APPLICATION IN SO FAR AS IT RELATES TO THE INFRINGEMENT OF ARTICLE 8 OF THE BASIC REGULATION . IN THE ALTERNATIVE , AND WITH REGARD TO THE SUBSTANCE OF THE CASE , IT PLACES A DIFFERENT INTERPRETATION UPON THE RELEVANT COMMUNITY PROVISIONS AND CONCLUDES ON THAT BASIS THAT THE MEASURES IN QUESTION ARE IN ACCORDANCE WITH COMMUNITY LAW . WITH REGARD TO THE REIMBURSEMENT OF THE STORAGE COSTS OF SUGAR CARRIED FORWARD IT CLAIMS THAT THIS PARTIAL COMPENSATION IS PROVIDED NOT BY THE ITALIAN STATE BUT BY THE FUND ACTING AS THE ADMINISTRATOR OF A FUND SET UP FROM PRIVATE RESOURCES .

ADMISSIBILITY

10 ACCORDING TO THE ITALIAN GOVERNMENT THE SUPPLEMENTARY REIMBURSEMENT OF THE STORAGE COSTS OF SUGAR PRODUCED IN ITALY IN ACCORDANCE WITH THE DECISION OF THE PRICE COMMITTEE IS INTENDED TO COMPENSATE FOR THE DIFFERENCES BETWEEN THE FINANCIAL CHARGES FOR STORAGE WHICH THE PROCESSING INDUSTRY IN ITALY MUST BEAR AND THOSE WHICH ARE TAKEN INTO CONSIDERATION WITHIN THE FRAMEWORK OF REIMBURSEMENT MEASURES AT COMMUNITY LEVEL . ACCORDINGLY THE SUPPLEMENTARY NATIONAL MEASURES MUST BE CLASSIFIED AS AIDS WITHIN THE MEANING OF ARTICLES 92 AND 93 OF THE EEC TREATY . IN THOSE CIRCUMSTANCES THE COMPATIBILITY OF THOSE NATIONAL MEASURES WITH THE PROVISIONS OF THE TREATY AND WITH THOSE LAID DOWN FOR THE IMPLEMENTATION OF THE COMMON AGRICULTURAL POLICY MAY ONLY BE APPRAISED IN ACCORDANCE WITH THE PROCEDURE PROVIDED FOR IN ARTICLES 92 AND 93 OF THE TREATY AND THE CRITERIA LAID DOWN THEREIN .

11 THE ITALIAN GOVERNMENT FURTHER CLAIMS THAT THE COMMISSION RECOGNIZED BOTH IN THE PROCEDURE BEFORE THE MATTER WAS REFERRED TO THE COURT AND IN ITS APPLICATION INITIATING PROCEEDINGS THAT THE NATIONAL MEASURES IN QUESTION CONSTITUTE AIDS WITHIN THE MEANING OF THE TREATY . AS THE COMMISSION HAS NOT INSTITUTED THE PROCEDURES REFERRED TO IN ARTICLE 93 OF THE TREATY THIS APPLICATION BASED ON ARTICLE 169 OF THE TREATY IS ALLEGED TO BE PREMATURE AND ACCORDINGLY INADMISSIBLE .

12 THESE TWO ARGUMENTS CANNOT BE UPHELD . THE COMMISSION RIGHTLY MAINTAINS THAT THE COUNCIL IS ENTITLED TO LAY DOWN , WITHIN THE CONTEXT OF THE REGULATIONS ESTABLISHING THE COMMON ORGANIZATION OF THE MARKETS IN AGRICULTURAL PRODUCTS , PROVISIONS PROHIBITING WHOLLY OR PARTIALLY CERTAIN FORMS OF NATIONAL AIDS FOR THE PRODUCTION OR MARKETING OF THE PRODUCTS IN QUESTION AND THAT AN INFRINGEMENT OF SUCH A PROHIBITION MAY BE DEALT WITH WITHIN THE SPECIFIC FRAMEWORK OF SUCH AN ORGANIZATION . IN FACT THE EXISTENCE OF THE SPECIAL PROCEDURE LAID DOWN IN ARTICLE 93 OF THE TREATY FOR APPRAISING THE COMPATIBILITY OF NATIONAL SYSTEMS OF AID WITH THE COMMON MARKET CANNOT AFFECT THE NECESSITY FOR MEMBER STATES TO OBSERVE THE RULES ON THE COMMON ORGANIZATION OF THE MARKET .

13 REGULATION NO 3330/74 CONTAINS VARIOUS PROVISIONS ON AIDS IN THE SUGAR SECTOR . THIS IS SO , FOR EXAMPLE , IN THE CASE OF ARTICLE 8 ON THE FLAT-RATE REIMBURSEMENT OF STORAGE COSTS AND OF ARTICLE 38 WHICH PROVIDES FOR THE GRANT OF ADAPTATION AIDS BY THE ITALIAN REPUBLIC . ALTHOUGH ARTICLE 41 OF THE REGULATION PROVIDES THAT ARTICLE 92 AND 93 OF THE TREATY SHALL APPLY TO THE PRODUCTION OF AND TRADE IN THE PRODUCTS COVERED BY THE COMMON ORGANIZATION OF THE MARKET IN SUGAR IT DOES SO SUBJECT TO AN EXPRESS RESERVATION CONCERNING ANY PROVISIONS TO THE CONTRARY IN THE SAME REGULATION . THE QUESTION WHETHER ARTICLE 8 OF THE REGULATION MUST BE CONSIDERED AS SUCH A CONTRARY PROVISION PERTAINS TO THE SUBSTANCE OF THE ACTION WHICH IT IS APPROPRIATE TO EXAMINE NOW .

THE INFRINGEMENT OF ARTICLE 8 OF REGULATION NO 3330/74

14 THE ITALIAN GOVERNMENT ADMITS THAT ARTICLE 8 OF REGULATION NO 3330/74 MAKES PROVISION FOR A FLAT-RATE , UNIFORM REIMBURSEMENT OF STORAGE COSTS . NEVERTHELESS THAT PROVISION MUST , IT CLAIMS , BE INTERPRETED IN THE LIGHT OF ITS OBJECTIVE , WHICH IS TO STABILIZE THE MARKET . IF THE STORAGE COSTS WERE NOT REFUNDED THE PRODUCTS IN QUESTION WOULD IN FACT BE PLACED ON THE MARKET IMMEDIATELY OR SOLD TO INTERVENTION AGENCIES , A SITUATION WHICH WOULD BE LIABLE TO CAUSE IMBALANCE OF THE MARKET . THE BASIC REGULATION HAS AS ITS OBJECTIVE THE ADOPTION OF MEASURES APPROPRIATE TO STABILIZING THE MARKET . THE ITALIAN GOVERNMENT RECALLS THAT , ACCORDING TO THE RECITALS IN THE PREAMBLE TO THE REGULATION , THAT OBJECTIVE MAY BE ATTAINED BY INTERVENTION ARRANGEMENTS AS WELL AS BY A SYSTEM COMPENSATING FOR STORAGE COSTS . THE GRANTING OF A SUPPLEMENTARY COMPENSATORY ALLOWANCE BY THE ITALIAN AUTHORITIES IS INTENDED TO ATTAIN THE SAME OBJECTIVE . FAR FROM BEING CONTRARY TO THE COMMUNITY SYSTEM , THAT GRANT THUS CONTRIBUTES TO ITS PROPER OPERATION .

15 THE COMMISSION DISPUTES THAT POINT OF VIEW . IT CONSIDERS THAT THE NATURE AND OBJECTIVE OF THE COMPENSATORY ALLOWANCE IN DISPUTE ARE IDENTICAL TO THOSE OF THE REFUND EFFECTED PURSUANT TO ARTICLE 8 OF THE REGULATION . THAT PROVISION IS TO BE NARROWLY INTERPRETED BECAUSE IT CONSTITUTES AN EXCEPTION TO THE GENERAL PROHIBITION ON AIDS ; IT IS INTENDED TO LAY DOWN EXHAUSTIVE RULES FOR THE ENTIRE SYSTEM OF CONTRIBUTIONS TO STORAGE COSTS .

16 IT IS THE CASE THAT THE SYSTEM OF COMPENSATION FOR STORAGE COSTS FOR SUGAR LAID DOWN BY REGULATION NO 3330/74 WAS CONCEIVED IN ORDER TO ATTAIN THE OBJECTIVES OF THAT REGULATION WHICH INCLUDE INTER ALIA THE STABILIZATION OF THE MARKET IN SUGAR . BY ESTABLISHING A UNIFORM FLAT-RATE REFUND FOR THE WHOLE COMMUNITY , THE AMOUNT OF WHICH IS FIXED ANNUALLY BY THE COMMUNITY INSTITUTIONS , THE REGULATION HOWEVER STATES THAT THESE OBJECTIVES MUST BE ATTAINED IN THE SAME WAY IN ALL MEMBER STATES .

17 IT IS THUS NECESSARY TO UPHOLD THE ARGUMENT OF THE COMMISSION THAT ARTICLE 8 OF THE REGULATION LAYS DOWN EXHAUSTIVELY THE PROVISIONS APPLICABLE TO THE REIMBURSEMENT OF STORAGE COSTS .

18 THE ITALIAN GOVERNMENT FURTHER MAINTAINS THAT ITS NATIONAL MEASURES ARE NECESSARY IN VIEW OF THE PARTICULARLY HEAVY FINANCIAL CHARGES BORNE IN ITALY BY UNDERTAKINGS SORTING SUGAR SINCE THE RATE OF INTEREST THERE IS MUCH HIGHER THAN IN THE OTHER MEMBER STATES OF THE COMMUNITY . THAT CIRCUMSTANCE , WHOSE IMPORTANCE WAS MOREOVER RECOGNIZED BY THE COMMISSION , NEVERTHELESS CANNOT JUSTIFY AN INTERPRETATION OF ARTICLE 8 OF REGULATION NO 3330/74 WHICH WOULD BE CONTRARY TO ITS LETTER AND SPIRIT . IT IS FOR THE COUNCIL TO APPRAISE WITHIN THE FRAMEWORK OF THE COMMON ORGANIZATION OF THE MARKET IN SUGAR WHETHER THE SPECIAL ECONOMIC CIRCUMSTANCES OBTAINING IN ONE OF THE MEMBER STATES JUSTIFY ADJUSTMENTS TO THE COMMUNITY SYSTEM .

19 IT MUST THUS BE DECLARED THAT THE ITALIAN REPUBLIC , BY GRANTING TO SUGAR MANUFACTURERS FOR THE 1976/77 AND 1977/78 MARKETING YEARS A COMPENSATORY ALLOWANCE FOR THE STORAGE COSTS OF SUGAR PRODUCED IN ITALY IN ADDITION TO THE REIMBURSEMENT PROVIDED FOR BY THE RELEVANT COMMUNITY PROVISIONS , HAS FAILED TO FULFIL ONE OF ITS OBLIGATIONS UNDER THE TREATY .

THE INFRINGEMENT OF ARTICLE 31 ( 2 ) OF REGULATION NO 3330/74

20 ACCORDING TO THE ITALIAN GOVERNMENT THE ABOVE-MENTIONED DECISIONS NOS 24/1976 AND 31/1977 OF THE PRICE COMMITTEE DID NOT PROVIDE FOR A PARTIAL REFUND OF THE STORAGE COSTS OF SUGAR CARRIED FORWARD BUT AUTHORIZED THE SUGAR EQUALIZATION FUND , A PUBLIC UNDERTAKING , TO RESERVE IN THE FORM OF A CREDIT OR OF A SPECIAL FUND A SHARE OF THE ADAPTATION AIDS GRANTED TO BEET PRODUCERS AND THEN TO GRANT A REIMBURSEMENT TO THE SUGAR MANUFACTURERS CONCERNED , FOR THE ACCOUNT OF SUCH PRODUCERS . THE LEVY FROM THE AIDS INTENDED FOR BEET PRODUCERS , THE SETTING UP OF THE SPECIAL FUND AND THE PARTIAL REIMBURSEMENT TO SUGAR MANUFACTURERS OF THE STORAGE COSTS OF SUGAR CARRIED FORWARD WERE NOT LAID DOWN BY THE DECISIONS OF THE PRICE COMMITTEE BUT BY INTER-TRADE AGREEMENTS BETWEEN THE ORGANIZATIONS REPRESENTING THE SUGAR INDUSTRY AND THOSE REPRESENTING THE BEET PRODUCERS . THE ITALIAN GOVERNMENT RECALLS IN THIS CONNEXION THAT ARTICLE 2 OF REGULATION ( EEC ) NO 748/68 OF THE COUNCIL OF 18 JUNE 1968 LAYING DOWN GENERAL RULES FOR POSTPONING PART OF THE SUGAR PRODUCTION TO THE FOLLOWING MARKETING YEAR ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1968 ( I ), P . 129 ) ENABLES SUGAR MANUFACTURERS TO REQUIRE BEET OR CANE SELLERS TO BEAR PART OF THE STORAGE COSTS WHERE SUGAR IS CARRIED FORWARD TO THE FOLLOWING MARKETING YEAR .

21 THE COMMISSION ADMITS THAT THE RESOURCES REQUIRED BY THE REIMBURSEMENT IN QUESTION DO NOT COME FROM THE STATE BUDGET . NEVERTHELESS IT MAINTAINS THAT THE SPECIAL FUND SET UP TO PAY FOR THE REIMBURSEMENT IS FINANCED BY A SPECIFIC CHARGE LAID DOWN PURSUANT TO THE MEASURES ADOPTED BY THE PRICE COMMITTEE . THE INTER-TRADE AGREEMENT TO WHICH REFERENCE IS MADE FORM PART OF A SYSTEM OF ADMINISTRATIVE PROCEDURES RESULTING IN A BODY OF DECISIONS WHICH ARE BINDING ON ALL SUGAR MANUFACTURERS AND BEET PRODUCERS . IN THOSE CIRCUMSTANCES THE COMMISSION CLAIMS THAT THE PARTICIPATION OF THE BEET PRODUCERS IS NOT VOLUNTARY SINCE THE FINANCIAL CHARGE IN QUESTION IS IMPOSED UPON THEM .

22 AT THE REQUEST OF THE COURT THE ITALIAN GOVERNMENT PRODUCED THE INTER-TRADE AGREEMENTS FOR THE 1976/77 AND 1977/78 MARKETING YEARS .

23 CONSIDERATION OF THESE DOCUMENTS HAS ESTABLISHED THAT IN FACT THE INTERVENTION OF THE ITALIAN AUTHORITIES WAS NOT RESTRICTED TO AUTHORIZING THE FUND TO ACT AS THE AGENT OF THE PARTIES TO THE INTER-TRADE AGREEMENTS . IN FACT THE AGREEMENTS CONTAIN VARIOUS FEATURES WHICH ARE FOREIGN TO AN AGREEMENT VOLUNTARILY ENTERED INTO BY PRIVATE UNDERTAKINGS . THUS IT WAS THE MINISTER FOR AGRICULTURE WHO DECLARED THAT THE AGREEMENT HAD BEEN CONCLUDED AND THAT IN THE CIRCUMSTANCES IN WHICH IT WAS CONCLUDED IT WAS BINDING ERGA OMNES ; FOR THE AGREEMENT RELATING TO THE 1977/78 YEAR THAT DECLARATION IS PRECEDED BY A PREAMBLE WHICH , THE MINISTER STATES , FORMS AN INTEGRAL PART OF THE AGREEMENT ; THE AGREEMENTS ENTER INTO FORCE AT THE TIME OF THE ADOPTION OF THE IMPLEMENTING MEASURES BY THE PRICE COMMITTEE ; AND THE AGREEMENTS SET UP A ' ' JOINT COMMITTEE ' ' PRESIDED OVER BY A REPRESENTATIVE OF THE MINISTER WHICH IS TO PROMOTE THE IMPLEMENTATION OF THE PROVISIONS OF THE AGREEMENT AND TO LAY DOWN CERTAIN IMPLEMENTING RULES .

24 IT FOLLOWS THAT THE CONCLUSION AND THE IMPLEMENTATION OF THE INTER-TRADE AGREEMENTS , THE OPERATIONS OF THE FUND AND THE MEASURES ADOPTED BY THE PRICE COMMITTEE AND BY THE MINISTER FOR AGRICULTURE ARE CONNECTED BY LINKS SO CLOSE THAT THEY ARE INSEPARABLE . IT MUST ACCORDINGLY BE DECLARED THAT THE INTER-TRADE AGREEMENTS FORM PART OF A BODY OF MEASURES WHICH ARE INTENDED TO PROVIDE SUPPORT FOR THE ITALIAN SUGAR INDUSTRY AND THAT THE ITALIAN GOVERNMENT IS RESPONSIBLE FOR THEM .

25 IN THOSE CIRCUMSTANCES THE PARTIAL REIMBURSEMENT OF THE STORAGE COSTS FOR SUGAR CARRIED FORWARD CANNOT BE CONSIDERED AS THE VOLUNTARY PARTICIPATION OF BEET PRODUCERS IN THE STORAGE COSTS FOR THE PURPOSE OF ARTICLE 2 OF THE SAID REGULATION NO 748/68 . ON THE CONTRARY THAT REIMBURSEMENT MUST BE DEFINED AS A SPECIAL MEANS OF AID IN THE SUGAR SECTOR ORGANIZED BY THE ITALIAN PUBLIC AUTHORITIES AND AT VARIANCE WITH ARTICLE 31 ( 2 ) OF REGULATION NO 3330/74 WHICH MUST BE UNDERSTOOD AS PROHIBITING THE MEMBER STATES FROM REIMBURSING THE STORAGE COSTS OF SUGAR WHERE IT IS CARRIED FORWARD TO THE FOLLOWING MARKETING YEAR .

26 IT MUST THUS BE DECLARED THAT THE ITALIAN REPUBLIC , BY GRANTING TO SUGAR PRODUCERS FOR THE 1976/77 AND 1977/78 MARKETING YEARS A PARTIAL REIMBURSEMENT OF THE STORAGE COSTS OF SUGAR CARRIED FORWARD TO THE FOLLOWING MARKETING YEAR , HAS FAILED TO FULFIL ONE OF ITS OBLIGATIONS UNDER THE TREATY .

27 PURSUANT TO ARTICLE 69 ( 2 ) OF THE RULES OF PROCEDURE THE UNSUCCESSFUL PARTY SHALL BE ORDERED TO PAY THE COSTS .

28 SINCE THE DEFENDANT HAS FAILED IN ITS SUBMISSION IT MUST BE ORDERED TO PAY THE COSTS .

ON THOSE GROUNDS ,

THE COURT

HEREBY :

1 . DECLARES THAT THE ITALIAN REPUBLIC , BY GRANTING TO SUGAR MANUFACTURERS FOR THE 1976/77 AND 1977/78 MARKETING YEARS A COMPENSATORY ALLOWANCE FOR THE STORAGE COSTS OF SUGAR PRODUCED IN ITALY IN ADDITION TO THE REIMBURSEMENT PROVIDED FOR BY THE RELEVANT COMMUNITY PROVISIONS , HAS FAILED TO FULFIL ONE OF ITS OBLIGATIONS UNDER THE TREATY ;

2 . DECLARES THAT THE ITALIAN REPUBLIC , BY GRANTING TO SUGAR PRODUCERS FOR THE 1976/77 AND 1977/78 MARKETING YEARS A PARTIAL REIMBURSEMENT OF THE STORAGE COSTS OF SUGAR CARRIED FORWARD TO THE FOLLOWING MARKETING YEAR , HAS FAILED TO FULFIL ONE OF ITS OBLIGATIONS UNDER THE TREATY ;

3 . ORDERS THE DEFENDANT TO PAY THE COSTS .