61988J0350

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1 . Measures adopted by the institutions - Statement of reasons - Obligation - Scope - Decision following, but going further than, a consistent practice

( EEC Treaty, Art . 190 )

2 . Agriculture - Common organization of the markets - Milk and milk products - Aid for butter and concentrated butter for use in the manufacture of pastry products, ice-cream and other foodstuffs - Progressive reduction of the maximum amount of aid in response to market developments - Justified management decision

( Commission Regulation No 570/88 )

3 . Community law - Principles - Protection of legitimate expectations - Limits - Modification of rules governing a common organization of the market - Discretionary power of Community institutions

1 . Although the reasons on which a decision following a well-established line of decisions is based may be given in a summary manner, for example by a reference to those decisions, the Community authority must give an explicit account of its reasoning if the decision goes appreciably further than the previous decisions . It is not necessary, however, for details of all relevant factual and legal aspects to be given . The question whether the statement of the grounds for a decision meets the requirements of Article 190 of the Treaty must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question . Moreover, the degree of precision of the statement of the reasons for a decision must be weighed against practical realities and the time and technical facilities available for making the decision .

2 . In view of the objective of Regulation No 570/88 on the sale of butter at reduced prices and the granting of aid for butter and concentrated butter for use in the manufacture of pastry products, ice-cream and other foodstuffs, which was to absorb stocks of butter which could not be disposed of in the normal way, the Commission was perfectly entitled, once it considered that the drop in the level of butter stocks made it less necessary to use subsidies to encourage purchases of market butter, to reduce progressively the maximum amount of aid which could be granted under that regulation .

3 . Traders cannot have a legitimate expectation that an existing situation which is capable of being altered by the Community institutions in the exercise of their discretionary power will be maintained . This is particularly true in an area such as the common organization of the markets whose purpose involves constant adjustments to meet changes in the economic situation . It follows that traders cannot claim a vested right to the maintenance of an advantage which they derive from the establishment of the common organization of the markets and which they enjoyed at a given time .

This applies a fortiori when the advantage in question is derived from exceptional arrangements which depart from the normal rules of the market and which the Commission has an obligation to adjust as soon as the state of the market has returned to normal, and when a curtailment of that advantage is foreseeable by a prudent and well-informed trader .

In Case C-350/88

( 1 ) Société française des Biscuits Delacre, a public limited liability company, whose registered office is at Nieppe RC Hazebrouck, ( France ),

( 2 ) Etablissements J . Le Scao, a public limited liability company, whose registered office is at Briec-de-l' Odet, ( France ),

( 3 ) Biscuiterie de l' Abbaye, a private limited liability company, whose registered office is at Lonlay-L' Abbaye, ( France ),

represented by Patrick Dibout, of the Paris Bar, with an address for service in Luxembourg at the Chambers of Tom Loesch, avocat, 8 rue Zithe,

applicants,

v

Commission of the European Communities, represented by D . G . Lawrence and Patrick Hetsch, members of its Legal Department, acting as Agents, with an address for service in Luxembourg at the office of Georgios Kremlis, a member of the Commission' s Legal Department, Wagner Centre, Kirchberg,

defendant,

APPLICATION for a declaration that the decision adopted by the Commission on 30 September 1988 in connection with invitation to tender No 8 ( Official Journal 1988, C 259, p . 9 ) under the standing invitation to tender pursuant to Commission Regulation ( EEC ) No 570/88 of 16 February 1988 on the sale of butter at reduced prices and the granting of aid for butter and concentrated butter for use in the manufacture of pastry products, ice-cream and other foodstuffs ( Official Journal 1988, L 55, p . 31 ) is void,

THE COURT ( Second Chamber )

composed of : F . A . Schockweiler, President of Chamber, G . F . Mancini and T . F . O' Higgins, Judges,

Advocate General : C . O . Lenz

Registrar : H . A . Ruehl, Principal Administrator

having regard to the Report for the Hearing and further to the hearing on 9 November 1989,

after hearing the Opinion of the Advocate General delivered at the sitting on 10 January 1990,

gives the following

Judgment

1 By an application lodged at the Court Registry on 2 December 1988, Société française des Biscuits Delacre, Etablissements J . Le Scao and Biscuiterie de l' Abbaye ( hereinafter referred to as "the applicants ") brought an action under the second paragraph of Article 173 of the EEC Treaty for a declaration that the decision adopted by the Commission on 30 September 1988 in connection with invitation to tender No 8 ( Official Journal 1988, C 259, p . 9 ) under the standing invitation to tender pursuant to Commission Regulation ( EEC ) No 570/88 of 16 February 1988 on the sale of butter at reduced prices and the granting of aid for butter and concentrated butter for use in the manufacture of pastry products, ice-cream and other foodstuffs ( Official Journal 1988, L 55, p . 31 ) was void .

2 The applicants, which are manufacturers of pastry products, participated in a standing invitation to tender with a view to obtaining aid for butter under Regulation No 570/88 . On 23 September 1988, under individual invitation to tender No 8 for 1988, they lodged tenders with the French intervention agency for a total of 110, 80 and 10 tonnes respectively of butter at 82% without tracers, with aid of FF 1 334.44 net of tax per 100 kg .

3 By a decision of 30 September 1988 addressed to the Member States, an extract of which, in the form of a table showing only the prices and amounts of aid decided upon by the Commission, was published in the C Series of the Official Journal of the European Communities ( Official Journal 1988, C 259, p . 9 ), the Commission fixed the maximum amount of aid for invitation to tender No 8 at ECU 154, equivalent to FF 1 151.28, per 100 kg .

4 By letters dated 3 October 1988, the French intervention agency informed the applicants that their tenders had been rejected on the ground that the aid for which they had applied was higher than the maximum amount decided upon by the Commission on 30 September 1988 .

5 It appears from the documents before the Court that, owing to an appreciable drop in butter stocks leading to a considerable increase in market butter prices, the maximum amount of aid for butter has decreased steadily since invitation to tender No 4 of 1988, when it was ECU 167 per 100 kg of butter ( Official Journal 1988, C 204, p . 12 ). After a reduction to ECU 166 for invitation to tender No 5 ( Official Journal 1988, C 217, p . 20 ), the amount of aid was fixed at ECU 163 for invitation to tender No 6 ( Official Journal 1988, C 226, p . 4 ) and then at ECU 159 for invitation to tender No 7 ( Official Journal 1988, C 249, p . 4 ). After the ECU 154 decided upon for invitation to tender No 8, the amount of aid went down further to ECU 150 for invitation to tender No 9 ( Official Journal 1988, C 273, p . 2 ).

6 In support of their application, the applicants claim that there has been a breach of an essential procedural requirement inasmuch as the contested decision did not state the reasons on which it was based and the principles of proportionality, the protection of legitimate expectations and the prohibition of discrimination have not been complied with .

7 Reference is made to the Report for the Hearing for a fuller account of the facts of the case, the course of the procedure and the submissions and arguments of the parties, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court .

The statement of the reasons on which the decision was based

8 The applicants claim that the contested decision does not comply with the requirement laid down in Article 190 of the EEC Treaty that decisions must state the reasons on which they are based inasmuch as it is not stated in the decision that it was taken after the opinion of the Management Committee had been obtained and no reasons are given for the reduction of the maximum amount of aid compared with the previous invitations to tender .

9 In order to determine whether the first complaint concerning the statement of reasons is well founded, it must be borne in mind that, in accordance with the first subparagraph of Article 18(1 ) of Regulation No 570/88, the minimum selling price for butter and the maximum amount of aid for butter or concentrated butter are to be fixed in accordance with the management committee procedure laid down in Article 30 of Regulation ( EEC ) No 804/68 of the Council of 27 June 1968 on the common organization of the market in milk and milk products ( Official Journal, English Special Edition 1968 ( I ), p . 176 ).

10 It must be observed in this regard that the applicants' complaint is that the Commission' s decision, as published in the C Series of the Official Journal, makes no mention of the consultation of the Management Committee .

11 In accordance with a Notice of the Commission ( Official Journal 1982, L 360, p . 43 ), such decisions are no longer published in extenso; only the information necessary to inform the traders concerned of the results of the relevant invitation to tender is published, while the complete Commission decision is notified to the Member States and enters into effect upon that notification .

12 It is clear from the documents before the Court that the decision, as notified to the French permanent representative, refers explicitly to the consultation of the Management Committee, since the second recital in its preamble states that "the Management Committee for Milk and Milk Products has not delivered an Opinion within the time-limit set by its Chairman ".

13 It follows that the complaint that there was no mention of the consultation of the management committee must be dismissed .

14 Secondly, with regard to the claim that no reasons were given for lowering the maximum amount of aid in comparison with the amount decided upon for the previous individual invitations to tender, the applicants complain that the contested decision merely referred to the regulation which it was implementing and maintain, in particular, that the Commission should have set out its reasoning in explicit terms when departing, as in this case, from consistent previous practice .

15 It is true that the Court has consistently held that the statement of grounds required by Article 190 of the EEC Treaty must disclose in a clear and unequivocal fashion the reasoning followed by the Community authority which adopted the measure in question in such a way as to make the persons concerned aware of the reasons for the measure and thus enable them to defend their rights and the Court to exercise its supervisory jurisdiction ( see paragraph 19 of the judgment of 30 September 1982 in Case 108/81 Amylum v Council (( 1982 )) ECR 3107; paragraph 37 of the judgment of 8 November 1983 in Joined Cases 96 to 102, 104, 105, 108 and 110/82 IAZ and Others v Commission (( 1983 )) ECR 3369; and paragraph 38 of the judgment of 25 October 1984 in Case 185/83 University of Groningen v Inspecteur der Invoerrechten en Accijnzen, Groningen (( 1984 )) ECR 3623 ). It is also accepted that, although the reasons on which a decision following a well-established line of decisions is based may be given in a summary manner, for example by a reference to those decisions, the Community authority must give an explicit account of its reasoning if the decision goes appreciably further than the previous decisions ( see paragraph 31 of the judgment of 26 November 1975 in Case 73/74 Groupement des fabricants de papiers peints and Others v Commission (( 1975 )) ECR 1491 ).

16 It is not necessary, however, for details of all relevant factual and legal aspects to be given . The Court has consistently held that the question whether the statement of the grounds for a decision meets the requirements of Article 190 of the Treaty must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question ( see paragraph 38 of the judgment in University of Groningen; paragraphs 36 and 37 of the judgment of 23 February 1978 in Case 92/77 An Bord Bainne v Minister for Agriculture (( 1978 )) ECR 497; and paragraphs 18 to 22 of the judgment of 25 October 1978 in Case 125/77 Koninklijke Scholten-Honig v Hoofdproduktschap voor Akkerbouwprodukten (( 1978 )) ECR 1991 ). Moreover, the degree of precision of the statement of the reasons for a decision must be weighed against practical realities and the time and technical facilities available for making the decision ( see the judgment of 1 December 1965 in Case 16/65 Firma C . Schwarze v Einfuhr - und Vorratsstelle fuer Getreide und Futtermittel (( 1965 )) ECR 877 ).

17 In the present case, the contested decision forms part of a series of measures intended to reduce butter stocks . In particular, the fixing of the minimum selling prices for butter and the maximum amounts of the aid for butter and concentrated butter pursuant to Regulation No 570/88 constitutes a uniform procedure which is repeated approximately every two weeks, in which decisions are taken on the basis of explicit criteria contained in rules with which the trade circles concerned are perfectly familiar and neither the mode of adoption nor the contents of those decisions differs to any appreciable extent .

18 Moreover, the modification of the minimum selling price and the maximum amount of the aid is an inherent aspect of the system of Regulation No 570/88 . The aim of the successive decisions taken in connection with the individual invitations to tender is to provide for a flexible reaction to factual circumstances over which the Community authority has no control, since the Commission takes its decision after receiving all the tenders submitted under an individual invitation to tender, having regard to the level of available stocks and market butter prices . Moreover, in the present case, it is undisputed that butters stocks fell considerably as from late 1986 .

19 In those circumstances, the reference in the contested decision to the legal base applicable to the fixing of the maximum level of aid fulfils the requirement laid down in Article 190 of the EEC Treaty that reasons must be stated, and it was not necessary to state the specific reasons for the modification of the amount of the aid compared with previous individual invitations to tender .

20 The applicants' second complaint must therefore also be rejected .

21 It follows from the foregoing that the contested decision contains a sufficient statement of the reasons on which it is based . The first submission must therefore be dismissed .

The principle of proportionality

22 In support of this submission, the applicants claim that the contested decision disregarded the principle of proportionality in so far as, contrary to the objectives of Article 39(1)(c ), ( d ) and ( e ) of the EEC Treaty and Regulation No 570/88, which are to stabilize markets, assure the availability of supplies and ensure that supplies reach consumers at reasonable prices, the decision fixed the maximum amount of the aid for the butter used by biscuit manufacturers at ECU 154 per 100 kg and thereby suddenly and unforeseeably established an increase in the cost of butter of approximately 55% since the beginning of 1988 .

23 The second recital in the preamble to Regulation No 570/88 makes it clear that the objective of the regulation was to promote the disposal and use of butter in order to remedy the situation on the butter market in the Community, which was encumbered by heavy stocks which could not be disposed of in the normal way .

24 It is clear from statistics produced by the Commission, which the applicants have not contested, that the stocks of butter in the Community fell appreciably during 1988 and, indeed, had started to fall as early as late 1986 . In September 1988, the level of stocks in the Community had fallen to less than one third of the quantities in stock in September 1986 ( 439 000 tonnes and 1 473 000 tonnes respectively, source : Eurostat ).

25 As far as public stocks of butter are concerned, the drop was even more significant . According to the information provided by the Commission' s Directorate-General for Agriculture, public reserves fell by more than five-sixths from 1 323 000 tonnes in September 1986 to 206 000 tonnes in September 1988 . That constant downward trend in butter stock levels continued, moreover, after September 1988 . As stock levels fell, the prices for butter and concentrated butter have increased steadily since early 1988 .

26 In view of those circumstances, the Commission, which was under an obligation to manage existing butter stocks and dispose of them on the most favourable terms, had to adjust its policy of aid for butter consumption by biscuit manufacturers to meet market developments .

27 Since the Commission was thus entitled to consider that the drop in the level of butter stocks made it less necessary to use subsidies to encourage purchases of market butter, the contested decision did not clearly depart from the purpose of the rules which the Commission had to implement .

28 Furthermore, the applicants have no grounds for describing the reduction of the maximum amount of aid established by the contested decision as sudden and unforeseeable . The amount of aid fell steadily after individual invitation to tender No 5 ( Commission Decision of 12 August 1988 ) and even continued in invitation to tender No 9 ( Commission Decision of 17 October 1988 ). On each occasion, moreover, the reduction was between 1 and 5 ecus per 100 kg of butter .

29 Even after the reduction during 1988, as a result of the downward trend in the level of butter stocks, aid for the purchase of market butter still represented 50% of its intervention price, so that the applicants were not made to suffer a disadvantage but only received a lesser advantage under the very favourable system set up by Regulation No 570/88 .

30 It follows that the submission alleging a breach of the principle of proportionality must be dismissed .

The principle of the protection of legitimate expectations

31 According to the applicants, the contested decision disregarded the principle of the protection of legitimate expectations inasmuch as it suddenly and unforeseeably departed from a consistent previous practice on the basis of which they had planned their production . The applicants claim that they based their development policy on the manufacture of butter-based products as a result of the system of sales at reduced prices and Community aid, inferring from the Commission' s attitude that the Community rules concerning the grant of aid for butter for the manufacture of pastry products would be maintained in effect without any sudden changes .

32 In order to determine whether this submission is well founded it must be borne in mind that, as the Court has held, the Community institutions have a wide discretionary power in regard to the common agricultural policy which reflects the responsibilities which the Treaty imposes on them ( paragraph 34 of the judgment of 11 March 1987 in Joined Cases 279, 280, 285 and 286/84 Walter Rau Lebensmittelwerke and Others v Commission (( 1987 )) ECR 1069 ). In particular, the Commission must be recognized as having such a margin of discretion in choosing the means necessary for carrying out its policy in its capacity as authority responsible for the management of butter stocks, in which it has to adjust its policy of aid for butter consumption to meet fluctuating market conditions .

33 The Court has consistently held that whilst the principle of the protection of legitimate expectations is one of the fundamental principles of the Community, traders cannot have a legitimate expectation that an existing situation which is capable of being altered by the Community institutions in the exercise of their discretionary power will be maintained ( see paragraph 27 of the judgment of 15 July 1982 in Case 245/81 Edeka Zentrale AG v Germany (( 1982 )) ECR 2745, paragraph 27 of the judgment of 28 October 1982 in Case 52/81 Offene Handelsgesellschaft in Firma Werner Faust v Commission (( 1982 )) ECR 3745, and paragraph 33 of the judgment of 17 June 1987 in Joined Cases 424 and 425/85 Cooeperative Melkproducentenbedrijven Noord-Nederland BA ( Frico ) and Others v Voedselvoorzienings In - en Verkoopbureau (( 1987 )) ECR 2755 ). This is particularly true in an area such as the common organization of the markets whose purpose involves constant adjustments to meet changes in the economic situation ( see paragraph 22 of the judgment of 16 May 1979 in Case 84/78 Angelo Tomadini v Amministrazione delle finanze dello Stato (( 1979 )) ECR 1801, paragraph 48 of the judgment of 5 May 1981 in Case 112/80 Firma Anton Duerbeck v Hauptzollamt Frankfurt am Main/Flughafen (( 1981 )) ECR 1095, and paragraph 33 of the judgment in Frico, cited above ).

34 It follows that traders cannot claim a vested right to the maintenance of an advantage which they derive from the establishment of the common organization of the markets and which they enjoyed at a given time ( see paragraph 22 of the judgment of 27 September 1979 in Case 230/78 Eridiana-Zuccherifici Nazionali and Another v Minister for Agriculture and Forestry and Others (( 1979 )) ECR 2749, and paragraph 18 of the judgment of 21 May 1987 in Joined Cases 133 to 136/85 Walter Rau Lebensmittelwerke v Bundesanstalt fuer landwirtschaftliche Marktordnung (( 1987 )) ECR 2289 ).

35 That conclusion is even more inescapable in a case such as the present one .

36 It must be observed in the first place that Regulation No 570/88 is a special measure whose purpose is to dispose of butter on particularly favourable terms in order to deal with an exceptional situation in which the market is encumbered by heavy stocks which cannot be disposed of in the normal way . As soon as the state of the market returns to normal, the Commission must in its management take account of the new situation and the obligation to make adjustments to exceptional arrangements which depart from the normal rules of the market . In those circumstances, the adjustment of the amount of aid to the state of the market is inherent in the scheme of Regulation No 570/88, and the applicants may not claim a vested right to the maintenance of advantages which they have derived over a certain period from the system set up to promote the disposal of surplus butter . This applies all the more forcefully in the present case since the system of aid was maintained and only the amount was modified .

37 Secondly, in view of the downward trend in stock levels which began in late 1986 and accelerated considerably during 1988, the applicants, as prudent and well-informed traders, should have foreseen the progressive increase in the selling price of butter and the concomitant reduction of the amount of aid, which are the inevitable consequences of a fall in stock levels . They are not therefore entitled to claim that they had a legitimate expectation that the amount of the aid would be maintained ( see paragraph 6 of the judgment of 1 February 1978 in Case 78/77 Firma Johann Luehrs v Hauptzollamt Hamburg-Jonas (( 1978 )) ECR 169, and paragraph 13 of the judgment in Amylum, cited above ).

38 It follows from the foregoing reasoning that the submission alleging a breach of the principle of the protection of legitimate expectations must also be dismissed .

The prohibition of discrimination

39 The applicants contend further that the contested decision failed in two respects to comply with the prohibition of discrimination . First, French legislation provides that only butter may be used in the manufacture of products marketed under the designation "made with butter", while the rules in other Member States also allow the use of other types of fat . Secondly, the applicants discern unequal treatment in the fact that, as undertakings established in France, they were informed of the state of butter stocks only in France . They claim that, unlike undertakings in other Member States, they were unable to obtain supplies of butter at reduced prices in other Member States at the appropriate time because they were inadequately informed .

40 With regard to the first complaint, it is sufficient to point out that the particular situation of French manufacturers of butter biscuits cannot be attributed to the contested decision; it is the result of differences between the laws of the Member States concerning the rules governing the designation of foodstuffs . As it stands at present, Community law does not preclude a Member State from imposing on its own traders stricter rules in that regard than those in force in other Member States .

41 With regard to the second complaint, it must be borne in mind that Articles 13(2 ) and 15(1 ) of Regulation No 570/88 require all intervention agencies to specify, in notices of invitations to tender, the quantity of butter for sale in each store, and to make the list of those stores, updated and published at regular intervals, available to prospective tenderers .

42 In those circumstances, the applicants could have enquired with intervention agencies in other Member States as to the levels of butter stocks available with a view, if need be, to obtaining supplies of stock butter from those sources .

43 The extra expense which may be entailed in such a procedure applies in the same way to any Community trader submitting tenders in a Member State other than that in which he is established, so that there is no breach of the prohibition of discrimination .

44 The applicants' fourth submission is therefore also unfounded .

45 Since none of the submissions put forward by the applicants can be upheld, the application must be dismissed in its entirety .

Costs

46 Under Article 69(2 ) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs . Since the applicants have failed in their submissions, they must be ordered to pay the costs .

On those grounds,

THE COURT ( Second Chamber )

hereby :

( 1 ) Dismisses the application;

( 2 ) Orders the applicants jointly and severally to pay the costs .