proceedings of the court of justice and the court of first...

J/98/22

Proceedings of the court of justice and the court of firstinstance of the european communities week of 28 Septemberto 2 October 1998

I. JUDGMENTS

Court of Justice

Case C-191/95

Commission of the European Communities v Federal Republic of Germany

Company law

Case C-39/97

Canon Kabushiki Kaisha v Metro-Goldwyn-Mayer Inc.

Approximation of laws

Case C-263/97

The Queen v Intervention Board for Agricultural Produce, ex parte: First City Trading Ltd andOthers

Agriculture

Case C-38/97

Autotrasporti Librandi Snc di Librandi F. & C. v Cuttica spedizioni e servizi internazionali Srl

Competition

Case C-279/95 P

Langnese-Iglo GmbH v Commission of the European Communities

Competition

Case C-209/96

United Kingdom of Great Britain and Northern Ireland v Commission of the EuropeanCommunities

Agriculture

Case C-232/96

French Republic v Commission of the European Communities

Agriculture

Case C-233/96

Kingdom of Denmark v Commission of the European Communities

Agriculture

Case C-238/96

Ireland v Commission of the European Communities

Agriculture

Case C-242/96

Italian Republic v Commission of the European Communities

Agriculture

Case C-27/94

Kingdom of the Netherlands v Commission of the European Communities

Agriculture

Case C-285/96

Commission of the European Communities v Italian Republic

Environment and consumers

Case C-71/97

Commission of the European Communities v Kingdom of Spain


Case C-127/97

Willi Burstein v Freistaat Bayern


Court of First Instance

Case T-149/96

Confederazione Nazionale Coltivatori Diretti (Coldiretti) v Council of the European Union

Agriculture

Admissibility

Case T-154/96

Christiane Chvatal and Others v Court of Justice of the European Communities

Staff Regulations of Officials

Case T-13/97

Antoinette Losch v Court of Justice of the European Communities


Case T-43/97

Isabelle Adine-Blanc v Commission of the European Communities


Case T-121/97

Richie Ryan v Court of Auditors of the European Communities

Law governing the institutions

Case T-164/97

Silvio Busacca and Others v Court of Auditors of the European Communities


Case T-155/97

Natural van Dam and Danser Container Line BV AG v Commission of the EuropeanCommunities

Transport

II. OPINIONS

Case C-90/97

Robert Swaddling v Adjudication Officer

Case C-303/97

Verbraucherschutzverein e.V v Sektkellerei G.C. Kessler GmbH & Co.

Case C-328/97

Glob-Sped AG v Hauptzollamt Lörrach

Case C-409/97

Commission of the European Communities v Grand Duchy of Luxembourg

Case C-258/97

HI Hospital Ingenieure Krankenhaustechnik Planungsgesellschaft mbH vLandeskrankenanstalten-Betriebsgesellschaft

1.

JUDGMENTS

Court of Justice

Case C-191/95

Commission of the European Communities v Federal Republic of Germany

Company law

29 September 1998

(Failure by a Member State to fulfil its obligations · Reasoned opinion · Principle of collegialityCompany law · Directives 68/151/EEC and 78/660/EEC · Annual accounts · Penalties for failureto disclose)

(Full Court)

By application lodged at the Registry of the Court on 16 June 1995, the Commission of theEuropean Communities commenced proceedings for a declaration that, by failing to provide forappropriate penalties in cases where companies limited by shares fail to disclose their annualaccounts, as prescribed in particular by the First Council Directive 68/151/EEC of 9 March 1968(hereinafter 'the First Directive‘ and the Fourth Council Directive 78/660/EEC of 25 July 1978(hereinafter 'the Fourth Directive‘), the Federal Republic of Germany has failed to fulfil itsobligations under the EC Treaty and those directives.

The German Government asks the Court to dismiss the action, principally, as inadmissible, or,in the alternative, as unfounded, and to order the Commission to pay the costs.

Admissibility

The German Government has put forward three pleas of inadmissibility alleging, first, breach ofthe principle of collegiality as regards the issuance of the reasoned opinion and thecommencement of proceedings, second, a change in the subject-matter of the dispute and,lastly, erroneous assessment as regards the alleged failure to fulfil obligations.

It is important to remember, at the outset, that the functioning of the Commission is governed bythe principle of collegiate responsibility.

It is common ground that the decisions to issue the reasoned opinion and to commenceproceedings are subject to that principle of collegiate responsibility.

The principle of collegiality is based on the equal participation of the Commissioners in theadoption of decisions, from which it follows in particular that decisions should be the subject ofcollective deliberation and that all the members of the college of Commissioners should bearcollective responsibility at political level for all decisions adopted.

Nevertheless, the formal requirements for effective compliance with the principle of collegialityvary according to the nature and legal effects of the acts adopted by that institution.

The issue of a reasoned opinion constitutes a preliminary procedure, which does not have anybinding legal effect for the addressee of the reasoned opinion. The purpose of that pre-litigationprocedure provided for by Article 169 of the Treaty is to enable the Member State to comply ofits own accord with the requirements of the Treaty or, if appropriate, to justify its position.

If that attempt at settlement is unsuccessful, the function of the reasoned opinion is to define thesubject-matter of the dispute. The Commission is not, however, empowered to determineconclusively, by reasoned opinions formulated pursuant to Article 169, the rights and duties of aMember State or to afford that State guarantees concerning the compatibility of a given line ofconduct with the Treaty. According to the system embodied in Articles 169 to 171 of the Treaty,the rights and duties of Member States may be determined and their conduct appraised only bya judgment of the Court.

The reasoned opinion therefore has legal effect only in relation to the commencement ofproceedings before the Court so that where a Member State does not comply with that opinionwithin the period allowed, the Commission has the right, but not the duty, to commenceproceedings before the Court.

The decision to commence proceedings before the Court, whilst it constitutes an indispensablestep for the purpose of enabling the Court to give judgment on the alleged failure to fulfilobligations by way of a binding decision, nevertheless does not per se alter the legal position inquestion.

Both the Commission's decision to issue a reasoned opinion and its decision to bring an actionfor a declaration of failure to fulfil obligations must be the subject of collective deliberation by thecollege of Commissioners.

The information on which those decisions are based must therefore be available to themembers of the college. It is not, however, necessary for the college itself formally to decide onthe wording of the acts which give effect to those decisions and put them in final form.

In this case it is not disputed that the members of the college had available to them all theinformation they considered would assist them for the purposes of adopting the decision whenthe college decided, on 31 July 1991, to issue the reasoned opinion, and approved, on 13December 1994, the proposal to bring the present action.

In those circumstances, it must be held that the Commission complied with the rules relating tothe principle of collegiality when it issued the reasoned opinion with regard to the FederalRepublic of Germany and brought the present action.

Consequently the plea of inadmissibility alleging breach of the principle of collegiateresponsibility must be dismissed as unfounded.

Change in the subject-matter of the dispute

The German Government maintains that the action is inadmissible because the contents of theapplication differ from those of the letter of formal notice.

The fact that the Commission did not persist in the complaints based on the fact that a largeproportion of companies limited by shares were failing to comply with the disclosurerequirements, whilst it detailed the complaints based on the need to provide appropriatesanctions, which it had already set out more generally in the letter of formal notice, merelylimited the subject-matter of the action.

It follows that the second plea of inadmissibility must also be dismissed as unfounded.

Erroneous statement of reasons as regards the alleged failure

In the submission of the German Government, the Commission was not entitled to question theconformity with Community law of the German provisions concerning the requirement todisclose annual accounts by basing itself on unverified figures relating to the level of compliancewith that requirement on the part of undertakings.

At the stage of the proceedings before the Court, the Commission did not persist in its complaintto the effect that a large proportion of companies limited by shares were failing to comply withthe disclosure requirements. The third plea of inadmissibility therefore refers to an allegedfailure at the pre-litigation stage which does not form part of the subject-matter of this action,and must thus be dismissed.

It follows that the action must be held admissible in its entirety.

Substance

The Commission claims that an examination of the provisions existing in German law showsclearly that although disclosure of the annual accounts of companies limited by shares isgoverned by Paragraph 325 et seq. of the Handelsgesetzbuch (German Commercial Code,hereinafter 'the HGB‘), the German legislature has not created any effective legal means ofimposing the disclosure requirement. Paragraph 335, first sentence, point 6, of the HGBprovides for the imposition of periodic penalty payments where the members of the bodyauthorised to represent a company limited by shares do not comply with the disclosurerequirement, but the court responsible for the register cannot impose such penalties of its ownmotion.

In that connection, it is sufficient to note that the Court held in Case C-97/96 DaihatsuDeutschland [1997] ECR I-6843, at paragraphs 14 and 15, that the legislative lacuna left by theFirst Directive was filled by the Fourth Directive.

In Daihatsu Deutschland, cited above, the Court ruled that Article 6 of the First Directive was tobe interpreted as precluding the legislation of a Member State from restricting to members orcreditors of the company, the central works council or the company's works council the right toapply for imposition of the penalty provided for by the law of that Member State in the event offailure by a company to fulfil the obligations regarding disclosure of annual accounts laid downby the First Directive.

The Court:

'1. Dismisses the pleas of inadmissibility;

2. Declares that, by failing to provide for appropriate penalties in cases wherecompanies limited by shares fail to effect compulsory disclosure of their annualaccounts as prescribed, in particular, by Articles 2(1)(f), 3 and 6 of the FirstCouncil Directive 68/151/EEC of 9 March 1968 on coordination of safeguardswhich, for the protection of the interests of members and others are required byMember States of companies within the meaning of the second paragraph ofArticle 58 of the Treaty, with a view to making such safeguards equivalentthroughout the Community, in conjunction with Article 47(1) of the Fourth CouncilDirective 78/660/EEC of 25 July 1978 based on Article 54(3)(g) of the Treaty on theannual accounts of certain types of companies, the Federal Republic of Germanyhas failed to fulfil its obligations under those directives;

3. Orders the Federal Republic of Germany to pay the costs.‘

Advocate General G. Cosmas delivered his Opinion at the sitting of the Full Court on 5June 1997.

He proposed that the Court:

(1) Dismiss the action brought by the Commission;

(2) Order the Commission to pay the costs.

Case C-39/97

Canon Kabushiki Kaisha v Metro-Goldwyn-Mayer Inc.


29 September 1998

Preliminary ruling

(Trade mark law · Likelihood of confusion · Similarity of goods or services)

(Full Court)

By order of 12 December 1996, the Bundesgerichtshof (Federal Court of Justice) referred to theCourt for a preliminary ruling under Article 177 of the EC Treaty a question on the interpretationof Article 4(1)(b) of First Council Directive 89/104/EEC of 21 December 1988.

That question was raised in proceedings between the Japanese company Canon KabushikiKaisha ('CKK‘) and the American corporation Metro-Goldwyn-Mayer Inc., formerly PatheCommunications Corporation ('MGM‘), following MGM's application in Germany in 1986 forregistration of the word trade mark 'CANNON‘ to be used in respect of the following goods andservices: 'films recorded on video tape cassettes (video film cassettes); production, distributionand projection of films for cinemas and television organisations‘.

The first examiner of the German Patent Office considered that the two marks were analogousand therefore refused registration on the ground that the respective goods and services weresimilar within the meaning of Paragraph 5(4)(1) of the Warenzeichengesetz (former Trade MarkLaw, 'the WZG‘). The second examiner set aside that decision and dismissed the opposition forlack of similarity.

The Bundespatentgericht (Federal Patent Court) dismissed CKK's appeal against the latterdecision, holding that there was no similarity within the meaning of Paragraph 5(4)(1) of theWZG.

CKK brought an appeal against the order of the Bundespatentgericht before theBundesgerichtshof.

In the first part of the question, the Bundesgerichtshof asks in substance whether, on a properconstruction of Article 4(1)(b) of the Directive, the distinctive character of the earlier trade mark,and in particular its

reputation, must be taken into account when determining whether the similarity between thegoods or services covered by the two trade marks is sufficient to give rise to the likelihood ofconfusion.

It is to be noted, first, that the tenth recital of the preamble to the Directive states that 'theprotection afforded by the registered trade mark, the function of which is in particular toguarantee the trade mark as an indication of origin, is absolute in the case of identity betweenthe mark and the sign and goods or services; the protection applies also in case of similaritybetween the mark and the sign and the goods or services;it is indispensable to give aninterpretation of the concept of similarity in relation to the likelihood of confusion; the likelihoodof confusion, the appreciation of which depends on numerous elements and, in particular, onthe recognition of the trade mark on the market, [on] the association which can be made withthe used or registered sign, [and on] the degree of similarity between the trade mark and thesign and between the goods or services identified, constitutes the specific condition for suchprotection‘.

A global assessment of the likelihood of confusion implies some interdependence between therelevant factors, and in particular a similarity between the trade marks and between these goodsor services. Accordingly, a lesser degree of similarity between these goods or services may beoffset by a greater degree of similarity between the marks, and vice versa. The interdependenceof these factors is expressly mentioned in the tenth recital of the preamble to the Directive,which states that it is indispensable to give an interpretation of the concept of similarity inrelation to the likelihood of confusion, the appreciation of which depends, in particular, on therecognition of the trade mark on the market and the degree of similarity between the mark andthe sign and between the goods or services identified.

Furthermore, according to the case-law of the Court, the more distinctive the earlier mark, thegreater the risk of confusion. Since protection of a trade mark depends, in accordance withArticle 4(1)(b) of the Directive, on there being a likelihood of confusion, marks with a highlydistinctive character, either per se or because of the reputation they possess on the market,enjoy broader protection than marks with a less distinctive character.

It follows that, for the purposes of Article 4(1)(b) of the Directive, registration of a trade markmay have to be refused, despite a lesser degree of similarity between the goods or servicescovered, where the marks are very similar and the earlier mark, in particular its reputation, ishighly distinctive.

It is, however, important to stress that, for the purposes of applying Article 4(1)(b), even where amark is identical to another with a highly distinctive character, it is still necessary to adduceevidence of similarity between the goods or services covered. In contrast to Article 4(4)(a),which expressly refers to the situation in which the goods or services are not similar, Article4(1)(b) provides that the likelihood of confusion presupposes that the goods or services coveredare identical or similar.

In the second part of the question the Bundesgerichtshof asks in substance whether there canbe a likelihood of confusion within the meaning of Article 4(1)(b) of the Directive where thepublic perception is that the goods or services have different places of origin.

There is a likelihood of confusion within the meaning of Article 4(1)(b) of the Directive where thepublic can be mistaken as to the origin of the goods or services in question.

Indeed, Article 2 of the Directive provides that a trade mark must be capable of distinguishingthe goods or services of one undertaking from those of other undertakings, while the tenthrecital in the preamble to the Directive states that the function of the protection conferred by themark is primarily to guarantee the indication of origin.

The risk that the public might believe that the goods or services in question come from the sameundertaking or, as the case may be, from economically-linked undertakings, constitutes alikelihood of confusion within the meaning of Article 4(1)(b) of the Directive. Consequently, inorder to demonstrate

that there is no likelihood of confusion, it is not sufficient to show simply that there is nolikelihood of the public being confused as to the place of production of the goods or services.

The Court ruled:

'On a proper construction of Article 4(1)(b) of First Council Directive 89/104/EEC of 21December 1988 to approximate the laws of the Member States relating to trade marks, thedistinctive character of the earlier trade mark, and in particular its reputation, must betaken into acc ount when determining whether the similarity between the goods orservices covered by the two trade marks is sufficient to give rise to the likelihood ofconfusion.

There may be a likelihood of confusion within the meaning of Article 4(1)(b) of Directive89/104 even where the public perception is that the goods or services have differentplaces of production. By contrast, there can be no such likelihood where it does notappear that the public could believe that the goods or services come from the sameundertaking or, as the case may be, from economically-linked undertakings.‘

Advocate General F.G. Jacobs delivered his Opinion at the sitting of the Full Court on 2April 1998.

Accordingly the question referred by the Bundesgerichtshof should in my opinion be answeredas follows:

'In the assessment of the similarity of goods or services covered by two marks within themeaning of Article 4(1)(b) of First Council Directive 89/104/EEC of 21 December 1988 toapproximate the laws of the Member States relating to trade marks, account may be taken ofthe distinctive character, in particular the reputation, of the earlier mark in deciding whetherthere is sufficient similarity to give rise to a likelihood of confusion. However, there will only be alikelihood of confusion within the meaning of that provision if it is likely that the public will beconfused into thinking that there is some sort of trade connection between the suppliers of thegoods or services in question.‘

Case C-263/97

The Queen v Intervention Board for Agricultural Produce, ex parte: First City Trading Ltdand Others

Agriculture

29 September 1998

Preliminary ruling

(Agriculture · Common organisation of the markets · Beef · Export refunds · Beef of British originrepatriated to the United Kingdom as a result of the announcements and decisions made inrelation to mad cow disease · Force majeure)

(First Chamber)

By order of 26 March 1997, the High Court of Justice, Queen's Bench Division, referred to theCourt for a preliminary ruling four questions on the interpretation of Articles 23 and 33 ofCommission Regulation

n 96/23

27 March 1996 and of Commission Regulation (EC) No 773/96 of 26 April 1996.

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United Kingdom to the other Member States or third countries.

According to the order for reference, First City Trading Ltd ('FCTL‘) and Meatal Supplies Ltd,two of the applicants in the main proceedings, are engaged in the export of beef from the UnitedKingdom. On 27 March 1996, when the ban imposed by the Commission came into effect,FCTL and Meatal were in the process of exporting 648 200 kg of beef. Approximately 70% ofthe FCTL beef and all of the Meatal beef left the territory of the United Kingdom shortly before27 March 1996 and was in transit on that date. That beef was subsequently repatriated to theUnited Kingdom. The remaining 30% of the FCTL beef never left the territory of the UnitedKingdom and was not permitted to do so after 27 March 1996.

FCTL and Meatal applied for and were granted advance payments of export refunds.

In the event, none of the FCTL beef or the Meatal beef entered the territory of any importingcountry. Since that normal precondition for payment of a differentiated export refund had notbeen satisfied, the Intervention Board for Agricultural Produce called upon the applicants in themain proceedings to repay the refund paid in advance.

The first question

By its first question, the national court is essentially asking whether Articles 23 and 33 ofRegulation No 3665/87, in the version thereof resulting from Commission Regulation (EEC) No1615/90 of 15 June 1990, must be interpreted as meaning that where, as a result, in particular,of force majeure, goods do not reach their country of destination but are repatriated to theMember State of export, the exporter is obliged to repay the export refunds paid in advance.

Actual access to the market of destination is in principle conditional on completion of theformalities for release for consumption in the country of destination, the fact that the product didnot reach that destination and, owing to force majeure, had to be exported to other countriesrules out the possibility of its being regarded, for the purposes of payment of the differentiatedrefund, as having been imported within the meaning of Article 5(1) of Regulation No 3665/87.

The position is the same where the product is repatriated to the Member State of export. In sucha situation, the formalities for release of the product for consumption in the country ofdestination have not been completed, so that it cannot be regarded, for the purposes ofpayment of the differentiated refund, as having been imported within the meaning of Article 5(1)of Regulation No 3665/87.

The second question

By its second question, the national court asks whether the general principles of Communitylaw, and, in particular, those relating to force majeure, the protection of legitimate expectations,proportionality or equity, entitle exporters of beef from the United Kingdom to retain all or part ofany export refunds paid in advance in circumstances where

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(b) bans on the importation of beef from the United Kingdom have also been imposed by anumber of third countries,

(c) exporters of beef were in the process of carrying goods to third countries at the timewhen Decision 96/239 was adopted,

(d) those exporters were forced to repatriate the beef to the United Kingdom,

(e) the exporters had received, in accordance with Council Regulations (EEC) Nos 565/80and 3665/87, advance payments of export refunds in respect of the export transactionsin issue, and

(f) the exporters suffered loss as a result of their inability to sell their beef on the exportmarkets in question.

Since the consequences of force majeure are clearly and exhaustively provided for byRegulation No 3665/87, that question must be construed as seeking to ascertain whether, if thecircumstances described by the national court constitute force majeure, Regulation No 3665/87is invalid under the general principles of Community law inasmuch as it does not permitexporters to retain all or part of any export refunds paid in advance.

As to the provisions of Regulation No 3665/87 concerning force majeure, it is settled case-lawthat, since the concept of force majeure does not have the same scope in various spheres ofapplication of Community law, its meaning must be determined by reference to the legal contextin which it is to operate. Therefore, Regulation No 3665/87 is not contrary to the generalprinciples of Community law inasmuch as it specifies and limits the effects of force majeure inthe field of export refunds.

As regards breach of the principle of proportionality.

There is no essential difference between a case in which goods are exported to other thirdcountries attracting no export refund and a case in which the goods are repatriated to theMember State of export. In both cases, the subsidised goods fail to reach their intended marketand cannot be sold there.

Consequently, the rule requiring export refunds paid in advance to be repaid where the goodsare repatriated to the Member State of export is proportional to the objective pursued.

As to breach of the principle of the protection of legitimate expectations, the Court has held thatthe provisions of Regulations Nos 565/80 and 3665/87 cannot give rise to any legitimateexpectation other than entitlement to a refund subject to the conditions laid down.

As to the argument that it would be inequitable to require exporters to repay export refunds paidin advance, the principle of equity cannot be regarded as allowing any derogation from theapplication of provisions of Community law, save as provided for by the legislation or where thelegislation is itself declared invalid.

The fourth question

exporters of beef were in the process of carrying goods to third countries on the date on whichDecision 96/239 was adopted,

those exporters were forced to repatriate the beef to the United Kingdom,

Decision No 773/239

It should be noted that the applicants in the main proceedings in this case, who wereinterveners in the main proceedings in National Farmers' Union and Others, also participated, inthat capacity, in the proceedings before the Court.

However, they have not in the present case put forward any submission which differs from thosepreviously considered in National Farmers' Union and Others and which is such as to call inquestion the legality of

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The Court ruled:

'1. Articles 23 and 33 of Commission Regulation (EEC) No 3665/87 of 27 November1987 laying down common detailed rules for the application of the system ofexport refunds on agricultural products, in the version thereof resulting fromCommission Regulation (EEC) No 1615/90 of 15 June 1990, must be interpreted asmeaning that where, as a result of, in particular, force majeure, goods do notreach their country of destination but are repatriated to the Member State ofexport, the exporter is obliged to repay any export refunds paid in advance.

2. Regulation No 3665/87 does not contravene the general principles of Communitylaw, in particular the principles of force majeure, the protection of legitimateexpectations, proportionality or equity, by prohibiting exporters of beef from theUnited Kingdom from retaining all or part of any export refunds paid in advance incircumstances where

(a) exports of beef from the United Kingdom to third countries have beenprohibited

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to protect against bovine spongiform encephalopathy,

(b) bans on the importation of beef from the United Kingdom have also beenimposed by a number of third countries,

(c) exporters of beef were in the process of carrying goods to third countrieson the

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(d) those exporters were forced to repatriate the beef to the United Kingdom,

(e) the exporters had received, in accordance with Council Regulation (EEC)No 565/80 of 4 March 1980 on the advance payment of export refunds inrespect of agricultural products and Commission Regulation (EEC) No3665/87, advance payments of export refunds in respect of the exporttransactions at issue, and

(f) the exporters suffered loss as a result of their inability to sell their beef onthe export markets in question.

3. Consideration of question 4 has not disclosed any factor of such a kind as toaffect the

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Commission Regulation (EC) No 773/96 of 26 April 1996 laying down specialmeasures derogating from Regulations (EEC) No 3665/87, (EEC) No 3719/88 and(EEC) No 1964/82 in the beef and veal sector is not rendered invalid by the factthat it prohibits exporters, in the circumstances described in the answer to thesecond question, from retaining all or part of any export refunds paid in advance.‘

Advocate General N. Fennelly delivered his Opinion at the sitting of the First Chamber on14 May 1998.

He recommended to the Court that it reply as follows:

(1) Articles 23 and 33 of Commission Regulation (EEC) No 3665/87 of 27 November 1987laying down common detailed rules for the application of the system of export refunds onagricultural products should be interpreted as applying where goods in transit in thecourse of export to third countries are repatriated to the Member State of export;

(2) In the circumstances described in the second question, the exporters are not entitled toretain all or part of the export refund paid in advance by virtue of general principles ofCommunity law;

(3) In the light of the answer to the second question, the third question does not fall to beanswered;

(4) Consideration in the light of the grounds stated in the order for reference of Commission

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encephalopathy and of Commission Regulation (EC) No 773/96 of 26 April 1996 laying downspecial measures derogating from Regulations (EEC) No 3665/87, (EEC) No 3719/88 and(EEC) No 1964/82 in the beef and veal sector has disclosed no factor capable of affecting theirvalidity.

Case C-38/97

Autotrasporti Librandi Snc di Librandi F. & C. v Cuttica spedizioni e servizi internazionaliSrl

Competition

1 October 1998

Preliminary ruling

(Competition · Road transport · Mandatory tariff · State legislation · Concepts of general interestand public interest)

(Second Chamber)

By order of 30 December 1996, the Giudice di Pace di Genova (Magistrates' Court, Genoa)referred to the Court for a preliminary ruling six questions on the interpretation of Articles 3(f)and (g), 5, 85 and 86 of the EC Treaty in order to enable it to rule on the compatibility withCommunity law of the Italian legislation relating to the fixing of road haulage tariffs.

Those questions have been raised in proceedings brought by Autotrasporti Librandi Snc diLibrandi F. & C. against Cuttica Spedizioni e Servizi Internazionali Srl for payment of thebalance of the price of road transport services performed for Cuttica.

The first two questions

By its first two questions, the national court is asking essentially whether Articles 3(f) and (g), 5,85, 86 and 90 of the Treaty preclude legislation of a Member State which provides for road-haulage tariffs to be approved and brought into force by the State on the basis of proposalssubmitted by a central committee the majority of whose members are representatives of theeconomic operators concerned and which extends the mandatory tariffs applicable in the road-haulage sector to other types of contracts, relating to different services, such as, in particular,contracts under invitations to tender and contracts for hire.

It should also be pointed out that in Centro Servizi Spediporto the Court was faced with a similarquestion in relation to the Italian legislation in force at the time, which differed essentially fromthat applicable in the main proceedings in one single respect: the national associations of roadhauliers were represented on the central committee by 12 persons instead of 17.

In that judgment the Court ruled that neither Articles 3(g), 5, 85, 86 or 90 of the EC Treaty norArticle 30 of that Treaty precluded the legislation of a Member State from providing for road-haulage tariffs to be approved and brought into force by the State on the basis of proposalssubmitted by a committee, where that committee was composed of a majority of representativesof the public authorities and a minority of representatives of the economic agents concernedand in its proposals had to observe certain public interest criteria, and where, moreover, thepublic authorities did not relinquish their rights and powers by taking into consideration, beforethe proposals were approved, the observations of other public and private bodies, or even byfixing tariffs ex officio.

Those findings are not called in question by the fact that, since the adoption of the ItalianMinisterial Decree of 2 February 1994 (G.U.R.I. No 34 of 11 February 1994), which increasedthe number of representatives of national road-haulier associations on the central committeefrom 12 to 17, the representatives of the economic agents are no longer in the minority on thecentral committee, or by the fact that, according to the information provided by the ItalianGovernment, the 'Inter-ministerial Price Committee‘, a consultative body, was replaced by abody called 'the Italian Price and Tariffs Monitoring Authority‘, or by the fact that the Italian Lawmaintained the extension of tariffs to various services, such as contracts under invitation totender and contracts for hire.

First, the change in the majority-minority relationship within the central committee does notwarrant the conclusion that a restrictive agreement within the meaning of Article 85 of the Treatyexists when, under the national legislation in question, the central committee must continue toobserve, in adopting its proposals, the public-interest criteria defined by the Italian Law.

Second, the amendment of the Italian Law does not entail a delegation by the public authoritiesof their powers to private economic agents since the power of the competent minister to rejector amend transport tariffs proposed to him by the central committee and his obligation to consultthe regions and the representatives of the economic sectors concerned remain unchanged.

However, it is for the national court to determine, in the exercise of its jurisdiction, that inpractice tariffs are fixed subject to observance of the public-interest criteria defined by the ItalianLaw and that the public authorities are not handing over their prerogatives to private economicagents.

The third question

By its third question the national court asks whether the concept of general interest to which theCourt referred in its judgments in the Reiff and Delta Schiffahrts- und Speditionsgesellschaftcases corresponds to the concept of public interest mentioned in its judgment in the CentroServizi Spediporto case.

In this regard, it should be observed, that in each of those three judgments the Court examined,in the light of the same criteria, whether the tariff committee in question had to fix tariffs bytaking account of interests other than those of the economic agents represented on thecommittee and whether, before adopting tariffs, the minister had to request the opinion of thirdparties in relation to those agents.

In so doing, the Court was making it clear that the interests of the collectivity had to prevail overthe private interests of individual operators.

In those circumstances, the conclusion must be that the concepts of general interest and publicinterest have the same meaning.

The fourth and fifth questions

By its fourth and fifth questions, the national court seeks to ascertain whether specific criteria tobe used in fixing tariffs, such as those in force under Italian law, are in accord with the publicinterest within the meaning of the judgment in Centro Servizi Spediporto.

In order to ensure that their action does not prevent, restrict or distort the operation ofcompetition, the Member States must necessarily take account of the public interest.

It is therefore for the Member States to determine the criteria which best allow the Communityrules of competition to be observed.

It is then for the national courts to determine whether the public-interest criteria defined in thenational legislation are observed in practice.

The sixth question

By its final question, the national court asks whether the fact that it is possible for collectiveagreements to be concluded which under national law are enforceable against operators whichhave not signed them, as is the case with those in question in the main proceedings, is liable toconstitute a breach of Article 85 of the Treaty.

In this regard, it must be recalled first of all that the Court has held that the fact that collectiveagreements, such as those provided for in Article 13 of the Italian Ministerial Decree of 18November 1982 (supplement to G.U.R.I. No 342 of 14 December 1982), may be concludeddoes not have the effect of restricting competition but allows certain derogations from themandatory tariffs and therefore increases the scope for competition.

It must be observed, next, that it is for the State concerned to define the group of operatorsagainst which collective agreements may be enforced.

The Court ruled:

'1. Articles 3(f) and (g), 5, 85, 86 and 90 of the Treaty do not preclude legislation of aMember State which provides for road-haulage tariffs to be approved and broughtinto force by the State on the basis of proposals of a central committee themajority of whose members are representatives of the economic agentsconcerned and which extends the mandatory tariffs applicable in the field ofcontracts for the carriage of goods by road to other types of contracts, relating todifferent services, such as, in particular, contracts under invitations to tender andcontracts for hire, provided that the tariffs are fixed with due regard for the public-interest criteria defined by Law No 298 and the public authorities do not hand overtheir prerogatives to private economic agents in taking into account, before theapproval of proposals, of the observations of other public and private bodies andeven by fixing tariffs ex officio.

2. The concept of general interest to which the Court referred in its judgments inCase C-185/91 Reiff and in Case C-153/93 Delta Schiffahrts- undSpeditionsgesellschaft corresponds to the concept of public interest mentioned inits judgment in Case C-96/94 Centro Servizi Spediporto.

3. It is for the Member States to determine the specific criteria to be used in fixingtariffs, such as those in force under Italian law, and for the national courts todetermine whether the criteria thus defined are respected in practice.

4. The fact that collective agreements such as those provided for in Article 13 of theMinisterial Decree of 18 November 1982 can be concluded and that they are evenenforceable under national law against operators who have not signed them doesnot have the effect of restricting competition within the meaning of Article 85 ofthe Treaty.‘

Advocate General S. Alber delivered his Opinion at the sitting of the Second Chamber on5 March 1998.

He proposed that the following replies be given to the questions referred to the Court:

1. Articles 3(f) and (g), 5, 85 and 86 of the Treaty do not preclude national legislation whichprovides for mandatory tariffs for the carriage of goods by road from being approved andbrought into force by a public authority on the basis of a proposal from a committee onwhich representatives of the interested economic operators are in the majority, providedthat it is ensured that those tariffs are fixed with due regard to the public interest criteriaspecified by law and provided that the public authorities do not delegate their powers toprivate economic operators.

2. Articles 3(f) and (g), 5, 85 and 86 of the Treaty do not preclude legislation of a MemberState which extends mandatory tariffs in the field of contracts for road haulage servicesto cover other types of contract relating to different services such as, in particular,contracts whereby a contractor undertakes to achieve a particular result and contractsfor hire, provided that the legislation takes account of the public interest criteria referredto in the reply to the first question and of the principle that the public authorities shouldnot delegate their right to make the final decision.

3. The concept of 'general interest‘ referred to by the Court in the Reiff and Deltajudgments is the same as the concept of 'public interest‘ used in a similar legal situationin the Centro Servizi Spediporto judgment.

4. The definition and appraisal of the terms 'general interest‘ and 'public interest‘ are theresponsibility of the individual Member States.

5. It is the task of the competent national court to ascertain whether the national provisionsare capable of precluding restrictive practices, whether the public interest is actuallytaken into account and whether the authorities have delegated their powers to privateeconomic operators. The national court must then ensure that its decision lays down aframework for competition which conforms with national and Community law.

Case C-279/95 P

Langnese-Iglo GmbH v Commission of the European Communities

Competition

1 October 1998

(Competition · Article 85(1) of the EC Treaty · Exclusive purchasing agreements for ice-cream ·Comfort letter · Prohibition of concluding exclusive agreements in the future)

(Fifth Chamber)

By application lodged at the Registry of the Court of Justice on 18 August 1995, Langnese-IgloGmbH brought an appeal, pursuant to Article 49 of the EC Statute of the Court of Justice,against the judgment of the Court of First Instance of 8 June 1995 in Case T-7/93 Langnese-Iglov Commission [1995] ECR II-1533 in which that Court dismissed in part its application for theannulment of Commission Decision 93/406/EEC of 23 December 1992 relating to a proceedingpursuant to Article 85 of the EEC Treaty against Langnese-Iglo GmbH (IV/34.072) (hereinafter'the contested decision‘).

The main appeal

The first ground of appeal concerns paragraphs 35 to 42 of the contested judgment which relateto breach of the principle of the protection of legitimate expectations.

In its appeal Langnese-Iglo maintains that the Commission had no authority to depart from thecontent of the comfort letter of 20 September 1985 and to prohibit the network of exclusiveagreements maintained by Langnese-Iglo, unless an examination had shown that the legal andfactual situation prevailing on the ice-cream market had changed appreciably. Langnese-Iglocontests the findings made by the Court of First Instance regarding supervening changes infactual circumstances on the market.

It also criticises the contested judgment for stating that, before issuing the comfort letter, theCommission had undertaken only a provisional examination of the conditions prevailing on themarket.

In that connection it must be observed at the outset that, according to settled case-law of theCourt of Justice, by virtue of Article 168a of the EC Treaty and the first paragraph of Article 51 ofthe EC Statute of the Court of Justice, an appeal may be based only on grounds relating to theinfringement of rules of law, to the exclusion of any appraisal of the facts.

However, in disputing the new circumstances mentioned by the Court of First Instance, namelythe appearance of new competitors on the market and the existence of new obstacles to accessto the market of which the Commission became aware after Mars lodged its complaint,Langnese-Iglo is challenging the assessment of the facts made by the Court of First Instance.Such an argument is therefore inadmissible in an appeal. The same applies to Langnese-Iglo'scomplaint concerning the finding by the Court of First Instance that the Commission undertook,before issuing the comfort letter, only a provisional analysis of the market conditions.

Langnese-Iglo's argument must be understood as also criticising the Court of First Instance forrecognising that the Commission was entitled to depart from the assessment set out in itscomfort letter not only because of changes in factual or legal circumstances supervening afterthe issue of the letter but also because of additional circumstances which, although existing longbefore, had not been brought to the Commission's notice until after the issue of that letter.

It is clear from those points mentioned by the Court of First Instance that the fact that theCommission has issued a comfort letter cannot mean that it is no longer entitled to take accountof a factual situation which existed before the letter was sent but was brought to its notice onlylater, particularly in connection with a complaint lodged at a later stage.

It follows that the first ground of appeal is partly inadmissible and partly unfounded and musttherefore be rejected.

The second ground of appeal

By its second ground of appeal Langnese-Iglo contests the conclusion reached by the Court ofFirst Instance in paragraphs 94 to 114 that the Commission was right to consider thatLangnese-Iglo's exclusive purchasing agreements involved an appreciable restriction ofcompetition on the relevant market and were thus incompatible with Article 85(1) of the Treaty.

According to Langnese-Iglo, that conclusion is based on certain factors which did not appear inthe documents before the Court of First Instance and on a misconceived legal assessment ofthe factual situation.

It must be observed that Langnese-Iglo does not specify the errors of law allegedly committedby the Court of First Instance in its assessment of matters of law and is calling in question factsestablished by the Court.

It is clear from the foregoing considerations that the second plea is inadmissible in its entirety.

The third plea in law

The third plea in law comprises two parts.

Langnese-Iglo claims that the Court of First Instance infringed the principle of proportionality inthat it held that the Commission had not committed any error in withdrawing the benefit of theblock exemption provided for by Regulation No 1984/83 of 22 June 1983 on the application ofArticle 85(3) of the Treaty to categories of exclusive purchasing agreements and prohibiting allexclusive purchase contracts concluded by Langnese-Iglo, without first having informedLangnese-Iglo of the extent to which a network of exclusive purchasing contracts wascompatible with Article 85(1) of the Treaty and, therefore, without giving it an opportunity toadjust the network to the requirements of that provision.

Langnese-Iglo does not indicate with sufficient precision the paragraphs of the judgment towhich it takes exception.

In view of that lack of precision, the Court of Justice is not in a position to examine the merits ofthis part of the plea.

The first part of the third plea is therefore inadmissible.

Langnese-Iglo contends that the prohibition of all its exclusive purchasing agreements islikewise contrary to the principle of equal treatment. It observes that the Court of First Instancefound, in paragraph 209 of the contested judgment, that Article 4 of the contested decisioninfringed that principle because it excluded the benefit of Regulation No 1984/83 for certainundertakings in the future, whereas Langnese-Iglo's competitors could exploit the advantageafforded by that regulation.

According to Langnese-Iglo, the principle of equal treatment should apply in the same way asregards the past.

As regards the reference to paragraph 209 of the contested judgment, it is important to notethat, in criticising the total prohibition of existing agreements, Langnese-Iglo is relying on aconsideration put forward by the Court of First Instance in relation only to future agreements.Accordingly, that reference is irrelevant.

In that connection, it must be borne in mind in the first place that, pursuant to Article 48(2) of theRules of Procedure of the Court of First Instance, no new plea in law may be introduced in thecourse of proceedings unless it is based on matters of law or of fact which come to light in thecourse of the procedure.

This part of the third plea is therefore inadmissible.

The cross-appeal

In the contested judgment the Court of First Instance annulled Article 4 of the contesteddecision.

The Court of First Instance stated in paragraph 205 that Article 3 of Regulation No 17, conferson the Commission only the power to prohibit existing exclusive agreements which areincompatible with the competition rules.

The Commission, supported by Mars, contends that the Court of First Instance's interpretationof Article 3 of Regulation No 17 is incorrect in law. In its view, that provision authorises theCommission to ensure that conduct found to have constituted an infringement of the competitionprovisions does not continue.

It must first be noted that, for the reasons set out in paragraphs 205 to 209 of the contestedjudgment, the Court of First Instance correctly decided that the Commission was not entitled toprohibit Langnese-Iglo from concluding any exclusive purchasing agreements in the future. TheCourt of First Instance's assessment is, moreover, consistent with the case-law of the Court ofJustice to the effect that Article 3 of Regulation No 17 is to be applied according to the nature ofthe infringement found.

Next, it must be noted that, before the Court of Justice, the Commission expressly indicated thatit did not object to that assessment by the Court of First Instance. It now states that the solepurpose of Article 4 of the contested decision was to prevent Langnese-Iglo from re-establishingthe same network of exclusive purchasing agreements with its retail distributors, without,however, preventing it from concluding new exclusive purchasing agreements with other retaildistributors. In that respect, its states, the judgment of

the Court of First Instance was based on a misinterpretation of the scope of Article 4 of thecontested decision.

In those circumstances, it is unnecessary to examine the cross-appeal since it is based on thehypothesis that the legality of Article 4 of the contested decision should be assessed on thebasis of the scope attributed to it by the Commission before the Court of Justice.

Consequently, the cross-appeal must be dismissed as inadmissible.

The Court:

'1. Dismisses the appeal by Langnese-Iglo GmbH;

2. Dismisses the cross-appeal by the Commission of the European Communities;

3. Orders Langnese-Iglo GmbH, the Commission of the European Communities andMars GmbH to bear their own costs.‘

Advocate General D. Ruiz-Jarabo Colomer delivered his Opinion at the sitting of the FifthChamber on 13 November 1997.

He proposed that the Court

(1) Declare the appeal in admissible in part and dismiss the admissible pleas;

(2) Dismiss the cross-appeal.

Case C-209/96

United Kingdom of Great Britain and Northern Ireland v Commission of the EuropeanCommunities

Agriculture

1 October 1998

(EAGGF · Clearance of accounts · 1992 and 1993 · Beef and veal)

(Fifth Chamber)

By application lodged at the Court Registry on 19 June 1996, the United Kingdom brought anaction for

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accounts presented by the Member States in respect of the expenditure for 1992 of theGuarantee Section

of the European Agricultural Guidance and Guarantee Fund (EAGGF) and in respect of certainexpenditure for 1993 ('the contested decision‘), in so far as it refused to charge to the EAGGFthe sum of £3 356 000 in respect of expenditure incurred by the United Kingdom for interventionpurchases of beef for 1992.

Until 1989, there was a system of automatic intervention buying when prices fell below certainthresholds, with the result that very large quantities were purchased by the interventionagencies at prices exceeding the market price.

In order to remedy that unsatisfactory situation, the system was reformed in 1989. Whilstpreserving automatic buying-in in the event of a very large fall in prices, a system of buying-inby tendering procedures was introduced with a view to ensuring that the quantities bought inand the prices paid out did not go beyond what was required for reasonable support of themarket.

Between 1990 and 1992, as a result of a combination of various circumstances (mad cowdisease (BSE), the reunification of Germany, the Gulf War, developments in relations withEastern Europe, etc.), the Community beef market underwent an unprecedented crisis which,as from the financial year 1991, led to a consistent increase in Community budgetaryexpenditure.

According to the Commission, a number of undertakings had submitted several tenders in thecontext of a single tender procedure. In its 1992 Summary Report it stated:

United Kingdom

EAGGF examination of signatures, names, addresses, bank account numbers, telephonenumbers etc. quickly led to the conclusion that very little effort had been made by tenderers todisguise their inter-connections and that the Intervention Board must have been fully aware ofwhat was happening from very early on.

Offers were not necessarily made by limited companies but sometimes individuals involved inthe running of companies which themselves had made offers.

Offers made by connected persons and/or companies had slightly different prices which wouldindicate an element of speculation. It was also found that tenderers sometimes asked for theirpayment to be assigned to a third party.

From the adjudication procedures examined the EAGGF could quickly and easily establish thatabout a third of the tenders accepted by the Intervention Board were linked to other tenders...

According to the Commission, those practices were expressly prohibited by the applicableCommunity rules and totally incompatible with the purpose of the intervention scheme.

In response to the Commission's argument that the competent national authorities should haveintervened in order to stop such practices, the United Kingdom authorities objected thatCommission Regulation (EEC) No 859/89 of 29 March 1989 laying down detailed rules for theapplication of intervention measures in the beef and veal sector did not authorise them tointervene where tenders were made by separate legal entities.

Lawfulness of the practice followed in the United Kingdom

By its first plea in law, the United Kingdom Government submits that the practice of acceptingtenders from any legal entity during the relevant period was lawful. There was no legal basis in1991 and 1992 for

the national intervention bodies to reject offers made by separate legal entities on the groundthat those entities were not independent of other tenderers.

The last sentence of Article 9(2) of Regulation No 859/89 merely provides that interested partiesmay submit one tender only per category in response to each invitation to tender. That wordingcannot therefore provide any support for the interpretation claimed by the Commission that, onaccount of the difference in meaning between the words 'interested party‘ and 'tenderers‘, thelatter may submit one tender only in response to an invitation to tender where they are part of asingle group.

It is only since the entry into force of Commission Regulation (EEC) No 2456/93 of 1 September1993 laying down detailed rules for the application of Regulation No 805/68 as regards thegeneral and special intervention measures for beef that the Community rules have containedprovisions on interconnections between tenderers. To uphold the interpretation of Article 9(2) ofRegulation No 859/89 suggested by the Commission would be tantamount to applying Article 11of Regulation No 2456/93 retroactively.

That evidence contained in the EAGGF's 1992 Summary Report was such as to give rise toserious suspicions that the prohibition on tenderers submitting more than one tender percategory in response to each invitation to tender had been circumvented by the use of othernames in order to disguise the fact that the tenders in actual fact emanated from a singleoperator. In view of the division of powers between the Community and the Member States inthe field of the common agricultural policy, those were matters which called for inspection andinvestigation by the latter.

By failing to carry out such inquiries, the United Kingdom failed to fulfil its obligations underArticle 8(1) of Council Regulation No 729/70 on the financing of the common agricultural policy(see Case C-2/93 Exportslachterijen van Oordegem v Belgische Dienst voor Bedrijfsleven enLandbouw [1994] ECR I-2283, paragraphs 16 to 18).

That provision imposes on the Member States the general obligation to take the measuresnecessary to satisfy themselves that the transactions financed by the EAGGF are actuallycarried out and are executed correctly, even if the specific Community act does not expresslyprovide for the adoption of particular supervisory measures.

By its second plea in law, the United Kingdom Government claims that, in its summary report,the Commission did not give a single example where the acceptance of connected offersresulted in harm to the EAGGF. It simply put forward a theoretical construction of what mighthave occurred.

Although it is therefore for the Commission to prove an infringement of the Community rules, theMember State concerned must demonstrate that the Commission committed an error as to thefinancial consequences to be attributed to it.

The Commission indicated how it was possible for the unlawful conduct of the United Kingdomtenderers to have led to an erroneous assessment of the market by the Community authoritieslikely to result in the purchase of excessive quantities of beef and veal, possibly at higher prices.In so doing, it established the probability that harm was caused to the Community budget. TheCommission cannot be required to do more than that, since it cannot carry out the systematicchecks and since analysis of the current state of a given market depends on informationgathered by the Member States.

Insufficient statement of reasons in the contested decision

By its third plea in law, the United Kingdom Government claims that the Commission did not putforward sufficient reasons to support its conclusion that connected offers either allowed themanipulation by tenderers of the intervention procedures or led to a higher level of interventionsby the national authorities. Such inadequate reasoning is, it argues, contrary to Article 190 ofthe EC Treaty.

It is sufficient to point out that decisions concerning the clearance of accounts do not requiredetailed reasons if they are taken on the basis either of summary reports or of anycorrespondence between the Member State and the Commission, which implies that thegovernment concerned was closely involved in the process by which the decision came aboutand is therefore aware of the reason for which the Commission considers that it must not chargethe sums in dispute to the EAGGF.

In the present case, the reasons on which the Commission's rejection is based are given in the1992 Summary Report. Moreover, the Commission informed the United Kingdom Governmentof the criticisms it was making after having carried out its checks in 1992.

The Court:

'1. Dismisses the application;

2. Orders the United Kingdom of Great Britain and Northern Ireland to pay the costs.‘

Advocate General S. Alber delivered his Opinion at the sitting of the Fifth Chamber on 24March 1998.

He proposed that the Court should:

(1) dismiss the application;

(2) order the United Kingdom to pay the costs.

Case C-232/96

French Republic v Commission of the European Communities

Agriculture

1 October 1998

(EAGGF · Clearance of accounts · 1992 and 1993 · Beef and veal · Cereals)

(Fifth Chamber)

By application lodged at the Court Registry on 8 July 1996, the French Republic brought anaction for the

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presented by the Member States in respect of the expenditure for 1992 of the GuaranteeSection of the European Agricultural Guidance and Guarantee Fund (EAGGF) and in respect ofcertain expenditure for 1993 ('the contested decision‘), in so far as it refused to charge to theEAGGF, first, FF 76 041 440 in respect of intervention measures in the beef and veal sectorand, secondly, FF 84 061 488 in respect of intervention measures in the context of publicstorage of cereals.

The financial correction in respect of intervention measures in the beef and veal sector

(See the facts in Case C-209/96, with the following particular features concerning the applicant)


'France

The EAGGF concludes that Ofival, the competent paying agency, must have been fully awarethat many of the offers were linked but made no effort to prevent the acceptance of these offers,either by refusing them or drawing the Commission services' attention to the potential abuses.Furthermore, the EAGGF also considers that prices and quantities offered by these linkedcompanies indicate an element of price speculation. Finally, the transfers of over-deliveredquantities to the contracts of other companies (which were detected by the EAGGF only whereadministrative and/or accounting errors had been made, and which would normally goundetected) indicates deliberate evasion of the rules providing for the non-payment of over-deliveries and security forfeiture for under-deliveries.‘


In response to the Commission's argument that the competent national authorities should haveintervened in order to stop such practices, the French authorities objected that CommissionRegulation (EEC) No 859/89 of 29 March 1989 laying down detailed rules for the application ofintervention measures in the beef and veal sector did not authorise them to intervene wheretenders were made by separate legal entities.

Lawfulness of the practice followed in France

By its first plea in law, the French Government submits that the practice of accepting tendersfrom any legal entity during the relevant period was lawful. There was no legal basis in 1991and 1992 for the national intervention bodies to reject offers made by separate legal entities onthe ground that those entities were not independent of other tenderers.

(See Case C-209/96)

By its second and third pleas in law, the French Government alleges that the Commission'sdemonstration of the interest which traders might have in submitting multiple tenders is of apurely theoretical nature, bearing no relation to the submission of multiple tenders.

(See Case C-209/96)

The correction in respect of intervention measures in the context of the public storage ofcereals

The submission that the national management and control system was in accordance withCommunity legislation

The French Government submits that the national system for the management and control ofthe quantities and quality of cereals delivered into intervention during 1992 met therequirements laid down by Community legislation.

In this connection, the first point to bear in mind is that, the French authorities do not deny thatthey should have modified significantly their previous procedure in order to fall into line with theCommission's

requirements and that the Community inspections have identified various irregularities, whichthe French authorities have admitted and penalised.

Next, the improvements announced by the French authorities were not introduced until 1993, sothat the irregularities found by the Commission during 1992 must be considered to have beenestablished.

Finally, so far as concerns the measures required by the Commission but which are notprovided for by the legislation in force, it need only be observed that Article 8(1) of RegulationNo 729/70, which defines the principles according to which the Community and the MemberStates must ensure the implementation of Community decisions on agricultural interventionfinanced by the EAGGF and combat fraud and irregularities in relation to those operations,imposes on the Member States the general obligation to take the measures necessary to satisfythemselves that the transactions financed by the EAGGF are actually carried out and areexecuted correctly, even if the specific Community act does not expressly provide for theadoption of particular supervisory measures.

The Court held:


2. Orders the French Republic to pay the costs.‘



(1). Dismiss the application;

(2) Order the French Republic to pay the costs.

Case C-233/96

Kingdom of Denmark v Commission of the European Communities

Agriculture

1 October 1998


(Fifth Chamber)

By application lodged at the Court Registry on 9 July 1996, the Kingdom of Denmark brought anaction

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accounts presented by the Member States in respect of the expenditure for 1992 of theGuarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF) and inrespect of certain expenditure for 1993 ('the contested decision‘), in so far as it refused tocharge to the EAGGF DKR 26 867 909 declared by the Kingdom of Denmark in respect of 1991and 1992 in the context of intervention purchases of beef and veal.



'Denmark

By linking names, addresses, telefax and telex numbers, securities and payments, the EAGGFestablished for every adjudication procedure examined that many individual offers originatedfrom the same source. Invoices forwarded by the tenderers to the EF-Direktoratet specifiedpayment to be made to other companies.‘


In response to the Commission's argument that the competent national authorities should haveintervened in order to stop such practices, the Danish authorities objected that Regulation No859/89 Commission Regulation (EEC) No 859/89 of 29 March 1989 laying down detailed rulesfor the application of intervention measures in the beef and veal sector did not authorise them tointervene where tenders were made by separate legal entities.

(See Case C-209/96)

Lawfulness of the practice followed in Denmark

By its first plea in law, the Danish Government submits that the practice of accepting tendersfrom any legal entity during the relevant period was lawful. There was no legal basis in 1991and 1992 for the national intervention bodies to reject offers made by separate legal entities onthe ground that those entities were not independent of other tenderers.

(See Case C-209/96)

Absence of harm suffered by the EAGGF

By its second plea in law, the Danish Government claims that the EAGGF suffered no harm.Thus, by deciding to make a linear reduction of 2% of the expenditure declared by the Kingdomof Denmark in respect of the purchase into intervention of beef in 1991 and 1992, theCommission applied a correction which is devoid of legal basis.

(See Case C-209/96)

By its third plea in law, the Danish Government claims that the contested decision does not fulfilthe requirement laid down in Article 190 of the EC Treaty that reasons be stated, since it doesnot make clear the reason for refusing to cover the costs.

(See Case C-209/96, with the following particular features concerning the applicant)

In the present case, the reasons on which the Commission's rejection is based are given in the1991 Summary Report. Moreover, the Commission informed the Danish Government of thecriticisms it was making after having carried out its checks in 1992.

The Court:


2. Orders the Kingdom of Denmark to pay the costs.‘



(1) Dismiss the application;

(2) Order the Kingdom of Denmark to pay the costs.

Case C-238/96

Ireland v Commission of the European Communities

Agriculture

1 October 1998


(Fifth Chamber)

By application lodged at the Court Registry on 10 July 1996, Ireland brought an action for theannulment

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by the Member States in respect of the expenditure for 1992 of the Guarantee Section of theEuropean Agricultural Guidance and Guarantee Fund (EAGGF) and in respect of certainexpenditure for 1993 ('the contested decision‘), in so far as it related to Ireland.

The corrections with regard to the public storage of beef

The regulations concerning intervention purchases provide that only meat of a certain quality,deboned and packed to certain standards can be accepted into intervention. In addition, thecompetent national authorities must carry out checks to ensure compliance with provisionsrequiring a specified result.

Ireland does not dispute the conclusion of the Commission that it was in breach of Article 8 ofCouncil Regulation No 729/70 on the financing of the common agricultural policy in 1990 and in1991. It acknowledges that weaknesses existed in 1990 and, to a much lesser extent, in 1991 inthe system of permanent presence. Nevertheless, it disputes certain of the other reasonsadvanced by the Commission in support of that conclusion.

Failure to state reasons

By its first plea, Ireland alleges that the Commission failed to supply any reasons to support itsconclusion that very large amounts were wrongly charged to the EAGGF.

In this regard, it is sufficient to point out that decisions concerning the clearance of accounts donot require detailed reasons if they are taken on the basis either of summary reports or of anycorrespondence between the Member State and the Commission, which implies that thegovernment concerned was closely involved in the process by which the decision came aboutand is therefore aware of the reason for which the Commission considers that it must not chargethe sums in dispute to the EAGGF.

It is clear from the correspondence between the Commission and the national authorities thatthe Commission informed them of the weaknesses in the control system which, moreover, hadalready been mentioned in the 1991 Summary Report.

Failure to assess the risks to the EAGGF

By its second plea in law, the Irish Government alleges that the Commission failed todemonstrate that very large amounts had been wrongly charged to the EAGGF in 1990 and1991 as a result of the alleged failure of the Irish authorities to fulfil their obligations underArticle 8 of Regulation No 729/70.


The Commission is not compelled to prove that there have been losses but may simply adducehighly significant evidence to that effect.

The management of EAGGF finances is principally in the hands of the national administrativeauthorities responsible for ensuring that the Community rules are strictly observed. That system,based on trust between national and Community authorities, does not involve any systematicsupervision by the Commission, which moreover would in practice be quite unable to carry itout. Only the Member State is in a position to know and determine precisely the informationnecessary for drawing up EAGGF accounts since the Commission is not close enough to obtainthe information it needs from the economic operators.

Incorrect assessment of the alleged losses incurred by the EAGGF

By its third plea in law, the Irish Government alleges that the Commission undertook anincorrect assessment of the amount of the alleged losses incurred by the EAGGF.

The Commission has also demonstrated other weaknesses in the control system. In particular itfound that the quantity of meat after deboning had not been checked at all. In addition, it foundupon checking that more than 10% of the meat sampled did not meet the standards for quality,fat-content and offal.

In those circumstances, the amount of the reduction imposed by the Commission does notappear unjustified.

The financial corrections in respect of intervention measures in the beef and veal sector

(See Case C-209/96 with the following particular features concerning the applicant

According to the Commission, a number of undertakings submitted several tenders in thecontext of a single tender procedure. In its 1991 Summary Report it stated:

Ireland

As many as nine individual offers were being made by the same group at prices within a fewpence of each other. The same situation was detected in all adjudication procedures examinedand must be viewed as widespread.

In view of all this, the EAGGF concludes that these offers were totally connected and originatedfrom the same source, and that this connection must have been evident to the adjudicationcommittees in the Member States concerned.


In response to the Commission's argument that the competent national authorities should haveintervened in order to stop such practices, the Irish authorities objected that CommissionRegulation (EEC) No 859/89 of 29 March 1989 laying down detailed rules for the application ofintervention measures in the beef and veal sector did not authorise them to intervene wheretenders were made by separate legal entities.

Lawfulness of the practice followed in Ireland

By its first plea in law, the Irish Government submits that the practice of accepting tenders fromany legal entity during the relevant period was lawful. There was no legal basis in 1991 and1992 for the national intervention bodies to reject offers made by separate legal entities on theground that those entities were not independent of other tenderers.

(See Case C209/96)

Absence of harm to the EAGGF

By its second plea in law, the Irish Government claims, in the alternative, that the tenderprocedures in Ireland did not lead to the purchase of greater quantities of beef at higher prices.Indeed, during negotiations, the Commission withdrew that allegation, which appeared in the1991 Summary Report.

(See Case C-209/96)

The Court held:


2. Orders Ireland to pay the costs.‘

Advocate General S.Alber delivered his Opinion at the sitting of the Fifth Chamber on 24March 1998.

He proposed that the Court should:

(1) Dismiss the action;

(2) Order Ireland to pay the costs.

Case C-242/96

Italian Republic v Commission of the European Communities

Agriculture

1 October 1998


(Fifth Chamber)

By application lodged at the Court Registry on 11 July 1996, the Italian Republic brought anaction for

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accounts presented by the Member States in respect of the expenditure for 1992 of theGuarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF) and inrespect of certain expenditure for 1993 (OJ 1996 L 117, p. 19, 'the contested decision‘), in so faras it related to Italy.

The correction with regard to the unlawful nature of the tender procedure



Italy

The EAGGF encountered an adjudication procedure not observed in any other Member State.Trade operators in the Italian beef market are grouped into 3 associations (consorzio) throughwhich offers to sell into intervention are lodged, that is to say the association receives offersfrom its members and submits them all at the same time to AIMA, the paying agency.

The Italian authorities, when criticised by the EAGGF on this point, volunteered the informationthat an association may even submit in its own name an overlapping global offer on behalf ofthose of its members which had not submitted individual offers.

Such practices are contrary to Article 9(6) of Regulation No 859/89 requiring Member States toguarantee the confidentiality of offers and negates the expected advantages of a genuineadjudication because it clearly reunites the interests of the supposed competitors.

The EAGGF also established in several instances links between tenderers by comparing thestandard information.


The Italian authorities objected that Commission Regulation (EEC) No 859/89 of 29 March 1989laying down detailed rules for the application of intervention measures in the beef and vealsector did not authorise them to intervene where tenders were made by separate legal entities.

The Italian Government submits that the practice of accepting tenders from any legal entityduring the relevant period was lawful. There was no legal basis in 1991 and 1992 for thenational intervention bodies to reject offers made by separate legal entities on the ground thatthose entities were not independent of other tenderers.

The last sentence of Article 9(2) of Regulation No 859/89 merely provides that interested partiesmay submit one tender only per category in response to each invitation to tender. That wordingcannot therefore provide any support for the interpretation claimed by the Commission that, onaccount of the difference in meaning between the words 'interested party‘ and 'tenderers‘, thelatter may submit one tender only in response to an invitation to tender where they are part of asingle group.

It is only since the entry into force of Commission Regulation (EEC) No 2456/93 of 1 September1993 laying down detailed rules for the application of Regulation No 805/68 as regards thegeneral and special intervention measures for beef that the Community rules have containedprovisions on interconnections between tenderers.

However, the contested decision does not fall to be annulled on the basis of the plea in law putforward by the Italian Government, since it contains other factual and legal grounds whichprovide it with a sufficient statement of reasons.

The EAGGF was thereby alleging that Italian tenderers had breached the rule that tenders mustbe independent, an essential requirement for the validity and effectiveness of any tenderprocedure. Although that rule does not prevent several companies belonging to one group fromtaking part at the same time in one tender procedure, it does preclude those same companiesfrom agreeing on the terms and conditions of the tenders which they each submit, if the tenderprocedure is not to be distorted.

The corrections with regard to the public storage of beef

It is apparent from the summary report on the results of inspections concerning the clearance ofthe EAGGF Guarantee Section accounts for 1992 and of certain expenditure for 1993 that theinvestigation carried out in 1990 and 1991 into the public storage of beef and veal in Italyshowed that there were serious deficiencies in the organisation. It is also clear from that reportthat the Azienda di Stato per gli interventi nel mercato agricolo (the State intervention agency inthe agricultural sector, hereinafter referred to as 'the AIMA‘) had in practice delegatedresponsibility for checks to the Associazione italian allentori (Italian cattle breeders' association,hereinafter referred to as 'the AIA‘), a professional body, without ascertaining whether thedelegated responsibilities were properly carried out.

The existence of the conduct complained of

The Italian Government points out that the purchasing operations are monitored by employeesof the relevant provincial offices of the AIA and by classifiers (?) approved by the Comitatobovini ('cattle‘ committee) of the Ministry of Agriculture and Forests, who work directly to theAIA. Moreover, both are required to follow clear rules and are directly answerable to the AIA andthe Comitato bovini.

The Member State cannot rebut the Commission's findings by mere assertions which are notsubstantiated by evidence of a reliable and operational supervisory system. If it is not able toshow that they are

inaccurate, the Commission's findings are capable of giving rise to serious doubts as to theexistence of an adequate and effective series of supervisory measures and inspectionprocedures.

Since the Italian Government is satisfied to answer numerous allegations with an affirmationthat inspections were carried out or even did not counter certain allegations or relies on the factthat no complaint was made, it is appropriate to reject the first plea in law.

The corrections with regard to the ewe premium

Article 5 of Council Regulation (EEC) No 3013/89 of 25 September 1989 on the commonorganization of the market in sheepmeat and goatmeat (OJ 1989 L 289, p. 1) provides for thegranting of a premium to sheepmeat and goatmeat producers to the extent necessary to offsetan income loss in the Community during a marketing year.

The summary report analyses in detail the deficiencies found, in the course of inspections toverify the applications for premia in respect of 1992 by the EAGGF inspectors, in the inspectionprocedures introduced by the Italian authorities with a view to ensuring the proper application ofthe system. In particular, the EAGGF found that the application files were inadequately checked,certain inspection files were unreliable and that there was no cross checking of data containedin the applications with the findings arising from on-the-spot inspections.

It must be observed that, where the Commission, instead of rejecting all the expenditureaffected by the infringement, has endeavoured to establish the financial impact of the unlawfulaction by means of calculations based on an assessment of what the situation on the relevantmarket would have been if the infringement had not occurred, the burden of proving that thosecalculations are not correct rests on the Member State.

So far as concerns the increased rigour demonstrated by the national authorities from 1992, itshould be noted that such improvements must be taken into account only where there aredoubts concerning the three flat-rate corrections to be applied. In this case, however, there is nosuch uncertainty. Because of the seriousness and scale of the irregularities found, as well asthe extent to which supervision was ineffective, the EAGGF remained, in all events, exposed toa serious financial risk.

The correction with regard to the public storage of cereals

Regulation (EEC) No 2727/75 of the Council of 29 October 1975 on the common organization ofthe market in cereals lays down the basic rules for the intervention scheme.

According to the summary report, the EAGGF commenced an audit of public storagearrangements for cereals in Italy as part of the 1991 accounts clearance, supplemented by anenquiry on intervention stocks in 1993. That inspection revealed serious shortcomings in theadministration and control system put in place to that end by the national authorities which wereessentially attributable to the fact that all the cereal purchase and storage operations wereentrusted to 'enti assuntori‘, private undertakings associated with the AIMA by contract.

The Italian Government acknowledges that the undertakings had not always fulfilled correctlythe tasks entrusted to them.

The correction with regard to set-aside of arable land

The aid scheme designed to encourage the set-aside of arable land was introduced by Article1a of Council Regulation (EEC) No 797/85 of 12 March 1985 on improving the efficiency ofagricultural structures as inserted by Council Regulation (EEC) No 1094/88 of 25 April 1988.Under that provision, the scheme covers all arable land, irrespective of the crops grown,provided that the land has in fact been cultivated for a reference period to be determined. Thatmeasure therefore consists in withdrawing from cultivation agricultural land used as arable land.

It is apparent from the summary report that the EAGGF checks found that, in Sicily, a largenumber of areas withdrawn from production in pursuance of the multiannual set-aside schemewas land subject to traditional fallow practices. The inspection also showed that the Italianauthorities had failed to check that aspect of the eligibility of the land. The aim of the scheme,the reduction of production, was therefore only partly met.

It should first of all be observed that the Italian Republic does not deny having failed to checkwhether the land allegedly set aside had in fact previously been cultivated or, at least, whether ithad been cultivated in the context of modified fallowing.

Furthermore, it did not adduce any evidence that the traditional fallowing practice had beenreplaced by 'green fallow‘.

The correction with regard to the reimbursement of costs of public storage of sugar

The common organization of the markets in the sugar sector is covered by Council Regulation(EEC) No 1785/81 of 30 June 1981 (OJ 1981 L 177, p. 4). Article 8 of that regulation providesfor a compensation system for storage costs in respect of certain types of sugar productsmanufactured from beet or cane of Community origin.

The monitoring missions, in particular the on-the-spot inspections, carried out by the EAGGF in1994 to check the systems applied in Italy in the context of the measures for reimbursement ofstorage costs for sugar, revealed that, until 31 December 1992, the competent organizations inItaly (in particular the communes) had not carried out any checks on specialised traders or otherapproved independent stores. Moreover, the EAGGF also found that no checks on thebeneficiaries were carried out by the AIMA.

It should be observed that, by failing to carry out on-the-spot checks on the specialised tradersduring the period under consideration by the Commission, the Italian Republic has failed to fulfilits supervisory obligations under Community rules.

In this regard, it cannot be contended that such an obligation is not expressly laid down in therelevant regulations. The Court has consistently held that it is apparent from Article 8(1) ofCouncil Regulation No 729/70 on the financing of the common agricultural policy that MemberStates are under a general obligation to take the measures necessary to satisfy themselves thatthe transactions financed by the EAGGF are actually carried out and are executed correctly,even if the specific Community act does not expressly provide for the adoption of particularsupervisory measures (see Case C-8/88 Germany v Commission, cited above, paragraphs 16and 17 and Case C-2/93 Exportslachterijen van Oordegem v Belgische Dienst voorBedrijfsleven en Landbouw [1994] ECR I-2283, paragraphs 16 to 18).

Those provisions must be viewed in the light of the obligation of faithful cooperation with theCommission, laid down in Article 5 of the EC Treaty, which, with particular regard to theutilization of Community resources, requires Member States to set up comprehensiveadministrative checks and on-the-spot inspections thus guaranteeing the conformity of financialoperations with Community law.

The objection raised by the Italian Government that it had not been shown that there had beenany damage to the Community fails to take account of the rules concerning the onus of proof.


The Court:


2. Orders the Italian Republic to pay the costs.‘


He proposed that the Court


(2) Order the Italian Republic to pay the costs.

Case C-27/94

Kingdom of the Netherlands v Commission of the European Communities

Agriculture

1 October 1998

(EAGGF · Clearance of accounts · 1990 financial year · Export refunds on barley)

(Sixth Chamber)

By an order lodged with the Registry of the Court on 21 January 1994, the Kingdom of theNetherlands

n 93/65

of the accounts presented by the Member States in respect of the expenditure for 1990 of theEuropean Agricultural Guidance and Guarantee Fund (EAGGF), Guarantee Section (OJ 1993 L301 p. 13, inasmuch as it disallowed payment of the sum of HFL 3 317 344.26 (hereinafter 'thedisputed sum‘) from Community funds.

In 1991 the Commission carried out audits of the body appointed by the Netherlands Minister forAgriculture, Nature Management and Fisheries to make payments, namely theHoofproduktschap voor Akkerbouwprodukten (Central Board for Agricultural Products).

In its Report No VI/002020 of 14 January 1992, the Commission noted that, in relation to theexport of 18 250 230 kg of barley to Russia, the export declaration was accepted on 27November 1989 by the Netherlands customs authorities in Terneuzen even though the barleyhad left the territory of the Community on board the Kapitan Stankov on 25 November 1989.

The Commission contends that the delay led to uncertainty as to whether the goods had beendeclared for export within the prescribed time-limit and whether the Netherlands customsauthorities had been in a position to inspect them.

The first plea in law

In its first plea in law, the Netherlands Government alleges that the contested decision infringesthe combined provisions of Article 8(2) of Council Regulation No 729/70 on the financing of thecommon agricultural policy and Articles 3, 4 and 47 of Commission Regulation (EEC) No3665/87 of 27 November 1987 laying down common detailed rules for the application of thesystem of export refunds on agricultural products.

Under Article 2 of Council Directive 81/177/EEC of 24 February 1981 on the harmonisation ofprocedures for the export of Community goods, the export of goods from the customs territory ofthe Community is conditional upon the lodging of an export declaration at a customs office.

Moreover, under Article 3(5) of Regulation No 3665/87, the document used 'must include allinformation necessary for the calculation of the amount of the refund‘. Under Article 3(6), at thetime of acceptance of the export declaration, the products must be placed under customscontrol until they leave the customs territory of the Community.

The effect of those provisions is that an export declaration must be made in writing, inter alia, inorder for it to be possible to check whether the information given by the exporter corresponds tothe goods presented for export, and that it must be submitted before the goods have leftcustoms territory.

The Netherlands authorities were not able to show, at least before the expiry of the periodprescribed in its decision of 6 November 1992, that the Commission was wrong in its findings.

Accordingly, the Commission's findings in relation to the submission of the export declarationand inspection of the goods at issue must be considered to give rise to serious doubts as to theaccuracy of that declaration and the inspections carried out by the Netherlands customsauthorities at Terneuzen.

The second plea in law

In its second plea in law, the Netherlands Government argues that the contested decisioninfringes Article 190 of the EC Treaty on the ground that the reasons stated are inadequate.

In the particular context of the preparation of decisions relating to the clearance of accounts, thestatement of reasons for a decision must be regarded as sufficient if the Member State to whichthe decision was addressed was closely involved in the process by which the decision cameabout and was aware of the reasons for which the Commission took the view that it must notcharge the sum in dispute to the EAGGF.

In this case, as the Commission has pointed out, the case-file shows that the NetherlandsGovernment was involved in the process by which the contested decision came about and thatthe Commission's uncertainty as to the circumstances surrounding the export of the barley inquestion was brought to the attention of the Netherlands authorities on several occasions.

The Court:

'1. Dismisses the action;

2. Orders the Kingdom of the Netherlands to pay the costs.‘

Advocate General S. Alber delivered his Opinion at the sitting of the Sixth Chamber on 19May 1998.



(2) Order the Kingdom of the Netherlands to pay the costs.

Case C-285/96

Commission of the European Communities v Italian Republic


1 October 1998

(Failure by a Member State to fulfil its obligations · Non-transposition of Directive 76/464/EEC ·Judgment by default)

(Sixth Chamber)

By application lodged at the Court Registry on 22 August 1996, the Commission of theEuropean Communities brought an action for a declaration that, by failing to adopt pollutionreduction programmes with quality objectives for the 99 dangerous substances listed in theAnnex, alternatively by failing to communicate to the Commission summaries of thoseprogrammes and the results of their implementation, in breach of Article 7 of Council Directive76/464/EEC of 4 May 1976 (hereinafter 'the Directive‘), and by failing to provide the relevantinformation requested to the Commission in breach of Article 5 of the EC Treaty, the ItalianRepublic has failed to fulfil its obligations under the EC Treaty.

First head of complaint

The Commission's first head of complaint is that the Italian Republic failed to fulfil its obligationsunder the EC Treaty by failing to establish pollution reduction programmes with qualityobjectives for the 99 dangerous substances listed in the Annex to the Directive, or by failing tocommunicate to the Commission summaries of the programmes and the results of theirimplementation in breach of Article 7 of the Directive.

Since the Italian Government has not contested that obligation.

Second head of complaint

The Commission's second head of complaint is that by failing to provide it with the informationrequested on the level of water pollution in Italy in order to enable it to establish the extent of theobligations flowing from Article 7 of the Directive, the Italian Republic failed to fulfil its obligationsunder Article 5 of the Treaty, which requires Member States to collaborate with the institutions ofthe Community to facilitate the achievement of their tasks.

Since the obligation to communicate summaries under Article 7(6) of the Directive only relatesto programmes which have already been established, the Italian Republic, by failing to provideto the Commission the information requested by it on the level of water pollution in Italy in orderto enable it to establish the extent of the obligations flowing from Article 7 of the Directive, is inbreach of Article 5 of the EC Treaty.

The Court:

'1. Declares that, by failing to adopt pollution reduction programmes with qualityobjectives for 99 dangerous substances set out in List I of the Annex to CouncilDirective 76/464/EEC of 4 May 1976 on pollution caused by certain dangeroussubstances discharged into the aquatic environment of the Community, the ItalianRepublic has failed to fulfil its obligations under that Directive;

2. Declares that, by failing to provide the Commission with the informationrequested by it on the level of water pollution in Italy in order to enable it toestablish the extent of the obligations flowing from Article 7 of Directive 76/464,the Italian Republic has failed to fulfil its obligations under Article 5 of the ECTreaty;

3. Orders the Italian Republic to pay the costs.‘

Advocate General J. Mischo delivered his Opinion at the sitting of the Sixth Chamber on18 June 1998.


· Declare that, by failing to adopt pollution reduction programmes with quality objectivesfor 99 dangerous substances set out in an annex to the Commission's application, andby failing to inform the Commission in summary form of the programmes and the resultsof their application, in infringement of Article 7 of Council Directive 76/464/EEC of 4 May1976 on pollution caused by certain dangerous substances discharged into the aquaticenvironment of the Community, the Italian Republic has failed to fulfil its obligationsunder the EC Treaty;

· Dismiss the rest of the application;

· Order the Italian Republic to pay the costs.

Case C-71/97

Commission of the European Communities v Kingdom of Spain


1 October 1998

(Failure by a Member State to fulfil its obligations · Failure to transpose a directive)

(Sixth Chamber)

By application lodged at the Registry of the Court on 19 February 1997, the Commission of theEuropean Communities brought an action for a declaration that, first, by failing to designate thezones considered to be vulnerable and to notify it of those designations, and, second, by failingto establish the codes of good agricultural practice and to notify it thereof, the Kingdom of Spainhas failed to fulfil its obligations under Articles 3 and 4 of Council Directive 91/676/EEC of 12December 1991.

As regards the absence of any intention on the part of the Kingdom of Spain not to fulfil itsobligations under Articles 3 and 4 of the Directive, it must be pointed out that the procedure laiddown in Article 169 of the Treaty is based on the objective finding that a Member State hasfailed to fulfil its obligations under the Treaty or secondary legislation.

When such a finding has been made, as in the present case, it is irrelevant whether the failureto fulfil obligations is the result of intention or negligence on the part of the Member Stateresponsible, or of technical difficulties encountered by it.

As regards, the argument based on the fact that the delay at issue resulted, inter alia, from thefact that the State and the autonomous communities have concurrent powers, it must be pointedout that, according to settled case-law, a State may not plead provisions and practices orcircumstances existing in its internal legal system in order to justify a failure to comply with theobligations and time-limits laid down in a directive.

The Court:

'1. Declares that by failing to designate the zones considered to be vulnerable and tonotify the Commission of those designations and by failing to establish the codesof good agricultural practice for the autonomous communities other thanAndalucia, Cantabria, Madrid, Murcia, Navarre and Valencia and to notify theCommission thereof, the Kingdom of Spain has failed to fulfil its obligations underArticles 3 and 4 of Council Directive 91/676/EEC of 12 December 1991 concerningthe protection of waters against pollution caused by nitrates from agriculturalsources;

2. Orders the Kingdom of Spain to pay the costs.‘

Advocate General J. Mischo delivered his Opinion at the sitting of the Sixth Chamber on26 March 1998.


· declare that, by failing to establish and to communicate to the Commission the codes ofgood agricultural practice required by Article 4 of Council Directive 91/676/EEC of 12December 1991 concerning the protection of waters against pollution caused by nitratesfrom agricultural sources as regards the autonomous communities other than Andalusia,Cantabria, Madrid, Murcia, Navarro and Valencia, and by failing to designate the zonesconsidered to be vulnerable and to notify those

designations to the Commission as required by Article 3 of that directive, the Kingdom of Spainhas failed to fulfil its obligations under the said directive;

· order the Kingdom of Spain to pay the costs.

Case C-127/97

Willi Burstein v Freistaat Bayern


1 October 1998

Preliminary ruling

(Article 100a(4) of the EC Treaty)

(Sixth Chamber)

By order of 13 March 1997, the Bayerisches Verwaltungsgericht (Bavarian Administrative Court)Regensburg referred to the Court for a preliminary ruling four questions on the interpretation ofCouncil Directive 76/769/EEC of 27 July 1976, as amended by Council Directive 91/173/EEC of21 March 1991, and of Article 100a(4) of the EC Treaty.

Those questions were raised in the course of proceedings brought by Mr Burstein against theGewerbeaufsichtsamt (Trade Supervisory Office) Regensburg for the annulment of a decisionby that authority concerning the disposal of dangerous waste.

By decision of 17 December 1992 the Gewerbeaufsichtsamt Regensburg required Mr Bursteinto dispose of approximately 120 000 boxes of US and East German army surplus ammunition,stored on his premises for resale as dangerous waste, on the ground that they werePCP(pentachlorophenol)-treated products which exceeded the permitted limit value of 5 mg/kgfixed by the German regulation on the prohibition of PCP.

Mr Burstein brought proceedings in the Bayerisches Verwaltungsgericht Regensburg againstthat decision, arguing inter alia that it was incompatible with Directive 91/173.

The first question

By its first question the national court is essentially asking whether the limit value established bythe first sentence of point 23 of Annex I to Directive 76/769, introduced by Article 1 of Directive91/173, is applicable only to PCP, its salts and esters and to preparations produced from thosesubstances, or whether that limit also applies to products treated with those substances or thosepreparations.

The plaintiff in the main proceedings submits that Directives 76/769 and 91/173 make nodistinction between the notion of 'substances‘ and 'preparations‘ on the one hand and that ofproducts treated with them, on the other. To begin with, the definitions of the substances andpreparations in Article 1(3) of

Directive 76/769 are drafted so widely that they also cover products treated with the substancesor preparations concerned.

In the absence of provisions to the contrary, the restrictions laid down by Directive 76/769 onthe marketing and use in the Member States of the dangerous substances and preparationslisted in the Annex thereto do not apply to products treated with such substances orpreparations.

Article 1(1) of Directive 76/769, as amended by Directive 91/173, does not apply to productstreated with PCP, its salts and esters or with a preparation produced from that substance, withthe result that the Member States remain in principle free to fix limit values for such productsindependently.

The Court ruled:

'The limit value established in the first sentence of point 23 of Annex I to CouncilDirective 76/769/EEC of 27 July 1976 on the approximation of the laws, regulations andadministrative provisions of the Member States relating to restrictions on the marketingand use of certain dangerous substances and preparations, as amended by CouncilDirective 91/173/EEC of 21 March 1991, is applicable to PCP, its salts and esters and topreparations produced from those substances, but not to products treated with thosesubstances or preparations.‘

Advocate General A. Saggio delivered his Opinion at the sitting of the Sixth Chamber on7 May 1998.

Not available

Court of First Instance

Case T-149/96

Confederazione Nazionale Coltivatori Diretti (Coldiretti) v Council of the European Union

Agriculture

30 September 1998

(Common agricultural policy · Animal health · Bovine spongiform encephalopathy · Action fordamages · Regulation (EC) No 1357/96 · Additional premiums · Action for annulment · Tradeassociation · Inadmissible)

(Fifth Chamber)

Bovine spongiform encephalopathy ('BSE‘), or 'mad cow disease‘ was detected for the first timein the United Kingdom in 1986.

In order to combat the disease and its consequential effects, and to supplement the variousmeasures taken by the United Kingdom, the European Community has since July 1988 adopteda number of decisions including.

By application lodged at the Registry of the Court of First Instance on 23 September 1996, theapplicants, the Confederazione Nazionale Coltivatori Diretti (Coldiretti), a trade organisationgoverned by Italian law, established in Rome, to which Italian stock farmers are affiliatedthrough the intermediary of the regional and provincial federations, together with 110 individualstock farmers, brought the present action against the Council, the Commission and the StandingVeterinary Committee.

The claims for compensation

Admissibility

The Council's objection of inadmissibility alleging that the application is not in accordance withArticle 44(1)(c) of the Rules of Procedure

An application seeking compensation for damage caused by a Community institution must statethe evidence from which, inter alia, the damage allegedly sustained by the applicant and, inparticular, the nature and extent of that damage can be identified.

In the present case, the application states the various categories of damage suffered by thebeef farmers, namely, first, actual damage resulting from sales of live animals for less than theirproduction cost, at a price which the applicants claim to be 40% lower than that which thefarmers expected to obtain; second, actual damage arising from the cost of keeping animalswhich remain unsold at the end of their fattening cycle; third, loss of the profits which they wouldotherwise have made on the sale of animals during the current year; and fourth, loss of incomeresulting from the persistent decline in beef consumption in the years to come.

In those circumstances, it must be accepted that the application, supplemented by theinformation contained in the annexes, is sufficiently precise as regards the nature and characterof the damage pleaded, and that details of the approximate extent of the alleged damage havebeen made available both to the defendants and to the Court.

The defendants' objection of inadmissibility alleging that Coldiretti has no legal interest inbringing the proceedings

Such an association has the right to bring proceedings under Article 215 of the Treaty onlywhere it is able to assert in law either a particular interest of its own which is distinct from that ofits members or a right to compensation which has been assigned to it by others.

It is true that Coldiretti represents the interests of arable and livestock farmers; nevertheless,only associations, and not individual farmers, can be members, since according to Article 7 of itsarticles of association, Coldiretti is a confederation made up of regional and provincialfederations of farmers owning their own holdings. Article 10 provides that its membership mayalso include organisations of agricultural operators pursuing objectives analogous to those ofColdiretti.

Coldiretti has not alleged any damage to its own interests for which it is claiming compensation;nor does it plead any assignment of rights or any express mandate authorising it to bringproceedings for compensation for losses suffered by its member associations or by theindividual farmers who are members of those associations.

Substance

In this case, it is necessary to examine, first, whether there is a causal link between theallegedly unlawful conduct of the Community institutions and the damage pleaded by theapplicants.

The fault alleged by the applicants consists, in essence, in the adoption of insufficient, incorrector inadequate legislation and measures in response to BSE. In particular, it consists in thefailure to adopt in 1990 a decision of the kind taken in March 1996, confining United Kingdombovine meat products wholly within that country or prohibiting their shipment to continentalEurope.

It would seem, first, that the existence of BSE amongst cattle in the United Kingdom was firstdiscovered in 1986.

From 1989 onwards the Community institutions adopted a series of measures in response tothe BSE crisis. However, although those measures were designed to prevent the spread of BSEin Member States of the Community other than the United Kingdom, to eradicate the diseaseand to eliminate its harmful effects, they did not involve the total confinement of United Kingdomcattle and bovine meat products within the territory of that Member State.

Despite the fact that the disease was known about, and notwithstanding the absence of anytotal ban prior to March 1996, consumer confidence in bovine meat remained unaffected, as isshown by the fact that there was no sharp fall in demand until 20 March 1996.

It was not until 20 March 1996 that the probable transmissibility of the disease to humans wasannounced in a statement of the Spongiform Encephalopathy Advisory Committee ('SEAC‘)SEAC.

The new information contained in that announcement was that a link between BSE andCreutzfeldt-Jakob disease had ceased to be a theoretical hypothesis and had become apossibility.

Following the issue of the statement in question, the United Kingdom authorities adoptedemergency measures.

It is not disputed that it was from that time that the slump in the beef and veal market started tooccur, brought about by an appreciable decline in demand.

It must therefore be concluded that the fall in demand which gave rise to the damage pleaded inthe present case was caused by the effect which the SEAC statement had on public opinion,that is to say, by the concern which knowledge of the possible transmissibility of BSE to humansprompted amongst European consumers of beef and veal.

It is necessary, however, to consider whether the applicants have adduced any evidence orindication of a causal link between the allegedly wrongful acts and omissions of the defendantsand the damage pleaded.

Consumer anxiety is not directly linked to imports of contaminated meat from the UnitedKingdom but to the possibility that the disease may be transmissible to humans. Consequently,if, in such hypothetical circumstances, it had been announced as early as 1990 that allnecessary measures had been adopted to combat the spread of the disease, it is unlikely thatthis could have prevented the arousal of grave fears amongst consumers.

The applicants have not established that the fall in demand was caused by allegedly wrongfulacts and omissions on the part of the defendants. Furthermore, they have not shown that, evenif the defendants had adopted the measures which the applicants complain that they failed totake, cattle farmers would not in any event have suffered damage as a result of a fall in themarket.

In view of the foregoing, the Court considers that no causal link has been established betweenthe damage pleaded and the allegedly wrongful conduct of the Community institutions.

The application for annulment of Council Regulation (EC) No 1357/96 of 8 July 1996 providingfor additional payments to be made in 1996 with the premiums referred to in Regulation (EEC)No 805/68 on the common organisation of the market in beef and veal and amending thatregulation

Arguments of the parties

The Court finds that the Council and the Commission confirmed that Regulation No 1357/96does not operate to limit the non-contractual liability of the Community.

It is in fact clear from the wording of the first and second recitals in the preamble to theregulation that the objective which it pursues is not, as the applicants have wrongly maintained,to limit the potential liability of the Community for its alleged delay in responding to the urgentthreat to health, but to lay down emergency measures to support the income of farmers, therebyenabling them to overcome the exceptional difficulties facing the market as a result of the BSEcrisis, with a view to safeguarding the future of that sector.

The Court held:

'1. Dismisses as inadmissible the application for compensation made byConfederazione Nazionale Coltivatori Diretti (Coldiretti);

2. Dismisses as unfounded the applications for compensation made by the otherapplicants (the individual farmers);

3. Rules that there is no need to give a decision on the application for annulment ofCouncil Regulation (EC) No 1357/96 of 8 July 1996 providing for additionalpayments to be made in 1996 with the premiums referred to in Regulation (EEC)No 805/68 on the common organisation of the market in beef and veal andamending that regulation;

4. Orders the applicants to pay the costs.‘

Case T-154/96

Christiane Chvatal and Others v Court of Justice of the European Communities


30 September 1998

(Officials · Termination of service as a result of the accession of new Member States · Actadversely affecting an official · Objection of illegality · Legality of Regulation (EC, Euratom,ECSC) No 2688/95 · Equal treatment · Infringement of essential procedural requirements · Priorconsultation of the institutions and of the Staff Regulations Committee)

(Fifth Chamber)

Case T-13/97

Antoinette Losch v Court of Justice of the European Communities


30 September 1998

(Officials Termination of service as a result of the accession of new Member States · Actadversely affecting an official · Objection of illegality · Legality of Regulation (EC, Euratom,ECSC) No 2688/95 · Equal treatment · Infringement of essential procedural requirements · Priorconsultation of the institutions and of the Staff Regulations Committee)

(Fifth Chamber)

Case T-43/97

Isabelle Adine-Blanc v Commission of the European Communities


30 September 1998

(Officials · Auxiliary staff · Duration of contract · Principle of the protection of legitimateexpectations · Duty to have regard for the welfare and interests of officials · Principle of soundadministration)

(Fifth Chamber)

Case T-121/97

Richie Ryan v Court of Auditors of the European Communities

Law governing the institutions

30 September 1998

((Action for annulment · System of payment for the members of the Court of Auditors ·Departure from office · Pension · No increase · Infringement of the basic regulation · Statementof reasons · Legitimate expectations · Principle of non-discrimination))

(Fifth Chamber)

Case T-164/97

Silvio Busacca and Others v Court of Auditors of the European Communities


30 September 1998

(Officials · Termination of service as a result of the accession of new Member States · Actadversely affecting an official · Objection of illegality · Legality of Regulation (EC, Euratom,ECSC) No 2688/95 · Equal treatment · Infringement of essential procedural requirements · Priorconsultation of the institutions and of the Staff Regulations Committee)

(Fifth Chamber)

Case T-155/97

Natural van Dam and Danser Container Line BV AG v Commission of the EuropeanCommunities

Transport

1 October 1998

(Inland waterway transport · Structural improvements · Conditions for bringing new vessels intoservice · Exclusion)

(Fourth Chamber)

The aim of Council Regulation (EEC) No 1101/89 of 27 April 1989 on structural improvements ininland waterway transport is to reduce the carrying overcapacity manifest in all sectors of theinland waterway transport market. To that end, provision is made for a scrapping schemecoordinated at Community level, together with supporting measures. Under the 'old for new‘rule, the owner of a new vessel must, if it is to be brought into service, scrap a tonnage ofcarrying capacity equivalent to the new vessel without receiving a scrapping premium. Wherethe owner scraps no vessel, he must pay a special contribution into the Fund covering his newvessel, established for that purpose.

Article 8(3)(c) of the Regulation makes provision for 'specialised vessels‘ to be exempted fromthat general scheme.

Natural van Dam AG and Danser Container Line BV ('the applicants‘), which operate acontainer line on the Rhine, planned to have three specialised vessels built for the carriage ofcontainerised dangerous substances, under either the Swiss flag or that of a Member State.

On 5 July 1996 they applied to the Commission for exemption under Article 8(3)(c) of theRegulation.

The Commission informed the applicants by letter of 7 March 1997; 'the contested decision‘) ofits refusal to grant the exemption sought.

The Commission pointed out, first, that the three vessels in question were technically suited forthe carriage of goods other than dangerous substances and, second, that such substancescould be transported by conventional vessels meeting the technical specifications laid down inthe regulation on the carriage of dangerous substances on the Rhine.

The Commission concluded that the effect of bringing the vessels in question into service wouldbe to increase the capacity of the fleet to which the structural improvement measures apply.Those vessels could not therefore be regarded as 'specialised‘ within the meaning of Article8(3)(c) of the Regulation.

Substance

The first plea in law: infringement of Regulation No 1101/89

The applicants maintain that they qualify for exemption because the Regulation does notpreclude the bringing into service of new vessels operating in a new branch of the inlandwaterway transport market, namely the carriage of containerised dangerous substances. Thatmode of transport constitutes a new form of supply which does not aggravate the existingovercapacity in the inland waterway market.

However, the applicants have confirmed throughout the proceedings that the vessels inquestion were intended for the carriage not only of dangerous substances, but also of othergoods (see paragraph 9 above). At the hearing, the applicants even explained that theyintended to transport other goods because the transport of containerised dangerous substancesalone is not economically viable.

It is therefore clear from the explanations given by the applicants that their vessels would havecontributed to the increase in carrying capacity of the fleets used for the transport of othergoods, a sector which already suffers from overcapacity. Consequently, the bringing of thosevessels into service would have run counter to the objectives of the Regulation.

It follows that the Commission quite legitimately took the view that the vessels in question didnot qualify for exemption, in view particularly of the applicants' intention to use them to transportgoods other than those for which they had been specially designed.

The second plea in law: breach of the obligation to state reasons

Thus the Commission is not under a duty, when stating reasons for its decisions, to take aposition on every argument relied upon by the parties concerned in support of their case. It issufficient to set out the essential facts and legal considerations underpinning the decision.

In the contested decision the Commission referred to the vessels' principal characteristics andto their technical capability of transporting other goods, facts which in the Commission's viewjustify the decision in the light of the explanatory note.

The Commission therefore gave sufficient reasons in law for its refusal to classify the vessels inquestion as specialised vessels within the meaning of Article 8(3)(c) of the Regulation.

The Court:


2. Orders the applicants to pay the costs.‘

2.

OPINIONS

Case C-90/97

Robert Swaddling v Adjudication Officer

Reference for a preliminary ruling · Social Security Commissioner · Interpretation of Art. 48 ofthe EC Treaty · Worker returning to his Member State of origin after working in another MemberState · Social security benefit · Income support · Residence conditions

Advocate General A. Saggio delivered his Opinion at the sitting of the Fifth Chamber on29 September 1998.

He proposed that the Court reply as follows:

Article 10a(1) of Council Regulation (EEC) No 1408/71 of 14 June 1971 on the application ofsocial security schemes to employed persons, to self-employed persons and to members oftheir families moving within the Community, as subsequently amended, must, having regard toArticles 48 and 51 of the Treaty, be interpreted as precluding national legislation which, in thecase of a person who worked and was habitually resident in one Member State, who thenexercised his right to freedom of movement in order to settle in another Member State where heworked and established his habitual abode, and who eventually returned to the former MemberState in search of work, makes a special non-contributory benefit with the characteristic featuresof income support as provided for under United Kingdom legislation subject to the requirementof habitual residence, which, to be fulfilled, presupposes completion of an appreciable period ofresidence in that State.

Case C-303/97

Verbraucherschutzverein e.V v Sektkellerei G.C. Kessler GmbH & Co.

Reference for a preliminary ruling · Bundesgerichtshof · Interpretation of Article 13(2)(b) ofCouncil Regulation (EEC) No 2333/92 of 13 July 1992 laying down general rules for thedescription and presentation of sparkling wines and aerated sparkling wines (OJ 1992 L 231, p.9) · Use of a brand name of a sparkling wine containing a word ('Hochgewächs‘) forming part ofthe description of a wine ('Riesling-Hochgewächs‘) · Brand name traditionally used · Brandname 'likely to cause confusion or mislead ... or ... liable to be confused‘

Advocate General N. Fennelly delivered his Opinion at the sitting of the Fifth Chamber on29 September 1998.

He recommended that the Court answer the first question referred by the Bundesgerichtshof asfollows:

It does not suffice for the prohibition in Article 13(2)(b) of Council Regulation (EEC) No 2333/92of 13 July 1993 laying down general rules for the description and presentation of sparklingwines and aerated sparkling wines to be applicable that a word in a brand name used todescribe a sparkling wine (in this case 'Hochgewächs‘) may, in the abstract, be capable of beingconfused with part of the description of a wine (in this case 'Riesling-Hochgewächs‘) not usedfor constituting the cuvée of the sparkling wine at issue.

Case C-328/97

Glob-Sped AG v Hauptzollamt Lörrach

Reference for a preliminary ruling · Interpretation of heading 3004 ('medicaments‘) of theCombined Nomenclature for 1993 - classification on the basis of the description of the curativeor prophylactic properties of the product and the way in which it is packaged, dispensed andmarketed - 'Taxofit‘

Advocate General N. Fennelly delivered his Opinion at the sitting of the First Chamber on1 October 1998.

He recommended that the Court respond as follows to the questions referred by the nationalcourt:

Products such as those described in the order for reference are to be classified under headingNo 3004 50 10 of the Combined Nomenclature, in the version established by CommissionRegulation (EEC) No 2505/92 of 14 July 1992 amending Annexes I and II to Council Regulation(EEC) No 2658/87 on the tariff and statistical nomenclature and on the Common Customs Tariff.

Case C-409/97

Commission of the European Communities v Grand Duchy of Luxembourg

Failure of a Member State to fulfil its obligations · Failure to adopt the laws, regulations oradministrative provisions necessary to comply with Council Directive 92/85/EEC of 19 October1992 on the introduction of measures to encourage improvements in the safety and health atwork of pregnant workers and workers who have recently given birth or are breastfeeding

Advocate General A. Saggio delivered his Opinion at the sitting of the First Chamber on 1October 1998.

He suggested that the Court:

· Declare that, by failing to adopt the laws, regulations or administrative provisionsnecessary to comply with Council Directive 92/85/EEC of 19 October 1992 on theintroduction of measures to encourage improvements in the safety and health at work ofpregnant workers and workers who have recently given birth or are breastfeeding, theGrand Duchy of Luxembourg has failed to fulfil its obligations under that directive andunder Article 189 of the Treaty;

· Order the Grand Duchy of Luxembourg to pay the costs.‘

Case C-258/97

HI Hospital Ingenieure Krankenhaustechnik Planungsgesellschaft mbH vLandeskrankenanstalten-Betriebsgesellschaft

Reference for a preliminary ruling - Unabhängiger Verwaltungssenat für Kärnten - Interpretationof Article 177 of the EC Treaty · Whether the Unabhängiger Verwaltungssenat für Kärnten is acourt or tribunal · Interpretation of Council Directive 89/665/EEC on the coordination of the laws,regulations and administrative provisions relating to the application of review procedures to theaward of public supply and public works

contracts and of Council Directive 92/50/EEC of 18 June 1992 relating to the coordination ofprocedures for the award of public service contracts · Situation in which, in the absence oftransposition of Council Directive 92/50/EEC, there is no national provision attributing the courtjurisdiction provided for with respect to public service contracts · Definition of services · Planningwork for the construction of a hospital

Advocate General A. Saggio delivered his Opinion at the sitting of the Sixth Chamber on1 October 1998.

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Original version: French

Completed on 16.10.1998

Catalogue No: DX-AC-98-0022-EN-C

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