Court of Justice of the European Communities (including Court of First Instance Decisions)

1 . AGRICULTURE - PROCESSED PRODUCTS - MONETARY COMPENSATORY AMOUNTS - APPLICATION - CONDITION - INCIDENCE OF COMPENSATORY AMOUNTS APPLICABLE TO BASIC PRODUCTS ON PRICE OF PROCESSED PRODUCTS
( REGULATION NO 974/71 OF THE COUNCIL , ART . 2 ( 2 ))
2 . AGRICULTURE - MONETARY COMPENSATORY AMOUNTS - GROUPS OF PRODUCTS - APPLICATION - COMMISSION - DISCRETION

1 . IN ORDER TO JUSTIFY THE APPLICATION OF COMPENSATORY AMOUNTS TO PROCESSED PRODUCTS , IT IS SUFFICIENT FOR THE COMPENSATORY AMOUNTS APPLICABLE TO THE BASIC PRODUCTS TO HAVE A CONSIDERABLE INCIDENCE ON THE PRICE OF THE PROCESSED PRODUCTS .

2 . THE COMMISSION IS NOT BOUND TO FIX COMPENSATORY AMOUNTS FOR ALL THE PRODUCTS IN A GROUP , BUT MAY ASSESS THE NEED TO APPLY COMPENSATORY AMOUNTS EITHER BY PRODUCTS OR BY GROUPS OF PRODUCTS .

3 . ACCORDING TO THE PROVISIONS OF ARTICLE 26 OF REGULATION NO 2727/75 , IT IS ONLY IF THE COMMISSION ADOPTS MEASURES WHICH ARE NOT IN ACCORDANCE WITH THE OPINION OF THE MANAGEMENT COMMITTEE THAT THOSE MEASURES MUST BE COMMUNICATED TO THE COUNCIL . IN THESE CIRCUMSTANCES THE ABSENCE OF AN OPINION BY THE COMMITTEE IN NO WAY AFFECTS THE VALIDITY OF THE MEASURES ADOPTED BY THE COMMISSION .

IN CASE 95/78
REFERENCE TO THE COURT UNDER ARTICLE 177 OF THE EEC TREATY BY THE PRETURA DI MILANO FOR A PRELIMINARY RULING IN THE PROCEEDINGS PENDING BEFORE THAT COURT BETWEEN
DULCIORA S.P.A .
WITH ASSOCIAZIONE INDUSTRIE DOLCIARIE ITALIANE ( A.I.D.I .) AS INTERVENER
AND
AMMINISTRAZIONE DELLE FINANZE DELLO STATO ( STATE FINANCE ADMINISTRATION )

ON THE VALIDITY OF COMMISSION REGULATION ( EEC ) NO 800/77 OF 20 APRIL 1977 AMENDING , AS REGARDS PRODUCTS WHICH ARE SUBJECT TO MONETARY COMPENSATORY AMOUNTS , REGULATION ( EEC ) NO 572/76 FIXING THE MONETARY COMPENSATORY AMOUNTS ( OFFICIAL JOURNAL 1977 , L 97 , P . 18 ) AND OF COMMISSION REGULATION ( EEC ) NO 2657/77 OF 30 NOVEMBER 1977 ON THE APPLICATION OF MONETARY COMPENSATORY AMOUNTS TO CERTAIN PRODUCTS NOT COVERED BY ANNEX II TO THE TREATY ( OFFICIAL JOURNAL 1977 , L 308 , P . 48 ),

1BY AN ORDER OF 11 APRIL 1978 , WHICH WAS RECEIVED AT THE COURT ON 20 APRIL 1978 , THE PRETURA DI MILANO REFERRED A NUMBER OF QUESTIONS TO THE COURT OF JUSTICE FOR A PRELIMINARY RULING UNDER ARTICLE 177 OF THE EEC TREATY ON THE VALIDITY OF COMMISSION REGULATION NO 800/77 OF 20 APRIL 1977 AMENDING , AS REGARDS PRODUCTS WHICH ARE SUBJECT TO MONETARY COMPENSATORY AMOUNTS , REGULATION NO 572/76 FIXING THE MONETARY COMPENSATORY AMOUNTS ( OFFICIAL JOURNAL 1977 , L 97 , P . 18 ) AND OF COMMISSION REGULATION NO 2657/77 OF 30 NOVEMBER 1977 ON THE APPLICATION OF MONETARY COMPENSATORY AMOUNTS TO CERTAIN PRODUCTS NOT COVERED BY ANNEX II TO THE TREATY ( OFFICIAL JOURNAL 1977 , L 308 , P . 48 ).

2THESE QUESTIONS WERE RAISED IN THE CONTEXT OF A DISPUTE OVER THE CHARGING OF COMPENSATORY AMOUNTS ON EXPORTS OF SUGAR CONFECTIONERY BY DULCIORA S.P.A ., THE PLAINTIFF IN THE MAIN ACTION , FROM ITALY TO THE FEDERAL REPUBLIC OF GERMANY , BELGIUM AND NON-MEMBER COUNTRIES DURING THE LAST MONTHS OF 1977 AND THE FIRST MONTHS OF 1978 .
3THE PLAINTIFF ASKED THE PRETURA DI MILANO TO DECLARE ILLEGAL THE CHARGING OF A COMPENSATORY AMOUNT ON THOSE GOODS UNDER REGULATION NOS 800/77 AND 2657/77 BY THE AMMINISTRAZIONE DELLE FINANZE , THE DEFENDANT .

4THE ASSOCIAZIONE INDUSTRIE DOLCIARIE ITALIANE INTERVENED IN THE MAIN ACTION IN SUPPORT OF THE PLAINTIFF ' S CLAIM .

5THE DISPUTE CONCERNS THE APPLICATION OF THE MONETARY COMPENSATORY AMOUNTS SYSTEM TO CERTAIN PRODUCTS WHICH ARE NOT COVERED BY ANNEX II TO THE TREATY AND ARE THE SUBJECT OF A SPECIFIC ARRANGEMENT UNDER ARTICLE 235 OF THE TREATY ACCORDING TO THE TERMS OF ARTICLE 1 ( 2 ) ( B ) OF REGULATION NO 974/71 OF THE COUNCIL OF 12 MAY 1971 ON CERTAIN MEASURES OF CONJUNCTURAL POLICY TO BE TAKEN IN AGRICULTURE FOLLOWING THE TEMPORARY WIDENING OF THE MARGINS OF FLUCTUATION FOR THE CURRENCIES OF CERTAIN MEMBER STATES ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1971 ( I ), P . 257 ).

6THE SAID PRODUCTS , TO WHICH REGULATION NO 800/77 RELATES , COME UNDER TARIFF HEADINGS 17.04 D ( SUGAR CONFECTIONERY NOT CONTAINING COCOA , OTHER THAN LIQUORICE EXTRACT , CHEWING GUM AND WHITE CHOCOLATE ), 18.06 B ( ICE CREAM ( NOT INCLUDING ICE CREAM POWDER ) AND OTHER ICES CONTAINING COCOA ), 18.06 C ( CHOCOLATE AND SUGAR CONFECTIONERY CONTAINING COCOA ), 19.08 B ( PASTRY , BISCUITS , CAKES AND OTHER FINE BAKERS ' WARES OTHER THAN GINGERBREAD AND THE LIKE ) AND 21.07 C ( ICE CREAM ( NOT INCLUDING ICE CREAM POWDER ) AND OTHER ICES NOT CONTAINING COCOA ).

7IT EMERGES FROM THE SECOND AND THIRD RECITALS IN THE PREAMBLE TO REGULATION NO 800/77 THAT , SINCE ALL THE BASIC AGRICULTURAL PRODUCTS FROM WHICH THOSE GOODS ARE DERIVED WERE SUBJECT TO MONETARY COMPENSATORY AMOUNTS OF A HIGH LEVEL , THE DIFFERENCE IN PRICES OF THE BAISC PRODUCTS HAD BECOME SO MARKED AS TO HAVE A CONSIDERABLE EFFECT ON THE CONDITIONS OF COMPETITION OF THE PROCESSED PRODUCTS , HAVING REGARD TO THE CHARACTERISTICS OF THE MARKET IN CERTAIN SENSITIVE PRODUCTS .

8THE SECOND SUBPARAGRAPH OF ARTICLE 2 ( 2 ) OF REGULATION NO 800/77 PROVIDED THAT IN RESPECT OF THE SAID PROCESSED PRODUCTS ' ' MONETARY COMPENSATORY AMOUNTS SHALL NOT APPLY BEYOND 31 DECEMBER 1977 ' ' .

9THE ADOPTION OF THAT REGULATION , WHICH APPLIED WITH EFFECT FROM 23 MAY 1977 , HAD BEEN PRECEDED BY THE COMMISSION DECISION OF 23 MARCH 1977 AUTHORIZING IRELAND TO TAKE PROTECTIVE MEASURES IN RESPECT OF CERTAIN PROCESSED AGRICULTURAL PRODUCTS UNDER ARTICLE 135 OF THE ACT OF ACCESSION AND ALLOWING THAT MEMBER STATE UNTIL 31 DECEMBER 1977 TO LEVY A CHARGE ON IMPORTS FROM THE UNITED KINGDOM AND GRANT A PAYMENT ON EXPORTS TO THE UNITED KINGDOM OF THE PROCESSED AGRICULTURAL PRODUCTS COMING UNDER THE ABOVE-MENTIONED TARIFF HEADINGS ( OFFICIAL JOURNAL 1977 , L 97 , P . 29 ).

10THE RECITALS IN THE PREAMBLE TO THIS DECISION STATED THAT :
' ' . . . THE COMPENSATORY AMOUNTS CHARGED OR GRANTED . . . ( ON THE ) BASIC PRODUCTS , WOULD AMOUNT TO 34.7% IN THE CASE OF THE UNITED KINGDOM AND TO 10.4% IN THE CASE OF IRELAND ; . . . THIS SITUATION , ENTAILING A RELATIVE DISADVANTAGE TO THE MANUFACTURERS . . . IN IRELAND ON THE COST OF THE BASIC PRODUCTS OF 24.3% , MAY LEAD TO DISTORTION IN THE TERMS OF COMPETITION IN TRADE IN THE PROCESSED AGRICULTURAL PRODUCTS REFERRED TO IN THE IRISH APPLICATION BETWEEN THE MEMBER STATES CONCERNED ; . . . THIS SITUATION , IN ITS PRESENT ACUTE FORM SINCE NOVEMBER 1976 , HAS GIVEN RISE TO SERIOUS DIFFICULTIES FOR THE SECTORS CONCERNED IN IRELAND . . . ' ' .

11THE MONETARY COMPENSATORY AMOUNTS THUS INTRODUCED BY THESE BILATERAL ARRANGEMENTS BETWEEN THE UNITED KINGDOM AND IRELAND WERE ALTERED BY THE COMMISSION DECISION OF 4 MAY 1977 ( OFFICIAL JOURNAL 1977 , L 123 , P . 18 ), ACCORDING TO WHICH THIS SECOND DECISION AS WELL AS THE PRECEDING ONE CEASED TO APPLY ON THE DAY ON WHICH REGULATION NO 800/77 TOOK EFFECT .

12PROLONGATION OF REGULATION NO 800/77 , FOR AN INDEFINITE PERIOD , WAS DECIDED BY REGULATION NO 2657/77 OF 30 NOVEMBER 1977 .
13THE QUESTIONS ASKED BY THE PRETURA DI MILANO ARE THE FOLLOWING :
1 . MUST REGULATION ( EEC ) NO 974/71 OF THE COUNCIL ( AS SUCCESSIVELY AMENDED ) BE INTERPRETED AS MEANING THAT THE COMMUNITY INSTITUTIONS MAY APPLY MONETARY COMPENSATORY AMOUNTS TO IMPORTS AND EXPORTS BETWEEN MEMBER STATES AND BETWEEN MEMBER STATES AND NON-MEMBER COUNTRIES OF PRODUCTS LISTED IN REGULATION NO 800/77 EVEN THOUGH NO DISTURBANCES WHATEVER HAVE OCCURRED ON THE MARKET IN THE BASIC PRODUCTS FROM WHICH THE PRODUCTS LISTED IN THE SAID REGULATION NO 800/77 ARE DERIVED?

2 . HAVING REGARD TO THE PROVISIONS OF REGULATION NO 974/71 AND THOSE OF THE FIRST SUBPARAGRAPH OF ARTICLE 40 ( 3 ) OF THE TREATY OF ROME ( PROHIBITION ON DISCRIMINATION ) IS THE COMMISSION AUTHORIZED TO APPLY BY MEANS OF A REGULATION ( IN THE PRESENT INSTANCE REGULATION NO 800/77 ) MONETARY COMPENSATORY AMOUNTS TO THE EXPORTATION AND IMPORTATION OF THE SUGAR CONFECTIONERY INDICATED IN THE SAID REGULATION NO 800/77 WITHOUT INTRODUCING SIMILAR COMPENSATORY AMOUNTS FOR ALL THE OTHER SUGAR CONFECTIONERY HAVING CHARACTERISTICS SIMILAR TO THOSE OF THE PRODUCTS AFFECTED AND WHICH ARE SUBJECT TO THE SAME CONDITIONS?

3 . ( A ) IF QUESTION ( 1 ) OR QUESTION ( 2 ) ABOVE IS ANSWERED IN THE NEGATIVE MUST COMMISSION REGULATIONS ( EEC ) NOS 800/77 AND 2657/77 BE CONSIDERED INVALID?

( B ) MUST COMMISSION REGULATION NO 2657/77 ALSO BE CONSIDERED INVALID BECAUSE :
( I ) IT EXTENDS THE APPLICATION OF REGULATION ( EEC ) NO 800/77 BEYOND 31 DECEMBER 1977 WITHOUT AN OPINION HAVING BEEN DELIVERED BY THE MANAGEMENT COMMITTEE ;

( II)BECAUSE IT WAS DRAWN UP WITH AN INCONSISTENT STATEMENT OF REASONS IN INFRINGEMENT OF ARTICLE 190 OF THE TREATY?

4.IF HOWEVER REGULATION ( EEC ) NO 2657/77 MUST BE CONSIDERED TO BE VALID ( AND THEREFORE ALSO REGULATION ( EEC ) NO 800/77 ) AND IT BE CONSIDERED APPLICABLE TO THE EXPORTATION OF PRODUCTS LISTED IN REGULATION ( EEC ) NO 800/77 FROM ITALY TO OTHER MEMBER STATES OR TO NON-MEMBER COUNTRIES AFTER 1 JANUARY 1978 IN PERFORMANCE OF CONTRACTS CONCLUDED BEFORE 1 DECEMBER 1977 ( THE DATE ON WHICH REGULATION ( EEC ) NO 2657/77 WAS ADOPTED ) THAT IS AT A TIME WHEN , TAKING ACCOUNT OF THE PROVISIONS OF REGULATION ( EEC ) NO 800/77 , IT WAS NOT POSSIBLE TO FORESEE THAT THE MONETARY COMPENSATORY AMOUNTS FOR THE PRODUCTS IN QUESTION WOULD BE MAINTAINED AFTER 31 DECEMBER 1977?

THE FIRST TWO QUESTIONS
14THE PLAINTIFF AND THE ITALIAN GOVERNMENT SUBMIT THAT BY ADOPTING REGULATION NO 800/77 THE COMMISSION INFRINGED THE PROVISIONS OF ARTICLE 1 ( 3 ) OF REGULATION NO 974/71 , ACCORDING TO WHICH , ' ' PARAGRAPH 1 SHALL APPLY ONLY WHERE APPLICATION OF THE MONETARY MEASURES REFERRED TO IN THAT PARAGRAPH WOULD LEAD TO DISTURBANCES IN TRADE IN AGRICULTURAL PRODUCTS ' ' .

15THEY SUBMIT THAT BY VIRTUE OF THAT PROVISION COMPENSATORY AMOUNTS ON PRODUCTS NOT COVERED BY ANNEX II TO THE TREATY AND FORMING THE SUBJECT OF A SPECIFIC ARRANGEMENT UNDER ARTICLE 235 OF THE TREATY COULD NOT HAVE BEEN INTRODUCED EXCEPT IN ORDER TO AVOID THE RISK OF DISTURBANCES IN TRADE IN THE BASIC AGRICULTURAL PRODUCTS ( SUGAR , CEREALS AND SO ON ) ON WHICH THE PROCESSED PRODUCTS , NAMELY ICE CREAM , CHOCOLATE , BISCUITS AND SO ON , DEPEND .

16THEY SUBMIT THAT , ACCORDING TO THE RECITALS IN THE PREAMBLE TO REGULATION NO 800/77 , THE COMMISSION ASSESSED NOT THE RISK OF DISTURBANCES IN TRADE IN AGRICULTURAL PRODUCTS BUT THE RISK OF DISTORTIONS IN COMPETITION IN THE PRODUCTS AT ISSUE .

17THEY ALSO SUBMIT THAT THE STATEMENT OF THE REASONS ON WHICH REGULATION NO 800/77 WAS BASED IS DEFECTIVE INASMUCH AS IT FAILS TO TAKE ACCOUNT OF THE RISK OF DISTURBANCES IN TRADE IN AGRICULTURAL PRODUCTS AND IN THAT IT CONFINES ITSELF TO ESTABLISHING THE RISK OF DISTURBANCES IN THE CONDITIONS OF COMPETITION IN TRADE IN THE PROCESSED PRODUCTS .

18IT IS TRUE THAT IN ORDER TO JUSTIFY REGULATION NO 800/77 THE COMMISSION STATED THAT ' ' IN THE CASE OF THE PROCESSED PRODUCTS NOT SUBJECT TO MONETARY COMPENSATORY AMOUNTS , THE DIFFERENCE IN PRICES OF THE BASIC PRODUCTS HAS BECOME SO MARKED AS TO HAVE A CONSIDERABLE EFFECT ON THE CONDITIONS OF COMPETITION OF THE PROCESSED PRODUCTS . . . ' ' .

19THE WORDING OF ARTICLE 1 ( 3 ) OF REGULATION NO 974/71 AS AMENDED BY REGULATION NO 2746/72 OF THE COUNCIL OF 19 DECEMBER 1972 ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1972 ( 28-30 DECEMBER ), P . 64 ) REQUIRES THAT FOR THE APPLICATION OF COMPENSATORY AMOUNTS TO BASIC AGRICULTURAL PRODUCTS , THE MONETARY MEASURES REFERRED TO IN PARAGRAPH 1 ( NAMELY THE FLUCTUATION OF THE EXCHANGE RATE OF A MEMBER STATE ' S CURRENCY ) SHOULD LEAD TO DISTURBANCES IN TRADE IN AGRICULTURAL PRODUCTS .

20AS REGARDS THE PROCESSED PRODUCT , IT EMERGES FROM THE PROVISIONS OF ARTICLE 2 ( 2 ) OF REGULATION NO 974/71 THAT THE COMPENSATORY AMOUNTS APPLICABLE SHALL BE EQUAL TO THE INCIDENCE , ON THE PRICE OF THE PRODUCT CONCERNED , OF THE APPLICATION OF THE COMPENSATORY AMOUNT TO THE PRICE OF THE BASIC PRODUCT ON WHICH IT DEPENDS .

21IT FOLLOWS THAT IN ORDER TO JUSTIFY THE APPLICATION OF COMPENSATORY AMOUNTS TO PROCESSED PRODUCTS , IT IS SUFFICIENT FOR THE COMPENSATORY AMOUNTS APPLICABLE TO THE BASIC PRODUCTS TO HAVE A CONSIDERABLE INCIDENCE ON THE PRICE OF THE PROCESSED PRODUCTS .

22AS REGARDS THE BASIC AGRICULTURAL PRODUCTS FROM WHICH THE PROCESSED PRODUCTS REFERRED TO IN REGULATION NO 800/77 ARE DERIVED , THE RISK OF DISTURBANCES HAD BEEN ESTABLISHED AT THE TIME WHEN THE MONETARY COMPENSATORY AMOUNTS WERE APPLIED TO THOSE BASIC PRODUCTS .

23HENCE THE COMMISSION WAS RIGHT IN CONFINING ITSELF TO ESTABLISHING THAT THE INCIDENCE ON THE PRICES OF THE PROCESSED PRODUCTS OF THE MONETARY COMPENSATORY AMOUNTS APPLICABLE TO THE BASIC PRODUCTS HAD BECOME SO MARKED AS FOR THE DIFFERENCE IN PRICES OF THE BASIC PRODUCTS TO HAVE A CONSIDERABLE EFFECT ON THE CONDITIONS OF COMPETITION OF THE PROCESSED PRODUCTS .

24THE STATEMENT OF THE REASONS ON WHICH REGULATION NO 800/77 IS BASED IS SUFFICIENT .

25THE ITALIAN GOVERNMENT SUBMITS THAT THE COMMISSION APPLIED MONETARY COMPENSATORY AMOUNTS TO THE PRODUCTS AT ISSUE NOT IN ORDER TO DEAL WITH THE DIFFICULTIES TO WHICH MONETARY INSTABILITY MIGHT GIVE RISE FOR THE PROPER FUNCTIONING OF THE COMMON ORGANIZATION OF THE MARKET , BUT IN ORDER TO DEAL WITH THE DIFFICULTIES COMPLAINED OF BY IRISH PROCESSING INDUSTRIES IN TRADE WITH THE UNITED KINGDOM .

26IT SUBMITS THAT APPLICATION OF MONETARY COMPENSATORY AMOUNTS TO THE PRODUCTS AT ISSUE IN RESPECT OF TRADE BETWEEN MEMBER STATES AND WITH NON-MEMBER COUNTRIES IS NOT JUSTIFIED BY THE SMALL INCIDENCE WHICH THE MONETARY DIFFERENCES MIGHT HAVE ON THE PRICES OF THE PROCESSED PRODUCTS .

27IT SUBMITS THAT UNDER ARTICLE 14 OF REGULATION NO 1059/69 , THE COUNCIL COULD HAVE TAKEN APPROPRIATE MEASURES EITHER TO DEAL WITH THE POSSIBLE EFFECT ON TRADE BETWEEN MEMBER STATES AND WITH NON-MEMBER COUNTRIES OF SPECIAL MEASURES ADOPTED UNDER THE COMMON ORGANIZATIONS AS REGARDS THE PRICES OF CERTAIN BASIC PRODUCTS , OR TO DEAL WITH A SPECIAL SITUATION WHICH MAY ARISE IN RESPECT OF CERTAIN GOODS .

28IT SUBMITS THAT , IN THE PART CONCERNING THE PRODUCTS TO WHICH THIS ACTION REFERS , REGULATION NO 800/77 BREACHES THE PRINCIPLE OF PROPORTIONALITY BECAUSE A MEASURE TAKEN UNDER THE SAID ARTICLE 14 WOULD HAVE BEEN ADEQUATE AND SUFFICIENT TO DEAL WITH THE DIFFICULTIES ENCOUNTERED BY THE IRISH PROCESSING INDUSTRIES IN THE LIMITED SECTOR OF TRADE WITH THE UNITED KINGDOM , WHEREAS THE APPLICATION OF COMPENSATORY AMOUNTS WAS NEITHER NECESSARY NOR IN PROPORTION TO THE AIM PURSUED .

29THE COMMISSION STATES THAT IN 1975 IT ADOPTED A PRACTICE WHEREBY MONETARY COMPENSATION WAS TO BE FIXED ONLY IN RESPECT OF PROCESSED PRODUCTS ON WHICH THE MAXIMUM AVERAGE INCIDENCE OF THE COMPENSATION EXCEEDED 5% .

30ON 1 JANUARY 1977 THE DIFFERENCE BETWEEN THE SO-CALLED GREEN RATES FOR THE POUND STERLING AND THE IRISH POUND WAS 24.3% , WHICH GAVE RISE TO REPEATED REPRESENTATIONS BY THE IRISH GOVERNMENT AND , FOLLOWING THOSE REPRESENTATIONS , TO THE DECISION OF 23 MARCH 1977 AUTHORIZING IRELAND TO TAKE PROTECTIVE MEASURES .

31THE COMMISSION STATES THAT MORE THOROUGH ANALYSIS OF THE LEGAL AND ECONOMIC SITUATION REVEALED THAT THE PROBLEMS POSED COULD NOT BE ADEQUATELY DEALT WITH BY THE DECISION ADOPTED IN RESPECT OF IRELAND .

32IT STATES THAT AT THE TIME WHEN REGULATION NO 800/77 WAS ADOPTED , THE RATES OF DIFFERENCE OF THE VARIOUS CURRENCIES TAKEN INTO ACCOUNT FOR THE FIXING OF THE COMPENSATORY AMOUNTS WERE AS FOLLOWS : POUND STERLING , - 34.7% ; IRISH POUND , - 10.4% ; FRENCH FRANC , - 16.2% ; ITALIAN LIRA , - 21.1% ; GERMAN MARK , + 9.3% ; BELGIAN AND LUXEMBOURG FRANCES , + 1.4% ; NETHERLANDS GUILDER , + 1.4% ; DANISH KRONER , 0 .
33IT EMERGED FROM THIS THAT THE DIFFERENCE BETWEEN THE POUND STERLING AND THE IRISH POUND WAS MUCH SMALLER THAN THE DIFFERENCE BETWEEN THE POUND STERLING AND ALL THE STRONG CURRENCIES AND BETWEEN THE GERMAN MARK AND THE ITALIAN LIRA .

34FURTHERMORE THE ACTUAL INCIDENCE OF THE MONETARY COMPENSATION ON THE PRODUCTS AT ISSUE EXCEEDED THE 5% LIMIT WHICH WAS REGARDED IN 1975 AS A DECISIVE FACTOR FOR THE ABOLITION OF THE SAID COMPENSATION .

35ARTICLE 14 OF REGULATION NO 1059/69 REFERS TO THE COUNCIL ' S ADOPTING ' ' APPROPRIATE MEASURES ' ' ONLY ' ' TO DEAL WITH THE POSSIBLE EFFECT ON TRADE BETWEEN MEMBER STATES AND WITH THIRD COUNTRIES OF SPECIAL MEASURES WHICH MAY BE ADOPTED UNDER THE COMMON ORGANIZATION OF AGRICULTURAL MARKETS AS REGARDS THE PRICES OF CERTAIN BASIC PRODUCTS ' ' .

36THE COMMISSION SUBMITS THAT CONSEQUENTLY THIS PROVISION IS NOT APPROPRIATE TO DEAL WITH THE RISK OF DISTURBANCES IN TRADE IN PROCESSED PRODUCTS CAUSED BY THE MONETARY SITUATION OF THE MEMBER STATES .

37THE PLAINTIFF AND THE ITALIAN GOVERNMENT HAVE NOT CALLED IN QUESTION THE STATISTICAL DATA SUPPLIED BY THE COMMISSION .

38THE PLAINTIFF SUBMITS THAT THE EXTENSION OF THE MONETARY COMPENSATION SYSTEM TO CONFECTIONERY PRODUCTS IS NOT JUSTIFIED BY THE FACT THAT THE COMPENSATORY AMOUNTS APPLIED TO THE BASIC PRODUCTS ALSO LED TO PRICE DIFFERENCES AND DISTORTIONS AT THE STAGE OF THE PROCESSED PRODUCTS , BECAUSE THE COMMISSION FAILED TO STATE WHY IT EXTENDED THE COMPENSATORY AMOUNTS SYSTEM TO CERTAIN PROCESSED AGRICULTURAL PRODUCTS BUT NOT TO OTHER IMPORTANT GROUPS OF PRODUCTS - SUCH AS , IN PARTICULAR , PREPARATIONS OF A KIND USED AS INFANT FOOD OR FOR DIETETIC OR CULINARY PURPOSES , CORN-FLAKES AND OTHER ORDINARY BAKERS ' WARES .

39IT SUBMITS THAT THE ABSENCE OF COMPENSATORY AMOUNTS ON THE LATTER PRODUCTS ENTAILED DISCRIMINATION BETWEEN EXPORTERS OF THOSE PRODUCTS AND EXPORTERS OF PRODUCTS CAUGHT BY THE CONTESTED REGULATION .

40HOWEVER , THE COMMISSION IS NOT BOUND TO FIX COMPENSATORY AMOUNTS FOR ALL THE PRODUCTS IN A GROUP , BUT MAY ASSESS THE NEED TO APPLY COMPENSATORY AMOUNTS EITHER BY PRODUCTS OR BY GROUPS OF PRODUCTS .

41MOREOVER , THE PLAINTIFF HAS NOT SHOWN THAT IT IS A QUESTION OF SIMILAR PRODUCTS WHICH ARE IN COMPETITION WITH THE PRODUCTS COVERED BY THE REGULATION .

42THEREFORE IT MUST BE FOUND THAT IT WAS OPEN TO THE COMMISSION TO ADOPT REGULATION NO 800/77 AND TO FIX MONETARY COMPENSATORY AMOUNTS FOR THE PRODUCTS IN QUESTION .

43ACCORDINGLY , THE ANSWER TO THE FIRST TWO QUESTIONS MUST BE THAT CONSIDERATION OF THE PROVISIONS IN QUESTION HAS DISCLOSED NO FACTOR OF SUCH A KIND AS TO AFFECT THE VALIDITY OF REGULATION NO 800/77 .
44IN THE LIGHT OF THE ANSWER TO THESE QUESTIONS , QUESTION 3 ( A ) DOES NOT REQUIRE AN ANSWER .

QUESTION 3 ( B ) ( I )
45QUESTION 3 ( B ) ( I ) ASKS WHETHER COMMISSION REGULATION NO 2657/77 MUST BE CONSIDERED INVALID BECAUSE IT EXTENDS THE APPLICATION OF REGULATION NO 800/77 BEYOND 31 DECEMBER 1977 WITHOUT AN OPINION HAVING BEEN DELIVERED BY THE MANAGEMENT COMMITTEE .

46ARTICLE 6 OF REGULATION NO 974/71 PROVIDES THAT DETAILED RULES FOR THE APPLICATION OF THAT REGULATION SHALL BE ADOPTED IN ACCORDANCE WITH THE PROCEDURE LAID DOWN IN ARTICLE 26 OF COUNCIL REGULATION NO 120/67 ON THE COMMON ORGANIZATION OF THE MARKET IN CEREALS , AS LAST AMENDED BY REGULATION NO 2434/70 , OR , IF APPROPRIATE , THE CORRESPONDING ARTICLE OF THE OTHER REGULATIONS ON THE COMMON ORGANIZATION OF AGRICULTURAL MARKETS .

47REGULATION NO 120/67 WAS REPEALED AND REPLACED BY REGULATION NO 2727/75 , ARTICLE 26 OF WHICH CORRESPONDS TO ARTICLE 26 OF REGULATION NO 120/67 AND PROVIDES AS FOLLOWS :
' ' 1 . WHERE THE PROCEDURE LAID DOWN IN THIS ARTICLE IS TO BE FOLLOWED , THE CHAIRMAN SHALL REFER THE MATTER TO THE COMMMITTEE , EITHER ON HIS OWN INITIATIVE OR AT THE REQUEST OF THE REPRESENTATIVE OF A MEMBER STATE .

2 . THE REPRESENTATIVE OF THE COMMISSION SHALL SUBMIT A DRAFT OF THE MEASURES TO BE ADOPTED . THE COMMITTEE SHALL DELIVER ITS OPINION ON THE DRAFT WITHIN A TIME-LIMIT SET BY THE CHAIRMAN ACCORDING TO THE URGENCY OF THE MATTER . AN OPINION SHALL BE DELIVERED BY A MAJORITY OF 41 VOTES .

3 . THE COMMISSION SHALL ADOPT MEASURES WHICH SHALL APPLY IMMEDIATELY . HOWEVER , IF THESE MEASURES ARE NOT IN ACCORDANCE WITH THE OPINION OF THE COMMITTEE , THEY SHALL FORTHWITH BE COMMUNICATED BY THE COMMISSION TO THE COUNCIL . IN THAT EVENT THE COMMISSION MAY DEFER APPLICATION OF THE MEASURES WHICH IT HAS ADOPTED FOR NOT MORE THAN ONE MONTH FROM THE DATE OF SUCH COMMUNICATION .

THE COUNCIL , ACTING BY A QUALIFIED MAJORITY , MAY TAKE A DIFFERENT DECISION WITHIN ONE MONTH . ' '
48IT APPEARS FROM THE LAST RECITAL IN THE PREAMBLE TO REGULATION NO 2657/77 THAT THE MANAGEMENT COMMITTEE DID NOT DELIVER AN OPINION WITHIN THE TIME-LIMIT SET BY ITS CHAIRMAN .

49ACCORDING TO THE PROVISIONS OF ARTICLE 26 OF REGULATION NO 2727/75 , IT IS ONLY IF THE COMMISSION ADOPTS MEASURES WHICH ARE NOT IN ACCORDANCE WITH THE OPINION OF THE COMMITTEE THAT THOSE MEASURES MUST BE COMMUNICATED TO THE COUNCIL .

50IN THESE CIRCUMSTANCES THE ABSENCE OF AN OPINION BY THE COMMITTEE IN NO WAY AFFECTS THE VALIDITY OF THE MEASURES ADOPTED BY THE COMMISSION .

QUESTION 3 ( B ) ( II )
51THE PLAINTIFF AND THE ITALIAN GOVERNMENT SUBMIT THAT BY THE SECOND SUBPARAGRAPH OF ARTICLE 2 ( 2 ) OF REGULATION NO 800/77 THE COMMISSION INTENDED TO LIMIT ITS OWN DISCRETIONARY POWER ITSELF , THAT IS TO SAY LIMIT THE EXERCISE OF THAT POWER TO THE PERIOD ENDING ON 31 DECEMBER 1977 WITHOUT THE POSSIBILITY OF ANY PROLONGATION .

52THEY ARGUE THAT CONSEQUENTLY , WHEN THE SITUATION HAS NOT GREATLY CHANGED AND THE COMMISSION DECIDES THAT THE COMPENSATORY AMOUNTS ARE TO BE APPLIED FOR AN INDEFINITE PERIOD , IT IS GUILTY OF MISUSE OF POWERS .

53ACCORDING TO THE PLAINTIFF , THE STATEMENT OF THE REASONS ON WHICH REGULATION NO 2657/77 IS BASED IS INCONSISTENT , BECAUSE THE APPLICATION OF A REGULATION WHICH WAS TO APPLY ' ' NOT . . . BEYOND ' ' 31 DECEMBER 1977 WAS PROLONGED EVEN THOUGH THE SITUATION HAD NOT ' ' GREATLY CHANGED ' ' , AS IS STATED BY THE COMMISSION ITSELF .

54EVEN IF ARTICLE 2 ( 2 ) OF REGULATION NO 800/77 HAD THE MEANING WHICH THE ITALIAN GOVERNMENT AND THE PLAINTIFF ATTRIBUTE TO IT , IT COULD NOT RELIEVE THE COMMISSION FROM ITS OBLIGATION TO REVIEW THE SITUATION BY THE END OF THE YEAR .

55THE SIXTH RECITAL IN THE PREAMBLE TO REGULATION NO 800/77 HAD PROVIDED THAT ' ' THE LIST OF . . . PRODUCTS SUBJECT TO MONETARY COMPENSATORY AMOUNTS SHOULD BE REVIEWED BY THE END OF THE YEAR IN THE LIGHT OF THE ECONOMIC SITUATION OF THOSE PRODUCTS ' ' .

56IN THE LIGHT OF THAT RECITAL IT COULD NOT BE INFERRED THAT , IF THE SITUATION REMAINED UNCHANGED , THE APPLICATION OF THE COMPENSATORY AMOUNTS WOULD NECESSARILY BE BROUGHT TO AN END ; ON THE CONTRARY IT COULD BE INFERRED THAT IF THEIR APPLICATION WERE TO CONTINUE AFTER 31 DECEMBER 1977 A NEW REGULATION WOULD BE NECESSARY .

57THEREFORE THE STATEMENT OF THE REASONS ON WHICH REGULATION NO 2657/77 IS BASED IS SUFFICIENT , AND THE ANSWER TO QUESTION 3 ( B ) ( II ) MUST BE IN THE NEGATIVE .

QUESTION 4
58QUESTION 4 ASKS WHETHER REGULATION NO 2657/77 CAN BE CONSIDERED APPLICABLE TO THE EXPORTATION OF PRODUCTS LISTED IN REGULATION NO 800/77 FROM ITALY TO OTHER MEMBER STATES OR TO NON-MEMBER COUNTRIES AFTER 1 JANUARY 1978 IN PERFORMANCE OF CONTRACTS CONCLUDED BEFORE 1 DECEMBER 1977 , THE DATE ON WHICH REGULATION NO 2657/77 WAS ADOPTED .

59THE ITALIAN GOVERNMENT AND THE PLAINTIFF SUBMIT THAT THERE IS ALSO A BREACH OF THE PRINCIPLE OF LEGITIMATE EXPECTATIONS INASMUCH AS THE FIXING OF THE PERIOD LAID DOWN IN REGULATION NO 800/77 WAS SO IMPERATIVE THAT IT WAS TO BE EXPECTED THAT THE COMPENSATORY AMOUNTS WOULD NOT APPLY BEYOND 31 DECEMBER 1977 .
60THEY SUBMIT THAT THE FACT THAT REGULATION NO 2657/77 ENTERED INTO FORCE A MONTH BEFORE THAT PERIOD EXPIRED IS NOT SUFFICIENT TO PROTECT LEGITIMATE EXPECTATIONS SINCE IT HAD BEEN DECLARED THAT THE PERIOD COULD NOT BE PROLONGED , THE TERMS OF THE SECOND SUBPARAGRAPH OF ARTICLE 2 ( 2 ) OF REGULATION NO 800/77 PROVIDING THAT ' ' MONETARY COMPENSATORY AMOUNTS SHALL NOT APPLY BEYOND 31 DECEMBER 1977 ' ' .

61THEY SUBMIT THAT CONSEQUENTLY , EVEN IF REGULATION NO 2657/77 WERE NOT TO BE DECLARED INVALID , THE MONETARY COMPENSATORY AMOUNTS SHOULD NOT BE APPLIED TO CONTRACTS CONCLUDED BEFORE THE ENTRY INTO FORCE OF THAT REGULATION , THAT IS TO SAY BEFORE 1 DECEMBER 1977 .
62HOWEVER , IN THE LIGHT OF THE TERMS OF THE SIXTH RECITAL IN THE PREAMBLE TO REGULATION NO 800/77 WHICH IS CITED ABOVE , A PRUDENT TRADER COULD NOT INFER FROM THE WORDING OF THE SECOND SUBPARAGRAPH OF ARTICLE 2 ( 2 ) OF THAT REGULATION THAT THE COMMISSION WOULD ABOLISH COMPENSATORY AMOUNTS ON THE PRODUCTS IN QUESTION IF THE SITUATION AT THE END OF THE YEAR REMAINED UNCHANGED .

63THERE WERE THEREFORE NO GROUNDS FOR EXEMPTING FROM THE APPLICATION OF COMPENSATORY AMOUNTS CONTRACTS CONCLUDED BEFORE THE DATE OF REGULATION NO 2657/77 .

COSTS
64THE COSTS INCURRED BY THE IRISH GOVERNMENT , THE ITALIAN GOVERNMENT AND THE COMMISSION OF THE EUROPEAN COMMUNITIES , WHICH SUBMITTED OBSERVATIONS TO THE COURT , ARE NOT RECOVERABLE .

65AS THESE PROCEEDINGS ARE , IN SO FAR AS THE PARTIES TO THE MAIN ACTION ARE CONCERNED , IN THE NATURE OF A STEP IN THE ACTION PENDING BEFORE THE PRETURA DI MILANO , THE DECISION ON COSTS IS A MATTER FOR THAT COURT .

ON THOSE GROUNDS ,
THE COURT ,
IN ANSWER TO THE QUESTIONS REFERRED TO IT BY THE PRETURA DI MILANO BY AN ORDER OF 11 APRIL 1978 , HEREBY RULES :
1 . CONSIDERATION OF THE PROVISIONS IN QUESTION HAS DISCLOSED NO FACTOR OF SUCH A KIND AS TO AFFECT THE VALIDITY OF REGULATION NO 800/77 .
2 . CONSIDERATION OF QUESTION 3 ( B ) HAS DISCLOSED NO FACTOR OF SUCH A KIND AS TO AFFECT THE VALIDITY OF REGULATION NO 2657/77 .
3 . THERE WERE THEREFORE NO GROUNDS FOR EXEMPTING FROM THE APPLICATION OF COMPENSATORY AMOUNTS CONTRACTS CONCLUDED BEFORE THE DATE OF REGULATION NO 2657/77 .