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

1 . COMMUNITY LAW - GENERAL PRINCIPLES - PROPORTIONALITY - PROPORTIONAL NATURE OF A MEASURE - CRITERIA FOR ASSESSMENT
2 . AGRICULTURE - COMMON ORGANIZATION OF THE MARKETS - MILK AND MILK PRODUCTS - BUTTER OFFERED FOR SALE AT A REDUCED PRICE - COMPULSORY PROCESSING OF BUTTER WITHIN A SPECIFIED PERIOD - PROVISION OF SECURITY BY THE SUCCESSFUL TENDERER - FAILURE TO OBSERVE THE PROCESSING PERIOD - TOTAL FORFEITURE OF THE SECURITY - PRINCIPLE OF PROPORTIONALITY - BREACH - NONE
( REGULATIONS ( EEC ) OF THE COMMISSION NOS 1259/72 , ART . 18 ( 2 ) AND 232/75 , ARTS 18 ( 2 ) AND 19 )

1 . IN ORDER TO ESTABLISH WHETHER A PROVISION OF COMMUNITY LAW IS CONSONANT WITH THE PRINCIPLE OF PROPORTIONALITY IT IS NECESSARY TO ESTABLISH , IN THE FIRST PLACE , WHETHER THE MEANS IT EMPLOYS TO ACHIEVE ITS AIM CORRESPOND TO THE IMPORTANCE OF THE AIM AND , IN THE SECOND PLACE , WHETHER THEY ARE NECESSARY FOR ITS ACHIEVEMENT .

2.THE PROVISIONS WHICH REQUIRE THE FORFEITURE OF THE SECURITY IN FULL WHEN THE PROCESSING PERIOD FOR BUTTER OFFERED FOR SALE AT A REDUCED PRICE IS EXCEEDED SEEK TO PREVENT SUCCESSFUL TENDERERS FROM ACCUMULATING STOCKS FOR SPECULATIVE PURPOSES . SUCH SPECULATION WOULD CONFLICT WITH THE PURPOSE OF REGULATIONS NOS 1259/72 AND 232/75 RELATING TO THE SALE OF BUTTER AT A REDUCED PRICE , BECAUSE A VERY LARGE PERCENTAGE OF THE BUTTER SOLD IN THAT WAY WOULD NOT BE PROCESSED , BUT WOULD BE USED TO ACCUMULATE STOCKS WHICH WOULD BE PARTLY FINANCED BY THE COMMUNITY BUDGET OUTSIDE THE FRAMEWORK OF THE REGULATIONS IN QUESTION . IT FOLLOWS THAT PREVENTING SPECULATION IS AN AIM OF FUNDAMENTAL IMPORTANCE TO THE PROPER FUNCTIONING OF THE SYSTEM . IN THOSE CIRCUMSTANCES THE TOTAL FORFEITURE OF THE SECURITY WHEN THE PERIODS PRESCRIBED BY THE COMMUNITY LEGISLATION ARE EXCEEDED IS A MEASURE WHICH IS PROPORTIONATE TO THE AIMS PURSUED BY REGULATIONS NOS 1259/72 AND 232/75 .

IN CASE 66/82
REFERENCE TO THE COURT UNDER ARTICLE 177 OF THE EEC TREATY BY THE TRIBUNAL ADMINISTRATIF ( ADMINISTRATIVE COURT ), PARIS , FOR A PRELIMINARY RULING IN THE ACTION PENDING BEFORE THAT COURT BETWEEN
FROMANCAIS SA , PARIS ,
AND
FONDS D ' ORIENTATION ET DE REGULARISATION DES MARCHES AGRICOLES ( FORMA ) ( AGRICULTURAL MARKETS GUIDANCE AND STABILIZATION FUND , HEREINAFTER REFERRED TO AS ' ' THE FUND ' ' ), PARIS ,

ON THE VALIDITY OF ARTICLE 18 ( 2 ) OF REGULATION ( EEC ) NO 1259/72 OF THE COMMISSION OF 16 JUNE 1972 ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1972 , ( II ), P . 559 ), ARTICLES 18 ( 2 ) AND 19 OF REGULATION ( EEC ) NO 232/75 OF THE COMMISSION OF 30 JANUARY 1975 ( OFFICIAL JOURNAL , 1975 , L 24 , P . 45 ) AND ARTICLE 13 ( 4 ) OF COMMISSION REGULATION ( EEC ) NO 1687/76 OF 30 JUNE 1976 ( OFFICIAL JOURNAL , 1976 , L 190 , P . 1 ),

1 BY A JUDGMENT OF 26 JANUARY 1982 WHICH WAS RECEIVED AT THE COURT ON 17 FEBRUARY 1982 THE TRIBUNAL ADMINISTRATIF ( ADMINISTRATIVE COURT ), PARIS , REFERRED TO THE COURT UNDER ARTICLE 177 OF THE EEC TREATY A PRELIMINARY QUESTION AS TO THE EFFECT OF THE PRINCIPLE OF PROPORTIONALITY ON THE VALIDITY OF ARTICLE 18 ( 2 ) OF REGULATION ( EEC ) NO 1259/72 OF THE COMMISSION OF 16 JUNE 1972 ON THE DISPOSAL OF BUTTER AT A REDUCED PRICE TO CERTAIN COMMUNITY PROCESSING UNDERTAKINGS ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1972 ( II ), P . 559 ), ARTICLE 18 ( 2 ) AND 19 OF REGULATION ( EEC ) NO 232/75 OF THE COMMISSION OF 30 JANUARY 1975 ON THE SALE OF BUTTER AT REDUCED PRICES FOR USE IN THE MANUFACTURE OF PASTRY PRODUCTS AND ICE-CREAM ( OFFICIAL JOURNAL , 1975 , L 24 , P . 45 ) AND ARTICLE 13 ( 4 ) OF COMMISSION REGULATION ( EEC ) NO 1687/76 OF 30 JUNE 1976 LAYING DOWN COMMON DETAILED RULES FOR VERIFYING THE USE AND/OR DESTINATION OF PRODUCTS FROM INTERVENTION ( OFFICIAL JOURNAL , 1976 , L 190 , P . 1 ).

2 THE QUESTION WAS RAISED IN THE COURSE OF AN ACTION BROUGHT BY FROMANCAIS SA AGAINST THE FONDS D ' ORIENTATION ET DE REGULARISATION DES MARCHES AGRICOLES ( ' ' THE FUND ' ' ), WHICH REFUSED TO RELEASE PROCESSING SECURITIES LODGED BY FROMANCAIS IN THE PERIOD FROM 1973 TO 1977 INCLUSIVE , WHEN THE LATTER BOUGHT ON DIFFERENT OCCASIONS INTERVENTION BUTTER SOLD AT A REDUCED PRICE FOR THE MANUFACTURE OF PASTRY PRODUCTS AND ICE-CREAM .

3 THE FUND CONSIDERED THAT AS FROMANCAIS HAD NOT PROVIDED PROOF THAT THE QUANTITIES OF BUTTER IN QUESTION HAD BEEN PROCESSED WITHIN THE PERIOD PRESCRIBED BY THE COMMUNITY LEGISLATION , IT HAD NOT FULFILLED THE CONDITIONS FOR THE RELEASE OF THE SECURITY APPLICABLE AT THAT TIME UNDER THE REGULATIONS .

4 ACCORDING TO ARTICLE 18 ( 2 ) OF REGULATION NO 1259/72 , WHICH CAME INTO FORCE ON 10 MARCH 1973 , AND ARTICLE 18 ( 2 ) OF REGULATION NO 232/75 , WHICH REPLACED IT WITH EFFECT FROM 1 FEBRUARY 1975 , EXCEPT IN CASES OF FORCE MAJEURE THE PROCESSING SECURITY WAS TO BE RELEASED ONLY FOR QUANTITIES IN RESPECT OF WHICH THE SUCCESSFUL TENDERER FURNISHED PROOF THAT CERTAIN CONDITIONS HAD BEEN MET . AMONG THOSE CONDITIONS WAS THE WRITTEN AGREEMENT TO CARRY OUT THE PROCESSING OF THE BUTTER WITHIN A SPECIFIED PERIOD , WHICH REGULATION NO 1259/72 FIXED AT 120 DAYS TO BE CALCULATED FROM THE TAKING OVER OF THE BUTTER AND WHICH REGULATION NO 232/75 SUBSEQUENTLY EXTENDED TO SIX MONTHS TO BE CALCULATED FROM THE SAME DAY . ARTICLE 19 ( 2 ) OF REGULATION NO 232/75 PROVIDED THAT IF THE PROCESSING PERIOD WAS EXCEEDED FOR REASONS OTHER THAN SERIOUS NEGLIGENCE ON THE PART OF THE PERSON CONCERNED , THAT PERSON COULD REQUEST , WITHIN A FURTHER 30-DAY PERIOD , THAT THE AMOUNT OF THE PROCESSING SECURITY RETAINED BE ONLY TWO UNITS OF ACCOUNT PER TONNE FOR EACH DAY BY WHICH THE PRESCRIBED PERIOD WAS EXCEEDED .

5 THE JUDGMENT OF THE NATIONAL COURT ALSO REFERS TO ARTICLE 13 ( 4 ) OF REGULATION NO 1687/76 , WHICH CAME INTO FORCE ON 1 OCTOBER 1976 . THAT PROVISION , HOWEVER , WHICH RELATES TO ADMINISTRATIVE CONTROLS ON THE DESTINATION OF THE BUTTER AND ON THE RELEASE OF THE SECURITY , DOES NOT DIRECTLY CONCERN THE SUBJECT-MATTER OF THE ACTION .

6 ARTICLE 15 OF THAT REGULATION STATES THAT ARTICLE 18 ( 2 ) OF REGULATION NO 232/75 IS REPEALED , BUT THERE ARE NUMEROUS REASONS FOR SUPPOSING THAT IT WAS NOT INTENDED TO REPEAL THE FIRST PARAGRAPH OF THAT PROVISION , WHICH MADE THE RELEASE OF THE SECURITY CONDITIONAL ON THE FULFILMENT OF CERTAIN CONDITIONS . THE TITLE OF THE REGULATION , WHICH REFERS TO ' ' COMMON DETAILED RULES FOR VERIFYING THE USE AND/OR DESTINATION OF PRODUCTS FROM INTERVENTION ' ' , SUGGESTS THAT THE REGULATION WAS SOLELY INTENDED TO AMEND THE RULES GOVERNING THE FURNISHING OF PROOF THAT THE OBLIGATIONS UNDERTAKEN BY THE SUCCESSFUL TENDERER HAD BEEN FULFILLED , IN OTHER WORDS , JUST THOSE RULES WHICH WERE PROVIDED FOR IN THE SECOND PARAGRAPH OF THE PROVISION IN QUESTION . MOREOVER , REGULATION NO 1687/76 DID NOT REPEAL ARTICLE 19 ( 2 ) OF REGULATION NO 232/75 , WHICH PROVIDED THAT ONLY PART OF THE SECURITY WAS TO BE RETAINED WHERE THE PERIOD WAS EXCEEDED AS A RESULT OF NEGLIGENCE , OTHER THAN SERIOUS NEGLIGENCE , ON THE PART OF THE PERSON CONCERNED , AND WHICH WOULD BE MEANINGLESS IF EXCEEDING THE PRESCRIBED PERIOD DID NOT PREVENT THE RELEASE OF THE SECURITY . FINALLY , COMMISSION REGULATION NO 262/79 OF 12 FEBRUARY 1979 , WHICH , ONCE AGAIN , AMENDED THE CONDITIONS REQUIRED FOR THE RELEASE OF THE SECURITY , EXPRESSLY REPEALS ONLY REGULATION NO 232/75 , A FACT WHICH WOULD BE DIFFICULT TO EXPLAIN IF REGULATION NO 1687/76 IMPOSED THE SAME CONDITIONS .

7 FROMANCAIS CLAIMS THAT BY TOTALLY EXCLUDING THE RELEASE OF THE SECURITY IN THE EVENT OF PROCESSING AFTER THE EXPIRY OF THE PRESCRIBED PERIOD , THE PROVISIONS IN QUESTION APPLY TO A RELATIVELY MINOR INFRINGEMENT OF THE UNDERTAKINGS ENTERED INTO BY THE SUCCESSFUL TENDERER THE SAME TREATMENT AS THAT WHICH IS RESERVED FOR A FAR MORE SERIOUS BREACH , SUCH AS THE COMPLETE ABSENCE OF PROCESSING , AND ARE THEREFORE CONTRARY TO THE PRINCIPLE OF PROPORTIONALITY .

8 IN ORDER TO ESTABLISH WHETHER A PROVISION OF COMMUNITY LAW IS CONSONANT WITH THE PRINCIPLE OF PROPORTIONALITY IT IS NECESSARY TO ESTABLISH , IN THE FIRST PLACE , WHETHER THE MEANS IT EMPLOYS TO ACHIEVE ITS AIM CORRESPOND TO THE IMPORTANCE OF THE AIM AND , IN THE SECOND PLACE , WHETHER THEY ARE NECESSARY FOR ITS ACHIEVEMENT .

9 THE PROVISIONS WHICH REQUIRE FORFEITURE OF THE SECURITY IN FULL WHEN THE PROCESSING PERIOD IS EXCEEDED SEEK TO PREVENT TENDERERS WHO ACQUIRE BUTTER AT A REDUCED PRICE FROM ACCUMULATING STOCKS FOR SPECULATIVE PURPOSES .

10 IN VIEW OF THE FACT THAT THE PRICE OF BUTTER SOLD BY INTERVENTION AGENCIES IS DETERMINED ON THE BASIS OF THE PRICE OF COMPETING VEGETABLE FATS AND THAT THE PRICE OF THE LATTER VARIES ACCORDING TO FLUCTUATIONS ON THE WORLD MARKETS , INCREASES IN THE PURCHASE PRICE OF BUTTER SOLD AT A REDUCED PRICE ARE FORESEEABLE SOME TIME IN ADVANCE .

11 IF NO PROCESSING PERIOD WERE IMPOSED OR IF IT COULD BE EXTENDED FOR RELATIVELY LONG PERIODS , THE SUCCESSFUL TENDERER MIGHT BE TEMPTED TO BUY LARGE QUANTITIES OF BUTTER IN ORDER TO USE IT IN CONDITIONS OTHER THAN THOSE ENVISAGED BY THE COMMUNITY LEGISLATION , IN PARTICULAR IN ORDER TO CREATE STOCKS WHICH WOULD ENABLE HIM TO AVOID THE EFFECT OF A SUBSEQUENT INCREASE IN THE PURCHASE PRICE .

12 SUCH SPECULATION WOULD CONFLICT WITH THE PURPOSE OF THE REGULATIONS RELATING TO THE SALE OF BUTTER AT A REDUCED PRICE , WHICH IS TO REMOVE SURPLUS BUTTER FROM THE MARKET BY PROMOTING ITS USE AS A SUBSTITUTE FOR OTHER FATS IN THE PREPARATION OF PASTRY PRODUCTS AND ICE-CREAM . IT WOULD BE AN INCENTIVE FOR THE BUYERS WITH THE MOST PURCHASING POWER TO MONOPOLIZE PURCHASES , WITH THE RESULT THAT A VERY LARGE PERCENTAGE OF THE BUTTER SOLD IN THAT WAY WOULD NOT BE PROCESSED , BUT WOULD BE USED TO ACCUMULATE STOCKS WHICH WOULD BE PARTLY FINANCED BY THE COMMUNITY BUDGET OUTSIDE THE FRAMEWORK OF THE REGULATIONS IN QUESTION .

13 IT MUST THEREFORE BE CONCLUDED THAT PREVENTING SPECULATION IS AN AIM OF FUNDAMENTAL IMPORTANCE TO THE PROPER FUNCTIONING OF THE SYSTEM ESTABLISHED BY REGULATIONS NOS 1259/72 AND 232/75 .
14 THE REQUIREMENT OF STRICT OBSERVANCE OF THE PROCESSING PERIOD IN ORDER TO ENSURE THAT THAT AIM IS ACHIEVED MAY NOT BE DISPUTED BY MAINTAINING , AS FROMANCAIS HAS DONE , THAT BY OCCASIONALLY ALTERING THE LENGTH OF THE PERIOD THE COMMISSION HAS ITSELF SHOWN THAT NO CONNECTION EXISTS BETWEEN THE LENGTH OF THE PROCESSING PERIOD AND THE POSSIBILITY OF SPECULATION .

15 IT IS TRUE THAT THE PROCESSING PERIOD FIXED BY REGULATION NO 1259/72 WAS EXTENDED FIRST BY REGULATION NO 232/75 AND THEN , A FEW YEARS LATER , BY REGULATION NO 262/78 , WHICH EXTENDED IT TO EIGHT MONTHS FROM THE LAST DAY FOR THE SUBMISSION OF TENDERS . HOWEVER , SUCH ALTERATIONS IN NO WAY ESTABLISH THAT THE COMMISSION CONSIDERED THAT OBSERVANCE OF THE PROCESSING TIME-LIMIT WAS UNIMPORTANT .

16 IN REALITY THE EXPERIENCE GAINED OVER THE YEARS ENABLED THE COMMISSION , IN THE EXERCISE OF ITS DISCRETION IN THE ECONOMIC SPHERE , TO CONSIDER THAT SLIGHTLY LONGER PERIODS MIGHT BE ALLOWED THE TRADERS CONCERNED ; THAT MUST NOT , HOWEVER , BE REGARDED AS AN ACKNOWLEDGEMENT THAT NO CONNECTION EXISTS BETWEEN THE PROCESSING PRIOD AND THE POSSIBILITY OF SPECULATION .

17 THE SAME OBSERVATION APPLIES TO THE SUPPLEMENTARY PERIOD , WHICH REGULATION NO 262/79 EXTENDED TO 60 DAYS . IN THAT REGARD , LIKEWISE , THERE ARE NO GROUNDS FOR SUGGESTING THAT , BEFORE DECIDING TO EXTEND THE PERIOD , THE COMMISSION DID NOT EXAMINE THE QUESTION WHETHER SUCH AN EXTENSION MIGHT LEAD TO SPECULATION .

18 IT FOLLOWS FROM THOSE CONSIDERATIONS THAT WITHHOLDING THE SECURITY IN FULL WHEN THE PERIODS PRESCRIBED BY THE COMMUNITY LEGISLATION ARE EXCEEDED IS A STEP WHICH IS PROPORTIONATE TO THE AIMS PURSUED BY REGULATIONS NOS 1259/72 AND 232/75 .
19 THE REPLY TO BE GIVEN TO THE TRIBUNAL ADMINISTRATIF , PARIS , MUST THEREFORE BE THAT CONSIDERATION OF THE QUESTION RAISED HAS DISCLOSED NO FACTOR OF SUCH A KIND AS TO AFFECT THE VALIDITY OF ARTICLE 18 ( 2 ) OF REGULATION NO 1259/72 OR OF ARTICLES 18 ( 2 ) AND 19 OF REGULATION NO 232/75 .

COSTS
20 THE COSTS INCURRED BY THE COMMISSION OF THE EUROPEAN COMMUNITES , WHICH HAS SUBMITTED OBSERVATIONS TO THE COURT , ARE NOT RECOVERABLE . AS 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 NATIONAL COURT , THE DECISION AS TO COSTS IS A MATTER FOR THAT COURT .

ON THOSE GROUNDS ,
THE COURT ( FIRST CHAMBER )
IN ANSWER TO THE QUESTION REFERRED TO IT BY THE TRIBUNAL ADMINISTRATIF , PARIS , BY JUDGMENT OF 26 JANUARY 1982 , HEREBY RULES :
CONSIDERATION OF THE QUESTION REFERRED TO THE COURT HAS DISCLOSED NO FACTOR OF SUCH A KIND AS TO AFFECT THE VALIDITY OF ARTICLE 18 ( 2 ) OF REGULATION ( EEC ) NO 1259/72 OF THE COMMISSION OF 16 JUNE 1972 OR OF ARTICLES 18 ( 2 ) AND 19 OF REGULATION ( EEC ) NO 232/75 OF THE COMMISSION OF 30 JANUARY 1975 .