Joined Cases C-37/02 and C-38/02

Di Lenardo Adriano Srl and Dilexport Srl

v

Ministero del Commercio con l’Estero

(Reference for a preliminary ruling from the Tribunale amministrativo regionale per il Veneto)

(Bananas – Common organisation of the markets – Regulation (EC) No 896/2001 – Common system of trade with third countries – Primary imports – Validity – Protection of legitimate expectations – Retroactivity – Implementing power)

Summary of the Judgment

1. Agriculture – Common organisation of the markets – Bananas – Arrangements for importation – Regulation No 404/93 – Operators eligible for the allocation of tariff quotas – Absence of definition – Delegation of implementing power to the Commission entailing broad discretion on its part – Regulation No 896/2001 laying down definition of those operators

(Art. 211 EC; Council Regulation No 404/93, Arts 18 and 19; Commission Regulation No 896/2001, Art. 3)

2. Community law – Principles – Protection of legitimate expectations – Limits – Amendment of the legislation on tariff quotas for the importation of bananas – Discretion of the institutions – Adjustment of the legislation to reflect changes in economic circumstances – Not possible to rely on the principle of the protection of legitimate expectations

(Council Regulation No 404/93)

3. Community law – Principles – Fundamental rights – Freedom to pursue a trade or profession – Restrictions – Regulation No 896/2001 on arrangements for importing bananas – Provision excluding from the category of ‘non-traditional operators’ persons related to a traditional operator – Restriction justified by the general interest – Whether permissible

(Council Regulation No 404/93; Commission Regulations No 896/2001, Art. 6(c), and No 2454/93, Art. 143)

1. It follows from the context of the Treaty in which Article 211 EC must be placed and also from practical requirements that the concept of implementation must be given a wide interpretation. In particular in the field of agricultural policy, since only the Commission is in a position to keep track of market trends and to act quickly when necessary, the Council may confer on it wide powers. Consequently, the limits of those powers must be determined by reference to the essential general aims of the organisation of the market in question and the Commission is authorised to adopt all the measures which are necessary or appropriate for the implementation of the basic legislation, provided that they are not contrary to such legislation or to the implementing legislation adopted by the Council.

As regards in particular management of tariff quotas for the importation of bananas into the Community, Regulation No 404/93 on the common organisation of the market in bananas, as amended by Regulation No 216/2001, Article 20 of which confers upon the Commission the power to adopt implementing provisions and, inter alia, rules on the management of the tariff quotas referred to in Article 18 of that regulation, does not include a definition of operators eligible for allocation of tariff quotas, thus certainly leaving the Commission broad discretion. Accordingly, a measure adopted by the Commission, which means that a significant share of the allocation of tariff quotas is reserved to economic operators who take on the commercial risk associated with production or purchase from producers and the transport of fresh products, falls within the discretion afforded to that institution for the implementation of the basic regulation, to the extent that it is likely to contribute to the proper functioning of the import arrangements and is not capable of disrupting the equilibrium of supply to the Community market which the basic regulation seeks to ensure.

(see paras 54-57, 59)

2. While the principle of the protection of legitimate expectations is one of the fundamental principles of the Community, traders are not justified in having a legitimate expectation that an existing situation which is capable of being altered by the Community institutions in the exercise of their discretionary power will be maintained, particularly in an area such as that of the common organisation of the markets, the objective of which involves constant adjustment to reflect changes in economic circumstances.

Accordingly, the businesses affected by the importation of bananas into the Community could not have any reasonable expectation that the applicable rules would be maintained since those rules have not only been amended many times, in particular on account of international commitments given by the Community within the framework of the World Trade Organisation, but require constant adjustment to reflect changes in the economic situation, leaving scope for broad discretion on the part of the Community institutions.

(see paras 70-71)

3. The freedom to pursue a trade or profession, like the right to property, is one of the general principles of Community law. However, those principles are not absolute, but must be viewed in relation to their social function. Consequently, restrictions may be imposed on the exercise of the freedom to pursue a trade or profession, as on the exercise of the right to property, provided that such restrictions in fact correspond to objectives of general interest pursued by the Community and do not constitute in relation to the aim pursued a disproportionate and intolerable interference, impairing the very substance of the rights guaranteed.

That is the case with Article 6(c) of Regulation No 896/2001 laying down detailed rules for applying Regulation No 404/93 as regards the arrangements for importing bananas into the Community, which restricts the freedom to pursue a trade or profession by precluding persons related to a traditional operator in accordance with Article 143 of Regulation No 2454/93 from being included in tariff quotas as a non-traditional operator. That restriction corresponds to an objective of general interest, which is to combat speculative or artificial practices in relation to the issue of import licences, and does not constitute, in relation to that aim, a disproportionate and intolerable interference, impairing the very substance of the right to freedom to pursue a trade or profession.

(see paras 82-85)

JUDGMENT OF THE COURT (Second Chamber) 15 July 2004 (1)

(Bananas – Common organisation of the market – Regulation (EC) No 896/2001 – Common system of trade with third countries – Primary imports – Validity – Protection of legitimate expectations – Retroactivity – Implementing power)

In Joined Cases C-37/02 and C-38/02,

REFERENCE to the Court under Article 234 EC by the Tribunale amministrativo regionale per il Veneto (Italy) for a preliminary ruling in the proceedings pending before that court between

and

on the validity of Articles 1, 3, 4, 5, 6 and 31of Commission Regulation (EC) No 896/2001of 7 May 2001 laying down detailed rules for applying Council Regulation (EEC) No 404/93 as regards the arrangements for importing bananas into the Community (OJ 2001 L 126, p. 6),

THE COURT (Second Chamber),,

composed of: C.W.A. Timmermans, President of the Chamber, J.-P. Puissochet and R. Schintgen (Rapporteur), F. Macken and N. Colneric, Judges,

Advocate General: C. Stix-Hackl,

after considering the written observations submitted on behalf of :

after hearing the oral observations of Di Lenardo Adriano Srl and Dilexport Srl, represented by A. Bozzi, C. Gatti and B. Telchini, and of the Commission, represented by L. Visaggio, acting as Agent, at the hearing on 20 November 2003,

after hearing the Opinion of the Advocate General at the sitting on 20 January 2004,

gives the following

‘On the basis of separate calculations for each of the categories of operators referred to in paragraph 1 … , each operator shall obtain import licences on the basis of the average quantities of bananas that he has sold in the three most recent years for which figures are available’.

‘… in order to comply with the aims stated above, while taking into account the special features of marketing bananas, a distinction must be made when administering the tariff quota between, on the one hand, operators who have previously marketed third country bananas and non-traditional ACP bananas and, on the other, operators who have previously marketed bananas produced in the Community [and traditional ACP bananas] while leaving a quantity available for new operators who have recently embarked on commercial activity or are about to embark on commercial activity in this sector;

… in order not to disrupt existing commercial links, while at the same time allowing some development of marketing structures, the issue to each operator of separate import licences for each of the categories defined above must be on the basis of the average quantity of bananas marketed by the operator over the three preceding years for which statistical data are available;

… in adopting additional criteria which operators should respect, the Commission is guided by the principle whereby the licences must be granted to natural or legal persons who have undertaken the commercial risk of marketing bananas and by the necessity of avoiding disturbing normal trading relations between persons occupying different points in the marketing chain;

… taking into account marketing structures, Member States must, on the basis of procedures and criteria adopted by the Commission, conduct a census of operators and establish quantities marketed to be used as a reference for the issue of certificates’.

‘…

For the purposes of this Title:

1.

2.

3.‘Article 3

For the purposes of this Regulation, “traditional operators” shall mean economic agents established in the European Community during the period for determining their reference quantities, and also at the time of their registration under Article 5 below, who have actually imported a minimum quantity of third-country and/or ACP-country bananas on their own account for subsequent marketing in the Community during a set reference period.

The minimum quantity referred to in the first paragraph shall be 100 tonnes imported in any one year of the reference period. This minimum quantity shall be 20 tonnes where the imports consist entirely of bananas with a length of 10 centimetres or less.

Article 4

1. Each traditional operator registered in a Member State in accordance with Article 5 shall receive, for each year and for all the origins listed in Annex I, a single reference quantity based on the quantities of bananas actually imported during the reference period.

2. For imports carried out in 1999 under the tariff quotas or as traditional ACP bananas, the reference period shall be made up of the years 1994, 1995 and 1996.’

‘For the purposes of this Regulation and as regards imports under the tariff quotas and as traditional ACP bananas, “newcomers” shall mean economic agents established in the European Community who, at the time of registration:

(b)

‘1. The Member States shall be responsible for ensuring compliance with this Section [entitled “Newcomers”].

In particular, they shall check that the operators concerned are commercially active for their own account as importers into the Community in the sector referred to in Article 7 and as independent economic units in terms of management, staffing and operations. Where there are grounds for suspecting that these conditions are not met, applications for registration and requests for annual allocations shall be accepted only subject to the operator’s providing evidence of compliance which is considered satisfactory by the national competent authorities.’

‘The Commission may, on the basis of an agreement with World Trade Organisation contracting parties with a substantial interest in the supply of bananas, allocate tariff quotas “A” and “B” among supplier countries.’

‘1.

2.‘This Regulation lays down detailed rules for applying the arrangements for importing bananas under the tariff quotas provided for in Article 18(1) of Regulation (EEC) No 404/93 and also outside those quotas.’

‘Article 3

For the purposes of this Regulation:

Article 4

1.

2.

3.Article 5

1.

2.

3.

4.…

Article 6

For the purposes of this Regulation, “non-traditional operators” means economic agents established in the Community at the time of their registration who:

‘1.

(b)

…

…

2.‘Operators may be registered, in a single Member State of their choice, as a non-traditional operator under tariff quota A/B and/or tariff quota C.

Traditional operators under a tariff quota may be registered as non-traditional operators under the tariff quota for which they do not have a reference quantity.

However, traditional operators C may be registered as non-traditional operators under tariff quota A/B only if they can supply proof that they have imported third-country bananas and/or non-traditional ACP bananas to the declared customs value specified in point (b) of Article 6 during the period indicated.’

…

‘The reference period to be used for defining categories of operators and determining the reference quantities of traditional operators should be the three-year period 1994 to 1996. The three-year period 1994 to 1996 is the most recent for which the Commission has sufficiently reliable data on primary imports. Using that period can also resolve a dispute which has been going on for a number of years with certain of the Community’s trading partners. In the light of the available data established for the purpose of administering the quotas opened in 1998, traditional operators need not be registered.’

‘Regulation (EC) No 2362/98 is repealed from 1 July 2001.

It shall, however, continue to apply to import licences issued for 2001.’

The limits on the implementing power conferred upon the Commission

– Observations submitted to the Court

– Findings of the Court

The principles of non-retroactivity, protection of legitimate expectations and legal certainty

– Observations submitted to the Court

– Findings of the Court

Observations submitted to the Court

Findings of the Court

On those grounds,

THE COURT (Second Chamber),

in answer to the questions referred to it by the Tribunale amministrativo regionale per il Veneto, by orders of 16 January 2002, hereby rules:

Timmermans

Puissochet

Schintgen

Macken

Colneric

Delivered in open court in Luxembourg on 15 July 2004.

R. Grass

C.W.A. Timmermans

Registrar

President