Avis juridique important

Judgment of the Court (Sixth Chamber) of 29 June 1995. - SCAC Srl v Associazione dei Produttori Ortofrutticoli. - Reference for a preliminary ruling: Tribunale di Piacenza - Italy. - Common organization of the markets - Processed tomato products - Limit to the granting of production aid - Determination of quotas - Validity of Regulation (EEC) Nº 668/93. - Case C-56/94. European Court reports 1995 Page I-01769

Summary Parties Grounds Decision on costs Operative part

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1. Agriculture ° Common organization of the markets ° Products processed from fruit and vegetables ° Production aid for processed tomato products ° Maximum quantities eligible for aid, expressed in tonnes of fresh tomatoes, according to categories of processed products ° Division between the processing undertakings ° Transfer by an undertaking of fresh tomatoes from the "peeled tomatoes" category to another category ° Effect on the quantities taken into account for the division in the following marketing year

(Council Regulation No 668/93, Art. 1(2))

2. Agriculture ° Common organization of the markets ° Discrimination between producers or consumers ° Production aid for processed tomato products ° Division between the processing undertakings of the maximum quantities eligible for aid, according to categories of processed products ° Limitation of inter-category transfer possibilities ° No discrimination

(EC Treaty, Art. 40(3), second subpara.; Council Regulation No 668/93, Art. 1(2))

1. Article 1(2) of Regulation No 668/93 on the introduction of a limit to the granting of production aid for processed tomato products must be interpreted as meaning that, in the event of a transfer of fresh tomatoes by a processing undertaking during a marketing year from the "peeled tomatoes" category to the "concentrate" or "other tomato products" category, only the quantities actually produced by that undertaking in each category, regard being had to that transfer, are to be taken into account in the following marketing year for the purposes of the division of the maximum quantities between the processing undertakings by the Member State concerned.

That interpretation, which takes into account the fact that the transfer possibilities merely meet the need for flexible management at the level of the undertaking, so as to allow undertakings to respond to any change in demand, is moreover the only interpretation compatible with the main object of the provision, which is to avoid overproduction in the sector.

2. The fact that Article 1(2) of Regulation No 668/93 on the introduction of a limit to the granting of production aid for processed tomato products does not envisage the possibility for processing undertakings to transfer part of the "concentrate" or "other products" quotas to the "peeled tomatoes" quotas, whereas the converse possibility does exist, does not constitute discrimination between producers prohibited by the second subparagraph of Article 40(3) of the Treaty.

Firstly, that restriction of transfer possibilities is objectively explained by the need to use fresh tomatoes of high quality and in a perfect state of conservation in the manufacture of peeled tomatoes, whereas tomatoes of lower quality may be used to make concentrate and other products. Secondly, the transfer possibilities do not create a disproportionate advantage for producers of peeled tomatoes, since their quota depends on the quantities actually produced during the reference period and, if they transfer tomatoes to the quantities for "concentrate" or "other products", they will lose the corresponding proportion of their quota of peeled tomatoes for the following marketing year, unless the Community institutions decide to increase the national quota.

In Case C-56/94,

REFERENCE to the Court under Article 177 of the EC Treaty by the Tribunale di Piacenza (Italy) for a preliminary ruling in the proceedings pending before that court between

SCAC Srl

and

Associazione dei Produttori Ortofrutticoli (ASIPO),

on the interpretation and validity of Article 1(2) of Council Regulation (EEC) No 668/93 of 17 March 1993 on the introduction of a limit to the granting of production aid for processed tomato products (OJ 1993 L 72, p. 1),

THE COURT (Sixth Chamber),

composed of: F.A. Schockweiler (Rapporteur), President of the Chamber, P.J.G. Kapteyn, G.F. Mancini, J.L. Murray and G. Hirsch, Judges,

Advocate General: D. Ruiz-Jarabo Colomer,

Registrar: L. Hewlett, Administrator,

after considering the written observations submitted on behalf of:

° SCAC Srl, by Fausto Capelli, of the Milan Bar, and Luigi Tassi, of the Piacenza Bar,

° ASIPO, by Francesco Sicilia, of the Parma Bar,

° the Council of the European Union, by Arthur Brautigam, Legal Adviser, and Antonio Lucidi, of its Legal Service, acting as Agents,

° the Commission of the European Communities, by Eugenio de March, Legal Adviser, acting as Agent, assisted by Alberto Dal Ferro, of the Vicenza Bar,

having regard to the Report for the Hearing,

after hearing the oral observations of SCAC Srl, represented by Fausto Capelli, and the Commission of the European Communities, represented by Eugenio de March and Alberto Dal Ferro, at the hearing on 16 March 1995,

after hearing the Opinion of the Advocate General at the sitting on 6 April 1995,

gives the following

Judgment

1 By order of 5 February 1994, received at the Court on 9 February 1994, the Tribunale di Piacenza (Piacenza District Court) referred to the Court for a preliminary ruling under Article 177 of the EC Treaty two questions on the interpretation and validity of Article 1(2) of Council Regulation (EEC) No 668/93 of 17 March 1993 on the introduction of a limit to the granting of production aid for processed tomato products (OJ 1993 L 72, p. 1).

2 Those questions were raised in proceedings between SCAC Srl (hereinafter "SCAC") and Associazione dei Produttori Ortofrutticoli (hereinafter "ASIPO") concerning the performance of a contract concluded on 31 March 1993, in which ASIPO had undertaken to supply to SCAC, for the 1993/94 marketing year, a quantity of fresh tomatoes intended to be processed into products other than concentrate or peeled tomatoes, that quantity corresponding to the average of the quantities of those products produced by SCAC in the 1990/91 and 1991/92 marketing years.

3 That average exceeded by 622 400 kg the quota allocated to SCAC by the Italian Ministry of Agriculture and Forestry, by Note No E-318 of 25 March 1993, for the 1993/94 marketing year as part of the division of quotas between the Italian processing undertakings in accordance with Article 1(2) of Regulation (EEC) No 668/93. The abovementioned contract expressly stated that SCAC considered itself unfairly penalized by the system for allocating quotas provided for in that regulation and that it was awaiting a ruling by the Court of Justice on its validity.

4 In performing the contract, ASIPO fulfilled its supply obligation only up to the amount of the quota determined by the ministerial scheme of division.

5 On 6 December 1993 SCAC applied to the Tribunale di Piacenza for urgent measures against ASIPO, seeking firstly an order for performance of the contract concluded with ASIPO on 31 March 1993 and secondly reference of the matter to the Court of Justice for a preliminary ruling on the scope and lawfulness of Article 1(2) of Regulation No 668/93 in the light of the principle of non-discrimination in Article 40(3) of the Treaty.

6 The Tribunale di Piacenza, granting the application, ordered ASIPO to deliver 622 400 kg of fresh tomatoes to SCAC, and at the same time referred the following questions to the Court:

"1. Must Article 1(2) of Council Regulation (EEC) No 668/93 be interpreted as meaning that when a tomato-processing undertaking to which a certain quota for the production of peeled tomatoes had been allocated transfers 25% of the fresh tomatoes from the 'peeled tomatoes' quota to the 'concentrate' or 'other products' quota, such a transfer affects subsequent marketing years, thus entailing that each undertaking is allocated the quota of fresh tomatoes intended for 'peeled tomatoes' which it received in the preceding marketing year, increased however by a quota of fresh tomatoes intended for 'concentrate' or 'other products' in proportion to the percentage of fresh tomatoes actually processed into 'concentrate' or 'other products' under the abovementioned transfer of 25% carried out during the preceding marketing year, and involving a corresponding decrease in the percentage quotas of fresh tomatoes (intended for 'concentrate' or 'other products' ) allocated to the other processing undertakings?

2. If the preceding question is answered in the affirmative, regard being had to the judgment of the Court of Justice in Joined Cases C-143/88 and C-92/89 Zuckerfabrik Suederdithmarschen and Zuckerfabrik Soest , and to the fact that serious doubts must be entertained as to the validity of Article 1(2) of Council Regulation (EEC) No 668/93 of 17 March 1993 and that the plaintiff appears to be under threat of serious and irreparable harm, is Article 1(2) of that regulation, providing for a progressive increase in the processing quota for fresh tomatoes allocated to undertakings producing 'peeled tomatoes' to the detriment of undertakings producing 'concentrate' or 'other products' under the machinery described in the preceding question, unlawful on the ground that it infringes the principle of non-discrimination recognized in the Community legal order and, in particular, Article 40(3) of the EEC Treaty?"

7 Council Regulation (EEC) No 516/77 of 14 March 1977 on the common organization of the market in products processed from fruit and vegetables (OJ 1977 L 73, p. 1), as amended, and Council Regulation (EEC) No 426/86 of 24 February 1986 (OJ 1986 L 49, p. 1), which replaced Regulation No 516/77, established a system of production aid in order to offset the difference between the prices of various products processed from fruit and vegetables grown in the Community and the prices of those products imported from non-member countries.

8 The fourth recital in the preamble to Regulation No 426/86 refers in this respect to the need, firstly, to make Community products more competitive, enabling them to be manufactured at a price lower than that which would result from the payment of a remunerative price to producers of the fresh products, and secondly, to ensure regular supplies to the processing industries by means of a minimum price to be paid by processors to producers.

9 However, in order to avoid a substantial expansion of production and consequent difficulties in marketing the processed products, Article 2(3) of Regulation No 426/86 gives the Council power to limit the grant of production aid to a specified quantity.

10 Such a limit was introduced with effect from the 1993/94 marketing year by Regulation No 668/93.

11 The limit is applied in a two-stage operation.

12 Firstly, for each producing Member State, Article 1(1) of Regulation No 668/93 fixes the quantities, expressed in tonnes of fresh tomatoes, for which aid can be granted, according to categories of processed tomato products, namely "concentrate", "peeled tomatoes" and "other products". The quantities for Italy are broken down as follows: "tomato concentrate": 1 655 000 tonnes; "tinned whole peeled tomatoes": 1 185 000 tonnes; and "other tomato products": 453 998 tonnes.

13 Secondly, under the first subparagraph of Article 1(2) of Regulation No 668/93, the above quantities are to be divided "by the Member States between the processing undertakings in proportion to the average quantities actually produced by each of them during the three marketing years preceding the marketing year for which the aid is fixed".

14 Regulation No 668/93 introduces some flexibility in the management of the quotas by enabling undertakings to apply to the State for authorization to carry out transfers from one quota to another in respect of the above three categories of products processed from tomatoes.

15 To that end, the second subparagraph of Article 1(2) provides:

"On application by the undertaking concerned, the competent authorities of the Member State shall authorize one only of the following transfer possibilities:

° a transfer of up to 25% of quantities of peeled tomatoes, expressed in quantities of fresh tomatoes, to the quantities allocated for tomato concentrate and other tomato products,

° a transfer of up to 5% of quantities of tomato concentrate, expressed in quantities of fresh tomatoes, to the quantities allocated for the other products,

° a transfer of up to 5% of the quantities of other tomato products, expressed in quantities of fresh tomatoes, to the quantities allocated for concentrate."

16 Article 1(4) of Regulation No 668/93 states:

"Where all the quantities defined in paragraph 1 have not been allocated, the remainder shall be divided fairly between the processing undertakings referred to in paragraph 2, taking account in particular of those undertakings which use new production technology."

17 Finally, Article 2 of Regulation No 668/93 provides that, for the first three marketing years of application of the regulation, the quantities produced for the 1992/93 marketing year are not to be taken into account for the calculation of the average of the quantities produced.

18 The detailed rules for the application of Regulation No 668/93 were laid down by Commission Regulation (EEC) No 1794/93 of 30 June 1993 (OJ 1993 L 163, p. 23).

Question 1

19 By its first question the national court essentially asks whether Article 1(2) of Regulation No 668/93 is to be interpreted as meaning that, in the event of a transfer of fresh tomatoes by a processing undertaking during a marketing year from the "peeled tomatoes" category to the "concentrate" or "other products" category, the undertaking concerned benefits in the following marketing year from the "peeled tomatoes" quota allocated for the previous year plus a "concentrate" or "other products" quota proportional to the quantities of "concentrate" or "other products" actually produced.

20 SCAC adopts that interpretation, but then asserts that its effect is to give preferential treatment to such an undertaking, to the detriment of processing undertakings which produce only "concentrate" or "other products" and whose quota of fresh tomatoes would be progressively reduced in each marketing year.

21 The premise on which the national court' s first question is based is incorrect. The interpretation of the second subparagraph of Article 1(2) suggested by SCAC and the consequences it attributes thereto are clearly wrong.

22 The second subparagraph of Article 1(2) must be read in connection with the first subparagraph, from which it is apparent that the quotas allocated to the Member States are to be divided between the processing undertakings in proportion to the average quantities actually produced by each of them during the reference period.

23 In those circumstances, and subject to the special provisions in Article 1(3) of Regulation No 668/93 on recently established undertakings and Article 1(4) on the failure to use up the maximum quantity allocated to the Member State in question, only the quantities actually produced can be used as a reference for allocating quotas in a given category of products. It follows that the transfer possibilities between the "concentrate", "peeled tomatoes" and "other products" categories cannot have the effect of allowing processing undertakings to claim production aid for quantities larger than those actually processed in the past. Any other interpretation would moreover have the consequence of frustrating the main object of the provision, namely to avoid overproduction in the sector.

24 As the Council and Commission rightly point out, the transfer possibilities merely meet the need for flexible management at the level of the undertaking, so as to allow undertakings to respond to any changes in demand.

25 The answer to Question 1 must therefore be that Article 1(2) of Regulation No 668/93 is to be interpreted as meaning that, in the event of a transfer of fresh tomatoes by a processing undertaking during a marketing year from the "peeled tomatoes" category to the "concentrate" or "other tomato products" category, only the quantities actually produced by that undertaking in each category, regard being had to that transfer, are to be taken into account in the following market year for the purposes of the division of the maximum quantities between the processing undertakings by the Member State concerned.

Question 2

26 In view of the answer to Question 1, there is in principle no need to answer Question 2, as formulated by the national court. However, in order to give a useful answer to the Tribunale di Piacenza, it should also be ascertained whether Article 1(2) of Regulation No 668/93, interpreted above, is consistent with the prohibition of discrimination in Article 40(3) of the Treaty.

28 The fact that a measure adopted within the framework of the common organization of a market may affect producers in different ways, depending upon the particular nature of their production, does not constitute discrimination if that measure is determined on the basis of objective rules, which are formulated to meet the needs of the general common organization of the market (see Case C-311/90 Hierl v Hauptzollamt Regensburg [1992] ECR I-2061, paragraph 19).

29 In the present case, as stated above, the imposition of limits on production aid for processed tomato products, by seeking to avoid distortions of the market, pursues one of the objectives of the common agricultural policy mentioned in Article 39(1)(c) of the Treaty. The transfer possibilities provided for in the second subparagraph of Article 1(2) of Regulation No 668/93 introduce some flexibility in this respect in the management of the quotas under the common organization of the market.

30 The fact that Regulation No 668/93 does not envisage the possibility for undertakings to transfer part of the "concentrate" or "other products" quotas to the "peeled tomatoes" quotas, whereas the converse possibility does exist, is objectively explained by the need to use fresh tomatoes of high quality and in a perfect state of conservation in the manufacture of peeled tomatoes. As the Commission has pointed out, tomatoes used to make concentrate and other products may be of lower quality.

31 Moreover, as the Advocate General notes in point 17 of his Opinion, the transfer possibilities do not create a disproportionate advantage for producers of peeled tomatoes, since their quota depends on the quantities actually produced during the reference period and, if they transfer tomatoes to the quantities for "concentrate" or "other products", they will lose the corresponding proportion of their quota of peeled tomatoes for the following marketing year, unless the Community institutions decide to increase the national quota.

32 Consequently, the answer to Question 2 must be that consideration of Article 1(2) of Regulation No 668/93 has disclosed no factor of such a kind as to affect the validity of that provision.

Costs

33 The costs incurred by the Council and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court.

On those grounds,

THE COURT (Sixth Chamber),

in answer to the questions referred to it by the Tribunale di Piacenza by order of 5 February 1994, hereby rules:

1. Article 1(2) of Council Regulation (EEC) No 668/93 of 17 March 1993 on the introduction of a limit to the granting of production aid for processed tomato products must be interpreted as meaning that, in the event of a transfer of fresh tomatoes by a processing undertaking during a marketing year from the "peeled tomatoes" category to the "concentrate" or "other tomato products" category, only the quantities actually produced by that undertaking in each category, regard being had to that transfer, are to be taken into account in the following marketing year for the purposes of the division of the maximum quantities between the processing undertakings by the Member State concerned.

2. Consideration of Article 1(2) of Regulation No 668/93 has disclosed no factor of such a kind as to affect the validity of that provision.