JUDGMENT OF CASE 106/83

Transcription

1 JUDGMENT OF CASE 106/83 2. The factors taken into account in the calculation of the sugar production levy for a given marketing year include the losses resulting from disposal of B quota sugar on the world market. Since neither Regulation No 3330/74 nor Regulation No 700/73 defines the concept of disposal, it was permissible for the Commission, when fixing the amount of the levy in Regulation No 3358/81, to quantify the volume of exports on the basis of the information derived from export licences, which impose an obligation on the licensees to carry out the operations in question, subject to the provision of security, rather than actual exports, which are difficult to bring into account owing to the practices pursued by the national authorities. In Case 106/83 REFERENCE to the Court under Article 177 of the EEC Treaty by the Tribunale di Genova [District Court, Genoa] for a preliminary ruling in the proceedings pending before that court between SERMIDE SPA supported by CONZORZIO NAZIONALE BIETICOLTORI and ASSOCIAZIONE NAZIONALE BIETICOLTORI, and by M. BIANCHINI AND C. MERCIAI, and CASSA CONGUAGLIO ZUCCHERO, MINISTERO DELLE FINANZE [Ministry of Finance,] MINISTERO DEL TESORO [Ministry of the Treasury], on the validity of Article 7 (2) of Regulation (EEC) No 700/73 of the Commission of 12 March 1973 laying down certain detailed rules for the application of the quota system for sugar (Official Journal 1973, L 67, p. 12), and of Article 1 of Commission Regulation (EEC) No 3358/81 of 25 November 1981 fixing the amounts of the production levy in the sugar sector for the period 1 July 1980 to 30 June 1981 and the amount payable by sugar manufacturers to those who sell sugar beet (Official Journal 1981, L 339, p. 17). 4210

2 THE COURT (Fourth Chamber) SERMIDE / CASSA CONGUAGLIO ZUCCHERO composed of: G. Bosco, President of Chamber, P. Pescatore, A. O'Keeffe, T. Koopmans and K. Bahlmann, Judges, Advocate General: P. VerLoren van Themaat Registrar: H. A. Rühi, Principal Administrator gives the following JUDGMENT Facts and Issues The facts of the case, the course of the procedure and the observations submitted pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the EEC may be summarized as follows: I Legal background to the dispute The regulations on the common organization of the market in sugar Regulation (EEC) No 3330/74 of the Council of 19 December 1974 (Official Journal 1974, L 359, p. 1) and Council Regulation (EEC) No 1785/81 of 30 June 1981 (Official Journal 1981, L 177, p. 4) established in respect of Community production a system which distinguishes between three types of quotas: (a) the A quota, known as the basic quota, the disposal of which in the common market is guaranteed at the intervention price; (b) the B quota, which is the quantity of sugar produced in excess of the basic quota but below the maximum quota and which may be exported with the benefit of an export aid; (c) the C quota, which covers sugar produced in excess of the A and B quotas and which may be marketed only in non-member countries but without the benefit of an export aid. The quota system provided for by Articles 24 to 31 of Regulation No 3330/74 expired, in accordance with Article 23 (1) thereof, at the end of the 1979/80 marketing year. However, Article 1(1) of Council Regulation (EEC) No 1592/80 of 24 June 1980 (Official Journal 1980, L 160, p. 12) extended the validity of those provisions, with the exception of the second subparagraph of Article 31 (1), to the 1980/81 marketing year. That system was definitively replaced by Regulation No 1785/81 as from 1 July The basic regulations provide, in respect of B quota sugar, for an export aid consisting of the difference between the 4211

3 JUDGMENT OF CASE 106/83 intervention price and the world sugar price. The refunds are financed by the levies fixed by the Commission for each marketing year. The system hitherto applicable was amended by Regulation No 1785/81 in several respects; in particular the levy, which under Regulation No 3330/74 was charged only on B quota sugar, was extended to A quota sugar. As regards the calculation of the levies, Article 7 of Regulation (EEC) No 700/73 of the Commission of 12 March 1973 laying down certain detailed rules for the application of the quota system for sugar (Official Journal 1973, L 67, p. 12), which was recognized as applicable by Article 44 (4) of Regulation No 3330/74 and was amended by Article 1(3) of Commission Regulation (EEC) No 1573/76 of 30 June 1976 (Official Journal 1976, L 172, p. 52), now provides as follows : "1. The amount of the production levy valid for a given marketing year shall be fixed before 1 December of the following marketing year. 2. Overall losses incurred in disposing of the quantity produced in the Community in excess of the guaranteed quantity shall be calculated on the basis of: (a) total sugar production in the Community during the marketing year concerned, expressed as white sugar, less : the guaranteed quantity valid for that marketing year, quantities produced in excess of the maximum quotas, quantities within the maximum quota carried forward pursuant to Article 31 of Regulation (EEC) No 3330/74; (b) a fixed amount per unit of weight to compensate losses incurred in disposing of that sugar. This amount shall correspond to the weighted average of losses incurred in disposing of sugar during the period 1 October of the relevant marketing year to 30 September of the following year, less the export levy charged during the same period." Article 9 of Regulation No 700/73 repealed Regulation (EEC) No 142/69 of the Commission of 25 January 1969 (Official Journal, English Special Edition 1969 (I), p. 18), which in Article 6(2) provided as follows: "2. Overall losses incurred in disposing of the quantity produced in the Community in excess of the guaranteed quantity shall be calculated on the basis of: (a) total sugar production in the Community during the marketing year in question, expressed as white sugar, minus : the guaranteed quantity valid for that marketing year, quantities produced in excess of the maximum quotas, quantities within the maximum quota carried forward pursuant to Article 32 of Regulation No 1009/67/EEC; and 4212

4 SERMIDE / CASSA CONGUAGLIO ZUCCHERO (b) a standard amount per unit of weight to compensate losses incurred in disposing of that sugar. This standard amount shall be calculated on the basis of a weighted average of losses incurred in disposing of sugar during that marketing year; losses incurred in disposing, under the most favourable conditions, of a quantity equal to the difference between the guaranteed quantity and the quantity disposed of for human consumption within the Community during the same marketing year shall be excluded." Article 1 (1) of Commission Regulation (EEC) No 3358/81 is worded as follows: "1. The amount of the sugar production levy for the 1980/81 sugar marketing year is hereby fixed at ECU per 100 kg of white sugar." "management committee" procedure normally applied in the agricultural sector. Article 2 (1) of the same regulation provides that the sugar marketing year is to begin on 1 July and to expire on 30 June of the following year for all the products listed in Article 1 of the regulation. Article 28, which, in accordance with Article 23(1), is applicable in respect of the marketing years 1981/82 to 1985/86, provides that the sugar production levy is, for any marketing year, to be equal to the average loss peltonne of sugar for export obligations to be fulfilled during the current marketing year. Regulation No 1785/81 replaced Regulation No 3330/74, which provided in Article 27 (2) that the production levy was to be calculated, for the marketing years in question, including the 1980/81 marketing year, on the basis of the quantity of sugar actually disposed of outside the Community. That provision was adopted in implementation inter alia of the aforesaid Article 7 of Regulation No 700/73 and of Regulation No 1785/81 Article 48 of Regulation No 1785/81 provides that: "Should transitional measures be necessary to facilitate transition to the system established by this regulation, in particular if the introduction of the system on the date provided for would give rise to substantial difficulties, such measures shall be adopted in accordance with the procedure laid down in Article 41. They shall be applicable until 30 June 1982 at the latest." The procedure provided for in Article 41 of that regulation follows the standard II Facts and written procedure The parties to the main proceedings are agreed as to the facts, which may be summarized as follows: On 10 May 1982 the Ufficio Ricevitoria [Collector's Office] of the Genoa customs authority instructed Seimide to pay the Cassa Conguaglio Zucchero a sugar production levy amounting to LIT in respect of B quota sugar produced by it during the 1980/81 marketing year. In the course of the proceedings before the national court, that amount was reduced to LIT The levy was calculated in accordance with Article 1 of Regulation No 3358/81 and Article 7 of Regulation No 700/73, that is to say on the basis of the losses resulting from the export obligations for sugar produced in excess 4213

5 JUDGMENT OF CASE 106/83 of the basic quota between 1 October 1980 and 30 September Sermide challenged the payment order before the Tribunale di Genova on the ground that the two aforesaid provisions were unlawful inasmuch as they were contrary to certain articles of the EEC Treaty and to certain other provisions contained in various Community regulations. The measures which it alleged were unlawful had led to an abnormal increase in the production levy for the 1980/81 marketing year which was beneficial only to exporters who qualified for export refunds, namely French and German producers, but detrimental to Italian producers. The Consorzio Nazionale Bieticoltori and the Associazione Nazionale Bieticoltori, in addition to Mr Bianchini and Mr Merciai, all of whom intervened in the main proceedings in support of the plaintiff, claimed that the provisions in question should be declared unlawful, in so far as they burdened the sugar processors with 40% of the contested levy and the sugar-beet growers with 60% thereof. During a preliminary inquiry the defendant Ministries "expressly agreed with the plaintiff's arguments regarding the adjustment of the reference period and the calculation of the levy on the basis of export obligations". By order of 28 March 1983 the Tribunale di Genova stayed the proceedings and referred the following questions to the Court of Justice for a preliminary ruling: "1. Is Article 7(2) of Regulation No 700/73 of the Commission which provides that the total losses resulting from the disposal of the quantity of sugar produced in the Community are to be calculated on the basis of a weighted average of losses resulting from the disposal of sugar during the period from 1 October of the relevant sugar marketing year to 30 September of the following year unlawful on the ground that it is contrary to (a) the prohibition of discrimination laid down in the first paragraph of Article 7 of the EEC Treaty, (b) the prohibition of discrimination laid down in Article 40 (3) of the EEC Treaty, (c) Article 2 of Council Regulation No 1785/81, which provides that the sugar marketing year is to begin on 1 July and is to end on 30 June of the following year, or (d) Article 28 of Council Regulation No 1785/81, which provides that the levy on the sugar produced in each marketing year is to be based, inter alia, on the average loss resulting from export obligations to be fulfilled during the same marketing year? 2. If the first question is answered in the affirmative, does it follow that Article 1 of Commission Regulation No 3358/81 which fixes the amount of the sugar production levy for the 1980/81 marketing year at ECU per 100 kg of white sugar is also unlawful? 3. Even if the first two questions are both answered in the negative, is Article 1 of Commission Regulation No 3358/81 which fixes the amount of the sugar production levy for the 1980/81 sugar marketing year at ECU per 100 kg of white sugar unlawful on the ground that it is contrary to (a) Article 27 (2) of Regulation No 3330/74 of the Council, which provides that the production levy for the 1980/81 marketing year is to be calculated on the basis of the quantity of sugar actually exported to non-member countries, or (b) Article 28 of Council Regulation No 4214

6 1785/81, which provides that only as from the 1981/82 marketing year is the production levy on sugar to be calculated on the basis of the quantity of sugar which is merely the subject of an export obligation?" The request for a preliminary ruling was lodged at the Court Registry on 6 June 1983 In the statement of reasons accompanying its order the Tribunale di Genova observes that the postponement by three months of the period to be taken into account for the calculation of the losses resulting from the disposal of sugar occasioned "serious and unjustifiable losses" to Italian producers, at least as regards the 1980/81 marketing year. On 1 July 1981 the Community intervention price rose, whereas the world sugar price fell, with the result that, on the one hand, a substantial increase occurred in the amount paid out for export refunds granted in the period from 1 July to 30 September 1981 and, on the other hand, there was an abnormal increase in the production levy for the 1980/81 marketing year in relation to prices for the next marketing year. There was therefore a discriminatory measure which was exclusively in the interests of export undertakings, or undertakings engaged predominantly in the export trade, and not in the interests of Italian undertakings. As regards the alleged unlawfulness of Regulation No 3358/81, the Tribunale de Genova observes that Regulation No 1785/81, which provides that account must be taken of the losses resulting from export obligations, did not become applicable until 30 June 1982 and that Regulation No 3330/74, which was formally applicable, provided that account was to be taken of the losses resulting from actual disposal. SERMIDE / CASSA CONGUAGLIO ZUCCHERO In accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the EEC, written observations were submitted by the plaintiff in the main proceedings, represented by Mauro De André, Avvocato, by the Italian Government, represented by Sergio Laporta, acting as Agent, and by the Commission of the European Communities, represented by J.-C. Sćchó and G. Campogrande, Legal Advisers in the Commission's Legal Department, acting as Agents. By an order dated 14 December 1983 the Court assigned the case to the Fourth Chamber. Upon hearing the report of the Judge- Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory inquiry. However, the Court asked the Commission to reply to the question "whether, and if so why, in adopting Regulation No 3358/81, which, on its own admission, was a 'transitional measure' designed to facilitate the transition to the system provided for by Regulation No 1785/81, the Commission failed to take account of the fact that by virtue of the application of Article 7 (2) of Regulation No 700/73 to the 1980/81 marketing year and of Article 28 of Regulation No 1785/81 to the 1981/82 marketing year the losses resulting from exports during July, August and September were taken into account twice: once in the determination of the levy for the 1980/81 marketing year and once in the determination of the levy for the 1981/82 marketing year". The Commission submitted its reply to that question on 6 February

7 III Written observations 1. Observations of the plaintiff in the main'proceedings The plaintiff in the main proceedings observes, as regards the first question, that, in its view, Article 7 (2) of Regulation No 700/73 is unlawful for two reasons : In the first place, it is contrary to the prohibition of discrimination laid down by both Article 7 and Article 40 (3) of the EEC Treaty; Secondly, it is contrary to Articles 2 and 28 of Regulation No 1785/81. JUDGMENT OF CASE 106/83 (a) As regards the first point, the plaintiff contends that until the adoption of Regulation No 700/73 the losses resulting from disposal which were used to calculate the levy on B sugar were, under Article 6 of Regulation No 142/69, those incurred during the marketing year to which the levy related, namely the period from 1 July to 30 June of the following year. However, under Article 7 (2) of Regulation No 700/73, the commencement of the reference period for the calculation of the losses resulting from exports to non-member countries was postponed by three months, namely from 1 July to 1 October. That postponement was detrimental to non-exporting producers or undertakings exporting proportionately smaller quantities and was beneficial to export undertakings or undertakings engaged predominantly in the export trade, such as German and French undertakings. Furthermore, 1 July is the date of the entry into force each year of the new Community intervention price for sugar As from 1 July 1981 the Community intervention price was increased from ECU to ECU, whereas the world sugar price fell during the period between June 1980 and September Thus, undertakings which exported during the period between 1 July and 30. September 1981 sugar produced in the 1980/81 marketing year received an export aid equal to the difference between the increased intervention price and the price on the world market, which was lower than in the previous marketing year. Accordingly, the export undertakings gained the difference between the new and the old intervention prices, with the result that the relative financial burden (the production levy) borne by all the undertakings became much greater, to the detriment of non-exporting undertakings or undertakings exporting proportionately smaller quantities. Such discrimination is unlawful since it is contrary both to the prohibition of discrimination on grounds of nationality laid down by the first paragraph of Article 7 of the EEC Treaty and to the prohibition of discrimination between Community producers laid down by Article 40 (3) of the EEC Teaty. (b) Article 7(2) of Regulation No 700/73 is also contrary to Regulation No 1785/81 inasmuch as the latter is a rule of law superior to the Commission regulation. Article 2 of Regulation No 1785/81 provides that the sugar marketing year is to begin on 1 July and to expire on 30 June of the following year. Article 28 of that regulation provides that, as from the 1980/81 marketing year, the production levy is to be calculated on the basis of the losses resulting from export obligations fulfilled during the marketing year to which the levy relates, that is to say the period between 1 July 1981 and 30 June Accordingly, losses resulting from ex-

8 SERMIDE / CASSA CONGUAGLIO ZUCCHERO ports which were incurred between 1 July and 30 September 1981 must be covered by the yield of the levy on the sugar produced during the 1981/82 marketing year. The same losses cannot be taken into account for the calculation of the levy for the 1980/81 marketing year, as provided for in Article 7 (2) of Regulation No 700/73. Any other solution would be discriminatory and illogical. but also on A sugar. The Commission, by adopting the regulation in question, exceeded the powers conferred on it by the Council. The plaintiff therefore submits that Article 7(2) of Regulation No 700/73 and Article 1 of Regulation No 3358/81 should be declared invalid by the Court. As regards the second question, the plaintiff is of the opinion that Article 1 (1) Commission Regulation No 3358/81, which fixes the amount of the levy for the 1980/81 marketing year by reference to the losses resulting from export obligations, is also invalid on the ground that it is ultra vires. It would in fact have the effect of repealing Article 28 of Council Regulation No 1785/81, which was adopted at an earlier date. As regards the third question, the plaintiff considers that Article 1(1) of Regulation No 3358/81 is unlawful also on the ground that it is incompatible with Article 27(2) of Regulation No 3330/74 and with Article 28 of Regulation No 1785/81. According to Article 27 (2) of Regulation No 3330/74, the levy was to be calculated on the basis of actual exports during the sugar marketing year. However, Article 28 of Regulation No 1785/81 lays down that as from the 1981/82 marketing year, the levy is to be determined on the basis of the losses resulting not only from actual exports but also from export obligations to be fulfilled during the same marketing year as that to which the levy relates. That is all the more significant in view of the fact that the system of levies displays different characteristics as from the 1981/82 marketing year; for example, the levy is charged not only on B sugar 2. Observations of the Italian Government The Italian Government considers that there are a number of divergences between the provisions of Regulation No 3330/74 (the validity of which was extended by Regulation No 1592/80) and those of Regulation No 1785/81 as regards the rules applicable to the levy. Those divergences are likely to intensify doubts as to the legality of the provisions in question. Regulation No 1785/81 introduced, as from the 1981/82 marketing year, certain drastic innovations by replacing the criterion that losses resulting from the disposal of sugar surpluses are to be borne partially by the producers with the principle that undertakings are fully responsible for the costs relating to the disposal on export markets of quantities of sugar (quotas A and B) qualifying for refunds. The essential features of the system established by Regulation No 1785/81 are as follows: The basic quota (A) is also subject to the levy. The levy applicable to the B quota may be as high as 37.5% of the intervention price. 4217

9 The loss to be divided amongst the producers is no longer represented, as it was in the past, by the costs incurred in relation to actual disposal during the marketing year but by the costs relating to export obligations to be fulfilled during the current marketing year. Losses not covered by the yield of the levy in the marketing year in which they were incurred are recoverable during the following marketing year. The rules introduced by Article 28 of Regulation No 1785/81 in fact overturned the system applicable until 30 JUDGMENT OF CASE 106/83 June 1981, under which each undertaking enjoyed a guarantee that it would be able to dispose of its entire A quota at a particular price, in view of the fact that only B quota was subject to the levy. Also, there is no longer the strict correlation between the quota system and the. actual costs incurred by undertakings which existed under the former system, since the new system provides for the carrying forward of any net loss from one marketing year to the next and for an entirely new method of calculating the production surplus, the exportation of which is to be financed by the producers. Under Regulation No 1785/81 the costs to be borne by the producers are calculated on the basis of the difference between the quantity produced and that consumed within the Community in a given marketing year, with the result that the producers are required to bear the cost of exporting the unexported surplus which is placed in storage pending marketing. However, under the rules formerly applicable, the guaranteed quantity exempt from the levy was not determined on the basis of the quantity consumed but was equal to the sum of the A quotas of Community producers As regards the amount of the production levy for the 1980/81 marketing year, which was fixed at ECU per 100 kg by Article 1 of Regulation No 3358/81, the Italian Government takes the view that it was calculated in accordance with a combination of principles which is not authorized by any provision of Regulation No 1785/81. The new rule whereby the losses incurred in the disposal of sugar are to be calculated by reference to the export obligations to be fulfilled during the marketing year in question, instead of the export actually carried out during the marketing year, seems inadequate for the 1980/81 marketing year for three reasons: Certain fundamental amendments of the quota system came into force on 1 July 1981 (full responsibility of producers). The quota system established by Regulation No 3330/74 remained applicable to the 1980/81 marketing year in the absence of any exception under Article 1 of Regulation No 1592/80. According to Article 4 (2) of Regulation No 1592/80, the determination of the losses for the 1980/81 marketing year is to be distinguished from the determination of that part of the losses not covered by the yield of the levy. From that, the Italian Government infers that for the period from 1 July 1980 to 30 June 1981 the financing of the losses resulting from the disposal of sugar

10 SERMIDE / CASSA CONGUAGLIO ZUCCHERO surpluses should have been borne by the producers, in accordance with Article 27 (2) of Regulation No 3330/74, and that it is inappropriate either to calculate the losses for the 1980/81 marketing year on the basis of export obligations or to establish a link between the calculation of the production levy for the 1980/81 marketing year and the calculation of the levy for the 1981/82 marketing year. Therefore, Article 1 of Regulation No 3358/81 is contrary to Article 27 (2) of Regulation No 3330/74 and to Articles 1 and 4 (2) of Regulation No 1592/80. the doubling of the amount of the levy on the losses incurred between July and October 1981, since they were taken into account both in the 1980/81 marketing year and in the next marketing year. The Italian Government therefore considers that these observations help to substantiate the doubts expressed by t he Tribunale di Genova as regards the validity of the provisions in question. The Italian Government also questions the legality of Article 7 (2) of Regulation No 700/73, which extended the period for the compensation of losses resulting from disposal by three months after the date of the expiry of the crop year (1 July to 30 June of the following year), since there was a risk that the application of that provision might appreciably affect at least for the 1980/81 marketing year the equilibrium maintained in the system of quotas. Compensation of the losses to be financed leads to different results if the reference period varies since the losses depend on factors which vary in time and include, in particular, the market price of the product and the intervention price. Losses rise in direct proportion to the fall in the world price and they rise particularly steeply where the drop in that price is accompanied by an increase in the intervention price, as was precisely the case after 1 July Although the extension of the period for the compensation of losses might have been justifiable if the rules had remained unchanged, it cannot be justified as regards the 1980/81 marketing year, upon the expiry of which a new system was introduced. That extension led to 3. Observations of the Commission The Commission points out, as regards the rules applicable, that in the 1980/81 marketing year the common organization of the market in sugar was governed by Regulation No 3330/74, which was repealed on 30 June 1981 in accordance with Article 49 (3) of Regulation No 1785/81. However, contrary to the opinion expressed by Seimide, the new basic regulation, No 1785/81, does not apply to the 1980/81 marketing year but refers expressly to the marketing years from 1981/82 to 1985/86. The Commission was, however, obliged to fix, before 1 December 1981 (according to Article 7(1) of Regulation No 700/73) but after the expiry of the 1980/81 marketing year, the amounts of the production levy in respect of sugar produced during that marketing year. Since the rules laid down by the new basic regulation, No 1785/81, were inapplicable to the 1980/81 marketing year, Regulation No 3358/81 fixing the amounts of the levy for the 1980/81 year was based not on Article 28 of Regulation No 1785/81 but on Article 48 thereof, which authorizes the Commission to adopt transitional measures. 4219

11 JUDGMENT OF CASE 106/83 Regulation No 700/73, which replaced Regulation No 142/69, remained applicable until the entry into force of Commission Regulation No 1443/82 of 8 June 1982 (Official Journal 1982, L 158, p. 17). As regards the fact that the latter regulation established as the reference period for the calculation of losses not the sugar marketing year but the period from 1 October 1980 to 30 September 1981, the Commission maintains that it is entirely justifiable to take into consideration a reference period which differs from the sugar marketing year in respect of which the system of prices is fixed and it relies in support of its view on the following reasons : the system established by Regulation No 142/69 taken into account the reference period from 1 October to 30 September of the following year, having regard to the fact that part of the sugar is disposed of after the expiry of the marketing year and that, on the basis of common commercial practices and traditional patterns of trade, exports of Community sugar produced during the previous marketing year may be said to cease at the end of September each year. Accordingly, Regulation No 700/73 merely consolidated the practice previously followed, as is apparent moreover from the third recital in the preamble to that regulation. In the first place, the commencement of the sugar marketing year has been set, since the inception of the common organization, of the market, at 1 July each year, on account of the early beet harvest in Italy. That enables Italian sugar producers to take advantage of the new intervention prices for new sugar and thus enables beet growers to obtain new minimum prices. Secondly, since the sugar produced during a particular marketing year is not disposed of in its entirety before the end of that marketing year, the basic regulations did not determine the period to be taken into consideration for the calculation of the total costs of disposal but left it to the Commission, assisted by the relevant management committee, to fix the period, as is clear moreover from Article 27 of Regulation No 3330/74. Furthermore, the legality of Regulation No 700/73 must be considered in the light of Regulation No 3330/74, the basic regulation, which makes reference to the former regulation in Article 44 (4) and in Annex II. As regards the concept of disposal of the product, the Commission contends that the basic regulations do not define it and do not impose any specific system for calculating the amount disposed of. The Commission chose to take account of "export obligations", that is to say quantities in respect of which, following invitations to tender, export licences have been issued entitling the holder to refunds, in the light of the following practical considerations : The Commission has always that is to say not only since the entry into force of Regulation No 700/73 but even under Under the general licensing system, undertakings are required to provide, within six months of the date of exportation, evidence that the goods have 4220

12 SERMIDE / CASSA CONGUAGLIO ZUCCHERO actually been exported. Six months must therefore elapse after the expiry of the reference period before an approach is made to the national administrative authorities in order to ascertain whether all exports subject to an "obligation" have been effected. Calculation of the levy for a given marketing year is thus delayed by six months plus the time needed for the checks to be carried out by the national authorities. The national authorities do not and cannot bring into account actual exports of sugar on the basis of the reference period (or, if need be, the sugar crop year). Determination of the total quantity actually exported during a reference period (or a crop year) would require a major reform of supervisory and accounting structures in most of the Member States. The Member States have on numerous occasions expressly stated that they are unable to introduce such reforms. In normal circumstances, the risk that an export obligation might not be discharged is small since the amount of the security which undertakings are required to provide discourages any inclination to repudiate the obligation. It is important to deal with the matter by reference to factors enabling a reasonable approximation to be arrived at. Regulation No 1785/81, in referring in Article 28 to "export obligations", merely consolidated and supplemented the interpretation followed since the creation of the common organization of the market. In adopting Regulation No 3358/81 the Commission adhered to that principle. As regards the alleged discrimination, the Commission considers that any such reproach is devoid of substance since Italian producers are entirely at liberty, regardless of the level of the intervention price and of the world price, to sell their sugar at any time, within the limits of the maximum quota, on the domestic market or on the world market and to receive in the latter case the refunds provided for, as is the case with producers in other countries, and they can thus contribute in the same way to the formation of the total losses resulting from disposal. They may also obtain the domestic market price, but once again on the same basis as producers in other Member States, with the result that it is impossible to speak of a restricted "Italian market". Finally, the Commission emphasizes that only disposal to non-member countries makes it possible to maintain, throughout the Community, a balance between supply and demand, which in turn enables all producers to sell at a price which comes close to the target price. Accordingly, the fact that all producers are obliged to contribute to the financing of export refunds which are needed to support the domestic price does not constitute discrimination. The Commission therefore considers that the answer to the questions submitted should be as follows: "Consideration of the questions raised has disclosed no factor of such a kind as to affect the validity of either Article 7 (2) of Regulation (EEC) No 700/73 of the Commission of 12 March 1973 or Article 1 of Commission Regulation (EEC) No 3358/81 of 25 November 1981." 4221

13 JUDGMENT OF CASE 106/83 IV The Commission's reply to a question from the Court The Commission gave the following reply to a question put to it by the Court: 1. The application of Regulation No 3358/81 and of Article 7(2) of Regulation No 700/73 to the 1980/81 marketing year and of Article 28 of Regulation No 1785/81 to the 1981/82 marketing year did not have the result that losses from exports in July, August and September 1981 were taken into account twice, except as regards a negligible proportion of those losses. 2. Under the system established by Regulations No 3330/74 and No 1785/81 (and by their implementing regulations, No 700/73 and No 1433/ 82), the production levy is to be calculated by reference to two factors, namely a quantitative factor and a financial factor. As regards the 1980/81 marketing year, the quantitative factor consists of the total quantity of sugar produced between 1 July 1980 and 30 June 1981, in accordance with Article 7 (2) (a) of Regulation No 700/73, less the guaranteed quantity for the same period provided for by Article 27 (2) of Regulation No 3330/74. As regards the 1981/82 marketing year, the quantitative factor was determined by the total quantity of sugar produced between 1 July 1981 and 30 June 1982, in accordance with Article 28 (1) (a) of Regulation No 1785/81, less the quantity consumed within the same period (see Article 28 (1) (b)). Thus none of the sugar produced during one marketing year was taken into account for the calculation of the losses resulting from exports in the other marketing year. It follows that the quantitative factor was not taken into account twice. The financial factor consists of the average loss resulting from the exportation of a given quantity of sugar. That average loss, multiplied by the quantitative factor, constitutes the total loss resulting from exports which is to be covered by the production levy. 3. The average loss is calculated on the basis of the refunds granted under the two systems provided for by the applicable rules, namely the system whereby refunds are fixed "by tender" and the system whereby they are fixed "at regular intervals". The first system covers most exports (as is clear from the table attached to the Commission's reply). The quantities of sugar qualifying for this type of refund were always, under the system established by Regulation No 3330/74 and applied until 30 September 1981 for the calculation of the levies, distinguished in the third quarter (July to September) of each,year by reference to the relevant crop year. For those purposes, export licences granted during the third quarter of 1981 contained a date of expiry (end of September 1981) in respect of quantities of sugar produced during the 1980/81 marketing year and a date of commencement (end of September 1981) in repect of quantities produced during the 1981/82 marketing year. Hece it was possible to distinguish during the quarter in question, as regards that type of refund, the average loss incurred in respect of sugar produced during the 1980/81 marketing year from the average loss incurred in respect of 4222

14 SERMIDE / CASSA CONGUAGLIO ZUCCHERO sugar produced in the following marketing year. It follows that that part of the financial factor was not taken into consideration twice. As regards the refunds granted during the third quarter (July to September) under the system whereby they are fixed at regular intervals, the Commission, having regard to the wholly negligible impact of such refunds on the calculation of the levy, never established, under the arrangements introduced by Regulations No 3330/74 and No 700/73, a system for distinguishing licences by reference to the relevant crop year. All the refunds of that type granted during the quarter in question were charged in their entirety to the previous marketing year, solely for the purposes of the calculation of the financial factor, and that was also the case as regards the third quarter (July to September) The margin of error which the application of that method involves is so small that it does not justify the establishment of a relatively complex administrative system for distinguishing between licences. 4. The Commission subsequently decided to take account once again of the refunds granted during the third quarter (July to September) 1981 under the system of fixing refunds at regular intervals (solely for the purposes of the calculation of the average loss) also for the 1981/82 marketing year in accordance with the producers' wishes. As a result of the reversal of the trend on the world market, producers had to bear a very heavy burden in levies in the 1981/82 marketing year. The fact that the quarter in question was once again taken into account made it possible to reduce the average loss incurred during the marketing year and, under the cumulative system provided for by Article 28 (2) of Regulation No 1785/81, to attempt to reduce the burden borne by the producers during the period from July 1981 to June That second operation clearly did not affect the calculation of the levy for the 1980/81 marketing year, which formed the basis for the adoption of Regulation No 3358/81. V Oral Procedure At the sitting on 14 March 1984 oral argument was presented by the following: M. De André of the Rome Bar, for the plaintiff in the main proceedings; I. M. Braguglia, Avvocato dello Stato, for the Italian Government; and G. L. Campogrande, Legal Adviser in the Commission's Legal Department, acting as Agent, for the Commission. The Advocate General delivered his Opinion at the sitting on 16 May Decision 1 By an order dated 28 March 1983, which was received at the Court Registry on 6 June 1983, the Tribunale di Genova [District Court, Genoa] referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty three 4223

15 JUDGMENT OF CASE 106/83 questions concerning the validity of Article 7 (2) of Regulation (EEC) No 700/73 of the Commission of 12 March 1973 laying down certain detailed rules for the application of the quota system for sugar (Official Journal 1973, L 67, p. 12) and of Article 1 of Commission Regulation (EEC) No 3358/81 of 25 November 1981 fixing the amounts of the production levy in the sugar sector for the period 1 July 1980 to 30 June 1981 and the amount payable by sugar manufacturers to those who sell sugar beet (Official Journal 1981, L 339, p. 17). 2 Those questions were raised in proceedings initiated by Sermide SpA, now in liquidation (hereinafter referred to as "Sermide"), an Italian producer of white sugar, against the Cassa Conguaglio Zucchero and the Ministers for Finance and for the Treasury (hereinafter referred to as "the defendants"). In the proceedings pending before the national court, Sermide was joined by the Consorzio Nazionale Bieticoltori and the Associazione Nazionale Bieticoltori, and by M. Bianchini and C. Merciai, as interveners. 3 The dispute is concerned with the question whether the Cassa Conguaglio Zucchero is entitled to recover the sum of LIT (reduced in the course of the main proceedings to LIT ) by way of production levies on the sugar produced by Sermide during the 1980/81 sugar marketing year in excess of the basic quota allocated to it. The Ufficio Ricevitoria [Collector's Office] of the Genoa customs authority had issued a notice of assessment in respect of that sum, which was served on 10 May The levy had been calculated in accordance with Commission Regulation No 3358/81, which was adopted on the basis of Article 48 of Council Regulation (EEC) No 1758/81 of 30 June 1981 on the common organization of the markets in the sugar sector (Official Journal 1981, L 177, p. 4), and in accordance with Article 7 of Regulation No 700/73 of the Commission, as amended by Article 1 (2) of Commission Regulation (EEC) No 1573/76 of 30 June 1976 (Official Journal 1976, L 172, p. 52). 5 In the proceedings before the national court Sermide contended that the two aforesaid provisions were unlawful inasmuch as they discriminated against it and were therefore contrary to the EEC Treaty and to certain other provisions of Community law. 4224

16 SERMIDE / CASSA CONGUAGLIO ZUCCHERO 6 Taking the view that the doubts expressed by Sermide as regards the validity of the provisions in question were legitimate, the Tribunale di Genova referred the following questions to the Court for a preliminary ruling: "1. Is Article 7 (2) of Regulation No 700/73 of the Commission which provides that the total losses resulting from the disposal of the quantity of sugar produced in the Community are to be calculated on the basis of a weighted average of losses resulting from the disposal of sugar during the period from 1 October of the relevant sugar marketing year to 30 September of the following year unlawful on the ground that it is contrary to (a) the prohibition of discrimination laid down in the first paragraph of Article 7 of the EEC Treaty, (b) the prohibition of discrimination laid down in Article 40 (3) of the EEC Treaty, (c) Article 2 of Council Regulation No 1785/81, which provides that the sugar marketing year is to begin on 1 July and is to end on 30 June of the following year, or (d) Article 28 of Council Regulation No 1785/81, which provides that the levy on the sugar produced in each marketing year is to be based, inter alia, on the average loss resulting from export obligations to be fulfilled during the same marketing year? 2. If the first question is answered in the affirmative, does it follow that Article 1 of Commission Regulation No 3358/81 which fixes the amount of the sugar production levy for the 1980/81 marketing year at ECU per 100 kg of white sugar is also unlawful? 3. Even if the first two questions are both answered in the negative, is Article 1 of Commission Regulation No 3358/81 which fixes the amount of the sugar production levy for the 1980/81 sugar marketing year at ECU per 100 kg of white sugar unlawful on the ground that it is contrary to (a) Article 27 (2) of Regulation No 3330/74 of the Council, which provides that the production levy for the 1980/81 marketing year is to be calculated on the basis of the quantity of sugar actually exported to non-member countries, or (b) Article 28 of Council Regulation No 1785/81, which provides that only as from the 1981/82 marketing year is the production levy on sugar to be calculated on the basis of the quantity of sugar which is merely the subject of an export obligation?" The relevant provisions 7 In order to answer the questions submitted by the Tribunale di Genova, it is appropriate to recall in the first place those features of the system of 4225

17 JUDGMENT OF CASE 106/83 production quotas and of the method of calculating the sugar production levy which are relevant to this case. 8 The basic regulation Regulation (EEC) No 3330/74 of the Council of 19 December 1974 on the common organization of the market in sugar (Official Journal 1974, L 359, p. 1) maintained the system of production quotas established by the former basic regulation Regulation No 1009/ 67/EEC of the Council of 18 December 1967 (Official Journal, English Special Edition 1967, p. 304). That system distinguishes between three categories of white sugar produced during a given sugar marketing year, that is to say between 1 July and 30 June of the following year: (a) The quantity which may be freely marketed within the common market and the disposal of which is guaranteed by the intervention price. This is known as the A quota. (b) The quantity in excess of the A quota but below a specified maximum quantity (known as the maximum quota and equal to the A quota plus weighting). This quantity, known as the B quota, may also be freely marketed within the common market or exported, whereupon it qualifies for an export aid. The Member States collect in respect of that quantity from the sugar manufacturers in question a production levy intended to finance the export aid granted in respect of B sugar. (c) The quantity which exceeds the maximum quota and which may not be disposed of within the common market but must be exported in the natural state before 1 January following the expiry of the marketing year in question, without the benefit of an export aid. This is known as the C quota. 9 According to Article 3 of Regulation No 3330/74, an intervention price for white sugar is to be fixed each year by the Council for the Community area having the largest surplus and derived intervention prices are to be fixed for other areas, taking account of the regional variations in the price of sugar. 10 Article 19 of Regulation No 3330/74 provides that, to the extent necessary to enable white sugar to be exported on the world market, an export refund may be granted which covers the difference between prices on the world market and prices within the Community and which is the same for the 4226

18 SERMIDE / CASSA CONGUAGLIO ZUCCHERO entire Community. The total amount paid in export refunds constitutes the "losses incurred in disposing of sugar" referred to in Article 7 (2) (b) of Regulation No 700/ The production levy which the Member States collect from sugar manufacturers in respect of B quota sugar is to be calculated, in accordance with Article 27 (2) of the basic regulation, by dividing total losses incurred in marketing the quantity produced in the Community outside the guaranteed quantity (corresponding at least to the A quota) by the sum of the quantities produced outside the A quota by Community undertakings but not in excess of the maximum quota. The levy may not, however, exceed 30% of the intervention price. 12 The detailed rules for implementing the system of production quotas were established by Regulation No 700/73 of the Commission, which was adopted on the basis of Regulation No 1009/67 and remained in force, with certain amendments, in particular those effected by Commission Regulation No 1573/76, until it was repealed by Commission Regulation (EEC) No 1443/82 of 8 June 1982 (Official Journal 1982, L 158, p. 17), which entered into force on 10 June It is clear from Article 7 (2) of Regulation No 700/73, as amended by Article 1 (2) of Regulation No 1573/76, that the total losses referred to in Article 27 (2) of Regulation No 3330/74 are to be calculated by reference to two factors, known as the quantitative factor and the financial factor. The quantitative factor consists of the total white sugar produced during the marketing year in question, less the guaranteed quantity valid for that marketing year, any quantities produced in excess of the maximum quota and any quantities produced within the maximum quota and carried forward by undertakings to the following sugar marketing year. The financial factor consists of the weighted average of the losses incurred in disposing of sugar during the period from 1 October of the relevant marketing year to 30 September of the following year (less the export levies charged during the same period). 4227

19 JUDGMENT OF CASE 106/83 14 It follows that the quantitative factor is calculated by reference to production during the sugar marketing year, that is to say the period from 1 July to 30 June of the following year, whereas the financial factor is calculated by reference to a period commencing three months after the opening of the sugar marketing year. 15 Although Articles 24 to 31 of Regulation No 3330/74, which concern the system of production quotas, including the production levy, were initially applicable only to the marketing years from 1975/76 to 1979/80 inclusive, their validity was extended so as to apply to the 1980/81 marketing year (with the exception of the second subparagraph of Article 31 (1)) by Article 1 (1) of Council Regulation (EEC) No 1592/80 of 24 June 1980 (Official Journal 1980, L 160, p. 12). 16 Regulation No 3330/74 was repealed with effect from 30 June 1981 by Article 49 (3) of the new basic regulation (Regulation No 1785/81), which provides in Article 23 (1) that Articles 24 to 32, concerning the system of production quotas, are to apply in respect of the sugar marketing years from 1981/82 to 1985/ The new basic regulation retained in principle the system of production quotas but amended it significantly, particularly as regards the production levy, which, in accordance with Article 28 (3), is no longer to be imposed on manufacturers exclusively in respect of their production of B sugar but in respect of their production of A and B sugar. However, the basic levy may not exceed an amount equal to 2% of the intervention price. Where the maximum permitted levy does not fully cover the total loss, an additional levy is to be paid by manufacturers in respect of their production of B sugar, which levy may not exceed an amount equal to 30% of the intervention price (or, in certain circumstances, an amount equal to 37.5% of that price). 18 Accordingly, Article 28 (3) of Regulation No 1785/81 provides that the basic levy is to be calculated by dividing the estimated total loss by the estimated production of A and B sugar attributable to the current marketing year. According to Article 28 (1) (d), the estimated total loss is to be calculated by 4228

20 SERMIDE / CASSA CONGUAGLIO ZUCCHERO reference to the estimated average loss for export obligations to be fulfilled during the current marketing year. 19 The rate of the sugar production levy for the 1980/81 marketing year was fixed at ECU per hundred kg of white sugar by Article 1 (1) of Commission Regulation (EEC) No 3358/81 of 25 November 1981 (Official Journal 1981, L 339, p. 17). That regulation was adopted pursuant to Article 48 of Regulation No 1785/81, which authorized the Commission to adopt transitional measures where necessary to facilitate the transition to the system established thereby, in particular if the introduction of the new system on the date provided for gave rise to substantial difficulties. Such measures were to be applicable only until 30 June 1982 at the latest. 20 In fixing the rate of the production levy for the 1980/81 marketing year, the Commission applied, in accordance with the preamble to Regulation No 3358/81, the criteria established by Article 7(2) of Regulation No 700/73 and took account, when calculating the financial factor, of the weighted average of the losses incurred in disposing of sugar during the period from 1 October 1980 to 30 September First question 21 The first question raises two separate issues: (a) whether or not the fact that by virtue of Article 7 of Regulation No 700/73 the reference period for the calculation of the average losses incurred in disposing of sugar, which runs from 1 October of the current marketing year to 30 September of the following year, differs from the sugar marketing year, which runs from 1 July to 30 June of the following year, constitutes discrimination prohibited by Articles 7 and 40 (3) of the EEC Treaty; and (b) whether those rules are contrary to Articles 2 and 28 of Regulation No 1785/81. The alleged breach of the principle of non-discrimination 22 The national court considers that the failure to synchronize the reference periods is, at least as regards the 1980/81 marketing year, tantamount to a 4229

21 JUDGMENT OF CASE 106/83 discriminatory measure: it adversely affects Italian undertakings, which are situated in areas that produce insufficient sugar to meet demand and so export relatively little, and it benefits undertakings in northern Europe, where there is a surplus and exporting is traditional. 23 That discrimination is said to stem from the fact that the increase in the Community intervention price as from 1 July 1981, the date on which the new marketing year began, and the concomitant fall in the world sugar price resulted in a sharp increase in the amount paid out in the form of export refunds (which was beneficial to North European undertakings) and consequently in an abnormal increase in the levy on B sugar produced in the 1980/81 marketing year (which was detrimental to Italian undertakings). 24 Sermide and the Italian Government contend that it is discriminatory not to calculate the production levy exclusively on the basis of the actual losses incurred in disposing of sugar during the marketing year in which the sugar which is subject to the levy is produced. They point out that the new Community intervention price comes into force each year at the beginning of that period, which coincides precisely with the natural crop cycle for sugar beet in southern Europe. However, at the end of the sugar marketing year, only North European undertakings have at their disposal, as a result of the crop cycle for sugar beet in the North, sufficient quantities of sugar produced before that date to enable them to benefit from the higher export refunds. 25 Furthermore, Sermide and the Italian Government contend that, when the production levy was calculated for both the 1980/81 and 1981/82 marketing years, the refunds for sugar produced in the 1980/81 marketing year and exported in the third quarter of 1981 were taken into consideration twice, thus leading to considerable and unjustified costs for producers. 26 The Commission, however, denies all charges of discrimination and emphasizes that, in choosing the period from 1 October to 30 September (instead of the sugar marketing year) as the reference period for the calculation of the losses incurred in disposing of sugar, it took account only of the natural crop cycles and of economic realities, that is to say common 4230

22 SERMIDE / CASSA CONGUAGLIO ZUCCHERO commercial practices and traditional patterns of trade. The commencement of the sugar marketing year was fixed as 1 July precisely in order to enable Italian producers to take advantage of the new intervention prices for new sugar. Furthermore, part of the sugar produced in northern Eurpe during a particular sugar marketing year is traditionally not exported until the period between 1 July and the expiry of the reference period. 27 Finally, the Commission maintains that to compel all undertakings which produce sugar in excess of the A quota to contribute towards the financing of export refunds does not constitute discrimination since only the disposal of surplus sugar to non-member countries makes it possible to maintain within the common market a balance between supply and demand, the effect of which is to support the domestic price in the interests of all producers, including Italian undertakings. 28 It is appropriate in the first place to point out that under the principle of non-discrimination between Community producers or consumers, which is enshrined in the second subparagraph of Article 40 (3) of the EEC Treaty and which includes the prohibition of discrimination on grounds of nationality laid down in the first paragraph of Article 7 of the EEC Treaty, comparable situations must not be treated differently and different situations must not be treated in the same way unless such treatment is objectively justified. It follows that the various elements in the common organization of the markets, such as protective measures, subsidies, aid and so on, may not be differentiated according to region or according to other factors affecting production or consumption except by reference to objective criteria which ensure a proportionate division of the advantages and disadvantages for those concerned without distinction between the territories of the Member States. 29 The Court's finding, in that regard, is that the rules set out in Article 7 (2) of Regulation No 700/73 concerning the calculation of the production levy are objectively justified notwithstanding their use of different reference periods, namely the sugar marketing year, which is used to establish the relevant quantity of white sugar produced (known as the quantitative factor), and the period from 1 October of the relevant marketing year to 30 September of the following year, which is used to establish the average losses incurred in disposing of sugar (known as the financial factor). 4231

23 JUDGMENT OF CASE 106/83 30 As regards the argument to the effect that that method of calculation is arbitrary inasmuch as it places South European producers at a disadvantage in relation to North European producers, it must be noted first of all that the rules in question apply only to sugar actually produced during the same sugar marketing year. There is objective justification for taking into consideration the refunds granted in respect of quantities of sugar exported after the end of a particular sugar marketing year since those quantities were produced during that marketing year. It is therefore perfectly logical, when calculating the total losses and, hence, the production levy for a particular sugar marketing year, to take account of the losses incurred in disposing of white sugar produced during that marketing year, but disposed of after its expiry. 31 The Court is unable to take into consideration the fact that, owing to the natural crop cycle for sugar beet, South European producers, unlike North European producers, no longer have at their disposal, after the end of the sugar marketing year, any sugar produced before that date and cannot therefore take advantage of the new intervention price applied as from the commencement of the new marketing year, whereas the levy imposed on the sugar produced by them during the previous marketing year takes account of total losses incurred during that part of the reference period which extends beyond the marketing year. That line of reasoning calls in question the Council's choice of dates for the commencement of the sugar marketing year and for the entry into force of the new intervention price, a choice which may be challenged only by contending that it constitutes a misuse of powers. However, no such contention has been advanced in the present case. 32 Moreover, as regards the argument to the effect that the failure to synchronize the reference periods produced arbitrary effects in relation to the amount of the refunds, and hence in relation to the amount of the levy, at least for the 1980/81 sugar marketing year, having regard to the particularly high intervention price which came into force on 1 July 1981, it must be pointed out that the refunds are intended, as is clear from the fifth recital in the preamble to Regulation No 3330/74, to stabilize the Community market by preventing price fluctuations on the world market from affecting prices within the Community. It follows that adjustments in the amount of the refunds are an inherent feature of the rules on external trade which form part of the common organization of the market in sugar. 4232

24 SERMIDE / CASSA CONGUAGLIO ZUCCHERO 33 As regards the argument to the effect that the application of a reference period tor the calculation of the losses incurred in disposing of sugar which extended beyond the end of the 1980/81 sugar marketing year was incompatible with the fact that far-reaching amendments were made to the rules governing sugar production levies with effect from 1 July 1981, it must be noted that the Commission applied the contested legislation only to the disposal of sugar produced before 1 July The fact that the amended rules contained certain features not present in the previous system cannot in itselt constitute discrimination, inasmuch as the measure adopted did not exceed the scope of the broad discretion enjoyed by the Community legislature in this area. 34 As regards the argument that certain refunds were taken into consideration twice once in the calculation of the levy for 1980/81 and again in the calculation of the levy for the 1981/82 - the Court notes that, in taking into consideration for the calculation of the average loss for the 1980/81 marketing year the losses resulting from the refunds fixed at regular intervals for sugar produced during the 1980/81 marketing year and disposed of during the third quarter of 1981, the Commission merely applied the legislation hitherto in force. In view of the reasons put forward by it in particular the considerable administrative difficulties involved, the Commission was under no obligation to set up, solely for the 1980/81 reference period, a system for charging those losses to one or other of the sugar marketing years concerned. The fact that the Commission adhered, even in respect of the transitional period in question, to the legislation which had been in torce tor a number of years, namely Regulation No 700/73, is not contrary to the prohibition of discrimination laid down in the second subparagraph of Article 40 (3) of the EEC Treaty. 35 However, as regards the fact that the Commission also took the same losses into consideration when calculating the average loss for the 1981/82 marketing year, it must be pointed out that to impose a burden twice on the basis of the same facts would be contrary to the principle of proportionality In that regard, the Commission maintains that in this case the taking into consideration of those losses a second time had no unfavourable consequences for producers in the sugar marketing year in question, since in reality it served only to reduce the average loss and therefore to reduce, albeit to a very limited extent, the amount of the levy for that period Sermide, however, observes that such "generosity" on the part of the Commission in its calculations cost Italian producers "approximately LIT million for the 1980/81 marketing year alone and probably the same 4233