JUDGMENT OF 25. 5.

1978 — JOINED CASES 83 AND 94/76, 4, 15 AND 40/77

In Joined Cases 83 and 94/76, 4, 15 and 40/77

The undertaking BAYERISCHE HNL VERMEHRUNGSBETRIEBE GMBH & Co.

KG, Gut Heinrichsruh,

BERND ADLEFF , sole trader, Grasslfing,

The undertaking F. X. ZOLLNER KG, Regensburg, and
CHRISTOF SCHWAB , agricultural engineer, Gut Schwaben,

Counsel: F. Modest, A. Heemann, J. Gundisch, G. Rauschning, K. Landry,

W. Röll, B. Festge, H. Heemann, P. Wegemer, of Hamburg, with an
address for service in Luxembourg at the Chambers of Felicien Jansen,
Huissier de Justice, 21 Rue Aldringen,

and Johann Seidl, Regenstauf, represented by Messrs von Boetticher,

Bernet and Partner, Munich, with an address for service in Luxembourg at
the Chambers of Ernst Arendt, 34 B Rue Philippe II,

applicants,

The European Economic Community , represented by its institutions,

1. The Council , represented by its Legal Adviser, Bernhard Schloh, acting

as Agent, with an address for service in Luxembourg at the office of J. N.
Van den Houten, Director of the Legal Service of the European
Investment Bank, 2 Place de Metz,
and

2. The Commission , represented by its Legal Adviser, Peter Gilsdorf, acting

as Agent, with an address for service in Luxembourg at the office of its
Legal Adviser, Mario Cervino, Jean Monnet Building, Kirchberg,

defendants,

APPLICATION pursuant to the second paragraph of Article 215 of the

EEC Treaty for damages in respect of the loss allegedly suffered by the
applicants as a result of the effects of Council Regulation (EEC) No 563/76
of 15 March 1976 on the compulsory purchase of skimmed-milk powder
held by intervention agencies for use in feeding-stuffs (Official Journal L
67, p. 18),

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 HNL v COUNCIL AND COMMISSION

THE COURT

composed of: H. Kutscher, President, M. Sørensen and G. Bosco,

(Presidents of Chambers), A. M. Donner, P. Pescatore, Lord Mackenzie
Stuart and A. Touffait, Judges,

Advocate General: F. Capotorti

Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts and Issues

The facts, procedure, conclusions and by intervention agencies for use in

arguments of the parties may be feeding-stuffs for animals other than
summarized as follows: young calves (Article 1).
In order to ensure compliance with this
obligation, the grant of aid for certain
I — Facts and procedure
vegetable foods (colza and rape seeds,
soya beans etc.) is made subject to the
1. The common organization of the
provision of a security or the pres­
market in milk and milk products entation of a document, of standard
provides for a system of prices based
Community form, made out by the
inter alia on a target price for milk as
competent authority of the Member
well as on intervention prices fixed
State which is responsible for de­
mainly for butter and skimmed-milk
naturing, hereinafter referred to as
powder.
"attestation of purchase denaturation"
Despite this price system, the (Articles 2 and 6).
Community is experiencing a surplus of
Free circulation in the Community of
milk which takes the form, in particular,
of the accumulation of considerable imported vegetable foods (such as oil
seeds, flour from these seeds, certain
intervention stocks of skimmed-milk
animal food preparations etc.) is subject
powder.
to the presentation of a "protein cer­
tificate" (Article 3 (1)).
2. Among the measures which the
institutions of the Community have That certificate is issued by Member
adopted in order to reduce those stocks States to any applicant. The issue
is Council Regulation (EEC) No thereof is conditional on the provision
563/76 of 15 March 1976 on the of a security or the submission of an
compulsory purchase of skimmed-milk "attestation of purchase and dena­
powder held by intervention agencies turation" (Article 3 (2)).
for use in feeding-stuffs (Official In the case of contracts concluded
Journal L 67, p. 18). before the date of entry into force of
That regulation imposed an obligation the regulation, the successive buyers of
to purchase skimmed-milk powder held the products referred to in Articles 2

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 JUDGMENT OF 25. 5. 1978 — JOINED CASES 83 AND 94/76, 4, 15 AND 40/77

and 3, or of protein products processed 7. In three identical judgments of 5

therefrom, are to bear the burden of the July 1977 ([1977] ECR 1211, 1247 and
costs arising under the arrangements 1269) in the references for preliminary
laid down in the regulation (Article 5). rulings which gave rise to the cases
mentioned under point 4 above, the
The regulation, which entered into Court declared that Regulation No
force on 15 March 1976, was applied 563/76 was null and void.
until 31 October 1976 (Article 11).
8. As a result of those judgments the
3. The applicants are engaged in the Court, continuing the procedure in
production and sale of chickens, these cases, sent the parties letters
reeding of laying hens and production worded as follows: "The parties are
of eggs. They claim that they have requested to supply all appropriate infor­
suffered damage by reason of the mation with a view to establishing
increase in the price of feeding-stuffs as whether there is a direct and necessary
a result of Regulation No 563/76. connexion between the provisions of
that regulation and the damage claimed
4. This same problem is the central by the applicants. In particular, they are
issue in the references for preliminary requested to indicate in this connexion
rulings which have given rise to Case whether the applicants could have
114/76, Bela-Mühle Josef Bergmann KG countered those effects in their
v Grows-Farm GmbH & Co. KG, to relationship with their suppliers by
Case 116/76, Granaria v Hoofdpro­ preventing the latter from passing on to
duktschap voor Akkerbouwprodukten and the price of the feeding-stuffs the effects
Produktschap voor Margarine, Vetten en of the system established by the regu­
Olien and to Joined Cases 119 and lation."
120/76, Kurt A. Becher v Hauptzollamt By documents lodged respectively on 13
Bremen-Nord and Ölmühle Hamburg September, 5 and 23 August 1977, the
AG v Hauptzollamt Hamburg-Waltershof. applicants in Joined Cases 83 and
94/76, 4 and 15/77 and the Council
and the Commission expressed their
5. The applications were lodged on 19 opinions on the effects of the invalidity
August and 30 September 1976, 10 of Regulation No 563/76 and replied to
January, 31 January and 6 April 1977 the questions put by the Court.
respectively.
By documents lodged respectively on 4,
By orders of 10 November 1976, 31 22 and 23 November 1977, each of the
January and 15 February 1977, the parties then adopted a viewpoint on the
Court decided to join Cases 83 and replies given by the other parties.
94/76 and 4 and 15/77 for the purposes
of the written and oral procedure. 9. In its reply lodged on 13 October
1977, the applicant in Case 40/77
6. The Court, after hearing the report considered it unnecessary to give its
of the Judge-Rapporteur and the views views on the invalidity of Regulation
of the Advocate General, decided to No 563/76. The reply therefore dealt
hear, at the hearing on 3 May 1977, the merely with the effects of that invalidity
observations of the parties in these cases and at the same time contained the
on the question concerning the liability applicant's replies to the questions put
of the Community with regard to Regu­ by the Court. The Commission lodged
lation No 563/76, except for the causal its rejoinder in Case 40/77 on 23
connexion between the regulation and November 1977, which also dealt
the damage suffered and the nature and merely with the effects of the invalidity
extent of the latter. of Regulation No 563/76.

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 HNL v COUNCIL AND COMMISSION

By order of 9 January 1978, the Court IV — Submissions and argu­

decided to join Case 40/77 to Joined ments put forward by the
Cases 83 and 94/76, 4 and 15/77 for parties as a result of the
the purposes of the oral procedure. judgments of the Court of
5 July 1977 declaring
10. After hearing the report of the Regulation No 563/76 to
Judge-Rapporteur and the views of the be null and void
Adovcate General, the Court then
decided to hear at the hearing on 1 1. Serious breach of a rule of law and
causal connexion between the breach
February 1978 the observations of the
parties in these five cases on the effects of that rule and the alleged damage
of the invalidity of Regulation No
(a) The applicants observe that the
563/76, excluding however the estimate
concept of serious breach of a rule of
of the damage.
law as applied by the Court may be
understood from two points of view,
that of the provision and that of its
II — Conclusions of the parties effects on those concerned.

The applicants claim that the Court The brevity of the grounds of the
should: decisions in the judgments of the Court
of 5 July 1977 shows that the Court
1. Order the defendant to pay by way considered that the obligation to
of damages purchase constituted such a serious
(a) DM 175 506.32 (Case 83/76) breach of the principle of propor­
(b) DM 33 527.02 (Case 94/76) tionality and of the prohibition on
(c) DM 18 694.14 (Case 4/77) discrimination that it was unnecessary
(d) DM 21 098.81 (Case 15/77) to discuss that breach at greater length
(e) DM 28 274.28 (Case 40/77) in the judgment or to limit its scope to
certain particular aspects of the rules.
2. Order the defendant to bear the
costs.
There is no precedent whereby the
Court has concluded that a measure of
economic policy taken by the
The defendants contend that the Court
should: Community institutions was illegal while
subsequently refusing the right to
1. Reject the applications as unfounded; compensation on the ground that the
2. Order the applicants to bear the illegality which had been found was not
costs.
sufficiently serious.
The applicants cannot accept that the
concept of serious breach of the right is
III — Submissions and argu­ based on that of a special sacrifice
ments put forward by the suffered in the general interest
parties with regard to the (Sonderopfer, hereinafter referred to as
validity of Regulation No "special sacrifice"), which is recognized
563/76 in German law.

The liability of the Council for its

In this connexion, the parties put legislative measures is not comparable
forward submissions and arguments with the liability for legislative measures
identical to those put forward by the adopted by the parliamentary
parties to the procedure in Cases 119 institutions in the Member States.
and 120/76, which were references to Council regulations cannot be treated as
the Court for preliminary rulings. equivalent to the legislation of the

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 JUDGMENT OF 25. 5. 1978 - JOINED CASES 83 AND 94/76, 4, 15 AND 40/77

Member States but only as regulations The applicants consider that it is

in respect of which the legal limits on impossible to impose upon them the
power have been determined burden of showing in detail how the
restrictively. Even if the theory of increase in price is calculated and how it
"special sacrifice" is accepted, it is arose. They claim that those are calcu­
apparent that in the present case such a lation factors which are beyond their
"special sacrifice" was imposed on the sphere of influence or knowledge.
applicants: the obligation to purchase The applicants consider that they have
constitutes, according to the judgments suffered serious damage: they state that
of the Court, "a discriminatory distri­ in Case 83/76, the damage is 50 °/o
bution of the burden of costs between
more than the annual profit of the
the various agricultural sectors". This applicant. In Case 94/76, the damage
means that the Court recognized that corresponds approximately to the
there was a particularly heavy burden declared annual profit. In Case 4/77
on the poultry industry for the benefit and Case 15/77, the damage represents
of the dairy industry. approximately 20 % of the annual
The applicants add, with regard to the profit.
problem of "special sacrifice", that the The applicants point out, with regard to
determining factor is not the number of the causal connexion, that no additional
persons concerned but whether it is obstacles to the lodging of a claim for
possible to distinguish them as a group damages should be set up once a regu­
from the community as a whole. This is lation has been declared null and void.
so in the present case. The Court has It is only possible to require that, in
explained that the financial effects of application of the general rules on
the sale of surplus skimmed-milk causality applicable with regard to the
powder had imposed a substantial law on the liability for damages of
burden on producers of pig meat and public authorities, abnormal, in other
poultry breeders. These groups may be words, inappropriate or totally
clearly demarcated. The applicants unforeseeable harmful consequences are
emphasize in this connection that of all not included in the liability incurred by
the economic categories affected by the the Community.
obligation to purchase, the only ones to
have suffered damage are animal (b) The Commission makes by way of
introduction the fundamental obser­
breeders who have not been able to pass
vation that there has been a serious
on these price increases to their buyers.
breach of a rule of law. The fact that
The applicants have drawn up, on the there has been a breach of superior
basis of information from their rules of law is not as such sufficient to
suppliers, tables according to which the fulfil that criterion. In view of the weak
burden resulting from Regulation No basis for the acceptance of a principle of
563/76 is between DM 0.36 and DM law common to the Member States with
2.34 per 100 kilogrammes. The regard to the liability of the legislature
applicants have also either lodged for legislative measures, the Commission
invoices relating to supplies of feeding­ considers that the Community may only
stuffs, or, in cases in which they be liable in such cases where there is
considered that those invoices were too specific and serious damage, in other
voluminous for the Court file, arranged words that the concept of serious
those invoices in tables and had the breach must be defined at least also so
accuracy of the quantities indicated far as the category of persons concerned
therein certified by the respective and the nature of the damage is
suppliers. concerned.

1214
 HNL v COUNCIL AND COMMISSION

In the cases which have hitherto been determine the extent of the damage
brought before the Court and in which suffered. It is also necessary to examine
the Community has been declared liable as a whole the policy pursued by the
in principle what was involved was Community institutions in the poultry-
either a law covering a special case meat and egg sectors.
(Joined Cases 5, 7 & 13 to 24/66, Firma
E. Kampffmeyer and Others v Com­ The Commission emphasizes that the
mission of the EEC, judgment of 14 July judgments of the Court of 5 July 1977
1967 [1967] ECR 245: Case 30/66, do no more than state quite generally
Firma Kurt A. Becher v Commission of that the burdens have been divided
the European Communities, judgment of between the various agricultural sectors.
30 November 1967 [1967] ECR 285), Whether the damage alleged by the
or a very limited category of persons applicants, which can only have arisen
(Case 74/74, CNTA S.A. v Commission at the third or fourth link in the chain
of the European Communities, judgment of causation, may be attributed with
of 14 May 1975 [1975] ECR 533). certainty to the regulation declared null
In the present case an almost incal­ and void is a quite different question.
culable number of traders is concerned.
Moreover, in applications of the present
With regard in particular to the group kind there must be a direct causal
of applicants, the Commission connexion, and this is lacking in the
emphasizes that all poultry breeders and present case.
egg producers are uniformly affected.
There has therefore been no specific In order to corroborate its opinion as to
damage nor "special sacrifice" but the the seriousness of the damage and the
burden has been divided uniformly over causal connexion, the Commission
the whole of an economic sector. determines any additional costs which
In addition there has been no serious might arise from Regulation No 563/76
damage. In this respect it is necessary to with the aid of examples:

Additional
Additional costs if skimmed-milk powder is used
per 100 kg of feeding-stuffs
costs if security
is lost per 100 kg Situation at end of Situation in
of feeding-stuffs March 1976 July 1976

Feeding-stuffs for laying

hens DM 1.09 DM 0.77 DM 0.63

Per egg 0.17 Pf 0.12 Pf 0.10 Pf

Feeding-stuffs for pullets DM 1.29 DM 0.91 DM 0.74

Per pullet 10.98 Pf 7.74 Pf 6.3 Pf

Feeding-stuffs for fattening DM 1.95 DM 1.37 DM 1.12

Per kg of chicken 3.5 Pf 2.5 Pf 2 Pf

The Commission concludes by stating no longer possible to ascertain any

that any increase in price as far as final damage at the level of the selling prices.
products are concerned is less than 1 % This finding is in addition confirmed by
of the selling price. In these circum­ the fan that in the case of the products
stances it is impossible to state that the in question the increase in price caused
applicants have suffered serious damage. by the increase in the price of broken
In fact, the effect of the additional soya beans is four times higher than that
burden is ultimately so minimal that it is caused by the effect of the costs

1215
 JUDGMENT OF 25. 5. 1978 — JOINED CASES 83 AND 94/76, 4, 15 AND 40/77

resulting from the actual incorporation particularly clear infringement and a

of skimmed-milk powder. manifestly grave violation of the basic
It is in addition difficult to determine a content of a principle.
posteriori the respective effects of the The Council considers that the
proportion of soya and that of skimmed considerations upon which the
milk on the increase in the price of obligation to purchase was based were
feeding-stuffs for poultry. The not a priori erroneous from a macro-
Commission has the impression that in economic point of view and were not in
the Spring of 1976 the feeding-stuffs principle indefensible. Consequently,
industry took advantage of the oppor­ there can be no question of serious
tunity afforded by the rules relating to breach.

the obligation to purchase in order to With regard to the damage, the Council
impose a general increase in prices and likewise considers that there must be
therefore merely stamped the invoices: serious damage in each individual case.
"The price of the feeding-stuffs includes The amount of the damage should
the burden resulting from the obligatory differentiate the person or persons
use of skimmed-milk powder". adversely affected from the community
The Commission adds that it is well as a whole, but the number of persons
known that in many cases suppliers of adversely affected must also dif­
feeding-stuffs for animals passed on to ferentiate them from the community as
their buyers the full amount of the a whole. The concept of the award of
security while they themselves only bore damages to the person or persons
the smaller burden resulting from the adversely affected by an unlawful
admixture of the skimmed-milk powder. measure adopted by the legislature must
Since the loss of the security could be linked to the concept of "special
sacrifice". The Council considers that in
probably have been avoided in most
cases, the additional costs which result the present case these conditions have
not been fulfilled.
therefrom should in principle be borne
by the person responsible for the loss, in The Council shares the Commission's
other words, in general, the importer. view on the question whether there is
serious damage, taking into account the
The Commission is surprised by the amount thereof.
statements made by the applicants with
regard to profits, in particular in Cases The Council takes the view that the
83/76 and 94/76. Since the increase in applicants have in no way been particu­
the cost of feeding-stuffs for animals larly affected by the obligation to
resulting from the increase in the price purchase. On the contrary, the costs
of soya is many times higher than that have risen for all consumers of feeding­
resulting from the rules relating to the stuffs for animals within the
obligation to purchase and since the fluc­ Community. The Council makes
reference to the German and French
tuations in the price of soya are a
normal phenomenon, the Commission systems of administrative law to support
cannot understand how in those circum­ its view in this connexion.

stances the applicants could have kept The Council adds that the adoption of
their undertakings in operation. Regulation No 563/76 was an alibi to
conceal other increases in price using
(c) The Council notes that the the pretext of the obligation to
meaning of serious breach has not purchase. It is necessary to exclude
hitherto been specified in the case-law these increases from the calculation. To
of the Court of Justice. It must be a the extent to which additional burdens
breach which is particularly blatant, a result from the loss of the security and

1216
 HNL v COUNCIL AND COMMISSION

not from the obligation to purchase, been altered either. For this reason the
those amounts should also be excluded. report summarizes thus: "The increases
The Council considers moreover that in costs cannot be passed on to the
the causal connexion is not sufficiently following stage of production either in
close to justify the applicants' claims for the case of day-old chicks or in that of
damages because those damages only pullets; they must rather be absorbed in
occured at the third or fourth link of the profit-margin of breeding under­
the chain of causation. takings".
The applicants in Cases 83 and 94/76
2. The possibility of the applicants' claim in addition that the system of
passing on to their customers the effect levies applicable to the importation of
of the charges resulting from Regu­ poultry-meat and poultry-meat products
lation No 563/76 merely makes it possible to prevent
imports from third countries from
(a) The applicants in Cases 83 & 94/76 exercising pressure on prices. The
have produced several sales contracts system has therefore no influence on
and invoices from which they claim that imports from other Member States and
it follows that before and after the entry in particular from the Netherlands
into force of Regulation No 563/76 which are very competitive in the
they obtained in principle the same poultry-meat sector. Moreover, the
selling price for their pullets. increases in costs caused by the
In addition they produced an experts' obligation to purchase were not taken
report drawn up by Professor Friedrich into consideration when the levy was
Hulsemeyer and Dr Siegfried Graser in fixed since the latter is only adjusted on
November 1976 entitled "The Effects of the basis of variations in the difference
the European Communities' Regulations between the price of forage on the
on Skimmed-Milk Powder on the Community market and on the world
Market in Pullets and Eggs in the market but not on the basis of the
Federal Republic of Germany". It variations in other factors.
follows from this report that in the
pullet-breeding sector there is no (b) The applicants in Cases 4 and
oligopolistic market structure. In fact, 15/77, who are egg producers, observe
the report emphasizes the fact that the that, contrary to the prices of pullets
widespread homogeneity of production and day-old chicks, the prices of eggs
and the free access of competing foreign undergo great seasonal variations. Regu­
suppliers to the domestic market lation No 563/76 was in force prin­
virtually make it impossible for cipally during the six summer months. It
producers to impose prices upon their is impossible to deduce from a
customers.
comparison between the prices during
At the same time the report shows that the six summer months and the prices
over a period of three quarters, the during the six winter months whether
variations in the price of compound the increase in the cost of animal
poultry feeding-stuffs have had no feeding-stuffs as a result of the effects
significant influence on the chicken of the obligation to purchase has had an
hatch of laying strains. Since the supply effect on the price of eggs. That
of chicks of laying strains has not question can only be answered on the
reacted to the alteration in the price of basis of abstract principles of economics
animal feeding-stuffs it is possible to and industrial management. The
conclude from this, on the basis of the applicants refer in this connexion to the
laws of supply and demand, that the above-mentioned experts' report and to
prices of those products could not have a supplementary report of 5 September

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 JUDGMENT OF 25. 5. 1978 — JOINED CASES 83 AND 94/76, 4, 15 AND 40/77

1977 on the effects of the Community entered into long-term outline

regulations on skimmed-milk powder agreements for the conclusion of
on the market in eggs in the Federal individual sales contracts relating to all
Republic of Germany, in the present products of their breeding farms, with
case, the factors which have determined Franz Zimmerer, a slaughterer, it must
the development of the price of eggs in abide by the results of the negotiations
1976. It follows from that report that on prices conducted by the management
throughout 1976 the prices of eggs were of that association of producers with
higher than those in 1975. That report that slaughterer. Since that situation
shows moreover that that increase in
existed as early as 1976, the applicant is
prices must be attributed to a reduction unable from a legal viewpoint to sell its
in supply on the market, a reduction in fattened poultry to slaughter-houses
the eggs for hatching laid by laying other than Franz Zimmerer.
strains and a reduction in the chicken
hatch of laying strains. The experts Quite apart from that, the applicant,
summarized their remarks as follows: extremely vulnerable from the economic
point of view, actually found it
"The results of the analyses of the
impossible in 1976 to sell its products to
development of supply and prices on the
market in eggs in the Federal Republic other slaughter-houses. Because its
business is situated in an under­
of Germany during the past two years,
in other words populated region in which communi­
cations are poor it was financially
— the explanation for the distinct rise unable to transport its chickens ready
in the price of eggs in 1976 by for slaughtering to more distant
comparison with the previous year slaughter-houses, especially since the
caused by restrictions on production
selling prices which it could obtain in
for economic reasons as early as
1976 in the case of the slaughter-houses
1975,
which came into consideration within a
— the definition of the conduct of reasonable radius of 100 kilometres
traders in the market in eggs as that were no higher than those offered by
of autonomously adjusting the the slaughter-house Franz Zimmerer
quantities of products, and, finally, and since transport would therefore in
— the completely inelastic reaction of every case have given rise to harmful
the domestic supply of eggs to the additional costs for the applicant.
temporary increase in the price of
In addition negotiations have been
animal feeding-stuffs caused by the
conducted in vain with the slaughter­
Community rules on skimmed-milk
house Franz Zimmerer inter alia by the
powder,
management of the association of
therefore enable the conclusion to be
producers to which the applicant
drawn with certainty with regard to the belongs in an attempt to pass on to pur­
market in eggs for consumption in the chasers of the applicants' products the
Federal Republic of Germany that the increases in the price of feeding-stuffs
additional cost of feeding-stuffs for for animals attributable to the
animals brought about by the system of application of Regulation No 563/76.
securities has been borne entirely by
producers." The applicant in Case 40/77 has also
lodged invoices relating to its sales from
(c) The applicant in Case 40/77, who which it is clear that before and after
runs an undertaking which breeds and the entry into force of Regulation No
fattens chickens, states that as a member 563/76 it allegedly obtained the same
of an association of producers which prices for its products.

1218
 HNL v COUNCIL AND COMMISSION

(d) The Commission considers that it The average prices obtained by

was or would have been possible for the producers for unsorted eggs on delivery
applicants in Cases 83 and 94/76 to pass to a packing centre increased by 29 °/o;
on to their customers the increase in the the selling prices of the packaging
cost of the feeding-stuffs. The centres to traders rose by 24 °/o. The
Hiilsemeyer-Graser report does not deal other distribution channels also
with the strong position on the market benefited from these improvements in
of breeders and producers. prices.
With regard to the choice of the The Commission points out with regard
invoices produced by the applicants to Case 40/77 that even if the applicant
relating to the sale of their products, the is said to have obtained no more on
Commission observes that it seems to be average in the period in question on the
rather arbitrary. Thus, invoices of 28 sale of its products than previously that
January 1975, 15 May 1974, 6 February would ultimately be of little significance
1974 and 28 January 1974 have been with regard to the present question. In
fact it is not known what other factors
produced by the applicant in Case
have influenced the individual formation
83/76 for the purpose of comparison
with the proceeds of sale for the period of prices in the contractual relationship
from March to September 1976. The between the applicant and its customers.
applicant in Case 94/76 has only The Commission claims that if the
produced two invoices from the period various accounts produced by the
outside the period of application of applicant are examined the "rise and
Regulation No 563/76. fall" of the selling prices, which
obviously has nothing to do with the
In the field of egg production the market general situation as regards costs, is
situation is fundamentally different. In astonishing (see for example the invoice
this field there is in fact extraordinarily of 7 May 1976: DM 1.99 per
keen competition between egg kilogramme, 3 July 1976: DM 1.93 per
producers and their market position in kilogramme and 14 September 1976:
relation to their customers is weak. The
DM 1.97 per kilogramme). Once more,
question whether it was possible to pass the general development of prices in this
on prices in spite of this situation sector is certainly indicative. In spite of
depends accordingly on the market increased supply in 1976 compared to
conditions. These conditions made it
1975 the prices at all stages of distri­
possible for the burden to which Regu­ bution were above the level of the
lation No 563/76 gave rise to be passed previous year. Producers experienced an
on, in particular because of the export increase of 8.5 %: the average return on
refunds and the import mechanisms fattened poultry rose from DM 1.75 per
provided for in the common organ­ kilogramme live weight to DM 1.90 per
ization of the market.
kilogramme live weight. The selling
In fact exports of eggs in shell increased prices of the slaughter-houses increased
by 21 % in 1976 in comparison with by 9.3% compared to 1975. These
1975 and accordingly relieved the returns at least suggest that the rise in
Community market. The additional the cost of feeding-stuffs affected the
amounts fixed in 1976 (see Article 8 of selling price.
Regulation No 2771/75, Official The price policy pursued by the
Journal L 82 of 1 November 1975, p. Community in the poultry-meat sector
49) in the case of eggs and egg products contributed substantially to those
were permanently at a high level in returns and therefore enabled or in any
1976 and in this way had a prohibitive case facilitated the passing on of costs.
effect on imports from third countries. The Commission is in a position to

1219
 JUDGMENT OF 25. 5. 1978 - JOINED CASES 83 AND 94/76, 4, 15 AND 40/77

influence present supply by means of feeding-stuffs albeit for only one day,
export refunds and the application of egg production falls by 20%; the
the import mechanisms provided for in resulting loss to the applicants would
the common organization of the market have been substantially higher than
and thus indirectly to influence price accepting the price increase charged by
formation. These instruments were the manufacturers of feeding-stuffs; to
intensively used by the Commission change from the feeding-stuff of one
throughout the period of the campaign supplier to that of another might also
for the use of skimmed-milk powder. lead to a fall in production; manufac­
While exports of chickens were stagnant turers of feeding-stuffs which had
in 1974 and 1975, there was a rise of increased their prices in fact account for
34 % in 1976. In addition to the levy an approximately 80 to 90 % of the
additional amount was fixed for imports production of industrially manufactured
from all third countries throughout compound feeding-stuffs in Bavaria; for
that reason and because of the
1976 so that in 1976 a total of only
approximately 5 000 tonnes of chicken considerable supplies of feeding-stuffs
was imported into the Community. required by the applicants it was
These imports are minimal in impossible to change from these large
comparison with the production of the manufacturers of feeding-stuffs to other
Community, which amounts to 2.2 small manufacturers of feeding-stuffs;
million tonnes. the applicant in Case 94/76 protested in
vain against the increases in the price of
(e) The Council states that when it feeding-stuffs.
adopted Regulation No 563/76 it The applicants considered that it was
assumed that the purchase price of impossible to claim repayment from
skimmed-milk powder would be their suppliers of feeding-stuffs of the
included as a cost factor in the price of additional costs imposed upon them.
feeding-stuffs and would finally be
passed on to the consumer. If all traders In a statement of 6 October 1977 the
without any distinction had Commission provided for repayment of
compulsorily to accept a higher cost the securities only under certain
factor for some of their feeding-stuffs it conditions. However, the applicants'
is logical to expect these higher costs to suppliers of animal feeding-stuffs did
be passed on to the final consumer. not waive the security deposited. They
therefore do not benefit from the
arrangements for repayment and for
3. Prevention of the damage
that reason cannot in their turn pass on
(a) The applicants state that they are any refunds to the applicants.
not in a position to resist the concerted
demands of their suppliers of feeding- (b) The Commission asks whether the
stuffs for an increase in the price of applicants could not have defended
feeding-stuffs for the following reasons: themselves more successfully by uniting
because of the amount of feeding-stuffs or through their associations. In view of
used by them poultry breeders cannot the relatively strong market position of
build up large reserves; it would only be the applicant in Case 83/76 the
possible to store the feeding-stuffs for a appraisal in this connexion might
period longer than two weeks by however be slightly different. The
suffering great disadvantages through Commission adds that the question of
the segregation of the components the passing-on of costs between under­
thereof and the decline in quality; if for takings belonging to a group is quite
example laying hens are deprived of different.

1220
 HNL v COUNCIL AND COMMISSION

The Commission and the Council the principle of wrongful act or

consider that Case 114/76 shows in omission is abandoned the criterion of
addition that there were cases in which serious breach of a rule of law however
the other party to a contract was able to acquires particular importance.
prevent costs being imposed on it. In
addition the Commission observes that (c) The Council takes the view that
in those cases in which the security according to the present state of the law
deposited is repaid to those concerned it is necessary to assume that an
as a result of the fact that Regulation application for damages is only well
No 563/76 has since been declared to founded if there has been a wrongful
be null and void, subsequent parties to act or omission. In this connexion it
contracts can now claim the repayment refers to the grounds of the decision in
from their suppliers of costs imposed on the judgment of the Court of 31 March
them.
1977 in Joined Cases 54 to 60/76
(Compagnie Industrielle et Agricole du
4. Wrongful act or omission Cpmte de Loheac and Others v Council
and Commission [1977] ECR 659).
(a) The applicants claim that in the The Council considers that its conduct
case-law of the Court of Justice until
now no particularly strict conditions
has not been wrongful. In this
connexion it refers to its conclusions
have been laid down with regard to the
requirement that the institutions of the concerning the question of serious
breach.
Community must have been guilty of a
wrongful act or omission. According to In case the Court of Justice considers
that case-law, it is possible to conclude that the Council has been guilty of a
that there has been a wrongful act or wrongful act or omission through
omission where a serious breach of a infringement of the principle of pro­
superior rule of law for the protection portionality, the Council takes the view
of individuals has occurred. that since in the present case it is
In the present case, however, there are necessary for a sufficiently serious
additional features which confirm that breach to have occurred only a serious
there has been a wrongful act or wrongful act or omission may be taken
into consideration. The fact that in the
omission because serious opposition had
been shown to the regulation in field of economic policy simple decision
question as early as the preliminary in the negative or affirmative are hardly
ever involved confirms this view. There
deliberations. The wrongful act or
omission of the Commission is based on has been no such serious wrongful act
or omission in this case.
the fact that it proposed the regulation
in question to the Council and
promoted it energetically.
V — Oral procedure
(b) The Commission observes that the
Court of Justice has hitherto always 1. The applicants in Cases 83 and
adhered to the principle of wrongful act 94/76 and 4 and 15/77, represented by
or omission in the case of applications J. Gündisch, the Council, represented
under Article 215 of the EEC Treaty. It by its Legal Adviser, B. Schloh, acting
concludes that, in view of its statements as Agent, and the Commission,
on the question whether a serious represented by its Legal Adviser, Peter
breach of a rule of law has occurred, it Gilsdorf, acting as Agent, presented oral
is doubtful whether there has been a argument at the hearing on 3 May
sufficiently wrongful act or omission. If 1977.

1221
 JUDGMENT OF 25. 5. 1978 — JOINED CASES 83 AND 94/76, 4, 15 AND 40/77

The Court of Justice had requested the 2. Following the judgments of the
Commission and the Council to supply Court of Justice of 5 July 1977
the necessary explanations on the costs declaring that Regulation No 563/76
of the dehydration of skimmedmilk and was null and void, the applicants in
on the costs of denaturing in connexion Joined Cases 83 and 94/76 and 4 and
with the compulsory use of skimmed- 15/77, represented by J. Gündisch, the
milk powder for animal feeding-stuffs applicant in Case 40/77, represented by
and to compare those costs with the J. Kornig, the Council, represented by
value of liquid milk as a feeding-stuff. its Legal Adviser, B. Schloh, acting
as Agent, and the Commission,
The applicants stated with regard to this
represented by its Legal Adviser,
question that the three items of
P. Gilsdorf, acting as Agent, presented
dehydration, storage and denaturing
oral argument at the hearing on 1
amount to approximately 27 units of
February 1978.
account or approximately DM 95 per
100 kilogrammes. The value of 100 The applicants in Cases 83 and 94/76
kilogrammes of skimmed-milk powder and 4 and 15/77 referred to the fact
as a feeding-stuff is approximately DM that the feeding-stuffs which they had
50 to 65. bought had contained 50 to 80 % more
soya meal or other vegetable
The Commission claimed that the manu­
components containing protein than the
facturing costs of skimmed-milk powder feeding-stuffs which the Commission
amounted to an average of 15 units of used with the help of sample calcu­
account per 100 kilogrammes. The costs lations as the basis for the fixing of the
of denaturing incurred by the contested additional burden under Regulation No
regulation amounted to between one 563/76 (14 % soya meal in the case of
and three units of account per 100 feeding-stuffs for laying hens and 25 %
kilogrammes according to the method in the case of feeding-stuffs for pullets).
of denaturing. The value of skimmed- It is impossible to fulfil the requirements
milk powder as a feeding-stuff depends of German legislation with regard to the
upon whether the product is used for necessary protein content with the pro­
feeding calves or feeding pigs and portion of soya meal laid down by the
poultry. In the first case the selling price Commission. The applicants point out
fixed by the Community for this method in addition in this connexion that the
of use determines the market price. The protein content of maize is only 7.5 %.
selling price during the period in Since the feeding-stuffs only contain
question amounted to 52 units of between 40 % and 48 % maize, the
account per 100 kilogrammes of protein contained in this cereal
skimmed-milk powder. In the second constitutes only a very small proportion
case the market price of the product of these feeding-stuffs. The other
depends upon its value as a feeding- protein carriers such as lucerne are also
stuff in comparison with substitute affected by the burdens arising from
products, in particular on the price of Regulation No 563/76.
soya meal. During the period of
The applicants do not share the
application of the contested regulation
Commission's view that the export
the price of soya meal was approxi­
refunds on eggs granted during the
mately 18 units of account per 100
period in which Regulation No 563/76
kilogrammes. The price of soya is at
was in force had made it possible to
present 25 units of account per 100
mitigate the difficulties which had arisen
kilogrammes.
in the poultry industry as a result of the
The Advocate General delivered his obligation to purchase; these difficulties
opinion at the hearing on 7 June 1977. were on the contrary intensified by

1222
 HNL v COUNCIL AND COMMISSION

them. The difference between the high proportion of cereal components in

refund and the proportion designated as the feeding-stuffs there is a high pro­
the "cereal factor" — which portion of protein; the Commission's
corresponds to the difference between conclusion is therefore not rebutted.
the price on the Community market and Moreover, the feeding-stuffs also
the price on the world market for the contain animal protein carriers.
quantity of cereals necessary for the
The export refunds on eggs were
manufacture of the product in question
relatively high in 1975 because the price
in the Community — was in fact
between 5 and 12 units of account in
situation in this sector during that
period was difficult.
1975 and only between 2 and 4.5 units
of account during the period of the With regard to fattened chickens the
obligation to purchase. Commission states that the refunds rose

The Commission stated that soya is not from 5 to 8 units of account in July
1976.
the only component containing protein.
Maize for example contains approxi­ The Advocate General delivered his
mately 10 % protein. Where there is a opinion on 1 March 1978.

Decision

1 The applicants claim that the European Economic Community, represented

by the Council and the Commission, should be ordered to compensate them
for the damage allegedly suffered as a result of the effects of Council Regu­
lation (EEC) No 563/76 of 15 March 1976 on the compulsory purchase of
skimmed-milk powder held by intervention agencies for use in feeding-stuffs
(Official Journal 1976, L 67, p. 18).

2 Since the cases have been joined for the purposes of the written and oral
procedure, they should continue to be joined for the purposes of the
judgment.

3 In three judgments of 5 July 1977 in Case 114/76 (Bela-Mühle), Case

116/76 (Granaria) and Joined Cases 119 and 120/76 (Ölmühle Hamburg
AG and Firma Kurt A. Becker) ([1977] ECR 1211 et seq) referred to the
Court of Justice for preliminary rulings the Court declared that Regulation
No 563/76 was null and void. It reached this conclusion on the ground that
the regulation provided for the obligation to purchase at such a dispro­
portionate price that it was equivalent to a discriminatory distribution of the
burden of costs between the various agricultural sectors without being
justified as a measure in order to obtain the objective in view, namely the
disposal of stocks of skimmed-milk powder.

1223
 JUDGMENT OF 25. 5. 1978 — JOINED CASES 83 AND 94/76, 4, 15 AND 40/77

4 The finding that a legislative measure such as the regulation in question is

null and void is however insufficient by itself for the Community to incur
non-contractual liability for damage caused to individuals under the second
paragraph of Article 215 of the EEC Treaty. The Court of Justice has
consistently stated that the Community does not incur liability on account
of a legislative measure which involves choices of economic policy unless a
sufficiently serious breach of a superior rule of law for the protection of the
individual has occurred.

5 In the present case there is no doubt that the prohibition on discrimination

laid down in the second subparagraph of the third paragraph of Article 40
of the Treaty and infringed by Regulation No 563/76 is in fact designed for
the protection of the individual, and that it is impossible to disregard the
importance of this prohibition in the system of the Treaty. To determine
what conditions must be present in addition to such breach for the
Community to incur liability in accordance with the criterion laid down in
the case-law of the Court of Justice it is necessary to take into consideration
the principles in the legal systems of the Member States governing the
liability of public authorities for damage caused to individuals by legislative
measures. Although these principles vary considerably from one Member
State to another, it is however possible to state that the public authorities
can only exceptionally and in special circumstances incur liability for
legislative measures which are the result of choices of economic policy. This
restrictive view is explained by the consideration that the legislative
authority, even where the validity of its measures is subject to judicial
review, cannot always be hindered in making its decisions by the prospect of
applications for damages whenever it has occasion to adopt legislative
measures in the public interest which may adversely affect the interests of
individuals.

6 It follows from these considerations that individuals may be required, in the

sectors coming within the economic policy of the Community, to accept
within reasonable limits certain harmful effects on their economic interests
as a result of a legislative measure without being able to obtain
compensation from public funds even if that measure has been declared null
and void. In a legislative field such as the one in question, in which one of
the chief features is the exercise of a wide discretion essential for the
implementation of the Common Agricultural Policy, the Community does
not therefore incur liability unless the institution concerned has manifestly
and gravely disregarded the limits on the exercise of its powers.

1224
 HNL v COUNCIL AND COMMISSION

7 This is not so in the case of a measure of economic policy such as that in

the present case, in view of its special features. In this connexion it is
necessary to observe first that this measure affected very wide categories of
traders, in other words all buyers of compound feeding-stuffs containing
protein, so that its effects on individual undertakings were considerably
lessened. Moreover, the effects of the regulation on the price of feeding-
stuffs as a factor in the production costs of those buyers were only limited
since that price rose by little more than 2 %. This price increase was parti­
cularly small in comparison with the price increases resulting, during the
period of application of the regulation, from the variations in the world
market prices of feeding-stuffs containing protein, which were three or four
times higher than the increase resulting from the obligation to purchase
skimmed-milk powder introduced by the regulation. The effects of the regu­
lation on the profit-earning capacity of the undertakings did not ultimately
exceed the bounds of the economic risks inherent in the activities of the agri­
cultural sectors concerned.

8 In these circumstances the fact that the regulation is null and void is
insufficient for the Community to incur liability under the second paragraph
of Article 215 of the Treaty. The application must therefore be dismissed as
unfounded.

Costs

9 Under Article 69 (2) of the Rules of Procedure the unsuccessful party must
be ordered to bear the costs. Since the applicants have failed in their
applications they must be ordered to pay the costs.

On those grounds

THE COURT

hereby:

1. Dismisses the applications.

1225
 OPINION OF MR CAPOTORTI — JOINED CASES 83 AND 94/76, 4, 15 AND 40/77

1. Orders the applicants to pay the costs.

Kutscher Sørensen Bosco

Donner Pescatore Mackenzie Stuart Touffait

Delivered in open court in Luxembourg on 25 May 1978.

A. Van Houtte H. Kutscher

Registrar President

OPINION OF MR ADVOCATE GENERAL CAPOTORTI

DELIVERED ON 7 JUNE 1977
(see [1977] ECR p 1223)

OPINION OF MR ADVOCATE GENERAL CAPOTORTI

DELIVERED ON 1 MARCH 1978 1

Mr President, milk powder held by intervention

Members of the Court, agencies for use in feeding-stuffs.

1. This opinion refers, as the Court is One very important preliminary point
aware, to five applications lodged must be considered as established, in
other words that the above-mentioned
against the Council and the Commission
under the second paragraph of Article regulation is null and void. The Court
declared it null and void in the
215 of the EEC Treaty by the under­
takings Bayerische HNL, Bernd Adleff, judgments of 5 July 1977 in Case
F. X. Zollner, Christof Schwab and 114/76 Bela-Mühle v Grows-Farm, Case
Johann Seidl. The applicants are 116/76 Granaria v Hoofdproduktscbap
claiming compensation for the damage voor Akkerbouwprodukten and Joined
which they state they have suffered Cases 119 and 120/76 Ölmühle
through the effects of Council Regu­ Hamburg and Becher v Hauptzollamt
lation No 563/76 of 15 March 1976 on Hamburg and Hauptzollamt Bremen-
the compulsory purchase of skimmed- Nord ([1977] ECR 1211 et seq.) which
I — Translated from the Italian.

1226