Judgments nº T-271/07 of The General Court, January 20, 2010

• Resolution Date: January 20, 2010
• Issuing Organization: The General Court
• Decision Number: T-271/07

In Joined Cases T‑252/07, T‑271/07 and T‑272/07,

Sungro, SA, established in Córdoba (Spain),

applicant in Case T‑252/07,

Eurosemillas, SA, established in Córdoba,

applicant in Case T‑271/07,

Surcotton, SA, established in Córdoba,

applicant in Case T‑272/07,

represented by L. Ortiz Blanco, lawyer,

v

Council of the European Union, represented by M. Moore, A. De Gregorio Merino and A. Westerhof Löfflerova, acting as Agents,

and

European Commission, represented by L. Parpala and F. Jimeno Fernández, acting as Agents, assisted by E. Díaz-Bastien Lopez, L. Divar Bilbao and J. Magdalena Anda, lawyers,

defendants,

ACTIONS for compensation, under Article 235 EC and the second paragraph of Article 288 EC, for losses allegedly suffered by the applicants as a result of the adoption and application, during the 2006/2007 marketing campaign, of Chapter 10a of Title IV of Council Regulation (EC) No 1782/2003 of 29 September 2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers and amending Regulations (EEC) No 2019/93, (EC) No 1452/2001, (EC) No 1453/2001, (EC) No 1454/2001, (EC) No 1868/94, (EC) No 1251/1999, (EC) No 1254/1999, (EC) No 1673/2000, (EEC) No 2358/71 and (EC) No 2529/2001 (OJ 2003 L 270, p. 1), as inserted by Article 1(20) of Council Regulation (EC) No 864/2004 of 29 April 2004 amending Regulation No 1782/2003 and adapting it by reason of the accession of the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia to the European Union (OJ 2004 L 161, p. 48), and annulled by the Court’s judgment in Case C‑310/04 Spain v Council [2006] ECR I‑7285,

THE GENERAL COURT (Eighth Chamber),

composed of E. Martins Ribeiro, President, S. Papasavvas and N. Wahl (Rapporteur), Judges,

Registrar: J. Palacio González, Principal Administrator,

having regard to the written procedure and further to the hearing on 22 April 2009,

gives the following

Judgment

Legal context

1 On the accession of the Hellenic Republic to the European Communities in 1980 a support scheme for cotton was introduced by Protocol 4 on cotton annexed to the Act of Accession of that Member State (OJ 1979 L 291, p. 174; ‘Protocol 4’).

2 That scheme was applied for the first time to the 1981 harvest, and was later extended when the Kingdom of Spain and the Portuguese Republic acceded to the Communities in 1986.

3 According to paragraph 2 of Protocol 4, the scheme is intended particularly to support the production of cotton in regions of the Community where it is important for the agricultural economy, to permit the producers concerned to earn a fair income, and to stabilise the market by structural improvements at the level of supply and marketing.

4 Paragraph 3 of Protocol 4, both in its original version and as amended by Council Regulation (EC) No 1050/2001 of 22 May 2001 adjusting, for the sixth time, the system of aid for cotton introduced by Protocol 4 (OJ 2001 L 148, p. 1), provides that the scheme ‘shall include the grant of an aid to production’.

5 Paragraph 6 of Protocol 4, as amended by Regulation No 1050/2001, provides that ‘[t]he Council, acting by a qualified majority on a proposal from the Commission and after consulting the European Parliament, shall decide on the adjustments necessary to the system introduced pursuant to this Protocol and shall adopt the general rules necessary for implementing the provisions of this Protocol’.

6 On the basis of paragraph 6, the Council of the European Union adopted Council Regulation (EC) No 1051/2001 of 22 May 2001 on production aid for cotton (OJ 2001 L 148, p. 3).

7 Under Articles 2, 11 and 12 of that regulation, the production aid for unginned cotton is equivalent to the difference between the guide price for unginned cotton fixed by the regulation and the world market price, and the aid is paid to cotton ginning undertakings for the unginned cotton purchased by them at a price at least equal to the minimum price fixed by that regulation.

8 As part of the reform of the common agricultural policy the Council adopted Regulation (EC) No 1782/2003 of 29 September 2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers and amending Regulations (EEC) No 2019/93, (EC) No 1452/2001, (EC) No 1453/2001, (EC) No 1454/2001, (EC) 1868/94, (EC) No 1251/1999, (EC) No 1254/1999, (EC) No 1673/2000, (EEC) No 2358/71 and (EC) No 2529/2001 (OJ 2003 L 270, p. 1).

9 Recitals 24 and 28 in the preamble to Regulation No 1782/2003 read as follows:

‘(24) Enhancing the competitiveness of Community agriculture and promoting food quality and environment standards necessarily entail a drop in institutional prices for agricultural products and an increase in the costs of production for agricultural holdings in the Community. To achieve those aims and promote more market-oriented and sustainable agriculture, it is necessary to complete the shift from production support to producer support by introducing a system of decoupled income support for each farm. While decoupling will leave the actual amounts paid to farmers unchanged, it will significantly increase the effectiveness of the income aid. It is, therefore, appropriate to make the single farm payment conditional upon cross-compliance with environmental, food safety [and] animal health and welfare [standards], as well as the maintenance of the farm in good agricultural and environmental condition.

…

(28) In order to leave farmers free to choose what to produce on their land, including products which are still under coupled support, thus increasing market orientation, the single payment should not be conditional on production of any specific product. However, in order to avoid distortions of competition some products should be excluded from production on eligible land.’

10 Recitals 1, 2, 5, 6, 7, 22 and 23 in the preamble to Council Regulation (EC) No 864/2004 of 29 April 2004 amending Regulation No 1782/2003 and adapting it by reason of the accession of the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia to the European Union (OJ 2004 L 161 p. 48; ‘the contested regulation’) state:

‘(1) The decoupling of direct producer support and the introduction of the single payment scheme are essential elements in the process of reforming the common agricultural policy aimed at moving away from a policy of price and production support to a policy of farmer income support. Regulation … No 1782/2003 … introduced these elements for a variety of agricultural products.

(2) In order to meet the objectives that lay at the heart of the reform of the common agricultural policy, the support for cotton, olive oil, raw tobacco and hops should be largely decoupled and integrated into the single payment scheme.

...

(5) A complete integration in the single payment scheme of the current support scheme in the cotton sector would bring a significant risk of production disruption to the cotton producer regions of the Community. A part of the support should therefore continue to be linked to the cultivation of cotton through a crop specific payment per eligible hectare. Its amount should be calculated in such a way so as to ensure economic conditions which, in regions which lend themselves to that crop, enable activity in the cotton sector to continue and prevent cotton from being driven out by other crops. In order to achieve that goal, it is justified that the total available aid per hectare per Member State is set at 35% of the national share of the aid that went indirectly to the producers.

(6) The remaining 65% of the national share of the aid that went indirectly to the producers should be available for the single payment scheme.

(7) For environmental reasons, a base area per Member State should be established in order to limit the areas sown under cotton. In addition, the eligible areas should be restricted to those authorised by the Member States.

...

(22) The decoupling of the aid for cotton and raw tobacco might require actions towards restructuring. Additional Community support for the production regions of the Member States in which Community aid for cotton and raw tobacco was granted during 2000, 2001 and 2002 should be made available by a transfer of funds from heading 1(a) to heading 1(b) of the financial perspectives. This additional support should be used as provided for in Council Regulation (EC) No 1257/1999 of 17 May 1999 on support for rural development from the European Agricultural Guidance and Guarantee Fund (EAGGF) …

(23) In order to ensure the harmonious continuation of the payment of income aid to producers in the cotton, olive oil and tobacco sectors, the option of postponing the integration of these support schemes in the single payment scheme should not apply.’

11 The contested regulation inserted in Title IV of Regulation No 1782/2003 a Chapter 10a, ‘Crop specific payment for cotton’, which comprises Articles 110a to 110f (‘the contested provisions’).

12 Under Articles 110a to 110c of Regulation No 1782/2003 as amended:

‘Article 110a

Scope

Aid shall be granted to farmers producing cotton falling within CN code 5201 00 under the conditions laid down in this Chapter.

Article 110b

Eligibility

1. The aid shall be granted per hectare of eligible area of cotton. In order to be eligible, the area shall be located on agricultural land authorised by the Member State for cotton production, sown under authorised varieties and maintained at least until the boll opening under normal growing conditions.

   However, if the cotton does not attain the stage of boll opening as a result of exceptional weather conditions recognised as such by the Member State, areas fully sown under cotton shall remain eligible for aid provided that the areas in question have up to the boll opening not been used for any other purpose...