Agrochem-Maks v Commission (Plant-protection products - Active substance oxasulfuron - Order (extracts)) [2019] EUECJ T-574/18 (21 January 2019)

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(Application for interim measures — Plant-protection products — Active substance oxasulfuron — Non-renewal of approval for placing on the market — Application for suspension of operation — Lack of urgency — Balancing of interests)

Agrochem-Maks d.o.o., established in Zagreb (Croatia), represented by S. Pappas, lawyer,

European Commission, represented by A. Lewis, I. Naglis and G. Koleva, acting as Agents,

APPLICATION based on Articles 278 and 279 TFEU, seeking suspension of the operation of Commission Implementing Regulation (EU) 2018/1019 of 18 July 2018 concerning the non-renewal of approval of the active substance oxasulfuron, in accordance with Regulation (EC) No 1107/2009 of the European Parliament and of the Council concerning the placing of plant protection products on the market, and amending Commission Implementing Regulation (EU) No 540/2011 (OJ 2018 L 183, p. 14),

32 In the first place, so far as concerns the seriousness of the alleged damage due to the risk of adverse effects on its turnover and profits, and the risk of a reduction in its total enterprise value, which must be examined together, the applicant considers that, as a result of the contested regulation, it will suffer a significant loss of turnover and profits, as well as of its ‘implied enterprise value’. In that regard, it is thus appropriate to point out that the damage alleged is purely financial.

33 Regarding the seriousness of the financial damage alleged, it is settled case-law that the interim measure sought will be justified only if it appears that, without such a measure, the party seeking it would be in a position that could imperil its existence before the final decision in the main action (see order of 30 April 2010, Xeda International and Pace International v Commission, T‑71/10 R, not published, EU:T:2010:173, paragraph 42 and the case-law cited).

34 In that regard, it is settled case-law that the assessment of the serious nature of such damage is carried out in the light of, inter alia, the size and turnover of the undertaking and the characteristics of the group to which it belongs (see order of 15 November 2011, Xeda International v Commission, T‑269/11 R, not published, EU:T:2011:665, paragraph 20 and the case-law cited; see also, to that effect, order of 15 April 1998, Camar v Commission and Council, C‑43/98 P(R), EU:C:1998:166, paragraph 36 and the case-law cited).

35 In addition, it must be recalled that, also according to settled case-law, it has been found, that, on the one hand, with regard to a loss corresponding to less than 10% of turnover of undertakings active in highly regulated markets, the financial difficulties which those undertakings risked suffering do not appear to be such as to threaten their very existence (order of 15 November 2011, Xeda International v Commission, T‑269/11 R, not published, EU:T:2011:665, paragraph 21; see also, to that effect, order of 11 April 2001, Commission v Bruno Farmaceutici and Others, C‑474/00 P(R), EU:C:2001:219, paragraph 106) and, on the other, regarding a loss representing almost two thirds of the turnover of those undertakings, while acknowledging that the financial difficulties they underwent could have been such as to threaten their very existence, it has nevertheless been underlined that, in a highly regulated sector where major investment is often required and the competent authorities may be led to intervene when public health risks become apparent, for reasons which cannot always be foreseen by the undertakings concerned, it was for those undertakings, if they were not to bear themselves the loss resulting from such intervention, to protect themselves against its consequences by adopting an appropriate policy (see order of 16 June 2016, ICA Laboratories and Others v Commission, C‑170/16 P(R), not published, EU:C:2016:462, paragraph 29 and the case-law cited).

36 In the present case, the applicant maintains, for 2017, that it has a total income of EUR 114 751 316, including EUR 15 216 941.17 from sales of the product Laguna, that is to say approximately 13.26% of its total turnover. In addition, sales of three products ancillary to Laguna, for the same year, reported a total of EUR 5 079 535.60, namely 4.43% of its total turnover. It submits, next, that the import on its behalf of those four products represents, for Kavran, EUR 15 716 330.04 for a total turnover of EUR 56 996 563, that is to say approximately 27.57% of Kavran’s total turnover. It submits, finally that Laguna and its ancillary products together represent more than 50% of its ‘implicit enterprise value’ with Kavran.

37 At the outset, the necessarily personal nature of the harm alleged in the analysis relating to urgency, as referred to in settled case-law, should be noted (order of 4 December 2007, Cheminova and Others v Commission, T‑326/07 R, EU:T:2007:364, paragraph 50 and the case-law cited). The applicant cannot thus, in the context of the present application for interim measures, rely on harm caused to other undertakings, which are not parties to the case, in order to demonstrate the seriousness of the alleged harm.

38 In that regard, it must be noted that, although the applicant states that the three ancillary products are generally purchased at the same time as Laguna, it does not adduce any evidence to show that they cannot be used without Laguna, for example in combination with another herbicide. The turnover relating to the three ancillary products cannot therefore be taken into account in analysing the seriousness of the harm.

39 In any event, it must be pointed out that it was accepted –– in the order of 28 April 2009, United Phosphorus v Commission (T‑95/09 R, not published, EU:T:2009:124, paragraph 69) –– that, in the evaluation of the seriousness of the harm, the judge hearing the application for interim relief could not confine himself to having recourse, in a mechanical and rigid manner, solely to the relevant turnover, but was required also to examine the circumstances particular to each case and relate them, when taking his decision, to the harm occasioned in terms of turnover.

40 While it is true that that case-law has, up to now, principally been invoked in order to allow the court to assess whether the seriousness of the alleged harm could be established despite the fact that the turnover did not exceed the indicative threshold of 10% referred to in paragraph 35 above, that prohibition of a mechanical and rigid analysis cannot be limited to that interpretation alone, but must also be understood as requiring the courts to confirm whether, given the specific circumstances of the case, the seriousness ought not to be established despite that threshold being exceeded.

41 In these circumstances, it appears that it must be noted, first, that it is apparent from the documents in the file that the applicant is, effectively, a distributor in Croatia of oxasulfuron manufactured by a Chinese subcontractor according to a formula provided by Syngenta and imported into Croatia by Kavran. Accordingly, it did not have to bear the significant investments, general costs and fixed costs that developing the activity of a manufacturer involved.

42 In that regard, it must be pointed out, at the outset, that, contrary to the view of the Commission, the status of distributor does not automatically mean that it is easy to replace a banned product with a similar one. Indeed, there are many obstacles which can, in that context, hinder or prevent the development of new substances, especially in a highly regulated market such as the one in question.

43 Moreover, it follows from the applicant’s observations, and from the marginal market share of pre-emergence herbicides, that those herbicides, which appear to be recommended for use in humid climates, accordingly seem not correspond to the Croatian market and therefore do not constitute, in principle, a viable alternative solution to oxasulfuron.

44 However, it must be noted, first, that, although the applicant claims that the only other post-emergence herbicide on the Croatian market is imazamox, sold by the competitor undertaking BASF, it puts forward no information concerning any alternative post-emergence products already present in the European Union which could be distributed on the Croatian market. In accordance with the principles referred to in paragraphs 26 to 28 above, it is for the party seeking interim measures to provide evidence enabling the court to rule.

45 Next, the applicant’s argument that it could not find any alternative herbicide to distribute on the Croatian market since the developers and manufacturers of active substances are generally responsible themselves for distribution cannot, as it stands, convince the judge hearing the application for interim measures. First, up to now, the applicant has been distributing a product developed by another undertaking, which accordingly contradicts its claim, and, second, the applicant’s facility and the distribution network it has developed on the Croatian market, together with the business opportunity that the disappearance of oxasulfuron would represent, appear to constitute evidence that the applicant could use in the process of finding new manufacturers.

46 Second, it must be noted that the applicant is operating in a highly regulated market. However, as noted in paragraph 35 above, it was therefore incumbent on the applicant to behave in such a way as to take into account the increased risk of a ban on the marketing of its product, in terms of having to bear the loss arising from such a ban. Consequently and contrary to what the applicant maintains, the Court should, in its analysis of the seriousness of the alleged harm, take into account the applicant’s business strategy.

47 In the present case, the share of turnover represented by sales of its product Laguna must be assessed as the result of a deliberate policy in a highly regulated market. Nevertheless, without any further evidence relating to measures that the applicant may have taken to avoid a potentially risky situation in the light of the nature of the market in question, exceeding the indicative threshold of 10% cannot, in itself, convince the judge hearing the application for interim measures of the seriousness of the alleged harm.

48 In this context, it should be pointed out that the applicant cannot rely on any legitimate expectations arising from the outcome arrived at by the rapporteur Member State. As the Commission rightly points out, this report is only an intermediate stage of a well-known procedure and does not in any way predict the final outcome to be determined by the Commission. Moreover, as the settled case-law points out, the principle of the protection of legitimate expectations can only be invoked in relation to a situation that could give rise to it caused by the institution empowered to take the final decision (see judgment of 30 January 2018, Przedsiębiorstwo Energetyki Cieplnej v ECHA, T‑625/16, not published, EU:T:2018:44, paragraphs 75 and 76 and the case-law cited). The principle of legitimate expectations cannot therefore arise, in the context of a procedure for the renewal of the approval of a plant protection substance such as in the present case, with regard to the results of the interim report submitted by the rapporteur Member State.

49 It must therefore be held that the facts of the case must lead the judge to place the significance of the relevant turnover in context and to conclude that the alleged loss is not serious on account of the likelihood of a negative effect on its turnover and profits or a reduction in its total business value.

85 As a preliminary point, it must be pointed out that the non-renewal of the product concerned is based, first, on the existence of two factors raising serious concerns and, second, on the existence of seven issues that could not be finalised. Although the first two factors concern established risks to earthworms and aquatic organisms, it cannot be inferred that a lack of information, such as the gaps arising from the seven issues that could not be finalised in the present case, can be interpreted as meaning that it follows that there is no risk to public health.

86 In the first place, so far as concerns the argument based on the lack of danger to public health, the applicant states that the substance at issue and the substance-based products have been on the market for over 20 years and that no public health incidents have taken place to date following their commercialisation. In addition, it claims that, otherwise, the extension of the initial approval for a period of six years from 2013 to 2019, pending the examination of the substance, would not have been granted by the Commission.

87 It is apparent from the material in the case file that risks to human health cannot be ruled out. In that regard, it must, first, be noted that the applicant can draw no convincing argument in the case at hand from the fact that the substance has been safely used in the European Union for more than 20 years without any harmful effects on human health ever having been reported. In the sector concerned by the present case, scientific developments are not uncommon and thus provide the opportunity to assess once again substances in the light of new knowledge and scientific discoveries. That is the basis of renewal procedures and the rationale for applying time limits to marketing authorisations. Consequently, the examination by the judge hearing the application for interim measures in the context of the balancing of interests must extend to the risks now identified (see, to that effect, order of 22 June 2018, Arysta LifeScience Netherlands v Commission, T‑476/17 R, EU:T:2018:407, paragraph 105), on the one hand, and which cannot be ruled out, on the other hand.

88 Next, the applicant’s position that there is no public health risk is based primarily on the arguments it raises in the context of its demonstration of the existence of a prima facie case, namely, first, that the decision to adopt the contested regulation stems from an infringement, first, of the obligation to state reasons of the administration with regard to its assessment that the shortcomings identified justify the non-renewal of the approval of oxasulfuron and, second, of the obligation to state reasons of the administration concerning the existence of a high risk for aquatic organisms and earthworms.

89 Those aspects fall within the review of the legality of the procedure and cannot lead, without other elements and with the exception of a possible acknowledgement of a manifest error of assessment, the judge hearing the application for interim measures, in the context of the balancing of interests, to consider that the conclusions presented in those documents must prevail over the preceding assessments which are in principle the result of a meticulous and exhaustive examination. It is not for him to conduct a technical assessment of scientific data that would exceed his powers (see, to that effect, order of 22 June 2018, Arysta LifeScience Netherlands v Commission, T‑476/17 R, EU:T:2018:407, paragraph 108).

90 This is especially true in the present case, where the alleged harm does not result, with regard to public health, from scientific data collected, but specifically from the lack of such data, constituting the shortcomings identified in the contested regulation. As noted in paragraph 85 above, those shortcomings do not make it possible to rule out risks to public health which, as identified in the contested regulation, must therefore be taken into consideration in the light of the other interests at stake.

91 In that regard, the applicant does not refer to any interest other than preventing the harm that the contested regulation would cause it, harm which, it has moreover been established, was neither serious nor irreparable. It is settled case-law that, in principle, the requirements of the protection of public health must unquestionably be given precedence over economic considerations (see order of 11 April 2001, Commission v Bruno Farmaceutici and Others, C‑474/00 P(R), EU:C:2001:219, paragraph 112 and the case-law cited, and judgment of 19 April 2012, Artegodan v Commission, C‑221/10 P, EU:C:2012:216, paragraph 99 and the case-law cited).

92 The alleged harm does not suffice to tip the balance of interests in favour of the applicant in so far as the public health risks identified in respect of oxasulfuron must be regarded as recognised (see paragraph 87 above).

93 In any event, even if the applicant had succeeded in proving the urgency relating to the characteristics of its damage, it would still have been necessary to assess it in the light of the principle laid down by well-established case-law according to which the precedence of the imperative requirements of the protection of public health may justify restrictions which have adverse consequences, and even substantial adverse consequences, for certain operators (see, to that effect, judgment of 1 June 2010, Blanco Pérez and Chao Gómez, C‑570/07 and C‑571/07, EU:C:2010:300, paragraph 90 and the case-law cited). In that context, the importance of recognising the precautionary principle has been highlighted; according to that principle, where there is uncertainty as to the existence or extent of risks to human health, the EU institutions may take protective measures without having to wait until the reality and seriousness of those risks have been demonstrated (see, to that effect, order of 19 December 2013, Commission v Germany, C‑426/13 P(R), EU:C:2013:848, paragraph 54 and the case-law cited).

94 Consequently, the arguments advanced by the applicant concerning the safety of the substance at issue purporting to demonstrate that public health considerations cannot have greater weight than those relating to its damage must be rejected.

1 Only the paragraphs of this order which the Court considers it appropriate to publish are reproduced here.

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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Agrochem-Maks v Commission (Plant-protection products - Active substance oxasulfuron - Order (extracts)) [2019] EUECJ T-574/18 (21 January 2019) URL: http://www.bailii.org/eu/cases/EUECJ/2019/T57418.html Cite as: [2019] EUECJ T-574/18

Court of Justice of the European Communities (including Court of First Instance Decisions)