The applicant concludes that to that extent the organs of the Community are obliged to make good the damage caused.

The applicant goes on to state that, as is clear not only from the previous history of the discrimination but also from the proceedings in Cases 117/76 and 16/77 Ruckdeschsel, the purpose of the provisions adopted shows that the intention was to exclude from the production refund only quellmehl intended for use as animal feed. It is convinced that Article 2 (a) and Article 4 of Regulation No 1570/78 must be interpreted in relation to that intention. It adds that in particular it is necessary to take into account the fact that the production refund for the manufacture of pre-gelatinized starch from wheat or maize continues to be granted even when that starch is not used for human consumption.

The applicant adds that, in order to remain competitive against maize starch and wheat starch, neither it nor Albert Ruschdeschel & Co. increased their selling prices as a result of the abolition of the production refund.

Finally, the applicant states that in order to relieve the Court of preparatory inquiries and to accelerate the procedure, it submitted its alternative claim, which allows the question of principle to be dealt with alone without inquiries, namely the question whether the Community is required to grant the production refund for maize and for wheat intended for the manufacture of quellmehl for human consumption also in respect of the period prior to 19 October 1977.

It recalls that the measures involved an economic choice, therefore entailing, in accordance with the settled case-law of the Court, a wide degree of discretion on the part of the Community institutions.

The Council goes on to state that in its judgment of 19 October 1977 the Court left open the choice between the reintroduction of the refunds for quellmehl and the abolition of the refunds for pre-gelatinized starch. The Council adds that if this second alternative had been chosen, equality between the two products could have been re-established as from 1 August 1974 without, however, its being necessary to recover the refunds already paid to the producers of pre-gelatinized starch. In fact it considers that there are compelling reasons of legal certainty which go in favour of not recovering the refunds paid when the right to those refunds is abolished retroactively in order to correct an error of the administration. It emphasizes that the judgment of the Court of 9 March 1978 in Case 54/77 Herpels v Commission [1978] ECR 585, at paragraph 38 of the decision, corroborates that point of view. Therfore, if the refund for pre-gelatinized starch had been abolished with effect from 1 August 1974, the applicant could not, according to the Council, claim any refund whatsoever for its products. If the matter is considered from that point of view, it seems difficult, in the Council's submission, to accept that it was not permissible, in choosing a solution much more favourable for the producers in question, to limit the regulations in point of time, as was done in this case. The Council goes on to note that in its judgment the Court did not require the institutions to take measures of a retroactive nature; it recalls that the proposals of the Commission did not envisage any retroactivity.

The Council concludes that the aforesaid regulations do not in any way go beyond the margin of discretion available to it in this case and that consequently they are valid, with the result that they cannot be the cause of a sufficiently serious breach of a superior rule of law for the protection of the individual.

Alternatively, working on the assumption that the applicant did not in fact increase its selling prices in order to compensate for the abolition of the refunds, the Council raises the question whether there really were compelling reasons preventing it from doing so.

It recalls in this context that it is clear from the summary of the observations of the plaintiffs in the main action in the judgment of 19 October 1977 that in a situation of free competition, apart from any refund, quellmehl is, as regards the cost of its manufacture, cheaper than pre-gelatinized starch; when pre-gelatinized starch was offered at DM 85 per 100 kg, quellmehl should, on account of the abolition of the refund, have been sold at DM 100 . On the basis of those prices there arises, according to the Council, by reason of the refund for pre-gelatinized starch, a competitive advantage of around 8.6 % over the selling price of quellmehl. If account is taken of the increase in the price of raw materials during the period for which the refund was not paid, which increase was around 30 %, it seems improbable to the Council that the applicant was unable to alter its selling prices in order to allow for that difference of 8.6 %, which even becomes 6.3 % as the prices of the two products have increased by 30 %. In this context the Council emphasizes that the producers of pre-gelatinized starch were also affected by the increase in the prices of raw materials.

The Council concludes that the abolition of the refunds did not go beyond the limits of the economic risks inherent in the applicant's activities and that it certainly could not have endangered the profitability of its business.

Finally, the Council points out that in the absence of the information necessary to form an opinion about the implications of the cost price of the quellmehl produced by the applicant, the selling prices and the increased competition from pre-gelatinized starch due to the benefit of the refund, it is not possible for it at this stage of the procedure to comment more fully on the question whether any damage was really suffered by the applicant. In any event, the Council has doubts on this point about the admissibility of the application in the light of Article 38 (1) of the Rules of Procedure.

The Commission adds that the applicant has not given the slightest indication of the extent of the damage which it claims to have suffered. Seeing that the quantities of quellmehl sold by the applicant during the period in question are roughly equivalent to those sold in the earlier periods, the Commission does not consider that the applicant can prove the existence of any damage.

The Commission observes further that the applicant does not satisfy the other conditions governing the liability of the Community for a legislative measure, as laid down in the judgment of the Court of 25 May 1978 in Joined Cases 83 and 94/76, 4, 15 and 40/77 Bayerische HNL and Others v Council and Commission [1978] ECR 1209.

The Commission admits in this context that the principle of equality constitutes a superior rule of law for the protection of individuals. However, it adds that infringements of that principle may give rise to entitlement to damages only in accordance with the legal principles common to the Member States and do not entail any obligation to make good the effects of those infringements apart from the obligation to pay damages.

According to the Commission, the judgment of the Court of 19 October 1977 contains factors which support its argument: at the time when that judgment was delivered, there was no doubt that by reason of established rights and the protection of legitimate expectation, the refunds granted to the starch producers could not be abolished retroactively; that is why, if the Court shared the applicant's point of view, it could easily have said, with regard to the period elapsed, that the quellmehl manufacturers were entitled to the same refund as that granted for starch; the Court declared that there were several courses of action for making good any damage sustained by those concerned. Thus it was for the institutions of the Community to make a choice between those possible courses of action.

In the Commission's opinion all those considerations lead to the following conclusions with regard to the present case: it is indisputable, following the judgment of the Court of 19 October 1977, that by abolishing the production refund for quellmehl on 1 August 1974 the institutions infringed the principle of equality as against the applicant; hence, if the other legal conditions were satisfied, the applicant could claim damages from the Community institutions; however, that possibility of entitlement to damages did not imply prima facie the granting ex post facto of the unpaid refund, because, as the substance of the benefits stricto sensu, that refund should not be regarded as constituting damage; it is in order to elude the consequences of that legal situation, unfavourable for it, that the applicant declares that following the judgment of the Court of 19 October 1977, the institutions were obliged in any event, by virtue of the principle of equality, to re-introduce the refund for quellmehl retroactively as from 1 August 1974; that is the reason why it claims compensation; according to the Commission that is wrong because, in accordance with the aforesaid judgment of the Court, the Community institutions were under only a contingent obligation to compensate the applicant according to the principles of Article 215 of the Treaty.

According to the Commission, there was no obligation to re-introduce the production refund for quellmehl retroactively as from 19 October 1977. In the Commission's view, a limitation upon discretionary power cannot be inferred from the fact that — contrary to the Commission's proposals — the Council none the less provided for limited retroactivity, since the Council had reasons for making a distinction between the period preceding and the period following the judgment of the Court.

Moreover, the Commission does not consider that it restricted its discretionary power since it had not provided for retroactive legislation.

The Commission adds that the applicant cannot rely on the principle of equality with regard to the limitation on discretionary power. According to the Commission, that principle means only that in a similar situation one person may not be treated differently from another; but it does not make it unlawful to treat the same person or the same group of persons in a particular way in one case and in a different way in another.

The Commission further points out that in any event the Community was not guilty of a serious and manifest disregard of the limits imposed upon the exercise of its power: the abolition of the refunds was the consequence of considerations of a practical nature and was in no way arbitrary.

Further, after the Court's judgment of 19 October 1977, there cannot in the Commission's view be any question of a serious and manifest abuse of power on its part: there are important considerations of principle which go against a right to the retroactive granting of refunds; besides, the judgment of the Court does not impose any obligation upon the institutions to grant such a right.

Finally, the Commission points out that after the abolition of the refund, the undertakings obviously did not have any great difficulty in maintaining the volume of sales of quellmehl at its former level. Thus the measures taken by the Community did not in any event affect the applicant in such a way that the liability of the Community inevitably follows from the gravity of its action.

The applicant further submits that a comparison could be made between the facts of this case and those of Case 74/74 CNTA, which concerned the abolition of monetary compensatory amounts, only if the institutions had suddenly abolished the production refund both for quellmehl and for pre-gelatinized starch. Since it is a question in this case not of the infringement of the principle of the protection of legitimate expectation, as in the CNTA case, but of the principle of equality, the manufacturers of quellmehl were entitled, according to the applicant, to enjoy a production refund as long as their competitors were receiving the refund.

The applicant considers that the conclusions of the Council and the Commission, to the effect that by its judgment of 19 October 1977 the Court intended to exclude the possibility of making good damage suffered by payment of an amount equivalent to that of the refund, are erroneous. In its view, that judgment establishes, as regards the past also, that the institutions are obliged to compensate the manufacturers of quellmehl, whilst at the same time leaving open several possibilities for that purpose. The applicant adds that since the extent of the damage suffered depends on the conduct of the manufacturers during that period, the Court was not in a position to ascertain the amount of the damage.

The applicant further states in reply that during the period in question it was able to pass on to the buyers the increases in the cost of raw materials, brought about by the increase in the threshold prices for wheat and maize, since the manufacturers of starch who continued to receive the production refund had to bear the same costs in that respect and were obliged to pass them on to the buyers of their products. However, it is quite different when unequal treatment of competing undertakings leads to distortions in the sphere of competition. In such a case, it is not as a rule possible to pass the increase in costs on to the buyers.

If, as a result of an occasional occurrence, the cost price for the dealer increases and he is not able to pass the increase on to the purchasers, because of the risk of seeing his competitors offer to supply more cheaply and thus of losing his customers as a result of asking for a higher price, he must, according to the applicant, in order to maintain his level of business activity, resign himself to suffering losses and continuing to sell to his customers without any price increase. That is the situation in this case: it was foreseeable for Albert Ruckdeschel & Co. that the situation resulting from the abolition of the refunds for quellmehl would not be permanent; the applicant and Albert Ruckdeschel & Co. were guided by those perfectly reasonable commercial considerations. Thus the applicant concludes that it is not possible to presume from the simple fact that those companies continued to manufacture and to sell that they did not suffer any damage.

The applicant further denies that the claim for damages for an amount equivalent to the refunds abolished depends on whether it was able to pass on the increase in its costs caused by that abolition. It draws that conclusion from the general concept of damage: damage which it is intended to make good by means of an action for damages is equal to the difference between the material situation in which the person injured would be if the act causing the damage had not taken place and the situation which arose as a direct consequence of that act.

According to the applicant, the question whether that damage was reduced after the event or could have been, in so far as the person injured passed the damage on to the purchaser, or could have done so, is an entirely separate question which in German law comes under the concept of Vorteilsanrechnung (bringing into account benefits received). The applicant goes on to state that according to the German case-law only circumstances bearing an adequate relationship of causality with the act causing the damage must be taken into consideration for that purpose. The applicant concludes that if that case-law is to be applied in this case there is no ground for taking into consideration the passing on to the customers of the increased costs arising from the abolition of the refund: even if the applicant had been able to pass on the increase, that result would have been obtained solely by virtue of the company's own initiative, and not as a result of the unlawful withholding of the refund. Moreover, the Community would be relieved of its obligations for no good reason if in the last analysis it were to benefit from the fact that the manufacturer of quellmehl, who passed on to his customers the increase in costs connected with the withholding of the production refund, were to be deprived of that advantage. The applicant considers that the German case-law must also be valid in Community law.

The Council then expresses its view on the applicant's submission that the person injured must be restored to the financial position in which he would have been if the damage had not occurred.

Doubting the relevance, even in German law, of that doctrine of civil law in the context of administrative proceedings between an individual and public authorities concerning a subsidy to which that individual claims to be entitled, the Council considers in any case that that doctrine cannot apply in the context of an action for non-contractual liability governed by Community law. The Council adds that it is clear from the judgment of the Court in Case 74/74 CNTA that the Community is not obliged to make good damage which, although apprehended, does not in fact occur.

The Commission takes the view that that argument may be taken into account when the admissibility of the action for damages is considered and that the action must thus be dismissed as inadmissible because the need for protection is lacking and because the real object of the action is not to obtain damages, but to enforce a claim.

If the action is declared admissible, an examination of questions of substance will reveal, according to the Commission, that the action is unfounded: if there does indeed exist an action for the enforcement of a claim, there cannot, by virtue of that very fact, be any damage; if, on the other hand, such a right to enforce a claim is not recognized, there cannot be any right to bring an action for damages having the same object.

Consequently, the Commission is of the opinion that the division of responsibilities between the institutions of the Community and the national authorities means that in this case the claim for refunds must be prosecuted through an action in the national court against the competent authorities. The Court could then give a preliminary ruling concerning solely the question whether the principle of equality requires that the applicant should also be granted a refund for the production of quellmehl retroactively for the period from I August 1974 and 18 October 1977. All the other questions should have been dealt with by the national authorities and courts. The applicant had cause to bring proceedings directly before the Court of Justice solely for the purpose of prosecuting a genuine action for damages.

As regards the damage allegedly suffered by the applicant, the Commission points out that the applicant's lower profits, due to the abolition of the refund, could not be treated as a real loss as the refund does not represent a commercial profit; it is not the fruit of an undertaking's own efforts, but purely a subsidy granted by the public authorities in pursuance of a particular objective. That objective is not to enable the undertakings to obtain a certain commercial profit.

With reference to the reasons for the refusal to grant a refund for periods already past, the Commission states that there is no mention in the judgment of 19 October 1977 of an obligation to grant the refund retroactively, although it was already obvious at the time it was not possible to require the manufacturers of pre-gelatinized starch to repay the amounts received in refunds. None the less the fact that the Court did not require the Council or the Commission to grant the refunds retroactively but expressly mentioned in this regard the possibility of making good contingent losses must, in the opinion of the Commission, have been of some importance. The reason for allowing compensation to be paid only for contingent losses is essentially, in its opinion, the fact that granting the refunds ex post facto no longer permits attainment of the objective in pursuance of which they were established, namely-encouraging the sale of certain products during a certain period.

Finally, the Commission observes that it is not fair to say, as the applicant says, that the Commission bound itself by adopting in Regulation No 1570/78 detailed rules relating to the re-introduction of the production refund for quellmehl: after the adoption of the mandatory provision contained in Article 6 of Council Regulation No 1127/78, the Commission no longer had any discretion in the matter; but that does not prevent it from considering that the reasons put forward by the Council are entirely apt to justify different schemes according as periods prior to or subsequent to the delivery of the judgment of the Court of 19 October 1977 are involved.