Speciality Produce Ltd v Secretary of State for the Environment, Food and Rural Affairs [2009] EWHC 1245 (Admin)

[2009] EWHC 1245 (Admin)Case No CO/7827/2008
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 5 June 2009
Before
IAN DOVE QCSitting as a Deputy Judge of the High Court
Between
SPECIALITY PRODUCE LIMITEDClaimantSECRETARY OF STATE FOR THE ENVIRONMENT, FOOD AND RURAL AFFAIRSDefendant
Aidan Robertson QC and Sarah Abram (instructed by Taylor Vinters Solicitors) for ClaimantIan Hutton (instructed by DEFRA) for DefendantHearing Hearing dates: 19-20 May 2009
Judgment

Ian Dove QC:

[1]This case has involved a considerable number of twists and turns over its history. Indeed, the battle grounds for the application for judicial review have changed substantially since it was issued. However, as agreed at the outset of the proceedings, there is now but one issue between the parties in respect of whether or not the Claimant is entitled to relief. That issue was agreed as follows:
“Did the defendant correctly reject the claimant’s application for re-recognition on the ground that it was contrary to Article 4(3) of Regulation 2988/95 or otherwise an abuse of law?”
[2]That application related to the status of the Claimant as a Producer Organisation (a “PO”) for the purposes of Council Regulation 2200/96, which is a regulation dealing with the common organisation of the market in fruit and vegetables.

The facts

[3]For the purposes of this Judgment it is only necessary to set out the facts which are pertinent to the consideration of the issue of abuse. As I have outlined above, the issues between the Claimant and the Rural Payments Agency (“the RPA”) have, over the course of time, ranged over a large number of issues. This judgment is only addressing the identified issue remaining in these proceedings.[4]The Claimant is an Industrial and Provident Society which was originally set up in 1998, in response to demand from growers of, in the first instance, salad produce. Originally, it comprised seven members but, over the course of time, the number of subscribing growers has increased. In 1998 the Claimant was granted recognition as a PO. An advantage of being a PO is that, under the terms of Regulation 2200/96, a PO is entitled to benefit from a system of match-funding in relation to monies expended on marketing its growers’ produce. Initially, this approval was granted on the basis of a five-year plan commencing on 1 January 1999. The scheme concerning POs is administered by the RPA.[5]From 1999 to 2003 the Claimant was regularly and repeatedly audited, and during that period retained its status as a PO and received the funding which was associated with that status. During that period of time its operations included a central marketing function. That central marketing function dealt in particular with the buyers from major food retailers, who sourced produce for their food stores from the Claimant. Documentation has been produced which I do not need to set out which provides evidence of this centralised marketing activity with the buyers of the main food retailers.[6]By 2004 it had become clear that the market in relation to the goods that the Claimant was providing was changing. Major food retailers were moving towards a system of operating with category managers which it is important to describe in order to obtain an understanding of the issue which has underlain the dispute between the Claimant and the Defendant.[7]The rationalisation of the market is a process which has perhaps been most clearly described in the Claimant’s business plan prepared for the period 2003–2008. That document was prepared and submitted as part of their application for renewal of recognition as a PO at the end of the first five years of their recognition. What that business plan demonstrates is that in the late 1990s the bringing of fruit and vegetable produce to the market, which consisted principally of large food store chains, was undertaken through a complex supply web involving both wholesalers and the provision of produce to the retailers by growers direct. This complex web subsequently rationalised by 2000 to a far more limited number of co-ordinated suppliers providing fruit and vegetable produce to the retailers. Subsequently, in or around 2004, this rationalisation progressed further by the introduction of category managers. Category managers take over the procurement of an entire category of produce for the retailer, thereby further rationalising the channelling of goods through the market to the consumer.[8]The Claimant had foreseen these changes in their market, and had changes planned in order to address these issues. Returning to their business plan, albeit the draft from which I propose to quote is from December 2005, I was assured that the essence of the plan was the same as that which was submitted to the RPA in 2003. The Claimant’s approach is set out in the section of the business plan which deals with Marketing Agents, as follows:
“Over a number of years the central sales function of Speciality Produce has been eroded as more and more retail customers nominated category managers as the only available channel for their business. The process was completed in 2004 when Sainsbury insisted their remaining business be handled through EVG (who subsequently lost it) and M&S politely but firmly suggested their business be transferred to Exotic Farm Produce from 2005 onwards. At this point it became clear that Speciality Produce no longer had the critical mass required to commercially justify maintaining a central sales function. The cost of this discipline is not, after a certain point, proportional to the volume of business. As a minimum this requires a dedicated office staffed 8 to 10 hours per day 364 days per year. The attendant complexity and costs of providing and maintaining 24 hour electronic data interchange systems, electronic sales order processing systems, and stock control systems requires round the clock availability of IT support. There would also be a requirement to retain the services of account managers/executives to service remaining account albeit on a part time basis. If it continued the sales desk would simply be duplicating the functions already being carried out by Marketing Agents. The decision was therefore taken in 2004 to spread any remaining business across existing Marketing Agents and close the central sales function. The Marketing Agents were asked to channel daily logistics directly through each provisional production hub. This allowed a whole stratum of costs to be removed and allowed the remaining commercial staff to concentrate on the development of long term business strategy. The money saved has effectively been used to offset the marketing costs/commissions levied by the Marketing Agents thus protecting members’ returns.”
[9]The application for renewal of recognition supported by the 2003 business plan containing, in essence, the text which I have quoted was approved by the Minister through the RPA on 8 December 2003. In the letter communicating that decision the RPA confirmed that the organisational strategy being pursued by the Claimant met with the requirements of the regulations in relation to POs. In March 2005 the central sales function of the Claimant was closed. As explained in the business plan the marketing activities were divided up amongst the members, particular members having been nominated to lead the marketing in respect of particular categories of produce.[10]In 2005–6 the European Court of Auditors audited the operation of the PO scheme in the UK. This gave rise to a number of issues about which action was required. The Claimant was approached and its activities re-evaluated in the light of this auditing exercise in July 2006. As a result of that re-evaluation, they were de-recognised. The notes of the re-evaluation exercise provide a distillation of the conclusions of the panel who conducted that re-evaluation, as follows:
“Due to the level of outsourcing and the setting up of separate functions for categories of product, this PO will be derecognised.”
[11]The setting up of separate functions for categories of product was of course the exercise which was described in the business plan as being necessary to meet the challenge of the introduction of category managers. The status of the Claimant was withdrawn on 17 August 2006.[12]This decision was followed by a meeting between the Claimant and the RPA on 30 August 2006, leading to an exchange of emails which has a bearing on the question of central marketing. The emails were exchanged between Mr Woods, the commercial manager of the Claimant, and Mr Lockwood, who was employed within the RPA inspectorate as a specialist in their policy and advice unit. Both had been present at the meeting on 30 August 2006. On 11 September 2006 Mr Woods emailed Mr Lockwood to confirm as follows:
“Sales The company will reinstate a central Sales Order Processing Desk (as opposed to Divisional Desks) with a new Electronic Sales Order Processing System. The company will employ its own Sales and Sales Administration staff. This system will produce the raw data to generate customer invoices from the central Financial Administration Desk.”
[13]The context of this was setting out a number of aspects of changes to the operational structure of the Claimant in order to meet what was perceived to be the requirements to secure recognition as a PO. In response to this email, Mr Lockwood replied on 12 September 2006 as follows:
“Sales A central sales (and marketing function) is essential and its previous removal had been a step in the wrong direction. Hopefully the members will see that if a central unit is run properly, there is a saving for them as individuals, and in my opinion it gives the company better opportunities to expand further in the future.”
Mr Lockwood went on to note that the Claimant had an advantage as it already existed as a company and many of the requirements necessary to secure recognition were already in place.[14]Following this exchange of emails, on 15 September 2006 the Claimant applied for re-recognition as a PO. That application was, however, refused on 14 December 2006. In the letter communicating that decision dated 14 December 2006, the RPA stated as follows in relation to part of the reasons why the application had been unsuccessful:
“There is no evidence of central marketing. On the contrary, the use of nine marketing agents suggests that the opposite is in fact the case. 96% of SPL’s produce is marketed by only five of the marketing agents. One marketing agent acts on behalf of only one member. This is inconsistent with article 11.1(b)(2) and article 11.1(c)(3) of the Regulation ... Noting the history of this matter, and in particular the fact that recognition was withdrawn from SPL in August 2006, it is not considered that it has demonstrated sufficient changes to correct the defects found in the original organisational structure.”
[15]The Claimant then embarked upon an appeal procedure in respect of both the initial decision to de-recognise them and also the refusal to re-recognise them. That appeal process is undertaken in two stages. The stage one appeal was dismissed. This was a process conducted on paper and, in relation to sales, the decision records as follows:
“...it is noteworthy that the introduction of a central marketing function has not been addressed. RPA also notes that whilst an assessment of the central sales administration arrangements has not been treated as dispositive of this appeal, it is unlikely that the company would be in a position to demonstrate the effectiveness of such arrangements until they had in fact been in place and working for some time.”
The decision also noted that, whilst in the original decision there had been an allegation of artificiality in relation to the arrangements with respect to one of the members of the Claimant, that allegation needed to be withdrawn since it was one which had been made inappropriately.[16]The matter then proceeded to the stage two appeal, involving a hearing before a panel of experts. The panel recommended to the Minister, following the hearing, that the appeal should be allowed. However, after further exchanges of correspondence between the Minister and the Claimant’s solicitors, the application was refused, partly at least on the basis that there was inadequate documentation to support the findings of the panel and the contentions of the Claimant. The application was refused on 18 July 2008. That decision initially founded this claim for judicial review. Whilst the claim was on foot, the Claimant sought to address the substance of the Minister’s refusal by the provision of further documentation. The decision was reconsidered by the Defendant in the light of that material, but the reconsideration led to a refusal by email dated 19 March 2009.[17]Whilst it is not clear from the terms of that decision, it was confirmed on behalf of the Defendant that the essence of the decision was the issue for determination in this case which I outlined at the start of this judgment, namely whether or not the Claimant’s position gave rise to an abuse in European Community law. The basis of those contentions is the evidence provided in relation to the documentation by Mr Woods in a witness statement exhibiting that information dated 19 January 2009. Within that witness statement the following paragraphs are particularly germane to the issues before me and are those which are the foundation of the Defendant’s contention that the re-establishment of the central marketing function by the Claimant is an abuse leading to the necessity to withhold status as a PO when measured against the legal principles which I shall set out below. “50 It was precisely to meet the RPA’s objections and to follow the guidance given at the meeting, and in particular from Stephen Lockwood, that SPL, as part of its application for re-recognition as a PO on 15 September 2006, presented to the RPA a clear commitment that it would re-establish marketing arrangements by the reintroduction of a central sales desk. Such a change would have reinstated the direct contact with and marketing to customers that had been in place prior to the move to a divisional structure. ... 54 I am now aware that the RPA considers ‘customer contact’ encompasses the traditional marketing activity of creating customer contact and encouraging sales. SPL’s view remains firmly that a key element of marketing is creating the product in an environmentally acceptable manner according to the Multiple’s particular requirements and ensuring consistent supply and quality, but has always agreed on the necessity for customer contact. When it comes to records that the RPA expects to be created, it must be borne in mind that conventionally this is a business where a great deal is done by demonstration and in conversation. The RPA also expects evidence of an SPL brand, and this is what we had strongly before the divisional reorganisation. The proposed changes would have done exactly these things because the re-establishment of a sales desk would have meant that SPL’s marketing activities were once again undertaken centrally by SPL rather than through the divisional structure of SPL. Invoicing has continued to be by SPL throughout the period up to 2003 to 2004 and during the subsequent divisional period. 55 In particular the reinstatement of the sales desk would have meant the recreation of the central sales force and of the sales administrative staff in customer contact roles. This change would have significantly altered SPL’s business model but SPL was prepared to do it (along with the other changes) in order to achieve re-recognition as a PO ... 64 In my evidence to the appeal panel, both written and oral, I described the development of the procurement and purchasing procedures of the Multiples. This had been a very fast changing area in recent years reflecting the intense competition between the Multiples, not only on price but also in obtaining quality and traceability assurance, and in the identification of sourcing of product from identifiable and preferably local growers. This has all been undertaken at the time of the initial movement by Multiples from co-ordinating purchasing of fresh fruit and vegetables themselves to subcontracting that arrangement to category managers. In doing so they were following commercial practices originally developed for groceries. This sector is dominated by multinational companies such as Nestle, Unilever, PepsiCo and Cadbury, who own global brands supported by large marketing budgets. The products are characterised by long shelf life and consistency of supply, quality and packaging. Category management failed to produce the expected benefits in produce where the industry is much more fragmented, there is very little branding and consequently marketing budgets are small or non-existent. The product itself is characterised by short shelf life and, by comparison with grocery, much more variation in quality, packaging and crucially supply. The introduction of category management in this field has simply introduced a layer of cost (the category manager) without delivering the hoped for benefits to either Multiple or producer. Consequently there has been a move by the Multiples back to direct purchasing arrangements. … 67 In the changing market, with the almost wholesale reorganisation by the Multiples of the purchasing arrangements which I have referred to above at paragraph 64, it makes good commercial sense to reinstate the sales desk and sales staff to continue to develop our relationship with the Multiples (at present largely undertaken on a divisional basis), as we had always intended to do once the re-recognition procedure had completed; and so irrespective of the outcome of this application we are taking steps to reinstate the desk and to staff it as we had originally intended. It will undertake a wide marketing role in particular pursuing the activities that were current before the change in 2004–2005.”

The law

[18]It is against the background of these facts that the Defendant contends that the Claimant’s application containing as part and parcel of it the re-establishment of the central sales function is an abuse in terms of the established principles of European law. In the recent case of Milk Supplies Limited v Department for Environment, Food and Rural Affairs [2009] EWHC 503, Plender J observed that the European law concept of “abuse of rights” is troublesome to a common lawyer since common lawyers are apt to define a right as being a legal entitlement requiring another person to perform the correlative duty. I understand and would with respect agree. However, to a practical person, the introduction of the concept of abuse of rights is a sensible and pragmatic response to the problem of unintended consequences, so as to avoid the creation and satisfaction of perverse incentives. It provides a safety valve recognising that the creation and application of rules do not always inevitably lead to the outcome which was desired and is desirable.[19]The starting point for the consideration of the legal principles relevant to this case must be the regulations which lead to the establishment of producer organisations. Council Regulation 2200/96 provides in its recitals an insight into the reasons why the regulations were enacted. In particular, those recitals provide as follows:
“(7) Whereas producer organisations are the basic elements in the common market organisation, the decentralised operation of which they ensure at their level; whereas, in the face of ever greater concentration of demand, the grouping of supply through these organisations is more than ever an economic necessity in order to strengthen the position of producers in the market; whereas such grouping must be effective on a voluntary basis and must prove its utility by the scope and efficiency of the services offered by producer organisations to their members; whereas the delivery of products to specialist producer organisations existing before the entry into force of this Regulation is not brought into question; ... (11) Whereas the establishment and proper functioning of operational funds requires that producer organisations should take charge of the whole of the relevant fruit and vegetable production of their members; (12) Whereas in order to control Community expenditure there should be a cap on assistance granted to producer organisations that establish operational funds.”
[20]Having observed that Article 1 of the Regulation is to set up a common organisation of the market in fruit and vegetables, in Article 11 criteria are provided for the recognition of producer organisations as follows:
“Article 11 1 For the purposes of this Regulation, ‘producer organisation’ means any legal entity: (a) Which is formed on the own initiative of growers of the following categories of product listed in article 1(2): (i) Fruit and vegetables (ii) Fruit (iii) Vegetables (iv) Products intended for processing (v) Citrus fruits (vi) Nuts (vi) Mushrooms; (b) Which has in particular the aim of: (i) Ensuring that production is planned and adjusted to demand, particularly in terms of quality and quantity; (ii) Promoting concentration of supply and the placing on the market of the products produced by its members; (iii) Reducing production costs and stabilising producer prices; (iv) Promoting the use of cultivation practices, production techniques and environmentally sound waste-management practices in particular to protect the quality of water, soil and landscape and preserve and/or encourage biodiversity;” (i) Fruit and vegetables (ii) Fruit (iii) Vegetables (iv) Products intended for processing (v) Citrus fruits (vi) Nuts (vi) Mushrooms; (i) Ensuring that production is planned and adjusted to demand, particularly in terms of quality and quantity; (ii) Promoting concentration of supply and the placing on the market of the products produced by its members; (iii) Reducing production costs and stabilising producer prices; (iv) Promoting the use of cultivation practices, production techniques and environmentally sound waste-management practices in particular to protect the quality of water, soil and landscape and preserve and/or encourage biodiversity;”
[21]Article 11 goes on to require at Article 11.1(3) that producer organisations should market their entire production through the producer organisation. Then, Article 11.2 provides as follows:
“Article 11.2 Member States shall recognise as producer organisations for the purposes of this Regulation all producer groups applying for such recognition, on the condition that: (a) They meet the requirements laid down in paragraph 1 and provide the relevant evidence including proof that they have a minimum number of members and cover a minimum volume of marketable production, to be determined in accordance with the procedure laid down in Article 45; (b) There is sufficient evidence that they can carry out their activities properly, both over time and in terms of effectiveness; (c) They effectively enable their members to obtain technical assistance in using environmentally-sound cultivation practices; (d) They effectively provide their members with the technical means for storing, packaging and marketing their produce and ensure proper commercial and budgetary management of their activities.”
[22]I heard various submissions about what, reading the Regulations as a whole, the purpose of the Regulations was. There is an obvious danger in paraphrasing what is an extensive piece of legislation. However, it is clear to me that in essence the purpose of the Regulations is to establish and promote as a recognised and beneficial market organisation the PO, provided that in so doing the administration of the scheme and the distribution of funding to facilitate PO’s would not give rise to either distortion of the market or the inefficient use of Community funds. I shall deal with the purpose of the Regulation in relation to the facts of this case below. The importance of obtaining an understanding of the purpose of the Regulations is the role that plays in the consideration of whether or not, on the facts of this case, the Claimant’s application amounts to an abuse.[23]The principle of abuse is initially to be found within Council Regulation 2988/95 at Article 4.3, which provides as follows:
“Acts which are established to have as their purpose the obtaining of an advantage contrary to the objectives of the Community law applicable in the case by artificially creating the conditions required for obtaining that advantage shall result, as the case shall be, either in failure to obtain the advantage or in its withdrawal.”
[24]As that Article has been explained and understood in subsequent case law in essence, whilst it has to be read as a whole, it gives rise to two questions. Firstly whether, viewed objectively, the principal aim of an act was undertaken for the purpose of obtaining an advantage contrary to the purpose of the Regulations notwithstanding that it falls strictly within the parameters of the Regulations. Secondly, taking a subjective view, whether the act was one which sought to create the conditions for securing the advantage artificially or for no commercial purpose? The cases which found this formulation of the law are as follows:[25]Firstly, in case C-110/99 Emsland Stärke v Hauptzollamt Hamburg-Jonas [2006] ECR I-1609, the Court of

Justice set out the principles in their judgment at paragraphs 52 and 53:

“52 A finding of an abuse requires, first, a combination of objective circumstances in which, despite formal observance of the conditions laid down by the Community rules, the purpose of those rules has not been achieved. 53 It requires, second, a subjective element consisting in the intention to obtain an advantage from the Community rules by creating artificially the conditions laid down for obtaining it. The existence of that subjective element can be established, inter alia, by evidence of collusion between the Community exporter receiving the refunds and the importer of the goods in the non-member country.”
[26]Following that case, the question of abuse was further considered by the Court in case C-255/02 Halifax plc v Commissioners of Customs and Excise. In that case, the Court of

Justice summarised the position again as follows:

“74 In view of the foregoing considerations, it would appear that, in the sphere of VAT, an abusive practice can be found to exist only if, first, the transactions concerned, notwithstanding formal application of the conditions laid down by the relevant provisions of the Sixth Directive and the national legislation transposing it, result in the accrual of a tax advantage the grant of which would be contrary to the purpose of those provisions. 75 Second, it must also be apparent from a number of objective factors that the essential aim of the transactions concerned is to obtain a tax advantage. As the Advocate General observed in point 89 of his Opinion, the prohibition of abuse is not relevant where the economic activity carried out may have some explanation other than the mere attainment of tax advantages.”
[27]Following the decision of Halifax, in the case of C-425/06 Ministero Dell’EconomiaE delle Finanze, the Part Service Sr [2008] ECR I-897l, the Court provided clarification of the first of the two limbs of the question posed in Emsland Stärke. It clarified in paragraphs 44 and 45 that, in relation to that first and objective question, the obtaining of the advantage must constitute the principal aim of the act in question.[28]As set out above, these principles were recently considered by this court in the case of Milk Supplies Limited v Department for Environment, Food and Rural Affairs [2009] EWHC 503 (QB) where, having set out the text of Council Regulation 2988/95, Plender J observed as follows:
“16 Thus an advantage envisaged by Community law will be foregone or withdrawn where the act meeting the formal conditions for the grant of the advantage is shown to have had as its purpose the obtaining of that advantage contrary to the objectives of the applicable Community law by artificially creating the conditions required for obtaining that advantage. Although it is true that Article 4(3) must be read as a whole, it is convenient to consider two aspects in sequence. Firstly there must be some act having as its purpose the obtaining of an advantage contrary to the objectives of the applicable Community law. Secondly that act must aspire to achieve its purpose by artificially creating the conditions required for obtaining that advantage. ... 22 In speaking of the artificial creation of conditions for obtaining an advantage, Article 4(3) of Council Regulation 2988/95 draws on the words of the Court of Justice in Case C-110/99, Emsland Stärke v Hauptzollamt Hamburg-Jonas. By using the word ‘artificial’ the Court must be taken to have meant engaging in transactions which have no commercial purpose other than the obtaining of the advantage in question.”
[29]The final aspect of these principles which was debated in the course of argument was the situation presented when a business had a number of means of organising itself. It is clear to me from the decision of the Court of Justice in case C-108/99 Commissioners of Customs and Excise v Cantor Fitzgerald International [2001] ECR I-7257 that the existence of more than one business or transaction structure for a person to pursue does not justify the selection of a form of transaction which would amount to an abuse. In other words, it is obviously open to a person to choose as to how they propose to organise their business or transactions but it is not available to them to select a form which would amount to an abuse. They can choose between different structures or arrangements, but the existence of choice does not justify the selection of an action which amounts to an abuse.[30]I turn now to pose the questions raised by the legal principles in relation to the facts of this case. Viewed objectively, was the principal aim of re-establishing the central sales function at SPL to obtain an advantage contrary to the purpose of the Regulations?[31]As I have set out above, I am satisfied that the purpose of the Regulations is to encourage and fund the establishment of POs as an appropriate market structure to facilitate the operation of the market provided that this does not lead to Community funds being wasted or the market being distorted. The Defendant says that the provision of unnecessary services in the form of the central sales function, which had been reinstated principally to achieve a subsidy, would not achieve the purpose of the Regulations. In particular, it would involve the wasting of Community funds by their being provided to assist the provision of a service which is not necessary.[32]It is clear and obvious that the obtaining of the match-funding by way of subsidy is an advantage which engages the consideration of the question of abuse. Furthermore it was not contended that the re-establishment of the central marketing function was not strictly within the ambit of the Regulations on the evidence now available.[33]The first limb of the test raises an objective question. Viewed objectively, I can see no basis for concluding that the reinstatement of a central marketing function does not fulfil the purpose of actively marketing and promoting all of the produce produced by the members of the proposed PO. It is a form of organisation which would facilitate the marketing of all of the growers’ produce and I can see nothing which would suggest that objectively viewed it is a form of organisation which is either wasteful or unnecessary. Tellingly it is clear to me that this central marketing function has been repeatedly regarded by the RPA, who undoubtedly seek to approach these issues as objectively as possible, as being an appropriate form of organisation to meet the requirements of the Regulations: I refer to the email from Mr Lockwood and the conclusions of the Stage 1 Appeal. This approach was more likely than not based upon the findings and advice from the investigations of the European Court of Auditors.[34]Mr Hutton’s submissions in this regard depend upon his reliance on parts of what Mr Woods describes as the reasons for the reorganisation of the Claimant to remove the central marketing function. These are subjective opinions and as stated the answer to the first question depends on an objective view of the matter. However, leaving aside the fact that these are subjective opinions and of course that Mr Woods states later in the witness statement that in current market conditions there would be commercial benefit in re-establishing the central sales function, it is clear that Mr Woods’ view is not the only view of the matter. In fact, as set out above, it appears clear to me that the view of Mr Lockwood and the others who participated in the determination of the Claimant’s stage one appeal was that a central marketing function was an essential prerequisite of securing the purpose of the Regulations. Leaving this difference of opinion which clearly existed several years ago to one side, to my mind it is clear that viewed objectively the establishment of a central marketing function for all of the goods produced by the members of the Claimant could not properly be said to be contrary to the purpose of the Regulations: indeed, it can be perceived as being provided directly in order to further the purposes of the Regulations.[35]My conclusions in respect of the first limb of the question in relation to abuse will be sufficient to dispose of the Defendant’s case. I propose, however, also to analyse the second limb.

Did the proposal to re-establish the central marketing function, viewed subjectively, serve no commercial purpose?

[36]Whilst, again, the Defendant relies on certain passages from Mr Woods’ witness statement, the case on this second limb is clear-cut. It is plain on the evidence that, viewed from the perspective of the Claimant and indeed from the perspective of the advisers of the Defendant, there are clear commercial purposes lying behind the re-establishment of the central marketing function. As Mr Woods makes plain in his witness statement at paragraph 67, he sees good commercial sense in re-establishing that central marketing function. Moreover, it is clear to me that Mr Lockwood’s views in advising the Claimant in September 2006 were to similar effect. Although Mr Hutton in his submissions sought to rely upon the expert report provided by Professor Hughes in relation to the evolution of the market, as Mr Robertson rightly points out towards the end of that report there is evidence demonstrating that the use of category managers has not proved altogether successful, and that new marketing arrangements need to be evolved and established to secure the future of the Claimant’s business. I accept the submission that this evidence clearly demonstrates the potential value of the reinstatement of the central marketing function. Thus, in relation to this second limb also, the Claimant’s case is successful. It cannot in my view be properly contended that the re-establishment of the central marketing function would serve no commercial purpose.

Relief

[37]In the circumstances of my findings, there can be no dispute but that the decisions taken by the Defendant on 18 July 2008 and 19 March 2009 must be quashed. Mr Robertson goes further, and submits that there should be an injunction granted requiring the Defendant to recognise the Claimant as a PO with effect from 1 January 2007. This is put on the basis that it was agreed by the Defendant before me that the only matter lying between the Claimant and recognition as a PO was the argument in respect of abuse, which I have disposed of. In those circumstances it is submitted, the Court could be satisfied that there could be no impediment to the recognition of the Claimant, and could properly award the injunction.[38]I am unwilling to take that additional step for the following reasons. Firstly, this Court will always be reluctant to put itself in the shoes of the decision-maker. In doing so, it exceeds its supervisory public law role, which is necessarily limited to examining whether there are errors of law in relation to decisions which have been reached rather than providing a forum in which decisions can be re-made. I suspect it may be for this reason that Mr Robertson was unable to locate any authority to act as a direct precedent founding his suggestion. Secondly, I am not convinced that such a remedy is required in this case since, once in receipt of my judgment, the Defendant will be able rapidly to determine the appeal in the light of my conclusions, and no doubt bearing in mind that, as set out above, the only factor which precluded the resolution of this claim by the granting of status to the Claimant was the contention raised in relation to abuse. All other factors which had been of concern to the Defendant had been resolved to the Defendant’s satisfaction by the time this matter was called on. Thus, to my mind, it would be unnecessary, let alone heavy-handed, for this Court to impose a decision where there is no evidence of the Defendant being reluctant to deal with the application speedily and appropriately once these proceedings had been resolved.

Conclusion

[39]For the reasons given, I am not satisfied that the Claimant’s application for re-recognition and appeal in respect of the initial refusal falls foul of the European law principles of abuse, and for that reason the Defendant’s decisions must be quashed.

Cited in 1 later judgment