C-138/78

JUDGMENT OF THE COURT OF 21 FEBRUARY 1979<appnote>1</appnote>

Hans-Markus Stölting v Hauptzollamt Hamburg-Jonas (preliminary ruling requested by the Finanzgericht Hamburg)

Case 138/78

1. Agriculture — Common organization of the market — Milk and milk products — Co-responsibility levy — Legality (Council Regulation No 1079/77)

2. Agriculture — Common agricultural policy — "Green " exchange rates — System — Legality (Council Regulation No 878/77)

1. The validity of Council Regulation advantages or disadvantages which No 1079/77 on the charging of a co- may appear as discrimination, it none responsibility levy in the milk sector the less remains true that in general cannot be contested in so far as, by such application serves to remedy seeking to restrain the production of monetary situations which in the milk in the face of the surpluses absence of a measure such as Regu- observed, the said co-responsibility lation No 878/77 would result in levy contributes to the attainment of much more serious, obvious and the objective of stabilizing markets general discrimination. Although it is and in so far as the level of the rate of not without certain drawbacks, the levy does not appear to be dispro- adoption of the system of the so- portionate in relation to the facts called green exchange rates is which led to its adoption. therefore justified by the prohibition 2. Although in certain transactions the on discrimination and the require- application of the so-called green ments of a common agricultural exchange rates may possibly involve policy.

Hauptzollamt (Principal Customs Office) Hamburg-Jonas

on the validity of Council Regulation No 1079/77 of 17 May 1977 (Official Journal 1977 L 131, p. 6) and Commission Regulation No 1822/77 of 5 August 1977 (Official Journal 1977 L 203, p. 1), on the charging of a co- responsibility levy in the milk sector and on the interpretation of Article 40 (3) of the EEC Treaty,

THE COURT

composed of: J. Mertens de Wilmars, Acting President, and Lord Mackenzie Stuart (Presidents of Chambers), A. M. Donner, P. Pescatore, M. Sørensen, A. O'Keeffe and G. Bosco, Judges,

Advocate General: H. Mayras Registrar: J. A. Pompe, Assistant Registrar

gives the following

surpluses which exist; whereas it is following questions to the Court of necessary, in view of the major public Justice: interest attached, to introduce a uniform 1. Are Council Regulation (EEC) No co-responsibility levy for several years on 1079/77 of 17 May 1977 and all milk delivered to dairies and certain Commission Regulation No 1822/77 farm sales of milk products." of 5 August 1977 on a co- Article 1 provides: responsibility levy on milk invalid because the EEC Treaty contains no "1. During the period from 16 power under which the said regu- September 1977 to the end of the lations could be adopted? 1979/80 milk year a co- responsibility levy shall be due from 2. In the event of Question 1 being all milk producers on milk supplied answered in the negative: Does the to an undertaking treating or charging of the co-responsibility lev)' processing milk and, in the cases on milk producers infringe the defined in Article 3 (2), on milk sold prohibition on discrimination in by the producer in the form of other Article 40 (3) of the EEC Treaty in milk products. that the levy is laid down in units of account and the conversion of the 2. This levy shall not be applied in the levy rates expressed in units of mountain and hill areas listed account into national currencies pursuant to Article 3 (3) of Directive according to the so-called green 75/268/EEC." exchange rates — provided for in the present case in Council Regulation The proceeds from the levy are used to (EEC) No 878/77 of 26 April 1977 finance the measures to expand the — can lead to unequal burdens in markets for milk products listed in relation to the actual monetary Article 4. situations of the Member States at

Justice, because it considered that it was Commission, assisted by Bjarne Hoff- necessary to resolve as soon as possible Nielsen, a member of the Commission's by way of the procedure under Article Legal Department. 177 of the EEC Treaty the doubts that a Upon hearing the report of the Judge- co-responsibility levy on milk appeared Rapporteur and the views of the to raise throughout the Federal Republic Advocate General, the Court decided to of Germany. open the oral procedure without any As to the second question, the Finanz- preparatory inquiry. gericht considered that the application of the so-called green exchange rates by Regulation No 878/77 to the co- II — Summary of the written observations submitted to responsibility levy without the the Court application of monetary compensatory amounts or monetary compensatory coefficients could possibly lead to 1. Question 1 different burdens in the Member States. Mr Slotting observes that Council Regu- In fact, in the present case trade rules are lation No 1079/77 of 17 May 1977 and not in question: the monetary question Commission Regulation No 1822/77 of arises in another form, namely that of 5 August 1977, in the form in which they the principle of equality of burdens. were adopted, lack a legal basis. It considered that the question is The levy is a charge which can be whether heavier taxation, having regard imposed only in accordance with Article to the actual monetary situations in the 201 of the EEC Treaty. different Member States, on milk Unlike levies of a fiscal nature, it cannot producers in the Member States with be considered as a guidance measure stronger currencies in relation to the authorized as such by Article 43 of the taxation imposed on milk producers in EEC Treaty. It would be otherwise only the Member States with weaker if the entire measure — the system and currencies is permissible on the ground implementation of the co-responsibility that the different burdens are possibly levy — had been adopted as a measure compensated for by advantageous for the guidance of the market within the measures having a converse effect — framework of a regulation. even though this occurs partially at other No allocation of the resources deriving stages of processing. from the co-responsibility levy is made in The order making the reference dated 2 the milk sector, so that all the resources June 1978 was lodged at the Court could be expended in any other area, as Registry on 14 June 1978. with a fiscal levy of a general nature, and In accordance with Article 20 of the this is not prohibited by the regulations. Protocol on the Statute of the Court of This opinion is shared by the Justice of the EEC, written observations Commission (see reply to written were submitted by Mr Stoking, question No 752/77 of Mr Klinker, represented by Walter Bergmann, Official Journal 1978 C 52, p. 18). Advocate of Lübeck, by the German Government, by the Council of the European Communities, represented by Bernhard Schloh, Adviser in the Legal Department of the Council, and by the Commission of the European Communities, represented by Peter Gilsdorf, Legal Adviser to the

on the imbalance between supply and constantly criticized for adopting agri- demand. cultural policy measures which are confined overmuch to the market and The levy system also constitutes a lawful means with regard to the rules of the price aspects and which do not have EEC Treaty on agriculture. In the sufficient effect on agricultural German Government's submission, under structures. However, if the preamble to Article 40 (3) of the EEC Treaty the Regulation No 1079/77 is examined, it Community legislature may adopt all will be found that the present case concerns a measure which is directed at measures required to apply Article 39, including levies and refunds as well as a long term and partially structural effect other individual measures provided for in from the point of view of its content. certain regulations. The co-responsibility levy exerts upon The co-responsibility levy forms an producers an economic and integral part of the common organi- psychological effect of such a kind as to zation of the market in milk. As a charge slow down the production of milk. on production it comes within the According to the Council, the same framework of the wide choice of objective could not have been attained by guidance and intervention measures, and a lowering of or a smaller increase in the it is within this framework that Article 39 target price. In fact the charging of the of the Treaty defines the common agri- co-responsibility levy on milk allows of cultural policy (judgment of 5 July 1977 in Case 114/76 [1977] ECR 1211, at p. 1221).

The Commission observes that the co- exceptions or for adjustment spread over a period of time. responsibility levy introduced by Regu- lations Nos 1079/77 and 1822/77 does Although it is true that the institutions of not exceed the limits laid down in the Community wished for budgetary Articles 39 and 40 of the EEC Treaty. reasons to avoid creating a legally In establishing the different measures binding connexion between the levy and intended to ensure the stabilization of the specific measures, nevertheless that markets, the Council is not obliged to connexion exists in practice. Financially restrict itself to the established forms the scale of the specific measures is such as purchases by intervention limited in practice by the resources agencies, aids and import levies. An yielded by the levy. exceptional situation on the market may 2. Questions 2 and 3 require the adoption of exceptional measures. Mr Stöking refers in this connexion to Unlike the rules on the compulsory the arguments set out in the order purchase of skimmed-milk powder making the reference (see under heading I above). introduced by Regulation No 563/76, the co-responsibility levy is a preventive According to the German Government, measure having long term effects which the method of calculation laid down for

STÖLTING HAUPTZOLLAMT HAMBURG-JONAS

carried out on the basis of the green currencies to benefit from the advantages rates. For a country with a weak of the favourable rate of exchange by the currency, the lower price for milk is expedients of guaranteed prices, aids and accompanied by a lesser charge to tax. refunds, whilst on the other hand taking Therefore the third question does not the day-to-day rates as the basis for the require an answer. fixing of the negative component of prices, namely the co-responsibility levy. The Council considers that Question 2 The converse is true of producers in must be answered in the negative, and Member States with weak currencies. that Question 3 is therefore purposeless. The Commission considers that in the All intervention measures, of which the present case there is equality of co-responsibility levy forms an integral treatment for practical purposes. Indeed part, are subject to the system of the so- called green exchange rates. That system formal equality of treatment applied to variable situations of fact would is applicable to agriculture generally. To apply another system of conversion to constitute inequality of treatment, and the co-responsibility levy would would consequently have to be deemed represent a discrimination. discriminatory (Case 13/63 [1963] ECR 165, at pp. 177/178). The Commission observes that the level of the guaranteed prices, which is There is no longer any need to answer variable owing to the application of the Question 3. so-called green exchange rates laid down in Regulation No 878/77 (Official Journal 1977 L 106, p. 27), affects the III — Oral procedure income of producers in the Member States. This is especially true in sectors The plaintiff in the main action, the such as that of milk in particular, in Council of the European Communities which due to the existence of a surplus and the Commission of the European the market level is determined to a large Communities presented oral argument at extent by the guaranteed prices. the hearing on 23 November 1978. In such a situation it would be The Advocate General delivered his

4 Article 43 of the Treaty must be interpreted in the light of Article 39, which sets out the objectives of the common agricultural policy, and Article 40, which regulates its implementation by providing inter alia that in order to attain the objectives set out in Article 39 a common organization of agri- cultural markets shall be established and that this organization may include all measures required to attain the said objectives. In this connexion Article

STÖLTING HAUPTZOLLAMT HAMBURG-JONAS

40 (3) mentions in particular "regulation of prices, aids for the production and marketing of the various products, storage and carry-over arrangements and common machinery for stabilizing imports or exports".

5 The reasons which led the Council to introduce the levy in question are set out as follows in the preamble to Regulation No 1079/77:

"Whereas the Community market in milk products is marked by structural surpluses arising from an imbalance between supply and demand in [those] products...;

Whereas a more direct link should be established between production and outlets for milk products in order gradually to restore equilibrium between production and market requirements and to reduce the heavy costs incurred by the Community as a result of the present situation and in particular of the large surpluses which exist; whereas it is necessary, in view of the major public interest attached, to introduce a uniform co-responsibility levy for several years on all milk delivered to dairies and certain farm sales of milk products;

7 This difference of opinion concerns in particular the expediency and effectiveness of the measure adopted in the regulations in question. If a measure is patently unsuited to the objective which the competent institution seeks to pursue this may affect its legality, but on the other hand the Council must be recognized as having a discretionary power in this area which corresponds to the political responsibilities which Articles 40 and 43 impose upon it. As it is directed towards restraining production in the face of the surpluses observed, the co-responsibility levy contributes to the attainment of the objective of stabilizing markets. Nor does the level of the rate of levy appear to be disproportionate in relation to the facts referred to by the Council. Therefore the answer should be that consideration of the question has disclosed no factor of such a kind as to affect the validity of Regulation No 1079/77.

8 Since Regulation No 1822/77 is unquestionably a measure for the implementation of the said Regulation No 1079/77 it follows from the foregoing that the same conclusion must apply to it.

9 Question 2 asks whether the charging of the co-responsibility levy on milk producers infringes the prohibition on discrimination contained in Article 40 (3) of the Treaty in that the levy is laid down in units of account and its conversion into national currencies according to the so-called green exchange rates — provided for in Council Regulation No 878/77 of 26 April

STÖLTING HAUPTZOLLAMT HAMBURG-JONAS

1977 on the exchange rates to be applied in agriculture (Official Journal 1977 L 106, p. 27) — can lead to unequal burdens in relation to the monetary situations of the Member States at any given time.

12 Since Question 3 is asked only in the event of Question 2 being answered in the affirmative, it is not necessary to consider it.

JUDGMENT OF 21. 2. 1979 — CASE 138/78

13 Therefore the answer to be given to the national court must be that consideration of the questions raised has disclosed no factor of such a kind as to affect the validity of Regulations Nos 1079/77 and 1822/77.

Costs

14 The costs incurred by the Commission of the European Communities, the Council of the European Communities and the Government of the Federal Republic of Germany, which have submitted observations to the Court, are not recoverable. As these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the national court, costs are a matter for that court.

On those grounds,

A. Van Houtte J. Mertens de Wilmars Registrar (President of the First Chamber) Acting President