C-233/81

JUDGMENT OF THE COURT 15 SEPTEMBER 1982 »

Denkavit Futtermittel GmbH v Federal Republic of Germany (reference for a preliminary ruling from the Verwaltungsgericht Frankfurt am Main) (Aid for skimmed milk — Inspection charges)

Case 233/81

Agriculture — Common organization of the markets — Ķiilk and milk products — Aid for skimmed milk — Cost of the nectary inspections — Charging to the undertaking concerned — Permissibility — Conditions (Commission ReguUtion No 172W79, Art. 10)

Article 10 of Regulation N o 1725/79 represent the normal cost of inspections does not prohibit Member States from of that nature and are not so great as to charging, under national legislation, the be liable to deter undertakings from cost of carrying out inspections pursuant carrying on the activities which the aid to that article to the undertaking for skimmed milk is intended to concerned provided that the charges encourage. which the undertaking is asked to pay-

In Case 233/81

THE COURT

composed of: J. Menens de Wilmars, President, G. Bosco, A. Touffait and O . Due (Presidents of Chambers), P. Pescatore, Lord Mackenzie Stuart, A. O'Keeffe, T. Koopmans, U. Everling, A. Chloros and F. Grévisse, Judges,

Advocate General: F. Capotorti Registrar: H . A. Rühi, Principal Administrator

gives the following

JUDGMENT

Facts and Issues

Skimmed-milk powder used for milk- Regulation (EEC) No 986/68 of the based substitute feedingstuffs for animals Council of 15 July 1968 laying down is eligible for the grant of aid only if general rules for granting aid for the skimmed-milk powder satisfies the skimmed milk and skimmed-milk powder conditions set out in Article 1 of Regu- for use as feed (Official Journal, English lation No 1725/79 and if the milk-based Special Edition 1968 (I), p. 260). That substitute feedingstuffs for animals regulation, which was adopted pursuant satisfy the conditions laid down in to Article 10 (2) of Regulation No Article 4 of that regulation. In order to 804/68, lays down the basic substantive ensure compliance with those provisions, conditions for the system of aid. It is the national authorities are required to take task of the intervention agency of each the inspection measures stipulated in Member State to pay the amount of the Article 10 of Regulation No 1725/79. To aid after proof that the skimmed milk that end, in addition to the regular has been used as feed or for the manu- inspection of records and accounts they facture of compound feedingstuffs or must also, at least once a month, take that the skimmed-milk powder has been samples of the products in question on denatured or used for the manufacture the premises used for manufacture and of compound feedingstuffs. Anicie 4 (2) analyse their composition. requires Member States to take the measures necessary to ensure the application of those provisions. Pursuant to Article 12 of the aforesaid German regulation relating to the grant of aid for skimmed milk, a fee is payable in respect of the costs incurred in the Commission Regulation (EEC) No taking of samples and their analysis. 1725/79 of 26 July 1979 on the rules for That provision is worded as follows: granting aid to skimmed milk processed into compound feedingstuffs and skimmed-milk powder intended for feed "Where, pursuant to the provisions for calves. That regulation, adopted mentioned in Article 1, supervision by pursuant to Article 1C (3) of basic Regu- the administrative authorities necessitates lation No 8C4/68, adopts provisions in the taking of samples or analyses of the implementation of Regulation No products the costs relating to the 986/68. It defines certain term? (tor packaging and transpon of samples and example "denaturing" and "compound the analysis of the products must be feedingstuffs"), lays down detailed rules refunded to the departments responsible on the manufacturing and marketing under Article 2. Those costs shall be

borne by the person submitting the II — Summary of the written application for aid." o b s e r v a t i o n s submitted to the Court On the basis of that provision Denkavit received a demand to pay charges amounting to DM 329.90. Those As to the facts Denkavit observes first inspection charges related to an that its associated companies in other application for aid amounting to DM Member States of the EEC are likewise 1 745 604.58 in respect of 115 572 kg of subject to regular inspections under the skimmed-milk powder. provisions of Article 10 of Regulation No 1725/79. None of those companies is Denkavit objected to that demand, but however required to pay a fee for the without success, and consequently costs relating to those inspections. brought an action before the Verwal- tungsgericht [Administrative Court] Frankfurt am Main, which stayed the As to the legal position Denkavit relies action and referred the following on three arguments in claiming that the question to the Court of Justice: charging of fees under Article 12 of the German regulation relating to the grant "Is it compatible with Community law of aid to skimmed milk is incompatible for the Federal Republic of Germany to with Community law: impose a charge for the costs of inspecting products under Article 10 of Commission Regulation (EEC) N o 1. There is no legal basis in Community 1725/79 of 26 July 1979 (Official law for the charging of such a fee Journal 1979, L 199, p. 1)?". since Member States have no power to adopt national provisions dealing The order for reference dated 8 July with the costs of inspections imposed 1981 was lodged at the Court Registry by the Community. on 17 August 1981. 2. It is in breach of the common price In pursuance of Article 20 of the system. Protocol on the Statute of the Court of Justice of the EEC written observations were submitted on behalf of Denkavit, 3. The administrative actions giving rise the plaintiff in the main action, by to the charges are undertaken solely Dietrich Ehle, Rechtsanwalt, Cologne, in the general interest. by the Government of the Federal Republic of Germany, represented by M. Seidel, acting as Agent, and by 1. As to the absence of Community rules the Commission of the European rehting to the charges, Denkavit observes Communities, represented by Meinhard that Article 10 of Regulation No Hilf, a member of its Legal Department, 1725/79 contains no provision relating to acting as Agent, assisted by Albrecht the costs of the regular inspections of all Stockburger, Rechtsanwalt, Frankfurt undertakings manufacturing the products am Main. in question which the authorities are required to carry out. On the other hand On hearing the report of the Judge- Article 9 (4) of that regulation does Rapporteur and the views of the provide for the recovery of costs in Advocate General the Court decided to respect of a special investigation carried open the oral procedure without any out at the claimant's request and in his preparatory inquiry. interest.

T h e regulation thus makes a clear Regulation N o 1038/72 of the Council distinction between those t w o types of of 18 M a y 1972 (Official Journal, inspection. Therefore, Denkavit main­ English Special Edition 1972 (II), p. tains that the legislature deliberately 456), provides that " M e m b e r States shall refrained from stipulating that the take the measures necessary" to ensure recipient of aid must bear the costs the application of the provisions laid relating to regular inspections. Regu­ down in Article 2 (4) and (5) and Article lation No 1725/79 constitutes an 3 (2). The implementing regulation exhaustive set of rules. T h e Member adopted by the Commission could not States may thus not claim fees to cover amend the basic regulation or derogate the costs of regular inspections. from it. Provisions governing charges are not necessary for the exercise of supervisory control by the State (see judgments of the Court of 14 December Denkavit alleges, furthermore, that the 1972 in Case 29/72 Manmex v Member States are not empowered to Amminstrazione delle Finanze dello Stato adopt national provisions relating to [1972] ECR 1309 at paragraph 5, and of charges. The judgment of the Court of 25 January 1977 in Case 46/76 Bauhuisv 30 November 1978 in Case 31/78 Netherlands [1977] ECR 5 at paragraph Bussone v Italian Ministry for Agńculture 14. The same argument applies a/onion and Forestry [1978] ECR 2429 appears to to the relationship of a Commission be based on a different idea but that regulation to a national implementing judgment is not relevant to the present regulation (see judgment of the Court of case. On the one hand the organization 11 February 1971 in Case 39/70 Nord­ of the market in eggs which was at issue deutscher Vieh- und Fleischkontor v in that case did not lead to a standard­ Hauptzollamt Hamburg-St. Annen [1971] ization of prices unlike the provisions ECR 49 at paragraph 4). governing the market for milk products which is relevant in this case. O n the other hand that case concerned quality controls carried out in the interest of the Finally Denkavit emphasizes that no consumer whilst the present case support for the obligation to pay the concerns inspections carried out solely in charges may be drawn from the rules the general interest. governing the obligation to furnish proof underlying Regulation N o 1725/79. T w o distinct rules are involved which in the present case bear no relation to each Furthermore, the rules concerning the other. Community law admits of no charges at issue are not procedural rules general principle according to which but have the effeci of imposing a sup­ legitimate administrative controls justify plementary condition for the grant of the the charging of a fee for the costs which aid, a condition not stipulated by Regu­ they entail (see judgment of the Court of lation N o 1725/79 which governs the 5 July 1978 in Case 137/77 City of matter. Frankfurt am Main v Neumann [1978] ECR 1637 at paragraph 12).

conditions are laid down in Article 1, 3 under Article 10 has led to a negative and 4 of Regulation No 1725/79 and in result, nevertheless still wishes to prove Article ! of Regulation N o 986/68. In his entitlement to the aid. accordance with the general rules governing the obligation to furnish proof it is the person claiming entitlement who The Commission observes that the must prove at his own expense that those detailed rules governing inspection pro- preconditions have been satisfied. That cedures must be laid down by the proof cannot be established without a Member States since the Community laboratory inspection of the compound legislature refrained from laying down feedingstuffs for animals manufactured all the procedural details.

In Community rules, to adopt the necessary this particular case involving the recovery procedural provisions or to apply, if of an aid unduly paid the Community appropriate, existing national rules of legislature thought fit following regular procedure. If that argument is accepted inspections which achieved negative the charging of national fees intended to results to provide for the possibility of cover costs of inspections imposed by a "special" investigation enabling the Community law must be considered to person concerned to prove that a part be lawful (see the judgments of the only of his production failed to satisfy Court of 30 November 1978 in Bttssone, the conditions laid down by the regu- mentioned above, of 16 December 1976 lation. It is not possible to draw any in Case 33/76 KEWE v Landwirtschafts- conclusions from that as to the financing kammer Saarland [1976] ECR 1989, of of general inspection measures laid down 16 December 3976 in Case 45/76 Comet by Article 10. v Prodwktschap voor Siergewassen [1976] ECR 2043 and of 12 June 1980 in Joined Cases 119 and 126/79 Lippische Haupt- genossenschafi and Westfälische Central- 2. As to the infringement of the common Genossenschafi v Bundesanstalt fiar land- system of pnces Denkavit refers to the wirtschaftliche Marktordnung [1980] ECR case-law of the Court from which it is 1863. clear that Member States may no longer, bv means of unilateral provisions, intervene in the machinery of price Such an interpretation does not conflict formation as it exists following the with Article 9 (4) of Regulation (EEC) common organization of markets (see No 1725/79. That provision is concerned judgment of the Court of 18 October more with a specific case namely that of 1979 in Case 5/79 Procureur General v a special investigation carried out in the Buys and Others ¡1979] ECR 3203).

DENKAVrr FUTTERMITTEL v GERMANY

by measures adopted unilaterally by a The Commission recalls the judgment Member Sute. given in Case 31/78 Bussone, mentioned above, according to which the discretion conceded to Member States as regards the means of regulating administrative costs may not be exercised in such a way Denkavit maintains that the charging of as to put at risk the objectives of the fees for the costs of inspection in fact rules conferring such discretion. The reduces the amount of the aid granted, amount of the inspection charges in this thus threatening the objective of the case is not such as to put at risk the Community which is to fix the aid according to economic criteria laid down objective of the aid, namely the main- by Article 2a of Regulation No 986/68 tenance of the target price. Given the as inserted bv Regulation No 666/74 relation between the amount of the (Official Journal 1974, L 85, p. 58). As a inspection charges (DM 329.90) and the result the net price of skimmed-milk amount of the aid (DM 1.7 million) it powder intended for feed for animals is cannot be claimed that the imposition of higher in the Federal Republic of charges might hamper the achievement Germany than in the other Member of the objectives of the aid. The Sutes where no such system exists. relationship in this case between those two amounts may moreover be considered to be representative.

Denkavit stresses that the aid to Nor was there a breach of the principle skimmed-milk powder is granted solely of equality laid down by Article 40 (3) of in the general interest. It is not intended the EEC Treaty since the fees in to confer an advantage on the industry question were charged according to concerned but to ensure the proper uniform criteria. The fact that other functioning of the common organization Member States charge no like fee or no of the market (see judgments of the fee at all does not amount to any kind of Court of 14 March 1973 in Case 57/72 a breach of the principle of equality but Westzucker [Wo] ECR 321 at paragraph merely demonstrates that the Member 20; and of 21 February 1974 in Case States have power to provide national 162/73 Birra Dreher [1974] ECR 201 at paragraph 8). The grant of direct aid is rules relating to the cost of inspections intended to avoid the stocking of until harmonization has been achieved in skimmed-milk powder. that field.

JUDGMENT OF 15. 9. 1982 — CASE 233/81

The 1725/79). As far as Denkavit is con- controls involved in those cases were cerned it thus constitutes an inspection imposed solely on grounds of health for fiscal purposes carried out solely in policy in the context of the importation the interest of the Community. of goods coming from another Member State. The interests which were at stake in those cases were thus different from those at stake in this case where it is only In conclusion Denkavit proposes that the by means of the inspections in question Court should give the following reply to that it is possible to prove entitlement to the question raised by the Verwaltungs- the aid.

interest. The public interest lies only in relating to inspections carried out in the the creation of certain incentives to framework of the common organizations undertakings. Each private undertaking of the markets. then decides if it is in its own interest to benefit from those incentives. Moreover In the same way the judgment in the aid granted represents an economic Bussone, mentioned above, gives no advantage for manufacturers of com- ground for concluding that the charging pound animal feedingstuffs because it of a fee for an inspection always implies enables them to offer compound animal that those inspections represent a service feedingstuffs of high quality at low pnces rendered by the State to the individual and thus to obtain a market advantage. concerned.

Decision

1 By an order of 8 July 1981 which was received by the Court on 17 August 1981 the Verwaltungsgericht [Administrative Court] Frankfurt am Main referred to the C o u r t for a preliminary ruling under Article 177 of the E E C Treaty a question concerning the interpretation of Anicie IC of Commission Regulation ( E E C ) N o 1725/79 of 26 July 1979 on the rules for granting aid to skimmed milk processed into c o m p o u n d feedingstuffs and skimmed-milk powder intended for feed for calves (Official Journal L 199, p. 1).

JUDGMENT OF 15. 9. «982 — CASE 233/81

2 The question arose in the course of an action by a manufacturer of calf feed made from skimmed-milk powder challenging a decision of the Bundesamt für Ernährung und Forstwirtschaft [Federal Office for Food and Forestry], the German intervention agency, which charged it D M 329.90 for expenses connected with the inspection of products eligible for Community aid. The decision was based on Article 12 of the German regulation of 1977 on the ~ grant of aid for skimmed milk (Beihilfenverordnung-Magermilch [skimmed milk aid regulation] Bundesgesetzblatt 1977 I, p. 792) which provides that the expenditure incurred in taking samples and making analyses of goods is to be charged to the persons applying for aid.

3 The undertaking in question maintained that the Community regulations governing aid for the use of skimmed-milk powder for animal feed left the Member States no discretion to regulate the manner in which the necessary inspections connected with the grant of aid in that sector were to be exercised, and the Verwaltungsgericht therefore asked the Court whether it was compatible with Community law for the Federal Republic of Germany to impose a charge for the cost of inspecting products pursuant to Article 10 of Regulation No 1725/79.

7 Article 10 of Regulation No 1725/79 reveals on examination that no provision is made as to the costs of the inspections which are to be carried out. However, inasmuch as Article 10 states that the control measures are to fulfil "at least" the conditions laid down therein, and provides that they are to be determined by the Member States, it indicates that the Community rules concerning such inspections are not exhaustive.

g The wording of the regulation does not, therefore, prevent Member States either from carrying out such inspections free of charge or from requiring the undertakings in question to reimburse the expenditure which such inspections entail.

9 It must therefore be concluded, as the Court has held with regard to the common organization of the market in eggs dudgment of 13 November 1978 in Bustone, Case 31/78 [1978] ECR 2429). that the Community rules leave Member States free to resolve the problem of financing the controls.

ic While Member States' freedom in that respect may not be used in such a way as to jeopardize the objectives of the rules under which it is granted those

JUDGMENT OF !5. 9. 1982 — CASE 233/81

objectives will not be jeopardized if the charges which the undertaking is asked to pay represent the normal cost of inspections of that nature and are not so great as to be liable to deter undertakings from carrying on the activities which the aid is intended to encourage.

Costs

14 The costs incurred by the Government of the Federal Republic of Germany and the Commission of the European Communities, which have submitted observations to the Court, arc not recoverable. As these proceedings are, in

DENKAVrr FUTTERMITTEL v GERMANY

so far as the parties to the main dispute are concerned, in the nature of a step in the action before the national court, the decision as to costs is a matter for that court.

On those grounds,

T H E COURT,

For the Registrar

H.A. Rühi J. Menens de Wilmars Principal Administrator President