C-15/83

JUDGMENT OF 17. 5. 1984 — CASE 15/83

1. The prohibition of quantitative treatment is objectively justified. restrictions on exports and of all There is no discrimination within the measures having equivalent effect meaning of that article when the applies not only to national measures difference in the method by which the but also to measures adopted by the aid is paid corresponds to an objective Community institutions. difference between the export situ­ ation, on the one hand, and that of trade within a Member State, on the 2. Article 34 relates to measures which other. have as their specific object or effect the restriction of patterns of exports and thereby the establishment of a 4. By virtue of the principle of pro­ difference in treatment between the portionality, measures adopted by domestic trade of a Member State and Community institutions must not its export trade in such a way as to exceed what is appropriate and provide a particular advantage for necessary to attain the objective national production or for the pursued. domestic market of the State in That principle is not breached by question at the expense of the rules which prescribe prior ad­ production or of the trade of other ministrative supervision to ensure Member States. compliance with the conditions for That does not apply to Community the payment of aid where the sums rules which, whilst not laying down involved are particularly large and identical conditions, prescribe at least there is a particular danger of fraud. equivalent conditions regarding ad­ ministrative supervision both for 5. Since the purpose of the rules for exports in bulk of compound granting aid for skimmed milk feedingstuffs and for the marketing processed into compound feeding- thereof within the country. stuffs is to exclude the possibility of aid being paid twice, as well as that of 3. By prohibiting any discrimination the goods re-entering normal market between producers or consumers channels, and thereby to prevent within the Community, Article 40 (3) fraudulent practices, the formalities of the Treaty requires that like regarding proof must continue to be situations should not be treated rigorously applied both to exports and differently unless such different to inland deliveries.

on the validity of Articles 6 (2) and 7 of Commission Regulation ( EEC ) No 1725 / 79 of 26 July 1979 on the rules for granting aid to skimmed milk processed into compound feedingstuffs and skimmed-milk powder intended for feed for calves (Official Journal 1979, L 199, p . 1),

THE COURT ( Second Chamber )

composed of: K. Bahlmann , President of Chamber , P . Pescatore and O . Due Judges ,

Advocate General : G. F. Mancini Registrar : J. A. Pompe , Deputy Registrar

gives the following

JUDGMENT

(a) a statement that the contents are 2. In this case the aid shall be paid only compound feedingstuff s ; when the undertaking has supplied the competent agency with sup­ porting documents establishing that (b) a marking enabling the undertaking delivery was made under the con­ benefiting from the aid to be ditions referred to in paragraph identified. This marking may be in 1 ( b )" code and in that case shall include the first letter of the name of the country of origin; According to Article 7 (1) of the regu­ lation : (c) the month and year of manufacture; "When delivery by tanker or container (d) the skimmed-milk powder content of as described in Article 5 (b) takes place the finished product." in a Member State other than the selling Member State, proof of delivery under the conditions set out in Article 6 (1) (b) However, according to Article 5 of the shall be furnished by production of the regulation, the provisions of Article 4 (2) control copy referred to in Article 10 of do not apply to : Regulation (EEC) No 223/77."

Article 7 (3) provides as follows: "(a) ...

"The importing Member State shall (b) compound feedingstuffs delivered check that the consignee complies with by tanker or container to a farm or the conditions set out in Article 6 (1) a breeding or fattening concern (b)." which uses these compound feedingstuffs under the conditions For the period in respect of which aid is laid down in Articles 6 and 7." requested, the aid is paid, by virtue of Article 9 (2), without prejudice to cases where the supporting documents are Article 6 of the regulation provides as available, only if follows :

Should the reports referred to in paragraph (b) above indicate that the Article 58 of Council Regulation (EEC) applicant has not complied with the No 222/77 of 13 December 1976 on provisions of the regulation during the Community transit (Official Journal previous month in question, payment of 1977, L 38, p. 1) provides that: the aid for the month which is the subject of the aid application is suspended pending receipt of the analysis "In derogation from this regulation, report and inspection report issued Belgium, Luxembourg and the Nether­ following the checks made during the lands may apply to the Community month in question and any aid unduly transit documents the agreements paid out is recovered within four weeks concluded or to be concluded between (Article 9 (3)). them with a view to reducing or abolishing frontier formalities at the Belgo-Luxembourg and Belgo-Ncther- Article 10 of the regulation provides that lands frontiers." in order to ensure compliance with the provisions of the regulation, Member States are to take certain inspection 2. Facts and written procedure measures, in particular regarding the use of skimmed milk and skimmed-milk powder in the manufacture of compound The plaintiff in the main proceedings feedingstuffs within the meaning of manufactures animal feedingstuffs pro­ Article 4 (1). cessed from skimmed-milk powder in the Netherlands. In respect thereof it receives Community aid which is granted As regards the production of the control to it pursuant to Article 10 of Regulation copy required pursuant to Article 7 (1) No 804/68 of the Council of 27 June of the regulation for deliveries in a 1968 on the common organization of the Member State other than that of the market in milk and milk products seller, Article 10 of Commission Regu­ (Official Journal, English Special lation (EEC) No 223/77 of 22 Edition, 1968 (I), p. 176). The plaintiff December 1976 on provisions for the supplies its products with or without implementation of the Community packaging ("in bulk"), both in the transit procedure and for certain Netherlands and abroad. At the present simplifications of that procedure time exports in bulk go only to Belgium. (Official Journal 1977, L 38, p. 20) provides as follows: The conditions applied by the competent Netherlands body, the Hoofdprodukt- "Proof that the conditions prescribed by schap voor Akkerbouwprodukten, for a Community measure as to the use payment of the aid differ according to and / or destination of goods imported whether the products in bulk are into, exported from, or moving within delivered within the Netherlands or in the Community have been complied another Member State.

(b) In the case of bulk deliveries to another Member State, the Hoofd­ produktschap required proof, in In those proceedings, the plaintiff accordance with Article 7 of Regu­ claimed that the contested decision lation No 1725/79, by production of should be annulled and that the the Control Copy T 5 referred to in defendant should pay it the aid upon Article 10 of Regulation No 223/77; presentation each month of the instead of that document it accepts, application together with the corres­ for deliveries in Belgium the Benelux ponding processing and summary re­ 5 document referred to in Article 58 ports, if necessary subject to recovery of of Regulation No 222/77. Since the aid if the circumstances justified this. those documents must be certified by In its view, by virtue of Article 58 of the State of destination, the aid is in Regulation No 222/77 the Benelux fact not usually paid until one month countries are empowered and even after the month of the application. obliged not to apply Article 7 of Regu­ lation No 1725/79 to deliveries in Belgium and to apply only Article 6 of that regulation in such cases. Moreover, it claims that Articles 6 (2) and 7 of Regulation No 1725/79 are not mandatory because they should be regarded as measures having an effect As a result of these different procedures, equivalent to quantitative restrictions aid in respect of bulk deliveries to on exports, contrary to Article 34 of Belgium is paid on average one month the EEC Treaty, and as constituting later than that for bulk deliveries in the discrimination against exports; they are Netherlands and for packaged deliveries likewise contrary to the principle of during the same period. This delay in the proportionality.

The défendant contested the claim thereto is required for settlement of the before the national court and maintained dispute. that the provisions of Article 6 and 7 ( 1 ) of Regulation No 1725/79, in con­ junction with Article 58 of Regulation In accordance with Article 20 of the No 222/77, imposed the mandatory Protocol on the Statute of the Court of requirement that in the case of bulk Justice of the EEC, written observations exports to Belgium the aid was payable were submitted by the plaintiff in the only after receipt of a copy of the main proceedings, represented by E. Benelux 5 control document. Grabandt of the Hague Bar, and by the defendant in the main proceedings, represented by R. J. M. ten Berge, acting By order of 25 January 1983, the as Agent. College van Beroep voor het Bedrijfs­ leven stayed the proceedings and decided to submit the following question to the Upon hearing the report of the Judge- Court for a preliminary ruling: Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any "Must Articles 34, 40 (3) and 43 (3) (b) preparatory inquiry, inviting the Com­ of the Treaty, Regulation (EEC) No mission to attend the hearing. 804/68, the principle of proportionality, or any of these, as well as any other principle underlying the Treaty be However, the Court decided to request construed as meaning that the provisions the Commission to explain, at the of Article 6 (2) read together with Article hearing, the specific reasons for which 7 of Regulation (EEC) No 1725/79 are Commission Regulation No 1725/79 incompatible therewith inasmuch as the provides for different treatment for effect of those provisions is that the aid deliveries in bulk intended for export, on referred to in that regulation for the one hand, and for similar deliveries skimmed-milk powder which has been within the domestic market, on the processed into compound feedingstuffs other, and to indicate the grounds for in one of the Member States and the stricter supervision procedures delivered by tanker or container is paid applied to exports. one month later in respect of exports than it is for inland deliveries?" By order of 23 November 1983 the Court assigned the case to the Second The order for reference was received at Chamber. the Court Registry on 26 January 1983.

powder used for animal feedingstuffs On the other hand, sepcial provisions within the framework of the common concerning exports in bulk go further organization of the market in the milk than the general provisions regarding sector. First, the aid constitutes a packaged products mentioned above. precondition for the processing of the This applies in particular to the provision skimmed-milk powder into animal pursuant to which the products ih feedingstuffs, since it enables the question have to be delivered by the industry to use the basic product in an manufacturer direct to the addressee, economically profitable manner. It points delivery to any intermediary being out, in the second place, that the aid was prohibited, and proof is to be furnished introduced in the general interest, so solely by production of Control Copy as to enable skimmed-milk powder T 5. As a result, the aid for exports in surpluses to be disposed of and thus to bulk is generally paid after a delay of avoid or reduce public storage of the one month and this makes exports in product. bulk considerably less attractive than sales within the Netherlands and the sale of packaged products, entailing a loss of interest amounting to HFL 1.40 per 100 kg in 1981 and HFL 1.05 per 100 kg in 1982. Thus, the loss of interest affects, in particular, exports in bulk which, in the country of destination, must compete with locally produced bulk products As regards the provisions of Regulation which, by virtue, of the application of the · No 1725/79 as a whole, the plaintiff in rules governing sales within the country, the main proceedings admits that they are not affected by this loss of interest. are motivated by the fact that the This different treatment of exports in amount of aid paid involves a bulk constitutes discrimination which considerable risk of fraud. That is why is contrary to the superior rules of the production and sale of the products Community law and is therefore illegal. in question is subject to rigorous conditions and far-reaching obligations and why numerous inspection measures, supported by extremely severe penalties, are provided for. Nevertheless, the whole scheme of Regulation No 1725/79 is founded, by reason of economic necessities, on as rapid as possible a payment of the aid at the end of the month to which it relates and the aid is normally paid before the results of the inspection in respect of the period concerned become available. Verification Accordingly, the plaintiff in the main that the provisions of the regulation have proceedings claims in the first place that been observed during the period in the discrimination at issue cannot be question does not therefore constitute a avoided by the exporter and in the precondition for payment of the aid. second place that it is unnecessary in Conversely, the beneficiary is subject to view of the system of inspections a strict obligation of repayment if it provided for in Regulation No 1725/79. is found following the prescribed It raises no objection to the inspection inspections that the regulation has been method as such but considers that there infringed. is no reason, in the case of exports in

The plaintiff goes on to state the reasons The defendant in the main proceedings for which Articles 6 (2) and 7 of Regu­ observes that it is incumbent upon the lation No 1725/79 are, in its view, Commission to adopt implementing invalid. In the first place, they must be measures regarding the grant of aid for regarded as measures having an effect the products in question. It appears from equivalent to quantitative restrictions on the recitals (in particular the sixth) in the exports and are therefore contrary to preamble to Regulation No 1725/79 that Article 34 of the EEC Treaty, a the Commission considered it advisable provinsion which is binding not only to lay down special inspection ar­ upon the Member States but also upon rangements for transport of the products the Community institutions. There is no and to prescribe specific conditions for justification for an exception under payment of the aid. Accordingly, it Article 36 since the discrimination in considers that the Commission acted question is of a purely economic within the scope of its formal and sub­ character and is not necessary in order to stantive powers and in a manner which is attain the objective of the inspection not contrary either to the EEC Treaty oi­ system in question. Moreover, con­ to Regulation No 804/68, or to the siderations relating to the prevention of principle of proportionality or to any fraud cannot affect freedom of trade other principle upon which the Treaty is between Member States and Article 36 of based. In any event, it is obliged to apply the EEC Treaty may not be relied upon the contested provisions until such time in that respect. as they have been declared invalid by a court of competent jurisdiction.

III — Oral procedure Furthermore, the Commission stated that implementation of the supervision pro­ cedures was the responsibility of the Member States, which were obliged to At the sitting on 26 January 1984, oral ensure that there were no delays in the argument was presented by the plaintiff forwarding of Control Copy T 5. in the main proceedings, represented by E. Grabandt, Advocate, and by the Commission, represented by R. C. Fischer, acting as Agent. Moreover, even though the Member States were not obliged to use Control T 5, as long as the goods did not leave their territory before proof of the In reply to the written question which intended or prescribed use or destination the Court put ot it before the hearing, had been furnished, there was nothing to the Commission stated that, in principle, stop them using Control Copy T 5 for Regulation No 1725/79 did not provide inland deliveries as well. for different treatment for deliveries in bulk intended for export, on the one hand, and for similar deliveries to the domestic market, on the other. Both Finally, the Commission stated that a were subject to administrative super­ Member State should not, when paying vision to ensure that the deliveries were the aid, be satisfied with the production made to a form or a breeding or of detailed records without any proof as fattening concern which used compound to the use of the goods delivered. feddingstuffs. In both cases, the aid Consequently, it pointed out that there could be paid only if the undertaking was a difference between the re­ proved that the abovementioned con­ quirements of Community law and the dition had been complied with. This was Netherlands practice, which partly done by producing a certificate issued by explained the difference in the time it the competent national authorities of the took for the aid to be paid. In any event, Member State in which delivery took it could be concluded that exports in place. bulk should be subject to the same rules as deliveries in bulk within a Member State when the latter were dealt with in a way which was contrary to the In the Commission's view, the only provisions of Regulation No 1725/79. difference lay in the fact that in the case of inland deliveries, the regulation left the Member States to choose the kind of certificate required whilst in the case of exports to other Member States proof The Advocate General delivered his was furnished by producing a T 5 cer­ opinion at the sitting on 15 March 1984.

4 The plaintiff in the main proceedings thus considers that the provisions at issue should be regarded as measures having an effect equivalent to quantitative restrictions on exports, contrary to Article 34 of the EEC Treaty and Regulation No 804/68, and as constituting discrimination against producers contrary to Articles 40 (3) and 43 (3) (b) of the EEC Treaty: it also considers them to be contrary to the principle of proportionality

JUDGMENT OF 17. 5. 1984 — CASE 15/83

5 The defendant in the main proceedings rejected that view and stated that it was bound by the provisions at issue.

6 It was in the light of that factual and legal situation that the College van Beroep voor het Bedrijfsleven submitted the following question to the Court, for a preliminary ruling :

"Must Articles 34, 40 (3) and 43 (3) (b) of the Treaty, Regulation (EEC) No 804/68, the principle of proportionality, or any of these, as well as any other principle underlying the Treaty be construed às meaning that the provisions of Article 6 (2) read together with Article 7 of Regulation (EEC) No 1725/79 are incompatible therewith inasmuch as the effect of those provisions is that the aid referred to in that regulation for skimmed-milk powder which has been processed into feedingstuffs in one of the Member States and delivered by tanker or container is paid one month later in respect of exports than it is for inland deliveries?"

7 That question, although formally concerned with the interpretation of certain provisions of the EEC Treaty and of Regulation No 804/68, in reality raises the question of the validity of Articles 6 (2) and 7 of Regulation No 1725/79.

As regards, on the other hand, deliveries in bulk within the selling Member State, each Member State may, in accordance with Article 14 of Regulation No 223/77 and notwithstanding the specific provisions on this point in Regu­ lation No 1725/79, require that proof is to be furnished in accordance with a national procedure.

11 However, it must be emphasized that when a Member State has chosen to apply a national procedure, it must nevertheless ensure that an equivalent result is achieved in conformity with the objective of Article 6 of Regulation No 1725/79.

12 Since the supervision requirements are essentially the same for both exports in bulk and inland deliveries in bulk, any delay in the payment of aid in respect of exports is merely the result of the different conditions under which exports are made, that is to say, the fact that in intra-Community trade the document T 5 is in circulation for a greater length of time than a national document within a Member State.

Infringement of Article 34 of the Treaty and of Article 22 of Regulation No 804 / 68

13 The question raised by the national court is intended to ascertain in the first place whether the provisions at issue constitute measures having an effect equivalent to a quantitative restriction on exports within the meaning of Article 34 of the EEC Treaty.

JUDGMENT OF 17. 5. 1984 — CASE 15/83

19 As the Commission has correctly stated, the only discrimination which may be considered in an application for a preliminary ruling under Article 177 of the Treaty is that which results from incorrect application of the relevant provisions by the national authorities.

DENKAVIT NEDERLAND / HOOFDPRODUKTSCHAP VOOR AKKERBOUWPRODUCTEN

20 That is equally true of the prohibition of measures having equivalent effect provided for in Article 22 (1) of Regulation No 804/68, which adapts Article 34 to the common organization of the market in milk and milk products.

Infringement of Articles 40 and 43 of the Treaty

21 As regards the alleged infringement of Article 40 (3) of the Treaty, that provision states that the common organization of agricultural markets is to "exclude any discrimination between producers or consumers within the Community".

22 Since the difference in the method by which the aid is paid corresponds to an objective difference between the export situation, on the one hand , and that of trade within a Member State, on the other , it does not constitute discrim­ ination within the meaning of the aforementioned article which requires that like situations should not be treated differently unless such different treatment is objectively justified ( judgments of 15 July 1982 in Case 245 / 81 Edeka [1982] ECR 2745 , paragraph 11 ; of 13 June 1978 in Case 139 / 77 Denkavit [1979] ECR 1317; and 15 September 1982 in Case 106 / 81 Kind [1982] ECR 2885 , paragraph 22).

27 It should be noted in the first place that, according to the fourth recital in the preamble to Regulation No 222/77, the implementation of a Community transit procedure, including the use of uniform control documents, will facilitate transport within the community and in particular simplify the formalities to be carried out when frontiers are crossed.

28 It should also be noted that the Community rules at issue require prior administrative supervision and, therefore, the return of the control copy to the competent authorities of the country of production before the aid is paid, both for exports in bulk and for inland deliveries in bulk, whether that document is the T 5 or the Benelux 5, or a document required by the national procedure pursuant to Article 14 of Regulation No 223/77.

29 Since the purpose of those rules is to exclude the possibility of aid being paid twice, as well as that of the goods re-entering normal market channels, and thereby to prevent fraudulent practices, the formalities regarding proof must continue to be rigorously applied both to exports and to inland deliveries.

30 During the oral procedure the Commission correctly observed that recourse to another method of checking compliance with the conditions laid down in Article 6 (1) (b) of Regulation No 1725/79, namely subsequent inspections followed, if necessary, by repayment of the aid granted, would entail, in particular, excessive administrative work for the Member States responsible for carrying out those inspections.

DENKAVIT NEDERLAND / HOOFDPRODUKTSCHAP VOOR AKKERBOUWPRODUCTEN

THE COURT (Second Chamber),

in reply to the question submitted to it by the College vana Beroep voor het Bedrijfsleven by order of 25 January 1983, hereby rules:

OPINION OF MR MANCINI — CASE 15/83

Consideration of the question raised by the College van Beroep voor het Bedrijfsleven has disclosed no factor of such a nature as to affect the validity of Articles 6 (2) and 7 of Regulation No 1725 / 79 .

Bahlmann Pescatore Due

Delivered in open court in Luxembourg on 17 May 1984.