C-182/85

Mr President, feed (Official Journal, English Special Members of the Court, Edition 1968 (I), p. 260) and Commission Regulation (EEC) No 1725/79 of 26 July 1979 on the rules for granting aid to 1. In this reference for a preliminary ruling, skimmed milk processed into compound the Amtsgericht Köln (Local Court, feedingstuffs and skimmed-milk powder Cologne) is asking the Court to interpret intended for feed for calves (Official certain regulations concerning aid for Journal 1979, L 199, p. 1) as subsequently skimmed-milk powder used as animal feed. amended), the supplier was required to take the goods back, repay the price if already paid by the purchaser and bear the costs The questions submitted seek essentially to resulting from the analysis and transport of establish whether the aid system is subject to the product. In the opposite situation — that the method of analysis and corresponding is to say if the skimmed-milk powder were tolerance margin provided for by the inter­ eligible for the aid but Denkavit none the vention system for the purpose of deter­ less refused to accept the product and mining the presence of whey in Lütticke took it back — the costs of skimmed-milk powder. The national court transport and analysis were to be borne by also seeks to ascertain whether, if it is estab­ the purchaser. lished that the aforesaid method of analysis is applicable to the aid system and has led to the finding that the skimmed-milk powder is Under the terms of the aforesaid contract, free of whey, the competent authorities are Denkavit analysed a consignment received entitled to reclaim the aid if new and on 14 July 1983. Depending on the method different tests reveal the presence of whey in of analysis used, the whey present in the the product. skimmed-milk powder varied between a maximum of 3% and a minimum — estab­ lished by applying the method provided for 2. The main dispute arises from the delivery under the intervention system — of 0.5%. of a consignment of skimmed-milk powder Denkavit then requested Lütticke to take by a German undertaking, Lütticke, to the goods back. Lütticke did so but claimed another German undertaking, Denkavit, reimbursement of the costs and, faced with which was to use it in the preparation of Denkaviťs refusal, instituted proceedings compound feedingstuffs eligible for against the latter before the Amtsgericht Community aid. Köln.

(EEC) No 625/78 of 30 March 1978 on '(1) Is the intervention system laid down for detailed rules of application for public the milk sector under basic Regulation storage of skimmed-milk powder (Official No 804/68 on the common organ- Journal 1978, L 84, p. 19) provides for the ization of the market in milk and milk possibility of offering the skimmed-milk products (Official Journal, English powder for sale to the intervention agency Special Edition 1968 (I), p. 176) to provided that whey is not present in the be interpreted as meaning that product in excess of 2%, Regulation No skimmed-milk powder which meets the 1725/79 does not provide for any tolerance quality requirements for intervention

Regulation No powder in question may also be 1725/79 does not provide for a method of regarded as free of whey for the analysis and, in those circumstances, it is purposes of the grant of aid under clear that reference must be made, by Regulation No 1725/79? analogy, to the method and tolerance margin laid down by Regulation No (3) If Question 2 is answered in the 625/78. A different interpretation would be affirmative : contrary to the principle of proportionality and, by depriving of aid products qualita- (a) does the fact that the method of tively suitable for public storage, it would analysis provided for under the frustrate one of the purposes for which intervention rules in Annex IV to those aids were established, namely to Regulation No 625/78 allows for a prevent the skimmed-milk powder surplus in tolerance margin of 2% mean that its entirety from being offered for sale to the same tolerance margin is to be intervention agencies. applied to the results of analyses carried out by the Member States, The Amtsgericht Köln considered that the using other methods not laid down latter argument was not devoid of merit, by Community law, in the particularly if it was true, as the plaintiff procedure for the grant of aid maintained, that the presence of minimal under Regulation No 1725/79? traces of whey might be due not to frau- dulent admixtures but to other factors. The (b) if it may be concluded on the basis Amtsgericht therefore stayed the pro- of the results of an analysis taking ceedings and, pursuant to Article 177 of the into account the relevant tolerance EEC Treaty, referred to the Court the margin that whey is absent from following questions for a preliminary ruling: a consignment of skimmed-milk

In these proceedings, written observations However, that definition must be viewed in were submitted by the parties to the main conjunction with the definition of milk (or proceedings and by the Commission of the buttermilk) in Article 1 (a) of Regulation European Communities. No 986/68, namely 'the milk-yield of one or more cows, to which nothing has been added and which has, at the most, been only partially skimmed' (emphasis added). It 3. Before I consider those questions, it is follows that, for the purposes of the rules appropriate to give a brief outline of the applicable in these proceedings and in relevant rules of Community law on the particular Regulation No 1725/79, milk contested aid. which has been prepared with ingredients other than those prescribed or with the admixture of substances not expressly Article 10 of Regulation No 804/68 of the permitted is ineligible for aid, even if its Council on the common organization of the appearance and chemical composition are market in milk and milk products provides perfectly normal. Moreover, that principle for the grant of aid for skimmed-milk was clearly laid down by the Court in its powder used as animal feed, on condition judgment of 21 September 1983 in Joined that it meets certain standards as to quality. Cases 205 to 215/82 Deutsche Milchkontor w That provision is substantially the same as Germany [1983] ECR 2633, paragraph 12 of Article 7 which governs the buying-in of the decision, and reference must be made to skimmed-milk powder by intervention it in order to resolve the problems before agencies. Article 7, however, requires the the Court.

Let me say at once that the premise on That remains to be seen. I would point out, which the latter contention is based is to begin with, that the fact that the aid correct. As we have just seen, 'first-quality' system does not provide for specific milk must be earmarked for sale to the methods and tolerance margins lacks the intervention agency, although no such significance ascribed to it by the requirement is imposed in the case of milk Commission. Article 10 of Regulation No eligible for aid. In addition, the intervention 1725/79 provides that 'with a view to system expressly provides that the ensuring compliance with the provisions of skimmed-milk powder must not contain Article 1 (2) and (4)' the Member States are buttermilk (Article 1 (1) (c) of Regulation to 'provide for supervision of the enterprises No 625/78) whilst under the aid system the concerned' with regard to 'the composition presence of buttermilk in the product has of the . . . skimmed-milk powder'. In so far been tolerated at least since 1975 (Article 1 as it adopts the definition in Article 1 (a) (a) of Regulation No 986/68, as amended and (d) of Regulation No 986/68 (supra, by Regulation (EEC) No 472/75, Official Section 3, at the end), Article 1 (2) of Journal 1975, L 52, p. 22, particularly the Regulation No 1725/79 requires that first recital in the preamble). Thirdly, the fat nothing should have been added to the content, which under the intervention skimmed-milk powder. Accordingly, one of system may not exceed 1.25% (Annex I to the aims of supervision of the enterprises Regulation No 625/78), may under the aid concerned will be to establish whether the system be as high as 11% (Article 1 (d) of skimmed-milk powder has been enriched Regulation No 986/68, as amended by with whey. Moreover, the Court has also Regulation No 472/75). Finally, although come to a similar conclusion, although it is under the intervention system the milk may couched in more general terms. In its not be more than one month old, no such judgment in the aforesaid Milchkontor case, limit is imposed by the aid system. it held that Member States 'must verify by means of appropriate controls that skimmed-milk powder complies with the However, the consequences drawn from relevant Community rules so as to ensure those facts by Denkavit and the Commission that Community aids are not paid in respect are excessive. Although it is true that a of products for which they ought not to be product which satisfies the requirements laid granted' (paragraph 43 of the decision).

The Commission disagrees. In its view, as is for public storage, a tolerance margin needs clear from the analysis report set out in to be fixed for technical reasons connected Annex I to Regulation No 1725/79, it is with the ever-present possibility of 'errors in unnecessary to test the product for the the method' or 'natural variations in the presence of whey and the test is carried out composition of the sample', and certainly only at the request of the national auth- does not imply that whey may be added to

The determine the scope of those controls. The Commission refuses to resign itself to that aforesaid provisions and the case-law of the conclusion and points out that the aforesaid Court clearly demonstrate, it seems to me, method is designed to detect the presence of that it is for the Member States to rennet whey in skimmed-milk powder, determine the scope of those controls and whereas so far as the grant of aid is the procedures for applying them, and that concerned, Regulation No 1725/79 and also holds true for the tolerance margin. Annex I thereto do not distinguish between The fact that Regulation No 1725/79 makes rennet whey and acid whey.

It is sufficient to recall, selected by the State in the exercise of the however, that milk eligible for aid may discretion conferred upon it by the relevant exhibit the characteristics of a product rules of Community law. eligible for sale to the intervention agency, from which it may be inferred that, at least where that is the case, the product is subject However, the scope of that discretion must to the method of analysis prescribed by be clearly understood. As is stated in point Community law. Moreover, the documents 8.3 of Annex IV to Regulation No 625/78 produced by the plaintiff and even by the with regard to the method of analysis laid defendant show that this is what normally down for skimmed-milk powder intended happens in practice.

A final point. The intervention system and To begin with, there is the problem raised in the aid system both form part of the Question No 2. The Amtsgericht seeks to common organization of the market in milk ascertain whether, once it has been estab- and milk products (judgment of 18 October lished by applying the Community method 1979 in Case 5/79 Buys v Denkamt [1979] that no whey is present in the product, the ECR 3203, paragraph 20 of the decision) latter is to be regarded as free of whey also and complement one another so as to satisfy for the purposes of the grant of aid.

That aim is also apparent As for me, I can only refer to the principles from the entire system of aid which pursues which I emphasized earlier. Since under the objectives that coincide at least in part with aid system the power to choose the method those of the intervention system but which is for detecting the presence of whey is vested far less onerous than the latter. in the Member States, the solution of the problem depends on the method of analysis adopted by the competent national auth- orities in specific cases.

That is true but the 5. The conclusion which I have arrived at Court has already taken that objection into and the arguments which I have used in account, albeit in different circumstances, in support thereof also enable the other paragraph 24 of its decision in the Milch- problems raised by the national court to be kontor case, where it held that ' . . . if resolved without too many difficulties. disparities in the legislation of Member

States proved to be such as to compromise same. Accordingly, a Member State which the equal treatment of producers and allows for a tolerance margin of less than traders in different Member States or distort 2 % would lay itself open to the charge that or impair the functioning of the common its conduct is discriminatory to say the least. market, it would be for the competent Community institutions to adopt the provisions needed to remedy such disparities'. 7. In Question 3 (b) the Amtsgericht seeks a ruling from the Court on the lawfulness of a Member State's claim for repayment of the aid where inspections carried out following

Once again the answer is in the negative. Every method On that point the parties' positions coincide. has its own tolerance margin which is The principle of legal certainty and the into- determined, as I have shown, by technical lerable risks to which undertakings would reasons peculiar to it. It follows that, to be exposed if the recovery of the aid were apply to one method a tolerance margin allowed justify in their view a negative calculated in relation to another method answer. However, that argument is unac- would be tantamount not only to disre- ceptable. As we have seen, the relevant garding the discretion conferred on the provisions of Community law (Article 1 (a) Member States (supra, Section 3) but also to of Regulation No 986/68 and Article 1 (2) ignoring the aforesaid reasons and, in the of Regulation No 1725/79) leave no doubt final analysis, the purpose for which those whatsoever that skimmed-milk powder to reasons are taken into account, namely to which whey has been added is for that very verify that the product is free of whey. reason excluded from the scope of the aid

OPINION OF MR MANCINI —CASE 182/85

is governed by the law of the State 1725/79 is contrary to the principle of concerned, subject only to the application of proportionality, inasmuch as it precludes the conditions which are no different from grant of aid in respect of a product that may those laid down for the recovery of aids be offered for sale to the intervention granted under national law and to the agency. protection of the interests of the Community in its entirety (see the Milch- In my view, in this case too the answer can kontor judgment, paragraph 19 et seq. of the only be in the negative. We know that the decision, and the judgments referred to by intervention system is no less strict than the Mr Advocate General VerLoren Van aid system in prohibiting the admixture of Themaat in his Opinion on that case). In whey to skimmed-milk powder. Hence, far conclusion, in this case the solution of the from jeopardizing the principle of propor- problems surrounding the claim for tionality, the differences in treatment to repayment and the protection of the debtor which the aforesaid provision may give rise is a matter for German law. are justified by the supposedly higher degree of accuracy of the method which the 8. The final question seeks to ascertain Member State concerned has selected for whether Article 1 (2) of Regulation No the purposes of the grant of aid.

9. In the light of all the aforesaid considerations, I suggest that the Court answer the questions referred to it by the Amtsgericht Köln, by order of 7 December 1984 in the proceedings between Liitticke and Denkavit, in the following terms:

(4) In so far as it provides that skimmed-milk powder is ineligible for aid where whey has been added to the product, Article 1 (2) of Regulation No 1725/79 does not contravene the principle of proportionality because the intervention system also requires the product to be free of whey and any differences in treatment can arise only from the different degree of accuracy of the method of analysis adopted for the purposes of the grant of aid.'