C-349/85

DENMARK ν COMMISSION

O P I N I O N O F M R ADVOCATE GENERAL DA C R U Z VILAÇA delivered on 12 N o v e m b e r 1987 *

Mr President, amount were laid down in Regulation No Members of the Court, 885/68 of the Council of 28 June 1968. 3

5. Pursuant to Article 18 (5) of Regulation I — The subject-matter of the action No 805/68, the Commission fixed — in particular by Regulation No 187/80 of 29 January 1980 4 — the export refunds to be granted in that sector in 1980 and 1981. A 1. In these proceedings, the Kingdom of list of the products covered and the amounts Denmark seeks the partial annulment, in of the refunds appear in the annex to the respect of export refunds in the beef and regulation. It indicates, in particular, the veal sector, of Commission Decisions preparations and preserves containing 85/450/EEC and 85/451/EEC of 28 bovine meat classified under subheading August 1985 on the clearance of the 16.02 Β III (b) 1 of the Common Customs accounts presented by that Member State in Tariff, for which the amounts of the refunds respect of expenditure financed by the payable depend on the percentage of bovine European Agricultural Guidance and meats which they contain. The annex speci­ Guarantee Fund (EAGGF), Guarantee fically refers to percentages 'of bovine meats Section, for 1980 and 1981.1 (excluding offal and fat)'.

6. These proceedings are specifically 2. What is the central issue in this dispute? concerned with the interpretation of the expression 'bovine meats (excluding . . . fat)' and that is the essential problem.

3. Regulation No 805/68 of the Council of 27 June 1968 2 established the common organization of the market in beef and veal, 7. The basic question to be resolved is which includes a system of export refunds whether that expression implies that all fat designed to cover the difference between of any kind must be excluded when the the prices of the product on the world meat content of the finished product is market and prices within the Community calculated or whether some of the fat may (Article 18). be regarded as forming part of the meat for the purpose of export refunds.

11. In support of its application, the Danish 14. According to the criteria adopted by the Government relies upon two submissions: Danish authorities, a natural fat content of up to 30% of the meat may be regarded as normal. Since the fat is a natural and (a) The contested decisions are based on an inherent part of meat, the only fat which incorrect interpretation of Commission cannot be taken into account for the Regulation No 187/80 and of the other purpose of determining the export refund is regulations fixing export refunds on fat added to the meat at the final prepa- beef and veal applicable in 1980 and ration stage. 1981, with the result that the Commission infringed Article 2 of Regulation No 729/70 of the Council 15. The United Kingdom, which was of 21 April 1970 on the financing of the allowed to intervene, proposes an interpre- common agricultural policy, 5 according tation of the regulation which is similar (but to which financing is to be provided for not identical) to that advocated by refunds on exports to third countries, Denmark. In the United Kingdom's granted in accordance with the opinion, in the absence of specific Community rules within the framework Community criteria, the expression 'bovine of the common organization of the meats' should be interpreted in a reasonable agricultural markets; and commonsensical way. It has thus taken the view, according to practice derived from the Meat Products and Spreadable Fish (b) Having itself failed to observe the Products Regulation 1984 (SI 1984 No time-limit for definitive clearance of the 1566), that that expression is equivalent to EAGGF accounts laid down in Article 5 the term 'lean beef', that is to say the lean muscle tissue from which all the visible fatty 5 — Official Journal, English Special Edition 1970 (I), p. 218. tissue has been separated, but which may

22. That also seems to me to be the inter­ 18. It must be acknowledged from the pretation which best ensures that the term is outset that the text of the regulation given its appropriate meaning. concerned lends itself to contradictory inter­ pretations. 23. Had the legislature sought only to exclude 'added fat' from the calculation of 19. On the one hand, when the annex to the meat content of the product, taking the Regulation No 187/80 uses the expression view that 'bovine meat' meant in principle 'bovine meats (excluding . . . fat)', it does 'bovine meat with its natural fat', then, not make any distinction regarding the according to the applicant's own logic, it nature of the fat to be excluded. Ubi lex would not in fact need to say so, since the non distinguit nec nos distinguere debemus: it term 'bovine meats' would of course not appears therefore that, in the absence of any include added fat. As the Danish other factors conducive to a different Government itself pointed out, the fat conclusion, all fat of any kind, whether would be substituted for the meat, causing added or natural, visible or intramuscular, the meat content of the product to diminish should be excluded for this purpose from and increasing the proportion of the the concept of 'bovine meats'. Since the product accounted for by ingredients other legislature did not refer specifically to any than meat. of those categories of fat and since bovine meats naturally contain fat, it would appear 24. In those circumstances, the fact that the that the parenthesis excluding fat means legislature considered it necessary to state that, in the particular case of a product that the bovine meat to be taken into classified under subheading 16.02 Β account excluded fat gives the impression III (b) 1 of the Common Customs Tariff, that it sought to exclude from the calcu­ fat, including natural fat, is not a lation of the meat content all the natural fat component of bovine meat. and not only the added fat (or the latter and the visible natural fat, as advocated by the United Kingdom). 20. This does not mean — contrary to what the applicant government asserts — that the Commission's interpretation, being based on 25. It is true that Regulation No 187/80 a 'fictitious definition' of meat, amounts to refers not only to 'fat' but also to 'offal', a rejection of the 'natural meaning' or tradi­ which is not normally regarded as forming tional, and perhaps even internationally part of meat. According to the United accepted, concept of 'meat' or 'bovine Kingdom this 'appears to indicate that the

type of fat contemplated falls into the same 29. Moreover, it should be noted that the category as offal, i. e. animal matter which general heading in the annex to Regulation is in general readily excisable from the lean No 187/80 corresponding to Common meat and does not form an integral part of Customs Tariff subheading 16.02 Β it'. III (b) 1 refers to 'Other preparations and preserves containing bovine meat or offals' and only further down, under subheadings ex (aa) and ex (bb) is fat, in addition to 26. The same conclusion appears to follow offal, excluded from meat. from the fact that, in the Common Customs Tariff, animal fat and offal are separately defined as products distinct from meat or products processed from meat 6 and of 30. In view of the title — which distin­ course, according to the United Kingdom, guishes between meat and offal — the only separable animal fat is capable of being express exclusion of offal in the parenthesis traded as a distinct product. must be seen either as poor drafting or as the result of a concern to ensure clarity, in view of the differences of definition to which I referred earlier. 27. That does not mean, however, that, even in works of reference such as that mentioned by the Commission in its Summary Report on the clearance of the 31. As regards fat, its inclusion in the EAGGF accounts referred to by Denmark parenthesis and not in the title would seem in support of its argument (Source book for to indicate that, at least in part, the food scientists), meat (taken to mean 'all the intention was to exclude something which, edible parts of the muscle connected to the in principle, falls within the definition of skeleton') includes 'the tongue, diaphragm, meat. heart and oesophagus', in addition to the 'bones, skin, tendons, nerves and blood vessels normally present in the muscular tissue'. Moreover, other documents referred 32. And this view seems to be reinforced by to by the applicant include within the defi- the fact that the text of the corresponding nition of meat a number of items which subheading in the Common Customs Tariff differ from those which I have just does not refer to the exclusion of fat from mentioned. the meat used for preparations (which, according to the United Kingdom's inter­ pretation, could only be intramuscular fat), by contrast with Regulation No 187/80, 28. The terminology does not, however, which excludes it expressly. seem to be universal and, depending upon the objectives pursued — scientific, commercial or technical purposes or calcu- lation of export refunds — there is nothing 33. The impression to be gained from to prevent the same expression being inter- reading the provision is that the legislature, preted in different ways, and therefore, in by having recourse to the parenthesis, my opinion, no argument can be based on wished to make it clear that certain ingre­ the fact that the regulation at issue refers to dients of animal origin whose characteristics 'offal' as well as to 'fat'. make them similar to bovine meat, to the point where they may be confused for meat 6 — See Chapters 2, 15 and 16 of the Common Customs Tariff. in the finished product, must not be taken

42. As is apparent from the 10th recital in 36. In particular, the regulation could have the preamble to Regulation No 805/68 and specified the nature of the fact concerned or from Article 18 (1) thereof, the purpose of made it clear that the percentages laid down the system of export refunds in this sector is in it are determined by analysis. to promote the export of products covered by the common organization of the market, so as to 'safeguard Community participation in international trade in beef and veal'. By 37. It follows, therefore, from the foregoing covering the difference between the prices considerations that the terms used in the of those products on the world market and provisions in question do not unequivocally the prices in the Community, the refunds favour only one of the interpretations put facilitate exports which would otherwise be forward. impossible, and Community producers are able to compete in external markets.

38. However, whilst the Commission inter­ pretation is not the only possible interpre­ 43. It is not necessarily a question, as was tation of the wording used, the Danish ultimately argued by the Commission, of interpretation is likewise not the one which promoting the export of products of the best corresponds to the literal content of the highest quality. provision.

44. In any event, the pursuit of the general 39. As regards the interpretation advocated objective to which I have referred must take by the United Kingdom, it must be stated account of the matters referred to in Article that the text of the provisions does not 2 of Regulation No 885/68 and, in

46. The Commission's interpretation is incontestably conducive to attainment of the 50. The first interpretation favours the objective of the system of refunds and that export of preparations with the greatest objective is achieved to a greater extent. possible meat content, in order to relieve an The amount of the refund is not merely oversupplied internal market; the applicant's proportional to the percentage of meat interpretation takes us a little further away without fat contained in the product, but is from that objective. in fact higher. With regard to 1980 and 1981, it is to be noted that for products in which the content of meat without fat was 80% or more and between 60% and 80% 51. Identical conclusions to those which I the amount of the refunds to be granted for have just mentioned are also suggested if the latter category was not three-quarters of the economic aspect of the exports is the amount granted for the former, which considered, another of the factors would be the result if the ratio between mentioned in Article 3 (d) of Regulation those percentages were taken as a basis, but No 885/68. It does not seem economically is in fact a little more than half. logical — as the Commission also stated at the hearing — to be able to use meat of lower quality and even to substitute fat of any kind for up to 30% of the meat and nevertheless to obtain the same refund, 47. According to the Commission, the notwithstanding the lower cost of the raw objective assigned to the system of export materials used. refunds in this sector was recently rein- forced by the addition of a new category of products containing 90% meat by weight, excluding offal and fat, by means of 52. The United Kingdom's interpretation Commission Regulation No 2672/85 of 23 now seems closer to the stated objective September 1985. 7 and, without doubt, represents the minimum that can be required for that objective to be 7 — Official Journal 1985, L 253, p. 18. regarded as complied with.

53. E — In its reply, the applicant also 187/80, in which uncooked preparations draws support for its argument from the containing 80% or more of meat received a origin and history of the regulations on refund of ECU 98.88 or of ECU 91.88 per refunds in the beef and veal sector. In its 100 kg net weight, depending on the desti view, Commission Regulation No 678/77 of nation, as against amounts varying between

57. The Danish Government and the quarters. United Kingdom refer to the fact that the regulations applicable to the pigmeat sector (in particular Regulation No 3065/86 of 7 October 1986 9 ) require account to be 54. However, the Commission's response to taken, for the purpose of export refunds, of that argument suffices to deprive it of fat of any nature and origin,10 which would probative force. The products involved are indicate that, if there had been any intention different, having different values and to exclude all fat in the parallel case of different prices in the export markets; bovine meat, an express reference would according to the Commission, the fact that also have been made. the refunds were identical at that time was a matter of chance, a mere historical coin cidence deriving from the assessment of the market made at that time and from the 58. That argument likewise does not appear possibilities of disposing of the products. decisive and, moreover, it can be applied conversely. In the case of bovine meat, to which the disputed words in brackets refer, the intention was to establish a system different from that applied to pigmeat; it is

This occurred in Regulation No 9 — Official Journal 1986, L 285, p. 17. 10 — Sec also the corresponding heading in the Common 8 — Official Journal 197ľ, L 84, p. 41. Customs Tariff.

59. On the other hand, I do not think that 63. The same could be said with respect to any decisive interpretative argument can be Commission Regulation No 2429/86 of 31 inferred from the fact that on 29 October July 1986, which established a common 1985 the Commission submitted to the procedure for determining the meat content Council a proposal for a regulation of preparations containing beef, which concerning the classification of goods within clarified the position by describing fat as 'fat subheading 16.02 Β III (b) 1 (aa) (33) of (including fat obtained from the meat the Nomenclature contained in the annex to itself)'.

For the Danish Government, that fact demonstrates the insubstantiality of the 65. F—Let us now consider the technical interpretation given by the Commission to aspects. Regulation N o 187/80 and regulations of the same kind. 66. It became apparent at the hearing that the meat content of the products in question can only be determined by analysis; it was also confirmed at the hearing that, as the 61. In the Commission's view, that applicant had already conceded in its reply, proposal, which was prepared because of an it is not possible to distinguish by chemical actual case of incorrect classification of a analysis between natural, visible or invisible product analysed by the Danish authorities, fat and added fat. does no more than confirm the applicable law, its adoption having become necessary 67. The distinction suggested by the in order to avoid incorrect interpretations applicant thus seriously restricts the effec and to ensure — as recommended in the tiveness of any examination of the finished preamble to Regulation No 97/69 of the product by analysis, so that greater Council of 16 January 1969 on measures to importance would have to be attached to be taken for uniform application of the visual inspections at the point of production, Nomenclature of the Common Customs together with the weighing of the raw Tariff 13 — that the nomenclature contained materials. in that tariff was applied uniformly.

DENMARK ν COMMISSION

it always involves — by contrast with refunds are granted in respect of prepa­ analytical examination — a certain degree rations containing bovine meat. of arbitrariness and subjectivity.

73. Be that as it may, the conclusion that 69. This does not mean that companies are may be drawn is, of course, that there are unable to determine with sufficient precision no technical reasons for rejecting the inter­ at the production stage what export refunds pretation advocated by the Commission, or should be paid to them for the products in for necessarily adopting the interpretation question, by reference to the quantity and contended for by Denmark and the United the nature of the raw materials used, so that Kingdom. they are able to plan their production programme. This can be done by means of empirical examination by an 'experienced 74. On the contrary, I believe that the eye', a system which, as the applicant stated technical questions raised militate in favour in its reply, could be improved upon by of the Commission's interpretation. comparing the raw material under exam­ ination with colour photographs of meat with differing fat contents, determined by 75. Since it is impossible to distinguish analysis. analytically between natural fat and added fat in the final product, the result of the applicant's interpretation is that any checking of the finished product might be 70. But examination of the final product is evaded by substituting added fat for meat in entirely different and cannot be carried out quantities greater than those allowed by the otherwise than by recourse to analytical Community regulations. methods.

79. The method which appears to be advocated in that circular is not capable of 85. But, whilst it is true that the Danish preventing fraud. Government, in justifying the choice of that percentage, relies upon the fact that the natural fat content of forequarters varies between 18% and 36%, it is no less true 80. Even if the possibility of fraud is disre- that no sound evidence has been produced garded, the applicant's interpretation, by to justify the specific figure of 30% rather applying a coeffiient of 30% to determine than any other, the logical basis of which the maximum permitted amount of intra- might, moreover, be presented more clearly. muscular fat, lowers the analytical limits in terms of meat without fat, provided for in the regulation, from 80%, 60%, 40% and 20% to, respectively, 56%, 42%, 28% and 86. And, whilst it is not possible to find any 14%. solid basis for the figure of 30% for natural fat (visible and invisible) allowed by the Danish Government, no incontestable justi- fication has been put forward, as I stated 81. In view of the fact that superior quality earlier, for the figure of 10% for invisible bovine meat contains between 2 % and 5% fat advocated by the United Kingdom. fat, this implies that the maximum refund will be paid both for a product whose content of meat without fat is between 9 5 % 87. In any case, none of the views put and 98% and for a product with a content forward appears capable of ensuring a of only 56%, and in the latter case the 'Community' interpretation of the contested remaining 44% may be made up of other expression. ingredients.

90. Consequently, as the Commission stated, there has been a distortion of 93. According to the Commission, the other competition with respect to those Member Member States (with the exception of States which adopt a strict interpretation of Luxembourg, to which the regulation does the regulation, in so far as Danish traders not apply) apply the rules at issue in (and, to a lesser extent, United Kingdom accordance with the interpretation which it traders) are able to obtain the same refund considers to be correct. for products containing a lower percentage of meat without fat. 94. Since the practice adopted by the Danish authorities is derived from an erroneous interpretation of Community law, 91. As the Court held in its judgments of 7 'the Commission is not obliged to charge February 1979 in Cases 11/76 Netherlands ν expenditure incurred on that basis to the Commission and 18/76 Federal Republic of Fund unless the incorrect interpretation may Germany ν Commission, ' 6 the system be attributed to a Community institution'. 17 provided for in Articles 2 and 3 of Regu­ lation No 729/70 of the Council of 21 April 1970 requires a 'strict interpretation' of the conditions under which expenditure is to be 95. However, it is here, in my opinion, that borne by the EAGGF, having regard, in the position maintained by the Commission particular, to the objective of that regu­ regarding Denmark's application may show lation. the first signs of shakiness.

100. It was the Commission which, in its defence, raised this problem by comparing 104. Attention should however be drawn the Danish version with the others. The immediately to the difference between the applicant took advantage of that fact in its grammatical forms used in the Danish reply to hold the Commission responsible version and those used in the others: for the differing degrees of clarity of the 'ikke . . . fedt' appears to correspond, more wordings used. precisely, to 'mas nao . . . a gordura' ('mais no . . . la graisse', 'but not. . . fat').

103. The Commission explained that its 109. A — The Danish Government argument had been based on the Danish maintains that the fact that the Commission, version of Regulation No 187/80, and that contrary to Article 5 of Regulation No 729/70, was slow in clearing the accounts 18 — Judgment of 3 March 1977 in Case 80/76 Kerry Milk ν Minister for Agriculture and Fisheries [1977] ECR 425, at p. for 1980 and 1981, taking considerably 435. more than the period of one year laid down 19 — Judgment of 12 July 1979 in Case 9/79 Koschniske ν Raad van Arbeid [1979] ECR 2717, paragraph 6. therein, constitutes an infringement of a 20 — Judgment of 27 October 1977 in Case 30/77 Regina ν legal obligation to act, which prevents it Bouchereau [19771 ECR 1999, paragraph 14; see also from having recourse to a new legal defi- judgments of 7 February 1979 in Cases 11/76 and 18/76, supra, at pp. 278 and 383. nition.

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110. If I understand it correctly, this infringement committed by the Member submission can be divided into two limbs. State.

115. The position in these proceedings is 111. Β—In the first, Denmark refers to the therefore, as the Commission has pointed Commission's failure to comply with the out, that the infringements attributed to the prescribed time-limit for the clearance of applicant took place in 1980 and 1981 the accounts. This is conceded by the whereas the Commission failed to comply Commission, which states that an excessive with the time-limit for the first time on 1 workload accounted for the delay. January 1982.

119. It cannot be said, in absolute terms, that 114. Moreover, as may also be deduced the legal definition applied in the contested from the judgment in Joined Cases 90 and decisions is 'new'. 91/63 (at p. 631), a Member State cannot rely upon a Community institution's failure to comply with a time-limit in order to 120. The Commission contends—and was exculpate itself for an infringement of not shown to be wrong — that it has never Community law committed by it at an adopted any interpretation different from earlier time. In those circumstances, there is that which it adopted in those decisions. It clearly no causal link between the merely had no reason at an earlier stage to Community's transgression and the apprehend the applicant's error of interpre­ tation, in so far as its first opportunity to do 2! — Judgmcntof 13 November 1961 ín loincd Cases 90 and so was during an inspection visit carried out 91/63 Commission ν Luxembourg and Belgium [1964] ECR 625, at p. 631. in July 1984.

OPINION OF MR DA CRUZ VILAÇA—CASE 349/85

121. Its interpretation of the contested legis- 127. It is doubtful whether, in that respect, lation was even notified to Ireland as early Denmark was under a duty of the same as November 1979, in response to a extent as that incumbent upon the question formulated by the Irish authorities; Commission. however, the Danish Government did not consult the Commission on that matter.

128. Furthermore, there is no reason to doubt the applicant's good faith as regards 122. It seems to me that this provides us its interpretation of the regulation, which it with our first glimpse of the essential considered to be correct and which it based, elements for assessing the applicant's as it explained, on its own usages and position as regards the problem of legitimate commercial and industrial criteria, without expectations. wondering whether different interpretations might be possible.

126. And it does not seem that the Commission's omission at that stage was consequential upon Denmark's failure to 132. Moreover, although I take the view consult it on the interpretation of the that the Commission's interpretation is contested passage. correct, it was not, having regard to the

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OPINION OF MR DA CRUZ VILAÇA —CASE 349/85

Member States in their application of the 143. This is particularly true if it is borne in rules of the common agricultural policy. mind that, according to the current case-law (see for example the judgment just cited, paragraph 27), it is for the Commission to 142. The bringing of an action for failure to decide whether it is appropriate to have fulfil Community obligations, under Article recourse to an action under Article 169 and, 169 of the Treaty, must not therefore be in particular, to decide not to bring an regarded as a necessary precondition or a action when the infringement has ceased, substitute for the withholding of financing without such discontinuance constituting in connection with the clearance of EAGGF recognition that the contested conduct was accounts. lawful.

IV — Conclusion

144. In view of the foregoing considerations, my opinion is that the first submission contained in the application is unfounded and that the submission put forward in the reply is inadmissible (and, in any case, unfounded).

145. On the other hand, it seems to me that the EAGGF's failure to approve the expenditure incurred in respect of export refunds in the circumstances to which these proceedings relate constitutes frustration of the applicant's legitimate expec- tation that the expenditure would be upheld.

146. For that reason, I propose that the Court should uphold the application, declaring the contested decisions void, and should order the Commission to pay the costs, including those relating to the intervention of the United Kingdom of Great Britain and Northern Ireland.