C-182/87

TROUW v HOOFDPRODUKTSCHAP VOOR AKKERBOUWPRODUCTEN

OPINION OF MR ADVOCATE GENERAL JACOBS delivered on 30 November 1988 *

My Lords, Article 4 (1) (a) of Commission Regulation No 1725/79, read together with Article 1(5) of the same regulation, as amended, required that per 100 kg of the finished product the feedingstuffs must contain at 1. In this case the Court is asked to rule on least 60 kg of partly skimmed milk powder the interpretation of Community rules after multiplication by a coefficient of 0.9. concerning aid for the processing of partly In fact, after multiplication by this figure, skimmed milk powder into compound feed- the quantities of skimmed-milk powder used ingstuffs. The request for a preliminary by Trouw varied between 57.996 and ruling arises from a dispute between a 58.996 kg per 100 kg of feedingstuffs. Netherlands trader, Trouw & Co. BV ('Trouw') and the Hoofdproduktschap voor Akkerbouwprodukten ('the intervention agency').

4. At the oral hearing, counsel for Trouw stated that the quantity of skimmed-milk Facts powder used per 100 kg of the finished product in the relevant period was in fact 60.5 kg, consisting of 40 kg of ordinary skimmed-milk powder and 20.5 kg of partly skimmed milk powder. The coefficient was 2. It appears from the Order for Reference applied only to the latter quantity, giving that between 3 June and 25 August 1985, rise to a total of 58.45 (40 + 18.45) kg. Trouw processed partly skimmed milk However, it appears to be common ground powder into compound feedingstuffs and between the parties that the actual quantity received aid in respect of the quantities of used exceeded 60 kg before multiplication powder used in accordance with Article by the coefficient, but fell short of that 2(1)(e) of the then applicable version of figure after the coefficient had been applied. Council Regulation (EEC) No 986/68.

of skimmed-milk powder used reached the and skimmed-milk powder used as feeding- requisite 60 kg per 100 kg of feedingstuffs stuffs. General rules for the granting of this in order to qualify for aid. At what stage, in aid are laid down in Council Regulation No other words, must the coefficient be 986/68 of 15 July 1968 (Official Journal, applied? English Special Edition 1969 (I), p. 260). Article 1 (d) of that regulation (as amended by Council Regulation No 472/75 of 27 February 1975, Official Journal 1975, L 52, 6. Trouw sought the annulment of the p. 22) defines skimmed-milk powder as decision of the intervention agency claiming milk or buttermilk in powder form with a reimbursement on the ground that the maximum fat content of 11 %. Article 2 (1) decision was based on an incorrect interpre­ of Regulation No 986/68 describes the tation of Regulation No 1725/79, in categories of skimmed milk and particular as regards the application of the skimmed-milk powder for which aid may be coefficient. By order of 5 June 1987, the granted. College van Beroep voor het Bedrijfsleven requested a preliminary ruling on the following question:

TROUW v HOOFDPRODUKTSCHAP VOOR AKKERBOUWPRODUCTEN

(f) skimmed-milk powder with a fat to qualify for aid, and Article 4 laid down content to be determined between 9 the compositional requirements for the and 11 %, not containing finished product, i. e. the feedingstuffs. buttermilk powder, produced in a dairy directly from liquid milk and denatured according to methods to be determined with a view to its use in the manufacture of 16. Following the introduction of the compound feedingstuffs'. differentiated system of aid for skimmed-milk powder referred to above, the Commission adopted Regulation No 3714/84 of 21 December 1984 laying down detailed rules for the granting of aid for the 12. This case is concerned with the product use of partly skimmed milk and partly described at (e) above, i. e. partly skimmed skimmed milk powder in feedingstuffs milk powder used in the manufacture of (Official Journal 1984, L 341, p. 65). compound feedingstuffs. Article 1 provided for a special aid for the fat content of skimmed-milk powder covered by Article 2 (1) (e) and (f) of Regu­ lation No 986/68 and containing at least 10% milk fat. 13. Anicie 2a (1) of Regulation No 986/68, as amended by Regulation No 2128/84, laid down the factors which were to be taken into account when fixing the amounts of 17. The introduction of the differentiated aid. In the case of categories (e) and (f) set aid system also necessitated changes to the out above, these factors included the trend implementing rules in Commission Regu­ in the intervention price for butter and the lation No 1725/79. Commission Regulation trend in prices for fats competing with the No 101/85 of 15 January 1985 (Official milk fats used as feed. Journal 1985, L 13, p. 12) amended Article 1 (1) (a) of Regulation No 1725/79 to include partly skimmed milk powder among the products eligible for aid. A reference to partly skimmed milk powder was also added 14. The differentiated system of aid in to the definition of compound feedingstuffs Regulation No 2128/84 was introduced in Article 4 (1) of Regulation No 1725/79, only on a temporary basis and lapsed at the which after this addition (shown in italics) end of the 1985/86 milk marketing year. read as follows:

19. In addition, the amendments to Regu­ lation No 1725/79 sought to take account of the fact that, with the adoption of Regu­ 22. From the written and oral observations lation No 3714/84 referred to above, it was and from the pleadings in the national possible for a trader who used partly proceedings, three views emerge as to the skimmed milk powder in the manufacture of correct application of the coefficient in feedingstuffs to benefit both from the Article 1 (5) of Regulation No 1725/79. special aid for fat content provided for by that regulation and from the aid for the total quantity of skimmed-milk powder used under Regulation No 1725/79. In order to take account of the possibility of an element 23. First, a view advanced by the plaintiff of dual aid, a new paragraph (5) was company, Trouw, before the national court inserted into Article 1 of Regulation No and in oral observations was that the coef­ 1725/79: ficient should be applied to the actual quan­ tities of partly skimmed milk powder used in the manufacture of feedingstuffs, but that it '5. To calculate the aid payable and to was sufficient that the feedingstuffs should ensure that the requirements of this regu­ contain, per 100 kg of the finished product, lation as regards quantities are observed, the at least 60 kg of partly skimmed milk quantities of skimmed-milk powder as powder before the coefficient was applied. In referred to in Article 2 (1) (e) and (f) of practical terms, this approach is equivalent Regulation (EEC) No 986/68 and skimmed to reducing the amount of aid paid out by milk as referred to in Article 2 (2) of the 10%, thus meeting the objective of avoiding said regulation shall be multiplied by a coef­ dual aid. On this view, Trouw should have ficient of 0.9.' been eligible for the aid under Regulation No 1725/79, since it is common ground between the parties that the actual quantity 20. The second recital to Regulation No of partly skimmed milk powder used by the 101/85 explains the purpose of the coef­ company per 100 kg of feedingstuffs ficient: exceeded 60 kg.

25. Finally, the view defended by the Commission was that the coefficient should 27. In order to decide on the correct inter­ be applied to the actual quantities of partly pretation, it is necessary to take into skimmed milk powder used, but that the account the wording of the relevant feedingstuffs must still contain, per 100 kg provisions, the purpose of the coefficient of the finished product, at least 60 kg of and the underlying objectives of the partly skimmed milk powder after the Community legislation. notional reduction of the quantities used by the application of the coefficient. Like the first view, this approach would have led to a reduction in the amount of aid by 10%, but it would have had the further practical 28. In this perspective, it is plain that the effect that if a trader was to meet the 60 % second view set out above cannot be minimum requirement after application of supported and that the coefficient in any the coefficient, he had to use a minimum of event had to be applied to the actual quan­ 66.67 kg of partly skimmed milk powder tities of skimmed-milk powder used. Article per 100 kg of compound feedingstuffs. In 1 (5) of Regulation No 1725/79 as other words, the indirect effect of this amended required that the coefficient approach was to tighten the compositional should be applied to '. . . the quantities of requirements laid down in Article 4 (1) (a), skimmed-milk powder as referred to in first indent, of Regulation No 1725/79. On Article 2 (1) (e) of Regulation (EEC) No this interpretation, Trouw was not eligible 986/68 .. . ', in other words, to the quan­ for aid. tities of partly skimmed milk powder 'used in the manufacture of compound feeding­ stuffs' (emphasis added). The second part of the second recital to Regulation No 101/85 also makes it plain that the coefficient operates to establish 'the quantity of milk powder contained in the product'. Moreover, the view that the coefficient be 26. I would add that the intervention applied to reduce the quantitative pres­ agency, while it originally applied the criptions rather than the actual quantities Commission's interpretation and sought used cannot be said in any way to further recovery of the aid paid to Trouw, the avowed purpose of the coefficient, i. e. subsequently submitted written observations the avoidance of dual aid, and runs counter attacking that interpretation on the grounds to the general objective of the legislation

'To calculate the aid payable and to ensure that the requirements of this regulation as 36. The argument (advanced by the regards quantities are observed ... '. Commission in its written observations) that the third interpretation better serves the underlying objectives of the Community 32. However there is, in my view, nothing legislation, can of course be turned both in the language of the provision to suggest ways. Since the practical effect of this view that the coefficient was intended to alter the was that it required traders to use a greater quantitative requirements laid down in quantity of skimmed-milk powder in order Article 4 (1). If anything, the language used to meet the minimum compositional indicates that the coefficient was intended standard, on the face of it, it clearly to reinforce, or at any rate not to prejudice, furthered those objectives. If, on the other those requirements. The terms of hand, the consequences for traders were so Article 1 (5) must on their face value be onerous that there was practically no

TROUW v HOOFDPRODUKTSCHAP VOOR AKKERBOUWPRODUKTEN

take-up of the aid scheme (which, according Commission's view, the effect of the third to the written observations of the inter­ interpretation was to guarantee that per vention agency, appears to have been the 100 kg of the finished product, feeding- case, at any rate in the Netherlands) then it stuffs would still have to contain a minimum is not clear how the objectives of the legis­ of 60 kg of non-fat (protein or sugar) milk lation were in fact furthered by this elements. approach.