C-267/88

OPINION OF MR MISCHO — JOINED CASES C-267/88 TO C-285/88

O P I N I O N OF MR ADVOCATE GENERAL MISCHO delivered on 13 December 1989 *

Mr President, (third question), or else because they take Members of the Court, no account of 'structural and natural disparities between the various agricultural regions', as required by Article 39(2)(a) of the EEC Treaty (fourth question). 1. Once again, the Court is being asked to give a preliminary ruling on a number of questions concerning the validity and inter- 4. The relevant legislation is well known to pretation of various provisions of Com- the Court and the provisions relevant to this munity law concerning the additional levy case are set out in detail in the Report for on milk. the Hearing. For the exact wording of the questions raised I would also refer to the Report for the Hearing.

2. Those questions were raised in proceedings which certain milk producers in the Liège and Belgian Haute Ardenne I — The first two questions regions instituted before the tribunal de première instance (Court of First Instance), Verviers, against the dairies to which they are affiliated, the Office national du lait et 5. Council Regulation (EEC) No 856/84 of ses dérivés and the Belgian State, for the 31 March 1984, 1 which inserted Article 5c repayment of certain sums which the dairies in the Community legislation on the had withheld from them by way of the common organization of the market in milk additional levy on milk from the price of and milk products, 2leaves Member States milk delivered by the producers. with a choice between two different formulas for implementing the additional levy on milk which it introduces.

'in the context of Formula B, producers may 10. That approach seems to me to be the take advantage within the 12 months one also taken by the national court which, concerned of individual reference quantities whilst asking two separate questions, relies not used by other producers affiliated to the on the same reasons for both. same creamery subject to those quantities being transferred to the national reserve of the Member State concerned in the cases provided for under the rules' (paragraph 12 of the judgment in Tbevenot). 11. I would point out, to begin with, that the Council itself evidently took the view that unless different rates had been fixed, the application of the two formulas would 7. Does the absence of such 'inbuilt have given rise to discrimination. offsetting' between producers under Formula A, for which Belgium has opted, lead to discrimination between Community producers which is prohibited by Article 12. The Council was aware of the fact that 40(3) of the Treaty? That is the thrust of the first question.

'when the levy is charged to the purchaser, its application does not necessarily cover all 8. The second question seeks to ascertain the quantities of milk delivered by each whether Article 1(1) of Regulation (EEC) producer and exceeding a quantity corre- No 857/84, 3in the version which was in sponding to that adopted in order to force between 2 April 1984 and 31 March establish the purchaser's reference quantity'. 1987, is also contrary to the principle of non-discrimination inasmuch as it provides that the additional levy is to be applied at the rate of either 75% or 100% of the That is why, target price for milk, according to whether a Member State opts for Formula A or Formula B. 'in order to obtain equivalence of results'

13. That difference in the rates, far from Formula A and the other to Formula B, being arbitrary and consequently discrimi- each of whom has exceeded his reference natory, was in fact designed to prevent quantity by 20 000 litres. Let us also assume discrimination between milk producers that the target price for milk is ECU 1. The according to whether they were subject to producer subject to Formula A pays an Formula A or Formula B. The question is additional levy equal to 75% of therefore whether that difference was ECU 20 000, namely ECU 15 000. If no sufficient to offset the advantages likely to offsetting can take place, the producer arise, where appropriate, under Formula B. subject to Formula B pays 100% of ECU 20 000, that is to say ECU 20 000. He is therefore treated more severely than the producer subject to Formula A. If 14. In that regard, it should be borne in offsetting takes place and covers mind that, as the Court has consistently one-quarter of the excess production, he held, pays 100% of ECU 15 000, that is say ECU 15 000, like his colleague subject to Formula A. If, on the other hand, offsetting covers one-half of his excess, he pays only 'when a situation necessitates the evaluation ECU 10 000. Finally, in the most extreme of a complex economic situation, as is the case, if within the same dairy overpro- case concerning the common agricultural duction and under-utilization of the quotas policy, the Community legislature enjoys a balance each other, no additional levy is wide discretion as to the nature and scope payable. of the measures to be taken'. 4

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by certain farmers which can benefit other 21. It is true that it was not introduced until producers affiliated to the same dairy, and it the end of the first marketing year, that is to was not a priori unreasonable to assume say at a time when, according to the that such falls could correspond to approxi- plaintiffs in the main proceedings, the mately one-quarter of deliveries. producers to whom Formula A was applied could in any event no longer take advantage of it by increasing their production, which they had reduced in the meantime. 19. As is clear from Special Report No 2/87 of the Court of Auditors on the quota/additional levy system in the milk sector (Official Journal C 266, 5.10.1987, 22. However, that argument is untenable p. 1, at p. 7), however, it would seem that since Article 4a gave no assurance that any in many cases offsetting covered more than overproduction could be offset. Moreover, one-quarter of the overproduction. offsetting under Article 4a was initially Accordingly, the difference in rates on its introduced only because during the first own did not make it possible to ensure year of the new system's operation the equal treatment in all the cases envisaged adjustment which it required each producer between farmers subject to Formula A and or purchaser to make had been rendered those subject to Formula B, not even within more difficult that category.

20. However, Council Regulation (EEC) 'by belated notification of the individual No 590/85 of 26 February 1985 5 amending reference quantities, due to difficulties Regulation No 857/84 inserted a fresh generally encountered with regard to the provision in the latter regulation, Article 4a, implementation of the system in the various which permits offsetting to take place Member States' (see the end of the first between different Member States, regardless recital in the preamble to Regulation No of the formula applied by them. That 590/85). provision authorizes Member States to

Official Journal 1987, L 78, p. 3). 16 March 1987 amending Regulation No Accordingly, contrary to what seems to be 804/68 (Official Journal 1987, L 78, p. 1) the plaintiffs' view, the purpose of Article 4a enhances the dissuasive effect of the system was not to authorize an increase in the by changing the manner in which the levy quantities produced but to take account of payable by a dairy is passed on to producers the difficulties which certain producers who have exceeded their reference quantity, might encounter in reducing their and it authorizes the Member States to production in keeping with their reference provide that, even where the quantities quantity. delivered to a dairy are equal to, or lower than, the dairy's reference quantity, the levy is to be payable in its entirety by all producers who have exceeded their 24. Nevertheless, the fact remains that, as a reference quantities by at least 10% or by at result of the introduction of Article 4a, each least 20 000 kg. That represents another Member State was able, as from the estab- attempt by the Council to accord equal lishment of the system of reference quan- treatment to all milk producers. However, tities, to offset the non-utilized reference Regulation No 773/87 could not be applied quantities of some producers against the until the final accounts for the 1986/87 overproduction of others. Such offsetting marketing year had been drawn up. was designed to permit the elimination of the disadvantages to which Formula A could give rise in certain situations by comparison with Formula B, notwith- standing the difference in the rates of 27. Let us therefore return to Article 4a: it additional levy. is quite clear that if a Member State did not avail itself of the possibilities offered by that provision, it was because it decided not to do so. At the hearing, however, the Belgian 25. Subsequently, moreover, the Council Government stated, without being contra- found that the difference in rates was no dicted, that Belgium had in fact exercised longer justified since the option in question.

29. Any differences of treatment which may Treaty dealing with agriculture. According occur notwithstanding the existence of to Article 40, the common agricultural different rates and notwithstanding the policy must be brought into force by the application of Article 4a could arise only end of the transitional period at the latest, from the differing degrees to which, particularly through common organizations depending on the area, individual quotas of agricultural markets. Such a common have been either under-utilized or exceeded. organization of the markets, in the case of Those are objective factors beyond the milk and milk products, is at present control of either the Community authorities governed by Council Regulation No 804/68 or the national authorities. Such differences (Official Journal, English Special Edition in treatment cannot be regarded as consti- 1968 (I), p. 176). tuting arbitrary discrimination.

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OPINION OF MR MISCHO—JOINED CASES C-267/88 TO C-285/88

36. Accordingly, none of the legislative of justifying those derogations. They must provisions referred to by the national court therefore be regarded as objectively justified should be regarded as constituting a and not as sources of discrimination. 'renationalization' measure or as being contrary to the principle of non-discrimi- nation between producers.

It based on objective considerations (see the therefore operates, at the very most, to the last two recitals in the preamble to Regu- detriment of Italian producers. As for lation No 590/85). Article 10 of Regulation No 857/84 which provides that in Greece, in the event of the application of Formula B, all purchasers taken as a whole are to be regarded as a 38. As for the two provisions referred to in single purchaser, it does not add, with points 1 and 2 of the question, they were regard to the relationship between countries both adopted in order to take account of which have chosen Formula A and those the specific circumstances of Italy and which have chosen Formula B, any new Greece, as stated in the second recital of distinguishing criterion to those which are the preamble to Regulation (EEC) No already inherent in the differences between 1305/85 8 and in the third recital of the those two formulas. Furthermore, ever since preamble to Regulation No 857/84. No Article 4a has authorized offsetting at attempt has been made to argue that the national level, regardless of the formula reasons relied upon in order to enable those applicable, that is to say as between two countries to qualify for the derogations purchasers as well, Article 10 of Regulation in question are either incorrect or incapable No 857/84 has lost much of its usefulness since Article 4a authorizes all the Member States in which Formula B is applicable to 6 — Council Regulation (EEC) No 1335/86 of 6 May 1986 amending Regulation (EEC) No 804/68 on the common treat all purchasers taken as a whole as a organization of the market in milk and milk products (OJ single purchaser. 1986, L 119, p. 19). 7 — Council Regulation (EEC) No 1343/86 of 6 May 1986 amending Regulation (EEC) No 857/84 adopting general rules for the application of the levy referred to in Article 5c of Regulation (EEC) No 804/68 in the milk and milk products sector (OJ 1984, L 119, p. 34). 8 — Council Regulation (EEC) No 1305/85 of 23 May 1985 amending Regulation (EEC) No 857/84 adopting general 40. I therefore suggest that the Court

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'(1) Articles 3(d), 38, 39 and 40 of the 43. In raising that question, the Belgian Treaty and Regulation (EEC) No court evidently starts from the premise that 804/68 of the Council of 27 June 1968 Formula B is more favourable to farmers on the common organization of the than Formula A and should therefore be market in milk and milk products must applied to milk producers from regions in be interpreted as not prohibiting which natural conditions are harsher and the adoption of specific measures holdings are smaller. applicable to certain producers, in connection with the implementation of the common agricultural policy, provided those measures are objectively 44. We have seen that Formula B does not justified by the specific circumstances authorize the transfer to overproducers of those producers. belonging to a given dairy of the quotas of producers who have ceased to make milk deliveries, whether they have done so in return for compensation or spontaneously. Offsetting takes place only if certain (2) Consideration of the third question has affiliated producers fail to use up their disclosed no factor of such a kind as to reference quantity as a result of purely affect the validity of the relevant short-term factors (sickness of animals, for provisions of Council Regulations instance). (EEC) Nos 857/84, 590/85, 1305/85, 1335/86 and 1343/86.'

45. On the other hand, Article 4a permits offsetting in Member States which apply Formula A, equivalent to that which can HI — The fourth question take place under Formula B.

48. The only reason which may still induce 52. In the second limb of the fourth a Member State to opt for Formula B question, the national court asks whether rather than Formula A lies in the better the aforesaid provision so interpreted is facilities which it can offer for adminis- valid, particularly in the light of Article trative purposes where, for instance, 39(2) of the Treaty and the Council virtually all the milk producers in a Directives on mountain and hill farming and geographical area are affiliated to a single farming in certain less-favoured areas. Once dairy. again the tribunal de première instance implicitly starts from the premiss that one of the two formulas is more attractive to milk producers than the other and that those 49. Although, as a result of the information who live in a less-favoured area should which has come to light in the proceedings normally be eligible for the most favourable before the Court, the fourth question has formula. thus become substantially devoid of interest, it must nevertheless be answered. 53. As is clear from all the foregoing, Article 1(2) of Regulation No 857/84 is not the only provision to be taken into 50. Like the Belgian and Greek consideration, and the rules as a whole Governments, the United Kingdom, the make it possible to avoid unequal treatment Council and the Commission, I consider it of a discriminatory nature according to to be clear from the actual wording of the whether a Member State chooses first subparagraph of the provision in Formula A or Formula B. question that the Member States may treat the whole of their territory as a single region even if the natural conditions, production and yield are not comparable throughout such territory. The part of the 54. In those circumstances, the application sentence which lists those conditions refers of only one of the two formulas to the only to the part of its territory which the whole of a Member State's territory cannot Member State intends to treat as a distinct be regarded as an infringement of Article region. 39(2)(a) which provides that, in working out the common agricultural policy, account is to be taken, in particular, of 'structural and natural disparities between the various agri- cultural regions'. 51. I therefore suggest that the first limb of the fourth question should be answered as follows: 55. Furthermore, it should be noted that Council Directive 75/268/EEC of 28 April 1975 on mountain and hill farming and 'Article 1(2) of Regulation (EEC) No farming in certain less-favoured areas 857/84 must be interpreted as meaning that (Official Journal 1975, L 128, p. 1) pursues a Member State is authorized to treat all of a purpose quite different from that of the its territory as a single region even if the Community rules concerning the additional natural conditions, structures of production levy on milk. Its purpose is to enable and average herd yields are not comparable Member States to establish a specific aid throughout its territory.' scheme for the benefit of agricultural

'(1) Consideration of the first two questions has disclosed no factor of such a kind as to affect the validity either of Article 5c(l) of Regulation (EEC) No 804/68 of the Council or of Article 1(1) of Council Regulation (EEC) No 857/84 in the version in force between 2 April 1984 and 31 March 1987.

(2) Articles 3(d), 38, 39 and 40 of the Treaty and Regulation (EEC) No 804/68 of the Council of 27 June 1968 on the common organization of the market in milk and milk products must be interpreted as not prohibiting the adoption of specific measures applicable to certain producers, in connection with the implementation of the common agricultural policy, provided those measures are objectively justified by the specific circumstances of those producers.

Consideration of the third question has disclosed no factor of such a kind as to affect the validity of the relevant provisions of Council Regulations (EEC) Nos 857/84, 590/85, 1305/85, 1335/86 and 1343/86.

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(3) Article 1(2) of Regulation (EEC) N o 857/84 must be interpreted as meaning that a Member State is authorized to treat all of its territory as a single region even if the natural conditions, structures of production and average herd yields are not comparable throughout its territory.