C-104/89

4.1. The requirements for liability applied by the Court in connection with legislative measures 1-3102

4.2. Liability on account of the Court's declaration that Regulation N o 857/84 is invalid 1-3105

4.2.1. Liability as a result of the judgments in Mulder and von Deetzen declaring the regulation invalid I -3106

(i) Breach of a superior rule of law for the protection of the individual 1-3106

(ii) Serious and inexcusable nature of the breach of the principle of protection of legitimate expectations I -3106

(iii) A limited and clearly defined group of producers are adversely affected by the breach I-3110

damage 1-3118

5.1.1. The period to be taken into account 1-3118

5.1.2. The reference quantity to be taken into account 1-3118

(i) Basis for the calculation 1-3118

(ii) The reduction coefficient 1-3119

* Original language: Dutch.

Mr President, These cases are the first two applications of a Members of the Court, great number — at present more than one hundred — with that object which have been received at the Court. The Court has sus­ pended the proceedings in the other cases until judgment has been given in these pro­ 1. The applicants in the joined cases which I ceedings. am now to consider are farmers who, in accordance with undertakings given pursuant to Council Regulation (EEC) N o 1078/77 of 17 May 1977, ' delivered no milk or dairy products during the reference year that their Member States adopted for the application of 1. The levy scheme and the Court's case-law the additional levy introduced by Council Regulations Nos 856/84 2 and 857/84 3 of 31 March 1984 (hereinafter referred to as 'the levy scheme'). As a result, they received no 2. The applicants' actions follow on from reference quantity, that is to say, a quantity the Court's judgments of 28 April 1988 in exempted from the additional levy by virtue Mulder4 and von Deetzen, 5 which were of Article 2 of Regulation N o 857/84. Pursu­ concerned with the application of Regulation ant to Article 178 and the second paragraph N o 857/84 to producers who, pursuant to a of Article 215 of the E E C Treaty, the appli­ non-marketing undertaking given under cants claim that the European Economic Regulation N o 1078/77, had not delivered Community, represented by the Council and any milk during the reference year adopted the Commission, should be ordered to pay by the Member State concerned. Regulation compensation for the damage which they N o 1078/77, which has since been repealed, have sustained and are still to sustain as a provided for two types of premium, namely result. a non-marketing premium and a conversion premium. Only the former is relevant to these proceedings. The non-marketing pre­ mium was granted on request to any pro­ 1 — Council Regulation (EEC) N o 1078/77 of 17 May 1977 introducing a system of premiums for the non- ducer undertaking not to dispose of milk or marketing of milk and milk products and for the conversion of dairy herds (OJ 1977 L 131, p. 1). milk products from his holding whether for 2 — Council Regulation (EEC) N o 856/84 of 31 March 1984 amending Regulation (EEC) N o 804/68 on the com­ mon organization of the market in milk and milk products (OJ 1984 L 90, p. 10). 3 — Council Regulation (EEC) N o 857/84 of 31 March 4 — Case 120/86 Mulder v Minister van Landbouw en Visserij 1984 adopting general rules for the application of the levy [1988] ECR 2321. referred to in Article 5c of Regulation (EEC) N o 804/68 in 5 — Case 170/86 von Deetzen v Hauptzollamt Hamburg-Jonas the milk and milk products sector (OJ 1984 L 90, p. 13). [1988] ECR 2355.

The fact remains that where such a producer, 3. In the judgment in Mulder the Court as in the present case, has been encouraged answered two questions which were referred by a Community measure to suspend mar- by the College van Beroep voor het Bedrijf- keting for a limited period in the general sleven (administrative court of last instance interest and against payment of a premium in matters of trade and industry) for a pre- he may legitimately expect not to be subject, liminary ruling. In its first question, the upon the expiry of his undertaking, to national court asked whether in establishing restrictions which specifically affect him pre- the reference quantities referred to in Article cisely because he availed himself of the pos- 2 of Regulation N o 857/84 Member States sibilities offered by the Community provi- might not take account of the specific situa- sions. tion of non-marketers. The Court stated in reply that the Member States might take account of the special circumstances of non- marketers 'only in so far as each producer fulfils the specific conditions laid down in However, the regulations on the additional Regulation N o 857/84 and if the Member levy on milk give rise to such restrictions for States have reference quantities available for producers who, pursuant to an undertaking that purpose'. entered into under Regulation N o 1078/77, did not deliver milk during the reference year. As stated in the reply to the first ques- tion, those producers may in fact be denied a reference quantity under the new system The second question in Mulder, which was precisely because of that undertaking if they also raised in von Deetzen's case, was do not fulfil the specific conditions laid whether or not in the light of that interpre- down in Regulation N o 857/84 or if the tation Regulation N o 857/84 was valid. I Member States have no reference quantities shall set out in extenso the reasoning fol- available. lowed by the Court in answering that ques- tion (paragraphs 23 to 28 of the judgment in Mulder and paragraphs 12 to 17 of that in von Deetzen):

entered into an undertaking, for a limited N o 857/84 providing for the grant of provi- period, not to deliver milk. There is nothing sional special reference quantities to non- in the provisions of Regulation N o marketers. The grant of such reference quan- 1078/77 or in its preamble to show that the tities was subject to certain conditions with a non-marketing undertaking entered into view to ensuring, in the words of the second under that regulation might, upon its expiry, recital in the preamble to the new regulation, entail a bar to resumption of the activity in that the producers concerned question. Such an effect therefore frustrates those producers' legitimate expectation that the effects of the system to which they had rendered themselves subject would be lim- ited. 'intend and are really able to resume milk production and find it impossible to obtain a reference quantity pursuant to Article 2 of It follows that the regulations on the addi- Regulation (EEC) N o 857/84'. tional levy on milk were adopted in breach of the principle of protection of legitimate expectations. Those regulations must there- fore be declared invalid on that ground, and The provisional special reference quantity is it is unnecessary to consider the other argu- equal to 60% of the quantity of milk deliv- ments as to their invalidity put forward in ered by the producer concerned during the the course of the proceedings. twelve calendar months preceding the month in which the application for the non- marketing premium was made. This refer- The reply to the second question submitted ence quantity is to be allocated to the pro- must therefore be that Council Regulation ducer definitively if, within two years from (EEC) N o 857/84 of 31 March 1984, as sup- 29 March 1989, the producer can prove that plemented by Commission Regulation he has actually resumed deliveries 7 and that (EEC) N o 1371/84 of 16 May 1984, is the deliveries have attained during the previ- invalid in so far as it does not provide for the ous twelve months a level equal to or greater allocation of a reference quantity to produc- than 80% of the provisional reference quan- ers who, pursuant to an undertaking entered tity. If the holding is sold or leased before into under Council Regulation (EEC) N o 1 April 1992, the special reference quantity 1078/77 of 17 May 1977, did not deliver milk will be returned to the Community reserve. during the reference year adopted by the Member State concerned.'

anteed total quantity of each Member State. 8 ulation N o 857/84 was valid. O n the one It compensated for the impact of the reduc- hand, the Court held that the Community tion on producers' individual reference legislature was entitled to apply a reduction quantities by decreasing the rate of with- coefficient to the volume of milk delivered drawal introduced by Regulation No by the producers concerned, in order to 775/87 » from 5.5% to 4 . 5 % . 1 0 By Regula- ensure that they were not accorded an undue tion N o 3881/89 n the Council increased the advantage by comparison with the producers Community reserve referred to in Article who had continued to deliver milk during 5c(4) of Regulation N o 804/68 12 to the reference year. O n the other hand, it held 2 082 887.750 tonnes for 1989-1990 (the cor- that, in comparison with the percentages by responding figure for 1988-1989 was which the reference quantities of the latter 443 000 tonnes), " of which 600 000 tonnes producers had been reduced — which in no was earmarked for the allocation b y the case exceeded 17.5% —, the reduction coef- Member States of the special reference quan- ficient might not be fixed at such a high level tities provided for in Article 3a of Regulation as specifically to affect non-marketers by N o 857/84. 14 very reason of the non-marketing undertak- ing which they had given. The Court took the view that a 40% reduction was in breach 6. In the judgments given on 11 December of the principle of protection of legitimate 1990 in the Spagl15 and Pastätter u cases the expectations. Accordingly, it declared Article Court answered the question whether the 3a(2) of Regulation N o 857/84 invalid. 17 60% rule laid down in Article 3a(2) of Reg-

I - 3098

MULDER v COUNCIL AND COMMISSION

I - 3099

OPINION OF MR VAN GERVEN — JOINED CASES C-104/89 AND C-37/90

Following the Court's judgments in Mulder legislation adopted pursuant to Article 3a, and von Deetzen — but before Regulation which had been adopted in the meantime, N o 764/89 was issued — Messrs Mulder, there was no longer any reason for those Brinkhoff and Twijnstra resumed milk pro- proceedings. duction (on 10 July 1988, 3 February 1989 and 1 May 1988, respectively). They were not granted provisional special refer- In December 1985 Mr Heinemann had also ence quantities, in the amounts of applied to Hauptzollamt (Principal Customs 278 140 kg, 176 481 kg and 245 653 kg Office) Hannover to grant him a reference respectively, until August 1989, pursuant to quantity of its own motion, but his request the Netherlands legislation enacted in order was refused. Mr Heinemann contested that to implement Article 3a of Regulation No decision by bringing proceedings in the 857/84 which had been adopted in the mean- Finanzgericht (Finance Court) Hannover. As time. Mr Muskens, for his part, deferred he has since been allocated a provisional spe- resumption of milk production until winter cial reference quantity of 22 023 kg pursuant 1989 following the allocation of a provisional to the 60% rule, those proceedings can only special reference quantity of 180 204 kg in relate to the refusal to grant him a reference late July that year. quantity of 100%.

I-3100

MULDER v C O U N C I L AND COMMISSION

enee quantities to producers such as the sible for the unlawful conduct which had applicants. been established, on the ground that the national authority was bound to : comply with the Commission's instructions (paragraph 23). 20 In the present cases, too, it must be held, as will be shown below, that 11. I agree with the applicants that that the measures adversely affecting the objection of inadmissibility must be rejected. applicants must be attributed to the Com- In Krohn (paragraphs 18 and 19) the Court stated as follows: munity institutions.

20 — In contrast, in the judgment of 7 July 1987 in Joined Cases 89 and 91/86 L'Etoile commerciale and CNTA v Commis- sion [1987] ECR 3005, in which the Court based itself on the same considerations (paragraphs 17 and 18) as I have On the basis of that reasoning the Court quoted above, it was decided that the national authority concluded in that case that the Commission bore the responsibility on the ground that in that case the Commission's act was not at the root of the damage found and not the national authority was respon- (paragraph 19).

I-3101

OPINION OF MR VAN GERVEN — JOINED CASES C-104/89 AND C-37/90

The argument which the institutions derive from Articles 3, 4 and 4a of Regulation N o 4. Assessment of the Community's liabil- 857/84 is unfounded, since those provisions ity give the Member States merely the possibility of allocating special or additional reference quantities to certain categories of producer. 4.1. The requirements for liability applied by Furthermore, that possibility is open only in the Court in connection with legisUtive meas- so far as the specific conditions set o u t in ures those provisions are fulfilled (and n o t all non-marketers meet those conditions) and the Member States have sufficient reference quantities available. 14. As the Court has consistently held, 'the liability of the Community on account of its legislative powers depends on the coinci- Consequently, the exception of inadmissibil- dence of a set of conditions as regards the ity cannot be upheld. unlawfulness of the act of the institution, the fact of damage and the existence of a direct link in the chain of causality between the act 13. The institutions also rely on other pleas and the damage complained of'. 21 The of inadmissibility. In their defences in Case requirements for a direct link in the chain of C-104/89, for instance, the Council and the Commission argued that the application did not satisfy the requirements of Article 38 of 21 — Judgment of 8 December 1987 in Case 50/86 Grands Mou- the Rules of Procedure. They maintained lins de Paris v EEC [1987] ECR 4833, paragraph 7.

I-3102

MULDER v COUNCIL AND COMMISSION

22 — Grands Moulins de Paris, paragraph 8. See also the judg- ment of 18 April 1991 in Case C-63/89 Assurances du Crédit v Council and Commission [1991] ECR 1-1799, paragraph 12, and the judgment of 27 June 1991 of the 24 — The case-law of the Court is not unambiguous. Sometimes Court of First Instance in Case T-120/89 Stahlwerke Peine- the use of the word 'or' gives the impression that alternative Salzeitter v Commission [1991] ECR 11-279, which in para- criteria are involved (see, for example, the judgment of graph 74 provides an extensive review of the case-law of the 30 May 1989 in Case 20/88 Roquette frères v Commission Court of Justice. [1989] ECR 1553, paragraph 26); at others the criteria are joined by *and' and therefore used conjunctively (see the 23 — In my estimation, that case-law remains intact following the judgment in Assurances du Crédit, citea above, paragraph judgment of 17 November 1991 in Joined Cases C-6/90 and 12). C-9/90 Francovich and Bonifad [1991] ECR 1-5357. Even if one shares the view taken by Mr Advocate General Mischo 25 — See also F. Schockweiler, Ín collaboration with G. Wivenes in his Opinion on those cases (see section 71 in particular) and J. M. Godart, 'Le régime de la responsabilité extra- that the same requirements must apply in order for the contractuelle du fait d'actes juridiques dans la Communauté Community to incur liability on account of legislative meas- européenne', Revue trìmesprieue de droit européen, ures as apply in order for the Member Sutes to incur lia- January-March 1990, p. 27, at p. 60. bility in that area, it must be borne in mind that the situa- 26 — In Peine-Salzgitter (see in particular paragraph 108), the tion in Francovich and Bonifaci was one in which the Court of First Instance speaks of the Commission mani- relevant Member Sute to attain a result clearly prescribed fesdy and gravely and 'therefore inexcusably' disregarding by a directive and hence had only a limited discretion. In the limits of its powers. contrast, the case-law discussed in this context applies to 27 — See also my Opinion of 19 November 1991 in Joined Cases situations in which the (Community) legislature has a broad C-363 and C-364/88 Finsider and Falck v Commission, measure of discretion. paragraph 25.

'Maize Gritz' cases, 28 the Court invoked the 17. As regards the unacceptable or inexcus- following circumstances in deciding that the able character of the breach, the judgment of Council had manifestly and gravely disre- 26 June 1990 in Sofrimport19 contains an garded the limits on its powers through the important pointer for the present cases. That exercise of a wide discretionary power essen- case, like these proceedings, was concerned tial for the implementation of the common with regulations which the Court had agricultural policy: (i) the particular impor- declared invalid for infringing the principle tance of the principle infringed by the regu- of protection of legitimate expectations and lation (in those cases, the principle of equal- which had caused the applicant undertaking ity) and hence the (objective) seriousness of to sustain damage in so far as they made it the breach; (ii) the fact that the disregard of impossible for it to carry on a particular that principle affected a limited and clearly commercial activity (importation of dessert defined group of commercial operators; (iii) apples). the fact that the damage alleged by the appli- cants went beyond the bounds of the eco- nomic risks inherent in the operators' activi- ties in the sector concerned; (iv) the fact that In ruling on the issue of the liability of the the principle in question was infringed with- Community, the Court held that there had out sufficient justification (which points to been a breach of a superior rule of law (para- the inexcusable nature of the error made by graph 26), accepted that the breach was suf- the authority: see section 15 above). ficiendy serious (paragraph 27) and held that the damage alleged by the applicant under- taking went beyond the limits of the eco- nomic risk inherent in the business at issue

(in French: "sans faire état d'un intérêt pub- 28 — Judgments in Case 238/78 Ireks-Arkady v Council and lic peremptoire"), the Commission commit- Commission [1979] ECR 2955, paragraph 11, Joined Cases 241, 242 and 245 to 250/78 DGV v Council and Commis- sion [1979] ECR 3017, paragraph 11, Joined Cases 261 and 262/78 Interquell Stärke-Chemie v Council and Commis- sion [1979] ECR 3045, paragraph 14, and Joined Cases 64 and 113/76, 167 and 239/78, 27, 28 and 45/79 P. Dumor- 29 — Case C-152/88 Sofrimport v Commission [1990] ECR tier Frères v Council [1979] ECR 3091, paragraph 11. 1-2477.

4.2. Liability on account of the Court's dec- Uration that ReguUtion No 857/84 is invalid 30 — See also the judgment of 14 May 1975 ¡n Case 74/74 CNTA v Commission [1975] ECR 533, in which (paragraph 44) the Court declared as follows: 'In the absence of an overriding matter of public interest (in French: "un intérêt public peremptoire"), the Commission has violated a superior rule of law, thus rendering the Community hable, by failing to include in Regulation N o 189/72 transitional measures for 19. In the light of the case-law which has the protection of the confidence which a trader might legit- just been discussed, I shall now consider — imately have had in the Community rules.' 31 — On the basis of the judgment in Amylum (Joined Cases having regard to the Court's decision relat- 116/77 and 124/77 Amylum v Council and Commission [1979] ECR 3497, paragraph 19) the Council and the Com- ing to the invalidity of Regulation N o mission argue that the Community may be held liable only 857/84, first in Mulder's and von Deetzen's if blame can be attributed to a Community institution and to arbitrary conduct. Arbitrary conduct is one of the least cases and then in Spagl's and Pastätter's cases acceptable wavs, but not therefore the only way, in which a — the question whether there was a suffi- public authority may seriously and manifestly disregard the limits of its powers. Furthermore, failure to take account of ciently serious breach of a superior rule of the specific situation of economic operations (in this case the non-marketers: sections 22-26 infra), without its being law for the protection of individuals. In possible to invoke any overriding public interest comes close to amounting to arbitrary treatment of those opera- tors. 32 — Judgment of 25 May 1978 in Joined Cases 83 and 94/76, 4, 15 and 40/77 Bayerische HNL v Council and Commission 33 — Judgment of 6 December 1984 in Case 59/83 BioviLu v [1978] ECR 1209. EEC [1984] ECR 4057.

For completeness' sake I would further point (iii) a limited and clearly defined group of out that in his Opinion in Mulder's case commercial operators were adversely Advocate General Sir Gordon Slynn con- affected by the breach; cluded that Regulation N o 857/84 also offended against another superior rule of law for the protection of individuals, namely the prohibition of discrimination. In any event, (iv) the alleged damage went beyond the the Court held that it did not have to con- bounds of the economic risks inherent sider other possible grounds for invalidity as in activities in the milk sector. it had already established that there had been a breach of the principle of protection of legitimate expectations. However, it appears from the passage quoted (in section 4.2.1. Liability as a result of the judgments in 12 above) from von Deetzen No 2 that the Mulder and von Deetzen decUrìng the regu- Court does in fact take the view that Regu- lation invalid lation N o 857/84 was contrary to the prohi- bition of discrimination, on the ground that it did not allow the non-marketers to resume (i) Breach of a superior rule of law for the deliveries 'under conditions that involved no protection of the individual discrimination between them and other milk producers'.

20. In Mulder (paragraph 26) and von Deetzen (paragraph 15), the Court declared Regulation N o 857/84 partially invalid on (ii) Serious and inexcusable nature of the the ground that it frustrated the legitimate breach of the principle of protection of legit- expectation of non-marketers, having regard imate expectations to the provisions of Regulation No 1078/77, that the effects of the scheme would be tem- porary. The Court accordingly held that the Council had created a situation which was such as to arouse expectations in individuals 21. The Council and the Commission argue in a system from which they derived certain that the invalidity of Regulation N o

857/84 as held by the Court in Mulder and assume, absolutely reasonably, that produc- von Deetzen cannot be regarded as a suffi- ers who had received a non-marketing pre- ciently serious breach. They point out that mium would no longer wish to resume milk Regulation N o 1078/77 came into being in a production after an interruption of five market situation characterized by substantial years. and increasing milk surpluses. As appears from the first recital in the preamble to the regulation, the Community legislature con- sidered it worthwhile in the circumstances to encourage the trend among farmers to cease Also according to the Council and the Com- milk production through the grant of a pre- mission, the Community legislature was con- mium. 90% of non-marketers, the applicants scious that not all producers would be included, opted to take advantage of the sys- granted a reference quantity under Article tem of the non-marketing premiums 34 and 2 of Regulation N o 857/84.

They argue, The Council and Commission further argue however, that, since it was improbable that that the intention behind the non-marketing many non-marketers would resume produc- premium was to give mainly weak farms the tion and since the Member States had been chance to give up milk production empowered to assist producers in certain definitively on acceptable terms. In view of specific situations, negligence or an oversight the type of persons interested in the non- capable of being regarded as being a suffi- marketing premium — chiefly elderly per- ciently serious breach was not involved here. sons, persons with no successor, physically What is more, the Council adds, non- handicapped persons or persons with barely marketers could always have obtained a ref- viable or downright unviable farms — and erence quantity by purchasing or leasing a also the fact that the amount of the premium farm or part of a farm. was significantly lower than the profit which a structurally sound farm could normally expect to make from milk production, the institutions argue that in 1984 when the levy scheme was introduced they were entitled to 22.

I-3107

OPINION OF MR VAN GERVEN — JOINED CASES C-104/89 AND C-37/90

particular situation of traders, without 24. Secondly, Regulation N o 857/84 made invoking any overriding public interest, con- no provision for measures to deal sufficiently stitutes a serious, inexcusable breach. certainly with the non-marketers' special sit- uation, of which the institutions were, or should have been, aware. The possibility of procuring a reference quantity by purchasing or leasing a farm certainly does not deal with the non-marketers' special situation. That possibility — which is not reserved specifi- cally for non-marketers — requires an In my view, such a situation seems to obtain unforeseen financial effort that is unjustified in this instance also: (1) the institutions on the part of producers who are entitled to knew, or were in a position to know, that a resume milk production. Neither are Articles not insignificant number of non-marketers 3, 4 and 4a of Regulation N o 857/84 appro- would resume production and hence would priate to secure non-marketers' rights, since be in a special situation; (2) they failed to they merely empower and do not oblige the take sufficient measures to cope with that Member States to grant a special or an extra special situation; (3) they are unable to reference quantity under certain conditions. invoke any overriding public interest b y way Moreover, those provisions cannot assist, or of justification. I shall now explain each of at best can only partly assist, non-marketers these points. wishing to resume milk deliveries:

can be granted only to young farmers Despite this, I take the view that the institu- who set up after 31 December 1980; tions were not entitled to assume that the Member States would actually take advan- tage of that possibility (again, it was not an obligation) in order to enable the non- marketers to resume milk deliveries. 3S — Article 4(1) of Regulation No 857/84 offers non-marketers no solution whatsoever, since it merely provides for the grant of additional reference quanti- ties and therefore assumes that a basic reference quantity has already been Article 5 of Regulation N o 857/84 provides granted under other provisions of the that Member States may grant specific or regulation; additional reference quantities only within their guaranteed quantity limit. A Member State taking advantage of one of the possibil- ities provided for in Articles 3 and 4 of Regu- lation N o 857/84 (on behalf, for instance, — neither is Article 4a of Regulation N o of non-marketers) must therefore also, as 857/84 appropriate to assist the non- required by Article 2(3) of the regulation, marketers. It authorizes the Member adapt the reference quantities of those pro- States to allocate non-utilized reference ducers who did in fact deliver milk in the quantities. Whether there are any non- course of the reference year. To my mind, utilized reference quantities can be deter- the Member States could not be expected to mined only after the event. Non- impose on those producers such an effort of marketers could not reasonably be solidarity vis-à-vis non-marketers because expected to resume production without the Community legislature itself had not knowing beforehand the reference quan- made specific provision for them. Is it not tity to the extent of which they might significant in this regard that in 1989 (that is deliver milk without having to pay a levy. to say, after the judgments in Mulder and von Deetzeń) the Council itself took the ini­ tiative of increasing the Community reserve by 600 000 tonnes in order to enable the Member States to grant non-marketers a spe­ cial reference quantity of 60% of their former production (see section 5 above)? 25. In their defences, the institutions attach The Council manifestly assumed that in the particular importance to the second subpara- absence of such an increase the Member graph of Article 3(1) of Regulation N o States could not be expected to release refer­ 857/84. That provision authorizes the Mem- ence quantities for non-marketers within ber States to grant a special reference quan- their guaranteed quantity limits. tity to producers who have carried out investment even without a development plan. It is indeed broadly worded and permits a 38 — It emerges from Spronk's case how sparingly the possibility special reference quantity to be granted to afforded by this provision has been taken up in the Neth­ non-marketers who, like the applicants in erlands. In its judgment of 12 July 1990 in that case (Case C-16/89 Spronk v Minister van Landbouw [1990] ECR these proceedings, invested in dairy cattle 1-3185) the Court held that the relevant Netherlands imple­ menting provision was not contrary to Regulation No with a view to resuming milk production. 857/84.

The applicants argue in the reply that in HNL the Court took the size of the group affected into account because as a result the 27. According to the Council and the Com- 'effects [of the regulation which was declared mission, the breach did not affect a 'limited invalid] on individual undertakings were and clearly defined group of commercial considerably lessened'. They infer from this operators'. To that end they refer to the that the Court did not wish to attach impor- Court's statement in Ireks-Arkady (para- tance to the large number of persons affected graph 11) and Inter quell (paragraph 14) to per se, but rather saw it as an indication the effect that only a small number (namely for assessing the extent of the damage sus- 18) quellmehl producers were affected and tained individually by the persons affected. hence that requirement was satisfied. They They further consider that, compared with further point out that in HNL (paragraph 7) the total number of dairy farmers in the the Court stated that the regulation which had been declared invalid 'affected very wide categories of traders, in other words all buy- ers of compound feeding-stuffs containing 39 — It appears from the answer given by Mr MacSharry on protein'. In their view, that was one of the behalf of the Commission to Mr John Hulme (OJ 1990 C 93, p. 26) that 13 187 non-marketers applied for such a ref- reasons why in that case the Court did not erence quantity. It does not appear from the case-file how many non-marketers actually obtained such a reference hold the Community liable. nuantitv.

28. A 'clearly defined group' and a 'limited group' (in terms of numbers) are two differ­ ent criteria. The fact that the group con­ 29. As far as the criterion of the 'limited cerned must be 'clearly defined' in order for group' is concerned, I can find no support in the Community to be able to be held liable the case-law of the Court for making the means that the number of persons affected Community's liability depend on the (abso­ must be capable of being determined at the lute) number of persons adversely affected. time when the ruling is given on the com­ Even apart from the fact that it would be pensation. That requirement is met in this impossible for the Court to set a figure on instance. that number, the words 'limited group' should be construed as referring to a group of undertakings on which the unlawful act imposed a specific disadvantage, in compari­ son with other groups of undertakings, which those other groups did not have to bear. That condition is clearly satisfied in the present cases: compared with milk producers In that regard, it is important to point out in who did not interrupt their milk production, the first place that the circle of potential per­ the non-marketers concerned were affected sons affected is established a prion. Only by the levy system specifically — and, more­ non-marketers are eligible for compensation. over, seriously — since they alone were pre­ Their number and identity are known. In vented by the contested rules from produc­ HNĹ, where the Court rejected the claims ing milk and, as a result, could not resume for compensation, the situation was different. milk deliveries. The Court referred in that judgment to the very large categories of traders affected, 'in other words, all buyers of compound feeding-stuffs containing protein' namely essentially all poultry farmers and egg pro­ ducers. In the present cases, not all non- In HNL, the position in that respect was also marketers can actually be regarded as having different. The Court determined that the been adversely affected, but only those who, effect of the unlawful measure at issue in that on the expiry of their non-marketing under­ case on the individual undertakings con­ taking, had not definitively abandoned milk cerned was small, since the price increase production and suffered damage as a result caused by the measure was definitely modest because Regulation N o 857/84 prevented and the resultant burden was spread over the them from resuming production. Admit­ whole economic sector, since essentially all tedly, the number of those non-marketers is poultry farmers and egg producers were not definitely fixed, since whether they are affected.

30. In connection with the determinacy and because they did not satisfy the criteria laid the number of persons adversely affected, I down in Regulation N o 764/89, which were would, moreover, qualify the institutions' designed to make sure that the non- view that the number of non-marketers who marketers in question intended and were are entitled to claim compensation is much really able to resume milk production and in excess of those who applied for a special found it impossible to obtain a reference 60% reference quantity. quantity pursuant to Article 2 of Regulation N o 857/84 (see Article 3a(l) of Regulation N o 857/84 and the second recital in the pre- amble to Regulation N o 764/89). As regards those operators, the institutions may assume, unless evidence is adduced to the contrary, Whether non-marketers suffered damage as a that those operators would not have been result of the failure to grant them a special eligible for the grant of a special reference reference quantity depends on whether, at quantity for non-marketers if Regulation N o time when their non-marketing undertakings 857/84 had provided for one and that they expired, they had already abandoned for are therefore not entitled to compensation. good the intention to resume milk produc- tion. If they had, they cannot claim that they had to stop production owing to Regulation N o 857/84 and therefore can lay no claim to compensation. Admittedly, it cannot be inferred with certainty from the fact that a non-marketer did not apply for a 60% refer- (iv) The alleged damage went beyond the ence quantity in 1989 — even though it was bounds of the economic risks inherent in open for him to do so — that he had already activities in the milk sector stopped milk production at the end of his non-marketing period. Nevertheless, that fact is a serious indication that that is the case and therefore justifies reversing the bur- den of proof. As a result, non-marketers who did not apply for a 60% reference quantity can argue that, when the non- 31. The Council and the Commission main- marketing undertaking expired, they were tain that the criterion applied by the Court still minded to resume milk production but in the quellmehl and maize gritz cases that that they subsequently abandoned that plan. the damage alleged by the applicants should In order to be able to argue that, they must have gone beyond the bounds of the normal provide concrete proof that they actually economic risks inherent in the operators' made an effort towards or after the end of activities in the sector concerned is not satis- the non-marketing period to obtain a refer- fied in the present cases. Each of the institu- ence quantity. tions sets forth a number of arguments.

Regulation N o 857/84, which was added by general risks to which every economic oper- Regulation N o 764/89 (and subsequently ator is subject, but also specific risks peculiar amended by Regulation N o 1639/91), does to activities in that sector. As a result, the not in itself constitute sufficient compensa- alleged damage does not qualify for compen- tion, in view of the monetary value which sation. such a reference quantity represents. That argument cannot be accepted. The monetary value undoubtedly possessed by a reference quantity is the present value of the future earnings which can be obtained from milk production by virtue of the quantity granted. I cannot see how this value, which relates to That argument goes to the heart of the pre- future earnings — and which in any event is condition for establishing liability which is not peculiar to the reference quantities now under discussion. Above (in section 18) granted {ex post) to non-marketers —, can I pointed out that that precondition is met if constitute compensation for past loss of the persons adversely affected suffered earnings resulting from the failure to grant a unforeseeable damage. As far as the present reference quantity. cases are concerned, it is established that the levy system placed the applicants in an unforeseeable situation, since in Mulder (paragraph 26) and von Deetzen (paragraph 15) the Court declared that: For its part, the Commission adds that the applicant in Case C-37/90 was not com- pelled by events to enter into a non- marketing undertaking and that during the non-marketing period instead of producing milk he fattened bullocks. Those arguments cannot be accepted either. It is irrelevant whether or not a producer was compelled by 'total and continuous exclusion of that kind events to enter into a non-marketing under- for the entire period of application of the taking, just as it is irrelevant what activities regulations on the additional levy, preventing he carried out during the non-marketing the producers concerned from resuming the period. In so far as replacement activities marketing of milk at the end of the five-year were carried on after the expiry of that period, was not an occurrence which those period, an argument may, however, be producers could have foreseen when they inferred therefrom with regard to the limita- entered into an undertaking, for a limited tion of the damage sustained, a question period, not to deliver milk'. which I shall be considering later (in section 49).

the Community to incur liability for the plain to the Community legislature that the damage suffered by the applicants. non-marketers in question could invoke an entitlement to the allocation of a reference quantity (see the third recital in the preamble to Regulation N o 764/89). However, it also 4.2.2. (No) liability as a result of the dedara- had to take account of 'the overriding neces- tion of invalidity in the Spagl and Pastätter sity of not jeopardizing the fragile stability cases that currently obtains in the milk products sector' (fifth recital in the preamble to Regu- lation N o 764/89) and of the interests of other producers and of the disadvantage at 34. In Spagl and Pastätter and subsequently which they would be put if the reference also in von Deetzen (No 2) the Court quantities allocated to them had to be declared that Article 3a(2) of Regulation N o reduced in order to enable a reference quan- 857/84, as amended by Regulation N o tity to be granted to the non-marketers. The 764/89, was invalid in so far as it restricted balancing of these interests led the Commu- the special reference quantity provided for in nity legislature to increase the Community that provision to 60% of the quantity of reserve by 600 000 tonnes for the benefit of milk delivered by the producer during the the non-marketers and to decrease commen- twelve calendar months preceding the month surately the total guaranteed quantity of each in which the application for the premium Member State, whilst offsetting the impact of was made. I consider that the declarations of that cut on individual reference quantities by invalidity in the Spagl and Pastätter cases, decreasing the rate of withdrawal introduced unlike the invalidity found in the Mulder by Regulation N o 775/87 (see section and von Deetzen cases, cannot cause the 5 above). The limitation of the reference Community to incur liability. Admittedly, quantity to be allocated to non-marketers to the Court also held in Spagl (paragraph 29) 60% — which is very different from their and in Pastätter (paragraph 20) that the being completely excluded from having a restriction was void for breach of the princi- reference quantity — remains in my view ple of protection of legitimate expectations within the scope of the broad discretion and therefore in breach of a superior rule of which the Community legislature has in this law. However, it appears to me that the sphere and cannot therefore be regarded as Community legislature's decision to restrict being a sufficiently serious breach, even to 60% the reference quantity to be granted though it turned out that the 60% rule was to non-marketers cannot be regarded as a invalid. manifest and serious misjudgment of its powers and therefore does not constitute a sufficiently serious breach of the principle of legitimate expectations.

is true that non-marketers may not be 4.3. The existence of damage and the causal excluded from milk production, the principle link of protection of legitimate expectations does not preclude a limitation of the reference quantity at a level such that production may be resumed. In any event, in Sofrimport (paragraph 27), too, the Court attached 37. The applicants claim that they could not importance to the fact that there was a com- carry on their occupation as dairy farmers plete failure to take account of the special from the time when their non-marketing position of the trader concerned and con- undertaking expired until the time when cluded that there had therefore been a suffi- they resumed milk deliveries to the extent of ciently serious breach of the principle of the 60% reference quantity which they were protection of legitimate expectations. granted. During that period they were not entitled to receive a reference quantity as a result of Regulation N o 857/84 and there- fore, owing to the magnitude of the addi- tional levy, obtained no income from the normal exercise of their occupation. They therefore had to resort to other — in some cases, loss-making — agricultural activities.

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OPINION OF MR VAN GERVEN — JOINED CASES C-104/89 AND C-37/90

As far as the second argument relied on by the institutions is concerned, it is sufficient to observe that the applicants did not fail to apply for a reference quantity, rather their As regards the institutions' first argument, efforts were fruitless (see sections 8 and namely that the Member States could have 9 above). Whether the applicants were under granted a special or additional reference a duty to limit the damage they suffered by quantity pursuant to Articles 3, 4 and 4a of engaging in replacement activities and, if so,

I-3116

MULDER v COUNCIL AND COMMISSION

40. As the starting point for assessing the 41. How, then, is the damage to be assessed? damage, the applicants in Case I consider that it is necessary to draw a dis- C-104/89 assume that financially they must tinction in this regard. First, the period to be be put in the situation in which they would taken into account for the purposes of calcu- normally have been had they been able to lating the damage has to be established resume milk deliveries immediately after the together with the reference quantity which expiry of the non-marketing undertaking on the applicants could normally have claimed terms which did not discriminate against during that period. It appears to me that the them compared with the producers referred Court has sufficient information to rule to in Article 2 of Regulation N o 857/84. In definitively on these aspects now. my view, that seems to be a proper starting point, although its working out will involve a number of practical difficulties with •which the Court has not yet been faced. Secondly, it is a question of calculating the profit which the applicants could normally have obtained during the period concerned The most significant difficulty is of course on the basis of the reference quantity to how to reconstruct the situation in which the which they were entitled, and which they applicants would have found themselves if lost as a result of the invalidity established deliveries had been resumed immediately. In by the judgments in Mulder and von order to avoid that difficulty the institutions Deetzen, while taking into account the suggest that, if they are held liable, the replacement activities which they carried out

43. The starting point for determining the reference quantity which the applicants 5.1.1. The period to be taken into account could normally have claimed during the period in question must be Article 2(1) of Regulation N o 857/84, which provides that the reference quantity to be granted is to be equal to the quantity of milk delivered by the producer in 1981, plus 1%. However, 42. Since I have already reached the conclu- under Article 2(2) the Member States were sion that the Community cannot be held lia- free to choose 1982 or 1983 as the reference ble for the damage which the applicants year (in fact they all opted for 1983) pro- maintain they suffered and have still to suffer vided that the quantity produced in that year as a result of the unlawfulness of the 60% was 'weighted by a percentage established so rule laid down in Article 3a(2) of Regulation N o 857/84 as established in the judgments in Spagl and Pastätter, the applicants are enti- tled to seek compensation only for the 41 — I would point out again (see section 30 above) that, in my view, non-marketers who did not apply for a 60% reference period during which they had no reference uantity pursuant to Regulation N o 764/89 should be quantity at all, that is to say for the period 3eemed, in the absence of proof to the contrary, to have given up milk production for good during the currency of between the expiry of their non-marketing their non-marketing undertakings, with the result that nor- mally they cannot argue that they suffered damage as a undertakings and, in principle, the entry into result of Regulation N o 857/84. That presumption that force of Regulation N o 764/89, Anicie 3 a of they discontinued milk production does not operate in the present cases, since the applicants did in fact apply for and which introduced the 60% rule. obtain a 60% reference quantity.

In Spagl (paragraph 21) and Pastätter (para- graph 12) the Court accepted that in the case of non-marketers who did not deliver any milk during the reference year adopted by (ii) The reduction coefficient the Member States the reference quantity could be calculated on another footing, namely on the basis of the volume of deliv- eries which they made during a representa- tive period preceding the non-marketing period. It is therefore uncontested that the basis for calculation provided for in Article 44. The Court expressly recognized in Spagl 3a(2) of Regulation N o 857/84 must be used (paragraph 21) and Pastätter (paragraph 12) as the starting point, in other words the vol- that the Community legislature was entitled ume of deliveries during the twelve calendar to apply to the basic figure for calculating months preceding the month in which appli- the reference quantity to be allocated to non- cation was made for the non-marketing pre- marketers a 'reduction coefficient designed to mium (called hereinafter 'the non-marketers' ensure that the category of producers con- reference year'). cerned was not accorded an undue advantage by comparison with the producers •who con- tinued to deliver milk during the reference year'. However, the Court considered that a reduction coefficient of 40% was too high, on the ground that it appeared from the However, the applicants in Case information provided to the Court that in no C-104/89 maintain that that basic figure case did the reduction coefficient applied in should be increased by 1%. I consider that the Member States pursuant to Article 2 of they are right. For the purposes of determin- Regulation N o 857/84 (inclusive of the rate ing the reference quantity the Community of withdrawal discussed in section 46) exceed legislature took as its basis milk deliveries in 17.5%. In this way, the Court indicated how 1981, plus 1% (see Article 2(1) of Regulation an appropriate reduction coefficient for non- marketers has to be determined, namely by applying a percentage which in the Member State of the producer concerned is represen- 42 — Regulation No 1639/91 amended Article 2(3) of Regulation tative of all the abatements which were No 857/84 so that the percentages in question may now also be adapted with a view to the grant of a special refer- applied there pursuant to Article 2 of Regu- ence quantity to non-marketers pursuant to Article 3a of Regulation No 857/84. lation N o 857/84 to the reference quantity

allocated to the producers referred to in that 45. The origin of the first objection lies in article. 43 the fact that, as already mentioned, all the Member States opted for 1983 as the refer- ence year, rather than for the volume pro- duced in the (basic) reference year 1981, plus 1%. In order in those circumstances to avoid exceeding the guaranteed total quantity per Member State, the Member States had — as As far as the period qualifying for compen- expressly provided for in Article 2(2) of Reg- sation (section 42 above) is concerned, this ulation N o 857/84 — to reduce the individ- means more specifically that the basic refer- ual reference quantities by a certain percent- ence quantity for the applicants (namely age. their production in the non-marketers' refer- ence year plus 1%) for each of the years in that period (corresponding to the first to the fifth year of application of the levy sys- tem *•) is to be reduced by a percentage rep- resentative of the reduction coefficient which was applicable in each of those years in the I agree with the applicants that when a rep- Member State concerned. resentative reduction coefficient is deter- mined for non-marketers no account may be taken of the percentage determined as described above in accordance with Article 2(2). That percentage compensates for the fact that the reference quantity of producers referred to in Article 2 was established on the basis of a reference year (1983) in which The applicants point out, however, that if in most cases, in view of the steady rise in non-marketers are not to suffer discrimina- productivity in the sector, producers deliv- tion compared with producers referred to in ered more milk than they did in 1981. Since Article 2, account must be taken of their par- the basis applying to non-marketers is milk ticular situation. In that regard, they object deliveries made during the non-marketers' that, on the lines of the Netherlands and reference year prior to 1981 (plus 1%), it German legislation (which was adopted after would be unreasonable and discriminatory the Spagl and Pastätter judgments in order to to apply to them the reduction coefficient implement Regulation N o 1639/91), account determined pursuant to Article 2(2) of Regu- is taken of two specific reduction coeffi- lation N o 857/84, since that coefficient is cients: the reduction coefficient which was designed to compensate for the advantage of applied in the first year to producers referred the higher production achieved between to in Article 2 and the rate of withdrawal 1981 and 1983, the later reference year introduced by Regulation N o 775/87, which adopted by the Member States. currently amounts to 4.5%.

applied in the relevant Member State pursu- 5.2. Assessment of the damage suffered by ant to Article 2 of Regulation N o way of loss of profit 857/84 should be left out of account, but only the reduction referred to in paragraph 2 thereof, not the reductions laid down by the Member States pursuant to paragraph 3. The latter reductions are intended to make it pos- 47. As I have already observed, this is a sible to grant a special or additional reference point on which, owing to the lack of suffi- quantity to producers in one of the special ciently certain and precise evidence, the situations referred to in Articles 3 and 4 of Court can for the time being provide only the regulation. The applicants would be general indications with a view to the parties' placed at an advantage in comparison with reaching agreement. Such indications can other producers if in determining the refer- relate only to the situation of the applicants ence quantity to be granted to them no in the present joined cases but may, never- account were to be taken of such reduction theless, be useful when assessing the com- coefficients, which were provided for on pensation claims of other non-marketers grounds of solidarity. who are in a similar situation.

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O P I N I O N O F M R VAN G E R V E N — J O I N E D CASES C-104/89 A N D C-37/90

If the applicants consider that their actual circumstances differ from the normal course of events, they must provide 48. As regards the calculation of loss of sufficient proof that that is the case. profits, there are two specific problems which the Court can resolve as of now. First, there is a problem raised by the institutions. According to them, it is not possible for the applicants to have actually produced, after the expiry of the non-marketing period, from young cows whose milk yield had not yet developed a quantity of milk equal to the reference quantity which they claim.

activities. The applicants disagree, although it ber States. See the references to Belgian, English, French, German, Netherlands and Swiss law in the Belgian standard appears that the applicants in Case work by J. Ronse, 'Schade en schadeloosstelling (onrecht matige daad)', Algemene Praktische Rechtsverzameling, 1957, N o s 73 and 74. See more specifically the wording of § 252 of the German Bürgerliches Gesetzbuch (Civil Code), which reads as follows: 'Der zu ersetzende Schaden umfasst auch den entgangenen Gewinn. Als entgangen gilt der 46 — The Court has recognized this principle in staff cases.

I - 3122

MULDER v COUNCIL AND COMMISSION

48 — There may in fact be a causal connection between some losses and the regulation which was declared invalid, for 47 — If it should appear that the applicants obtained a higher example in the case of the loss alleged by some applicants in profit than the normal profit from the replacement activi- Case 104/89 on the sale of cows purchased in 1983 or ties, that extra profit should not be deducted from the lost 1984 with a view to the resumption of milk production, profits, since the Community should not derive an advan- which was subsequendy made impossible by Regulation tage from special efforts made by the applicants. N o 857/84.

I-3123

OPINION OF MR VAN GERVEN — JOINED CASES C-104/89 AND C-37/90

Conclusion

54. F o r the reasons set o u t in the foregoing I p r o p o s e that, before deciding further, the C o u r t should:

(1) declare t h a t t h e E u r o p e a n E c o n o m i c C o m m u n i t y m u s t p a y the applicants an a m o u n t c o m m e n s u r a t e with t h e d a m a g e w h i c h t h e y sustained in the p e r i o d b e t w e e n t h e e x p i r y of t h e n o n - m a r k e t i n g u n d e r t a k i n g w h i c h t h e y entered into p u r s u a n t t o C o u n c i l Regulation N o 1078/77 of 17 M a y 1977 a n d t h e grant to

I-3124

MULDER v COUNCIL AND COMMISSION

them of a provisional reference quantity pursuant to Article 3a of Council Regulation N o 857/84 of 31 March 1984 (which was added by Council Regu- lation N o 764/89 of 20 March 1989) or the time at which they resumed milk deliveries if they did so before the grant of the aforesaid reference quantity;

(4) declare that legal interest is due on the amount of compensation to be paid as from the date on which the judgment is given at the rate applying in the Mem- ber State concerned on that date, and possibly also compensatory interest at the usual rate applying in the Member State concerned, in so far as the amount of compensation to be paid does not already take fully into account the time which has elapsed up until then;

(5) declare that if the parties fail to agree or to agree on all points within 12 months of the date on which the judgment is given, the parties must for- ward their calculations to the Court with a view to the settlement of the out- standing points in issue;

(6) reserve the costs.

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