C-189/89

3. By decision of 4 April 1986, the defendant in the national proceedings, the Hauptzollamt Rosenheim, rejected an administrative appeal against the setting of the quota and Mr Spagl brought legal 2. The plaintiff in the national proceedings proceedings challenging that decision. By in Case C-l89/89, Mr Spagl, farms a the time the action came to be considered holding in Bavaria of some 12 hectares. On by the referring court, Article 3a of Regu­ 1 April 1978, he entered the Community lation No 857/84 had been adopted. non-marketing scheme and undertook not However, it appeared that Mr Spagl was to market milk or milk products for five again ineligible for a quota, because he years. During that period, he carried out could not satisfy the condition in Article 3a improvements to his holding with a view to that the non-marketing undertaking must resuming milk production. When his under­ have expired after 31 December 1983.

* Original language: English.

I - 4554

SPAGL

(2) in the event that Question 1 is 7. The national court however had doubts answered in the negative, in so far as as to the compatibility of the 60% the special reference quantity is equal, restriction with the general principles of under Article 3a(2), to only 60 % of the respect for legitimate expectations, of quantity of milk or milk equivalent used non-discrimination and the protection of the as the basis for the non-marketing or right to private property. In the order for conversion premium?' reference, it points out that the 60 % rule is

I - 4555

OPINION OF MR JACOBS —CASE C-189/89

8. The questions referred are concerned with the validity of two specific aspects of 10. Concerned by the growing Community the new Article 3a of Regulation surplus of milk and milk products, the No 857/84, namely, the limitation of the Council on 17 May 1977 adopted Regu­ grant of special reference quantities to lation No 1078/77 (Official Journal 1977 producers whose non-marketing or L 131, p. 1) introducing a system of conversion period expired after 31 premiums for producers who undertook for December 1983 or after 30 September 1983 a specified period not to market milk or where appropriate ('the cut-off date'), and milk products (the non-marketing premium) the basis of allocation of quota, i. e. 60 % of or to cease milk deliveries and convert their previous deliveries ('the 60 % rule'). In order dairy herds to meat production (the to answer the questions it is necessary first conversion premium). The non-marketing to consider the relevant Community legis­ undertaking lasted five years and the lation. conversion undertaking four years (Articles 2 and 3). The amount of the premium in both cases was fixed by reference to the producer's milk deliveries in the 12 months preceding the month when the application was lodged (Article 4 of Regulation 9. First, however, it should be noted that No 1078/77, as amended by Council Regu­ the legality of the cut-off date and of the lation (EEC) No 1041/78, Official Journal 60 % rule is at issue in a number of other 1978 L 134, p. 9). The scheme was closed

I - 4556

SPAGL

13. Council Regulation No 857/84 12. Those measures proved inadequate to (Official Journal 1984 L 90, p. 13) lays stem rising milk production and on 1 April down general rules for the application of 1984 the Community introduced a system to the levy system and in particular for the control production based on an additional determination of the individual reference levy to be borne by milk producers on quantity or quota, i. e. the quantity exempt quantities of milk delivered in excess of an from the additional levy. Under Article 2(1), annual reference quantity (commonly the quota is to be equal to the quantity of known as a quota). To that end, Council milk or milk equivalent delivered by the Regulation (EEC) No 856/84 (Official producer (Formula A) or purchased by a Journal 1984 L 90, p. 10) inserted a new purchaser (Formula B) during the 1981 Article 5c into Council Regulation (EEC) calendar year, plus 1%. However, under No 804/68 on the common organization of Article 2(2), Member States may provide the market in milk and milk products that on their territory the quota is to be (Official Journal, English Special Edition equal to the quantity of the milk or milk 1968 I, p. 176). Under Article 5c(1), the equivalent delivered or purchased during the levy is payable either by milk producers 1982 or 1983 calendar year, weighted by a (Formula A) or by purchasers of milk or percentage so as not to exceed the other milk products who must pass it on to guaranteed quantity laid down for the the producers delivering to them in Member State concerned. That percentage proportion to their contribution to the can be modified so as to create within the purchaser's reference quantity being national guaranteed quantity a reserve of exceeded (Formula B). Article 5c(3) quota for allocation to the categories of provides that the sum of the reference quan­ producers envisaged by Articles 3 and 4 tities allocated to producers or purchasers (Articles 2(3) and 5).

15. The recently adopted Articles 3b and 3c of Regulation No 857/84 extend the possi­ bilities for Member States to grant quota to producers in special situations. Article 3b was introduced by Council Regulation (EEC) No 3880/89 (Official Journal 1989 18. Commission Regulation (EEC) L 378, p. 3) and empowers Member States No 1546/88 lays down detailed rules for to grant further additional or special the application of the additional levy reference quantities to certain categories of (Official Journal 1988 L 139, p. 12) and producers, including those with devel­ replaces an earlier regulation (Regulation opment plans, new producers and those (EEC) No 1371/84, Official Journal 1984 whose quota does not exceed 60 0OO kg. L 132, p. 11). Of particular relevance in Under Article 3c, introduced by Council these cases is Article 9(2) (formerly Article Regulation (EEC) No 1183/90 (Official 6(2)), which empowers Member States to Journal 1990 L 119, p. 27) Member States assign quotas to persons who have are required to grant extra quota to commenced operations after the beginning producers whose quota is less than 60 000 of the reference period on the same basis as kg (or 100 000 kg in mountain areas) and, if indicated in Article 5(4)(b) of the same quota remains available, to producers whose regulation, i. e. on the basis of their sales or partially unused production capacity places deliveries in their last 12 months of them in a difficult situation. In order to operation before 1 April 1984, weighted by release quota for allocation under Article a percentage as appropriate. In the case of 3c, Regulation No 1183/90 sets up a new producers who have been producing for less Community scheme granting compensation than 12 months, Member States are to to producers who undertake to abandon determine a quota on the basis of actual milk production definitively. sales or deliveries.

19. The Community rules initially made no actually resumed direct sales and / or specific provision for the allocation of deliveries and that such sales or deliveries quotas to farmers who, because they were at during the previous 12 months have reached the time participating in the non-marketing a level equal to or greater than 80 % of the and conversion scheme, did not produce provisional quota. milk during the relevant reference year. As already indicated, the Court in Case 120/86 Mulder and Case 170/86 von Deetzen ruled that Regulation No 857/84 was invalid to the extent that it failed to make such provision. 21. In order to make the allocation of quota under Article 3a possible, the Community reserve of quota was increased. This was effected by reducing the national guaranteed total quantities by a further 1% (Council Regulation (EEC) No 3879 / 89 , Official Journal 1989 L 378, p. 1), 20. In response to that judgment, and after although the impact on individual quotas negotiations lasting nearly a year, Council was offset by a reduction to 4 . 5 % of the Regulation (EEC) No 764/89 was adopted rate of temporary withdrawal fixed by (Official Journal 1989 L 84, p. 2). That Regulation No 775/87 (Council Regulation regulation inserts a new Article 3a into (EEC) No 3882/89, Official Journal 1989 Regulation No 857/84 providing for the L 378, p. 6). Council Regulation (EEC) provisional grant of special reference quan­ No 3881/89 (Official Journal 1989 L 378, tities to producers whose non-marketing or p. 5), which established the Community conversion period expired after 31 reserve for 1989/90, and Council Regu­ December 1983 (or after 30 September 1983 lation (EEC) No 1184/90 (Official Journal in Member States where the milk collection 1990 L 119, p. 30), which established the in the months April to September is at least reserve for 1990/91, each reserved 600 000 twice that of the months October to March tonnes for the purpose of alleviating the of the following year) and who have not difficulties encountered by Member States already received a quota under the in allocating special reference quantities provisions for new entrants in Article under Article 3a. 5(4)(b) and / or Article 9(2) of Regulation No 1546/88. Article 3a(l)(a) to (d) imposes certain further conditions designed essen­ tially to ensure that producers applying for a special reference quantity seriously intend to resume milk production and are in a The validity of the cut-off date position to do so. Under Article 3a(2), the provisional quota is to be equal to 60 % of the quantity of milk delivered or the quantity of milk equivalent sold by the producer during the 12 calendar months 22. Before reviewing the arguments of the preceding the month in which the parties, it is necessary to consider the application for the non-marketing or precise scope of the first question referred in conversion premium was made. The Case C-189/89 Spagl. Having regard to the provisional quota is rendered definitive if factual position of Mr Spagl, it is probable within two years from 29 March 1989 that the national court, in questioning the producers can prove to the satisfaction of validity of the cut-off date, is concerned the competent authority that they have with the situation of a producer whose

23. In my view, the question must be understood in the narrow sense as contem­ plating only producers who have not already received a quota. Producers who have been allocated a quota under Article 9(2) of Regulation No 1546/88 are doubly excluded from the benefit of Article 3a — by the cut-off date and by the specific 25. The Council and the Commission exclusion in the second indent of Article defend the cut-off date essentially on three 3a ( l ) of producers who have 'received grounds. First, as regards the issue of a reference quantity under the terms legitimate expectations, they argue that laid down pursuant to Article 5 (4) (6) Article 3a of Regulation No 857/84 is and / or Article 9(2) of Regulation designed to perform the limited function of No 1546/88 ... '. That specific provision is ensuring the allocation of reference quan­ not at issue in this case. However, it will fall tities to producers who, following their to be considered in the pending case of participation in the non-marketing and Reese (Case C-44/90) which concerns conversion scheme, were unable to obtain a precisely the situation of a producer who quota in any other way: in their view, was granted a quota under Article 9(2) of producers in Mr Spagl's situation were in a Regulation No 1546/88 but who seeks a position to obtain a quota under the more generous allocation under Article 3a pre-existing Community provisions. They of Regulation No 857/84. point out that Mr Spagl had over a year between the expiry of his non-marketing undertaking and the introduction of the additional levy system; in that time, he could have resumed production and attracted a quota either under Article 2 of Regulation No 857/84 or under Article 9(2) of Regulation No 1546/88. Alter­ 24. The arguments concerning the validity natively, even if he was not able to resume of the cut-off date involve primarily respect

production before 1 April 1984, it should and Commission do not succeed in have been possible for him to obtain a quota justifying that requirement. under Articles 3 or 4 of Regulation No 857/84, which permit Member States to allocate special or additional reference quantities to producers in a special situation, or under Article 4a which permits the redis­ tribution of unused reference quantities. The Community legislation thus already took account of producers in his position, and there was no question of a total and 28. As regards the argument that producers permanent exclusion from the market. in Mr Spagl's position could have obtained a quota under the general Community provisions, it should be noted that Article 2 of Regulation No 857/84 applies only in the case of producers who were in production throughout the relevant reference year. Article 9(2) of Regulation No 1546/88, dealing with new producers, is an optional provision which, although it was applied in Germany, was not 26. Secondly, the Council argues that the implemented in all Member States. Even cut-off date is in any event justified by over­ where it was applied, Article 9(2) was riding considerations of legal certainty and subject to the availability of reserves of of the effectiveness of the levy system. quota in the relevant national reserve, and Finally, as regards the principle of in any event could only assist producers non-discrimination, the Council argues that who were in production for at least one the situations of producers whose month before 1 April 1984, which was not non-marketing undertakings expired prior the case with Mr Spagl. As for Articles 3 to 31 December 1983, and of those whose and 4 of Regulation No 857 / 84 , as the undertakings expired after that date are Court pointed out in Case 120/86 Mulder, objectively different in that in the latter case quotas may be allocated under those there was no possibility of production provisions only to the extent that a producer during 1983, the reference year chosen by falls within one or more of the situations most of the Member States. specifically envisaged and to the extent that Member States have reserves of quota available for allocation to producers in special situations. The Court in the same case also stated that while Article 4a of Regulation No 857/84 accords Member States a wide margin of discretion as regards the allocation of unused reference quantities, that power is limited by the rule 27. The preamble to Regulation as to priority allocation laid down in the No 764/89 does not contain any reason for second subparagraph of Article 4a ( l ), and the inclusion of the requirement that, in by the extent to which unused reference order for him to be eligible for a special quantities are available (Case 120/86 reference quantity, a producer's undertaking Mulder, at paragraphs 15 to 20). In any must have expired after 31 December 1983 event, Article 4a only permits re-allocation (or 30 September 1983, as the case may be). of unused quantities on an annual and ex In my view, the arguments of the Council post facto basis: it therefore does not provide

30. As the Court pointed out in Case 120/86 Mulder 32. I would add that the breach of the principle of respect for legitimate expec­ tations cannot in my view be said to be '... total and continuous exclusion of that justified by reference to overriding consider­ kind for the entire period of application of ations of legal certainty or the effectiveness the regulations on the additional levy, of the additional levy system. Legal preventing the producers concerned from certainty might well justify the imposition of resuming the marketing of milk at the end a time-limit for applications for the award of the five-year period, was not an of special quota (and Article 3a does impose occurrence which those producers could such a limit) but cannot justify the retro­ have foreseen when they entered into an active imposition of a cut-off date as a undertaking, for a limited period, not to condition of eligibility for the grant of such deliver milk. ... Such an effect therefore quota. As regards the effectiveness of the frustrates those producers' legitimate expec­ system, the Council and Commission are tation that the effects of the system to which concerned that Article 3a will encourage the they had rendered themselves subject would resumption of production by producers who be limited' (paragraph 26). would not otherwise have contemplated it but who now wish to profit from the important asset value which a milk quota currently represents. In my view, reference to the effectiveness of the levy system might 31. A cut-off date which has the effect of justify measures to discourage the definitively depriving certain producers of resumption of milk production in general the possibility of resuming production must (and I will return to this point when

33. As regards the issue of discrimination, it is clear that the cut-off date produces differences of treatment between former participants in the non-marketing and conversion scheme. Those producers whose undertakings expired after 31 December 1983 (or after 30 September 1983, as the Excluded from the scope of this provision case may be), are entitled under Article 3a are producers who were ineligible for a to a provisional reference quantity of 60% special quota because their undertakings of former deliveries and have a transitional expired before the cut-off date. period of two years in which to re-establish production and render the provisional quota definitive. At the other extreme, those producers whose undertakings expired before 31 December 1983 and who had no production before 1 April 1984, either because their undertakings expired too close 35. It cannot be argued that the possibility to the cut-off date or because, like or otherwise of production in the reference Mr Spagl, they were for practical or year amounts to an objective difference in financial reasons unable to resume the situation of producers because, as production promptly, are excluded already indicated, that possibility was purely altogether from the quota system and will illusory for a number of the affected be liable to pay the additional levy on every producers, in particular those whose under- litre of milk delivered by them. takings expired close to the cut-off date. In the absence of an objective ground for differentiation between the situations of former participants in the non-marketing and conversion schemes, the cut-off date in Article 3a must be regarded as incompatible with the principle of non-discrimination 34. The cut-off date produces a further which finds expression in Article 40(3) of difference in treatment in that producers the Treaty.

39. The Council points out that even producers who received quota under Article 2 of Regulation No 857/84 were not 37. As a final point, I would mention that if entitled to 100% of their production in the the provision imposing the cut-off date is reference year but were subject to held invalid, then the Community legislator deductions made by Member States under will have to amend Regulation No 764/89 Article 2(1) or imposed by the Community so as to give a new opportunity to in the course of the operation of the producers who were previously excluded by additional levy system. The Council adds that provision to apply for a special that 60% is only a basic entitlement and reference quantity, even if the practical that it is necessary to consider the validity effects of the amendment are likely to be of Article 3a in the context of the other relatively small. provisions which make it possible for producers contemplated by Article 3a to obtain special or additional reference quan­ tities, notably, Articles 3, 3b, 3c, 4, and 4a of Regulation No 857/84, and emphasizes that in applying those largely discretionary The 60% rule provisions Member States are bound by general principles of Community law. As regards specifically the issue of legitimate expectations, the Council and Commission argue that while the Court in Cases 120/86 Mulder and 170/86 von Deetzen recognized 38. Mr Spagl and Mr Pastätter submit that a legitimate expectation on the part of the 60% rule is incompatible with the prin­ former participants in the non-marketing ciples of respect for legitimate expectations and conversion scheme not to be excluded and of non-discrimination. As regards from milk production, it did not recognize a legitimate expectations, they argue that the right to return to a level of production Court ruled in Cases 120/86 Mulder and comparable to that which they had 170/86 von Deetzen that a producer who previously enjoyed. They submit that the had taken part in the non-marketing or 60% rule is in any event justified in the conversion scheme could legitimately expect overriding interest of preserving the stability not to be subject, upon the expiry of his of the milk market and safeguarding the undertaking, to restrictions which speci­ objectives of the additional levy system, and fically affected him precisely because he of avoiding an undue benefit for returning availed himself of the possibilities offered by producers. As regards the principle of the Community provisions. As to the non-discrimination, they argue that principle of non-discrimination, they point producers contemplated by Article 3a are in

40. In my opinion, the issue of legitimate expectations is far less clear-cut in relation to the 60 % rule than in relation to the cut-off date. It is true that the Court in Cases 120/86 Mulder and 170/86 von 25. However, the regulations on the Deelzen ruled that a former producer in the additional levy on milk give rise to such non-marketing and conversion scheme restrictions for producers who, pursuant to could legitimately expect, upon the expiry an undertaking entered into under Regu­ of his undertaking, not to be subject to lation No 1078/77, did not deliver milk restrictions which affect him precisely during the reference year. As stated in the because of his participation in the scheme. reply to the first question, those producers The relevant paragraph must however be may in fact be denied a reference quantity seen in its context: under the new system precisely because of that undertaking if they do not fulfil the specific conditions laid down in Regulation No 857/84 or if the Member States have no reference quantities available.

'23. It must be conceded, as the Netherlands Government and the 26. Contrary to the Commission's Commission have correctly observed, that a contention, total and continuous exclusion of producer who has voluntarily ceased that kind for the entire period of application production for a certain period cannot legit­ of the regulations on the additional levy, imately expect to be able to resume preventing the producers concerned from production under the same conditions as resuming the marketing of milk at the end of those which previously applied and not to the five-year period, was not an occurrence

which those producers could have foreseen nation between producers, and I will turn to when they entered into an undertaking, for that question below. a limited period, not to deliver milk. There is nothing in the provisions of Regulation No 1078/77 or in its preamble to show that the non-marketing undertaking entered into under that regulation might, upon its expiry, entail a bar to resumption of the activity in 42. In my view, returning producers had a question. Such an effect therefore frustrates legitimate expectation, not necessarily to those producers' legitimate expectation that resume full production, but not to be the effects of the system to which they had treated less favourably, when allowance had rendered themselves subject would be been made for differences in their circum­ limited.' (emphasis added). stances, than producers who continued in production during the reference year ('continuing producers'). It follows that the complaint based on legitimate expectations can be examined together with the complaint based on discrimination, in so far as the latter complaint rests on a If the relevant part of the judgment is read comparison between the treatment of as a whole, with particular reference to the returning producers and the treatment of phrases which I have emphasized, it is continuing producers. apparent that the specific restriction to which the Court took objection was the total exclusion from the market of certain former participants in the non-marketing and conversion schemes which resulted from the operation of the then applicable rules. 43. If such a comparison is made, then it is There is nothing in the judgment to suggest clear at the outset that Article 3 a accords a that the Court recognized an expectation on markedly lower basic entitlement than that the part of former participants to return to a enjoyed by producers who were allocated a level of production comparable to that quota in the normal way under Article 2 of which had been achieved prior to joining Regulation No 857/84. This is true even if the scheme. account is taken of the fixed deductions made at the Community level and the variable deductions made by the different Member States under Article 2(1) of Regu­ lation No 857/84, which do not apply to producers receiving a quota under Article 3a. The total deductions imposed at 41. I would add that the overriding interest Community level by means of the reduction of the Community in restricting excess milk in national guaranteed quantities under production is an element which must be Regulation No 1335/86 and Regulation balanced against the legitimate expectation No 3879/89 and the suspension or with­ of producers to return to production: the drawal of individual quotas effected by purchase, storage and disposal of surplus Regulations Nos 775/87 and 3882/89, milk products still constitutes one of the amount to a total of 8.5%. As regards largest burdens on the Community budget. I deductions made at the national level, it emphasize that those considerations do not appears from information supplied by the in my view justify any form of discrimi­ Commission in response to a question from

46. Similar objections can be made if one resorts to the recently adopted Articles 3b and 3c of Regulation No 857/84. Article 3b at first sight appears appropriate for the 44. The situation in the Federal Republic of purpose of supplementing the 60% entit- Germany was more complicated because lement, in that it empowers Member States under the national implementing rules to grant further additional or special different percentages were applied reference quantities inter alia to new according to the level of deliveries and producers and those whose quota does not according to whether or not production was exceed 60 000 kg. However, the usefulness increased between 1981 and 1983. A of Article 3b is limited by the requirement producer in the most unfavourable position, that allocation must not exceed 1% of the i.e. a very large producer whose deliveries in Member State's guaranteed quantity, and of 1983 exceeded those in 1981, suffered an course by the availability of quota in the initial reduction of 4%, further deductions relevant national reserve. Still more hypo- related to the scale of production and the thetical is Article 3c, which was inserted rate of increase, and an additional reduction into Regulation No 857/84 by Regulation of 3.5% in respect of quantities produced in No 1183/90 and requires Member States to excess of 300 000 kg. At the other extreme, grant extra quota to small producers and, if small producers (i.e. those producing 60 000 quota remains available, to producers with kg of milk or less) who had not increased partially unused production capacity. production between 1981 and 1983 suffered Although it has not yet been implemented, a reduction at the national level of only 2%. Article 3c also appears in principle capable These figures too indicate a basic entit- of helping certain Article 3a producers. lement considerably in excess of 60%. However, although the provision is binding on Member States, it should be noted that quota allocated under Article 3c must first be released by other producers who participate in the new Community programme for financing the cessation of milk production. The availability of quota 45. It is also plain that the discretionary under Article 3c will thus depend upon the provisions of Regulation No 857/84 cannot success of that programme, which itself is be relied upon with certainty to supplement likely to be contingent upon the willingness

of the Member States to top up the figures on which the quotas were to be Community rates of compensation. calculated were necessarily different. The quota of continuing producers under Article 2 of Regulation No 857/84 was properly based on their production in the reference year, i.e. on recent production figures, while for returning producers, when Regulation No 764/89 was adopted, the only available 47. It thus appears indisputable that there is base was their production many years a difference in treatment as regards the previously. allocation of quota as between returning and continuing producers and that the abovementioned provisions of the Community legislation cannot eliminate that difference in all cases. In order to decide whether this difference in treatment amounts to unlawful discrimination, it is necessary to determine whether there are objective grounds for that differentiation. 50. Thirdly, in the case of continuing While I do not find the arguments advanced producers it could properly be assumed that by the Council and Commission on this they would be adversely affected by any central issue very convincing, it seems to me reduction in their existing production levels, that the following points must be raised. and that assumption was reflected in the fact that their basic entitlement to quota was substantially related to their production in the reference year. The same assumption could not necessarily be made in the case of returning producers, because of the very fact that they were resuming production 48. First, it could reasonably be assumed from a nil base. that continuing producers were dependent for their livelihood on continuing production, whereas returning producers, even if they had made investments with a view to resuming production, had been able for a period of years to make other uses of their farms. Such an assumption must be particularly strong in the case of former participants in the conversion scheme, who 51. Fourthly, continuing producers could were required by their four-year under­ properly be regarded as constituting a taking to convert their dairy herds to beef homogeneous category which should be production. treated in the same way; although there were some variations, such as the flexibility in the choice of reference year under Article 3(3) of Regulation No 857/84, there was little difficulty in ensuring that they should be treated uniformly, that is, broadly in line with their existing levels of production. In 49. Secondly, no exact comparison was contrast, returning producers were not in possible between continuing producers and comparable situations among themselves. I returning producers, because the base will elaborate this point.

52. When Regulation No 764/89 was States varied widely, with the result that enacted, a single formula had to be found to complete equality could not be attained. apply to potentially at least tens of thousands of producers in a wide variety of situations. No doubt there were some, like Mr Spagl, who intended to resume production to the full extent of their previous production or more, others who intended to resume production to a lesser extent, others again who might be induced to resume production by the adoption of the 1989 regulation itself. In addition, there were probably differences between the intentions and expectations of those who had received the non-marketing premium and those who had received the conversion premium. In those circumstances, any attempt at mathematical equality was impossible. Moreover, for reasons which I have mentioned earlier, it would also be impossible to achieve complete equality between the returning producers and the 53. In those circumstances, although the existing producers in the different Member 60 % quota must be regarded as low in States, given the great diversity of their situ­ relation to the claims of some returning ations and of the solutions adopted in the producers, it cannot in my view be regarded Member States themselves in dealing with as infringing the principle of non-discrimi­ them. This is illustrated by the fact that nation. A higher figure might even have where, as in the United Kingdom, the basic been excessive in relation to the reasonable expectations of other producers who had quota of continuing producers after the abandoned production but who might now various deductions was 82.5%, rather than be led to resume production. To focus only 100%, the 60 % figure gave the returning on those returning producers who may have producers approximately three-quarters of suffered hardship as a result of the 60 % the quota of continuing producers, whereas restriction does not suffice to establish in another Member State, where continuing discrimination, since the figure of 60 % must producers may have had a basic entitlement be assessed in relation to all the diverse of 90 %, the 60 % figure gave the returning cases taken together. It was therefore not unreasonable for the Community legislator producers some two-thirds only. In making to leave it to the Member States to 'top up' this comparison, I recognize that the base the 60 % in appropriate cases where they figure was not comparable as between had the means to do so, so as to take returning producers and continuing account of the circumstances of individual producers, since the base figures were producers, even if, in the nature of the derived from different years, while system, it was not possible to ensure that, production overall was generally increasing. even with such topping-up, every single Nevertheless the point remains valid that the producer would receive a quota exactly proportionate to his expectations or his situation of producers in different Member needs.

54. I therefore conclude that the 60% rule vations submitted in these cases, namely, the is not invalid for breach of the principle of retroactivity of the 60% rule. As I have non-discrimination. Nor, in my view, can it already mentioned (at paragraph 34 above), be regarded as being incompatible with due paragraph 5 of Article 3 a exempts producers observance of the right to property. As the who receive a special reference quantity Court has recognized, notably in Case from the payment of the additional levy in 44/78 Hauer [1979] ECR 3727, paragraph respect of quantities of milk produced prior 23 and Case 5/88 Wachauf [1989] ECR to the sixth period of application of the 2609, paragraph 18, the exercise of the right scheme (i. e. before 1 April 1989) which do to property may be restricted, in particular not exceed the amount of the provisional in the context of a common organization of special reference quantity. It appears from the market, provided that the restrictions in the preamble to Regulation No 764/89 that question correspond to objectives of general that provision was adopted in the interests interest pursued by the Community. In my of fairness and it was plainly intended by opinion, the 60% restriction is justified by the legislator to benefit returning producers. the objective of general Community interest However, the result of the provision is to consisting in the containment of surplus impose the levy with retrospective effect on milk production. At the same time, that returning producers in respect of their past restriction cannot be said to amount to a production exceeding their 60% special disproportionate or intolerable interference quota. In my view, the retrospective impo­ such as to impinge upon the very substance sition of the 60% rule must be regarded as of the right to property. The 60% limit unlawful. restricts, but does not remove the producer's right to use his holding for dairy production, and does not affect the possi­ bility of using the farm for other purposes or of disposing of it. As I have already said, given the impossibility of achieving absolute equality between returning and continuing producers, and as between the different categories of returning producers, the 60% restriction must be regarded as proportionate and reasonable.

59. I conclude that the 60 % quota cannot be imposed in respect of periods prior to 1 April 1989 (i. e. prior to the sixth period of 57. It was not until the adoption of Regu­ application of the levy system) and that the lation No 764/89 on 20 March 1989 that affected producers should not be liable to the situation was finally clarified. However, pay the additional levy on their production in providing for the allocation of a 60 % up to — as the only possible quota to returning producers, that regu­ yardstick — 100% of their deliveries before lation in effect adopted a completely new joining the non-marketing or conversion solution. While there would, in my view, scheme. It is true that, even after allowing have been no difficulty if the 60 % quota for the differences between the base figures had been adopted at the outset in 1984, it which I have already mentioned, the figure was unlawful to impose the new solution of 100% may put some of those producers retrospectively. Returning producers who in a better position as regards the period up had been subject to the levy when it was to 1 April 1989 than continuing producers first introduced could properly consider, who received a quota corresponding to after the judgments mentioned above, that some 80 % or 90% of their previous the imposition of the levy was unlawful, and production. However, again no true that they were entitled to recover any sums comparison is possible, since continuing that they had paid, in any event on quan­ producers were able to plan their tities up to the amount of their previous production and so avoid the levy altogether, production. To that extent, it was not open while in the case of returning producers, in to the legislator to reimpose the levy retro­ view of the uncertainty as to the relevant spectively. Moreover, it is inequitable to production limit, no such planning was impose it retrospectively on producers who, possible. because of the initial error of the Community legislator, have been kept in complete uncertainty as to the size of their quotas. The inequitable character of the legislation is underlined by the penal rate of the levy.

'(1) Article 3a of Council Regulation (EEC) No 857/84 is invalid in so far as a producer whose period of non-marketing pursuant to an undertaking given under Council Regulation (EEC) No 1078/77 expired before 31 December 1983 (or before 30 September 1983, as the case may be), is not eligible for receipt of a special reference quantity.

(2) Article 3a of Council Regulation (EEC) No 857/84 is invalid in so far as a producer who receives a special reference quantity under that provision is liable to pay the additional levy in respect of quantities produced prior to the sixth period of application of the scheme which do not exceed the quantity of milk delivered or the quantity of milk equivalent sold by that producer during the 12 calendar months preceding the month in which the application for the non-marketing or conversion premium was made pursuant to Council Regu­ lation No 1078/77.

(3) Examination of Article 3a of Council Regulation (EEC) No 857/84 has revealed no further factor of such a kind as to affect the validity of the provision in question.'

62. In Case C-217/89 Pastätter, I would give the following answers:

'(1) Article 3a of Council Regulation (EEC) No 857/84 is invalid in so far as a producer who receives a special reference quantity under that provision is liable to pay the additional levy in respect of quantities produced prior to the

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