C-22/90

1. By Decision 89/627/EEC of 15 November 1989 on the clearance of the accounts presented by the Member States in The principal submission respect of the expenditure for 1987 of the Guarantee Section of the European Agri- cultural Guidance and Guarantee Fund, ' the Commission among other things charged expenditure of FF 10 569 874 to the French Republic. That amount corre- 2. In order to understand the principal sponds to the additional levies applicable to submission, it should be borne in mind that the quantities of milk collected during the Regulation (EEC) N o 856/84 imposed an third period of application of the levy additional levy on quantities of milk (1986/1987) and considered to exceed (by delivered or sold in excess of a determined 5 192 tonnes) the guaranteed total quantity reference quantity. The levy is applicable set for deliveries by Article 5c(3) of Council whatever method of marketing production Regulation (EEC) N o 804/68. 2 is used: delivery to a purchaser (dairy) or direct sale for consumption. There is, however, a clear distinction depending on the method chosen. Thus a producer who, during the reference period, marketed his production simultaneously by both methods has two individual reference quantities, one for deliveries and the other for direct sales. The French Government considers that the abovementioned decision is null and void arid puts forward two submissions in support of that conclusion. As its principal argument, it maintains that the decision is That distinction also applies at the level of based on a misinterpretation of Article 6a of the guaranteed total quantities of Member States: Article 5c(3) of Regulation * Original language: French. 1 — OJ L 359, p. 23. 3 — Regulation of 31 March 1984 adopting ¡jenerał rules for 2 — Regulation of 27 June 1968 on the common organization the application of the levy referred to in Article 5c of of the market in milk and milk product; (OJ, English Regulation (EEC) N o 804/68 in the milk and milk Special Edition 1968 (I), p. 176). Article 5c was inserted products senor (OJ L 90, p. 13). Article 6a was inserted by Council Regulation (EEC) N o 856/84 of 31 March by Council Regulation (EEC) N o 590/85 of 26 February 1984 amending Regulation (EEC) N o 804/68 (OJ L 90, 1985 amending Regulation (EEC) N o 857/84 (OJ L 68, p. 10). p. 1).

3. Initially, the levy system made no provision for transferring reference quant- 4. In the light of the fluctuations in the ities from one sector of activity to another relative proportions of the two commercial according to the producers' marketing activities and in order to enable producers requirements. It catered only for producers with two reference quantities to adapt to who cease, totally or partially, either their certain specific marketing requirements (see direct sales or their deliveries. Article 4(5) the fifth recital in the preamble to Regu- of Commission Regulation (EEC) lation (EEC) No 590/85), the Council No 1371/84, 4 applicable during the period inserted in Regulation N o 857/84 a covered by the contested decision, 5 provides provision enabling the producers concerned that: to transfer reference quantities from one sector of activity to another. The relevant provision is the new Article 6a, which provides that:

T o be admissible, the producer's request referred to in the first paragraph must contain all the necessary items of in- formation to assess:

Next, the parties accept that the transfer authorization is valid only within a — the size of the applicant's dairy farm, twelve-month period. That authorization accordingly lapses at the end of each marketing year, but may be renewed if the producer submits a new request. — the total volume of his milk production, deliveries and direct sales of milk and/or milk products,

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FRANCE v COMMISSION

additional or special reference quantities to Government has not disputed this — that be granted to other producers selling the transfers granted to those 29 producers directly for consumption. Furthermore, such were not in compliance with the rules. abolition of the reference quantity for 'direct sales' does not confer entitlement to a correlative increase in the quantity for 'deliveries', but solely to the possibility of such an increase if the Member State has reserve quantities for that purpose. In my view, the Commission could have treated the 29 files in question as a significant factor in support of the allegation that the French authorities had not checked compliance with the requirement that a transfer under Article 6a of Regulation No 857/84 cannot be granted to a Finally, the parties agree that Article 6a producer who has definitively ceased his enables Member States to grant transfers to direct sales activity, or, in any event, had producers who have completely, though not set up an effective mechanism for temporarily, suspended their direct sales checking compliance with that requirement activities. However, they differ on the (see the judgment in Case C-8/88 Germany question of the time at which that v Commission [1990] ECR 1-2321, at suspension must be considered to be a paragraph 42). definitive cessation of activity.

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O P I N I O N O F MR VAN GERVEN — C A S E C-22/90

I cannot say whether that coincidence requirements'. ' 2 Furthermore, the increase influenced the Commission's decision. In of one of the two reference quantities 'shall any event, the Commission has not be subject to a reduction of the same complained that France did not systemat- amount in the other reference quantity ically check in actual /act, that is to say in during the same twelve-month period'. The the light of the information in its file, terms in which the first paragraph of Article whether the producers who had requested a 6a is couched accordingly indicate the two transfer had definitively ceased their direct fundamental conditions governing transfers sales activity. It has chosen to define the under that article. There must be a producer principle of 'definitive cessation' in abstract who is temporarily experiencing difficulties terms. According to the Commission, in marketing his production by direct sales, 'producers who have transferred the greatest but who intends to take up that activity possible quantity from direct sales to again, at the same level as before the deliveries' can be considered to have 'ceased request for transfer, once those difficulties direct sales'. 10 The Commission bases that have disappeared. Furthermore, the transfer definition on its interpretation of Article 6a cannot lead to an increase in the total of Regulation No 857/84: in its view reference quantity of the individual 'Article 6a is applicable only where producer concerned. In other words, the producers carry out two commercial activities producer is authorized not to increase but during the same twelve-month period' to maintain the volume of production which (emphasis added). " It follows, in the he can market levy free. Commission's view, that the quantity of 28 540 tonnes relating to producers who have transferred the greatest possible quantity from direct sales to deliveries cannot be taken into account in determining France's guaranteed total quantity for deliveries.

school and so on) under a contract for such a quantity will be granted, given that which it had tendered. The producer may the quantities granted must stay within the involuntarily lose that contract for several limit of the Member State's guaranteed total years, while retaining the hope — and the quantity for deliveries. Accordingly, the necessary material infrastructure for when interpretation argued for by the the time comes — of regaining the contract Commission provides no guarantee that the in a subsequent tender. producer concerned will not be deprived of the 'fruits of his labour and of his investments' by the grant of a reference quantity for 'deliveries' corresponding to the quantity for 'direct sales' that would be abolished. 10. A consequence of the interpretation advocated by the Commission would be that a producer in a situation of the kind described above would no longer be able to In the light of the aforesaid consequences, it benefit from a transfer under Article 6a of seems to me that if the Council had Regulation No 857/84 if within twelve intended to exclude from the scope of months he had not found another outlet for Article 6a of Regulation No 857/84 the milk products to be sold for direct producers who, without abandoning it consumption. The definitive cessation definitively, suspend their direct sales system provided for by Article 5 of Regu- activity for more than one marketing year, lation No 1546/88 would therefore have to it would have inserted an express provision be applied to him. His reference quantity to that effect. I accordingly consider that for 'direct sales' would accordingly be the French Government is justified in taking abolished so that, in view of the dissuasive the view that the contested decision is based nature of the levy, he would be deprived of on a misinterpretation of Article 6a and the 'fruits of his labour and of his should be annulled. investments' — in the words used by the Court in Wachauf v Bundesamt fiir Ernährung und Forstwirtschaft 13 — in carrying on not only direct sales of his milk but also the business of milk production The alternative submission itself to the extent of the 'direct sales' reference quantity, although he did not at any time intend to suspend or reduce such production. 11. I will restrict myself to a brief consideration of the alternative submission, given that it is relevant only if, contrary to my proposal, the principal submission is not accepted by the Court. It is true that the definitive cessation system envisages the possibility of a reference quantity for 'deliveries' being granted to producers who cease their direct sales I agree with the arguments put forward activity. It does not, however, in all cases by the Commission against the French guarantee to the producer concerned that Government's proposition that the EAGGF should have carried out its calculations 13 — Cast 5/88 [1989] ECR 2609. The words quoted arc lake from paragraph 19 of lhe judgment. concerning the fat content by putting the

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