C-21/92

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who, upon the termination of their under- delivered or the quantity of milk equivalent taking, were willing to restart milk produc- sold by the producer during the 12 calendar tion (hereafter: 'returning producers'). months preceding the month in which the application for the non-marketing or conver- sion premium was made. The Court came to that conclusion on the ground that that restriction was contrary to the principle of legitimate expectations. 5. In Mulder v Minister van Landbouw en Visserij ('Mulder I') 6 and Von Deetzen v Hauptzollamt Hamburg-Jonas, 7 the Court held that Regulation N o 857/84 was invalid in so far as it did not provide for the alloca- tion of a reference quantity to those produ- 8. In response to those judgments, the cers on the ground that it infringed their legit- Council adopted Regulation N o 1639/91, imate expectations. which amended Article 3a(2) of Regulation N o 857/84 by introducing a new method for the calculation of the special reference quan- tity.

Garantiemengen-Verordnung (MG VO), N o 1639/91, concerning the abatement which fixed the abatement at 15%. n to be applied to the special reference quantities be interpreted as meaning that the abatement is determined only by the percentage which is representa- tive of all the abatements but contains at least the basic reduction or does the abatement result from the percentage 11. The plaintiffs in the main proceedings, which is representative of all the abate- Mr and Mrs Kamp ('the plaintiffs'), are dairy ments, plus the basic reduction? farmers who by a decision of the local exec- utive of the Chamber of Agriculture for the Rhineland dated 7 May 1981 were granted a non-marketing premium of DM 66 434.76 for 118 201 kg of milk under Regulation N o 1078/77. Following the termination of 2. Is Article 3a(2) of Regulation their non-marketing undertaking in 1985, N o 857/84, as amended by Regulation they applied for a special reference quantity. N o 1639/91, valid, although the calcula- Initially, their application was refused. Sub- tion of the basic reduction cannot be sequently, on the basis of Paragraph 6a of the reconstructed? MGVO, they were allocated a special refer- ence quantity of 100 471 kg, which was equivalent to 85% of the quantity on the basis of which their premium was calculated. Following that allocation, the plaintiffs sought an increase in their reference quantity to 100% in proceedings before the Finance 3. Is Article 3a(2) of Regulation Court, Düsseldorf. N o 857/84, as amended by Regulation N o 1639/91, valid in so far as the quan- tity for which entitlement to premium under Regulation N o 1078/77 was obtained is based on production but the representative abatements were calcu- lated on the basis of the production 12. In the course of those proceedings, the for 1983 and, because of the increase in Finance Court has referred to the Court the production from 1981 to 1983, were following questions: correspondingly higher?

13. With regard to the first question, it appears that there is a difference of opinion between, on the one hand, the German Gov- ernment, the United Kingdom Government and the Commission and, on the other hand, the Council. The German Government, the 15. Under Article 3a(2), the special reference United Kingdom Government and the Com- quantity is calculated on the basis of three mission take the view that the basic reduc- components: (a) the quantity in respect of tion of 4.5% does not form part of, and which the premium entitlement has been should be applied in addition to, the percent- preserved or acquired; (b) a percentage rep- age representative of all the abatements resentative of all the abatements applied to applied to the reference quantities estab- the reference quantities established in accor- lished in accordance with Article 2. By con- dance with Article 2; (c) a basic reduction of trast, the Council argues that Article 3a(2) 4.5%. I will examine in turn the last two of should be interpreted as meaning that the those components. I will start with the basic percentage representative of all the abate- reduction of 4.5%. ments comprises the basic reduction of 4.5%.

14. It emerges, however, from the written 16. That reduction has its origin in Council observations submitted to the Court and Regulation (EEC) N o 775/87 12 which, in a from the submissions made at the hearing further attempt to curb excess production in that that difference of opinion is not one of milk and milk products, provided for the substance. The German Government, the temporary withdrawal of a uniform propor- United Kingdom Government and the Com- tion of the reference quantities mentioned in mission consider that the basic reduction of Article 5c of Regulation N o 804/68. 4.5% and the representative percentage are separate components which must be applied cumulatively. By contrast, the Council con- siders that the basic reduction of 4.5% is part 12 — OJ 1987 L 78, p. 5.

17. Regulation N o 775/87 fixed the rate of from the difference between the total guaran- withdrawal at 4% for the fourth period of teed quantity for 1990-1991 and milk deliv- application of the additional levy (i.e. 1 eries in 1983. Council Regulation (EEC) April 1987 to 31 March 1988) and at 5.5% N o 3879/89 16 fixed the total guaranteed for the fifth period (i. e. 1 April 1988 to 31 quantity for Germany for each of the March 1989). Council Regulation (EEC) three 12-month periods from 1 April 1989 N o 3882/89 13 fixed the rate of withdrawal at to 31 March 1992 at 22 519 080 tonnes. As 4.5% for the subsequent three periods. u appears from the order for reference, milk That rate was applicable at the time when deliveries in Germany for 1983 Regulation No 1639/91 was adopted. were 25 176 000 tonnes. The difference between those two quantities results in an abatement of 10.5%. Consequently, contrary to the view expressed in the order for refer- ence, which appears to have led the national court to refer the question in issue, the basic 18. The basic reduction of 4.5% represents a reduction of 4.5% was not taken into temporary withdrawal which does not con- account twice in the German implementing stitute a reduction of the total guaranteed legislation. quantity. Until the adoption of Council Reg- ulation (EEC) N o 816/92, 15 the quantity temporarily withdrawn formed part of the total guaranteed quantity for each Member State laid down in Article 5c of Regulation N o 804/68. It is only as a result of Regula- tion N o 816/92 that the quantity temporarily withdrawn is indicated separately from the 20. As already stated, under Article 2(2) of total guaranteed quantity. Regulation N o 857/84, Member States may provide that on their territory the reference quantity is to be equal to the quantity of milk or milk equivalent delivered or pur- chased during the 1982 or 1983 calendar year, weighted by a percentage established so as not to exceed the guaranteed quantity laid 19. In contrast to the basic reduction of down by Article 5c of Regulation N o 804/68 4.5%, the percentage representative of all the for the Member State concerned. abatements applied to the reference quanti- ties established under Article 2 is not uni- form throughout the Community but varies from Member State to Member State. As the German Government and the Commission point out, with regard to Germany, which chose the calendar year of 1983 as reference year, the representative abatement results 21. Article 2(2) also provides that that per- centage may be varied on the basis of the level of deliveries of certain categories of 13 — OJ 1989 L 378, p. 6. 14 — Regulation N o 775/87 has since been amended by Council Regulation (EEC) N o 3643/90 (OJ 1990 L 362, p. 9). 15 — OJ 1992 L 86, p. 83. 16 — OJ 1989 L 378, p. 1.

producers, of the trend in deliveries in cer- of the percentage representative of all the tain regions between 1981 and 1983 or of the abatements applied to the reference quanti- trend in deliveries of certain categories of ties established under Article 2 and must producers during the same period. Art- therefore be applied in addition to that per- icle 2(3) provides that the percentages centage. Strictly speaking, it would not be referred to in Article 2(1) and 2(2) can be correct to consider that the basic reduction adapted by the Member States so as to facil- forms part of the 'percentage representative itate the allocation of special and additional of all the abatements applied to the reference reference quantities to certain categories of quantities established in accordance with producers. Article 2'. First, it is not 'representative' since its application is uniform throughout the Community and, secondly, unlike the abatements applied to the reference quanti- ties established under Article 2, it represents a temporary withdrawal. It differs therefore from the representative percentage both with 22. It is clear, therefore, that under Article 2 regard to its method of calculation and with Member States enjoy a discretion to apply regard to its legal nature. varied percentages to different categories of producers. This by itself is sufficient to show that, unlike the basic reduction of 4.5%, the percentage representative of all the abate- ments applied to the reference quantities established under Article 2, which is men- tioned in Article 3a(2), may be different in 25. In answer to the first question, therefore, the various Member States. I conclude that the basic reduction of 4.5% does not form part of, and should be applied in addition to, the percentage representative of all the abatements applied to the reference quantities established in accordance with Article 2. Those abatements do not include the basic reduction of 4.5%. 23. As already stated, in substance the Council agrees with the German Govern- ment, the United Kingdom Government and the Commission that the basic reduction of 4.5% should not be applied to returning pro- The second question ducers twice, although it reaches that conclu- sion on somewhat different grounds.

28. Contrary to what the referring court states in its second question, therefore, the calculation of the basic reduction can be 31. In those judgments, the Court laid down reconstructed. two principles with regard to the calculation of the reference quantity to be allocated t o returning producers: I S first, the reference quantity must be calculated in such a way as to ensure that a returning producer is not The third question subject, upon the expiry of his undertaking, to restrictions which specifically affect him by reason of his undertaking; 19 secondly, a returning producer must not be accorded an undue advantage by comparison with con- tinuing producers. O n the basis of those two principles, the Court accepted that in order 29. Before examining the issues raised by the third question, it will be helpful to take a closer look at the reasoning of the Court in Spagl and Pastätter since it is as a result of 17 — Joined Cases C-104/89 and C-37/90 [1992] E C R 1-3061. 18 — See Spagl, paragraphs 21 to 24 of the judgment; Pastätter, those judgments that the Council amended paragraphs 12 to 15 of the judgment. Article 3a(2). It will also be necessary to 19 — That principle had already been laid down by the Court in Mulder I, at paragraph 24 of the judgment, and Von examine the judgment of the Court in Mul- Deetzen, at paragraph 13 of the judgment.

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to calculate the reference quantity to be allo- Regulation N o 764/89 did not give rise to a cated to returning producers the Council sufficiently serious breach of a superior rule could validly apply a reduction coefficient of law for the protection of individuals, which was representative of the rates appli- which according to the established case-law cable to producers covered by Article 2 20 of the Court is a condition which must be (hereafter: 'continuing producers'). satisfied in order for the Community to incur non-contractual liability as a result of legislation.

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the quantity on the basis of which their non- 38. It follows that there are rwo differences marketing premium was calculated. That between the method for the calculation of quantity should be increased by 1 % by anal- the special reference quantity provided for in ogous application of Article 2(1) of Regula- Article 3a(2), as amended by Regulation tion N o 857/84 in order to ensure that the N o 1639/91, and the method followed by the applicants do not suffer a restriction which Court in Mulder II for the calculation of the specifically affects them by comparison with reference quantities to which the applicants continuing producers. However, in order to in those proceedings should have been enti- ensure that the applicants are not accorded tled. an undue advantage by comparison with continuing producers, an abatement repre- sentative of the abatements applied to con- tinuing producers should be applied to them.

39. Those differences are the following:

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40. As a result of the above differences, it 43. In their written observations, the plain- would be more beneficial for a producer in tiffs point out that, since they entered into a the position of the plaintiffs to have his ref- non-marketing undertaking in 1981, they did erence quantities calculated according to the not contribute to the increase in milk pro- method followed by the Court in Mulder II duction which took place between 1981 and rather than according to the method pro- 1983. They argue that a percentage represen- vided for in Article 3a(2). tative of the abatements provided for as a result of that increase should not be deducted from the quantity in respect of which their premium entitlement was acquired. They claim that such a deduction places them in a position of inequality vis- à-vis producers who delivered milk during the 1983 calendar year and constitutes dis- crimination prohibited by Community law.

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the calculation of the compensation to which differences exist between the calculation of the applicants in that case were entitled. In the reference quantity which a producer their view, that method ensures equal treat- should have been granted in a specified ment between returning producers and con- period in the past for the purposes of assess- tinuing producers and should be adopted by ing the compensation due to him in proceed- the Community. ings concerning the non-contractual liability of the Community and the calculation of the reference quantity to be granted to a general category of producers in the future.

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is required to protect the legitimate interests 52. It will be recalled that, according to the of returning producers and to honour their plaintiffs, the percentage provided for in legitimate expectations in accordance with Article 2(2) of Regulation N o 857/84 must the criteria enunciated by the Court in Spagl not be taken into account for the purposes of and Pastätter. It must also take into account calculating the representative rate of abate- the legitimate interests of continuing produ- ment applicable to returning producers on cers. Further, in giving effect to the legitimate the ground that they did not contribute to interests of those groups of producers, it the increase in production that took place must avoid endangering the objectives of the between 1981 and 1983. That argument is milk quota system. supported by the judgment of the Court in Mulder II (see above at paragraph 36). In my view, however, it is not wholly convincing.

50. As the Court has consistently held, when it is necessary to evaluate a complex economic situation, as is the case with the common agricultural policy, the Community legislature enjoys a wide discretion as to the 53. The Court has held that a producer who nature and scope of the measures to be has voluntarily ceased production for a cer- taken: see Erpelding v Secrétaire d'État à tain period cannot legitimately expect to be l'Agriculture et a L· Viticulture. 22 able to resume production under the same conditions as those which previously applied and not to be subject to any rules of market or structural policy adopted in the meantime: see Mulder I, paragraph 23, Von Deetzen, paragraph 12.

57. As we have already seen, according to the judgments of the Court in Mulder I and Spagl, in adopting a method for the calcula- tion of the reference quantity to be allocated to returning producers, the Council must not make such producers subject to restrictions which specifically affect them by reason of their undertaking. It is clear, however, that if a restriction applied equally to returning producers and to continuing producers who 55. Returning producers abstained from are in a comparable situation it would not be production voluntarily and in return for a a restriction which specifically affected the premium. It could be argued that the impo- former category of producers by reason of sition on those producers of the abatement their undertaking. The group of continuing provided for in Article 2(2), which falls far producers who are in a comparable situation short of the flat-rate reduction of 40% pro- with returning producers comprises those vided for by the previous version of Arti- producers who for reasons beyond their cle 3a(2), falls within the normal commercial control did not contribute to the increase in risks which they can reasonably be expected milk production between 1981 and 1983. A to sustain and is not therefore contrary to Member State may however make such pro- the principle of legitimate expectations. It ducers subject to the abatement provided for could also be argued that the imposition of in Article 2(2). that abatement on returning producers is not contrary to the principle of equal treatment because, as the Commission points out, con- tinuing producers and returning producers are not in comparable situations.

59. In Erpelding, the Court held that Regu- affected by an exceptional event during the lation N o 857/84 precludes a continuing reference year adopted by the Member State producer whose milk production has been concerned may obtain, under Article 3(3) of affected by an exceptional event throughout Regulation N o 857/84, reference to his deliv- the 1981 to 1983 period from having refer- eries of milk in another calendar year within ence made either to the quantity of milk o r the 1981 to 1983 period, but the percentage milk equivalent which he delivered in a year generally applicable in that Member State prior to 1981 or to a notional quantity to be must be applied to those deliveries. There- calculated by extrapolating the normal trend fore, the reference quantity to which Mr in his deliveries during a certain period prior Leukhardt was entitled was equal to the to the occurrence of that exceptional event. quantity of milk which he delivered dur- ing 1981, subject however to application of the percentage specified in Article 2(2), adjusted if necessary on the terms laid down in the last sentence of that Article (see para- graph 25).

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did not increase milk production question could arise whether the fact that between 1981 and 1983. At least where both Article 3a(2) does not provide for such an those categories of producers are made sub- increase affects its validity. That question has ject to the reduction provided for by Arti- not been referred by the national court and it cle 2(2), that reduction is not a restriction is not necessary to examine it. It is sufficient which specifically affects a returning pro- to note that, for the reasons which I have ducer by reason of his undertaking. It is given above, the view can be taken that the therefore contrary neither to the principle of validity of Article 3a(2) cannot be called into equality nor to the principle of legitimate question on that ground. It could be argued expectations. that the difference in treatment between con- tinuing producers and returning producers arising as a result of the fact that the 1% increase is not applied to returning produ- cers falls within the normal commercial risks to which those producers can be expected to be subject and that therefore it is not con- trary to the principle of legitimate expecta- 64. I therefore conclude that the validity of tions. It could also be argued that it does not Article 3a(2) is not called into question by breach the principle of equality since return- the fact that, for the purposes of calculating ing producers and continuing producers are the reference quantities allocated to return- in an objectively different situation. ing producers, it provides for the application of a reduction corresponding to the percent- age provided for in Article 2(2).

68. It appears from the order for reference, 70. It will be remembered that Article 2(2) however, that a similar argument was of Regulation N o 857/84 as supplemented advanced by the plaintiffs in the course of by Article 2(1) of Commission Regulation the main proceedings. The referring court (EEC) N o 1546/88 24 provides that Member rejected that argument and did not make a States who choose as a reference year reference on that issue on the ground that the 1982 or the 1983 calendar year may vary the payment of compensation to continuing the reference quantities provided for in Arti- producers could perhaps justify a claim by a cle 2(1) of Regulation N o 857/84 so as not to returning producer for the payment of such exceed the guaranteed total quantity, on the compensation but could not justify the grant following grounds: of higher reference quantities to the plain- tiffs. In my view that argument is correct.

The fourth question (a) the level of deliveries of certain categories of persons liable for the levy;

69. By the fourth question, the referring court asks whether Article 3a(2) of Regula- tion N o 857/84, as amended by Regulation N o 1639/91, is valid although it does not (b)the trend of deliveries in certain regions grant to the Member States the possibility of between 1981 and 1983; making graduated reductions with regard to the allocation of special reference quantities to returning producers corresponding to those provided for in Article 2(2) of 24 — OJ 1988 L 139, p. 12.

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(c) the trend between 1981 and 1983 in deliv- States varying the special reference quantity eries of certain categories of persons lia- to be allocated to returning producers on ble for the levy. grounds similar to those provided for in rela- tion to continuing producers.

72. In my view, that interpretation is correct. It is true that Article 3a(2) refers to a per- centage representative of all the abatements applied to the reference quantities estab- lished in accordance with Article 2. That ref- erence does not mean, however, that the rep- 74. As the United Kingdom Government resentative percentage may never be varied. observes, however, the second and the third If that were the case, it would not be deter- grounds provided for by Article 2(2) on the mined in accordance with objective criteria. In my view, Article 3a(2) should not be taken to exclude the possibility of Member 25 — OJ 1986 L 165, p. 6.

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Conclusion

77. I a m therefore of the o p i n i o n that the questions referred t o the C o u r t should be a n s w e r e d as follows:

1. Article 3a(2) of C o u n c i l Regulation ( E E C ) N o 857/84, as a m e n d e d b y C o u n c i l R e g u l a t i o n ( E E C ) N o 1639/91, m u s t b e interpreted as m e a n i n g that t h e 4 . 5 % basic r e d u c t i o n is n o t p a r t of, a n d s h o u l d b e applied in a d d i t i o n t o , t h e per- centage representative of all the a b a t e m e n t s applied to the reference quantities

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established in accordance with Article 2 of Regulation N o 857/84. Those abatements do not include the basic reduction of 4.5%.