C-353/92

* Original language: English. 1 — O J 1992 L 181, p. 12. 3 — See Annex I t o Regulation N o 1765/92. 2 — O J 1992 L 221, p. 22. 4 — O J 1991 L 356, p . 17, see below, paragraphs 26 et seq.

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4. The underlying objective of the Council Member State or a region within the Mem- Regulation is laid down in the second recital ber State, at the option of the Member State of its preamble which states: concerned. 6 Instead of a system of regional base areas, a Member State may apply a sys- tem of individual base areas for all of its ter- ritory. Under that system, a base area for each holding is established as the average number of hectares which were down to ara- ble crops, or which were fallowed in confor- '... in order to ensure better market balances, mity with a publicly funded scheme, dur- a new support system has to be established; ing 1989, 1990 and 1991. 7 ... the best way to achieve this objective is to approximate the Community prices of cer- tain arable crops to the prices of the world market and to compensate the loss of income caused by the reduction of the institutional prices by a compensatory payment for pro- ducers who sow such products ... .' 7. The compensatory payment is granted under a 'general scheme' open to all produc- ers or under a 'simplified scheme' open to small producers. 8 Small producers may opt either for the general or for the simplified scheme. Small producers are defined as 5. In accordance with that objective, the those who make a claim for compensatory Council Regulation establishes a system of payments for an area no bigger than the compensatory payments for Community area which would be needed to produce producers. Those producers may apply for a 92 tonnes of cereals, if they achieve the aver- compensatory payment under the conditions age cereals yield which has been determined set out in Title I. The compensatory payment for their region or, in the case of the Member is fixed on a per hectare basis and it is States who operate the system of individual regionally differentiated. 5 base areas, whose individual base area is no bigger than that area. 9

receive compensation for that obligation. 10 10. The Commission Regulation contains Under the simplified scheme, no set-aside detailed rules for the application of the sup- requirement is imposed but the compensa- port system established by the Council Reg- tory payment is paid at the rate applicable to ulation to producers of oil seeds. Article 2 of cereals irrespective of the crops actually the Commission Regulation states that the sown. n The rate applicable to cereals is sub- compensatory payment provided for by the stantially lower than the rate applicable to oil Council Regulation shall be allocated solely seeds. 12 to areas under oil seed crops which are cov- ered by an application lodged with the com- petent authority by the date set by the Mem- ber State and which are entirely sown by 9. Article 10, which is of primary impor- that date. Article 2 also states that the date in tance in these proceedings, provides as fol- question may not be later than the date men- lows: tioned in Annex I. Annex I specifies as the final date for sowing the crop and for sub- mitting applications with regard to all oil seeds, including soya beans, the date of 15 May prior to the marketing year. ' 1 . The compensatory payments for cereals, and protein crops, as well as the compensa- tion for the set-aside obligation, shall be paid between 16 October and 31 December next following the harvest.

11. There are two types of cultivation of soya beans: principal cultivation and second- 2. In order to qualify for the compensatory ary cultivation. Secondary cultivation pre- payment, a producer must, at the latest by cedes or follows the principal cultivation of 15 May preceding the relevant harvest: another crop and lasts between two and five months. Where it precedes a principal culti- vation, its main objective is to prepare the soil for that cultivation. Where it follows a principal cultivation, it takes advantage of — have sown the seed, fertilizers already existing in the soil.

13. In its action against the Council, the 15. The Commission, which has intervened Greek Government states that since, under in support of the Council, also claims that Article 10(2) of the Council Regulation, a the application of the Greek Government producer does not qualify for a compensa- should be rejected as inadmissible or, in any tory payment unless he has sown the crop event, as unfounded on the basis of argu- by 15 May, secondary cultivation of soya ments similar to those submitted by the beans in Greece is excluded from the com- Council. pensatory payment. The Greek Government claims that, in requiring a producer of soya beans to have sown the crop and to have lodged the application by 15 May in order to be entitled to a compensatory payment, the Council Regulation is void on the following grounds: lack of reasoning, breach of the principle of non-discrimination, breach of 16. In its action against the Commission, the Article 39 of the Treaty, breach of the prin- Greek Government seeks the annulment of ciple of protection of legitimate expectations, the Commission Regulation in the event that and breach of a principle of Community the date of 15 May is fixed with regard to oil preference. seeds by that regulation and not by the Council Regulation.

The date of 15 May

21. The explanation of the conundrum is, in my view, as follows. Producers of oil seeds who take part in the simplified scheme are entitled to the compensatory payment for 19. The date of 15 May is set, as we have cereals. Therefore they come within the seen, 1 3 by Article 10(2) of the Council Reg- scope of application of Article 10 of the ulation. However, Article 10 must be read as Council Regulation, which must be read as a whole. Article 10(1) refers to the compen- applying not only to cereal producers but satory payments for cereals and for protein also to those oil seed producers who qualify crops but it does not refer to the compensa- for the compensatory payment for cereals. tory payments for oil seeds. Although Arti- (It will be noted that Article 10 refers to the cle 10(2) refers in general to 'the compensa- 'compensatory payment for cereals' 15 and tory payment', it is clear that it refers to the not to the compensatory payment payable to compensatory payment for cereals and for cereal producers.) Article 10(2) of the Coun- protein crops only. The compensatory pay- cil Regulation therefore sets the date of ment for oil seeds is dealt with in Article 11. 15 May for oil seed producers who take part That article, however, does not set a date, but in the simplified scheme. The Commission leaves the date to be specified by a subse- Regulation fixes the same date for producers quent implementing measure of the Com- who come within the general scheme. mission. 14 That measure is the Commission Regulation.

20. The Commission Regulation, for its part, 22. It follows that the argument of the sets the date only for producers who come Council and of the Commission that the within a general scheme: Article 2(l)(b), application of the Greek Government against the Council should be rejected on the

24. In 1962, within the framework of the General Agreement on Tariffs and Trade 26. Regulation N o 3766/91 19 established a (Dillon Round), the Community agreed to new support system for producers of soya the importation into the Community of soya beans, rape seed and colza seed and sun- beans from third countries without duties. flower seed. The adoption of that regulation At that time, the Community production of is closely connected with the general reform soya beans was very small, but Community of the common agricultural policy decided producers were thereafter in direct competi- on 21 May 1992. It is necessary to look tion with producers from third countries. briefly at the reasons which led to that reform.

16 — OJ 1974 L 201, p. 5. 17 — OJ 1979 L 190, p. 8. 18 — OJ 1985 L 151, p. 15. See also Council Regulation (EEC) 25. In view of that competition, and in order N o 2194/85 adopting general rules concerning special mea- sures for soya beans, OJ 1985 L 204, p. 1. to promote the production of soya beans in 19 — See above, paragraph 3.

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28. The Commission identified cereals, pro- tein crops and oil seeds as a sector of arable crops which should be made subject to a common support system. However, the existing support system of soya beans had been found to be in breach of the Commu- 30. Regulation N o 3766/91 only applied for nity's obligations under the General Agree- the marketing year 1992 to 1993. An inte- ment on Tariffs and Trade. With a view to grated support system for cereals, protein crops and oil seeds was introduced by the

20 — See Commission, 'The development and future of the com- mon agricultural policy', EC Bulletin, Supplement N o 5 of 1991, p. 9. 23 — See the fifth recital of the preamble to Regulation N o 3766/91, below paragraph 74 and see also "The develop- 21 — Ibid. ment and future of the common agricultural policy', cited 22 — Op. cit., p. 12. in note 20, p. 26.

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contested Council Regulation, which 32. The support system established by the replaced Regulation N o 3766/91 and abol- Council Regulation is based on the principle ished the system of maximum guaranteed that the compensatory payment may only be areas. paid once a year for a given area. That is made clear in the seventeenth recital of the preamble to that regulation. It is also con- firmed by Article 4 of the Commission Reg- ulation which states that one plot of land may not be the subject of more than one application for a compensatory payment in the same marketing year.

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34. I turn now to examine the issues approach in challenging both regulations has between the parties. been shown to be justified.

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sion of those producers runs counter to the vided that such details fall within the general basic objective of the Council Regulation, scheme of the measure as a whole. 28 which is to protect the income of all produc- ers who are adversely affected by the reduc- tion of institutional prices, and makes it nec- essary to include in that regulation specific reasons which explain why producers who sow the crop after 15 May need to be excluded. 42. In the present case, the Council and the Commission suggest, the requirement that the crop must have been sown and that the application for the compensatory payment must have been submitted by 15 May serves practical needs. In particular, it facilitates the administration and the supervision of the support system. Contrary to what the Greek 40. The Greek Government also claims that, Government claims, it does not run counter on the basis of the arguments stated above, to the objectives of the Council Regulation the Commission Regulation is void for lack but is an integral part of the support system of reasoning. established by that regulation.

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quantity produced. Although Regulation cereals or for protein crops, a producer must N o 3766/91 introduced a system of direct have sown the crop and must have lodged an payments similar to that subsequently pro- application by 15 May. In the light of the vided for by the contested Council Regula- case-law of the Court set out above, how- tion, it did not incorporate all the elements ever, it is clear that it was not necessary for of the support system established by that the Council to include in the preamble spe- regulation. In line with the support system cific reasons in order to justify the choice of applicable to cereals and protein crops, it a certain date since the setting of that date allowed aid for the principal as well as for was a detail which fell within the general the secondary cultivation. In order to facili- scheme of the Council Regulation as a tate the granting of direct payments for sec- whole. Moreover the choice of the date of 15 ondary cultivations it provided for the dead- May could readily be understood given that line of 30 May. Since, however, under the the basis of the support system established contested Council Regulation, a producer by the Council Regulation was the principle may only claim support for one cultivation, that the compensatory payment may only be the earlier date of 15 May could reasonably paid once a year for a given area; and the rea- be chosen. sons for the adoption of that system are made clear in the preamble. Consequently the suggestion that the Council Regulation was not sufficiently reasoned cannot be sus- tained. Moreover, the date of 15 May applies only as a general rule. In order to prevent that date from giving rise to unfair conse- quences, Article 12, seventh indent, of the 44. N o explanation of the choice of date is Council Regulation empowers the Commis- offered in the contested regulations them- sion to change it with regard to areas where selves. The eighteenth recital of the preamble exceptional climatic conditions render it to the Council Regulation states as follows: inapplicable.

parties the concern which prompted the The principle of equality enactment of the implementing rules con- tained in it. 29 It follows that the statement of reasons of the Commission Regulation is supplemented by, and must be read in com- bination with, the statement of reasons of the Council Regulation. 48. According to the Greek Government, the requirement that, in order to qualify for the compensatory payment, a producer of soya beans must have sown the crop by 15 May runs counter to the principle of equality, as laid down in particular by Arti- cle 40(3) of the Treaty, which states that the common organization of agricultural mar- kets must exclude any discrimination 46. Further, the fifth recital of the preamble between producers and consumers within to the Commission Regulation states that the Community. certain criteria should be common to both the general scheme and to the simplified scheme. That explains why the Commission Regulation fixes the same date as that fixed by the Council Regulation. Moreover, as is the case with the Council Regulation, the date of 15 May fixed by the Commission Regulation applies only as a general rule. 49. The Greek Government argues that, Article 2(2) of that regulation allows deroga- owing to climatic conditions and conditions tions in the event that climatic conditions pertaining to the soil, the best period for the prevent the oil seeds from being sown prior cultivation of soya beans in Greece is to 15 May. Contrary to the contentions of between 20 April and 15 July. The require- the Greek Government, therefore, the Com- ment that a producer must have sown the mission Regulation is sufficiently reasoned. crop by 15 May excludes from the compen- satory payment, on the basis of an arbitrary criterion, soya bean producers in Greece and in other areas where the climate and the soil are similar to those of Greece and where as a result the crop is sown after that date.

which takes place within the same marketing That does not mean, however, that it is con- year that would lead to inequality. In regions trary to the principle of equality. The general where the climate and the soil are favourable, principle of equality, of which Article 40(3) a producer could sow crops twice or even is a specific expression, precludes comparable three times a year and receive a compensa- situations from being treated differently tory payment for each sowing. By contrast, unless the difference in treatment is objec- in regions where the climate and the soil are tively justified. It does not preclude the not favourable, a producer could only sow Community legislature from adopting a cri- crops once and therefore he could receive terion of general application. The establish- only one compensatory payment. ment of a common agricultural policy neces- sitates the adoption of common rules. The fact that the introduction of a measure under the common organization of the market may affect producers in different ways, depending upon the particular nature of their produc- tion or on local conditions, cannot be regarded as discrimination prohibited by Article 40(3) of the Treaty if the measure is 51. In reply, the Greek Government makes determined on the basis of objective rules, it clear that it does not argue that the rule formulated to meet the needs of the general according to which a producer is entitled common organization of the market. 30 only to one compensatory payment for a given area in a marketing year is contrary to the principle of equality. Its argument is that those producers who sow the crop after 15 May are excluded from the compensatory payment and therefore are discriminated against vis-à-vis producers who sow the crop before that date.

56. Greek producers are clearly not totally excluded from claiming the compensatory payment. Since the best period for the culti- 59. The Greek Government argues that, vation of soya beans in Greece is between since secondary cultivation of soya beans in 20 April and 15 July, Greek producers may Greece starts after 15 May, that cultivation is claim the compensatory payment, provided excluded from the compensatory payment. It that they sow the crop and lodge the appli- has not however provided any evidence to cation between 20 April and 15 May. The show that there is discrimination against Greek Government has not explained why it Greek producers in that respect vis-à-vis is particularly difficult for Greek producers producers from other Member States. The to sow the crop within that period. secondary cultivation of crops is not a prac- tice known only in Greece but one which is widespread in the Community. Whereas in Greece secondary cultivation of soya beans covers not more than 2 800 hectares, the Commission points out, without being con- tradicted by the Greek Government, that in 57. As we have already seen, the deadline Italy it covers 180 000 hectares. of 15 May is not absolute. Article 12, seventh indent, of the Council Regulation and Arti- cle 2(2) of the Commission Regulation pro- vide for derogations in the event that excep- tional climatic conditions render the normal dates inapplicable. If a Greek producer of soya beans is unable to sow the crop by 15 May because of exceptional climatic con- ditions, he may take advantage of those pro- 60. In any event, the exclusion of secondary visions. cultivation from the compensatory payment cannot in itself be considered as an infringe- ment of the principle of equality. Since a producer is entitled to a compensatory pay- ment only once a year for a given area, he cannot receive a compensatory payment both for the principal and for the secondary 58. By a letter of 9 March 1993, annexed to cultivation. The Greek Government has not the Commission's submissions, the Greek established that a Greek producer is unable

to complete the sowing for the principal cul- Infringement of Article 39 of the Treaty tivation before 15 May and receive compen- satory payment for that cultivation. N o r has it provided any evidence to show that a Greek producer would benefit more if he received a compensatory payment in relation to his secondary cultivation of soya beans than in relation to his principal cultivation. 63. The Greek Government claims that the Council Regulation and the Commission Regulation infringe Article 39 of the Treaty, which lays down the objectives of the com- mon agricultural policy. It points out that under Article 39(l)(b) one of those objec- tives is to ensure a fair standard of living for the agricultural community, in particular by increasing the individual earnings of persons 61. It might be suggested that a Greek pro- engaged in agriculture. The Government ducer who sows crops which fall outside the argues that the deadline of 15 May runs scope of the Council Regulation as his pri- counter to that objective on the ground that mary cultivation may wish to sow soya producers who sow the crop after 15 May beans as a secondary cultivation and that he are not entitled to a compensatory payment is not able to do so before 15 May. However, and as a result suffer a reduction of their that producer may be able to avail himself of income by almost 50 per cent. According to the exceptions provided for in Article 12, the Government, such a substantial reduc- seventh indent, of the Council Regulation tion of the income of producers is not justi- and in Article 2(2) of the Commission Reg- fied by the need to pursue the other objec- ulation. In any event, it could well be argued tives of the common agricultural policy that a producer who sows crops which fall provided for by Article 39. outside the scope of the Council Regulation as a principal cultivation does so at his own risk. He cannot expect to be treated on the same footing with regard to the compensa- tory payment as a producer who sows crops which fall within the scope of that regulation as a primary cultivation. 64. The Government also refers to Arti- cle 39(l)(d), according to which one of the objectives of the common agricultural policy is to assure the availability of supplies. It interprets that provision to mean that, in adopting measures in the field of agriculture, the Community institutions should ensure that Community production in agricultural products is, at least to a certain extent, self- 62. I conclude that the claim of the Greek sufficient. It argues that the exclusion of pro- Government in so far as it is based on an ducers who sow the crop after 15 May from infringement of the principle of equality the compensatory payment discourages must be rejected. those producers from continuing production

67. The Court has also held that agricultural 65. Furthermore, the Greek Government policy objectives must be conceived in such a refers to Article 39(2) which states that, in manner as to enable the institutions to carry working out the common agricultural policy, out their duties in the light of developments account must be taken of the particular in agriculture and in the economy as a nature of agricultural activity which results whole. 35 In adopting measures in the field of from the social structure of agriculture. It agriculture, therefore, the institutions must argues that, in accordance with that provi- take into account the prevailing market con- sion, the common agricultural policy should ditions. They must also take into account the include measures which aim at reducing ine- internationalization of the markets and the qualities between large and small producers. liberalization of world trade. The ultimate The Greek producers who sow soya seed aim of the support system established by the after 15 May are small producers and their Council Regulation is to ensure better mar- exclusion from the compensatory payment ket balances and to approximate Community results in the reduction of their income. By prices to the prices on the world market. 36 contrast, large producers do not suffer such a In view of the obligations undertaken by the reduction. It follows, according to the Greek Community in the framework of the Gen- Government, that the support system estab- eral Agreement on Tariffs and Trade and in lished by the Council Regulation not only fails to reduce inequalities between small and large producers but leads to their increase. 32 — Joined Cases 279/84, 280/84, 285/84 and 286/84 Rau v Commission [1987] ECR 1069, paragraph 34 of the judgment; Case C-350/88 Delacre and Others v Commission, cited in note 27, paragraph 32. 33 — Case 5/73 Balkan-Import-Export v Hauptzollamt Berlin- Packhof [1973] ECR 1091, paragraph 24 of the judgment; Case 203/86 Spain v Council [1988] ECR 4563, para- graph 1 0. 34 — Joined Cases 197/80 to 200/80, 243/80, 245/80 and 247/80 Ludwigskafener Walzmühle v Council and Commission [1981] ECR 3211, paragraph 41 of the judgment. 35 — Case 68/86 United Kingdom v Council [1988] ECR 855, 66. In my view, those arguments cannot be paragraph 10 of the judgment; Case C-331/88 Fedesa and Others [1990] ECR 1-4023, paragraph 26. accepted. The Court has consistently held 36 — See Regulation N o 1765/92, preamble, second recital, above that the Community institutions have a wide paragraph 4.

68. I do not accept the Greek Government's interpretation of Article 39(l)(d). It is true that one of the objectives of the common agricultural policy is to assure the availability of supplies. However, contrary to what the The principle of protection of legitimate Government argues, Article 39 does not expectations require that the Community must be self- sufficient.

71. The Greek Government argues that the requirement that the producer must have 69. The Government has not established that sown the crop by 15 May infringes the prin- the deadline of 15 May increases the inequal- ciple of protection of legitimate expectations. ities between small and large producers con- It points out that from 1974 until the adop- trary to Article 39(2). As already stated, it tion of the Council Regulation a number of has not established that Greek producers, Community measures provided financial who are all small producers, cannot sow the support for the production of soya beans in crop before the date of 15 May. Moreover, the Community irrespective of the time of

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sowing. It argues that the requirement that duction irrespective of the time of sowing of the crop must have been sown by 15 May the crop. runs counter to the consistent policy which the Community institutions followed for a period of 17 years and that, consequently, it infringes the principle of protection of legit- imate expectations.

73. As we have seen, Regulation N o 3766/91 included a specific provision with regard to the secondary cultivation of soya beans. Article 4(7) stated that producers who intended to plant soya beans as a catch-crop could apply for a direct payment by 30 May.

37 — Case C-350/88 Delacre and Others v Commission, cited in note 27, paragraph 33 of the judgment; Case 245/81 Edeka v Germany [1982] ECR 2745, paragraph 27. 38 — Delacre, cited in note 27; Case 84/78 Tomadini v Amminis- trazione delle Finanze dello Stato [1979] ECR 1801, para- graph 22 of the judgment. 39 — Delacre, cited in note 27, paragraph 34 of the judgment; 75. Furthermore, as the Commission points Case 230/78 Eridania v Minister for Agriculture and For- estry, cited in note 29, paragraph 22. out, the Council Regulation has neither ret-

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79. In any event, if the Greek Government's argument were to be understood as a sub- mission that Community law requires pref- 77. The Greek Government claims that the erence to be given to Community products, Council Regulation and the Commission that submission seems to me to be question- Regulation should be annulled on the able. It seems to me that Community prefer- ground that they are contrary to the princi- ence, although sometimes regarded as a legal ple of Community preference. It states that principle, is rather a matter of policy. It is Community producers of soya beans are at a true that in an early case, Bens v Hauptzoll- competitive disadvantage vis-à-vis producers amt München,40 the Court appeared to of soya beans from third countries who can regard Community preference as 'one of the place their products on the Community mar- principles of the Treaty'. However the Court ket at lower prices. According to the Greek appears to have extrapolated that principle Government, the Council must provide from the very specific provision of Arti- Community producers with the necessary cle 44(2) of the Treaty, which provided that economic support in order to prevent their income from being reduced, taking into account their competitive position on the market. 40 — Case 5/67 [1968] ECR 83 at 98.

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80. In subsequent cases, the principle of 41 — Case 106/81 Kind v EEC [1982] ECR 2885. Community preference seems generally to 42 — See e. g. Case 6/78 Union Française de Céréales v Haupt- have been invoked in the particular context zollamt Hamburg-Jonas [1978] E C R 1675; Case 119/86 Spain v Council and Commission [1987] E C R 4121. of transitional arrangements of various kinds. 43 — See Article 55(6) of the Act concerning the conditions of Thus the principle has been invoked in the accession of the Kingdom of Denmark, Ireland, the King­ dom of Norway and the United Kingdom to the E E C and context of the introduction of a common to the Euratom (OJ, English Sp. Ed., 27 March 1972) and Article 85(4) of the Act concerning the conditions of acces­ organization of the market where, in the sion of the Kingdom of Spain and the Portuguese Republic process of transition from the system of to the European Communities (OJ 1985 L 302, p. 23). 44 — See e. g. Case 55/75 Balkan-Import Export v Hauptzollamt national markets to a common organization, Berlin-Packhof [1976] ECR 19, paragraph 15 of the trade with other Member States might be judgment; and Case 58/86 Coopérative Agńcole d'Approvisionnement des Avirons v Receveur des Douanes temporarily disadvantaged compared with [1987] ECR 1525, paragraph 9.

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85. I conclude therefore that the argument which Article 4 of the Commission Regula- of the Greek Government according to tion is invalid must be rejected.

Conclusion

86. I am therefore of the opinion that:

In Case C-353/92