C-426/92

GERMANY v DEUTSCHES MILCH-KONTOR

OPINION OF ADVOCATE GENERAL DARMON delivered on 21 April 1994 *

Mr President, I — The relevant rules of Community law Members of the Court,

1. By order of 27 August 1992, the Bundes­ verwaltungsgericht referred to the Court for a preliminary ruling three questions on the 3. Regulation (EEC) No 804/68 of the interpretation of a number of Community Council of 27 June 1968 on the common regulations governing the conditions for the organization of the market in milk and milk grant of Community aid for skimmed-milk products 1 introduced a system of rules powder produced in one Member State and designed to facilitate the marketing of the intended for processing in another Member products to which it applied. The second State. The questions facing the Court thus subparagraph of Article 7(2) provides that concern, first, the possibility of carrying out systematic inspections at frontiers and, sec­ ond, the question whether such inspections are compatible with Articles 9, 12, 16 and 95 of the EEC Treaty where they are designed to ensure compliance with conditions relat­ ing to the composition of skimmed-milk powder. 'Special measures may be taken for skimmed-milk powder which cannot be mar­ keted on normal terms during a milk year.'

2. Before I specify the content of the ques­ tions in the reference, it is necessary to set out the relevant rules and briefly to summa­ rize the facts of the dispute in the main pro­ ceedings between the company Deutsches Milch-Kontor and the Federal Republic of Germany, represented by the Bundesamt für 4. More specifically, Article 10(1) provides Ernährung und Forstwirtschaft (Federal for the grant of aid for skimmed-milk pow­ Office for Food and Forestry) ('the Bundes­ der for use in feedingstuffs provided that it amt'). satisfies a number of conditions.

...'. 7. That regulation was amended by Regula­ tion (EEC) No 1726/79, 4which makes the payment of aid by the Member State of export subject to a number of conditions.

9. Article 2(4) was also redrafted as follows: 2 — OJ , English Special Edition 1968 (I), p . 260. 3 — Commission Regulation (EEC) No 1624/76 of 2 July 1976 concerning special arrangements for the payment of aid for skimmed-milk powder denatured or processed into com­ pound feedingstuffs in the territory of another Member State (OJ 1976 L 180, p. 9). 4 — Commission Regulation (EEC) No 1726/79 of 26 July 1979 amending Regulations (EEC) No 1624/76, (EEC) No 368/77, (EEC) No 443/77 and (EEC) No 1844/77 on aid measures and special sales operations for skimmed-milk 'The control copy shall be issued only on powder for use in feed (OJ 1979 L 199, p . 10). production of a certificate issued by the

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competent authority stating that it has veri­ 'However, where the skimmed-milk powder fied that the provisions of paragraph 1(a) and used, whether as such or in the form of a (b) have been complied with. mixture, comes directly from the factory premises in which it is produced, the check ... may be made before the skimmed-milk powder leaves the said factory premises.'

...'.

OPINION OF MR DARMON — CASE C-426/92

load of approximately 25 tonnes and is sub­ 17. In the first two questions, which I shall ject, when crossing the frontier, to systematic examine together, the national court is asking inspections by the Bundesamt in which essentially whether the first subparagraph of samples are taken from certain parts of each Article 2(4) of Regulation No 1624/76 lorry-load. The purpose of these inspections of 2 July 1976, as amended by Article 1 of is to ensure that the goods comply with the Regulation No 1726/79 of 26 July 1979, conditions laid down in the relevant Com­ requires that the inspection should relate to munity regulations. The costs of the analyses each lorry-load of skimmed-milk powder carried out pursuant to these inspections intended for processing in Italy and, if not, are passed on to the trader in question how frequently such inspections may be car­ and amount to DM 112 per sample. ried out. Between 29 April 1980 and 8 September 1980 payment notices amounting to DM 17 081.28 were issued, reflecting the costs of the ana­ lyses carried out. Deutsches Milch-Kontor questioned the propriety of this in legal pro­ ceedings on the ground that the imposition III — Discussion of such costs was tantamount to a charge having an effect equivalent to a quantitative restriction on exports.

20. Let me make it clear at the outset: none 23. It would for that reason appear that sys­ of the Community regulations provides for tematic inspections are not required under any frontier inspection whatever of the com­ the Community rules in question. position of skimmed-milk powder, whether carried out on a systematic or random basis; provision exists only for inspections either in the undertaking where the skimmed-milk powder is produced (Article 10(1)) or when it is being denatured or processed into com­ 24. Moreover, in referring to the whole of pound feed (Article 10(2)). Article 10 of Regulation No 1725/79 regard­ ing the inspection to be carried out, Art­ icle 2(1) of Regulation No 1624/76, as amended, is necessarily referring, in respect of frequency, to Article 10(2), even though 21. Likewise, no provision exists for system­ that provision deals with the processing or atic inspections in the undertaking of manu­ denaturing of skimmed-milk powder. facture in so far as, while 'proof of control by the Member State of destination and of provision of the security ... may be provided 9 only by production of the control copy ...', that copy is issued only if the competent authority of the consignor Member State 25. In its judgment in Denkavit Futtermit- guarantees that it has 'verified that the provi­ 1 tel, 1in which it was called on to interpret sions of paragraphs 1(a) and (b) have been 10 Article 10 of Regulation No 1725/79, the complied with', the provisions in question Court stated that that provision being those relating to the quality and com­ position of the skimmed-milk powder and the checks carried out thereon. Verification of compliance, however, is not the same thing as prior inspection, at the place of pro­ duction, of all consignments intended for export. '... describes the inspection measures which are to be taken by the Member States as regards, in particular, the maximum moisture content of skimmed-milk powder and the use of the product, whether as such or in the form of a mixture, in the manufacture of 22. It should be borne in mind that Art­ compound feedingstuffs within the meaning icle 10 of Regulation No 1725/79 requires of the regulation. As to that last point, Art­ Member States to ensure that its require­ icle 10(2) provides that the control measures ments are complied with and that in this to be determined by the Member State con­ connection 'frequent and unannounced' cerned are to fulfil at least the conditions laid inspections are regarded as satisfying that down therein'. 2 1

26. That article provides for 'frequent and Community law is in keeping with, rather unannounced' inspections. However, it 15 than contrary to, those provisions ...'. appears that, since we are dealing with min­ imum guarantees, Member States might well be entitled to introduce, in production undertakings, regular inspections as to the quality and composition of skimmed-milk 29. The questions before the Court in this powder in order to guarantee that the prod­ case concern the compatibility with Com­ uct satisfies the conditions of entitlement to munity law of the substitute inspections car­ Community aid. ried out on a systematic basis when goods cross a frontier, rather than that of the addi­ tional inspections which the Federal Repub­ lic of Germany has imposed within produc­ tion undertakings. 27. Additional inspections of this kind would, in this context, be compatible with Community law since they would have the purpose of preventing the all too frequent instances of fraud involving aid which have in any case been the subject of regular criti­ 30. It would certainly appear that inspec­ cism by the Court of Auditors. 13 tions during production are infrequent, since, although the German Government's expert mentioned such inspections during the oral procedure, neither the national court nor the parties to the main proceedings made 28. As Advocate General Capotorti wrote in any reference to them. If we proceed on the his Opinion in BayWa and Others: 14 assumption that they are carried out, supple­ mentary inspections may be implemented by the Member States, although the question of their compatibility must be determined according to Community law. 'Instead, there are sound reasons for the view that any other check which is, of course, additional and not a substitute is quite com­ patible with Community law. It should not be forgotten that the purpose of supervision 31. In his Opinion in Denkavit Futtermittel, is to prevent abuses by recipients of the pre­ Advocate General Capotorti expressed him­ mium and to ensure that the policy of pro­ self very clearly on this point in the follow­ viding incentives for denaturing is properly ing terms: implemented in all the Member States. The imposition of checks to supplement those actually prescribed by the provisions of

'Frontier controls remain justified only in so far as they are necessary either for the imple­ 32. Thus, in its judgment in Hessische mentation of the exceptions to free move­ 17 Mehlindustrie Karl Schöttler, in which it ment referred to in Article 36 of the Treaty; was faced with the question whether national or for the levying of internal taxation within measures were compatible with Community the meaning of Article 95 of the Treaty when rules, the Court ruled that the crossing of the frontier may legitimately be assimilated to the situation which, in the case of domestic goods, gives rise to the levying of the tax; or for transit controls; or finally when they are essential in order to obtain reasonably complete and accurate information on movement of goods within 'Different methods of supervision such as the Community. These residuary controls sampling, audit, or recognition of denaturing must nevertheless be reduced as far as possi­ plants can, individually or in combination, ble so that trade between Member States can be equally effective even though none of take place in conditions as close as possible 18 20 them constitutes an absolute guarantee'. to those prevalent on a domestic market'.

33. Systematic frontier inspections of all lor­ ries transporting skimmed-milk powder intended for processing in Italy, however, 35. Nor can systematic frontier inspections cannot be regarded as compatible with Com­ be justified by Community rules inasmuch munity law or, more specifically, with the as the Court has ruled, particularly in its principle of proportionality. 21 judgment in Denkavit Nederhnd, that

those products complied with the require­ ments set out in the Community rules in cases where those rules did not make such affiliation compulsory. The Court ruled that

40. So far as the first ground relied on is concerned, it should be borne in mind that only measures of a non-economic nature can '... effective control can be established with­ override the principle of the free movement 27 out an obligation of that kind and the Court of goods, while, with regard to the second, has consistently held that considerations of an administrative nature cannot justify dero­ 24 — Paragraph 12. 25 — Page 3 of the French translation. 26 — Ibid., page 16. 22 — Paragraph 15. 27 — Judgment in Case 238/82 Duphar and Others v Nether- 23 — Case 29/82 Van Luipen [1983] ECR 151. lands [1984] ECR 523, paragraph 23.

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the Court has in its case-law never accepted 44. According to Advocate General Ver- justification of an administrative nature. Loren van Themaat in his Opinion in Joined 30 Cases 2/82 to 4/82 Delhaize Frères,

43. In its judgment in Commission v United 29 Kingdom, concerning UHT milk, the Court considered the question whether 46. In order to reply to the first two ques­ inspections carried out by the Member State tions in the reference, I take the view that of importation on grounds of the protection Regulation No 1726/79 precludes national of public health were compatible with Com­ rules from imposing, in the case of exports of munity law and reached the conclusion that skimmed-milk powder intended for process­ measures existed which were less restrictive ing in another Member State, systematic of trade. frontier inspections of all lorries transporting

28 — Judgment in Case 29/82 Van Luipen, cited above in foot­ note 23. 30 — Joined Cases 2/82 to 4/82 Delhaize Frères 'Le Lion' and Others v Belgium [1983] ECR 2973. 29 — Case 124/81 Commission v United Kingdom [1983] ECR 203. 31 — Pages 2991 and 2992.

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that product which are carried out in order tion to reimburse the expenditure which to ensure compliance with the conditions 34 such inspections entail.' laid down in Regulation No 1725/79.

49. However, taking the view that the free­ 47. I now wish to address the third question dom thus granted could not be used in such in the reference, which asks whether it is a way as to jeopardize the objectives of the compatible with Community law for traders rules, the Court left it to the national court to be required to pay the costs of the ana­ to ensure that lyses carried out in connection with systematic frontier inspections.

32 — Cited above in footnote 11. 34 — Paragraph 8. 33 — Paragraph 7. 35 — Paragraph 10.

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IV — Conclusion

52. I therefore propose that the Court rule as follows:

Commission Regulation (EEC) No 1624/76 of 2 July 1976 concerning special arrangements for the payment of aid for skimmed-milk powder denatured or pro­ cessed into compound feedingstuffs in the territory of another Member State, as amended by Commission Regulation (EEC) No 1726/79 of 26 July 1979, precludes national rules from imposing, in the case of exports of skimmed-milk powder intended for processing in another Member State, and with a view to ensuring com­ pliance with the rules governing the composition of that product, systematic fron­ tier inspections of the loads of all lorries transporting it and consequently from charging to the traders concerned the costs relating to such inspections.