C-21/92

JUDGMENT OF 5. 5. 1994 — CASE C-21/92

J U D G M E N T O F T H E C O U R T (Fifth Chamber) 5 May 1994 *

In Case C-21/92,

R E F E R E N C E to the Court under Article 177 of the EEC Treaty by the Finanz- gericht Düsseldorf (Federal Republic of Germany) for a preliminary ruling in the proceedings pending before that court between

Marlies and Heinz-Bernd Kamp

and

KAMP

Advocate General: F. G. Jacobs, Registrar: L. Hewlett, Administrator,

after considering the written observations submitted on behalf of:

— Mr and Mrs Kamp, by Mechtild Düsing, Rechtsanwalt, Münster,

— the German Government, by Claus-Dieter Quassowski, Regierungsdirektor, and Ernst Röder, Ministerialrat at the Federal Ministry of Economic Affairs, acting as Agents,

— the United Kingdom, by Susan Cochrane of the Treasury Solicitor's Depart- ment, acting as Agent, and David Anderson, Barrister,

JUDGMENT OF 5. 5. 1994 — CASE C-21/92

gives the following

Judgment

1 By order of 8 January 1992, received at the Court on 28 January 1992, the Finan- zgericht (Finance Court) Düsseldorf referred to the Court for a preliminary ruling under Article 177 of the E E C Treaty four questions on the interpretation and validity of Article 3a(2) of Council Regulation (EEC) N o 857/84 of 31 March 1984 adopting general rules for the application of the levy referred to in Article 5c of Regulation (EEC) N o 804/68 in the milk and milk products sector (Official Jour- nal 1984 L 90, p. 13), as amended by Council Regulation (EEC) N o 1639/91 of 13 June 1991 (Official Journal 1991 L 150, p. 35).

2 Those questions were raised in the course of proceedings between Mr and Mrs Kamp, milk producers, and Hauptzollamt (Principal Customs Office) Wuppertal concerning their special reference quantity, set at 85% of the quantity of milk on the basis of which a non-marketing premium had been granted to them.

3 In 1981, Mr and Mrs Kamp gave, for the period running from 1981 to the end of 1985, a non-marketing undertaking under Council Regulation (EEC) N o 1078/77 of 17 May 1977 introducing a system of premiums for the non- marketing of milk and milk products and for the conversion of dairy herds (Offi- cial Journal 1977 L 131, p. 1). In return for their undertaking they received a non- marketing premium corresponding to 118 201 kg of milk.

' 1. Must Article 3a(2) of Regulation (EEC) N o 857/84, as amended by Regula- tion (EEC) N o 1639/91, concerning the abatement to be applied to the special reference quantities be interpreted as meaning that the abatement is deter- mined only by the percentage which is representative of all the abatements but contains at least the basic reduction or does the abatement result from the percentage which is representative of all the abatements, plus the basic reduc- tion?

2. Is Article 3a(2) of Regulation (EEC) N o 857/84, as amended by Regulation (EEC) N o 1639/91, valid, although the calculation of the basic reduction can- not be reconstructed?

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3. Is Article 3a(2) of Regulation (EEC) N o 857/84, as amended by Regulation (EEC) N o 1639/91, valid in so far as the quantity for which entitlement to premium under Regulation (EEC) N o 1078/77 was obtained is based on pro- duction but the representative abatements were calculated on the basis of the production for 1983 and, because of the increase in production from 1981 to 1983, were correspondingly higher?

4. Is Article 3a(2) of Regulation (EEC) N o 857/84, as amended by Regulation (EEC) N o 1639/91, valid in so far as, as regards the calculation of the special reference quantities in respect of producers who entered into a non-marketing undertaking pursuant to Regulation (EEC) N o 1078/77, the Member States were not granted a possibility of making graduated reductions corresponding to that provided in Article 2(2) of Regulation (EEC) N o 857/84?'

9 In consequence of those judgments, the Council adopted Regulation (EEC) N o 764/89 of 20 March 1989 amending Regulation (EEC) N o 857/84 adopting general rules for the application of the levy referred to in Article 5c of Regulation (EEC) N o 804/68 in the milk and milk products sector (Official Journal 1989 L 84, p. 2). That regulation added a new Article 3a to Regulation N o 857/84, providing essentially that producers who, pursuant to an undertaking given under Regulation N o 1078/77, had not delivered milk during the reference year were to receive, in certain circumstances, a special reference quantity. Article 3a(2) provided that that quantity was to be equal to 60% of the quantity of milk delivered or the quantity of milk equivalent sold by the producer during the 12 months preceding the month in which the application for the non-marketing or conversion premium was made.

io That 60% rule was also held to be invalid by the Court on the ground of breach of the principle of the protection of legitimate expectations, since the application to producers covered by Article 3a of Regulation N o 857/84 as amended of a reduc- tion of 40% which, far from being representative of the rates applicable to the pro- ducers covered by Article 2, was more than double the highest total of such rates was to be regarded as a restriction which specifically affected the first-mentioned category of producers by very reason of their undertaking as to non-marketing or conversion (Case C-189/89 Spagl v Hauptzollamt Rosenheim [1990] ECR 1-4539, paragraphs 24 and 29, and Case C-217/89 Pastätter v Hauptzollamt Bad Reichen- hall [1990] ECR 1-4585, paragraphs 15 and 20).

i4 According to the explanation of how the 15% is calculated given to the referring court by the Federal Minister for Food, Agriculture and Forestry, the percentage representative of all the abatements, which he referred to as the 'abatement rate', represents the difference between deliveries in Germany in 1983 and Germany's guaranteed total quantity for the 12-month period 1990/1991.

is The 'basic reduction' mentioned in Article 3a(2) of Regulation N o 857/84 derives from Council Regulation (EEC) No 775/87 of 16 March 1987 temporarily with-

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KAMP

drawing a proportion of the reference quantities mentioned in Anicie 5c(l) of Regulation (EEC) N o 804/68 on the common organization of the market in milk and milk products (Official Journal 1987 L 78, p. 5). It represents the proportion of the reference quantities allocated to each Member State which is temporarily withdrawn at a uniform rate. Amended several times, the relevant rate for the period in question was set at 4.5% by Council Regulation (EEC) N o 3882/89 of 11 December 1989 (Official Journal 1989 L 378, p. 6).

The first question

The fact that the 'basic reduction' of 4.5% is mentioned explicitly and separately would not be justified if that reduction were already an integral part of the repre- sentative percentage.

i9 The objectives pursued by the two methods of reducing the reference quantities are different. The reduction by application of a representative percentage was sim- ply a first attempt to reduce milk deliveries. The basic reduction of 4.5%, laid down by Regulation N o 775/87 as amended, is the result of a temporary with- drawal of a uniform proportion of each reference quantity. According to the first recital in the preamble to Regulation N o 775/87, that measure is intended to rein- force the measures already taken under Article 5c of Regulation N o 804/68, namely the measures which have already resulted in the reduction expressed by the percentage representative of all the abatements. By the temporary suspension, the Community made a further attempt t o curb persistent excess production of milk.

20 Aggregating the representative percentage and the basic reduction does not conflict with the principle of the protection of legitimate expectations.

2i In Spagl and Pastätter, cited above, the Court set out two principles according to which producers resuming production on the one hand must not be subject to restrictions which specifically affect them by reason of their non-marketing under- takings and on the other hand must not be accorded an undue advantage by com- parison with other producers. Accordingly, the Court accepted that the Council was entitled to apply a rate of reduction corresponding to a figure representative of

25 The basic reduction of 4.5% simply reflects a temporary withdrawal of a propor- tion of the guaranteed total quantity of each Member State for the relevant period. Since the rate of that basic reduction was the same in all the Member States, the reduction was in the nature of a uniform abatement. Moreover, the rate of 4.5% applicable to all milk producers for the period in question has the same economic purpose, namely to reduce production.

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26 Accordingly, Article 3a(2) of Regulation N o 857/84, as amended by Regulation N o 1639/91, must be interpreted as meaning that the basic reduction is to be added to the percentage representative of all the abatements applied to the reference quantities established in accordance with Article 2.

The second question

27 In this question, read in the light of the grounds of the order for reference, the national court raises the issue of the validity of Article 3a(2) of Regulation N o 857/84 in so far as it refers to a basic reduction of 4.5%. It notes that according to the seventh recital in the preamble t o Regulation N o 1639/91 that rate is based on Regulation N o 775/87, although the latter did not provide for such a rate.

31 Admittedly, the higher production in 1983, which is taken into account in deter- mining the representative percentage, may place the producers concerned in the main proceedings at a disadvantage.

32 However, because of the hypothetical nature of the likely trend in milk production of producers who participated in the non-marketing scheme during the relevant period, the Council had to resort to a global comparison by categories of produ- cers in order to adopt legislation on the allocation of a special reference quantity for producers resuming production.

33 The Council was entitled to assume that the category of producers who have given a non-marketing undertaking cannot be compared with the limited group of pro- ducers who continued production and managed to increase it during the period from 1981 to 1983. The comparison had to be with all producers who continued

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production. Since the increase in production could be due to various factors, the Community legislature was not required to proceed on the assumption that pro- ducers resuming production would have participated in that increase had they not interrupted their activity. In those circumstances, the Council was entitled to assimilate the situation of the category of producers in question and that of pro- ducers who had continued to produce, irrespective of whether the latter had con- tributed to any increase.

37 In this question, read in the light of the grounds of the order for reference, the national court raises the issue of the validity of Article 3a(2) of Regulation N o 857/84 in so far as it may be considered to infringe the principle of non- discrimination set out in the second subparagraph of Article 40(3) of the Treaty for a reason other than that given in the previous question. It emphasizes that Arti- cle 2(2) of Regulation N o 857/84 enables the rate of abatement to be varied, for certain categories of producers who have continued production, by reference to particular features specific to them. According to the interpretation put forward by the national court, but disputed by the United Kingdom, the Council, and, at the hearing, also by the Commission, Article 3a(2) precludes such variation for all pro- ducers who resumed production after a non-marketing period. Thus small produ- cers, such as those concerned in the main proceedings, are at least in part placed at a disadvantage. They must bear an additional burden since they do not benefit from the abatement rates provided for in the German legislation implementing Article 2(2) in relation to small producers who have not interrupted their produc- tion pursuant to a non-marketing undertaking.

38 As the Advocate General pointed out in his Opinion, Article 3a(2) of Regulation N o 857/84 does permit the representative percentage to be varied in the circum- stances set out in Article 2(2) because it is to be determined in accordance with objective criteria. It is however difficult to apply the variation because the trend in production of the category of producers who at any time gave non-marketing undertakings is hypothetical. The representative percentage can in practice be var- ied only on the basis of the level of deliveries of certain categories of persons liable for the levy, that is to say on the basis of the size of the holding.

T H E C O U R T (Fifth Chamber),

in answer to the questions referred to it by the Finanzgericht Düsseldorf by order of 8 January 1992, hereby rules:

1. Article 3a(2) of Council Regulation (EEC) N o 857/84 of 31 March 1984 adopting general rules for the application of the levy referred to in Article 5c of Regulation (EEC) N o 804/68 in the milk and milk products sector, as amended by Council Regulation (EEC) N o 1639/91 of 13 June 1991, must be interpreted as meaning that the basic reduction is to be added to the per- centage representative of all the abatements applied to the reference quanti- ties established in accordance with Article 2;

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2. Consideration of the other questions raised has disclosed no factor of such a kind as to affect the validity of Article 3a(2) of Regulation N o 857/84, as amended by Regulation N o 1639/91.