T-466/93

Council of the European Union, represented by Arthur Bräutigam, Legal Adviser, and Michael Bishop, of the Legal Service, acting as Agents, with an address for ser- vice in Luxembourg at the office of Bruno Eynard, Manager of the Legal Direc- torate, European Investment Bank, 100 Boulevard Konrad Adenauer,

defendant,

a Language of the case: English.

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supported by

having regard to the written procedure and further to the hearing on 14 February 1995,

gives the following

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Judgment

Facts and legislative background

3 In 1986, in view of the continuing surplus in the milk sector, the guaranteed total quantities were reduced without compensation by 2% for the 1987-1988 milk year

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and by 1% for the 1988-1989 milk year, by Council Regulation (EEC) N o 1335/86 of 6 May 1986 amending Regulation N o 804/68 (OJ 1986 L 119, p. 19) and by Council Regulation (EEC) N o 1343/86 of 6 May 1986 amending Regulation (EEC) N o 857/84 adopting general rules for the application of the levy referred to in Arti- cle 5c of Regulation (EEC) N o 804/68 in the milk and milk products sector (OJ 1986 L 119, p. 34). That reduction was accompanied by a system of compensation for producers undertaking to discontinue production, under Council Regulation (EEC) N o 1336/86 of 6 May 1986 fixing compensation for the definitive discon- tinuation of milk production (OJ 1986 L 119, p. 21).

4 In 1987, because a balance between supply and demand had still not been attained, 4% of each reference quantity for the 1987-1988 milk year, and 5.5% for 1988- 1989, were temporarily withdrawn under Article 1(1) of Council Regulation (EEC) N o 775/87 of 16 March 1987 temporarily withdrawing a proportion of the refer- ence quantities mentioned in Article 5c(l) of Regulation N o 804/68 (OJ 1987 L 78, p. 5). In return, Article 2 of Regulation N o 775/87 provided for the payment of compensation of ECU 10 per 100 kg for each of those periods.

7 In 1991, Council Regulation (EEC) N o 1630/91 of 13 June 1991 amending Regu­ lation N o 804/68 (OJ 1991 L 150, p. 19) again reduced the guaranteed total quan­ tities by 2%, subject to compensation as provided for in Articles 1 and 2 of Regu­ lation (EEC) N o 1637/91 of 13 June 1991 fixing compensation with regard to the reduction of the reference quantities referred to in Article 5c of Regulation N o 804/68 and compensation for the definitive discontinuation of milk production (OJ 1991 L 150, p. 30).

8 On 31 March 1992, the Council adopted Regulation (EEC) N o 816/92 amending Regulation N o 804/68 (OJ 1992 L 86, p. 83), which is the regulation contested in Cases T-466/93, T-469/93, T-473/93 and T-474/93. The first two recitals in the pre­ amble to that regulation read as follows:

'Whereas the additional-levy arrangements introduced by Article 5c of Council Regulation (EEC) N o 804/68 ... expire on 31 March 1992; whereas new arrange­ ments applicable until the year 2000 are to be adopted as part of the reform of the

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common agricultural policy (CAP); whereas it is necessary in the meantime to con- tinue the present arrangements for a ninth period of 12 months; whereas, under the Commission proposals, the total quantity set by this Regulation may be reduced, in return for compensation, for the said period so that the rationalization efforts already begun can be continued;

The quantities referred to in Regulation (EEC) N o 775/87 which are not included in the first subparagraph are as follows in thousands of tonnes:

Ireland 237.600

The Council shall take a final decision on the future of those quantities in the context of the reform of the CAP.'

10 In a series of regulations of 30 June 1992 — Regulation (EEC) N o 2071/92 amend­ ing Regulation N o 804/68, Regulation (EEC) N o 2072/92 fixing the target price for milk and the intervention prices for certain milk products for two annual peri­ ods from 1 July 1993 to 30 June 1995, Regulation (EEC) N o 2073/92 on promot­ ing consumption in the Community and expanding the markets for milk and milk products and Regulation (EEC) N o 2074/92 establishing an additional levy on the milk and milk-products sector (OJ 1992 L 215, pp. 64, 65, 67 and 69 respectively) — the Council adopted the necessary legislation relating to the operation of the markets for milk and milk products for the 1992-1993 milk year without mention­ ing the 'reference quantities not included' referred to in Regulation N o 816/92.

1 1 By letter of 16 December 1992, the Irish Creamery Milk Suppliers Association ('ICMSA'), acting on behalf of all its members, including the applicants, asked the Council, in substance, to provide compensation for the suspension of reference quantities under Regulation N o 816/92 and not to make that suspension perma­ nent or, if the suspension were to be made permanent, to provide proper compen­ sation for the producers affected. By letter of the same date, the ICMSA asked the

12 Next, since it was still necessary to maintain an additional levy system, Council Regulation (EEC) N o 3950/92 of 28 December 1992 establishing an additional levy in the milk and milk products sector (OJ 1992 L 405, p. 1) extended the rules gov- erning the system of reference quantities and additional levies for a further seven years and codified those rules, while at the same time incorporating the previous Community reserve into the guaranteed total quantities (see, in particular, the first and third recitals in the preamble). Article 3 of Regulation N o 3950/92 provides that the sum of the individual reference quantities of the same type may not exceed the corresponding total quantities to be determined for each Member State. Article 4 provides that the individual reference quantities are to be equal to those available on 31 March 1993, subject to national adjustments, within the limits of the total quantities referred to in Article 3.

1 3 On 5 February 1993, the Council replied to the ICMSA that, at its meeting from 14 to 17 December 1992, it had not adopted any measure concerning the tempo- rary suspension provided for in Regulation N o 816/92.

14 On 17 February 1993, the Commission replied to the ICMSA that decisions taken by the Council on the basis of a proposal from the Commission took the general

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interest into account and might not accommodate all sectional interests in all respects. Reference was also made in the letter to 'the adoption of the Council regulation which converts into a definitive reduction without further compensation the quantities referred to in Regulation (EEC) N o 775/87'.

16 Article 1 of Regulation N o 748/93 added the following to Article 3 of Regulation N o 3950/92:

'The total guaranteed quantities for the Member States for the 12-month period 1 April 1993 to 31 March 1994 shall be fixed at the same level as those set out in Article 5c(3)(g) of Regulation (EEC) N o 804/68, increased by the amounts from the Community reserve as allocated on 31 March 1993, and those set out in the Annex to Regulation (EEC) N o 857/84.'

17 Regulation N o 748/93 thus excluded from the guaranteed total quantities for the 1993-1994 milk year the reference quantities not included for 1992-1993 under Regulation N o 816/92.

18 Finally, Council Regulation (EEC) N o 1560/93 of 14 June 1993 amending Regu- lation N o 3950/92 (OJ 1993 L 154, p. 30) replaced Article 3 of Regulation N o 3950/92 by a new article fixing total quantities for each Member State. The total quantity fixed for Ireland included an increase of 0.6% in order to permit the allo- cation of additional quantities to certain categories of producers (see Article 1 of Regulation N o 1560/93).

19 The reference quantities initially allocated to each of the applicants and the subse- quent changes to those quantities as a result, inter alia, of the provisions set out above, are shown in the tables in Annex I to this judgment. The applicants' deliv- eries of milk are shown in the tables in Annex II. Those tables form an integral part of this judgment.

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24 Upon hearing the report of the Judge-Rapporteur, the Court (Third Chamber) decided to open the oral procedure without any preparatory inquiry but, as a meas­ ure of organization of the procedure, requested the applicants to produce certain figures relating to their production and the amount of the additional levy for which

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they were liable for the 1992-1993 milk year and, in Case T-477/93, for 1993-1994. The hearing took place on 14 February 1995.

Forms of order sought

In Cases T-466/93, T-469/93, T-473/93 and T-474/93

— E C U 943.8 (IRL 903.47) in Case T-474/93,

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or such other sum as the Court rules appropriate;

— award interest on those sums at the rate of 8% per year to run from 1 April 1993; and

— order the defendant to pay the costs.

27 The intervener claims that the Court should:

— dismiss the applications for damages as unfounded;

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— order each applicant to pay the costs of the intervention in his case.

28 In reply to the Commission's observations in intervention, the applicants claim that the Court should:

— award the applicant damages in the sum of ECU 5 759.50 (IRL 5 513.39) or such other sum as the Court rules appropriate, in respect of the loss suffered by the applicant as a result of the effect of Regulation N o 748/93;

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— award interest on that sum at the rate of 8% per year to run from 1 April 1993; and

— order the defendant to pay the costs.

30 The defendant contends that the Court should:

— reject the form of order sought by the intervener;

— grant the forms of order sought in the application; and

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— if the defendant is not ordered to pay the costs of the intervention by the Com- mission, order the Commission to pay the applicant's costs.

33 At the hearing on 14 February 1995, the applicants in Cases T-466/93, T-469/93, T-473/93 and T-474/93, and Mr O'Dwyer, the applicant in Case T-477/93, with- drew their claims for the annulment of Regulation N o 816/92 and Regulation N o 748/93 respectively. The Court therefore notes the partial withdrawal of the appli- cations in so far as they seek the annulment of the regulations in issue.

The first plea — Breach of the principle of the protection of legitimate expectations

Summary of the parties' arguments

36 The applicants put forward, in substance, two main arguments. First, they consider that the legislative context prior to the adoption of Regulation N o 816/92 had given them a legitimate expectation which was violated, for the period from 1 April 1992 to 31 March 1993, either by the failure to pay compensation or by the failure to reinstate the 4.5% of the reference quantities which had been temporarily with­ drawn by Regulation N o 775/87. Secondly, they assert that the withdrawal, with­ out any prior notice or transitional measures, of the compensation provided for in Regulation N o 775/87 also constitutes a violation of their legitimate expectations.

37 With regard to the legislative context, the applicants state that Regulation N o 816/92 falls within the same legislative context as Regulation N o 775/87, as amended by Regulations N o 1111/88 and N o 3879/89, which concerned a 'tem­ porary' withdrawal, with compensation, of 4.5%of the reference quantities, as the Court of Justice held in Case C-311/90 Hierl ν Hauptzollamt Regensburg [1992] ECR I-2061. In those circumstances, Regulation N o 816/92 should be interpreted as extending the temporary withdrawal of the 4.5% at least for the 1992-1993 milk year, since the second recital in its preamble (paragraph 8 above) specifies that the quantities in issue 'are not included' and that 'the Council will decide definitively

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41 Finally, the fact that the applicants had already received compensation over the five previous milk years is not relevant because the compensation provided for in Regu­ lation N o 775/87 had always been related to the previous temporary withdrawal and was not adequate, as the Court of Justice acknowledged in Hierl. The appli­ cants further deny the defendant's allegation that milk prices in Ireland have increased since 1987.

42 The defendant stresses that to admit that milk producers can have a legitimate expectation in the indefinite continuation of the compensation would be tanta­ mount to recognizing acquired rights in that respect, contrary to consistent case- law (see Case 250/84 Eridania ν Cassa Conguaglio Zucchero [1986] ECR 117 and Case 203/86 Spain ν Council [1988] ECR 4563).

43 The withdrawal effected by Regulation N o 775/87 was initially introduced as a temporary measure and was due to a desire to review the proportion withdrawn in the light of market developments. According to the first recital in the preamble to that regulation, the compensation was to be proportionate to the additional impo­ sition on producers — thus explaining, since the effort of adjustment required decreases as time goes by, the progressive reduction of the amount of compensa­ tion. If the price of milk remains the same or decreases producers need to find replacement activities to make good the loss of income but if prices increase — as was the case here — the initial loss of income disappears with time.

4 4 Since the unfavourable trend in demand had necessitated subsequent reductions in supply, the Commission, in its proposals for the reform of the common agricul­ tural policy published on 31 December 1991, proposed transforming that tempo-

46 Several other reductions of the reference quantities had already been imposed and had not always been temporary or accompanied by compensation. Furthermore, the Court of Justice has consistently held that a prudent and well-informed oper­ ator should expect measures which have to be imposed in view of market devel­ opments (see Case C-350/88 Delacre and Others ν Commission [1990] ECR I-395). The principle in the CNTA judgment cited by the applicants does not apply in the present case since there is an overriding public interest justifying subsequent reduc­ tions in the reference quantities, and such reductions were perfectly foreseeable in view of the unfavourable developments on the market. Moreover, the compensa­ tion paid out in the present case under Regulation N o 775/87, amounting in total to E C U 45.5 per 100 kg, very amply compensated producers both for any poten­ tial loss of income and for the efforts of adjustment required.

47 The Commission, the intervener, argues, inter alia, that the changes introduced by Regulation N o 816/92 were foreseeable (Case 265/85 Van den Bergh en Jurgens ν

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Commission [1987] ECR 1155). The fact that the quantities in question had been withdrawn for a number of years, the degressive compensation paid over that period, the continuing surplus production and the explanatory memorandum to the Commission's proposal COM(91) 409 final of 31 October 1991 should have enabled a prudent and well-informed producer to realize that the former situation could not be restored and to anticipate further reductions to the reference quanti­ ties and the discontinuance of the compensation.

tion that the Council will not, in its administration of the common agricultural policy, reduce the guaranteed total quantities, and thus individual producers' ref- erence quantities, for the future (see, inter alia, Spain v Council, paragraphs 19 and 20).

so Nor, the Court considers, may milk producers legitimately expect in such a con- text that any reduction in their individual reference quantities will be accompanied by compensation. The Hierl judgment, cited by the applicants, does not run counter to that view. In particular, the mere fact that compensation was granted when the total guaranteed quantities were reduced by previous regulations cannot have given the operators concerned any legitimate expectation that compensation would be granted on the occasion of each subsequent reduction in those quantities.

51 Those considerations are all the more pertinent in the present case in that the whole set of rules governing the additional levy scheme set up by Regulation N o 856/84, including Regulation N o 775/87 as amended by Regulation N o 1111/88 and Regu- lation N o 3879/89, was due to expire on 31 March 1992. Since the conditions under which that system could be renewed for future years fell within the Council's broad power of appreciation, no economic operator could in principle have any legitimate expectation whatever as to the tenor of the legislative measures which the Council would adopt for the period subsequent to 31 March 1992, particularly as regards the maintenance of the total guaranteed quantities.

52 In principle, therefore, the applicants may not claim that the reduction without compensation of their reference quantities for the 1992-1993 milk year in Regu- lation N o 816/92 constituted a breach of their legitimate expectations.

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56 N o r does the Court consider that there is merit in the applicants' argument based on the legislative context, to the effect that Regulation N o 816/92 should be inter- preted as extending the temporary withdrawal effected by Regulation N o 775/87, thus giving rise to a legitimate expectation that the reduction of reference quanti- ties effected by Regulation N o 816/92 would be accompanied by compensation.

57 The very nature of a legitimate expectation means that, if it is to be effectively relied upon, it must have been derived from acts or omissions prior to the measure which is alleged to have infringed it. The terms of Regulation N o 816/92, the measure contested in the present case, therefore cannot themselves serve as a basis for the legitimate expectations on which the applicants seek to rely. All the other elements which the applicants adduce as having caused them to entertain legitimate expec- tations (see paragraph 38 above) must likewise be dismissed in so far as they are subsequent to the adoption of Regulation N o 816/92.

58 The only circumstance prior to 31 March 1992 adduced by the applicants to estab- lish their legitimate expectations is the temporaiy withdrawal provided for in Regu- lation N o 775/87 as amended by Regulation N o 1111/88 and Regulation N o 3879/89. However, for the reasons given above, the terms of those previous regu- lations could not themselves give rise to a legitimate expectation as to the measures subsequently to be adopted by the Council in its administration of the common agricultural policy. In particular, the use of the word 'temporary' in Regulation N o 775/87 did not give rise to any legitimate expectation that the quantities in ques- tion would be returned or that compensation would be. granted for their definitive withdrawal.

Summary of the parties' arguments

61 Citing the case-law of the Court of Justice, the applicants claim, in substance, that the preamble to Regulation N o 816/92 (paragraph 8 above) does not indicate the reasons for the divergence between its provisions and the previous system of tem­ porary withdrawal with compensation, established by Regulation N o 775/87. In particular, no reasons are given for no longer granting compensation and it is not specified to what extent or for what reason the temporary withdrawal of the ref­ erence quantities may have been converted into a permanent reduction. N o r is there any certainty as to how long such a measure is intended to last.

62 The non-payment of compensation does not form part of the overall system of measures adopted by the Council, in particular because Regulation N o 816/92 involved a fundamental departure from the system of temporary withdrawal with compensation set up by Regulation N o 775/87, Regulation N o 1111/88 and Regu­

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lation N o 3879/89. The applicants add that the seventh recital in the preamble to Council Regulation (EEC) N o 1639/91 of 13 June 1991 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 (OJ 1991 L 150, p. 35), stating that 'Regulation (EEC) N o 775/87 ... provides for degressive compensation over five years for the reduction in production capacity resulting from such suspension', does not form part of the system of measures deal- ing with the temporary withdrawal and, in any event, could be interpreted as mean- ing that the temporary withdrawal would be lifted at the end of the five years.

Findings of the Court

67 According to the case-law of the Court of Justice, the statement of reasons required by Article 190 of the Treaty must be appropriate to the nature of the measure in question. It must show clearly and unequivocally the reasoning of the Community authority which adopted the contested measure so as to inform the persons con­ cerned of the justification for the measure adopted and thus to enable them to defend their rights and the Court to exercise its powers of review. However, the statement of the reasons on which regulations are based is not required to specify the often very numerous and complex matters of fact and law dealt with in the reg­ ulations, provided that they fall within the general scheme of the body of measures of which they form part (Ertdania, paragraphs 37 and 38; Delacre and Others, para­ graphs 15 and 16).

68 With regard to the reduction of the reference quantities effected by Regulation N o 816/92, Article 1 of that regulation lays down the total guaranteed quantities for each Member State for the 1992-1993 milk year and specifies that, for that period, certain quantities — given in tonnes for each Member State — are not included in the total guaranteed quantities. It further states that 'the Council shall take a final decision on the future of these quantities in the context of the reform of the CAP'.

69 It is clear from the second recital in the preamble to Regulation N o 816/92 that those quantities were not included for the 1992-1993 milk year because 'owing to

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73 The applicants' second plea in law must therefore be rejected.

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The third plea — Breach of Articles 39 and 40 of the Treaty

Summary of the parties' arguments

74 The applicants claim that the temporary withdrawal, in Regulation N o 816/92, of part of the reference quantities without compensation, constitutes a flagrant breach of the objectives set out in Article 39(1 )(b) and (2) of the Treaty. In that regard, they stress the need not to disrupt the delicate balance between all the measures taken in the common organization of the market in milk and milk products, par­ ticularly in view of the penal sanction of the additional levy if a producer exceeds his reference quantity.

79 The intervener does not comment on this plea.

Findings of the Court

80 In accordance with the case-law of the Court of Justice, in pursuing the objectives of the common agricultural policy the Community institutions must constantly reconcile any conflicts between those objectives taken individually and, where nec­ essary, give any one objective temporary priority in order to satisfy the demands of the economic factors or conditions in view of which their decisions are made. It has also been held that, in matters concerning the common agricultural policy, the

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Community legislature has a broad discretion which corresponds to the political responsibilities imposed upon it by Articles 40 and 43 of the Treaty (see Hierl, paragraph 13, and Germany ν Council, paragraph 47).

82 Thus the Council could, within the framework of its broad discretionary powers in the field of the common agricultural policy, legitimately give temporary priority to the objective of stabilizing the market for milk products without stepping beyond the limits of its powers under Article 39 of the Treaty. Furthermore, in Case 84/87 Erpelding ν Secrétaire d'Etat à l'Agriculture et à la Viticulture [1988] ECR 2647, paragraph 26, the Court of Justice held that the additional levy system, whose purpose is to re-establish, by limiting milk production, the balance between supply and demand in the milk market, characterized by structural surpluses, is both within the ambit of the objective of rational development of milk production within the meaning of Article 39(l)(a) of the Treaty and, by contributing to a sta- bilization of the income of the agricultural community affected, within that of ensuring a fair standard of living for that community within the meaning of Article 39(1 )(b) of the Treaty.

83 Finally, the Court notes that, in any event, the applicants have not adduced any evidence whatsoever that the Council acted in breach either of the objective of

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ensuring a 'fair standard of living' for the agricultural community within the mean­ ing of Article 39(l)(b) of the Treaty, or of Article 39(2) of the Treaty, by not pro­ viding for compensation for the 1992-1993 milk year.

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87 Fourthly, with the exception of Mr O'Dwyer, the applicants have taken advantage of the opportunities provided, in particular by 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 prod­ ucts sector (OJ 1984 L 90, p. 13) as replaced by Regulation N o 3950/92, to increase their reference quantities substantially. As can be seen from Annex I to this judg­ ment, additional reference quantities were granted to Mr Keane, as a small pro­ ducer, in the 1989-1990 milk year, and, by decisions of the Milk Quotas Appeals Tribunal, to Mr Keane and Mr Cronin in the 1990-1991 milk year and again to Mr Keane in 1991-1992. Mr Keane, Mr Cronin and Mr Reidy also increased their ref­ erence quantities by certain purchases of additional quotas under the Milk Quota Restructuring Schemes set up in Ireland. Finally, Mr Cronin and Mr Reidy leased certain additional quantities.

88 It follows from the above that the quotas available to Mr Keane, Mr Cronin and Mr Reidy in the 1992-1993 milk year, after the reduction effected by Regulation N o 816/92, were higher than those available to them immediately prior to the tem­ porary withdrawal effected by Regulation N o 775/87, by some 132%, 47% and 1 1 % respectively (see Annex I to this judgment).

91 The applicants stress that the right to property forms part of the fundamental rights guaranteed in the Community legal order. In Case 44/79 Hauer ν Land Rheinland- Pfalz [1979] ECR 3727, it was held that it is necessary to identify the aim pursued by the disputed measure and to examine whether the restrictions in question cor­ respond reasonably to that aim or whether they constitute a disproportionate and intolerable interference with the rights of the owner.

92 In the present case, the absence of compensation for the 1992-1993 milk year means that such a reasonable correspondence is no longer present. In the applicants' view, Regulation N o 816/92 involves an expropriation without compensation, since ref­ erence quantities are an asset with a real economic value (see the Opinion of Advo­ cate General Jacobs in Case 5/88 Wachauf ν Bundesamt für Ernährung und Forstwirtschaft [1989] ECR 2609, at p. 2622). Their permanent suppression with- out compensation is therefore an intolerable interference in the right to property and threatens the applicants' holdings.

93 The applicants further invoke the right to pursue a trade or profession, also con- firmed in Community law in Hauer, paragraph 32. They consider that the provi- sions of Regulation N o 816/92 constitute an infringement of that right, not justi- fied in the public interest.

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94 T h e defendant stresses that the C o u r t of Justice has never acknowledged that milk quotas can be the subject of p r o p e r t y rights distinct from the land t o which they are attached. T h e reduction of the reference quantities imposed in the present case cannot therefore, as a matter of principle, infringe the parties' right t o o w n p r o p ­ erty (Case C-44/89 Von Deetzen ν Hauptzollamt Oldenburg [1991] E C R I-5119, ('Von Deetzen 11') paragraph 27).

JUDGMENT OF 13. 7. 1995 —JOINED CASES T-466/93, T-469/93, T-473/93, T-474/93 AND T-477/93

and the freedom to pursue a trade or profession may be restricted, particularly in the context of a common organization of a market, provided that any restrictions in fact correspond to objectives of general interest pursued by the Community and do not constitute, in the light of the aim pursued, a disproportionate and intoler- able interference, impairing the very substance of the rights guaranteed (Schräder paragraph 15; Wachauf paragraph 18; Case C-177/90 Kühn ν Landwirtschaftska­ mmer Weser-Ems [1992] ECR I-35, paragraphs 16 and 17; and Germany ν Council, paragraph 78).

99 Furthermore, the right to property safeguarded within the Community legal order does not include the right to dispose for profit of an advantage such as the refer­ ence quantities allocated in the context of a common organization of the market, which does not derive either from the assets or from the occupational activity of the person concerned (Von Deetzen II, paragraph 27; Case C-2/92 The Queen ν Ministry of Agriculture, Fisheries and Food ex parte Bostock [1994] ECR 1-955, paragraph 19).

100 The Court has already held (paragraphs 81 and 82 above) that by reducing the ref- erence quantities without compensation for the 1992-1993 milk year, Regulation N o 816/92 was responding to the objectives pursued by the Council in the general interest within the framework of the common organization of the market in milk and milk products, in particular those of stabilizing the market and reducing struc­ tural surpluses.

Summary of the parties' arguments

104 The applicants consider that the provisions of Regulation N o 816/92 are dispro­ portionate to the aim pursued by the Community legislature and place an onerous burden on them. Since compensation was provided as an integral part of the pre­ vious regulations, since the recitals in the preamble to Regulation N o 816/92 do not suggest that circumstances have materially changed since the adoption of Regu­ lation N o 3882/89, which provided for the payment of compensation, and since those same recitals show that the main purpose of the regulation was to provide a stop-gap measure pending the Commission's proposals for the reform of the com­ mon agricultural policy, the failure to grant compensation is disproportionate to the aim desired. As a result, the applicants suffer the double penalty of being liable for the additional levy at a lower level of deliveries and not receiving compensation for that reduction. In Hierl (paragraph 11), the Court of Justice stressed that Regu­ lation N o 775/87 did not infringe the principle of proportionality because com­ pensation was paid, but there is no longer any compensation in the present case.

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105 T h e defendant considers that this plea in law is directly connected with the previ- ous plea alleging infringement of the right to p r o p e r t y and that it has already been sufficiently demonstrated that the reduction imposed is not disproportionate to the objectives sought. In any event, it is clear that the Council has not manifestly exceeded the limits of the discretionary powers which the Court recognizes that it enjoys in that regard.

The sixth plea — Breach of the principle of non-discrimination

Summary of the parties' arguments

109 The applicants point out that the principle of non-discrimination is one of the most fundamental in Community law and is expressed in the second subparagraph of Article 40(3) of the Treaty. They also point to the terms of the eighth recital in the preamble to Regulation N o 856/84 and the second recital in the preamble to Com­ mission Regulation N o 1371/84 of 16 May 1984 laying down detailed mies for the application of the additional levy referred to in Article 5c of Regulation N o 804/68 (OJ 1984 L 132, p. 11), which specify, respectively, that in Ireland the daiiy indus­ try contributes to a significant extent to the gross national product and that the scope for developing alternatives to milk production is very limited in Ireland. In those circumstances, the applicants consider that Regulation N o 816/92 does not comply with the conditions laid down by the Court of Justice in Hierl, paragraph 19, in particular because it does not recognize the particular difficulties imposed by it on Irish producers. It has thus resulted in such producers being covertly treated similarly to those in other Member States, although their different situation has been recognized.

1 1 0 The temporary withdrawal without compensation is also discriminatory because producers in other Member States were able to adapt more readily to the conse­

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Findings of the Court

1 1 3It is settled law that the prohibition of discrimination between producers or con­ sumers in the Community, laid down in the second subparagraph of Article 40(3)

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of the Treaty, requires that comparable situations should not be treated in a differ­ ent manner, or different situations in the same manner, unless such treatment is objectively justified. Measures taken under the common organization of the mar­ ket, and in particular its intervention mechanisms, must therefore not be differen­ tiated according to regions and other conditions relating to production or con­ sumption except on the basis of objective criteria which ensure that the advantages and disadvantages are distributed proportionately among those concerned, without any distinction being made between the territories of the Member States (see Spain ν Council, paragraph 25; Hierl, paragraph 18; and Germany ν Council, paragraph 67). Furthermore, with regard to judicial review of the way in which the prohibi­ tion of discrimination laid down in the second subparagraph of Article 40(3) of the Treaty is implemented, in matters concerning the common agricultural policy the Council has, as has already been stated, a broad discretion which corresponds to the political responsibilities imposed on it by Articles 40 and 43 of the Treaty (see Joined Cases C-267/88 to C-285/88 Wuidart and Others ν Laiterie Coopérative Eupenoise [1990] ECR 1-435, paragraph 14).

1 1 4 It is common ground in the present case that additional reference quantities were already allocated to Ireland by Regulation N o 856/84 and Regulation N o 1371/84, in order, in particular, to take into account the extent to which the dairy industry contributes to the gross national product in Ireland and the factors rendering it difficult in Ireland to develop alternatives to milk production.

118 The sixth plea in law must therefore be rejected.

The arguments raised by the applicants other than Mr O'Dwyer

Summary of the parties' arguments

1 1 9Mr Keane, Mr Cronin and Mr Reidy maintain that the temporary withdrawals under Regulation N o 775/87 applied to the original reference quantities laid down in Article 5c(l) and (3) of Regulation N o 804/68. Those original reference quanti­ ties, they claim, are separate from the quantities derived from the Community reserve set up by Article 5c(4) of Regulation N o 804/68. However, it is clear from the fourth subparagraph of Article 1(1) of Regulation N o 775/87 that, because For­ mula Β is applied in Ireland, the suspension of 4.5% of the guaranteed total quan-

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123 The intervener does not comment on these pleas.

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JUDGMENT OF 13. 7. 1995 —JOINED CASES T-466/93, T-469/93, T-473/93, T-474/93 AND T-477/93

Findings of the Court

124 The applicants complain, in substance, that the reduction of the reference quanti- ties as a result of Regulation N o 816/92 affects not only the reference quantities allocated to them when Regulation N o 856/84 was adopted but also the additional reference quantities which they have since acquired, in particular those allocated by the Irish authorities to Mr Keane and Mr Cronin.

125 However, the applicants do not deny that, under Formula B, applied in Ireland, the reduction of the total guaranteed quantities provided for in Regulation N o 816/92 was necessarily passed on to each milk purchaser who was in turn obliged to pass the relevant reduction on to the reference quantities of the milk producers con- cerned. It is common ground that it is necessary to proceed in that proportional manner without regard to the specific origin of the different reference quantities of individual producers.

1 2 8 In those circumstances, the Court considers that Mr Cronin, Mr Keane and Mr Reidy may not successfully plead a breach of the principle of the protection of legitimate expectations based on the fact that the reduction in total guaranteed quantities in Regulation N o 816/92 affected the additional reference quantities which they had acquired after the allocation of their initial reference quantities. Likewise, in the Court's opinion, the fact that Regulation N o 816/92 imposed a uniform reduction in the reference quantities without talcing their individual ori­ gins into account, does not conflict with the objective of Article 39 of the Treaty, with the principles of proportionality and non-discrimination, or with the right to property and the right to pursue a trade or profession.

129 The specific pleas put forward by Mr Keane, Mr Cronin and Mr Reidy must there­ fore be rejected.

1 3 0It follows from all the foregoing that, in the absence of any culpable illegality, the claims for damages in Cases T-466/93, T-469/93, T-473/93 and T-474/93 must be dismissed without there being any need to consider whether the alleged breaches

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JUDGMENT OF 13. 7. 1995 —JOINED CASES T-466/93, T-469/93, T-473/93, T-474/93 AND T-477/93

of Community law on which the applicants rely may be described as 'sufficiently serious', within the meaning of the case-law of the Court of Justice, for the Com- munity to incur non-contractual liability (see Mulder II, paragraphs 19 to 21). Nor, in the absence of any illegality arising out of the adoption of the contested regu- lation, is it necessary to rule on the calculations of the alleged loss put forward by the applicants or on the existence of a causal link between the damage allegedly suffered and the contested measure.

Breach of the principle of the protection of legitimate expectations

Summary of the parties' arguments

134 The applicant submits that, by failing in Regulation N o 748/93 to deal with the suspended reference quantities and to provide proper compensation, the Council committed a flagrant violation of the principle of the protection of legitimate expectations. In support of that contention he puts forward, in addition to the arguments summarized in paragraphs 36 to 41 above, the following further argu­ ments.

1 3 5The applicant compares Regulation N o 748/93 to Regulation N o 816/92, both being apparently intended to fill a legal void. As appears from its preamble (para­ graph 15 above), Regulation N o 748/93 was adopted in haste and without consid­ eration of all the questions, in particular the issue of the reference quantities tem­ porarily withdrawn. In a statement issued on 17 March 1993 following the meeting at which Regulation N o 748/93 was adopted, the Council declared that it would 'take a decision ... on other questions already raised by delegations,' which might refer, inter alia, to the reference quantities temporarily suspended.

136 The applicant submits that it may be concluded from Regulation N o 3950/92 and Regulation N o 748/93, taken together, that (i) their drafting and reasoning are imprecise and insufficient; (ii) Regulation N o 748/93 does not constitute a final decision on the future of the suspended quantities; (iii) the Council has illegally sought to suppress those quantities indirectly; and (iv) since the provisions of Regulation N o 775/87 have not been extended, the quantities previously suspended should have been restored on 1 April 1993.

Findings of the Court

1 4 0It must be borne in mind that the effect of Regulation N o 748/93 was to roll over, for the 1993-1994 milk year, the guaranteed total quantities laid down for the 1992- 1993 milk year by Regulation N o 816/92.

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141 For the reasons already set out in paragraphs 48 to 60 above, mutatis mutandis, the Court considers that the applicant may not in principle successfully rely on the principle of the protection of legitimate expectations in order to argue that the ref­ erence quantities not included for the 1992-1993 milk year under Regulation N o 816/92 should have been given back or that compensation should have been granted for 1993-1994.

142 As regards the specific elements on which the applicant relies as the basis for his alleged legitimate expectation (paragraph 38 above), the only elements prior to the adoption of Regulation N o 748/93 are: the provisions of Regulation N o 816/92; the Council's letter of 5 February 1993 (paragraph 13 above); and the two press releases from the Irish Department of Agriculture and Food of 1 July 1992 and 17 Decem­ ber 1992.

Breach of Article 190 of the Treaty

Summary of the parties' arguments

147 Since the preamble to Regulation N o 816/92 stated that the 4.5% of the reference quantities were not to be included for the 1992-1992 milk year, the applicant con- siders that Regulation N o 748/93 should have specified whether that percentage was to be included for the 1993-1994 milk year. Moreover, although Regulation N o 816/92 had indicated that the Council would decide definitively what was to hap- pen to that percentage, Regulation N o 748/93 did not so decide, without stating reasons. Regulation N o 748/93 infringes Article 190 of the Treaty by stating nei- ther the reasons nor the legal basis for the permanent reduction without compen- sation which is the obvious objective of the combined effects of Regulation N o 3950/92 and Regulation N o 748/93.

148 In those circumstances, it is not possible to refer to the statement of reasons in previous regulations since only Regulation N o 748/93 could have dealt properly with those reference quantities, being the first in which it was possible to give effect to the provisions of Regulation N o 816/92 stating that a definitive decision was to be taken in that regard.

149 The provision in Regulation N o 816/92 to the effect that the reference quantities referred to therein were not to be included for the 1992-1993 milk year implies that the matter should have been dealt with by the end of that period, therefore by

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153 Regulation N o 748/93 forms part of the body of measures adopted in the field of the additional levy scheme, including, inter alia, Regulation N o 816/92 and Regu­ lation N o 3950/92, from which it is clear that structural surpluses were persisting in the milk sector and that the additional levy system remained necessary. In that context, the third recital in the preamble to Regulation N o 748/93 specifies that 'pending a subsequent decision, the total guaranteed quantities in force on 31 March 1993 should be rolled over and increased by the amounts from the Com­ munity reserve existing on that date'.

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154 In those circumstances, the Court considers that the Council has sufficiently stated its reasons for rolling over for the 1993-1994 milk year the total guaranteed quan- tities for 1992-1993. The Court further considers, in the light of the whole body of measures adopted in the field of the additional levy scheme, that the absence of a statement of reasons for the non-payment of compensation for the 1993-1994 milk year did not deprive the applicant of an effective opportunity to defend his rights or to prevent the Court from exercising its powers of review (see paragraph 71 above).

155 Nor, in the absence of any time-limit for the reexamination provided for in the last subparagraph of Article 1 of Regulation N o 816/92, was the Council under any obligation to provide details regarding the future of the quantities referred to in that provision. In that regard, Regulation N o 748/93 specifically states that it was adopted 'pending a subsequent decision'.

Costs

160 Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. Since the applicants have been unsuccessful and the Council has applied for costs, each of the applicants must be ordered to pay his own costs and those incurred by the Council in the relevant case.

161 The Commission, which intervened in support of the Council, must be ordered to bear its own costs in accordance with Article 87(4) of the Rules of Procedure.

O n those grounds,

T H E C O U R T O F FIRST INSTANCE (Third Chamber)

hereby:

Delivered in open court in Luxembourg on 13 July 1995.

H. Jung J. Biancarelli

Registrar President

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