C-22/94

2. Those questions were raised in the con- text of a dispute between four Irish milk- producers (Michael Slattery, Hugh Duffy, Bertie Roche and Eddie Twomey), supported by the Irish Farmers Association, and the Irish Ministry of Agriculture. By letter of 28 April 1993, the aforementioned producers '(1) Is Article 5c(3)(g) of Council Regu- applied to that Ministry, in its capacity as the lation (EEC) N o 804/68 on the com- national competent authority for the pur- mon organization of the market in milk poses of the additional levy scheme, for the and milk products as inserted by Article return of 4.5% of their permanent reference 1(3) of Council Regulation (EEC) N o quantities, which had been temporarily with- 816/92 invalid and contrary to Commu- drawn between 1 April 1987 and 31 March nity law in so far as the reference quan- 1992. In the alternative, they sought equiva- tities allocated for 1992-1993 excluded lent compensation for the loss and damage the 4.5% of reference quantities tempo- suffered by them as a result of the definitive rarily suspended pursuant to Council reduction of their reference quantities by Regulation (EEC) N o 775/87 as that percentage. amended, without the payment of com- pensation to producers?

* Original language: Spanish. 1 — Council Regulation (EEC) N o 816/92 of 31 March 1992 amending Regulation (EEC) N o 804/68 on the common 3 — Council Regulation (EEC) N o 3950/92 of 28 December 1992 organization of the market in milk and milk products (OJ establishing an additional levy in the milk and milk products 1992 L 86, p. 83). sector (OJ 1992 L 405, p. 1). 2 — Council Regulation (EEC) N o 1560/93 of 14 Tunc 1993 4 — Council Regulation (EEC) N o 748/93 of 17 March 1993 amending Regulation (EEC) N o 3950/92 establishing an amending Regulation (EEC) N o 3950/92 establishing an additional levy in the milk and milk products sector (OJ additional levy in the milk and milk products sector (OJ 1993 L 154, p. 30). 1993 L 77, p. 16).

Community law — Each Member State distributed its guar- anteed quantity among its producers, allocating to them an individual quantity reference, commonly referred to as a 'milk quota'. 5. In order to reduce the imbalance between supply and demand for milk and milk prod- ucts and the resulting structural surpluses, Regulation (EEC) N o 856/84 5 modified the common organization of the market in that sector by introducing an additional levy — Exceeding the reference quantity gave rise to the obligation for producers to pay an additional levy, intended to 5 — Council Regulation (EEC) No 856/84 of 31 March 1984 finance the expenditure incurred in mar- amending Regulation (EEC) No 804/68 on the common keting that surplus. The levy was payable organization of the market in milk and milk products (OT 1984 L 90, p. 10). by the producer (Formula A) or the

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purchaser of such milk, who was entitled The last-mentioned measure, which is the to pass the cost on to the producer (For- subject of the present case, automatically mula B), the choice between them falling entails a corresponding reduction or tempo- to the Member State. Ireland opted for rary withdrawal of producers' individual ref- Formula B. erence quantities.

7. The additional levy scheme was estab- lished for a period of five years as from 1 April 1984. None the less, the measures ini- 9. In 1988 it was agreed to extend the addi- tially envisaged were not sufficient to balance tional levy scheme until 31 March 1992. 10 At supply and demand for milk and milk prod- the same time, Article 1 of Regulation (EEC) ucts. The Community institutions therefore adopted further measures to reinforce the scheme, including in particular compensation 8 — Council Regulation (EEC) N o 1335/86 of 6 May 1986 for the discontinuation of milk production 7 amending Regulation (EEC) N o 804/68 on the common organization of the market in milk and milk products and the reduction or temporary withdrawal (OJ 1986 L119, p. 19) and Council Regulation (EEC) N o 1343/86 of 6 May 1986 amending Regulation (EEC) of the guaranteed total quantities of milk. 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 1986 L 119, p. 34). 9 — Council Regulation (EEC) N o 775/87 of 16 March 1987 6 — Council Regulation (EEC) N o 857/84 of 31 March 1984 temporarily withdrawing a proportion of the reference adopting general rules for the application of the levy referred quantities mentioned in Article 5c(l) of Regulation (EEC) to in Article 5c of Regulation (EEC) N o 804/68 in the milk N o 804/68 on the common organization of the market in and milk products sector (OJ 1984 L 90, p. 13). milk and milk products (OJ 1987 L 78, p. 5). 7 — That measure was introduced by Council Regulation (EEC) 10 — That extension was provided for in Council Regulation N o 1336/86 of 6 May 1986 fixing compensation for the (EEC) N o 1109/88 of 25 April 1988 amending Regulation definitive discontinuation of milk production (OJ 1986 (EEC) N o 804/68 on the common organization of the mar- L 119, p. 21). ket in milk and milk products (OJ 1988 L 110, p. 27).

12. Subsequently, the Council adopted 10. Regulation (EEC) N o 3879/89 1 2 laid Regulation N o 816/92, whose validity is at down a further reduction of 1 % of the guar- issue in the present case, with the aim of anteed total quantities, without any compen- extending the additional levy scheme for one sation, with the aim of increasing the Com- more year (from 1 April 1992 to 31 March munity reserve. At the same time, Regulation 1993), in anticipation of the adoption of (EEC) N o 3882/89 » reduced the percentage measures reforming the Common Agricul- of the total quantities temporarily with- tural Policy ('CAP'). In order to continue to drawn from 5.5% to 4.5% in order to keep control production during that period Regu- the non-withdrawn reference quantities lation N o 816/92 indicated that the Commis- unaltered. Regulation N o 3882/89 also sion might propose a reduction of the total increased the compensation provided for in guaranteed quantity, in return for compensa- Regulation N o 1111/88 to E C U 10 per 100 tion, so that the rationalization efforts kg for 1989/90, E C U 8.5 per 100 kg for already begun could be continued. Further- 1990/91 and ECU 7 per 100 kg for 1991/92 more, that regulation fixed the guaranteed in order to continue to pay producers the total quantities without taking account of the amount resulting from the rate of temporary 4.5% of the reference quantities temporarily withdrawal of 5.5%. withdrawn by Regulation N o 775/87, it being for the Council to decide definitively what was to happen with those quantities 11 — Council Regulation (EEC) N o 1111/88 of 25 April 1988 in the course of the reform of the amending Regulation (EEC) N o 775/87 temporarily with- drawing a proportion of the reference quantities mentioned CAP. Accordingly, Article 1 of Regulation in Article 5c(l) of Regulation (EEC) N o 804/68 on the common organization of the market in milk and milk prod- ucts (OJ 1988 L 110, p. 30). 12 — Council Regulation (EEC) N o 3879/89 of 11 December 1989 amending Regulation (EEC) N o 804/68 on the com- 14 — Council Regulation (EEC) N o 1630/91 of 13 June 1991 mon organization of the market in milk and milk products amending Regulation (EEC) N o 804/68 on the common (OJ 1989 L 378, p. 1). organization of the market in milk and milk products (OJ 13 — Council Regulation (EEC) N o 3882/89 of 11 December 1991 L 150, p. 19). 1989 amending Regulation (EEC) N o 775/87 temporarily 15 — Council Regulation (EEC) N o 1637/91 of 13 June 1991 fix- withdrawing a proportion of the reference quantities men- ing compensation with regard to the reduction of the refer- tioned in Article 5c(l) of Regulation (EEC) N o 804/68 on ence quantities referred to in Article 5c of Regulation the common organization of the market in milk and milk (EEC) N o 804/68 and compensation for the definitive dis- products (OJ 1989 L 378, p. 6). continuation of milk production (OJ 1991 L 150, p. 30).

Ireland 237.600

14. The total quantities for each Member State for the period 1993/94 were adjusted by means of Regulation N o 1560/93, whose

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IRISH FARMERS ASSOCIATION AND OTHERS v MINISTER FOR AGRICULTURE, FOOD AND FORESTRY, IRELAND, AND THE ATTORNEY GENERAL validity is also at issue in the present case. 16. The possible grounds of annulment in Article 1 of that regulation alters the word- respect of both regulations set forth in the ing of Article 3 of Regulation N o 3950/92, order for reference and in the observations fixing the total quantities for each Member of the parties are the infringement of the State, which in the case of Ireland were right to property and of the freedom to pur- 5 230 554 tonnes (deliveries) and 15 210 sue a trade or profession, breach of the tonnes (direct sales). That total quantity allo- principles of the protection of legitimate cated to Ireland included a 0.6% increase to expectations, proportionality and non- permit the allocation of additional reference discrimination, infringement of Article 190 quantities to certain categories of producers. of the EC Treaty and misuse of powers. I Finally, the second recital in the preamble to will next consider each of those grounds. Regulation N o 1560/93 specifies that the temporary withdrawal in 1987 of 4.5% of the individual reference quantities is to become a definitive reduction, for which no compensation is provided.

Infringement of the right to property and of the freedom to pursue a trade or profession

The questions submitted for a preliminary ruling

18. In the present case it must be ascertained whether the definitive withdrawal of 4.5% of the producers' quotas without compensation 19. Nevertheless, I consider that the defini- constitutes an infringement of the right to tive withdrawal of 4.5% of the reference property and the freedom to pursue a trade quantities without compensation effected by or profession. In this context, the Court of Regulations N o 816/92 and N o 1560/93 con- Justice has held that 'the right to property stitutes a justified restriction of the farmers' safeguarded by the community legal order right to property and freedom to pursue a does not include the right to dispose, for trade or profession on the grounds I will set profit, of an advantage, such as the reference out below. quantities allocated in the context of the common organization of a market, which does not derive from the assets or occupa- tional activity of the person concerned'. 17 This does not mean that the reference quan- tity, which constitutes an asset linked to a holding, does not possess a significant econ- omic value. In other words, the linking of the quota to the holding as regards its ability to be transferred (a rule which admits of sev- 20. First, the definitive withdrawal of those eral exceptions, provided for in Community reference quantities serves the aims pursued legislation) does not mean that the reference by the Community institutions in the gen- quantity has no economic value in itself. 18 eral interest within the framework of the That quantity forms part of the farmer's common organization of the market in milk property rights, the value of which increases and milk products, in particular those of sta- or decreases according to the size of the quo- bilizing the market and reducing structural tas allocated to him. Thus, I am of the view surpluses. that the definitive withdrawal of a producer's reference quantity affects his right to prop-

IRISH FARMERS ASSOCIATION AND OTHERS v MINISTER FOR AGRICULTURE, FOOD AND FORESTRY, IRELAND, AND THE ATTORNEY GENERAL profession where, as in the present case, it is 23. I therefore consider that the definitive limited to a small percentage of producers' 4.5% reduction of the quotas of the produc- quotas (4.5%), which does not threaten the ers, without compensation, does not consti- profitability of the holdings. The national tute an infringement of the right to property court itself points out that the Irish produc- or of the freedom to pursue a trade or pro- ers have not and will not suffer any loss of fession. income as a result of the permanent with- drawal of 4.5% of their quota since it will lead to an increase in the price of milk. It also notes that there will probably be no reduction in the repayment capacity of the plaintiffs or the capital value of the remain- ing quota after the definitive withdrawal. If the value of the producers' assets does not Breach of the principle of the protection of decrease as a result of that withdrawal, I con- legitimate expectations sider that it cannot constitute a dispropor- tionate interference likely to impair the substance of the right to property.

25. In the light of that case-law, it must be 27. With regard to compensation, the Com- ascertained whether producers affected by munity rules relating to the additional levy the temporary withdrawal of 4.5% of their scheme, set forth above, established various quotas could have a legitimate expectation measures to stabilize the markets which, in that those reference quantities would be some cases, were coupled with payments to restored after the end of the suspension producers in order to compensate them for period initially provided for (from 1 April the reduction of their quota, while in other 1987 to 31 March 1992) or that they would cases, producers have absorbed the decrease obtain compensation in the event that the in their quota without receiving any com- pensation whatever. Therefore, in the context temporary withdrawal became definitive. of that legislation, milk producers cannot legitimately expect that any reduction in or temporary withdrawal of their individual reference quantities will be accompanied by compensation. 21

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IRISH FARMERS ASSOCIATION AND OTHERS v MINISTER FOR AGRICULTURE, FOOD AND FORESTRY, IRELAND, AND THE ATTORNEY GENERAL expectations have been infringed if the meas- compensation, 23 given the existence of the ure is adopted. 22 following factors:

— equivalent reference quantities had been withdrawn for the previous five years; 29. In the present case, I consider that the reduction of the reference quantities, without compensation, for the period 1992/93 and the permanent withdrawal effected by Regu- lation N o 1560/93 were foreseeable by a prudent and discriminating trader. At the — producers had benefitted from degressive end of the five-year period of the temporary compensation amounting in total to withdrawal prescribed by Regulation N o E C U 45.5 per 100 kg; 775/87, the Council followed the Commis- sion's proposal and adopted Regulation N o 816/92, which did not continue the degres- sive compensation. The suspended reference quantities were deducted from the guaran- teed total quantities, giving rise to a reduc- — milk production surpluses continued to tion in individual quotas, and the Council reserved the right to reconsider their future exist in the Community; in the light of market developments. Conse- quently, the only promise made to producers was that the future of that 4.5% of the refer- ence quantities would be reconsidered, as was subsequently the case when Regulation N o 1560/93, which chose to suspend them — the Commission's proposal, set out in definitively without compensation, was Document COM(91) 409 final of 31 adopted. October 1991, 24 advocated the solution adopted by the Council.

protection of legitimate expectations by rea- ucts, with the purpose of establishing a bal- son of their making definitive the temporary ance between supply and demand and reduc- withdrawal of 4.5% of the individual refer- ing structural surpluses. That measure, ence quantities, without compensation. together with the others adopted as part of the additional levy scheme, is intended to limit milk production in keeping with the objective of stabilizing markets, expressly provided for in Article 39(l)(c) of the Treaty. Furthermore, as the Court stated in Erpeld- The prinaple of proportionality ing,26 such a measure contributes to the rational development of milk production within the meaning of Article 39(l)(a) of the Treaty and to ensuring a fair standard of liv- ing for the agricultural community within the meaning of Article 39(1 )(b), since it secures their income. 32. The Court of Justice has consistently held that the principle of proportionality is one of the general principles of Community law. By virtue of that principle, 'the legality of measures imposing financial burdens on economic operators is conditional upon those measures being appropriate to and nec- essary for the attainment of objectives legiti- mately pursued by the rules in question, pro- vided however that, where there is a choice between several appropriate measures, the least onerous measure must be used and care must be taken to ensure that the charges 34. The measure would be justified by virtue imposed are not disproportionate to the aims of the Treaty even if the permanent with- pursued'. 25 drawal of the reference quantities had caused the farmers economic loss in the absence of compensation, a circumstance not demon- strated by the documents before the Court. In the context of the measures to limit pro- duction adopted by the Council, faced with a market long characterized by large structural 33. The conversion of the temporary with- surpluses, a loss of income temporarily low- drawal of 4.5% of the individual reference ering the farmers' standard of living must be quantities into a definitive reduction, with- accepted. 27 Moreover, the Court of Justice out compensation, constitutes a measure has held that 'in pursuing the objectives of adopted in the context of the additional levy the common agricultural policy the Commu- scheme, pursuant to the common organiza- nity institutions must secure the permanent tion of the market in milk and milk prod-

37. The Court has consistently held that the principle of non-discrimination between 35. Finally, the permanent withdrawal with- producers or consumers within the Commu- out compensation of 4.5% of the reference nity, laid down in the second subparagraph quantities constitutes, in my view, the least of Article 40(3) of the Treaty, is only a spe- onerous measure for stabilizing the Commu- cific expression of the general principle of nity milk production, since the alternative equal treatment in Community law, which would have been to reduce the intervention 'means that comparable situations are not to prices for milk products, which would have be treated differently and that different situ- had more negative effects on producers' ations are not to be treated alike unless such incomes. 29 Furthermore, such definitive treatment is objectively justified. It follows withdrawal does not impose on producers a that the measures taken under the common disproportionate burden, since they received organization of the market, and in particular degressive compensation from 1987 to 1992 its intervention mechanisms, must not be dif- for the reference quantities in question and ferentiated according to regions and other because the reduction in their quotas has conditions relating to production or con- given rise to a price increase which makes sumption, except on the basis of objective good any losses, as the national court points criteria which ensure that the advantages and out. disadvantages are distributed proportionately among those concerned, without any distinc- tion being made between the territories of the Member States.' 30

39. According to the case-law, it would only be feasible to treat Irish producers more favourably with respect to the permanent withdrawal of their quotas if it could be objectively justified. The contribution of 41. I do not believe that the definitive with- milk production to the Irish gross national drawal of the reference quantities without product is greater than in other Member any distinction between small and large pro- States and this is compounded by the diffi- ducers infringes the principle of non- culty of developing in that country agricul- discrimination. The Court has held that 'the tural alternatives to milk production. Ire- fact that a measure adopted within the land's particular situation was taken into framework of the common organization of account by the Community institutions, the market may affect producers in different however, when total reference quantities ways, depending upon the particular nature were allocated on the introduction of the of their production, does not constitute dis- additional levy system, so that the basis for crimination if that measure is determined on the calculation of its quota was more favour- the basis of objective rules, •which are formu- able. As a result of this, Irish producers have lated to meet the needs of the general com- suffered less than those of the other Member mon organization of the market'. 31 The per- States from the measures for stabilizing milk manent withdrawal from all holders of production. The Commission is right when reference quantities is amply justified: since it points out that the specific situation of the they all benefit from the advantages of the Irish producers was duly taken account of additional levy scheme, it is logical that they and it is not acceptable that, because of their should also likewise accept measures to current situation, they should be excluded either totally or partially from the measures to control milk production, such as the 31 — Hierl, referred to above, paragraph 19.

44. The two Community regulations at issue in the present case are markedly different with respect to their statements of reasons. There is no doubt that Regulation N o 42. On the basis of the above arguments I 1560/93 contains an adequate statement of conclude that the permanent withdrawal of reasons for the conversion of the temporary the reference quantities at issue in the withdrawal of 4.5% of the reference quanti- present case is not contrary to the principle ties into a permanent reduction. The second of non-discrimination. recital in the preamble to that regulation sets out the situation and origin of that with- drawal and mentions as reasons for its con- version into a definitive reduction the con- tinuing milk production surpluses and the Infringement of Article 190 of the Treaty payment for five years of degressive com- pensation to producers. 33 A sufficient state- ment of reasons for the definitive reduction of the quotas and the non-payment of com- pensation was thereby given.

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from 1987 in the calculation of the guaran- with respect to the conversion of the tempo- teed total quantities and postponed the rary withdrawal of 4.5% of the quotas into a decision on their future until the CAP was permanent reduction and they do not, there- reformed on the ground that surpluses con- fore, infringe Article 190 of the Treaty. tinued to exist. The reason for such post- ponement, set out in the first recital in the preamble to the regulation, is thus quite brief and, moreover, does not justify the abolition of the compensation. Misuse of powers

34 — Case 817/79 Buyl and Others v Commission [1982] ECR 245, paragraph 28, and Case T-46/89 Pitrone v Commission [1990] ECR 11-577, paragraph 70. 46. Regulations N o 816/92 and N o 1560/93 35 — Case C-331/88 Fedesa and Others [1990] ECR 1-4023, contain an adequate statement of reasons paragraph 24.

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IRISH FARMERS ASSOCIATION AND OTHERS v MINISTER FOR AGRICULTURE, FOOD AND FORESTRY, IRELAND, AND THE ATTORNEY GENERAL institutions have not misused their powers. tion in producers' earnings, contrary to the By adopting those two regulations the aim set out in Article 39(1 )(b) of the Treaty, Council has exercised the legislative power but in the present case there has been no conferred on it by Article 40(3) of the Treaty such loss, due to the increase in the milk in the field of agricultural policy in order to price and the value of the reference quanti- adopt a measure intended to achieve the ties retained by producers. Even if such objective of stabilizing the markets, expressly losses had been incurred, there would have mentioned in Article 39(l)(c) of the Treaty. been no misuse of powers since the Commu- As I have said, the Court held in Hierl that nity institutions may give the achievement of the temporary withdrawal of reference quan- any one of the aims set out in Article 39(1) tities constituted an appropriate measure to temporary priority, to the detriment of the achieve that aim and there is no doubt that others. the definitive withdrawal of reference quan- tities is also appropriate.

50. Accordingly, the Council has not mis- used its powers in any way such as to affect 49. The absence of compensation for such the validity of Regulations N o 816/92 and permanent withdrawal could entail a reduc- N o 1560/93.

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