C-181/96

WILLENS v LANDWIRTSCHAFTSKAMMER H A N N O V E R

OPINION OF ADVOCATE GENERAL LÉGER delivered on 24 September 1998 *

1. The questions referred by the Bundesver- The system of premiums for non-marketing waltungsgericht (Federal Administrative and conversion Court) for a preliminary ruling relate to the Community regulations on milk quotas and in particular the provisions adopted following the Court's judgments in Mulder 1 and Von Deetzen 2 and applicable to producers of milk and milk products who were previously sub- ject to the legislation introducing a system of premiums for the non-marketing of milk and 3. Council Regulation (EEC) N o 1078/77 4 the conversion of dairy herds. therefore laid down measures to reduce the supply. In particular, a system of premiums was introduced for producers who ceased marketing milk and milk products from their holdings for a period of five years or who converted their dairy herds to meat produc- tion for a period of four years. I — The Community regulations

The additional levy system

2. The common organisation of the market in milk and milk products was established in 1968 by Council Regulation (EEC) N o 804/68. 3 As this market showed an inherent imbalance involving an excess of supply over 4. In 1984 it was observed that milk produc- demand from the outset, the Community tion continued to rise inexorably in spite of regulations stress the legislature's concern to the measures adopted. As stricter measures curtail the increase in production. were now necessary, the common organisa- tion of the market in milk and milk products

9. In Mulder and Von Deetzen the Court held that as the regulation failed to provide for the allocation of reference quantities to Slom pro- ducers it frustrated their legitimate expecta- 7. The general rules on the application of the tions as to the limited nature of the scheme additional levy were adopted in Council Regu- to which they were committed, and should lation (EEC) N o 857/84. 6 In Germany the therefore be declared invalid.

5 — Council Regulation of 31 March 1984 amending Regulation 7 — The term 'Slom' is taken from the Dutch 'slachtoffers omschak- N o 804/68 (OJ 1984 L 90, p. 10). ling', which means 'victims of reconversion'. The acronym 6 — Council Regulation of 31 March 1984 adopting general rules SLOM was already used in the Netherlands to represent for the application of the levy referred to in Article 5c of 'Stopzetting Leverandes en Omschakling Melkproduktie', Regulation (EEC) N o 804/68 in the milk and milk products meanings 'suspension of deliveries and conversion of milk sector (OJ 1984 L 90, p. 13, 'the contested regulation'). production'.

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WILKENS v LANDWIRTSCHAFTSKAMMER HANNOVER

10. In order to comply with those judgments Regulation (EEC) N o 1639/91 1 1to take the Council adopted Regulation (EEC) N o account of the judgments in Spagl and 764/89 8 which inserted into Regulation N o Pastätter. A second indent was thus added, 857/84 Article 3a, providing for the provi- extending the category of producers eligible sional grant of a special reference quantity to for the special reference quantity under Article categories of producers who had taken part in 3a to include those whose non-marketing or non-marketing schemes and who fulfilled cer- conversion period in performance of the tain conditions. undertaking entered into under Regulation N o 1078/77 ended during 1983.

shall receive on a provisional basis, on appli- 17. In June 1989 Mr Wilkens applied for a cation submitted within a time-limit of three provisional special reference quantity in order months from 1 July 1991, a special reference to resume milk production. The Land- quantity on the terms laid down in (a), (b) wirtschaftskammer Hannover, the defendant and (d) above.' in the main proceedings, certified that the legal requirements for the allocation of such a special quota were fulfilled, but reserved the right to withdraw its certification if the pro- ceedings then in progress before the Oberver- waltungsgericht resulted in a reduction of the II — The facts and the national proceedings premium or the milk quantity on which the premium calculation was based.

14. In June 1981 Mr Wilkens, the plaintiff in the main proceedings, obtained a premium 18. Following the judgment of the Oberver- for the conversion of his dairy herd to beef waltungsgericht Lüneberg of 26 April 1990 production. confirming the withdrawal of the premium, the Landwirtschaftskammer Hannover with- drew the provisional certificate by a decision of 13 July 1992. As a result no special refer- ence quantity could be allocated to Mr Wilkens.

15. In March 1983 the Bezirksregierung Han- nover (Hanover local government authorities) observed irregularities in the slaughter of dairy cows during an inspection of the holding. It revoked the decision to grant a conversion premium and demanded the repayment of the 19. Mr Wilkens' appeal against the with- first instalment, with interest. drawal decision was rejected by the Verwal- tungsgericht Hanover, as was the appeal to the Oberverwaltungsgericht Lüneberg.

22. By the first question, the Bundesverwal- tungsgericht seeks to know whether a pro- 21. The Bundesverwaltungsgericht was of the ducer who has given a non-marketing or con- opinion that the outcome of the proceedings version undertaking under Regulation N o depended on the interpretation and possibly 1078/17 12 but is no longer entitled to the rel- the validity of the second subparagraph of evant premium because he has failed to per- Article 3a(1) of the contested regulation, from form the obligations imposed by this under- which it appeared that the provisional alloca- taking may nevertheless be allocated a special tion of a special reference quantity depended reference quantity, under the second subpara- on the performance of the non-marketing or graph of Article 3a(I) of the contested regula- conversion undertaking given under Regula- tion, in order to resume marketing milk. tion N o 1078/77; it therefore stayed the main proceedings and submitted the following ques- tions to this Court for a preliminary ruling:

23. By the second question it asks whether the provisions of this text are compatible with the principles of protection of legitimate '(1) Does the second subparagraph of Article expectations and proportionality if they are 3a(1) of Regulation (EEC) N o 857/84, as interpreted to mean that the operator in ques- amended by Regulation (EEC) N o tion has no entitlement to a special reference 1639/91, preclude granting a provisional quantity. special reference quantity to producers who have been asked to repay a non- marketing or conversion premium on account of breach of the undertaking given by them?

25. The questions relate to the provisions of which the decision to withdraw Mr Wilkens' Article 3a of the contested regulation, which premium in this case casts doubt. were added as a result of the adoption of Regulation N o 1639/91 in order to extend the additional levy scheme to producers whose non-marketing period ended in 1983. The Bundesverwaltungsgericht stated that 'the applicant's obligations arising from his par- ticipation in the non-marketing scheme came to an end on 2 March 1983, when the grant 28. However, the condition may also be lim- of a premium was cancelled'. 13 ited to the requirement that the non-marketing period should expire in 1983, as is suggested by the object of the revision which led the Community legislature to amend Article 3a. It should be noted that Regulation N o 1639/91 is intended precisely to extend the additional levy scheme to producers whose non- marketing period ended during 1983. 15 O n 26. The national court rightly points out 14 that interpretation, the reference to '... per- that a literal reading of the text is not very formance of the undertaking given under helpful, as the provisions can be construed in Regulation (EEC) N o 1078/77' would simply two ways. serve to indicate the rules on which the under- taking is based.

31. The main purpose of these successive regulations is to re-establish the balance in the milk and milk products market by reducing the supply. 36. In order to determine the exact scope of the second subparagraph of Article 3a(1) we must refer to the decisions of the Court which were the immediate cause of the adoption of that provision. 17 32. Article 3a of the contested regulation, the purpose of which is to enable producers who have entered into undertakings under the non- marketing scheme to benefit from the addi- tional levy scheme, lies at the intersection of the two schemes. 37. In Mulder and Von Deetzen the Court ruled that '... the regulations on the additional levy on milk give rise to ... restrictions for producers who, pursuant to an undertaking entered into under Regulation No 1078/77, 33. It is justified by the need to protect the did not deliver milk during the reference legitimate expectations of that category of year'. 18 operators.

34. It should be borne in mind that the 38. The allocation of a special reference quan- original additional levy scheme did not take tity thus appears to be very clearly reserved account of producers in the non-marketing for producers who have given an undertaking scheme who had not delivered milk during under the non-marketing scheme and who the reference year because of their under- have not in fact sold milk or milk products at taking not to market. the expiry date of their undertaking.

16 — First recital of Regulation No 1078/77 and first to fourth 17 — First recital of Regulation No 764/89. recitals of Regulation No 856/84. 18 — Paragraphs 25 and 14 respectively; the italics are mine.

41. In Jensen 19 the Court emphasised that '... the essential reason in law for the granting and definitive acquisition of the non- marketing premium is the actual cessation of 45. Where the loss of entitlement to the pre- all marketing of the said products during the mium arises from a breach of the non- entire five-year period provided for ...'. marketing obligation, the claimant's reliance on the limited nature of the effects of the scheme to which he originally agreed, which are the prohibition on the marketing of milk and milk products for a predetermined period only and the subsequent option to resume 42. Secondly, pursuant to the contested regu- marketing, is no longer valid: the marketing lation the producer in question cannot be ban has been disregarded and the question of regarded as being among those entitled to resumption is no longer relevant, as it has allocation of a special reference quantity. already occurred.

43. The personal scope of Article 3a obvi- ously does not include producers who have 46. It should be stressed that the refusal to not performed their non-marketing under- allocate a special quota in this case does not taking. Conversely, the provision is designed constitute a penalty. The Commission pointed out, correctly, that the withdrawal of the pre- mium and the refusal to allocate a special quota •were merely the legal consequences of 19 — Case 199/87 [1988] ECR 5045, paragraph 30. See more the application of a legal regime. By the same recently Case C-127/94 Ecroyd [1996] ECR I-2731, para- graph 48. token I think that if the conditions governing

49. I also support the Commission's argu- 52. It cannot be denied that although Article ment that the defaulting producer forfeits the 3a does not authorise the allocation of a spe- cial reference quantity to producers who have marketed milk in breach of their undertaking, it nevertheless achieves its original purpose, 20 — See the discussion by Advocate General Jacobs of the notion of penalty in Community law, and in particular the exces- which is to enable operators who have ceased sively broad interpretation which the term is sometimes marketing under such an undertaking to given, in his Opinion in Case C-240/90 Germany v Com- mission [1992] ECR 5383, in particular paragraph 30. resume production.

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O P I N I O N OF MR LÉGER — CASE C-181/96

53. The interpretation I suggest does not tions the consequences for the producers of appear to infringe the principle of propor- the obligation to repay the premium fol- tionality, as the calculation, and possible lowing a failure to perform their undertaking, refusal, of the special quota is wholly depen- without giving further details of the nature of dent on the quantity of milk marketed by the the alleged infringement. producer in breach of his undertaking.

21 — An undertaking given under Regulation N o 1078/77 does not only include the producer's obligation not to dispose of milk or milk products from his holding during the non- marketing period; it also covers, for example, the obligation not to lease his dairy cattle or entrust them to others, whether for consideration or free of charge, or to dispose of his dairy cattle except for slaughter or export. 56. The rules applicable to producers who 22 — Case 358/97 [1989] ECR 891, paragraph 23 et seq. fail to fulfil their undertakings is not always 23 — Commission Regulation of 15 June 1977 laying down rules easy to determine; this is evident from the for the application of the system of premiums for the non- marketing of milk and milk products and the conversion of formulation of the question referred. It men- dairy herds (OJ 1977 L 150, p. 24).

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WILKENS v LANDWIRTSCHAFTSKAMMER H A N N O V E R

cation of a special reference quantity would undertaken in writing to perform the obliga- be affected by the loss of the right to the pre- tions entered into by its predecessor.' 26 mium for reasons other than the non- marketing itself.

63. In my opinion Ecroyd confirms the notion 60. In Ecroyd, on the contrary, one of the that proof of non-marketing is sufficient to questions related precisely to the allocation of justify the allocation of a special reference a special reference quantity in the event of quantity even if other requirements have not such a failure to perform. been fulfilled.

66. It could be certainly be argued, therefore, that the infringement of another obligation, for example the disposal of the dairy herd for purposes other than slaughter or export, 27 could justify the refusal of a special quota, as 70. In fact the Court appears to have regarded well as the loss of the premium. the failure to comply with the legal formality which was at the origin of the Ecroyd case, as likewise insufficient to justify either the with- drawal of the premium or the refusal of the special quota, which explains the validation of the two measures.

67. However, the infringement of that type of obligation is already covered by the system established by Regulation N o 1078/77, which allows for the repayment of premiums in such cases; in my opinion that is not comparable with the breach of the non-marketing obliga- 71. I think that that will not necessarily be so tion. Proof of infringement of those obliga- in all circumstances precisely because of the tions is not sufficient to establish that milk or purpose of Article 3a. milk products have been disposed of, which is the sole justification for a refusal to allocate a special reference quantity, for the reasons already given.

72. Loss of entitlement to the non-marketing premium does not necessarily entail refusal of a special quota, unless the operator's failure 68. I would also dismiss the notion, appar- to perform his undertaking under Regulation ently supplied by Ecroyd, that there is a nec- N o 1078/77 consists in breach of the non- essary connection between the grant or reten- marketing obligation. tion of a non-marketing premium and the allocation of a special reference quantity.

74. The system established by Article 3a has a purpose other than that of guaranteeing the effective implementation of the scheme. It could only have been intended to enable pro- ducers who have ceased marketing to resume at the end of the legal period, in application 77. The national court states that the judg- of the contested regulation. To add the refusal ment under appeal does not state that the of a special quota to the refusal of a premium applicant failed to observe the prohibition on where marketing has not been proved amounts milk production, and the Landwirtschaftska- to an attempt to supply what is absent from mmer Hannover does not claim that he did. 29 the second indent of Article 3a(1), contrary to Mr Wilkens claims that he was not alleged to that purpose. As a result the producer who have continued milk production during the has fulfilled his non-marketing obligation is conversion period. 30 However, the Council deprived of the right to resume production claims that Mr Wilkens has not produced for reasons which are not directly connected proof of performance of the obligation not to with the reduction of surpluses. dispose of milk products during that period. 31

75. It seems reasonable, therefore, to argue that the refusal to allocate a special reference 78. The national court states that the Land- quantity can only be based on the loss of wirtschaftskammer Hannover justified the entitlement to the non-marketing premium if retraction of the provisional declaration that this loss follows from a clearly established the conditions for the allocation of a special breach of the non-marketing obligation. quota were fulfilled on the basis of the with- drawal of the non-marketing premium. 32

(1) T h e s e c o n d i n d e n t of Article 3a(1) of C o u n c i l R e g u l a t i o n ( E E C ) N o 857/84 of 31 M a r c h 1984 a d o p t i n g general rules for t h e a p p l i c a t i o n of t h e levy referred t o in Article 5c of R e g u l a t i o n ( E E C ) N o 804/68 in t h e milk a n d milk p r o d u c t s sector, as a m e n d e d b y C o u n c i l R e g u l a t i o n ( E E C ) 1639/91 of 13 J u n e 1991, is t o b e i n t e r p r e t e d as p r e c l u d i n g t h e p r o v i s i o n a l allocation of a special reference q u a n t i t y t o a p r o d u c e r w h o has h a d e n t i t l e m e n t t o t h e p a y m e n t of a n o n - m a r k e t i n g o r c o n v e r s i o n p r e m i u m w i t h d r a w n o r f r o m w h o m r e p a y m e n t of t h e p r e m i u m is s o u g h t if t h a t w a s t h e result of t h e p r o d u c e r ' s n o n - p e r f o r m a n c e of t h e n o n - m a r k e t i n g obligation given u n d e r C o u n c i l R e g u l a t i o n ( E E C ) N o 1 0 7 8 / 7 7 of 17 M a y 1977 i n t r o d u c i n g a s y s t e m of p r e m i u m s for t h e n o n - m a r k e t i n g of m i l k a n d m i l k p r o d u c t s a n d for t h e c o n v e r s i o n of d a i r y h e r d s .

(2) E x a m i n a t i o n of t h e s e c o n d q u e s t i o n has revealed n o t h i n g capable of affecting t h e validity of t h e s e c o n d i n d e n t of Article 3a(1) of R e g u l a t i o n N o 857/84.

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