C-186/96
ECLI:EU:C:1998:336
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DEMAND v HAUPTZOIXAMT TRIER
OPINION OF ADVOCATE GENERAL RUIZ-JARABO COLOMER delivered on 7 July 1998 *
1. In the present case the Bundesfinanzhof introduced with a view to reducing individual has referred to the Court a question for a reference quantities. Any producer prepared preliminary ruling on the validity of Regula to discontinue milk production on a perma 1 tion (EEC) No 3950/92 and, in particular, nent basis was offered compensation of the provision whereby the series of tempo DM 1.60 per kilograms of his guaranteed rary withdrawals of a part of the individual quantity. Since this scheme resulted in a higher reference quantities, free of levies, hitherto quantity than had been envisaged, the German allocated to milk producers ('milk quotas') authorities offered the surplus to producers became definitive without compensation. interested in increasing their quotas in return for payment of the compensation which the State had paid at the relevant time (DM 1.60 per kilogram).
Facts and main proceedings
4. In December 1993 the Hauptzollamt Trier, the national body competent for the imple mentation of the additional levy scheme, informed Mr Demand that his individual ref 2. Stefan Demand, the plaintiff in the main erence quantity at the dairy Erbeskopf eG, proceedings, is a dairy farmer in Ravers- Thalfang, for the current marketing year had beuren, Rheinland-Pfalz. been reduced by 4.74% with effect from April of that year. That figure consisted of the rate of reduction provided for in Regulation No 3950/92 (4.5%) plus a further reduction· (0.24%) governed by internal provisions (see point 22 below), which is not in issue. Mr Demand's quota thus fell from 165 503 3. In 1990/91 Mr Demand increased his ini kilograms to 157 658 kilograms per annum. tial quota to 67 784 kilograms of milk per annum. That increase came about in the con text of a national scheme (see point 25 below)
* Original language: Spanish. 1 — Council Regulation of 28 December 1992 establishing an 5. Mr Demand appealed against the Haupt- additional levy in the milk and milk products sector (OJ 1992 L 405, p. 1). zollamťs decision; he claimed, essentially, that
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there had been a breach of his fundamental Regulation (EEC) No 856/84 modified the right to property and also of the principles of common organisation of the market in that non-discrimination and protection of legiti sector by introducing an additional levy pay mate expectations. The Finanzgericht able in certain circumstances in addition to Rheinland-tfalz dismissed his appeal and at the existing 'co-responsibility' levy. Under the same time rejected his request that it this new control mechanism, which was appli should refer a question to the Court of Jus cable with effect from 2 April 1984, Commu tice for a preliminary ruling. nity milk producers were allocated individual reference quantities from the total quantity allocated to each Member State, not including the quantity intended for the Community reserve created in order to deal with the spe cific needs of some Member States and a 6. Stefan Demand then appealed, at last number of producers. instance, to the Bundesfinanzhof, where the question arose whether Regulation No 3950/92 was compatible with Community law, in so far as, by virtue of that regulation, the suspension of part of the reference quan tities allocated to producers was made defini tive, without any provision for compensation.
9. Any producer exceeding the reference quantity was required to pay an additional 7. Before examining that question it is first levy of at least 75% of the reference price necessary to describe the rules on the addi intended to finance the expenditure incurred tional levy scheme introduced in the common in marketing the surplus production. organisation of the market in milk and milk products in order to control excess produc tion.
Applicable rules
10. The general rules for the application of the additional levy scheme were established by the Council in Regulation (EEC) No Community legisUtion 3 857/84. That regulation allowed the Member
2 — Council Regulation of 31 March 1984 amending Regulation (EEC) No 804/68 on the common organisation of the market in milk and milk products (OJ 1984 L 90, p . 10). 8. In order to reduce the imbalance between 3 — Regulation of 31 March 1984 adopting general rules for the supply and demand for milk and milk prod application of the levy referred to in Article 5c of Regulation No 804/68 in the milk and milk products sector (OJ 1984 ucts and the resulting structural surpluses, L 90, p. 64).
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States to create national reserves of reference lation (EEC) No 775/87 temporarily with quantities in order to take account of the spe drew a proportion of the reference quantity, cial situations of some of their producers. amounting to 4% of the guaranteed total quantities for the period 1987/88 and 5.5% for the period 1988/89. Compensation was granted for that temporary withdrawal of a percentage of the quotas at a rate of ECU 10 per 100 kilograms for each of those periods.
11. The additional levy scheme was estab lished for a period of five years. None the less, the measures initially laid down were not 13. In 1988 it was agreed to extend the addi sufficient to balance supply and demand for 7 tional levy scheme until 31 March 1992. At milk and milk products. The Community the same time, Article 1 of Regulation (EEC) institutions therefore adopted further mea 8 No 1111/88 maintained the temporary with sures to reinforce the scheme, including com drawal of 5.5% of the total quantities pro pensation for any producer definitively dis 4 vided for in Regulation No 775/87, and continuing production and the reduction or extended it over the subsequent three temporary withdrawal of the total guaranteed 12-month periods (1989/90, 1990/91 and quantities of milk. This last-mentioned mea 1991/92). Moreover, Article 1(2) of Regula sure, which is the subject of the present case, tion No 1111/88 continued to provide for automatically entails a corresponding reduc compensation for withdrawal, albeit in the tion or temporary withdrawal of producers' form of the direct payment of digressive com individual reference quantities. pensation at the rate of ECU 8 per 100 kilo grams for 1989/90, ECU 7 per 100 kilograms for 1990/91 and ECU 6 per 100 kilograms for 1991/92.
12. Regulations (EEC) No 1335/86 and No 5 9 1343/86 reduced the total guaranteed quan 14. Regulation (EEC) No 3879/89 laid down tities by 2% for the period 1987/88 and 1% a further reduction of 1% of the guaranteed for the period 1988/89, without providing for total quantities, without any compensation, payment of compensation to the producers. In addition to that definitive reduction, Regu 6 — Council Regulation of 16 March 1987 temporarily with drawing a proportion of the reference quantities mentioned in Article 5c(1) of Regulation No 804/68 (OJ 1987 L 78, p. 5). 4 — This measure was introduced by Council Regulation (EEC) No 1336/86 of 6 May 1986 fixing compensation for the 7 —• This extension was provided for in Council Regulation (EEC) definitive discontinuation of milk production (OJ 1986 No 1109/88 of 25 April 1988 amending Regulation (EEC) No L 119, p. 21). 804/68 (OJ 1988 L 110, p. 27). 5 — Council Regulation of 6 May 1986 amending Regulation No 8 — Council Regulation of 25 April 1988 amending Regulation 804/68 (OJ 1986 L 119, p. 19) and Council Regulation of 6 No 775/87 (OJ 1988 L 110, p. 30). May 1986 amending Regulation No 857/84 (OJ 1986 L 119, 9 — Council Regulation of 11 December 1989 amending Regula p. 34). tion No 804/68 (OJ 1989 L 378, p. 1).
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with the aim of increasing the Community extending the additional levy scheme for a reserve. At the same time, Regulation (EEC) further year (from 1 April 1992 to 31 March No 3882/89 reduced the proportion of the 1993), in anticipation of the adoption of mea guaranteed total quantities temporarily with sures reforming the Common Agricultural drawn from 5.5% to 4.5%, in order to keep Policy ('CAP'). In order to continue to con the non-withdrawn reference quantities unal trol production during that period, Regula tered. Regulation No 3882/89 also increased tion No 816/92 provided that the Commis the compensation provided for in Regulation sion might propose a reduction of the No 1111/88 to ECU 10 per 100 kilograms for guaranteed total quantity, in return for com 1989/90, ECU 8.5 per 100 kilograms for pensation, so that the rationalisation efforts 1990/91 and ECU 7 per 100 kilograms for already begun could be continued. Further 1991/92, in order to continue to pay pro more, that regulation fixed the guaranteed ducers the amount resulting from the rate of total quantities without taking account of the withdrawal of 5.5%. 4.5% of the reference quantities temporarily withdrawn by Regulation No 775/87, whose future was to be definitively decided by the Council in the course of the reform of the CAP.
15. In 1991 the Community institutions adopted Regulation (EEC) No 1630/91, 11 which reduced the guaranteed total quantities by a further 2 %. In this case compensation was provided for in Regulation (EEC) No 1637/91. 12
17. The transitional situation in 1992 ended with the adoption of Regulation No 3950/92, whose validity is at issue in the present case and which continued the application of the additional levy scheme for a further seven years and codified the existing provisions with the aim of simplifying and clarifying them. 16. The Council subsequently adopted Regu Article 4 of that regulation provided that the lation (EEC) No 816/92 13for the purpose of individual reference quantities were to be equal to those available on 31 March 1993, without prejudice to adjustments made at national level within the limits of the total 10 — Council Regulation of 11 December 1989 amending Regula tion No 775/87 (OJ 1989 L 378, p . 6). quantity allocated to each Member State. 11 — Council Regulation of 13 June 1991 amending Regulation Regulation No 3950/92 did not expressly No 804/68 (OJ 1991 L 150, p . 19). resolve the problem of the 4.5% of the indi 12 — Council Regulation of 13 June 1991 fixing compensation with regard to the reference quantities referred to in Article vidual reference quantities which had been 5c of Regulation No 804/68 and compensation for the definitive discontinuation of milk production (OJ 1991 temporarily withdrawn. The total quantities L 150, p . 30). allocated to the Member States for 1993/94 13 — Council Regulation of 31 March 1992 amending Regulation No 804/68 (OJ 1983 L 86, p . 83). were fixed, albeit subject to subsequent adjust-
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ment, by Regulation (EEC) No 748/93, ducers entitled thereto did not intend to use. which opted to maintain the quantities in This requirement replaced the mere power to force on 31 March 1993, increased by the authorise such temporary transfers provided 16 amounts from the Community reserve existing for in Regulation (EEC) No 2998/97. on that date. Regulation No 748/93 therefore excluded from the guaranteed total quantities for 1993/94 the reference quantities which had been temporarily withdrawn and which had not been maintained for 1992/93 by Regu lation No 816/92.
20. Article 8(1) of Regulation No 3950/92 provided that Member States might authorise, from 1 April 1993, 'the transfer of reference quantities between certain producer catego ries without transfer of the corresponding land'. These transfers were to be authorised on the basis of objective criteria and were to 18. The total quantities for each Member take place in defined regions. State applicable in 1993/94 were adjusted by 15 Regulation (EEC) No 1560/93. Article 1 of that regulation alters the wording of Article 3 of Regulation No 3950/92, fixing the total quantities for each Member State, which in the case of Germany were 27 764 778 tonnes. National legislation The second recital in the preamble to Regula tion No 1560/93 states that the temporary suspension in 1987 of 4.5% of the individual reference quantities is to be consolidated into a definitive reduction, for which no compen sation is provided.
21. The Community rules described above were implemented in Germany by means of a series of amendments of the regulation on guaranteed milk quantities (Milch- Guarantiemengen-Verordnung, hereinafter 'the MGV'). Article 4(1) of the MGV (as 1 amended on 24 March 1993) 7provided that 19. Under Article 6 of Regulation No 3950/92 from 1 April 1993 individual reference quan Member States were to authorise, for tities were to correspond to the quantities 12-month periods, temporary transfers of allocated to producers on 31 March 1993, less individual reference quantities which pro the quantities withdrawn up to that date.
14 — Council Regulation of 17 March 1993 amending Regulation No 3590/92 (OJ 1993 L 77, p. 16). 16 — Council Regulation of 5 October 1987 amending Regula 15 — Council Regulation of 14 June 1993 amending Regulation tion No 804/68 (OJ 1987 L 285, p. 1). No 3950/92 (OJ 1993 L 154, p. 30). 17 — BGBl. 1993 I, p. 374.
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22. Article 4(b)(6) of the MGV (as amended the Law of 17 July 1984 and reiterated, in 18 22 on 2 April 1992) provided that from 1 April particular, by the Law of 24 July 1990. The 1992 the 4.74% of the reference quantities latter law — whose legal basis was Article hitherto guaranteed was to continue to be 4(1)(a) of Regulation No 857/84 — provided suspended. The reason why this amount was that the Länder were authorised, subject to 0.24% higher than the amount withdrawn certain conditions, to grant compensation of pursuant to Regulation No 3882/89 (see point up to DM 1.60 per kilogram to any dairy 4 above) was that the German authorities had farmer prepared to discontinue milk produc previously allocated special reference quanti tion in whole or in part. The scheme proved ties in order to deal with particular situations. to be more successful than the authorities had Since this reduction was effected by an internal envisaged and a Land administrative regula 23 measure it falls outside the scope of the present tion was adopted which provided that the question. surplus quantities were to be offered to the remaining producers in return for payment of the same amount as that paid to those dis continuing up production (DM 1.60 per kilo gram).
23. In application of the Community legisla tion (see point 19 in fine, above), the MGV 19 (as amended on 3 July 1990) provided for the temporary transfer, for 12-month periods The question referred for a preliminary ruling and subject to certain conditions, of the refer ence quantities not used by producers.
26. In the proceedings between Mr Demand and the Hauptzollamt Trier (see point 6 above) the Seventh Chamber of the Bundesfinanzhof 24. The MGV (as amended on 24 September decided on 19 March 1996 to stay proceed 20 1993) authorised the transfer of quotas ings and to refer the following question to without transfer of the holding, in accordance the Court of Justice for a preliminary ruling: with the Community rules (see point 20 above).
'Are the combined provisions of Article 4(1) and the first paragraph of Article 3 of Regula
25. The scheme introduced by the German authorities to reduce individual reference quantities (see point 3 above) was initiated by 21 — Gesetz über die Gewährung einer Vergütung für die Auf gabe der Milcherzeugung fur den Markt, BGBl. 1984 I, p. 942. 22 — BGBl. 1990 I, p . 1470. 23 — Gewährung einer Vergütung für die endgültige Aufgabe der Milcherzeugung für den Markt und Zuweisung von zusät 18 — BGBl. 1992 I, p. 845. zlichen Anheferungs-Referenzmengen, Verwaltungsvorsh- 19 — BGBl. 1990 I, p. 1334. chrift des Ministeriums für Lanwirtschaft, Weinbau und 20 — BGBl. 1993 I, p. 1659. Forsten, MinBl. Rheinland-Pfalz 1991, p. 163.
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tion (EEC) No 3950/92 — whereby the sus 29. Expressed in those terms, the substantive pension, under Article 5c(3)(g) of Regulation question finds an adequate answer in the (EEC) No 804/68 as amended by Regulation Court's judgment of 15 April 1997 in Irish (EEC) No 816/92, of part of the reference Farmers Association and Others v Minister for quantities allocated to producers was trans Agriculture, Food and Forestry, Ireland and 25 formed without compensation into a perma the Attorney General (hereinafter 'the Irish nent reduction of those reference quantities, Farmers judgment'). In that judgment the without exempting from that reduction at compatibility with Community law of the least additional quantities acquired by pro definitive withdrawal of 4.5% of the indi ducers — compatible with Community law, vidual quotas at issue in this case was clari and in particular with the right to the protec fied. The Court then made a detailed exami tion of property and the principles of equal nation of the measure in question from the treatment and protection of legitimate expec point of view of the fundamental right to tations?' property and the principles of the protection of legitimate expectations, proportionality and equal treatment and concluded that consider ation of those principles had disclosed no factor capable of affecting the validity of the measure.
27. What falls to be determined, therefore, is whether certain provisions of Regulation 24 No 3950/92 to the effect that the 4.5% of the individual reference quantities hitherto 30. The Seventh Chamber of the Bundesfi temporarily withdrawn are not included in nanzhof none the less preferred to maintain Member States' overall quantities are compat its question for a preliminary ruling. In its ible with the fundamental principles protected letter of 30 July 1997 it stated, inter alia: by Community law. That regulation meant in practice that producers' quotas were defini tively reduced without any compensation being payable. 'In its reference for a preliminary ruling the Chamber also asked whether the transforma tion, without compensation, of the suspen sion of part of the reference quantities into a permanent reduction should not have exempted from that reduction at least refer 28. The grounds on which it is argued both ence quantities which producers had acquired in the order for reference and in the observa in return for payment (on the basis of alloca tions submitted to the Court that the regula tions by the Land). The Court of Justice did tion is invalid are a breach of the right to not address that problem in its judgment of property and of the principles of equal treat 15 April 1997 in Case C-22/94. ... Having ment and protection of legitimate expecta regard, in particular, to the principles of the tions. protection of property and of legitimate expec-
24 — As amended by Regulation No 1560/93. 25 — Case C-22/94 [1997] ECR I-1809.
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tations which the applicant invokes in respect the main proceedings to whom the 4.5% of the 67 000 kilograms of additional milk reduction applied account was taken not only quota acquired on the basis of allocations by of the quantities initially allocated (in 1984/85) the Land, the Chamber considers it necessary but also of those subsequently 'purchased' by to maintain its reference for a preliminary the producer. Thus between 1988 and 1992 ruling.' Michael Slattery had purchased a quota of 2 862 gallons of milk under a national milk restructuring programme. The reduction also applied, for example, to the 2 000 gallons of quota allocated by the Milk Quota Appeals Tribunal to John Corbett, an intervener in the main proceedings, with effect from 1992/93. 31. In this way, then, the national court limits On the other hand, the reduction did not the scope of the original question to the con affect the quantities 'taken on lease' by various tent of the parenthetical qualification ('with producers, since in that case the reduction out exempting from that reduction at least was applied to the lessors' quotas. additional quantities acquired by producers') and thus by implication acknowledges that the remainder of its question was given an adequate answer in the Irish Farmers judg ment.
32. The question referred to the Court might therefore be worded as follows: Does the fact that a proportion of the reference quantities 34. Second, as I explained earlier (see point 3 definitively reduced was acquired in return above), Mr Demand cannot be considered to for payment have any effect on the principle have purchased the 67 000 kilograms or so of established in the Irish Farmers judgment? To additional quota from the State. He merely my mind it must be answered in the negative. took advantage of the opportunity which the Land gave him to secure the transfer of a cer tain reference quantity originating in the quotas surrendered by other producers who preferred to discontinue production in return for payment of compensation, in exchange for which he was required to refund the State 33. First, the fact that in Mr Demand's case the specific amount which it had been required a proportion of the quota in question was to pay to producers ceasing production, acquired subsequent to the initial allocation namely DM 1.60 per kilogram. In those cir does not in itself constitute a new material cumstances it is clear that, as regards that fact. It is apparent upon examining the judg additional reference quantity, Mr Demand ment of reference of the High Court of Ire enjoyed the same prerogatives and was sub land in the Irish Farmers case that for the ject to the same restrictions as those producers purpose of calculating the reference quanti who ceased production. Accordingly, there is ties of each of the producers and plaintiffs in no reason for which a different set of rules
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should apply to the quantities by which according to its aims. In doing so the legisla Mr Demand increased his initial quota in ture is fully aware that economic dynamism 1990/91. will be sure to bring to light legal aspects of the new instrument which were not foreseen and probably not foreseeable. It will again be for the legislature or, as the case may be, the courts to define its limits and to adapt this foreign body to the workings of the law.
35. In the light of the foregoing observations, it would be legitimate, for the purpose of deciding the present case, to adopt in its entirety the Court's reasoning in the Irish Farmers judgment, which, in the absence of any distinction between the various means of acquiring reference quantities, should apply to all of them. I consider, however, that it might be useful to take the opportunity pro vided by the question referred to the Court to examine the legal nature of individual ref erence quantities or quotas.
37. To my mind that is the situation as regards the so-called milk quotas. The Community The nature of milk quotas legislature must have believed that it could simply regulate these instruments according to their purpose, namely to control milk pro duction within the Community, and leave it to each Member State to resolve the complex private-law issues which the introduction of the new scheme would inevitably raise. 36. We have come a long way since classical Mindful of the significance of the new arrange Roman times, when property signified a power ment, however, it laid down two important over a thing that was so direct and complete conditions: the quota scheme was introduced as to be indistinguishable from the thing itself. on a temporary basis and the quotas were Nowadays a large proportion of transactions linked with dairy holdings. Both of these relate to things which, strictly speaking, are conditions have been gradually weakened, the not things at all. They have been created in first because the quota scheme has been con order to satisfy a specific socio-economic sistently extended between 1984 and the function and, more than any other good, present time and the second because the depend on the legislative framework within Member States have been given increasingly which they arc created and sustained. Take, wider opportunities to authorise the transfer for example, industrial patents. In order to of reference quantities independently of the protect industrial products and thus encourage holding. Since 1 April 1993 Member States invention, the legislature creates a new legal have even been able to authorise, subject to instrument and defines its content primarily certain conditions, 'the transfer of reference
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quantities between certain producer catego whether the quota is an immovable asset or a ries without transfer of the corresponding movable asset or whether it is possible to land' (see point 20 above). provide real securities over the actual quota rather than the milk production effected there 32 under.
The justification for the indecisive and case- by-case approach which the Court of Justice tends to take in defining the criteria for pro tecting property interests is based, at least in part, on this wide range of views which the 38. The national legislatures have used those Community legislation has spawned within opportunities in very different ways. While in the legal orders of the Member States, in par England a veritable 'quota market' has flour ticular in the field of private law. 33
ished since the introduction of the scheme, the French rules do not even permit the tem porary transfers provided for in Article 6 of 26 Regulation No 3950/92. In the absence of a coherent and stable legislative approach, it comes as no surprise that the characterisation of milk quotas by national courts has ranged 27 from 'valuable intangible asset', or even 39. While the relative stability of the quota 'intangible asset susceptible of being leased or scheme over a given period helps to create a transferred, ownership of which constitutes a degree of legal certainty, the relaxation of the 2 subjective right', 8to the more modest conditions governing the transfer of quotas 29 'administrative restriction of production' or reinforces the concept which traders legiti 30 'fiscal advantage akin to a subsidy'. Legal mately have of the quota as an autonomous writers have already expressed doubts as to valuable asset. In those circumstances, and in spite of the great differences in regard to this matter between the individual national legal orders, I believe that milk quotas must cur 26 — See, in that regard, H . Gehrke, 'Wie gemeinsam ist die Gemeinsame Agrarpolitik? — Zur Ausführung der rently be regarded as authentic intangible EG-Regeln für die Übertragung von Milchquoten in England und Wales, Franckreich und Deutschland', European Review assets. However, since they were introduced of Private Law, 1995, pp. 21-52. 27 — 'Valuable intangible asset', per Justice Murphy in Lawlor v The Minister for Agriculture and Others, ILRM, 1988, p . 400. 28 — 'Bene immateriale, succettibile di affitto o cessione, la cui 31 — See, in that regard, A. Bernard: 'Les quotas laitiers, meubles titolarità costituisce posizione de diritto soggettivo', Tribu ou immeubles?', Revue de Droit Rural, No 150, February nale di Parma, judgment of 16 December 1993, reported in 1987, p. 49 et seq. Dir. e giur. agr. e dell'amb., 1994, p. 112. 32 — See, for example, J. M. De la Cuesta: 'Aspectos jurídico- 29 — 'Contingentement administratif de la production'; H . Savoie: privados de la llamada cuota lechera', Revista de Derecho 'Quotas laitiers, procédures administratives et droit de pro Privado, 1988, p . 1067 et seq. priété: trois décisions récentes du Conseil d'État', Revue de 33 — The result of this has been certain structural deficiencies in Droit Rural, No 231, March 1995, p. 113 et seq. the case-law of the Court of Justice as compared with that 30 — 'Subventionsähnliche abgabenrechtliche Bevorzugung'; of the national courts (for the German case, see T. Schilling: Bundesgerichtshof, order of 19 July 1991, reported in Agrar- 'Eigentum und Marktordnung nach Gemeinschafts- und recht, 1991, p. 344. nach deutschem Recht', EuGRZ, 1998, p. 189).
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for the purpose of regulating the market in from levy, one must take into account the milk, their content should be defined inherently regulatory nature of milk quotas according to that purpose, which continues before classifying those measures as expro to be their raison d'être. priations. In economic terms, one might per haps say that for a trader who holds a quota the intervention measures which affect that quota represent one more operating risk, closely linked with the situation on the market. That is a risk which the operator will have to bear, although only in consideration of the protection which the system affords him by 40. For those reasons I consider that exami guaranteeing a minimum price. nation of the validity of the measures adopted within the framework of the regulation of the market in milk must be centred on their necessity and proportionality in the light of the aim which they were intended to pursue. The conclusions drawn from that examina tion will have to be applied to every holder 42. Milk quotas thus constitute instruments of a reference quantity, irrespective of the of market intervention which, through the means whereby those quantities were allo process of the law, have become an item of cated (or, if one prefers, acquired). property. The content of that item of property/ instrument will clearly vary according to the various national legal systems. Some will require a closer link between the quota and a holding or will subject the transfer of the quota to various conditions. The quota is not thereby deprived of its character as an item or property, just as firearms or enriched ura 41. Put another way, although the fact that nium are not deprived of their character as milk quotas are in the nature of property may items of property by the restrictions on trans enhance their role in transactions to the point ferring them. Those conditions will only pro of protecting the subjective rights of those vide a means of preventing, to some extent, holding them, that aspect must not prevail the creation of 'quota markets'. over the paramount objective of regulating the market. Traders who deal in quotas (by means of the various transactions permitted under national law) must never lose sight of the fact that in the final analysis quotas are, in their essence and by virtue of their pur pose, instruments for regulating the market on a temporary basis and that this entails risks 43. The solution which I propose is, to my and uncertainty. That clearly does not mean mind, not only the one which best reflects that the legislature is completely free to dis economic reality; it is the one which permits pose of those reference quantities as it pleases. a more satisfactory protection of subjective It does mean, however, that when analysing rights. It is now less true than ever that 'the the validity of any regulatory measure, such right to property thus safeguarded within the as the 4.5% reduction of the quantities free Community legal order does not comprehend
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the right to dispose, for profit, of an advan Preliminary question: validity of the national tage, such as the reference quantities allocated rules on the reallocation of quotas in the framework of the common organisa tion of a market, which does not derive from the assets or occupational activity of the person 34 concerned'. That is what the Court appears to have meant by omitting that passage from the more recent Irish Farmers judgment. Unlike the approach it took in earlier cases, in that judgment the Court did not reject the allegation of violation of the right to property 45. At the hearing the Commission for the on the ground that quotas did not constitute first time expressed its doubts as to the com assets. On the other hand, the Court stated patibility with Community law of the German that 'conversion into a definitive reduction provisions, in so far as they permitted the without compensation does not affect the acquisition of specific quotas previously actual substance of that right [to property] released over and above the objectives fixed inasmuch as the Irish producers were able to (see point 25 above). In the Commission's continue to pursue their trade as milk pro opinion, although the promotion of the defini 35 ducers'. That statement shows that the tive discontinuance of milk production in Court decided to approach the legal impact return for payment of compensation was of intervention measures — which is what based on Article 4(1)(a) of Regulation No milk quotas are — on their own particular 857/84, the reallocation of quotas in return ground, that of the right to property. It only for payment of the same amount — estab remains, therefore, to say so clearly. lished by ministerial regulation — never had any basis in law. That provision was formally based on Article 4(1)(c) of Regulation No 857/84, which provided that Member States could allocate quotas to producers with a view to restructuring the milk sector. The Com mission considers that requiring payment by the beneficiaries of restructuring objectives is no way to pursue those objectives. In those circumstances, Mr Demand cannot rely as against the Community institutions on argu ments based on the operation of acquiring quotas in return for payment, since this clearly 44. Before concluding these preliminary falls outside the scope of Community law. observations, I should point out that the milk quota system not only serves as a useful instrument for the stabilisation of the market but also plays an important part in the restruc turing of the market.
34 — Case C-44/89 Von Deetzen v Hauptzollamt Oldenburg [1991] ECR I-5119, paragraph 27, and Case C-2/92 The Queen v Ministry of Agriculture, Fisheries and Food, ex 46. My own view is that even if the above- parte Bostock [1994] ECR I-955, paragraph 19 (emphasis added). mentioned redistribution measures are invalid 35 — Paragraph 29 (emphasis added). they are not so obviously invalid that the
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Court should make a declaration to that effect if only because it must be considered in rela in these proceedings without giving the par tion to its-function in society. Consequently, ties concerned, in particular the Federal restrictions may be imposed on it, in par Republic of Germany, the opportunity to be ticular under a common organisation of a heard on this matter. I consider, rather, that market, provided that those restrictions cor an absolute ban on the allocation, in return respond to objectives of general interest pur for payment, of milk quotas previously trans sued by the Community and do not consti ferred to the national' reserve pursuant to tute, with regard to the objective pursued, a Article 4(1)(a) of Regulation No 857/84, that disproportionate and intolerable interference is to say, within the framework of an opera affecting the very substance of the rights thus 36 tion intended to enable producers wishing to guaranteed. do so to discontinue milk production defini tively, is not to be inferred from Article 4(1)(c) of that regulation. In any event, since the solution which I recommend (see point 40 above) consists specifically in applying the same legal regime to quotas which have been acquired as to those initially allocated, for the purposes of the following examination, I shall, 49. There can be no doubt that the definitive in the following analysis, proceed on the reduction of 4.5%, without compensation, of plausible assumption that the national provi the reference quantities, irrespective of their sions under which the quotas were acquired origin, effected under Regulation No 3950/92 are compatible with the Community rules corresponds to objectives of general interest then in force. pursued by the Community institutions in the context of the common organisation of the market in milk and milk products, in par ticular the stabilisation of the market and the reduction of structural surplus. That is reiter ated in the 17th recital in the preamble to Regulation No 3950/92. Moreover, no one 47. I shall now examine the principles which, has denied before this Court that the purpose in the view of the national court and the pursued by the contested measure is in fact plaintiff in the main proceedings, may have one of general interest. been infringed as a result of the definitive reduction in the present case.
Infringement of the right to property 50. It remains to ascertain whether the reduc tion adopted may constitute a dispropor-
36 — Case 265/87 Schräderv Hauptzollamt Gronan [1989] ECR 2237, paragraph 15; Case 5/88 Wachauf v Bundesamt für Ernährung und Forslwirtscbaft [1989] ECR 2609, paragraph 48. As the Court of Justice has consistently 18; Case C-177/90Külm v Landwirlsbaftshammcr Weser-Ems [1992] ECR I-35, paragraphs 16 and 17; and Case C-280/93 held, property is not an absolute prerogative, Germany v Council[1994] ECR I-4973, paragraph 78.
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OPINION OF MR RUIZ-JARABO — CASE C-186/96
tionate and intolerable interference affecting the common organisation of the markets. That the very substance of the right to property, conclusion is reinforced by the fact that the having regard to the objectives already referred various measures adopted by the Community to, namely the stabilisation of the market and institutions since 1987 have not adversely the reduction of structural surpluses. affected the level of milk producers' income. Mr Demand claims that the price of milk has been falling in Germany since 1990 and pro duces private statistics to support his claim. The official data provided by the Commis 37 sion show, however, that between 1987 and 1996 the structural surpluses of milk and milk products were maintained, both in the Com munity as a whole and in the Federal Republic of Germany, despite the reduction at issue. As a result of that reduction the proportion 51. The same conclusion is valid for those of consumption to production in the Com producers who made use of the opportunity munity rose from 84% to 90% and the sub afforded by the relevant provisions to increase sidised quantities of butter and skimmed milk their reference quantities in return for the powder (products suitable for storage) fell by corresponding payment. Those producers 10% and 16% respectively. In spite of the derive greater benefit from the advantages of endeavours to limit production, in 1993 60% the common organisation of the market, in of the butter and 92% of the skimmed milk particular the guaranteed prices, while at the powder produced in the Community only same time increasing their proportional con found a market because of Community assis tribution to the structural surplus in that tance. Similarly, from the marketing year sector. It is therefore right that they should 1992/93, when the definitive reduction in the be obliged to participate in reductions of the present case was introduced, to 1995, the last guaranteed total quantities in the same pro 39 38 year for which figures are available, the net portions as other producers. total income of farms in Germany (as in the Community as a whole), far from falling, has consistently risen. In those circumstances, I consider that by adopting a reduction affecting a small percentage of producers' quotas (4.5%), which does not threaten the viability of farms, the Council acted within the wide discretion which it enjoys when regulating
52. For all those reasons, I conclude that in the present circumstances the definitive reduc tion of 4.5 % of the producers' quotas, without compensation, does not infringe the right to property.
39 — Joined Cases T-466/93, T-469/93, T-473/93, T-474/93 and 37 — Taken from Cronos, Eurostat. T-477/93 O'Dwyer and Others v Council [1995] ECR 38 — Taken from RICA, DG IV of the Commission. II-2071, paragraph 127.
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DEMAND v HAUPTZOLLAMT TRIER
Breach of the principle of protection of legiti- which did not extend the digressive compen mate expectations sation. The reference quantities which had been withdrawn were deducted from the guar anteed total quantities, leading to a reduction in individual quotas, while the Council reserved the right to decide what was to happen to those quantities in the light of market developments. Consequently, all that producers were promised was that the future 53. The Court of Justice has consistently held of that 4.5% of their reference quantities that 'while the principle of the protection of would be reconsidered, which in fact hap legitimate expectations is one of the funda pened when the Council adopted Regulation mental principles of the Community, traders No 1560/93 and decided to reduce the refer cannot have a legitimate expectation that an ence quantities definitively without compen existing situation which is capable of being sation. altered by the Community institutions in the exercise of their discretionary power will be maintained ... This is particularly true in an area such as the common organisation of the markets whose purpose involves constant adjustments to meet changes in the economic 40 situation'. In a similar context, 'the field of application of the principle of legitimate expec tations cannot be extended to the point of 55. I consider that a prudent and diligent milk generally preventing new rules from applying producer was in a position to foresee in good to the future effects of situations which arose 41 time that the reference quantities would be under the earlier rules'. 42 reduced without compensation, given the concurrent existence of the following factors:
54. In this case I consider that the withdrawal of the reference quantities, without compen — equivalent reference quantities had been sation, for 1992/93 and the permanent reduc withdrawn during the previous five years; tion effected by Regulation No 1560/93 (see point 18 above) were foreseeable by a pru dent and diligent trader. At the end of the five-year period established for the tempo rary withdrawal by Regulation No 775/87 the Council, following the proposal of the •— producers had benefited from digressive Commission, adopted Regulation No 816/92, compensation amounting to ECU 45.5 per 100 kilograms;
40 — Case C-350/88 Delacre and Others v Commission [1990] ECR I-395, paragraph 33. 41 — Case 203/86 Spain v Council [1988] ECR 4563, paragraph 42 — The same conclusion is found in the O'Dwyer judgment, 19. cited above, paragraph 54.
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OPINION OF MR RUIZ-JARABO — CASE C-186/96
— surplus milk production persisted in the If that conclusion definitely applies to the Community; quotas initially allocated, there is no reason why it should not also apply to reference quantities acquired in return for payment in the marketing year 1990/91. As I have already explained (points 3 and 34), the scheme entailed not the acquisition of newly- established reference quantities but the transfer of existing reference quantities which had — the Commission's proposal, set out in been released in favour of the State in return document COM(91) 409 final of 31 43 for payment of compensation. In acquiring October 1991, recommended the solu those quotas the new holder could not expect tion adopted by the Council. anything other than to be placed in the same legal situation as the producers discontinuing milk production, nor had he any reason to think that a quota acquired by transfer would be subject to a different regime from that applied to a quota initially allocated.
In any event, the additional levy system ceased to be applicable, in principle, on 31 March 1992 (see point 13 above). In renewing the system the Council therefore enjoyed a par ticularly wide discretion, so that no trader Breach of the principle of equal treatment could be certain that the existing system would continue to apply after 31 March 1992.
56. Accordingly, I consider that Regulation 57. The plaintiff in the main proceedings No 3950/92, as amended by Regulation No maintains that the reduction in the present 1560/93, does not breach the principle of case is comparable, as regards its effects, to protection of legitimate expectations by the partial discontinuation of production making definitive the temporary withdrawal without compensation. In that regard, the of 4.5% of the individual reference quantities producers concerned, especially those who without making provision for compensation. increased their quota in return for payment, were treated less favourably than those who received compensation for agreeing to dis 43 — OJ 1991 C 337, p. 35. continue production.
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DEMAND v HAUPTZOLLAMT TRIER
58. The principle of non-discrimination continue production and accept the compen between producers or consumers of the Com sation offered by the German authorities, or munity laid down in the second paragraph of to keep, or even to increase, the reference Article 40(3) of the Treaty requires that dif quantities, with the attendant advantages and ferent situations are not to be treated in the obligations, was eminently a matter for indi same way unless that treatment is objectively vidual judgment. It was for each producer to 44 justified. In that sense, the situation which weigh up the economic advantage associated Mr Demand assumed on acquiring the addi with discontinuing production with the com tional quota must be compared with the situ mercial prospects offered within the frame ation of which the said new quota takes work of the common organisation of the account, that is to say, with the situation of market in milk, which should have included the holders who discontinued production the matters to which I referred above in con immediately before they did so. That situa nection with the protection of legitimate tion was distinguished, first, by the fact that expectations: in other words, producers should those quota-holders were able, on a tempo have contemplated the possibility that the rary basis, to produce a specific quantity of guaranteed quantities would be reduced in milk exempt from the additional levy and the near future. indirectly enjoy a guaranteed price and, second, by the need to adjust the market intervention system in order to avoid, in par ticular, situations of surplus supply. I shall merely point out that there is nothing to dis tinguish those opportunities and obligations from those which the plaintiff now raises in connection with his new quota, which, more 60. To sum up, I consider that the allegation over, are the same as those which the refer of breach of the principle of non ence quantities initially allocated entail. In discrimination cannot be upheld. applying the reduction in the present case to every reference quantity, irrespective of how it was acquired, the Community legislature therefore scrupulously observed the principle of equal treatment. Other principles invoked
61. Mr Demand also alleges breach of the principle of proportionality and of the obli gation to state the reasons on which certain 59. The decision whether, in commercial acts of the institutions arc based (Article 190 terms, it would have been preferable to dis of the Treaty) and also misuse of powers. As formulated, the first and third of those allega tions arc covered, as regards the protection which they claim, by the arguments I have 44 — See, among many other judgments, Case C-311/90 Werl v Hauptzollamt Regensburg [1992] ECR I-2061, paragraph 18. already examined in connection with the prin-
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OPINION OF MR RUIZ-JARABO — CASE C-186/96
ciples of the right to property and the protec Court of Justice from exercising its power of tion of legitimate expectations. As regards review. Let me say, nevertheless, that the those three allegations, I would, for the rest, peculiar features of the Community legisla refer to my Opinion in the Irish Farmers case, tive process and the requirements of the prin cited above. I consider, therefore, that — ciple of transparency appear more and more analysed in its context — the lack of express to demand very close attention and great justification for the measure of reduction meticulousness in giving reasons for legisla without compensation does not deprive the tive measures which have a direct impact on applicant of the effective possibility of the terms under which the ownership of prop asserting his rights, nor does it prevent the erty can be vested in individuals.
Conclusion
62. In the light of the foregoing considerations , I propose that the Court should answer the question referred by the Bundesfinanzhof as follows:
These proceedings have not disclosed any factor capable of affecting the validity of Article 4(1) in conjunction with Article 3 of Council Regulation ( EEC ) No 3950/92 of 28 December 1992, even though that provision does not include in the reference quantities the 4 . 5 % temporarily withdrawn pursuant to Council Regulation ( EEC ) No 775 / 87 as amended , and even though it makes no provision for compensating producers and draws no distinction between the various possible ways of obtaining those reference quantities.
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