C-186/96

Hauptzollamt Trier

on the validity of the first paragraph of Article 3 and Article 4(1) of Council Regu­ lation (EEC) No 3950/92 of 28 December 1992 establishing an additional levy in the milk and milk products sector (OJ 1992 L 405, p . 1),

THE COURT (Sixth Chamber),

composed of: G. Hirsch (Rapporteur), President of the Second Chamber, acting for the President of the Sixth Chamber, G. F. Mancini, H . Ragnemalm, R. Schintgen and K. M. Ioannou, Judges,

Advocate General: D. Ruiz-Jarabo Colomer, Registrar: H . A. Rühi, Principal Administrator,

* Language of the case: German.

having regard to the Report for the Hearing,

after hearing the oral observations of Stefan Demand, represented by Mechtild Düsing, the German Government, represented by Ernst Röder, Ministerialrat in the Federal Ministry of the Economy, acting as Agent, the Council, represented by Jan- Peter Hix, and the Commission, represented by Klaus-Dieter Borchardt, at the hearing on 11 June 1998,

after hearing the Opinion of the Advocate General at the sitting on 7 July 1998,

gives the following

Judgment

1 By order of 19 March 1996, received at the Court on 3 June 1996, the Bundes­ finanzhof (Federal Finance Court) referred to the Court for a preliminary ruling under Article 177 of the EC Treaty a question on the validity of the first paragraph of Article 3 and Article 4(1) of Council Regulation (EEC) No 3950/92 of 28 December 1992 establishing an additional levy in the milk and milk products sector (OJ 1992 L 405, p. 1).

5 The abovementioned additional levy is payable on all quantities of milk delivered in excess of a reference quantity to be determined for each producer or buyer within the limit of a total quantity guaranteed for each Member State. The refer­ ence quantity exempt from the additional levy was, under Article 2 of Council Regulation (EEC) No 857/84 of 31 March 1984 adopting general rules for the appli­ cation of the levy referred to in Article 5c of Regulation (EEC) No 804/68 (OJ 1984 L 90, p . 13), equal to the quantity of milk or milk equivalent delivered or purchased, in accordance with the relevant formula, during the reference year. That year had been chosen by the Member States from the years 1981 to 1983. The Federal Republic of Germany opted for 1983.

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JUDGMENT OF 17. 12. 1998 — CASE C-186/96

6 On account of continuing excess milk production, the Community was forced to reduce further the total quantity initially guaranteed to Member States. In order to achieve certain reductions at the level of individual producers, the Community introduced, in the context of the additional levy scheme, various measures, such as programmes for definitive discontinuation of milk production or for mandatory reduction of the reference quantity initially granted, or a combination of those programmes.

7 Thus, excluding any reduction of the total guaranteed quantity in exchange for compensation, as decided on in 1986, Council Regulation (EEC) No 775/87 of 16 March 1987 temporarily withdrawing a proportion of the reference quantities men­ tioned in Article 5c(1) of Regulation (EEC) No 804/68 (OJ 1987 L 78, p . 5) tem­ porarily withdrew reference quantities of 4 % for the 1987/88 marketing year and of 5.5% for the following year. In exchange for that temporary withdrawal, provi­ sion was made for compensation of ECU 10 per 100 kilograms for each of those periods.

11 Pursuant to Article 1 of Regulation No 816/92, which inserted in Regulation (EEC) No 804/68 of the Council of 27 June 1968 (OJ, English Special Edition 1968 (I), p. 176) an Article 5c(3)(g), the temporarily withdrawn reference quantities were not retained in the total guaranteed quantities. The practical consequence of this was that individual reference quantities were reduced without compensation. However, it was the Council's intention to decide definitively on the future of the withdrawn reference quantities in the context of reform of the common agricultural policy.

12 The new scheme introduced by Regulation No 3950/92 codifies the provisions on reference quantities and additional levies. However, the rules announced in the con­ text of reform of the common agricultural policy concerning the definitive treat­ ment of the temporarily withdrawn reference quantities do not appear in that regu­ lation.

13 As regards the withdrawn quantities, Article 3 of Regulation No 3950/92 provides:

'The sum of the individual reference quantities of the same type may not exceed the corresponding total quantities to be determined for each Member State.

…'

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16 Next, Council Regulation (EEC) No 1560/93 of 14 June 1993 amending Regula­ tion No 3950/92 (OJ 1993 L 154, p. 30) fixed the total guaranteed quantities for each Member State, stating, in the second recital in the preamble thereto, that 'the temporary suspension of a part of the reference quantities ... under Regulation (EEC) No 775/87 was dictated by the market situation; ... a downward sliding indemnity was granted to producers for five years for the quantities thus suspended; ... Regulation (EEC) No 816/92, which extended the additional levy scheme ... did not adopt... the quantities previously suspended on account of the continuing sur­ plus situation which called for the 4.5% suspension of the deliveries reference quan­ tities to be consolidated into a definitive reduction of the guaranteed total quanti­ ties; ... in the regulations finally adopted in the milk and milk products sector to implement the reform of the common agricultural policy ... the quantities concerned have no longer been retained'.

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DEMAND v HAUPTZOLLAMT TRIER

17 The individual reference quantity of the plaintiff in the main proceedings, the reduc­ tion of which is at issue, includes inter alia an additional reference quantity which enabled him to increase his initial reference quantity. He acquired that additional quantity, for DM 1.60 per kilogram of milk, in the 1990/91 marketing year, as part of an operation undertaken at national, or regional, level for the purpose of reducing the individual reference quantities.

German law and the national proceedings

— grant to producers undertaking to discontinue definitively part of their milk production compensation to be paid in one or more annual instalments;

(b) ...

(c) grant producers undertaking farming as their main occupation an additional reference quantity, whether their herd fulfils the conditions set out in paragraph (b) or not.'

20 Under the Order, the operation was twofold. First, each producer prepared defini­ tively to discontinue milk production was offered compensation of DM 1.60 per kilogram of his guaranteed quantity.

21 Since the operation resulted in a reduction greater than that initially envisaged, the German authorities offered the surplus to those producers who wished to increase their quota against payment of a sum equal to the amount paid by Land Rheinland- Pfalz by way of compensation to producers who had discontinued milk produc­ tion. To that end, a producer wishing to acquire an additional reference quantity was required, under paragraph 3.1.2, to conclude an assignment contract with a producer who was discontinuing production and pay the price to the relevant public authority.

22 By decision of 13 December 1993, the HZA Trier confirmed the reduction of 4.74% applied by the dairy concerned, which affects without distinction both the initial reference quantities and the additional quantities acquired by the plaintiff in the main proceedings in the context of the operation undertaken in the 1990/91 marketing year.

25 The question whether the conversion of the temporary suspension of a percentage of the reference quantity into a definitive reduction without compensation is valid has already been examined by the Court of Justice in the case which gave rise to its judgment of 15 April 1997 in Case C-22/94 Irish Farmers' Association v Minster for Agriculture, Food and Forestry [1997] ECR I-1809, which was pending when the Bundesfinanzhof submitted its request for a preliminary ruling and to which that Court referred in the grounds of its order for reference.

26 In its judgment in Irish Farmers' Association, the Court held that, in so far as the provisions of Article 5c(3)(g) of Regulation No 804/68, inserted by Article 1 (3) of

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JUDGMENT OF 17. 12. 1998 — CASE C-186/96

Regulation No 816/92, and of Article 3 of Regulation No 3950/92, as amended by Article 1 of Regulation No 1560/93, converted the temporary withdrawal of a per­ centage of the reference quantity within the meaning of Regulation No 775/87, without compensation, into a definitive reduction, consideration of the general prin­ ciples of Community law such as the protection of legitimate expectations, non­ discrimination and proportionality as well as consideration of the fundamental right to property had disclosed no factor capable of affecting the validity of those provi­ sions.

27 On 22 April 1997, the Court forwarded a copy of the Irish Farmers' Association judgment to the Bundesfinanzhof and asked it whether it wished to maintain its request for a preliminary ruling.

31 Nor can the validity of Articles 3 and 4 of Regulation No 3950/92 be called in ques­ tion as regards the additional reference quantities which the plaintiff in the main proceedings was able to obtain only against payment of a sum of DM 1.60 per kilogram to the competent authority.

32 In that connection, it must be borne in mind at the outset that the additional refer­ ence quantities were not dealt with only in the judgment in Irish Farmers' Associa- tion and Others, cited above, but also in the judgments of the Court of First Instance in Joined Cases T-466/93, T-469/93, T-473/93, T-474/93 and T-477/93 O'Dwyer and Others v Council [1995] ECR 11-2071 and Case T-119/95 Hauer v Council and Commission [1998] ECR II-2713, in which the validity of Regulation No 816/92 was contested.

33 A Member State has such reference quantities available for reallocation only to the extent to which reference quantities initially granted to other producers have been released by the latter. As is clear from Article 5c(1) of Regulation No 804/68, inserted by Regulation No 856/84, the sum of all the individual reference quanti­ ties granted constitutes the total guaranteed quantity which may not be exceeded. Thus, the competent German authority was able to grant the plaintiff in the main proceedings only reference quantities which other producers chose not to produce any longer.

34 However, and quite apart from the fact that the amount paid by the plaintiff in the main proceedings is, in this case, equal to the sum paid by the competent authority by way of compensation for discontinuing production, the Community milk quota scheme creates no legal link between the two actions.

38 On the other hand, it would be contrary to the spirit and purpose of the additional levy scheme to exclude from a temporary suspension programme, followed by definitive reduction, reference quantities which, after being withdrawn from the market, are readmitted to it before reallocation to other producers. Since the pur­ chase of an additional reference quantity is an economic option which enables pro­ ducers to increase their volume of deliveries, those producers contribute to increasing the structural surplus in the sector. There is therefore good reason for them to be required to participate in the reduction effort asked of producers.

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DEMAND v HAUPTZOLLAMT TRIER

39 As the Advocate General stated in point 34 of his Opinion , the plaintiff in the main proceedings enjoys, in such circumstances, the same prerogatives and is subject to the same restrictions in respect of that additional reference quantity as any other producer in possession of an initial reference quantity.

The right to property and the principle of proportionality

40 With regard more particularly to the right to property, which, according to the plaintiff in the main proceedings, has been infringed, the Court held, in paragraphs 28 and 29 of Irish Farmers' Association, cited above, that the regulations in ques­ tion form part of a body of legislation intended to remedy the surpluses on the milk market and therefore correspond to aims pursued by the Community in the general interest and that the conversion into a definitive reduction without compensation does not affect the actual substance of that right.

44 It follows from the foregoing that consideration of the general principles of Com­ munity law, and in particular those of the protection of legitimate expectations and of the fundamental right to property, has not disclosed any factor of such a kind as to affect the validity of the first paragraph of Article 3 and Article 4(1) of Regula­ tion No 3950/92 in so far as those articles converted, without compensation, tem­ porary suspension of a percentage of the additional reference quantity granted in return for payment into a definitive reduction.

Costs

45 The costs incurred by the Commission, which has submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court.

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DEMAND v HAUFTZOLLAMT TRIER

On those grounds,

R. Grass P. J. G. Kapteyn

Registrar President of the Sixth Chamber

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