C-428/99

3. Under Article 92 of the EC Treaty (now, after amendment, Article 87 EC), any aid granted by a Member State or through State resources which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods is deemed to be incompatible with the common market in so far as it affects trade between Member States. However, inter alia, aid to make good the damage caused by natural disasters or exceptional occurrences is deemed compatible with the 2. In those circumstances, the College van common market. Beroep voor het Bedrijfsleven (Commercial Court of Appeal) wishes to know whether the Netherlands authorities were entitled to adopt the original national rules and, depending on the answer to that question, whether Community law precludes pay- ment in accordance with those rules, in 4. Under Article 93(3) of the EC Treaty particular in the light of a possible legit- (now Article 88(3) EC), the Commission imate expectation based on the initial must be given advance notice of any plans assessment. to grant or alter aid. If it considers that a plan is not compatible with the common market, it must decide, after allowing the 1 — Original language: English. parties concerned to submit their com-

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ments, whether the aid must be abolished procedure provided for in Article 27. 4 or altered. The Member State concerned Those measures may only be taken in so may not put its proposed measures into far as, and for as long as, is strictly effect until a final decision has been necessary for the support of that market.' reached.

6. Article 23 of Regulation No 805/68, as 8. Article 8(1)(a) of Council Directive amended by Regulation No 1261/71, 3pro- 90/425/EEC 5 provides, inter alia: vides: 'In order to take account of the restrictions on free circulation which may result from the application of measures for combating the spread of diseases in ani- mals, exceptional measures of support for 'If, during a check carried out at the place the market affected by those restrictions of destination of a consignment or during may be taken in accordance with the 4 — Article 27 refers to measures to be taken by, and on the proposal of, the Commission after consulting the Manage- 2 —Regulation (EEC) No 805/68 of the Council of 27 June ment Committee for Beef and Veal and subject to the 1968 on the common organisation of the market in beef and acquiescence of the Council. veal, OJ, English Special Edition 1968(I), p. 187 5 — Council Directive 90/425/EEC of 26 June 1990 concerning 3 — Regulation (EEC) No 1261/71 of the Council of 15 June veterinary and zootechnical checks applicable in intra- 1971 on exceptional measures to be taken in different Community trade in certain live animals and products with agricultural sectors arising from health protection problems, a view to the completion of the internal market, OJ 1990 OJ, English Special Edition 1971(II), p. 377. L 224, p. 29.

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transport, the competent authorities of a The protective measures provided for Member State establish in Article 10 may be applied.

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that it had taken certain measures as a such calves might enter the food chain had result of new information on the appear- led to a lack of consumer confidence in beef ance of certain cases of Creutzfeldt-Jakob and a disturbance of the markets in Bel- disease in humans, possibly linked to BSE. gium, France and the Netherlands. It was As a result, other Member States decided to therefore necessary to take exceptional ban imports of live bovine animals and beef measures to support those markets by and veal from the United Kingdom. In establishing a Community co-financed Decision 96/239, 8the Commission pointed scheme authorising those Member States out that although a definitive stance on the to purchase the animals concerned with a transmissibility of BSE to humans was not view to killing and subsequently destroying then possible, a risk of transmission could them. The price paid to producers was to not be excluded. Since the resulting uncer- compensate them for not selling the calves tainty had created serious concern among in question, and it was appropriate to base consumers, the Commission decided, as an that price on the most recently observed emergency measure, to ban the transport of price of carcases of calves on the Commu- all bovine animals and all beef and veal or nity market, namely ECU 2.8 per kilogram derived products from the United Kingdom live weight. to the other Member States. 9

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13. In accordance with Article 7, Regu- 16. Rules governing the payment of com- lation No 717/96 entered into force on the pensation to the owners of slaughtered day of its publication in the Official calves 12 were also adopted on 3 April and Journal of the European Communities, came into force on 9 April 1996. Under namely 20 April 1996, but was to be those rules as initially adopted, the amount applicable from 11 April 1996. of compensation was to be the commercial value of the calves determined, on the basis of an expert appraisal, prior to their removal from the holding where they were kept. With effect from 17 April 1996, 13 a proviso was added to the effect that, 'as soon as an amount for compensation is determined under European legislation, that amount shall apply'. The rules were Netherlands legislation further amended on 26 April 1996 14 to the effect that compensation was to be ECU 2.8 per kilogram live weight, calculated in accordance with Article 2(1) of Regulation 14. The Netherlands authorities had, how- No 717/96. That amendment was to apply ever, already taken measures to deal with with retroactive effect as from 11 April the serious health concerns then prevalent. 1996. On 3 April 1996, under the Netherlands legislation on livestock and animal health and well-being, the Minister for Agricul- ture, Nature Management and Fisheries, acting in concertation with the State Sec- retary for Public Health and Sport, adopted a decree by virtue of which calves born in the United Kingdom were to be slaught- ered. 11

The dispute in the main proceedings 21. Appealing to the College van Beroep voor het Bedrijfsleven, Van den Bor argues essentially that neither the valuer nor the official of the inspection service gave any information of the change in the rules, and apparently themselves remained unaware of the change for a further two weeks 18. On 19 April 1996, calves belonging to during which valuation of British-born H. van den Bor BV ('Van den Bor') were calves continued. In those circumstances, valued by an expert at NLG 619 001.25, Van den Bor had a legitimate expectation prior to their purchase for slaughter, and that the amount of the valuation would be Van den Bor was issued with a statement paid. by the area director of the national live- stock and meat inspection service confirm- ing that valuation as the amount which would be paid in compensation. It appears that the calves were actually bought in by the national intervention agency on 25 April 1996. 22. The College took the view that if national law alone were applicable, Van den Bor would have such a legitimate expectation. That might not however be the case if the intervention agency were obliged by Community law to assess the compensation as it finally did. In that 19. On 4 June 1996, the intervention regard, a number of questions arose, in agency sent Van den Bor a confirmation particular as to the competence of the of the purchase, stating that the price paid Netherlands authorities to adopt their would be NLG 5.99 (equivalent to ECU own rules pending the adoption of Com- 2.8) per kilogram live weight. On that munity legislation. The national court basis, a total of NLG 609 266.10 was therefore stayed the proceedings and apparently paid. requested the Court of Justice to give a preliminary ruling on the following ques- tions:

2. If the answer to Question 1 is in the negative, does Community law pre- clude the honouring of the expectation 24. As I have noted at paragraph 19 of my raised by a decision under the above- Opinion in Denkavit, 15 it is clear from the mentioned national rules that a spec- Court's consistent case-law that, where ified amount of compensation will be there is a common organisation of the paid, which if solely national law were market, the competence of the Member applicable, would have to be regarded States to take independent action in the as justified? sector concerned is limited to cases where the specific matter is not regulated at Community level or where specific com- petence is granted by Community law. 16 However, they are obliged to take whatever steps are necessary to ensure implemen- tation of the Community rules. 17 In any event, they may not take any measures which undermine, create exceptions to or 3. If Question 1 is answered in the affirm- interfere with the proper functioning of the ative, does Community law, and in common organisation. 18 particular Regulation No 717/96, pre- clude the compensation to the appel- lant from being determined in accord- ance with the abovementioned national rules?'

25. For the reasons given in paragraphs 23 to 32 of that Opinion, I consider that Article 8(1)(a) of Directive 90/425 provided

15 — Case C-507/99, Opinion delivered today, 16 — See Case 48/85 Commission v Germany [1986] ECR2549, 23. Written observations have been sub- paragraph 12 of the judgment. mitted by the Netherlands Government and 17 — See Joined Cases 89/86 and 91/86 Etoile Commerciale and CNTA [1987] ECR 3005, paragraph 11 of the judgment. the Commission, both of which presented 18 — See Case 83/78 Redmond [1978] ECR 2347), paragraph oral argument at the hearing. Van den Bor 56 of the judgment and, most recently, Case C-1/96 Compassion in World farming [1998] ECR 1-1251, has made no submissions to the Court. paragraph 41.

29. I cannot agree with the Commission that the market-regulation aspect must prevail over the health protection aspect so that no authority for the payment of compensation could be derived from Direc- — Health protection tive 90/425. If it was justified to protect public health by ensuring that no meat from possibly suspect calves entered the food chain and if the promise of compen- sation was necessary to avert the risk of non-compliance with the slaughtering requirements, then the fact that such meas- 27. The Netherlands Government has ures may also have contributed to the argued essentially, in particular at the stabilisation of a severely disturbed market hearing, that the compensation scheme cannot negate the authority conferred by was inseparable from the public-health Articles 8(l)(a) and/or 10(1) of Directive aim pursued by the compulsory slaughter. 90/425 — always provided that the aim of To order slaughter on such a large scale protecting public health was not merely without paying compensation to owners ancillary or incidental to the pursuit of a would entail a serious risk that the origin of different aim. Here, the explanatory mem- calves would be concealed and their meat orandum to the decision setting up the would find its way on to the market, in compensation scheme refers exclusively to direct conflict with the aim sought. health concerns and to Directive 90/425.

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30. I consider that in the wholly excep- all to protecting public health in the con- tional circumstances prevailing at the time text of the internal market, as it is more- there was justification for the Netherlands over obliged to do pursuant to Directives Government to seek to eliminate all meat 90/425 and 89/662'. from British-born calves completely from the food chain, on public-health grounds. It will be recalled that there was great uncer- tainty then as to the precise mode of transmission of BSE among cattle and the duration of the incubation period, 19 together with serious concern over the emerging risk that it could be transmitted to humans in the form of a fatal, incurable and particularly distressing disease.

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33. It is perhaps worth noting that grounds, pending the adoption of a Com- Article 8(1 )(a) of Directive 90/425 provides munity compensation scheme. That view is that 'costs' (in French, 'frais') relating to unaffected by the fact that the compen- the measures are to be borne by the person sation contributed also to other objectives responsible for the animals, but I do not such as market stabilisation or support. consider the term to refer to the damage suffered as a result of their loss — com- pensation for such loss is a standard feature of both national and Community measures (including Regulation No 717/96) in such circumstances. The term 'costs' in my view refers rather to such items as the expense 36. However, if the Court should not take incurred in conveying animals to the desig- the same view, the compensation must be nated slaughterhouse. examined in the light of the rules on market intervention and State aid.

34. It may be borne in mind in that context that the Netherlands Government did not — Market intervention and State aid seek to apply its own compensation scheme in preference to the Community scheme under Regulation No 717/96. When it was known that a Community regulation would be adopted, the rules were amended to provide for a future change and, once the regulation was adopted, it was complied 37. In the hypothesis that the compen- with in full. It appears moreover from the sation scheme falls to be assessed in the case-file and from what the Netherlands light of the rules on the common organi- Government said at the hearing that no sation of the market in beef and veal and on compensation was ever paid out on the State aid, it cannot in my view be held that basis of the original national scheme but the Netherlands Government was entitled only in line with Regulation No 717/96. to implement its own scheme.

in trade with other Member States, it fell from the office of its Permanent Represen- within the definition in Article 92(1) of the tative to the Commission's Director-Gen- EC Treaty and was thus also caught by eral for Agriculture, informing the latter of Article 24 of Regulation No 805/68. the scheme, a copy of which was appar- ently attached. That letter was apparently not in any format approved by the Com- mission, such as that set out in Annex II to its letter to Member States of 2 August 1995, 25omitted much of the information to be given in accordance with that annex, and was not sent to the Secretariat-General of the Commission as requested therein. 39. The scheme might none the less have However, those requirements are not con- been regarded as aid to make good the tained in any legally binding document, 26 damage caused by natural disasters or and the Court has stated that in order for a exceptional occurrences and thus as com- notification to be regarded as complete, it is patible with the common market by virtue sufficient if it contains such information as of Article 92(2)(b) of the EC Treaty. 24 In will enable the Commission to form a that case, however, Article 93(3) requires prima facie opinion of the compatibility the Member State to inform the Commis- of the aid with the Treaty. 27 In those sion in advance of its plans to grant aid and circumstances, the Court does not have to refrain from implementing the aid until enough evidence here to conclude that the the Commission (or the Council, as the case Netherlands scheme in issue was not may be) has given its decision. adequately notified to the Commission for the purposes of Article 93(3) of the EC Treaty.

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and it appears that the Netherlands Gov- most if not all of the Court's case-law ernment at no time sought to implement it relating to payments by national authorities until it had been brought into line with the concerns situations in which aid has been provisions of Regulation No 717/96, thus unlawfully paid out and should be complying with Regulation No 805/68 and recovered. The present situation differs in obviating any further need for notification that Van den Bor wishes to rely on what is or approval. merely an alleged assurance that a certain amount will be paid.

43. Next, it may be noted that, as regards 28 —Case C-24/95 Alcan Deutschland [1997] LCR I-1591, legitimate expectation in Community law, paragraph 25 of the judgment and the case-law cited there.

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then Van den Bor could place no reliance before its publication, it may exceptionally whatever on any expectation that it would be otherwise where (i) the purpose to be be paid. achieved so demands and (ii) the legitimate expectations of those concerned are duly respected. 29

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original Netherlands rules provided for full than an expert valuation, since under the compensation on the basis of the commer- Netherlands scheme the latter was to be cial value of the calves as assessed prior to reduced if the general condition of the their removal from the holding, whereas animal warranted it. In those circum- Regulation No 717/96 provided for full stances, I take the view that the legitimate compensation on the basis of the most expectations of Netherlands calf producers recently observed price of carcases of calves were respected and that the retroactive on the Community market, in terms of effect of Regulation No 717/96 was justi- kilograms live weight. Clearly, the amounts fied. determined were likely to be very similar in both cases and it is noteworthy that, for Van den Bor, the difference seems to have been slight. In many cases, the result of the Community rules may simply have been a 51. That being so, the Netherlands auth- more precise determination of the amount orities were required to comply with the appraised by the expert valuer; in some, a provisions of that regulation when imple- fixed price per kilogram live weight may menting their compensation scheme as have been more favourable to the producer from 11 April 1996.

Conclusion

52. In the light of all the above considerations, I am of the opinion that the Court should answer the questions raised by the College voor Beroep van het Bedrijfsleven as follows:

The Netherlands Minister for Agriculture, Nature Management and Fisheries was authorised, under Article 8(1)(a) and/or Article 10(1) of Council Directive 90/425/EEC, to adopt on 3 April 1996 national rules enabling compensation to