C-118/02

A — Community law 4. In order to limit dried fodder production within the Community, the amount for which aid may be granted is subject to maximum limits, depending on the method of drying. If these limits are exceeded in the 2. Council Regulation (EC) No 603/95 2 course of the marketing year, the aid is (hereinafter: 'the basic regulation') estab- reduced. The reduction applies uniformly in lished a common organisation of the all the Member States for the first 5% by market in dried fodder. The purpose of this organisation of the market is to introduce 3 — Under Article 1 of the basic regulation, the provisions apply primarily to the following products: flours and pellets of dried lucerne; lucerne, sainfoin, clover, lupins, vetches and 1 — Original language: German. similar fodder products; protein concentrates obtained from 2 — Regulation (EC) No 603/95 of 21 February 1995 on the lucerne juice and from grass juice; and dehydrated products common organisation of the market in dried fodder (OJ obtained therefrom. 1995 I. 63, p. II. 4 — See the second recital in the preamble to the basic regulation.

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which the maximum guaranteed quantity is cases conditional on the conclusion of exceeded.5 For any excess beyond 5% contracts between producers and proces- additional reductions are made in any sing undertakings. Under Article. 11(1) of Member State that has exceeded the the basic regulation, such contracts must national guaranteed amount. 6 state inter alia the area from which the crop is to be delivered to the processing under- taking, and the terms of supply and payment.

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— the checking and establishment of 10. Commission Regulation (EC) No entitlement to the aid, including any 785/95 8 (hereinafter: 'the implementing necessary controls, ..., regulation') contains the detailed rules for the application of the basic regulation. 9 According to the first recital in the pre- amble to the implementing regulation, certain concepts should be defined 'in order to ensure efficient application of the system of aid for dried fodder'. The implementing — the criteria for determining the mini- regulation lays down the detailed minimum mum quality, quality criteria in respect of moisture and protein content for dried fodder products referred to in Article 8 of the basic regulation. Essentially, aid is to be granted for products of sound and fair merchan- table quality which have left the processing undertaking and have the following char- — the conditions to be fulfilled by the acteristics: moisture content between 11% undertakings referred to in the second and 14%, and minimum crude protein indent of Article 9(c), as well as the content of 45% in the case of protein conditions referred to in Article 10, concentrates and dried products and of 15% in the case of other products.

— the control measure to be carried out referred to in Article 12(2),

11. In this connection, Article 9 of the implementing regulation requires proces- sing undertakings to determine, for fodder to be dehydrated and, where applicable, for sun-dried fodder delivered to them for — the criteria to be fulfilled for the processing, the quantities delivered, meas- conclusion of contracts referred to in ured by systematic weighing. They are also Article 9 and the information which required to notify the competent authority they 'must contain, in addition to the of the average moisture content, determined criteria laid down in Article 11, in accordance with the provision, within the specified time.

16. The preamble to that decree states:

14. Other provisions of the implementing regulation concern the cross-checks to be 'The Community provisions on aid for carried out by the competent national dried fodder are contained in. Council authorities (Article 14) and the information Regulation (EC) No 603/95 of 21 February to be supplied by Member States to the 1995 on the common organisation of the Commission (Article 15). It is perhaps market in dried fodder and in Commission

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Regulation (EC) No 785/95 of 6 April 1995 lishing that they meet the requirements laying down detailed rules for the applica- imposed in the Community legislation, tion of Regulation No 603/95. within the time-limits laid down therein.

Without prejudice to the direct applicability 2. They must notify the competent body of of those regulations, the competent national the Autonomous Community of the dis- authority to which they refer is to be patch schedule for dried fodder eligible for determined by national law. aid which is due to leave the undertaking.

referring court for a declaration that Article February 1995 and Commission Regu- 5(3) of Decree 283/1999 of 22 February lation (EC) No 785/95 of 6 April 1999 establishing the basic rules relating to 1995? the aid scheme in the dried fodder sector, published in Boletín Oficial del Estado No 46 of 23 February 1999 is unlawful and seeking the annulment of that provision.

19. It cites Regulation No 603/95 and Regulation No 785/95 in support of this 2. Is a national provision which makes view. Those regulations contain provisions the grant of aid for the drying of green laying down the conditions which proces- or fresh fodder subject to the condition sing undertakings and their production that the fodder must reach the proces- must meet in order to receive Community sing plant with a moisture content of aids. Only two aspects of the aid system are over 30% and an average moisture delegated to the Member States: checking content, on entry to the processing that the processing undertakings located undertaking, of at least 35%, mea- within their jurisdiction meet the conditions sured at least every 10 days, compa- for entitlement to aid, and administering tible with the second paragraph of payment of the aid. The Member States are Article 249 EC, Article 10 EC, the not, however, authorised to amend the second subparagraph of Article 34(2) Community regulations by establishing EC, Council Regulation (EC) No conditions or requirements which are new 603/95 of 21 February 1995 and or different from those laid down in the Commission Regulation (EC) No Community legislation. 785/95 of 6 April 1995?

4. Is a national provision which makes — the moisture content of green or fresh the grant of aid for the drying of green fodder when it is delivered to the or fresh fodder subject to the condition processing plant (second question), that the fodder must come from plots of land situated at a maximum dis- tance of 100 kilometres from the corresponding processing plant unless, in the latter case, a greater distance may be justified by the use of appro- priate specialised transport, compati- — the maximum period between delivery ble with the second paragraph of and processing of green or fresh fodder Article 249 EC, Article 10 EC, the (third question), second subparagraph of Article 34(2) EC, Council Regulation (EC) No 603/95 of 21 February 1995 and Commission Regulation (EC) No 785/95 of 6 April 1995? — the maximum distance between the place where green or fresh fodder is grown and the place where it is processed (fourth question).

IV — Examination of the questions referred 22. All of the questions concern individual conditions with respect to green or fresh fodder for processing and all consequently raise in equal measure the issue of the relationship between national law and 21. By its questions, the referring court Community law on the organisation of seeks essentially to ascertain whether the markets. For reasons that will be explained, basic regulation and the implementing a single answer to the questions will suffice regulation preclude national provisions because, in my view, despite the fact that which lay down specific conditions with they refer to different conditions, the respect to green or fresh fodder for proces- questions should be taken in conjunction sing and as to where such fodder is grown. and examined together. These conditions relate to:

24. The Commission refers in its written observations to the judgment of 18 Septem- ber 1986 in Case 48/85, 10 in which the Court held that 'it is one of the fundamental characteristics of a common organisation of the market that in the sectors concerned the 26. In the light of this case-law, the Member States can no longer take action following steps are mandatory in determin- through national provisions adopted uni- ing whether a national measure is compa- laterally (see in particular the judgment of tible with Community law on the organisa- 29 June 1978 in Case 154/77 Procureur du tion of markets: it must first be ascertained Roi v Dechmann [1978] ECR 1573). Their whether the measure relates to a sector legislative competence can only be residual; which is regulated by a common organisa- it is limited to situations which are not tion of the market. If it does, it must then be governed by the Community rules and to ascertained whether the Community provi- cases where those rules expressly give them sion is intended to establish an exhaustive power to act'. scheme of regulation. If the measure has been adopted in a sector that is not regulated by the common organisation of the market in question or if the Community provision is not intended to establish an exhaustive scheme of regulation, further 25. Thus the Member States have only steps must be taken to determine, in the residual legislative competence in the sec- light of the effects of the national measures, tors regulated by a common organisation of the market. Whether or not a Member State may exercise this residual legislative com- petence depends in turn upon whether the 11 — Judgment in Case 218/85 Cerafel [1986] ECR 3513, paragraph 13, to which the Commission rightly refers. See also judgments in Case C-27/96 Danisco Sugar [1997] ECR I-6653, paragraph 24, Case C-1/96 Compassion in World Farming [1998] ECR I-1251, paragraph 41, Case C-507/99 Denkavit [2002] ECR I-169, paragraph 32, and 10 — Case 48/85 Commission v Germany [1986] ECR 2549, Case C-332/00 Belgium v Commission [2002] ECR I- paragraph 12. 3609, paragraph 29.

30. The Commission refers to practice in Spain, where green or fresh fodder is pre- dried in the open air, causing a loss of moisture. It concludes that this practice is contrary to the spirit and purpose of the 28. The Spanish Government and the Community system of aid, that is to say, Commission take the opposite view. The Regulation No 603/95 and Regulation No Commission refers to the settled case-law of 785/95, since the purpose of granting aid at a higher rate for artificially heat-dried products is precisely to compensate for the 12 — Attention is also drawn here to the fundamental judgments higher costs incurred in this method of in Case 51/74 Van der Hulst [1975] ECR 79 and Case drying. 83/78 Redmond [1978] ECR 2347, in w h ich the Court held that 'once the Community has... legislated for the establishment of the common organisation of the market in a given sector. Member States are under an obligation to refrain from taking any measure which might undermine or create exceptions to it' (Redmond, paragraph 56). 13 — Cited i n footnote 10.

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32. The referring court is asking for an interpretation of the second paragraph of Article 249 EC, Article 10 EC, the second subparagraph of Article 34(2) EC, Regula- tion No 603/95 and Regulation No 785/95. With regard to the second paragraph of Article 249 EC, the referring court appar- ently wishes to ascertain whether the fact that regulations are binding and directly 34. The sporadic references to 'green fod- applicable precludes the adoption of a der' — for example in the first indent of national provision of the kind at issue in Article 9(a) of the basic regulation — or this case. However, the answer to this 'fresh fodder' — for example in Article 2(2) question calls for an interpretation of the (a) of the implementing regulation or regulations concerned. This also applies to Article 11(1) of the basic regulation — do the duty of cooperation in good faith under not alter this assessment. Such references do Article 10 EC. The reference to the second not extend the scope of the market organi- subparagraph of Article 34(2) EC is pre- sation concerned but must on the contrary sumably to be understood as meaning that be seen in their legislative context in each a national provision of the kind at issue in case: they occur in the description of the this case could result in — prohibited — stock records to be kept pursuant to Article discrimination between producers and this 9(a) of the basic regulation or the proces- too must be examined in the course of sing contracts referred to in Article 9(c) of interpreting the two regulations. There is the basic regulation, thus in connection therefore no need for a separate examina- tion of the provisions of primary law cited in this case. 14 — See footnote 10 above.

with provisions designed to verify entitle- 37. It is therefore necessary to examine ment to aid. whether the national conditions at issue in this case interfere with the ability of the organisation of the market in dried fodder to function properly. It should be pointed out in this connection that Spanish proces- sing undertakings are among the principal beneficiaries of this system of aid. 17 The maximum guaranteed quantity has fre- 35. The referring court points out however quently been exceeded in Spain. The con- that both the basic regulation and the tested national measure lays down add- implementing regulation lay down condi- itional conditions with respect to products tions with respect to the moisture and for processing in a sector that is not protein content — that is to say, the quality regulated by the organisation of the market — of products covered by the common in dried fodder in order, in particular, to organisation of the market. 1 5In its opi- counter detrimental practices. 18 nion, that suggests that it is inadmissible to introduce further quality criteria. I, how- ever, cannot agree with that view inasmuch as the national conditions at issue in this case are precisely not applicable to products covered by the common organisation of the market. The contested national conditions could at most be brought into question if they were to make it effectively impossible 38. In so far as they relate to the moisture to satisfy the above quality criteria; but content of green or fresh fodder, the none of the parties, however, has claimed contested conditions take account of the that that was the case. fact that a higher rate of aid for artificially heat-dried fodder appears to be justified only if it uses more energy. 19Moreover, the contested conditions should help to improve the correspondence between national production and the maximum guaranteed quantity, so that from this point of view also any interference with the 36. It should be pointed out once again, in ability of the common organisation of the this connection, that the Member State concerned is in any case under an obliga- tion not to adopt any measure which might 17 — According to figures supplied by the Commission, produc- interfere with the proper functioning of the tion of artificially heat-dried fodder amounted to approxi- organisation of the market, 1 6irrespective mately I 571 000 tonnes in the marketing year 1997/98 (Total production for the 15 EU Member States: 4 282 000 of the scope of the common organisation of tonnes; comparable figures for 1998/99: 1 668 000 tonnes and 1999/00: I 769 000 tonnes). In the same period, the the market concerned. guaranteed quantity in Spam amounted to 1 224 000 tonnes, so mat production represented 128% of the guaranteed quantity. 18 — See, at point 30 above, the Commission's submission concerning the practice of pre-drying in the open air green 15 — See-, for example. Article 8 ot the basic regulation .inci or fresh fodder which is to be artificially heat-dried later. Article 3(1 Kb) of the implementing regulation. 19 — See the second recital in the preamble to the basic 16 — See footnote 11 above. regulation.

42. Discrimination prohibited under the second subparagraph of Article 34(2) EC also appears to be precluded, if only 40. At the request of the Court, the Spanish because green or fresh fodder is not subject Government and the Commission both to the organisation of the market at issue in explained along the same lines that the this case. Any inequality in the treatment Kingdom of Spain had not formally notified accorded to farmers subject to the national the adoption of the provisions at issue in conditions compared with other farmers in this case but that such notification pursuant the Community does not exceed that which to Article 12(3) of the basic regulation 20 is necessarily entailed by the lack of was in any event unnecessary because the harmonisation in this sector, which is not national provisions at issue in this case did governed by Community law. 21 not constitute a supervisory system within the meaning of Article 12(1). The applicant in the main proceedings was unable to 21 — According to settled case-law, the application of national law cannot be held to be contrary to the principle of non- discrimination on grounds of nationality merely because other Member States allegedly apply less strict rules. See judgment in Case C-50/96 Deutsche Telekom v Lilli 20 — That provision requires Member States to forward to the Schröder [2000] ECR I-743, paragraph 52, with further Commission the provisions they plan to apply to imple- references. On domestic discrimination, see the earlier ment Article 12(1) on the introduction of a supervisory judgment in Case 155/80 Oebel [1981] ECR 1993, system before such provisions are adopted. paragraph 9.