Important legal notice

61989C0016

European Court reports 1990 Page I-03185

Opinion of the Advocate-General

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Mr President,

Members of the Court,

1 . The College van Beroep voor het Bedrijfsleven ( administrative court of last instance in matters of trade and industry ), The Hague, has requested the Court for a preliminary ruling on the interpretation of Article 3(1 ) of Council Regulation ( EEC ) No 857/84 . ( 1 ) This provision reads as follows :

"For the determination of the reference quantities referred to in Article 2 and in connection with the application of formulas A and B, certain special situations shall be taken into account as follows :

( 1 ) producers who have adopted milk production development plans under Directive 72/159/EEC ( 2 ) lodged before 1 March 1984 may obtain, according to the Member State' s decision :

( i ) if the plan is still being implemented, a special reference quantity taking account of the milk and milk product quantities provided for in the development plan,

( ii ) if the plan has been implemented after 1 January 1981, a special reference quantity taking into account the milk and milk product quantities which they delivered in the year during which the plan was completed .

Investments carried out without a development plan can also be taken into account if the Member State has sufficient information ."

3 . In the meantime, the Court has already interpreted Article 3(1 ) of Regulation No 857/84 in its judgment of 11 July 1989 in the Cornée case . ( 4 ) The Cornée case concerned producers with a development plan which was still being implemented in 1983, the reference year chosen by France, and to which the first indent of the first subparagraph of Article 3(1 ) of Regulation No 857/84 applied . Mr Spronk, however, is a producer whose development plan was implemented in 1983, the reference year chosen by the Netherlands . From the order for reference it is clear in particular that the cowshed constructed by Mr Spronk was actually put into service before the end of 1983 . ( 5 ) The situation in the main proceedings therefore requires an appraisal on the basis of the second indent of the first subparagraph of Article 3 .

4 . As regards the facts of the main proceedings, the legislation applicable and the observations submitted to the Court, I would refer to the Report for the Hearing .

Power or obligation?

5 . By the first question the national court asks primarily whether Article 3(1 ) of Regulation No 857/84 merely creates a power for the Member States to grant a special reference quantity to producers who lodged a milk production development plan under Directive 72/159 before 1 March 1994 .

6 . The Court has already answered this question in its judgment in Cornée . In paragraph 13 of its judgment, it actually stated with regard to the first indent of the first subparagraph of Article 3(1 ) of Regulation No 857/84 ( that is to say, where the plan is still being implemented ) as follows :

"From the wording of the aforementioned provision it is clear that it grants to the Member States a discretionary power to decide whether special reference quantities should be allocated to the producers mentioned in that provision and, if so, to determine their size" ( emphasis added ).

In my opinion this interpretation also applies to the second indent of the first subparagraph of Article 3(1 ) ( that is to say in the case at issue in the main proceedings, in which the development plan has been implemented after 1 January 1981 ).

Limits of the power

7 . By the first and second questions the national court further seeks to establish the limits within which Member States must remain if they decide, in accordance with the aforesaid discretionary power, to grant a special reference quantity to producers with a development plan .

8 . In answering this question it should be remembered that the principal aim of the additional levy introduced in the milk sector is to curb the increase in milk production . ( 6 ) In accordance with that aim, Article 5 of Regulation No 857/84 requires the Member States, in granting additional reference quantities to various categories of priority producers referred to in Articles 3 and 4 of the regulation, to remain within the limits of the guaranteed total quantity referred to in Article 5c of Regulation No 804/68 . These additional quantities must be drawn from a reserve constituted by the Member State within the guaranteed quantity . The size of the reserve depends chiefly on the percentage reduction which the Member State applies pursuant to Article 2(3 ) of Regulation No 857/84 to the reference quantities to be granted to non-priority producers . ( 7 ) It is clear from all these provisions that the allocation of additional quantities to one category of producers is bound to reduce the quantities which may be granted to other categories . The Member States must therefore balance two conflicting interests : first, those of priority producers and non-priority producers and, secondly, as between the priority producers .

9 . Amongst the priority producers, producers with a development plan are an important category . In its judgment in Cornée the Court stated, however, that the implementation of a development plan does not confer on the producer concerned the right to produce the quantity of milk corresponding to the plan' s objective ( paragraph 26 ) and that they cannot rely on any alleged legitimate expectation based on the implementation of the plan in order to oppose any reduction in their reference quantities, provided that the reductions are permitted under the relevant Community rules and do not relate specifically to the reference quantities of that category of producer ( paragraph 27 ).

10 . From the foregoing observations it may be concluded that the Member States have a wide discretionary power as regards the allocation of reference quantities to producers with a development plan . This does not, however, mean that if, after balancing the interests in question, the Member States decide to grant a special quantity to this category of producers, they are entirely free to determine the condition and its size . They must consider the aim of Article 3(1 ) of Regulation No 857/84, which is to offer an opportunity to producers who have invested in their holding to make a return on their investments ( see paragraph 12 of the judgment in Cornée ).

In accordance with this aim, the first subparagraph of Article 3(1 ) of Regulation No 857/84 provides that Member States who grant a special reference quantity to producers with a development plan must determine this quantity "taking account" either ( first indent ) of the production provided for in the development plan, if the plan is still being implemented, or ( second indent ) of the production in the year in which the plan is completed .

11 . As regards the first indent, the Court states in Cornée that the words "taking account" must be interpreted as meaning that the quantity granted must bear a relation to the production objective of the development plan ( paragraph 14 ). From that the Court inferred that the allocation of a single fixed quantity to all producers is incompatible with the regulation ( paragraph 15 ). The Court goes on to state, however, that the Member States are not required to observe a strict proportionality between the objective of the plan and the quantity to be granted . In other words, although the objective of the plan is the main criterion, other objective criteria may be applied as well ( paragraph 16 ).

12 . Under the second indent the Member States are required to "take into account" the milk quantities which the producers in question delivered in the year during which the plan was completed .

In the opinion which I delivered in Cornée ( point 20 ), I have already stated that this provision is irrelevant as regards producers of a Member State which has chosen 1983 as the reference year in accordance with Article 2(2 ) of Regulation No 857/84, if the producers completed their development plan in 1981 or 1982 . In such a case, the reference quantity for 1983 naturally takes account of an annual production which was fully achieved with the assistance of the installations invested in .

What if the plan is implemented in the course of the reference year chosen by the Member State? In such a case, must the special reference quantity be calculated with the milk production in the year in which the plan was completed as the main criterion? An affirmative answer would not be compatible with the aim of the provision, referred to above ( point 10 ), namely to permit producers to make a return on their investment . Thus the milk production achieved by Mr Spronk in 1983 is not representative of the increased production capacity at his disposal after the new cowshed was put into service in November 1983 . A reference quantity which takes account solely of actual production throughout the whole of 1983 would hardly be in keeping with the aforesaid objective .

In such a case it seems to me that it is more in keeping with the aim of the rules to interpret the wording of the second indent as requiring the quantity to be granted to take account of production capacity actually obtained after the plan had been implemented . It is then for the Member States, by extrapolation of the ( higher ) production achieved after the plan was implemented over the entire calendar year or by applying other objective criteria, to establish a relationship between the special quantity to be granted and the partially projected and partially obtained production capacity in the reference year .

13 . In its observations the Commission pointed out that the Member States must exercise the power conferred on them by Article 3(1 ) of Regulation No 857/84 in accordance with the general principles of Community law and in particular with the principles of equal treatment and non-discrimination, the protection of legitimate expectations and the prohibition of any misuse of powers . This goes without saying and, consequently, I do not consider that it should be stated in the reply to the national court .

The discretionary power in this case

14 . By the third question the national court seeks to establish whether Article 3(1 ) of Regulation No 857/84 permits the Member States to adopt rules such as those contained in Article 11 of the Super-Levy Decree as regards producers who have incurred investment obligations .

15 . The first feature of Article 11 of the Super-Levy Decree which should be noted is that the rules which it lays down are applicable both to producers who have made investments as part of an approved development plan ( such as Mr Spronk ) and producers who have invested without such a plan .

The possibility of taking account of producers who have made investments without a development plan is expressly mentioned in the second subparagraph of Article 3(1 ) of Regulation No 857/84 . It is subject to the condition that the Member State has sufficient information . This condition must of course be satisfied for each producer and indeed for each investment . I do not consider that it precludes general national rules in which producer-investors are treated equally, whether or not they have a development plan, provided that the national authorities in applying the rules ensure that the allocation of reference quantities to those without development plans is based on sufficient specific information .

16 . A further feature of the Netherlands rules is that the special quantity to be allocated is calculated on the basis of milk production in a period of approximately one calendar year before the investment obligations were incurred . ( 8 ) To this quantity is added a special quantity calculated in accordance with the following formula : a fixed quantity of milk ( 5 500 kg ) is allocated for each extra stall constructed; ( 9 ) three proportionate reductions are, however, applied to this additional quantity : first, a reduction of 20% applicable to all producer-investors, with the exception of new dairy farmers for whom a reduction of 10% applies; secondly, a reduction of one-third for producers such as Mr Spronk who have actually put the new stalls into service in 1983 ( for producers who put the stalls into use after 1983 but before 1 April 1985 the reduction is two-thirds ); thirdly, a reduction of 8.65% which corresponds to the percentage reduction applicable to all producers . The quantity to be granted may never, however, be lower than the quantity resulting from the application of the general rules applicable to producers .

17 . Producers like Mr Spronk who actually put new stalls into service in 1983 and whose development plan is therefore completed may thus claim a special reference quantity which bears some relation to the number of stalls constructed . This seems to me to be an objective criterion which means that the quantity to be granted takes account of production capacity obtained after investment and which is therefore consistent with the second indent of Article 3(1 ) of Regulation No 857/84 as I have interpreted it above ( in point 12 ). It is true that under the Netherlands rules a fixed quantity of 5 500 kg of milk is allocated for each additional stall . This fixed quantity - which according to the Netherlands Government corresponds to average national production in 1983 and which is also the same as that taken into account in Mr Spronk' s development plan - plays the part here of a unit of account, which enables reference quantities to be calculated without it being necessary to await the figures for actual production per stall . It does not mean that each producer is granted the same fixed reference quantity . By applying this criterion the Netherlands therefore has not exceeded its discretionary power .

18 . As I have already stated, Article 11 of the Super-Levy Decree provides that, for purposes of the calculation of the quantity to be granted to producers other than new producers, the number of additional stalls constructed must be reduced by 20 %. According to the Netherlands Government, this reduction was introduced because of the need to freeze production at 1983 levels, in view of the necessarily limited scope of the national reserve within the total national quota . These factors compelled the Netherlands authorities to adopt a restrictive policy as regards the allocation of additional quantities, especially as the general reduction percentage was not increased because this would have a disproportionate effect on other producers .

This percentage reduction is therefore the result of balancing the interests of the producers, which must be undertaken by every Member State when it divides the total guaranteed quantity . In my opinion the application of this reduction is also within the limits of the discretionary power conferred on the Member States by the Council .

19 . Another restriction under the Netherlands rules concerns the reduction by one-third or two-thirds of the quantity calculated on the basis of the number of additional stalls constructed, according to the time at which the new stalls were actually put into service .

The representative of the Netherlands Government stated at the hearing that this phasing in time was the result not only of the limited size of the quantities to be granted but also of the choice made in the Netherlands to reduce the special quantity to be granted as the introduction of the additional levy became more and more foreseeable . This choice also seems to me to be within the limits of the discretionary power conferred on the Member States .

20 . The national court states that the restrictions inherent in the Netherlands rules may mean that no special quantity is granted to producers with a development plan ( which is not, however, the case of Mr Spronk ) or may be granted a quantity which is ( substantially ) lower than the production objective stated in the plan .

National rules which have such consequences are not, for that reason alone, incompatible with the relevant Community provisions . As I have already stated ( in point 9 ), the Court held in its judgment in Cornée that producers with a development plan could not rely on Directive 72/159 or on any alleged legitimate expectation in order to oppose Community rules restricting production which did not relate to them specifically .

21 . The order for reference lists further conditions to which Article 11 of the Super-Levy Decree subjects the granting of special quantities : investment obligations incurred before 1 September 1981 are disregarded; investments in stalls for dairy cows and cows in calf must attain certain minimum amounts; a minimum percentage is fixed for the increase in the number of stalls for dairy cows and cows in calf . From the order for reference it is clear, however, that Mr Spronk satisfies these conditions . They should therefore not be examined here .

Conclusion

22 . In view of the foregoing considerations I propose that the questions should be answered as follows :

"( 1 ) The first subparagraph of Article 3(1 ) of Council Regulation ( EEC ) No 857/84 leaves it to the Member States to decide whether a special reference quantity should be granted to producers who lodged a milk production development plan under Directive 72/159/EEC before 1 March 1984 .

( 2 ) In order to comply with the abovementioned provision the special reference quantity which a Member State decides to allocate to producers with a development plan must bear an appropriate relationship to the production objective provided for in the plan, if it is still being implemented in the reference year, or to the production capacity obtained after investment, if the plan was completed during the reference year .