OPINION OF ADVOCATE GENERAL TESAURO

delivered on 26 Februry 1992 (*1)

Mr President,

Members of the Court,

1.The questions which the Verwaltungsgericht (Administrative Court) Frankfurt am Main has referred to the Court for a preliminary ruling hinge upon the interpretation of Article 6(5) of Commission Regulation (EEC) No 3540/85 of 5 December 1985 laying down detailed rules for the application of the special measures for peas, field beans and sweet lupins, (*1) which permits the partial recovery (in proportion to the seriousness of the infringement committed) of aid granted on such products if the quantity declared by the first buyer for the purpose of obtaining the aid is higher than that received.

In substance, in the present proceedings the Court is called upon to decide whether the abovementioned provision is also applicable by analogy if the first buyer has not complied with the obligation to pay the producer the minimum price laid down by the rules governing the sector in question.

2.The Community rules to which the case relates are set out in detail in the Report for the Hearing and I shall confine myself here to highlighting the aspects which are more directly relevant for our purposes.

In order to support production within the Community, Council Regulation (EEC) No 1431/82 of 18 May 1982 laying down special measures for peas and field beans (*2) established a system of aid for the legumes in question which are harvested in the Community and used to manufacture products for use as human foodstuff or animal feed. The aid is not paid direct to producers but to the final users; however, the granting of aid is made conditional on guarantees that the producer has received not less than the minimum price for the quantities for which aid is sought (Article 3(3)). Article 2a of the same regulation, as amended by Regulation (EEC) No 1485/85, (*3) introduced monthly increases in addition to the minimum price to be paid to the producer.

The terms on which aid is granted and the control procedures are governed by Council Regulation (EEC) No 2036/82 of 19 July 1982 adopting general rules concerning special measures for peas and field beans. (*4) Article 4(1) of that regulation requires the first buyer to lodge the contract made with the producer and a declaration certifying the quantity delivered by the latter (declaration of delivery) with the agency appointed by the Member State. The agency in question, after verifying the content of the contract and the declaration, delivers to the first buyer the ‘certificate of purchase at the minimum price’, that is a certificate confirming that the producer has obtained at least the minimum price for the quantity he has delivered, adjusted as appropriate by monthly increments (Article 4(2)). The aid is thus granted to each user, provided that he has lodged an application and the certificate of purchase at the minimum price with the agency appointed by the Member State and on condition that the quantity specified in the certificate has actually been used, after being placed under supervision, in the same undertaking (Article 5(1)).

3.Let us now come to the facts of the case. In 1986 Helmut Haneberg GmbH&Co KG (hereinafter ‘Haneberg’) bought peas for which the Bundesanstalt für landwirtschaftliche Marktordnung (Federal Office for the Organization of Agricultural Markets, hereinafter ‘the BALM’) issued certificates of purchase at the minimum price. A subsequent inspection by the BALM showed that the minimum price (DM68.29 per 100 kg) had been paid for the peas, but not the monthly increment (DM 0.43 per 100 kg).

Citing Article 6(5) of Regulation No 3540/85, the BALM required Haneberg to produce the certificate of purchase at the minimum price or to repay the aid granted. Deeming the regulation in question to be an inadequate legal basis for recovery of the aid, Haneberg challenged the decision before the Verwaltungsgericht Frankfurt am Main, which made an order for reference to this Court.

4.In its first question the national court asks whether Article 6(5) of Regulation No 3540/85 may be applied to recover aid in respect the legumes if the obligation to pay the producer at least the minimum price has not been met.

I observe first of all that the extremely clear drafting of the rule in question is such as to exclude its application by analogy for the purpose of the total recovery of an aid. It expressly contemplates the case in which the declared quantity is greater than that actually delivered and provides for the return of the certificate of purchase at the minimum price (so that it may be rectified and hence so that the correct aid may be paid) or, if the aid has already been paid, for the recovery of the aid on the excess quantity only. In my view, the fact that the rule in question does not contemplate the possibility of recovering the full amount of aid means that the possibility of applying it ‘by analogy’ if the obligation to pay the minimum price to the producer has not been met, which would lead to such an outcome, must be ruled out a priori.

5.With regard to the possibility of an application by analogy in the sense indicated by the national court in its second question, in other words in such a way that the penalty for noncompliance with the obligation to pay the minimum price is proportional to the seriousness of the infringement committed, I believe that the reply must also be in the negative.

The inapplicability of Article 6(5) to the case before the Court stems from the rationale of the rule in question and from the logic of the system governing aid for legumes. I would point out in this regard that the purpose of such a rule is to support Community production of the products in question and that such an objective is achieved by ensuring a fair return for producers, in other words at least the payment of the minimum price.

Hence it is clear that any disregard of the obligation to pay the minimum price, by however small an amount, is such as to jeopardize the achievement of the objective of the system, thereby undermining the very raison d'être of the aid. That is confirmed by the seventh recital to Regulation No 1431/82, which clearly indicates that the granting of aid is conditional on guarantees that farmers receive not less than the minimum price. In substance, the obligation in question is an essential precondition for the granting of aid, the disregard of which is therefore such as to justify the total loss of the aid.

In this regard, it is worth recalling that, in accordance with consistent case-law, (*5) the total loss of aid is legitimate as a result of noncompliance with an obligation which is essential for the proper functioning of the scheme of aids.

6.Furthermore, even a superficial examination of the circumstances expressly contemplated by Article 6(5) by comparison with the case of nonpayment of the due minimum price to the producer shows that application by analogy is to be ruled out. In the event of a difference between quantities, the mechanism established by the provision in question has no impact on the principal objective of the system, inasmuch as aid is in any case granted only in respect of the quantity for which the producer has received the minimum price, whereas should the minimum price not have been paid in full an essential condition for the actual granting of aid has not been fulfilled.

Moreover, it is clear in any case that application of the procedures laid down in the provision in question for the purposes of recovery would work, as a result of an entirely fictitious operation, to the disadvantage of the producer, who would receive only part of the minimum price; the same would apply if — in contrast to the case in point — the difference between the price actually paid and the prescribed minimum price were substantial. In order to apply the rule in question by analogy to a case in which the minimum price has not been paid, it would be necessary to convert the unpaid price fictitiously into a quantity in order to be able to recover the aid solely on the excess quantity. It is patently obvious that such an outcome is unacceptable; it would mean completely distorting the system, by allowing the producer to obtain the minimum price for only part of the quantity delivered to the first buyer.

In short, Article 6(5) of Regulation No 3540/85 cannot be applied either to recover the entire amount of aid, as the BALM has done, or, for the reasons I have just set out, in proportion to the seriousness of the infringement committed.

7.The preceding statement replies to the questions as put by the court of reference; in order to give helpful reply, however, it is necessary, in the absence of a specific provision governing the circumstances in question, to ascertain the consequences of an infringement of the obligation to pay the producer the minimum price.

I observe first of all that, in view of the foregoing, the claim by Haneberg that infringement of the obligation to pay the minimum price was without consequence at the time of the events in question is certainly unacceptable.

In the meantime Regulation No 3540/85 has been amended by Regulation (EEC) No 1561/90, (*6) which inserted Article 4a, under which a first buyer who has not paid the minimum price is obliged to pay the producer ‘an amount equal to twice the difference between the minimum price and the price actually paid’. That provision was adopted following the Council's amendment of Regulation No 2036/82 by means of Regulation (EEC) No 1789/89; (*7) the amendments abolished certain administrative documents, in particular the declaration of delivery, and strengthened a series of further controls.

It is primarily on the basis of Article 4a that Haneberg maintains that noncompliance with the obligation to pay the minimum price could at most entail a penalty in proportion to the infringement committed and hence to the amount of the ‘unpaid price’ but certainly not the recovery of the entire aid.

8.The fact that a rule similar to Article 4a was not envisaged in the system in force at the material time is easy to explain when it is considered that it was envisaged that the competent agency would carry out checks in advance for the purpose of issuing the certificate of purchase at the minimum price. In substance, the certificate was issued or in any case should have been issued only after verification that the producer had actually received the minimum price, including any monthly increments. Moreover, it was easy to verify that that condition had been met from the declaration of delivery, in which the minimum price and the quantity delivered were indicated.

The specific nature of the new rules just mentioned suggests that the fact that the possibility has been envisaged of subsequently rectifying the omission by paying the producer twice the difference between the minimum price and the price actually paid does not conflict with what was stated in section 5, namely that payment of the minimum price to the producer is the primary objective of the scheme in question and hence that failure to comply with such an obligation would in principle destroy the very raison d'être of the aid. This objective appears to be adequately safeguarded by the new rules, since the producer is paid the minimum price (or even twice the amount still owing to him) and since the risk of being excluded from the market by the withdrawal of ‘approval’ for the purposes of the operations in question is a very severe penalty for the first buyer, and more severe than complete recovery of the aid in a single case.

9.To return to the case before us, it should therefore be emphasized that the ‘loophole’ in question, which was perhaps due to the fact that the fabric of the system was considered to be sufficiently tightly woven to prevent cases such as this from arising, does not mean that failure to comply with the obligation under discussion was without consequence.

The absence of a specific provision, in the rules governing aid for legumes, to deal with cases such as the one before the Court did not in fact prevent any possibility of recovering the aid. In this regard, I recall that pursuant to Article 8(1) of Regulation (EEC) No 729/70 of the Council of 21 April 1970 on the financing of the common agricultural policy (8) the Member States are required, inter alia, to ‘recover sums lost as a result of irregularities or negligence’.

As the Court has already had occasion to state in the judgment in the Deutsche Milchkontor case, (9)‘in the absence of provisions of Community law disputes concerning the recovery of amounts unduly paid under Community law must be decided by national courts pursuant to their own national law subject to the limits imposed by Community law inasmuch as the rules and procedures laid down by national law must not have the effect of making it virtually impossible to implement Community regulations and national legislation must be applied in a manner which is not discriminatory compared to procedures for deciding similar but purely national disputes’ (paragraph 19).

In the same judgment the Court also dealt with another aspect of particular relevance to this, namely the consequences of the disregard by the competent national authorities of the obligation to carry out checks required by Community legislation in order to prevent the payment of Community aid in respect of products for which it ought not to be granted. In that regard, the Court held that ‘in the present state of development of Community law those consequences are determined by national law and not by Community law. It is therefore likewise the task of the national courts to determine them on the basis of the relevant national law’ (paragraph 44).

In the light of the foregoing considerations, I therefore propose that the Court should reply as follows to the questions raised by the Verwaltungsgericht Frankfurt am Main:

(1)Article 6(5) of Commission Regulation (EEC) No 3540/85 is not applicable if the obligation to pay the producer the minimum price has not been complied with.

(2)In the present state of Community law, sums unduly paid by way of aids under Community law are recovered by the national authorities according to the criteria and detailed rules laid down by national legislation subject to the limits imposed by Community law on the application of national law.

(3)Before issuing the certificate of purchase at the minimum price, the national authorities were required, pursuant to Article 4(2) of Council Regulation (EEC) No 2036/82 in force at the material time, to check that the first buyer had actually paid the producer at least the minimum price; it is for the national court to assess the consequences of any breach of that obligation for the purpose of recovering the aid unduly paid.

*1 Original language: Italian.

1 OJ 1985 L 342, p. 1.

2 OJ 1982 L 162, p. 28.

3 OJ 1985 L 151, p. 7.

4 OJ 1982 L 219, p. 1.

5 See for example Case 357/88 Hopermann v Bundesanstalt f Ur landwirtschaftliche Marktordnung [1990] ECR I-1669.

6 OJ 1990 L 148, p. 9.

7 OJ 1989 L 176, p. 11.

8 OJ, English Special Edition 1970 (I), p. 218.

9 Joined Cases 205/82 to 215/82 Deutsche Milchkontor v Germany [1983] ECR 2633.