Important legal notice

61988C0113

European Court reports 1989 Page 01991

Opinion of the Advocate-General

My Lords,

1 . Community legislation on milk quotas permits farmers whose level of milk production was affected by an exceptional event in the base year chosen by a Member State to opt for an alternative base year within a limited range laid down in the legislation . This reference for a preliminary ruling raises the question whether the Community legislation permits a farmer who has suffered a long-term reduction in production because of circumstances outside his control to choose a base year outside that range; and, if not, whether the legislation offends against general principles of law recognised in Community law . In the event that the farmer must choose his alternative base year within the range laid down, the national court seeks guidance as to exactly how the individual quota is to be calculated .

The legislative framework

2 . In an attempt to curb milk production, Council Regulation ( EEC ) No . 856/84, which amended Regulation ( EEC ) No . 804/68 on the common organisation of the market in milk and milk products, introduced a levy, additional to the co-responsibility levy, on quantities of milk or milk equivalent delivered beyond a reference quantity to be determined ( OJ 1984 L 90, p . 10 ). In implementing the levy system, Member States were allowed to choose between two formulae . Under Formula A, the levy is payable by the individual milk producer on the quantities of milk delivered to a purchaser which in the relevant twelve-month period exceed a reference quantity to be determined . Under Formula B, the purchaser ( e.g . the co-operative or dairy ) pays the levy on the quantities delivered to it by producers which, in the relevant twelve-month period, exceed a reference quantity to be determined . The purchaser then passes on the levy to the individual producers in proportion to their contribution to the excess . The sum of the individual reference quantities allocated in a Member State must not exceed the guaranteed total quantity established for that Member State on the basis of milk deliveries during the 1981 calendar year, plus 1 %.

3 . General rules for the application of the levy system and in particular the determination of reference quantities are laid down in Council Regulation ( EEC ) No . 857/84 ( OJ 1984 L 90, p.13 ). Of particular importance to this case is Article 2 which is concerned with the determination of the base year and the applicable coefficient . The format of Article 2 has since been changed by Council Regulation ( EEC ) No . 1911/86 ( OJ 1986 L 165, p.6 ) and Council Regulation ( EEC ) No . 2316/86 ( OJ 1986 L 202, p.3 ) but I shall refer to the 1984 text which was applicable at the material time .

4 . Under Article 2(1 ) the reference quantity is in principle to be "equal to the quantity of milk or milk equivalent delivered by the producer during the 1981 calendar year ( Formula A ), or to the quantity of milk or milk equivalent purchased by a purchaser during the 1981 calendar year ( Formula B ), plus 1 %". However, under Article 2(2 ), "Member States may provide that on their territory the reference quantity shall be equal to the quantity of milk or milk equivalent delivered or purchased during the 1982 calendar year or the 1983 calendar year, weighted by a percentage established so as not to exceed the guaranteed quantity ...". The percentage referred to may be varied on the basis of the level of deliveries of certain categories of persons liable for the levy, of the trend in deliveries in certain regions between 1981 and 1983 or of the trend of deliveries of certain categories of persons liable during this period . Under Article 2(3 ), Member States may also adapt the percentages referred to in Article 2(1 ) and Article 2(2 ) so as to ensure the application of Articles 3 and 4 of the Regulation .

5 . Articles 3 and 4 deal with the determination and allocation of additional reference quantities in certain special cases . Article 3(3 ) deals with hardship cases, and provides that "producers whose milk production during the reference year referred to under Article 2 has been affected by exceptional events occurring before or during that year shall obtain, on request, reference to another calendar reference year within the 1981 to 1983 period ".

Factual background

7 . The plaintiff in the national proceedings, Karl Leukhardt, is a dairy farmer . For reasons which are not disclosed in the order for reference, he suffered substantial and continuing losses of cows, with the result that his milk deliveries declined from 188,954 kg in 1980 to 160,707 kg in 1981, 142,417 kg in 1982 and 142,747 kg in 1983 . Following recognition as a hardship case, he was allocated a reference quantity on the basis of his deliveries in 1981, less 4%, giving rise to a figure of 155,500 kg .

8 . Appealing against that allocation, the plaintiff argued that his quota should be determined on the basis of his 1980 deliveries, which would give rise to a figure of some 182,600 kg . Failing that, he argued that the quota should be fixed on the basis of his 1981 deliveries plus 1%, that is to say, according to the formula laid down in Article 2(1 ) of Regulation No . 857/84 . This would result in a quota of 162,314 kg .

1 . Is Article 3(3 ) of Council Regulation ( EEC ) No . 857/84 of 31 March 1984 adopting general rules for the application of the levy referred to in Article 5c of Regulation ( EEC ) No . 804/68 in the milk and milk products sector to be interpreted as meaning - or, if it is in part invalid, to be supplemented so as to provide - that a milk producer whose milk production was affected by an exceptional event in every year from 1981 to 1983 may choose as the calendar reference year a different year, such as the next earliest, in which his milk production was not affected by an exceptional event?

2 . If Question 1 is answered in the negative : are Article 2(1 ) and ( 2 ) and Article 3(3 ) of Regulation No . 857/84 to be interpreted as meaning that a producer delivering to a purchaser whose milk production was affected by an exceptional event in the reference year chosen ( in the Federal Republic of Germany, 1983 ) may require the delivery reference quantity to be granted to him to be calculated either according to the method laid down in Article 2(2 ) of Regulation No . 857/84, on the basis of another calendar reference year ( 1981 or 1982 ), or, according to the method laid down in Article 2(1 ) of Regulation No . 857/84, on the basis of the quantity of milk delivered during the 1981 calendar year plus 1 %?

The first question

10 . As regards the first question, the plaintiff argues that the limitation of the choice of an alternative base year to the range specified in Article 3(3 ) of Regulation No . 857/84 in a case where a producer has, through exceptional circumstances, suffered a substantial decrease in milk production throughout the period 1981-1983, amounts to a breach of the prohibition of discrimination laid down in Article 40(3 ) of the Treaty, of the general principle of equality, of the protection of property and freedom of economic activity, and of the general principles of legal certainty and the protection of legitimate expectations .

11 . The Commission and the German Government, however, point out that the first question has already been answered in the Court' s judgment of 17 May 1988 in Case 84/87 Marcel Erpelding v . Secretary of State for Agriculture and Viticulture, and I fully agree with this statement . In the Erpelding judgment, the Court ruled that the provisions of Regulation No . 857/84 do not permit producers to choose a base year outside the range specified in Article 3(3 ), even in a case where the persons affected did not have any representative production during the whole of that period ( paragraph 18 ). The Court rejected the contention that the limitation in the choice of alternative base years discriminated against producers affected by exceptional circumstances throughout the period 1981-1983, finding that any difference of treatment was objectively justified by the necessity of providing, in the interests of legal certainty and of the effectiveness of the levy system, some limitation on the range of years capable of being considered as base years for the determination of quotas ( paragraph 30 ). I do not think that the reliance by the plaintiff in this case, in addition to the principle of non-discrimination, on the protection of property, the freedom of economic activity, and on the principles of legal certainty and protection of legitimate expectations, provide any ground for a different conclusion in these proceedings .

The second question

12 . The second question is concerned with the precise method of calculation of the individual reference quantity of a producer who has been recognised as a hardship case . Can such a producer, in addition to choosing ( within the range 1981-1983 ) a base year other than that adopted by the Member State for general application, also require, where the result would be more favourable to him, the application of a coefficient other than that generally applied in the Member State? Specifically, if the producer has chosen 1981 as his alternative base year, can he require that the coefficient which, under Article 2(1 ) of Regulation No . 857/84 is applicable to 1981 ( i.e . plus 1 %), be applied in determining his quota, or must he accept the coefficient adopted by the Member State under Article 2(2 ) of that Regulation ( i.e . in this case minus 4 %)?

13 . The Commission and the German Government have both submitted that Articles 2 and 3 of Regulation No . 857/84 cannot be interpreted as permitting the producer, in addition to the choice of an alternative base year, the choice of an alternative coefficient . I would say at the outset that I fully agree . My point of departure is the Erpelding judgment, already cited, in which the Court considered the interpretation of Regulation No . 857/84 and of Commission Regulation ( EEC ) No . 1371/84 laying down detailed rules for the application of the additional levy ( OJ 1984 L 132, p . 11 ) in order inter alia to decide whether a producer in a hardship situation could opt for an alternative base year outside the range laid down in Article 3(3 ) of Regulation No . 857/84 . The Court described the legislation as follows :

14 . It appears to me that the same reasoning must be applied in the present case . The detailed rules for the determination of quotas must be assumed to be complete . Therefore, in the absence of an express provision admitting this possibility, a producer should not have the choice of the applicable coefficient .

15 . No such express provision is to be found in the legislation . Article 3(3 ) of Regulation No . 857/84 plainly admits only the choice of an alternative base year, and says nothing about the applicable coefficient . Moreover, as the Commission and the German Government point out, the Court, when ruling on the interpretation of Article 3(3 ) in its judgment of 28 April 1988 in Case 61/87 André Thevenot v . Centrale Laitière de Franche-Comté stated that that provision leaves unaffected the application of the other rules concerning the determination of reference quantities and individual quantities, in particular the rules contained in Article 2 of Regulation No . 857/84 ( paragraph 18 ).

16 . Article 2 of Regulation No . 857/84 is concerned with the determination of the base year and the applicable coefficient and is plainly addressed to Member States . There is no suggestion in the provision that individual producers should have any say as to the choice of coefficient . Moreover, although Article 2 gives Member States a certain discretion as regards the choice of an alternative base year and the applicable coefficient, and as regards the variation or adaptation of that coefficient, that discretion is designed to take account of the considerations of a general nature set out in Article 2 and not to take account of the specific situation of individual producers . Thus where, under the first sentence of Article 2(2 ), a Member State chooses a base year other than 1981, it is bound to apply to the production in that year a coefficient which will achieve the same overall result as Article 2(1 ): it has no discretion, when fixing the coefficient, to apply a different percentage in individual cases . Under the second sentence of Article 2(2 ), the Member State has discretion to vary the coefficient on the basis of certain factors of a general nature, such as the trend in deliveries of certain categories of persons liable for the levy or in certain regions; again, there is no discretion to vary the coefficient in order to take account of individual situations . Similarly, Article 2(3 ) permits Member States to adapt the coefficient referred to in paragraphs 1 or 2 in order to ensure the application of Articles 3 and 4; but it is plain that the object of this provision is the overall reduction of reference quantities in order to provide for a reserve of quota for allocation in hardship and other special cases, rather than the adjustment of individual reference quantities in response to individual circumstances .

17 . Moreover, as the Commission points out, the judgment in Joined Cases 201 and 202/85 Klensch and Others v . Secrétaire d' Etat à l' Agriculture et à la Viticulture (( 1986 )) ECR 3477 confirms that within the framework of Article 2 of Regulation No . 857/84 a Member State must make a clear choice between the method of determination of the base year and the applicable coefficient laid down in paragraph 1, or the method laid down in paragraph 2 : it is not open to a Member State to combine elements from the two methods ( paragraph 15 of the judgment ).

18 . I am therefore of the opinion that the questions referred by the national court should be answered as follows :

1 . Article 3(3 ) of Council Regulation No . 857/84 must be interpreted as meaning that a milk producer whose milk production was affected by an exceptional event in every year from 1981 to 1983 may not choose as the calendar reference year a different year, such as the next earliest, in which his milk production was not affected by an exceptional event .

2 . Examination of the first question posed by the national court has disclosed no factor of such a kind as to affect the validity of Article 3(3 ) of Council Regulation No . 857/84 .

3 . Article 2(1 ) and ( 2 ) and Article 3(3 ) of Regulation No . 857/84 must be interpreted as meaning that a producer whose milk production was affected by an exceptional event in the reference year chosen by the Member State may not require that the delivery reference quantity to be granted to him be calculated either according to the method laid down in Article 2(2 ) of Regulation No . 857/84, on the basis of another calendar reference year, or according to the method laid down in Article 2(1 ) of that Regulation, on the basis of the quantity of milk delivered during the 1981 calendar year plus 1 %.