Report for the Hearing delivered in Case C-67/89

I — Facts and written procedure

1. The relevant Community legislation

a) Council Regulation (EEC) No 856/84 of 31 March 1984 amending Regulation (EEC) No 804/68 on the common organization of the market in milk and milk products (Official Journal 1984, L 90, p. 10) inserted Article 5c in Regulation No 804/68. That provision introduced, during five consecutive periods of 12 months beginning on 1 April 1984, an additional levy payable by producers or purchasers of cows' milk with the aim of curbing the increase in milk production while at the same time permitting the structural developments and adjustments required. According to Article 5c(l), the levy system is to be implemented in each region of the territory of the Member States in accordance with one of the following formulas:

i) under formula A, the levy is payable by milk producers on the quantities of milk delivered to a purchaser which exceed a reference quantity to be determined (the producer formula);

ii) under formula B, the levy is payable by purchasers of milk or other milk products (dairies) on the quantities of milk delivered by producers which exceed a reference quantity to be determined. The purchaser liable to pay the levy is required to pass it on only to those producers who have increased their deliveries, in proportion to their contribution to the excess over the purchaser's reference quantity (the purchaser formula).

b) The general rules for implementing the additional levy are set out in 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 No 804/68 in the milk and milk products sector (Official Journal 1984, L 90, p. 13), as subsequently amended. Article 1(1) of that regulation fixes the levy at 75% of the target price for milk where formula A (the producer formula) is applied and at 100% of the target price for milk where formula B (the purchaser formula) is applied. Regulation No 857/84 also fixes the reference quantity referred to in Regulation No 856/84, that is to say the quantity exempt from the additional levy. That quantity is normally equal to the quantity of milk or milk equivalent delivered by a producer (formula A) or purchased by a purchaser (formula B) during the 1981 calendar year, plus 1% (Article 2(1)). However, Member States may provide that on their territory the reference quantity is to 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. That percentage may be varied on the basis of the level of deliveries of certain categories of persons liable to pay the levy, of the trend in deliveries in certain regions between 1981 and 1983 or of the trend in deliveries of certain categories of persons liable during this same period, under conditions to be determined according to procedures provided for in Article 30 of Regulation No 804/68 (Article 2(2)). According to Articles 3, 4 and 4a of Regulation No 857/84, the Member States may take account of certain special situations in fixing the reference quantities or grant specific or additional reference quantities. More specifically, Article 3 provides 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) ...

2) ...

3) 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 year within the 1981 to 1983 period. ...’

c) The detailed rules for implementing the additional levy were laid down in Commission Regulation (EEC) No 1371/84 of 16 May 1984 laying down detailed rules for the application of the additional levy referred to in Article 5c of Regulation No 804/68 (Official Journal 1984, L 132, p. 11), as subsequently amended. Article 3 of Regulation 1371/84 contains a list of special situations justifying the use of a different reference calendar year under Article 3(3) of Regulation No 857/84.

2. The German legislation implementing the Community legislation

The system establishing the additional levy on milk was implemented in the Federal Republic of Germany by the ‘Verordnung über die Abgaben im Rahmen von Garantiemengen im Bereich der Marktorganisation für Milch und Milcherzeugnisse (Milch-Garantiemengen-Verordnung)’ (Regulation on levies in connection with guaranteed quantities in the organization of the market in milk and milk products — Milk (Guaranteed Quantities) Regulation) of 25 May 1984 (Bundesgesetzblatt 1984 I, p. 720), as amended for the first time by the regulation of 27 September 1984 {Bundesgesetzblatt 1984 I, p. 1255).

Paragraph 1 of that regulation lays down the principle that in Germany it is the producer and not the purchaser who must pay the levy. According to Paragraph 4(2), ‘the reference quantity shall be equal to the quantity of milk delivered by the milk producer to a purchaser during the 1983 calendar year, less 4%. That rate of abatement shall be increased if the quantity delivered during the 1983 calendar year is greater than the quantity delivered during the 1981 calendar year, in accordance with the following formula:

but not by more than five percentage points ... ’.

3. The main proceedings

Mr Alfons Berkenheide, a farmer, delivered to the cooperative dairy Münsterland eG 114406 kg of milk in 1980, 105970 kg in 1981, 102472 kg in 1982 and 121721 kg in 1983. On the basis of the deliveries made in 1983, the dairy allocated to Mr Berkenheide a delivery reference quantity of 110900 kg. The dairy arrived at that figure by reducing the quantity of milk delivered in the 1983 calendar year by the basic abatement rate of 4% (first sentence of Paragraph 4(2) of the Milch-Garan-tiemengen-Verordnung) followed by a further abatement of 4.9% (second sentence of Paragraph 4(2) of the Milch-Garan-tiemengen-Verordnung) on the ground that in the 1983 calendar year Mr Berkenheide had delivered a greater quantity of milk than in 1981.

By letter of 17 February 1986, Mr Berkenheide requested the Hauptzollamt Münster to recalculate the delivery reference quantity without taking into account the 4.9% abatement based on the increase in production. That request was refused by decision of 31 July 1986.

Mr Berkenheide challenged that decision on the ground that his case was exceptional within the meaning of Article 3(3) of Regulation No 857/84, since an epizootic had led to a reduction in the quantity of milk delivered in 1981 and 1982. The competent Chamber of Agriculture confirmed that an exceptional event had occurred but at the same time drew attention to the fact that the applicable German legislation precluded that factor from being taken into account.

The Hauptzollamt Münster dismissed the objection on the ground that the second sentence of Paragraph 4(2) of the Milch-Garantiemengen-Verordnung did not allow the delivery reference quantities to be calculated in any other way.

In the proceedings instituted by him before the Finanzgericht Düsseldorf, Mr Berkenheide maintains that in calculating the reference quantities for milk the Hauptzollamt was wrong to take into account a 4.9% abatement based on the increase in production. His farm, he argues, did not contribute to an increase in milk production between 1981 and 1983. He therefore claims that he should be allocated a delivery reference quantity of 116900 kg of milk.

The Hauptzollamt Münster contends that it was impossible in this case to allocate a higher delivery reference quantity by refraining from applying the abatement rate based on the increase in production or by taking as a basis a modified abatement rate since milk production was not appreciably affected by an exceptional event in 1983. In any event, only the quantity of milk actually produced in another calendar year within the 1981 to 1983 period could have been taken into consideration.

By order of 1 February 1989 the Finanzgericht Düsseldorf stayed the proceedings in that dispute and asked the Court to give a preliminary ruling pursuant to Article 177 of the EEC Treaty on the following question:

‘Is it contrary to Article 3(3) of Council Regulation (EEC) No 857/84 of 31 March 1984 (Official Journal 1984, L 90, p. 13) in conjunction with Article 3 of Commission Regulation (EEC) No 1371/84 of 16 May 1984 (Official Journal 1984, L 132, p. 11) to interpret the second sentence of Paragraph 4(2) of the Milch-Garan-tiemengen-Verordnung (Milk (Guaranteed Quantities) Regulation) of 25 May 1984 {Bundesgesetzblatt 1984 I, p. 720), as amended for the first time by the regulation of 27 September 1984 {Bundesgesetzblatt 1984 I, p. 1255), so as to mean that if milk production in the 1981 calendar year was affected by an exceptional event (an epizootic) within the meaning of the abovementioned provisions of Community law the quantity of milk which it is estimated that the milk producer would have produced in 1981 had the event not occurred, rather than the quantity actually produced in 1981, is taken as the basis for calculating the “Steigerungsabzug” (abatement based on the increase in production)?’

4. Procedure before the Court

The order for reference was received at the Court Registry on 6 March 1989.

In accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the European Communities, written observations were submitted by the Government of the Federal Republic of Germany, represented by Martin Seidel, and by the Commission of the European Communities, represented by its Legal Adviser Dierk Booss.

On hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory inquiry.

By decision of 17 January 1990 the Court assigned the case to the Third Chamber pursuant to Article 95 of the Rules of Procedure.

II — Written observations submitted to the Court

The German Government and the Commission of the European Communities agree that the question submitted for a preliminary ruling calls for an affirmative answer inasmuch as in calculating the ‘Steigerungsabzug’ (abatement based on the increase in production) it is impossible to take as a basis an assessment of the quantity which the producer would have obtained in 1981 if the exceptional event in question had not occurred.

1. The German Government points out that Article 3(3) of Regulation No 857/84 applies only where the quantity of milk delivered by a milk producer was reduced on account of an exceptional event occurring in the reference year chosen by the Member State. The rule in Article 3(3) is designed to release the milk producer from the risk of having to declare during the reference year, because of an exceptional event, low milk deliveries on the basis of which the reference quantity will be calculated. Accordingly, it is only if a dairy farmer's milk production in 1983 is affected by an exceptional event that the producer may substitute for the quantity of milk delivered in 1983 that delivered in 1981 or in 1982. If, on the other hand, as in this case, milk production was not affected by an exceptional event in 1983, Article 3(3) does not apply, irrespective of whether milk production was affected by such an event in 1981 or 1982. According to the German Government, that interpretation is confirmed by the judgment of 17 May 1988 in Case 84/87 Erpelding [1988] ECR 2647, in which the Court stated that ‘the structure and the purpose of the rules concerned indicate that they contain an exhaustive list of the situations in which reference quantities or individual quantities may be granted and set out precise rules concerning the determination of those quantities’. Nor does the scheme of Article 3 of Regulation No 857/84, viewed in the general context of the regulation, support a different conclusion. The fact that Article 3 is a provision derogating solely from Article 2 of the same regulation and not a general derogation from that regulation is sufficient to preclude a broad interpretation of that provision. That being so, Article 3(3) of Regulation No 857/84 cannot be regarded as a provision to the effect that it is necessary, for the calculation of the ‘Steigerungsabzug’, to take as a basis an estimated or calculated quantity for 1981 where the actual delivery of milk in that year was affected by an exceptional event.

2. The Commission takes the view that the question submitted for a preliminary ruling seeks in substance to ascertain whether, when reference quantities are determined in accordance with Article 3(3) of Regulation No 857/84 and Article 3 of Regulation No 1371/84, an exceptional event occurring in 1981 must be taken into consideration even where 1983 was chosen as the reference year. According to the Commission, Article 3(3) of Regulation No 857/84, as supplemented by Article 3 of Regulation No 1371/84, ensures that the producer is not adversely affected by the choice of a reference year by the Member State, which is free to select a year in the period between 1981 and 1983, where he has been appreciably affected by exceptional events occurring during that year. The Commission refers in that connection to the judgment of 25 November 1986 in Joined Cases 201/85 and 202/85 Klensch [1986] ECR 3477, in which the Court stated that although the Member States may choose between two methods of calculating the reference quantities, they may not combine parts of each. It follows, in the Commission's view, that the Member States are bound by whatever system they apply in accordance with Article 2 of Regulation No 857/84 and it cannot be called in question by individual producers relying on exceptional events not provided for in Article 3(3). Furthermore, in its judgment of 28 April 1988 in Case 61/87 Thévenot [1988] ECR 2375 the Court stated in connection with the interpretation of Article 3(3) that that provision ‘does not affect the application of the other rules concerning the determination of reference quantities and individual quantities and, more particularly, the rules contained in Article 2 of Regulation No 857/84’. The Commission concludes that the scheme and the purpose of the relevant Community legislation imply that the individual harm suffered by the plaintiff in the main proceedings because of an epizootic in 1981 owing to the carryover of the reference quantity must be accepted, since otherwise the Federal Republic of Germany would be unable to meet its obligation to calculate the percentages in general terms in accordance with Article 2 of Regulation No 857/84 on the basis of certain factors. The Commission therefore considers that Article 3(3) of Regulation No 857/84, as supplemented by Article 3 of Regulation No 1371/84, must be interpreted as meaning that an exceptional event affecting a producer in a year other than that chosen as the reference year under that provision may not be taken into consideration.

III — Answers to questions put by the Court

1. In answer to a question from the Court, the German Government points out that the question submitted by the Finanzgericht must be set in the context of Article 2(2) of Regulation No 857/84. According to that provision, the Member States may reduce the quantity calculated for a reference year in accordance with various procedures. In calculating the reference quantity the Federal Republic took as its basis the 1983 calendar year. That quantity is reduced in accordance with Paragraph 4(2) of the Milch-Garantiemengen-Verordnung. Article 2(2) of Regulation No 857/84 therefore constitutes the legal basis for Paragraph 4(2) of the Milch-Garantiemengen-Verordnung. The interpretation of Paragraph 4(2) suggested by the national court must consequently be appraised in the light of Article 2(2) in order to establish whether there has been an infringement of Community law. Article 3(3) of Regulation No 857/84 merely provides an exception for producers whose milk production was affected by an exceptional event occurring in the calendar year chosen by the Member Sute concerned. That provision has no relation to the calculation of the ‘Steigerungsabzug’ pursuant to the second sentence of Paragraph 4(2) of the Milch-Garan-tiemengen-Verordnung.

2. In reply to a question from the Court, the Commission explains that the question submitted for a preliminary ruling can also be construed as seeking to ascertain whether Article 2(2) of Regulation No 857/84 can be interpreted as meaning that in calculating the ‘percentage’ referred to it is necessary to take into account an exceptional event which cannot be considered pursuant to Article 3(3). As the Commission has already stated in its written observations, an exceptional event of that kind may not in any circumstances lead in a specific case to a departure from the system chosen by the Member State for the application of the percentage. It is another question whether such an event must in general be taken into account in fixing the percentage, that is to say the ‘Steigerungsabzug’ pursuant to Paragraph 4(2) of the Milch-Garantiemengen-Verordnung. The Commission does not deny that this may be possible in connection with the definition of ‘certain categories of persons liable for the levy’ within the meaning of Article 2(l)(c) of Regulation No 1371/84. However, the Commission takes the view that the Member States are under no obligation to avail themselves of that possibility. Furthermore, the Commission points out that the trend regarding deliveries in connection with the fixing of the aforesaid percentage is relevant only in the Federal Republic of Germany.

M. Zuleeg

Judge-Rapporteur

1 Language of the case: German.