Report for the Hearing in Case C-190/91

I — Legal framework

1. Community legislation

1. The first subparagraph of Article 1b(l1 of Regulation (EEC) No 797/85, as amended by Council Regulation (EEC) No 1094/88 of 25 April 1988 amending Council Regulations No 797/85 of 12 May 1985 and No 1760/87 of 15 June 1987 as regards the set-aside of arable land and the extensification and conversion of production, provides that ‘Member States shall introduce an aid scheme to promote extensification for surplus products’, that is to say for products ‘for which there are consistently, at Community level, no normal, unsubsidized outlets’. Article 1b(2) specifies that ‘extensification shall be defined as a reduction of at least 20%, for a period of at least five years, in the output of the product concerned without any increase in other surplus production capacity’. In the words of Article 1b(3)(a), Member States are to determine the conditions for granting the aid, including those for reducing output of the various products. In order to achieve that reduction in output in the case of beef and veal, ‘it may be stipulated [by the Member States] that ... the number of livestock units must be reduced by at least 20%’.

2. Commission Regulation (EEC) No 4115/88 of 21 December 1988 laying down detailed rules for applying the aid scheme to promote the extensification of production lists in Annex I the products eligible for the aid (including cattle (beef/veal)) and determines in Annex II the maximum amounts eligible per year. In addition, it specifies the various criteria which the Member States must observe, in particular the methods of evaluating reductions, certain information which applicants for the aid must provide, the undertakings which they must give, various other conditions for eligibility and also detailed rules for differentiating the rate of aid and for carrying out inspections. Article 10(3) of that regulation provides

‘Where the extensification is applied to livestock farming, the producer shall undertake to see that:

production capacity, in particular buildings and fixed plant and equipment, released as a result of extensification, is not used either by the farmer or by any third parry to increase the output of the products referred to in Annex I or of pig-meat or poultry products,

fodder production areas continue to be used to provide feed for the livestock on the holding.’

2. National rules

1. In Italy, a decree of the Minister of Agriculture and Forestry of 12 September 1985 (GURI No 223 of 2 September 1985), subsequently amended by Ministerial Decrees of 26 September 1985 (GURI No 231 of 1 October 1985) and of 26 March 1986 (GURI No 80 of 7 April 1986), lays down the criteria and the rules for applying the aforementioned Regulations.

2. Ministerial Decree No 34 of 8 February 1990 (GURI Ordinary Supplement No 48 of 27 February 1990) lays down the provisions for applying the aid scheme for extensification of production, specifying in particular that all agricultural producers who, either independently or in association with others, farm the products listed in Annex I to Regulation (EEC) No 4115/88 may benefit from aid for the extensification of production.

3. In Circular No 24486 of 5 September 1990, which was sent to the regions, the competent authorities and the Commission, the Minister of Agriculture and Forestry set out a number of specific points including, in particular, with regard to the measures dealing with extensification of production, the following provisions:

‘With regard to the livestock rearing sector, in the absence of official and conclusive guidance from the Commission, it should be noted that applications submitted by factory farms will not be accepted.

In the absence of express restrictions to that effect in Community legislation, that position has been adopted on the ground that all the aid schemes envisaged in Regulation (EEC) No 797/85, including extensification, are intended solely for agricultural holdings, which are not to be taken as including factory farms.

Moreover, the provisions of Regulation (EEC) No 4115/88 are to the same effect, in so far as, in a series of general rules, they presuppose the existence of land for growing fodder.

In order for applications to be accepted, it is therefore necessary for applicants to have the use, throughout the period of their undertaking, of fodder-growing areas and thus of fodder obtained therefrom.

However, it is not possible to fix in advance a minimum ratio between the number of adult bovine animals and the fodder production area available: whether that ratio is adequate for the purposes of accepting the application must be assessed by taking account of the particular local situation, and will thus have to be determined case by case.’

4. The Regione Veneto, after taking note of those points, adopted, by Decision No 4258 of the Giunta of 19 July 1990, criteria for determining applications for aid.

5. According to the Decision of the Giunta, only farmers who operate an agricultural holding with cultivation of the land are entitled to benefit from those measures, so that factory farms may not benefit from the aid scheme. In its decision, the Regione Veneto gave the following explanations:

‘With regard to intensive livestock rearing establishments which do not operate in conjunction with an agricultural holding, it is considered possible, within the framework of adapting the measure to national conditions, to confirm the negative position which the Minister has already announced in that respect. That position is also supported by what is to be found in the Community legislation concerning the exclusion of the rearers in question from the extensification scheme. While Regulations No 1094/88 and No 4115/88 do not expressly restrict the scheme to particular types of establishment and do not specify a minimum fodder production area, it is obvious that all the aid schemes in Regulation (EEC) No 797/85, of which extensification forms part, are aimed exclusively at agricultural holdings. Besides, the rule contained in the second indent of Article 10(3) of Regulation (EEC) No 4115/88, which lays down that fodder production areas are to continue to be used to provide feed for the livestock on the holding, cannot be applied by the rearers in question, who rely exclusively on the market to obtain feed for their cattle. As a result, the aim in view — to reduce, together with the number of cattle, the amount of fodder used — would not be achieved, since the fodder which would no longer be purchased by the rearers in question would in any event be used by other rearers.

...

In view of the actual conditions of livestock rearing at national and regional levels, it has therefore been considered expedient, within the framework of the powers conferred on the regions in order to adapt the measures to the local situation, to exclude in addition from the benefits laid down in Ministerial Decree No 34/1990 rearing establishments in which the cattle are fed on fodder less than one quarter of which is obtained from the holding.

That condition must be verified at the commencement of the undertaking and ascertained on the basis of the current organization of production, within the framework of the agricultural holding, the production achieved and the requirements of the cattle raised there.’

II — Facts and procedure

1. The dispute in the main proceedings arose from the rejection by the Italian regional authorities of an application for aid for extensification of the production of cattle submitted by Mr Antonio Lante on 28 March 1990 pursuant to Regulation No 797/85, as amended, and the implementing Italian legislation. Mr Lante owns an establishment for the intensive rearing of beef cattle in the Cariano di Albaredo d'Adige area, in the province of Verona. The Regione Veneto refused Mr Lante's application of 19 September 1990 on the ground that aid cannot be paid to an intensive rearing establishment in which the cattle are reared on feed less than one quarter of which is obtained from the holding.

2. Against that decision, Mr Lante contended, in the statement of claim in the proceedings which he brought in the Tribunale Amministrativo Regionale per il Veneto that the exclusion from the benefit of extensification aid of rearing establishments using little or no feed produced by the rearer himself is unlawful because it is contrary to Regulation (EEC) No 797/85. Mr Lante also took the view that, pursuant to Regulation (EEC) No 4115/88, the products of livestock rearing are eligible for extensification aid as such, and not according to the fodder obtained from the holding. According to Mr Lante, Article 10(3) of that Regulation simply means that a livestock rearer who intends to take advantage of extensification aid may not use any unused fodder production areas to increase other livestock rearing or to produce other surplus products.

3. According to the Regione Veneto, the exclusion from the system of extensification aid of rearing establishments not possessing an agricultural holding or in which the cattle are reared on feed less than one quarter of which comes from the agricultural holding is lawful in the light of the concept of a farmer practising farming as his main occupation which is to be found in the various provisions in Regulation (EEC) No 795/85 and its subsequent amendments and in Regulation (EEC) No 4115/88.

4. The national court has explained that the crux of the instant proceedings lies essentially in the interpretation by the Regione Veneto of Regulation (EEC) No 797/85, as amended by Regulation (EEC) No 1094/88, since Mr Lante contends that he meets the conditions laid down by the Community rules for entitlement to the aid for which they make provision.

5. The national court then points out that Regulation (EEC) No 797/85, as amended and supplemented, constitutes an essential normative reference point in the revision of the objectives of the common agricultural policy which the Community institutions have undertaken in recent years. With regard in particular to agricultural structures, that regulation significantly alters the previous approach, by instituting common action expressly intended to improve the efficiency of holdings and to assist the development of their structures. The main purpose of the various provisions of that regulation is to adjust production in line with market demand.

6. The Tribunale Amministrativo per il Veneto has therefore referred to the Court the following questions for a preliminary ruling: (1) Must Article lB(3)(a) of Regulation No 1094/88 be interpreted as allowing the Member States, when laying down the conditions for the granting of the aid to promote the extensification of production in accordance with the procedure laid down by their domestic public law, to exclude certain categories of activities such as, for example, so-called ‘intensive’ livestock rearing (that is to say, rearing not carried out in connection with an agricultural holding) from the benefit of the aid on the assumption that that type of aid is intended exclusively for agricultural holdings? Is that interpretation permissible in view of the wider objectives of the policy on agricultural structures pursued by Regulation No 797/85 (and its subsequent amendments and supplements) and by present trends in the common agricultural policy, as discerned from Community legislation, of the fact that it is impossible to find in Community law any general uniform definition of ‘agricultural holding’ (judgment of the Court of Justice of 28 February 1978 in Case 85/77 Società Santa Anna Azienda v INPS [1977] ECR 527 and, finally, in view of the fact that Article 2 and Annex I of Commission Regulation No 4115/88 provide that ‘Cattle (beef/veal)’ are eligible for the aid in question? (2) If the preceding question is answered in the affirmative, can the second indent of Article 10(3) of Regulation No 4115/88, which provides that fodder production areas should continue to be used for the livestock on the holding, be interpreted as meaning that farms on which cattle are reared on feed of which less than a quarter is obtained from the holding are ineligible for the aid for the promotion of extensification of production, whose detailed rules are also laid down in Regulation No 4115/88?

7. The order of the Tribunale Amministrativo Regionale per il Veneto of 3 May 1991 was lodged at the Court Registry on 25 July 1991.

8. Pursuant to Article 20 of the Protocol on the Statute of the Court of Justice, written observations were submitted by the applicant in the main proceedings, represented by Viscardini Dona, of the Padua Bar, by the Italian Government, represented by O. Fiumara, Avvocato dello Stato, acting as Agent, and by the Commission of the European Communities, represented by E. de March and F. Santaolalla, of the Legal Service, acting as Agents, assisted by A. Carnelutti, of the Paris Bar.

9. Upon 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 and to assign the case to the Sixth Chamber.

III — Written observations submitted to the Court

1. The applicant in the main proceedings points out that the first question is intended essentially to establish whether exclusion from the benefit of extensification aid of livestock rearing establishments which do not operate in conjunction with an agricultural holding, decided unilaterally by a Member State, is compatible with Regulation (EEC) No 797/85 as amended by Regulation (EEC) No 1094/88. The problem which arises is that of the extent of the discretion allowed to the Member States in the determination of the conditions for granting the aid referred to in Article 1b(3)(a) of Regulation (EEC) No 797/85. Mr Lante emphasizes that the Member States do not have discretion to determine the conditions for granting the aid. Owing to the Community nature of the aid scheme, if the Member States were allowed to lay down the conditions for access to the aid autonomously, it could result in unjustified discriminations. The Member States' discretion is restricted by the detailed rules for applying the aid scheme laid down by Regulation (EEC) No 4115/88, whence it emerges that the exclusion of factory farms from the benefit of extensification aid is incompatible with the detailed rules. Mr Lante contends that, even if it were true that the aid scheme was intended solely for agricultural holdings, that does not mean that factory farms are not to be considered as agricultural holdings. Regulation (EEC) No 797/85 has as its objective the development of agriculture in the Community. Article 38(1) of the Treaty defines agricultural products as ‘the products of the soil, of stock-farming and of fisheries and products of first-stage processing directly related to these products’. There can thus be no doubt that cultivating the soil, cattle-rearing and fishfarming are agricultural activities according to the terms of the Treaty. In the opinion of Mr Lante, while, in its original version, Regulation (EEC) No 797/85 refers to holdings, with the sole object of improving the efficiency of the structures, with the amendments introduced by Regulation (EEC) No 1094/88, the emphasis has shifted to products. Regulation (EEC) No 797/85, as amended by Regulation (EEC) No 1094/88, takes into consideration not only agricultural holdings but also agricultural products within the meaning of Article 38(1) of the Treaty, for which there is support in the market at Community level. Thus, in Articles la, 1b and 1c, it is no longer a question of holdings or farmers, but simply a question of producers. Mr Lante emphasizes that the first subparagraph of Article 1b(1) of Regulation No 797/85, introduced by Regulation (EEC) No 1094/88, provides that the Member States shall introduce an aid scheme to promote extensification for surplus products. According to that provision, surplus products are those for which there are consistently, at Community level, no normal unsubsidized outlets. Pursuant to Commission Regulation (EEC) No 4115/88, cattle (beef/veal) are included among the products which are eligible for extensification aid as surplus products, regardless of whether the establishments where they are produced are or are not connected with an agricultural holding. It may thus be concluded that to exclude factory farming from the aid scheme is contrary to the letter of Regulation (EEC) No 797/85. With regard to the purpose behind extensification aid, Mr Lante considers that it is to reduce the production of surplus products in order to regularize the market and to alleviate the burden of Community support. Excluding factory farms, which are by definition intensive rearing establishments, from the aid goes directly against what was intended by the Community legislator. Furthermore, that means that factory farms are encouraged and that only livestock rearing carried out on the land is reduced, contrary to the new direction of the common policy. Mr Lante recalls to mind that the requirements of environmental protection are an essential component of the new direction of the common agricultural policy, as confirmed by Article 130R of the Treaty. That policy cannot be operated by anyone practising factory farming. It is thus absurd to wish to perpetuate livestock rearing of that type, when it would be in the general interest not only to reduce it but even to do away with it altogether. However, it is not acceptable to decide, for reasons of expediency, to exclude intensive rearing establishments from the aid. Mr Lante points out that the aim of the extensification aid scheme, determined at Community level, is to reduce the overall volume of production of surplus products in such a way as to bring supply into line with demand. The new trend of the common policy tends towards the progressive abandonment of price support, which is the cause of surpluses in certain sectors, and which the Community budget can no longer afford to bear. Abandoning price support implies, however, that market prices must be more profitable, a situation which can only be achieved by a reduction in supply. Mr Lante points out that in the system of the single market, as already exists for agricultural products, it is irrelevant that livestock rearing in Italy does not produce surplus products. The concept of surplus products, as seen in the first subparagraph of Article 1b(1) of Regulation (EEC) No 797/85, refers only to the fact that they are products whose sales are subsidized by the Community. Beef and veal products in Italy also benefit from the intervention measures laid down by the Community within the framework of the common organization of the market in that sector. It must thus be ruled out that a Member State may refuse aid to certain undertakings or to groups of undertakings on the basis of an assessment using national criteria. According to Mr Lante, that assertion is supported by Article 32a of Regulation (EEC) No 797/8, introduced by Regulation (EEC) No 1094/88, which makes it possible for a Member State not to apply the aid schemes for the set-aside of arable land and the extensification and conversion of production in those regions or areas where production should not be reduced, but only where so authorized by the Commission. It may thus be concluded that the exclusion of factory farms from the extensification aid scheme, decided upon unilaterally by a Member State, is contrary to the objectives of that scheme. According to Mr Lante, even accepting that the Member States may determine certain conditions for granting the aid, those conditions cannot have the effect of discriminating between their producers according to whether or not they have a rearing establishment which has its own land. The provisions which exclude from that scheme certain producers who none the less fulfil the conditions laid down by Community legislation introduce a difference in treatment between producers, contrary to the principle of nondiscrimination laid down in Article 40(3) of the Treaty. Mr Lante concludes therefrom that the discretion given to the Member States by Article 1b(3)(a) of Regulation (EEC) No 797/85 to determine the conditions for granting the extensification aid is not absolute. In particular, the Member States are not allowed to exclude beef and veal producers from the benefit of the aid on the sole ground that they carry out livestock rearing independently of the existence or the use of a holding. He therefore suggests that the first question should be answered as follows: With regard to the second question, Mr Lante points out that the objective of the extensification aid scheme is to reduce not the utilization of fodder but the production of beef and veal. According to Mr Lante, the Community legislation must be interpreted with reference to Article 1b(2) of Regulation (EEC) No 797/85. The purpose of that provision is to prevent a producer who benefits from the aid from using or allowing any third party to use the structures and/or fodder production areas of his own farm to increase the output of other rearing activities or of other surplus products and of thus cancelling out the effect of the aid granted. Mr Lante explains that the link established between fodder production areas and the feeding of the animals on the holding does not mean that a livestock rearer who uses little or no fodder produced by himself cannot benefit from the aid. It means only that a livestock rearer who intends to benefit from the aid for the extensification of the production of beef and veal may not make available to other rearers the fodder production areas which he is not using. On the other hand, where the beneficiary of the aid does not have such fodder production areas, the problem does not arise. Accordingly, he suggests that the following answer be given to the second preliminary question:

‘Article 1b(3)(a) of Regulation (EEC) No 797/85, as amended by Article 1 of Regulation (EEC) No 1094/88, must be interpreted as meaning that it does not allow the Member States to exclude rearing establishments which do not operate in conjunction with an agricultural holding from the benefit of the aid for the extensification of the production of beef and veal.’

‘The provision appearing in the second subparagraph of Article 10(3) of Regulation (EEC) No 4115/88, which provides that the fodder production areas shall continue to be used to provide feed for the livestock on the holding, is not to be interpreted as meaning that rearing establishments in which the cattle are reared on feed less than one quarter of which is obtained from the agricultural holding cannot benefit from the aid for extensification of production.’

2. The Italian Government points out that Regulation (EEC) No 1094/88 is intended to secure a gradual drop in output in those agricultural sectors where there is a surplus and to improve the efficiency of those structures. To that end, it provides that the Member States shall introduce an aid scheme to promote extensification for products for which there are consistently no normal unsubsidized outlets, with a view to reducing by at least 20%, for a period of at least five years, the output of the product concerned. Regulation (EEC) No 4115/88 has laid down detailed rules for applying the aid scheme to promote the extensification of production, by providing in particular that it shall be carried out by the producer according to the detailed rules laid down by the Member States. The Italian Government emphasizes that an undertaking cannot be described as agricultural merely because it is involved with agricultural products. The Community legislation at issue is intended to improve the efficiency of agricultural structures and it thus restricts the scope of intervention to only what is necessary for carrying on an agricultural activity and, more specifically, to the things that form the structure of the agricultural holding, that is to say all the fixed assets. The Italian Government explains that the Community legislation refers to strictly agricultural holdings, by providing for a system of aid for farmers practising farming as their main occupation. The provisions introduced by Regulation (EEC) No 1094/88, intended to develop a system of set-aside of arable land, refers to economic operators who farm by cultivating and making use of the land. According to the Italian Government, taking account of those premises and of the discretion given to the Member States, it is impossible to assert that the national measure is contrary to the Community provisions. The national measure, which is fully reasoned, states that factory farms cannot be included among the beneficiaries because the Community rule refers to the land and to holdings which are strictly agricultural, so that factory farms cannot be considered as agricultural holdings. The Italian Government emphasizes that the extensification in question is intended to reduce surplus products, among which meat occupies a leading role. In that sector, reduction may be effected by utilizing the ‘quantitative’ method. That is based on the idea that by eliminating part (a minimum of 20%) of a holding and by maintaining the same production techniques, the quantity of meat produced by the remainder of the herd is reduced to the same extent. Factory farms can reduce production by acquiring and fattening fewer head of cattle. The Italian Government contends that, in order to bring about an effective reduction in the quantity of meat produced, it is essential to extensify the ‘upstream’ sectors, that is to say rearing establishments in the true sense, and not the ‘downstream’ sectors. The distinction which was meant to be made between fattening centres and rearing establishments in the true sense is very significant. Including factory farms among the beneficiaries of the extensification scheme could lead to a reduction in demand for fattened cattle from rearing establishments in the true sense. The Italian Government explains that the methods for calculating the reduction in output are based on the number of units of adult bovine animals slaughtered, the unit of adult bovine animal being defined according to the age of the animal. Thus the significant factor is not the weight of the animal but its age. This method of proceeding may be utilized by fattening centres with a view to extensification without a corresponding reduction in the quantity of meat produced. The Italian Government recalls to mind that, in the beef and veal sector, the unit of adult bovine animal (UABA) is defined as an adult bovine animal of more than 24 months. A bovine animal aged between six months and 24 months represents 0, 6 UABA. A fattening centre which, throughout the reference period, slaughters 100 bovine animals of 24 months, or 100 UABA, and brings the fattening cycle forward by one month (by slaughtering at 23 months), can enjoy the advantages of extensification, since 100 cattle which represent 100 UABA at 24 months represent only 60 at 23 months, or a reduction of 40%. Appropriate action could limit the difference in weight between a bovine animal of 24 months and one of 23 months. In addition, the centre would no longer find it necessary to bear an increase in its fixed costs in respect of structures which were not being utilized since, in this case, all the buildings would be fully utilized. It is obvious that that possibility could be exploited by the fattening centres owing to their great flexibility, unlike rearing establishments in the true sense, which are restricted by the predetermined composition of their livestock.In conclusion, the Italian Government suggests that the first question submitted by the national court should be answered in the affirmative. According to the Italian Government, that answer to the first question renders a position on the second question superfluous.

3. The Commission points out that, by its questions, the national court wishes to know whether a Member State is justified in excluding intensive factory farms from the benefit of the system of extensification aid on the ground that Regulation (EEC) No 797/85 refers only to agricultural holdings, that concept necessarily implying the availability of land. The second question, although referring to a provision of the Regulation adopted by the Commission for applying the aid scheme, contains the same question with regard to undertakings whose cattle are fed on fodder less than 25% of which is obtained from the holding. The Commission takes the view that that interpretation by the Regione introduces two additional conditions for eligibility (the possession of a minimum fodder producing area and a minimum percentage of fodder obtained from the holding). It follows from the arguments put forward by the Regione that it justifies the exclusion by contending that such a rearing establishment is not run by a farmer ‘practising farming as his main occupation’. According to the Commission, the two exclusions appear to be based on a twofold error, namely that the regulation is applicable only to enterprises with land and, in addition, only to farmers practising farming as their main occupation. With a view to providing the national court with all the factors which will help to settle the proceedings before it, it is necessary to answer the first preliminary question by including therein the two types of excluded undertaking (rearing establishments land and those where less than 25% of the feed comes from fodder obtained from the holding). According to the Commission, the answer in both cases is in the negative. It follows both from the objectives and from the wording of the provisions referred to that the interpretation made by the Regione is the result of a misreading of the applicable Community law, which undermines the objective pursued by the Community and goes beyond the framework of the powers given by the Council to the Member States.The Commission explains that, since 1985, a new direction of the common agricultural policy has been made necessary by the need progressively to reorientate production in the surplus sectors. The structural policy has been given the objective of assisting farmers to adapt to these new realities and to alleviate the effects, in particular as regards their income, of these new directions. From that point of view, the Council has supplemented its action aimed at improving the efficiency of agricultural structures, introduced by Regulation (EEC) No 797/85 in its original version, by creating a system of extensification aid. The objective of this system is to achieve a significant reduction (of at least 20% for five years) in surplus output. The Commission points out that to exclude from such a reduction drive factory farms or those for which the feed is not obtained from a minimum fodder producing area would, in certain Member States, reduce the effectiveness of the measure decided by the Community. Such an interpretation undermines the objective pursued by the Community and deprives the provisions at issue of a significant part of their useful effect. That undermining is particularly noticeable because factory farms have contributed considerably to the creation of surpluses due to their productivity. In the Commission's opinion, the fact that only farmers practising farming as their main occupation may benefit from the system of aid referred to in Article 2 of Regulation (EEC) No 797/85, and that the definition of that term was made the responsibility of to the Member States, does not mean that only those farmers are eligible to benefit from aid schemes which have been introduced since then. The subject matter, the scope and the objective of these other schemes are different. It is true that the aid scheme for set-aside of arable land is concerned only with farmers who own land. However, Article la of Regulation (EEC) No 797/85 does not in any way confine the benefit of that scheme to farmers practising farming as their main occupation. With regard to the aid schemes for extensification and conversion of production, the Commission emphasizes that neither Article lb nor Article 1c of Regulation (EEC) No 797/85 restricts its application to farmers owing land, or a fortiori to farmers practising farming as their main occupation. Those two schemes are intended to bring about a substantial reduction in production or a significant conversion of production towards non-surplus products. The last ten years have seen a significant expansion of intensive rearing establishments without land or which do not farm their land. The three schemes in question are thus aimed at reducing the volume of production, whatever the description in national law and regardless of the physical structure of the holdings. In the Commission's view, none of the references to the applicable Community provisions which the Regione has made, either taken alone or read in conjunction with others, allows it to be shown that the aid scheme is concerned only with agricultural holdings in the sense of agricultural holdings with land. By their nature or their subject matter, those various provisions are concerned with agricultural holdings with land or with arable land. However, they are confined to that subject matter and do not prevent other provisions which define the aid schemes for extensification or conversion from applying to rearing establishments without land, provided they produce surplus products within the meaning of the Regulation.Furthermore, according to the Commission, both the principle of non-discrimination enshrined in Article 40(3) of the Treaty and the principle of the uniform application of Community law prevent the Council from deciding on the exclusions in question. Since the Community has set itself the objective of achieving a substantial reduction in surplus production, no objective reason can justify excluding a category of establishments which have a decisive impact on the markets in the surplus products. The same must be said of the exclusion of holdings whose fodder provides less than 25% of the feed for the cattle.The Commission observes that that exclusion would have reserved to farmers with land the benefit of aids which industrial producers of surplus products would legally have been entitled to claim and which they would have wished to claim. The latter would have been the victims of the evolution of the markets and would, as a result, have been harmed by a choice which, for all that, was contrary to the objective pursued by the Community. In addition, every action taken by the Community must be based on a common conception and common criteria, even if the variety of situations justifies solutions which vary according to the regions and causes the Council to delegate to the Member States the responsibility of defining certain essential concepts, such as that of a farmer who practises farming as his main occupation, within the framework of the system of investment aid governed by Article 2 of Regulation (EEC) No 797/85. The Commission emphasizes that, in exercising that delegated power, the Member States are acting on behalf of the Community. They may not undermine either the objective of the common action or the uniformity of Community concepts. Furthermore, in the absence of express powers, they may not impose additional conditions on the granting of a Community aid or unilaterally reduce the categories of beneficiaries on the basis of criteria which are not expressly laid down by the Council. To allow a Member State to introduce an additional condition or a unilateral restriction of the scope of a Community act, in the absence of an express and duly reasoned power in the act itself, would be to authorize that Member State to infringe the principle of the equality of the nationals of the Member States before Community law. As far as the Commission is concerned, it is obvious that the definition of the categories of beneficiaries of a right conferred by the Treaty constitutes a fundamental element of each action taken by the Community. That definition may not therefore vary from one Member State to another, unless the regulation introduces distinctions on grounds which are objectively justified. On the contrary, it follows from a reading of Article 1b(1) to (6) that no conditions are laid down with regard to the possession of land or the percentage of cattle feed obtained from the holding.According to the Commission, it follows therefrom that a Member State, or a regional community of that State, infringes the provisions of Article lb of Regulation (EEC) No 797/85 when it restricts its scope, contrary to the objective of the measure, by adding a condition which is obviously extraneous to that objective. That is so in the case in point, since the Regione justifies the first exclusion by the desire to protect the national zootechnical patrimony and the second on grounds, otherwise unexplained, based on the expediency of adapting the scheme to national and local reality. The Commission points out that the products referred to in Annex I to Regulation (EEC) No 4115/88 are the subject of a single definition in the Community. As a result, the method by which the Council defines its scope is the one that is most compatible with both the objective pursued and the aforementioned general principles of Community law. It is the one that is followed by the Treaty itself, which in Article 38 and Annex II, refers to agricultural products and not to farmers or holdings. The Commission thus takes the view that a factory farm, that is to say an industrial rearing establishment, may very well constitute an agricultural holding. Article lb of Regulation (EEC) No 797/85 does not allow a Member State to exclude on principle from the benefit of the Community system of aid for extensification a category of establishments such as factory farms. The Commission emphasizes that Article 10(3) of Regulation No 4115/88 does not alter that conclusion. That provision cannot allow the conclusion to be drawn that the aid may only be sought by rearers who possess a holding which enables them to feed their own cattle, nor, a fortiori, can it justify a rule which requires that a minimum percentage of cattle feed be provided by the holding or that a minimum percentage of the production areas of the holding be dedicated to that feed. Consequently, the Commission suggests that the Court give the following answer to the preliminary questions:

‘Article 1b of Council Regulation (EEC) No 797/85 does not allow a Member State to exclude on principle from the benefit of the Community system of extensification aid factory farms or farms whose cattle are fed on fodder less than 25% of which is obtained from the holding. Article 10(3) of Commission Regulation (EEC) No 4115/88 cannot be interpreted as justifying that last exclusion’.

M. Diez de Velasco

Judge-Rapporteur

1 Language of the case: Italian.