Court of Justice of the European Communities (including Court of First Instance Decisions)

AGRICULTURE - COMMON ORGANIZATION OF THE MARKETS - MILK AND MILK PRODUCTS - AID FOR THE PROCESSING OF SKIMMED MILK INTO CASEINS AND CASEINATES - FAILURE TO COMPLY WITH THE REQUIREMENT AS TO MAXIMUM WATER CONTENT - LOSS OF THE AID IN ITS ENTIRETY - PRINCIPLE OF PROPORTIONALITY - BREACH - NONE
( REGULATIONS ( EEC ) NOS 804/68 AND 987/68 OF THE COUNCIL ; REGULATION ( EEC ) NO 756/70 OF THE COMMISSION )

THE LOSS OF THE WHOLE OF THE AID FOR THE PROCESSING OF SKIMMED MILK INTO CASEINS AND CASEINATES IN THE EVENT OF A PRODUCER ' S FAILING TO COMPLY WITH THE REQUIREMENT AS TO MAXIMUM WATER CONTENT FOR THOSE PRODUCTS LAID DOWN IN REGULATION NO 756/70 IS NECESSARY AND IS NOT OUT OF PROPORTION TO THE OBJECTIVE OF GUARANTEEING THE QUALITY OF THOSE PRODUCTS . THAT OBJECTIVE , THE ADOPTION OF WHICH IS FULLY JUSTIFIED , IS AN ESSENTIAL FEATURE OF THE COMMUNITY LEGISLATION CONCERNED AND THE COMMISSION WAS THEREFORE JUSTIFIED IN TAKING THE VIEW THAT IN ORDER TO ENSURE THE SALE OF THE PRODUCTS IN QUESTION THE MAINTENANCE OF HIGH QUALITY WAS NECESSARY AND THAT THE GRANT OF AID AT A REDUCED RATE FOR A PRODUCT OF SUBSTANDARD QUALITY WAS NOT IN KEEPING WITH THAT AIM . IN THOSE CIRCUMSTANCES , THE PROVISIONS OF REGULATION NO 756/70 , WHICH MAKES THE GRANT OF AID CONDITIONAL UPON STRICT COMPLIANCE WITH THE REQUIREMENT AS TO MAXIMUM WATER CONTENT , ARE NOT CON- TRARY TO THE PRINCIPLE OF PROPORTIONALITY . IN CASE 273/81 ,
REFERENCE TO THE COURT UNDER ARTICLE 177 OF THE EEC TREATY BY THE TRIBUNAL ADMINISTRATIF ( ADMINISTRATIVE COURT ), PARIS , FOR A PRELIMINARY RULING IN THE ACTION PENDING BEFORE THAT COURT BETWEEN

SOCIETE LAITIERE DE GACE , GACE ,
AND
FONDS D ' ORIENTATION ET DE REGULARISATION DES MARCHES AGRICOLES ( AGRICULTURAL MARKETS GUIDANCE AND STABILIZATION FUND ) ( FORMA ), PARIS ,

ON THE VALIDITY OF THE FOLLOWING REGULATIONS :
REGULATION ( EEC ) NO 987/68 OF THE COUNCIL OF 15 JULY 1968 LAYING DOWN GENERAL RULES FOR GRANTING AID FOR SKIMMED MILK PROCESSED INTO CASEIN OR CASEINATES ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1968 ( I ), P . 262 ); AND
REGULATION ( EEC ) NO 756/70 OF THE COMMISSION OF 24 APRIL 1970 ON GRANTING AID FOR SKIMMED MILK PROCESSED INTO CASEIN AND CASEINATES ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1970 ( I ), P . 201 ),

1 BY JUDGMENT OF 16 JUNE 1981 , WHICH WAS RECEIVED AT THE COURT ON 12 OCTOBER 1981 , THE TRIBUNAL ADMINISTRATIF ( ADMINISTRATIVE COURT ), PARIS , REFERRED TO THE COURT OF JUSTICE FOR A PRELIMINARY RULING UNDER ARTICLE 177 OF THE EEC TREATY A QUESTION ON THE VALIDITY OF REGULATION ( EEC ) NO 987/68 OF THE COUNCIL OF 15 JULY 1968 LAYING DOWN GENERAL RULES FOR GRANTING AID FOR SKIMMED MILK PROCESSED INTO CASEIN OR CASEINATES ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1968 ( I ), P . 262 ) AND OF REGULATION ( EEC ) NO 756/70 OF THE COMMISSION OF 24 APRIL 1970 ON GRANTING AID FOR SKIMMED MILK PROCESSED INTO CASEIN AND CASEINATES ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1970 ( I ), P . 201 ), AS AMENDED BY REGULATION ( EEC ) NO 455/73 OF THE COMMISSION OF 31 JANUARY 1973 ( OFFICIAL JOURNAL 1973 , L 53 , P . 8 ) AND BY REGULATION ( EEC ) NO 2940/73 OF THE COMMISSION OF 29 OCTOBER 1973 ( OFFICIAL JOURNAL 1973 , L 301 , P . 23 ).

2 THE QUESTION WAS RAISED IN A DISPUTE PENDING BEFORE THE NATIONAL COURT BETWEEN SOCIETE LAITIERE DE GACE ( HEREINAFTER REFERRED TO AS ' ' THE SOCIETE ' ' ) AND THE FONDS D ' ORIENTATION ET DE REGULARISATION DES MARCHES AGRICOLES ( AGRICULTURAL MARKETS GUIDANCE AND STABILIZATION FUND , HEREINAFTER REFERRED TO AS ' ' THE FUND ' ' ) CONCERNING THE DEFENDANT ' S REFUSAL TO PAY THE PLAINTIFF COMMUNITY AID FOR 85 625 KG OF CASEINATES MANUFACTURED FROM SKIMMED MILK , IN THE SECOND WEEK OF JUNE 1979 .
3 AS A RESULT OF THE INCORRECT SETTING OF THE DRIER IN THE FACTORY MANUFACTURING THE CASEINATES , WHICH THE PRODUCER FAILED TO NOTICE , THE WATER CONTENT OF THE PRODUCTS IN QUESTION EXCEEDED BY 0.6% THE MINIMUM WATER CONTENT OF 6% PRESCRIBED BY ANNEXES I , II AND III OF REGULATION NO 756/70 OF THE COMMISSION IN THE VERSION WHICH WAS IN FORCE AT THE TIME ; THE FUND THEREFORE TOOK THE VIEW THAT THE CASEINATES DID NOT SATISFY THE CONDITIONS REQUIRED IN ORDER TO BENEFIT FROM THE COMMUNITY AID IN VIEW OF THE FACT THAT , ACCORDING TO REGULATION NO 756/70 , ONLY CASEINS AND CASEINATES WHICH ' ' CORRESPOND TO THE SPECIFICATIONS LAID DOWN IN THE ANNEXES ' ' QUALIFY FOR THE AID .

4 SINCE THE PLAINTIFF IN THE MAIN ACTION RAISED A QUESTION CONCERNING THE VALIDITY OF THE REGULATION CONCERNED , THE NATIONAL COURT STAYED THE PROCEEDINGS AND ASKED THE COURT TO GIVE A PRELIMINARY RULING ON THE QUESTION :
' ' WHETHER REGULATION ( EEC ) NO 987/68 OF THE COUNCIL LAYING DOWN GENERAL RULES FOR GRANTING AID FOR SKIMMED MILK PROCESSED INTO CASEIN OR CASEINATES AND REGULATION ( EEC ) NO 756/70 OF THE COMMISSION LAYING DOWN REQUIREMENTS AS TO THE QUALITY OF THE DENATURED PRODUCT CONTRAVENE THE PRINCIPLE OF PROPORTIONALITY AND WHETHER OR NOT THOSE REGULATIONS ARE THUS VALID INASMUCH AS THEY PROVIDE NO DISTINCTION AS TO THE SANCTION IN THE CASE WHERE SKIMMED MILK IS NOT PROCESSED AND IN THE CASE WHERE AFTER PROCESSING THE PRODUCT DEVIATES SLIGHTLY FROM THE FORMULA LAID DOWN IN THE PROVISIONS OF THE REGULATION . ' '
5 THE QUESTION THUS RAISED BY THE COURT MAKING THE REFERENCE RELATES IN THE FIRST PLACE TO THE VALIDITY OF REGULATION NO 987/68 OF THE COUNCIL . IT SHOULD BE OBSERVED IN THAT REGARD THAT THE QUESTION OF BREACH OF THE PRINCIPLE OF PROPORTIONALITY DOES NOT ARISE IN RELATION TO THAT REGULATION . THE PREAMBLE TO THAT REGULATION STATES MERELY THAT AID FOR THE PROCESSING OF SKIMMED MILK INTO CASEIN AND CASEINATES IS GRANTED ONLY IF THOSE PRODUCTS REACH ' ' CERTAIN STANDARDS ' ' ; THOSE STANDARDS WERE LAID DOWN SUBSEQUENTLY BY REGULATION NO 756/70 OF THE COMMISSION .

6 ACCORDINGLY , IN ORDER TO ANSWER THE QUESTION RAISED BY THE COURT MAKING THE REFERENCE , IT IS NECESSARY ONLY TO ASCERTAIN WHETHER THE WITHHOLDING OF THE AID , AS PROVIDED FOR BY REGULATION NO 756/70 , IN THE EVENT OF THE PRODUCER ' S FAILURE TO COMPLY WITH THE MAXIMUM WATER CONTENT , IS A MEASURE PROPORTIONATE TO THE OBJECTIVE PURSUED BY THE COMMUNITY LEGISLATION ON THE AID TO BE GRANTED FOR SKIMMED MILK PROCESSED INTO CASEIN AND CASEINATES .

7 REGULATION ( EEC ) NO 804/68 OF THE COUNCIL OF 27 JUNE 1968 ON THE COMMON ORGANIZATION OF THE MARKET IN MILK AND MILK PRODUCTS ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1968 ( I ), P . 176 ) PROVIDES , IN ARTICLE 11 ( 1 ), THAT AID IS TO BE GRANTED FOR COMMUNITY-PRODUCED SKIMMED MILK PROCESSED INTO CASEIN ' ' IF SUCH MILK AND THE CASEIN PRODUCED FROM IT REACH CERTAIN STANDARDS ' ' , TO BE DEFINED IN SUBSEQUENT REGULATIONS . REGULATION NO 987/68 EXTENDS TO CASEINATES THE SAME TREATMENT AS THAT ACCORDED TO CASEIN . AMONGST THE CONDITIONS WHICH MUST BE SATISFIED IF THE AID IS TO BE GRANTED , REGULATION NO 756/70 INCLUDES THOSE RELATING TO QUALITY SET OUT IN THE ANNEXES THERETO .

8 THE SOCIETE ARGUES THAT MAINTENANCE OF HIGH QUALITY IN THE PRODUCTION OF CASEINATES BY IMPOSITION OF THE REQUIREMENT THAT THE MAXIMUM WATER CONTENT MUST BE COMPLIED WITH IS A SECONDARY OBJECTIVE COMPARED WITH THE PROMOTION OF THE PROCESSING OF SKIMMED MILK INTO CASEINATES AND THAT , ACCORDINGLY , THE REFUSAL TO GRANT ANY AID WHATEVER WHERE THE MAXIMUM WATER CONTENT IS EXCEEDED IS QUITE OUT OF PROPORTION IF IT IS USED TO ENSURE THE ATTAINMENT OF AN OBJECTIVE WHICH IS OF MARGINAL IMPORTANCE WHEN THE PRINCIPAL OBJECTIVE OF THE COMMUNITY LEGISLATION IS ACHIEVED IN ITS ENTIRETY . THE COMMISSION , HOWEVER , CONTENDS THAT THE TWO OBJECTIVES IN QUESTION ARE OF EQUAL IMPORTANCE AND THAT THEIR ATTAINMENT CAN AND MUST BE GUARANTEED BY THE SAME MEANS .

9 IT MUST BE EMPHASIZED IN THAT REGARD THAT MAINTENANCE OF THE QUALITY OF THE PRODUCT CONSTITUTES A FUNDAMENTAL OBJECTIVE OF THE COMMUNITY LEGISLATION IN QUESTION . ONE OF THE GENERAL AIMS OF THE COMMON ORGANIZATION OF AGRICULTURAL MARKETS IS TO ENSURE THE PRODUCTION OF HIGH QUALITY CASEIN AND CASEINATES WHICH , AS IS APPARENT FROM THE FIFTH RECITAL IN THE PREAMBLE TO REGULATION NO 987/68 LEADS , IN PARTICULAR , ' ' TO BETTER OUTLETS AND BETTER RETURNS ON THE SALE OF SKIMMED MILKS ' ' . THE CHOICE OF THAT OBJECTIVE , AS A RESULT OF WHICH ON THE MARKET THE PRODUCTS IN QUESTION ARE DESCRIBED BY REFERENCE TO THEIR QUALITY , IS FULLY JUSTIFIED .

10 MOREOVER , IN ITS SUCCESSIVE REGULATIONS ON THE AID TO BE GRANTED FOR THE PROCESSING OF SKIMMED MILK INTO CASEIN AND CASEINATES , THE COMMISSION HAS CONSISTENTLY TIGHTENED THE CONDITIONS AS TO QUALITY WITH WHICH THE PRODUCT MUST COMPLY IN ORDER TO QUALIFY FOR THE AID AND THAT ATTITUDE MERELY CONFIRMS THE FACT THAT THE QUALITY OF THAT PRODUCT MUST BE GUARANTEED .

11 THEREFORE , ON THE BASIS OF THOSE CONSIDERATIONS , THE CONCLUSION MUST BE DRAWN THAT THE WITHHOLDING OF THE AID IN THE EVENT OF THE PRODUCER ' S FAILING TO COMPLY WITH THE MAXIMUM WATER CONTENT IS NOT OUT OF PROPORTION TO THE OBJECTIVE PURSUED , WHICH IS TO GUARANTEE THE QUALITY OF THE PRODUCT .

12 AT THE HEARING , THE SOCIETE ALSO AFFIRMED THAT COMPLIANCE WITH A MAXIMUM WATER CONTENT WAS NOT NECESSARY IN ORDER TO GUARANTEE THE QUALITY OF THE PRODUCT . THE COMMISSION REJOINED THAT COMPLIANCE WITH THAT OBLIGATION WAS ESSENTIAL FOR THE ATTAINMENT OF THAT OBJECTIVE AND THAT FAILURE TO COMPLY THEREWITH WAS AMPLE JUSTIFICATION FOR WITHHOLDING OF THE AID IN ITS ENTIRETY .

13 AS IS CLEAR FROM THE FILE ON THE CASE , CASEINATES MAY BE USED FOR INDUSTRIAL PURPOSES OR IN FOODSTUFFS , EITHER AS EMULSIFIERS IN PREPARED MEATS OR TO GIVE CONSISTENCY TO BABY FOODS . IT IS ESTABLISHED THAT A WATER CONTENT IN EXCESS OF 6% CANNOT BE TOLERATED WHERE CASEINATES INTENDED FOR HUMAN CONSUMPTION ARE STORED INASMUCH AS IT CONTRIBUTES TO RAPID DETERIORATION OF THE TASTE OF THE CASEINATES , THEREBY PREVENTING THEIR USE IN FOODSTUFFS .

14 ALTHOUGH IT DOES NOT CHALLENGE THAT FINDING , THE SOCIETE MAINTAINS THAT EVEN IF THE MAXIMUM WATER CONTENT IS EXCEEDED , THAT FACT HAS NO BEARING ON THE USE OF THE PRODUCT , EVEN IN FOODSTUFFS . IT ARGUES THAT CASEINATES WHICH ARE TO BE USED IN FOODSTUFFS ARE NEVER INTENDED TO BE STORED FOR LONG PERIODS , AS IS SHOWN BY THE FACT THAT THE CASEINATES WHICH GAVE RISE TO THIS DISPUTE WERE SOLD IN THE DAYS IMMEDIATELY FOLLOWING THEIR MANUFACTURE . ACCORDING TO THE PLAINTIFF , THE COMMISSION ' S ARGUMENT IS THEREFORE UNFOUNDED INASMUCH AS IT DISREGARDS THE ACTUAL CONDITIONS UNDER WHICH THAT PRODUCT IS MARKETED .

15 THAT ARGUMENT WOULD BE RELEVANT ONLY IF CASEINATES FOR HUMAN CONSUMPTION WERE ALWAYS SOLD ALMOST AS SOON AS THEY HAD BEEN MANUFACTURED AND WERE NEVER STORED FOR MORE THAN A SHORT PERIOD . THE SOCIETE , WHICH PUT FORWARD THAT ARGUMENT , HAS ITSELF STATED THAT ' ' CASEINATE MANUFACTURED DIRECTLY FROM FRESH MILK IS IN MOST CASES USED VERY SOON AFTER PRODUCTION AND IS NOT INTENDED TO BE STORED FOR LONG PERIODS ' ' . THE SOCIETE THEREFORE RECOGNIZES THAT , IN CERTAIN CASES , STORAGE FOR LONG PERIODS CANNOT BE RULED OUT . IN THOSE CIRCUMSTANCES , THE REQUIREMENT RELATING TO THE MAXIMUM WATER CONTENT MUST BE STRICTLY COMPLIED WITH IN ORDER TO PREVENT THE RISK OF ANY DETERIORATION IN THE TASTE OF THE PRODUCT .

16 IN THE LIGHT OF ALL THE FOREGOING CONSIDERATIONS , THE CONCLUSION MUST BE DRAWN THAT THE PROVISIONS OF REGULATION NO 756/70 , WHICH MAKES THE GRANT OF AID CONDITIONAL UPON STRICT COMPLIANCE WITH THE MAXIMUM WATER CONTENT , ARE NOT CONTRARY TO THE PRINCIPLE OF PROPORTIONALITY . THE COMMISSION WAS JUSTIFIED IN TAKING THE VIEW THAT IN ORDER TO SELL THE PRODUCTS IN QUESTION THE MAINTENANCE OF HIGH QUALITY WAS NECESSARY AND THAT THE GRANT OF AID AT A REDUCED RATE FOR A PRODUCT OF SUBSTANDARD QUALITY WAS NOT IN KEEPING WITH THAT AIM .

17 ACCORDINGLY , THE ANSWER TO THE QUESTION SUBMITTED BY THE TRIBUNAL ADMINISTRATIF , PARIS , MUST BE THAT CONSIDERATION OF THE QUESTION RAISED HAS DISCLOSED NO FACTOR OF SUCH A KIND AS TO AFFECT THE VALIDITY EITHER OF REGULATION ( EEC ) NO 987/68 OF THE COUNCIL PROVIDING FOR AID FOR THE PROCESSING OF SKIMMED MILK INTO CASEIN AND CASEINATES , OR OF REGULATION ( EEC ) NO 756/70 OF THE COMMISSION LAYING DOWN CRITERIA REGARDING THE QUALITY OF THE PROCESSED PRODUCT .

COSTS
18 THE COSTS INCURRED BY THE COUNCIL AND THE COMMISSION OF THE EUROPEAN COMMUNITIES , WHICH HAVE SUBMITTED OBSERVATIONS TO THE COURT , ARE NOT RECOVERABLE . AS THESE PROCEEDINGS ARE , IN SO FAR AS THE PARTIES TO THE MAIN PROCEEDINGS ARE CONCERNED , IN THE NATURE OF A STEP IN THE ACTION PENDING BEFORE THE NATIONAL COURT , THE DECISION ON COSTS IS A MATTER FOR THAT COURT .

ON THOSE GROUNDS ,
THE COURT ( FIRST CHAMBER )
IN ANSWER TO THE QUESTION REFERRED TO IT BY THE TRIBUNAL ADMINISTRATIF , PARIS , BY JUDGMENT OF 16 JUNE 1981 , HEREBY RULES :
CONSIDERATION OF THE QUESTION RAISED HAS DISCLOSED NO FACTOR OF SUCH A KIND AS TO AFFECT THE VALIDITY EITHER OF REGULATION ( EEC ) NO 987/68 OF THE COUNCIL PROVIDING FOR AID FOR THE PROCESSING OF SKIMMED MILK INTO CASEIN AND CASEINATES , OR OF REGULATION ( EEC ) NO 756/70 OF THE COMMISSION LAYING DOWN CRITERIA REGARDING THE QUALITY OF THE PROCESSED PRODUCT .