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

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Agriculture - Common organization of the markets - Milk and milk products - Aid for skimmed milk processed into compound feedingstuffs and skimmed-milk powder intended for feed for calves - Aid for the processing of skimmed-milk powder - Calculation - Coefficient intended to avoid overlapping with the special aid for the processing of milk powder with a high fat content - Rules of application
( Commission Regulation No 1725/79, Arts 1(5 ) and 4(1)(a ) )

Article 1(5 ) of Regulation No 1725/79 on the rules for granting aid for skimmed-milk powder processed into compound feedingstuffs, which was introduced by Regulation No 101/85 in order to take account of any special aid received for the processing of the fat content in milk powder, cannot be interpreted as having modified the quantitative requirements in respect of the composition of such feedingstuffs which Article 4(1)(a ) lays down as a condition for the granting of the aid . Therefore, the coefficient of 0.9 for which it provides serves solely to determine the quantities of milk powder on the basis of which the aid is calculated .

In Case 182/87
REFERENCE to the Court under Article 177 of the EEC Treaty by the College van Beroep voor het Bedrijfsleven ( Administrative court of last instance in matters of trade and industry ) for a preliminary ruling in the action pending before that court between
Trouw & Co . BV, Putten, the Netherlands,
and
Hoofdproduktschap voor Akkerbouwprodukten ( Central Board for Agricultural Products ), The Hague,
on the interpretation of Articles 1(5 ) and 4(1)(a ) of Commission Regulation No 1725/79 of 26 July 1979 on the rules for granting aid to skimmed milk processed into compound feedingstuffs and skimmed-milk powder intended for feed for calves ( Official Journal 1979, L 199, p . 1 ),
THE COURT ( First Chamber ),
composed of R . Joliet, President of Chamber, Sir Gordon Slynn and G . C . Rodríguez Iglesias, Judges,
Advocate General : F . G . Jacobs
Registrar : B . Pastor, Administrator
after considering the observations submitted on behalf of
Trouw & Co . BV, the plaintiff in the main proceedings, by L . H . van Lennep and E . H . Pijnacker Hordijk, of the Bar at the Hague, whose Chambers are in Brussels, at the hearing,
the Hoofdproduktschap voor Akkerbouwprodukten, the defendant in the main proceedings, by A . W . F . Helmstrijd, during the written procedure,
the Commission of the European Communities, by R . C . Fischer, Legal Adviser,
having regard to the Report for the Hearing and further to the hearing on 9 November 1988,
after hearing the Opinion of the Advocate General delivered at the sitting on 30 November 1988,
gives the following
Judgment

1 By order dated 5 June 1987, which was received at the Court on 10 June 1987, the College van Beroep voor het Bedrijfsleven referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty a question on the interpretation of Articles 1(5 ) and 4(1)(a ) of Commission Regulation No 1725/79 of 26 July 1979 on the rules for granting aid to skimmed milk processed into compound feedingstuffs and skimmed-milk powder intended for feed for calves ( Official Journal 1979, L 199, p . 1 ).
2 On 15 July 1968, the Council adopted, as part of the measures aimed at reducing milk surpluses, Regulation No 986/68 laying down general rules for granting aid for skimmed milk and skimmed-milk powder for use as feed ( Official Journal, English Special Edition 1968 ( I ), p . 260 ). Article 1 of that regulation, as amended by Regulation ( EEC ) No 472/75 of the Council of 27 February 1975 ( Official Journal 1975, L 52, p . 22 ), defines skimmed-milk powder as milk or buttermilk in powder form with a maximum fat content of 11 %. That regulation initially provided for a single system of aid for the processing of skimmed-milk powder used in the manufacture of compound feedingstuffs .
3 By Regulation No 1725/79, the Commission laid down the rules for granting aid for the use of skimmed-milk powder in the manufacture of compound feedingstuffs . Article 4(1)(a ) provides that compound feedingstuffs must contain not less than 60 kg and not more than 70 kg of skimmed-milk powder per 100 kg of the finished product in order for processors to qualify for the aid .
4 Subsequently, an increase in butterfat surpluses led the Council to set up a special system of aid in order to encourage the processing of milk powders with a high fat content . Council Regulation ( EEC ) No 2128/84 of 17 July 1984 ( Official Journal 1984, L 196, p . 6 ) was therefore adopted to amend Regulation No 986/68, cited above . The Commission itself then adopted Regulation No 3714/84 of 21 December 1984, which lays down detailed rules for the granting of that aid ( Official Journal 1984, L 341, p . 65 ).
5 Under those new arrangements, two separate aids were granted in respect of skimmed-milk powder with a fat content of between 9 and 11% ( hereinafter referred to as "partly skimmed milk powder "). The processing of the non-fat content of that type of skimmed milk still qualified for the aid defined in Commission Regulation No 1725/79 . A higher level of aid, however, was granted under Regulation No 3714/84 in respect of the processing of the fat content .
6 In order to avoid an overlapping of the two systems of aid for the processing of the fat content of partly skimmed milk, which Regulation No 3714/84 assessed at 10% of such milk, the Commission considered it necessary to reduce by 10% the quantity of partly skimmed milk used as a basis for calculating the aid in respect of the non-fat content .
7 The Commission therefore adopted Regulation ( EEC ) No 101/85 of 15 January 1985 ( Official Journal 1985, L 13, p . 12 ) which inserted paragraph ( 5 ) in Article 1 of Regulation No 1725/79, worded as follows :
"5 . To calculate the aid payable and to ensure that the requirements of this regulation as regards quantities are observed, the quantities of skimmed-milk powder as referred to in Article 2(1)(e ) and ( f ) of Regulation ( EEC ) No 986/68 and skimmed milk as referred to in Article 2(2 ) of the said regulation shall be multiplied by a coefficient of 0.9 ."
8 The following grounds for that provision were stated in the preamble to the regulation :
"Whereas, in calculating the aid payable for skimmed-milk powder under Regulation ( EEC ) No 1725/79, account should be taken of any aid paid for milk fat under Regulation ( EEC ) No 3714/84; whereas a coefficient should therefore be fixed establishing the quantity of milk powder contained in the product; ...".
9 During the period when the dual system of aid described above was in operation, Trouw & Co . BV (" Trouw "), the plaintiff in the main proceedings, processed skimmed-milk powder with a fat content of between 9 and 11% for the purpose of manufacturing compound feedingstuffs . It is common ground that the compound feedingstuffs produced by Trouw contained between 60 and 70 kg of skimmed-milk powder per 100 kg of the finished product . When those products were manufactured, Trouw received both of the aids provided for in the abovementioned regulations from the Hoofdproduktschap voor Akkerbouwprodukten (" the Hoofdproduktschap "), the defendant in the main proceedings .
10 The Hoofdproduktschap subsequently considered, however, that it had been wrong to grant those aids for the processing of the products concerned . In its view, the coefficient introduced by Regulation No 101/85 should apply not only for the purpose of determining the quantities in respect of which aid is to be granted but also for that of calculating the quantities of partly skimmed milk powder which the finished product must contain in order to qualify for the aid . The Hoofdproduktschap thus considered that the quantities of milk powder must still be between 60 and 70 kg per 100 kg of the finished product after the coefficient of 0.9 has been applied to the actual quantities of partly skimmed milk powder contained in the finished product . In the event, the compound feedingstuffs produced by Trouw did not meet that requirement and the aids had thus been granted in error . The Hoofdproduktschap therefore decided to demand repayment of those aids .
11 Trouw brought proceedings contesting that decision before the College van Beroep voor het Bedrijfsleven . It claimed that Article 1(5 ) of Regulation No 1725/79, which provided for the application of a coefficient of reduction, applied only for the purposes of determining the quantities in respect of which aid was granted to processors . That provision did not, however, modify the quantitative requirements laid down in Article 4(1)(a ) of Regulation No 1725/79 . It was therefore sufficient that compound feedingstuffs should contain not less than 60 kg and not more than 70 kg of skimmed-milk powder per 100 kg of the finished product before the coefficient was applied, and that requirement was met in the present case .
12 In order to settle the dispute, the national court referred the following question to the Court for a preliminary ruling :
"Must Articles 1(5 ) and 4(1)(a ) of Regulation ( EEC ) No 1725/79, read in conjunction with each other, be construed as meaning that the actual quantities of skimmed-milk powder per 100 kg of the finished product should be multiplied by a coefficient of 0.9 and that the result of that multiplication should be between 60 and 70 kg?"
13 Reference is made to the Report for the Hearing for a fuller account of the legal background, the facts of the case in the main proceedings and the observations submitted to the Court, which are referred to hereinafter only in so far as is necessary for the reasoning of the Court .
14 The question referred to the Court is, essentially, whether the coefficient of 0.9 laid down in Article 1(5 ) of Regulation No 1725/79 serves solely to determine the quantities of skimmed-milk powder on the basis of which the aid is calculated, or whether that coefficient must apply also to the quantities of partly skimmed milk powder actually present per 100 kg of the finished product, so that the quantities of milk powder should still be not less than 60 kg and not more than 70 kg after the coefficient has been applied if the processing is to qualify for aid .
15 In the observations which it submitted to the Court, Trouw maintained the same arguments as it had put forward before the national court . The Hoofdproduktschap, on the other hand, moved away from the position on which it had based its decision and which it had upheld before the national court . It pointed out that, if the quantities of milk powder contained in the finished product had still to be between 60 and 70 kg after the coefficient was applied, processors would be obliged to use more partly skimmed milk powder in order to qualify for aid, which would make processing more costly and would destroy the economic effectiveness of the aid system . The Hoofdproduktschap therefore adopted Trouw' s interpretation .
16 The Commission relied on the actual terms of Article 1(5 ) of Regulation No 1725/79 to maintain that, whilst the coefficient should indeed apply to the quantities of partly skimmed milk contained in the finished product for the purpose of calculating the aid, the quantities of milk powder should still lie between 60 and 70 kg per 100 kg of the finished product even after the reduction . In that regard, the Commission claimed that the aim of the aid for the processing of milk fat was to encourage producers of feedingstuffs to use milk powder with a particularly high fat content . However, if the quantities of non-fat constituents were to remain as high as under the previous aid system, the quantities of milk powder would still have to meet the quantitative requirements referred to in Article 4(1 ) of Regulation No 1725/79, even after they had been reduced by applying the coefficient . In the Commission' s view, that interpretation would ensure that the finished product contained at least 60 kg of non-fat constituents, as would have been the case under the previous rules .
17 It is important to note, in that regard, that the coefficient was fixed so as to reduce by 10% the amount of the aid granted under Regulation No 1725/79 for milk powder processing, because Council Regulation No 2128/84, cited above, introduced a special aid for processing the fat content in milk powder, which was assessed at 10% of the milk powder by Regulation No 3714/84, cited above . The aim of laying down the coefficient was thus to avoid the overlapping of two aids for the processing of the fat content in milk powder .
18 The grounds stated in the preamble to Regulation No 101/85 which introduced Article 1(5 ) into Regulation No 1725/79, however, do not mention the need to increase the actual quantities of milk powder contained in the finished products in order to ensure that the quantities of non-fat constituents processed remain stable .
19 Nor can that provision be interpreted as having modified the quantitative requirements referred to in Article 4(1 ) of Regulation No 1725/79 .
20 It must be borne in mind that, under the previous system of aid, the milk powder contained in the finished products already had a certain fat content . That content might even be as much as 11%, the maximum permissible under the new system of aid . Even assuming that the application of the new system had led to an increase in the processing of milk fat and a correlative decrease in the processing of non-fat constituents, it would never be justifiable to assess that decrease at 10 %.
21 It must also be noted that the previous system of aid never required there to be at least 60 kg of non-fat constituents per 100 kg of the finished product . Article 4(1)(a ) of Regulation No 1725/79 provided, before the system of special aid for the processing of milk fat was introduced, that compound feedingstuffs were to contain at least 60 kg of milk powder per 100 kg of the finished product . However, that minimum quantity of 60 kg of milk powder itself had a certain fat content, which might be as much as 11 %. The previous rules, therefore, never made it a condition for the granting of aid for the use of milk powder in the manufacture of compound feedingstuffs that there should be at least 60 kg of non-fat constituents per 100 kg of the finished product .
22 Consequently the answer to the question raised by the national court must be that the coefficient of 0.9 laid down in Article 1(5 ) of Regulation No 1725/79 serves solely to determine the quantities of milk powder on the basis of which the aid is calculated

Costs
23 The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable . Since these proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the proceedings 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 College van Beroep voor het Bedrijfsleven, by order of 5 June 1987, hereby rules :
The coefficient of 0.9 laid down in Article 1(5 ) of Commission Regulation ( EEC ) No 1725/79 of 26 July 1979 serves solely to determine the quantities of milk powder on the basis of which the aid is calculated .