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 - Additional levy on milk - Producers with two reference quantities, for direct sales and deliveries to dairies - Possibility of transferring reference quantities from one sector of activity to the other on the basis of marketing requirements - Persons entitled - Total suspension of one activity by producers during a marketing year - Inclusion
(Council Regulation No 857/84, Art. 6a)

The scope of Article 6a of Regulation No 857/84, which enables dairy producers who have two reference quantities, one for direct sales and the other for deliveries to dairies, to transfer them from one sector of activity to another within a twelve-month period, cannot be restricted to the situation where the producer in question in fact carries on both of those activities during the same twelve-month period. The purpose of that provision, which is to enable producers to adapt to changes in their marketing requirements which may have an effect over more than one marketing year, would not be fully achieved if, as a result of such a restriction, those who temporarily ceased their direct sales during a given marketing year owing to such changes could not benefit from it.

In Case C-22/90,
French Republic, represented initially by Edwige Belliard, Assistant Director in the Legal Affairs Directorate of the Ministry of Foreign Affairs, acting as Agent, and by Géraud de Bergues, Principal Deputy Secretary in the Legal Affairs Directorate of the same ministry, acting as alternate Agent, and subsequently by Philippe Pouzoulet, Deputy Director in the Legal Affairs Directorate of the same ministry, acting as Agent, and by Géraud de Bergues, acting as alternate Agent, with an address for service in Luxembourg at the French Embassy, 9 Boulevard du Prince Henri,
applicant,
v
Commission of the European Communities, represented by Patrick Hetsch, a member of its Legal Service, acting as Agent, with an address for service at the office of Roberto Hayder, a representative of its Legal Service, Wagner Centre, Kirchberg,
defendant,
APPLICATION for the annulment of Commission Decision 89/627/EEC of 15 November 1989 on the clearance of the accounts presented by the Member States in respect of the expenditure for 1987 of the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (Official Journal 1989 L 359, p. 23), in so far as that decision found that the guaranteed total quantity for milk deliveries had been exceeded by 5 192 tonnes for the 1986/1987 marketing year,
THE COURT,
composed of: O. Due, President, Sir Gordon Slynn, F.A. Schockweiler and F. Grévisse (Presidents of Chambers), G.F. Mancini, J.C. Moitinho de Almeida and M. Zuleeg, Judges,
Advocate General: W. Van Gerven,
Registrar: J.-G. Giraud,
having regard to the Report for the Hearing,
after hearing oral argument from the parties at the hearing on 14 May 1991,
after hearing the Opinion of the Advocate General delivered at the sitting on 26 June 1991,
gives the following
Judgment

1 By application lodged at the Court Registry on 24 January 1990, the French Republic brought an action under Article 173 of the EEC Treaty for the annulment of Commission Decision 89/627/EEC of 15 November 1989 on the clearance of the accounts presented by the Member States in respect of the expenditure for 1987 of the Guarantee Section of the European Agricultural Guidance and Guarantee Fund, in so far as that decision found that the guaranteed total quantity for milk deliveries had been exceeded by 5 192 tonnes for the 1986/1987 marketing year.
2 By the contested decision, the Commission among other things charged to France expenditure of FF 10 569 874, corresponding to the additional levies applicable to the quantity of milk (5 192 tonnes) which, during the third period of application of the additional levy on milk (1986/1987), exceeded the guaranteed total quantity set for deliveries of milk and milk products in France. That quantity of 5 192 tonnes derived from transfers made by France between reference quantities which had been allocated to milk producers for their direct sales and reference quantities allocated for deliveries to dairies. The contested decision is based on the consideration that those transfers were in breach of the relevant Community rules, in so far as the producers concerned had not in fact been carrying out both direct sales and deliveries to dairies during the marketing year in question.
3 In support of its action, France relies on two pleas alleging that the Commission misinterpreted both the rules concerning transfers between reference quantities for direct sales and reference quantities for deliveries to dairies and the rules concerning the calculation of the average fat content of milk used as the basis for calculating the additional levy.
4 Reference is made to the Report for the Hearing for a full account of the facts of the case, the procedure and the pleas and arguments of the parties, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court.
The relevant Community legislation
5 The system imposing an additional levy on milk, introduced by 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), is structured in such a way that a levy is imposed on deliveries of milk or other milk products exceeding a reference quantity to be determined. Article 2 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 (Official Journal 1984 L 90, p. 13) provides that that quantity is in principle to be equal to the quantity of milk or milk equivalent delivered by the producer to the dairy or bought by the dairy during the reference year, adjusted by a certain percentage.
6 Article 6 of Regulation No 857/84 provides, however, that a reference quantity is also to be allocated to producers who have made direct sales, as a result of which a single producer may benefit from two reference quantities, one for his deliveries to dairies and the other for his sales to the consumer. Article 6a of Regulation No 857/84, added to that regulation by Council Regulation (EEC) No 590/85 of 26 February 1985 amending Regulation No 857/84 (Official Journal 1985 L 68, p. 1), provides that producers who thus have two reference quantities "may, on request, obtain an increase in one of the reference quantities within a twelve-month period to enable them to adapt to changes in their marketing requirements. Any such increase shall be subject to a reduction of the same amount in the other reference quantity during the same twelve-month period".
7 The procedure for applying the additional levy on milk, imposed by Article 5c of Regulation No 804/68, was established by Commission Regulation (EEC) No 1546/88 of 3 June 1988 (Official Journal 1988 L 139, p. 12). Article 5(5) of that regulation provides in substance that producers who have obtained a reference quantity for their direct sales and who cease direct sales totally or in part "may deliver their milk and milk products to a purchaser ..., provided that the Member State can grant them a reference quantity from the guaranteed quantity ...". Regulation No 1546/88 also lays down, in Article 12, rules for the calculation of the average fat content of milk used as the basis for calculating the additional levy.
First plea
8 In its first plea, the French Republic complains that the Commission incorrectly applied Article 6a of Regulation No 857/84, as amended, by finding in the contested decision that the guaranteed quantity was exceeded by 5 192 tonnes of milk, as a result of transfers between reference quantities for direct sales and reference quantities for deliveries to dairies by producers who had not, during the marketing year in question, carried out both direct sales and deliveries to dairies.
9 The French Government points out in that regard that Article 6a governs provisional transfers between reference quantities for direct sales and those for deliveries to dairies. That provision accordingly enables a producer who has two reference quantities to move, for a given marketing year, all or part of those quantities from one activity to the other, on the basis that such authorization lapses at the end of each marketing year. On the other hand, when a producer definitively ceases his direct sales, his reference quantity for that activity reverts, in accordance with Article 5(5) of Regulation No 1546/88, to the national reserve and he may only be granted, if necessary, a new reference quantity deducted from the national reserve for his deliveries to dairies.
10 A comparison between the two provisions referred to above reveals, according to the French Government, that a provisional transfer as provided for in Article 6a of Regulation No 857/84 is subject to only two conditions, namely the producer concerned must have two reference quantities, for his direct sales and for his deliveries to dairies, and he must be in a position in which he has to adapt to changes in his marketing requirements. However, that provision does not require the producer to carry out at the same time, during the marketing year in question, both direct sales and deliveries to dairies.
11 The Commission, on the other hand, maintains that the machinery for provisional transfers, established by Article 6a of Regulation No 857/84, can be set in motion only if the producer in fact carries out direct sales and deliveries to dairies during the marketing year in question. The purpose of that provision is, according to the Commission, to enable a producer who markets his dairy production in part by direct sales and in part by deliveries to dairies to redirect the intended use of that production when his marketing requirements no longer correspond, during a given marketing year, to the usual distribution pattern.
12 It follows, according to the Commission, that transfers between reference quantities for direct sales and reference quantities for deliveries to dairies presuppose that the producers are in fact carrying out, during the marketing year in question, both direct sales and deliveries to dairies.
13 The Commission' s argument cannot be accepted.
14 It is clear from the actual wording of Article 6a of Regulation No 857/84 that the scope of that provision cannot be restricted to the situation where a producer who has two reference quantities, for direct sales and for deliveries to dairies, in fact carries on both of those activities during the same twelve-month period.
15 That interpretation, based on the wording of the provision in question, is consistent with its purpose, which is to enable producers who have two reference quantities to adapt to changes in their marketing requirements. Given that the effects of such changes may extend over more than one marketing year, the achievement of that objective could not be fully guaranteed if Article 6a were interpreted so as to exclude from its scope producers who were not in fact carrying out both direct sales and deliveries to dairies during the same marketing year, that is to say in particular those who, on account of changes in their marketing requirements, temporarily ceased their direct sales during a given marketing year.
16 Furthermore, it follows from the scheme of the relevant legislation that producers who do not fall within the scope of Article 6a of Regulation No 857/84 may seek to change their marketing methods only under Article 5(5) of Regulation No 1546/88, governing the system for definitive cessation of direct sales. That provision, however, permits only the transfer of reference quantities for direct sales to reference quantities for deliveries to dairies and not the reverse. In addition, it makes deliveries to dairies, which are exempt from the additional levy, subject to the condition that the Member State in question is able to grant reference quantities from its guaranteed total quantity.
17 It follows from all the foregoing considerations that the contested decision, in so far as it finds that the guaranteed total quantity for milk deliveries was exceeded by 5 192 tonnes for the 1986/1987 marketing year because of the refusal to extend Article 6a of Regulation No 857/84 to producers who did not in fact carry out both direct sales and deliveries to dairies during that marketing year, is based on a misinterpretation of that provision and must therefore be annulled.
Second plea
18 Since the contested decision must be annulled for the aforesaid reasons, it is not necessary to consider the second plea alleging a misinterpretation of Article 12 of Regulation No 1546/88, concerning the calculation of the average fat content of milk used as the basis for calculating the additional levy.

Costs
19 Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs. Since the Commission has been unsuccessful, it must be ordered to pay the costs.

On those grounds,
THE COURT
hereby:
1. Annuls Commission Decision 89/627/EEC of 15 November 1989 on the clearance of the accounts presented by the Member States in respect of the expenditure for 1987 of the Guarantee Section of the European Agricultural Guidance and Guarantee Fund, in so far as that decision finds that the guaranteed total quantity for milk deliveries was exceeded by 5 192 tonnes for the 1986/1987 marketing year;
2. Orders the Commission to pay the costs.