61980CJ0107_EN
Parties
Subject of the case
Grounds
Decision on costs
Operative part
Parties
IN CASE 107/80
GIACOMO CATTANEO ADORNO, OF GABIANO MONFERRATO, ITALY, REPRESENTED BY EMILIO CAPPELLI AND PAOLO DE CATERINI OF THE ROME BAR, ACTING AS AGENTS, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE CHAMBERS OF CHARLES TURK, 4 RUE NICOLAS WELTER,
APPLICANT,
SUPPORTED BY
THE GOVERNMENT OF THE ITALIAN REPUBLIC, REPRESENTED BY OSCAR FIUMARA, AVVOCATO DELLO STATO, ACTING AS AGENT, WITH AN ADDRESS FOR SERVICE AT THE ITALIAN EMBASSY IN LUXEMBOURG,
INTERVENER,
V
COMMISSION OF THE EUROPEAN COMMUNITIES, REPRESENTED BY GIANLUIGI CAMPOGRANDE, A MEMBER OF ITS LEGAL DEPARTMENT, ACTING AS AGENT, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICE OF ITS LEGAL ADVISER, MARIO CERVINO, JEAN MONNET BUILDING, KIRCHBERG,
DEFENDANT,
Subject of the case
APPLICATION FOR A DECLARATION THAT THE COMMISSION ' S DECISION CONTAINED IN LETTER NO 01766 OF 24 JANUARY 1980 FROM ITS DIRECTOR-GENERAL FOR AGRICULTURE REJECTING THE APPLICATION FOR AID FROM THE GUIDANCE SECTION OF THE EUROPEAN AGRICULTURAL GUIDANCE AND GUARANTEE FUND FOR 1979 SUBMITTED TO THE COMMISSION THROUGH THE ITALIAN GOVERNMENT PURSUANT TO ARTICLE 13 OF COUNCIL REGULATION NO 355/77 OF 15 FEBRUARY 1977 ON COMMON MEASURES TO IMPROVE THE CONDITIONS UNDER WHICH AGRICULTURAL PRODUCTS ARE PROCESSED AND MARKETED ( OFFICIAL JOURNAL 1977, L 51, P . 1 ), IS VOID,
Grounds
1 BY AN APPLICATION LODGED AT THE COURT REGISTRY ON 3 APRIL 1980 MR CATTANEO ADORNO BROUGHT AN ACTION UNDER THE SECOND PARAGRAPH OF ARTICLE 173 OF THE EEC TREATY FOR A DECLARATION THAT THE COMMISSION ' S DECISION OF 24 JANUARY 1980, REFUSING TO GRANT AID FROM THE GUIDANCE SECTION OF THE EUROPEAN AGRICULTURAL GUIDANCE AND GUARANTEE FUND ( HEREINAFTER REFERRED TO AS ' ' THE FUND ' ' ) FOR AN INVESTMENT PROJECT SUBMITTED BY THE APPLICANT UNDER COUNCIL REGULATION ( EEC ) NO 355/77 OF 15 FEBRUARY 1977 ON COMMON MEASURES TO IMPROVE THE CONDITIONS UNDER WHICH AGRICULTURAL PRODUCTS ARE PROCESSED AND MARKETED ( OFFICIAL JOURNAL, L 51, P . 1 ), IS VOID .
2 THE APPLICANT RUNS A FARM LOCATED AT GABIANO MONFERRATO IN THE PIEDMONT AREA . THE UNDERTAKING COMPRISES TWO HOLDINGS WHICH CONSIST OF LAND COVERING APPROXIMATELY 176 HECTARES, TRADITIONALLY DEVOTED TO WINE-GROWING AND
CAPABLE OF PRODUCING HIGH-QUALITY WINE . BY MEANS OF THE INVESTMENT PROJECT WHICH IS AT ISSUE THE APPLICANT PROPOSED THE CREATION OF A NEW WINE-MAKING CENTRE DESIGNED TO IMPROVE THE PROCESSING INTO WINE OF THE GRAPES PRODUCED ON THE FARM, TO RATIONALIZE THE STORAGE AND PRESERVATION OF THE WINE, TO IMPROVE TRANSPORT BETWEEN THE TWO FARMS AND, TO SHORTEN THE MARKETING CHANNELS FOR THE WINE, AT THE SAME TIME IMPROVING THE QUALITY, PRESENTATION AND MARKET PREPARATION OF HIS PRODUCT .
3 THE DECISION WHICH IS AT ISSUE STATES THAT THE PROJECT IS NOT ELIGIBLE FOR AID FROM THE GUIDANCE SECTION OF THE FUND . THE COMMISSION STATED IN ITS DECISION THAT THE APPLICATION FOR AID IN QUESTION FELL WITHIN THE SCOPE OF COUNCIL DIRECTIVE 72/159/EEC OF 17 APRIL 1972 ON THE MODERNIZATION OF FARMS ( OFFICIAL JOURNAL, ENGLISH SPECIAL EDITION 1972 ( II ), P . 324 ); THAT THE MEASURES LAID DOWN IN THAT DIRECTIVE CONSTITUTED A ' ' COMMON MEASURE ' '
WITHIN THE MEANING OF ARTICLE 6 ( 1 ) OF REGULATION ( EEC ) NO 729/70 OF THE COUNCIL OF 21 APRIL 1970 ON THE FINANCING OF THE COMMON AGRICULTURAL POLICY ( OFFICIAL JOURNAL, ENGLISH SPECIAL EDITION 1970 ( I ), P . 218 ); AND THAT BY VIRTUE OF ARTICLE 15 ( 2 ) OF REGULATION ( EEC ) NO 355/77 PROJECTS WHICH WERE ELIGIBLE FOR COMMUNITY AID UNDER OTHER COMMON MEASURES DID NOT FALL WITHIN THE SCOPE OF THAT REGULATION .
4 THE FIVE SUBMISSIONS MADE RELIED UPON BY THE APPLICANT ARE BASED, IN ORDER, ON INFRINGEMENT OF REGULATION ( EEC ) NO 355/77, IN PARTICULAR ARTICLES 1, 6 AND 15 ( 2 ); ON THE FAILURE TO STATE THE REASONS ON WHICH THE DECISION IN QUESTION IS BASED ; ON THE MISAPPLICATION OF DIRECTIVE 72/159/EEC, ESPECIALLY ARTICLES 1 AND 2 ; ON THE COMMISSION ' S LACK OF POWER TO DETERMINE THOSE WHO ARE ELIGIBLE TO RECEIVE AID UNDER THE DIRECTIVE ; AND ON BREACH OF THE PRINCIPLE OF NON-DISCRIMINATION .
5 SINCE THE DISPUTE IS PRINCIPALLY CONCERNED WITH DEFINING THE SCOPE OF EACH OF REGULATION NO 355/77 AND DIRECTIVE 72/159/EEC, IT IS CONVENIENT TO COMMENCE WITH AN EXAMINATION OF THE FIRST AND THIRD SUBMISSIONS TAKEN TOGETHER .
6 THE APPLICANT CLAIMS THAT DIRECTIVE 72/159/EEC IS NOT APPLICABLE TO HIS CASE . THE SYSTEM OF INCENTIVES LAID DOWN IN THAT DIRECTIVE IS DESIGNED IN FACT TO ENABLE ' ' FARMS SUITABLE FOR DEVELOPMENT ' '
TO ADAPT THEMSELVES TO ECONOMIC
PROGRESS THROUGH AN APPROPRIATE DEVELOPMENT SCHEME . THE FARMS WHICH MAY BENEFIT FROM THE SYSTEM UNDER THE DIRECTIVE ARE THOSE WHERE THE FARMER ' S EARNED INCOME IS BELOW THE LEVEL OF A FAIR RETURN, OR WHERE THE STRUCTURE IS SUCH AS TO JEOPARDIZE THE MAINTENANCE OF THAT INCOME AT SUCH A LEVEL . THOSE CONDITIONS ARE NOT MET IN THE CASE OF OPERATORS WHO, LIKE THE APPLICANT, RUN FARMS WHERE AN EARNED INCOME HAS BEEN ACHIEVED WHICH IS COMPARABLE TO, OR EVEN GREATER THAN, THAT RECEIVED FOR NON-AGRICULTURAL WORK IN THE REGION IN QUESTION .
7 THE APPLICANT FURTHER MAINTAINS THAT IN THOSE CIRCUMSTANCES HIS CASE IS NOT CAUGHT BY ARTICLE 15 ( 2 ) OF REGULATION ( EEC ) NO 355/77 . THAT PROVISION, ACCORDING TO WHICH PROJECTS ' ' WHICH ARE ELIGIBLE FOR COMMUNITY AID UNDER OTHER COMMON MEASURES ' '
WITHIN THE MEANING OF REGULATION ( EEC ) NO 729/70 DO NOT COME WITHIN THE SCOPE OF REGULATION ( EEC ) NO 355/77, IS SOLELY DESIGNED TO PREVENT THE AGGREGATION OF COMMUNITY AIDS FOR THE ACCOMPLISHMENT OF ONE AND THE SAME PROJECT .
8 THE COMMISSION REJECTS THE APPLICANT ' S INTERPRETATION OF ARTICLE 15 ( 2 ) OF REGULATION ( EEC ) NO 355/77 . IN ITS OPINION IT IS INCONCEIVABLE THAT THE COMMUNITY LEGISLATURE INTENDED TO CONFER THE GREATER BENEFIT PROVIDED FOR UNDER THE REGULATION FOR INVESTMENTS CONCERNED SOLELY WITH THE MODERNIZATION OF A FARM WHICH IS COVERED BY DIRECTIVE 72/159/EEC, WHEN THOSE INVESTMENTS DO NOT MEET THE CONDITIONS LAID DOWN BY THE DIRECTIVE . ON THOSE GROUNDS THE COMMISSION EXCLUDED AT THE OUTSET FROM THE SCOPE OF THE REGULATION ALL PROJECTS WHICH, LIKE THAT SUBMITTED BY THE APPLICANT, FELL WITHIN THE SCOPE OF THE DIRECTIVE BY REASON OF THE NATURE OF THE INVESTMENT PROPOSED, EVEN IF THE FARMER WAS NOT ELIGIBLE FOR THE AID PROVIDED FOR BY THE DIRECTIVE FOR REASONS OTHER THAN THE NATURE OF THE PROJECT BUT PERTAINING TO THE SIZE OR PROFITABILITY OF THE FARM .
9 THE ITALIAN GOVERNMENT, THE INTERVENER, CRITICIZED THE ABSTRACT FASHION IN WHICH THE COMMISSION REACHED ITS DECISION ON THE PROJECT SUBMITTED BY THE APPLICANT . AN ANALYSIS OF THE PROVISIONS OF REGULATION ( EEC ) NO 355/77 AND DIRECTIVE 72/159/EEC AND OF THE RECITALS IN THE PREAMBLE TO EACH OF THEM REVEALS THAT THE TWO TEXTS HAVE SPECIFIC, DISTINCT SPHERES OF APPLICATION . THE DIRECTIVE IS DESIGNED TO ENCOURAGE RATIONAL PRODUCTION METHODS BY REFORMING THE STRUCTURE OF AGRICULTURAL PRODUCTION ; THE REGULATION, BY CONTRAST, IS
INTENDED TO ENCOURAGE THE IMPROVEMENT AND RATIONALIZATION OF PROCESSING AND MARKETING STRUCTURES FOR AGRICULTURAL PRODUCTS . THAT BEING SO, THE COMMISSION OUGHT TO HAVE SCRUTINIZED THE INVESTMENT PROJECT SUBMITTED TO IT IN ORDER TO DETERMINE ITS SCOPE AND PURPOSE IN THE LIGHT OF THE CRITERIA AND DEFINITIONS CONTAINED IN THE TWO INSTRUMENTS IN QUESTION, RATHER THAN BE CONTENT TO DESCRIBE THE PROJECT AS A ' ' MODERNIZATION ' '
PROJECT .
10 IN ADDITION, THE COMMISSION CLAIMS THAT THE AID PROVIDED FOR IN THE DIRECTIVE IS MEANT TO FINANCE FARMS WHEREAS THE CONTRIBUTIONS ENVISAGED IN THE REGULATION ARE INTENDED FOR NON-FARMING ACTIVITIES CONCERNED WITH INITIAL PROCESSING OR MARKETING, EVEN WHERE THESE ARE CARRIED OUT BY PERSONS WHO AT THE SAME TIME FOLLOW AN AGRICULTURAL OCCUPATION . THE TRUE PURPOSE OF REGULATION ( EEC ) NO 355/77 IS NOT TO ENSURE AN ADEQUATE INCOME FOR FARMERS BUT TO IMPROVE MARKET STRUCTURES . THAT HAS LEAD THE COMMISSION TO CONCLUDE THAT A FARMER IS NOT ELIGIBLE FOR THE AID PROVIDED FOR BY THE REGULATION UNLESS HE IS PLANNING, BY IMPROVING HIS FACILITIES FOR INITIAL PROCESSING OR MARKETING, TO ALTER THE BALANCE OF HIS ACTIVITIES IN SUCH A WAY AS TO DIRECT THEM CLEARLY TOWARDS PROCESSING AND MARKETING PRODUCTS FROM OTHER FARMS . THAT IS NOT THE CASE OF THE PROJECT SUBMITTED BY THE APPLICANT .
11 THAT LAST ARGUMENT MUST BE CONSIDERED FIRST, FOR IF IT IS WELL FOUNDED IT IS DECISIVE, THE APPLICANT NOT HAVING CLAIMED THAT THE PROJECT HE SUBMITTED WAS DESIGNED TO DIRECT HIS FARMING ACTIVITIES CLEARLY TOWARDS PROCESSING AND MARKETING PRODUCTS FROM FARMS OTHER THAN HIS OWN .
12 AN ANALYSIS OF THE TEXT OF, AND PREAMBLE TO, REGULATION ( EEC ) NO 355/77 DOES NOT SUPPORT THE CONCLUSIONS MAINTAINED BY THE COMMISSION . ACCORDING TO ARTICLE 19 THE AID FROM THE FUND PROVIDED FOR BY THE REGULATION MAY BE GRANTED TO, AMONG OTHERS, NATURAL PERSONS WHO ARE ULTIMATELY RESPONSIBLE FOR THE COST OF CARRYING OUT THE PROJECT . ARTICLE 6 PROVIDES THAT FOR THE PURPOSES OF THE REGULATION ' ' PROJECT ' '
MEANS INTER ALIA, ANY PROJECT INVOLVING PRIVATE MATERIAL INVESTMENT RELATING WHOLLY OR IN PART TO BUILDINGS OR EQUIPMENT FOR RATIONALIZING OR DEVELOPING STORAGE, MARKET PREPARATION, PRESERVATION OR
PROCESSING OF AGRICULTURAL PROJECTS - WITH NO STIPULATION AS TO WHERE THESE PRODUCTS MUST COME FROM - AND IMPROVING MARKETING CHANNELS . PROJECTS MUST ACCORDING TO ARTICLE 7, RELATE TO THE MARKETING OF THE AGRICULTURAL PRODUCTS SET OUT IN ANNEX II TO THE TREATY OR TO THE PRODUCTION OF THE PROCESSED PRODUCTS ALSO SET OUT THEREIN .
13 THE NET RESULT OF THOSE PROVISIONS IS THAT PROJECTS FOR IMPROVING THE PROCESSING AND MARKETING OF AGRICULTURAL PRODUCTS FROM THE SAME FARM AS THAT IN WHICH THE INVESTMENT IS TO BE MADE ARE IN NO WAY EXCLUDED FROM THE SCOPE OF THE REGULATION IF THEY ARE CAPABLE OF MAKING AN EFFECTIVE CONTRIBUTION TOWARDS RATIONALIZING PROCESSING AND MARKETING STRUCTURES .
14 IT IS TRUE THAT ARTICLE 9 OF THE REGULATION PROVIDES THAT PROJECTS MUST CONTRIBUTE TO IMPROVING THE SITUATION OF THE BASIS AGRICULTURAL PRODUCTION SECTOR IN QUESTION AND IN PARTICULAR MUST GUARANTEE THE PRODUCERS OF THE BASIC AGRICULTURAL PRODUCT AN ADEQUATE AND LASTING SHARE IN THE RESULTING ECONOMIC BENEFITS ; BUT THAT PROVISION, WHICH RECOGNIZES THAT PERSONS OTHER THAN THE PRODUCERS OF THE BASIC AGRICULTURAL PRODUCT MAY BENEFIT FROM THE AID PROVIDED FOR BY THE REGULATION, DOES NOT RESTRICT THE SCOPE OF THE REGULATION TO THAT CASE ALONE .
15 FURTHERMORE, IN THE PREAMBLE TO REGULATION ( EEC ) NO 355/77 IT IS STATED THAT THE IMPROVEMENT OF THE PROCESSING AND MARKETING OF AGRICULTURAL PRODUCTS ENVISAGED BY THE REGULATION MAY BE ACHIEVED BY IMPROVING THE QUALITY AND PRESENTATION OF SUCH PRODUCTS, AND THE RATIONALIZATION OF PROCESSING AND MARKETING STRUCTURES FOR AGRICULTURAL PRODUCTS MUST HAVE A LASTING BENEFICIAL EFFECT ON THE AGRICULTURAL SECTOR . PROJECTS SUBMITTED BY FARMERS MAY CONTRIBUTE TO THE ACHIEVEMENT OF SUCH AIMS IN SO FAR AS THEY MAY, ON COMPLETION, HAVE RESULTS WHICH, WHILST IMPROVING AGRICULTURAL PRODUCTION, ARE CAPABLE OF AFFECTING PROCESSING AND MARKETING STRUCTURES IN A CERTAIN AREA OR ON A CERTAIN MARKET .
16 ACCORDING TO THE FILE SUBMITTED TO THE COMMISSION BY THE APPLICANT THE PROJECT AT ISSUE IS NOT PRINCIPALLY AIMED AT DEVELOPING THOSE ACTIVITIES WHICH ARE RELATED TO PRODUCTION OF THE BASIC PRODUCT, THAT IS TO SAY, GRAPES, BUT TO RATIONALIZING THE STORAGE AND PRESERVATION OF THE WINE, IMPROVING THE QUALITY, PRESENTATION AND MARKET PREPARATION OF WINE PRODUCTS AND SHORTENING THE MARKETING CHAIN . IT FOLLOWS FROM THE FOREGOING CONSIDERATIONS THAT SUCH EFFORTS TO RATIONALIZE ARE PRECISELY THOSE WHICH ARE COVERED BY REGULATION ( EEC ) NO 355/77 AND THAT IN PRINCIPLE THE PROJECT WHICH WAS SUBMITTED BY THE APPLICANT MUST BE CONSIDERED TO BE AN INVESTMENT PROJECT WITHIN THE MEANING OF ARTICLE 6 OF THAT REGULATION .
17 THAT BEING SO, IT MUST BE ESTABLISHED WHETHER ARTICLE 15 ( 2 ) OF THE REGULATION, WHICH EXCLUDES FROM THE SCOPE OF THE REGULATION PROJECTS WHICH ARE ELIGIBLE FOR COMMUNITY AID UNDER OTHER COMMON MEASURES, IS APPLICABLE IN THE PRESENT INSTANCE, AND IT MUST BE ASCERTAINED IN PARTICULAR WHETHER THE PROJECT SUBMITTED BY THE APPLICANT MAY BE CLASSED AS A MODERNIZATION PROJECT UNDER DIRECTIVE 72/159/EEC .
18 THE PURPOSE OF DIRECTIVE 72/159/EEC IS TO INITIATE THE REFORM OF AGRICULTURAL STRUCTURES . THE FIFTH RECITAL IN THE PREAMBLE STATES THAT SUCH REFORM SHOULD BE DIRECTED TOWARDS THE FORMATION AND DEVELOPMENT OF FARMS CAPABLE OF ADJUSTING TO ECONOMIC DEVELOPMENTS, THAT IS TO SAY, THOSE ON WHICH THE FARMER HAS ADEQUATE OCCUPATIONAL SKILL AND COMPETENCE, ON WHICH PROFITABILITY IS VERIFIED BY ACCOUNTS AND WHICH ARE CAPABLE, THROUGH THE ADOPTION OF RATIONAL METHODS OF PRODUCTION, OF ENSURING A FAIR INCOME AND SATISFACTORY WORKING CONDITIONS FOR PERSONS WORKING THEREON . ARTICLES 2, 3, 4, 11 AND 12 DEAL WITH THOSE DIFFERENT FACTORS, WHILST OTHER PROVISIONS PROVIDE FOR AID IN RELATION TO SCHEMES FOR IRRIGATION OR FOR LAND REPARCELLING AND FOR THE CONSTRUCTION OF FARM BUILDINGS OR FOR LAND IMPROVEMENT OPERATIONS .
19 IT IS APPARENT, THEREFORE, THAT THE AID PROVIDED FOR UNDER THE DIRECTIVE IS DESIGNED TO IMPROVE PRODUCTION CONDITIONS FOR BASIC AGRICULTURAL PRODUCTS IN ORDER TO RAISE THE PROFITABILITY OF FARMS TO A SUITABLE LEVEL .
20 IN CONSEQUENCE DIRECTIVE 72/159/EEC HAS A SPECIAL SCOPE WHICH DOES NOT, AS A RULE, COINCIDE WITH THAT OF REGULATION ( EEC ) NO 355/77 .
21 SINCE THE PURPOSE OF THE PROJECT SUBMITTED BY THE APPLICANT IS NOT TO RAISE THE PROFITABILITY OF HIS FARM BY IMPROVING PRODUCTION CONDITIONS FOR BASIC AGRICULTURAL PRODUCTS BUT TO IMPROVE THE PROCESSING AND MARKETING OF THOSE PRODUCTS IT DOES NOT FALL WITHIN THE SCOPE OF THE DIRECTIVE .
22 AS A RESULT THE DECISION AT ISSUE HAS NO PROPER LEGAL FOUNDATION INASMUCH AS THE APPLICANT ' S APPLICATION FOR AID WAS THEREIN HELD TO FALL WITHIN THE SCOPE OF DIRECTIVE 72/159/EEC AND INASMUCH AS CONSIDERATION OF THE APPLICATION IN THE CONTEXT OF REGULATION ( EEC ) NO 355/77 WAS THEREIN REFUSED WITHOUT ITS HAVING BEEN ASCERTAINED WHETHER THE CONDITIONS LAID DOWN BY THAT REGULATION WERE MET .
23 IN THE CIRCUMSTANCES THE DECISION AT ISSUE MUST BE DECLARED VOID AND IT IS NOT NECESSARY TO CONSIDER THE OTHER SUBMISSIONS MADE BY THE APPLICANT .
Decision on costs
24 PURSUANT TO ARTICLE 69 ( 2 ) OF THE RULES OF PROCEDURES THE UNSUCCESSFUL PARTY IS TO BE ORDERED TO PAY THE COSTS . SINCE THE DEFENDANT HAS BEEN UNSUCCESSFUL IT MUST BE ORDERED TO PAY THE COSTS, EXCLUDING THOSE OF THE INTERVENER, WHO HAS MADE NO APPLICATION FOR THEM .
Operative part
ON THOSE GROUNDS,
THE COURT
HEREBY RULES :
1 . THE COMMISSION ' S DECISION OF 24 JANUARY 1980 REFUSING AID FROM THE GUIDANCE SECTION OF THE EUROPEAN AGRICULTURAL GUIDANCE AND GUARANTEE FUND FOR AN INVESTMENT PROJECT SUBMITTED BY THE APPLICANT UNDER COUNCIL REGULATION NO 355/77 OF 15 FEBRUARY 1977 ON COMMON MEASURES TO IMPROVE THE CONDITIONS UNDER WHICH AGRICULTURAL PRODUCTS ARE PROCESSED AND MARKETED ( OFFICIAL JOURNAL 1977, L 51, P . 1 ) IS DECLARED VOID .
2 . THE COMMISSION OF THE EUROPEAN COMMUNITIES IS ORDERED TO PAY THE COSTS EXCLUDING THE COSTS OF THE INTERVENER .