2.

Five submissions are listed in support of the present application. The broadest of these is the first, described as “infringement and misapplication of Council Regulation (EEC) No 355/77 of 15 February 1977, in particular Articles 1, 6 and 15 (2), and also of Council Directive 72/159/EEC of 17 April 1972; misuse of powers”. In my view that submission should be considered in conjunction with the third, which likewise refers to infringement and misapplication of the directive (as also to misuse of powers). In fact the aim of both the first and the third submissions is to show that, contrary to the Commission's statements in the decision at issue, Mr Cattaneo Adorno's application falls within the scope of Regulation (EEC) No 355/77 and not that of Directive 72/159 EEC. In order to resolve this particular case I think a decision has first to be taken on the general question of the relationship between the two instruments as regards the area governed by each. The Commission's argument, already implied in the letter of 24 January 1980 and later expanded in the present proceedings, is that the two instruments are alternatives: in other words, operations which are eligible for incentives on the basis of Directive 72/159/EEC will always be different and distinct from those which are eligible for aid under Regulation (EEC) No 355/77. In support of that view the Commission points out numerous differences between the two systems of aid in question. It observes that the directive and the regulation have different aims (the improvement of agricultural production structures on the one hand, and the improvement of marketing structures for agricultural products on the other), concern different types of farms (farms with their traditional production in the case of the directive and undertakings concerned with the treatment, processing and marketing of agricultural products in the case of the regulation), have a different impact on production (which the regulation can influence only indirectly, helping to regulate it by strengthening certain market structures) and serve different socio-economic purposes (inasmuch as the directive is designed to improve the efficiency of individual farms, whereas the regulation pursues various aims affecting whole sectors of production). Still according to the Commission, those various aims must be held to be served in cases where the processing and marketing structures of several agricultural undertakings are amalgamated, or where capital furnished by people who are not farmers goes towards activities of that kind, those being descriptions of cases which reflect the general intent of Regulation (EEC) No 355/77: whereas improving individual facilities for production, or even for processing and marketing, serves only in the interests of the proprietor of the farm without contributing towards rationalizing the market, and thus falls outside the scope of the regulation. Nevertheless, it appears to me that the differences between the two schemes under consideration do not preclude the existence of an area of economic activity to which both schemes may be considered to apply: that is to say, a kind of overlapping, albeit purely marginal, of the two sets of rules. Indeed as far as their respective aims are concerned, if the modernization of farms which is the aim of the directive may include, as the Commission maintains, the improvement of facilities for processing or marketing agricultural products of the farm itself, similarly the improvement of marketing structure for agricultural products coincides for the purposes of the regulation with the improvement of processing and marketing structures for such products. A farm which processes its own products and puts them on sale is therefore in a position to benefit from both schemes for providing aid for its development; that is, unless it is considered that by its very nature a farm must be precluded from benefiting from the regulation or that the fact that its own products are the subject of the processing and marketing prevent it from being eligible for such benefits. In that respect it is not difficult to appreciate that whilst it is stated in Article 1 of Regulation (EEC) No 355/77 that the regulation is intended to apply to undertakings which are “engaged in the treatment, processing or marketing of agricultural products”, it leaves open the question of the character of the undertaking, whether agricultural, industrial or commercial, and therefore agricultural undertakings are clearly not excluded from its scope. Equally open in the case of the regulation, in my opinion, is the question whether the products to be processed or marketed come from the same farm or from other farms. As to that, the Commission sought to argue the point on the basis of Article 9 of the regulation. The first paragraph of that provision stipulates, as I have already said, that investment projects must “contribute to improving the situation of the basic agricultural production sector in question”, and that they must “in particular ... guarantee the producers of the basic agricultural product an adequate and lasting share in the resulting economic benefits”. The second paragraph then states that evidence must be provided that the conditions of the preceding paragraph have been fulfilled and that “account may be taken inter alia of long-term supply contracts concluded with the producers of the basic agricultural product, on reasonable terms for such producers”. The question is whether those provisions do or do not imply a requirement that a distinction is always to be made between the processing undertaking which is applying for aid under the regulation and the producers of the basic agricultural product. It seems to me that they do not. There is no doubt that Article 9 was drafted on the assumption that the producers of the basic agricultural products are third parties vis-à-vis the processing undertaking; but that is not sufficient to justify the assumption that should the two functions (that of the producer and that of the processor) be assimilated the regulation is rendered inapplicable. The principal aim of Article 9 is that the situation in different sectors of agricultural production should be improved by means of investment projects; however, it is clearly easier to achieve such an objective if the undertaking submitting the project itself belongs to the category or producers of the basic agricultural product. In that case the producers share in the benefits resulting from the investment project for processing activities is automatic. Obviously there will not be any supply contracts between the producer undertaking and the processing undertaking where these are one and the same; but in the second paragraph of Article 9 quoted above such contracts represent only one of the possible proofs that the condition in the first paragraph has been complied with.