Opinion of Mr Advocate General Jacobs delivered on 30 June 1993. - Marlies and Heinz-Bernd Kamp v Hauptzollamt Wuppertal. - Reference for a preliminary ruling: Finanzgericht Düsseldorf - Germany. - Additional levy on milk - Calculation of the special reference quantity - Abatements and reductions. - Case C-21/92.



European Court reports 1994 Page I-01619



Opinion of the Advocate-General

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My Lords,

1. In this case, the Finanzgericht (Finance Court) Duesseldorf has referred to the Court four questions on the interpretation and validity of Article 3a(2) of Council Regulation (EEC) No 857/84 adopting general rules for the application of the levy referred to in Article 5c of Council Regulation (EEC) No 804/68 in the milk and milk products sector, (1) as amended by Council Regulation (EEC) No 1639/91. (2)

2. In an attempt to limit surplus production in milk and milk products in the common market, Council Regulation (EEC) No 1078/77 (3) introduced two types of premium, a non-marketing premium and a conversion premium. Council Regulation (EEC) No 856/84 (4) introduced an additional levy payable on quantities of milk delivered annually beyond a guaranteed threshold, known as the reference quantity, by inserting a new Article 5c in Regulation No 804/68 on the common organization of the market in milk and milk products. (5)

3. The procedure for calculating the reference quantity was provided for in Council Regulation No 857/84. According to Article 2(1) of that Regulation, the reference quantity is to be equal to the quantity of milk or milk equivalent delivered by the producer (Formula A) or purchased by a purchaser (Formula B) during the 1981 calendar year, plus 1%. According to Article 2(2), however, Member States may provide that on their territory the reference quantity is to be equal to the quantity of milk or milk equivalent delivered or purchased during the 1982 or 1983 calendar year, weighted by a percentage established so as not to exceed the guaranteed quantity laid down by Article 5c of Regulation No 804/68 for the Member State concerned. In accordance with Article 2(2), Germany chose the 1983 calendar year as the year of reference.

4. Regulation No 857/84 did not provide for the allocation of a reference quantity to producers who, pursuant to an undertaking under Regulation No 1078/77, did not deliver milk during the reference year adopted by the Member State concerned, and who, upon the termination of their undertaking, were willing to restart milk production (hereafter: "returning producers").

5. In Mulder v Minister van Landbouw en Visserij ("Mulder I") (6) and Von Deetzen v Hauptzollamt Hamburg-Jonas, (7) the Court held that Regulation No 857/84 was invalid in so far as it did not provide for the allocation of a reference quantity to those producers on the ground that it infringed their legitimate expectations.

6. Following those judgments, the Council adopted Regulation (EEC) No 764/89. (8) That regulation inserted a new Article 3a in Regulation No 857/84 providing essentially that returning producers were to receive in certain circumstances a special reference quantity equal to 60% of the quantity of milk delivered or the quantity of milk equivalent sold by the producer during the 12 calendar months preceding the month in which the application for the non-marketing or conversion premium was made.

7. In Spagl (9) and Pastaetter (10) the Court held that Article 3a(2) of Regulation No 857/84 was invalid in so far as it restricted the special reference quantity provided for in that provision to 60% of the quantity of milk delivered or the quantity of milk equivalent sold by the producer during the 12 calendar months preceding the month in which the application for the non-marketing or conversion premium was made. The Court came to that conclusion on the ground that that restriction was contrary to the principle of legitimate expectations.

8. In response to those judgments, the Council adopted Regulation No 1639/91, which amended Article 3a(2) of Regulation No 857/84 by introducing a new method for the calculation of the special reference quantity.

9. So far as relevant for the purposes of the present proceedings, Article 3a(2), as amended, provides as follows:

"The special reference quantity shall be determined by the Member State in accordance with objective criteria, by deducting from the quantity in respect of which the premium entitlement under Regulation (EEC) No 1078/77 has been preserved or acquired a percentage representative of all the abatements applied to the reference quantities established in accordance with Article 2, including in any case a basic reduction of 4.5%, or Article 6."

10. In Germany, Article 3a(2) was implemented by Paragraph 6a(1) of the Milch-Garantiemengen-Verordnung (MGVO), which fixed the abatement at 15%. (11)

11. The plaintiffs in the main proceedings, Mr and Mrs Kamp ("the plaintiffs"), are dairy farmers who by a decision of the local executive of the Chamber of Agriculture for the Rhineland dated 7 May 1981 were granted a non-marketing premium of DM 66 434.76 for 118 201 kg of milk under Regulation No 1078/77. Following the termination of their non-marketing undertaking in 1985, they applied for a special reference quantity. Initially, their application was refused. Subsequently, on the basis of Paragraph 6a of the MGVO, they were allocated a special reference quantity of 100 471 kg, which was equivalent to 85% of the quantity on the basis of which their premium was calculated. Following that allocation, the plaintiffs sought an increase in their reference quantity to 100% in proceedings before the Finance Court, Duesseldorf.

12. In the course of those proceedings, the Finance Court has referred to the Court the following questions:

"1. Must Article 3a(2) of Regulation No 857/84, as amended by Regulation No 1639/91, concerning the abatement to be applied to the special reference quantities be interpreted as meaning that the abatement is determined only by the percentage which is representative of all the abatements but contains at least the basic reduction or does the abatement result from the percentage which is representative of all the abatements, plus the basic reduction?

2. Is Article 3a(2) of Regulation No 857/84, as amended by Regulation No 1639/91, valid, although the calculation of the basic reduction cannot be reconstructed?

3. Is Article 3a(2) of Regulation No 857/84, as amended by Regulation No 1639/91, valid in so far as the quantity for which entitlement to premium under Regulation No 1078/77 was obtained is based on production but the representative abatements were calculated on the basis of the production for 1983 and, because of the increase in production from 1981 to 1983, were correspondingly higher?

4. Is Article 3a(2) of Regulation No 857/84, as amended by Regulation No 1639/91, valid in so far as, as regards the calculation of the special reference quantities in respect of producers who entered into a non-marketing undertaking pursuant to Regulation No 1078/77, the Member States were not granted a possibility of making graduated reductions corresponding to that provided in Article 2(2) of Regulation No 857/84?"

The first question

13. With regard to the first question, it appears that there is a difference of opinion between, on the one hand, the German Government, the United Kingdom Government and the Commission and, on the other hand, the Council. The German Government, the United Kingdom Government and the Commission take the view that the basic reduction of 4.5% does not form part of, and should be applied in addition to, the percentage representative of all the abatements applied to the reference quantities established in accordance with Article 2. By contrast, the Council argues that Article 3a(2) should be interpreted as meaning that the percentage representative of all the abatements comprises the basic reduction of 4.5%.

14. It emerges, however, from the written observations submitted to the Court and from the submissions made at the hearing that that difference of opinion is not one of substance. The German Government, the United Kingdom Government and the Commission consider that the basic reduction of 4.5% and the representative percentage are separate components which must be applied cumulatively. By contrast, the Council considers that the basic reduction of 4.5% is part of the representative percentage. It states, however, that the basic reduction of 4.5% must not be added to the representative percentage if it has already been taken into account by the Member States for the purposes of calculating that percentage. Both calculations lead therefore to the same result: the basic reduction of 4.5% must be applied to returning producers once and only once. This must indeed be taken to be the correct interpretation of Article 3a(2).

15. Under Article 3a(2), the special reference quantity is calculated on the basis of three components: (a) the quantity in respect of which the premium entitlement has been preserved or acquired; (b) a percentage representative of all the abatements applied to the reference quantities established in accordance with Article 2; (c) a basic reduction of 4.5%. I will examine in turn the last two of those components. I will start with the basic reduction of 4.5%.

16. That reduction has its origin in Council Regulation (EEC) No 775/87 (12) which, in a further attempt to curb excess production in milk and milk products, provided for the temporary withdrawal of a uniform proportion of the reference quantities mentioned in Article 5c of Regulation No 804/68.

17. Regulation No 775/87 fixed the rate of withdrawal at 4% for the fourth period of application of the additional levy (i.e. 1 April 1987 to 31 March 1988) and at 5.5% for the fifth period (i.e. 1 April 1988 to 31 March 1989). Council Regulation (EEC) No 3882/89 (13) fixed the rate of withdrawal at 4.5% for the subsequent three periods. (14) That rate was applicable at the time when Regulation No 1639/91 was adopted.

18. The basic reduction of 4.5% represents a temporary withdrawal which does not constitute a reduction of the total guaranteed quantity. Until the adoption of Council Regulation (EEC) No 816/92, (15) the quantity temporarily withdrawn formed part of the total guaranteed quantity for each Member State laid down in Article 5c of Regulation No 804/68. It is only as a result of Regulation No 816/92 that the quantity temporarily withdrawn is indicated separately from the total guaranteed quantity.

19. In contrast to the basic reduction of 4.5%, the percentage representative of all the abatements applied to the reference quantities established under Article 2 is not uniform throughout the Community but varies from Member State to Member State. As the German Government and the Commission point out, with regard to Germany, which chose the calendar year of 1983 as reference year, the representative abatement results from the difference between the total guaranteed quantity for 1990-1991 and milk deliveries in 1983. Council Regulation (EEC) No 3879/89 (16) fixed the total guaranteed quantity for Germany for each of the three 12-month periods from 1 April 1989 to 31 March 1992 at 22 519 080 tonnes. As appears from the order for reference, milk deliveries in Germany for 1983 were 25 176 000 tonnes. The difference between those two quantities results in an abatement of 10.5%. Consequently, contrary to the view expressed in the order for reference, which appears to have led the national court to refer the question in issue, the basic reduction of 4.5% was not taken into account twice in the German implementing legislation.

20. As already stated, under Article 2(2) of Regulation No 857/84, Member States may provide that on their territory the reference quantity is to be equal to the quantity of milk or milk equivalent delivered or purchased during the 1982 or 1983 calendar year, weighted by a percentage established so as not to exceed the guaranteed quantity laid down by Article 5c of Regulation No 804/68 for the Member State concerned.

21. Article 2(2) also provides that that percentage may be varied on the basis of the level of deliveries of certain categories of producers, of the trend in deliveries in certain regions between 1981 and 1983 or of the trend in deliveries of certain categories of producers during the same period. Article 2(3) provides that the percentages referred to in Article 2(1) and 2(2) can be adapted by the Member States so as to facilitate the allocation of special and additional reference quantities to certain categories of producers.

22. It is clear, therefore, that under Article 2 Member States enjoy a discretion to apply varied percentages to different categories of producers. This by itself is sufficient to show that, unlike the basic reduction of 4.5%, the percentage representative of all the abatements applied to the reference quantities established under Article 2, which is mentioned in Article 3a(2), may be different in the various Member States.

23. As already stated, in substance the Council agrees with the German Government, the United Kingdom Government and the Commission that the basic reduction of 4.5% should not be applied to returning producers twice, although it reaches that conclusion on somewhat different grounds.

24. In my view, although the practical result is the same, it is more accurate to say that the basic reduction of 4.5% does not form part of the percentage representative of all the abatements applied to the reference quantities established under Article 2 and must therefore be applied in addition to that percentage. Strictly speaking, it would not be correct to consider that the basic reduction forms part of the "percentage representative of all the abatements applied to the reference quantities established in accordance with Article 2". First, it is not "representative" since its application is uniform throughout the Community and, secondly, unlike the abatements applied to the reference quantities established under Article 2, it represents a temporary withdrawal. It differs therefore from the representative percentage both with regard to its method of calculation and with regard to its legal nature.

25. In answer to the first question, therefore, I conclude that the basic reduction of 4.5% does not form part of, and should be applied in addition to, the percentage representative of all the abatements applied to the reference quantities established in accordance with Article 2. Those abatements do not include the basic reduction of 4.5%.

The second question

26. By the second question, the referring court essentially asks how the reduction of 4.5% mentioned in Article 3a(2) has been calculated. As appears from the order for reference, the question is based on the assumption that, although the seventh recital of the preamble to Regulation No 1639/91 refers to Regulation No 775/87 as the basis of the 4.5% reduction, that reduction is not provided for in Regulation No 775/87.

27. That assumption, however, is erroneous. As already stated, the figure of 4.5% does not appear in the text of Regulation No 775/87 as initially adopted but it was added by Regulation No 3882/89. Article 1(1) of that Regulation replaced the second subparagraph of Article 1(1) of Regulation No 775/87 and fixed the rate of temporary withdrawal for the sixth, seventh and eighth 12-month periods at 4.5%.

28. Contrary to what the referring court states in its second question, therefore, the calculation of the basic reduction can be reconstructed.

The third question

29. Before examining the issues raised by the third question, it will be helpful to take a closer look at the reasoning of the Court in Spagl and Pastaetter since it is as a result of those judgments that the Council amended Article 3a(2). It will also be necessary to examine the judgment of the Court in Mulder and Others v Council and Commission (Mulder II). (17) That judgment was delivered after the submission to the Court of written observations but was relied upon heavily by the plaintiffs at the oral hearing.

30. We have seen that in Spagl and Pastaetter the Court held that Article 3a, as in force at that time, was invalid as being contrary to the principle of legitimate expectations in so far as it restricted the reference quantity to be allocated to returning producers to 60% of the quantity of milk delivered or the quantity of milk equivalent sold by the producer during the 12 calendar months preceding the month in which the application for the non-marketing or conversion premium was made.

31. In those judgments, the Court laid down two principles with regard to the calculation of the reference quantity to be allocated to returning producers: (18) first, the reference quantity must be calculated in such a way as to ensure that a returning producer is not subject, upon the expiry of his undertaking, to restrictions which specifically affect him by reason of his undertaking; (19) secondly, a returning producer must not be accorded an undue advantage by comparison with continuing producers. On the basis of those two principles, the Court accepted that in order to calculate the reference quantity to be allocated to returning producers the Council could validly apply a reduction coefficient which was representative of the rates applicable to producers covered by Article 2 (20) (hereafter: "continuing producers").

32. In Mulder II, the applicants were producers who, pursuant to an undertaking under Regulation No 1078/77, did not deliver milk during the reference year adopted by the Member States concerned. They sought to recover from the Community the loss that they suffered as a result of the application of Regulation No 857/84 and of Regulation No 764/89 in so far as those regulations did not provide for the allocation to them of a representative reference quantity.

33. The Court held that the applicants were entitled to compensation with regard to the damage that they suffered as a result of being totally excluded from the allocation of a reference quantity by Regulation No 857/84, as it stood before it was amended by Regulation No 764/89. By contrast, the Court held that the applicants were not entitled to compensation with regard to the damage that they suffered as a result of being allocated a reduced provisional reference quantity in accordance with Regulation No 764/89. The Court came to that conclusion on the ground that, unlike Regulation No 857/84, Regulation No 764/89 did not give rise to a sufficiently serious breach of a superior rule of law for the protection of individuals, which according to the established case-law of the Court is a condition which must be satisfied in order for the Community to incur non-contractual liability as a result of legislation.

34. With regard to the extent of the loss to be compensated by the Community, the Court held that account should be taken of the applicants' loss of income. In principle, that loss was equal to the difference between, on the one hand, the income which the applicants would have obtained in the normal course of events by delivering milk if they had been allocated the reference quantities to which they were entitled in the period between 1 April 1984, the date of the entry into force of Regulation No 857/84, and 29 March 1989, the date of entry into force of Regulation No 764/89, and, on the other hand, the income which they actually obtained by delivering milk during that period outside any reference quantity increased by the income which they obtained or could have obtained during the same period from possible substitute activities (paragraph 26 of the judgment).

35. The Court laid down the method for the calculation of the reference quantities to which the applicants should have been entitled in the material period at paragraphs 28 to 31 of the judgment. According to that method, account should be taken of the quantity of milk delivered by them during a representative period before they entered into a non-marketing undertaking, such as the quantity on the basis of which their non-marketing premium was calculated. That quantity should be increased by 1% by analogous application of Article 2(1) of Regulation No 857/84 in order to ensure that the applicants do not suffer a restriction which specifically affects them by comparison with continuing producers. However, in order to ensure that the applicants are not accorded an undue advantage by comparison with continuing producers, an abatement representative of the abatements applied to continuing producers should be applied to them.

36. The Court added that, for the purposes of establishing that representative rate of abatement, the percentage provided for in Article 2(2) should not be taken into account. This is because the purpose of that percentage is to counterbalance the general increase in production between 1981 and 1983. Its application to the applicants would impose upon them a restriction which would affect them specifically since their reference quantities should be determined on the basis of their milk deliveries before 1982.

37. The Court also held that the compensation provided for by Regulation No 775/87 for the temporary suspension of a percentage of the reference quantities of continuing producers should also be taken into account for the purposes of establishing the representative rate of abatement.

38. It follows that there are two differences between the method for the calculation of the special reference quantity provided for in Article 3a(2), as amended by Regulation No 1639/91, and the method followed by the Court in Mulder II for the calculation of the reference quantities to which the applicants in those proceedings should have been entitled.

39. Those differences are the following:

(a) Under the method of calculation followed by the Court in Mulder II, the quantity on the basis of which the entitlement to premium under Regulation No 1078/77 was obtained must be increased by 1%. By contrast, such an increase is not applied under Article 3a(2).

(b) Under the method of calculation followed by the Court in Mulder II, the percentage provided for in Article 2(2) of Regulation No 857/84 must not be taken into account for the purposes of calculating the representative rate of abatement. By contrast, Article 3a(2) provides for the deduction of a percentage representative of "all the abatements" applied to the reference quantities established in accordance with Article 2. It is clear therefore that the abatements applied under Article 2(2) must be taken into account for the purposes of calculating the representative rate of abatement.

40. As a result of the above differences, it would be more beneficial for a producer in the position of the plaintiffs to have his reference quantities calculated according to the method followed by the Court in Mulder II rather than according to the method provided for in Article 3a(2).

41. In the light of the above, I turn to address the third question. By that question, the referring court enquires as to the validity of Article 3a(2) on the ground that it places at a disadvantage producers who, in fulfilment of an undertaking under Regulation No 1078/77, did not deliver milk during the 1983 calendar year, which was adopted as the reference year by Germany, vis-à-vis producers who delivered milk during that year.

42. Between 1981 and 1983 there was a considerable increase in milk production in Germany both with regard to deliveries of milk to purchasers and with regard to milk production per dairy cow. Consequently, in accordance with Article 2(2) of Regulation No 857/84, German law provided for specific abatements so as to ensure that the guaranteed quantity laid down by Article 5c of Regulation No 804/68 for Germany was not exceeded.

43. In their written observations, the plaintiffs point out that, since they entered into a non-marketing undertaking in 1981, they did not contribute to the increase in milk production which took place between 1981 and 1983. They argue that a percentage representative of the abatements provided for as a result of that increase should not be deducted from the quantity in respect of which their premium entitlement was acquired. They claim that such a deduction places them in a position of inequality vis-à-vis producers who delivered milk during the 1983 calendar year and constitutes discrimination prohibited by Community law.

44. The Council, the Commission and the United Kingdom Government argue that Article 3a(2) is valid. The Commission argues that returning producers and continuing producers cannot be treated equally because they are not in comparable situations. It claims that, with regard to the calculation of the reference quantity to be allocated to returning producers, it is not the principle of equality but the principle of legitimate expectations that applies. In support of that argument, it refers to the judgment of the Court in Spagl.

45. At the oral hearing, the plaintiffs referred to the judgment of the Court in Mulder II. They proposed a method for the calculation of their reference quantity in accordance with the criteria laid down by the Court for the calculation of the compensation to which the applicants in that case were entitled. In their view, that method ensures equal treatment between returning producers and continuing producers and should be adopted by the Community.

46. It is clearly not the object of these proceedings to specify the method for the calculation of the plaintiffs' reference quantity. Indeed, it is not a matter for the Court to decide that method but for the national authorities acting in accordance with the provisions of Community law. It is necessary, however, to examine, bearing in mind the questions asked by the referring court, whether the judgment of the Court in Mulder II affects the interpretation or validity of Article 3a(2).

47. In my view, it is not correct to say that Article 3a(2) is invalid simply because the method for the calculation of the special reference quantity provided for in that provision is different from that followed by the Court in Mulder II. It may first be noted that, at the time when the Council adopted Regulation No 1639/91, the judgment of the Court in that case had not been delivered. Although Article 3a(2), as amended by that regulation, was mentioned in the Opinion of Advocate General Van Gerven, (21) it was not in issue in that case nor was it examined by the Court. In any event, it seems to me that differences exist between the calculation of the reference quantity which a producer should have been granted in a specified period in the past for the purposes of assessing the compensation due to him in proceedings concerning the non-contractual liability of the Community and the calculation of the reference quantity to be granted to a general category of producers in the future.

48. The former calculation is made by the Court whereas the latter falls within the competence of the Council, which in exercising that competence enjoys, subject to certain limitations, discretionary powers. In addition, the two calculations have different characteristics and fulfil different functions. The former calculation is made ex post facto and has a hypothetical character. Its purpose is to quantify the loss caused by the Community to specific producers by calculating the difference between the income which those producers would have obtained in the absence of the illegal Community act and the income which they actually obtained or should have obtained from possible substitute activities in the period concerned.

49. By contrast, the latter calculation, as already stated, concerns a general category of producers and relates to the future. In laying down such a method of calculation, the Council exercises an economic policy choice with a view to reconciling a number of conflicting objectives. In particular, the Council is required to protect the legitimate interests of returning producers and to honour their legitimate expectations in accordance with the criteria enunciated by the Court in Spagl and Pastaetter. It must also take into account the legitimate interests of continuing producers. Further, in giving effect to the legitimate interests of those groups of producers, it must avoid endangering the objectives of the milk quota system.

50. As the Court has consistently held, when it is necessary to evaluate a complex economic situation, as is the case with the common agricultural policy, the Community legislature enjoys a wide discretion as to the nature and scope of the measures to be taken: see Erpelding v Secrétaire d' État à l' Agriculture et à la Viticulture. (22)

51. It seems to me therefore that in laying down the method for the calculation of the special reference quantity to be allocated to returning producers in the future, the Council is not necessarily bound to follow the calculation followed by the Court in Mulder II. It will be necessary, however, to declare Article 3a(2) invalid, if in adopting it the Council exceeded its discretionary powers. In assessing whether that is the case, the judgment of the Court in Mulder II must of course be taken into account.

52. It will be recalled that, according to the plaintiffs, the percentage provided for in Article 2(2) of Regulation No 857/84 must not be taken into account for the purposes of calculating the representative rate of abatement applicable to returning producers on the ground that they did not contribute to the increase in production that took place between 1981 and 1983. That argument is supported by the judgment of the Court in Mulder II (see above at paragraph 36). In my view, however, it is not wholly convincing.

53. The Court has held that a producer who has voluntarily ceased production for a certain period cannot legitimately expect to be able to resume production under the same conditions as those which previously applied and not to be subject to any rules of market or structural policy adopted in the meantime: see Mulder I, paragraph 23, Von Deetzen, paragraph 12.

54. Thus, upon rejoining the market after the expiry of their undertaking, returning producers cannot expect to find the market as they left it and can legitimately be made subject to rules which are necessary in view of the way that the market developed during their absence. It can be argued therefore that the fact that returning producers did not contribute to the overall increase in production as a result of voluntarily remaining outside the market for a specific period does not entitle them, upon re-entering the market, to be exempted from restrictive rules the introduction of which became necessary as a result of that increase.

55. Returning producers abstained from production voluntarily and in return for a premium. It could be argued that the imposition on those producers of the abatement provided for in Article 2(2), which falls far short of the flat-rate reduction of 40% provided for by the previous version of Article 3a(2), falls within the normal commercial risks which they can reasonably be expected to sustain and is not therefore contrary to the principle of legitimate expectations. It could also be argued that the imposition of that abatement on returning producers is not contrary to the principle of equal treatment because, as the Commission points out, continuing producers and returning producers are not in comparable situations.

56. Even if those arguments were not accepted, it seems to me that the application to returning producers of the abatement provided for in Article 2(2) need be regarded neither as contrary to the principle of legitimate expectations nor as contrary to the principle of equality.

57. As we have already seen, according to the judgments of the Court in Mulder I and Spagl, in adopting a method for the calculation of the reference quantity to be allocated to returning producers, the Council must not make such producers subject to restrictions which specifically affect them by reason of their undertaking. It is clear, however, that if a restriction applied equally to returning producers and to continuing producers who are in a comparable situation it would not be a restriction which specifically affected the former category of producers by reason of their undertaking. The group of continuing producers who are in a comparable situation with returning producers comprises those producers who for reasons beyond their control did not contribute to the increase in milk production between 1981 and 1983. A Member State may however make such producers subject to the abatement provided for in Article 2(2).

58. This is illustrated by the following cases which concerned the interpretation of Article 3(3) of Regulation No 857/84. According to that provision, producers whose milk production during the reference year adopted by the Member State concerned has been affected by exceptional events occurring before or during that year shall obtain, on request, reference to another calendar reference year within the 1981 to 1983 period.

59. In Erpelding, the Court held that Regulation No 857/84 precludes a continuing producer whose milk production has been affected by an exceptional event throughout the 1981 to 1983 period from having reference made either to the quantity of milk or milk equivalent which he delivered in a year prior to 1981 or to a notional quantity to be calculated by extrapolating the normal trend in his deliveries during a certain period prior to the occurrence of that exceptional event.

60. The judgment in Erpelding was reiterated in Leukhardt v Hauptzollamt Reutlingen. (23) In that case, as a subsidiary argument, Mr Leukhardt, a continuing producer whose production had been appreciably affected by an exceptional event throughout the period from 1981 to 1983, sought to have his reference quantity calculated on the basis of the quantity of milk delivered by him in 1981 plus 1% pursuant to Article 2(1) of Regulation No 857/84. Mr Leukhardt farmed in Germany which, in accordance with the method laid down in Article 2(2) of Regulation No 857/84, provided that the reference quantity for producers was in principle equal to the quantity of milk delivered by them in 1983, less 4%.

61. The Court held that a producer whose milk production has been appreciably affected by an exceptional event during the reference year adopted by the Member State concerned may obtain, under Article 3(3) of Regulation No 857/84, reference to his deliveries of milk in another calendar year within the 1981 to 1983 period, but the percentage generally applicable in that Member State must be applied to those deliveries. Therefore, the reference quantity to which Mr Leukhardt was entitled was equal to the quantity of milk which he delivered during 1981, subject however to application of the percentage specified in Article 2(2), adjusted if necessary on the terms laid down in the last sentence of that Article (see paragraph 25).

62. It is clear therefore from the judgment of the Court in Leukhardt that a continuing producer who for reasons beyond his control did not take part in the increase in production between 1981 and 1983 may be made subject to the abatement provided for in Article 2(2).

63. In my view, the judgments of the Court in Erpelding and Leukhardt show that Article 3a(2) is not invalid to the extent that it permits Member States to make returning producers subject to the reduction provided for in Article 2(2). A Member State must be entitled to treat a returning producer in a way similar to a continuing producer who did not increase milk production between 1981 and 1983. At least where both those categories of producers are made subject to the reduction provided for by Article 2(2), that reduction is not a restriction which specifically affects a returning producer by reason of his undertaking. It is therefore contrary neither to the principle of equality nor to the principle of legitimate expectations.

64. I therefore conclude that the validity of Article 3a(2) is not called into question by the fact that, for the purposes of calculating the reference quantities allocated to returning producers, it provides for the application of a reduction corresponding to the percentage provided for in Article 2(2).

65. Before turning to examine the fourth question, I will briefly discuss two further issues pertaining to the validity of Article 3a(2).

66. It will be remembered that, unlike the method for the calculation of the special reference quantity followed by the Court in Mulder II, Article 3a(2) does not provide that the quantity in respect of which the premium entitlement has been preserved or acquired must be increased by 1%. The question could arise whether the fact that Article 3a(2) does not provide for such an increase affects its validity. That question has not been referred by the national court and it is not necessary to examine it. It is sufficient to note that, for the reasons which I have given above, the view can be taken that the validity of Article 3a(2) cannot be called into question on that ground. It could be argued that the difference in treatment between continuing producers and returning producers arising as a result of the fact that the 1% increase is not applied to returning producers falls within the normal commercial risks to which those producers can be expected to be subject and that therefore it is not contrary to the principle of legitimate expectations. It could also be argued that it does not breach the principle of equality since returning producers and continuing producers are in an objectively different situation.

67. The second issue concerns the granting of compensation to returning producers as a result of the application to them of the 4.5% basic reduction. As we have seen, Regulation No 775/87 provided for the temporary withdrawal of a uniform proportion of each reference quantity which it fixed at 4% for the fourth period of the application of the additional levy and at 5.5% for the fifth period. The temporary withdrawal was fixed at 4.5% by Regulation No 3882/89 for the subsequent three periods. Regulation No 775/87 and Regulation No 3882/89 provided for the granting of compensation to continuing producers for the quantities withdrawn. In Mulder II, the Court held that the compensation provided for by Regulation No 775/87 should be taken into account for the purposes of establishing the representative rate of abatement in the calculation of the reference quantity which the applicants in that case should have been granted. The plaintiffs argue that they should be granted compensation in return for the 4.5% basic reduction being applicable to them.

68. It appears from the order for reference, however, that a similar argument was advanced by the plaintiffs in the course of the main proceedings. The referring court rejected that argument and did not make a reference on that issue on the ground that the payment of compensation to continuing producers could perhaps justify a claim by a returning producer for the payment of such compensation but could not justify the grant of higher reference quantities to the plaintiffs. In my view that argument is correct.

The fourth question

69. By the fourth question, the referring court asks whether Article 3a(2) of Regulation No 857/84, as amended by Regulation No 1639/91, is valid although it does not grant to the Member States the possibility of making graduated reductions with regard to the allocation of special reference quantities to returning producers corresponding to those provided for in Article 2(2) of Regulation No 857/84 with regard to continuing producers.

70. It will be remembered that Article 2(2) of Regulation No 857/84 as supplemented by Article 2(1) of Commission Regulation (EEC) No 1546/88 (24) provides that Member States who choose as a reference year the 1982 or the 1983 calendar year may vary the reference quantities provided for in Article 2(1) of Regulation No 857/84 so as not to exceed the guaranteed total quantity, on the following grounds:

(a) the level of deliveries of certain categories of persons liable for the levy;

(b) the trend of deliveries in certain regions between 1981 and 1983;

(c) the trend between 1981 and 1983 in deliveries of certain categories of persons liable for the levy.

71. The United Kingdom Government argues that, contrary to the assumption of the referring court, Article 3a(2) does empower Member States to vary the rate of abatement applicable to returning producers on the basis of the level of their deliveries. The Council also takes the view that Member States are permitted to make such variations but subject to certain conditions. At the oral hearing, the Commission departed from the position which it had taken in its written observations and agreed with the view of the United Kingdom Government and of the Council that Article 3a(2) permits Member States to vary the rate of abatement applicable to returning producers.

72. In my view, that interpretation is correct. It is true that Article 3a(2) refers to a percentage representative of all the abatements applied to the reference quantities established in accordance with Article 2. That reference does not mean, however, that the representative percentage may never be varied. If that were the case, it would not be determined in accordance with objective criteria. In my view, Article 3a(2) should not be taken to exclude the possibility of Member States varying the special reference quantity to be allocated to returning producers on grounds similar to those provided for in relation to continuing producers.

73. That view is also supported by the fact that Council Regulation (EEC) No 1911/86 (25) amended Article 2 of Regulation No 857/84 so as to allow Member States who chose as a reference year the calendar year of 1981 to vary the reference quantities provided for in Article 2(1) on the same grounds as those applicable to Member States who chose as reference year the 1982 or the 1983 calendar year. According to the preamble to Regulation No 1911/86, that amendment was introduced so as to allow Member States more flexibility and enable them to take better account of the actual characteristics and trends of milk production and milk collection until the entry into force of the additional levy system. It would not be consonant with that policy if it were accepted that Member States enjoyed no power to vary the special reference quantity to be allocated to returning producers.

74. As the United Kingdom Government observes, however, the second and the third grounds provided for by Article 2(2) on the basis of which the reference quantities may be varied cannot be applied to the determination of the reference quantities to be allocated to returning producers. This is because those grounds concern trends in deliveries in the period between 1981 and 1983, during which returning producers made no deliveries. It follows that the only ground of those provided for in Article 2(2) which can be applied to returning producers is the level of deliveries of certain categories of persons liable for the levy. According to Article 2(1) of Regulation No 1546/88, those categories are to be defined in terms of annual deliveries and in relation to average deliveries per holding in the Member State concerned.

75. I add, for completeness, a further point. Returning producers must, as we have seen, be treated in the same way as any other producers who made no increase in milk production between 1981 and 1983. Consequently if the latter were given the benefit of a graduated reduction when reference quantities were awarded under Article 2(2), a similarly reduced abatement should be applied to returning producers receiving a reference quantity under Article 3a(2).

76. I conclude therefore that, contrary to the assumption of the referring court, Article 3a(2) allows Member States to vary the reference quantities to be allocated to returning producers on the basis of their level of deliveries as provided for by Article 2(2) in relation to continuing producers. The validity of Article 3a(2) cannot be called into question, therefore, on the ground that it does not provide for the possibility of such variations.

Conclusion

77. I am therefore of the opinion that the questions referred to the Court should be answered as follows:

1. Article 3a(2) of Council Regulation (EEC) No 857/84, as amended by Council Regulation (EEC) No 1639/91, must be interpreted as meaning that the 4.5% basic reduction is not part of, and should be applied in addition to, the percentage representative of all the abatements applied to the reference quantities established in accordance with Article 2 of Regulation No 857/84. Those abatements do not include the basic reduction of 4.5%.

2. Article 3a(2) of Council Regulation (EEC) No 857/84, as amended by Council Regulation (EEC) No 1639/91, must be interpreted as allowing Member States to vary the reference quantities to be allocated to returning producers on the basis of the level of deliveries of certain categories of those producers.

3. Consideration of the matters examined has disclosed no factor of such kind as to affect the validity of Article 3a(2) of Council Regulation (EEC) No 857/84, as amended by Council Regulation (EEC) No 1639/91.

(*) Original language: English.

(1) - OJ 1984 L 90, p. 13.

(2) - OJ 1991 L 150, p. 35.

(3) - OJ 1977 L 131, p. 1.

(4) - OJ 1984 L 90, p. 10.

(5) - OJ, English Special Edition 1968 I, p. 176.

(6) - Case 120/86 [1988] ECR 2321.

(7) - Case 170/86 [1988] ECR 2355.

(8) - OJ 1989 L 84, p. 2.

(9) - Case C-189/89 [1990] ECR I-4539.

(10) - Case C-217/89 [1990] ECR I-4585.

(11) - See Twentieth Regulation of 19 July 1991 amending the MGVO, Bundesgesetzblatt, p. 1597.

(12) - OJ 1987 L 78, p. 5.

(13) - OJ 1989 L 378, p. 6.

(14) - Regulation No 775/87 has since been amended by Council Regulation (EEC) No 3643/90 (OJ 1990 L 362, p. 9).

(15) - OJ 1992 L 86, p. 83.

(16) - OJ 1989 L 378, p. 1.

(17) - Joined Cases C-104/89 and C-37/90 [1992] ECR I-3061.

(18) - See Spagl, paragraphs 21 to 24 of the judgment; Pastaetter, paragraphs 12 to 15 of the judgment.

(19) - That principle had already been laid down by the Court in Mulder I, at paragraph 24 of the judgment, and Von Deetzen, at paragraph 13 of the judgment.

(20) - See Spagl, paragraph 24 of the judgment, Pastaetter, paragraph 15 of the judgment.

(21) - See [1992] ECR I-3098-3099, 3119-3120.

(22) - Case 84/87 [1988] ECR 2647, paragraph 27.

(23) - Case 113/88 [1989] ECR 1991. See also the judgments of the Court in Case C-67/89 Berkenheide [1990] ECR I-2615 and Case C-85/90 Dowling [1992] ECR I-5305.

(24) - OJ 1988 L 139, p. 12.

(25) - OJ 1986 L 165, p. 6.