2.

It has been established that the lack of conformity which was detected is linked to the incorrect setting of the drier, owing to a defective thermostat which led to the retention in the finished product of a higher water content than that specified by the Community regulation. Moreover, the Société pointed out that it detected the error and was able to trace its cause on 3 July 1979 when it received the results of the checks carried out on its production for the second half of May. It immediately rectified the error in the manufacturing process which explains why the products manufactured in the first half of July were in conformity with the requirements of the Community legislation concerning criteria as to quality. After the Société had contacted the relevant departments — including the Service Vétérinaire d'Hygiène Alimentaire — of the Direction de la Qualité [Quality Control Division] at the Ministry of Agriculture, the director of that division expressly acknowledged in a letter of 24 October 1979 addressed to the director of the Fund that the plaintiff in the main proceedings had acted in good faith since the defective functioning of laboratory equipment was at times difficult to detect promptly. He stated that, in his opinion, “in this case the financial consequences of the incorrect setting of the drier used for regulating the water content of the caseinates constituted a penalty out of proportion to the resultant fall in quality”. The Société considered that it had thus achieved the primary objective of the Community legislation, namely the processing of skimmed milk into caseinates, and had failed to attain only its secondary objective, namely the promotion of the manufacture of high quality caseinates. On 20 May 1980 it therefore submitted an application to the director of the Fund for aid proportionate to the quantity of skimmed milk which it had actually processed. By letter of 9 June 1980, the director of the Fund rejected the application inter alia on the ground that the Fund was not responsible for interpreting Community law by determining whether the objectives laid down in Regulation (EEC) No 987/68 had actually been achieved by the undertakings in question; the Fund merely applied the rules, which provided for withholding of the aid in its entirety in the event of any lack of conformity of the caseinates produced. A written exchange of views between the Société's lawyer and the relevant officers of the. Commission proved equally inconclusive since the Director-General for Agriculture pointed out, in a letter of 24 September 1980, that “the decision concerning a request for aid is a matter for the competent agency in the Member State in question” and he emphasized, moreover, that “the manufacture of casemates complying with the minimum standard of quality prescribed by the Community legislation constitutes a fundamental condition” for the grant of the Community aid. By another letter of the same date addressed to the Fund, the Director-General for Agriculture again stated that he had no comment to make with regard to the Fund's refusal to pay the aid for the quantity of casemates which had been declared to be substandard. Meanwhile, on 21 July 19801 the Société brought an action before the Tribunal Administratif [Administrative Court], Paris, for the annulment of the Fund's decision of 12 June rejecting the plaintiffs application for aid, oh the ground that that decision was ultra vires, and for an order that the Sute should pay to the plaintiff the sum of FF I 326117.29 with interest thereon. In support of those claims, the Société again argued that the Fund's refusal to grant it the aid provided for by Regulations Nos 987/68 and 756/70 was contrary to the overriding legal principle of proportionality since the aim of those regulations was to encourage traders to process skimmed milk into caseinates, an objective which had been achieved in this case and the lack of conformity noted by the Fund was only very slight and in no way affected the intended use of the product. Accordingly, the Société considers that it should not be deprived of the entire amount of the aid, which is the usual consequence in the case of a trader who has failed to carry out the processing in accordance with an undertaking given to that effect.