Judgment of the Court (Third Chamber) of 10 January 1992. - Ralf-Herbert Kühn v Landwirtschaftskammer Weser-Ems. - Reference for a preliminary ruling: Niedersächsisches Oberverwaltungsgericht - Germany. - Additional levy on milk. - Case C-177/90.



European Court reports 1992 Page I-00035



Summary

Parties

Grounds

Decision on costs

Operative part



Keywords

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1. Agriculture - Common organization of the markets - Milk and milk products - Additional levy on milk - Determination of reference quantities exempt from the levy - Producer having begun deliveries of milk during the reference year - Obtaining a reference year other than that chosen by the Member State concerned - Not permissible - Breach of the principle of the protection of legitimate expectations - Breach of the right to property and the freedom to pursue an occupation - Discrimination - None

(Council Regulation No 857/84; Commission Regulation No 1371/84)

2. Agriculture - Common organization of the markets - Milk and milk products - Additional levy on milk - Determination of reference quantities exempt from the levy - Lessee taking over the management of an agricultural holding before the entry into force of the additional levy scheme - Member State taking into account deliveries made during the reference year by the previous lessee - Optional nature

(Council Regulation No 857/84, Art. 7(1) and (4), as amended by Regulation No 590/85; Commission Regulation No 1371/84, third subparagraph of Art. 5)

Summary

1. Regulation No 857/84 adopting general rules for the application of the additional levy on milk, as amended by Regulation No 1371/84 laying down general rules for the application of that levy, precludes a producer who began deliveries of milk during the reference year chosen by the Member State concerned and who consequently cannot show a representative level of deliveries for that year from obtaining, on that ground alone, reference to some other reference year. That possibility is not provided for by the regulations, which contain an exhaustive list of the situations in which reference quantities may be granted and set out precise rules concerning the determination of those quantities.

As thus interpreted, the regulations do not infringe the principle of the protection of legitimate expectations because the latter does not preclude, in the case of a scheme such as that concerning the additional levy, the imposition of restrictions on a producer by reason of the fact that he has not marketed milk or has marketed only a reduced quantity during a period prior to the entry into force of that scheme, in consequence of a decision which he freely took without being encouraged to do so by a Community measure.

Moreover, fundamental rights are not infringed by the regulations because the very substance of the right to property and the freedom to pursue an occupation, the exercise of which may be subject to restrictions when these correspond to objectives of general interest such as that of remedying the situation of surpluses on the milk market, is not affected since the economic operators concerned retain the freedom to engage in the production of products other than milk on their holding.

Finally, the regulations do not infringe the prohibition of discrimination because the difference in treatment of producers whose deliveries began during the reference year is objectively justified by the need to limit to the greatest extent possible, in the interests of both legal certainty and the effectiveness of the additional levy scheme, the situations which may justify the reference to another reference year.

2. Article 7(1) and (4) of Regulation No 857/84 adopting general rules for the application of the additional levy on milk, as amended by Regulation No 590/85, read in conjunction with the second sentence of the third subparagraph of Article 5 of Regulation No 1371/84 laying down detailed rules for the application of that levy, must be interpreted as permitting, but not requiring, Member States to allocate to a lessee who has taken over the management of an agricultural holding before the entry into force of the additional levy scheme a reference quantity which takes account of deliveries of milk made during the reference year by the previous lessee of that holding.

Parties

In Case C-177/90,

REFERENCE to the Court under Article 177 of the EEC Treaty by the Oberverwaltungsgericht fuer die Laender Niedersachsen und Schleswig-Holstein (Higher Administrative Court for the Laender of Lower Saxony and Schleswig-Holstein) for a preliminary ruling in the proceedings pending before that court between

Ralf-Herbert Kuehn

and

Landwirtschaftskammer Weser-Ems,

on the interpretation and the validity of Articles 3(3) and 7(1) 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) and the interpretation of subparagraphs 1 and 3 of Article 5 of Commission Regulation (EEC) No 1371/84 of 16 May 1984 laying detailed rules for the application of the additional levy referred to in Article 5c of Regulation No 804/68 (Official Journal 1984 L 132, p. 11),

THE COURT (Third Chamber),

composed of: F. Grévisse, President of the Chamber, J.C. Moitinho de Almeida and M. Zuleeg, Judges,

Advocate General: J. Mischo,

Registrar: H.A. Ruehl, Principal Administrator,

after considering the written observations submitted on behalf of:

- Ralf-Herbert Kuehn, by Bernd Meisterernst, Rechtsanwalt, Muenster,

- the Landwirtschaftskammer Weser-Ems, by its Director,

- the Council of the European Communities, by Guus Houttuin, an administrator in its Legal Service, acting as Agent,

- the Commission of the European Communities, by Dierk Booss, Legal Adviser, acting as Agent,

having regard to the Report for the Hearing,

after hearing the oral observations of Ralf-Herbert Kuehn, the Commission and the Council at the hearing on 11 July 1991,

after hearing the Opinion of the Advocate General at the sitting on 26 September 1991,

gives the following

Judgment

Grounds

1 By order of 11 May 1989, which was received at the Court on 7 June 1990, the Oberverwaltungsgericht fuer die Laender Niedersachsen und Schleswig-Holstein referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty two questions on the interpretation and validity of certain provisions 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) and of Commission Regulation (EEC) No 1371/84 of 16 May 1984 laying down detailed rules for the application of the additional levy referred to in Article 5c of Regulation No 804/68 (Official Journal 1984 L 132, p. 11).

2 Those questions were raised in proceedings between Ralf-Herbert Kuehn, owner of an agricultural holding specializing in milk production, and the Landwirtschaftskammer (Chamber of Agriculture) Weser-Ems concerning a reference quantity under the scheme for an additional levy on milk. Mr Kuehn' s holding had been leased successively to Mr Roolfs and to Mr Cremer. Mr Roolfs had delivered to the dairy 220 489 kg of milk in 1981, 200 625 kg in 1982 and 55 621 kg between 1 January and 30 April 1983. Mr Cremer, who subsequently left the holding, delivered to the dairy 32 666 kg of milk between 1 May and 31 December 1983.

3 The Landwirtschaftskammer Weser-Ems allocated to Mr Cremer a reference quantity of 41 700 kg of milk; it also allocated to him an additional reference quantity of 5 000 kg pursuant to a German law intended to ensure the survival of dairy holdings.

4 In his action, brought before the competent administrative courts, Mr Kuehn is applying, essentially, for an order for the reference quantity for his holding to be calculated, in accordance with Article 3(3) of Regulation No 857/84, cited above, on the basis of its production during 1981 or 1982. After his application was dismissed by the court of first instance, the Verwaltungsgericht, Mr Kuehn appealed to the Oberverwaltungsgericht for the Laender of Lower Saxony and Schleswig-Holstein.

5 Those are the circumstances in which the Oberverwaltungsgericht stayed the proceedings and referred the following questions to the Court for a preliminary ruling:

"(1) Were the Council or the Commission of the European Communities under an obligation, when adopting the provisions governing guaranteed milk quantities, to make allowance (in Article 3(3) of Regulation (EEC) No 857/84) for a change of lessee on an agricultural holding occurring in the reference year chosen by the Member States, by means of a provision for cases of hardship (for example, the option of appointing a different year as the reference year)?

(2) Is a reference quantity transferred, by virtue of Article 7(1) of Regulation (EEC) No 857/84 in conjunction with subparagraphs 1 and 3 of Article 5 of Regulation (EEC) No 1371/84, to a producer who takes over the holding when an entire holding used for milk production changes hands between 1 January 1983 and 2 April 1984?"

6 Reference is made to the Report for the Hearing for a fuller account of details of the main proceedings, the Community legislation in question and the written and oral observations submitted to the Court, which are mentioned or discussed below only in so far as is necessary for the reasoning of the Court.

The first question

7 The first question seeks essentially to ascertain whether Council Regulation No 857/84 in conjunction with Commission Regulation No 1371/84 prevent a producer, who has begun milk deliveries during the reference year chosen by the Member State concerned and who, accordingly, cannot show a representative level of deliveries for that year, from obtaining reference to another reference year, and, if so, if the provisions concerned are valid.

8 In order to reply appropriately to this question, it must be borne in mind at the outset that, by virtue of Article 2 of Regulation No 857/84, the reference quantity exempt from the additional levy is in principle equal to the quantity of milk or milk equivalent delivered by the producer or purchased by a purchaser during the reference year chosen by the Member State within the period from 1981 to 1983, weighted by a percentage established so as not to exceed the guaranteed quantity. However, Articles 3, 3a, 4 and 4a of the same regulation, as amended, permit Member States to take into account certain particular situations when determining the reference quantities or to grant specific or additional reference quantities.

9 More particularly, the first subparagraph of Article 3(3) of Regulation No 857/84 permits producers, whose milk production during the reference year chosen pursuant to Article 2 has been affected by exceptional events occurring before or during that year, to obtain reference to another calendar reference year within the 1981 to 1983 period. The second subparagraph of Article 3(3) contains a list of situations which may justify reference to another reference year; that list was extended by Article 3 of Commission Regulation No 1371/84, cited above.

10 However, none of the provisions cited above allow specific account to be taken, when allocating a reference quantity, of the fact that the producer operating the holding has changed during the reference year chosen by the Member State concerned.

11 As the Court has held, most recently in its judgment in Case 113/88 Leukhardt v Hauptzollamt Reutlingen [1989] ECR 1991, paragraph 13, the structure and purpose of the regulations concerned indicate that they contain an exhaustive list of the situations in which reference quantities or individual quantities may be granted and set out precise rules concerning the determination of those quantities. Since none of those provisions makes it possible for producers to obtain reference to milk deliveries in the situation which is the subject of the main proceedings, it must be considered impossible to obtain, for that reason, reference to a reference year other than that chosen by the Member State concerned, even in the case where the persons concerned cannot show a level of deliveries representative of the production capacity of the holding during the reference year.

12 That interpretation is not open to the objection that it is incompatible with the requirements deriving from the general principles of Community law.

13 Contrary to the contention of the plaintiff in the main proceedings, the legislation in question does not infringe the principle of the protection of legitimate expectations. The Court has consistently held that in the sphere of the common organization of the markets whose purpose involves constant adjustments to meet changes in the economic situation, economic operators cannot legitimately expect that they will not be subject to restrictions arising out of future rules of market or structural policy (see, to this effect, the judgments in Joined Cases 424/85 and 425/85 Frico v Voedesel Voor Zienings In-En Verkoopbureau [1987] ECR 2755, paragraph 33; Case 120/86 Mulder v Minister van Landbouw En Visserij [1988] ECR 2321, paragraph 23, and Case 170/86 Von Deetzen v Hauptzollamt Hamburg-Jonas [1988] ECR 2355, paragraph 12).

14 Moreover, the principle of the protection of legitimate expectations may be invoked as against Community rules, only to the extent that the Community itself has previously created a situation which can give rise to a legitimate expectation.

15 Thus an economic operator who has been encouraged by a Community measure to suspend marketing of milk for a limited period in the general interest and against payment of a premium may, therefore, legitimately expect not to be subject, upon the expiry of his undertaking, to restrictions which affect him specifically precisely because he availed himself of the possibilities offered by the Community rules (see the judgments in Mulder, paragraph 24, and Von Deetzen, paragraph 13, both cited above). On the other hand, the principle of the protection of legitimate expectations does not preclude, in the case of a scheme such as that concerning the additional levy, the imposition of restrictions on a producer by reason of the fact that he has not marketed milk or has marketed only a reduced quantity of milk during a period prior to the entry into force of that scheme, in consequence of a decision which he freely took without being encouraged to do so by a Community measure.

16 Nor, as thus interpreted, do the regulations infringe the right to property or the freedom of the producers concerned to pursue an occupation. Those rights, which are part of the fundamental rights the observance of which is ensured by the Court, are not absolute rights but must be considered in relation to their social function. Consequently, restrictions may be imposed on the exercise of those rights, in particular in the context of a common organization of the markets, provided that those restrictions in fact correspond to objectives of general interest pursued by the Community and do not constitute, with regard to the aim pursued, a disproportionate and intolerable interference, impairing the very substance of those rights (see, for example, the judgment in Case 5/88 Wachauf v Bundesamt fuer Ernaehrung und Forstwirtschaft [1989] ECR 2609, paragraph 18).

17 Having regard to those criteria, the regulations in question, which form part of a body of legislation intended to remedy the situation of surpluses on the milk and milk products market, correspond to the aims pursued by the Community in the general interest. They do not affect the very substance of the right to property and of the freedom to pursue an occupation because they do not affect the possibility for the operators in question to engage in the production of products other than milk on the holding concerned.

18 Finally, as so interpreted, the regulations do not infringe the prohibition of discrimination laid down in Article 40(3) of the EEC Treaty, which is the specific expression of the general principle of equality (see, most recently, the judgment in Joined Cases C-267/88 to C-285/88 Wuidart and Others [1990] ECR I-467, paragraph 13). The situation of which the plaintiff in the main proceedings complains is the result of the fact that, by not providing the allocation of a reference quantity based on a representative production for producers whose milk deliveries began during the reference year chosen by the Member State concerned, the regulations in question affect that category of producers more severely than those who can show a representative production during that year. Such an effect is justified by the need to limit to the greatest extent possible, in the interests of both legal certainty and the effectiveness of the additional levy scheme, the situations which may justify the reference to another reference year. The difference in treatment concerned is therefore objectively justified and cannot, consequently, be regarded as discriminatory within the meaning of Article 40(3) of the EEC Treaty, as interpreted by the Court.

19 For all those reasons, the answer to the first question must be that Council Regulation (EEC) No 857/84 of 31 March 1984, as supplemented by Commission Regulation (EEC) No 1371/84 of 16 May 1984, precludes a producer who began deliveries of milk during the reference year chosen by the Member State concerned and who consequently cannot show a representative level of deliveries for that year from obtaining, on that ground alone, reference to some other reference year. Consideration of the first question raised by the national court has disclosed no factor of such a kind as to affect the validity of those regulations, as thus interpreted.

The second question

20 The second question seeks essentially to ascertain whether Article 7(1) and (4) of Council Regulation No 857/84, as amended by Council Regulation (EEC) No 590/85 of 26 February 1985 (Official Journal 1985 L 68, p. 1), read in conjunction with the second sentence of subparagraph 3 of Article 5 of Commission Regulation No 1371/84, must be interpreted as requiring the Member States to allocate to a lessee, who has taken over the management of a holding before the entry into force of the additional levy scheme, a reference quantity which takes account of deliveries of milk made during the reference year by the previous lessee of that holding.

21 Article 7(1) of Regulation No 857/84, as amended, provides that "where an undertaking is sold, leased or transferred by inheritance, all or part of the corresponding reference quantity shall be transferred to the purchaser, tenant or heir according to procedures to be determined". However, under Article 7(4) "in the case of rural leases due to expire, where the lessee is not entitled to an extension of the lease on similar terms, Member States may provide that all or part of the reference quantity corresponding to the holding or the part thereof which forms the subject of the lease shall be put at the disposal of the departing lessee if he intends to continue milk production".

22 As the Court stated in its judgment in Wachauf, cited above, it is apparent from those provisions that the Community legislature intended that at the end of the lease the reference quantity should in principle return to the lessor who retakes possession of the holding, subject however to the Member States' power to allocate all or part of the reference quantity to the departing lessee. Those provisions however only refer, as their wording indicates, to the case where a reference quantity has always been allocated to a person, that is to say, the case where a transfer of the holding has occurred after the entry into force of the additional levy scheme.

23 Article 5 of Regulation No 1371/84 laid down the rules applying to the transfer of reference quantities following a change of ownership or possession of a holding. Subparagraph 1 of that article provides to that end that "where an entire holding is sold, leased or transferred by inheritance, the corresponding reference quantity shall be transferred in full to the producer who takes over the holding"; subparagraph 2 of Article 5 contains rules concerning the distribution of that reference quantity where only part of the holding is transferred. The second sentence of subparagraph 3 of Article 5 of Regulation No 1371/84 provides that "Member States may apply the provisions of subparagraphs 1 and 2 in respect of transfers taking place during and after the reference period".

24 Consideration and comparison of the above provisions show that transfers of holdings occurring before the entry into force of the additional levy scheme give rise to the transfer of the corresponding reference quantities only where the Member State concerned has provided for this in exercise of the power given to it in the second sentence of the third subparagraph of Article 5 of Regulation No 1371/84. It is only to that extent that deliveries of milk made during the reference year used by the Member State concerned by the lessee who previously managed the undertaking must be taken into consideration when determining the reference quantity allocated to the new lessee.

25 For those reasons, the answer to the second question must be that Article 7(1) and (4) of Council Regulation No 857/84 of 31 March 1984, as amended by Council Regulation No 590/85 of 6 February 1985, read in conjunction with the second sentence of the third subparagraph of Article 5 of Commission Regulation No 1371/84 of 16 May 1984, must be interpreted as permitting, but not requiring, Member States to allocate to a lessee who has taken over the management of an agricultural holding before the entry into force of the additional levy scheme a reference quantity which takes account of deliveries of milk made during the reference year by the previous lessee of that holding.

Decision on costs

Costs

26 The costs incurred by the Council of the European Communities and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the proceedings pending before the national court, the decision on costs is a matter for that court.

Operative part

On those grounds,

THE COURT (Third Chamber),

in answer to the questions referred to it by the Oberverwaltungsgericht for the Laender of Lower Saxony and Schleswig-Holstein, by order of 11 May 1989, hereby rules:

1. 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, as supplemented by Commission Regulation (EEC) No 1371/84 of 16 May 1984 laying down detailed rules for the application of the additional levy referred to in Article 5c of Regulation (EEC) No 804/68, precludes a producer who began deliveries of milk during the reference year chosen by the Member State concerned and who consequently cannot show a representative level of deliveries for that year from obtaining, on that ground alone, reference to some other reference year. Consideration of the first question raised by the national court has disclosed no factor of such a kind as to affect the validity of those regulations, as thus interpreted;

2. Article 7(1) and (4) of Council Regulation No 857/84 of 31 March 1984, as amended by Council Regulation No 590/85 of 26 February 1985, read in conjunction with the second sentence of the third subparagraph of Article 5 of Commission Regulation No 1371/84 of 16 May 1984, must be interpreted as permitting, but not requiring, Member States to allocate to a lessee who has taken over the management of an agricultural holding before the entry into force of the additional levy scheme a reference quantity which takes account of deliveries of milk made during the reference year by the previous lessee of that holding.