Opinion of Mr Advocate General Jacobs delivered on 29 November 2001. - Denkavit Nederland BV v Minister van Landbouw, Natuurbeheer en Visserij et Voedselvoorzieningsin- en verkoopbureau. - Reference for a preliminary ruling: College van Beroep voor het bedrijfsleven - Netherlands. - Agriculture - Combatting bovine spongiform encephalopathy - Powers of the Member States - Decision to slaughter and determination of the timing of slaughter of United Kingdom calves during the bovine spongiform encephalopathy crisis in March 1996. - Case C-507/99.



European Court reports 2002 Page I-00169



Opinion of the Advocate-General

1. If a Member State is authorised, by Council Directive 90/425/EEC or by Commission Regulation (EC) No 717/96, to have certain calves slaughtered on public health grounds and a certain rate per kilogram live weight is to be paid to farmers to compensate them for not selling the calves, may that Member State also require the animals to be slaughtered immediately or are the farmers entitled to delay presentation for slaughter until the calves have reached the weight at which they would normally have been sold on the market? That is the essence of the question on which the Netherlands College van Beroep voor het Bedrijfsleven (Commercial Court of Appeal) seeks a ruling in the present case.

Community legislation

The common organisation of the market in beef and veal

2. The common organisation of the market in beef and veal is governed by Council Regulation (EEC) No 805/68, as amended.

3. Article 23 of Regulation No 805/68, as amended by Regulation No 1261/71, provides: In order to take account of the restrictions on free circulation which may result from the application of measures for combating the spread of diseases in animals, exceptional measures of support for the market affected by those restrictions may be taken in accordance with the procedure provided for in Article 27. Those measures may only be taken in so far as, and for as long as, is strictly necessary for the support of that market.

Health requirements

4. Article 8(1) of Council Directive 90/425/EEC provides, inter alia:

If, during a check carried out at the place of destination of a consignment or during transport, the competent authorities of a Member State establish

(a) the presence of agents responsible for a disease referred to in Directive 82/894/EEC, as last amended by Commission Decision 90/134/EEC, a zoonosis or disease, or any cause likely to constitute a serious hazard to animals or humans, or that the products come from a region contaminated by an epizootic disease, they shall order that the animal or consignment of animals be put in quarantine at the nearest quarantine station or slaughtered and/or destroyed.

...

The protective measures provided for in Article 10 may be applied.

...

5. Article 10 of the directive concerns measures to be taken in the event of an outbreak of an animal disease. Under Article 10(1), any Member State in which there is an outbreak of any animal disease referred to in Directive 82/894, or any zoonosis, disease or other cause likely to constitute a serious hazard to animals or to human health, must immediately notify the other Member States and the Commission. A Member State of destination may, on serious public or animal health grounds, take interim protective measures pending the adoption of measures by the Commission and must notify those measures to the Commission and the other Member States without delay. Under Article 10(4), the Commission is required to monitor the situation and take whatever measures are necessary.

The BSE crisis

6. On 20 March 1996, in the context of a high incidence of bovine spongiform encephalopathy (BSE), the United Kingdom Government informed the Commission that it had taken certain measures as a result of new information on the appearance of certain cases of Creutzfeldt-Jakob disease in humans, possibly linked to BSE. As a result, other Member States decided to ban imports of live bovine animals and beef and veal from the United Kingdom. In Decision 96/239, the Commission pointed out that although a definitive stance on the transmissibility of BSE to humans was not then possible, a risk of transmission could not be excluded. Since the resulting uncertainty had created serious concern among consumers, the Commission decided, as an emergency measure, to ban the transport of all bovine animals and all beef and veal or derived products from the United Kingdom to the other Member States.

7. Some three weeks later, the Commission adopted Regulation (EC) No 717/96 on the basis of Article 23 of Regulation No 805/68. The preamble to that regulation refers to the ban on exports from the United Kingdom but points out that calves born there had been exported to other Member States for fattening prior to the introduction of the ban. The possibility that such calves might enter the food chain had led to a lack of consumer confidence in beef and a disturbance of the markets in Belgium, France and the Netherlands. It was therefore necessary to take exceptional measures to support those markets by establishing a Community co-financed scheme authorising those Member States to purchase the animals concerned with a view to killing and subsequently destroying them. The price paid to producers was to compensate them for not selling the calves in question, and it was appropriate to base that price on the most recently observed price of carcases of calves on the Community market, namely ECU 2.8 per kilogram live weight.

8. Thus, Article 1(1) of Regulation No 717/96 authorised the competent national authorities to purchase any bovine animal aged six months or less on 20 March 1996 and present on that date on a holding located in their territory, presented to them by any producer, which could be proved by him to have been born in the United Kingdom.

9. The following paragraphs laid down stringent conditions requiring the animals to be slaughtered and disposed of in such a way as to eliminate any possibility of contamination of products destined for human or animal consumption or use in cosmetic or pharmaceutical products, and subject to permanent supervision and control by the national authorities.

10. Article 1(5) provides: If the number of animals presented for sale and subsequent destruction exceeds the number for which there is capacity to destroy in the Member State concerned, the competent authority may limit access to this scheme.

11. Under Article 2, the price to be paid was ECU 2.8 per kilogram live weight, to be cofinanced by the Community at a rate of 70%.

Netherlands legislation

12. The Netherlands authorities had already taken measures to deal with the serious health concerns then prevalent. On 3 April 1996, the Minister for Agriculture, Nature Management and Fisheries adopted a decree by virtue of which calves born in the United Kingdom were to be slaughtered within a period to be determined by the area director of the national cattle and meat inspectorate.

13. The explanatory memorandum to that decree stated: the measure entailing the slaughtering of animals is based on Article 8(1)(a) of Directive 90/425/EEC under which the Member States must slaughter and/or destroy animals if, during a check carried out at the place of destination, the animals are found to come from a region contaminated by an epizootic disease.

14. Rules governing the payment of compensation to the owners of slaughtered calves were also adopted on 3 April. Under those rules as they stood at the material time, compensation was to be ECU 2.8 per kilogram live weight in accordance with Article 2 of Regulation No 717/96.

The proceedings

15. Denkavit Nederland BV (Denkavit) owned a number of calves which were required to be slaughtered under the Netherlands rules outlined above. In April, May and June 1996, Denkavit took issue with various communications and decisions of the Netherlands authorities by virtue of which its calves were to be purchased for slaughter before they were fully fattened. Denkavit's objections, and its claim for damages, were rejected by three decisions against which it has appealed to the College van Beroep voor het Bedrijfsleven.

16. The assumption underlying the dispute is that producers normally plan to sell their calves for veal at around the age of six months and base their economic calculations on the weight attained at that age. If an imported calf is slaughtered earlier, at a lower weight, the cost price per kilogram (which includes the cost of acquisition and the cost of feeding) will thus be greater since further fattening to normal marketable weight will include only the cost of feeding. If compensation is based on a single rate per kilogram live weight regardless of the age of slaughter, however, then producers whose calves are slaughtered earlier may receive proportionally less than if the calves had been allowed to attain normal marketable weight.

17. The national court has stayed the proceedings and seeks a preliminary ruling on the following questions:

1. Does the fact that the calves in issue come under the common organisation of the market in beef and veal mean that the (alleged) power on the part of the Netherlands authorities to determine the point in time at which British calves are to be slaughtered must have a basis in Community legislation, in the absence of which the national authorities do not have any such power?

2. If the answer to the first question is in the affirmative: does Article 8 of Directive 90/425/EEC constitute an adequate basis for that power?

3. If the second question is answered in the negative: is there any other basis for that power in Community law?

18. Written observations have been submitted by Denkavit, the Netherlands Government and the Commission, all of whom presented oral argument at the hearing.

Analysis

Need for a legal basis in Community law

19. As the parties have pertinently pointed out, the answer to the national court's first question may be found, in general terms, in the Court's consistent case-law. Where there is a common organisation of the market, the competence of the Member States to take independent action in the sector concerned is limited to cases where the specific matter is not regulated at Community level or where specific competence is granted by Community law. However, they are obliged to take whatever steps are necessary to ensure implementation of the Community rules. In any event, they may not take any measures which undermine, create exceptions to or interfere with the proper functioning of the common organisation.

20. However, the specific aspect of the first question - whether there must be a Community legislative basis for the Netherlands authorities' competence to determine the date of slaughter of the calves in issue - requires an examination of the legislation referred to in the second and (implicitly) the third questions. It must be determined whether that legislation regulated the relevant matter and/or authorised such national powers and whether the assumption of such competence was required by or at least in conformity with the Community measures.

Directive 90/425

21. Denkavit argues that Article 8(1)(a) of Directive 90/425 allows slaughter and/or destruction of animals infected with a disease or animal products from a region contaminated by a disease. That distinction is in its view logical because it is possible to establish whether an animal is infected but not whether a product comes from an infected animal. Denkavit's calves however were animals - not found to be infected with BSE - from a contaminated region, and were therefore not concerned by the provision, which could thus not provide a basis for the adoption of the Netherlands rules.

22. A different basis might have been found in Article 10(1) of the same directive, Denkavit submits, had it not been for the fact that the fourth subparagraph of that provision authorises only interim protective measures. Slaughter is however a definitive, and not an interim or protective, measure. Even if the rules in issue could be regarded as interim measures, they could only be taken and remain valid pending the adoption of measures by the Commission - in this instance Regulation No 717/96.

23. In my view, it is clear that Directive 90/425 delimits the circumstances in which Member States may without specific Community authorisation order the slaughter and destruction of live animals imported from other Member States. If the circumstances referred to in Article 8(1)(a) are present, they are obliged either to place the animals in quarantine or to have them slaughtered. If the circumstances are those of Article 10(1), there is a broader discretion to take interim protective measures on health grounds. In using the powers thus conferred upon them, the Member States must in any event remain within the limits defined and must take whatever steps are necessary to ensure that the directive is properly implemented.

24. I do not however agree with Denkavit's view that Article 8(1)(a) concerns only live infected animals or animal products from a contaminated region, to the exclusion of live animals from a contaminated region, not proved to be infected.

25. Whilst a literal reading does go some way to support that view, it also provides evidence for a contrary interpretation. The only measures which the provision specifically authorises - indeed requires - are the quarantining or slaughter and/or destruction of the animal or consignment of animals. There is no indication of any action which may be taken with regard to products. Thus, although a region contaminated by an epizootic disease is mentioned, on the most literal interpretation no measures are authorised with respect to either animals or products coming from such a region. Such an interpretation is unhelpful and a broader approach is clearly called for.

26. According to the footnotes to their respective preambles, Directive 90/425 derives from the same Commission proposal as Directive 89/662. Article 7(1) of that original proposal read as follows: If, during a check carried out at the place of destination of a consignment the competent authorities of the Member State of destination establish the presence of an epizootic or any new serious and contagious disease they shall order that the animals be slaughtered at once or that the consignment be destroyed. That original proposal was subsequently amended in two ways of particular relevance here.

27. First, two separate directives were adopted of which, as the Commission has pointed out, Directive 89/662 deals principally with animal products and Directive 90/425 principally with live animals. Second, the provision was extended to imports which might present a risk because they came from an area contaminated by disease, regardless of whether the presence of the disease could be established in those imports.

28. Articles 7(1)(a) of Directive 89/662 and 8(1)(a) of Directive 90/425 are identical as far as ... or that the products come from a region contaminated by an epizootic disease, they shall .... The former goes on to provide in certain circumstances for the destruction or disposal of the batch of products concerned, whereas the latter, as will be recalled, provides for the quarantining, slaughter and/or destruction of the animals concerned.

29. Nevertheless, the scope of Directive 90/425 is not confined to animals alone; it explicitly covers animal products also, and there is no reason to suppose that products were meant to be excluded from Article 8(1)(a), where they are specifically mentioned. Nor however can live animals be excluded from that provision. The Commission stated at the hearing that Article 8(1)(a) was intended to be as comprehensive as possible and to cover all possible situations in which it might be necessary to quarantine, or slaughter and destroy, animals or to destroy animal products. I would agree that such a comprehensive interpretation is the only reasonable way to reconcile the rather fragmented literal terms of the provision; in other words, it must apply to both products and animals from a contaminated region, and it must authorise the destruction of both products and animals.

30. The slaughter and destruction of animals from a contaminated region, even if they show no signs of disease, is clearly a desirable action to authorise in the context of the provision, since there may well be circumstances in which slaughter and destruction are necessary with a view to preventing the spread of a particularly contagious or infectious disease. In the specific circumstances of the BSE crisis in 1996, when the risk was perceived of a fatal and particularly distressing disease being transmitted to humans but there was great uncertainty as to the precise mode of transmission among cattle and the duration of the incubation period, such measures seem fully justified.

31. Moreover, even if the reference to coming from a contaminated region were held to apply solely to products, I consider that the wording of Article 8(1)(a) as a whole is sufficient to cover circumstances of the kind in issue. Slaughter is authorised if the competent authorities establish the presence of, inter alia, any cause likely to constitute a serious hazard to animals or humans. Such causes must in my view include the fact that animals have come from an area infected by a fatal disease in circumstances in which it cannot be affirmed with certainty that they cannot have contracted or inherited that disease.

32. Article 8(1)(a) of Directive 90/425 thus I consider provided a sufficient general legal basis in Community law for the Netherlands authorities to order the slaughter and destruction of calves from a region contaminated by BSE, and it was expressly on that basis that the Netherlands rules were adopted.

33. There is on the other hand nothing - nor has it been suggested that there is anything - in that provision or in the scheme of the directive to circumscribe in any way their power to decide on the timing of such action. Unless limits are imposed - and provided that the aim of the measure is met - Member States must be free to decide on that timing, since otherwise their power to order the slaughter would be severely impaired.

34. That being so, it is not necessary to consider in detail the fourth subparagraph of Article 10(1) of the directive. However, two points may be made. On the one hand, Denkavit is misguided in claiming that slaughter cannot be an interim protective measure. Those words need not be construed here with the sense of reversible. Slaughter of certain animals may be undertaken as a temporary step pending the introduction of other less far-reaching methods of containment. On the other hand, it is true that under Article 10(1) the Member State of destination is authorised to take measures only until the Commission has acted - which, in this case, it did by adopting Regulation No 717/96.

Regulation No 717/96

35. Since Regulation No 717/96 regulates the power to buy and the requirement to slaughter calves with specific regard to the circumstances of the present case, it must be considered whether that measure in any way qualifies the general powers which the Netherlands authorities derived from Article 8(1)(a) of Directive 90/425.

36. One problem of interpretation has been raised in the context of the regulation, that of the significance to be attached to the term presented in Article 1(1). In Denkavit's view, that term implies that the producer must be entitled to choose the moment of presentation, on the basis of both the literal wording - in Dutch, the phrase used is voor verkoop ... aangeboden (literally offered for sale) although Denkavit also stresses the voluntary element which it considers to be inherent in the French présenté or the English presented - and the scheme of the regulation, in which the fixed rate of compensation is based on prices of carcases observed on the market, that is to say fully-fattened carcases.

37. First of all, I agree with the Commission that Article 1(1) clearly empowers the Member States concerned to choose whether the calves in question are to be purchased, and the fact that they must be presented for that purpose does not preclude the imposition of an obligation to present. The national authorities were in any event entitled to impose such an obligation - and a time for compliance therewith - pursuant to Article 8(1)(a) of Directive 90/425.

38. I agree moreover with the Netherlands Government that the main purpose of Regulation No 717/96 was to authorise not the compulsory slaughter of the calves in question (which was already catered for by Directive 90/425) but the payment of a purchase price to compensate producers (which is not provided for in that directive and which appears from the scheme of the regulation to constitute market intervention). It is true that there was also a public-health aim; however, that aim was pursued not by authorising slaughter but by discouraging evasion through the payment of compensation, without which the ordering of such large-scale slaughter might well have meant that the origin of some animals would be concealed. The principal aim was, as is clear from the preamble and from the fact that the regulation was adopted on the basis of Article 23 of Regulation No 805/68, to support a market faced with the need to slaughter large numbers of animals in order to restore public confidence.

39. The national court has suggested that Article 1(5) of Regulation No 717/96 makes sense only if the initiative of presentation lies with the producer and not with the authorities. However, as the Netherlands Government has pointed out, compliance with the provisions of Article 1(2) to (4), which imposed substantial obligations with regard to slaughter, disposal and supervision, required the deployment of considerable resources. The need to limit access to the scheme under Article 1(5) might thus have arisen if producers had wished to present their calves over too short a period. It may be that not all producers made the same economic calculation as Denkavit; finding themselves in possession of animals which were effectively deprived of any market value, some might have preferred to obtain compensation as rapidly as possible in order to start production anew.

40. Denkavit also argues that, since the amount of compensation was fixed on the basis of market prices observed for fully-fattened calves, since the price paid under the scheme was to compensate [producers] for not selling the calves in question and since the price per kilogram system may not fully offset loss of earnings where calves are slaughtered before marketable age and weight, Regulation No 717/96 must have been intended to apply to calves when they reached that stage and not before.

41. Not only is there nothing in the terms of the regulation to support that view but I do not consider it to be a plausible interpretation of the legislative intention.

42. I agree with the Netherlands Government that there may be no specific right to full compensation - or indeed to any compensation at all - for loss incurred as a result of disease, which is a risk inherent in any farming activity, or of compliance with public-health measures designed to prevent the spread of disease. The Netherlands Government is further right to point out that the calves in question had in fact no commercial value at all since they could not have been sold on the market whereas, as the Commission has noted, the only market value on which compensation could be based was that of carcases since there is no rate for live animals. Clearly, in those circumstances to allow calves to be fattened to a certain weight in order to qualify for greater compensation would be (as the Netherlands Government points out) a profligate use of Community funds and (as the Commission stresses) incompatible with any coherent agricultural policy.

43. Thus, in my view there is nothing in the terms of Regulation No 717/96 which either limits the power of the Netherlands authorities to order immediate slaughter or which confers any right on producers to fatten their calves before slaughter.

The requirement of equal treatment

44. Denkavit suggests however that Regulation No 717/96 must be read in the light of the prohibition of discrimination. If applied in the way sought by the Netherlands authorities, it would lead to a graduated discrimination between producers whose calves were of marketable weight and those who had just commenced the fattening process. It should therefore be interpreted so as to allow all producers to fatten their calves to marketable weight before slaughter - or indeed, Denkavit suggested at the hearing, should be declared invalid as far as the provision for a single rate of compensation is concerned.

45. The Court has consistently held that the general principle of equality is a fundamental principle of Community law which precludes comparable situations from being treated in a different manner, and that different situations must not be treated in the same way, unless the difference in treatment is objectively justified. Denkavit complains that different situations are being treated in the same way without objective justification.

46. I agree that producers in possession of British-born calves aged six months or less on 20 March 1996 were not all in precisely the same situation. Those whose calves were aged near to the upper limit had invested more and had more immediate hopes of selling at the market rate than was the case for those who had recently purchased very young calves; moreover, it seems to be agreed that the law of (in this case) increasing returns meant that the investment per kilogram live weight was less for the former than for the latter, whereas the overall investment was greater for the former. However, those differences were all differences of degree.

47. It seems to me that there was in that case a graduated difference of treatment (in terms of the amount of compensation paid) linked to a graduated difference in situation (in terms of the amount of investment made). Denkavit's complaint is that the ratio between the two sliding scales was not constant.

48. Although it would have been possible to render all producers' situations more comparable by allowing them all to fatten their calves to full weight in order to determine what compensation should be paid, that would have involved pointless expenditure on animals with no economic value and the payment of more compensation overall than was objectively necessary. It would also have been less likely to achieve the aim of stabilising the market by allaying consumer concern. Nor would it appear practicable to have adjusted the rate of compensation so as to take accurate account of the age of the calves, given the absence of any market rates for younger carcases.

49. In those circumstances, I consider it was objectively justifiable to adopt a single rate of compensation for all calves, regardless of the age at which they were to be slaughtered. Moreover, where all members of a class of producers are in situations which are comparable within certain defined limits, there is not necessarily any breach of the principle of equal treatment simply because of an absence of differentiation on a case-by-case basis. There will always be differences of degree between individual situations, and these must be accommodated within any particular compensation scheme.

50. It may in any event be that the differences involved were in fact not excessive. No suggestion has been made to the Court that the compensation paid was insufficient to cover the cost of the calves and their fattening to the date of slaughter, whatever that date - the allegation is simply of a varying degree of loss of (entirely hypothetical) profit. Thus, under Regulation No 717/96 a producer having just bought a consignment of calves for fattening may well have received compensation sufficient to enable him to purchase a new consignment and continue his production after a short interruption. A producer whose calves had reached marketable age and weight would have received approximately the price he would have obtained on the market; his production could then continue more or less as planned. Each would thus receive compensation broadly commensurate with his situation in terms of the production cycle.

Conclusion

51. In the light of all the above considerations, I am of the opinion that the Court should give the following answer to the College van Beroep voor het Bedrijfsleven:

Article 8(1)(a) of Council Directive 90/425/EEC provided a sufficient basis in Community law for the adoption by the Netherlands authorities of rules requiring the slaughter, at a time to be determined by those authorities, of calves born in the United Kingdom, in the context of the BSE crisis in the months following March 1996. Nothing in that directive or in Commission Regulation (EEC) No 717/96, which authorises the payment of a flat rate of compensation in respect of that slaughter and on which such measures could also be based, in any way limits the discretion of the national authorities to determine the moment of slaughter in those circumstances.