Council Regulation (EC) No 2330/98 of 22 October 1998 providing for an offer of compensation to certain producers of milk and milk products temporarily restricted in carrying out their trade
Date: 1998-10-22
Institutions: Council of the European Union
Subjects: farmer, indemnification, milk, milk product, production aid, production quota

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Official Journal of the European Communities

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COUNCIL REGULATION (EC) No 2330/98

of 22 October 1998

providing for an offer of compensation to certain producers of milk and milk
products temporarily restricted in carrying out their trade

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community, and in particular Article 43 thereof,

Having regard to the proposal from the Commission (1),

Having regard to the opinion of the European Parlia-
ment (2),

Having regard to the opinion of the Economic and Social
Committee (3),

Whereas, when the additional
levy scheme was intro-
duced in 1984 in the milk and milk products sector,
Community legislation, in establishing rules for the allo-
cation of individual reference quantities, did not take
account of the situation of producers who, as a result of an
undertaking pursuant to Council Regulation (EEC) No
1078/77 of 17 May 1977 introducing a system of
premiums for the non-marketing of milk and milk prod-
ucts and for the conversion of dairy herds (4), had not
delivered or sold milk during the reference year adopted
by the Member State or were restricted in the level of
deliveries or sales during that year;

Whereas, following the judgment of the Court of Justice
of 19 May 1992 in joined cases C-104/89 and C-37/90,
the Community institutions undertook to give full effect
to that ruling in respect of all concerned producers whose
circumstances satisfied the conditions laid down in the
judgment with regard to the liability of the Community
to make good the damage the said producers had suffered
insofar as the original Community legislation did not
provide for the allocation of an individual reference
quantity to them; whereas the producers concerned were
essentially those who were entitled to apply for a special
reference quantity pursuant to the provisions added to
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 (5) by Regulation
(EEC) No 764/89 (6) or Regulation (EEC) No 1639/91 (7);
whereas Council Regulation (EEC) No 2187/93 of 22 July
1993 providing for an offer of compensation to certain
temporarily
producers of milk and milk products

(1) OJ C 273, 2. 9. 1998, p. 3.
(2) OJ C 328, 26. 10. 1998.
(3) Opinion delivered on 15 October 1998 (not yet published in

the Official Journal).

(4) OJ L 131, 26. 5. 1997, p. 1. Regulation as last amended by
Regulation (EEC) No 1300/84 (OJ L 125, 12. 5. 1984, p. 23).
(5) OJ L 90, 1. 4. 1984, p. 13. Regulation repealed by Regulation

(EEC) No 3950/92 (OJ L 405, 31. 12. 92, p. 1 ).

(6) OJ L 84, 29. 3. 1989, p. 2.
(7) OJ L 150, 15. 6. 1991, p. 35.

prevented from carrying on their trade (8)
introduced
compensation arrangements for these producers under
which an offer calculated on a flat-rate basis was made to
all eligible producers who submitted applications, which
could be accepted in full and final settlement or else
rejected;

Whereas, on the application of two producers, the Court
of First Instance, in its judgment of 9 December 1997 in
joined cases T-195/94 and T-202/94, ordered the
Community to make good the damage the said producers
had suffered insofar as the original Community legislation
establishing the additional levy scheme did not provide
for the allocation of an individual reference quantity in
respect of holdings subject to an undertaking pursuant to
Regulation (EEC) No 1078/77 and insofar as subsequent
amendments to the legislation excluded the allocation of
special reference quantities to transferees of a premium
granted pursuant to Regulation (EEC) No 1078/77 who
had received a reference quantity by virtue of Article 2
and/or Article 6 of Regulation (EEC) No 857/84;

Whereas there is a significant number of other producers
whose circumstances satisfy the conditions laid down in
the judgment with regard to the liability of
the
already initiated
Community and who have either
proceedings against the Council and the Commission or
addressed claims for compensation to the Community
institutions; whereas the producers concerned are essen-
tially those who were entitled to apply for a special refer-
ence quantity pursuant to Regulation (EEC) No 2055/
93 (9); whereas it is therefore appropriate to adopt arrange-
ments with a view to the settlement of these claims;

Whereas, in view of the number of potentially eligible
producers it would not be possible to evaluate the claim
of each producer on an individual basis; whereas it is
therefore necessary to use a flat-rate approach; whereas it
is appropriate to follow as far as possible the arrange-
ments set out in Regulation (EEC) No 2187/93;

Whereas a direct
link should be drawn between the
acceptance of the right to a special reference quantity
pursuant to Regulation (EEC) No 2055/93 and the exist-
ence of an injury consisting in the restriction in milk
the producer
production contrary to the wishes of

(8) OJ L 196, 5. 8. 1993, p. 6.
(9) OJ L 187, 29. 7. 1993, p. 8.

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concerned; whereas in order to ensure that a producer
cannot benefit by obtaining a special reference quantity
for the sole purpose of speculating on the supposed asset
value of the reference quantity allocated, account should
be taken of the subsequent actions of the producer during
the restricted period laid down in Regulation (EEC) No
2055/93;

Whereas it is necessary to determine in the case of trans-
ferees of part of a holding subject to an undertaking
pursuant to Regulation (EEC) No 1078/77 the basis on
which the annual quantity should be calculated; whereas
the annual quantity will generally be determined by refer-
ence to the area of land transferred as a proportion of the
total area of the original holding; whereas, however, as a
result of the judgment of the Court of Justice of 16
October 1997 in Case C-165/95, where the original
holding was a mixed holding, the determination should
be made, where the necessary proofs exist, in proportion
to the part of the holding directly or indirectly given over
to dairy production at the time when the undertaking was
entered into pursuant to Regulation (EEC) No 1078/77;
whereas the same principles should be applied in the case
where the transferee of the whole of a holding subject to
such an undertaking, or the transferee of part of such a
holding, subsequently gave up a part of the holding prior
to the allocation of a special reference quantity;

Whereas, subject to the above, the quantity to be com-
pensated must be calculated in accordance with the prin-
ciples enunciated in the grounds of the judgments of the
Court of Justice of 19 May 1992 and of the Court of First
Instance of 9 December 1997;

Whereas the period for which compensation is to be
offered should be indicated; whereas the damage suffered
by the producers concerned can, in accordance with the
abovementioned principles be considered to have ended
at the date of adoption of Regulation (EEC) No 2055/93,
or, if earlier, the date of allocation of a special reference
the
quantity; whereas the provisions of Article 43 of
Statute of the Court of Justice laying down the five-year
time bar on claims must be applied; whereas in response
to applications from producers received after the date of
the judgment of
Instance of 9
December 1997, the institutions have temporarily waived
their right to invoke the time bar provisions; whereas
therefore it is necessary to stipulate the circumstances in
which the limitation period shall start to run again;

the Court of First

for

Whereas for administrative reasons it is necessary to fix a
time limit
for
the submission of
compensation by producers to the competent authorities
in order to be admissible, as well as the time limits for the
transmission of offers and their acceptance; whereas the
Commission should be empowered to extend the time

applications

limit for the transmission of offers in appropriate circum-
stances;

Whereas, for the purposes of the implementation of this
Regulation, the Member States shall carry out the neces-
sary administrative tasks in accordance with its provisions,
by virtue of a specific mandate limited to the execution of
those tasks; whereas, given that a condition of acceptance
of an offer must be the relinquishment of all claims
against the Community arising out of the failure to al-
locate reference quantities, the offer of compensation to
the producer should be made by the competent authority
of the Member State in the name and on behalf of the
Council and the Commission;

the
Whereas Regulation (EEC) No 2187/93 sets out
amounts of compensation in ecus per 100 kg of milk for
each of
the years 1984/85 to 1990/91 differentiated
according to farm size in terms of milk production;
whereas these amounts represent the global estimate per
year and farm size of the difference between the income
which the producers concerned would have received from
marketing milk had they not been restricted from doing
so and the income which they obtained, or could have
obtained, by showing reasonable diligence during the
same period; whereas, in the light of the experience of the
application of that Regulation, it can be concluded that
the objectivity of the method used for the calculation of
the amounts has been demonstrated and that they consti-
tute an acceptable assessment of the losses sustained by
the producers;

Whereas it is therefore appropriate to retain the same
amounts for the purposes of the compensation arrange-
ments for producers under
this Regulation; whereas,
however, the differentiation according to farm size is not
to producers who are transferees of a non-
relevant
marketing premium or of part of a holding subject to a
non-marketing undertaking; whereas it can be accepted
that in general such producers were operating on hold-
ings on which the milk production was expanding and
with reference quantities which were above the average;
whereas it
is therefore appropriate to use the figures
relating to the largest farm size; whereas it is necessary to
fix amounts also for
the years 1991/92 to 1993/94;
whereas these amounts can be calculated on the basis of
the amounts for the preceding years with adjustments to
take account of fluctuations in the milk price in the
Member States on whose territory the majority of the
producers concerned have their holdings;

Whereas failure by the producer to accept the offer made
by the competent authority of
the Member State in
accordance with the provisions of this Regulation would
constitute a refusal of the Community offer; whereas any
legal proceedings continued or initiated thereafter by the
producer would fall within the Community’s jurisdiction;

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Whereas the experience of the implementation of Regula-
tion (EEC) No 2187/93 has shown the advisability of
providing for a power to authorise the transmission of
compensation offers to producers who fail to comply with
certain conditions set out in the arrangements fixed in the
Regulation, but whose circumstances nevertheless satisfy
the conditions laid down in the judgments of the Court of
Justice or Court of First Instance with regard to the
liability of the Community,

HAS ADOPTED THIS REGULATION:

Article 1

Compensation on the terms set out in this Regulation
shall be granted to those producers who were transferees
of the whole or part of a holding subject to an under-
taking given pursuant to Regulation (EEC) No 1078/77
(‘SLOM holding') and who have suffered loss as a result of
a restriction in levels of deliveries or sales of milk or milk
products by virtue of that undertaking during the refer-
ence year selected by the Member State concerned under
the additional levy scheme in the milk and milk product
sector.

Article 2

An application for compensation shall be deemed eligible
if it is submitted by a producer who has been allocated a
special reference quantity pursuant
to Article 1(1) of
Regulation (EEC) No 2055/93, or who, pursuant to Article
1(2) of that Regulation, has been allocated a share of a
special reference quantity previously allocated by virtue of
Article 3a of Regulation (EEC) No 857/84, or an equi-
valent quantity emanating from the national
reserve
referred to in Article 5 of Council Regulation (EEC) No
3950/92 of 28 December 1992 establishing an additional
levy in the milk and milk products sector (1) where a
Member State has decided pursuant to Article 1(2), third
subparagraph of Regulation (EEC) No 2055/93 to fulfil
the rights of the transferee in that way.

Article 3

The application shall be submitted by the person to
whom the special reference quantity referred to in Article
2 has been allocated or by his or her heir or heirs, without
prejudice to the application of the provisions of Member
States’ national law.

2055/93 participated before 1 October 1996 in any
measure regarding the definitive abandonment of refer-
ence quantities or sold or leased the whole of his holding
before that date.

Article 5

1.
The competent authority referred to in Article 9
shall determine the annual quantity in respect of which
compensation is due on the basis of the quantity used to
calculate the premium granted pursuant to Regulation
(EEC) No 1078/77, increased by 1 % and reduced by a
percentage representing the reductions applied in each
Member State to the reference quantities of producers
established in accordance with Articles 2 and 6 of Regula-
tion (EEC) No 857/84.

2.
For producers who were transferees of the whole of a
SLOM holding the annual quantity shall be that calcu-
lated in accordance with paragraph 1 reduced, where
appropriate, in accordance with paragraph 4.

3.
For producers who were transferees of a part of a
SLOM holding, the annual quantity shall be that calcu-
lated in accordance with paragraph 1 reduced in propor-
tion to the area of the original SLOM holding which was
not transferred. Where the original SLOM holding was a
mixed holding, the reduction shall be calculated on the
basis of the areas of the original SLOM holding which
were used directly or indirectly for milk production
provided that such use can be established to the satisfac-
tion of the competent authority. The resulting quantity
shall be further reduced, where appropriate, in accordance
with paragraph 4.

4.
If the producer has given up a part of the SLOM
holding, or of the part of the SLOM holding transferred to
him, prior to the allocation of a special reference quantity
pursuant to Regulation (EEC) No 2055/93 including the
period of
the annual
the non-marketing undertaking,
quantity in respect of which compensation is due as
referred to in paragraphs 2 and 3 respectively shall be
reduced in proportion to the area given up. Where the
original SLOM holding was a mixed holding, the reduc-
tion shall be calculated taking account only of the areas
which were used directly or indirectly for milk production
provided that such use can be established to the satisfac-
tion of the competent authority.

Article 4

Article 6

By way of derogation from Article 2, an application shall
not be accepted if the producer who received the special
to Regulation (EEC) No
reference quantity pursuant

(1) OJ L 405, 31. 12. 1992, p. 1. Regulation as last amended by
Commission Regulation (EC) No 903/98 (OJ L 127, 29. 4.
1998, p. 8).

If part of the holding of the producer was sold or leased
after the allocation of the special reference quantity and
before 1 October 1996, the annual quantity in respect of
which compensation is due, determined in accordance
with Article 5, shall be reduced by the amount of the
special reference quantity returned to the national reserve.

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Article 7

1. Compensation shall only be offered for the period
for which the right to compensation is not time-barred.

For the purpose of determining the period for which

2.
compensation shall be offered:

(a)

the date of interruption of the five-year time bar laid
down by Article 43 of the State of the Court of Justice
shall be the earliest of the following events:

— in the case of an action brought before the Court
of Justice or the Court of First Instance, the date
on which the application is entered in its register,

— in the case of an application addressed to a
Community institution, the date of reception of
such application by the Council or the Commis-
sion (whichever was the earlier) provided either
that the applicant subsequently brought an action
before the Court of First Instance within the two-
month delay stipulated in Article 43 of the Statute
of the Court of Justice, or that the Community
institution accepted in writing that such applica-
tion interrupted the time bar;

(b) the starting date of the compensation period shall be
five years before the date of interruption of the time
bar, but not before 2 April 1984 nor before the date
on which the non-marketing or conversion under-
taking expired;

(c) the closing date of the compensation period shall be 1
August 1993 or the date when the producer received a
special reference quantity if earlier.

Article 8

If during the compensation period, and prior to the al-
location of the special reference quantity, production was
increased by the producer in excess of
the reference
quantity available to him, the quantity in respect of which
compensation is due shall be reduced for the period
concerned by the quantities delivered or sold directly
which exceed that reference quantity. The quantities
delivered or sold directly, and the reference quantity avail-
able, for a part of a twelve month period, shall be deter-
mined as a proportion of the total deliveries or direct
sales, and the reference quantity available, for the whole
the twelve month period. The reference quantities
of
referred to in the second subparagraph of Article 2 of
Regulation (EEC) No 2055/93 are not taken into account
for the purposes of determining the reference quantity
available.

Article 9

Each application for compensation must be addressed to
the competent authority designated for that purpose in
each Member State concerned using a form drawn up in

accordance with the procedure laid down in Article 30 of
Regulation (EEC) No 804/68 (1). It must be received by
the competent authority by 31 January 1999 at the latest
in order to be admissible.

Article 10

The competent authority referred to in Article 9 shall
check the accuracy of the information provided by the
producer and shall calculate the amount of the compensa-
tion on the basis of the quantity and the period in respect
of which compensation is due, using the amounts speci-
fied in the Annex.

Article 11

Interest shall be added to the amount of the compensa-
tion at the rate of 6 % per year from 9 December 1997 to
the date of payment of the compensation. However, in
the event
that payment of compensation is delayed
because of a failure by the producer to provide informa-
relating to the application for
tion or documents
compensation requested by the competent authority, or
the proof of the withdrawal of the proceedings referred to
in Article 13(3) second subparagraph, interest shall not be
paid for the period of the delay.

Article 12

The total amount of compensation shall be converted into
national currency using the agricultural conversion rate
applicable on the date on which this Regulation enters
into force.

Article 13

1. Within four months of receipt of an application for
compensation,
the competent authority referred to in
Article 9 shall transmit an offer of compensation calcu-
lated in accordance with this Regulation to the applicant,
accompanied by a receipt in full and final settlement.
This period may be extended by the Commission in
accordance with the procedure referred to in Article 16 at
the duly justified request of a Member State. The offer
shall be made in the name and on behalf of the Council
and the Commission.

2. Where the applicant is the transferee of part of a
SLOM holding and the special reference quantity al-
located pursuant to Articles 1(1) or 1(2) of Regulation
(EEC) No 2055/93 is subject to re-assessment by the
national authorities, the time limit in paragraph 1 shall be
four months from the date of the final decision of the
national authorities on the re-assessment of the special
reference quantity, where that decision is later than the
receipt of the application for compensation.

(1) Council Regulation (EEC) No 804/68 of 27 June 1968 on the
common organisation of
in milk and milk
products (OJ L 148, 28. 6. 1968, p. 13). Regulation as last
amended by Regulation (EC) No 1587/96 (OJ L 206, 16. 8.
1996, p. 21).

the market

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The offer shall be accepted by the return to the
3.
competent authority of the duly signed receipt. It must be
received by the competent authority not later than three
months following the date of transmission of the offer in
order to be binding.

The compensation shall be paid on acceptance of the
offer. However, in the case of producers who have insti-
tuted proceedings against the Community institutions,
proof of the withdrawal of the proceedings must also be
presented to the competent authority before payment of
the compensation.

Failure to accept the offer within the time limit laid down
shall mean that
it shall cease to be binding on the
Council and Commission.

Acceptance of the offer shall imply the relinquishment of
any claim of whatever nature against the Community in
respect of any loss within the meaning of Article 1,
including interest and costs.

Article 14

The limitation period pursuant to Article 43 of the Statute
of the Court of Justice shall start to run again from 1
February 1999 for all producers referred to in Article 1
who have not presented an application for compensation
in accordance with Article 9 unless it was interrupted by
the institution of proceedings which are still pending.

For producers who have received an offer of compensa-
tion by virtue of Article 13(1) or (2), the limitation period
shall start to run again on the day following the expiry of
the period for acceptance of the offer set out in Article
13(3) unless it was interrupted by the institution of
proceedings which are still pending.

Article 15

The Commission may decide in accordance with the
procedure referred to in Article 16 to authorise the trans-
mission of offers of compensation to producers whose
circumstances are such as to satisfy the requirements for
establishing the liability of the Community, but who have
not obtained compensation pursuant to Regulation (EEC)
No 2187/93 or under the preceding provisions of this
Regulation. The amount of compensation offered shall be
calculated in accordance with the provisions of Regula-
tion (EEC) No 2187/93 or of this Regulation or in accord-
ance with the criteria which may be laid down in the
judgment on damages by the Court of Justice in joined
cases C-104/89 and C-37/90, as appropriate. The rate of
interest to be added and the period for which it is to be
calculated may be adapted to take account of specific
circumstances. The necessary time limits relating to the
offers of compensation and their acceptance shall also be
fixed.

Article 16

Detailed rules for the application of this Regulation, and
in particular the provisions regarding payment of the
costs of producers’ agents, shall be adopted by the
Commission in accordance with the procedure laid down
in Article 30 of Council Regulation (EEC) No 804/68.

Article 17

The financing of the payments made pursuant to this
Regulation shall be deemed to be intervention within the
meaning of Article 3 of Regulation (EEC) No 729/70 (1).

Article 18

This Regulation shall enter into force on the third day
following its publication in the Official Journal of the
European Communities.

This Regulation shall be binding in its entirety and directly applicable in all Member
States.

Done at Luxembourg, 22 October 1998.

For the Council

The President

W. MOLTERER

(1) Council Regulation (EEC) No 729/70 of 21 April 1970 on the
financing of the common agricultural policy (OJ L 94, 28. 4.
1970, p. 13). Regulation as last amended by Regulation (EC)
No 1287/95 (OJ L 125, 8. 6. 1995, p. 1).

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ANNEX

COMPENSATION TO BE OFFERED PURSUANT TO ARTICLE 10

(ecus per 100 kg of milk)

Year

1984/1985

1985/1986

1986/1987

1987/1988

1988/1989

1989/1990

1990/1991

1991/1992

1992/1993

1993/1994

Amount

9,2

10,5

9,7

10,0

12,3

12,9

11,7

11,8

12,4

12,4