CELEX: 61985CC0009
Language: en
Date: 1986-05-27 00:00:00
Title: Opinion of Mr Advocate General Mancini delivered on 27 May 1986. # Nordbutter GmbH & Co. KG v Federal Republic of Germany. # Reference for a preliminary ruling: Verwaltungsgericht Frankfurt am Main - Germany. # Skimmed milk for use as animal feed - Repayment of the full amount of special aid. # Case 9/85.

OPINION OF MR ADVOCATE GENERAL MANCINI
      delivered on 27 May 1986 (
            *1
         )
      
         Mr President,
      
      
         Members of the Court,
      
      
               1. 
            
            
               The Verwaltungsgericht [Administrative Court] Frankfurt am Main has asked the Court for a ruling on the validity and the interpretation of various provisions of Commission Regulation (EEC) No 2793/77 of 15 December 1977 (Official Journal 1977, L 321, p. 30). The Court considered that regulation recently in its judgment of 28 June 1984 in Joined Cases 187 and 190/83 Nordbutter v Federal Republic of Germany [1984] ECR 2553. It is therefore sufficient merely to recall that in order to increase the consumption of milk in the Community the Council made provision for two types of aid. The first was instituted in 1968 for skimmed milk used for feed for animals for slaughter. The second, which is worth more and which is known as ‘special aid’, was introduced in 1977 and is intended for fresh skimmed milk used solely for the feeding of animals other than young calves. However, those schemes provided opportunities for fraud, in particular where the livestock of the farms concerned consisted of calves and other animals. Such farms, which are known as ‘mixed farms’ were able to obtain skimmed milk on the more advantageous terms of the special aid, while using it for feeding calves.
               It was therefore necessary to prevent farms from having direct access to the aid and to impose effective controls on the use which the farms made of the milk obtained under the scheme. Indeed those are the objectives of Regulation No 2793/77, which stipulates that the aid is to be paid solely to dairies (Article 3) and solely for the quantities of skimmed milk covered by an undertaking on the part of the farms, and in particular the mixed farms, to: (a) ‘declare to the dairy, before the beginning of each quarter, the maximum number of calves less than four months old which will be kept on the farm during the quarter in question’ (the second indent of Article 4 (1) (c)); and (b) ‘to take delivery, for each calf declared pursuant to the above indent, of a minimum quantity of skimmed milk not qualifying for special aid equal to 6 kilograms per day or 180 kilograms per month’ (the ‘6 kg rule’, the third indent of Articles 4 (1) (c)). The undertaking must be signed by each farmer and the information which it contains is to be included in the application which the dairy submits to obtain the aid.
               Article 4 (3), added by Commission Regulation (EEC) No 188/83 of 26 January 1983 (Official Journal 1983, L 25, p. 14), provides in addition that, ‘where a statement made to a dairy of the size of a herd or the maximum number of cows is not forwarded on time but not more than 10 days late, the amount of aid shall be reduced by 10% for the period concerned’. Finally, Article 5 (3) provides that ‘any application for the payment of special aid submitted by the dairy to the competent authority shall include (in addition to references to the above-mentioned undertakings) ... a declaration that the dairy:
               
                        (a)
                     
                     
                        has complied, in respect of the skimmed milk concerned, with the conditions referred to in Article 3 ...
                     
                  
                        (b)
                     
                     
                        will... forego or repay the special aid wholly or in part to the competent authority if it is found that the farmer has not abided by one of the undertakings referred to in Article 4’.
                     
                  It is clear from the foregoing that under the system of special aid set up by Regulation No 2793/77 the information furnished by the farms is subject to two controls. The first is preventive and is entrusted to the dairy which, in submitting the application for aid, must guarantee that the conditions contained in the undertaking entered into by the farmer are complied with. In that connection the Court noted in the above-mentioned judgment of 28 June 1984 that ‘no provision of Community law prevents dairies from including in the ... contract (of supply in that case) entered into with each farm clauses according to which the farmer agrees to permit a representative of the dairy to enter the farm premises and undertakes to submit all documents and information needed as evidence that the milk has been used in accordance with the Community regulations and the undertakings entered into’ (paragraph 17 of the decision). The second control, on the other hand, is not automatic. It takes place after the payment of the aid and is carried out by the national authorities.
            
         
               2. 
            
            
               The facts of this case are as follows: According to the order requesting a preliminary ruling the Bundesamt für Ernährung und Forstwirtschaft [Federal Board for Food and Forestry, hereinafter referred to as ‘the Board’] established in the course of inspections intended to determine whether the above schemes were being properly operated that in the period 1980-1981 various mixed farms had failed to abide by their undertakings and had not complied with the time-limits established in Article 4. The Board therefore ordered the dairy, Nordbutter GmbH (Rendsburg), which had received special aid on behalf of those farms, to reimburse the sums concerned. The dairy brought an action before the Verwaltungsgericht [Administrative Court] against that decision claiming that in calculating the maximum number of calves present on the farms supplied by the dairy, the supervisory body had applied a different criterion to that laid down in Article 4. It also argued that the obligation to reimburse the full amount of the aid where it was found that the declarations of the farmers had not been submitted in time or contained errors exceeded the aims of the regulation and was therefore contrary to the principle of proportionality. Although the Verwaltungsgericht was to a large extent prepared to accept those arguments, it considered it necessary to stay the proceedings and refer the following questions to the Court of Justice for a preliminary ruling:
               
                        (a)
                     
                     
                        How is the expression ‘maximum number’ contained in the second indent of Article 4 (1) (c) of Regulation No 2793/77 to be interpreted?
                     
                  
                        (b)
                     
                     
                        Is the rule embodied in Article 4 (3), as added by subsequent legislation, incompatible with the principle of proportionality in so far as it provides that the aid is to be withheld merely because the size of the herd or the maximum number of young calves is notified to the dairy more than 10 days late?
                     
                  
                        (c)
                     
                     
                        Is it compatible with the principle of proportionality to withhold or to reclaim the full amount of the aid where the information supplied by the farmer was incorrect... (for example where he has indicated a lower number of calves than are actually kept on the farm) or is the special aid forfeited only in respect of the difference between the amount which should have been paid on the basis of the real size of the herd and the amount actually paid?
                     
                  
                        (d)
                     
                     
                        Is it within the discretion of the authorities to withhold or to reclaim the special aid wholly or in part pursuant to Article 5 (3) (b) of Regulation No 2793/77?
                     
                  
                        (e)
                     
                     
                        If Question (d) is answered in the negative, in what circumstances and to what extent may the special aid be withheld or reclaimed in part only?
                     
                  
         
               3. 
            
            
               Commenting on the first question, the Verwaltungsgericht considers the possibility that for the purposes of the ‘6 kg rule’ the expression ‘maximum number’ in Article 4 may refer rather to the average number of calves kept on a farm during the quarter concerned. It is that court's view that, construed in that sense, the provision ceases to penalize farmers who for a certain period keep a higher number of calves than normal and ensures genuine equality of treatment for all the farms.
               However, I would note that, besides being contrary to the letter of the provision, that intepretation is not consistent with the aim of increasing the consumption of milk intended for animal feed and undermines the effectiveness of the control carried out by the dairy. In the light of those aims, the expression ‘maximum number’ can only mean the highest number of calves kept by the farmer at any one time throughout the quarter. Indeed that information enables the dairy to ascertain in advance the total amount of livestock kept on a mixed farm in order to calculate the quantity of milk to be supplied under the special scheme and also serves as a basis for determining the supplies of milk which do not qualify under that scheme and of which the farmer must take delivery in accordance with the third indent of Article 4 (1) (c).
               On the other hand, declarations based on the average number of calves would make it possible for the farms to acquire a smaller quantity of milk under the less advantageous, ordinary aid scheme and then to offset the maximum number of calves against the minimum number registered during the quarter, thus frustrating any control by the dairy, with which — it must be recalled — primary responsibility for ensuring the proper implementation of the aid scheme lies.
               Those considerations also apply to the second and third questions. In the opinion of the Verwaltungsgericht there are two reasons for considering that Article 4 (3) may be contrary to the principle of proportionality. In the first place, it takes the view that the farmer's obligation to communicate within a certain period information concerning the type and number of animals kept is of a secondary nature. It therefore appears excessive to penalize failure to comply therewith by imposing a heavy penalty such as the forfeiture of the entire aid. It also considers that the penalty for providing false information is too severe. According to the national court, in such circumstances ‘it would be more appropriate to recover the ... aid only in so far as it was granted on the basis of incorrect statements’.
               What can be said of such observations? As the Court is aware, a Community rule is consistent with the principle of proportionality if the means which it employs correspond to the importance of its aim and are necessary for the achievement of that aim (judgment of 23 February 1983 in Case 66/82 Fromançais [1983] ECR 395). As I stated at the beginning of this Opinion, the special aid was established to increase the consumption of skimmed milk by promoting its use as feed for animals other than calves and the regulation in question here was adopted in order to prevent the fraudulent abuses which could occur in such a scheme. In that context and having regard to the fact that responsibility for the proper implementation of the scheme lies with the dairies, the obligation imposed on mixed farms under Article 4 (3) is in no way secondary in nature. On the contrary it fulfils an essential function. It enables the dairy to supply milk in quantities corresponding to the genuine requirements of each farmer.
               Although conscious of how important it was for the proper functioning of the scheme that the information which is the subject of that obligation should be communicated in good time, the legislature recognized that slight delays are always possible and imposed a lesser penalty for delays not exceeding 10 days, namely a 10% reduction in the aid. However, it can certainly not be claimed that the forfeiture of the entire aid where the information is communicated even later or not at all is an excessive penalty in relation to the aims of the regulation. Moreover such a measure is not punitive in the real sense of the word and cannot therefore be equated to measures such as the confiscation of a security. It is merely the refusal to grant aid for the purchase of milk for a period of one quarter.
               Similar reasoning applies where the information supplied is incorrect; indeed the argument is even more convincing. To provide, out of regard for the principle of proportionality, that the aid should be reduced by an amount corresponding to the extent to which the information supplied by the farm is found to be incorrect would deprive the rules of any deterrent effect and would incite farmers to attempt to commit fraud. If caught their aid would be reduced only to the amount to which they would have been entitled if they had given the correct information.
               There is, moreover, little to be gained by arguing that in the course of the quarter events may occur which are unforeseeable and thus liable to modify the information previously supplied, as for example the premature birth of a calf. In that respect it is enough to note that according to Article 6 of the regulation ‘the farmers concerned (those eligible for special aid) shall forward to the competent agency in their Member State: ... an undertaking immediately to notify any change in ... (the) information which might involve a change in the rate of aid’. Although that provision concerns principally farms which themselves produce the milk intended for animal feed, the rule is of general application, as is clear from subparagraph (b). It therefore applies to all the farmers.
               In conclusion I shall deal briefly with Questions (d) and (e). In my view Article 5 does not leave the national authorities any discretion in deciding when and why the repayment of the aid should be in full or in part. As the Commission pointed out, the wording used in the provision merely indicates that the obligation to repay exists only in relation to the undertakings made by farmers whose failure to comply with conditions laid down in Article 3 has been ascertained by the supervisory body. As regards the other undertakings entered into by farmers the application for aid remains valid.
            
         
               4. 
            
            
               On the basis of the foregoing I propose that the Court should reply as follows to the questions referred to it by the Verwaltungsgericht Frankfurt am Main by order of 13 December 1984 in proceedings between Nordbutter GmbH and the Federal Republic of Germany:
               
                        (a)
                     
                     
                        The expression ‘maximum number’ in the second indent of Article 4 (1) (c) of Commission Regulation No 2793/77 must be interpreted as meaning the highest number of calves kept on a mixed farm at any one time throughout the period to which the rule refers,
                     
                  
                        (b)
                     
                     
                        The forfeiture of the full amount of the special aid in the event of incorrect statements regarding the number of calves kept on a mixed farm or in the event of the failure to comply with the time-limit provided for in Article 4 is compatible with the principle of proportionality because it corresponds sufficiently to the objectives pursued by the regulation,
                     
                  
                        (c)
                     
                     
                        The obligation to ‘repay the special aid wholly or in part’ in Article 5 means that the dairy is required to repay the special aid in respect of the undertakings given by farms which are found not to have conformed to the conditions laid down in Article 3 (1) (a) of the regulation.
                     
                  
         (
            *1
         )	Translated from the Italian.