CELEX: 61992CC0120
Language: en
Date: 1993-05-19
Title: Opinion of Mr Advocate General Van Gerven delivered on 19 May 1993. # Friedrich Schultz v Hauptzollamt Heilbronn. # Reference for a preliminary ruling: Finanzgericht Baden-Württemberg - Germany. # Additional levy on milk - Fat content of milk. # Case C-120/92.

OPINION OF ADVOCATE GENERAL
      VAN GERVEN
      delivered on 19 May 1993 (
            *1
         )
      
         Mr President,
      
      
         Members of the Court,
      
      
               1. 
            
            
               This case is concerned with a reference for a preliminary ruling from the German Finanzgericht (Finance Court) Baden-Württemberg on the interpretation and validity of the first subparagraph and the second indent of the second subparagraph of Article 12(1) of Commission Regulation (EEC) No 1546/88 of 3 June 1988. (
                     1
                  ) That regulation is intended to lay down detailed rules for the application of the additional levy referred to in Article 5c of Council Regulation (EEC) No 804/68 and was amended by Commission Regulation (EEC) No 1033/89 of 20 April 1989. (
                     2
                  ) The national court's question arose in proceedings between Friedrich Schultz and Hauptzollamt (Principal Customs Office) Heilbronn.
            
         
               2. 
            
            
               In order to curb the increase in milk production, Article 5c of Regulation (EEC) No 804/68 of the Council of 27 June 1968 on the common organization of the market in milk and milk products (
                     3
                  ) introduced an additional levy payable by producers or purchasers of cows' milk. The levy is payable for quantities of milk or other milk products delivered which ‘for the 12 months concerned exceed a reference quantity to be determined’. (
                     4
                  ) In Regulation (EEC) No 857/84 of 31 March 1984, the Council indicates what reference quantities are to be taken into account, (
                     5
                  ) but leaves it to the Commission to determine ‘the characteristics of the milk and, in particular, the fat content thereof, considered to be representative in order to establish the quantities of milk delivered or purchased’. (
                     6
                  )
            
         
               3. 
            
            
               Accordingly, the Commission adopted Article 12 of Regulation No 1546/88, subsequently amended by Article 1 of Regulation No 1033/89, the provision at issue in the proceedings before the Finanzgericht. Article 12(1) provides, inter alia, as follows:
               ‘For the purposes of Article 11(c) of Regulation (EEC) No 857/84, the characteristics of the milk considered to be representative shall be those recorded for the milk delivered during the second period of application of the additional levy arrangements.
               
               However,
               
                        —
                     
                     
                        ...
                     
                  
                        —
                     
                     
                        in the case of producers whose deliveries of milk were interrupted, or the fat conlent of whose delivered milk tell during the period referred to in the preceding subparagraph, the Member State may decide, at the request of the party con cerned, that the fat content considered to be representative is to be the average content recorded during the first period of application of the additional levy arrangements. The Member States shall notify the Commission of the measures which they adopt for the application of the abovementioned provisions,
                     
                  
                        —
                     
                     
                        ...’ (my emphasis).
                     
                  The Finanzgericht and the parties agree that the ‘first period of application of the additional levy arrangements’ ran from 1 April 1984 until 31 March 1985 and the ‘second period’ from 1 April 1985 to 31 March 1986. (
                     7
                  )
            
         
               4. 
            
            
               It appears from the grounds of the Finanzgcricht's order for reference that over the period 1981 to 1984 the herd of Mr Schultz, a milk producer, was struck by disease on several occasions, with the result that a large number of cows had to be replaced by younger animals. The upshot of the fact that this meant that an abnormally large number of young cows were used for milk production was a considerable decline in the average fat content of the milk. According to the Finanzgericht, the fat content did not attain normal levels again until after the 1985-1986 period.
               Pursuant to Article 5c of Regulation No 804/68, in the 1989-1990 accounting period Mr Schultz was charged an additional levy of DM 5529. According to the Finanzgericht, that additional levy — precisely as in the case of the similar additional levies which had been imposed on him in respect of previous accounting periods — was a direct consequence of the abnormally low fat content in the 1985-1986 period and, consequently, of the abnormally high mortality rate in Mr Schultz's herd in the 1981-1984 period.
               After making an unsuccessful complaint, Mr Schultz brought an action in the Finanzgericht. He argues that account should be taken, not of the low average fat content for the 1985-1986 period, but of the average fat content for the 1989-1990 period, which would mean that he would not be due to pay any additional levy.
            
         
               5. 
            
            
               The Finanzgericht has referred two questions to the Court for a preliminary ruling. First, it asks whether the provisions of the first subparagraph and the second indent of the second subparagraph of Article 12(1) of Regulation No 1546/88, as amended by Regulation No 1033/89 are:
               ‘invalid or to be interpreted as meaning that a Member State may, by way of exception, provide that the representative fat content is to be that in the period of application in which the average fat content of the delivered milk
               
                        (a)
                     
                     
                        was last unreduced or, if this is not possible,
                     
                  
                        (b)
                     
                     
                        for the first time after the second period of application of the additional levy was no longer reduced’.
                     
                  The national court's second question reads as follows:
               ‘If Question 1 is answered in the negative, are the provisions in Article 12(1) and (2) of the abovementioned regulation invalid in so far as they do not alter the period of application (1985/86) which is applicable in principle?’
            
         
               6. 
            
            
               In view of the fact that the two questions overlap to a certain extent, I would divide up the rest of this Opinion as follows. First (section 7), I shall consider whether the provisions in question are capable of being interpreted in the way described in the Finanzgericht's first question. After that (section 8 et seq.), I shall consider the validity of Article 12(1) and (2) in response to both the first and the second questions.
            
         
               7. 
            
            
               In its first question, the Finanzgericht asks whether the provisions in question may not be interpreted in manner more favourable to Mr Schultz. I can answer this briefly. To my mind, the wording of Article 12(1) is clear and not amenable to interpretation.
               In fact, as the Finanzgericht observes in the grounds of its order, Article 12(1) contains only one ‘hardship clause’ (that is to say, a clause designed to prevent the application in full of the additional levy having inequitable effects). That clause, contained in the second indent of the second subparagraph of Article 12(1) (see section 3 above), cannot afford Mr Schultz any relief and therefore, in the Finanzgericht's view, fails in its aim:
               ‘That hardship rule does not benefit a producer whose milk exhibits not only in the normal 1985/86 period but also in the 1984/85 period allowed as an exception a fat content which is at least equally reduced. The plaintiff finds himself in that situation The Senate inclines to the view that in principle a hardship rule is required in the context of Article 12 of the implementing regulation, but that the rule provided for in the second indent of the second subparagraph of Article 12(1) (reference to the higher average fat content for 1984/85) is insufficient for the reasons mentioned above.’
               The Finanzgericht's doubt as to the reasonableness of the ‘hardship clause’ set out in Article 12(1) does indeed raise the question at issue as to the validity of the provision, but cannot be grounds for interpreting itcontra legem. The fact that neither of the parties to the proceedings nor the national court has expressed any doubt about the content or the scope of Article 12(1) strengthens me in my conviction that, in view of its clarity, the provision is not amenable to interpretation and that therefore there is no possibility of its being interpreted in the manner suggested in the national court's first question.
            
         
               8. 
            
            
               This brings me to the second question, which is concerned with the validity of the provisions at issue. The Finanzgericht considers that the present Article 12 is excessively hard on producers of milk whose average fat content declined because of unforeseen circumstances in both the 1984-1985 and the 1985-1986 periods. ‘Compared with other milk producers, who did not have to suffer any reduction of the fat content of their milk in the normal 1985-1986 period, [such producers are] worse off each year for no clear objective reason.’
               The Finanzgericht also states that that arbitrary adverse treatment of a particular group of producers previously did not obtain to the same extent. Article 9(1) of Commission Regulation (EEC) No 1371/84 of 16 May 1984 (
                     8
                  ) provided as follows:
               ‘For the purposes of Article 11(c) of Regulation (EEC) No 857/84, the characteristics of the milk considered to be representative shall be those recorded for the milk delivered or purchased during the preceding 12-month period.’
               Under such a system of changing reference periods, the adverse effects of an unforeseen diminution in the average fat content of milk gradually and automatically decline. With effect from 1 October 1986, however, that system was replaced by the present one, which uses the reference periods 1985-1986 and, alternatively, 1984-1985 as fixed reference periods. (
                     9
                  ) The reason given by the Commission for the change at the time was that ‘the objective of control of milk production pursued by the additional levy scheme would be better served by ... the fixing of a reference period’. (
                     10
                  ) The Finanzgericht doubts whether that objective does in fact justify the measure in question.
            
         
               9. 
            
            
               In fact, there is no doubt that the system of fixed reference periods in force hits milk producers like Mr Schultz, whose production, owing to unforeseen circumstances, recorded a particularly low average fat content in both the 1984-1985 and the 1985-1986 period, particularly hard.
               The question, however, is whether this is sufficient to decide that the system is invalid. Indications as to how this question should be answered can be found in three earlier judgments of the Court in milk cases. Precisely as in this case, those judgments were concerned with the validity of the reference to fixed reference periods in order to determine the additional levy provided for in Article 5c of Regulation No 804/68. The only difference as compared with this case is that the judgments in question are not concerned with the determination of the average fat content of the milk produced but with the fixing, pursuant to Regulation No 857/84, of reference quantities exempt from additional levy.
            
         
               10. 
            
            
               It seems appropriate briefly to set out the rules at issue in those judgments. According to Article 2(1) of Regulation No 857/84, the reference quantity referred to in Article 5c of Regulation No 804/68 is in principle equal to the quantity of milk (or milk equivalent) which was delivered during the 1981 calendar year, plus 1%. Under Article 2(2), the Member States may, however, decide to adopt calendar years 1982 or 1983 as fixed reference periods. Articles 3, 4 and 4a of Regulation No 857/84 provide for derogations from those rules in certain specific situations. The first subparagraph of Article 3(3) provides as follows:
               
                        ‘3.
                     
                     
                        Producers whose milk production during the reference year referred to under Article 2 has been affected by exceptional events occurring before or during that year shall obtain, on request, reference to another calendar reference year within the 1981 to 1983 period.’
                     
                  The second subparagraph of Article 3(3) sets out a number of situations which may justify the application of the first subparagraph. (
                     11
                  )‘[A] n epizootic affecting all or part of the milk herd’ is one of those situations.
            
         
               11. 
            
            
               The judgment in Erpelding (
                     12
                  ) is concerned with a milk producer whose herd was repeatedly struck by disease between 1980 and 1985. In response to a question from the Luxembourg Conseil d'État (State Council) in which it asked whether account could not be taken ‘on equitable grounds and to avoid discrimination between producers’ of production in a year prior to 1981 or of a notional production, the Court held that no such account could be taken. In view of the particular relevance of the Court's reasoning to the instant case, I would quote a relative large number of paragraphs from this judgment.
               In the judgment, the Court placed Regulation No 857/84 in the context of the structural milk surpluses and held as follows:
               ‘It should be noted that the structure and the purpose of the rules concerned indicate that they contain an exhaustive list of the situations in which reference quantities or individual quantities may be granted and set out predse rules concerning the determination of those quantities. Since none of those provisions makes it possible for producers to obtain reference to milk deliveries made by them outside the 1981 to 1983 period it must be held that such an option is excluded, even in cases where the persons concerned had no representative production throughout the period’ (paragraph 18, my emphasis).
               ‘That interpretation cannot be considered to be incompatible with the requirements flowing from the concept of force majeure Although the Court has consistently held that force majeure may excuse an operator from certain legal consequences which, under the applicable rules, would normally flow from the nonoccurrence of a fact or the noncompliance with an obligation it can never create for the benefit of that operator a right not provided for in the relevant rules’ (paragraph 20).
               In addition, the Court also rejected Erpelding's argument that the provision in question was invalid because it conflicted with the aims of the common agricultural policy, the principal of equal treatment and the principal of proportionality. In this connection, the Court held, inter alia:
               
               ‘As for the complaint that the principle of proportionality has been breached, the Court has consistently held that when a situation necessitates the evaluation of a complex economic situation, as is the case concerning the common agricultural policy, the Community legislature enjoys a wide discretion as to the nature and scope of the measures to be taken. The particular circumstances mentioned in the judgment making the reference do not make it possible to hold that the bounds of that discretion have been exceeded in this case’ (paragraph 27).
               ‘By allowing producers whose milk production has significantly declined because of an exceptional event during the reference year selected by the Member State concerned to choose another reference year, but limiting that choice to years in the 1981 to 1983 period, the Community legislature has duly taken into consideration the special position of those operators, but at the same time has complied with the imperative requirements of legal certainty and the effectiveness of the additional levy system. Furthermore, it has allowed Member States, under certain conditions, to reallocate nonutilized reference quantities to producers who arc in a special position. (
                     13
                  ) It cannot, therefore, be accused of having imposed on operators burdens disproportionate to the objectives pursued by failing to take into account every conceivable circumstance ...’ (paragraph 28, my emphasis).
               ‘In this case it appears that the difference in treatment of which Mr Erpclding is complaining stems from the fact that by not allowing producers whose milk production has been significantly reduced throughout the 1981 to 1983 period to obtain an individual quantity based on a representative production, the rules affect that category of producers adversely in comparison with those who are able to rely on a representative production. However, such an effect is justified by the need to limit the number of years which may be taken as reference years, in the
                  interests of both legal certainty and the effectiveness of the additional levy system. The resulting difference in treatment is therefore objectively justified and consequently may not be regarded as discriminatory within the definition of that concept as established by the Court’ (paragraph 30, my emphasis).
            
         
               12. 
            
            
               Subsequently, the Court confirmed this decision in Leukhardt (
                     14
                  ) concerning a factually virtually identical case. The Court reiterated what it held in Erpelding and added, again on the ground that the Community legislature enjoyed a wide discretion in regard to the common agricultural policy, that the provisions at issue did not constitute a breach of the right to enjoy property, the right to pursue an occupation, the principle of legal certainty or the protection of legitimate expectations. (
                     15
                  )
            
         
               13. 
            
            
               It seems obvious to me that this case-law should be applied mutatis mutandis here. Also in this case, the provision at issue contains an exhaustive list, here of the characteristics of milk which are to be regarded as representative, together with the detailed rules for determining those characteristics. Since the provision does not provide for the possibility of taking account of fat content recorded outside the 1984-1986 periods it must be assumed without exception that there is no such possibility for producers who had no representative production during the whole period. The harsh consequences that this may cause are justified — here too in the interest of legal certainty and the effectiveness of the additional levy scheme — by the need to limit the number of years which can be taken as the reference year.
            
         
               14. 
            
            
               As against the above application by analogy of the case-law on exempted reference quantities in this instance, it could be argued that the provisions at issue in Erpelding and Leukhardt had more to do with the interests of milk producers who had been let down than the provisions at issue here. However, I am not convinced by that argument.
               It is true that Article 3(3) of Regulation No 857/84 allows Member States to choose between three fixed reference periods (the 1981, 1982 or 1983 calendar year), whilst Article 12(1) of Regulation No 1546/88 only provides for two such periods (the 1984-1985 and 1985-1986 periods of application). It should not be overlooked, however, that the range of hardship clauses in Regulation No 857/84 is broader. It includes, among other possibilities, Article 4a, (
                     16
                  ) which allows Member States for a limited period to allocate unused producers' and purchasers' reference quantities to other market participants.
               However, the hardship clause set out in the second indent of the second subparagraph of Article 12(1) of Regulation No 1546/88 is not in all respects stricter than the clause contained in Article 3(3) of Regulation No 857/84. The Commission rightly points out, for instance, in its written observations to the Court that Article 3(3) exhaustively sets out the special situations which the Member States may take into account, whereas the clause contained in Article 12(1) does not.
            
         
               15. 
            
            
               Essentially what is at issue here again is the question as to the nature and extent of judicial review of a weighing of interests conducted by the legislature in the exercise of a wide discretion. Instead of weighing those interests in the balance itself, the court has to consider whether the legislature did not balance the interests at stake against each other in a manifestly unreasonable way. Although I myself would perhaps have given somewhat more weight to the interests of the milk producers concerned, for instance by opting for a system of changing reference periods of the kind which formerly existed (see section 8 above), I am unable to describe the balancing of interests conducted by the Community legislature as manifestly unreasonable, inter alia in the light of the Court's case-law. Neither can I see any reason for holding that the provisions at issue are invalid for infringing the principles of proportionality or equal treatment.
            
         
               16. 
            
            
               In sum, I propose that the Court's reply to the Finanzgericht's questions should be as follows:
               
                        (1)
                     
                     
                        The first subparagraph and the second indent of the second subparagraph of Article 12(1) of Commission Regulation (EEC) No 1546/88, as amended by Article 1 of Commission Regulation (EEC) No 1033/89, cannot be interpreted as meaning that, in determining the fat content to be regarded as representative, a period of application other than the first or second period of application of the additional levy scheme may be employed.
                     
                  
                        (2)
                     
                     
                        Consideration of paragraphs 1 and 2 of the aforesaid Article 12 in the light of the facts set out in the order for reference has not disclosed any facts or circumstances such as to call the validity of Article 12(1) and (2) of Regulation No 1546/88 in question.
                     
                  
         (
            *1
         )	Original language: Dutch.
      (
            1
         )	OJ 1988 L 139, p. 12.
      (
            2
         )	Commission Regulation No 1033/89 of 20 April 1989 amending Regulation (EEC) No 1546/88 laying down detailed rules for the application of the additional levy referred to in Article 5c of Council Regulation (EEC) No 804/68 (OJ 1989 L 110, p. 27).
      (
            3
         )	OJ, English Special Edition 1968(1), p. 176. Article 5c was added by Article 1 of Council Regulation (EEC) No 856/84 of 31 March 1984 amending Regulation (EEC) No 804/68 on the common organization of the market in milk and milk products (OJ 1984 L 90, p. 10).
      (
            4
         )	Article 5c of Regulation No 840/68.
      (
            5
         )	Sec Article 2 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 (OJ 1984 L 90, p. 13).
      (
            6
         )	Article 11(c) of Regulation No 857/84.
      (
            7
         )	Sec Article 5c(l) of Regulation No 804/68, as amended by Regulation No 856/84, which refers to ‘five consecutive peri ods of 12 months beginning on 1 April 1984’.
      (
            8
         )	Commission Regulation (EEC) No 1371/84 of 16 May 1984 laying down detailed rules for the application of lhe additional levy referred to in Article 5c of Regulation (EEC) No 804/68 (OJ 1984 L 132. p. 11). This regulation was repealed by Article 2C of Regulation No 1546/88
      (
            9
         )	Tins was done by Article 1 of Commission Regulation (EEC) No 2969/86 of 26 September 1986 amending for the 13th time Regulation (EEC) No 1371/84 laying down detailed rules for the application of the additional levv referred to in Article 5c of Regulation (EEC) No 804/86 (OJ 1986 L 276, p 28).
      (
            10
         )	Sec the second recital in the preamble to Regulation No 2969/86
      (
            11
         )	The original list was subsequently supplemented by Article 3 of Regulation No 1371/84.
      (
            12
         )	Case 84/87 Erpelding v Secrétaire d'Etat à l'Agriculture et à La Viticulture [1988] ECR 2647.
      (
            13
         )	Merc, the Court is referring lo Amele 4a oi Regulation No 857/84, as amended bv Article 1 of amending Council Regulation (IF.C) No 590/85 of 26 I-cbruarv 1985 (OJ 1985 L 68. p 1)
      (
            14
         )	Case 113/88 Leukhardt v Hauptzollamt Reutlingen [1989] ECR 1991, paragraph 8.
      (
            15
         )	Recently confirmed in Case C-177/90 Kühn [1992] ECR I-35.
      (
            16
         )	See section 11 above, in particular footnote 13.