1 BY AN ORDER OF 19 JANUARY 1979 WHICH WAS RECEIVED AT THE COURT ON 2 MARCH 1979 THE FINANZGERICHT MUNSTER REFERRED TO THE COURT , PURSUANT TO ARTICLE 177 OF THE EEC TREATY , A QUESTION ON THE INTERPRETATION OF THE SAID TREATY , ARTICLE 1 OF REGULATION NO 2464/69 OF THE COUNCIL OF 9 DECEMBER 1969 ON MEASURES TO BE TAKEN IN AGRICULTURE AS A RESULT OF THE REVALUATION OF THE GERMAN MARK ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1969 ( II ), P . 527 ) AND THE COUNCIL DECISION OF 21 JANUARY 1974 , NOTIFIED TO THE FEDERAL REPUBLIC OF GERMANY ON 24 JANUARY 1974 , WHEREBY THE COUNCIL EXTENDED AND AMENDED CERTAIN PROVISIONS OF ARTICLE 1 OF THE SAID REGULATION .
2 THE REASON FOR THE MAIN ACTION IS THE REJECTION BY THE FINANZAMT WARENDORF , THE DEFENDANT IN THE MAIN ACTION , OF AN APPLICATION FOR AID UNDER THE AUFWERTUNGSAUSGLEICHGESETZ ( LAW ON COMPENSATION FOR THE EFFECTS OF REVALUATION ), WHICH WAS ENACTED ON 23 DECEMBER 1969 PURSUANT TO THE SAID REGULATION . THIS APPLICATION WAS MADE BY THE PLAINTIFF COMPANY IN THE MAIN ACTION , WHOSE BUSINESS , APART FROM THE PRODUCTION OF ANIMAL FEED , IS THE FATTENING OF CALVES WITH MILK-BASED SUBSTITUTE FEEDING-STUFFS WHICH IT PRODUCES ITSELF .
3 THE DEFENDANT IN THE MAIN ACTION BASED ITS REFUSAL TO GRANT THE AID APPLIED FOR BY THE PLAINTIFF COMPANY ON THE FACT THAT , SINCE THE COMPANY DID NOT HAVE ANY AGRICULTURAL LAND FOR THE PURPOSE OF FATTENING ITS CALVES , IT CONSTITUTED NOT AN AGRICULTURAL UNDERTAKING WITHIN THE MEANING OF GERMAN TAX LAW , TO WHICH THE PREVIOUSLY MENTIONED LAW REFERS , BUT RATHER AN INDUSTRIAL UNDERTAKING .
4 IT IS RIGHT TO RECALL THAT THE MAIN ACTION HAS ALREADY GIVEN RISE TO A REFERENCE FOR A PRELIMINARY RULING MADE BY THE SAME FINANZGERICHT , WHICH WAS THE SUBJECT OF CASE 139/77 IN WHICH THE COURT GAVE JUDGMENT ON 13 JUNE 1978 (( 1978 ) ECR 1317 ). IN THAT JUDGMENT THE COURT , AFTER EXAMINING ( PAGES 1329 TO 1331 ) THE ORIGIN AND SUBSTANCE OF THE COMMUNITY RULES AND THE NATIONAL LAW IN QUESTION ANSWERED THE FOLLOWING QUESTIONS REFERRED TO IT FOR A PRELIMINARY RULING : ' ' 1 . UNDER COMMUNITY LAW DOES THE EXPRESSION ' AGRICULTURAL PRODUCERS ' IN ARTICLE 1 ( 1 ) AND ( 3 ) OF REGULATION ( EEC ) NO 2464/69 INCLUDE INDUSTRIAL LIVESTOCK BREEDERS AND KEEPERS WITHIN THE MEANING OF GERMAN TAX LAW? 2 . IF THE FIRST QUESTION IS ANSWERED IN THE AFFIRMATIVE : ARE ARTICLE 39 AND THE SECOND SUBPARAGRAPH OF ARTICLE 40 ( 3 ) OF THE EEC TREATY AND ARTICLE 1 OF REGULATION ( EEC ) NO 2464/69 OF THE COUNCIL OR ANY OTHER PROVISIONS OF COMMUNITY LAW TO BE INTERPRETED AS MEANING THAT THEY FORBID THE FEDERAL REPUBLIC OF GERMANY , AS A MEMBER STATE OF THE EEC TO WHICH REGULATION ( EEC ) NO 2464/69 WAS ADDRESSED , IN THE EVENT OF THE GRANT OF DIRECT AID BY WAY OF COMPENSATION FOR THE REVALUATION OF THE GERMAN MARK IN RESPECT OF AGRICULTURAL PRODUCTS SUBJECT TO AN ORGANIZATION OF THE MARKET , TO EXCLUDE SPECIFIC CLASSES OF AGRICULTURAL PRODUCERS - IN THIS CASE , INDUSTRIAL LIVESTOCK BREEDERS AND KEEPERS WITHIN THE MEANING OF GERMAN TAX LAW - FROM THE GRANT OF AID? ' '
5 REGARDING THE FIRST QUESTION THE COURT HELD THAT SINCE NEITHER THE CONTEXT NOR THE OBJECTIVES OF REGULATION NO 2464/69 DEMAND A RESTRICTIVE INTERPRETATION , IT IS NOT OUT OF THE QUESTION THAT THE RELATIVELY BROAD EXPRESSION ' ' AGRICULTURAL PRODUCERS ' ' , WHICH IS USED IN THE WORDING OF THE REGULATION , MAY INCLUDE PRODUCTION OF AGRICULTURAL PRODUCTS BY ANY METHOD WHATEVER .
6 REGARDING THE SECOND QUESTION THE COURT STATED THAT IT MUST BE CONSIDERED WHETHER THE DIFFERENTIATION , FOR THE PURPOSES OF GERMAN TAX LAW , MADE BY THE AUFWERTUNGSAUSGLEICHGESETZ BETWEEN AGRICULTURAL BREEDERS AND KEEPERS ON THE ONE HAND AND INDUSTRIAL BREEDERS AND KEEPERS ON THE OTHER , IS DISCRIMINATORY WITHIN THE MEANING OF ARTICLE 40 ( 3 ) OF THE TREATY . THE COURT GAVE THE FOLLOWING GROUNDS FOR ANSWERING THIS QUESTION IN THE NEGATIVE ( PARA- GRAPH 17 ): ' ' IT APPEARS FROM THE CASE FILE INTER ALIA THAT , BECAUSE THEY USE FODDER WHICH IS MOSTLY THEIR OWN FARM PRODUCE , AGRICULTURAL LIVESTOCK BREEDERS AND KEEPERS WITHIN THE MEANING OF GERMAN TAX LAW ARE SUBJECT IN PARTICULAR TO THE RISKS INHERENT IN WORKING THE SOIL . ON THE OTHER HAND , INDUSTRIAL LIVESTOCK BREEDERS AND KEEPERS WITHIN THE MEANING OF GERMAN TAX LAW ARE NOT EXPOSED TO THE SAME RISKS , AS THEY BUY THE FEEDING-STUFFS NEEDED FOR THEIR ANIMALS MOSTLY ON EITHER THE NATIONAL OR THE INTERNATIONAL MARKET , AND IF THEIR NATIONAL CURRENCY IS REVALUED THEY ARE ABLE TO OBTAIN THEM ABROAD AT ADVANTAGEOUS PRICES . ACCORDINGLY , THE DISTINCTION BETWEEN AGRICULTURAL LIVESTOCK BREEDERS AND KEEPERS AND INDUSTRIAL LIVESTOCK BREEDERS AND KEEPERS , WHICH GERMAN TAX LAW MAKES BY LAYING DOWN A RATIO BETWEEN THE HEAD OF LIVESTOCK AND THE UTILIZED AGRICULTURAL AREA AND WHICH THE GOVERNMENT OF THE FEDERAL REPUBLIC OF GERMANY ADOPTED AS AN OBJECTIVE , ALBEIT UNMODULATED , CRITERION AS REGARDS THE GRANTING OF THE AID WHICH IT IS EMPOWERED TO GRANT BY THE PROVISIONS OF REGULATION NO 2464/69 , CANNOT BE CLASSIFIED AS DISCRIMINATORY . ' '
7 IN GIVING A PRELIMINARY RULING ON THE QUESTIONS PUT BY THE FINANZGERICHT THE COURT HELD : ' ' NEITHER THE PROVISIONS OF THE EEC TREATY NOR ARTICLE 1 OF REGULATION NO 2464/69 OF THE COUNCIL NOR THE PROVISIONS OF THE COUNCIL DECISION OF 21 JANUARY 1974 FORBADE THE FEDERAL REPUBLIC OF GERMANY TO EXCLUDE INDUSTRIAL LIVESTOCK BREEDERS OR KEEPERS FROM THE AID REFERRED TO IN THE SAID REGULATION ' ' .
8 BY ITS ORDER FOR REFERENCE TO THE COURT IN THE PRESENT CASE THE FINANZGERICHT PUT A NEW QUESTION FOR A PRELIMINARY RULING WORDED AS FOLLOW : ' ' DO THE EEC TREATY , ARTICLE 1 OF REGULATION ( EEC ) NO 2464/69 , THE COUNCIL DECISION OF 21 JANUARY 1974 OR ANY OTHER PROVISION OF COMMUNITY LAW FORBID THE FEDERAL REPUBLIC OF GERMANY TO EXCLUDE ' INDUSTRIAL ' CALF FATTENERS WITHIN THE MEANING OF GERMAN TAX LAW FROM AID UNDER THAT REGULATION IF AGRICULTURAL CALF FATTENERS USE THE SAME INDUSTRIALLY PRODUCED FEEDING-STUFFS FOR FATTENING CALVES AS INDUSTRIAL CALF FATTENERS? ' '
9 IT MUST BE OBSERVED ON THE ONE HAND THAT THIS QUESTION , UNLIKE THE QUESTIONS PUT IN CASE 139/77 , REFERS NOT TO LIVESTOCK BREEDERS AND KEEPERS IN GENERAL BUT ONLY CALF FATTENERS AND ON THE OTHER HAND THAT IT ASSUMES THE PREMISE , EXPLAINED IN THE GROUNDS OF THE ORDER FOR REFERENCE , THAT ' ' AGRICULTURAL ' ' CALF FATTENERS USE IN FATTENING THE SAME INDUSTRIALLY PRODUCED MILK-BASED SUBSTITUTE FEEDING-STUFFS AS ' ' INDUSTRIAL ' ' CALF FATTENERS .
10 THE CORRECTNESS OF THIS ASSUMPTION WAS CHALLENGED BY THE COMMISSION . IN ITS VIEW , APART FROM MANUFACTURED FEED SUBSTITUTES , ' ' AGRICULTURAL ' ' CALF FATTENERS ALSO USE TO A CONSIDERABLE EXTENT FULL CREAM MILK OR SKIMMED MILK WHICH THEY PRODUCE THEMSELVES . IN THIS RESPECT THE COMMISSION REFERS TO THE FACTS BASED ON THE COMMUNITY SYSTEM IN FORCE SINCE 1969 OF AID GRANTED FOR MILK FOR USE AS ANIMAL FEEDING-STUFFS AND TO THE STATISTICS RELATING TO FEEDING WITH FULL CREAM MILK AND SKIMED MILK IN THE FEDERAL REPUBLIC OF GERMANY . THE RESULT IS THAT VERY LARGE QUANTITIES OF FULL CREAM AND SKIMMED MILK ARE USED AS ANIMAL FEEDING-STUFFS AND MORE THAN HALF SUCH QUANTITIES IS USED FOR FEEDING CALVES AS IS SHOWN BY THE RESULTS OF THE APPLICATION OF THE DIFFERENTIATED SYSTEM OF AID ESTABLISHED BY COMMISSION REGULATION NO 2793/77 ( OFFICIAL JOURNAL NO L 321 , P . 30 ).
11 ON THE BASIS OF ALL THE FACTS WHICH IT GIVES THE COMMISSION ESTIMATES THAT AT PRESENT MILK MAKES UP A THIRD OF FEEDING-STUFFS FOR CALVES AND THAT THIS RATIO WAS PROBABLY EVEN HIGHER DURING THE PERIOD FROM 1969 TO 1973 .
12 THE COURT CANNOT , WITHIN THE FRAMEWORK OF PROCEEDINGS BROUGHT UNDER ARTICLE 177 OF THE TREATY , SETTLE A DIFFERENCE OF THIS KIND WHICH , LIKE ANY OTHER ASSESSMENT OF THE FACTS INVOLVED , IS WITHIN THE PROVINCE OF THE NATIONAL COURT .
13 IT IS RIGHT , NEVERTHELESS , TO OBSERVE THAT EVEN ASSUMING THAT ' ' AGRICULTURAL ' ' CALF FATTENERS EXCLUSIVELY USE THE SAME INDUSTRIALLY PRODUCED MILK-BASED SUBSTITUTE FEEDING-STUFFS AS USED BY ' ' INDUSTRIAL ' ' CALF FATTENERS , THIS DOES NOT AFFECT THE ANSWER TO BE GIVEN TO THE NEW QUESTION PUT BY THE NATIONAL COURT .
14 AS WAS RECALLED IN THE JUDGMENT GIVEN IN CASE 139/77 , IN THE WORDS OF THE FIRST RECITAL IN THE PREAMBLE TO REGULATION NO 2464/69 , ' ' THE REVALUATION OF THE GERMAN MARK AND THE PRESENT UNALTERED VALUE OF THE UNIT OF ACCOUNT ENTAIL A REDUCTION IN AGRICULTURAL PRICES EXPRESSED IN GERMAN MARKS . . . FROM 1 JANUARY 1970 ; . . . GERMAN AGRICULTURE WILL THEREBY SUFFER A LOSS OF INCOME ' ' . THE LOSSES CONTEMPLATED , WHICH THE REGULATION AIMED TO COMPENSATE , WERE IN THE AGRICULTURAL SECTORS SUCH AS MILK AND CEREALS WHERE AN INTERVENTION SYSTEM APPLIED . THE REVALUATION ALMOST AUTOMATICALLY LED TO A REDUCTION IN AGRICULTURAL PRICES EXPRESSED IN GERMAN MARKS BUT FIXED IN UNITS OF ACCOUNT UNDER THE COMMON AGRICULTURAL POLICY . IT IS PRECISELY IN THESE SECTORS THAT PRODUCTION DEPENDS ON WORKING AN ADEQUATE AMOUNT OF AGRICULTURAL LAND .
15 ACCORDINGLY , THE DISTINCTION BETWEEN AGRICULTURAL LIVESTOCK BREEDERS AND KEEPERS AND INDUSTRIAL LIVESTOCK BREEDERS AND KEEPERS , WHICH GERMAN TAX LAW MAKES ON THE BASIS OF A RATIO BETWEEN THE HEAD OF LIVESTOCK AND THE AGRI CULTURAL LAND USED AND WHICH THE FEDERAL REPUBLIC OF GERMANY ADOPTED FOR THE PURPOSE OF GRANTING AID UNDER THE AUFWERTUNGSAUSGLEICHGESETZ MEETS THE AIM OF THE REGULATION .
16 IT MUST BE REMEMBERED THAT THE FOURTH RECITAL IN THE PREAMBLE TO THE REGULATION STATES : ' ' THE AID MUST BE GRANTED ONLY DURING A SPECIFIC PERIOD , IT BEING POSSIBLE TO ENSURE THE CONTINUATION OF AID THROUGH MEASURES OF SOCIAL OR STRUCTURAL POLICY ' ' . IT FOLLOWS FROM THIS THAT THE AID CONTEMPLATED FALLS WITHIN THE PERSPECTIVE OF CONSIDERATIONS OF A SOCIAL NATURE CORRESPONDING TO THE REQUIREMENT OF ARTICLE 39 ( 2 ) ( A ) OF THE TREATY OF TAKING ACCOUNT OF THE PARTICULAR NATURE OF AGRICULTURAL ACTIVITY , WHICH RESULTS FROM THE SOCIAL STRUCTURE OF AGRICULTURE . FOR THE PURPOSE OF GRANTING AID AS COMPENSATION FOR THE EFFECTS OF THE REVALUATION , THIS NATURE JUSTIFIES THE FEDERAL REPUBLIC OF GERMANY IN GIVING PRIORITY TO THE SECTORS OF THE AGRICULTURAL ECONOMY WHICH SUFFERED MOST DIRECTLY LOSSES OF INCOME AS A RESULT OF THE REVALUATION , THAT IS TO SAY THE SECTORS CONCERNED WITH WORKING THE SOIL . SINCE SUCH PREFERENCE IS NOT ARBITRARY IT CANNOT BE REGARDED AS DISCRIMINATION BETWEEN PRODUCERS PROHIBITED BY ARTICLE 40 ( 3 ) OF THE TREATY .
17 IT FOLLOWS FROM ALL THESE CONSIDERATIONS THAT THE ANSWER TO THE NATIONAL COURT SHOULD BE THAT NEITHER THE PROVISIONS OF THE EEC TREATY NOR ARTICLE 1 OF REGULATION NO 2464/69 OF THE COUNCIL NOR THE COUNCIL DECISION OF 21 JANUARY 1974 FORBADE THE FEDERAL REPUBLIC OF GERMANY TO EXCLUDE INDUSTRIAL CALF FATTENERS FROM THE AID REFERRED TO IN THE SAID REGULATION .