1 BY APPLICATION LODGED AT THE COURT REGISTRY ON 25 MARCH 1982 , THE COMMISSION OF THE EUROPEAN COMMUNITIES BROUGHT AN ACTION UNDER ARTICLE 169 OF THE EEC TREATY FOR A DECLARATION THAT THE FEDERAL REPUBLIC OF GERMANY , BY NOT ENSURING THAT THE PROHIBITION , CONTAINED IN ARTICLE 4 OF COUNCIL REGULATION ( EEC ) NO 2253/77 OF 11 OCTOBER 1977 ON STRUCTURAL MEASURES IN THE HOP SECTOR ( OFFICIAL JOURNAL 1977 , L 261 , P . 1 ), OF ANY INCREASE IN THE AREAS PLANTED WITH HOPS WAS OBSERVED BY THE PRODUCER GROUPS , AS SUCH , IN THE EVENT OF THE GRANT OF AIDS , HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER THE TREATY .
2 REGULATION NO 2253/77 LAYS DOWN THE DETAILED RULES FOR THE APPLICATION OF ARTICLES 8 AND 9 OF REGULATION ( EEC ) NO 1696/71 OF THE COUNCIL OF 26 JULY 1971 ON THE COMMON ORGANIZATION OF THE MARKET IN HOPS ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1971 ( II ), P . 634 ). ARTICLE 8 RELATES TO THE GRANT OF AID TO RECOGNIZED PRODUCER GROUPS TO ENCOURAGE THEIR FORMATION AND TO FACILITATE THEIR OPERATION . ARTICLE 9 RELATES TO THE GRANT OF AID TO PRODUCER GROUPS FOR OPERATIONS TO BE USED FOR CHANGING TO DIFFERENT VARIETIES AND FOR REORGANIZING HOP GARDENS .
3 ARTICLE 9 OF REGULATION NO 1696/71 WAS AMENDED BY COUNCIL REGULATION ( EEC ) NO 1170/77 OF 17 MAY 1977 ( OFFICIAL JOURNAL 1977 , L 137 , P . 7 ). PARAGRAPH ( 3 ) THEREOF , IN ITS AMENDED FORM , PROVIDES THAT THE MEMBER STATES MAY GRANT TO RECOGNIZED PRODUCER GROUPS AID FOR CONVERSION TO OTHER VARIETIES AND THE REORGANIZATION OF HOP GARDENS , PROVIDED THAT SUCH OPERATIONS ENTAIL A REDUCTION OF AT LEAST 40 % IN THE AREA CONCERNED .
4 THE CONCEPT OF A ' ' PRODUCER GROUP ' ' IS DEFINED IN ARTICLE 7 OF REGULATION NO 1696/71 , AS AMENDED BY REGULATION NO 1170/77 . ACCORDING TO THAT DEFINITION A PRODUCER GROUP CONSISTS EXCLUSIVELY OR MAINLY OF HOP PRODUCERS FORMED ON THE INITIATIVE OF THE PRODUCERS FOR A NUMBER OF HOP PRODUCTION AND MARKETING PURPOSES INCLUDING ' ' ADAPTING SUCH PRODUCTION JOINTLY TO THE REQUIREMENTS OF THE MARKET AND IMPROVING THE PRODUCT BY CONVERTING TO OTHER VARIETIES AND BY REORGANIZING HOP GARDENS ' ' . THE OTHER OBJECTIVES INCLUDE THE PROMOTION OF RATIONALIZATION AND MECHANIZATION OF CULTIVATION AND HARVESTING OPERATIONS AND THE ADOPTION OF COMMON RULES FOR THE PRODUCTION AND MARKETING OF ALL THE PRODUCE OF THE MEMBERS .
5 ACCORDING TO ARTICLE 7 A PRODUCER GROUP IS TO BE RECOGNIZED BY THE MEMBER STATES IF IT FULFILS CERTAIN GENERAL CONDITIONS , IN PARTICULAR THE CONDITION THAT IT APPLIES COMMON RULES FOR PRODUCTION AND PLACING ON THE MARKET . ACCORDING TO COMMISSION REGULATION NO 2564/77 OF 22 NOVEMBER 1977 ( OFFICIAL JOURNAL L 299 , P . 9 ) THOSE COMMON RULES ARE TO COMPRISE INTER ALIA , RULES RELATING TO THE USE OF ONE OR MORE SPECIFIED VARIETIES WHEN RENEWING PLANTATIONS OR CREATING NEW ONES , TO COMPLIANCE WITH CERTAIN METHODS OF CULTIVATION , TO HARVESTING AND DRYING AND RULES RELATING TO THE QUANTITIES WHICH THE PRODUCERS ARE AUTHORIZED TO SELL THEMSELVES AND THE RULES GOVERNING SUCH SALES .
6 IN SUBSTANCE THIS DISPUTE RELATES TO THE CONSEQUENCES OF THE GRANT OF AID FOR CONVERSION TO OTHER VARIETIES AND FOR REORGANIZATION OF HOP GARDENS PROVIDED FOR IN ARTICLE 9 OF REGULATION NO 1696/71 , AS GRANTED TO RECOGNIZED PRODUCER GROUPS .
7 REGULATION NO 2253/77 PROVIDES FIRST , IN ARTICLE 3 , THAT SUCH AID IS TO BE GRANTED ON PRESENTATION TO THE AUTHORITIES APPOINTED BY THE MEMBER STATES OF A PLAN FOR CONVERSION TO OTHER VARIETIES AND FOR THE REORGANIZATION OF HOP GARDENS ' ' WHICH ENTAILS AT LEAST A 40 % REDUCTION IN THE TOTAL AREA REGISTERED AS AT 30 JUNE 1977 TO WHICH THE PLAN APPLIES ' ' .
8 THE REGULATION GOES ON TO PROVIDE , IN ARTICLE 4 , THAT ' ' FOR A PERIOD OF THREE YEARS FOLLOWING IMPLEMENTATION OF THE PLAN TO CONVERT TO OTHER VARIETIES OR TO REORGANIZE HOP GARDENS , A RECOGNIZED PRODUCER GROUP MAY NOT PLANT WITH HOPS AN AREA GREATER THAT THAT RESULTING FROM THE APPLICATION OF THAT PLAN ' ' .
9 THE COMMISSION IS OF THE OPINION THAT THE PROHIBITION , CONTAINED IN ARTICLE 4 OF REGULATION NO 2253/77 , OF ANY INCREASE IN THE AREAS PLANTED WITH HOPS APPLIES TO A PRODUCER GROUP , AS SUCH , WHERE THAT GROUP HAS PRESENTED THE PLAN RELATING TO STRUCTURAL MEASURES FOR THE PURPOSE OF OBTAINING AID . SINCE THE PROHIBITION CONTAINED IN ARTICLE 4 HAS THAT GENERAL APPLICATION NO MEMBER OF THE PRODUCER GROUP HAS THE RIGHT TO EXTEND HIS AREA PLANTED WITH HOPS DURING THE THREE YEARS FOLLOWING THE IMPLEMENTATION OF THE PLAN .
10 AFTER ESTABLISHING THAT THE DIRECTIVES BY WHICH THE MINISTER FOR AGRICULTURE OF THE LAND OF BAVARIA INSTRUCTED RECOGNIZED GROUPS IN BAVARIA AS TO THEIR OBLIGATIONS ARISING FROM THE IMPLEMENTATION OF A CONVERSION AND REORGANIZATION PLAN WERE NOT IN COMPLIANCE WITH THE PROHIBITION CONTAINED IN ARTICLE 4 , INTERPRETED AS AFORESAID , THE COMMISSION ENTERED INTO CORRESPONDENCE WITH THE GOVERNMENT OF THE FEDERAL REPUBLIC OF GERMANY WHICH , HOWEVER , DISPUTED THE COMMISSION ' S INTERPRETATION OF ARTICLE 4 .
11 IN FACT THE GERMAN GOVERNMENT CONTENDED THAT IT FOLLOWED FROM ARTICLE 3 OF REGULATION NO 2253/77 , ACCORDING TO WHICH THE CONVERSION AND REORGANIZATION PLAN WAS TO ENTAIL AT LEAST A 40 % REDUCTION IN THE TOTAL AREA ' ' TO WHICH THE PLAN APPLIES ' ' , THAT THE PLAN DID NOT NECESSARILY RELATE TO THE TOTAL AREA PLANTED WITH HOPS OF THE PRODUCERS WHO WERE MEMBERS OF THE GROUP . THOSE PRODUCERS WHOSE LAND WAS NOT INVOLVED IN THE PLAN AND WHO THEREFORE DID NOT QUALIFY FOR AID BY VIRTUE OF ARTICLE 6 ( 2 ) OF REGULATION NO 2253/77 WERE NOT BOUND BY THE OBLIGATIONS FLOWING FROM THE IMPLEMENTATION OF THE PLAN ACCORDING TO ARTICLE 4 OF THE REGULATION .
12 IN THE COURSE OF THE CORRESPONDENCE AND DISCUSSIONS BETWEEN THE RELEVANT OFFICERS OF THE COMMISSION AND THE GERMAN GOVERNMENT IT WAS NOT POSSIBLE TO ELIMINATE THE DIFFERENCES OF OPINION AS TO THE INTERPRETATION OF THE PROVISION AND THE COMMISSION THEREFORE BROUGHT THESE PROCEEDINGS .
13 THE DISPUTE BETWEEN THE PARTIES CONCERNS FIRST THE WORDING OF THE PROVISION AT ISSUE . IN THE COMMISSION ' S VIEW THE WORDING OF ARTICLE 4 , ACCORDING TO WHICH FOR A PERIOD OF THREE YEARS FOLLOWING IMPLEMENTATION OF THE PLAN ' ' A RECOGNIZED PRODUCER GROUP MAY NOT PLANT WITH HOPS AN AREA GREATER THAN THAT RESULTING FROM THE APPLICATION OF THE PLAN ' ' , CLEARLY EXPRESSES THE RULE THAT THE PROHIBITION OF AN INCREASE IN THE AREA PLANTED APPLIES TO THE GROUP , AS SUCH , AND NOT TO THE INDIVIDUAL PRODUCERS WHO HAVE IMPLEMENTED THE STRUCTURAL MEASURES IN QUESTION .
14 THE GERMAN GOVERNMENT IS OF THE OPINION , ON THE OTHER HAND , THAT THE PROHIBITION , CONTAINED IN ARTICLE 4 , OF ANY INCREASE IN THE AREA PLANTED MUST HAVE THE SAME SCOPE AS THE REDUCTION IN THE AREA PLANTED CONTAINED IN ARTICLE 3 , WHICH REFERS TO A PART OF ' ' THE TOTAL AREA . . . TO WHICH THE PLAN APPLIES ' ' AND THEREFORE RELATES ONLY TO PRODUCERS WHOSE LAND IS INVOLVED IN THE PLAN .
15 IN ADDITION THE COMMISSION CITES THE OBJECTIVES OF THE SYSTEM OF AIDS FOR CONVERSION AND REORGANIZATION . THE PURPOSE OF THAT SYSTEM , WHICH WAS ESTABLISHED TO DEAL WITH MARKETING DIFFICULTIES WHICH HAD ARISEN IN THE HOP MARKET , WAS TO COMBINE AN IMPROVEMENT IN THE QUALITY OF PRODUCTION WITH A SUBSTANTIAL REDUCTION IN CONVERTED ACREAGE IN ORDER TO ACHIEVE A BALANCE BETWEEN SUPPLY AND DEMAND . THE REQUIREMENT CONTAINED IN ARTICLE 9 OF REGULATION NO 1696/71 OF A REDUCTION OF AT LEAST 40 % IN THE AREA CONCERNED LOSES ALL MEANING IF IT IS POSSIBLE TO COMPENSATE FOR THAT REDUCTION BY AN INCREASE IN THE AREA PLANTED WITH HOPS BY THE MEMBERS OF THE PRODUCER GROUP WHO HAVE NOT PARTICIPATED DIRECTLY IN THE REORGANIZATION .
16 THE GERMAN GOVERNMENT MAINTAINS THAT THE PURPOSE OF THE SYSTEM OF AIDS IS TO ENCOURAGE THE VOLUNTARY COOPERATION OF THE PRODUCERS IN PUTTING STRUCTURAL MEASURES INTO EFFECT . SUCH SYSTEMS , WHICH ALSO INCLUDE PREMIUMS FOR THE SLAUGHTER OF DAIRY COWS AND SUBSIDIES FOR THE DESTRUCTION OF INLAND WATERWAY VESSELS , DO NOT RESTRICT THE COMMERCIAL FREEDOM OF THOSE PRODUCERS WHO DO NOT RECEIVE COMMUNITY AID .
17 IN ORDER TO DETERMINE THE SCOPE OF ARTICLE 4 OF REGULATION NO 2253/77 , THE INTERPRETATION OF WHICH IS IN DISPUTE , IT IS NECESSARY TO CONSIDER THE PURPOSE OF THE SYSTEM OF AIDS FOR CONVERSION AND REORGANIZATION WITHIN THE CONTEXT OF THE WHOLE ORGANIZATION OF THE MARKET IN HOPS AS MODIFIED BY REGULATION NO 1170/77 .
18 THE RECITALS IN THE PREAMBLE TO REGULATION NO 1170/77 STATE THAT SINCE THE IMPLEMENTATION OF THE COMMON ORGANIZATION OF THE MARKET IN HOPS IN 1971 , THE SITUATION IN THAT MARKET HAS CHANGED RADICALLY AS SHOWN BY THE IMBALANCE BETWEEN SUPPLY AND DEMAND WHICH HAS LED TO A SLUMP IN PRICES . THAT IMBALANCE IS THE RESULT PARTLY OF AN EXCESSIVE INCREASE IN THE AREA UNDER HOPS , PARTICULARLY OF CERTAIN VARIETIES , AND PARTLY OF THE USE OF SMALLER QUANTITIES OF HOPS IN THE MANUFACTURE OF BEER .
19 THE RECITALS EMPHASIZE THAT IN ORDER TO ACHIEVE A BALANCE BETWEEN SUPPLY AND DEMAND HOP PRODUCERS SHOULD COMBINE AND FORM PRODUCER GROUPS WHICH WOULD BE MORE CAPABLE OF HAVING AN IMPACT ON PRODUCTION POLICY AND ON THE MANAGEMENT OF SUPPLY . LIKEWISE THE QUALITATIVE ADJUSTMENT OF PRODUCTION TO MARKET TRENDS SHOULD BE PURSUED BY CONTINUING THE GRANT OF AID FOR CONVERSION TO OTHER VARIETIES AND THE REORGANIZATION OF HOP GARDENS , BUT THE GRANT OF THAT AID SHOULD BE SUBJECT TO A SUBSTANTIAL REDUCTION IN THE AREA CONVERTED .
20 THE ARGUMENTS SUBMITTED BY THE GERMAN GOVERNMENT ARE NOT COMPATIBLE WITH THE ABOVEMENTIONED PURPOSES OF THE AMENDMENTS MADE IN 1977 .
21 FIRST , THOSE ARGUMENTS ARE BASED ON THE IDEA THAT AID IS GRANTED TO INDIVIDUAL PRODUCERS , THAT ONLY THOSE INDIVIDUAL PRODUCERS WHO RECEIVE AID ARE INTENDED TO BE AFFECTED BY THE PROHIBITION OF ANY INCREASE IN THE AREA UNDER HOPS AND THAT THE PRODUCER GROUP ' S ONLY FUNCTION IS TO ACT AS AN OFFICE FOR MAKING PAYMENTS . IN THAT CONNECTION IT SHOULD BE NOTED THAT THE AIM OF THE 1977 RULES IS PRECISELY TO ALLOW PRODUCER GROUPS , TO WHICH THE AID IN QUESTION IS GRANTED BY VIRTUE OF ARTICLE 9 ( 3 ) OF REGULATION NO 1696/71 , TO CONTRIBUTE TO ACHIEVING A BALANCE ON THE MARKET BY EXERTING AN INFLUENCE INTER ALIA ON SUPPLY AND DEMAND .
22 SECONDLY , THE ARGUMENTS OF THE GERMAN GOVERNMENT WOULD HAVE THE EFFECT OF ALLOWING PRODUCERS WHO HAVE COMBINED IN A PRODUCER GROUP TO CARRY OUT GRUBBING-UP OPERATIONS ON THE LAND OF SOME OF THEM AND OF RECEIVING THE CORRESPONDING COMMUNITY AID WHILST AT THE SAME TIME ALLOWING AN INCREASE IN THE AREA PLANTED WITH HOPS BELONGING TO OTHER MEMBERS OF THE SAME GROUP . SUCH A SITUATION WOULD BE MANIFESTLY CONTRARY TO ONE OF THE PRINCIPAL OBJECTIVES OF THE 1977 RULES , WHICH IS TO REDUCE THE SUPPLY OF HOPS BY RESTRICTING THE TOTAL AREA PLANTED .
23 CONSEQUENTLY , ARTICLE 4 OF REGULATION NO 2253/77 MUST BE INTERPRETED AS MEANING THAT THE PROHIBITION THEREIN CONTAINED OF AN INCREASE IN THE AREA PLANTED WITH HOPS APPLIES TO ALL THE PRODUCERS WHO ARE MEMBERS OF THE RECOGNIZED PRODUCER GROUP RECEIVING THE AID , WHETHER OR NOT THOSE MEMBERS ARE INDIVIDUALLY CONCERNED WITH THE STRUCTURAL MEASURES IN QUESTION .
24 THE GERMAN GOVERNMENT ALSO CONTENDS THAT SUCH AN INTERPRETATION OF ARTICLE 4 OF REGULATION NO 2253/77 INFRINGES A FUNDAMENTAL RIGHT , NAMELY THE RIGHT TO PROPERTY , SINCE THOSE PRODUCERS WHO HAVE NEITHER TAKEN PART IN THE IMPLEMENTATION OF THE STRUCTURAL MEASURES NOR HAVE RECEIVED THE CORRESPONDING AID ARE NEVERTHELESS UNDER AN OBLIGATION NOT TO INCREASE THEIR AREAS UNDER HOPS .
25 THAT ARGUMENT , HOWEVER , IS BASED ON A MISCONCEPTION AS TO THE POSITION OCCUPIED BY THE PRODUCER GROUP WITHIN THE FRAMEWORK OF THE COMMUNITY RULES IN THE HOP SECTOR . IT IS FOR THE COMPETENT BODIES WITHIN THE PRODUCER GROUP TO DECIDE WHETHER OR NOT IT IS APPROPRIATE TO UNDERTAKE THE SUBSIDIZED OPERATIONS OF CONVERSION AND REORGANIZATION AND WHO THUS BIND THE GROUP AND THE WHOLE OF ITS MEMBERS TO BEAR THE CORRESPONDING BURDENS . THE INDIVIDUAL PRODUCER IS BOUND BY SUCH DECISIONS AS HE IS BY ANY OTHER DECISION VALIDLY TAKEN BY THOSE BODIES UNDER THE GENERAL RULES GOVERNING ASSOCIATIONS OF PERSONS .
26 IT FOLLOWS FROM THE FOREGOING CONSIDERATIONS THAT THE FEDERAL REPUBLIC OF GERMANY , BY NOT ENSURING THAT THE PROHIBITION , CONTAINED IN ARTICLE 4 OF REGULATION NO 2253/77 , OF ANY INCREASE IN THE AREAS PLANTED WITH HOPS WAS OBSERVED BY THE PRODUCER GROUPS ESTABLISHED WITHIN ITS TERRITORY , IN THE EVENT OF THE GRANT OF AIDS FOR CONVERSION TO OTHER VARIETIES AND FOR REORGANIZATION OF HOP GARDENS , HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER THE EEC TREATY .