Opinion of Mr Advocate General Van Gerven

Mr President,

Members of the Court,

1. The Verwaltungsgericht Frankfurt am Main (hereinafter referred to as the national court) referred to the Court the following question for a preliminary ruling:

2. The question concerns carryover payments which may be granted for certain cereals still in stock at the end of the marketing year. These carryover payments have their legal basis in Article 9(1) of the basic regulation for the cereals sector (hereinafter referred to as the basic regulation). This article was amended in 1986, after the material facts in this case.

The regulations

3. Article 9(6) of the basic regulation provides that detailed rules for the application of carryover payments, and in particular the categories of those entitled to it, are to be adopted in accordance with the procedure laid down in Article 26, that is to say the management committee for cereals procedure. This procedure led to the adoption of Commission Regulation No 1821/81 (hereinafter referred to as the implementing regulation), Article 1 of which is at issue in these proceedings.

4. This case concerns rye which on 31 July 1985, that is to say at the end of the marketing year, was held by Wilhelm-Lampe-Miihle (hereinafter referred to as Lampe-Mühle), a milling undertaking.

The main proceedings

5. The preliminary question concerns the interpretation of the implementing regulation, Regulation No 1821/81. Lampe-Mühle brought an action before the national court challenging the refusal on the part of the Bundesanstalt für landwirtschaftliche Marktordnung (Federal Office for the Organization of Agricultural Markets, hereinafter referred to as the Federal Office) to grant it a carryover payment for a consignment of rye (320.08 tonnes) owned by it on 31 July 1985, in its stocks at that date and harvested in the Community. The reason given for the refusal was that, after submitting the application, Lampe-Mühle had sold the rye in question to seven different milling undertakings, each of which had milled its own share of the rye. The Federal Office does not deny that the rye was milled; that is clear from the documents submitted by Lampe-Mühle (Vermahlungsbestätigung — declaration of milling), which I will consider further below), on which the respective purchasers confirm that they milled the rye in question. From this declaration it is also clear that Lampe-Mühle did not attempt to conceal that it had sold the rye and that the rye had been milled by the purchasers thereof.

The preliminary question

6. It is clear from an examination of the preliminary question (set out in paragraph 1) that there are two, closely related questions: first of all, whether or not the applicant for the carryover payment must own the rye at the time of milling, and secondly, whether the rye must be milled by the applicant itself or may be milled by another milling undertaking. In theory, the reply to one question is not determined by the reply to the other. It is possible to imagine rules whereby the applicant milling undertaking must own the rye at the time of milling but may have the rye milled by a third party, just as it is also possible to imagine rules whereby the applicant milling undertaking may transfer to third parties ownership of part of the rye before it is milled but without delivering the rye until it has been milled.

7. In fact, however, it is clear from the terms of the regulation, from the order requesting the Court for a preliminary ruling and from the observations submitted to the Court that the question whether the applicant undertaking must own the rye at the time of milling is of no real importance. The only significant question is who must mill the rye and it is on this question alone that the observations submitted by Lampe-Mühle, on the one hand, and by the Federal Office and the Commission, on the other, differ. According to the Federal Office and the Commission, the rye must be milled by the applicant itself, whether or not it is still owner at the time. Lampe-Mühle considers that the applicant need not own the rye at the time of milling or mill the rye itself.

The two possible interpretations

8. Lampe-Mühle considers that it does not appear from the terms of Article 1(b) that the applicant for a carryover payment in respect of rye and the milling undertaking which actually mills the rye in question must be the same. This argument, based on a literal interpretation of the provision and confirmed by the form of the Vermahlungsbestätigung used in the Federal Republic, finds support in the fact that the requirement that the rye should be milled for human consumption is purely a quality requirement (in other words, the emphasis is on fitness for human consumption), which may be satisfied even where the rye is milled by an undertaking other than that which applied for the carryover payment.

No indication may be found from the national implementing rules

9. According to the literal interpretation put forward by Lampe-Mühle, Article 1(b) which is at issue imposes only one requirement: that on 31 July the stock of rye must be owned by the milling undertaking which applies for the carryover payment. The words to be milled for human consumption merely restate the method provided for in Article 2(2) of proving that the rye satisfies the minimum quality standards for intervention, that is to say of showing that the rye is milled for human consumption.

10. It seems to me that a form used in the Federal Republic can hardly be relevant as regards the interpretation of the Community rule at issue here. Even if support could be found in that form for Lampe-Mühle's interpretation of Article 1(b) of Commission Regulation No 1821/81, which I doubt, that merely proves the way in which the Federal Office interpreted the regulation but still does not mean that this was also the meaning intended by the authors of the regulation. The Federal Office's interpretation — even if, as I have said, it were established — might have given rise to a legitimate expectation on the part of Lampe-Mühle. It is not, however, for the Court to determine whether it should have those consequences under national law.

Arguments based on the terms of the regulation

11. The rejection of any arguments which may be derived from the national implementing rules does not necessarily mean that Lampe-Mühle's argument based on the terms of the regulation (see 9 above) is unfounded. I will now examine that argument in connection with other elements which may be derived from Regulation No 1821/81.

The argument regarding supervision

12. The Federal Office bases its interpretation, which it acknowledges cannot clearly follow from the text alone, on an examination of the system of control which is centred on the person and undertaking receiving the payment. This system of control consists of measures which the Member States are required to adopt and implement by virtue of Article 8(1) (and the ninth recital in the preamble) of the implementing regulation.

13. Undertakings are in general required only to keep accounts and not to record individual variations and movements of goods. In the case of the Federal Republic applicants for carryover payments are obliged by Paragraph 5 of the Verordnung über die Gewährung von Übergangsvergütung für Getreide (regulation on the granting of carryover payments for cereals) of 9 July 1979 to keep and retain such stock books. This is in accordance with the authority conferred on the Member States in Article 8(1) of implementing regulation (EEC) No 1821/81.

14. In order to give this argument, which was contested by Lampe-Mühle at the hearing, a fair appraisal, the parties represented were asked whether third parties, that is to say milling undertakings which had not applied for a payment, were subject to accounting obligations which, in addition to physical checks at the relevant time, would enable an equivalent check to be made as to whether the milling obligation had been carried out and could be supplemented by ex post facto checks of the accounts.

15. In reply to the question asked, Lampe-Mühle referred to the Verordnung über Meldepflichten der Getreide-, Stärkeund Futtermittelwirtschaft, of 26 June 1978, which requires all milling undertakings which mill a minimum quantity per annum to make monthly returns giving data relating to stocks at the beginning of the year, stock changes during the year, and stocks at the end of the period. The necessary information to enable them to make these returns must be made systematically and kept for three years. In its observations on this information supplied by Lampe-Mühle, the Federal Office states that these compulsory returns were introduced for another purpose and are consequently not specifically adapted to supervision of the carryover payments at issue and in particular are expressed globally, in tonnes — that is to say, in quantities. They therefore cannot guarantee that registers will in fact be kept of the origin and destination of individual consignments. The Federal Office acknowledges, however, that such records are probably required in order to comply with the obligation to make returns. It states in addition that small milling undertakings are either not subject to that obligation (if their annual turnover is less than 250 tonnes) or required to make declarations at different intervals (if they have a turnover of between 250 and 500 tonnes).

16. As regards the supervision argument and the parties' comments on it, I would point out that in its judgments on aids the Court has always attached great importance to interpretations which promote the effective supervision of the use of the Community's financial resources.

Conclusion

17. On the basis of the foregoing considerations, I propose that the Court should give the following reply to the preliminary question:

1 Origina! language: Dutch.

2 Regulation (EEC) No 2727/75 of the Council of 29 October 1975 on the common organization of the market in cereals (OJ 1975, L 281, p. 1).

3 See Council Regulation (EEC) No 1579/86 of 23 May 1986 amending Regulation (EEC) No 2727/75 on the common organization of the market in cereals (OJ 1986, L 139, p. 29). On this amendment, see footnote 9 below.

4 Article 6 of the basic regulation, cited above in footnote 1.

5 Recitals in the preamble to Council Regulation (EEC) No 1949/81 of 13 July 1981 amending the basic regulation (OJ 1981, L 198, p. 2)

6 The maximum amount of the payment was laid down at the material date in Article 9(3) of the basic regulation, as amended by the regulation cited in footnote 4.

7 Commission Regulation (EEC) No 1821/81 of 2 July 1981 laying down the conditions for granting carryover payments for certain cereals in stoeit at the end of the marketing year (OJ 1981, L 182, p. 10), and in particular the last recital in the preamble.

8 First recital in the preamble to the implementing regulation, cited above in footnote 6.

9 Third recital in the preamble.

10 Third recital in the preamble.

11 Council Regulation No 1579/86, cited above in footnote 2, transferred the power to decide whether or not carryover payments should be granted wholly to the Commission; see the new Article 9 and the ninth recital in the preamble.

12 Commission Regulation (EEC) No 2124/85 of 26 July 1985 on precautionary measures in the cereals sector other than durum wheat (OJ 1985, L 198, p. 31), and in particular the sixth recital in the preamble and Article 4; the precautionary nature of the regulation is referred to in Article 6.

13 Communication No 10/85/21 of 25 July 1985 on the granting of carryover payments for cereals for 1984/85, Bimdesan/eiger, 1985. p 8481 et ieq

14 In the first annex to the notification, the application form for the payment, the applicant must sign tne declaration that the rye will be milled by me/us for human consumption from a comparison of the two forms annexed to the notice, little support can be found for the interpretation which Lampe-Mühle infers from the way in which it completed the second form, the declaration of milling, as described in 9 above

15 For the rejection of a claim of legitimate expectation by the German administrative courts, with regard to the (identical) previous regulation, Regulation (EEC) No 1554/73, because the undertaking had obtained no information on the meaning of Article 1(b) which in its view was unclear, see the judgment of the Eighth Senate of the Hessischer Verwaltungsgenchlshof (Administrative Court, Hessen), 30 May 1983, VIII OE 28/79 Rieht der Landwirlichaft (1983), p. 333, at p 335

16 This argument is regarded as important by the Eighth Senate of the Hessische Verwaltungsgerichtshof, with regard to the identical Article 1(b) of Regulation (EEC) No 1554/73, the predecessor to Regulation No 1821/81, in its judgment cited in footnote 13, at p. 334.

17 This is Lampe-Miihie's literal argument, to which reference is made in 8.

18 Verordnung uber die Gewahrung von Übcrgangsvergulung fur Getreide, 9 July 1979, Bandei- geíetzblatt I, p 1021

19 The precise question asked, to which Lampe-Muhle and the Federal Office and the Commission were able to reply in writing after the hearing, read as follows On wfial legal basis are milling undertakings not applying for a carryover payment in the Federal Republic of Germany required to keep, retain and make available systematic records on entries and exits of cereals (a stock book) and on millings of cereals (a milling register)

20 The Federal Office had in particular stated in its written observations that the fact that it also has, under the general provision laid down in Paragraph 33(2) of the Gesetz zur Durchführung der gemeinsamen Marktorganisationen (Law on the implementation of the common organization of the market, as contained in the notice of 27 August 1986 in Bundesgesetzblatt I, p. 1397) a right to check milling undertakings which acquire the rye, does not solve the problem, since such purchasers not applying for a carryover payment are not required to keep stock and milling records. In other words, the Federal Republic could make an on-the-spot check but find no evidence. The question asked was intended to give Lampe-Mühler an opportunity of refuting this argument.

21 Bundesgesetzblatt, 1978,1, pp. 883 to 888.

22 Paragraph 2(1) and (2) of the Verordnung and Annex I thereto.

23 Paragraph 5 of the Verordnung.

24 Both in paragraph 12 of the judgment of 12 December 1985 in Case 276/84 Metelmann [19851 ECR 4057, referred to by the Commission, and in the judgments of 3 January 1985 referred to by Lampe-Mühle, namely Case 20/84 De Jong [1985] ECR 2061, paragraph 17, and of 1 October 1985 in Case 125/83 Corman [1985] ECR 3039, paragraph 22, the Court accepted an interpretation of an agricultural regulation which guaranteed the efficacy of the system of control.