Judgment of the Court (Third Chamber) 15 January 1991

In Case C-215/89, REFERENCE to the Court under Article 177 of the EEC Treaty by the Bundesverwaltungsgericht for a preliminary ruling in the proceedings pending before that court between

THE COURT (Third Chamber) composed of: J. C. Moitinho de Almeida, President of the Chamber, F. Grévisse and M. Zuleeg, Judges, Advocate General: F. G. Jacobs Registrar: H. A. Rühi, Principal Administrator,

after considering the observations submitted on behalf of: Mr Eddelbiittel, the plaintiff in the main proceedings, by R. A. Petersen, Rechtsanwalt, Lüneburg, the Commission of the European Communities by its Legal Adviser Dierk Booss, acting as Agent, assisted by Michael Schütte, Rechtsanwalt, Hamburg and Brussels,

having regard to the Report for the Hearing,

after hearing oral argument by the Commission, represented by Hans-Jürgen Rabe, Rechtsanwalt, Hamburg, at the hearing on 2 October 1990,

after hearing the Opinion of the Advocate General delivered at the sitting on 23 October 1990,

gives the following

Judgment

The first question

The second question

Costs

1. By order dated 27 April 1989, which was received at the Court on 10 July 1989, the Bundesverwaltungsgericht (Federal Administrative Court) referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty two questions concerning the interpretation of Article 3(1) of Council Regulation (EEC) No 1078/77 of 17 May 1977 introducing a system of premiums for the non-marketing of milk and milk products and for the conversion of dairy herds (OJ 1977 L 131, p. 1), as amended by Council Regulation (EEC) No 1041/78 of 22 May 1978 (OJ 1978 L 134, p. 9), and the first indent of Article 1(3)(b) of Commission Regulation (EEC) No 1391/78 of 23 June 1978 laying down amended rules for the application of the system of premiums for the non-marketing of milk and milk products and for the conversion of dairy herds (OJ 1978 L 167, p. 45).

2. The questions arose in legal proceedings between Friedel Eddelbüttel, a farmer, and the Bezirksregierung (district administration) Lüneburg concerning a conversion premium which had been paid to Mr Eddelbüttel under those regulations.

3. Mr Eddelbüttel applied for payment of the premium on 29 March 1979. In his application submitted to the Bezirksregierung, he stated that he had 24 dairy cows on his farm and that during the 12 months preceding his application he had marketed 113059 litres of milk.

4. By a decision of 27 April 1979 the Bezirksregierung approved the application for premium with effect from 29 March 1979 and provisionally fixed the quantity of milk qualifying for the premium at the level stated in the application. By a decision of 15 May 1979, the Bezirksregierung paid Mr Eddelbüttel DM 40390.31 as the first instalment of the conversion premium.

5. The Bezirksregierung subsequently learnt that before submitting the application for premium Mr Eddelbüttel might have sold 10 high-yielding dairy cows and replaced them with cull cows; accordingly, by a decision of 31 August 1981, the Bezirksregierung revoked its decisions of 27 April and 15 May 1979 and fixed the quantity of milk qualifying for premium at 65951 litres and the amount of the first instalment of premium at DM 23993.68. By a decision of the same day, the Bezirksregierung called upon Mr Eddelbüttel to repay, with interest, the difference between that amount and the amount paid to him on 15 May 1979 on the ground that he had partially changed his dairy herd and therefore the quantity of milk declared when the application was submitted no longer corresponded to the production capacity of his farm.

6. After his administrative appeal against the decisions of 31 August 1981 was unsuccessful, Mr Eddelbüttel brought proceedings in the administrative courts.

7. The Bundesverwaltungsgericht, before which the matter came on an appeal on a point of law, took the view that the outcome of the litigation was dependent on the interpretation of certain provisions of the applicable Community legislation; it therefore stayed the proceedings and referred the following questions to the Court for a preliminary ruling:

8. Reference is made to the Report for the Hearing for a fuller account of the facts of the case before the national court, the relevant Community provisions, the course of the procedure and the observations submitted to the Court, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court.

9. Having regard to the facts of the case, the first question is to be understood as seeking to ascertain whether the combined provisions of Article 3(1) of Council Regulation No 1078/77, as amended by Council Regulation No 1041/78, and the first indent of Anicie 1 (3)(b) of Commission Regulation No 1391/78 are to be interpreted as requiring the amount of the conversion premium to be reduced in so far as the number of dairy cows on the holding at the time of approval of the application, although 15 or more, is less than the number necessary to achieve the deliveries of milk or milk products on the basis of which the amount of the premium is calculated.

10. Article 3(1) of Regulation No 1078/77, as amended by Regulation No 1041/78, states that:

11. Article 1(3) of Commission Regulation No 1391/78, adopted pursuant to Article 7 of Council Regulation No 1078/77, states that:

12. It is evident from the foregoing provisions, in particular the first indent of Article 1(3)(b) of Regulation No 1391/78, that the quantity of milk to be taken into consideration in calculating the premium is as a rule equal to the quantity of milk actually delivered during the 12 calendar months preceding the submission of the application, but that that amount must be reduced proportionately in so far as the number of dairy cows on the holding at the time of approval of the application is less than the number of cows appropriate to the quantity of milk delivered.

13. It is not, however, entirely clear from the foregoing provisions whether the proportional reduction also applies if at the date of approval of the application the producer still satisfies the condition contained in the second indent of Article 3(1) of Regulation No 1078/77 that he should have at least 15 dairy cows on his holding. That question must therefore be assessed according to the context of the provisions and the objectives of the system of conversion premiums.

14. As is stated in the preamble to Regulation No 1078/77, the system is intended to encourage milk producers to convert their dairy herds to meat production so as to reduce the surpluses on the market for milk and milk products. The purpose of the relevant provisions is thus to ensure that when a producer is granted a conversion premium a quantity of milk equivalent to the quantity on the basis of which the amount of the premium is calculated is actually withdrawn from the market.

15. The achievement of that objective would be jeopardized if the premium was paid in full to a producer who, at the time of approval of the application, no longer had a dairy herd with a production capacity equivalent to that quantity of milk. In such a situation the possibility could not be excluded that all or part of the herd whose production was taken as the basis for calculating the premium might continue to be used for milk production by other farmers to whom the cows had been sold.

16. It follows from the foregoing observations that the conversion premium must be reduced proportionately to the full extent to which the production capacity of the herd on the holding at the time of approval of the application for premium is less than the production capacity which made possible the deliveries of milk forming the basis for calculating the amount of the premium. The reduction cannot therefore be prevented on the ground that the producer in question still has at least 15 dairy cows on his holding at the time of approval of the application.

17. For the foregoing reasons, the answer to the first question must be that the combined provisions of Article 3(1) of Council Regulation No 1078/77, as amended by Council Regulation No 1041/78 of 22 May 1978, and the first indent of Article 1(3)(b) of Commission Regulation No 1391/78 of 23 June 1978 must be interpreted as requiring the amount of the conversion premium to be reduced in so far as the number of dairy cows on the holding at the time of approval of the application, although 15 or more, is less than the number necessary to achieve the deliveries of milk or milk products on the basis of which the amount of the premium is calculated.

18. The second question concerns the meaning of the expression appropriate number in the first indent of Article 1(3)(b) of Regulation No 1391/78.

19. As is evident from the reply given to the first question, that expression refers to the number of dairy cows necessary to achieve the deliveries of milk on the basis of which the amount of the premium is calculated.

20. It follows that an appropriate number within the meaning of that provision must be the number of dairy cows corresponding to that volume of deliveries taking into account the particular circumstances of the holding in question.

21. The answer to the second question must therefore be that the expression appropriate number in the first indent of Article 1(3)(b) of Commission Regulation No 1391/78 of 23 June 1978 must be interpreted as meaning the number of dairy cows which, taking into account the actual situation of the holding in question, is necessary to achieve the deliveries of milk or milk products on the basis of which the amount of the premium is calculated.

22. The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable. Since these proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the action pending before the national court, the decision on costs is a matter for that court.

On those grounds, THE COURT (Third Chamber), in reply to the questions submitted to it by the Bundesverwaltungsgericht, by order of 17 April 1989, hereby rules:

(1) The combined provisions of Article 3(1) of Council Regulation (EEC) No 1078/77 of 17 May 1977 introducing a system of premiums for the non-marketing of milk and milk products and for the conversion of dairy herds, as amended by Council Regulation (EEC) No 1041/78 of 22 May 1978, and the first indent of Article 1(3)(b) of Commission Regulation (EEC) No 1391/78 of 23 June 1978 laying down amended rules for the application of the system of premiums for the non-marketing of milk and milk products and for the conversion of dairy herds must be interpreted as requiring the amount of the conversion premium to be reduced in so far as the number of dairy cows on the holding at the time of approval of the application, although 15 or more, is less than the number necessary to achieve the deliveries of milk or milk products on the basis of which the amount of the premium is calculated.

(2) The expression appropriate number in the first indent of Article 1(3)(b) of Commission Regulation (EEC) No 1391/78 of 23 June 1978 must be interpreted as meaning the number of dairy cows which, taking into account the actual situation of the holding in question, is necessary to achieve the deliveries of milk or milk products on the basis of which the amount of the premium is calculated.

1 Language of the case: German.