Report for the Hearing in Case C-22/90

I — Facts

1. Relevant legislation

2. The contested decision

By Decision 89/627/EEC of 15 November 1989 on the clearance of the accounts presented by the Member States in respect of the expenditure for 1987 of the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (Official Journal 1989 L 359, p. 23), the Commission among other things charged expenditure of FF 10569874 to the French Republic. That amount corresponds to the applicable additional levies on the quantities of milk (5192 tonnes) exceeding, during the third period of application of the levy (1986/1987), the guaranteed total quantity fixed for deliveries by Regulation No 856/84.

II — Written procedure and forms of order sought

The application of the French Republic was lodged at the Court Registry on 24 January 1990.

Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory enquiry.

The French Republic claims that the Court should:

The Commission contends that the Court should:

III — Pleas in law and arguments of the parties

1. The French Government maintains, as its principal argument, that the contested decision that the guaranteed total quantity for milk deliveries to dairies was exceeeded is based on a misinterpretation of Article 6a of Regulation No 857/84, as amended. It claims, in the alternative, that the decision in question is unlawful in that the Commission, in its calculations to assess the incorrect understatement of the difference between the milk collected and France's guaranteed total quantity resulting from that country's misinterpretation of Article 6a of Regulation No 857/84, did not take into account all the possibilities afforded at the relevant time to dairies considered in excess for calculating the increase in the average fat content of their milk, in particular by Article 12 of Regulation No 1546/88.

2. The Commission maintains, as to the interpretation of Article 6a of Regulation No 857/84, that the machinery for provisional transfers set up by that provision can be applied only if the request for transfer demonstrates the actual existence, with respect to a producer with two reference quantities, of direct sales or deliveries qualifying for such a transfer. Such a transfer assumes that the producer is obliged to undertake it in order to enable him to adapt to changes in his marketing requirements (first paragraph of Article 6a). For that purpose, the second paragraph of Article 6a specifies the information which must be included in the request for transfer in order for it to be admissible, and which is essential for it to be assessed.

IV — Reply to a question from the Court

The Court requested the Commission to reply in writing to the following question:

The Commission replied to that question as follows :

The wording, scheme and purpose of Article 6a of Regulation No 857/84, read in the light of the preamble to Regulation No 590/85 which inserted that provision in Regulation No 857/84, led the Commission to conclude that the right conferred by Article 6a presupposed that two commercial activities would be carried out and led temporarily — within a given period covered by the milk quota system — to the redistribution of the two reference quantities of the producers concerned so as precisely to reflect the provisional readjustment as between their two activities.

It follows from that interpretation, in the view of the Commission, that transferring the reference quantities of the producers concerned is only permitted during the twelvemonth period in which that readjustment occurs, so that, during the following period, in order to benefit from the right conferred by Article 6a of Regulation No 857/84, those producers must in fact have taken up again and actually carried on both activities — direct sales and deliveries — in order to requalify for the provisional transfer system established by that provision.

For a structural change in the relationship between the commercial activities of direct sales and deliveries to be reflected in the redistribution of reference quantities, the Member State may, on the basis of objective and duly justified statistical data, obtain an adjustment of the guaranteed total quantities. However, in order for that machinery for structural transfers to be consistent with the system established by Article 6a of Regulation No 857/84, the former must still reflect a definitive change of commercial activity and the latter a provisional change.

The Commission points out that the need to distinguish between, on the one hand, provisional transfers within a single period of twelve months with both commercial activities being taken up again during the following period, and, on the other, structural transfers valid until the end of the dairy quota system with one of the two activities being definitively abandoned, is fully justified by the perverse consequences which would ensue if a Member State made transfers under Article 6a, decided during a given period on the basis of short-term factors, permanent by repeating them automatically from one period to the next.

Such a practice would mean that only those producers who had a dual reference quantity and who sought the benefit of Article 6a would definitively obtain an increase, by way of exemption from the additional levy, in the reference quantity in relation to which they redirected one of their activities. If the Member State had strictly applied the rules laid down by the Council by making a transfer between guaranteed total quantities for deliveries and those for direct sales, all producers, whether or not they had a dual reference quantity, who had chosen to redirect their commercial activity once and for all would have been able to benefit from that adjustment.

The Commission adds that it is precisely in order to avoid structural transfers being used for purposes other than redistribution to all dairy producers who have redirected their activity from direct sales to deliveries that Article 6a, which was designed to deal with the short-term uncertainties of production, must be applied so as to exclude any producer who, at the time when he submits his request, is no longer in fact carrying on both activities. Any other solution would open the door to an increase in the quantities produced which are exempt from the levy, thereby distorting the requirements inherent in the machinery for the management of dairy production.

1 Language of the case: French.