61992C0433

++++

Mr President,

Members of the Court,

1. The two joint cases before the Court concern the interpretation of three Commission regulations for granting private storage aid for beef and veal.

2. Those regulations are Regulations (EEC) No 1071/68 of 25 July 1968, (1) No 2471/77 of 8 November 1977 (2) and No 1405/78 of 22 June 1978, (3) the latter two having been adopted in order to "amend ... certain conditions" (4) in the first regulation as to the granting of aids and which are at the root of the disputes in Cases C-434/92 and C-433/92 respectively.

3. The questions referred to the Court for a preliminary ruling by the Bundesverwaltungsgericht concern the interpretation of some of those conditions.

4. The provisions at the centre of the dispute are as follows:

(1) Article 3(2) of Regulation No 1071/68 indicates that the contract for private storage aid must impose the following obligations on the private storer:

"...

(a) at his own risk and expense to take the agreed quantity of the product into store and store it within the time limits laid down;

(b) to advise the competent intervention agency of the day and place of storage and the nature and quantity of the products to be stored;

(c) to forward to that intervention agency without delay the supporting documents for the storage operations;

...

(e) to allow the intervention agency at any time to check fulfilment of the obligations undertaken."

(2) Article 4 of Regulation No 2471/77 (carcases, half-carcases and compensated quarters) provides for the possibility of boning and cutting the meat and states:

"...

3. For the purposes of this Regulation, 100 kilograms of the unboned meat shall be equivalent to:

(a) 77 kilograms of boned meat in the case of cutting and boning the total quantity for which the contract is concluded, or in the case of cutting and boning the same number of fore- and hindquarters;

(b) 70 kilograms of boned meat in the case of cutting and boning all the forequarters.

..."

(3) The same possibility of boning and cutting the meat (forequarters), before placing it in store, is also provided for in Article 4 of Regulation No 1405/78 as follows:

"...

2. For the purposes of this Regulations, 100 kilograms of unboned meat shall be equal to 70 kilograms of boned meat.

..."

(4) Article 4(4) and (5) of Regulation No 2471/77 and Article 4(3) of Regulation No 1405/78 provide that if the quantity stored is less than 85% of quantity of unboned meat for which the contract was concluded, no aid is granted and, where that quantity is equal to or greater than that percentage, the amount of the aid is proportionately reduced.

5. The facts giving rise to the dispute in the main proceedings occurred in the context of the application of those provisions. Let me recall them briefly.

6. In the first case, Otto Frick GmbH ("Frick") had received aid in respect of 22 157.4 kg of boned meat obtained from 29 571 kg of unboned meat, that is to say, yielding 74.93%. Following the early removal from storage by the plaintiff of 3 220.8 kg the Bundesanstalt fuer landwirtschaftliche Marktordnung (hereinafter referred to as "the BALM") demanded repayment of all the aid granted on the ground that, by reason of that removal, the threshold of 85% of the quantity to be stored under the contract required by Regulation No 1405/78 in order to become entitled to such aid had not been attained.

7. The BALM arrives at that conclusion by applying to the 3 220.8 kg removed from storage the "actual" yield of 74.93% obtained upon boning, which gives an amount of 4 298 kg before boning. Although the latter quantity is deducted from that originally stored - 29 571 kg - there remains only the boned meat from the 25 273 kg of boned meat, that is to say a percentage below the threshold of 85% of the quantity for which the contract was concluded required by the regulation concerned.

8. Frick contests before the national court and before the Court of Justice the application of that "actual" yield and claims that it is the "notional" yield rate of 70% (100 kg of unboned meat corresponds to 70 kg of boned meat) provided for in the regulation which must be applied: in the present case, the threshold of 85% necessary to obtain aid would be attained if that aid did not have to be withdrawn but merely reduced.

9. As regards the second case, Firma Vinzenz Murr GmbH ("Murr") had received aid for the storage of 31 367 kg of boned meat. The BALM, on having it brought to its attention that 5 175.8 kg had been stored before the contract had been concluded, considered that entry into store had not been authorized and demanded repayment of all the aid on the ground that on applying to the quantity of 5 175.8 kg the actual yield rate (77.09%) resulting from the boning operation and deducting the weight thus obtained from the original quantity, the remaining quantity in storage fell below the threshold of 85% required by the regulation concerned.

10. Murr maintains that storage of the meat may begin before the conclusion of the contract and that, in the present case, the BALM had the opportunity of monitoring the storage operation as efficiently as after that conclusion, since it had been advised by telephone of Murr' s intention - to which it had not objected - to cut and bone the quantity of meat under consideration on the same day that it had received Murr' s application for aid. Furthermore, Murr considers, as does Frick, that it is the method of calculation which appears in the regulation (100 kg of unboned meat corresponds here to 70 kg of boned meat) which must be applied in order to ascertain whether or not the threshold of 85% has been met.

11. It is on the question of the conversion key - the actual rate or the "notional" rate - to be applied in order to calculate the minimum quantity to be placed in storage in order to become entitled to aid, in whole or in part, that the question in the first case and, in the alternative, the last of the five questions submitted in the second case relate.

12. The first four questions seek to ascertain whether or not Murr may claim aid for the consignment stored before the conclusion of the contract with BALM.

13. The first seeks to ascertain whether storage of the agreed quantity may begin only after the storage contract has been concluded.

14. Since Regulation No 1071/68 does not contain any clear statements in that regard, the Commission proposed that by reference to some of its provisions concerning storage contracts the Court should reply in the affirmative to that question. I share that point of view.

15. According to Article 3(2)(b) and (c), the contract is to impose on the storer the obligation of advising the competent intervention agency of the day and place of storage and the nature and quantity of the products to be stored and to forward to it "without delay" the supporting documents for the storage operations. It follows that entry into store must normally take place after the contract has been concluded.

16. Those provisions read in conjunction with Article 3(2)(e), which imposes the obligation on the storer to allow the intervention agency at any time to check fulfilment of the obligations undertaken, tend to support that view. If entry into store takes place before the contract is concluded, inspection can only be carried out a posteriori, at the risk of affecting its reliability.

17. Should the reply to the first question be in the affirmative, the national court asks the Court of Justice to state with which activity the process of storage begins within the meaning of Article 3(2) of Regulation No 1071/68.

18. Regulation No 2471/77 states that the period of storage is either four of five months (Article 5(1)) and that it begins on the day on which storing is completed. (second paragraph of Article 3(2)).

19. Although that regulation gives no clearer indication than Regulation No 1071/68 about the beginning of entry into store, those provisions nevertheless provide strong indications of it.

20. The first is given in Article 5(1) of Regulation No 1071/68 which provides that "the amount of aid shall be fixed per unit of weight ascertained on entry into store and before freezing". Entry into store is therefore placed after weighing and before freezing.

21. According to the wording of the second recital in the preamble to that regulation, only private storers who are able to guarantee "...that storage will be effected in a proper manner and who have adequate refrigeration capacity within the Community". Article 3(2)(b) refers to "storage ... of the products to be stored" and refers to the obligation on the storer to "store the products in easily identifiable lots" (Article 3(2)(d)).

22. That indication, which explains the preceding one, suggests that it is cold storage which marks the beginning of the period of storage, since the process of refrigeration can be embarked on only subsequently in order in particular to allow the intervention agency to carry out the necessary checks.

23. Once it is accepted as a principle that entry into store must be begun only after the conclusion of the storage contract, it must be determined whether the contractor who has stored a lot before the contract was concluded loses entitlement to aid in respect of that lot, which is the object of the third question referred to the Court.

24. In other words, must that obligation be described as a primary obligation, infringement of which may entail loss of entitlement to the aid, or merely as a secondary obligation which does not justify such a penalty?

25. In its judgment in E.D. and F. Man (Sugar) Ltd (5) the Court stated that

"... where Community legislation makes a distinction between a primary obligation, compliance with which is necessary in order to attain the objective sought, and a secondary obligation, essentially of an administrative nature, it cannot, without breaching the principle of proportionality, penalize failure to comply with the secondary obligation as severely as failure to comply with the primary obligation". (6)

26. And in the judgment in Fromançais (7) that

"in order to establish whether a provision of Community law is consonant with the principle of proportionality it is necessary to establish, in the first place, whether the means it employs to achieve its aim correspond to the importance of the aim and, in the second place, whether they are necessary for its achievement". (8)

27. The purpose of the aids is above all to encourage storage. However, storage must be carried out while observing certain appropriate conditions which ensure its efficiency and to enable the intervention agency to carry out its checks. If that is not the case, then the objective of the regulations cannot be attained.

28. Those conditions, in particular observance of the obligation - the importance of which I have pointed out - to begin to take into store only after the conclusion of the storage contract, must, consequently, be classified as primary obligations infringement whereof justifies in principle the loss of entitlement to aid for the quantity of meat concerned.

29. Let me say again: in view of the foregoing, that penalty seems to me to be appropriate and necessary for the attainment of the essential aims of the regulation in question which are to encourage storage while preventing irregularities and fraud.

30. Having said that, what if the authority had nonetheless had the opportunity to check entry into store as effectively as if it had taken place regularly, that is to say, after the storage contract had been concluded?

31. The Bundesverwaltungsgericht proposes, in such a case, "a different view of the problem" (9) raised by the present case in its fourth question, an approach shared by the Commission and by Murr and to which I find it difficult not to subscribe.

32. BALM had been informed by telephone - a practice usually followed in these matters by its local office - of Murr' s intention to begin taking into store early a certain quantity of meat and that it had not expressed any reservations in that respect.

33. If that "early storage" did not affect the possibility for BALM to carry out supervision, which is a matter entirely for the national court to decide, it should be considered that the storer has not lost his entitlement to aid for the disputed quantity.

34. I turn now to the question common to both cases. It does not arise in the same terms. If the Court follows my proposal as regards the fourth question in the Murr case, the national court will not require a reply to its fourth question in order to settle the dispute before it. (10)

35. However, that question is still relevant in the contrary case and, in any event, the reply which this Court gives is solely in order to enable the national court to resolve the Frick case.

36. Let me point out that the problem concerns the conversion key to be referred to where the meat is cut and boned. If the Court adopts the solution suggested by the undertakings and opts for the standard rate provided for in the aforementioned regulations, entitlement to the contested aids will be ensured in any event. If, on the other hand, the Court agrees with BALM and the Commission and considers that only the "actual" rate should be applied, that entitlement will be refused, for certain in the case of Frick, and with the aforementioned reservations in the case of Murr.

37. In my opinion, the first solution must be accepted in view both of the wording of the provisions themselves and of the lack of legal basis in support of the second.

38. First, the wording of the provisions: Article 4(3) of Regulation No 2471/77 and Article 4(2) of Regulation No 1405/78 clearly state that "For the purposes of this Regulation ..." x kilograms of unboned meat are equal to y kilograms of boned meat.

39. It therefore seems to me that, in the absence of an express exception to it, that rule must be fully applied in the implementation of the aforementioned regulations.

40. Therefore, where a quantity of boned meat is removed irregularly from storage or stored under irregular conditions, so that, in both cases, it cannot be taken into account before an aid is granted, the conversion key expressly provided for in the provisions of the regulations concerned should be applied rather than any actual rate to which they make no reference.

41. It seems reasonable to me that a matter as technical as the storing of beef should be the subject of clear provisions. Whilst there is indeed a clear indication concerning the standard rate in Regulations No 2471/77 and 1405/78 (100 kg of unboned meat equal 77 or 70 kg of boned meat, as the case may be), that is not so as regards the actual rate, which, in the Commission' s view, is the one to be applied.

42. Consequently, a reading of those provisions leads me to believe that solely the standard rate referred to therein should be applied.

43. In its judgment in Germany v Commission (11) the Court stated that:

"... Community legislation must be certain and its application foreseeable by those subject to it. That requirement of legal certainty must be observed all the more strictly in the case of rules liable to entail financial consequences, in order that those concerned may know precisely the extent of the obligations which they impose on them".

44. Furthermore, the absence of any legal basis for the solution proposed by the Commission, which says that it is the actual rate which should be applied, strengthens my opinion.

45. Just as there is no express provision in the regulations concerning an actual conversion key, it is not possible, in my view, to strain their terms in order to arrive at an interpretation to support the Commission' s position.

46. The Commission asks the Court to infer from Article 4(1) of Regulation No 2471/77 and 1405/78, which state that all the meat resulting from the boning operation is to be placed in store (and not solely 77 or 70 kg of boned meat for every 100 kg of unboned meat), that it is the actual quantity resulting from the boning process which should be taken into consideration in order to determine the aid to be granted. Such an interpretation would prohibit the storer who has chosen to bone the meat and who has obtained greater yield from applying for the whole of the aid while retaining the possibility of selling the excess portions. Furthermore, the fifth recital of the preamble to Regulation No 1071/68 states that "... to take account of commercial practice, certain margins of variation of the agreed quantity for storage should be allowed". Consequently, a storer who has obtained greater yield after boning should not be given more flexibility by taking into account a notional rate.

47. I do not share that point of view.

48. The obligation on all traders to store all the meat resulting from the boning operation corresponds indeed to one of the main aims of the aforementioned regulations which is to ensure storage of an amount of beef which is as large as possible (12) and to avoid fraud. It is not at all incompatible with the existence of standard-rate conversion keys intended to determine clearly and in advance the conditions for the allocation of aid.

49. Those conversion keys cannot have as their sole purpose, contrary to the Commission' s argument, to establish a minimum yield rate to be applied to boning operations. They constitute one of the essential elements of the regulations since entitlement to aid is subject to their application.

50. Neither does it seem to me that the fifth recital in the preamble to Regulation No 1071/68 could be interpreted in the manner indicated by the Commission and I do not believe it possible to infer from it any prohibition on the traders concerned to have the standard rate applied to them in the case of boned meat.

51. Moreover, I consider that the application to part of the boned meat, removed from store early or irregularly stored, of the actual rate, in order to determine to what quantity of unboned meat it is equivalent, is liable to lead to serious errors of assessment.

52. That actual rate results from the boning of the whole of the meat taken into store, that is to say, all the portions together. In that sense, it concerns an average actual rate resulting form the entire boning operation.

53. Consequently to apply that average actual rate to a small quantity of meat - the amount removed from store early or stored irregularly - consisting only of certain portions, would be inappropriate because that rate is actual only by reference to the yield obtained upon boning of the of the whole of the meat taken into store.

54. That reinforces my view that it is the standard rate, as indicated in the regulations, which must be applied.

55. As regards the risk that storers who have boned the meat might sell the excess portions, suffice it to note that the regulations concerned (Article 4(1)) authorize boning only on condition that all the meat resulting from that operation is placed in store.

56. I therefore propose that the Court give the following answer to the questions submitted by the national court:

(1) Article 3(2) of Regulation (EEC) No 1071/68 of the Commission of 25 July 1968 laying down detailed rules for granting private storage aid for beef and veal must be interpreted as meaning that the private storer may not begin the process of storing the agreed quantity until after the storage contract has been concluded;

(2) the activity with which the process of storing within the meaning of that provision begins is the placing of the goods in the cold storage room before any freezing takes place;

(3) the requirement that the meat should not be taken into store until after the contract has been concluded constitutes a primary obligation, infringement of which entails in principle loss of entitlement to aid for the quantity of meat concerned;

(4) none the less, entitlement to aid is not lost where the private storer notifies the local office of the intervention agency by telephone of its intention to take the aforementioned quantity into store early, the local office expresses no reservations, and that operation does not affect the possibility of effective supervision by that agency of compliance by the private storer with his obligations;

(5) in order to calculate, in the case of boned meat, the quantity of meat to take into consideration as regards entitlement to aid for storage, reference should be made to the standard rates provided for in Article 4(3) of Commission Regulation (EEC) No 2471/77 of 8 November 1977 on the granting at a standard rate fixed in advance of private storage aid in respect of beef carcases, half carcases and compensated quarters and Article 4(2) of Commission Regulation (EEC) No 1405/78 of 22 June 1978 on the granting at a standard rate fixed in advance of private storage aid for beef forequarters.

(*) Original language: French.

(1) - Regulation laying down detailed rules for granting private storage aid for beef and veal (OJ, English Special Edition 1968 II, p. 354).

(2) - Regulation on the granting at a standard rate fixed in advance of private storage aid in respect of beef carcases, half carcases and compensated quarters (OJ 1977 L 286, p. 20).

(3) - Regulation on the granting at a standard rate fixed in advance of private storage aid for beef forequarters (OJ 1978 L 170, p. 20).

(4) - See the fifth and fourth recital of those regulations respectively.

(5) - Judgment of 24 September 1985/Case 181/84 Man (Sugar) v IBAP [1985] ECR 2889.

(6) - Paragraph 20.

(7) - Judgment of 23 February 1983 in Case 66/82 Fromançais v FORMA [1983] ECR 395.

(8) - Paragraph 8.

(9) - Order for reference II(1)(d).

(10) - Ibid., first paragraph of II(1).

(11) - Judgment of 15 December 1987 (Case 332/85 Germany v Commission [1987] ECR 5143, paragraph 23).

(12) - See the judgment of the Court of 1 February 1994 (Case C-374/92 Irsfeld v Bundesanstalt fuer landwirtschaftliche Marktordnung [1994] ECR I-0000, paragraph 24).