In Case C-236/90,
REFERENCE to the Court under Article 177 of the EEC Treaty from the Bayerisches Verwaltungsgericht Regensburg for a preliminary ruling in the proceedings pending before that court between
Reinhard Maier
and
Freistaat Bayern
on the interpretation and validity of Article 3a of Commission Regulation (EEC) No 1546/88 of 3 June 1988 laying down detailed rules for the application of the additional levy referred to in Article 5c of Regulation (EEC) No 804/68 (OJ 1988 L 139, p. 12), as amended by Commission Regulation (EEC) No 1033/89 of 20 April 1989 (OJ 1989 L 110, p. 27),
THE COURT (Third Chamber),
composed of: F. Grévisse, President of the Chamber, J.C. Moitinho de Almeida and M. Zuleeg, Judges,
Advocate General: C.O. Lenz,
Registrar: D. Triantafyllou, Administrator,
after considering the written observations submitted on behalf of:
° Reinhard Maier, by Auer and Associates, Rechtsanwaelte, Regensburg,
° Freistaat Bayern, by Walter Rzepka, Generallandesanwalt,
° the Commission of the European Communities, by Dierk Booss, Legal Adviser, acting as Agent,
having regard to the Report for the Hearing,
after hearing the oral observations of Freistaat Bayern, represented by Rainer Leptihn, Oberlandesanwalt, and the Commission at the hearing on 4 February 1992,
after hearing the Opinion of the Advocate General at the sitting on 27 February 1992,
gives the following
Judgment
1 By order of 19 July 1990, received at the Court on 30 July 1990, the Bayerisches Verwaltungsgericht (Bavarian Administrative Court) Regensburg referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty two questions on the interpretation and validity of Article 3a of Commission Regulation (EEC) No 1546/88 of 3 June 1988 laying down detailed rules for the application of the additional levy referred to in Article 5c of Regulation (EEC) No 804/68 (OJ 1988 L 139, p. 12), as amended by Commission Regulation (EEC) No 1033/89 of 20 April 1989 (OJ 1989 L 110, p. 27).
2 Those questions were raised in proceedings between Reinhard Maier, a farmer, and Freistaat Bayern (Free State of Bavaria) concerning a reference quantity under the scheme for an additional levy on milk.
3 Mr Maier operated a dairy holding until the end of October 1981. From 29 October 1981 he received a conversion premium for four years under 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). On 1 January 1987 he let all the agricultural land and cowsheds forming his holding for a period of 20 years.
4 On 27 June 1989 Mr Maier asked the competent national authority to allocate him a special reference quantity under Article 3a of Council Regulation (EEC) No 857/84 of 31 March 1984 adopting general rules for the application of the levy referred to in Article 5c of Regulation (EEC) No 804/68 in the milk and milk products sector (OJ 1984 L 90, p. 13) as amended by Council Regulation (EEC) No 764/89 of 20 March 1989 (OJ 1989 L 84, p. 2). That provision was supplemented by Article 3a of Commission Regulation No 1546/88, as amended.
5 Mr Maier' s request was rejected on the ground that he had leased his holding and was therefore not in a position to produce on his holding up to the quantity requested.
6 Mr Maier lodged an unsuccessful administrative complaint, then brought an action before the Bayerisches Verwaltungsgericht Regensburg, which stayed the proceedings and referred the following questions to the Court for a preliminary ruling under Article 177 of the EEC Treaty:
"1. Question on the interpretation of Article 3a of Commission Regulation (EEC) No 1546/88, inserted by Article 1(2) of Commission Regulation (EEC) No 1033/89 of 20 April 1989:
Is a producer who has let his holding after the end of the conversion period still operating the same holding as he operated at the time of the approval of his application for a premium?
2. Question on the validity of the rules referred to in Question 1, if that question is answered in the negative:
Is the requirement that the owner of a holding should operate it himself contrary to superior rules of Community law?"
7 Reference is made to the Report for the Hearing for a fuller account of the facts of the case in the main proceedings, the Community provisions in issue, the course of the procedure and the observations submitted to the Court, which are mentioned hereinafter only in so far as is necessary for the reasoning of the Court.
First question
8 The first question seeks essentially to ascertain whether Article 3a of Regulation No 1546/88, as amended by Regulation No 1033/89, must be interpreted as meaning that a farmer who has let his holding at the end of a conversion obligation undertaken pursuant to Regulation No 1078/77 may, within the meaning of those provisions, be regarded as a producer still operating the same holding as the one he operated at the time of the approval of his application for the conversion premium.
9 In that respect, it should be noted that Article 3a(1) of Regulation No 1546/88 provides that requests for a special reference quantity under Article 3a of Regulation No 857/84, as amended by Regulation No 764/89, "shall be made by the producers concerned to the competent authority designated by the Member State, in accordance with the procedure laid down by it and provided that the producers can prove that they still operate, in whole or in part, the same holdings as those they operated at the time of the approval ... of their premium applications".
10 Article 12(d) of Regulation No 857/84 defines a "holding" for the purposes of the rules in question as "all the production units operated by the producer and located within the geographical territory of the Community". The word "producer" is itself defined in Article 12(c) of the same regulation as "a natural or legal person or group of natural or legal persons farming a holding located within the geographical territory of the Community".
11 Taken together, those definitions show that the term "producers" in Article 3a of Regulation No 1546/88 refers only to farmers who, for the purposes of milk production, operate all the production units on their own account. Where a holding has been let, those conditions are fulfilled only by the lessee, who enjoys the right to operate the holding, and not by the lessor, the landlord who, by the very fact of letting the holding, has transferred that right to the lessee.
12 A farmer who lets a holding which he owns therefore loses the status of producer in relation to that holding and can no longer operate it within the meaning of the abovementioned rules.
13 That interpretation is confirmed by Article 3a(1)(b) of Regulation No 857/84, as amended by Regulation No 764/89, which provides that, in order to receive a special reference quantity, the producers concerned must "establish in support of their request ... that they are able to produce on their holding up to the reference quantity requested". That provision implies that a farmer who ceases to operate his holding himself, in particular as a result of letting it, thereby loses the right to a special reference quantity.
14 The answer to the first question must therefore be that Article 3a of Regulation No 1546/88, as amended by Regulation No 1033/89, must be interpreted as meaning that a farmer who let his holding at the end of a conversion obligation undertaken pursuant to Regulation No 1078/77 cannot be regarded as a producer still operating the same holding as the one he operated at the time of the approval of his application for the conversion premium.
Second question
15 In view of the answer to the first question, the second question seeks to ascertain whether Article 3a of Regulation No 1546/88, as amended by Regulation No 1033/89, is valid, in so far as it prevents a special reference quantity from being allocated to farmers who have let their holding.
16 In the grounds of the order for reference, the national court expresses doubts, first, as to whether that article is compatible with Article 3a(1)(b) of Regulation No 857/84, as amended by Regulation No 764/89.
17 Commission Regulation No 1546/88, as amended, lays down detailed rules for the application of Council Regulation No 857/84, as amended. That implementing regulation was adopted on the basis of the enabling provision in Article 5c(7) of the basic regulation, Council Regulation (EEC) No 804/68 of 27 June 1968 on the common organization of the market in milk and milk products (OJ, English Special Edition 1968 (I), p. 176), as amended by Council Regulation (EEC) No 856/84 of 31 March 1984 (OJ 1984 L 90, p. 10).
18 The Commission did not exceed the limits of the powers conferred upon it when it provided, in the amended version of Regulation No 1546/88, as interpreted above by the Court, that farmers who let their holding at the end of a conversion obligation are not entitled to benefit from that regulation; on the contrary, it is clear from the reasons underlying the answer to the first question that the Commission confined itself to implementing the rules laid down in Regulation No 857/84, as amended, and in particular in Article 3a(1)(b) thereof, without misinterpreting the scope of those rules.
19 Secondly, the national court wonders whether Article 3a of Regulation No 1546/88, as amended by Regulation No 1033/89, does not infringe the principle of the protection of legitimate expectations as applied in Case 120/86 Mulder v Minister van Landbouw en Visserij [1988] ECR 2321 and Case 170/86 von Deetzen v Hauptzollamt Hamburg-Jonas [1988] ECR 2355.
20 In those judgments, the Court held that a producer who has voluntarily ceased production for a certain period cannot legitimately expect to be able to resume production under the same conditions as those which had previously applied and not to be subject to any rules of market or structural policy adopted in the mean time (Mulder, paragraph 23, and von Deetzen, paragraph 12), but that, on the other hand, where such a producer has been encouraged by a Community measure to suspend marketing for a limited period in the general interest and against payment of a premium he may legitimately expect not to be subject, upon the expiry of his undertaking, to restrictions which specifically affect him precisely because he availed himself of the possibilities offered by the Community provisions (Mulder, paragraph 24, and von Deetzen, paragraph 13).
21 In that respect, it is sufficient to note, as the Court declared in Case C-44/89 von Deetzen v Hauptzollamt Oldenburg [1991] ECR I-5119, paragraph 21, that whilst producers who had entered into a non-marketing or conversion undertaking under Regulation No 1078/77 were legitimately entitled to expect to be able to resume the marketing of milk at the end of their non-marketing or conversion period and to carry on that activity under conditions that involved no discrimination between them and other milk producers, they could not thereby expect a common organization of the market to confer on them a commercial advantage which did not derive from their farming activity.
22 It follows that such farmers who gave up milk production by letting their holding could not legitimately expect to obtain a reference quantity at the end of their non-marketing or conversion period.
23 Consequently, no infringement of the principle of the protection of legitimate expectations has been established.
24 The national court finally indicates that there are two ways in which Article 3a of Regulation No 1546/88, as amended by Regulation No 1033/89, might be discriminatory. First, it places farmers who let their holding prior to the entry into force of the modified scheme in 1989 at a disadvantage compared to farmers who let their holding after that date. The former, being unable to obtain a reference quantity, could not, unlike the latter, transfer to the lessee a holding with a reference quantity. Secondly, it places the first category of producers at a disadvantage compared to farmers who, instead of letting their holding, continued to operate it with employed labour and who were also able to benefit from a special reference quantity.
25 As the Court has consistently held (see, most recently, von Deetzen v Hauptzollamt Oldenburg, paragraph 23), the prohibition of discrimination between Community producers laid down in Article 40(3) of the Treaty is merely a specific enunciation of the general principle of equality which is one of the fundamental principles of Community law. That principle requires that similar situations must not be treated differently unless differentiation is objectively justified.
26 In the light of those criteria, the refusal to allow farmers who let their holdings prior to the entry into force of the modified scheme in 1989 to obtain a special reference quantity, even though farmers who let their holdings after that date and those who continue to operate their holdings on their own account, albeit with employed labour, are able to do so, is justified by the need to prevent a reference quantity from being claimed for the sole purpose of deriving a purely financial advantage therefrom, owing to the market value which those reference quantities have acquired in the mean time, without there being any real intention on the part of the person concerned of resuming the marketing of milk (see von Deetzen v Hauptzollamt Oldenburg, paragraph 24).
27 The difference in treatment in question is objectively justified and therefore cannot be described as discriminatory within the meaning of the case-law of the Court. Consequently, no infringement of the principle of equality and non-discrimination has been established.
28 The answer to the second question must therefore be that consideration, on the basis of the factors mentioned in the order for reference, of Article 3a of Commission Regulation No 1546/88, as amended by Regulation No 1033/89, has disclosed no factors of such a kind as to affect its validity.
Costs
29 The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, 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 answer to the questions referred to it by the Bayerisches Verwaltungsgericht Regensburg by order of 19 July 1990, hereby rules:
1. Article 3a of Commission Regulation (EEC) No 1546/88 of 3 June 1988, as amended by Commission Regulation (EEC) No 1033/89 of 20 April 1989, must be interpreted as meaning that a farmer who let his holding at the end of a conversion obligation undertaken pursuant to Council Regulation (EEC) No 1078/77 of 17 May 1977 cannot be regarded as a producer still operating the same holding as the one he operated at the time of the approval of his application for the conversion premium.
2. Consideration, on the basis of the factors mentioned in the order for reference, of Article 3a of Commission Regulation (EEC) No 1546/88 of 3 June 1988, as amended by Commission Regulation (EEC) No 1033/89 of 20 April 1989, has disclosed no factors of such a kind as to affect its validity.
