The Queen contra Ministry of Agriculture, Fisheries and Food, ex parte H. & R. Ecroyd Holdings Ltd y John Rupert Ecroyd.

• Jurisdiction: European Union
• Celex Number: 61994CC0127
• ECLI: ECLI:EU:C:1996:2
• Date: 11 January 1996
• Court: Court of Justice (European Union)
• Procedure Type: Reference for a preliminary ruling
• Docket Number: C-127/94

61994C0127

Opinion of Mr Advocate General Léger delivered on 11 January 1996. - The Queen v Ministry of Agriculture, Fisheries and Food, ex parte H. & R. Ecroyd Holdings Ltd and John Rupert Ecroyd. - Reference for a preliminary ruling: High Court of Justice, Queen's Bench Division - United Kingdom. - Milk production quota scheme - Allocation of special reference quantities - Powers and/or duties of the Member States. - Case C-127/94.

European Court reports 1996 Page I-02731

Opinion of the Advocate-General

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1 The questions submitted by the High Court of Justice, Queen's Bench Division, invite the Court of Justice to address itself once more to the rules on milk quotas.

2 The origin of the present reference for a preliminary ruling lies in six separate actions brought before the High Court of Justice, all of which contested decisions by the Ministry of Agriculture, Fisheries and Food (`the Ministry') refusing to allocate milk quotas to the applicants. However, as a result of an order of the High Court withdrawing the questions concerning four of those actions, the President of the Court of Justice ordered, by order of 14 December 1994, that the case be removed from the register in so far as it concerned the parties to those actions. As the proceedings now stand, the reference for a preliminary ruling concerns only the questions submitted in the context of the two cases still pending in the main proceedings, which have been brought by H. & R. Ecroyd Holdings Ltd (`Ecroyd Ltd') and John Ecroyd (`John Ecroyd').

3 Before setting out the facts in each of those two cases, it is necessary for me to set out the relevant Community provisions as briefly as possible.

Legal background

4 The common organization of the market in milk and milk products was established in 1968 by Regulation (EEC) No 804/68. (1) Since that market was characterized, from the outset, by a tendency to an imbalance between supply and demand, leading to structural surpluses, the Community rules have always been adopted with the aim of putting a brake on the increase in production.

5 Consequently, Regulation (EEC) No 1078/77 (2) provided for a number of measures which aimed to reduce supply. In particular, it introduced a scheme for granting premiums to farmers who gave a written undertaking that they would not market milk or milk products from their holdings for a period of five years (`non-marketing premiums').

6 Article 4(1) of that regulation laid down the amount of those premiums and prescribed the method for paying them as follows:

`The non-marketing premium shall be calculated on the basis of the quantity of milk or its equivalent in milk products delivered by the producer during the 1976 calendar year.

(...)

50% of the premium shall be paid during the first three months of the non-marketing period.

The balance shall be paid in the third and fifth years in two equal instalments of 25% of the premium, provided the recipient satisfies the competent authorities that the undertakings provided for in Article 2 have been fulfilled.'

7 Article 6 of that same regulation laid down the rules applicable to transfers. Any person taking over an agricultural holding could claim the balance of the premium allocated to his predecessor, provided that he undertook in writing to continue to carry out the undertakings given by his predecessor.

8 In 1984 it was found that, despite the measures established in 1977, there continued to be an inexorable increase in milk production. Since it had become necessary to adopt more rigorous measures, the common organization of the market in milk and milk products was therefore radically amended by the introduction of the supplementary levy scheme, also referred to as the `milk quota scheme'.

9 Article 5c of Regulation No 804/68, which had been added by Article 1 of Regulation (EEC) No 856/84, (3) instituted a system of additional levies to be paid by each producer or purchaser of milk on quantities exceeding an annual individual reference quantity, that annual reference quantity being known as a `milk quota'. Established initially for a period of five years, that scheme was extended in 1988 (4) until 31 March 1992. In 1992, in the course of the reform of the common agricultural policy, the Council retained the milk quotas scheme for a period of eight years.

10 Under Article 5c(3) of Regulation No 804/68, the sum of the reference quantities allocated to persons subject to the levy in a particular Member State may not exceed a guaranteed total quantity, which differs for each Member State and is equal to the sum of the quantities of milk delivered to undertakings treating or processing milk or other milk products in each Member State during the 1981 calendar year, plus 1%.

11 The general rules for the application of the additional levy were established by Regulation (EEC) No 857/84. (5) In the United Kingdom, the reference quantity was fixed on the basis of the 1983 calendar year.

12 That system did not provide for the possibility of allocating a quota to producers who, because of their participation in the temporary non-marketing system provided for by Regulation No 1078/77, had not delivered or sold milk during the reference year adopted for the allocation of quotas (those producers are commonly referred to as `Slom producers' (6)).

13 In its judgments in Case 120/86 Mulder (7) and Case 170/86 Von Deetzen, (8) the Court of Justice held that in so far as, specifically, those rules did not provide for the allocation of reference quantities to Slom producers they infringed those producers' legitimate expectation that the effects of the system to which they had rendered themselves subject would be limited, and they therefore had to be annulled.

14 In order to comply with those judgments, the Council adopted Regulation (EEC) No 764/89, (9) which inserts a new Article 3a into Regulation No 857/84. That article provides for the provisional allocation of a special reference quantity (commonly called `Slom quota') to certain categories of producers who had taken part in non-marketing schemes and who satisfied certain conditions.

15 That allocation of a Slom quota was made subject to certain time-limits. Under the new Article 3a, the period of non-marketing had to expire after 31 December 1983 and the request for an allocation had to be made by the producer within a period of three months from 29 March 1989.

16 Article 3a(2) fixed the amount of special reference quantity at 60% of the quantity of milk delivered by the producer during the 12 calendar months preceding the month in which the application for the non-marketing premium had been made, provided that the producer had not lost his entitlement to the premium (the `60% rule'). That provision also laid down rules concerning the amount of the quota to be allocated, both to the transferor and the transferee, where part of a holding had been transferred during the course of the non-marketing period.

17 Article 3a(3) specified the conditions upon which a provisional special reference quantity could become definitive: the need to achieve production of 80% of the quota allocated within two years from 29 March 1989, failing which the producer lost his right to quota and it returned to the Community reserve (the `all or nothing rule').

18 However, under the terms of Article 3a(1), second indent, producers who had already obtained a quota elsewhere in accordance with the conditions laid down by other provisions of the additional levy regime were not entitled to a Slom quota (the `anti-accumulation rule').

19 In a number of judgments, the Court of Justice subsequently annulled or interpreted certain of those provisions.

20 In Case C-189/89 Spagl v Hauptzollamt Rosenheim (10) and Case C-217/89 Pastaetter v Hauptzollamt Bad Reichenhall, (11) the Court thus annulled Article 3a(1) and (2), taking the view that they infringed the legitimate expectations of producers who had taken part in the non-marketing scheme, since they provided for the non-allocation of Slom quotas to producers whose period of non-marketing expired before 31 December 1983, and for the 60% rule respectively.

21 The judgment in Case C-314/89 Rauh v Hauptzollamt Nuernberg-Fuerth (12) (hereinafter `the judgment in Rauh') clarified the transfer arrangements. In that case, the Court of Justice interpreted Article 3a as meaning that, subject to the conditions which it laid down, a special reference quantity might be granted to a producer who had taken over a holding by way of succession or similar means after the expiry of a non-marketing undertaking entered into pursuant to Regulation No 1078/77 by his predecessor in title.

22 Following those judgments, the Council adopted Regulation (EEC) No 1639/91, (13) which once again amended the rules. In substance that regulation:

- removes the time-limit under which only producers whose non-marketing undertaking expired after 31 December 1983 were entitled to a specific reference quantity;

- abolishes the 60% rule;

- abolishes the all or nothing rule (the principle of 80% is retained, but if it is not achieved, the quota does not return to the Community reserve; the producer receives a quota for the part which has actually been produced during those two years);

- amends the transfer rules, in accordance with the judgment in Rauh, by providing for the possibility of granting a milk quota to a producer who has received the holding through an inheritance or similar means following the expiry of the non-marketing undertaking entered into by the originator of the inheritance before 29 June 1989, if he submits an application within three months from 1 July 1991 (that category of producers is commonly called `Slom II');

- maintains the anti-accumulation rule.

23 It was precisely with regard to the last rule that the Court was asked to give another preliminary ruling. In the judgment in Case C-264/90 Wehrs v...