JUDGMENT OF THE COURT (Third Chamber)
20 January 2000 (1)
(Agriculture Regulation (EEC) No 4115/88 Aid for the extensification ofproduction Penalties applicable)
In Case C-414/98,
REFERENCE to the Court under Article 177 of the EC Treaty (now Article 234EC) by the Verwaltungsgericht Schwerin (Germany) for a preliminary ruling in theproceedings pending before that court between
Landerzeugergemeinschaft eG Groß Godems
and
Amt für Landwirtschaft Parchim
on the interpretation of Article 16 of Commission Regulation (EEC) No 4115/88of 21 December 1988 laying down detailed rules for applying the aid scheme topromote the extensification of production (OJ 1988 L 361, p. 13), as amended byCommission Regulation (EEC) No 838/93 of 6 April 1993 (OJ 1993 L 88, p. 16),
THE COURT (Third Chamber),
composed of: J.C. Moitinho de Almeida, President of the Chamber, C. Gulmannand J.-P. Puissochet (Rapporteur), Judges,
Advocate General: D. Ruiz-Jarabo Colomer,
Registrar: R. Grass,
after considering the written observations submitted on behalf of:
Landerzeugergemeinschaft eG Groß Godems, by C. Columbus,Rechtsanwältin, Berlin,
the Commission of the European Communities, by M. Niejahr and K.-D.Borchardt, of its Legal Service, acting as Agents,
having regard to the report of the Judge-Rapporteur,
after hearing the Opinion of the Advocate General at the sitting on 11 November1999,
gives the following
Judgment
- 1.
- By order of 17 September 1998, received at the Court Registry on 20 November1998, the Verwaltungsgericht (Administrative Court) Schwerin referred to the Courtfor a preliminary ruling under Article 177 of the EC Treaty (now Article 234 EC)three questions on the interpretation of Article 16 of Commission Regulation(EEC) No 4115/88 of 21 December 1988 laying down detailed rules for applyingthe aid scheme to promote the extensification of production (OJ 1988 L 361, p. 13),as amended by Commission Regulation (EEC) No 838/93 of 6 April 1993 (OJ 1993L 88, p. 16).
- 2.
- Those questions were raised in proceedings between Landerzeugergemeinschaft(Agricultural Producer Group) eG Groß Godems (hereinafter 'theLanderzeugergemeinschaft) and the Amt für Landwirtschaft (Office forAgriculture) Parchim (hereinafter 'the Amt) concerning the withdrawal ofextensification aid paid by that body.
- 3.
- Regulation No 4115/88 was adopted on the basis of Article 1b of CouncilRegulation (EEC) No 797/85 of 12 March 1985 on improving the efficiency ofagricultural structures (OJ 1985 L 93, p. 1), as last amended by Council Regulation(EEC) No 1137/88 of 29 March 1988 (OJ 1988 L 108, p. 1). As is clear from itsArticle 3, its purpose is inter alia to make the grant of extensification aidconditional upon an undertaking by the producer to make a real reduction in output.
- 4.
- Under Article 4 the reduction in output is to be ensured by the farmer accordingto the procedure laid down by the Member States, which may provide for twomethods, a 'quantitative method, based on the actual reduction in quantitativeterms, in accordance with Article 6 of Regulation No 4115/88, and a 'productionmethods method, based on the adoption of less intensive production methods, inaccordance with Article 8 of that regulation.
- 5.
- Regulation No 4115/88 also lays down the checks to be carried out by MemberStates and the measures to be taken to penalise failure to comply with undertakingsgiven by the beneficiary. In that connection, in particular, Article 16, as amendedby Regulation No 838/93, provides:
'1. Where checks on the number of units of area (hectares), livestock (LSU),weight (tonnes) or volume (m3) show a discrepancy of at least 2% and 0.2 units upto 10% and two units between the number of units for which the aid is requestedand the number of units measured, the aid shall be calculated on the basis of thelatter number of units, reduced by the margin of excess. That reduction shall alsoapply to aid paid in advance, except where the beneficiary can prove that thediscrepancy is not intentional or the result of negligence on his/her part.
2. If the excess exceeds the limits given in paragraph 1, no aid shall be due for theperiod covered by the undertaking to carry out extensification, without prejudiceto any additional penalty which may be appropriate. Aid paid for previous years,however, shall not be recovered if the beneficiary can prove that the discrepancyis not intentional or the result of negligence on his/her part.
3. Member States shall impose financial penalties as a minimum sanction in theevent of failure to comply with undertakings made, other than undertakingsreferred to in paragraphs 1 and 2, except in cases of force majeure or failure tocomply with undertakings as a result of other factors beyond the control of thebeneficiary. In the case of serious infringements of these undertakings andparticularly in the case of attempted fraud by the beneficiary or his/her successors,no aid shall be due for the period covered by the undertaking to carry outextensification, without prejudice to any additional penalty which may beappropriate.
- 6.
- It is clear from the order for reference that the Extensivierungs-RichtlinieMecklenburg-Vorpommern of 1 September 1991 (Directive of the Minister forAgriculture of the Land Mecklenburg-Vorpommern concerning extensification,hereinafter 'the Richtlinie), regulates the extensification of agricultural productionby the 'production methods method provided for by Articles 4 and 8 ofRegulation No 4115/88, by applying the rules of organic farming. In particular,under Paragraphs 2.5(a) and 4.2.1 of the Richtlinie, the use of synthetic nitrogencompounds is prohibited after the conversion of the farming operation to lessintensive production methods.
- 7.
- By decision of 24 January 1992, the Amt granted the Landerzeugergemeinschaftannual aid for extensification of its agricultural production over a five-year periodon its undertaking to carry out extensification on its land during that period. Theamount of that annual aid, initially set at DEM 298 650, on the basis of an area of352.95 ha cultivated with surplus products and an area of 495.49 ha cultivated withnon-surplus products, was amended by subsequent decisions. Aid for the financialyears 1991/1992 and 1992/1993 was actually paid.
- 8.
- In the course of a check carried out on 17 June 1994 it was found that theLanderzeugergemeinschaft had that very day spread synthetic fertilizer on an arablearea of 56.85 hectares. The Amt took the view that the Landerzeugergemeinschafthad breached its undertaking to use less intensive production methods and not touse nitrogenous fertilizer on areas subject to extensification, and that thatdeliberate contravention constituted a serious infringement within the meaning ofArticle 16(3) of Regulation No 4115/88, as amended. By decision of 2 December1994, it therefore annulled its decision to grant annual aid and all the amendingdecisions and demanded repayment of the sums already paid.
- 9.
- As the objection lodged by the Landerzeugergemeinschaft against that decision wasdismissed, it brought an action in the Verwaltungsgericht Schwerin. Taking the viewthat the dispute turned on the interpretation of Article 16 of Regulation No4115/88, as amended, the Verwaltungsgericht decided to stay proceedings and referthe following questions to the Court of Justice for a preliminary ruling:
'1. Does the penalty laid down by the first sentence of Article 16(1) ofRegulation (EEC) No 4115/88, as amended by Regulation (EEC) No838/93, still apply where the discrepancy between the number of units forwhich the aid is requested and the number of units measured is not morethan 10% of the area but more than two hectares?
2. Does the reduction with regard to aid paid in advance, laid down by thesecond sentence of Article 16(1) of Regulation (EEC) No 4115/88, asamended by Regulation (EEC) No 838/93, extend back only to the point intime when the areas under cultivation ceased to be farmed extensively oris the discrepancy to be calculated and deducted for the whole period of theundertaking?
3. What are the criteria for determining whether there is a seriousinfringement within the meaning of Article 16(3) of Regulation (EEC) No4115/88, as amended by Regulation (EEC) No 838/93?
The first question
- 10.
- By its first question the national court is asking whether the method of calculatingthe reduction of extensification aid laid down by Article 16(1) of Regulation No
4115/88, as amended, is applicable where the discrepancy between the number ofunits for which the aid is requested and the number of units measured exceeds twohectares but is less than 10% of the surface for which aid is requested.
- 11.
- The plaintiff in the main proceedings and the Commission submit that the Courtshould answer that question in the affirmative. They argue that the reductionmethod laid down by Article 16(1) of Regulation No 4115/88, as amended, appliesas long as the two maximum limits laid down by that paragraph have not both beenexceeded, any other interpretation being contrary to the proportionality of thesystem of penalties provided for by Regulation No 4115/88, as amended.
- 12.
- It is clear from the wording of Article 16(1) of Regulation No 4115/88, as amended,that the reduction provided for by that article applies where the discrepancy foundis between the two minimum limits (2% and 0.2 ha) and the two maximum limits(10% and 2 ha) which it establishes. The use of the word 'and to link the twolimits in each case indicates that they are cumulative. The provision in questiontherefore applies where the minimum limits have both been attained and themaximum limits have not both been exceeded.
- 13.
- As the plaintiff in the main proceedings and the Commission point out, any otherinterpretation would be contrary to the general scheme of the system of penaltieslaid down by Regulation No 4115/88, as amended. That system lays down differentpenalties according to the seriousness of the infringement established and, inparticular, takes account, through the use of both percentage and absolutethresholds, of differences in the scale of the operations concerned.
- 14.
- The answer to the first question must therefore be that Article 16(1) of RegulationNo 4115/88, as amended, must be interpreted to mean that the method ofcalculating the reduction of extensification aid which it lays down is applicablewhere the discrepancy between the number of units for which the aid is requestedand the number of units measured exceeds two hectares but is less than 10% of thesurface for which aid is requested.
The second question
- 15.
- By its second question the national court is asking whether the reduction ofextensification aid laid down by the second sentence of Article 16(1) of Regulation(EEC) No 4115/88, as amended, is confined to the period after the infringementwas established or covers the whole period of the undertaking given by thebeneficiary of the aid.
- 16.
- The plaintiff in the main proceedings takes the view that the reduction ofextensification aid must be confined to the period after the infringement. It arguesthat this interpretation must be inferred a contrario from the clear wording of
Article 16(2) and (3), according to which 'no aid shall be due for the periodcovered by the undertaking to carry out extensification.
- 17.
- The Commission takes the opposing view that the reduction must also cover theperiod before the infringement if the beneficiary of the aid does not prove that thediscrepancy between the number of units for which aid is requested and thenumber of units measured is neither intentional nor the result of negligence on itspart. The Commission argues that the phrase '[t]hat reduction shall also apply toaid paid in advance in the second sentence of Article 16(1) of Regulation No4115/88, as amended, reflects the intention of the legislature to reduce aid for thewhole of the period covered by the undertaking given.
- 18.
- It is clear from the wording of the second sentence of Article 16(1) of RegulationNo 4115/88, as amended, that the reduction also applies to aid paid before theinfringement, unless the beneficiary can prove that the discrepancy is notintentional or the result of negligence on its part. Except in such a case, thereduction must therefore relate to the whole of the period covered by theundertaking given by the beneficiary of the aid.
- 19.
- Contrary to the arguments of the plaintiff in the main proceedings, the wording ofArticle 16(2) and (3) of Regulation No 4115/88, as amended, does not allow anyother interpretation of the provision in question. Those paragraphs cover moreserious penalties, consisting, in particular, in the total withdrawal of aid, whereasArticle 16(1) concerns only its reduction, even if such reduction applies to thewhole of the period covered by the undertaking.
- 20.
- The answer to the second question must therefore be that the reduction ofextensification aid laid down by the second sentence of Article 16(1) of RegulationNo 4115/88, as amended, covers the whole period of the undertaking given by thebeneficiary of the aid, unless the latter can prove that the discrepancy between thenumber of units for which aid was requested and the number of units measured isneither intentional nor the result of negligence on its part.
The third question
- 21.
- In the light of the answers given to the first two questions, there is no need to replyto the third question.
Costs
- 22.
- The costs incurred by the Commission, which has submitted observations to theCourt, 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 oncosts is a matter for that court.
On those grounds,
THE COURT (Third Chamber),
in answer to the questions referred to it by the Verwaltungsgericht Schwerin byorder of 17 September 1998, hereby rules:
1. Article 16(1) of Commission Regulation (EEC) No 4115/88 of 21 December1988 laying down detailed rules for applying the aid scheme to promote theextensification of production, as amended by Commission Regulation(EEC) No 838/93 of 6 April 1993, must be interpreted to mean that themethod of calculating the reduction of extensification aid which it laysdown is applicable where the discrepancy between the number of units forwhich the aid is requested and the number of units measured exceeds twohectares but is less than 10% of the surface for which aid is requested.
2. The reduction of extensification aid laid down by the second sentence ofArticle 16(1) of Regulation No 4115/88, as amended by Regulation No838/93, covers the whole period of the undertaking given by the beneficiaryof the aid, unless the latter can prove that the discrepancy between thenumber of units for which aid was requested and the number of unitsmeasured is neither intentional nor the result of negligence on its part.
| Moitinho de AlmeidaGulmann Puissochet |
Delivered in open court in Luxembourg on 20 January 2000.
R. Grass
J.C. Moitinho de Almeida
Registrar
President of the Third Chamber