Opinion of the Advocate-General
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My Lords,
1 . In these proceedings, the Netherlands Government seeks the annulment of Commission Decision 88/630/EEC of 29 November 1988 concerning the clearance of EAGGF accounts for 1986 ( Official Journal 1988 L 353, p . 30 ) to the extent that it disallows expenditure of HFL 1 624 796 because of an alleged breach by the Dutch authorities of Community rules concerning quality controls on intervention butter .
2 . The dispute is a straightforward one and turns on the interpretation of the relevant Community rules . Those rules are set out in Commission Regulation ( EEC ) No 685/69 of 14 April 1969 on detailed rules of application for intervention on the market in butter and cream ( Official Journal English Special Edition 1969 ( I ), p . 194 ) as amended by Commission Regulation ( EEC ) No 1829/80 of 11 July 1980 ( Official Journal 1980 L 178, p . 22 ) and Commission Regulation ( EEC ) No 1836/86 of 12 June 1986 ( Official Journal 1986 L 158, p . 57 ).
3 . Under Regulation No 685/69, intervention agencies are to buy in butter only if it satisfies certain requirements, including requirements as to good keeping quality ( Articles 2 and 3 ). To that end, Article 6(1 ) ( as amended by Regulation No 1836/86 ) provides that prior to definitive purchase the butter must first be kept for a storage test period of two months starting from the day of entry of the butter into the cold storage depot . Under Article 6(2 ) ( as amended by Regulation No 1829/80 ), the seller by his offer undertakes that "where, during the storage test period, the deterioration in the quality of the butter proves greater than that which normally results from storing butter satisfying the requirements referred to in Article 2", he will take back the butter, reimburse any buying-in price already paid and pay the storage costs from the day of takeover to the date of removal from storage .
4 . It is common ground that Article 6 implicitly requires Member State authorities to carry out tests on the keeping quality of butter put into trial storage in order to determine whether abnormal deterioration has taken place . The dispute turns on when those tests should be carried out . The practice of the Dutch authorities is to take samples towards the end of the trial two-month period, on average around day 53 . In the Commission' s view, the tests should not take place before the end of that period, at the earliest on the last day, at the latest several days afterwards .
5 . Case C-11/90 Netherlands v Commission raises the same issue in relation to the clearance of accounts for 1987 and the decision in this case is likely to determine that case also . Case C-28/89 Germany v Commission also raises the same issue, among others . The oral hearing in that case was held on 9 October 1990 and I have reserved my Opinion in the present proceedings so as to consider both cases together .
6 . In the present case, the Netherlands Government argues that the wording of Article 6(2 ) of Regulation No 685/69, which refers to deterioration "during the storage test period", indicates that testing must take place before the end of that period . It points out that, in view of the consequences of the rejection of butter as substandard, it is in the interests of the seller to know before the end of the trial period whether or not the butter will be purchased : the Commission' s interpretation in effect results in an extension of the trial period, which would leave the seller in continuing uncertainty and could result in his incurring increased storage costs . The Netherlands Government also considers that its interpretation is perfectly in keeping with the objective of Article 6, which is to ensure that the butter meets the necessary conditions for keeping quality . In this regard, it relies on a Danish study ( annexed to the Application ) on the effect of temperature on the keeping quality of different butter varieties put in cold storage . According to the Netherlands Government, that study suggests that butter kept in cold storage at a temperature of -18 C which has not shown any abnormal deterioration after 45 days will not show any after 60 days . The Netherlands Government deduces from this that any abnormal deterioration will manifest itself at a relatively early stage of the test period . In addition, the Netherlands Government argues that the disallowance is contrary to the principles of legal certainty and/or protection of legitimate expectations in that it was not until 1987 that the Commission challenged the Dutch interpretation of the regulation . Finally, it contends that the Commission' s decision is not adequately reasoned, in particular as regards the proportion of relevant expenditure which was disallowed .
7 . The Commission argues that its interpretation is in keeping with the purpose of the trial period, which, by guaranteeing that the butter meets the required standards for keeping quality, reduces the risk for the Community of deterioration in the quality of the butter during the period of intervention storage which follows that period . While acceptable results to tests carried out towards the end of the trial period might indicate a probability that the butter will meet the required standards at the end of that period, it cannot establish this with any certainty . The Commission argues that the interest of the seller in knowing what his obligations are can be met by carrying out the tests as soon as possible after the end of the trial period . As regards the arguments on legal certainty and legitimate expectations, the Commission points out that it did not discover the Dutch practice until it carried out certain inspections in 1987; in any event, it explained its interpretation at a meeting of the Milk Management Committee in August 1985 and confirmed it in an interpretative note of March 1986 . Member States thus had adequate time to adapt their practice to the correct interpretation .
8 . In my opinion, the wording of the regulation supports the Commission' s strict interpretation . Article 6(1 ) provides for butter to be put through a "storage test period", the purpose of which, as the cited words clearly indicate, is to permit an assessment to be made of the keeping quality of the butter before it is definitively taken over by the intervention agency . The trial period is expressly fixed at two months, not more and not less . The wording of Article 6(1 ) thus clearly indicates that testing for keeping quality cannot take place before the end of the trial period .
9 . It is not possible for the words "during the storage test period" in Article 6(2 ) to bear the strained interpretation put on them by the Dutch Government . These words cannot indicate that it is sufficient to carry out tests on keeping quality in the course of the trial period, since that would be in flat contradiction with the requirement in Article 6(1 ) that the trial period is fixed at two months . In my view, Article 6(2 ) is merely concerned with the consequences of the finding, at the end of the trial period, that the butter has suffered an abnormal deterioration in quality, and contains no indication as to the timing of the tests .
10 . The objective of the two-month trial period and the quality tests, namely, to provide a guarantee of keeping quality before the butter is definitively taken into intervention storage, also supports a strict interpretation of the regulation .
11 . It is, of course, conceivable that that objective could be achieved by other methods . The Netherlands Government, relying on the Danish report already referred to, argues that tests carried out after only 14 days on samples of butter taken at the time of entry into cold storage and kept at a temperature of 13 C, already provide a sufficient guarantee of keeping quality and that butter which passes those tests will not manifest serious deterioration for some 564 days . If that is correct, then it might indicate that the two-month trial period is longer than is necessary and that the regulation should be amended to take account of technical advances in testing methods . The issue is a technical one which has certainly not been determined by these proceedings . The significance of the Danish report was the subject of a written question put by the Court to the Netherlands Government and of questions asked at the hearing, the answers to which have not in my view removed the doubts about its relevance .
12 . In any event, the Court has consistently ruled, notably in Case 819/79 Germany v Commission [1981] ECR 21, that where Community legislation prescribes a particular system of supervision, the need for a uniform application of Community regulations requires that Member States must comply with that system, so that it is not necessary to consider whether an alternative system might be no less effective than that prescribed . Accordingly, for so long as Regulation No 685/69 lays down a storage test period of two months, there is in my view no doubt that Member State authorities must test for keeping quality at the end of the test period, even if they have already carried out other tests at the outset of or during the period .
13 . The Netherlands Government makes much of the seller' s interest in knowing where he stands in relation to butter in trial storage, and of the risk of a legal challenge in respect of tests carried out after the end of the trial period . However, in my view the seller' s legitimate interest can be adequately protected by carrying out the tests as promptly as possible at the end of the period . Moreover, it appears improbable that, where tests are carried out within, at the latest, a few days of the expiry of the test period, the seller would be able convincingly to argue that any abnormal deterioration discovered by the tests had not taken place during that period .
14 . It also appears to me that the arguments in relation to legal certainty and protection of legitimate expectations must be rejected . The Netherlands Government has itself produced, as annex to the Application, the Minutes ( in French ) of the 726th meeting of the Management Committee for Milk and Milk Products, held on 16 August 1985, which records at paragraph 7f(1 ) an interpretative statement by the Commission to the effect that "les contrôles de l' organisme d' intervention doivent [donc] être effectués au terme de cette période probatoire" ( emphasis added ). The Netherlands Government also appends an Interpretative Note of the Commission ( in English ) of 18 March 1986, which at paragraph 2, second indent, sets out in relation to Article 6(2 ) of Regulation No 685/89 the consequences "if, at the end of the probationary period, it is established that the butter does not meet the quality requirements referred to in Article 2 ..." ( emphasis added ). The Netherlands Government contends that these statements, and in particular the underlined phrases, were misleading and ambiguous and could reasonably lead it to suppose that tests carried out towards the end of the trial period were acceptable . In my view, however, both statements are quite unambiguous; moreover, the Minutes of the meeting of 16 August 1985 put the matter beyond any possible doubt by going on to record, at paragraph 7f(2 ), the Commission' s view that the tests should not be organized in such a way as to impose on the seller "un allongement sensible" ( an appreciable prolongation ) of the test period . It thus appears that as early as August 1985 the Member States had adequate warning of the Commission' s interpretation, so that they were in a position to adapt their practices before the start of 1986 .
15 . Finally, I would also reject the argument of the Netherlands Government that, having regard to the difficulties of interpretation raised by Article 6 of Regulation No 685/69, and to the number of Member States which applied a different interpretation from that of the Commission, the reasons given for the disallowance in the Summary Report on the clearance of accounts for 1986 must be regarded as inadequate . The Commission' s position is fully set out at paragraph 3.3.4.2 ( at pp . 54 and 55 ) of the Summary Report, and I have already indicated that in my view there was no basis for an alternative interpretation, even if held by a relatively large number of Member States . As regards the specific percentage of disallowance, i.e . 0.25% of relevant expenditure, it appears from the Summary Report that the Commission reached this figure on the basis of two considerations . First, the quality controls on production carried out in the five affected Member States were, on the whole, adequate . Secondly, the tests for keeping quality carried out in the Member States which did observe the correct procedures indicated that only a small proportion of the total quantities failed to meet required standard . It is of course true that these factors do not fully explain the precise percentage arrived at . But since it was impossible for the Commission to determine what the correct figure should have been in relation to each of the affected five Member States, and since the alternative approach would have been to disallow the whole of the relevant expenditure, I consider that the reasons given for the adoption of the percentage must be regarded as adequate .
16 . Accordingly, I am of the view that the Court should dismiss the application and order the Kingdom of the Netherlands to pay the costs .
(*) Original language : English .
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