Milk Marketing Board of England and Wales v Cricket St. Thomas Estate. (Agriculture ) [1990] EUECJ R-372/88 (27 March 1990)

Judgment 1 By order dated 3 November 1988 which was received at the Court on 23 December 1988, the High Court of Justice, Queen' s Bench Division, referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty a number of questions on the interpretation of Article 25 of Regulation ( EEC ) No 804/68 of the Council of 27 June 1968 on the common organization of the market in milk and milk products ( Official Journal, English Special Edition 1968 ( I ), p . 176 ), as amended by Council Regulation ( EEC ) No 1421/78 of 20 June 1978 ( Official Journal 1978, L 171, p . 12 ). 2 Those questions were raised in proceedings between Cricket St Thomas Estate ( hereinafter referred to as "Cricket St Thomas "), an agricultural estate producing milk and milk products, and the Milk Marketing Board of England and Wales ( hereinafter referred to as "the Board "). 3 The Board is one of several such statutory bodies ( Milk Marketing Boards ) in the United Kingdom, whose principal activities are the purchase, wholesaling and retailing of milk for human consumption and the manufacture and sale of milk products of various kinds . 4 After the accession of the United Kingdom to the Community, the operation of the Milk Marketing Boards was integrated into the common organization of the market in milk and milk products established by Regulation No 804/68, cited above, which is the basic regulation for such products . Regulation No 1421/78, cited above, amending Regulation No 804/68, provided for the possibility of recognizing the Milk Marketing Boards within the framework of that common organization of the market and authorizing the Member State in question to grant, subject to certain conditions, to an organization of milk producers established in a specific area ( a ) the exclusive right to buy from those producers the milk which they produce and market without processing and ( b ) the right to equalize the prices paid to producers, irrespective of the use for which the milk purchased from them is intended . 5 In 1981 those special rights were granted to the Board by the competent national authorities pursuant to Council Regulation ( EEC ) No 1422/78 of 20 June 1978 concerning the granting of certain special rights to milk producer organizations in the United Kingdom ( Official Journal 1978, L 171, p . 14 ). Rules for implementing that regulation were laid down by Commission Regulation No 1565/79 of 25 July 1979 ( Official Journal 1979, L 188, p . 29 ). 6 The rules governing the exercise of those special rights are laid down in the Milk Marketing Scheme . That scheme, which regulates the Board' s activities, makes provision for producers established within the Board' s area to be required to sell to the Board the milk which they produce . The Board has, for its part, an obligation, subject to certain exceptions, to purchase any raw milk of marketable quality offered to it by those producers . 7 Under the Milk Marketing Scheme, two categories of producer may be permitted, subject to certain conditions, to withhold their milk from sale to the Board and to market it on their own account . Those two categories of producer are producer-retailers, who hold a retail licence issued by the Board, and producer-processors, who are parties to a withholding agreement with the Board . Both categories of producer are required to pay certain contributions to the Board in accordance with the provisions of the Milk Marketing Scheme . The payment of those contributions is also provided for in the terms of the abovementioned licences and agreements . 8 Cricket St Thomas holds a producer-retailer licence and is also a producer-processor under an agreement entered into with the Board . It sells milk on the retail market both directly and through intermediaries . 9 In 1984, Cricket St Thomas stopped paying contributions to the Board . In 1986, the Board brought an action to recover those sums . The action relates to contributions payable by producers under the Milk Marketing Scheme, that is to say "capital contributions" calculated by reference to the total quantity of milk sold and intended to finance the Board' s capital investments, "producer-retailer contributions" payable under a producer-retailer licence, and "producer-processor contributions" payable under an agreement between the Board and a producer-processor, as well as penalties and sums recoverable in the event of a failure to comply with obligations under the Milk Marketing Scheme, in particular the obligation to furnish returns of the quantities of milk withheld from the Board . 10 Before the High Court, Cricket St Thomas contended that each of those claims was contrary to Community law . It argued that the Board' s exclusive right to buy within the meaning of Article 25(1)(a ) of Regulation No 804/68 did not extend to milk pasteurized by the producer . It further contended that the Board had no power under Community law to require producers who withheld their milk from the Board to pay contributions and that the sums demanded were unreasonable in amount . 11 The High Court has referred the following questions to the Court for a preliminary ruling : "( 1 ) Whether,and if so in what circumstances, the exclusive right referred to in Article 25(1)(a ) of Regulation ( EEC ) No 804/68 as amended by Council Regulation ( EEC ) No 1421/78 is exercisable in respect of pasteurized milk? ( 2 ) ( a ) Is the Milk Marketing Board in England and Wales entitled as a matter of Community law, and if so in what circumstances, to require a producer who produces pasteurized milk in England and Wales and sells it there ( otherwise than to the Board ), to pay to the Board a levy on such milk (' the contribution' ) so that the producer is treated in principle as if he had sold his milk to the Board at the producer price and bought it back at the Board' s trade selling price? ( b ) Is the Board so entitled, and if so in what circumstances, if the milk is not pasteurized? ( 3 ) Does the answer to Question 2 vary according to whether the sale of milk is by retail, by semi-retail or by wholesale? ( 4 ) If the Milk Marketing Scheme ( as amended ) does not expressly empower the Board to impose the contribution upon such producers who are 'producer-processors' , may the Board none the less impose the contribution on producer-processors in reliance upon any Community law entitlement which may be found to exist in answer to Questions 1 or 2 above? ( 5 ) In any event is the Board entitled as a matter of Community law to require the producers mentioned in Question 2 to pay to the Board additional sums by way of : ( a ) capital levies pursuant to paragraphs 51(2 ) and 71(2 ) of the Scheme; ( b ) losses pursuant to Section 10 of the Agricultural Marketing Act 1958 and paragraph 77(6 ) of the Scheme; ( c ) penalties pursuant to paragraph 77 of the Scheme?" 12 Reference is made to the Report for the Hearing for a fuller account of the legal background, the facts of the case in the main proceedings, the course of the procedure and the observations submitted to the Court, which are referred to hereinafter only in so far as is necessary for the reasoning of the Court . The first question : Interpretation of Article 25(1)(a ) of Regulation No 804/68, as amended by Regulation No 1421/78 13 In order to answer this question, the purpose of which is to ascertain the scope of the Board' s prerogatives regarding the purchase of milk vis-à-vis producers within its area, it must be determined whether the concept of milk produced and marketed without processing includes milk pasteurized by the producers in question . 14 With regard to this point, the parties to the main proceedings have given conflicting interpretations of Article 25(1)(a ) of the basic regulation, No 804/68, as amended, on the basis, in particular, of the different language versions of that subparagraph . Cricket St Thomas relies on the English version to support the interpretation that the Board' s exclusive purchasing right does not cover pasteurized milk, while the Board relies on the other language versions to reach the conclusion that the exclusive right in question extends to milk pasteurized by producers . 15 The English version of Article 25(1)(a ) of the basic regulation appears to exclude from the Board' s exclusive purchasing right any milk which has been processed, referring as it does to "the milk which they produce and market without processing ". However, it must be noted that other provisions in the same language version, which define the Board' s commercial powers according to the state of preparation of the milk or milk products, contain a number of terminological discrepancies in the use of the terms "processing", "manufacture" and "conversion ". 16 The other language versions, particularly the French and German versions, which are consistent in their use of the terms in question, contain on the contrary a distinction between the concept of the treatment of milk and processing operations . In those versions, Article 7(1 ) and Article 10(2 ) of Regulation No 1422/78 and Article 3(1 ) of Commission Regulation ( EEC ) No 1565/79 of 25 July 1979 laying down rules for implementing Regulation ( EEC ) No 1422/78 distinguish between milk which is "en l' état", meaning milk as such, and "produits transformés", meaning products processed from milk . 17 In determining the scope of the Board' s exclusive right to buy milk, it must be stressed at the outset that whilst the relevant Community rules were drawn up in order to take account of the special situation of the Milk Marketing Boards in the United Kingdom, Regulation No 1421/78, as the third recital in its preamble indicates, does not refer exclusively to that Member State since it also envisages the possibility that equivalent organizations may be recognized in other Member States . 18 In any event, the English version of Article 25(1)(a ) of Regulation No 804/68 cannot serve as the sole basis for the interpretation of that provision, or be made to override the other language versions in this regard . Such an approach would be incompatible with the requirement for the uniform application of Community law . 19 As the Court stated in its judgment of 5 December 1967 in Case 19/67 Sociale Verzekeringsbank v Van der Vecht (( 1967 )) ECR 345, the need for a uniform interpretation of Community regulations means that a particular provision should not be considered in isolation but in cases of doubt should be interpreted and applied in the light of the other languages . In its judgment of 27 October 1977 in Case 30/77 Regina v Bouchereau (( 1977 )) ECR 1999, the Court also stated that the different language versions of a Community text must be given a uniform interpretation and hence, in the case of divergence between the language versions, the provision in question must be interpreted by reference to the purpose and general scheme of the rules of which it forms a part . 20 As regards the provisions to which the national court refers, it must be noted that Article 25(2 ) of Regulation No 804/68, as amended, which is the basic provision in the matter, draws a distinction between milk used for direct human consumption in the form of whole milk, on the one hand, and other milk products, on the other . Article 5(1 ) of Regulation No 1422/78, cited above, also draws a distinction, regarding the financial management and administration of the Milk Marketing Boards, between the processing of milk for direct human consumption and the manufacture of milk products . 21 It is clear from those considerations that the distinguishing criterion established by the Community rules as regards the scope of the Board' s exclusive right to buy milk is based on the main characteristics of the product in question and its intended commercial use . The question is therefore whether the product concerned may still be regarded as milk or whether it is a different product, derived from milk . 22 In that regard, it must be observed that the pasteurization process, which is a treatment carried out at a particular temperature in order to ensure that the milk keeps better, does not essentially alter the nature of the product, which remains milk for consumption, and must therefore be distinguished from other operations, in particular processing operations which involve converting the milk into a different product . 23 That conclusion is borne out by the objectives of the Community legislation laying down special rules governing the operation of the Milk Marketing Boards in the United Kingdom . If the Board' s exclusive right to buy milk did not extend to pasteurized milk, producers would be able to refuse to supply their milk to the Board, and to pasteurize it and sell it directly on the market . That result would mean the creation of a second marketing channel jeopardizing the effectiveness of the system operated under the Milk Marketing Scheme . 24 It must be added that the circumstances in which the Board' s exclusive right to buy pasteurized milk must be exercised are laid down in Regulations Nos 1422/78 and 1565/79, cited above . 25 Consequently, the answer to the first question must be that the exclusive right referred to in Article 25(1)(a ) of Regulation ( EEC ) No 804/68 of the Council of 27 June 1968 on the common organization of the market in milk and milk products, as amended by Council Regulation ( EEC ) No 1421/78 of 20 June 1978, is exercisable in respect of pasteurized milk in the circumstances laid down in Council Regulation ( EEC ) No 1422/78 of 20 June 1978 concerning the granting of certain special rights to milk producer organizations in the United Kingdom and Commission Regulation ( EEC ) No 1565/79 of 25 July 1979 laying down rules for implementing Regulation No 1422/78 . The second, third and fourth questions : Contributions levied on certain categories of producer 26 In these questions, the national court seeks to ascertain the extent to which and the circumstances in which Community law allows the Board to levy the contributions provided for under the Milk Marketing Scheme on producers who withhold the milk which they produce - whether it be raw or pasteurized - from sale to the Board and sell it by retail, by semi-retail or by wholesale . 27 It must be recalled first of all that in its judgment of 2 December 1986 in Case 23/84 Commission v United Kingdom (( 1986 )) ECR 3581 the Court accepted that the milk marketing schemes set up in the United Kingdom, which involve a number of restrictions for milk producers in so far as they are subject to the Board' s prerogatives, were lawful in the light of the general principles of the Treaty . 28 It must also be stressed that, under Articles 7 and 8 of Regulation No 1422/78, the Board' s exclusive right to buy milk does not extend to the quantities which the producer withholds from sale to the Board by agreement with that organization or to the milk produced by a producer-retailer . 29 Those two categories of producer are defined under the Milk Marketing Scheme respectively as producer-processors, who are parties to an agreement with the Board, in accordance with Article 7 of Regulation No 1422/78, and as producer-retailers, who hold a licence granted by the Board, in accordance with Article 8 of Regulation No 1422/78 . 30 The contributions from those two categories of producer are intended to regulate the difference between the higher price which such producers can obtain by selling directly on the market and the lower price which would be paid to them by the Board . They are intended to place producer-processors and producer-retailers in the same position as other producers . The purpose of the contributions, therefore, is to ensure equal treatment for all producers subject to the Milk Marketing Scheme and to prevent producer-processors and producer-retailers from having an advantage over other producers who, being less able to market their milk directly, sell their milk to the Board . 31 It should be added that the Board may refuse to enter into an agreement with a producer-processor or to issue a licence to a producer-retailer . It is therefore entitled, a fortiori, to make the grant of the right to withhold the milk produced by the producers in question from sale to the Board subject to certain conditions whose purpose is to ensure the maintenance and operation of the Milk Marketing Scheme . 32 It follows from the foregoing that the obligation to pay the contributions in question applies both to raw milk and to pasteurized milk sold directly on the market . 33 As regards the manner in which the milk is sold, namely by retail, by semi-retail or by wholesale, this can have no effect on the existence of that obligation since the relevant Community provisions do not draw any distinction between the various ways in which the milk is marketed . 34 The amount of the contributions to be paid by a producer who produces pasteurized milk in a specific area of the United Kingdom and sells it there otherwise than to the Board must nevertheless satisfy the requirements of proportionality laid down in Article 5(3 ) of Regulation No 1422/78, as must the rules governing their collection by the Board . 35 It is for the national court to make the necessary findings of fact in order to determine whether the contributions in question meet those criteria . 36 The answer to the second, third and fourth questions must therefore be that a Milk Marketing Board is entitled as a matter of Community law to require a producer who produces pasteurized milk in a specific area of the United Kingdom and sells it there otherwise than to that Milk Marketing Board to pay contributions, whether the sale of the milk is by retail, by semi-retail or by wholesale, provided that such contributions satisfy the requirements of proportionality laid down in Article 5(3 ) of Regulation No 1422/78 . The fifth question : Further financial obligations for certain categories of producer 37 By this question, the national court seeks to ascertain whether the Board is entitled under Community law to require producers who have decided not to sell their milk to the Board to pay additional sums by way of capital levies, losses and penalties pursuant to the Milk Marketing Scheme . 38 The provisions of the scheme cited by the national court refer to the measures which the Board may take as a result of a breach of the various obligations which producers have under the scheme . Besides the obligation upon producer-processors and producer-retailers to pay contributions, there is an obligation for such producers to provide the Board with returns indicating the quantities of milk not sold to the Board during the course of a specific accounting period . 39 If a producer-processor or producer-retailer fails to supply the required returns showing the quantities of milk withheld from sale to the Board, the Milk Marketing Scheme provides that the Board may estimate those quantities in order to assess the sums payable by the producer by way of capital levies, losses recoverable in respect of unpaid contributions and penalties imposed in respect of breaches of obligations . 40 It should be noted that the obligations regarding the provision of information arise from the supervisory arrangements provided for in Regulation No 1565/79 . 41 It must be stressed that it is for the national court to assess whether those provisions of the Milk Marketing Scheme whose purpose is to facilitate the Board' s exercise of its statutory functions regarding the supervision and management of the scheme are in conformity with the general principles of Community law, in particular the principle of proportionality . 42 The answer to the fifth question must therefore be that Community law does not preclude a Milk Marketing Board from requiring producers who produce pasteurized milk in a specific area of the United Kingdom and sell it there otherwise than to that Milk Marketing Board to pay financial charges if those producers contravene the provisions of the relevant milk marketing scheme, provided that such charges are consistent with the general principles of Community law, in particular the principle of proportionality . Costs 43 The costs incurred by the United Kingdom and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable . Since these proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the proceedings pending before the national court, the decision on costs is a matter for that court . On those grounds, THE COURT ( Sixth Chamber ), in answer to the questions submitted to it by the High Court of Justice, Queen' s Bench Division, by order of 3 November 1988, hereby rules : ( 1 ) The exclusive right referred to in Article 25(1)(a ) of Regulation ( EEC ) No 804/68 of the Council of 27 June 1968 on the common organization of the market in milk and milk products, as amended by Council Regulation ( EEC ) No 1421/78 of 20 June 1978, is exercisable in respect of pasteurized milk in the circumstances laid down in Council Regulation ( EEC ) No 1422/78 of 20 June 1978 concerning the granting of certain special rights to milk producer organizations in the United Kingdom and Commission Regulation ( EEC ) No 1565/79 of 25 July 1979 laying down rules for implementing Regulation No 1422/78 . ( 2 ) A Milk Marketing Board is entitled as a matter of Community law to require a producer who produces pasteurized milk in a specific area of the United Kingdom and sells it there otherwise than to that Milk Marketing Board to pay contributions, whether the sale of the milk is by retail, by semi-retail or by wholesale, provided that such contributions satisfy the requirements of proportionality laid down in Article 5(3 ) of Regulation No 1422/78 . ( 3 ) Community law does not preclude a Milk Marketing Board from requiring producers who produce pasteurized milk in a specific area of the United Kingdom and sell it there otherwise than to that Milk Marketing Board to pay financial charges if those producers contravene the provisions of the relevant milk marketing scheme, provided that such charges are consistent with the general principles of Community law, in particular the principle of proportionality . © European Communities, 2001 All rights reserved BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII