Stute Nahrungsmittelwerke GmbH & Co. KG v Bundesamt fuer Ernahrung und Forstwirtschaft. (Agriculture ) [1989] EUECJ R-77/88 (15 June 1989)

Judgment 1 By an order dated 1 March 1988, which was received at the Court on 9 March 1988, the Verwaltungsgericht Frankfurt am Main referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty a number of questions on the interpretation of Council Regulation ( EEC ) No 516/77 of 14 March 1977 on the common organization of the market in products processed from fruit and vegetables ( Official Journal 1977, L 73, p . 1 ). 2 Those questions were raised in the course of an action brought by Stute Nahrungsmittelwerke GmbH & Co . KG, Paderborn ( hereinafter referred to as "Stute ") against the Bundesamt fuer Ernaehrung und Forstwirtschaft, the German intervention agency, following its refusal to grant production aid which Stute had requested in respect of the processing of cherries purchased by it from a producers' organization into cherries preserved in syrup . That refusal was based on the view that the producers' organization in question did not satisfy the conditions laid down in Regulation No 516/77 . 3 The system of production aid for products processed from fruit and vegetables was established by Council Regulation ( EEC ) No 1152/78 of 30 May 1978 amending Regulation No 516/77 ( Official Journal 1978, L 144, p . 1 ). That regulation adds an Article 3a to Regulation No 516/77 which provides inter alia that the system of aid shall be based on "contracts binding, within the Community, producers or recognized groups or associations thereof and processors or legally constituted groups or associations thereof ". The system of aid applies to cherries preserved in syrup by virtue of Council Regulation ( EEC ) No 1639/79 of 24 July 1979 amending Regulation No 516/77 ( Official Journal 1979, L 192, p . 3 ). 4 The contract which gave rise to the dispute in the main proceedings was concluded between Stute and the company Rudolf Bargstedt Hamburg Obsterzeugerorganisation GmbH which supplied to Stute the cherries to be processed into cherries preserved in syrup . In the Bundesamt' s view that company could not be considered to be a producers' organization because it was under the control of Rudolf Bargstedt, a dealer and wholesaler who was not a producer of fruit and vegetables and therefore could not supply any to the company . He was the main shareholder in the company and, at the time when the contract with Stute was concluded, held 68 votes out of a total of 103 under the company' s document of incorporation . According to Stute, Bargstedt GmbH had been recognized by the authorities of the Land Hamburg as a producers' organization within the meaning of the provisions of Community law . The order for reference shows that that recognition was accorded under Council Regulation ( EEC ) No 1035/72 of 18 May 1972 on the common organization of the market in fruit and vegetables ( Official Journal, English Special Edition 1972 ( II ), p . 437 ). 5 The Verwaltungsgericht Frankfurt am Main, to which Stute appealed against that decision, decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling : "( 1 ) What are the minimum requirements which must be satisfied by a 'recognized' producers' group within the meaning of Article 3a(2 ) of Council Regulation ( EEC ) No 516/77 of 14 March 1977 ( Official Journal 1977, L 73, p . 1 ) as amended by Council Regulation ( EEC ) No 1152/78 ( Official Journal 1978, L 144, p . 1 ), Article 3a(1 ) of that regulation as amended by Council Regulation ( EEC ) No 988/84 of 31 March 1984 ( Official Journal 1984, L 103, p . 11 ), and Article 3(1 ) of Council Regulation ( EEC ) No 426/86 of 24 February 1986 ( Official Journal 1986, L 49, p . 1 )? With regard to those minimum requirements, is a producers' group as referred to in Article 3a of Regulation No 516/77 to be defined in accordance with Article 13 of Council Regulation ( EEC ) No 1035/72 or with Article 4 of Council Regulation ( EEC ) No 1360/78? ( 2 ) Do those minimum requirements include a requirement that the producers must be able to exert their influence on decisions in the recognized producers' group by holding a majority of votes, and does it matter if a member of such a producers' association is not a producer himself but holds the majority of votes, or is it sufficient if the producers, as minority shareholders, have powers of control and rights of veto? ( 3 ) Is compliance with those minimum requirements a condition of entitlement to aid if all other conditions in respect of such aid are satisfied, and in particular if the competent authority has recognized the producers' association? Is there in that respect a question of legitimate expectations on the part of the producers' association and its customers?" 6 Reference is made to the Report for the Hearing for a more detailed summary of the facts and legal background to the main proceedings and of the written observations submitted to the Court, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court . 7 It should be noted at the outset that the first two questions, which should be examined together, relate to the conditions which must be satisfied by producers' groups within the meaning of Regulation No 516/77 and to the help which examination of other agricultural regulations might provide for the purposes of interpretation . The third question concerns a different problem, that of the protection to be afforded to legitimate expectations on the part of a person who has concluded contracts with a company which that person may have believed to be a recognized producers' organization . The first and second questions 8 Although the first question asks in general terms what are the "minimum requirements" which must be satisfied by recognized producers' groups, the order for reference and the wording of the second question make it clear that the national court is seeking to ascertain whether the presence of persons other than producers among the members of the group prevents it from being accorded recognition and, if not, whether the position is different where non-producers hold a majority of votes in the group or have other means of exercising control over its affairs . 9 Article 3a of Regulation No 516/77, inserted by Regulation No 1152/78, provides no details of the requirements which must be satisfied by a producers' group or of the procedure by which recognition may be accorded to such a group . 10 It was not until 1988, in laying down detailed rules for the application of the Council regulation which succeeded Regulation No 516/77, that the Commission defined the concept of a producers' group, and it did so only for the purpose of implementing the system of aid for processed tomato products . According to that definition, which is contained in Article 1 of Commission Regulation ( EEC ) No 722/88 of 18 March 1988 ( Official Journal 1988, L 74, p . 49 ), a producers' group means either an organization of producers established and recognized in accordance with Regulation No 1035/72, which is the basic regulation governing fresh fruit and vegetables, or a group established for the conclusion of contracts for the supply of fresh tomatoes and recognized for that purpose by the Member State concerned . 11 Article 13 of Regulation No 1035/72 provides that an organization of fruit and vegetable producers must be established "on the producers' own initiative" and that such an organization has the object inter alia of requiring "producer members" to sell their produce through the organization and to adhere to the quality standards which it adopts . 12 It may be inferred from this set of disparate provisions that a recognized producers' group for the purposes of Regulation No 516/77 must consist principally of producers and must have been established on their own initiative . On the other hand, there is no provision which precludes a producers' group from accepting as members persons other than producers, in particular business people who are acquainted with the market and are able to contribute to improved marketing of the products in question . 13 Such an interpretation is consistent with the objectives of the legislation in question . It is clear from the relevant provisions already mentioned and from the preamble to Regulation No 1152/78 that the purpose of producers' groups as referred to by that Regulation is to ensure regular supplies to the processing industry and payment by processors of a minimum price to producers . In contracts concluded with processors, producers' groups are required in particular to organize the schedule for deliveries to processors so as to ensure regular supplies ( see Article 3a(2 ) of Regulation No 516/77 ). 14 An examination of the duties assigned to producers' groups by the applicable provisions shows that while such groups do perform certain functions in the commercial sector, they were established primarily in order to improve the quality and regularity of production and thereby to operate in the interest of producer members . It follows that producers themselves must exercise control over their groups . 15 The answer to the first and second questions must therefore be that Article 3a of Regulation No 516/77 on the common organization of the market in products processed from fruit and vegetables must be interpreted as meaning that a producers' group is characterized by the fact that it was established on the producers' initiative and that it consists principally of producers . Those requirements do not preclude the participation of non-producers in the group, provided, however, that they do not hold a majority of votes in the group or have other means of controlling the group' s affairs . The third question 16 Since the granting of aid to fruit and vegetable processing undertakings is made conditional on the existence of contracts with producers of fruit and vegetables or with "recognized groups or associations thereof", it is to be assumed that such a group must satisfy the conditions laid down by the relevant Community provisions . 17 The national court asks, however, whether the position may be different where a processing undertaking has concluded a supply contract with a company which, although not meeting all the conditions laid down, has been recognized as a producers' group by a national authority other than the competent intervention agency . The national court seeks in particular to ascertain whether such a processing undertaking may invoke the general principle of protection of legitimate expectations . 18 The answer to both those questions must be in the negative . In the first place, an economic unit which does not satisfy the conditions upon which recognition as a producers' group depends cannot acquire such a status by means of a measure adopted to that effect by an authority within a Member State . Secondly, Community aid may be granted only when the conditions laid down in the relevant Community provisions have been met . The right to receive production aid as defined in those provisions and financed out of Community funds cannot depend on a unilateral act by an authority within a Member State . 19 In those circumstances the processing undertaking cannot invoke the principle of protection of legitimate expectations in order to receive aid to which it is not entitled under the relevant provisions of Community law . 20 The answer to the third question must therefore be that Article 3a of Regulation No 516/77 must be interpreted as meaning that a processing undertaking is not entitled to production aid if the company with which it has concluded a contract for the supply of fresh fruit is not a recognized producers' group for the purposes of that provision . That remains true where the processing undertaking may have believed that the company in question had been recognized as a producers' organization under other provisions of Community law . Costs 21 The costs incurred by the Government of the Hellenic Republic and the Commission of the European Communities, which submitted observations to the Court, are not recoverable . As these proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the action before the national court, the decision on costs is a matter for that court . On those grounds, THE COURT ( Fourth Chamber ), in answer to the questions referred to it by the Verwaltungsgericht Frankfurt am Main by order of 1 March 1988, hereby rules : Article 3a of Council Regulation ( EEC ) No 516/77 of 14 March 1977 on the common organization of the market in products processed from fruit and vegetables must be interpreted as meaning that : ( a ) a producers' group is characterized by the fact that it was established on the producers' initiative and is composed principally of producers . Those requirements do not preclude the participation of non-producers in the group, provided, however, that they do not hold a majority of votes in the group or have other means of controlling the group' s affairs; ( b ) a processing undertaking is not entitled to production aid if the company with which it has concluded a contract for the supply of fresh fruit is not a recognized producers' group for the purposes of that provision . That remains true where the processing undertaking may have believed that the company in question had been recognized as a producers' organization under other provisions of Community law . © European Communities, 2001 All rights reserved BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII