Schweizerische Lactina Panchaud AG v Bundesamt fuer Ernahrung und Forstwirtschaft. [1989] EUECJ R-346/88 (14 December 1989)

Judgment 1 By order of 3 November 1988, which was received at the Court on 28 November 1988, the Verwaltungsgericht Frankfurt am Main referred a question to the Court pursuant to Article 177 of the EEC Treaty for a preliminary ruling on the interpretation of Article 4 of Commission Regulation No 1725/79 on the rules for granting aid to skimmed milk processed into compound feedingstuffs and skimmed-milk powder intended for feed for calves ( Official Journal 1979, L 199, p . 1 ). 2 That question was raised in a dispute between an undertaking producing feed for calves, whose registered office was in Kehl, Federal Republic of Germany, and the German intervention agency for dairy products, the Bundesamt fuer Ernaehrung und Forstwirtschaft ( Federal Office for Food and Forestry ). The latter had refused to grant the aid requested by the undertaking in respect of a quantity of skimmed-milk powder incorporated in animal feed on the ground that the labelling of the bags used to package the skimmed-milk powder in question was not in conformity with the requirements laid down by Regulation No 1725/79 . 3 The undertaking had purchased the skimmed-milk powder from a French producer . The product formed part of a mixture which was packed in bags . The statement "Mélange destiné à la fabrication d' aliments composés - règlement ( CEE ) n° 1725/79", which must be marked as required by that regulation, was not on the bags used for packing the mixture but on labels sewn into the upper seam of those bags . 4 The Verwaltungsgericht Frankfurt am Main, before which the matter was brought by the undertaking in question, referred the following question to the Court for a preliminary ruling : "Is the condition laid down in Article 4(4)(b ) of Commission Regulation ( EEC ) No 1725/79 of 26 July 1979 ( Official Journal L 199, 7.8.1979, p . 1 ), to the effect that the package containing the mixture must bear certain statements, satisfied if the statements are on labels which are firmly sewn into the upper seam of the paper bags?" 5 Reference is made to the Report for the Hearing for a fuller account of the facts of the case, the course of the procedure and 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 . 6 According to Article 4(4)(b ) of Regulation No 1725/79, whose interpretation has been sought, "skimmed-milk powder incorporated in a mixture may not be used" for the manufacture of compound feedingstuffs eligible for Community aid "unless : ( a ) ... ( b ) thepackage containing the mixture bears in clearly legible form : - one or more of the following statements : "Mixture intended for the manufacture of compound feedingstuffs - Regulation ( EEC ) No 1725/79", ... "Mélange destiné à la fabrication d' aliments composés - règlement ( CEE ) n° 1725/79", ...". 7 With regard to the marketing of compound feedingstuffs, Article 4(2 ) of the aforesaid regulation provides that such feedingstuffs must be packed in bags "on which shall be printed, in clearly legible characters", four statements specified by that provision . However, as a result of the amendment of that regulation by Commission Regulation ( EEC ) No 3368/88 of 28 October 1988 ( Official Journal 1988, L 296, p . 50 ), Article 4(2 ) imposes that requirement only in the case of two of those statements, whilst the other two must be set out "( i ) either on the label inserted in the closing device, ( ii ) or printed on the package itself ". 8 Article 4(2 ) of Regulation No 1725/79 thus draws a clear distinction between the marking of the requisite information on the package itself and the marking of such information on the label inserted in the closing device . In those circumstances, it is impossible to deduce from the actual wording of the more general expression used in Article 4(4)(b ) (" unless ... the package ... bears ...") what the precise scope of that provision is as regards the possibility of marking the requisite information on the label inserted in the closing device of the bag . 9 Furthermore, that lack of clarity is also apparent from the fact that, in an explanatory circular regarding Regulation No 1725/79, the French intervention agency, the Fonds d' orientation et de régularisation des marchés agricoles ( Forma ), interpreted Article 4(4)(b ) as permitting the requisite information to be marked either on the bag or on a label inserted in the closing device, whereas the German intervention agency, the Bundesamt, after consulting the Commission, took the opposite view . 10 Accordingly, since the wording of the provision in question is not sufficiently clear to support the conclusion that it precludes a statement from being marked on the label inserted in the closing device, reference must be made to the objectives of the provision in question, as set out in the preamble to Regulation No 1725/79 . 11 According to the fifth recital in the preamble to the regulation, aid for skimmed-milk powder used in the manufacture of compound feedingstuffs should be granted only if those feedingstuffs conform to certain minimum standards as regards, in particular, composition that are customarily observed in the industry . It is therefore necessary to specify, for the purposes of control, that the products should be packaged in such a way as to enable them to be identified . That consideration, which was amplified in Article 4(2 ) in connection with the marketing of compound feedingstuffs and in Article 4(4 ) in connection with the use of skimmed-milk powder incorporated in a mixture, aims essentially to ensure that products are carefully identified with a view to preventing fraud . According to the third recital, it is necessary to ensure that the skimmed-milk powder is in fact used as feed; to that end, there should inter alia be appropriate provisions to prevent aid being paid more than once for one and the same product . 12 Consequently, the objectives of Regulation No 1725/79 preclude the marking of the requisite information on labels inserted in the closing device of the package only where that method of identifying the mixture may give rise to or facilitate fraud . 13 In its observations, the Commission maintained that this is always the case since it is very easy to substitute one label for another . However, it has neither expanded that argument nor justified it . It must be pointed out, nevertheless, that any attempt to remove a label inserted in the closing device, with a view to replacing it, may lead to the packaging being torn and thus have the same effect as the removal of a statement on the packaging . That risk arises, in particular, where the label in question is firmly sewn into the upper seam of the paper bags, the possibility envisaged in the question submitted for a preliminary ruling . 14 However, it is impossible to ascertain from the documents before the Court whether there is only one method of inserting a label in the closing device, or several . In those circumstances, the possibility cannot be ruled out that some of those methods may be such as to facilitate fraud . Accordingly, it is for the national court to make the necessary distinctions and to ascertain, if appropriate, whether or not a given method of inserting the label in the closing device may be regarded as being such as to facilitate fraud . 15 The answer to the question submitted must therefore be that Article 4(4)(b ) of Regulation No 1725/79 is to be interpreted as meaning that the phrase "the package ... bears ...one or more of the following statements" allows the requisite information to be marked on labels inserted in the closing device of the package, provided that the method by which they are affixed is not such as to facilitate fraud . Costs 16 The costs incurred by the Commission of the European Communities, which has 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 ( Fourth Chamber ), in answer to the question referred to it by the Verwaltungsgericht Frankfurt am Main, by order of 3 November 1988, hereby rules : Article 4(4)(b ) of Commission Regulation ( EEC ) No 1725/79 of 26 July 1979 on the rules for granting aid to skimmed milk processed into compound feedingstuffs and skimmed-milk powder intended for feed for calves is to be interpreted as meaning that the phrase "the package ... bears ... one or more of the following statements" allows the requisite information to be marked on labels inserted in the closing device of the package, provided that the method by which they are affixed is not such as to facilitate fraud . © European Communities, 2001 All rights reserved BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII