NN v Regione Lombardia (C-636/21)

Contents

Judgment of the Court (Third Chamber)8 June 2023^note(Reference for a preliminary ruling — Agriculture — Common organisation of the markets — Regulation (EU) No 1308/2013 — Article 220 — Market support measures related to animal diseases — Implementing Regulation (EU) 2019/1323 — Exceptional market support measures for the eggs and poultrymeat sectors in Italy — National legislation — Condition for the granting of aid — Farmers operational on the market in question on the date of submission of the application — Discretion of the Member States)In Case C‑636/21,REQUEST for a preliminary ruling under Article 267 TFEU from the Consiglio di Stato (Council of State, Italy), made by decision of 13 October 2021, received at the Court on 15 October 2021, in the proceedingsNNvRegione Lombardia,THE COURT (Third Chamber),composed of K. Jürimäe, President of the Chamber, M. Safjan, N. Piçarra, N. Jääskinen and M. Gavalec (Rapporteur), Judges,Advocate General: L. Medina,Registrar: A. Calot Escobar,having regard to the written procedure,after considering the observations submitted on behalf of:– NN, by E. Barilà, avvocato,– the Regione Lombardia, by S. Gallonetto, A. Santagostino and M. Tamborino, avvocate,– the Italian Government, by G. Palmieri, acting as Agent, and by E. Feola, avvocato dello Stato,– the European Commission, by A.C. Becker and F. Moro, acting as Agents,having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,gives the following

Judgment

1This request for a preliminary ruling concerns the interpretation of Article 220 of Regulation (EU) No 1308/2013 of the European Parliament and of the Council of 17 December 2013 establishing a common organisation of the markets in agricultural products and repealing Council Regulations (EEC) No 922/72, (EEC) No 234/79, (EC) No 1037/2001 and (EC) No 1234/2007 (OJ 2013 L 347, p. 671), and of Commission Implementing Regulation (EU) 2019/1323 of 2 August 2019 on exceptional market support measures for the eggs and poultrymeat sectors in Italy (OJ 2019 L 206, p. 12).

2The request has been made in proceedings between NN, a farmer in the poultrymeat sector and the Regione Lombardia (Region of Lombardy, Italy) concerning the dismissal of NN’s application for a grant of financial aid.

Legal context

European Union law

Regulation No 1308/2013

3Article 220 of Regulation No 1308/2013, in the version applicable to the dispute in the main proceedings, entitled ‘Measures concerning animal diseases and loss of consumer confidence due to public, animal or plant health risks’, provides:1.The [European] Commission may adopt implementing acts taking exceptional support measures for the affected market in order to take account of:(a) restrictions on intra-Union and third-country trade which may result from the application of measures for combating the spread of diseases in animals; and(b) serious market disturbances directly attributed to a loss in consumer confidence due to public, animal or plant health and disease risks.Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 229(2).2.The measures provided for in paragraph 1 shall apply to any of the following sectors:…(e) eggs;(f) poultrymeat.The measures provided for in point (b) of the first subparagraph of paragraph 1 related to a loss in consumer confidence due to public or plant health risks shall also apply to all other agricultural products except those listed in Section 2 of Part XXIV of Annex I.The Commission shall be empowered to adopt delegated acts in accordance with the urgency procedure referred to in Article 228, extending the list of products in the first two subparagraphs of this paragraph.3. The measures provided for in paragraph 1 shall be taken at the request of the Member State concerned.4. The measures provided for in point (a) of the first subparagraph of paragraph 1 may be taken only if the Member State concerned has taken health and veterinary measures quickly to stamp out the disease, and only to the extent and for the duration strictly necessary to support the market concerned.5. The Union shall provide part-financing equivalent to 50% of the expenditure borne by Member States for the measures provided for in paragraph 1.…6. Member States shall ensure that, where producers contribute to the expenditure borne by Member States, this does not result in distortion of competition between producers in different Member States.’

Implementing Regulation 2019/1323

4Recitals 3, 4, 6 and 10 of Implementing Regulation 2019/1323 are worded as follows:(3) … Italy took control, monitoring and preventive measures and established protection and surveillance zones (“the regulated zones”) pursuant to Commission Implementing Decisions …(4) Italy informed the Commission that the necessary health and veterinary measures, which had been applied to contain and eradicate the spread of the disease, had affected a very large number of operators and that those operators suffered income losses not eligible for Union financial contribution under Regulation (EU) No 652/2014 of the European Parliament and of the Council [of 15 May 2014 laying down provisions for the management of expenditure relating to the food chain, animal health and animal welfare, and relating to plant health and plant reproductive material, amending Council Directives 98/56/EC, 2000/29/EC and 2008/90/EC, Regulations (EC) No 178/2002, (EC) No 882/2004 and (EC) No 396/2005 of the European Parliament and of the Council, Directive 2009/128/EC of the European Parliament and of the Council and Regulation (EC) No 1107/2009 of the European Parliament and of the Council and repealing Council Decisions 66/399/EEC, 76/894/EEC and 2009/470/EC (OJ 2014 L 189, p. 1)].…(6) As a result of the animal health and veterinary measures referred to in recital 3, fallowing periods were prolonged, placing of birds was prohibited and movements were restricted on holdings of all types of poultry in the regulated zones … This concerned the following species [inter alia] Gallus domesticus. This led to a loss of production of hatching eggs, consumption eggs, live animals and poultry meat in these holdings. It is therefore appropriate to compensate losses due to destroyed and processed eggs as well as non-produced animals, longer rearing or culling.…(10) The extent and duration of the exceptional market support measures provided for in this Regulation should be limited to what is strictly necessary to support the market. In particular, the exceptional market support measures should apply only to the production of eggs and poultry in the holdings located in the regulated zones and for the duration of the animal health and veterinary measures laid down in the Union and Italian legislation relevant to the 45 outbreaks of highly pathogenic avian influenza confirmed between 1 October 2017 and 30 June 2018, and to the respective regulated zones.’

5Under Article 1 of that regulation:‘The Union shall provide part-financing equivalent to 50% of the expenditure borne by Italy to support the market of hatching eggs, consumption eggs and poultry meat seriously affected by the 45 outbreaks of highly pathogenic avian influenza of subtype H5 which were detected and notified by Italy between 1 October 2017 and 30 June 2018.’

6Article 2 of that regulation provides:‘Expenditure borne by Italy shall be eligible for Union part-financing only:(a) for the duration of the application of animal health and veterinary measures referred to in Union and Italian legislation listed in the Annex and related to the period laid down in Article 1; and(b) for those poultry holdings that have been subject to the animal health and veterinary measures and located in the [regulated] zones; and(c) if it has been paid by Italy to the beneficiaries by 30 September 2020 at the latest. Article 5(2) of [Commission] Delegated [Regulation (EU) No 907/2014 of 11 March 2014 supplementing Regulation (EU) No 1306/2013 of the European Parliament and of the Council with regard to paying agencies and other bodies, financial management, clearance of accounts, securities and use of euro (OJ 2014 L 255, p. 18)] shall not apply; and(d) if the animal or product, for the period referred to in point (a), has not benefitted from any compensation by means of state aid or insurance and for which no Union financial contribution has been received under Regulation (EU) No 652/2014.’

7Article 3(1)(b) of that regulation sets out:‘The maximum amount of Union part-financing shall be EUR 32147498, detailed as follows:…(b) for losses related to the adjustment of rearing period due to transfer ban in the regulated zones, [flat rates] shall apply per animal …’

8Article 4 of Implementing Regulation 2019/1323 provides:‘Italy shall carry out administrative and physical checks in accordance with Articles 58 and 59 of Regulation (EU) No 1306/2013 of the European Parliament and of the Council.In particular, Italy shall verify:(a) the eligibility of the applicant submitting the request for support;(b) for each eligible applicant: the eligibility, the quantity and the value of the actual loss of production;(c) that funding has not been received by any eligible applicant from any other sources to compensate the losses referred to in Article 2 of this Regulation.For eligible applicants for which administrative checks are completed, aid can be paid without waiting for all checks being made, notably those on applicants selected for on-the-spot checks.In cases where the eligibility of an applicant was not confirmed, the aid shall be recovered and sanctions applied.’

Italian law

9Under Implementing Regulation 2019/1323, the Ministro delle Politiche agricole alimentari e forestali (Ministry of Agricultural, Food and Forestry Policies) adopted the Decreto ministeriale n. 383/2020 del 15 gennaio 2020 (Ministerial Decree No 383/2020 of 15 January 2020) concerning the ‘Rules for the implementation of Implementing Regulation (EU) 2019/1323 on exceptional market support measures for the eggs and poultrymeat sectors in Italy’ (GURI No 55 of 4 March 2020). Article 2(1) of that decree is worded as follows:1. The measures referred to in Article 3(1) of Implementing Regulation (EU) 2019/1323 shall be regarded as exceptional support measures for the Italian poultry market within the meaning of Article 220 of Regulation No 1308/2013.’

10Under Article 3 of that ministerial decree, entitled ‘Identification of beneficiaries’:‘The following persons may submit an application for compensation for damage:(a) holdings producing hatching eggs;(b) holdings producing chicks (hatcheries);(c) holdings rearing pullets, laying hens and broilers of the species referred to in Article 1;(d) egg packing centres.’

11Article 4 of that ministerial decree provides:1. Persons wishing to benefit from the aid referred to in this decree shall submit, depending on where the undertaking has its registered office, an application to the regional competent accredited paying Agency.2. For the purposes of the payment of aid, applicants must demonstrate the damage suffered as a result of the implementation of health measures introduced to contain the highly pathogenic avian influenza epidemic of subtype H5 in the period between 1 October 2017 and 30 June 2018.…4. Applications shall be accompanied by statements of the persons concerned and shall be substantiated by ad hoc documentation capable of demonstrating that the applications made are justified. Those documents may take the form of the official registers in possession of the holdings or any other specific accounting, health or commercial document in possession of those holdings.’

The dispute in the main proceedings and the question referred for a preliminary ruling

12NN was the owner of three poultry farms in Italy. Following the restrictive health measures adopted because of the avian influenza epidemic, NN had to suspend his operations from 10 December 2017 to 26 December 2017 on two of those farms, and from 29 October 2017 to 26 December 2017 on the last farm. However, on 4 November 2019, due to his advanced age he transferred all those farms to his sons.

13On 10 April 2020, relying on Ministerial Decree No 383/2020, NN submitted an aid application to the Lombardy regional paying agency in respect of those three farms on account of the damage caused by the avian influenza.

14By Decree No 1419/2020, the Region of Lombardy refused to grant NN the aid on the ground that, in so far as he held no poultry farm on the date of submission of that request, he was not a ‘beneficiary’, within the meaning of Ministerial Decree No 383/2020.

15NN brought an action against that decree before the Tribunale amministrativo regionale per la Lombardia (Regional Administrative Court, Lombardy, Italy) which, by its judgment No 59/2021, dismissed that action.

16That court took the view that the support measure provided for by Implementing Regulation 2019/1323 had to be understood as a measure essentially intended to support the market concerned and therefore only farmers who were operational on the date of submission of the aid application concerned by that market. It found that the objective pursued by that support measure was therefore not to compensate farmers who have suffered damage referred to in the past, but to support the undertaking concerned, including by reimbursement of the damage suffered by that undertaking. According to that court this necessarily requires the holding in question still to be operational on that date.

17On 19 March 2021, NN brought an appeal against that judgment before the Consiglio di Stato (Council of State, Italy), the referring court, arguing that that judgment is contrary to EU law, namely Article 220 of Regulation No 1308/2013, and Implementing Regulation 2019/1323.

18The referring court observes that it must be determined whether the support measure provided for by EU legislation must be understood as being a reimbursement measure of the damage suffered, which entitles a farmer who has suffered harm, even though he or she was no longer the owner of the holding on the date on which the aid application was submitted or whether that support measure seeks only to support the market concerned and is not directed at farmers who were operational on that market on that date.

19That court finds that the content of EU legislation is not without ambiguity so far as concerns the subjective conditions required in respect of the grant of the aid in question. In that regard, it maintains that if a purely compensatory function of the measure concerned should be preferred, a distorting effect could follow from that if persons who have transferred their holdings should be excluded from the scope of beneficiaries, namely current owners of holdings who together contribute to making up the market to be supported.

20In those circumstances, the Consiglio di Stato (Council of State) decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:‘Does Article 220 of [Regulation No 1308/2013] and [Implementing Regulation 2019/1323] preclude national legislation (such as [Decree No 383/2020]) which is interpreted and applied so as to limit access to compensation for damage caused by avian influenza only to undertakings that have not ceased operating on the date of submission of the application?’

Consideration of the question referred

21By its question, the referring court asks, in essence, whether Article 220 of Regulation No 1308/2013, read in conjunction with Implementing Regulation 2019/1323 must be interpreted as precluding national legislation which is interpreted and applied so as to limit the scope of beneficiaries of the support measures provided for by the latter regulation only to farmers who were still operational in the poultrymeat sector on the date of submission of the aid application.

22As a preliminary point, it should be noted that Article 220(1) of Regulation No 1308/2013 provides for the possibility for the Commission to adopt implementing acts taking exceptional support measures for the affected market in order to take account of: (a) restrictions which may result from the application of measures for combating the spread of diseases in animals and (b) serious market disturbances directly attributed to a loss in consumer confidence. Article 220(4) clarifies that the measures provided for in point (a) of the first subparagraph of paragraph 1 may be adopted only to the extent and for the duration strictly necessary to support the market concerned.

23Exceptional market support measures for the eggs and poultrymeat sectors in Italy, for the purposes of Article 220(1)(a) of that regulation have been taken by means of Implementing Regulation 2019/1323.

24Article 2 of Implementing Regulation 2019/1323 defines expenditure borne by the Italian Republic in respect of support measures adopted under Regulation No 1308/2013 and which are eligible for Union part-financing referred to in Article 1 of Implementing Regulation 2019/1323. In particular, it follows from Article 2(b) of that regulation that those poultry farms that have been subject to the animal health and veterinary measures, located in the zones referred to in EU and Italian Republic legislation listed in the annex of that regulation are eligible for those support measures. In accordance with Article 4 of that regulation, it is for the Italian authorities to verify, in particular, the eligibility of an applicant submitting an aid application.

25It must be held that, pursuant to the conditions of eligibility defined in Article 2 of Implementing Regulation 2019/1323, that regulation does not clarify whether, as required by Italian legislation, that applicant must be operational on the date of submission of the aid application.

26Since that obligation does not stem from EU law, it falls within the discretion of the Member States. Such a requirement cannot, however, adversely affect the objectives pursued by the EU legislation concerned and the general principles of EU law (see, to that effect, judgments of 17 December 2015, Szemerey, C‑330/14, EU:C:2015:826, paragraph 42, and of 7 April 2022, Avio Lucos, C‑116/20, EU:C:2022:273, paragraph 72).

27Therefore, the objectives pursued by Regulation No 1308/2013 and Implementing Regulation 2019/1323 must be determined.

28In that respect, so far as concerns Regulation No 1308/2013, it pursues a general objective which consists, as is apparent from recital 10 of that regulation, in providing a set of market intervention and support measures in order to stabilise the markets and to ensure a fair standard of living for the agricultural community.

29As regards the objective pursued by Implementing Regulation 2019/1323, which implements Article 220(1)(a) of Regulation No 1308/2013, it follows from recitals 4 and 10 of Implementing Regulation 2019/1323 that it seeks to adopt exceptional market support measures for the eggs and poultrymeat sectors in Italy. It thus provides for, inter alia, compensation for income losses suffered by farmers on account of the application of necessary animal health and veterinary measures, adopted by that Member State, to contain and eradicate the spread of influenza of subtype H5.

30In that context, Article 3(1)(b) of Implementing Regulation 2019/1323 provides, inter alia, that the expenditure is intended to compensate for losses of production related to the adjustment of rearing period due to the transfer ban in regulated zones. It follows that the exceptional measures laid down by Regulation No 1308/2013 are clarified in Implementing Regulation 2019/1323, in taking a specific form which consists in compensating the losses related to the adoption of health and veterinary measures to combat the spread of animal disease by supporting farmers whose holding was directed affected by those measures.

31It follows from the foregoing considerations that, by adopting Implementing Regulation 2019/1323, the EU legislature intended to provide for the possibility for farmers to be eligible for the support measures of the relevant market in order to compensate for income losses which those farmers suffered on account of the application of those animal health and veterinary measures and, accordingly, to encourage those farmers to properly implement those animal health and veterinary measures.

32It therefore follows from the objectives of Regulation No 1308/2013 and from Implementing Regulation 2019/1323 that the only relevant factor which should be examined in order to establish the eligibility of an applicant for support measures provided for by Regulation 2019/1323 is to ascertain whether that applicant was operational on the relevant market at the time when the loss was suffered, regardless of whether that applicant is still operational on the date of submission of the aid application.

33Therefore, one of the eligibility conditions for farmers for support measures, such as that at issue in the main proceedings, which consists in being a farmer operational on the relevant market on the date of submission of the aid application, appears to compromise the effectiveness of compensating for the losses suffered, provided for by EU law, and, therefore, the objectives pursued by Regulation No 1308/2013 and Implementing Regulation 2019/1323. Such a condition of eligibility leads to the exclusion of farmers, who were operational on the market at the time when the animal health and veterinary measures were applied but who were no longer operational on the date of submission of the aid application, from accessing compensation for the losses which they have suffered due to the adoption of the measures to combat the avian influenza epidemic.

34Moreover, as the Commission in essence contends in its observations, between the outbreak of the avian influenza epidemic in Italy in 2017 and 2018 and the adoption of Implementing Regulation 2019/1323 and, subsequently, the adoption of Ministerial Decree No 383/2020 concerning the rules for the implementation of that implementing regulation in Italy, a significant period of time passed, the consequences of which should not be borne by the farmers concerned. It should be guaranteed that farmers who have effectively been subject to animal health and veterinary measures, in the event of losses related to the implementation of such measures, could be entitled to the aid, envisaged by Regulation No 1308/2013 and Implementing Regulation 2019/1323, the objective of which is to compensate for those losses.

35In the light of the foregoing and without it being necessary to rule on the compatibility of Italian legislation with the general principles of law, the answer to the question referred is that Article 220 of Regulation No 1308/2013, read in conjunction with Implementing Regulation 2019/1323, must be interpreted as precluding national legislation which is interpreted and applied so as to limit access to the support measures provided for by the latter regulation only to farmers who were still operational in the poultrymeat sector on the date of submission of the aid application.

Costs

36Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

Operative part

On those grounds, the Court (Third Chamber) hereby rules: Article 220 of Regulation (EU) No 1308/2013 of the European Parliament and of the Council of 17 December 2013 establishing a common organisation of the markets in agricultural products and repealing Council Regulations (EEC) No 922/72, (EEC) No 234/79, (EC) No 1037/2001 and (EC) No 1234/2007, read in combination with Commission Implementing Regulation (EU) 2019/1323 of 2 August 2019 on exceptional market support measures for the eggs and poultrymeat sectors in Italy,must be interpreted as precluding national legislation which is interpreted and applied so as to limit access to the support measures provided for by the latter regulation only to farmers who were still operational in the poultrymeat sector on the date of submission of the aid application.