## Facts

- Bela-Mühle, a German compound-feed producer, incorporated subsidised skimmed-milk powder as a protein source in animal feed.
- Regulation (EEC) No 1725/79 compelled manufacturers to mix a specified quantity of fish oil into the powder, rendering it unfit for human consumption and deterring fraudulent diversion to the food chain.
- Bela-Mühle asserted that the fish-oil additive caused rancidity, reduced livestock acceptance, generated waste, and increased production costs.
- The firm argued that laboratory testing and administrative controls already prevented diversion, making the additive unnecessary.
- In reimbursement proceedings, a German administrative court referred questions to the European Court of Justice on the regulation’s compatibility with the EU principle of proportionality.
- The reference required clarification of how far Common Agricultural Policy (CAP) measures, despite broad legislative discretion, remain subject to proportionality review.

## Issues

1. Whether mandatory fish-oil denaturing was suitable to achieve the anti-fraud objective of preventing human re-consumption.
2. If suitable, whether equally effective but less restrictive alternatives existed, rendering the measure unnecessary.
3. Whether the economic burden imposed on feed manufacturers outweighed the public benefit, thereby failing the fair-balance limb of proportionality.

## Decision

- CAP regulations are reviewable under general EU principles, including proportionality.
- The Court formulated a three-stage proportionality test: (i) suitability (rational connection to the aim); (ii) necessity (absence of equally effective, less onerous means); and (iii) fair balance (benefits outweigh disadvantages).
- The fish-oil requirement was capable of deterring diversion, satisfying suitability.
- Although colourants or post-production controls were mentioned, strict necessity had not been disproved given the legislature’s wide discretion.
- The economic disadvantages did not exceed the public interest in fraud prevention; the measure therefore met the fair-balance limb.
- Accordingly, the regulation remained valid, but the judgment clarified the evidential burden EU institutions bear when proportionality is challenged.

## Legal Principles

- Proportionality applies to all EU legislative acts, including those adopted under the CAP.
- Judicial review proceeds sequentially: legitimate aim, suitability, necessity, and fair balance (proportionality stricto sensu).
- Even where institutional discretion is broad, EU bodies must demonstrate compliance with each limb when a measure is contested.

## Conclusion

The Court upheld the fish-oil denaturing requirement and crystallised a structured three-limb proportionality test, signalling that future CAP measures imposing economic costs must be demonstrably suitable, strictly necessary, and proportionately balanced against their disadvantages.

Bela-Mühle (Case C-124/76) [1977] ECR 175