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Judgment of the Court (Second Chamber) of 7 October 2004.

Kingdom of Spain v Commission of the European Communities.

C-153/01 • 62001CJ0153 • ECLI:EU:C:2004:589

  • Inbound citations: 24
  • Cited paragraphs: 0
  • Outbound citations: 20

Judgment of the Court (Second Chamber) of 7 October 2004.

Kingdom of Spain v Commission of the European Communities.

C-153/01 • 62001CJ0153 • ECLI:EU:C:2004:589

Cited paragraphs only

Case C-153/01

Kingdom of Spain

v

Commission of the European Communities

(EAGGF – Clearance of accounts – Financial years 1996 to 1998 – Decision 2001/137/EC)

Summary of the Judgment

1. Agriculture – EAGGF – Clearance of accounts – Refusal to charge to the EAGGF expenditure arising from irregularities in the application of the Community rules – Assessment of the losses incurred by the EAGGF – Disputed by the Member State concerned – Burden of proof

(Council Regulation No 729/70)

2. Agriculture – EAGGF – Clearance of accounts – Communication to the Member States of the results of the investigations of the control services – Substantive conditions – No reference to Regulation No 1663/95 – Not a breach of an essential formal requirement – Conditions

(Council Regulation No 729/70, Art. 5(2)(c); Commission Regulation No 1663/95, Art. 8(1), first subpara.)

3. Agriculture – EAGGF – Clearance of accounts – Late payment of the additional levy on milk – Financial adjustment pursuant to Article 5(2) of Regulation No 536/93 on the ground that default interest was not collected by a Member State – Not permissible – Exception – National authorities’ negligence causing the EAGGF loss

(Council Regulation No 729/70, Art. 8(2), first subpara.; Commission Regulation No 536/93, Arts 3(4) and 5(2))

4. Agriculture – Common agricultural policy – EAGGF financing – Principles – Aid paid in breach of the Community rules – Charge to the Fund – Not permissible

(Council Regulations No 729/70, Arts 2 and 3, and No 1765/92, Art. 2(6), first subpara.)

1. The EAGGF finances only intervention undertaken in accordance with the Community rules within the framework of the common organisation of agricultural markets. The Commission is not required to prove that there has been a loss but may simply adduce sound evidence of such loss. For those difficult cases where the extent of the losses cannot be ascertained precisely, the losses to the Community funds must be determined by an evaluation of the risk to which they are exposed by the deficiency in the controls. Although it is for the Commission to prove that the rules of the common organisation of the agricultural markets have been infringed, once it has established such an infringement it is for the Member State to demonstrate, if appropriate, that the Commission made an error as to the financial consequences to be attached to that infringement. The Member State must then adduce the most detailed and comprehensive evidence possible that its figures are accurate and, if appropriate, that the Commission’s calculations are incorrect.

(see paras 66-67)

2. Under the procedure for the clearance of the EAGGF’s accounts, the Commission is bound, in its relations with the Member States, to respect the conditions it has imposed on itself by implementing regulations. However, the Member States cannot, in their relations with the Commission, adopt purely formalist positions, when it is clear from the circumstances that their rights were fully protected.

Where the document by which the Commission communicates to the Member State the results of the investigations carried out on site and the corrective measures to be taken informs the government concerned fully about the Commission’s reservations and the adjustments which will probably be made in relation to the sector in question, so that it can fulfil the warning function given to written communications by Article 5(2)(c) of Regulation No 729/70 on the financing of the common agricultural policy and the first subparagraph of Article 8(1) of Regulation No 1663/95 laying down detailed rules for the application of Regulation No 729/70 regarding the procedure for the clearance of the accounts of the EAGGF Guarantee Section, the mere omission, in that document, of a reference to Regulation No 1663/95 cannot be regarded as a breach of an essential formal requirement.

(see para. 93)

3. Notwithstanding that, first, Article 3(4) of Regulation No 536/93 laying down detailed rules on the application of the additional levy on milk and milk products makes purchasers and producers liable to pay interest, as from 1 September of each year, to the competent body in case of late payment of the additional levy and, second, Article 5(2) of that regulation makes Member States responsible for deducting interest paid from the applications for reimbursement of expenditure on milk and milk products submitted to the EAGGF, the Commission cannot use the latter provision as a basis for making a financial adjustment because of a Member State’s failure to collect such interest. The fact that certain sums due remain unpaid, or have been paid belatedly, does not of itself constitute failure to fulfil obligations placed on the Member States by Community law.

However, according to the first subparagraph of Article 8(2) of Regulation No 729/70 on the financing of the common agricultural policy, the Commission may apply an adjustment where it is able to show that the EAGGF suffered a loss as a result of a negligent failure, attributable to the national authorities, to recover the disputed sums.

(see paras 102, 104, 106)

4. Articles 2 and 3 of Regulation No 729/70 on the financing of the common agricultural policy allow the Commission to charge to the EAGGF only sums paid in accordance with the rules laid down in the different agricultural sectors. Therefore, the Commission cannot reimburse sums paid in breach of the second indent of the first subparagraph of Article 2(6) of Regulation No 1765/92 establishing a support system for producers of certain arable crops, as amended, and is, as a result, entitled to impose a financial adjustment equal to those sums.

(see paras 134, 137-138)

JUDGMENT OF THE COURT (Second Chamber) 7 October 2004 (1)

(EAGGF – Clearance of accounts – Financial years 1996 to 1998 – Decision 2001/137/EC)

In Case C-153/01,ACTION for partial annulment under Article 230 EC, brought on 9 April 2001,

applicant,

v

defendant,

THE COURT (Second Chamber),,

composed of: C.W.A. Timmermans, President of the Chamber, C. Gulmann, J.N. Cunha Rodrigues, R. Schintgen and F. Macken (Rapporteur), Judges,

Advocate General: P. Léger,

after considering the observations submitted by the parties,

after hearing the Opinion of the Advocate General at the sitting on 6 May 2004,

gives the following

‘The Commission …

shall decide on the expenditure to be excluded from the Community financing referred to in Articles 2 and 3 where it finds that expenditure has not been effected in compliance with Community rules.

Before a decision to refuse financing is taken, the results of the Commission’s checks and the replies of the Member State concerned shall be notified in writing, after which the two parties shall endeavour to reach agreement on the action to be taken.

If no agreement is reached, the Member State may ask for a procedure to be initiated with a view to mediating between the respective positions within a period of four months, the results of which shall be set out in a report sent to and examined by the Commission, before a decision to refuse financing is taken.

The Commission shall evaluate the amounts to be excluded having regard in particular to the degree of non‑compliance found. The Commission shall take into account the nature and gravity of the infringement and the financial loss suffered by the Community.

A refusal to finance may not involve expenditure effected prior to twenty‑four months preceding the Commission’s written communication of the results of those checks to the Member State concerned. …’

‘The Member States, in accordance with national provisions laid down by law, regulation or administrative action shall take the measures necessary to:

‘When, as a result of any enquiry, the Commission considers that expenditure was not effected according to Community rules, it shall communicate to the Member State concerned its findings, the corrective measures to be taken to ensure future compliance, and an evaluation of any expenditure which it may propose to exclude pursuant to Article 5(2)(c) of Regulation (EEC) No 729/70. The communication shall make reference to this Regulation. …’

‘When one or more key controls are not applied or are applied so poorly or so infrequently that they are ineffective in determining whether claims are eligible or preventing irregularities, an adjustment of 10% is justified as it can reasonably be concluded that there is a high risk of wide-spread loss to the Fund.

When all key controls are applied, but not in the number, frequency or depth required by the legislation, an adjustment of 5% is justified as it can reasonably be concluded both that they do not provide the expected degree of assurance that claims are regular and that the risk to the Fund is significant.

When a Member State has adequately performed the key controls but completely failed to carry out one or more ancillary controls, an adjustment of 2% is justified since there is less risk of loss to the Fund and the infringement is less serious.

However, where implementation of the checking system has been non-existent or seriously inadequate and there are indications of very frequent irregularities and negligence in combating irregular or fraudulent practices, an adjustment of 25% is justified since the fact that claims may be submitted with impunity where there is no entitlement may reasonably be assumed to involve extremely high losses for the Fund.’

‘For seven new consecutive periods of twelve months commencing on 1 April 1993, an additional levy shall be payable by producers of cow’s milk on quantities of milk or milk equivalent delivered to a purchaser or sold directly for consumption during the 12-month period in question in excess of a quantity to be determined.

The levy shall be 115 % of the target price for milk.’

‘1. The levy shall be payable on all quantities of milk or milk equivalent marketed during the 12-month period in question in excess of the relevant quantity referred to in Article 3. It shall be shared between the producers who contributed to the overrun.

In accordance with a decision of the Member State, the contribution of producers towards the levy payable shall be established, after the unused reference quantities have been reallocated or not, either at the level of the purchaser, in the light of the overrun remaining after unused reference quantities have been allocated in proportion to the reference quantities of each producer, or at national level, in the light of the overrun in the reference quantity of each individual producer.

2. As regards deliveries, before a date and in accordance with detailed rules to be laid down, the purchaser liable for the levy shall pay to the competent body of the Member State the amount payable, which he shall deduct from the price of milk paid to producers who owe the levy or, failing this, collect by any appropriate means.

3. As regards direct sales, the producer shall pay the levy payable to the competent body of the Member State before a date and in accordance with rules to be laid down.’

‘The levy shall be considered as intervention to stabilise agricultural markets and shall be used to finance expenditure in the milk sector.’

‘… experience gained has shown that major delays in both the transmission of figures on collections or direct sales and payment of the levy have prevented the arrangements from being fully effective; … therefore, lessons should be learned from the past and the necessary conclusions drawn by laying down strict requirements as regards notification and payment deadlines and providing for penalties where deadlines are not met.’

‘Before 1 September each year, the purchaser liable for levies shall pay the competent body the amount due in accordance with rules laid down by the Member State.

Where the time-limit for payment is not met, the sums due shall bear interest at a rate per annum fixed by the Member State and which shall not be lower than the rate of interest which the latter applies for the recovery of wrongly paid amounts’.

‘Member States shall take any additional measures necessary to ensure payment of levies due to the Community within the time-limit laid down.

Where the set of documents referred to in Article 3(5) of Commission Regulation (EEC) No 2776/88 …, which the Member States must transmit to the Commission each month, shows that this time-limit has not been met, the Commission shall reduce advances on entry in the accounts of agricultural expenditure in proportion to the amount due or an estimate thereof.

Interest paid pursuant to Article 3(4) and Article 4(4) shall be deducted by the Member States from expenditure on milk and milk products.’

‘… when the sum of the individual areas for which aid is claimed under the arable producers’ scheme … is in excess of the regional base area, the following will be applied in the region in question:

Areas which are the subject of a special set-aside in accordance with the second indent of the preceding subparagraph shall not be taken into account in applying this paragraph.’

‘Should exceptional climatic conditions have affected production in a marketing year in which it is found that the regional base area has been exceeded, and should those conditions have had the effect of lowering yields to a level considerably below the normal and of causing the excess in question, then, provided that the budgetary situation so allows, the Commission may … totally or partially exempt producers in the regions affected from one or both measures applicable under this paragraph.’

‘In the marketing year 1994/95, Article 2(6) of Regulation (EEC) No 1765/92 shall not apply in respect of the area planted with cereals, proteins, linseed, the related compulsory set-aside and all voluntary set-aside in the Spanish regional base area ‘Regadío’ as referred to in Commission Regulation (EC) No 1098/94.’

‘Whereas compliance with the provisions on Community aid must be effectively monitored …’.

‘1.

2.

3.

Should on-the-spot checks reveal significant irregularities in a region or part of a region the competent authority shall make additional checks during the current year in that area and shall increase the percentage of applications to be checked in the following year.

4.

5.…’

‘Should a Member State decide to use remote sensing on all or part of the sample referred to in Article 6(3) it shall:

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On those grounds, the Court (Second Chamber) hereby:

Signatures.

© European Union, https://eur-lex.europa.eu, 1998 - 2024

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