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Judgment of the Court (Second Chamber) of 9 September 2004.

Hellenic Republic v Commission of the European Communities.

C-332/01 • 62001CJ0332 • ECLI:EU:C:2004:496

  • Inbound citations: 16
  • Cited paragraphs: 5
  • Outbound citations: 8

Judgment of the Court (Second Chamber) of 9 September 2004.

Hellenic Republic v Commission of the European Communities.

C-332/01 • 62001CJ0332 • ECLI:EU:C:2004:496

Cited paragraphs only

Case C-332/01

Hellenic Republic

v

Commission of the European Communities

(EAGGF – Clearance of accounts – 1996 to 1999 – Decision 2001/557/EC – Cotton, olive oil, dried grapes, sheepmeat and goatmeat)

Summary of the Judgment

1. Agriculture – Common agricultural policy – Financing by the EAGGF – Principles – Conformity of expenditure with the Community rules – Obligation to supervise incumbent on the Member States

2. Acts of the institutions – Regulations – Regulation laying down specific measures of supervision – No discretionary power for the Member States – Non-implementation – Justification – Greater effectiveness of another system of supervision – Not permissible

3. Agriculture – Common agricultural policy – Financing by the EAGGF – Procedure for the clearance of the accounts – Purpose – Financial correction not constituting a sanction

4. Acts of the institutions – Statement of reasons – Duty – Scope – Decision relating to the clearance of accounts in respect of expenditure financed by the EAGGF

5. Agriculture – Common agricultural policy – Integrated system of management and supervision relating to certain aid schemes – Representativeness of the samples inspected – Influence of the choice of geographic basis

(Commission Regulation No 3887/92, Art. 6(1), (3) and (4))

6. Agriculture – Common agricultural policy – Financing by the EAGGF – Granting of premiums for producers of sheepmeat and goatmeat – Identification of animals moved prior to being placed in agistment – Concept of ‘placing in agistment’ – Scope

(Commission Regulation No 2700/93, Art. 1(3), subpara. (2))

1. As regards Community financing of certain expenditure by the Member States for the purpose of the EAGGF, it is for the authorities of the Member States to implement a reliable and operational supervisory system organised in such as way as to prevent shortcomings. In that respect, the argument that the failure to carry out inspections was due to a temporary lack of staff cannot be taken into account.

(see para. 50)

2. Where a regulation lays down specific measures of supervision, the Member States must apply them and it is unnecessary to examine the merits of the view that another system of supervision is more effective, even if alternative inspections have already been organised.

(see para. 62)

3. An action for failure to fulfil obligations under Article 226 EC and the procedure for the clearance of the EAGGF accounts pursue different aims and are governed by different rules. In the latter procedure, the Commission is under an obligation to carry out a financial correction if the expenditure in respect of which financing has been requested has not been carried out in accordance with Community rules. Such a financial correction is designed to avoid the EAGGF’s being burdened with amounts that have not served to finance an objective pursued by the Community legislation in question and therefore does not constitute a penalty.

(see para. 63)

4. In the particular context of the preparation of decisions relating to the clearance of the EAGGF’s accounts, the statement of reasons for a decision must be regarded as sufficient if the Member State to which the decision was addressed was sufficiently involved in the process by which the decision came about and was aware of the reasons for which the Commission took the view that it must not charge the sum in dispute to the EAGGF.

(see para. 67)

5. Article 6(3) of Regulation No 3887/92 laying down detailed rules for applying the integrated administration and control system for certain Community aid schemes provides that, as regards the geographic basis of the sample, on-the-spot checks are to cover at least a significant percentage of applications and that that significant percentage is to represent a certain percentage of ‘livestock’ aid applications. That provision does not however state whether the minimum percentage is to be calculated in respect of an administrative district or of the country as a whole.

In that respect, the representativeness of the samples is best ensured if these are determined at the level of administrative districts rather than nationally. It would be contrary to the objective of effective checks if certain administrative districts producing a significant quantity of the products in question could escape in whole or in part from the checks provided that the national average of the sample exceeded the prescribed percentage.

(see paras 109, 111)

6. The concept of ‘placing in agistment’ for the purposes of the second subparagraph of Article 1(3) of Regulation No 2700/93 on detailed rules for the application of the premium in favour of sheepmeat and goatmeat producers, the purpose of which is to ensure that the animals moved have been identified before they are kept together with other animals, must be interpreted as applying to cases in which animals are kept together with others on the basis of the farming in common of flocks and herds belonging to different owners.

The essential characteristic of placing in agistment is that animals of different origins are kept together and that it becomes impossible in practice to distinguish between them if they have not been marked beforehand.

(see para. 142)

JUDGMENT OF THE COURT (Second Chamber) 9 September 2004 (1)

(EAGGF – Clearance of accounts – 1996 to 1999 – Decision 2001/557/EC – Cotton, olive oil, dried grapes, sheepmeat and goatmeat)

In Case C-332/01,ACTION for annulment under Article 230 EC brought on 3 September 2001,

applicant,

v

defendant,

THE COURT (Second Chamber),,

composed of: C.W.A. Timmermans, President of the Chamber, J.-P. Puissochet, J.N. Cunha Rodrigues (Rapporteur), R. Schintgen and N. Colneric, Judges,

Advocate General: F.G. Jacobs,

having regard to the written procedure and further to the hearing on 13 November 2003,

after hearing the Opinion of the Advocate General at the sitting on 22 January 2004,

gives the following

‘The Commission, …

(c) 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. …’

‘Member States shall make available to the Commission all information required for the proper working of the [EAGGF] and shall take all suitable measures to facilitate the supervision which the Commission may consider it necessary to undertake within the framework of the management of Community financing, including inspections on the spot.

Member States shall communicate to the Commission provisions laid down by law, regulation or administrative action which they have adopted for the application of legal acts of the Community relating to the common agricultural policy insofar as those acts have financial consequences for the [EAGGF]. ’

‘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, a correction 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, a correction 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, a correction of 2% is justified since there is less risk of loss to the Fund and the infringement is less serious.

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, a correction 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.’

‘All cotton growers shall, before a date set by the Member State concerned and, except in cases of force majeure, not later than 1 July, send an annual declaration of the areas sown.

However, for the year 1996, in the case of Greece, the date 1 July is replaced by 1 August.’

‘The agency appointed by the producer Member State shall verify … the accuracy of the declarations of areas sown, on the basis of random inspections relating to not less than 5% of the declarations.’

‘By 30 April each year in respect of the following marketing year, cultivation declarations shall be submitted …’

‘Cultivation declarations shall include at least the following:

‘Member States shall organise on-the-spot checks in accordance with paragraph 3 covering a representative percentage of declarations submitted in each competent administrative unit. That percentage may not be less than 1% and shall be increased to at least 15% where a significant number of incorrect declarations is discovered.’

‘For the purposes of administering the aid scheme, a computerised alphanumeric database known as a “database”, containing the information referred to in Articles 4 and 8(4) shall be introduced. The system of alphanumeric identification of plots shall be that used for the integrated system referred to in Article 4 of Council Regulation (EEC) No 3508/92 supplemented, where appropriate, to cover the wine-growing areas covered by this aid scheme.’

‘The Member States must have set up the database referred to in Article 2(4) before the start of the 2002/03 marketing year. During the 1999/2000, 2000/01 and 2001/02 marketing years, the obligation to register in the database shall be replaced by an obligation to submit an application for registration in the database in accordance with Article 4(2) before 1 September 1999; the references relating to the area and identification of plots shall be the land-registry references or other indications recognised as equivalent by the body responsible for checks on the areas.’

‘Without prejudice to the requirements pertaining to application for aid under individual schemes the “livestock” aid application shall contain all necessary information, in particular:

…’

‘1. Administrative and on-the-spot checks shall be made in such a way as to ensure effective verification of compliance with the terms under which aids and premiums are granted.

3. On-the-spot checks shall cover at least a significant percentage of applications. The significant percentage shall represent at least:

4. Applications subjected to on-the-spot checking shall be selected by the competent authority on the basis of a risk analysis and an element of representativeness of the aid applications submitted. The risk analysis shall take account of:

…’

‘In cases where owing to the impact of natural circumstances the farmer cannot meet his commitment to keep the animals notified for a premium throughout the compulsory retention period he shall be entitled to the premium for the number of eligible animals actually kept throughout the period, provided that he has informed the competent authority in writing within 10 working days of finding any reduction in the number of animals.’

‘Every inspection visit must be the subject of a report setting out, in particular, the reasons for the visit, the persons present, the number of parcels visited, those measured, the measuring methods used, the number of animals of each species found and, where applicable, their identity numbers.

It will be open to the farmer or his representative to sign the report. He may either merely attest his presence at the inspection or also add his observations.’

‘The retention period during which the producer undertakes to keep on his holding … the number of ewes and/or she-goats in respect of which the premium is requested shall be 100 days starting on the last day of the period for the submission of applications referred to in paragraph 2.

Before all or some of that number of ewes and/or she-goats in respect of which the premium is requested are placed in agistment during the retention period, the animals concerned must be identified. …’

‘1. On-the-spot inspections shall be carried out in accordance with Article 6 of Regulation (EEC) No 3887/92, and the system for the permanent recording of livestock movements must comply with the rules laid down by Article 4 of [Council] Directive 92/102/EEC [of 27 November 1992 on the identification and registration of animals (OJ 1992 L 355, p. 32)].

However, for the 1994 marketing year, if a Member State has not yet implemented the recording system referred to in the first subparagraph, it may introduce a recording system capable of permanently and clearly reflecting the actual livestock situation. …

2. For each marketing year Member States shall draw up an inventory of sheep producers marketing sheep’s milk and sheep’s milk products. …’

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

Signatures.

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