# 62015TJ0518

JUDGMENT OF THE GENERAL COURT (Sixth Chamber)

1 February 2018 (
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  )

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(EAGF and EAFRD — Expenditure excluded from financing — Metropolitan France’s rural development programme — Rural development support measures — Areas with natural handicaps — Flat-rate financial correction — Expenditure incurred by France — On-the-spot checks — Stocking criterion — Counting of animals — Increase in the flat-rate correction due to the recurrence of the failure to fulfil obligations — Procedural safeguards)

In Case T‐518/15,

French Republic, represented initially by G. de Bergues, D. Colas, R. Coesme and A. Daly, and subsequently by Colas, Coesme and Daly and finally by Colas, Coesme, S. Horrenberger and E. de Moustier, acting as Agents,

French Republic

applicant,

supported by

Kingdom of Spain, represented initially by M. Sampol Pucurull, and subsequently by V. Ester Casas, acting as Agents,

Kingdom of Spain

intervener,

v

European Commission, represented by A. Bouquet, A. Lewis and J. Aquilina, acting as Agents,

European Commission

defendant,

ACTION based on Article 263 TFEU and seeking the partial annulment of Commission Implementing Decision (EU) 2015/1119 of 22 June 2015 excluding from European Union financing certain expenditure incurred by the Member States under the European Agricultural Guarantee Fund (EAGF) and under the European Agricultural Fund for Rural Development (EAFRD) (OJ 2015 L 182, p. 39).

THE GENERAL COURT (Sixth Chamber),

composed of G. Berardis (Rapporteur), President, D. Spielmann and Z. Csehi (Rapporteur), Judges,

Registrar: M. Marescaux, Administrator,

having regard to the written part of the procedure and further to the hearing on 29 June 2017,

gives the following

Judgment

Judgment

Background to the dispute

Background to the dispute

| 1 | Under Article 36(a)(i) and (ii) of Regulation No 1698/2005 of 20 September 2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) (OJ 2005 L 277, p. 1), the French authorities adopted the Plan for Rural Development in Metropolitan France for the period 2007 to 2013 (programme de développement rural hexagonal; ‘the PRDH 2007-2013’), which provides for, inter alia, the granting of Compensatory Allowances for Natural Handicaps (‘CANH’) to farmers located in areas of natural handicaps. |
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1

Under Article 36(a)(i) and (ii) of Regulation No 1698/2005 of 20 September 2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) (OJ 2005 L 277, p. 1), the French authorities adopted the Plan for Rural Development in Metropolitan France for the period 2007 to 2013 (programme de développement rural hexagonal; ‘the PRDH 2007-2013’), which provides for, inter alia, the granting of Compensatory Allowances for Natural Handicaps (‘CANH’) to farmers located in areas of natural handicaps.

| 2 | By Decision C(2007) 3446 of 19 July 2007, the European Commission approved the PRDH 2007-2013, which contains, inter alia, measures within the meaning of Article 36(a)(i) and (ii) of Regulation No 1698/2005, namely, measures 211 and 212. Those measures ensure that farmers located in areas of natural handicaps, in mountain areas and areas other than mountain areas, respectively, comply with practices which encourage good land use by making the payment of compensation for forage areas subject to compliance with a stocking criterion. This stocking criterion, expressed as a livestock unit (‘LU’) per hectare, allows the density of livestock on forage areas to be controlled so as to avoid under-grazing or overgrazing. In accordance with Article 71(3) of Regulation No 1698/2005, the PRDH 2007-2013 sets a number of eligibility conditions for those measures, including, in particular, compliance with the stocking density, which is defined at departmental level and falls between thresholds defined by area or by sub-area. |
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2

By Decision C(2007) 3446 of 19 July 2007, the European Commission approved the PRDH 2007-2013, which contains, inter alia, measures within the meaning of Article 36(a)(i) and (ii) of Regulation No 1698/2005, namely, measures 211 and 212. Those measures ensure that farmers located in areas of natural handicaps, in mountain areas and areas other than mountain areas, respectively, comply with practices which encourage good land use by making the payment of compensation for forage areas subject to compliance with a stocking criterion. This stocking criterion, expressed as a livestock unit (‘LU’) per hectare, allows the density of livestock on forage areas to be controlled so as to avoid under-grazing or overgrazing. In accordance with Article 71(3) of Regulation No 1698/2005, the PRDH 2007-2013 sets a number of eligibility conditions for those measures, including, in particular, compliance with the stocking density, which is defined at departmental level and falls between thresholds defined by area or by sub-area.

| 3 | The financial correction forming the subject matter of the present action was established by the Commission following the investigation, identified under reference RD 2/2012/005/FR, relating to specific measures under Axis 2 of the PRDH 2007-2013 for the year 2011, namely, measures 211 and 212 relating to CANH and sub-measure 214-A, the agri-environmental grassland premium (prime herbagère agro-environnementale; ‘the PHAE’). |
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3

The financial correction forming the subject matter of the present action was established by the Commission following the investigation, identified under reference RD 2/2012/005/FR, relating to specific measures under Axis 2 of the PRDH 2007-2013 for the year 2011, namely, measures 211 and 212 relating to CANH and sub-measure 214-A, the agri-environmental grassland premium (prime herbagère agro-environnementale; ‘the PHAE’).

| 4 | The investigation was conducted in accordance with Article 31(1) to (3) of Council Regulation (EC) No 1290/2005 of 21 June 2005 on the financing of the common agricultural policy (OJ 2005 L 209, p. 1), which was applicable at the time the investigation was opened. |
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4

The investigation was conducted in accordance with Article 31(1) to (3) of Council Regulation (EC) No 1290/2005 of 21 June 2005 on the financing of the common agricultural policy (OJ 2005 L 209, p. 1), which was applicable at the time the investigation was opened.

| 5 | By letter dated 11 December 2012, on the basis of Article 11(1) of Commission Regulation (EC) No 885/2006 of 21 June 2006 laying down detailed rules for the application of Council Regulation (EC) No 1290/2005 as regards the accreditation of paying agencies and other bodies and the clearance of the accounts of the EAGF and of the EAFRD (OJ 2006 L 171, p. 90), the Commission communicated the findings it had made as a result of the investigation to the French authorities and asked them for additional information (‘the communication of findings’). |
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5

By letter dated 11 December 2012, on the basis of Article 11(1) of Commission Regulation (EC) No 885/2006 of 21 June 2006 laying down detailed rules for the application of Council Regulation (EC) No 1290/2005 as regards the accreditation of paying agencies and other bodies and the clearance of the accounts of the EAGF and of the EAFRD (OJ 2006 L 171, p. 90), the Commission communicated the findings it had made as a result of the investigation to the French authorities and asked them for additional information (‘the communication of findings’).

| 6 | In paragraph 4.3 of the communication of findings, entitled ‘Failure to verify stocking density’, the Commission stated, inter alia, that the detailed rules governing on-the-spot checks for measures relating to CANH and for the sub-measure relating to the PHAE were contrary to Articles 4(1), 10(1) and 14(2) of Commission Regulation (EU) No 65/2011 of 27 January 2011 laying down detailed rules for the implementation of Council Regulation (EC) No 1698/2005, as regards the implementation of control procedures as well as cross-compliance in respect of rural development support measures (OJ 2011 L 25, p. 8), in that the bovine and ovine/caprine animals for which an application for specific aid had been submitted had not been checked or counted, nor had they been the subject of a plausibility check during the on-the-spot checks. The Commission noted that an identical finding had already been made on that point in the two previous investigations, RD 2/2008/10/FR and RD 2/2011/03/FR, and asked the French authorities to adapt their procedures for on-the-spot checks. |
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6

In paragraph 4.3 of the communication of findings, entitled ‘Failure to verify stocking density’, the Commission stated, inter alia, that the detailed rules governing on-the-spot checks for measures relating to CANH and for the sub-measure relating to the PHAE were contrary to Articles 4(1), 10(1) and 14(2) of Commission Regulation (EU) No 65/2011 of 27 January 2011 laying down detailed rules for the implementation of Council Regulation (EC) No 1698/2005, as regards the implementation of control procedures as well as cross-compliance in respect of rural development support measures (OJ 2011 L 25, p. 8), in that the bovine and ovine/caprine animals for which an application for specific aid had been submitted had not been checked or counted, nor had they been the subject of a plausibility check during the on-the-spot checks. The Commission noted that an identical finding had already been made on that point in the two previous investigations, RD 2/2008/10/FR and RD 2/2011/03/FR, and asked the French authorities to adapt their procedures for on-the-spot checks.

| 7 | By letter of 2 April 2013, the French authorities sent the Commission their observations on the communication of findings. |
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7

By letter of 2 April 2013, the French authorities sent the Commission their observations on the communication of findings.

| 8 | In paragraph 4.3 of those observations, the French authorities:





  – | rejected the use of a plausibility check as a means of proving eligibility for aid; |
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8

In paragraph 4.3 of those observations, the French authorities:

–

rejected the use of a plausibility check as a means of proving eligibility for aid;

| – | claimed that the calculation of the stocking density as regards bovine animals was carried out using a computerised national database monitored in accordance with the procedure laid down in the various EU regulations concerning that database; |
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–

claimed that the calculation of the stocking density as regards bovine animals was carried out using a computerised national database monitored in accordance with the procedure laid down in the various EU regulations concerning that database;

| – | noted that the verification of the stocking density for CANH was carried out at the same time as the on-the-spot checks performed either in relation to eligibility for various livestock aid measures or in relation to cross-compliance, since the counting of bovine animals not on the computerised national database and of ovine/caprine animals for which no livestock aid application has been submitted takes place systematically during the on-the-spot checks in relation to CANH. |
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–

noted that the verification of the stocking density for CANH was carried out at the same time as the on-the-spot checks performed either in relation to eligibility for various livestock aid measures or in relation to cross-compliance, since the counting of bovine animals not on the computerised national database and of ovine/caprine animals for which no livestock aid application has been submitted takes place systematically during the on-the-spot checks in relation to CANH.

| 9 | By letter of 24 June 2013, pursuant to the third subparagraph of Article 11(1) of Regulation No 885/2006, the Commission invited the French authorities to a bilateral meeting, which was held on 28 November 2013. |
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9

By letter of 24 June 2013, pursuant to the third subparagraph of Article 11(1) of Regulation No 885/2006, the Commission invited the French authorities to a bilateral meeting, which was held on 28 November 2013.

| 10 | On 11 December 2013, pursuant to Article 11(2) of Regulation No 885/2006, the Commission communicated to the French authorities the minutes of the meeting, and asked them for additional information. The French authorities replied on 27 February 2014. |
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10

On 11 December 2013, pursuant to Article 11(2) of Regulation No 885/2006, the Commission communicated to the French authorities the minutes of the meeting, and asked them for additional information. The French authorities replied on 27 February 2014.

| 11 | By letter of 27 May 2014 (‘the formal communication’), the Commission formally communicated to the French authorities that it was maintaining its position. It considered that the deficiency detected constituted a weakness in a key control creating a risk ‘for the Fund’ for which, ordinarily, a financial correction of 5% would be applied. However, it stated that, since that deficiency had already been pointed out in two previous investigations, it was considered to be recurrent, and that it was therefore appropriate to propose the application of a flat-rate correction of 10% of the expenditure declared to the European Agricultural Guarantee Fund (EAGF) and the European Agricultural Fund for Rural Development (EAFRD) to be excluded from financing, in the net amount of EUR 115 971 211.03. The Commission also stated that the flat-rate correction concerned the expenditure relating to claim years 2011 and 2013 incurred during the financial years 2011 to 2013, as no corrective measures had been implemented for these years. |
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11

By letter of 27 May 2014 (‘the formal communication’), the Commission formally communicated to the French authorities that it was maintaining its position. It considered that the deficiency detected constituted a weakness in a key control creating a risk ‘for the Fund’ for which, ordinarily, a financial correction of 5% would be applied. However, it stated that, since that deficiency had already been pointed out in two previous investigations, it was considered to be recurrent, and that it was therefore appropriate to propose the application of a flat-rate correction of 10% of the expenditure declared to the European Agricultural Guarantee Fund (EAGF) and the European Agricultural Fund for Rural Development (EAFRD) to be excluded from financing, in the net amount of EUR 115 971 211.03. The Commission also stated that the flat-rate correction concerned the expenditure relating to claim years 2011 and 2013 incurred during the financial years 2011 to 2013, as no corrective measures had been implemented for these years.

| 12 | On 3 July 2014, the French authorities referred the matter to the Conciliation Body, which submitted its report No 14/FR/635 on 15 January 2015. |
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12

On 3 July 2014, the French authorities referred the matter to the Conciliation Body, which submitted its report No 14/FR/635 on 15 January 2015.

| 13 | By letter dated 16 March 2015, following the failure of the conciliation procedure, the Commission communicated its final position to the French authorities (‘the final position’), maintaining, in part, the position taken in the formal communication and proposing to exclude from financing the expenditure declared to the EAGF and EAFRD in the amount of EUR 98 276 677.07, covering the expenditure relating to claim year 2011 and that relating to claim years 2012 and 2013 incurred after 11 December 2010, for the financial years 2011 to 2013, in respect of measures relating to CANH and the sub-measure relating to the PHAE. |
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13

By letter dated 16 March 2015, following the failure of the conciliation procedure, the Commission communicated its final position to the French authorities (‘the final position’), maintaining, in part, the position taken in the formal communication and proposing to exclude from financing the expenditure declared to the EAGF and EAFRD in the amount of EUR 98 276 677.07, covering the expenditure relating to claim year 2011 and that relating to claim years 2012 and 2013 incurred after 11 December 2010, for the financial years 2011 to 2013, in respect of measures relating to CANH and the sub-measure relating to the PHAE.

| 14 | By letter of 18 June 2015, the Commission proposed, in the light of the approach taken by the General Court in its judgment of 30 April 2015, France v Commission (T‐259/13, not published, EU:T:2015:250), to exclude from the basis of calculation of the financial correction, to be set out in the forthcoming decision, the expenditure relating to ovine/caprine animals for which no livestock aid application had been submitted. Since the Commission could not make that exclusion before the publication of that decision, it proposed to make the necessary adjustments after the publication of the decision and, to that end, asked the French authorities to provide the gross amounts to be excluded from the basis of calculation of the financial correction. |
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14

By letter of 18 June 2015, the Commission proposed, in the light of the approach taken by the General Court in its judgment of 30 April 2015, France v Commission (T‐259/13, not published, EU:T:2015:250), to exclude from the basis of calculation of the financial correction, to be set out in the forthcoming decision, the expenditure relating to ovine/caprine animals for which no livestock aid application had been submitted. Since the Commission could not make that exclusion before the publication of that decision, it proposed to make the necessary adjustments after the publication of the decision and, to that end, asked the French authorities to provide the gross amounts to be excluded from the basis of calculation of the financial correction.

| 15 | On 22 June 2015, the Commission adopted Implementing Decision (EU) 2015/1119 excluding from European Union financing certain expenditure incurred by the Member States under the European Agricultural Guarantee Fund (EAGF) and under the European Agricultural Fund for Rural Development (EAFRD) (OJ 2015 L 182, p. 39), (‘the contested decision’). |
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15

On 22 June 2015, the Commission adopted Implementing Decision (EU) 2015/1119 excluding from European Union financing certain expenditure incurred by the Member States under the European Agricultural Guarantee Fund (EAGF) and under the European Agricultural Fund for Rural Development (EAFRD) (OJ 2015 L 182, p. 39), (‘the contested decision’).

| 16 | By the contested decision, in the context of a conformity clearance of agricultural accounts procedure, the Commission excluded from EU financing a net amount of EUR 98 276 627.35. That flat-rate correction applies to certain expenditure incurred by the French Republic in respect of measures 211 and 212 relating to CANH and sub-measure 214-A relating to the PHAE, under Axis 2 of the PDRH 2007-2013. That expenditure corresponds to aid paid by the French authorities in respect of applications made for the years 2011 to 2013. |
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16

By the contested decision, in the context of a conformity clearance of agricultural accounts procedure, the Commission excluded from EU financing a net amount of EUR 98 276 627.35. That flat-rate correction applies to certain expenditure incurred by the French Republic in respect of measures 211 and 212 relating to CANH and sub-measure 214-A relating to the PHAE, under Axis 2 of the PDRH 2007-2013. That expenditure corresponds to aid paid by the French authorities in respect of applications made for the years 2011 to 2013.

| 17 | The contested decision was adopted in accordance with Article 52(1) to (3) of Regulation (EU) No 1306/2013 of the European Parliament and of the Council of 17 December 2013 on the financing, management and monitoring of the common agricultural policy and repealing Council Regulations (EEC) No 352/78, (EC) No 165/94, (EC) No 2799/98, (EC) No 814/2000, (EC) No 1290/2005 and (EC) No 485/2008 (OJ 2013 L 347, p. 549), which repealed Regulation No 1290/2005 with effect from 1 January 2014. The conformity clearance procedure introduced by Article 52 of Regulation No 1306/2013 corresponds, in essence, to that provided for in Article 31 of Regulation No 1290/2005. |
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17

The contested decision was adopted in accordance with Article 52(1) to (3) of Regulation (EU) No 1306/2013 of the European Parliament and of the Council of 17 December 2013 on the financing, management and monitoring of the common agricultural policy and repealing Council Regulations (EEC) No 352/78, (EC) No 165/94, (EC) No 2799/98, (EC) No 814/2000, (EC) No 1290/2005 and (EC) No 485/2008 (OJ 2013 L 347, p. 549), which repealed Regulation No 1290/2005 with effect from 1 January 2014. The conformity clearance procedure introduced by Article 52 of Regulation No 1306/2013 corresponds, in essence, to that provided for in Article 31 of Regulation No 1290/2005.

Procedure and forms of order sought

Procedure and forms of order sought

| 18 | By application lodged at the Registry of the General Court on 2 September 2015 the French Republic brought the present action. |
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18

By application lodged at the Registry of the General Court on 2 September 2015 the French Republic brought the present action.

| 19 | On 30 November 2015, the Commission lodged its defence. The reply and the rejoinder were lodged within the prescribed periods. |
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19

On 30 November 2015, the Commission lodged its defence. The reply and the rejoinder were lodged within the prescribed periods.

| 20 | By a document lodged at the Registry of the General Court on 1 December 2015, the Kingdom of Spain sought leave to intervene in the present proceedings in support of the form of order sought by the French Republic. By decision of 11 January 2016, the President of the Sixth Chamber of the General Court granted that leave to intervene. The Kingdom of Spain lodged its statement in intervention and the main parties lodged their observations on that statement within the prescribed periods. |
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20

By a document lodged at the Registry of the General Court on 1 December 2015, the Kingdom of Spain sought leave to intervene in the present proceedings in support of the form of order sought by the French Republic. By decision of 11 January 2016, the President of the Sixth Chamber of the General Court granted that leave to intervene. The Kingdom of Spain lodged its statement in intervention and the main parties lodged their observations on that statement within the prescribed periods.

| 21 | Following a change in the composition of the General Court, in the interest of the proper administration of justice, the President of the General Court, pursuant to Article 27(3) of the Rules of Procedure of the General Court, reallocated the case to a new Judge-Rapporteur, who was assigned to the Second Chamber. Following a change in the composition of the Chambers of the General Court, pursuant to Article 27(5) of the Rules of Procedure, the case was reallocated to the Sixth Chamber, to which that same Judge-Rapporteur was consequently assigned. |
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21

Following a change in the composition of the General Court, in the interest of the proper administration of justice, the President of the General Court, pursuant to Article 27(3) of the Rules of Procedure of the General Court, reallocated the case to a new Judge-Rapporteur, who was assigned to the Second Chamber. Following a change in the composition of the Chambers of the General Court, pursuant to Article 27(5) of the Rules of Procedure, the case was reallocated to the Sixth Chamber, to which that same Judge-Rapporteur was consequently assigned.

| 22 | By way of a measure of organisation of procedure of 4 May 2017, adopted on the basis of Article 89(3) of the Rules of Procedure, the parties were asked to give their views on the consequences to be drawn in the present case from the judgments of 26 January 2017, Spain v Commission (C‐506/15 P, not published, EU:C:2017:42), and of 26 January 2017, France v Commission (C‐373/15 P, EU:C:2017:55). The parties complied with that request within the prescribed period. The Commission was also asked to lodge certain documents at the Court Registry, which it did within the same time limit. |
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22

By way of a measure of organisation of procedure of 4 May 2017, adopted on the basis of Article 89(3) of the Rules of Procedure, the parties were asked to give their views on the consequences to be drawn in the present case from the judgments of 26 January 2017, Spain v Commission (C‐506/15 P, not published, EU:C:2017:42), and of 26 January 2017, France v Commission (C‐373/15 P, EU:C:2017:55). The parties complied with that request within the prescribed period. The Commission was also asked to lodge certain documents at the Court Registry, which it did within the same time limit.

| 23 | The French Republic, supported by the Kingdom of Spain, claims that the Court should:





  – | principally, annul in part the contested decision excluding from European Union financing certain expenditure incurred by Member States under the EAGF and the EAFRD in so far as it excludes from European Union financing the expenditure incurred by the French Republic in respect of CANH and the PHAE under Axis 2 of the PDRH 2007-2013 for the financial years 2011 to 2013 in the amount of the aid paid for applications made in the years 2011 to 2013; |
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23

The French Republic, supported by the Kingdom of Spain, claims that the Court should:

–

principally, annul in part the contested decision excluding from European Union financing certain expenditure incurred by Member States under the EAGF and the EAFRD in so far as it excludes from European Union financing the expenditure incurred by the French Republic in respect of CANH and the PHAE under Axis 2 of the PDRH 2007-2013 for the financial years 2011 to 2013 in the amount of the aid paid for applications made in the years 2011 to 2013;

| – | in the alternative, annul in part the contested decision in so far as it includes in the basis of calculation of the flat-rate correction the expenditure relating to ovine/caprine animals for which no livestock aid application has been submitted; |
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–

in the alternative, annul in part the contested decision in so far as it includes in the basis of calculation of the flat-rate correction the expenditure relating to ovine/caprine animals for which no livestock aid application has been submitted;

| – | in the further alternative, annul in part the contested decision in so far as it applies an increased flat-rate correction of 10% on the basis that the failure to count the animals alleged against the French authorities was recurrent; |
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–

in the further alternative, annul in part the contested decision in so far as it applies an increased flat-rate correction of 10% on the basis that the failure to count the animals alleged against the French authorities was recurrent;

| – | order the Commission to pay the costs. |
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–

order the Commission to pay the costs.

| 24 | The Commission contends that the Court should:





  – | dismiss the action; |
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24

The Commission contends that the Court should:

–

dismiss the action;

| – | declare that it is not necessary to rule on the second plea in law; |
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–

declare that it is not necessary to rule on the second plea in law;

| – | order the French Republic to pay the costs. |
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–

order the French Republic to pay the costs.

Law

Law

| 25 | In support of its action, the French Republic relied on three pleas in law, but at the hearing, it withdrew the second plea. |
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25

In support of its action, the French Republic relied on three pleas in law, but at the hearing, it withdrew the second plea.

| 26 | The first plea alleges infringement of Articles 4(1), 10(1) and 14(2) of Regulation No 65/2011 and Article 11(1) of Regulation No 885/2006, in that the Commission considered that the French Government had failed to fulfil its obligations in relation to the verification of stocking density. |
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26

The first plea alleges infringement of Articles 4(1), 10(1) and 14(2) of Regulation No 65/2011 and Article 11(1) of Regulation No 885/2006, in that the Commission considered that the French Government had failed to fulfil its obligations in relation to the verification of stocking density.

| 27 | The third plea, raised in the further alternative, alleges that the Commission infringed the rules laid down in Commission Document No VI/5330/97 of 23 December 1997, entitled ‘Guidelines for the calculation of financial consequences when preparing the decision regarding the clearance of the accounts of EAGGF Guarantee’ (‘Document VI/5330/97’) and in Document AGRI/60637/2006, entitled ‘Commission Communication — How the Commission intends to handle recurrent shortcomings in control systems under the EAGGF Guarantee Section accounts clearance procedure’ (‘Document AGRI/60637/2006’), by applying an increased flat-rate correction of 10% on the basis that the failure to count the animals alleged against the French authorities was recurrent, because it concerned a key control which had already been corrected in two previous investigations and had not been subject to improvements carried out by the French authorities. |
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27

The third plea, raised in the further alternative, alleges that the Commission infringed the rules laid down in Commission Document No VI/5330/97 of 23 December 1997, entitled ‘Guidelines for the calculation of financial consequences when preparing the decision regarding the clearance of the accounts of EAGGF Guarantee’ (‘Document VI/5330/97’) and in Document AGRI/60637/2006, entitled ‘Commission Communication — How the Commission intends to handle recurrent shortcomings in control systems under the EAGGF Guarantee Section accounts clearance procedure’ (‘Document AGRI/60637/2006’), by applying an increased flat-rate correction of 10% on the basis that the failure to count the animals alleged against the French authorities was recurrent, because it concerned a key control which had already been corrected in two previous investigations and had not been subject to improvements carried out by the French authorities.

Preliminary observations

Preliminary observations

| 28 | As a preliminary point, it must be observed that only intervention undertaken in accordance with the EU rules in the framework of the common organisation of the agricultural markets is to be financed by the EAGF (judgment of 4 September 2015, United Kingdom v Commission, T‐245/13, EU:T:2015:595, paragraph 64), and that under the rules of EU law concerning, in particular, the EAGF, it is for the Member States to organise an effective system of inspection and supervision (see judgment of 17 May 2013, Bulgaria v Commission, T‐335/11, not published, EU:T:2013:262, paragraph 29 and the case-law cited). |
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28

As a preliminary point, it must be observed that only intervention undertaken in accordance with the EU rules in the framework of the common organisation of the agricultural markets is to be financed by the EAGF (judgment of 4 September 2015, United Kingdom v Commission, T‐245/13, EU:T:2015:595, paragraph 64), and that under the rules of EU law concerning, in particular, the EAGF, it is for the Member States to organise an effective system of inspection and supervision (see judgment of 17 May 2013, Bulgaria v Commission, T‐335/11, not published, EU:T:2013:262, paragraph 29 and the case-law cited).

| 29 | Moreover, according to settled case-law, it is for the Commission to prove an infringement of the rules on the common organisation of the agricultural markets. The Commission is therefore obliged to give reasons for its decision finding an absence of, or deficiencies in, inspection procedures operated by the Member State in question. However, the Commission is required not to show exhaustively that the checks carried out by the national authorities are inadequate, or that there are irregularities in the figures submitted by them, but to adduce evidence of serious and reasonable doubt on its part regarding those checks or figures. The Member State concerned, for its part, cannot rebut the Commission’s findings by mere assertions which are not substantiated by evidence of a reliable and operational supervisory system. If it is not able to show that the Commission’s findings are inaccurate, they are likely to raise serious doubts as to the existence of an appropriate and effective body of supervisory measures and inspection procedures. The reason for this mitigation of the burden of proof on the Commission is that it is the Member State which is best placed to collect and verify the data required for the clearance of the accounts of the EAGF and consequently, it is for that State to adduce the most detailed and comprehensive evidence that its checks have been carried out and its figures are accurate and, if appropriate, that the Commission’s assertions are incorrect (see judgment of 4 September 2015, United Kingdom v Commission, T‐245/13, EU:T:2015:595, paragraph 65 and the case-law cited). |
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29

Moreover, according to settled case-law, it is for the Commission to prove an infringement of the rules on the common organisation of the agricultural markets. The Commission is therefore obliged to give reasons for its decision finding an absence of, or deficiencies in, inspection procedures operated by the Member State in question. However, the Commission is required not to show exhaustively that the checks carried out by the national authorities are inadequate, or that there are irregularities in the figures submitted by them, but to adduce evidence of serious and reasonable doubt on its part regarding those checks or figures. The Member State concerned, for its part, cannot rebut the Commission’s findings by mere assertions which are not substantiated by evidence of a reliable and operational supervisory system. If it is not able to show that the Commission’s findings are inaccurate, they are likely to raise serious doubts as to the existence of an appropriate and effective body of supervisory measures and inspection procedures. The reason for this mitigation of the burden of proof on the Commission is that it is the Member State which is best placed to collect and verify the data required for the clearance of the accounts of the EAGF and consequently, it is for that State to adduce the most detailed and comprehensive evidence that its checks have been carried out and its figures are accurate and, if appropriate, that the Commission’s assertions are incorrect (see judgment of 4 September 2015, United Kingdom v Commission, T‐245/13, EU:T:2015:595, paragraph 65 and the case-law cited).

| 30 | Finally, according to the case-law, although it is for the Commission to prove that EU rules have been infringed, once it has established such an infringement, it is for the Member State to demonstrate, where appropriate, that the Commission has made an error as to the financial consequences to be attached to that infringement (see judgment of 4 September 2015, United Kingdom v Commission, T‐245/13, EU:T:2015:595, paragraph 66 and the case-law cited). The management of the financing of the EAGF is principally in the hands of the national administrative authorities responsible for ensuring that the EU rules are strictly observed and is based on trust between national and European Union authorities. Only the Member State is in a position to know and determine precisely the information necessary for drawing up the accounts of the Fund, since the Commission is not close enough to obtain the information it needs from the economic operators (see judgment of 4 September 2015, United Kingdom v Commission, T‐245/13, EU:T:2015:595, paragraph 67 and the case-law cited). |
| --- | --- |

30

Finally, according to the case-law, although it is for the Commission to prove that EU rules have been infringed, once it has established such an infringement, it is for the Member State to demonstrate, where appropriate, that the Commission has made an error as to the financial consequences to be attached to that infringement (see judgment of 4 September 2015, United Kingdom v Commission, T‐245/13, EU:T:2015:595, paragraph 66 and the case-law cited). The management of the financing of the EAGF is principally in the hands of the national administrative authorities responsible for ensuring that the EU rules are strictly observed and is based on trust between national and European Union authorities. Only the Member State is in a position to know and determine precisely the information necessary for drawing up the accounts of the Fund, since the Commission is not close enough to obtain the information it needs from the economic operators (see judgment of 4 September 2015, United Kingdom v Commission, T‐245/13, EU:T:2015:595, paragraph 67 and the case-law cited).

| 31 | It is in the light of those considerations that the pleas raised by the French Republic must be examined. |
| --- | --- |

31

It is in the light of those considerations that the pleas raised by the French Republic must be examined.

The admissibility and effectiveness of the pleas in the action in so far as they concern mutatis mutandis the sub-measure relating to the PHAE

The admissibility and effectiveness of the pleas in the action in so far as they concern mutatis mutandis the sub-measure relating to the PHAE

| 32 | The French Republic claims, as a preliminary point, that, throughout the administrative procedure, the Commission considered that the failure to verify stocking density concerned not only the measures relating to CANH, but also the sub-measure relating to the PHAE, despite their having different purposes and award criteria. Therefore, the French Republic claims that the case it has presented in respect of measures 211 and 212 relating to CANH ‘also applies, mutatis mutandis, as regards sub-measure 214-A [relating to the] PHAE’ and that the dispute thus relates to the overall amount of the financial correction in the contested decision, namely, a net amount of EUR 98 276 677.07. In the reply, the French Republic confirms that it wishes to raise the same pleas in respect of the sub-measure relating to the PHAE. |
| --- | --- |

32

The French Republic claims, as a preliminary point, that, throughout the administrative procedure, the Commission considered that the failure to verify stocking density concerned not only the measures relating to CANH, but also the sub-measure relating to the PHAE, despite their having different purposes and award criteria. Therefore, the French Republic claims that the case it has presented in respect of measures 211 and 212 relating to CANH ‘also applies, mutatis mutandis, as regards sub-measure 214-A [relating to the] PHAE’ and that the dispute thus relates to the overall amount of the financial correction in the contested decision, namely, a net amount of EUR 98 276 677.07. In the reply, the French Republic confirms that it wishes to raise the same pleas in respect of the sub-measure relating to the PHAE.

mutatis mutandis

| 33 | The Commission disputes the arguments put forward by the French Republic. |
| --- | --- |

33

The Commission disputes the arguments put forward by the French Republic.

| 34 | In that regard, it should be noted that, by its arguments, the Commission seeks to dispute both the admissibility and the effectiveness of the pleas raised by the French Republic, in so far as they are also raised in respect of the sub-measure relating to the PHAE. |
| --- | --- |

34

In that regard, it should be noted that, by its arguments, the Commission seeks to dispute both the admissibility and the effectiveness of the pleas raised by the French Republic, in so far as they are also raised in respect of the sub-measure relating to the PHAE.

| 35 | In so far as, by its argument, the Commission seeks to dispute the admissibility of the pleas inasmuch as those pleas are also raised in respect of the sub-measure relating to the PHAE, it should be noted that, according to settled case-law, it follows from Article 21 of the Statute of the Court of Justice of the European Union, applicable to the General Court in accordance with Article 53 of that statute, and Article 76 of the Rules of Procedure, that an application must state clearly and precisely the subject matter of the dispute, the form of order sought and a brief statement of the pleas in law on which the application is based, so as to enable the defendant to prepare a defence and the Court to rule on the application, if necessary, without having to seek further information (see, to that effect, judgment of 26 January 2017, GGP Italy v Commission, T‐474/15, EU:T:2017:36, paragraphs 31 and 32 and the case-law cited). |
| --- | --- |

35

In so far as, by its argument, the Commission seeks to dispute the admissibility of the pleas inasmuch as those pleas are also raised in respect of the sub-measure relating to the PHAE, it should be noted that, according to settled case-law, it follows from Article 21 of the Statute of the Court of Justice of the European Union, applicable to the General Court in accordance with Article 53 of that statute, and Article 76 of the Rules of Procedure, that an application must state clearly and precisely the subject matter of the dispute, the form of order sought and a brief statement of the pleas in law on which the application is based, so as to enable the defendant to prepare a defence and the Court to rule on the application, if necessary, without having to seek further information (see, to that effect, judgment of 26 January 2017, GGP Italy v Commission, T‐474/15, EU:T:2017:36, paragraphs 31 and 32 and the case-law cited).

| 36 | In the present case, it should be noted that the French Republic states clearly and precisely the subject matter of the dispute and includes a brief statement of the pleas raised. It also explains the reasons why it considers that the pleas it has raised as regards the measures relating to CANH are also applicable to the sub-measure relating to the PHAE. It is clear from the application that the raising of those pleas in relation to both types of measures is based on the argument that the Commission treats the two types of measures at issue in the same way in the context of its complaint concerning the failure to verify stocking density. |
| --- | --- |

36

In the present case, it should be noted that the French Republic states clearly and precisely the subject matter of the dispute and includes a brief statement of the pleas raised. It also explains the reasons why it considers that the pleas it has raised as regards the measures relating to CANH are also applicable to the sub-measure relating to the PHAE. It is clear from the application that the raising of those pleas in relation to both types of measures is based on the argument that the Commission treats the two types of measures at issue in the same way in the context of its complaint concerning the failure to verify stocking density.

| 37 | It follows that the French Republic is entitled to raise those pleas in respect of the sub-measure relating to the PHAE. |
| --- | --- |

37

It follows that the French Republic is entitled to raise those pleas in respect of the sub-measure relating to the PHAE.

| 38 | In so far as, by its arguments, the Commission seeks to dispute the effectiveness of the pleas in the action inasmuch as those pleas are also raised in respect of the sub-measure relating to the PHAE, in the first place, it should be noted that the rules applicable to the measures relating to CANH are the same as those applicable to agri-environmental measures, such as the measures relating to the PHAE. It is clear from Title IV of Regulation No 1698/2005 that both measures relating to CANH and agri-environmental measures constitute rural development support measures which are aimed at improving the competitiveness of the agricultural and forestry sector. |
| --- | --- |

38

In so far as, by its arguments, the Commission seeks to dispute the effectiveness of the pleas in the action inasmuch as those pleas are also raised in respect of the sub-measure relating to the PHAE, in the first place, it should be noted that the rules applicable to the measures relating to CANH are the same as those applicable to agri-environmental measures, such as the measures relating to the PHAE. It is clear from Title IV of Regulation No 1698/2005 that both measures relating to CANH and agri-environmental measures constitute rural development support measures which are aimed at improving the competitiveness of the agricultural and forestry sector.

| 39 | Secondly, it is clear from the DGPAAT/SDEA/C2011-3030 circular of 22 April 2011 concerning agri-environmental measures that the stocking density for those types of measures is calculated in the same way as the stocking density for measures relating to CANH. The stocking density for measures relating to the PHAE is calculated as ‘the ratio of herbivorous animals on the holding, converted into LU, to the declared forage areas on the farm’, while the DGPAAT/SDEA/C2011-3071 circular of 29 August 2011, setting out the statutory conditions for CANH for the years 2011 to 2013, states that the stocking density for those measures is calculated as the ‘ratio of the number of LUs to the number of hectares of forage areas’. |
| --- | --- |

39

Secondly, it is clear from the DGPAAT/SDEA/C2011-3030 circular of 22 April 2011 concerning agri-environmental measures that the stocking density for those types of measures is calculated in the same way as the stocking density for measures relating to CANH. The stocking density for measures relating to the PHAE is calculated as ‘the ratio of herbivorous animals on the holding, converted into LU, to the declared forage areas on the farm’, while the DGPAAT/SDEA/C2011-3071 circular of 29 August 2011, setting out the statutory conditions for CANH for the years 2011 to 2013, states that the stocking density for those measures is calculated as the ‘ratio of the number of LUs to the number of hectares of forage areas’.

| 40 | Thirdly, it is clear from the final position adopted by the Commission that the exclusion of some of the expenditure declared to the EAFRD is based on the absence of an on-the-spot check of the stocking density for measures relating to CANH and for the sub-measure relating to the PHAE, and that the financial correction is applied to both types of measures. |
| --- | --- |

40

Thirdly, it is clear from the final position adopted by the Commission that the exclusion of some of the expenditure declared to the EAFRD is based on the absence of an on-the-spot check of the stocking density for measures relating to CANH and for the sub-measure relating to the PHAE, and that the financial correction is applied to both types of measures.

| 41 | Fourthly, as noted by the French Republic, throughout the clearance procedure that led to the contested decision, the Commission did not put forward any arguments as regards the sub-measure relating to the PHAE that were different from those put forward as regards measures relating to CANH. |
| --- | --- |

41

Fourthly, as noted by the French Republic, throughout the clearance procedure that led to the contested decision, the Commission did not put forward any arguments as regards the sub-measure relating to the PHAE that were different from those put forward as regards measures relating to CANH.

| 42 | In the light of the foregoing, it must be concluded that the French Republic has effectively put forward its pleas both for the measures relating to CANH and for the sub-measure relating to the PHAE. |
| --- | --- |

42

In the light of the foregoing, it must be concluded that the French Republic has effectively put forward its pleas both for the measures relating to CANH and for the sub-measure relating to the PHAE.

The first plea, alleging infringement of Articles 4(1), 10(1) and 14(2) of Regulation No 65/2011 and Article 11(1) of Regulation No 885/2006

The first plea, alleging infringement of Articles 4(1), 10(1) and 14(2) of Regulation No 65/2011 and Article 11(1) of Regulation No 885/2006

| 43 | By its first plea, the French Republic, supported by the Kingdom of Spain, claims that the Commission infringed Articles 4(1), 10(1) and 14(2) of Regulation No 65/2011 and Article 11(1) of Regulation No 885/2006 by finding that the French Republic had failed to fulfil its obligations in relation to the verification of stocking density. |
| --- | --- |

43

By its first plea, the French Republic, supported by the Kingdom of Spain, claims that the Commission infringed Articles 4(1), 10(1) and 14(2) of Regulation No 65/2011 and Article 11(1) of Regulation No 885/2006 by finding that the French Republic had failed to fulfil its obligations in relation to the verification of stocking density.

| 44 | The French Republic divides this plea into two parts. |
| --- | --- |

44

The French Republic divides this plea into two parts.

| 45 | By the first part, the French Republic claims, in essence, that it was not obliged to count the animals during on-the-spot checks in order to verify compliance with the criterion relating to stocking density, as there is no such obligation under Article 4(1) or Article 10(1) or Article 14(2) of Regulation No 65/2011. The checks made by the French authorities against the national identification database (base de données nationale d’identification; ‘the BDNI’) meet the requirements laid down in Article 4(1) of Regulation No 65/2001 in so far as they allow effective verification of compliance with the terms under which CANH are granted. |
| --- | --- |

45

By the first part, the French Republic claims, in essence, that it was not obliged to count the animals during on-the-spot checks in order to verify compliance with the criterion relating to stocking density, as there is no such obligation under Article 4(1) or Article 10(1) or Article 14(2) of Regulation No 65/2011. The checks made by the French authorities against the national identification database (base de données nationale d’identification; ‘the BDNI’) meet the requirements laid down in Article 4(1) of Regulation No 65/2001 in so far as they allow effective verification of compliance with the terms under which CANH are granted.

| 46 | By the second part, the French Republic claims, in essence, that animals do not need to be subject to a plausibility check during on-the-spot checks, since such an obligation does not arise from Article 4(1) or Article 10(1) or Article 14(2) of Regulation No 65/2011. The Commission used that concept of ‘plausibility’ without clarifying its legal basis, its meaning, or the practical means for its implementation. |
| --- | --- |

46

By the second part, the French Republic claims, in essence, that animals do not need to be subject to a plausibility check during on-the-spot checks, since such an obligation does not arise from Article 4(1) or Article 10(1) or Article 14(2) of Regulation No 65/2011. The Commission used that concept of ‘plausibility’ without clarifying its legal basis, its meaning, or the practical means for its implementation.

| 47 | The Commission disputes the applicant’s arguments. |
| --- | --- |

47

The Commission disputes the applicant’s arguments.

| 48 | Since the two parts of the first plea are closely connected, they should be examined together. |
| --- | --- |

48

Since the two parts of the first plea are closely connected, they should be examined together.

| 49 | As a preliminary point, as regards the principles of checks concerning the measures relating to CANH and the sub-measure relating to the PHAE, it must be recalled that, under Article 4 of Regulation No 65/2011:
  ‘1.   Member States shall establish a control system that ensures that all necessary checks are carried out for effective verification of compliance with the terms under which support is granted.
  ...
  4.   Where appropriate, on-the-spot checks provided for in Articles 12, 20 and 25 of this Regulation and other checks provided for in Union rules regarding agricultural subsidies shall be carried out at the same time.
  ...’ |
| --- | --- |

49

As a preliminary point, as regards the principles of checks concerning the measures relating to CANH and the sub-measure relating to the PHAE, it must be recalled that, under Article 4 of Regulation No 65/2011:

‘1.   Member States shall establish a control system that ensures that all necessary checks are carried out for effective verification of compliance with the terms under which support is granted.

...

4.   Where appropriate, on-the-spot checks provided for in Articles 12, 20 and 25 of this Regulation and other checks provided for in Union rules regarding agricultural subsidies shall be carried out at the same time.

...’

| 50 | Article 10 of Regulation No 65/2011 provides as follows:
  ‘1.   Member States shall make use of the integrated administration and control system provided for in Chapter 4 of Title II of Regulation (EC) No 73/2009.
  2.   Verification of compliance with the eligibility criteria shall consist of administrative and on-the-spot checks.
  3.   Observance of cross-compliance requirements shall be verified through on-the-spot checks and, where appropriate, through administrative checks.
  4.   During the period covered by a commitment, parcels for which support is being granted may not be exchanged except in cases specifically provided for in the rural development programme.’ |
| --- | --- |

50

Article 10 of Regulation No 65/2011 provides as follows:

‘1.   Member States shall make use of the integrated administration and control system provided for in Chapter 4 of Title II of Regulation (EC) No 73/2009.

2.   Verification of compliance with the eligibility criteria shall consist of administrative and on-the-spot checks.

3.   Observance of cross-compliance requirements shall be verified through on-the-spot checks and, where appropriate, through administrative checks.

4.   During the period covered by a commitment, parcels for which support is being granted may not be exchanged except in cases specifically provided for in the rural development programme.’

| 51 | As regards on-the-spot checks in particular, Article 14(2) of Regulation No 65/2011 provides that on-the-spot checks ‘shall cover all the commitments and obligations of a beneficiary which can be checked at the time of the visit’. |
| --- | --- |

51

As regards on-the-spot checks in particular, Article 14(2) of Regulation No 65/2011 provides that on-the-spot checks ‘shall cover all the commitments and obligations of a beneficiary which can be checked at the time of the visit’.

| 52 | In that regard, it should be recalled that, even if the EU rules on the granting of aid and premiums do not expressly require Member States to introduce specific supervisory measures and inspection procedures, the fact remains that, under Article 14(2) of Regulation No 65/2011, it falls to the Member States to carry out on-the-spot checks covering all the commitments and obligations of a beneficiary, including those arising under national law, which can be checked at the time of the visit (see, to that effect, judgments of 26 January 2017, Spain v Commission, C‐506/15 P, not published, EU:C:2017:42, paragraph 69, and of 26 January 2017, France v Commission, C‐373/15 P, EU:C:2017:55, paragraph 71). |
| --- | --- |

52

In that regard, it should be recalled that, even if the EU rules on the granting of aid and premiums do not expressly require Member States to introduce specific supervisory measures and inspection procedures, the fact remains that, under Article 14(2) of Regulation No 65/2011, it falls to the Member States to carry out on-the-spot checks covering all the commitments and obligations of a beneficiary, including those arising under national law, which can be checked at the time of the visit (see, to that effect, judgments of 26 January 2017, Spain v Commission, C‐506/15 P, not published, EU:C:2017:42, paragraph 69, and of 26 January 2017, France v Commission, C‐373/15 P, EU:C:2017:55, paragraph 71).

| 53 | In the present case, the PDRH 2007-2013, as approved by the Commission, provided for a stocking criterion expressed in LUs, as a requirement of eligibility for CANH, with the aim of controlling the density of livestock present on forage areas in order to avoid under-grazing and overgrazing. The French authorities were therefore required, during the on-the-spot checks, to determine the stocking criterion by counting the animals present on the holding at the time of the inspection visit, a count which moreover was provided for in point 7.2 of circular DGPAAT/SDEA/C2011-3071 of 29 August 2011, cited in paragraph 39 above, in order to verify whether that criterion was adhered to meticulously and thus to corroborate the data emerging from the administrative checks (see, by analogy, judgment of 26 January 2017, France v Commission, C‐373/15 P, EU:C:2017:55, paragraph 72). |
| --- | --- |

53

In the present case, the PDRH 2007-2013, as approved by the Commission, provided for a stocking criterion expressed in LUs, as a requirement of eligibility for CANH, with the aim of controlling the density of livestock present on forage areas in order to avoid under-grazing and overgrazing. The French authorities were therefore required, during the on-the-spot checks, to determine the stocking criterion by counting the animals present on the holding at the time of the inspection visit, a count which moreover was provided for in point 7.2 of circular DGPAAT/SDEA/C2011-3071 of 29 August 2011, cited in paragraph 39 above, in order to verify whether that criterion was adhered to meticulously and thus to corroborate the data emerging from the administrative checks (see, by analogy, judgment of 26 January 2017, France v Commission, C‐373/15 P, EU:C:2017:55, paragraph 72).

| 54 | Secondly, it should be noted that the Commission stated that, in the case of large livestock, the plausibility check could be used as an alternative to an ad hoc calculation of the number of animals in order to verify the stocking density. In its formal communication, the Commission complained to the French authorities that ‘the stocking density was not verified on the spot ... in so far as the animals were not verified, counted or made subject to a plausibility check’. It also noted that ‘carrying out checks on herd size or assessing the plausibility thereof [should] be an integral part of on-the-spot checks’. It made the same complaints in the communication of findings and in the invitation to the bilateral meeting. Similarly, in its final position, the Commission complained to the French authorities that ‘the on-the-spot checks carried out for rural development measures [did not include] the counting of livestock or a plausibility check’, stating that ‘those animals [were] neither counted nor made subject to a plausibility check’ and that ‘the stocking density [was] not established following the on-the-spot check’. |
| --- | --- |

54

Secondly, it should be noted that the Commission stated that, in the case of large livestock, the plausibility check could be used as an alternative to an ad hoc calculation of the number of animals in order to verify the stocking density. In its formal communication, the Commission complained to the French authorities that ‘the stocking density was not verified on the spot ... in so far as the animals were not verified, counted or made subject to a plausibility check’. It also noted that ‘carrying out checks on herd size or assessing the plausibility thereof [should] be an integral part of on-the-spot checks’. It made the same complaints in the communication of findings and in the invitation to the bilateral meeting. Similarly, in its final position, the Commission complained to the French authorities that ‘the on-the-spot checks carried out for rural development measures [did not include] the counting of livestock or a plausibility check’, stating that ‘those animals [were] neither counted nor made subject to a plausibility check’ and that ‘the stocking density [was] not established following the on-the-spot check’.

| 55 | Furthermore, throughout the administrative procedure, the Commission reiterated that carrying out checks on herd size or assessing the plausibility thereof should be an integral part of on-the-spot checks in respect of Axis 2 measures, for which the commitments of the beneficiaries specified a stocking density. It therefore repeatedly called on the French authorities to adapt their control procedure. If, during the administrative procedure, the French authorities had doubts about the meaning and the practical means of implementing the plausibility check, they could have requested explanations from the Commission, whereas they merely challenged the lack of a legal basis for the plausibility check. |
| --- | --- |

55

Furthermore, throughout the administrative procedure, the Commission reiterated that carrying out checks on herd size or assessing the plausibility thereof should be an integral part of on-the-spot checks in respect of Axis 2 measures, for which the commitments of the beneficiaries specified a stocking density. It therefore repeatedly called on the French authorities to adapt their control procedure. If, during the administrative procedure, the French authorities had doubts about the meaning and the practical means of implementing the plausibility check, they could have requested explanations from the Commission, whereas they merely challenged the lack of a legal basis for the plausibility check.

| 56 | The argument that the Commission infringed the first subparagraph of Article 11(1) of Regulation No 885/2006 should therefore be rejected, as the Commission did not, at any point in the administrative procedure, specify the corrective measures that the French Republic was required to take in order to comply with the obligation to subject the livestock to a plausibility check. |
| --- | --- |

56

The argument that the Commission infringed the first subparagraph of Article 11(1) of Regulation No 885/2006 should therefore be rejected, as the Commission did not, at any point in the administrative procedure, specify the corrective measures that the French Republic was required to take in order to comply with the obligation to subject the livestock to a plausibility check.

| 57 | In the light of all the foregoing, it must be concluded that the Commission was right to consider that the French authorities were required to count the livestock or carry out a plausibility check during the on-the-spot checks in order to determine the stocking density criterion on the holding receiving CANH. The same applies as regards the conclusion drawn by the Commission concerning the obligation to count animals or carry out a plausibility check to determine the stocking density criterion for the sub-measure relating to the PHAE. |
| --- | --- |

57

In the light of all the foregoing, it must be concluded that the Commission was right to consider that the French authorities were required to count the livestock or carry out a plausibility check during the on-the-spot checks in order to determine the stocking density criterion on the holding receiving CANH. The same applies as regards the conclusion drawn by the Commission concerning the obligation to count animals or carry out a plausibility check to determine the stocking density criterion for the sub-measure relating to the PHAE.

| 58 | That conclusion cannot be called into question by the judgment of 26 January 2017, France v Commission (C‐373/15 P, EU:C:2017:55), in so far as it sets aside the judgment of 30 April 2015, France v Commission (T‐259/13, not published, EU:T:2015:250). |
| --- | --- |

58

That conclusion cannot be called into question by the judgment of 26 January 2017, France v Commission (C‐373/15 P, EU:C:2017:55), in so far as it sets aside the judgment of 30 April 2015, France v Commission (T‐259/13, not published, EU:T:2015:250).

| 59 | In that regard, it should be recalled that in its judgment of 26 January 2017, France v Commission (C‐373/15 P, EU:C:2017:55, paragraph 97), the Court of Justice held that the General Court had erred in law in considering, in paragraph 74 of the judgment of 30 April 2015, France v Commission (T‐259/13, not published, EU:T:2015:250), that the system of on-the-spot checks to be carried out pursuant to Article 12 et seq. of Commission Regulation No 1975/2006 of 7 December 2006 laying down detailed rules for the implementation of Council Regulation (EC) No 1698/2005, as regards the implementation of control procedures as well as cross-compliance in respect of rural development support measures (OJ 2006 L 368, p. 74), the wording of which corresponds to that used in Article 12 et seq. of Regulation No 65/2011, was autonomous and independent of the checks carried out in the context of the administration of the identification of bovine animals or beef premiums, without determining, first, whether the latter checks constituted checks provided for in the EU rules regarding agricultural subsidies within the meaning of Article 5(2) of Regulation No 1975/2006, the wording of which corresponds to that used in Article 4(4) of Regulation No 65/2011, and, secondly, whether they could be carried out at the same time as the checks provided for in Article 12 et seq. of that regulation. |
| --- | --- |

59

In that regard, it should be recalled that in its judgment of 26 January 2017, France v Commission (C‐373/15 P, EU:C:2017:55, paragraph 97), the Court of Justice held that the General Court had erred in law in considering, in paragraph 74 of the judgment of 30 April 2015, France v Commission (T‐259/13, not published, EU:T:2015:250), that the system of on-the-spot checks to be carried out pursuant to Article 12 et seq. of Commission Regulation No 1975/2006 of 7 December 2006 laying down detailed rules for the implementation of Council Regulation (EC) No 1698/2005, as regards the implementation of control procedures as well as cross-compliance in respect of rural development support measures (OJ 2006 L 368, p. 74), the wording of which corresponds to that used in Article 12 et seq. of Regulation No 65/2011, was autonomous and independent of the checks carried out in the context of the administration of the identification of bovine animals or beef premiums, without determining, first, whether the latter checks constituted checks provided for in the EU rules regarding agricultural subsidies within the meaning of Article 5(2) of Regulation No 1975/2006, the wording of which corresponds to that used in Article 4(4) of Regulation No 65/2011, and, secondly, whether they could be carried out at the same time as the checks provided for in Article 12 et seq. of that regulation.

| 60 | Member States are therefore permitted, in principle, to carry out on-the-spot checks under Article 12 et seq. of Regulation No 65/2011, such as on-the-spot checks relating to CANH, together with the on-the-spot checks carried out in the context of the identification of bovine animals or beef premiums, provided that two conditions are satisfied, namely, first, that the latter checks constitute checks provided for in the EU rules regarding agricultural subsidies, within the meaning of Article 4 of Regulation No 65/2011 and, secondly, that they can be carried out at the same time as the checks provided for in Article 12 et seq. of that regulation (see, to that effect and by analogy, judgment of 26 January 2017, France v Commission, C‐373/15 P, EU:C:2017:55, paragraphs 95 and 96). |
| --- | --- |

60

Member States are therefore permitted, in principle, to carry out on-the-spot checks under Article 12 et seq. of Regulation No 65/2011, such as on-the-spot checks relating to CANH, together with the on-the-spot checks carried out in the context of the identification of bovine animals or beef premiums, provided that two conditions are satisfied, namely, first, that the latter checks constitute checks provided for in the EU rules regarding agricultural subsidies, within the meaning of Article 4 of Regulation No 65/2011 and, secondly, that they can be carried out at the same time as the checks provided for in Article 12 et seq. of that regulation (see, to that effect and by analogy, judgment of 26 January 2017, France v Commission, C‐373/15 P, EU:C:2017:55, paragraphs 95 and 96).

| 61 | As regards the first condition, the parties are in disagreement as to whether checks carried out in the context of the administration of the identification of bovine animals constitute checks provided for in the EU rules regarding agricultural subsidies. However, they agree that checks on the administration of beef premiums constitute checks provided for in EU rules regarding agricultural subsidies. |
| --- | --- |

61

As regards the first condition, the parties are in disagreement as to whether checks carried out in the context of the administration of the identification of bovine animals constitute checks provided for in the EU rules regarding agricultural subsidies. However, they agree that checks on the administration of beef premiums constitute checks provided for in EU rules regarding agricultural subsidies.

| 62 | In that regard, it should be noted that checks on the identification of bovine animals are checks carried out under Commission Regulation (EC) No 1082/2003 of 23 June 2003 laying down detailed rules for the implementation of Regulation (EC) No 1760/2000 of the European Parliament and of the Council as regards the minimum level of controls to be carried out in the framework of the system for the identification and registration of bovine animals (OJ 2003 L 156, p. 9). That regulation, adopted pursuant to Regulation (EC) No 1760/2000 of the European Parliament and of the Council of 17 July 2000 establishing a system for the identification and registration of bovine animals and regarding the labelling of beef and beef products and repealing Council Regulation (EC) No 820/97 (OJ 2000 L 204, p. 1), forms part of EU legislation on veterinary and zootechnical matters, aimed at protecting public and animal health. However, as noted by the French Republic, checks on the identification of bovine animals are also provided for in Commission Regulation (EC) No 1122/2009 of 30 November 2009 laying down detailed rules for the implementation of Council Regulation (EC) No 73/2009 as regards cross-compliance, modulation and the integrated administration and control system, under the direct support schemes for farmers provided for that regulation, as well as for the implementation of Council Regulation (EC) No 1234/2007 as regards cross-compliance under the support scheme provided for the wine sector (OJ 2009 L 316, p. 65). In particular, these checks are carried out in order to meet the cross-compliance requirements laid down in Article 4 of Council Regulation (EC) No 73/2009 of 19 January 2009 establishing common rules for direct support schemes for farmers under the common agricultural policy and establishing certain support schemes for farmers, amending Regulations (EC) No 1290/2005, (EC) No 247/2006, (EC) No 378/2007 and repealing Regulation (EC) No 1782/2003 (OJ 2009 L 30, p. 16). |
| --- | --- |

62

In that regard, it should be noted that checks on the identification of bovine animals are checks carried out under Commission Regulation (EC) No 1082/2003 of 23 June 2003 laying down detailed rules for the implementation of Regulation (EC) No 1760/2000 of the European Parliament and of the Council as regards the minimum level of controls to be carried out in the framework of the system for the identification and registration of bovine animals (OJ 2003 L 156, p. 9). That regulation, adopted pursuant to Regulation (EC) No 1760/2000 of the European Parliament and of the Council of 17 July 2000 establishing a system for the identification and registration of bovine animals and regarding the labelling of beef and beef products and repealing Council Regulation (EC) No 820/97 (OJ 2000 L 204, p. 1), forms part of EU legislation on veterinary and zootechnical matters, aimed at protecting public and animal health. However, as noted by the French Republic, checks on the identification of bovine animals are also provided for in Commission Regulation (EC) No 1122/2009 of 30 November 2009 laying down detailed rules for the implementation of Council Regulation (EC) No 73/2009 as regards cross-compliance, modulation and the integrated administration and control system, under the direct support schemes for farmers provided for that regulation, as well as for the implementation of Council Regulation (EC) No 1234/2007 as regards cross-compliance under the support scheme provided for the wine sector (OJ 2009 L 316, p. 65). In particular, these checks are carried out in order to meet the cross-compliance requirements laid down in Article 4 of Council Regulation (EC) No 73/2009 of 19 January 2009 establishing common rules for direct support schemes for farmers under the common agricultural policy and establishing certain support schemes for farmers, amending Regulations (EC) No 1290/2005, (EC) No 247/2006, (EC) No 378/2007 and repealing Regulation (EC) No 1782/2003 (OJ 2009 L 30, p. 16).

| 63 | It follows that checks on the identification of bovine animals constitute checks provided for in the EU rules regarding agricultural subsidies, so the first of the two conditions mentioned in paragraph 60 above is satisfied. |
| --- | --- |

63

It follows that checks on the identification of bovine animals constitute checks provided for in the EU rules regarding agricultural subsidies, so the first of the two conditions mentioned in paragraph 60 above is satisfied.

| 64 | Moreover, in its answer to the General Court’s questions, the Commission itself acknowledges that the system of animal registration and identification supports agricultural subsidy systems. |
| --- | --- |

64

Moreover, in its answer to the General Court’s questions, the Commission itself acknowledges that the system of animal registration and identification supports agricultural subsidy systems.

| 65 | As regards the second condition mentioned in paragraph 60 above, the French Republic claims, in essence, that the animal counts carried out by the French authorities during the on-the-spot checks in the context of the identification of bovine animals or beef premiums make it possible to take into account the specific nature of the CANH scheme and to determine the stocking criterion under that scheme. A single animal count could be used for each of those checks. |
| --- | --- |

65

As regards the second condition mentioned in paragraph 60 above, the French Republic claims, in essence, that the animal counts carried out by the French authorities during the on-the-spot checks in the context of the identification of bovine animals or beef premiums make it possible to take into account the specific nature of the CANH scheme and to determine the stocking criterion under that scheme. A single animal count could be used for each of those checks.

| 66 | According to the French Republic, the French control system is effective for the purpose of Article 4(1) of Regulation No 65/2011 given that the animal counts carried out during the on-the-spot checks in the context of the identification of bovine animals or beef premiums are processed on an ongoing basis by the databases used to monitor the payment of land subsidies such as CANH. |
| --- | --- |

66

According to the French Republic, the French control system is effective for the purpose of Article 4(1) of Regulation No 65/2011 given that the animal counts carried out during the on-the-spot checks in the context of the identification of bovine animals or beef premiums are processed on an ongoing basis by the databases used to monitor the payment of land subsidies such as CANH.

| 67 | In particular, the French Republic states that the two parameters by which the stocking density criterion for the grant of CANH can be determined, namely, the age of the bovine animals and the average period of time per year they spend on the holding, are taken into account by the BDNI. The bovine animal BDNI contains the identification number of all the holdings where each animal has been kept, the dates of each transfer of each animal and the date of birth of each animal, which makes it possible to determine the age of each animal, and consequently, the stocking density, to have at all times the identification number of all the bovine animals present on a holding and to know how many of those animals are present on each holding. Therefore, the data necessary to calculate the number of livestock and data relating to the livestock are collected during on-the-spot checks in the context of animal identification or beef premiums where, at that point, the animals are counted and their age and the period of time they have been on the agricultural land are verified. |
| --- | --- |

67

In particular, the French Republic states that the two parameters by which the stocking density criterion for the grant of CANH can be determined, namely, the age of the bovine animals and the average period of time per year they spend on the holding, are taken into account by the BDNI. The bovine animal BDNI contains the identification number of all the holdings where each animal has been kept, the dates of each transfer of each animal and the date of birth of each animal, which makes it possible to determine the age of each animal, and consequently, the stocking density, to have at all times the identification number of all the bovine animals present on a holding and to know how many of those animals are present on each holding. Therefore, the data necessary to calculate the number of livestock and data relating to the livestock are collected during on-the-spot checks in the context of animal identification or beef premiums where, at that point, the animals are counted and their age and the period of time they have been on the agricultural land are verified.

| 68 | The Commission disputes, in essence, that the checks carried out in the context of the identification of bovine animals or beef premiums relied on by the French Republic in the present case can be used to check compliance with the stocking criterion provided for in respect of CANH. |
| --- | --- |

68

The Commission disputes, in essence, that the checks carried out in the context of the identification of bovine animals or beef premiums relied on by the French Republic in the present case can be used to check compliance with the stocking criterion provided for in respect of CANH.

| 69 | First of all, it should be recalled that it has already been held that none of the provisions of Regulation No 65/2011 can be interpreted as meaning that, if administrative checks are carried out using information derived from a reliable database, the on-the-spot checks under that regulation are no longer necessary. Indeed, such an interpretation disregards the objective of on-the-spot checks, which includes verifying the conformity of the information contained in the databases established by the Member States, in accordance with Article 15(3) of Regulation No 65/2011 and Article 42 of Regulation No 1122/2009 (see, to that effect, judgments of 26 January 2017, France v Commission, C‐373/15 P, EU:C:2017:55, paragraphs 27, 60 and 74, and of 30 April 2015, France v Commission, T‐259/13, not published, EU:T:2015:250, paragraph 70). |
| --- | --- |

69

First of all, it should be recalled that it has already been held that none of the provisions of Regulation No 65/2011 can be interpreted as meaning that, if administrative checks are carried out using information derived from a reliable database, the on-the-spot checks under that regulation are no longer necessary. Indeed, such an interpretation disregards the objective of on-the-spot checks, which includes verifying the conformity of the information contained in the databases established by the Member States, in accordance with Article 15(3) of Regulation No 65/2011 and Article 42 of Regulation No 1122/2009 (see, to that effect, judgments of 26 January 2017, France v Commission, C‐373/15 P, EU:C:2017:55, paragraphs 27, 60 and 74, and of 30 April 2015, France v Commission, T‐259/13, not published, EU:T:2015:250, paragraph 70).

| 70 | Therefore, the fact that the checks implemented by the national authorities meet the requirements laid down in Article 4(1) of Regulation No 65/2011 in that the BDNI takes into account the two parameters which make it possible to determine the stocking density criterion, namely, the parameter relating to the age of the bovine animals and the parameter relating to the average period of time per year they spend on the holding, cannot exempt the French authorities from the obligation to count the animals during the on-the-spot check in order to carry out the checks required under Regulation No 65/2011 and to ensure the conformity of the databases used to calculate the stocking density. |
| --- | --- |

70

Therefore, the fact that the checks implemented by the national authorities meet the requirements laid down in Article 4(1) of Regulation No 65/2011 in that the BDNI takes into account the two parameters which make it possible to determine the stocking density criterion, namely, the parameter relating to the age of the bovine animals and the parameter relating to the average period of time per year they spend on the holding, cannot exempt the French authorities from the obligation to count the animals during the on-the-spot check in order to carry out the checks required under Regulation No 65/2011 and to ensure the conformity of the databases used to calculate the stocking density.

| 71 | Secondly, as the Commission states in its response to the questions put by the Court, it should be noted that it is apparent from Article 5(2) of Regulation No 1975/2006, the wording of which corresponds to that of Article 4(4) of Regulation No 65/2011, that the on-the-spot checks in respect of CANH are to be carried out at the same time as other checks provided for in the EU rules regarding agricultural subsidies ‘where appropriate’. It follows that, in principle, there may be cases in which it is not possible to carry out on-the-spot checks in respect of CANH at the same time as other checks provided for in the EU rules regarding agricultural subsidies, since there is no absolute rule that joint checks must be carried out, but merely an option to do so, which is open to exceptions. |
| --- | --- |

71

Secondly, as the Commission states in its response to the questions put by the Court, it should be noted that it is apparent from Article 5(2) of Regulation No 1975/2006, the wording of which corresponds to that of Article 4(4) of Regulation No 65/2011, that the on-the-spot checks in respect of CANH are to be carried out at the same time as other checks provided for in the EU rules regarding agricultural subsidies ‘where appropriate’. It follows that, in principle, there may be cases in which it is not possible to carry out on-the-spot checks in respect of CANH at the same time as other checks provided for in the EU rules regarding agricultural subsidies, since there is no absolute rule that joint checks must be carried out, but merely an option to do so, which is open to exceptions.

| 72 | Thirdly, it should be noted that, in the present case, the French Republic does not demonstrate that the counts carried out by the French authorities during the on-the-spot checks in the context of the identification of bovine animals or beef premiums take full account of the specific nature of CANH rules and, in particular, of the disparity between the animals subject to checks in respect of CANH. |
| --- | --- |

72

Thirdly, it should be noted that, in the present case, the French Republic does not demonstrate that the counts carried out by the French authorities during the on-the-spot checks in the context of the identification of bovine animals or beef premiums take full account of the specific nature of CANH rules and, in particular, of the disparity between the animals subject to checks in respect of CANH.

| 73 | Indeed, the Commission observes, without being contradicted on that point by the French Republic, that checks in the context of the identification of bovine animals or beef premiums fulfil criteria which are different from the criteria fulfilled by checks in respect of CANH as regards, in particular, the facilities which are subject to checks, the animals counted or identified and the frequency of the checks. |
| --- | --- |

73

Indeed, the Commission observes, without being contradicted on that point by the French Republic, that checks in the context of the identification of bovine animals or beef premiums fulfil criteria which are different from the criteria fulfilled by checks in respect of CANH as regards, in particular, the facilities which are subject to checks, the animals counted or identified and the frequency of the checks.

| 74 | For example, the animals which must be counted in the context of CANH do not necessarily correspond to those which must be counted in the context of animal identification or beef premiums. While a count in the context of animal identification or beef premiums relates to all bovine, ovine, caprine and porcine animals for the purpose of registering them in animal databases and obtaining a representative sample for the application of ear tags, on-the-spot checks in respect of measures relating to CANH relate to all species of grazing livestock. |
| --- | --- |

74

For example, the animals which must be counted in the context of CANH do not necessarily correspond to those which must be counted in the context of animal identification or beef premiums. While a count in the context of animal identification or beef premiums relates to all bovine, ovine, caprine and porcine animals for the purpose of registering them in animal databases and obtaining a representative sample for the application of ear tags, on-the-spot checks in respect of measures relating to CANH relate to all species of grazing livestock.

| 75 | The inevitable conclusion is that, by its arguments, the French Republic has not demonstrated that, in the present case, all the animals checked in the context of measures relating to CANH had been subject to on-the-spot checks in the context of animal identification or beef premiums. In that regard, the notes sent by the French authorities to the Commission, which were produced as an annex to the application, regarding the report on checks relating to the identification of bovine animals and small ruminants carried out in France from 2011 to 2013, in accordance with Article 5 of Regulation No 1082/2003 and Article 7 of Commission Regulation (EC) No 1505/2006 of 11 October 2006 implementing Council Regulation (EC) No 21/2004 as regards the minimum level of checks to be carried out in relation to the identification and registration of ovine and caprine animals (OJ 2006 L 280, p. 3), are irrelevant, as they concern only bovine, ovine and caprine animals and they do not prove that the checks which are the subject of those reports also cover all the species of animals checked in respect of CANH. |
| --- | --- |

75

The inevitable conclusion is that, by its arguments, the French Republic has not demonstrated that, in the present case, all the animals checked in the context of measures relating to CANH had been subject to on-the-spot checks in the context of animal identification or beef premiums. In that regard, the notes sent by the French authorities to the Commission, which were produced as an annex to the application, regarding the report on checks relating to the identification of bovine animals and small ruminants carried out in France from 2011 to 2013, in accordance with Article 5 of Regulation No 1082/2003 and Article 7 of Commission Regulation (EC) No 1505/2006 of 11 October 2006 implementing Council Regulation (EC) No 21/2004 as regards the minimum level of checks to be carried out in relation to the identification and registration of ovine and caprine animals (OJ 2006 L 280, p. 3), are irrelevant, as they concern only bovine, ovine and caprine animals and they do not prove that the checks which are the subject of those reports also cover all the species of animals checked in respect of CANH.

| 76 | In these circumstances, the French Republic’s argument that a single animal count may be used both in respect of on-the-spot checks in the context of bovine animal identification or beef premiums and in respect of CANH checks cannot succeed. |
| --- | --- |

76

In these circumstances, the French Republic’s argument that a single animal count may be used both in respect of on-the-spot checks in the context of bovine animal identification or beef premiums and in respect of CANH checks cannot succeed.

| 77 | Likewise, a mere statement regarding the existence of checks serving different purposes and, as the French Republic acknowledged at the hearing, being carried out in different years cannot be considered as sufficient proof that the Commission erred in finding that the French authorities had failed to fulfil their obligations to count animals during on-the-spot checks in respect of measures relating to CANH in order to verify the stocking density. |
| --- | --- |

77

Likewise, a mere statement regarding the existence of checks serving different purposes and, as the French Republic acknowledged at the hearing, being carried out in different years cannot be considered as sufficient proof that the Commission erred in finding that the French authorities had failed to fulfil their obligations to count animals during on-the-spot checks in respect of measures relating to CANH in order to verify the stocking density.

| 78 | Therefore, since the second condition mentioned in paragraph 60 above is not satisfied, the first plea in the action must be dismissed. |
| --- | --- |

78

Therefore, since the second condition mentioned in paragraph 60 above is not satisfied, the first plea in the action must be dismissed.

| 79 | The conclusion drawn in paragraph 57 above cannot be called into question by the argument put forward by the French Republic and the Kingdom of Spain that the counting of animals during on-the-spot checks does not make it possible to verify compliance with the stocking density criterion because stocking density is an annual average figure. In its pleadings, the French Republic does not identify any legal basis in EU law according to which stocking density should be considered as an annual average figure. Moreover, it has cited no case-law of the Court of Justice or the General Court to support its argument. Furthermore, it should be noted, as the Commission has observed, that the PRDH 2007-2013, drawn up by the French Republic itself, does not establish that stocking density is an annual average figure. |
| --- | --- |

79

The conclusion drawn in paragraph 57 above cannot be called into question by the argument put forward by the French Republic and the Kingdom of Spain that the counting of animals during on-the-spot checks does not make it possible to verify compliance with the stocking density criterion because stocking density is an annual average figure. In its pleadings, the French Republic does not identify any legal basis in EU law according to which stocking density should be considered as an annual average figure. Moreover, it has cited no case-law of the Court of Justice or the General Court to support its argument. Furthermore, it should be noted, as the Commission has observed, that the PRDH 2007-2013, drawn up by the French Republic itself, does not establish that stocking density is an annual average figure.

| 80 | The PDRH 2007-2013 merely requires that the number of livestock is between the minimum and maximum thresholds defined by the Prefect for each area or sub-area of the department, depending on its agri-climatic features, without specifying that it is an annual value. Moreover, even assuming that the period concerned is one year, the beneficiaries must stay within the range of values that has been set. Variations between maximum and minimum values may occur throughout the relevant period and, since it is impossible to check those values on a daily basis, an average for the year may be accepted. However, in order to ensure compliance with the condition relating to stocking density, that average should be calculated on the basis of the values that lie between the minimum and maximum values of the range (see, by analogy, judgment of 15 July 2015, Spain v Commission, T‐561/13, not published, EU:T:2015:496, paragraph 56). |
| --- | --- |

80

The PDRH 2007-2013 merely requires that the number of livestock is between the minimum and maximum thresholds defined by the Prefect for each area or sub-area of the department, depending on its agri-climatic features, without specifying that it is an annual value. Moreover, even assuming that the period concerned is one year, the beneficiaries must stay within the range of values that has been set. Variations between maximum and minimum values may occur throughout the relevant period and, since it is impossible to check those values on a daily basis, an average for the year may be accepted. However, in order to ensure compliance with the condition relating to stocking density, that average should be calculated on the basis of the values that lie between the minimum and maximum values of the range (see, by analogy, judgment of 15 July 2015, Spain v Commission, T‐561/13, not published, EU:T:2015:496, paragraph 56).

| 81 | According to the French Republic’s interpretation that compliance with the stocking density criterion must be based on the calculation of an average for the year, beneficiaries may, at certain times during the year, exceed the maximum or fall below the minimum values of the range provided for in the PDRH 2007-2013, in so far as doing so does not affect the final average value for the whole year. That approach would encourage strategic behaviour on the part of the beneficiaries which might be inconsistent with the objectives pursued by the aid in question, in particular the safeguarding and promotion of sustainable farming systems (see recital 33 of Regulation No 1698/2005). Exceeding the maximum values at certain times of the year could lead to over-exploitation of the areas concerned and the failure to meet minimum values could lead to situations in which those areas are under-used (see, by analogy, judgment of 15 July 2015, Spain v Commission, T‐561/13, not published, EU:T:2015:496, paragraph 56). |
| --- | --- |

81

According to the French Republic’s interpretation that compliance with the stocking density criterion must be based on the calculation of an average for the year, beneficiaries may, at certain times during the year, exceed the maximum or fall below the minimum values of the range provided for in the PDRH 2007-2013, in so far as doing so does not affect the final average value for the whole year. That approach would encourage strategic behaviour on the part of the beneficiaries which might be inconsistent with the objectives pursued by the aid in question, in particular the safeguarding and promotion of sustainable farming systems (see recital 33 of Regulation No 1698/2005). Exceeding the maximum values at certain times of the year could lead to over-exploitation of the areas concerned and the failure to meet minimum values could lead to situations in which those areas are under-used (see, by analogy, judgment of 15 July 2015, Spain v Commission, T‐561/13, not published, EU:T:2015:496, paragraph 56).

| 82 | The national authorities are therefore required, during on-the-spot checks, to determine the stocking density criterion by, inter alia, counting the animals at the time of the inspection visit in order to determine whether the maximum and minimum values set by the PDRH 2007-2013 are adhered to meticulously and thus to corroborate the data emerging from the administrative checks (see, by analogy, judgment of 26 January 2017, Spain v Commission, C‐506/15 P, not published, EU:C:2017:42,.paragraph 70). |
| --- | --- |

82

The national authorities are therefore required, during on-the-spot checks, to determine the stocking density criterion by, inter alia, counting the animals at the time of the inspection visit in order to determine whether the maximum and minimum values set by the PDRH 2007-2013 are adhered to meticulously and thus to corroborate the data emerging from the administrative checks (see, by analogy, judgment of 26 January 2017, Spain v Commission, C‐506/15 P, not published, EU:C:2017:42,.paragraph 70).

| 83 | Consequently, the French Republic’s argument that the fact that, on a given day, a holding has a stocking density lower than the threshold or higher than the ceiling provided for in the context of CANH does not constitute a failure to fulfil the conditions of eligibility for aid, cannot succeed. In accordance with Article 14(2) of Regulation No 65/2011, on-the-spot checks are to cover all the commitments and obligations of a beneficiary which can be checked at the time of the visit. |
| --- | --- |

83

Consequently, the French Republic’s argument that the fact that, on a given day, a holding has a stocking density lower than the threshold or higher than the ceiling provided for in the context of CANH does not constitute a failure to fulfil the conditions of eligibility for aid, cannot succeed. In accordance with Article 14(2) of Regulation No 65/2011, on-the-spot checks are to cover all the commitments and obligations of a beneficiary which can be checked at the time of the visit.

| 84 | Moreover, the fact that, as the French Republic claims, certain factors influencing the determination of the stocking density, such as the age of the animals, cannot be determined with absolute precision cannot exempt the national authorities from their obligation to carry out checks in that regard. In addition, it is not inconceivable that, as the Commission submits, inspectors carrying out on-the-spot checks may be able to determine with sufficient precision the age of the animals (judgment of 26 January 2017, Spain v Commission, C‐506/15 P, not published, EU:C:2017:42, paragraph 71). |
| --- | --- |

84

Moreover, the fact that, as the French Republic claims, certain factors influencing the determination of the stocking density, such as the age of the animals, cannot be determined with absolute precision cannot exempt the national authorities from their obligation to carry out checks in that regard. In addition, it is not inconceivable that, as the Commission submits, inspectors carrying out on-the-spot checks may be able to determine with sufficient precision the age of the animals (judgment of 26 January 2017, Spain v Commission, C‐506/15 P, not published, EU:C:2017:42, paragraph 71).

| 85 | In the light of the foregoing, the first plea must be rejected. |
| --- | --- |

85

In the light of the foregoing, the first plea must be rejected.

The third plea, raised in the further alternative, alleging infringement of the rules set out in Documents VI/5330/97 and AGRI/60637/2006

The third plea, raised in the further alternative, alleging infringement of the rules set out in Documents VI/5330/97 and AGRI/60637/2006

| 86 | By the third plea, raised in the further alternative, the French Republic claims that the Commission infringed the rules set out in Documents VI/5330/97 and AGRI/60637/2006, by applying an increased flat-rate correction of 10% on the basis that the failure to count the animals alleged against the French authorities was recurrent, because it concerned a key control which had already been corrected in two previous investigations and had not been subject to improvements. |
| --- | --- |

86

By the third plea, raised in the further alternative, the French Republic claims that the Commission infringed the rules set out in Documents VI/5330/97 and AGRI/60637/2006, by applying an increased flat-rate correction of 10% on the basis that the failure to count the animals alleged against the French authorities was recurrent, because it concerned a key control which had already been corrected in two previous investigations and had not been subject to improvements.

| 87 | The French Republic claims that, according to Document AGRI/60637/2006, read in conjunction with Document VI/5330/97, two conditions must be satisfied in order for the Commission to be able to apply such an increase. These are, first, that the Commission has notified the Member State concerned of the improvements it should make to rectify the irregularities alleged against it in the context of previous clearance procedures and, secondly, that the Member State has failed to rectify the irregularities although it was in a position to do so. |
| --- | --- |

87

The French Republic claims that, according to Document AGRI/60637/2006, read in conjunction with Document VI/5330/97, two conditions must be satisfied in order for the Commission to be able to apply such an increase. These are, first, that the Commission has notified the Member State concerned of the improvements it should make to rectify the irregularities alleged against it in the context of previous clearance procedures and, secondly, that the Member State has failed to rectify the irregularities although it was in a position to do so.

| 88 | According to the French Republic, the second condition is not satisfied in the present case, given that it was impossible for the French authorities to rectify the irregularities identified by the Commission during the first investigation before the opening of the two subsequent investigations. The on-the-spot checks would have been able to incorporate the improvements stipulated by the Commission following the first administrative procedure only after the adoption of Commission Implementing Decision 2013/123/EU of 26 February 2013 on excluding from European Union financing certain expenditure incurred by the Member States under the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF), under the EAGF and under the EAFRD (OJ 2013 L 67, p. 20), which was adopted following the first administrative procedure, that is to say, after the two years covered by the two subsequent investigations had passed. Therefore, the irregularities detected during the procedure that led to the contested decision cannot be regarded as recurrent within the meaning of Document AGRI/60637/2006. |
| --- | --- |

88

According to the French Republic, the second condition is not satisfied in the present case, given that it was impossible for the French authorities to rectify the irregularities identified by the Commission during the first investigation before the opening of the two subsequent investigations. The on-the-spot checks would have been able to incorporate the improvements stipulated by the Commission following the first administrative procedure only after the adoption of Commission Implementing Decision 2013/123/EU of 26 February 2013 on excluding from European Union financing certain expenditure incurred by the Member States under the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF), under the EAGF and under the EAFRD (OJ 2013 L 67, p. 20), which was adopted following the first administrative procedure, that is to say, after the two years covered by the two subsequent investigations had passed. Therefore, the irregularities detected during the procedure that led to the contested decision cannot be regarded as recurrent within the meaning of Document AGRI/60637/2006.

| 89 | First, the Commission claims that the French Republic had been aware of the shortcomings identified in its control system since 23 February 2009 (the date of the communication of the findings of the first investigation, which set out the irregularities detected and the recommendations), and that the three investigations concerned the same issue. The French Republic therefore knew that the procedure at issue related to deficiencies which had been ongoing for several years. Secondly, the Commission submits that the reasoning of the French Republic applies only in cases of ‘recidivism’, which was expressly rejected by the General Court in respect of a financial correction in its judgment of 17 May 2013, Greece v Commission (T‐294/11, not published, EU:T:2013:261, paragraphs 98 and 100). However, the adoption of a formal decision establishing the existence of such a deficiency is not necessary in the case of ‘recurrence’, a concept which applies when the repeated occurrence of deficiencies posing a risk to the control system as a whole is found. |
| --- | --- |

89

First, the Commission claims that the French Republic had been aware of the shortcomings identified in its control system since 23 February 2009 (the date of the communication of the findings of the first investigation, which set out the irregularities detected and the recommendations), and that the three investigations concerned the same issue. The French Republic therefore knew that the procedure at issue related to deficiencies which had been ongoing for several years. Secondly, the Commission submits that the reasoning of the French Republic applies only in cases of ‘recidivism’, which was expressly rejected by the General Court in respect of a financial correction in its judgment of 17 May 2013, Greece v Commission (T‐294/11, not published, EU:T:2013:261, paragraphs 98 and 100). However, the adoption of a formal decision establishing the existence of such a deficiency is not necessary in the case of ‘recurrence’, a concept which applies when the repeated occurrence of deficiencies posing a risk to the control system as a whole is found.

| 90 | As a preliminary point, it should be recalled that the guidelines on flat-rate financial corrections were defined in Document VI/5330/97. Annex 2 to that document, entitled ‘Guidelines for the application of flat-rate corrections’, sets out the following different levels of flat-rate financial correction:
  ‘When one or more key controls are not applied or applied so poorly or so infrequently that they are completely ineffective in determining the eligibility of the claim or preventing irregularity, then a correction of 10% is justified, as it can reasonably be concluded that there was 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 regulations, then a correction of 5% is justified, as it can reasonably be concluded they do not provide sufficient level of assurance of the regularity of claims, and that the risk to the Fund was significant.
  When a Member State has adequately performed the key controls, but completely failed to operate one or more ancillary controls, then a correction of 2% is justified in view of the lower risk of loss to the Fund, and in view of the lesser seriousness of the infringement.
  ...’ |
| --- | --- |

90

As a preliminary point, it should be recalled that the guidelines on flat-rate financial corrections were defined in Document VI/5330/97. Annex 2 to that document, entitled ‘Guidelines for the application of flat-rate corrections’, sets out the following different levels of flat-rate financial correction:

‘When one or more key controls are not applied or applied so poorly or so infrequently that they are completely ineffective in determining the eligibility of the claim or preventing irregularity, then a correction of 10% is justified, as it can reasonably be concluded that there was 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 regulations, then a correction of 5% is justified, as it can reasonably be concluded they do not provide sufficient level of assurance of the regularity of claims, and that the risk to the Fund was significant.

When a Member State has adequately performed the key controls, but completely failed to operate one or more ancillary controls, then a correction of 2% is justified in view of the lower risk of loss to the Fund, and in view of the lesser seriousness of the infringement.

...’

| 91 | Document AGRI/60637/2006 sets out the way in which the Commission proposes to apply the principle, set out in Document VI/5330/97, according to which the infringement becomes more serious if a Member State fails to improve its controls when the Commission has already notified it of the necessary improvements. |
| --- | --- |

91

Document AGRI/60637/2006 sets out the way in which the Commission proposes to apply the principle, set out in Document VI/5330/97, according to which the infringement becomes more serious if a Member State fails to improve its controls when the Commission has already notified it of the necessary improvements.

| 92 | The second subparagraph of paragraph 1 of Document AGRI/60637/2006 sets out the principle that the Commission is to take account of the nature and seriousness of the infringement and of the financial loss to the European Union. |
| --- | --- |

92

The second subparagraph of paragraph 1 of Document AGRI/60637/2006 sets out the principle that the Commission is to take account of the nature and seriousness of the infringement and of the financial loss to the European Union.

| 93 | Paragraph 2 of Document AGRI/60637/2006 provides:
  ‘Where the absence of or shortcomings in a control system or an aspect of that system have been the subject of one or more financial correction decisions under the EAGGF Guarantee Section accounts clearance procedure,
  and
  the same shortcomings are found to have continued in a period after the one for which the corrections are made,
  the Commission considers ... that there is normally justification for applying an increase to the flat-rate [financial] correction applied at the time of the previous correction, in view of the increased risk of financial loss to the EAGGF.’ |
| --- | --- |

93

Paragraph 2 of Document AGRI/60637/2006 provides:

‘Where the absence of or shortcomings in a control system or an aspect of that system have been the subject of one or more financial correction decisions under the EAGGF Guarantee Section accounts clearance procedure,

and

the same shortcomings are found to have continued in a period after the one for which the corrections are made,

the Commission considers ... that there is normally justification for applying an increase to the flat-rate [financial] correction applied at the time of the previous correction, in view of the increased risk of financial loss to the EAGGF.’

| 94 | Therefore, it is clear from paragraph 2 of Document AGRI/60637/2006 that, in essence, two conditions must be satisfied for the Commission to consider that there is normally justification for applying an increase to the flat-rate financial correction applied at the time of a previous correction, namely:





  – | the absence of or shortcomings in a control system or an aspect of that system which have been the subject of one or more financial correction decisions under the accounts clearance procedure; |
| --- | --- | --- |

94

Therefore, it is clear from paragraph 2 of Document AGRI/60637/2006 that, in essence, two conditions must be satisfied for the Commission to consider that there is normally justification for applying an increase to the flat-rate financial correction applied at the time of a previous correction, namely:

–

the absence of or shortcomings in a control system or an aspect of that system which have been the subject of one or more financial correction decisions under the accounts clearance procedure;

| – | the finding that the same shortcomings have continued in a period after the one for which the corrections are made. |
| --- | --- |

–

the finding that the same shortcomings have continued in a period after the one for which the corrections are made.

| 95 | It is necessary, in the present case, to interpret these two conditions. |
| --- | --- |

95

It is necessary, in the present case, to interpret these two conditions.

| 96 | As regards the first condition, it should be noted that it is apparent from the wording of Document AGRI/60637/2006 that, in order for an increase to be applied as a result of recurrence, the absence of or shortcomings in a control system or an aspect of that system, must have been the subject of a ‘financial correction decision’ adopted under the accounts clearance procedure, namely, a decision adopted by the Commission under Article 31 of Regulation No 1290/2005. |
| --- | --- |

96

As regards the first condition, it should be noted that it is apparent from the wording of Document AGRI/60637/2006 that, in order for an increase to be applied as a result of recurrence, the absence of or shortcomings in a control system or an aspect of that system, must have been the subject of a ‘financial correction decision’ adopted under the accounts clearance procedure, namely, a decision adopted by the Commission under Article 31 of Regulation No 1290/2005.

| 97 | Therefore, a formal communication drawn up in accordance with Article 11(1) of Regulation No 885/2006, being a measure whose aim is to prepare the final decision, cannot be regarded as a financial correction decision under the accounts clearance procedure for the purposes of that condition. |
| --- | --- |

97

Therefore, a formal communication drawn up in accordance with Article 11(1) of Regulation No 885/2006, being a measure whose aim is to prepare the final decision, cannot be regarded as a financial correction decision under the accounts clearance procedure for the purposes of that condition.

| 98 | Furthermore, it is settled case-law that decisions on the clearance of accounts of the European Agricultural Guidance and Guarantee Fund (EAGGF) are to be taken at the conclusion of inter partes proceedings, so the results of the checks set out in the first communication are not final and may be clarified and reviewed in the light of the responses provided by the Member State during the subsequent administrative procedure judgments of 17 June 2009, Portugal v Commission, T‐50/07, not published, EU:T:2009:206, paragraphs 34 and 37, and of 12 November 2010, Spain v Commission, T‐113/08, not published, EU:T:2010:465, paragraph 132; see, also, judgment of 24 March 2011, Greece v Commission, T‐184/09, not published, EU:T:2011:120, paragraph 45 and the case-law cited). |
| --- | --- |

98

Furthermore, it is settled case-law that decisions on the clearance of accounts of the European Agricultural Guidance and Guarantee Fund (EAGGF) are to be taken at the conclusion of inter partes proceedings, so the results of the checks set out in the first communication are not final and may be clarified and reviewed in the light of the responses provided by the Member State during the subsequent administrative procedure judgments of 17 June 2009, Portugal v Commission, T‐50/07, not published, EU:T:2009:206, paragraphs 34 and 37, and of 12 November 2010, Spain v Commission, T‐113/08, not published, EU:T:2010:465, paragraph 132; see, also, judgment of 24 March 2011, Greece v Commission, T‐184/09, not published, EU:T:2011:120, paragraph 45 and the case-law cited).

inter partes

| 99 | In the present case, the Commission submits, in essence, that, after the letter of 23 February was sent, the French Republic was in a position to know the irregularities at issue and the improvements that needed to be made to its system of on-the-spot checks. |
| --- | --- |

99

In the present case, the Commission submits, in essence, that, after the letter of 23 February was sent, the French Republic was in a position to know the irregularities at issue and the improvements that needed to be made to its system of on-the-spot checks.

| 100 | In that regard, it should be noted that, by that letter, the Commission sent to the French Republic a formal communication drawn up in accordance with Article 11(1) of Regulation No 885/2006. That letter was presented in the context of the procedure laid down in Article 11 of Regulation No 885/2006, which led to the adoption by the Commission of Implementing Decision 2013/123 on excluding from European Union financing certain expenditure, in accordance with Article 31 of Regulation No 1290/2005. Thus, the final decision of the Commission to exclude some expenditure from European Union financing had not yet been adopted at the time of the sending of the letter of 23 February 2009, since the latter was a preparatory measure whose purpose was to prepare implementing Decision 2013/123. |
| --- | --- |

100

In that regard, it should be noted that, by that letter, the Commission sent to the French Republic a formal communication drawn up in accordance with Article 11(1) of Regulation No 885/2006. That letter was presented in the context of the procedure laid down in Article 11 of Regulation No 885/2006, which led to the adoption by the Commission of Implementing Decision 2013/123 on excluding from European Union financing certain expenditure, in accordance with Article 31 of Regulation No 1290/2005. Thus, the final decision of the Commission to exclude some expenditure from European Union financing had not yet been adopted at the time of the sending of the letter of 23 February 2009, since the latter was a preparatory measure whose purpose was to prepare implementing Decision 2013/123.

| 101 | It follows that the letter of 23 February 2009 is not sufficient to satisfy the first of the two conditions mentioned in paragraph 94 above, Therefore, the Commission’s argument that it is not necessary or desirable to await the adoption of a formal decision establishing the existence of a deficiency in order for there to be a finding of recurrence when a formal communication adopted in accordance with Article 11(1) of Regulation No 885/2006 is sufficient, cannot succeed. |
| --- | --- |

101

It follows that the letter of 23 February 2009 is not sufficient to satisfy the first of the two conditions mentioned in paragraph 94 above, Therefore, the Commission’s argument that it is not necessary or desirable to await the adoption of a formal decision establishing the existence of a deficiency in order for there to be a finding of recurrence when a formal communication adopted in accordance with Article 11(1) of Regulation No 885/2006 is sufficient, cannot succeed.

| 102 | As regards the second condition set out in paragraph 94 above, the parties disagree, in essence, on the interpretation of the phrase ‘the period subsequent to the period already corrected’. |
| --- | --- |

102

As regards the second condition set out in paragraph 94 above, the parties disagree, in essence, on the interpretation of the phrase ‘the period subsequent to the period already corrected’.

| 103 | The Commission follows a strictly literal interpretation, whereby the relevant period is the period subject to the investigation subsequent to the investigation in which the deficiency was detected for the first time and sanctioned by a financial correction decision. Conversely, the French Republic adopts, in essence, the interpretation whereby the relevant period is the period subsequent to the adoption of the financial correction decision terminating the investigation in which the deficiency at issue was detected for the first time. |
| --- | --- |

103

The Commission follows a strictly literal interpretation, whereby the relevant period is the period subject to the investigation subsequent to the investigation in which the deficiency was detected for the first time and sanctioned by a financial correction decision. Conversely, the French Republic adopts, in essence, the interpretation whereby the relevant period is the period subsequent to the adoption of the financial correction decision terminating the investigation in which the deficiency at issue was detected for the first time.

| 104 | In the present case, it is apparent from the final position adopted by the Commission that the Commission applied an increased flat-rate correction of 10% on the basis that the failure to count the animals alleged against the French authorities was recurrent, because it concerned a key control which had already been corrected in two previous investigations, and had not been subject to improvements carried out by the French authorities. |
| --- | --- |

104

In the present case, it is apparent from the final position adopted by the Commission that the Commission applied an increased flat-rate correction of 10% on the basis that the failure to count the animals alleged against the French authorities was recurrent, because it concerned a key control which had already been corrected in two previous investigations, and had not been subject to improvements carried out by the French authorities.

| 105 | Three different investigations, which led to three different financial correction decisions, took place in the present case:





  – | investigation RDG/2008/010/FR, concerning the years 2007 and 2008, which led to the adoption of Implementing Decision 2013/123 on 26 February 2013; |
| --- | --- | --- |

105

Three different investigations, which led to three different financial correction decisions, took place in the present case:

–

investigation RDG/2008/010/FR, concerning the years 2007 and 2008, which led to the adoption of Implementing Decision 2013/123 on 26 February 2013;

| – | investigation RD 2/2011/003/FR, concerning the years 2009 and 2010, which led to the adoption of Commission Implementing Decision (EU) 2015/103 of 16 January 2015 excluding from European Union financing certain expenditure incurred by the Member States under the EAGF and the EAFRD (OJ 2015 L 16, p. 33); |
| --- | --- |

–

investigation RD 2/2011/003/FR, concerning the years 2009 and 2010, which led to the adoption of Commission Implementing Decision (EU) 2015/103 of 16 January 2015 excluding from European Union financing certain expenditure incurred by the Member States under the EAGF and the EAFRD (OJ 2015 L 16, p. 33);

| – | investigation RD 2/2012/005/FR, concerning the years 2011 to 2013, which led to the adoption of the contested decision on 22 June 2015. |
| --- | --- |

–

investigation RD 2/2012/005/FR, concerning the years 2011 to 2013, which led to the adoption of the contested decision on 22 June 2015.

| 106 | On 22 June 2015, the date of the contested decision, the Commission had already adopted two decisions, namely, Decision 2013/123, on 26 February 2013, and Decision 2015/103, on 16 January 2015. Moreover, according to the contested decision, the same weakness already identified in the first decision continues for a period subsequent to the period to which the correction relates, namely the period covering the years 2007 and 2008. That weakness was also detected for the years 2009 to 2013. |
| --- | --- |

106

On 22 June 2015, the date of the contested decision, the Commission had already adopted two decisions, namely, Decision 2013/123, on 26 February 2013, and Decision 2015/103, on 16 January 2015. Moreover, according to the contested decision, the same weakness already identified in the first decision continues for a period subsequent to the period to which the correction relates, namely the period covering the years 2007 and 2008. That weakness was also detected for the years 2009 to 2013.

| 107 | However, as was pointed out by the French Republic, in the years 2009 to 2013, the period covered by the second and third investigations, a financial correction decision setting out the Commission’s final position as regards the weaknesses on the part of the French Republic detected during the first investigation had not yet been adopted by the Commission. Therefore, for the years 2009 to 2013, the French Republic had no certainty as to the deficiencies detected during the first investigation and was not required to follow the recommendations given in the letter of 23 February 2009 to adapt the stocking density control measures in order to make the improvements stipulated by the Commission to avoid the same weakness in the control system being detected for the years 2009 to 2013. |
| --- | --- |

107

However, as was pointed out by the French Republic, in the years 2009 to 2013, the period covered by the second and third investigations, a financial correction decision setting out the Commission’s final position as regards the weaknesses on the part of the French Republic detected during the first investigation had not yet been adopted by the Commission. Therefore, for the years 2009 to 2013, the French Republic had no certainty as to the deficiencies detected during the first investigation and was not required to follow the recommendations given in the letter of 23 February 2009 to adapt the stocking density control measures in order to make the improvements stipulated by the Commission to avoid the same weakness in the control system being detected for the years 2009 to 2013.

| 108 | In other words, by the contested decision, the Commission complains that the French Republic’s failure has become ‘more serious’, which justifies an increase for recurrence, as it did not remedy the failure to count animals in the years 2011 to 2013, a failure which had already been detected for the years 2007 to 2010. However, the finding of a failure to improve the control system alleged by the Commission was made only in the decision adopted on 26 February 2013. |
| --- | --- |

108

In other words, by the contested decision, the Commission complains that the French Republic’s failure has become ‘more serious’, which justifies an increase for recurrence, as it did not remedy the failure to count animals in the years 2011 to 2013, a failure which had already been detected for the years 2007 to 2010. However, the finding of a failure to improve the control system alleged by the Commission was made only in the decision adopted on 26 February 2013.

| 109 | It follows that the Commission’s interpretation is not consistent with the wording of the Document VI/5330/97, the scope of which is specified in Document AGRI/60637/2006. |
| --- | --- |

109

It follows that the Commission’s interpretation is not consistent with the wording of the Document VI/5330/97, the scope of which is specified in Document AGRI/60637/2006.

| 110 | As regards the application of flat-rate corrections, according to Document VI/5330/97, ‘a Member State’s failure to perfect controls becomes more serious if the Commission has already notified it of the improvements it considers essential’. It is therefore clear from the wording of that document that the failure to make improvements, which may be an aggravating factor, cannot be deemed to have occurred until after notification of the necessary improvements, namely, as stated in Document AGRI/60637/2006, after the financial correction decision adopted in the context of the accounts clearance procedure. |
| --- | --- |

110

As regards the application of flat-rate corrections, according to Document VI/5330/97, ‘a Member State’s failure to perfect controls becomes more serious if the Commission has already notified it of the improvements it considers essential’. It is therefore clear from the wording of that document that the failure to make improvements, which may be an aggravating factor, cannot be deemed to have occurred until after notification of the necessary improvements, namely, as stated in Document AGRI/60637/2006, after the financial correction decision adopted in the context of the accounts clearance procedure.

| 111 | Moreover, to regard, as the Commission does, the alleged irregularities as being recurrent without examining whether the Member State has had the opportunity to remedy them following the initial complaint leads, ultimately, to a notion that recurrence is based solely on the mere repetition of the disputed irregularities, regardless of whether a decision has been adopted as required by Document AGRI/60637/2006. |
| --- | --- |

111

Moreover, to regard, as the Commission does, the alleged irregularities as being recurrent without examining whether the Member State has had the opportunity to remedy them following the initial complaint leads, ultimately, to a notion that recurrence is based solely on the mere repetition of the disputed irregularities, regardless of whether a decision has been adopted as required by Document AGRI/60637/2006.

| 112 | In the light of the foregoing, the third plea must be upheld and the contested decision must be annulled in so far as it applies an increased flat-rate correction of 10% on the basis that the failure to count the animals alleged against the French authorities was recurrent and had not been subject to improvements carried out by the French authorities. |
| --- | --- |

112

In the light of the foregoing, the third plea must be upheld and the contested decision must be annulled in so far as it applies an increased flat-rate correction of 10% on the basis that the failure to count the animals alleged against the French authorities was recurrent and had not been subject to improvements carried out by the French authorities.

Costs

Costs

| 113 | Under Article 134(3) of the Rules of Procedure, the parties are to bear their own costs where each party succeeds on some heads and fails on others. |
| --- | --- |

113

Under Article 134(3) of the Rules of Procedure, the parties are to bear their own costs where each party succeeds on some heads and fails on others.

| 114 | In the present case, the Commission and the French Republic should be ordered to bear their own costs. |
| --- | --- |

114

In the present case, the Commission and the French Republic should be ordered to bear their own costs.

| 115 | In accordance with Article 138(1) of the Rules of Procedure, the Kingdom of Spain must bear its own costs. |
| --- | --- |

115

In accordance with Article 138(1) of the Rules of Procedure, the Kingdom of Spain must bear its own costs.

| | On those grounds,
  THE GENERAL COURT (Sixth Chamber)
  hereby: |
| --- | --- |

On those grounds,

THE GENERAL COURT (Sixth Chamber)

hereby:

| | 1. | Annuls Commission Implementing Decision (EU) 2015/1119 of 22 June 2015 excluding from European Union financing certain expenditure incurred by the Member States under the European Agricultural Guarantee Fund (EAGF) and under the European Agricultural Fund for Rural Development (EAFRD) in so far as it applies an increased flat-rate correction of 10% on the basis that the failure to count the animals alleged against the French authorities was recurrent and had not been subject to improvements carried out by the French authorities; |
| --- | --- | --- |

1.

1.

Annuls Commission Implementing Decision (EU) 2015/1119 of 22 June 2015 excluding from European Union financing certain expenditure incurred by the Member States under the European Agricultural Guarantee Fund (EAGF) and under the European Agricultural Fund for Rural Development (EAFRD) in so far as it applies an increased flat-rate correction of 10% on the basis that the failure to count the animals alleged against the French authorities was recurrent and had not been subject to improvements carried out by the French authorities;

Annuls Commission Implementing Decision (EU) 2015/1119 of 22 June 2015 excluding from European Union financing certain expenditure incurred by the Member States under the European Agricultural Guarantee Fund (EAGF) and under the European Agricultural Fund for Rural Development (EAFRD) in so far as it applies an increased flat-rate correction of 10% on the basis that the failure to count the animals alleged against the French authorities was recurrent and had not been subject to improvements carried out by the French authorities;

| | 2. | Dismisses the action as to the remainder; |
| --- | --- | --- |

2.

2.

Dismisses the action as to the remainder;

Dismisses the action as to the remainder;

| | 3. | Orders the French Republic and the European Commission to bear their own costs; |
| --- | --- | --- |

3.

3.

Orders the French Republic and the European Commission to bear their own costs;

Orders the French Republic and the European Commission to bear their own costs;

| | 4. | Orders the Kingdom of Spain to bear its own costs. |
| --- | --- | --- |

4.

4.

Orders the Kingdom of Spain to bear its own costs.

Orders the Kingdom of Spain to bear its own costs.

| | Berardis


  Spielmann


  Csehi


  Delivered in open court in Luxembourg on 1 February 2018.
  [Signatures] |
| --- | --- |

Berardis

Spielmann

Csehi

Delivered in open court in Luxembourg on 1 February 2018.

[Signatures]

---

(
  *1
  )	Language of the case: French.

*1