# C_2018112EN.01003301.xml

| 26.3.2018 | EN | Official Journal of the European Union | C 112/33 |
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Action brought on 19 January 2018 — Republic of Lithuania v European Commission

(Case T-19/18)

(2018/C 112/43)

Language of the case: Lithuanian

Parties

Applicant: Republic of Lithuania (represented by: D. Kriaučiūnas, R. Krasuckaitė, R. Dzikovič, G. Taluntytė, V. Vasiliauskienė, M. Palionis and A. Dapkuvienė)

Defendant: European Commission

Form of order sought

| 1. | annul Commission Implementing Decision (EU) 2017/2014 of 8 November 2017 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 provides for the imposition on Lithuania of a financial correction of EUR 9 745 705,88 regarding expenditure connected with funding from the European Agricultural Fund for Rural Development; |
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| 2. | annul Commission Implementing Decision (EU) 2017/2014 of 8 November 2017 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 provides for the imposition on Lithuania of a financial correction of EUR 546 351,91 regarding expenditure connected with funding from the European Agricultural Guarantee Fund and the European Agricultural Fund for Rural Development; |
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| 3. | order the European Commission to pay the costs. |
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Pleas in law and main arguments

In support of the action, the applicant relies on the following pleas in law.

| I. | By imposing a correction of EUR 9 745 705,88 for a deficiency in key controls, the European Commission (‘the Commission’) infringed Article 52(2) of Regulation (EU) No 1306/2013 in so far as, in deciding on the gravity of the non-conformity, on the nature of the infringements and on the financial damage caused to the European Union and:
1.
relying on an incorrect interpretation of Article 24(1) and (2)(a) of Regulation (EU) No 65/2011, it wrongly found that the assessments of applicants’ eligibility carried out in Lithuania are insufficient because:
1.1
the checks carried out by Lithuanian authorities concerning the relatedness of an undertaking and a connected undertaking or a partner undertaking abroad were not thorough for the purpose of confirming the applicants’ status as small or medium-sized undertakings; 1.2
in Lithuania the monitoring of projects recognised as risky on account of suspected artificial conditions is ineffective; 2.
relying on an incorrect interpretation of Article 24(2)(d) of Regulation (EU) No 65/2011, it wrongly found that the quality of the checks carried out in Lithuania of the reasonableness of the costs was insufficient; 3.
relying on an incorrect interpretation of Article 26(1)(d) and (2) of Regulation (EU) No 65/2011, it wrongly found that the system of on-the-spot checks applied in Lithuania is insufficient; 4.
relying on an incorrect interpretation of Article 24(2)(a) of Regulation (EU) No 65/2011, it wrongly found that goods acquired in one of the projects checked were essentially used for purposes other than those of the project. | 1. | relying on an incorrect interpretation of Article 24(1) and (2)(a) of Regulation (EU) No 65/2011, it wrongly found that the assessments of applicants’ eligibility carried out in Lithuania are insufficient because:
1.1
the checks carried out by Lithuanian authorities concerning the relatedness of an undertaking and a connected undertaking or a partner undertaking abroad were not thorough for the purpose of confirming the applicants’ status as small or medium-sized undertakings; 1.2
in Lithuania the monitoring of projects recognised as risky on account of suspected artificial conditions is ineffective; | 1.1 | the checks carried out by Lithuanian authorities concerning the relatedness of an undertaking and a connected undertaking or a partner undertaking abroad were not thorough for the purpose of confirming the applicants’ status as small or medium-sized undertakings; | 1.2 | in Lithuania the monitoring of projects recognised as risky on account of suspected artificial conditions is ineffective; | 2. | relying on an incorrect interpretation of Article 24(2)(d) of Regulation (EU) No 65/2011, it wrongly found that the quality of the checks carried out in Lithuania of the reasonableness of the costs was insufficient; | 3. | relying on an incorrect interpretation of Article 26(1)(d) and (2) of Regulation (EU) No 65/2011, it wrongly found that the system of on-the-spot checks applied in Lithuania is insufficient; | 4. | relying on an incorrect interpretation of Article 24(2)(a) of Regulation (EU) No 65/2011, it wrongly found that goods acquired in one of the projects checked were essentially used for purposes other than those of the project. |
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| 1. | relying on an incorrect interpretation of Article 24(1) and (2)(a) of Regulation (EU) No 65/2011, it wrongly found that the assessments of applicants’ eligibility carried out in Lithuania are insufficient because:
1.1
the checks carried out by Lithuanian authorities concerning the relatedness of an undertaking and a connected undertaking or a partner undertaking abroad were not thorough for the purpose of confirming the applicants’ status as small or medium-sized undertakings; 1.2
in Lithuania the monitoring of projects recognised as risky on account of suspected artificial conditions is ineffective; | 1.1 | the checks carried out by Lithuanian authorities concerning the relatedness of an undertaking and a connected undertaking or a partner undertaking abroad were not thorough for the purpose of confirming the applicants’ status as small or medium-sized undertakings; | 1.2 | in Lithuania the monitoring of projects recognised as risky on account of suspected artificial conditions is ineffective; | | | | | | | | |
| 1.1 | the checks carried out by Lithuanian authorities concerning the relatedness of an undertaking and a connected undertaking or a partner undertaking abroad were not thorough for the purpose of confirming the applicants’ status as small or medium-sized undertakings; | | | | | | | | | | | | |
| 1.2 | in Lithuania the monitoring of projects recognised as risky on account of suspected artificial conditions is ineffective; | | | | | | | | | | | | |
| 2. | relying on an incorrect interpretation of Article 24(2)(d) of Regulation (EU) No 65/2011, it wrongly found that the quality of the checks carried out in Lithuania of the reasonableness of the costs was insufficient; | | | | | | | | | | | | |
| 3. | relying on an incorrect interpretation of Article 26(1)(d) and (2) of Regulation (EU) No 65/2011, it wrongly found that the system of on-the-spot checks applied in Lithuania is insufficient; | | | | | | | | | | | | |
| 4. | relying on an incorrect interpretation of Article 24(2)(a) of Regulation (EU) No 65/2011, it wrongly found that goods acquired in one of the projects checked were essentially used for purposes other than those of the project. | | | | | | | | | | | | |

| II. | By imposing a correction of EUR 546 351,91 for a deficiency in key and ancillary controls, the Commission infringed Article 52(2) of Regulation (EU) No 1306/2013 in so far as, in deciding on the gravity of the non-conformity, on the nature of the infringements and on the financial damage caused to the European Union:
1.
it failed to take account of the calculations carried out by the competent authorities of the Republic of Lithuania concerning the financial damage caused to the European Union that is connected with divergences of the penalty system which relate to infringements as to animal identification and registration and are not provided for in the relevant measures of EU law, in respect of the 2014 claim year; 2.
it failed to take account of the calculations carried out by the competent authorities of the Republic of Lithuania concerning the financial damage caused to the European Union that is connected with an overly lenient assessment of failure to observe the requirements for the identification and registration of animals, in respect of the 2014 claim year; 3.
also relying on an incorrect interpretation of Article 51(1) of Regulation (EC) No 1122/2009, it wrongly found that in Lithuania risk analysis did not comply with that regulation because risk factors connected with the animals were not included in it; 4.
also relying on an incorrect interpretation of Article 84 of Regulation (EC) No 1122/2009, it wrongly found that the monitoring carried out in Lithuania of the results of controls did not comply with that regulation, because statistics were supplied without full observance of the Commission’s templates. | 1. | it failed to take account of the calculations carried out by the competent authorities of the Republic of Lithuania concerning the financial damage caused to the European Union that is connected with divergences of the penalty system which relate to infringements as to animal identification and registration and are not provided for in the relevant measures of EU law, in respect of the 2014 claim year; | 2. | it failed to take account of the calculations carried out by the competent authorities of the Republic of Lithuania concerning the financial damage caused to the European Union that is connected with an overly lenient assessment of failure to observe the requirements for the identification and registration of animals, in respect of the 2014 claim year; | 3. | also relying on an incorrect interpretation of Article 51(1) of Regulation (EC) No 1122/2009, it wrongly found that in Lithuania risk analysis did not comply with that regulation because risk factors connected with the animals were not included in it; | 4. | also relying on an incorrect interpretation of Article 84 of Regulation (EC) No 1122/2009, it wrongly found that the monitoring carried out in Lithuania of the results of controls did not comply with that regulation, because statistics were supplied without full observance of the Commission’s templates. |
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| 1. | it failed to take account of the calculations carried out by the competent authorities of the Republic of Lithuania concerning the financial damage caused to the European Union that is connected with divergences of the penalty system which relate to infringements as to animal identification and registration and are not provided for in the relevant measures of EU law, in respect of the 2014 claim year; | | | | | | | | |
| 2. | it failed to take account of the calculations carried out by the competent authorities of the Republic of Lithuania concerning the financial damage caused to the European Union that is connected with an overly lenient assessment of failure to observe the requirements for the identification and registration of animals, in respect of the 2014 claim year; | | | | | | | | |
| 3. | also relying on an incorrect interpretation of Article 51(1) of Regulation (EC) No 1122/2009, it wrongly found that in Lithuania risk analysis did not comply with that regulation because risk factors connected with the animals were not included in it; | | | | | | | | |
| 4. | also relying on an incorrect interpretation of Article 84 of Regulation (EC) No 1122/2009, it wrongly found that the monitoring carried out in Lithuania of the results of controls did not comply with that regulation, because statistics were supplied without full observance of the Commission’s templates. | | | | | | | | |

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