# 62021TJ0235

JUDGMENT OF THE GENERAL COURT (First Chamber)

8 March 2023 (
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  )

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(EAGF and EAFRD – Expenditure excluded from financing – Expenditure incurred by Bulgaria – Promotion measures – OLAF investigation report – Conformity clearance – Duty to state reasons)

In Case T‐235/21,

Republic of Bulgaria, represented by T. Mitova and L. Zaharieva, acting as Agents,

Republic of Bulgaria

applicant,

v

European Commission, represented by G. Koleva, J. Aquilina and A. Sauka, acting as Agents,

European Commission

defendant,

THE GENERAL COURT (First Chamber),

composed, at the time of the deliberations, of H. Kanninen, President, N. Półtorak (Rapporteur) and M. Stancu, Judges,

Registrar: G. Mitrev, Administrator,

having regard to the written part of the procedure,

further to the hearing on 27 September 2022,

gives the following

Judgment

Judgment

| 1 | By its action under Article 263 TFEU, the Republic of Bulgaria seeks the annulment of Commission Implementing Decision (EU) 2021/261 of 17 February 2021 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 2021 L 59, p. 10; ‘the contested decision’), in so far as that decision relates to certain expenditure that it effected. |
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1

By its action under Article 263 TFEU, the Republic of Bulgaria seeks the annulment of Commission Implementing Decision (EU) 2021/261 of 17 February 2021 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 2021 L 59, p. 10; ‘the contested decision’), in so far as that decision relates to certain expenditure that it effected.

Background to the dispute

Background to the dispute

Administrative procedure

Administrative procedure

| 2 | By letter Ares(2016) 6881454 of 4 January 2017, the European Commission’s Directorate-General for Agriculture and Rural Development (DG AGRI) requested the Republic of Bulgaria to submit its comments on the information provided by the European Anti-Fraud Office (OLAF) in investigation INT/2016/101/BG (‘the communication of findings’). In essence, it emerged from that investigation that fraudulent activity had resulted in the undue payment of EU funds. DG AGRI informed the Republic of Bulgaria that eligibility for funding from the EAGF of all expenditure in respect of programmes implemented by [confidential] (
  1
  ) was affected. Therefore, DG AGRI pointed out that, in accordance with Article 52 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), it was considering the possibility of excluding such expenditure from Union financing. It also recommended that the Bulgarian authorities suspend payments in respect of all programmes and transactions in which [confidential] was implicated where they had sufficient grounds to do so. |
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2

By letter Ares(2016) 6881454 of 4 January 2017, the European Commission’s Directorate-General for Agriculture and Rural Development (DG AGRI) requested the Republic of Bulgaria to submit its comments on the information provided by the European Anti-Fraud Office (OLAF) in investigation INT/2016/101/BG (‘the communication of findings’). In essence, it emerged from that investigation that fraudulent activity had resulted in the undue payment of EU funds. DG AGRI informed the Republic of Bulgaria that eligibility for funding from the EAGF of all expenditure in respect of programmes implemented by [confidential] (
  1
  ) was affected. Therefore, DG AGRI pointed out that, in accordance with Article 52 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), it was considering the possibility of excluding such expenditure from Union financing. It also recommended that the Bulgarian authorities suspend payments in respect of all programmes and transactions in which [confidential] was implicated where they had sufficient grounds to do so.

confidential

1

confidential

| 3 | By letter Ares(2017) 4323588 of 2 May 2017, DG AGRI invited the Bulgarian authorities to attend a bilateral meeting in accordance with the first subparagraph of Article 34(2) of Commission Implementing Regulation (EU) No 908/2014 of 6 August 2014 laying down rules for the application of Regulation (EU) No 1306/2013 of the European Parliament and of the Council with regard to paying agencies and other bodies, financial management, clearance of accounts, rules on checks, securities and transparency (OJ 2014 L 255, p. 59). It also informed the Republic of Bulgaria that it maintained its position that OLAF’s findings indicated that there were serious irregularities regarding the expenditure referred to in paragraph 2 above. It explained that it would provide, also by letter and after the publication of OLAF’s final report, further details on the various steps that would be taken in the clearance procedure that had been initiated. It concluded by pointing out that, pending that report, it maintained its position that all expenditure in respect of the programmes implemented by [confidential] was at risk. The first bilateral meeting took place on 12 July 2017. |
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3

By letter Ares(2017) 4323588 of 2 May 2017, DG AGRI invited the Bulgarian authorities to attend a bilateral meeting in accordance with the first subparagraph of Article 34(2) of Commission Implementing Regulation (EU) No 908/2014 of 6 August 2014 laying down rules for the application of Regulation (EU) No 1306/2013 of the European Parliament and of the Council with regard to paying agencies and other bodies, financial management, clearance of accounts, rules on checks, securities and transparency (OJ 2014 L 255, p. 59). It also informed the Republic of Bulgaria that it maintained its position that OLAF’s findings indicated that there were serious irregularities regarding the expenditure referred to in paragraph 2 above. It explained that it would provide, also by letter and after the publication of OLAF’s final report, further details on the various steps that would be taken in the clearance procedure that had been initiated. It concluded by pointing out that, pending that report, it maintained its position that all expenditure in respect of the programmes implemented by [confidential] was at risk. The first bilateral meeting took place on 12 July 2017.

confidential

| 4 | By letter Ares(2017) 4417644 of 11 September 2017, DG AGRI forwarded the minutes of the bilateral meeting held on 12 July 2017 to the Republic of Bulgaria and asked the latter some additional questions. It also informed the Republic of Bulgaria that it was necessary to wait for OLAF’s final report before pursuing the next steps of the clearance procedure, particularly as regards the quantification of the risk to the fund in question resulting from the deficiencies found. In accordance with Article 34(9) of Implementing Regulation No 908/2014, DG AGRI decided to extend the six-month period provided for in Article 34(3) of that regulation by an additional three months in order to send its conclusions to the Republic of Bulgaria. |
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4

By letter Ares(2017) 4417644 of 11 September 2017, DG AGRI forwarded the minutes of the bilateral meeting held on 12 July 2017 to the Republic of Bulgaria and asked the latter some additional questions. It also informed the Republic of Bulgaria that it was necessary to wait for OLAF’s final report before pursuing the next steps of the clearance procedure, particularly as regards the quantification of the risk to the fund in question resulting from the deficiencies found. In accordance with Article 34(9) of Implementing Regulation No 908/2014, DG AGRI decided to extend the six-month period provided for in Article 34(3) of that regulation by an additional three months in order to send its conclusions to the Republic of Bulgaria.

| 5 | By letter Ares(2018) 329836 of 19 January 2018, DG AGRI forwarded OLAF’s final report with reference OF/2012/0565/B (‘OLAF’s first report’) to the Republic of Bulgaria. It informed the Bulgarian authorities that it would organise a second bilateral meeting with them to discuss that report. |
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5

By letter Ares(2018) 329836 of 19 January 2018, DG AGRI forwarded OLAF’s final report with reference OF/2012/0565/B (‘OLAF’s first report’) to the Republic of Bulgaria. It informed the Bulgarian authorities that it would organise a second bilateral meeting with them to discuss that report.

| 6 | By letter Ares(2018) 2319201 of 7 May 2018, DG AGRI invited the Republic of Bulgaria to a second bilateral meeting to discuss OLAF’s first report (‘the second invitation to a bilateral meeting’). It also stated that, after analysing that report, it maintained its position that all expenditure in respect of the promotion programmes in which [confidential] was implicated was at risk. It therefore recommended that the Bulgarian authorities continue to suspend payments for all programmes in which [confidential] was implicated and that irregular payments should be recovered from the beneficiaries, in accordance with Article 54 of Regulation No 1306/2013. That second bilateral meeting was held on 23 May 2018. |
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6

By letter Ares(2018) 2319201 of 7 May 2018, DG AGRI invited the Republic of Bulgaria to a second bilateral meeting to discuss OLAF’s first report (‘the second invitation to a bilateral meeting’). It also stated that, after analysing that report, it maintained its position that all expenditure in respect of the promotion programmes in which [confidential] was implicated was at risk. It therefore recommended that the Bulgarian authorities continue to suspend payments for all programmes in which [confidential] was implicated and that irregular payments should be recovered from the beneficiaries, in accordance with Article 54 of Regulation No 1306/2013. That second bilateral meeting was held on 23 May 2018.

confidential

confidential

| 7 | By letter Ares(2018) 3168772 of 29 June 2018, DG AGRI forwarded the minutes of the second bilateral meeting to the Republic of Bulgaria. It also recalled that further information had been requested at that meeting. |
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7

By letter Ares(2018) 3168772 of 29 June 2018, DG AGRI forwarded the minutes of the second bilateral meeting to the Republic of Bulgaria. It also recalled that further information had been requested at that meeting.

| 8 | By letter Ares(2018) 451290 of 3 September 2018, DG AGRI forwarded the OLAF report with reference OF/2016/0390/B5 (‘OLAF’s second report’) to the Bulgarian authorities. That report concerned the irregularities committed by [confidential] in connection with promotion programmes financed by the EAGF. |
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8

By letter Ares(2018) 451290 of 3 September 2018, DG AGRI forwarded the OLAF report with reference OF/2016/0390/B5 (‘OLAF’s second report’) to the Bulgarian authorities. That report concerned the irregularities committed by [confidential] in connection with promotion programmes financed by the EAGF.

confidential

| 9 | By letter Ares(2019) 1300497 of 1 March 2019, DG AGRI requested the Bulgarian authorities to provide further information, in accordance with Article 34(5)(a) of Implementing Regulation No 908/2014, on the recovery of the amounts related to expenditure incurred by the EAGF under the nine promotion programmes identified as posing risks to the fund in question, in addition to the entry of the corresponding amounts in the debtors’ ledger pursuant to Article 54 of Regulation No 1306/2013. DG AGRI also stated that, under that article, the recovery procedure in respect of the programmes implemented by [confidential] should be requested no later than 18 months from 19 January 2018, while the recovery procedure in respect of the programme implemented by [confidential] should be requested no later than 18 months from 3 September 2018 – that is to say, the dates on which the first and second OLAF reports (together, ‘OLAF’s final reports’) were sent to the Bulgarian paying agency. |
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9

By letter Ares(2019) 1300497 of 1 March 2019, DG AGRI requested the Bulgarian authorities to provide further information, in accordance with Article 34(5)(a) of Implementing Regulation No 908/2014, on the recovery of the amounts related to expenditure incurred by the EAGF under the nine promotion programmes identified as posing risks to the fund in question, in addition to the entry of the corresponding amounts in the debtors’ ledger pursuant to Article 54 of Regulation No 1306/2013. DG AGRI also stated that, under that article, the recovery procedure in respect of the programmes implemented by [confidential] should be requested no later than 18 months from 19 January 2018, while the recovery procedure in respect of the programme implemented by [confidential] should be requested no later than 18 months from 3 September 2018 – that is to say, the dates on which the first and second OLAF reports (together, ‘OLAF’s final reports’) were sent to the Bulgarian paying agency.

confidential

confidential

| 10 | By letter Ares(2019) 7043430 of 19 November 2019, DG AGRI forwarded a communication to the Republic of Bulgaria pursuant to the third subparagraph of Article 34(3) of Implementing Regulation No 908/2014 (‘the formal communication’), which analysed, inter alia, the information provided by the Bulgarian authorities in their letters No 99-129 of 20 July 2018, No 99-162 of 21 September 2018 and No 53-1-116 of 24 April 2019. It emerged, in essence, that, following the bilateral discussion of 29 May 2018 and on the basis of the additional information subsequently provided by the Republic of Bulgaria and OLAF’s final reports, DG AGRI considered that the financing of nine promotion programmes implemented by [confidential] and [confidential] was not in conformity with the applicable rules. Furthermore, DG AGRI considered that, since the Republic of Bulgaria had not initiated any procedure for the recovery and recording in the debtors’ ledger of the paying agency, its management and control system did not comply with the requirements laid down by EU law and there was therefore a risk to the fund in question. DG AGRI thus proposed to exclude the amount of EUR 7 656 848.97 from EAGF funding. |
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10

By letter Ares(2019) 7043430 of 19 November 2019, DG AGRI forwarded a communication to the Republic of Bulgaria pursuant to the third subparagraph of Article 34(3) of Implementing Regulation No 908/2014 (‘the formal communication’), which analysed, inter alia, the information provided by the Bulgarian authorities in their letters No 99-129 of 20 July 2018, No 99-162 of 21 September 2018 and No 53-1-116 of 24 April 2019. It emerged, in essence, that, following the bilateral discussion of 29 May 2018 and on the basis of the additional information subsequently provided by the Republic of Bulgaria and OLAF’s final reports, DG AGRI considered that the financing of nine promotion programmes implemented by [confidential] and [confidential] was not in conformity with the applicable rules. Furthermore, DG AGRI considered that, since the Republic of Bulgaria had not initiated any procedure for the recovery and recording in the debtors’ ledger of the paying agency, its management and control system did not comply with the requirements laid down by EU law and there was therefore a risk to the fund in question. DG AGRI thus proposed to exclude the amount of EUR 7 656 848.97 from EAGF funding.

confidential

confidential

| 11 | By letter No 99-170 of 18 December 2019, the Republic of Bulgaria referred the matter to the conciliation body in accordance with Article 40(1) of Implementing Regulation No 908/2014. The conciliation body delivered its opinion on 25 February 2020. |
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11

By letter No 99-170 of 18 December 2019, the Republic of Bulgaria referred the matter to the conciliation body in accordance with Article 40(1) of Implementing Regulation No 908/2014. The conciliation body delivered its opinion on 25 February 2020.

| 12 | By letter Ares(2020) 4231484 of 12 August 2020, DG AGRI forwarded its final opinion to the Republic of Bulgaria (‘the final opinion’), by which it informed the Republic of Bulgaria that it maintained its position as set out in letter Ares(2019) 7043430 of 19 November 2019 and that it thus proposed to exclude the amount of EUR 7 656 848.97 from EAGF funding. |
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12

By letter Ares(2020) 4231484 of 12 August 2020, DG AGRI forwarded its final opinion to the Republic of Bulgaria (‘the final opinion’), by which it informed the Republic of Bulgaria that it maintained its position as set out in letter Ares(2019) 7043430 of 19 November 2019 and that it thus proposed to exclude the amount of EUR 7 656 848.97 from EAGF funding.

Contested decision

Contested decision

| 13 | On 17 February 2021, the Commission adopted the contested decision, on the basis of Article 52 of Regulation No 1306/2013, by which it applied a one-off correction by excluding from Union financing certain expenditure incurred by the Republic of Bulgaria under operational programmes co-financed by the EAGF and the EAFRD. In essence, it emerged that, in the light of the audits carried out, the bilateral discussions and the conciliation procedure, part of the expenditure declared by the Republic of Bulgaria did not meet the conditions for financing under the EAGF due to the absence of recoveries. |
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13

On 17 February 2021, the Commission adopted the contested decision, on the basis of Article 52 of Regulation No 1306/2013, by which it applied a one-off correction by excluding from Union financing certain expenditure incurred by the Republic of Bulgaria under operational programmes co-financed by the EAGF and the EAFRD. In essence, it emerged that, in the light of the audits carried out, the bilateral discussions and the conciliation procedure, part of the expenditure declared by the Republic of Bulgaria did not meet the conditions for financing under the EAGF due to the absence of recoveries.

| 14 | Consequently, the contested decision excluded the amount of EUR 7 656 848.97 from Union financing. |
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14

Consequently, the contested decision excluded the amount of EUR 7 656 848.97 from Union financing.

Forms of order sought

Forms of order sought

| 15 | The Republic of Bulgaria claims that the Court should:





  – | annul the contested decision in so far as it applied a financial correction totalling EUR 7 656 848.97 in relation to investigation INT/2016/101/BG; |
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15

The Republic of Bulgaria claims that the Court should:

–

annul the contested decision in so far as it applied a financial correction totalling EUR 7 656 848.97 in relation to investigation INT/2016/101/BG;

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

order the Commission to pay the costs.

| 16 | The Commission contends that the Court should:





  – | dismiss the action; |
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16

The Commission contends that the Court should:

–

dismiss the action;

| – | order the Republic of Bulgaria to pay the costs. |
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–

order the Republic of Bulgaria to pay the costs.

Law

Law

Admissibility of the evidence produced on 26 September 2022

Admissibility of the evidence produced on 26 September 2022

| 17 | On 26 September 2022, the day before the hearing, the Republic of Bulgaria submitted new evidence, namely a letter from the Commission in which it had forwarded an OLAF report, which the Republic of Bulgaria regarded as having a similar subject to OLAF’s final reports at issue in the present case. |
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17

On 26 September 2022, the day before the hearing, the Republic of Bulgaria submitted new evidence, namely a letter from the Commission in which it had forwarded an OLAF report, which the Republic of Bulgaria regarded as having a similar subject to OLAF’s final reports at issue in the present case.

| 18 | At the hearing, the Republic of Bulgaria claimed that it had been unable to produce that evidence during the written part of the procedure since it had received it after the procedure had closed, namely on 12 May 2022, which the Commission does not dispute. |
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18

At the hearing, the Republic of Bulgaria claimed that it had been unable to produce that evidence during the written part of the procedure since it had received it after the procedure had closed, namely on 12 May 2022, which the Commission does not dispute.

| 19 | The Commission submits that the evidence should be considered inadmissible in so far as it was submitted late. |
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19

The Commission submits that the evidence should be considered inadmissible in so far as it was submitted late.

| 20 | In that regard, it must be recalled that, according to Article 85(3) of the Rules of Procedure of the General Court, the main parties may, exceptionally, produce or offer further evidence before the oral part of the procedure is closed or before the decision of the General Court to rule without an oral part of the procedure, provided that the delay in the submission of such evidence is justified. |
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20

In that regard, it must be recalled that, according to Article 85(3) of the Rules of Procedure of the General Court, the main parties may, exceptionally, produce or offer further evidence before the oral part of the procedure is closed or before the decision of the General Court to rule without an oral part of the procedure, provided that the delay in the submission of such evidence is justified.

| 21 | In the present case, the evidence produced on 26 September 2022 consists of a letter from the Commission which the Republic of Bulgaria received on 12 May 2022. However, the reply was filed on 6 October 2021 and the written part of the procedure was closed on 30 November 2021. |
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21

In the present case, the evidence produced on 26 September 2022 consists of a letter from the Commission which the Republic of Bulgaria received on 12 May 2022. However, the reply was filed on 6 October 2021 and the written part of the procedure was closed on 30 November 2021.

| 22 | The Republic of Bulgaria was thus unable to submit that evidence before the end of the written part of the procedure. It must therefore be regarded as admissible. |
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22

The Republic of Bulgaria was thus unable to submit that evidence before the end of the written part of the procedure. It must therefore be regarded as admissible.

Substance

Substance

| 23 | In support of its action, the Republic of Bulgaria relies on five pleas in law, alleging, respectively and in essence: (i) an infringement of its procedural rights during the administrative procedure that led to the adoption of the contested decision; (ii) an inadequate statement of reasons; (iii) a misinterpretation of Article 54(1) of Regulation No 1306/2013 as regards the definition of the starting point of the 18-month period from which recovery of any undue payment must be requested from the beneficiary by the Member State concerned; (iv) an error of assessment by the Commission in so far as it considered that the paying agency had failed to act with the requisite care to recover the contested sums and that it had been negligent in failing to initiate an administrative recovery procedure within the time limits prescribed in Article 54(1) of Regulation No 1306/2013; and (v) that the amount of expenditure excluded from Union financing by the contested decision does not comply with Article 54 of Regulation No 1306/2013 or with the principle of proportionality. |
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23

In support of its action, the Republic of Bulgaria relies on five pleas in law, alleging, respectively and in essence: (i) an infringement of its procedural rights during the administrative procedure that led to the adoption of the contested decision; (ii) an inadequate statement of reasons; (iii) a misinterpretation of Article 54(1) of Regulation No 1306/2013 as regards the definition of the starting point of the 18-month period from which recovery of any undue payment must be requested from the beneficiary by the Member State concerned; (iv) an error of assessment by the Commission in so far as it considered that the paying agency had failed to act with the requisite care to recover the contested sums and that it had been negligent in failing to initiate an administrative recovery procedure within the time limits prescribed in Article 54(1) of Regulation No 1306/2013; and (v) that the amount of expenditure excluded from Union financing by the contested decision does not comply with Article 54 of Regulation No 1306/2013 or with the principle of proportionality.

| 24 | As a preliminary point, it must be recalled that the European Agricultural Funds only finance interventions within the framework of the common organisation of the agricultural markets that are carried out in accordance with EU legislation (see, to that effect, judgment of 6 November 2014, Netherlands v Commission, C‐610/13 P, not published, EU:C:2014:2349, paragraph 59 and the case-law cited). |
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24

As a preliminary point, it must be recalled that the European Agricultural Funds only finance interventions within the framework of the common organisation of the agricultural markets that are carried out in accordance with EU legislation (see, to that effect, judgment of 6 November 2014, Netherlands v Commission, C‐610/13 P, not published, EU:C:2014:2349, paragraph 59 and the case-law cited).

| 25 | Furthermore, the management of the financing of Union funds 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 EU authorities. Only the Member State is in a position to know and to determine precisely the information necessary for drawing up fund accounts, since the Commission is not close enough to obtain the information it needs from the economic operators (see, to that effect, judgments of 7 October 2004, Spain v Commission, C‐153/01, EU:C:2004:589, paragraph 133 and the case-law cited, and of 4 September 2009, Austria v Commission, T‐368/05, not published, EU:T:2009:305, paragraph 182 and the case-law cited). |
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25

Furthermore, the management of the financing of Union funds 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 EU authorities. Only the Member State is in a position to know and to determine precisely the information necessary for drawing up fund accounts, since the Commission is not close enough to obtain the information it needs from the economic operators (see, to that effect, judgments of 7 October 2004, Spain v Commission, C‐153/01, EU:C:2004:589, paragraph 133 and the case-law cited, and of 4 September 2009, Austria v Commission, T‐368/05, not published, EU:T:2009:305, paragraph 182 and the case-law cited).

| 26 | It is in the light of those considerations that the pleas in law raised by the Republic of Bulgaria in support of its action must be examined. |
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26

It is in the light of those considerations that the pleas in law raised by the Republic of Bulgaria in support of its action must be examined.

The first plea in law, alleging an infringement of the procedural rights of the Republic of Bulgaria during the administrative procedure that led to the adoption of the contested decision

The first plea in law, alleging an infringement of the procedural rights of the Republic of Bulgaria during the administrative procedure that led to the adoption of the contested decision

| 27 | The Republic of Bulgaria submits that, in the communication of findings, the Commission initiated the clearance procedure at issue on the basis of Article 52(1) of Regulation No 1306/2013, which was subsequently confirmed during the various exchanges that followed. It points out in that regard that, under Article 34(2) of Implementing Regulation No 908/2014, when, as a result of an inquiry, the Commission considers that expenditure was not effected in compliance with Union rules, it must communicate its findings to the Member State concerned, specifying the corrective measures needed to ensure future compliance with those rules. The Commission’s reservations should thus have been made perfectly clear. However, the Republic of Bulgaria states that, in the second invitation to a bilateral meeting, the Commission mentioned for the first time the potential infringement of Article 54(5)(a) and (c) of Regulation No 1306/2013, while continuing to refer simultaneously to Article 52 of that regulation. The Republic of Bulgaria observes that, at the end of the administrative procedure, the contested financial correction was ultimately based on negligence on the part of the paying agency due to failure to recover the relevant expenditure from the beneficiaries, pursuant to Article 54(5)(a) and (c) of Regulation No 1306/2013, and failure to record it in the debtors’ ledger within the time limit prescribed in Article 54(1) of that regulation. |
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27

The Republic of Bulgaria submits that, in the communication of findings, the Commission initiated the clearance procedure at issue on the basis of Article 52(1) of Regulation No 1306/2013, which was subsequently confirmed during the various exchanges that followed. It points out in that regard that, under Article 34(2) of Implementing Regulation No 908/2014, when, as a result of an inquiry, the Commission considers that expenditure was not effected in compliance with Union rules, it must communicate its findings to the Member State concerned, specifying the corrective measures needed to ensure future compliance with those rules. The Commission’s reservations should thus have been made perfectly clear. However, the Republic of Bulgaria states that, in the second invitation to a bilateral meeting, the Commission mentioned for the first time the potential infringement of Article 54(5)(a) and (c) of Regulation No 1306/2013, while continuing to refer simultaneously to Article 52 of that regulation. The Republic of Bulgaria observes that, at the end of the administrative procedure, the contested financial correction was ultimately based on negligence on the part of the paying agency due to failure to recover the relevant expenditure from the beneficiaries, pursuant to Article 54(5)(a) and (c) of Regulation No 1306/2013, and failure to record it in the debtors’ ledger within the time limit prescribed in Article 54(1) of that regulation.

| 28 | In the light of the foregoing, the Republic of Bulgaria submits that the change in the Commission’s position as to the legal basis on which the contested financial correction is based misled the paying agency, in so far as it initially considered that the clearance procedure had been initiated under Article 52 of Regulation No 1306/2013 owing to deficiencies in the management and control systems for transactions financed by the EAGF. It points out that, in the early stages of that procedure, no such deficiencies were found, while no issue was raised concerning the debt recovery system. It therefore claims that the clarification provided by the Commission when the paying agency received the request for further information under Article 34(5)(a) of Implementing Regulation No 908/2014 was too late. This was the first time that the Commission had given its interpretation of Article 54(1) of Regulation No 1306/2013, according to which, in the present case, the 18-month time limit for the recovery of the debts at issue had started running when the paying agency received OLAF’s final reports – in other words, on 19 January 2018 for the first report and on 3 September 2018 for the second report. Furthermore, the Republic of Bulgaria takes the view that the information sent by the Commission in the communication of findings could have been sent earlier. It follows from the foregoing that the Republic of Bulgaria considers that it has not benefited from the procedural guarantees provided for in Article 52(3) of Regulation No 1306/2013 and Article 34(2) of Implementing Regulation No 908/2014. |
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28

In the light of the foregoing, the Republic of Bulgaria submits that the change in the Commission’s position as to the legal basis on which the contested financial correction is based misled the paying agency, in so far as it initially considered that the clearance procedure had been initiated under Article 52 of Regulation No 1306/2013 owing to deficiencies in the management and control systems for transactions financed by the EAGF. It points out that, in the early stages of that procedure, no such deficiencies were found, while no issue was raised concerning the debt recovery system. It therefore claims that the clarification provided by the Commission when the paying agency received the request for further information under Article 34(5)(a) of Implementing Regulation No 908/2014 was too late. This was the first time that the Commission had given its interpretation of Article 54(1) of Regulation No 1306/2013, according to which, in the present case, the 18-month time limit for the recovery of the debts at issue had started running when the paying agency received OLAF’s final reports – in other words, on 19 January 2018 for the first report and on 3 September 2018 for the second report. Furthermore, the Republic of Bulgaria takes the view that the information sent by the Commission in the communication of findings could have been sent earlier. It follows from the foregoing that the Republic of Bulgaria considers that it has not benefited from the procedural guarantees provided for in Article 52(3) of Regulation No 1306/2013 and Article 34(2) of Implementing Regulation No 908/2014.

| 29 | The Commission disputes those arguments. |
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29

The Commission disputes those arguments.

| 30 | As a preliminary point, it must be observed that, by this plea, the Republic of Bulgaria submits, in essence, that the conformity clearance procedure in the present case is vitiated by defects that prevented it from benefiting from the procedural guarantees under Article 52(3) of Regulation No 1306/2013 and Article 34(2) of Implementing Regulation No 908/2014. In its view, the infringement of those guarantees constitutes an infringement of the rights of the defence, in addition to the principle of sincere cooperation, the right to be heard and the principle of good administration, and should therefore lead to the annulment of the contested decision. In that respect, this plea consists of two distinct parts: the first alleging that the Commission was not permitted to change the legal basis on which the contested decision was ultimately based during the administrative procedure; and the second that, in so doing, the Commission misled it by suggesting that deficiencies were identified in relation to its management and control system – the only situations referred to in Article 52 of Regulation No 1306/2013 – rather than the recovery of the funds in question, which is determined by Article 54 thereof. |
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30

As a preliminary point, it must be observed that, by this plea, the Republic of Bulgaria submits, in essence, that the conformity clearance procedure in the present case is vitiated by defects that prevented it from benefiting from the procedural guarantees under Article 52(3) of Regulation No 1306/2013 and Article 34(2) of Implementing Regulation No 908/2014. In its view, the infringement of those guarantees constitutes an infringement of the rights of the defence, in addition to the principle of sincere cooperation, the right to be heard and the principle of good administration, and should therefore lead to the annulment of the contested decision. In that respect, this plea consists of two distinct parts: the first alleging that the Commission was not permitted to change the legal basis on which the contested decision was ultimately based during the administrative procedure; and the second that, in so doing, the Commission misled it by suggesting that deficiencies were identified in relation to its management and control system – the only situations referred to in Article 52 of Regulation No 1306/2013 – rather than the recovery of the funds in question, which is determined by Article 54 thereof.

| 31 | On that subject, it is worth noting, with regard to the alleged infringement of the rights of the defence and the right to be heard, that according to the case-law, respect for the rights of the defence is a fundamental principle of EU law which must be guaranteed even in the absence of any rules governing the proceedings in question. That principle requires that the addressees of decisions which significantly affect their interests should be placed in a position in which they may effectively make known their views (see judgment of 19 January 2006, Comunità montana della Valnerina v Commission, C‐240/03 P, EU:C:2006:44, paragraph 129 and the case-law cited). In proceedings relating to the EAGF, it has been held that that principle requires the final and conclusive decision on the clearance of accounts to be taken at the conclusion of a specific procedure giving effect to the audi alteram partem principle, during which the Member States concerned must be provided with all the guarantees necessary for them to present their point of view (see, to that effect, judgment of 9 October 2012, Italy v Commission, T‐426/08, not published, EU:T:2012:526, paragraph 141 and the case-law cited). |
| --- | --- |

31

On that subject, it is worth noting, with regard to the alleged infringement of the rights of the defence and the right to be heard, that according to the case-law, respect for the rights of the defence is a fundamental principle of EU law which must be guaranteed even in the absence of any rules governing the proceedings in question. That principle requires that the addressees of decisions which significantly affect their interests should be placed in a position in which they may effectively make known their views (see judgment of 19 January 2006, Comunità montana della Valnerina v Commission, C‐240/03 P, EU:C:2006:44, paragraph 129 and the case-law cited). In proceedings relating to the EAGF, it has been held that that principle requires the final and conclusive decision on the clearance of accounts to be taken at the conclusion of a specific procedure giving effect to the audi alteram partem principle, during which the Member States concerned must be provided with all the guarantees necessary for them to present their point of view (see, to that effect, judgment of 9 October 2012, Italy v Commission, T‐426/08, not published, EU:T:2012:526, paragraph 141 and the case-law cited).

audi alteram partem

| 32 | As to the right to be heard, that requires the Commission to take into account all the information provided by the Member State during the procedure giving effect to the audi alteram partem principle, prior to the final decision on the amount to be excluded (see, to that effect, judgments of 18 September 2003, United Kingdom v Commission, C‐346/00, EU:C:2003:474, paragraph 70, and of 26 November 2008, Greece v Commission, T‐263/06, not published, EU:T:2008:529, paragraph 136). |
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32

As to the right to be heard, that requires the Commission to take into account all the information provided by the Member State during the procedure giving effect to the audi alteram partem principle, prior to the final decision on the amount to be excluded (see, to that effect, judgments of 18 September 2003, United Kingdom v Commission, C‐346/00, EU:C:2003:474, paragraph 70, and of 26 November 2008, Greece v Commission, T‐263/06, not published, EU:T:2008:529, paragraph 136).

audi alteram partem

| 33 | Furthermore, it must be recalled that, on the basis of Article 52 of Regulation No 1306/2013, the Commission adopts implementing acts determining the amounts to be excluded from Union financing where it considers that expenditure falling within the scope of Article 4(1) thereof, namely EAGF expenditure, has not been effected in conformity with Union law. That article therefore defines the procedure to be followed for the application of conformity clearance corrections. That procedure is also described in Article 34 of Implementing Regulation No 908/2014. |
| --- | --- |

33

Furthermore, it must be recalled that, on the basis of Article 52 of Regulation No 1306/2013, the Commission adopts implementing acts determining the amounts to be excluded from Union financing where it considers that expenditure falling within the scope of Article 4(1) thereof, namely EAGF expenditure, has not been effected in conformity with Union law. That article therefore defines the procedure to be followed for the application of conformity clearance corrections. That procedure is also described in Article 34 of Implementing Regulation No 908/2014.

| 34 | The purpose of Article 54 of Regulation No 1306/2013 is to satisfy the general objective of safeguarding the financial interests of the Union by imposing a specific obligation on the Member States to initiate a timely debt recovery procedure where irregularities or negligence affect the expenditure incurred under the relevant fund. In that respect, Article 54(5) of that regulation provides, inter alia, that the Commission may exclude certain expenditure from Union financing, provided that the procedure laid down in Article 52 of Regulation No 1306/2013 has been followed. |
| --- | --- |

34

The purpose of Article 54 of Regulation No 1306/2013 is to satisfy the general objective of safeguarding the financial interests of the Union by imposing a specific obligation on the Member States to initiate a timely debt recovery procedure where irregularities or negligence affect the expenditure incurred under the relevant fund. In that respect, Article 54(5) of that regulation provides, inter alia, that the Commission may exclude certain expenditure from Union financing, provided that the procedure laid down in Article 52 of Regulation No 1306/2013 has been followed.

| 35 | It is in the light of the foregoing considerations that the first plea in law must be assessed. |
| --- | --- |

35

It is in the light of the foregoing considerations that the first plea in law must be assessed.

| 36 | Under Article 34 of Implementing Regulation No 908/2014, the conformity clearance procedure must, in essence, consist of six stages. First, the Commission communicates its findings to the Member State concerned, specifying the corrective measures it considers necessary and indicating the provisional level of financial correction it considers appropriate. That Member State must reply within two months of receipt of the communication. Second, the Commission schedules a bilateral meeting to endeavour to come to an agreement as to the measures to be taken in the light of the findings set out in the communication of findings and to evaluate the seriousness of the infringement and of the financial damage caused to the Union. It must send the minutes of that meeting within 30 working days to the Member State concerned, which may in turn send its observations on the subject. Third, within six months after sending those minutes, the Commission communicates its conclusions. Fourth, the Member State concerned may request a conciliation procedure as described in Article 40 of Implementing Regulation No 908/2014. Fifth, if the conciliation procedure is unsuccessful, the Commission communicates its conclusions to the Member State concerned. Finally, sixth, the Commission may adopt one or more decisions pursuant to Article 52 of Regulation No 1306/2013 for the purpose of excluding from Union financing the expenditure affected by non-compliance with the applicable rules. |
| --- | --- |

36

Under Article 34 of Implementing Regulation No 908/2014, the conformity clearance procedure must, in essence, consist of six stages. First, the Commission communicates its findings to the Member State concerned, specifying the corrective measures it considers necessary and indicating the provisional level of financial correction it considers appropriate. That Member State must reply within two months of receipt of the communication. Second, the Commission schedules a bilateral meeting to endeavour to come to an agreement as to the measures to be taken in the light of the findings set out in the communication of findings and to evaluate the seriousness of the infringement and of the financial damage caused to the Union. It must send the minutes of that meeting within 30 working days to the Member State concerned, which may in turn send its observations on the subject. Third, within six months after sending those minutes, the Commission communicates its conclusions. Fourth, the Member State concerned may request a conciliation procedure as described in Article 40 of Implementing Regulation No 908/2014. Fifth, if the conciliation procedure is unsuccessful, the Commission communicates its conclusions to the Member State concerned. Finally, sixth, the Commission may adopt one or more decisions pursuant to Article 52 of Regulation No 1306/2013 for the purpose of excluding from Union financing the expenditure affected by non-compliance with the applicable rules.

| 37 | Regarding the first stage described in paragraph 36 above, it is clear from the case-law that the Commission’s communication of its findings, within the meaning of Article 34(2) of Implementing Regulation No 908/2014, must first identify, in a sufficiently precise manner, all irregularities which the Member State concerned is alleged to have committed and which, ultimately, formed the basis for the financial correction applied. Such a communication alone can ensure that full information is provided concerning the Commission’s reservations (see, by analogy, judgment of 3 May 2012, Spain v Commission, C‐24/11 P, EU:C:2012:266, paragraph 31). In addition, it must identify the purpose and outcome of the Commission’s investigations and indicate the corrective measures that should be adopted in the future (see, to that effect and by analogy, judgment of 26 September 2018, Portugal v Commission, T‐463/16, not published, EU:T:2018:606, paragraph 68). |
| --- | --- |

37

Regarding the first stage described in paragraph 36 above, it is clear from the case-law that the Commission’s communication of its findings, within the meaning of Article 34(2) of Implementing Regulation No 908/2014, must first identify, in a sufficiently precise manner, all irregularities which the Member State concerned is alleged to have committed and which, ultimately, formed the basis for the financial correction applied. Such a communication alone can ensure that full information is provided concerning the Commission’s reservations (see, by analogy, judgment of 3 May 2012, Spain v Commission, C‐24/11 P, EU:C:2012:266, paragraph 31). In addition, it must identify the purpose and outcome of the Commission’s investigations and indicate the corrective measures that should be adopted in the future (see, to that effect and by analogy, judgment of 26 September 2018, Portugal v Commission, T‐463/16, not published, EU:T:2018:606, paragraph 68).

| 38 | In the present case, the Commission initiated the clearance procedure by sending the communication of findings to the Republic of Bulgaria on 4 January 2017. In that document, as summarised in paragraph 2 above, it was stated that, in accordance with Article 52 of Regulation No 1306/2013 and following the information provided by OLAF, the Commission was considering the possibility of excluding from Union financing part of the expenditure in respect of programmes and transactions in which [confidential] was implicated. Exchanges then took place before, during and after the first bilateral meeting to discuss the issues identified by the Commission. |
| --- | --- |

38

In the present case, the Commission initiated the clearance procedure by sending the communication of findings to the Republic of Bulgaria on 4 January 2017. In that document, as summarised in paragraph 2 above, it was stated that, in accordance with Article 52 of Regulation No 1306/2013 and following the information provided by OLAF, the Commission was considering the possibility of excluding from Union financing part of the expenditure in respect of programmes and transactions in which [confidential] was implicated. Exchanges then took place before, during and after the first bilateral meeting to discuss the issues identified by the Commission.

confidential

| 39 | After receiving OLAF’s first report in investigation OF/2016/0390/B5, which it sent to the Republic of Bulgaria on 19 January 2018, the Commission decided to invite the Republic of Bulgaria to a second bilateral meeting by letter dated 7 May 2018. In that invitation, Article 54 of Regulation No 1306/2013 was referred to for the first time. Accordingly, it was recommended that the Republic of Bulgaria proceed with the recovery of payments that OLAF’s first report considered to have been made unduly. The Republic of Bulgaria sent its observations on the invitation by letter of 22 May 2018. It expressly informed the Commission that it did not intend to proceed with the immediate recovery of the expenditure at issue, stating that its own competent investigative bodies had not issued a decision in the preliminary procedure initiated on the subject. It maintained its position during the remainder of the clearance procedure and until its completion. By letter of 3 September 2018, the Commission forwarded OLAF’s second report to the applicant on the irregularities committed by [confidential]. |
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39

After receiving OLAF’s first report in investigation OF/2016/0390/B5, which it sent to the Republic of Bulgaria on 19 January 2018, the Commission decided to invite the Republic of Bulgaria to a second bilateral meeting by letter dated 7 May 2018. In that invitation, Article 54 of Regulation No 1306/2013 was referred to for the first time. Accordingly, it was recommended that the Republic of Bulgaria proceed with the recovery of payments that OLAF’s first report considered to have been made unduly. The Republic of Bulgaria sent its observations on the invitation by letter of 22 May 2018. It expressly informed the Commission that it did not intend to proceed with the immediate recovery of the expenditure at issue, stating that its own competent investigative bodies had not issued a decision in the preliminary procedure initiated on the subject. It maintained its position during the remainder of the clearance procedure and until its completion. By letter of 3 September 2018, the Commission forwarded OLAF’s second report to the applicant on the irregularities committed by [confidential].

confidential

| 40 | In the final opinion, on 12 August 2020, the Commission informed the Republic of Bulgaria that it maintained the position expressed in the formal communication, which consisted of imposing a financial correction on it on the basis of Article 54(5)(a) and (c) of Regulation No 1306/2013, due to the paying agency’s failure to request the recovery of the debts at issue from the beneficiaries and to record the amounts in question in the debtors’ ledger within the time limit prescribed in Article 54(1) thereof. The contested decision began by stating, in general, that it had been adopted, in particular, pursuant to Article 52 of Regulation No 1306/2013. More specifically, as regards the financial correction imposed on the Republic of Bulgaria, it stated that that was due to the absence of recovery for promotion measures carried out between 2010 and 2017. |
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40

In the final opinion, on 12 August 2020, the Commission informed the Republic of Bulgaria that it maintained the position expressed in the formal communication, which consisted of imposing a financial correction on it on the basis of Article 54(5)(a) and (c) of Regulation No 1306/2013, due to the paying agency’s failure to request the recovery of the debts at issue from the beneficiaries and to record the amounts in question in the debtors’ ledger within the time limit prescribed in Article 54(1) thereof. The contested decision began by stating, in general, that it had been adopted, in particular, pursuant to Article 52 of Regulation No 1306/2013. More specifically, as regards the financial correction imposed on the Republic of Bulgaria, it stated that that was due to the absence of recovery for promotion measures carried out between 2010 and 2017.

| 41 | In the light of the foregoing, it must be noted that, as is apparent from paragraphs 38 to 40 above, the grounds for the contested financial correction, as set out in the summary report and in the contested decision, only partially match the grounds for initiating the clearance procedure at issue, as explained by the Commission in the communication of findings. |
| --- | --- |

41

In the light of the foregoing, it must be noted that, as is apparent from paragraphs 38 to 40 above, the grounds for the contested financial correction, as set out in the summary report and in the contested decision, only partially match the grounds for initiating the clearance procedure at issue, as explained by the Commission in the communication of findings.

| 42 | However, as described in paragraph 39 above, the Commission invited the Republic of Bulgaria to a second bilateral meeting. In that second invitation, it was pointed out, inter alia, that certain payments could be considered ineligible for Union financing, and it was recommended, on the one hand, that payments deemed to pose a risk to the fund in question should not be renewed, and on the other hand, that irregular payments should be recovered from their respective beneficiaries in accordance with Article 54 of Regulation No 1306/2013. The second invitation to a bilateral meeting also contained a reference to Article 34 of Implementing Regulation No 908/2014 and set out precise details of the irregularities that might justify a financial correction at that stage. It also indicated the corrective measures that should be envisaged. To that extent, the second invitation can be considered to have, in essence, altered the communication of findings sent to the Republic of Bulgaria on 4 January 2017. |
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42

However, as described in paragraph 39 above, the Commission invited the Republic of Bulgaria to a second bilateral meeting. In that second invitation, it was pointed out, inter alia, that certain payments could be considered ineligible for Union financing, and it was recommended, on the one hand, that payments deemed to pose a risk to the fund in question should not be renewed, and on the other hand, that irregular payments should be recovered from their respective beneficiaries in accordance with Article 54 of Regulation No 1306/2013. The second invitation to a bilateral meeting also contained a reference to Article 34 of Implementing Regulation No 908/2014 and set out precise details of the irregularities that might justify a financial correction at that stage. It also indicated the corrective measures that should be envisaged. To that extent, the second invitation can be considered to have, in essence, altered the communication of findings sent to the Republic of Bulgaria on 4 January 2017.

| 43 | However, the Commission was only able to take a firm position on the need to initiate the recovery procedure in accordance with Article 54 of Regulation No 1306/2013 at that stage because it had read OLAF’s first report, which had just been sent to it. |
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43

However, the Commission was only able to take a firm position on the need to initiate the recovery procedure in accordance with Article 54 of Regulation No 1306/2013 at that stage because it had read OLAF’s first report, which had just been sent to it.

| 44 | Moreover, it is apparent from the case file that the Republic of Bulgaria was able to state its views on all the issues raised by the Commission in the second invitation to a bilateral meeting, particularly the issue of the recovery of the disputed expenditure and the application of Article 54 of Regulation No 1306/2013. Thus, the Republic of Bulgaria was able to submit its observations on the subject, first by letter of 22 May 2018 – in other words, before the second bilateral meeting was arranged, as provided for in Article 34 of Implementing Regulation No 908/2014 – and then at the second bilateral meeting and in the subsequent stages of the clearance procedure. |
| --- | --- |

44

Moreover, it is apparent from the case file that the Republic of Bulgaria was able to state its views on all the issues raised by the Commission in the second invitation to a bilateral meeting, particularly the issue of the recovery of the disputed expenditure and the application of Article 54 of Regulation No 1306/2013. Thus, the Republic of Bulgaria was able to submit its observations on the subject, first by letter of 22 May 2018 – in other words, before the second bilateral meeting was arranged, as provided for in Article 34 of Implementing Regulation No 908/2014 – and then at the second bilateral meeting and in the subsequent stages of the clearance procedure.

| 45 | Furthermore, it was only during the exchanges described in paragraph 44 above that the Republic of Bulgaria expressly notified the Commission that it did not intend to take any particular action to effect the recovery at that stage, stating that its own competent investigative bodies had not issued a decision in the preliminary procedure initiated on the subject. It was because of that refusal that the Commission, following the second bilateral meeting, informed the Republic of Bulgaria that it expected it to initiate the recovery procedure and instructed it to keep it informed of the progress of that corrective measure. The Republic of Bulgaria also notified the Commission that it would finalise the entry of the amounts in question in the debtors’ ledger, as provided for in Article 54(1) of Regulation No 1306/2013, in the coming weeks. |
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45

Furthermore, it was only during the exchanges described in paragraph 44 above that the Republic of Bulgaria expressly notified the Commission that it did not intend to take any particular action to effect the recovery at that stage, stating that its own competent investigative bodies had not issued a decision in the preliminary procedure initiated on the subject. It was because of that refusal that the Commission, following the second bilateral meeting, informed the Republic of Bulgaria that it expected it to initiate the recovery procedure and instructed it to keep it informed of the progress of that corrective measure. The Republic of Bulgaria also notified the Commission that it would finalise the entry of the amounts in question in the debtors’ ledger, as provided for in Article 54(1) of Regulation No 1306/2013, in the coming weeks.

| 46 | In the light of the foregoing, it is worth mentioning that it was because of the refusal of the Republic of Bulgaria to comply with some of the corrective measures envisaged – namely the prompt recovery of the payments at issue – that, in the request for further information sent on 1 March 2019, the Commission reminded the Republic of Bulgaria of the requirements under Article 54(1) of Regulation No 1306/2013. On that occasion, the Commission pointed out that the Republic of Bulgaria had to request the recovery of undue payments from the beneficiaries within 18 months of the notification of OLAF’s final reports following its two investigations. Moreover, the reference to Article 54 of Regulation No 1306/2013 left no room for doubt as to the possibility of financial corrections in the event of failure to respect that time limit. |
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46

In the light of the foregoing, it is worth mentioning that it was because of the refusal of the Republic of Bulgaria to comply with some of the corrective measures envisaged – namely the prompt recovery of the payments at issue – that, in the request for further information sent on 1 March 2019, the Commission reminded the Republic of Bulgaria of the requirements under Article 54(1) of Regulation No 1306/2013. On that occasion, the Commission pointed out that the Republic of Bulgaria had to request the recovery of undue payments from the beneficiaries within 18 months of the notification of OLAF’s final reports following its two investigations. Moreover, the reference to Article 54 of Regulation No 1306/2013 left no room for doubt as to the possibility of financial corrections in the event of failure to respect that time limit.

| 47 | The parties do not dispute that the Republic of Bulgaria was in a position to state its views on the Commission’s interpretation of Article 54(1) of Regulation No 1306/2013, particularly as regards the point at which the time limit began for initiating proceedings for the recovery of the expenditure at issue from the beneficiaries in question. In its letter of 24 April 2019, the Republic of Bulgaria expressly disagreed with that interpretation, without claiming that it was impossible to initiate the recovery procedure for the expenditure at issue. Those entire debates were, moreover, known to the conciliation body, as evidenced by the summary of the facts contained in its conciliation report. |
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47

The parties do not dispute that the Republic of Bulgaria was in a position to state its views on the Commission’s interpretation of Article 54(1) of Regulation No 1306/2013, particularly as regards the point at which the time limit began for initiating proceedings for the recovery of the expenditure at issue from the beneficiaries in question. In its letter of 24 April 2019, the Republic of Bulgaria expressly disagreed with that interpretation, without claiming that it was impossible to initiate the recovery procedure for the expenditure at issue. Those entire debates were, moreover, known to the conciliation body, as evidenced by the summary of the facts contained in its conciliation report.

| 48 | On that basis, the Republic of Bulgaria cannot contend that it was not made aware that a financial correction could be imposed on it if it did not initiate a procedure for the recovery of the expenditure at issue from the beneficiary, in accordance with Article 54 of Regulation No 1306/2013. |
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48

On that basis, the Republic of Bulgaria cannot contend that it was not made aware that a financial correction could be imposed on it if it did not initiate a procedure for the recovery of the expenditure at issue from the beneficiary, in accordance with Article 54 of Regulation No 1306/2013.

| 49 | In addition, since the Commission’s position on the need to recover the expenditure at issue had been communicated to it before the second bilateral meeting, and since all the questions relating to the application, in the present case, of Article 54 of Regulation No 1306/2013 were discussed throughout the remainder of the clearance procedure, including before the conciliation body, it cannot be held that the procedural rights of the Republic of Bulgaria were infringed, nor were its rights of defence, the principle of sincere cooperation, its right to be heard or the principle of good administration. |
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49

In addition, since the Commission’s position on the need to recover the expenditure at issue had been communicated to it before the second bilateral meeting, and since all the questions relating to the application, in the present case, of Article 54 of Regulation No 1306/2013 were discussed throughout the remainder of the clearance procedure, including before the conciliation body, it cannot be held that the procedural rights of the Republic of Bulgaria were infringed, nor were its rights of defence, the principle of sincere cooperation, its right to be heard or the principle of good administration.

| 50 | That finding is not called into question by the arguments put forward by the Republic of Bulgaria, according to which (i) the Commission never mentioned any irregularities in the management and control system put in place by the Republic of Bulgaria, nor any deficiencies in the paying agency’s subsequent checks, and (ii) the statement of objections on which the Commission based the contested decision was too late to enable it to adapt its conduct accordingly. |
| --- | --- |

50

That finding is not called into question by the arguments put forward by the Republic of Bulgaria, according to which (i) the Commission never mentioned any irregularities in the management and control system put in place by the Republic of Bulgaria, nor any deficiencies in the paying agency’s subsequent checks, and (ii) the statement of objections on which the Commission based the contested decision was too late to enable it to adapt its conduct accordingly.

| 51 | The first argument has no bearing on the assessment of the lawfulness of the contested decision, since that decision is not based on alleged deficiencies in the management and control system put in place by the Republic of Bulgaria, but on the failure of the Republic of Bulgaria to recover the expenditure at issue from the beneficiaries within the time limit prescribed in Article 54(1) of Regulation No 1306/2013. |
| --- | --- |

51

The first argument has no bearing on the assessment of the lawfulness of the contested decision, since that decision is not based on alleged deficiencies in the management and control system put in place by the Republic of Bulgaria, but on the failure of the Republic of Bulgaria to recover the expenditure at issue from the beneficiaries within the time limit prescribed in Article 54(1) of Regulation No 1306/2013.

| 52 | As for the second argument, it must be observed, on the one hand, that the assertion that the Commission’s statement of objections could have been sent earlier is unsubstantiated. On the other hand, in so far as the Republic of Bulgaria submits that the letter sent on 1 March 2019 was too late for it to adopt the necessary measures, since the 18-month time limit for initiating the recovery of debts concerning [confidential] was already about to expire, whereas the time limit for the debts of [confidential] had already expired more than 6 months previously, that is consistent with the arguments raised in the context of the third plea. It will therefore be appropriate to analyse that argument in the context of the examination of that plea. |
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52

As for the second argument, it must be observed, on the one hand, that the assertion that the Commission’s statement of objections could have been sent earlier is unsubstantiated. On the other hand, in so far as the Republic of Bulgaria submits that the letter sent on 1 March 2019 was too late for it to adopt the necessary measures, since the 18-month time limit for initiating the recovery of debts concerning [confidential] was already about to expire, whereas the time limit for the debts of [confidential] had already expired more than 6 months previously, that is consistent with the arguments raised in the context of the third plea. It will therefore be appropriate to analyse that argument in the context of the examination of that plea.

confidential

confidential

| 53 | Moreover, in so far as the Republic of Bulgaria submits that the Commission’s letter that it received on 12 May 2022 supports the assumptions it makes in the present case, it must be observed that the Republic of Bulgaria does not explain which particular assumptions that finding should apply to, nor is this apparent from reading that letter. |
| --- | --- |

53

Moreover, in so far as the Republic of Bulgaria submits that the Commission’s letter that it received on 12 May 2022 supports the assumptions it makes in the present case, it must be observed that the Republic of Bulgaria does not explain which particular assumptions that finding should apply to, nor is this apparent from reading that letter.

| 54 | The first plea in law must therefore be dismissed in its entirety. |
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54

The first plea in law must therefore be dismissed in its entirety.

The second plea in law, alleging breach of the duty to state reasons

The second plea in law, alleging breach of the duty to state reasons

| 55 | The Republic of Bulgaria submits, in essence, that the contested decision is vitiated by an inadequate statement of reasons. It refers to several of the points made in the first plea, which it considers equally relevant for establishing that the contested decision is not sufficiently well founded. It also recalls that it was only at the stage of the invitation to a second bilateral meeting that the Commission first mentioned Article 54(1) of Regulation No 1306/2013, adding that the Commission did not comment on the position expressed by the paying agency in its reply to that invitation, according to which, in the light of OLAF’s first final report, the financial consequences of the action of [confidential] should be shared between itself and the Union. Furthermore, it claims that, although the Commission accepted that the facts set out in OLAF’s final reports constituted offences under the Bulgarian Criminal Code, it merely referred to its interpretation of Article 54(1) of Regulation No 1306/2013 and the need to initiate the administrative procedure to enter the beneficiaries on the list of debtors and to recover the irregular expenditure. At the reply stage, the Republic of Bulgaria alleged that the procedure by which the contested decision came about, as described in the first plea, prevented it from understanding the grounds of the decision. It submits that the Commission should have initiated a new clearance procedure based on the relevant grounds, which it only invoked during the procedure at issue in the present case. |
| --- | --- |

55

The Republic of Bulgaria submits, in essence, that the contested decision is vitiated by an inadequate statement of reasons. It refers to several of the points made in the first plea, which it considers equally relevant for establishing that the contested decision is not sufficiently well founded. It also recalls that it was only at the stage of the invitation to a second bilateral meeting that the Commission first mentioned Article 54(1) of Regulation No 1306/2013, adding that the Commission did not comment on the position expressed by the paying agency in its reply to that invitation, according to which, in the light of OLAF’s first final report, the financial consequences of the action of [confidential] should be shared between itself and the Union. Furthermore, it claims that, although the Commission accepted that the facts set out in OLAF’s final reports constituted offences under the Bulgarian Criminal Code, it merely referred to its interpretation of Article 54(1) of Regulation No 1306/2013 and the need to initiate the administrative procedure to enter the beneficiaries on the list of debtors and to recover the irregular expenditure. At the reply stage, the Republic of Bulgaria alleged that the procedure by which the contested decision came about, as described in the first plea, prevented it from understanding the grounds of the decision. It submits that the Commission should have initiated a new clearance procedure based on the relevant grounds, which it only invoked during the procedure at issue in the present case.

confidential

| 56 | The Commission disputes those arguments. |
| --- | --- |

56

The Commission disputes those arguments.

| 57 | It must be recalled, as a preliminary point, that the statement of reasons required by Article 296 TFEU must be appropriate to the act at issue and must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted the measure in question in such a way as to enable the persons concerned to ascertain the reasons for the measure and to enable the competent court to exercise its supervisory jurisdiction (see judgment of 29 April 2004, Netherlands v Commission, C‐159/01, EU:C:2004:246, paragraph 65 and the case-law cited). |
| --- | --- |

57

It must be recalled, as a preliminary point, that the statement of reasons required by Article 296 TFEU must be appropriate to the act at issue and must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted the measure in question in such a way as to enable the persons concerned to ascertain the reasons for the measure and to enable the competent court to exercise its supervisory jurisdiction (see judgment of 29 April 2004, Netherlands v Commission, C‐159/01, EU:C:2004:246, paragraph 65 and the case-law cited).

| 58 | In particular, the purpose of the obligation to state the reasons on which an act adversely affecting an individual is based, which is a corollary of the principle of respect for the rights of the defence, is, first, to provide the person concerned with sufficient information to make it possible to ascertain whether the act is well founded or whether it is vitiated by a defect which may permit its legality to be contested before the Courts of the European Union and, second, to enable the latter to review the legality of that act (see judgment of 16 February 2017, Romania v Commission, T‐145/15, EU:T:2017:86, paragraph 43 and the case-law cited). |
| --- | --- |

58

In particular, the purpose of the obligation to state the reasons on which an act adversely affecting an individual is based, which is a corollary of the principle of respect for the rights of the defence, is, first, to provide the person concerned with sufficient information to make it possible to ascertain whether the act is well founded or whether it is vitiated by a defect which may permit its legality to be contested before the Courts of the European Union and, second, to enable the latter to review the legality of that act (see judgment of 16 February 2017, Romania v Commission, T‐145/15, EU:T:2017:86, paragraph 43 and the case-law cited).

| 59 | However, the statement of reasons cannot be required to go into every relevant point of fact and law. Whether the statement of reasons meets the requirements referred to in paragraphs 39 and 40 above must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question (see judgment of 16 February 2017, Romania v Commission, T‐145/15, EU:T:2017:86, paragraph 44 and the case-law cited). |
| --- | --- |

59

However, the statement of reasons cannot be required to go into every relevant point of fact and law. Whether the statement of reasons meets the requirements referred to in paragraphs 39 and 40 above must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question (see judgment of 16 February 2017, Romania v Commission, T‐145/15, EU:T:2017:86, paragraph 44 and the case-law cited).

| 60 | It must also be recalled that the decisions taken by the Commission concerning the clearance of accounts of the fund concerned are taken on the basis either of summary reports or of correspondence between the Commission and the Member State concerned (see, to that effect, judgment of 14 March 2002, Netherlands v Commission, C‐132/99, EU:C:2002:168, paragraph 39). In those conditions, the statement of reasons for a decision refusing to charge part of the declared expenditure to it must be regarded as sufficient if the Member State to which the decision was addressed was closely involved in the process by which the decision came about and was aware of the reasons for which the Commission took the view that it must not charge the sum in dispute to the fund concerned (see, to that effect, judgments of 20 September 2001, Belgium v Commission, C‐263/98, EU:C:2001:455, paragraph 98, and of 17 May 2013, Greece v Commission, T‐294/11, not published, EU:T:2013:261, paragraph 94). |
| --- | --- |

60

It must also be recalled that the decisions taken by the Commission concerning the clearance of accounts of the fund concerned are taken on the basis either of summary reports or of correspondence between the Commission and the Member State concerned (see, to that effect, judgment of 14 March 2002, Netherlands v Commission, C‐132/99, EU:C:2002:168, paragraph 39). In those conditions, the statement of reasons for a decision refusing to charge part of the declared expenditure to it must be regarded as sufficient if the Member State to which the decision was addressed was closely involved in the process by which the decision came about and was aware of the reasons for which the Commission took the view that it must not charge the sum in dispute to the fund concerned (see, to that effect, judgments of 20 September 2001, Belgium v Commission, C‐263/98, EU:C:2001:455, paragraph 98, and of 17 May 2013, Greece v Commission, T‐294/11, not published, EU:T:2013:261, paragraph 94).

| 61 | First, in so far as the Republic of Bulgaria submits that the Commission only mentioned Article 54(1) of Regulation No 1306/2013 in the invitation to a second bilateral meeting, it is sufficient to note that, as stated in paragraphs 38 to 40 above, the Republic of Bulgaria was involved in the process by which the contested decision came about and that, as is apparent from the examination of the first plea in law, the question of the recovery of the debts at issue, in accordance with Article 54 of Regulation No 1306/2008, was discussed between the parties on numerous occasions. |
| --- | --- |

61

First, in so far as the Republic of Bulgaria submits that the Commission only mentioned Article 54(1) of Regulation No 1306/2013 in the invitation to a second bilateral meeting, it is sufficient to note that, as stated in paragraphs 38 to 40 above, the Republic of Bulgaria was involved in the process by which the contested decision came about and that, as is apparent from the examination of the first plea in law, the question of the recovery of the debts at issue, in accordance with Article 54 of Regulation No 1306/2008, was discussed between the parties on numerous occasions.

| 62 | Consequently, the Republic of Bulgaria cannot contend that it was not informed of the reasons why the Commission intended to impose the contested financial correction on it, nor that it was unable to understand the grounds of the contested decision on that point. |
| --- | --- |

62

Consequently, the Republic of Bulgaria cannot contend that it was not informed of the reasons why the Commission intended to impose the contested financial correction on it, nor that it was unable to understand the grounds of the contested decision on that point.

| 63 | Second, the Republic of Bulgaria submits that the Commission did not reply to the observation, communicated in the reply to the second invitation to a bilateral meeting, that the Union should share the financial consequences of the contested irregularities. |
| --- | --- |

63

Second, the Republic of Bulgaria submits that the Commission did not reply to the observation, communicated in the reply to the second invitation to a bilateral meeting, that the Union should share the financial consequences of the contested irregularities.

| 64 | In that respect, it is sufficient to note that the Commission expressly replied to that observation in the formal communication, which it sent on 19 November 2019, in accordance with Article 34(3) of Implementing Regulation No 908/2014. Therefore, that argument has no factual basis. |
| --- | --- |

64

In that respect, it is sufficient to note that the Commission expressly replied to that observation in the formal communication, which it sent on 19 November 2019, in accordance with Article 34(3) of Implementing Regulation No 908/2014. Therefore, that argument has no factual basis.

| 65 | Third, the Republic of Bulgaria claims that the Commission did not mention the specific rules derived from EU law which were allegedly infringed by [confidential] and [confidential] and on which it could have relied in requesting the recovery of the debts at issue. |
| --- | --- |

65

Third, the Republic of Bulgaria claims that the Commission did not mention the specific rules derived from EU law which were allegedly infringed by [confidential] and [confidential] and on which it could have relied in requesting the recovery of the debts at issue.

confidential

confidential

| 66 | Nevertheless, it is clear from all of the foregoing that the Commission’s conclusions, at the various stages of the clearance procedure, were based, inter alia, on interim investigation reports and on OLAF’s final reports. Those included detailed analyses of the irregularities found by OLAF. It is apparent from the minutes of the second bilateral meeting that the Republic of Bulgaria acknowledged, in essence, that the evidence submitted by OLAF was very serious and showed that the expenditure effected in the nine promotion programmes posed a risk to the fund in question. It follows that the Republic of Bulgaria cannot claim that it was unaware that the expenditure was to be recovered since it did not comply with specific EU rules, including Article 54(1) of Regulation No 1306/2013. |
| --- | --- |

66

Nevertheless, it is clear from all of the foregoing that the Commission’s conclusions, at the various stages of the clearance procedure, were based, inter alia, on interim investigation reports and on OLAF’s final reports. Those included detailed analyses of the irregularities found by OLAF. It is apparent from the minutes of the second bilateral meeting that the Republic of Bulgaria acknowledged, in essence, that the evidence submitted by OLAF was very serious and showed that the expenditure effected in the nine promotion programmes posed a risk to the fund in question. It follows that the Republic of Bulgaria cannot claim that it was unaware that the expenditure was to be recovered since it did not comply with specific EU rules, including Article 54(1) of Regulation No 1306/2013.

| 67 | Fourth, in so far as the Republic of Bulgaria refers to the parts of its pleadings included in the first plea in law, since it considers them relevant for establishing an infringement of Article 296 TFEU, it is sufficient to state that it raises no argument capable of explaining why that should be considered to be the case. |
| --- | --- |

67

Fourth, in so far as the Republic of Bulgaria refers to the parts of its pleadings included in the first plea in law, since it considers them relevant for establishing an infringement of Article 296 TFEU, it is sufficient to state that it raises no argument capable of explaining why that should be considered to be the case.

| 68 | In any event, it is clear from all the previous assessments and from the pleas in law and arguments raised by the Republic of Bulgaria in support of its action that the statement of reasons given in the contested decision enabled it to ascertain the reasons for the disputed financial correction and that it also enables the Court to exercise its review. |
| --- | --- |

68

In any event, it is clear from all the previous assessments and from the pleas in law and arguments raised by the Republic of Bulgaria in support of its action that the statement of reasons given in the contested decision enabled it to ascertain the reasons for the disputed financial correction and that it also enables the Court to exercise its review.

| 69 | Consequently, the second plea must be dismissed. |
| --- | --- |

69

Consequently, the second plea must be dismissed.

The third plea in law, alleging incorrect interpretation of Article 54(1) of Regulation No 1306/2013

The third plea in law, alleging incorrect interpretation of Article 54(1) of Regulation No 1306/2013

| 70 | The Republic of Bulgaria submits that the Commission was mistaken in believing that the 18-month time limit prescribed in Article 54(1) of Regulation No 1306/2013 for the paying agency to request recovery of undue payments from the beneficiaries began to run from the date of receipt, by the Member State concerned, of OLAF’s final reports. It takes the view that, where a procedure is initiated under Article 52 of Regulation No 1306/2013, that procedure requires a decision to refuse financing to be adopted following the various steps provided for in Article 34 of Implementing Regulation No 908/2014. It claims that, when OLAF submitted its final reports, the Commission had not yet communicated its final conclusion in accordance with Article 34(4) of that regulation. Moreover, it observes that, in the present case, the amounts indicated in OLAF’s final reports did not match those excluded from Union financing by the contested decision. |
| --- | --- |

70

The Republic of Bulgaria submits that the Commission was mistaken in believing that the 18-month time limit prescribed in Article 54(1) of Regulation No 1306/2013 for the paying agency to request recovery of undue payments from the beneficiaries began to run from the date of receipt, by the Member State concerned, of OLAF’s final reports. It takes the view that, where a procedure is initiated under Article 52 of Regulation No 1306/2013, that procedure requires a decision to refuse financing to be adopted following the various steps provided for in Article 34 of Implementing Regulation No 908/2014. It claims that, when OLAF submitted its final reports, the Commission had not yet communicated its final conclusion in accordance with Article 34(4) of that regulation. Moreover, it observes that, in the present case, the amounts indicated in OLAF’s final reports did not match those excluded from Union financing by the contested decision.

| 71 | The Republic of Bulgaria infers from the foregoing that the various documents exchanged during the administrative procedure can only be regarded as preparatory documents for the contested decision and cannot be regarded as a control report or similar document within the meaning of Article 54(1) of Regulation No 1306/2013. It therefore considers that that article must be interpreted as meaning that it is the point at which the contested decision is notified that should be regarded, in the present case, as the point at which such a control report or similar document is received. It also points out, on the basis of Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the Council of 11 September 2013 concerning investigations conducted by the European Anti-Fraud Office (OLAF) and repealing Regulation (EC) No 1073/1999 of the European Parliament and of the Council and Council Regulation (Euratom) No 1074/1999 (OJ 2013 L 248, p. 1), that the transmission of OLAF’s final reports and recommendations to the national authorities is not accompanied by obligations as to what action should be taken by those authorities. It infers from that that those reports cannot automatically lead to the initiation of administrative or judicial proceedings, nor to the adoption of Union acts such as the contested decision. Lastly, it adds that no information has been provided on the Commission’s interpretation in the form of guidelines or relevant legislation. |
| --- | --- |

71

The Republic of Bulgaria infers from the foregoing that the various documents exchanged during the administrative procedure can only be regarded as preparatory documents for the contested decision and cannot be regarded as a control report or similar document within the meaning of Article 54(1) of Regulation No 1306/2013. It therefore considers that that article must be interpreted as meaning that it is the point at which the contested decision is notified that should be regarded, in the present case, as the point at which such a control report or similar document is received. It also points out, on the basis of Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the Council of 11 September 2013 concerning investigations conducted by the European Anti-Fraud Office (OLAF) and repealing Regulation (EC) No 1073/1999 of the European Parliament and of the Council and Council Regulation (Euratom) No 1074/1999 (OJ 2013 L 248, p. 1), that the transmission of OLAF’s final reports and recommendations to the national authorities is not accompanied by obligations as to what action should be taken by those authorities. It infers from that that those reports cannot automatically lead to the initiation of administrative or judicial proceedings, nor to the adoption of Union acts such as the contested decision. Lastly, it adds that no information has been provided on the Commission’s interpretation in the form of guidelines or relevant legislation.

| 72 | The Commission disputes those arguments. |
| --- | --- |

72

The Commission disputes those arguments.

| 73 | According to Article 54(1) of Regulation No 1306/2013, ‘for any undue payment following the occurrence of irregularity or negligence, Member States shall request recovery from the beneficiary within 18 months after the approval and, where applicable, reception, by the paying agency or body responsible for the recovery, of a control report or similar document, stating that an irregularity has taken place’. |
| --- | --- |

73

According to Article 54(1) of Regulation No 1306/2013, ‘for any undue payment following the occurrence of irregularity or negligence, Member States shall request recovery from the beneficiary within 18 months after the approval and, where applicable, reception, by the paying agency or body responsible for the recovery, of a control report or similar document, stating that an irregularity has taken place’.

| 74 | The Republic of Bulgaria submits that, in the present case, only the notification of the contested decision could be regarded as the point at which a control report or similar document is received, since Articles 52 and 54 of Regulation No 1306/2013 must be interpreted together. |
| --- | --- |

74

The Republic of Bulgaria submits that, in the present case, only the notification of the contested decision could be regarded as the point at which a control report or similar document is received, since Articles 52 and 54 of Regulation No 1306/2013 must be interpreted together.

| 75 | However, first, under Article 52 of Regulation No 1306/2013, as supplemented by Article 34 of Implementing Regulation No 908/2014, the clearance procedure end with the adoption, by the Commission, of implementing acts determining the amounts to be excluded from Union financing. |
| --- | --- |

75

However, first, under Article 52 of Regulation No 1306/2013, as supplemented by Article 34 of Implementing Regulation No 908/2014, the clearance procedure end with the adoption, by the Commission, of implementing acts determining the amounts to be excluded from Union financing.

| 76 | If the legislature had intended to set the starting point for the 18-month time limit prescribed for Member States to request the recovery of undue payments from their beneficiaries as the time of formal completion of the clearance procedure, as provided for in Article 52 of Regulation No 1306/2013, it would have specifically mentioned the implementing acts referred to in paragraph 74 above. Furthermore, it does not mention a control report or similar document, the use of those two concepts suggesting that they may be documents of various kinds, whereas only decisions can close the conformity clearance procedure. |
| --- | --- |

76

If the legislature had intended to set the starting point for the 18-month time limit prescribed for Member States to request the recovery of undue payments from their beneficiaries as the time of formal completion of the clearance procedure, as provided for in Article 52 of Regulation No 1306/2013, it would have specifically mentioned the implementing acts referred to in paragraph 74 above. Furthermore, it does not mention a control report or similar document, the use of those two concepts suggesting that they may be documents of various kinds, whereas only decisions can close the conformity clearance procedure.

| 77 | Second, the arguments of the Republic of Bulgaria cannot be accepted where it submits that OLAF’s final reports cannot be likened to the control reports or similar documents referred to in Article 54(1) of Regulation No 1306/2013 because they do not definitively establish the amounts to be excluded from Union financing. |
| --- | --- |

77

Second, the arguments of the Republic of Bulgaria cannot be accepted where it submits that OLAF’s final reports cannot be likened to the control reports or similar documents referred to in Article 54(1) of Regulation No 1306/2013 because they do not definitively establish the amounts to be excluded from Union financing.

| 78 | The interpretation of the Republic of Bulgaria is based on a misreading of the provision at issue, from which it is clear that the purpose of a control report or similar document is not to establish the amount of expenditure that should be excluded from Union financing, but to indicate the existence of an irregularity. |
| --- | --- |

78

The interpretation of the Republic of Bulgaria is based on a misreading of the provision at issue, from which it is clear that the purpose of a control report or similar document is not to establish the amount of expenditure that should be excluded from Union financing, but to indicate the existence of an irregularity.

| 79 | Third, on the basis of Regulation No 883/2013, the Republic of Bulgaria considers that, since OLAF’s final reports cannot automatically lead to the initiation of national administrative or judicial proceedings, they cannot be regarded as control reports or similar documents within the meaning of Article 54(1) of Regulation No 1306/2013. |
| --- | --- |

79

Third, on the basis of Regulation No 883/2013, the Republic of Bulgaria considers that, since OLAF’s final reports cannot automatically lead to the initiation of national administrative or judicial proceedings, they cannot be regarded as control reports or similar documents within the meaning of Article 54(1) of Regulation No 1306/2013.

| 80 | However, in the context of a conformity clearance procedure, the determination of the act on which the obligation of the Member State concerned to request the recovery of undue payments from their beneficiaries is based does not depend on the interpretation of Regulation No 883/2013, but on the interpretation of Regulation No 1306/2013. In other words, the fact that, in essence, it is clear from Article 11 of Regulation No 883/2013 and from the order of 21 June 2017, Inox Mare v Commission (T‐289/16, EU:T:2017:414), that the competent authorities of the Member States decide what action should be taken on completed investigations after receiving OLAF’s final report, does not predetermine whether that final report can be regarded as a control report or similar document within the meaning of Article 54(1) of Regulation No 1306/2013. |
| --- | --- |

80

However, in the context of a conformity clearance procedure, the determination of the act on which the obligation of the Member State concerned to request the recovery of undue payments from their beneficiaries is based does not depend on the interpretation of Regulation No 883/2013, but on the interpretation of Regulation No 1306/2013. In other words, the fact that, in essence, it is clear from Article 11 of Regulation No 883/2013 and from the order of 21 June 2017, Inox Mare v Commission (T‐289/16, EU:T:2017:414), that the competent authorities of the Member States decide what action should be taken on completed investigations after receiving OLAF’s final report, does not predetermine whether that final report can be regarded as a control report or similar document within the meaning of Article 54(1) of Regulation No 1306/2013.

| 81 | The obligation to request the recovery of debts affected by the irregularities found in that final report does not stem from Regulation No 883/2013, but from Article 54(1) of Regulation No 1306/2013, which provides that, once the Member State concerned has been notified of the irregularity, it has 18 months in which to request that recovery from the beneficiaries. |
| --- | --- |

81

The obligation to request the recovery of debts affected by the irregularities found in that final report does not stem from Regulation No 883/2013, but from Article 54(1) of Regulation No 1306/2013, which provides that, once the Member State concerned has been notified of the irregularity, it has 18 months in which to request that recovery from the beneficiaries.

| 82 | The third plea must therefore be dismissed in its entirety. |
| --- | --- |

82

The third plea must therefore be dismissed in its entirety.

The fourth plea in law, alleging an error of assessment in so far as the Commission considered that the paying agency had failed to act with the requisite care and had been negligent

The fourth plea in law, alleging an error of assessment in so far as the Commission considered that the paying agency had failed to act with the requisite care and had been negligent

| 83 | The Republic of Bulgaria submits that EU law distinguishes between the concepts of irregularity and fraud. In that respect, it points out that Member States have a freedom of choice as to the penalties applicable. It takes the view that the Commission has failed to assess the circumstances of the case as regards the actions taken by the paying agencies in the light of Bulgarian law and that any negligence has thus been presumed. Specifically, it submits that the paying agency fulfilled its duties by challenging the decisions of its own national courts of first instance by which the decisions suspending payments were annulled and that its authorities had, in any event, provided all the information requested during the clearance procedure. |
| --- | --- |

83

The Republic of Bulgaria submits that EU law distinguishes between the concepts of irregularity and fraud. In that respect, it points out that Member States have a freedom of choice as to the penalties applicable. It takes the view that the Commission has failed to assess the circumstances of the case as regards the actions taken by the paying agencies in the light of Bulgarian law and that any negligence has thus been presumed. Specifically, it submits that the paying agency fulfilled its duties by challenging the decisions of its own national courts of first instance by which the decisions suspending payments were annulled and that its authorities had, in any event, provided all the information requested during the clearance procedure.

| 84 | As for the recovery of the debts, it states that by bringing a civil action, not only the beneficiaries of the aid but the individuals implicated may be held liable for the reimbursement of the expenditure, whereas the paying agency would not have had that option in an administrative procedure. By becoming a civil party in criminal proceedings, the State is also able to see the evidence gathered during the preliminary investigation. It adds that the courts have held that the ability of the State to bring a civil action in criminal proceedings constitutes an independent form of action for protecting legitimate rights and interests in the event of an infringement of the general prohibition on causing harm to others, and that it does not compete with the special tax procedure, since they are not interchangeable. |
| --- | --- |

84

As for the recovery of the debts, it states that by bringing a civil action, not only the beneficiaries of the aid but the individuals implicated may be held liable for the reimbursement of the expenditure, whereas the paying agency would not have had that option in an administrative procedure. By becoming a civil party in criminal proceedings, the State is also able to see the evidence gathered during the preliminary investigation. It adds that the courts have held that the ability of the State to bring a civil action in criminal proceedings constitutes an independent form of action for protecting legitimate rights and interests in the event of an infringement of the general prohibition on causing harm to others, and that it does not compete with the special tax procedure, since they are not interchangeable.

| 85 | Moreover, regarding the adoption of an administrative measure, the Republic of Bulgaria states that the paying agency’s orders to suspend payments were annulled by the Bulgarian national administrative courts. It points out that, nevertheless, the paying agency has not resumed the process of examining payment requests, which led to one of the beneficiaries bringing an action for non-compliance with a judgment. The head of the paying agency was issued with a fine and leave was granted to bring an action for annulment of its implied decision to refuse to resume the process of examining payment requests. Accordingly, it believes that, in order to recover all the sums paid under a specific programme, issuing an opinion concluding that a public debt exists towards the State based on the grounds for suspension of the payments set out in OLAF’s reports would, at this stage, be bound to fail. In the present case, it considers that the details contained in OLAF’s reports have been examined and that actions have been taken on that basis. It also claims that Bulgarian procedural rules impose an obligation to suspend administrative or judicial proceedings in cases where a criminal offence is discovered that could influence the outcome of those proceedings. Furthermore, OLAF has not, to date, reported any infringement by the competent authorities owing to deficiencies in the control system put in place. |
| --- | --- |

85

Moreover, regarding the adoption of an administrative measure, the Republic of Bulgaria states that the paying agency’s orders to suspend payments were annulled by the Bulgarian national administrative courts. It points out that, nevertheless, the paying agency has not resumed the process of examining payment requests, which led to one of the beneficiaries bringing an action for non-compliance with a judgment. The head of the paying agency was issued with a fine and leave was granted to bring an action for annulment of its implied decision to refuse to resume the process of examining payment requests. Accordingly, it believes that, in order to recover all the sums paid under a specific programme, issuing an opinion concluding that a public debt exists towards the State based on the grounds for suspension of the payments set out in OLAF’s reports would, at this stage, be bound to fail. In the present case, it considers that the details contained in OLAF’s reports have been examined and that actions have been taken on that basis. It also claims that Bulgarian procedural rules impose an obligation to suspend administrative or judicial proceedings in cases where a criminal offence is discovered that could influence the outcome of those proceedings. Furthermore, OLAF has not, to date, reported any infringement by the competent authorities owing to deficiencies in the control system put in place.

| 86 | The Commission disputes those arguments. |
| --- | --- |

86

The Commission disputes those arguments.

| 87 | As a preliminary point, it must be recalled that Article 58(1)(e) of Regulation No 1306/2013 provides that the Member States are to take all measures necessary to ensure effective protection of the financial interests of the European Union, in particular in order to recover the sums lost as a result of irregularities or negligence. In addition, the Member States are to take the necessary measures to initiate court proceedings, where appropriate, in order to recover those sums (judgment of 30 January 2019, Belgium v Commission, C‐587/17 P, EU:C:2019:75, paragraph 66). |
| --- | --- |

87

As a preliminary point, it must be recalled that Article 58(1)(e) of Regulation No 1306/2013 provides that the Member States are to take all measures necessary to ensure effective protection of the financial interests of the European Union, in particular in order to recover the sums lost as a result of irregularities or negligence. In addition, the Member States are to take the necessary measures to initiate court proceedings, where appropriate, in order to recover those sums (judgment of 30 January 2019, Belgium v Commission, C‐587/17 P, EU:C:2019:75, paragraph 66).

| 88 | Article 58(1) of Regulation No 1306/2013, by requiring Member States to ensure the protection of the European Union’s financial interests and to recover sums unduly paid, expresses, as regards the financing of the common agricultural policy, the duty of general diligence laid down in Article 4(3) TEU. That duty, which applies throughout the procedure for the recovery of those sums, means that the national authorities are to effect recovery promptly and in good time, and are to make use of the means of verification and recovery at their disposal in order to ensure that those interests are protected (judgment of 30 January 2019, Belgium v Commission, C‐587/17 P, EU:C:2019:75, paragraph 67). With the passage of time, recovery of the sums unduly paid is likely to become complicated or impossible for reasons such as the fact that undertakings may have ceased trading or accounting documents may have been lost (judgment of 30 January 2020, Portugal v Commission, T‐292/18, EU:T:2020:18, paragraph 65). |
| --- | --- |

88

Article 58(1) of Regulation No 1306/2013, by requiring Member States to ensure the protection of the European Union’s financial interests and to recover sums unduly paid, expresses, as regards the financing of the common agricultural policy, the duty of general diligence laid down in Article 4(3) TEU. That duty, which applies throughout the procedure for the recovery of those sums, means that the national authorities are to effect recovery promptly and in good time, and are to make use of the means of verification and recovery at their disposal in order to ensure that those interests are protected (judgment of 30 January 2019, Belgium v Commission, C‐587/17 P, EU:C:2019:75, paragraph 67). With the passage of time, recovery of the sums unduly paid is likely to become complicated or impossible for reasons such as the fact that undertakings may have ceased trading or accounting documents may have been lost (judgment of 30 January 2020, Portugal v Commission, T‐292/18, EU:T:2020:18, paragraph 65).

| 89 | However, those provisions do not lay down the specific measures which must be adopted for that purpose, in particular the court proceedings which must be initiated in order to recover those sums (judgment of 30 January 2019, Belgium v Commission, C‐587/17 P, EU:C:2019:75, paragraph 68). |
| --- | --- |

89

However, those provisions do not lay down the specific measures which must be adopted for that purpose, in particular the court proceedings which must be initiated in order to recover those sums (judgment of 30 January 2019, Belgium v Commission, C‐587/17 P, EU:C:2019:75, paragraph 68).

| 90 | This means that it falls to the national authorities, subject to compliance with the duty of diligence, to choose the remedies which they deem most appropriate in order to recover the sums in question, having regard to the particular circumstances of the case (judgment of 30 January 2019, Belgium v Commission, C‐587/17 P, EU:C:2019:75, paragraph 70). |
| --- | --- |

90

This means that it falls to the national authorities, subject to compliance with the duty of diligence, to choose the remedies which they deem most appropriate in order to recover the sums in question, having regard to the particular circumstances of the case (judgment of 30 January 2019, Belgium v Commission, C‐587/17 P, EU:C:2019:75, paragraph 70).

| 91 | In the present case, first, it must be determined whether the paying agency of the Republic of Bulgaria neglected its duty of diligence by failing to take, within the time limits prescribed in Article 54(1) of Regulation No 1306/2013, the administrative measures necessary to recover the amounts that OLAF considered had been unduly paid in respect of eight of the programmes in question. Second, it must be assessed whether the Republic of Bulgaria was negligent, within the meaning of Article 54(5)(c) of that regulation, in informing the Commission during the clearance procedure that, until the criminal investigation under way had been completed, the paying agency would not take any action to that effect in respect of the ninth programme. |
| --- | --- |

91

In the present case, first, it must be determined whether the paying agency of the Republic of Bulgaria neglected its duty of diligence by failing to take, within the time limits prescribed in Article 54(1) of Regulation No 1306/2013, the administrative measures necessary to recover the amounts that OLAF considered had been unduly paid in respect of eight of the programmes in question. Second, it must be assessed whether the Republic of Bulgaria was negligent, within the meaning of Article 54(5)(c) of that regulation, in informing the Commission during the clearance procedure that, until the criminal investigation under way had been completed, the paying agency would not take any action to that effect in respect of the ninth programme.

| 92 | As is apparent from the final opinion in particular, the contested financial correction was imposed on the Republic of Bulgaria on the ground that the Bulgarian paying agency had been negligent in not requesting the recovery of the expenditure at issue from the beneficiaries within the time limits prescribed in Article 54(5)(a) and (c) of Regulation No 1306/2013. |
| --- | --- |

92

As is apparent from the final opinion in particular, the contested financial correction was imposed on the Republic of Bulgaria on the ground that the Bulgarian paying agency had been negligent in not requesting the recovery of the expenditure at issue from the beneficiaries within the time limits prescribed in Article 54(5)(a) and (c) of Regulation No 1306/2013.

| 93 | However, the Republic of Bulgaria claims, in essence, that the paying agency could not comply with those time limits because, since fraud was involved, criminal proceedings had been initiated which prevented it from commencing a parallel procedure for recovery of the expenditure concerned. It insists that it had to wait for those proceedings to be completed before proceeding with that recovery. |
| --- | --- |

93

However, the Republic of Bulgaria claims, in essence, that the paying agency could not comply with those time limits because, since fraud was involved, criminal proceedings had been initiated which prevented it from commencing a parallel procedure for recovery of the expenditure concerned. It insists that it had to wait for those proceedings to be completed before proceeding with that recovery.

| 94 | In that regard, it is clear from the case-law that, on the one hand, while it is for the Member States of the Union to choose the means conducive to ensuring the effectiveness of controls and the prompt recovery of aid unduly paid, the initiation of criminal proceedings does not necessarily imply that the competent authorities may refrain from any measure aimed, if not at recovery, at least at securing a debt resulting from an undue payment under the fund concerned (see, to that effect, judgment of 10 October 2012, Greece v Commission, T‐158/09, not published, EU:T:2012:530, paragraph 83). On the other hand, in essence, a breach of the duty of diligence which requires the Member States to take all measures necessary to ensure effective protection of the financial interests of the Union and to recover the sums unduly paid cannot be justified by the Member States by relying on the length of administrative or judicial proceedings commenced by the economic agent concerned (judgment of 30 January 2020, Portugal v Commission, T‐292/18, EU:T:2020:18, paragraph 66). |
| --- | --- |

94

In that regard, it is clear from the case-law that, on the one hand, while it is for the Member States of the Union to choose the means conducive to ensuring the effectiveness of controls and the prompt recovery of aid unduly paid, the initiation of criminal proceedings does not necessarily imply that the competent authorities may refrain from any measure aimed, if not at recovery, at least at securing a debt resulting from an undue payment under the fund concerned (see, to that effect, judgment of 10 October 2012, Greece v Commission, T‐158/09, not published, EU:T:2012:530, paragraph 83). On the other hand, in essence, a breach of the duty of diligence which requires the Member States to take all measures necessary to ensure effective protection of the financial interests of the Union and to recover the sums unduly paid cannot be justified by the Member States by relying on the length of administrative or judicial proceedings commenced by the economic agent concerned (judgment of 30 January 2020, Portugal v Commission, T‐292/18, EU:T:2020:18, paragraph 66).

| 95 | In the present case, as confirmed at the hearing, it is common ground that, as of the date of adoption of the contested decision, the Republic of Bulgaria had not taken any civil or administrative action to recover the expenditure at issue. Thus, the only proceedings initiated at that time were criminal in nature and were at the preliminary investigation stage, and not at the judicial stage. Furthermore, the paying agency’s orders, which the Republic of Bulgaria claims were annulled by its national courts, sought to suspend payments in respect of the programmes affected by the fraud mentioned in OLAF’s final reports, and not to recover the amounts already paid. |
| --- | --- |

95

In the present case, as confirmed at the hearing, it is common ground that, as of the date of adoption of the contested decision, the Republic of Bulgaria had not taken any civil or administrative action to recover the expenditure at issue. Thus, the only proceedings initiated at that time were criminal in nature and were at the preliminary investigation stage, and not at the judicial stage. Furthermore, the paying agency’s orders, which the Republic of Bulgaria claims were annulled by its national courts, sought to suspend payments in respect of the programmes affected by the fraud mentioned in OLAF’s final reports, and not to recover the amounts already paid.

| 96 | Likewise, the arguments of the Republic of Bulgaria cannot be accepted when it insists that, given the likelihood that the measures taken by the paying agency would be annulled, and had thus proved ineffective and costly, the paying agency had decided not to take any action at that stage. |
| --- | --- |

96

Likewise, the arguments of the Republic of Bulgaria cannot be accepted when it insists that, given the likelihood that the measures taken by the paying agency would be annulled, and had thus proved ineffective and costly, the paying agency had decided not to take any action at that stage.

| 97 | As observed in paragraph 95 above, the paying agency’s orders, which were annulled by the Bulgarian national courts, focused on the suspension of payments to the promotion programmes found in OLAF’s final reports to be at risk, and not on the recovery of the expenditure at issue. |
| --- | --- |

97

As observed in paragraph 95 above, the paying agency’s orders, which were annulled by the Bulgarian national courts, focused on the suspension of payments to the promotion programmes found in OLAF’s final reports to be at risk, and not on the recovery of the expenditure at issue.

| 98 | In that regard, it is apparent from the case file that not all of the paying agency’s orders were challenged before the national courts of the Republic of Bulgaria. Consequently, there is no evidence to suggest that, had measures to recover the expenditure at issue been adopted, all of them would have been the subject of an application for annulment before those courts. By the same token, hypothetically they could have been annulled by the Bulgarian national courts. |
| --- | --- |

98

In that regard, it is apparent from the case file that not all of the paying agency’s orders were challenged before the national courts of the Republic of Bulgaria. Consequently, there is no evidence to suggest that, had measures to recover the expenditure at issue been adopted, all of them would have been the subject of an application for annulment before those courts. By the same token, hypothetically they could have been annulled by the Bulgarian national courts.

| 99 | In that context, it must also be observed that, under the second subparagraph of Article 54(2) of Regulation No 1306/2013, if the Republic of Bulgaria had adopted administrative measures to recover the sums concerned and, in parallel, the Bulgarian national courts had concluded that there was no irregularity, it could have declared to the fund in question, as expenditure, the financial burden incurred in that respect. |
| --- | --- |

99

In that context, it must also be observed that, under the second subparagraph of Article 54(2) of Regulation No 1306/2013, if the Republic of Bulgaria had adopted administrative measures to recover the sums concerned and, in parallel, the Bulgarian national courts had concluded that there was no irregularity, it could have declared to the fund in question, as expenditure, the financial burden incurred in that respect.

| 100 | Third, it must also be observed that the Republic of Bulgaria gave no indication as to the time limits within which the proceedings initiated were likely to be completed. |
| --- | --- |

100

Third, it must also be observed that the Republic of Bulgaria gave no indication as to the time limits within which the proceedings initiated were likely to be completed.

| 101 | In the light of all of the foregoing, the fourth plea in law must be dismissed in its entirety. |
| --- | --- |

101

In the light of all of the foregoing, the fourth plea in law must be dismissed in its entirety.

The fifth plea in law, alleging an infringement of Article 54 of Regulation No 1306/2013 and of the principle of proportionality

The fifth plea in law, alleging an infringement of Article 54 of Regulation No 1306/2013 and of the principle of proportionality

| 102 | The Republic of Bulgaria notes that the Commission found no irregularities when it audited the various promotion programmes in respect of which the expenditure at issue had ultimately been considered to pose a risk to the fund in question. In addition, it claims that it is clear from Article 54(2) of Regulation No 1306/2013 that the financial burden resulting from the failure to recover sums unduly paid must be shared equally between the Union and the Member State concerned. It adds that there are no conformity clearance rules if the irregularities do not relate to deficiencies in the management and control systems of the Member States. It specifies that payments effected by Member States under the EAGF are reimbursed by the Union budget. Thus, it considers that, in so far as the Member States act on behalf of the Union, it is the Union that should bear the losses caused by the conduct of individuals, when they have done their utmost to ensure the regularity of transactions financed by the EAGF. It therefore considers that, in the present case, responsibility for the financial consequences of the irregularities found by the Commission should be shared with the Union and that the amount of the contested financial corrections is therefore disproportionate. |
| --- | --- |

102

The Republic of Bulgaria notes that the Commission found no irregularities when it audited the various promotion programmes in respect of which the expenditure at issue had ultimately been considered to pose a risk to the fund in question. In addition, it claims that it is clear from Article 54(2) of Regulation No 1306/2013 that the financial burden resulting from the failure to recover sums unduly paid must be shared equally between the Union and the Member State concerned. It adds that there are no conformity clearance rules if the irregularities do not relate to deficiencies in the management and control systems of the Member States. It specifies that payments effected by Member States under the EAGF are reimbursed by the Union budget. Thus, it considers that, in so far as the Member States act on behalf of the Union, it is the Union that should bear the losses caused by the conduct of individuals, when they have done their utmost to ensure the regularity of transactions financed by the EAGF. It therefore considers that, in the present case, responsibility for the financial consequences of the irregularities found by the Commission should be shared with the Union and that the amount of the contested financial corrections is therefore disproportionate.

| 103 | The Commission disputes those arguments. |
| --- | --- |

103

The Commission disputes those arguments.

| 104 | First, the Republic of Bulgaria submits, in essence, that there are no conformity clearance rules if the irregularities found by the Commission do not relate to deficiencies in the management and control systems of the Member States. |
| --- | --- |

104

First, the Republic of Bulgaria submits, in essence, that there are no conformity clearance rules if the irregularities found by the Commission do not relate to deficiencies in the management and control systems of the Member States.

| 105 | It is sufficient to note in that regard that it is clear from Article 54(5) of Regulation No 1306/2013 that, in so far as it follows the procedure laid down in Article 52(3) of that regulation, the Commission is entitled, inter alia, to adopt implementing acts excluding from Union financing the amounts charged to the Union budget in three scenarios, which do not necessarily correspond to deficiencies in the management and control systems of the Member States. |
| --- | --- |

105

It is sufficient to note in that regard that it is clear from Article 54(5) of Regulation No 1306/2013 that, in so far as it follows the procedure laid down in Article 52(3) of that regulation, the Commission is entitled, inter alia, to adopt implementing acts excluding from Union financing the amounts charged to the Union budget in three scenarios, which do not necessarily correspond to deficiencies in the management and control systems of the Member States.

| 106 | In the present case, it is common ground that the contested financial correction was adopted on the basis of two of those scenarios – namely, the one provided for in Article 54(5)(a) of Regulation No 1306/2013, which concerns the failure to recover undue expenditure within the time limits prescribed in Article 54(1) thereof, and the one provided for in Article 54(5)(c) of that regulation, which concerns the failure to recover such expenditure due to negligence attributable to the administrative authorities or another official body of the Member State. |
| --- | --- |

106

In the present case, it is common ground that the contested financial correction was adopted on the basis of two of those scenarios – namely, the one provided for in Article 54(5)(a) of Regulation No 1306/2013, which concerns the failure to recover undue expenditure within the time limits prescribed in Article 54(1) thereof, and the one provided for in Article 54(5)(c) of that regulation, which concerns the failure to recover such expenditure due to negligence attributable to the administrative authorities or another official body of the Member State.

| 107 | Accordingly, the argument that the irregularities found by the Commission in the present case do not relate to deficiencies in the management and control systems of the Republic of Bulgaria is irrelevant for assessing the legality of the contested decision and must be dismissed on that ground. |
| --- | --- |

107

Accordingly, the argument that the irregularities found by the Commission in the present case do not relate to deficiencies in the management and control systems of the Republic of Bulgaria is irrelevant for assessing the legality of the contested decision and must be dismissed on that ground.

| 108 | Similarly, it follows from the foregoing that the arguments put forward by the Republic of Bulgaria to demonstrate that it has not failed to fulfil its obligations under Council Regulation (EC) No 3/2008 of 17 December 2007 on information provision and promotion measures for agricultural products on the internal market and in third countries (OJ 2008 L 3, p. 1) and Commission Regulation (EC) No 501/2008 of 5 June 2008 laying down detailed rules for the application of Council Regulation (EC) No 3/2008 (OJ 2008 L 147, p. 3), and that the implementation of the ‘promotion programme’ scheme is shared with the Commission, are irrelevant and must also be rejected for the same reason. |
| --- | --- |

108

Similarly, it follows from the foregoing that the arguments put forward by the Republic of Bulgaria to demonstrate that it has not failed to fulfil its obligations under Council Regulation (EC) No 3/2008 of 17 December 2007 on information provision and promotion measures for agricultural products on the internal market and in third countries (OJ 2008 L 3, p. 1) and Commission Regulation (EC) No 501/2008 of 5 June 2008 laying down detailed rules for the application of Council Regulation (EC) No 3/2008 (OJ 2008 L 147, p. 3), and that the implementation of the ‘promotion programme’ scheme is shared with the Commission, are irrelevant and must also be rejected for the same reason.

| 109 | Second, the Republic of Bulgaria relies on Article 54(2) of Regulation No 1306/2013 to request that the financial burden resulting from the irregularities affecting the expenditure at issue be shared with the Commission. |
| --- | --- |

109

Second, the Republic of Bulgaria relies on Article 54(2) of Regulation No 1306/2013 to request that the financial burden resulting from the irregularities affecting the expenditure at issue be shared with the Commission.

| 110 | However, recital 37 of Regulation No 1306/2013 states that ‘in certain cases of negligence by the Member State, it is also right to charge the full sum to the Member State concerned’. |
| --- | --- |

110

However, recital 37 of Regulation No 1306/2013 states that ‘in certain cases of negligence by the Member State, it is also right to charge the full sum to the Member State concerned’.

| 111 | In the present case, the Commission adopted the contested financial correction because it considered that the failure to adopt any measure to recover the expenditure at issue must be regarded as negligence on the part of the Republic of Bulgaria. |
| --- | --- |

111

In the present case, the Commission adopted the contested financial correction because it considered that the failure to adopt any measure to recover the expenditure at issue must be regarded as negligence on the part of the Republic of Bulgaria.

| 112 | Furthermore, it must be observed that Article 54(2) of Regulation No 1306/2013 describes the cases in which the financial burden resulting from irregularities affecting expenditure effected under the EAGF may be shared between the Member State concerned and the Commission. This states that ‘if recovery [of undue payments] has not taken place within four years from the date of the recovery request, or within eight years where recovery is taken in the national courts, 50% of the financial consequences of the non-recovery shall be borne by the Member State concerned and 50% by the Union’s budget’. |
| --- | --- |

112

Furthermore, it must be observed that Article 54(2) of Regulation No 1306/2013 describes the cases in which the financial burden resulting from irregularities affecting expenditure effected under the EAGF may be shared between the Member State concerned and the Commission. This states that ‘if recovery [of undue payments] has not taken place within four years from the date of the recovery request, or within eight years where recovery is taken in the national courts, 50% of the financial consequences of the non-recovery shall be borne by the Member State concerned and 50% by the Union’s budget’.

| 113 | That provision does not apply in the present case, since no request for recovery, within the meaning of that provision, has been made by the Republic of Bulgaria and such a request has not been brought before its national courts either – which is, moreover, the very reason for the contested financial correction. |
| --- | --- |

113

That provision does not apply in the present case, since no request for recovery, within the meaning of that provision, has been made by the Republic of Bulgaria and such a request has not been brought before its national courts either – which is, moreover, the very reason for the contested financial correction.

| 114 | Consequently, the fifth plea must be dismissed in its entirety and, accordingly, the action must be dismissed. |
| --- | --- |

114

Consequently, the fifth plea must be dismissed in its entirety and, accordingly, the action must be dismissed.

Costs

Costs

| 115 | Under Article 134(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. |
| --- | --- |

115

Under Article 134(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.

| 116 | Since the Republic of Bulgaria has been unsuccessful, it must be ordered to pay the costs, in accordance with the form of order sought by the Commission. |
| --- | --- |

116

Since the Republic of Bulgaria has been unsuccessful, it must be ordered to pay the costs, in accordance with the form of order sought by the Commission.

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

On those grounds,

THE GENERAL COURT (First Chamber)

hereby:

| | 1. | Dismisses the action; |
| --- | --- | --- |

1.

1.

Dismisses the action;

Dismisses the action;

| | 2. | Orders the Republic of Bulgaria to pay the costs. |
| --- | --- | --- |

2.

2.

Orders the Republic of Bulgaria to pay the costs.

Orders the Republic of Bulgaria to pay the costs.

| | Kanninen


  Półtorak


  Stancu


  Delivered in open court in Luxembourg on 8 March 2023.
  [Signatures] |
| --- | --- |

Kanninen

Półtorak

Stancu

Delivered in open court in Luxembourg on 8 March 2023.

[Signatures]

---

(
  *1
  )	Language of the case: Bulgarian.

*1

(
  1
  )	Confidential information omitted.

1