Judgment — ECLI:EU:C:1999:148
Date: 1999-03-18
Language of the case: Italian
Court formation: Fifth Chamber
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Agriculture and Fisheries;European Agricultural Guidance and Guarantee Fund (EAGGF);Oils and fats
Concepts: Procedure for clearance of accounts;Olive oil
Procedure: Action for annulment - unfounded
Origin: Italy

Summary Report3 that 
the Commission decision which is challenged 
here was based on the fact that in 82 instances 
— no longer covered and secured by guar­
antee — aid had been paid unlawfully and 
that the sums advanced had not yet been 
recovered from the recipients by the national 
authorities. 
10. The Italian Government contests the 
legality of the reductions, arguing essentially 
that the conclusions in the Summary Report 
are incorrect. In the exposition of its argu­
ment, the Italian Government subdivides the 
undertakings concerned into five groups. 
11. Group A comprises seven undertakings. 
In their case, according to the Italian Govern­
ment, the aid has already been claimed back 
and recovered. These are the undertakings 
Valdolio, P. I. O., Certo C , OL. F. Ili de 
Sensi, Perilu, Vizzari and OL. Albenese. 
3 — Summary Report on the findings of the clearance of the 
accounts of tne Guarantee Section of the EAGGF in respect 
of the 1992 and in part the 1993 financial years (Commission 
document VI/6355/95 Final of 27 March 1996). 
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ITALY v COMMISSION 
12. Group B includes the Luccisano under­
taking. In its case the aid to be recovered is 
said to have been set off against other claims. 
13. Group C concerns the Valle Piacentino 
undertaking which, according to the Italian 
Government, has meanwhile lodged security, 
in the form of a voluntary mortgage on real 
property owned by it and a bank guarantee, 
to cover the aid paid. At the time when the 
guarantee was released, there were still no 
grounds for suspecting any unlawful conduct 
on the part of that undertaking. 
14. With regard to the undertakings in Group 
D, the Italian Government maintains that 
recovery of the sums paid has not yet been 
achieved in full and that in the meantime the 
aid is still secured by guarantees. 
15. Lastly, the fifth category concerns the 
special case of the Caruso Rosa undertaking. 
The authority responsible for monitoring 
compliance with the conditions for the 
granting of aid for the consumption of olive 
oil (Agecontrol) had found irregularities in 
the case of that company, without, however, 
succeeding in ascertaining the amount of the 
aid wrongly paid. Nor has it been possible, in 
the absence of reliable information, to forfeit 
the guarantees. However, as soon as the cur­
rent additional investigations are completed, 
the amount of aid unlawfully paid will be 
claimed back. 
16. The Italian Government claims that the 
Court should: 
— annul the decision of the Commission of 
20 November 1996 No C(96)3274 final in 
so far as it refuses to charge to the EAGGF 
ITL 11934 331913 in the clearance of 
accounts submitted by the Italian Republic 
in respect of expenditure in the 1992 finan­
cial year; and 
— order the defendant to pay the costs. 
17. The Commission contends that the Court 
should: 
— dismiss the action, and 
— order the applicant to pay the costs. 
18. The Commission contends that the Italian 
Government has not shown that it made mis­
takes in assessing the facts. The Commission 
maintains that it correctly assessed all the 
information that it had received before 
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OPINION OF MR ALBER — CASE C-59/97 
25 February 1995 and that, therefore, its deci­
sion to disallow the expenditure in respect of 
aid for the consumption of olive oil was a 
proper one. That alone is sufficient ground 
for dismissing the action brought by the Italian 
Republic as unfounded. 
19. As regards, now, the individual undertak­
ings mentioned by the Italian Government, 
the Commission's submissions are as follows: 
With the exception of the expenditure con­
cerning the undertakings P. I. O., Certo C. 
and Perilli, the expenditure in respect of the 
Group A undertakings had been taken into 
account in the context of the clearance of the 
accounts for the 1995 financial year. The infor­
mation provided on those three undertakings 
was, however, contradictory and did not jus­
tify the conclusion that the aid advanced had 
indeed been recovered. 
20. Similarly, the documents concerning the 
Luccisano undertaking do not justify the con­
clusion that the amount declared had actually 
been paid back to the EAGGF. 
21. With regard to the Valle Picentino under­
taking, the security initially lodged was not 
forfeited and the amount declared was neither 
claimed back nor credited to the account of 
the EAGGF. 
22. With regard to the undertakings com­
prising Group D, the Italian Government 
itself concedes that the amounts paid have 
not yet been recovered and that the Italian 
authorities are not in a position to prove that 
the guarantees exist. That very fact shows, 
however, that the contested reductions were 
rightly made. 
23. Finally, as regards the Caruso Rosa under­
taking, the guarantees should not have been 
released and the Italian authorities should 
instead have demanded that the period of 
validity of the guarantees be extended. 
C — The applicable legislation 
24. The basic rules governing the olive oil 
sector are set out in Regulation N o 
136/66/EEC. 4 Article 11(1), inserted by Reg­
ulation (EEC) N o 2210/88,5 provides the 
following in respect of aid for the consump­
tion of olive oil: 
'Where the production target price minus the 
production aid is higher than the representa­
tive market price for olive oil, consumption 
4 — Council Regulation of 22 September 1966 on the establish­
ment of a common organisation of the market in oils and fats 
(OJ, English Special Edition, 1965-66, p. 221). 
5 — Council Regulation of 19 July 1988 amending Regulation No 
136/66/EEC on the establishment of a common organisation 
of the market in oils and fats (OJ 1988 L 197, p. 1). 
I -1688 
ITALY v COMMISSION 
aid shall be granted for olive oil produced 
and placed on the market in the Community. 
Such aid shall be equal to the difference 
between those two amounts.' 
25. Regulation (EEC) N o 3089/78 6 lays down 
the general rules in respect of aid for the con­
sumption of olive oil. Article 7 of that regula­
tion requires the Member States to institute 
'... a system of supervision to ensure that the 
product for which aid has been applied quali­
fies for such aid'. 
26. Pursuant to Article 8, the aid is to be paid 
'... when the supervisory body designated by 
the Member State in which packaging takes 
place has checked that the conditions for 
granting the aid have been satisfied. 
The aid may, however, be advanced as soon 
as the aid application is submitted, provided 
that sufficient security has been provided.' 
27. The implementing provisions in respect 
of the grant of consumption aid for olive oil 
are, in so far as they relate to the 1992 finan­
cial year in point here, laid down in Regula­
tion (EEC) No 2677/85, 7 as last amended by 
Regulation (EEC) No 571/91. s 
28. Article 9(3) of that regulation requires the 
Member State to pay 'the aid within 150 days 
of the submissions of the aid application. 
However, this period may be extended if the 
monitoring process requires additional inves­
tigations, provided that the duration of validity 
of the security referred to in Article 11(1) is 
extended by the same amount of time.' 
29. With regard to the security, Article 11 
provides: 
' 1 . The amount of the aid shall be advanced 
to the party concerned as soon as he submits 
an application for aid together with a 
certificate showing that a security equal to 
the amount of the aid has been lodged. 
2. The security shall be lodged by an estab­
lishment meeting the criteria laid down by 
6 — Council Regulation of 19 December 1978 laying down gen­
eral rules in respect of aid for the consumption of olive oil 
(OJ 1978 L 369, p. 12). 
7 — Commission Regulation of 24 September 1998 laying down 
implementing rules in respect of the system of consumption 
aid for olive oil (OJ 1998 L 254, p. 5). 
8 — Commission Regulation of 8 March 1991 amending Commis­
sion Regulation (EEC) No 2677/85 of 24 September 1985 
laying down implementing rules in respect of the system of 
consumption aid for olive oil (OJ 1991 I. 63, p. 19). 
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OPINION OF MR ALBER — CASE C-59/97 
the Member State to which application for 
aid is made. The security shall be valid for at 
least six months. 
3. The security shall be released as soon as 
the competent authority of the Member State 
has recognised entitlement to the aid in respect 
of the quantities shown in the application. 
If entitlement to the aid is not recognised in 
respect of all or part of the quantities shown 
in the application, the security shall be forfeit 
in proportion to the quantities in respect of 
which the conditions giving entitlement to 
the aid were not complied with. 
The body responsible for checking entitle­
ment to aid shall notify the paying agency 
each month of its findings as regards the rec­
ognition of entitlement to aid of each approved 
undertaking. 
Ì 
30. Article 12(1) defines more precisely the 
system of supervision referred to under Article 
7 of Regulation N o 3089/78 with a view to 
ensuring the effectiveness and the proper con­
duct of the checks in question. 
31. Furthermore, Article 12 provides inter 
alia: 
' 1 . ... 
2. If any doubt arises as to the accuracy of 
the information given in the application for 
aid, the Member State shall suspend payment 
of aid in respect of the quantity of olive oil 
which is the subject of the inspection and 
take any steps necessary to ensure recovery 
of aid which may turn out to have been 
wrongly granted and the payment of any 
fines. 
3. Advances and aid wrongly paid shall be 
reimbursed together with interest ... 
The amount paid to the Member State shall 
be deducted from claims made on the EAGGF 
by the paying agencies or authorities of the 
Member States.' 
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ITALY v COMMISSION 
32. Finally, Article 29 of Regulation (EEC) 
N o 2220/85 9 contains the following provi­
sion: 
'Once the competent authority is aware of 
circumstances giving rise to forfeiture of the 
security, in whole or in part, it shall without 
delay demand that the party required to meet 
the obligation to pay the sum forfeited, 
allowing up to 30 days ... for payment.' 
Where payment has not been made at the end 
of this period, the guarantor, amongst others, 
can also be required to pay without delay. 
33. To summarise, it may thus be said that 
the aid is paid only when the competent 
supervisory body has checked that the condi­
tions for granting the aid have been satisfied. 
However, the aid can be paid in advance sub­
ject to the lodging of a security which may 
only be released after recognition of entitle­
ment to the aid. Where there is no entitle­
ment to the aid, the security lodged is imme­
diately forfeit. Therefore, in the event that the 
competent authority docs not recognise enti­
tlement to the aid, the undertaking concerned 
must pay back the aid advanced. 
34. In accordance with Article 5 of Regula­
tion (EEC) N o 729/70,10 the Commission 
makes up the accounts on the basis of the 
annual accounts transmitted by the Member 
States accompanied by the documents required 
for making up the balance sheets. 
35. Article 1(3) of Regulation (EEC) No 
1723/72, » inserted by Regulation (EEC) N o 
422/86, u provides that the Commission may 
fix a deadline for Member States to commu­
nicate additional information. In the case of 
failure to submit the information concerned 
within the period fixed, 'the Commission 
shall take its decision on the basis of those 
elements of information in its possession at 
the deadline, except in cases where the late 
submission of information is justified by 
exceptional circumstances'. 
D — Opinion 
36. With regard to four of the seven under­
takings comprising Group A, namely Val-
dolio, Vizzari, OL. Albanese and OL. E lii dc 
Sensi, the Italian Government admitted at the 
hearing, after the Commission had pointed to 
the fact in its written pleadings, that, with 
regard to the amounts claimed in this context, 
the action had become devoid of purpose 
9 — Regulation of the Commission of 22 July 1985 laying down 
common detailed rules for the application of the system of 
securities for agricultural products (OJ 1985 L 205, p. 5). 
10 — Regulation of the Council of 21 April 1970 on the financing 
of the common agricultural policy (OJ, English Special Edi­
tion 1970 (I), p. 218). 
11 — Commission Regulation of 26 July 1972 on making up 
accounts for the European Agricultural Guidance and Guar­
antee Fund, Guarantee Section 0O L 186, p. 1). 
12 — Commission Regulation of 25 February 1986 amending 
Regulation (EEC) No 1723/72 on making up accounts for 
the European Agricultural Guidance and Guarantee Fund, 
Guarantee Section (OJ 1986 L 48, p. 31). 
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O P I N I O N O F MR ALBER — CASE C-59/97 
because those same amounts had been taken 
into consideration for the 1995 financial 
year. I3 Consequently, only the cases of the 
remaining undertakings cited by the Italian 
Government need now be considered. 
37. The Italian Government's argument, sum­
marised, is that the applicable rules were 
observed so far as the documents submitted 
were concerned and thus the Commission 
was required to allow the expenditure. 
38. The Commission relies first on the time-
limit of 28 February 1995 it had set for sub­
mitting the documents and rejects the addi­
tional information produced after that deadline 
as out of time. Moreover, the Commission 
points to certain unclear and contradictory 
elements in the information submitted and 
claims, furthermore, that the applicable pro­
visions concerning the grant of aid were not 
complied with. 
39. As a preliminary point, it should be borne 
in mind that in disputes where a Member 
State is seeking the annulment of a Commis­
sion decision on the clearance of the accounts 
of the EAGGF, the burden of proof resting 
on the applicant is, according to settled case-
law, particularly onerous.14 
40. Moreover, the Commission is not required 
to demonstrate exhaustively that the data sub­
mitted by the Member States are incorrect 
but merely to make out a plausible case that 
there are justified doubts regarding the fig­
ures submitted by the national authorities.15 
The reason for this rule concerning the burden 
of proof is that ultimately it is the State which 
is best placed to collect and verify the data 
required for the clearance of EAGGF 
accounts. Consequently, it is for the State to 
prove in full the correctness of its figures and, 
as the case may be, to demonstrate that the 
Commission's calculations are incorrect.16 
41. With regard to the remaining undertak­
ings in Group A, namely P. I. O., Certo C. 
and Perilli, the Commission claims that the 
documents produced justify the inference that 
they had in part been transmitted after the 
deadline which the Commission had fixed at 
28 February 1995. Moreover, the documents 
submitted contain differing figures concerning 
the sums to be claimed back; those amounts 
13 — The Italian Government, however, has not withdrawn or 
settled its action in this respect. 
14 — See Case 11/76 Netherlands v Commission [1979] ECR 245, 
at paragraph 9; and Case C-48/91 Netherknds v Commis­
sion [1993] ECR 1-5611, at paragraph 16. 
15 — Sec the judgment in Case C-48/91 (cited in footnote 14), at 
paragraph 17. 
16 — It should be observed here that the Commission docs not 
have any more extensive supervisory powers with respect to 
the administration of EC resources by national authorities, 
so that from this point of view, too, the sharing of the 
burden of proof appears justified. The European Parliament 
pointed this out in its resolution of 13 April 1989 on pre­
venting and combating fraud against the European Commu­
nity budget in a post-1992 Europe (OJ 1989 C 120, p. 279). 
I - 1692 
ITALY v COMMISSION 
were claimed back in part but not yet recov­
ered; furthermore, the same amounts appeared 
under various headings with the result that it 
was not clear to which heading they arc now 
to be ascribed or even whether they come 
under several headings and are thus accounted 
for twice. All things considered, however, it 
cannot be inferred from the documents what 
specific sums are concerned and to what extent 
they were repaid. 
42. It must first be stated that in this case it 
is common ground that the deadline men­
tioned in Article 1(3) of Regulation N o 
1723/72 was set by the Commission at 28 
February 1995. Since the Italian Government 
has not claimed the existence of exceptional 
circumstances, the additional information pro­
duced after that date must be regarded as out 
of t ime. , 7 That alone is sufficient ground for 
dismissing the plea on this point of the con­
tested decision. Moreover, the Italian Gov­
ernment has not submitted any concrete or 
decisive evidence such as to call in question 
the accuracy of the Commission's findings or 
the inferences it drew from them. A mere 
assertion to the contrary effect cannot, in view 
of the abovementioned rules concerning the 
burden of proof, suffice for that purpose. 
43. Since the Italian Government did no more 
than say it was unable to discern any contra­
dictions or obscurities in the documents 
produced, it was unable to show with suffi­
cient certainty that the Commission's deci­
sion was erroneous. 
44. With regard to the Luccisano undertaking 
in Group B, it should first be reiterated that 
the Commission was only required to take 
into account the documents produced before 
28 February 1995. However, it was only with 
its letter of 18 September 1995 that the com­
petent Italian authority informed the Com­
mission of the fact that, in August 1994, the 
Luccisano undertaking had requested that the 
aid to be repaid be offset against outstanding 
claims. However, that set-off was effected 
only by a decree of 15 December 1995. 
45. On that point the Commission itself states 
that it had taken into account the documents 
concerning the 1995 financial year that had 
been produced before that deadline in so far 
as they had been submitted before 15 October 
1995 (final date for submitting documents 
concerning the 1995 financial year). It follows 
that the Italian Government did not produce 
the documents within the period prescribed 
by the Commission and, furthermore, that it 
did not plead exceptional circumstances such 
as would justify the delay which occurred, 
46. Accordingly, the complaint on this point 
as regards the disallowance of expenditure for 
the 1992 financial year must also be rejected. 
17 — In this regard, sec also Case C-54/91 Germany v Commis­
sion [1993] ECR 1-3399, at paragraph 14. 
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OPINION OF MR ALBER — CASE C-59/97 
47. With regard to the Valle Picentino under­
taking in Group C, the Commission bases 
itself, in disallowing the expenditure, on a 
report of the Italian supervisory authority. 
That report states that, although there is no 
objective evidence to that effect, it is reason­
able to assume that there may have been at 
least to some extent fictitious purchases of 
olive oil. The report thus refers to possibly 
fraudulent conduct on the part of the under­
taking, which, in principle, precludes recogni­
tion of any entitlement to aid. At the hearing 
the Italian Government moreover conceded 
that there could well be irregularities in rela­
tion to the amount of aid concerning this 
undertaking. However, according to that Gov­
ernment, that is merely an unsubstantiated 
suspicion. 
48. The implementing provisions adopted by 
the Community legislature concerning con­
sumption aid for olive oil were introduced, as 
it is stated in the preambles to the regulations 
in question, also with a view to preventing 
fraud. 
49. Article 11(3) of Regulation N o 2667/85 
must consequently also be read in this con­
text. That article provides that security is only 
to be released once the competent authority 
of the Member State has recognised the exist­
ence of a right to the aid. However, it follows 
from Article 11 that where there are justified 
doubts no such right can be recognised. The 
Commission thus rightly points out that in 
view of the serious doubt regarding the regu­
larity of the conduct of the undertaking con­
cerned, the security originally lodged should 
not have been released, particularly since 
the supervisory authority itself mentions that 
there may have been fraud by way of ficti­
tious purchases. 
50. Nor can the lodging of new securities at 
a later stage alter that conclusion in any way. 
Since the relevant provisions make the pay­
ment of aid by way of advance subject to the 
requirement that a security has been lodged, 
precisely in order to frustrate plans to commit 
fraud, that requirement cannot be circum­
vented by first releasing the securities origi­
nally provided and, in the course of time, 
lodging new securities if need be. 
51. In the present case, the supervisory 
authority issued its investigation report on 26 
January 1993 but the new securities men­
tioned by the Italian Government were only 
lodged in September 1993, that is to say, nine 
months later. The effective application of the 
rules governing aid presupposes, however, 
that the sums paid in advance are covered by 
a security until such time as entitlement to 
the aid is itself recognised. It is therefore in 
breach of the provisions in force that, not­
withstanding the existence of serious doubts, 
the securities were released and were not 
replaced until nine months later, in the con­
text of pending criminal proceedings. Such a 
procedure is not in keeping with the spirit 
I -1694 
ITALY v COMMISSION 
and purpose of the rules for monitoring con­
sumption aid for olive oil — which aim inter 
alia to forestall any fraud. The Italian Gov­
ernment's initial assertion that the conduct of 
the Valle Piccntino undertaking was unobjec­
tionable related to the year 1990 and is there­
fore of no relevance for the purposes of this 
case. 
52. It follows that the argument of the Com­
mission must be upheld and the plea put for­
ward by the Italian Government must be 
rejected on this point. 
53. The Italian Government's argument con­
cerning the undertakings in Group D must 
likewise be rejected. The Italian Government 
merely claims that the procedures for recovery 
of the amounts are not yet completed and 
that the existence of the securities can be 
proved. However, no such proof has been 
adduced. 
54. As those securities have therefore not 
been shown to exist, the Italian Government 
is merely making a counter-assertion which is 
not sufficient to show that the Commission's 
decision is unlawful. In the absence of any 
further particulars in this respect, the plea in 
law concerning this point must be rejected. 
55. The last plea put forward by the Italian 
Government concerns the Caruso Rosa under­
taking. Here the Italian Government main­
tains that whilst the supervisory authority 
complained of the existence of irregularities, 
it was not possible to quantify precisely the 
amount of aid which was wrongly paid. Fur­
ther investigations were carried out subse­
quently but the outcome was no different. In 
response to the Commission's criticism that 
the Italian authorities should have asked for 
the securities to be extended for a further 
period, the Italian Government merely states 
that such a step would have been pointless. 
56. Here again, the conditions for entitlement 
to the aid were not satisfied in view of the 
doubts that existed, so that by virtue of the 
applicable provisions the security should not 
have been released. In the context of the 
abovementioned rules concerning the burden 
of proof it should also be noted here that the 
Italian Government neither makes any sub­
stantiated claim nor proves that the securities 
were properly released and that the Commis­
sion's conduct was unlawful. Under the appli­
cable provisions, where a right to the grant of 
aid cannot be recognised, the security 
I - 1695 
OPINION OF MR ALBER — CASE C-59/97 
provided for advance payment of aid cannot 
be released. 
57. To summarise, it may be concluded that 
the Italian Government has been unable to 
prove that the calculations of the Commis­
sion were incorrect. The action must there­
fore be dismissed. 
Costs 
58. Under the first subparagraph of Article 
69(2) of the Rules of Procedure, the unsuc­
cessful party is to be ordered to pay the costs. 
E — Conclusion 
59. In the light of the foregoing, I p ropose that the C o u r t should: 
(1) dismiss the application; 
(2) order the Italian Republ ic to p a y the costs. 
I - 1696