Judgment — ECLI:EU:T:2003:338
Date: 2003-12-11
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)
Concepts: Structural reform of agriculture: joint action;Structural funds
Procedure: Action for annulment - unfounded
Origin: Italy

Summary of the Judgment 
1. Agriculture — Common agricultural policy — Structural reform — Common meas­
ures — Improvement of the conditions tinder which agricultural products are 
processed and marketed — Obligation on the beneficiary to carry out an EAGGF-
financed operation correctly — Main line financed idle for over two years — 
Breach — Temporary constraints not relevant 
(Council Regulation No 355/77, Arts 9(1) and 100(c)) 
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SUMMARY — CASE T-305/00 
2. Agriculture — Common agricultural policy — Structural reform — Common meas­
ures— Improvement of the conditions under which agricultural products are 
processed and marketed — Examination of projects for the improvement or rational­
isation of the processing and marketing of those products — Exclusive competence of 
the Commission 
(Council Regulations Nos 355/77, Arts 1(3), 3 and 9, and 4253/88, Art. 14(3)) 
3. Economic and social cohesion — Structural assistance — Community financing — 
Withdrawal of financial assistance from the EAGGF on account of irregularities — 
Whether permissible 
(Council Regulation No 4253/88, Art. 24(2)) 
4. Agriculture — Common agricultural policy — Structural reform — Common meas­
ures — Improvement of the conditions under which agricultural products are 
processed and marketed — EAGGF financial assistance discontinued for breach of 
fundamental obligations — Proportionality 
(Art. 5, third para., EC; Council Regulation No 355/77, Art. 10(c)) 
1. It follows from Article 10(c), 
Article 9(1) and the fourth recital in 
Regulation No 355/77 on common 
measures to improve the conditions 
under which agricultural products are 
processed and marketed that the imple­
mentation of a project for modernising 
an establishment processing products 
in the fruit and vegetable sector and its 
contribution to a lasting beneficial 
effect on the processing and marketing 
of juices and nectars from fruits con­
stitute a fundamental obligation which 
is incumbent upon the beneficiary of 
EAGGF assistance as a result of its 
award. 
When a trader applies for Community 
aid for a specific operation he assumes, 
under those provisions of Regulation 
No 355/77, and in particular under 
Article 10(c), the obligation to carry 
out correctly the operation being 
financed and to obtain the planned 
results. If the main line being financed 
under that project is idle for over two 
years this means in principle that the 
project will not have the lasting econ­
omic effect sought or obtain the antici­
pated results as provided for in that 
regulation. Such a suspension therefore 
constitutes a breach of Article 10(c). 
Moreover, temporary constraints due 
to market trends and rationalisation of 
the undertaking which a beneficiary of 
EAGGF aid has to face are inherent in 
the normal commercial risks which any 
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CONSERVE ITALIA v COMMISSION 
reasonably well-informed trader 
should be able to foresee. Hence, those 
factors cannot be relied upon in order 
to avoid the application of Regulation 
No 355/77. 
(see paras 77, 80-81) 
2. The Commission alone has the power 
to examine whether projects for the 
improvement or rationalisation of pro­
cessing and marketing structures in 
respect of agricultural products meet 
the conditions of the operation and the 
Community regulat ions, under 
Article 1(3) of Regulation No 355/77 
on common measures to improve the 
conditions under which agricultural 
products are processed and marketed 
and Article 14(3) of Regulation 
No 4253/88 laying down provisions 
for implement ing Regula t ion 
No 2052/88 as regards coordination 
of the activities of the different Struc­
tural Funds between themselves and 
with the operations of the European 
Investment Bank and the other existing 
financial instruments. Therefore, a 
beneficiary of EAGGF aid cannot legit­
imately claim that suspension of a 
production line of agricultural prod­
ucts financed under such projects is in 
accordance with the criterion of the 
proper functioning of the market, 
referred to in Article 3 of Regulation 
No 355/77, and that to continue its 
activities would have been in breach of 
Article 9 of Regulation No 355/77, in 
the absence of any communication or 
confirmation on the part of the Com­
mission. 
(see para. 83) 
3. The system of subsidies introduced 
under the Community rules relies on 
the performance by the beneficiary of a 
number of obligations which entitles 
him to receive the financial aid envis­
aged. If the beneficiary does not 
comply with all those obligations, 
Ar t ic le 24(2) of R e g u l a t i o n 
No 4253/88 laying down provisions 
for implement ing Regu la t ion 
No 2052/88 as regards coordination 
of the activities of the different Struc­
tural Funds between themselves and 
with the operations of the European 
Investment Bank and the other existing 
financial instruments authorises the 
Commission to reconsider the extent 
of the obligations it assumes under the 
decision to grant that aid. 
(see para. 110) 
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SUMMARY — CASE T-305/00 
4. Discontinuance of EAGGF aid is not, 
in principle, disproportionate where it 
is established that the beneficiary of 
that aid has infringed an obligation 
that is fundamental for the proper 
operation of the EAGGF. On the one 
hand, the proportionality principle, as 
laid down in the third paragraph of 
Article 5 EC, requires that measures 
adopted by Community institutions 
must not exceed what is appropriate 
and necessary for attaining the objec­
tive pursued. On the other hand, 
infringement of obligations whose 
observance is of fundamental import­
ance to the proper functioning of a 
Community system may be penalised 
by forfeiture of a right conferred by 
Community legislation, such as entitle­
ment to aid. 
The objective of contributing to the 
lasting economic effect of the structural 
improvement of processing of juices 
and nectars from fruits, as provided for 
in Article 10 of Regulation No 355/77 
on common measures to improve the 
conditions under which agricultural 
products are processed and marketed, 
constitutes a fundamental obligation 
under the EAGGF rules. Likewise, use 
of another line forming part of a 
financed project for the only product 
in the fruit and vegetable sector whose 
processing is totally excluded from 
Community financing, an exclusion 
which applies to the beneficiary, also 
constitutes an infringement of the 
essential conditions for the aid granted. 
Therefore, actions such as suspending 
for more than two years the activity of 
the line principally financed by Com­
munity aid, in breach of Artide 10(c) 
of Regulation No 355/77, or the use of 
another line forming part of a financed 
project for processing the only product 
excluded from the aid infringe obli­
gations compliance with which is of 
fundamental importance for the proper 
operation of the EAGGF system, and 
the Commission does not exceed the 
limits of what is appropriate and 
necessary in order to ensure the proper 
operation of the system in considering 
that such infringements justify discon­
tinuance of the aid. 
(see paras 111-118) 
II - 5662