Judgment — ECLI:EU:C:2004:589
Date: 2004-10-07
Language of the case: Spanish
Court formation: Second Chamber
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Agriculture and Fisheries;European Agricultural Guidance and Guarantee Fund (EAGGF)
Concepts: Procedure for clearance of accounts;Co-responsibility levy and additional levy on milk;Conditions subject to which expenditure is borne by the EAGGF
Procedure: Action for annulment - unfounded;Action for annulment - successful
Origin: Spain

Summary Report on the outcome of the checks on clearance of the accounts of the EAGGF Guarantee Section for the 1996, 1997 and 1998 financial years. (3) 4. The Spanish Government’s action covers the expenditure in relation to the five abovementioned sectors: (1) arable crops and consequences of the non-imposition of special set-aside for the 1995 harvest; (2) arable crops in the Autonomous Community of Andalusia; (3) production aid for olive oil; (4) consumption aid for olive oil, and (5) additional milk levy. 5. In relation to the sectors of expenditure under 2, 3 and 5, the pleas in law developed by the Kingdom of Spain consist in purely factual assessments. Therefore, I shall concentrate my exposition on the categories of expenditure 1 and 4 covering arable crops and the consequences of the non-imposition of special set-aside for the 1995 harvest and on consumption aid for olive oil. I – Legal background 6. Article 3(1) of Council Regulation (EEC) No 729/70 of 21 April 1970 on the financing of the common agricultural policy (4) provides that intervention intended to stabilise the agricultural markets, undertaken according to Community rules within the framework of the common organisation of agricultural markets, is to be financed by the European Community, through the Guarantee Section of the EAGGF. 7. Under Article 4(2) of Regulation No 729/70, the Commission is to make available to Member States the necessary credits so that the authorities and bodies designated by them may, in accordance with Community rules and national legislation, make payment of such intervention. Under the terms of Article 5(2)(b) of that regulation the Commission is, before the end of the following year, on the basis of the annual accounts, accompanied by the documents required for making up the balance sheets, to clear the accounts of the authorities and bodies of the Member States. 8. Article 8(1) of Regulation No 729/70 provides that, in accordance with national provisions laid down by law, regulation or administrative action, the Member States are to take the measures necessary to satisfy themselves that transactions financed by the EAGGF are actually carried out and are executed correctly; in order to prevent and deal with irregularities, and to recover sums lost as a result of irregularities or negligence. 9. Under Article 8(2) of Regulation No 729/90, in the absence of total recovery, the financial consequences of irregularities or negligence are to be borne by the Community, with the exception of the consequences of irregularities or negligence attributable to administrative authorities or other bodies of the Member States. The sums recovered are to be paid to the paying authorities or other bodies and deducted by them from the expenditure financed by the EAGGF. 10. In accordance with Article 9(1) of Regulation No 729/70, the Member States are to make available to the Commission all the information required for the proper working of the EAGGF and take all suitable measures to facilitate the supervision which the Commission may consider it necessary to undertake within the framework of the management of Community financing, including inspections on the spot. Member States are to communicate to the Commission any provisions laid down by law, regulation or administrative action which they have adopted for the application of legal acts of the Community relating to the common agricultural policy in so far as those acts have financial consequences for the EAGGF. II – Arable crops: the 1994 harvest and the effects of the failure to impose special set-aside for the 1995 harvest 11. The Kingdom of Spain disputes the financial correction applied in this respect by the Commission. The correction arises from the non-observance of the imposition of special set-aside of arable crops for the 1995 harvest, provided for by Regulation (EEC) No 1765/92 (5) because of the exceeding of the areas guaranteed for arable crops found for the 1994 year. The Kingdom of Spain submits that its action was justified. It relies on separate arguments as regards arable crops on unirrigated land and arable crops on irrigated land. Arable crops on unirrigated land 12. The Spanish authorities requested, in respect of unirrigated land, the application of Regulation (EC) No 1422/97 (6) which would exempt them among other things from the extraordinary set-aside. That regulation provides, in certain circumstances, such as an exceptional drought, for a different assessment of excesses. The Kingdom of Spain experienced precisely such a drought. 13. I think, as the Commission correctly stated in its defence, that the reform introduced by Regulation No 1422/97 cannot apply to this case. That regulation is applicable only with effect from the 1996 marketing year. However, the Spanish authorities rely on it to justify the excesses in the 1994 harvest. Regulation No 1422/97 cannot have retrospective effect. Arable crops on irrigated land 14. The Spanish authorities have cited Regulation (EC) No 1040/95 (7) which provides, exceptionally, for the 1994/95 marketing year, that the excess in areas is to have effect only for producers of oil seeds, not for producers of other arable crops on irrigated land. Thus, they maintain, the obligation of special set-aside for the 1995/96 marketing year applies only to irrigated arable oil seed crops. However, according to the Kingdom of Spain, that obligation no longer applies to oil seeds because of a political agreement with the Commission to that effect. 15. The Commission denies the existence of such an agreement, which the Kingdom of Spain has not proved. 16. It is clear from the foregoing that, on that point, the Kingdom of Spain has produced no proof of its allegations. III – Consumption aid for olive oil 17. The Commission imposed on the Kingdom of Spain a financial correction of 10% of the total of the costs declared for consumption aid for olive oil corresponding to the financial year 1996. The correction is based on failings in the Spanish management, payment and control systems. The Kingdom of Spain contests that decision and asserts that the correction thus made by the Commission is void, because the legal procedure was not observed. 18. The legal procedure provides that the written communication of the results of the checks, which the Commission sends to the Member State concerned, may not involve expenditure effected prior to 24 months preceding that communication, in compliance with Article 5(2)(c) of Regulation No 729/70, as amended by Regulation (EC) No 1287/95. (8) In addition, that communication must make express reference to Article 8 of Regulation (EC) No 1663/95, (9) the regulation implementing Regulation No 729/70 (hereinafter ‘the implementing regulation’), which specifies the contents of the written communication. 19. I observe that the Court has developed settled case-law on the requirements of form and substance which the communication must satisfy for the purposes of Article 5(2)(c) of Regulation No 729/70, as amended, read in conjunction with Article 8 of the implementing regulation. (10) Thus, the communication must not involve expenses effected prior to the 24 months preceding that communication. It must be written, must contain the failings established with regard to the requirements of Community law as well as a request for a reply and must be sent to the national authorities. (11) However, the Court has clearly stated that the mere omission of an express reference to Article 8 of the implementing regulation is not a breach of an essential formal requirement. (12) 20. The omission of an express reference to Article 8 of the implementing regulation raised by the Kingdom of Spain in respect of the Commission’s letter must therefore be evaluated in the light of that case-law. 21. Accordingly, there is no ground for objection to the financial correction applied and, consequently, the plea in law advanced by the Kingdom of Spain cannot be upheld. IV – Conclusion 22. In the light of those considerations, and without prejudice to the examination of the factual matters at issue in the present application, I suggest that the Court should: – dismiss the action; – order the Kingdom of Spain to pay the costs. 1 – Original language: French. 2 – . – OJ 2001 L 50, p. 9. 3 – . – AGRI-24491-2000-FR. 4 – . – OJ, English Special Edition 1970(I), p. 218. For a general exposition of that regulation, see my Opinion in Case C-344/01 Germany v Commission [2004] ECR I-0000. See also, on the assessment of corrections, the Belle Report in my Opinion in Case C-349/97 Spain v Commission [2003] ECR I-3851. 5 – . – Council Regulation of 30 June 1992 establishing a support system for producers of certain arable crops (OJ 1992 L 181, p. 12). 6 – . – Council Regulation of 22 July 1997 amending Regulation No 1765/92 (OJ 1997 L 196, p. 18). 7 – . – Commission Regulation of 10 May 1995 laying down further transitional measures for the management of base areas in Spain (OJ 1995 L 106, p. 4). 8 – . – Council Regulation of 22 May 1995 amending Regulation No 729/70 (OJ 1995 L 125, p. 1). 9 – . – Commission Regulation of 7 July 1995 laying down detailed rules for the application of Regulation No 729/70 regarding the procedure for the clearance of the accounts of the EAGGF Guarantee Section (OJ 1995 L 158, p. 6). 10 – . – On the requirements to observe the legal procedure, see Case C-170/00 Finland v Commission [2002] ECR I-1007, paragraph 25 et seq. See, also, Case C-158/00 Luxembourg v Commission [2002] ECR I-5373, paragraph 23 et seq. which refers to the Court’s interpretation in the judgment in Finland v Commission, cited above. 11 – . – See Finland v Commission, paragraph 28 et seq., also referred to in Luxembourg v Commission, paragraph 23 et seq. It is interesting to refer also to the Opinion of Advocate General Tizzano in Luxembourg v Commission, which emphasises, as regards the review of those requirements that, in the case of irregularities, ‘their presence together clearly produces a different emphasis from that which each of them may have when considered separately’ (paragraph 30). According to him, in the context of the Court’s interpretation of the procedural provisions, those provisions ‘may also be the subject of an evaluation which is not purely formalistic, provided that the rights of the Member States are fully protected’ (paragraph 38). 12 – . – See Finland v Commission, paragraphs 33 and 34.