Opinion of the Advocate General — ECLI:EU:C:2003:69
Date: 2003-02-06
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Agriculture and Fisheries;European Agricultural Guidance and Guarantee Fund (EAGGF)
Procedure: Action for annulment - unfounded
Origin: Greece

Summary of the arguments of the parties I - 15 4. Assessment I - 17 C - The correction due to shortcomings in the administration, control and supervision of aids for early retirement from farming I - 20 1. Relevant legislation I - 20 2. Commission findings and procedure I - 22 3. Summary of the arguments of the parties I - 23 4. Assessment I - 24 D - The corrections due to failure to apply the IACS in the beef and veal sector I - 25 1. Relevant legislation I - 25 2. Commission findings and procedure I - 26 3. Summary of the arguments of the parties I - 27 4. Assessment I - 28 E - The amount of the lump-sum corrections imposed in the arable crop and beef and veal sectors, and in relation to aid for early retirement from farming I - 29 1. Summary of the arguments of the parties I - 29 3. Assessment I - 30 F - The corrections due to delay in executing the additional payments provided for in Regulation (EC) No 1357/96 I - 31 1. Relevant legislation I - 31 2. Commission findings and procedure I - 32 3. The correction of GRD 237 098 402 I - 33 (a) Summary of the arguments of the parties I - 33 (c) Assessment I - 34 (i) The allegedly incorrect assessment of the disputed amount as late payment I - 36 (ii) The alleged impossibility of complying with the time-limit of 15 October 1996 I - 37 4. The correction of GRD 350 000 000 I - 38 (a) Summary of the arguments of the parties I - 38 (b) Assessment I - 38 G - The financial corrections due to the retentions made by the ACA I - 39 1. Legal and factual background I - 39 2. Analysis I - 39 H - The financial corrections due to failure to comply with payment deadlines I - 40 1. Applicable legislation I - 40 2. Facts and arguments of the parties I - 41 3. Assessment I - 42 IV - Costs I - 44 V - Conclusion I - 45 I - Introduction 1. In an action brought on 11 September 2000, the Hellenic Republic requested the Court, within the meaning of Article 230 EC, to annul Commission Decision 2000/449/EC of 5 July 2000 excluding from Community financing certain expenditure incurred by the Member States under the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF) (2) in the part in which it provides for financial corrections with respect to Greece for the financial years 1996, 1997 and 1998. 2. More specifically, the Hellenic Republic, in eight different grounds, makes eight complaints against the disputed decision, contesting the refusal of the EAGGF to finance the following sums: - GRD 26 482 795 paid by way of support in the arable crops sector, due to the shortcomings of the integrated administration and control system and the incorrect deduction of a portion of the support (first, sixth and seventh grounds); - GRD 134 771 782 paid by way of aid for early retirement from agriculture, due to the poor quality of checks and supervision (second and sixth grounds); - GRD 1 782 487 651 paid by way of premiums in the beef and veal sector, due to failure to complete or to apply at all the integrated administration and control system (third and sixth grounds); - GRD 237 098 402 and 350 000 000 paid by way of additional payments in the beef and veal sector pursuant to Regulation (EC) No 1357/96, (3) due to the late payment of those amounts (fourth and fifth grounds); - GRD 560 130 762 paid by way of premiums in the beef and veal sector, due to the incorrect deduction of a portion of those premiums (seventh ground); - GRD 5 326 625 paid in the cereals sector and excluded from Community financing in respect of the larger sum of GRD 141 667 389 due to the delay in making the relevant payments (eighth ground). II - General legislative framework 3. Articles 1(2)(b) and 3(1) of Regulation (EEC) No 729/70 (4) provide that the Guarantee Section of the EAGGF shall finance intervention intended to stabilise the agricultural markets undertaken in accordance with Community rules within the framework of the common organisation of agricultural markets. In that context, Article 1(4) of the Regulation also provides that expenditure relating to administrative costs and personnel borne by Member States and by recipients of aid from the [EAGGF] shall not be taken over by the Fund. 4. Article 5(2)(c) of that regulation, in the version amended by Regulation (EC) No 1287/95, (5) sets out the procedure to be followed when it is found that certain expenditure has not been effected according to Community rules. It provides in particular that the Commission, after consulting the Fund Committee: shall decide on the expenditure to be excluded from the Community financing referred to in Articles 2 and 3 where it finds that expenditure has not been effected in compliance with Community rules. Before a decision to refuse financing is taken, the results of the Commission's checks and the replies of the Member States concerned shall be notified in writing, after which the two parties shall endeavour to reach agreement on the action to be taken. If no agreement is reached, the Member State may ask for a procedure to be initiated with a view to mediating between the respective positions within a period of four months, the results of which shall be set out in a report sent to and examined by the Commission, before a decision to refuse financing is taken. The Commission shall evaluate the amounts to be excluded having regard in particular to the degree of non-compliance found. The Commission shall take into account the nature and gravity of the infringement and the financial loss suffered by the Community. .... 5. Articles 8(1) and (2) of Regulation No 729/70, as amended by Regulation No 1287/95, provides that: 1. Member States in accordance with national provisions laid down by law, regulation or administrative action, shall take the measures necessary to: - satisfy themselves that transactions financed by the Fund are actually carried out and are executed correctly, - prevent and deal with irregularities; - recover sums lost as a result of irregularities or negligence. The Member States shall inform the Commission of the measures taken for those purposes and in particular of the state of the administrative and judicial procedures. 2. In the absence of total recovery, the financial consequences of irregularities or negligence shall 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 shall be paid to the accredited paying agencies and deducted by them from the expenditure financed by the Fund. The interest on sums recovered or paid late shall be paid into the Fund. 6. With reference to Article 5(2)(c) of Regulation No 729/70 cited above, I would draw the Court's attention to Articles 8(1) and (2) of Regulation (EC) No 1663/95 (6) which lays down detailed rules for the application of the former. Pursuant to the latter provisions: 1. When, as a result of any enquiry, the Commission considers that expenditure was not effected according to Community rules, it shall communicate to the Member State concerned its findings, the corrective measures to be taken to ensure future compliance, and an evaluation of any expenditure which it may propose to exclude ... . The Member State shall reply within two months, and the Commission may modify its position in consequence. ... After expiry of the period allowed for reply, the Commission shall initiate a bilateral discussion, and both parties shall endeavour to come to an agreement as to the measures to be taken. The Commission shall then formally communicate its conclusions to the Member State, referring to Commission Decision 94/442/EC. 2. The decisions referred to in Article 5(2)(c) of Regulation (EEC) No 729/70 shall be taken after an examination of any report drawn up by the Conciliation Body according to the provisions laid down in Directive 94/442/EC. 7. Article 1(1) of Decision 94/442/EC (7) lays down that: 1. For the purposes of the clearance of EAGGF Guarantee Section accounts, a Conciliation Body, ... , is hereby set up in the Commission. Its tasks shall be: (a) to examine any matter referred to it by a Member State which, following inspections pursuant to Article 9 of Regulation (EEC) No 729/70 and bilateral discussion of the findings of such inspections, receives formal notification from the competent Commission departments, with reference to this decision, of the conclusion that certain items of expenditure incurred by that Member State are not chargeable to the EAGGF Guarantee Section, (b) to try to reconcile the divergent positions of the Commission and the Member State concerned, and (c) at the end of its investigations, to draw up a report on the outcome of its efforts at reconciliation making any remarks it deems useful should all or some of the points of the dispute remain unresolved. 8. Pursuant to Article 1(2)(a) of the decision: the position of the [Conciliation] Body shall be without prejudice to the Commission's final decision on the clearance of the accounts .... 9. Within the meaning of Articles 2(4) and (5) of the decision: 4. The Body shall conduct its investigations as informally and promptly as possible, basing itself on the evidence in the dossier and on a fair hearing of the Commission staff and national authorities concerned. At the end of its investigation it shall send them the report referred to in Article 1(1)(c). 5. Where, within four months of a case being referred to it, the Body has failed to reconcile the positions of the Commission and the Member State, the conciliation procedure is deemed to have failed. The report referred to in Article 1(1)(c) shall state the reasons why the positions could not be reconciled. 10. Commission working document VI/216/93 of 1 June 1993, later replaced by document VI/5330/97 of 23 December 1997, sets out the guidelines that the Commission intends to follow when applying financial corrections in the context of the EAGGF clearance of accounts procedure. According to those guidelines, when it is not possible to determine the actual amount of the incorrect payments, and hence to quantify the financial loss suffered by the Community, the Commission applies lump-sum financial corrections, usually equal to 2%, 5%, 10% or 25% of the declared expenditure, depending on the extent of the impending loss. 11. With particular regard to the financial corrections relating to the inadequacy of the checks made by the authorities of the Member States, the guidelines distinguish between two categories of checks, essential checks and additional checks: - essential checks, in other words administrative and material checks, of substantive elements, particularly the existence of the subject of the claim for payment, the amount and qualitative conditions, including compliance with deadlines, harvesting conditions, storage period, etc. These controls are to be carried out in situ and using independent data such as farm registers to make cross-checks. - additional checks, in other words the administrative operations needed to deal properly with claims, such as checks on compliance with time-limits for submission, identification of duplicate applications, risk analysis, imposition of penalties and suitable vigilance with regard to procedures. 12. On the basis of these guidelines, the Commission applies the various rates of lump-sum correction: [w]hen one or more essential checks are not applied or are applied so defectively or sporadically as to be useless for the purpose of deciding on the eligibility of a claim or preventing irregularities, a correction of 10% is justified in that it is reasonable to assume that there is a high risk of serious financial loss for the Fund. When all the essential checks have been applied, but not in the number, or with the frequency or intensity required by law, a correction of 5% is justified in that it is reasonable to assume that insufficient guarantees have been provided concerning the validity of the requests and that there is a significant risk of financial loss for the Fund. When a Member State has carried out the essential checks adequately, but has completely neglected to carry out one or more additional checks, a correction of 2% is justified in view of the lower risk of financial loss for the Fund and the more minor nature of the infringement. .... 13. The guidelines do however provide for the application of a rate of 25% in the case of total non-compliance or serious shortcomings on the part of a Member State in applying a system of checks, or of proven and frequent irregularities or negligence with respect to combating fraudulent or irregular practices. 14. In exceptional cases, larger corrections made be made, up to 100%. III - Analysis A - Preliminary remarks 15. Before examining the grounds adduced by the Greek Government, I think it would be useful first to recall various principles which, according to the Court's consistent case-law, should be adhered to when assessing whether objections to decisions to refuse Community financing for expenditure incurred by Member States are well founded. 16. Above all, it should be remembered that, pursuant to Articles 2(1) and (3)(1) of Regulation No 729/70, the Guarantee Section of the EAGGF may only finance expenditure incurred by the Member States in accordance with the Community rules in the different agricultural sectors, (8) and that the purpose of the clearance of accounts procedure introduced by that regulation is to ensure that the financial resources made available to Member States are actually used in compliance with the relevant provisions. 17. Also, it is well-known that Article 8(1) of Regulation No 729/70 requires the Member States to take all the measures necessary to satisfy themselves that transactions financed by the Fund are actually carried out and are executed correctly, to prevent and deal with irregularities and to recover sums lost as a result of irregularities or negligence, even if the Community legislation in force in the agricultural sector concerned does not provide for the adoption of particular supervisory measures. (9) That provision, which is the expression, in the context of the financing of the common agricultural policy, of the obligation of reasonable cooperation enshrined in Article 10 EC, defines, according to the Court's case-law, the principles according to which the Community and the Member States are to ensure the implementation of intervention measures financed by the EAGGF and combat fraud and irregularities in relation to those operations. (10) 18. I would also point out that when the Commission refuses to charge to the EAGGF expenditure incurred by a Member State as a result of an infringement of the rules of the common organisation of agricultural markets, it has a duty to prove the existence of such an infringement. (11) In particular, when the refusal to grant Community financing is based on the absence of or defects in inspection procedures operated by the Member State in question, the Commission is obliged to give reasons for its decision. (12) To that end, however, the Commission is not required to demonstrate exhaustively the inadequate nature of the checks carried out by the Member State or that that there are irregularities in the data submitted by the latter, but to adduce evidence of serious and reasonable doubt on its part regarding such checks or data. (13) 19. The burden of proof lies thus because it is the Member State that is best placed to collect and verify the data required for the clearance of EAGGF accounts, and it must therefore adduce the most detailed and comprehensive evidence that it has made checks or that its figures are accurate and, if appropriate, that the Commission's assertions are incorrect. (14) In this connection, a Member State whose checks have been deemed non-existent or inadequate by the Commission cannot rebut the findings of the latter by mere assertions which are not substantiated by evidence of a reliable and operational supervisory system. (15) 20. This said, I shall now examine the claims and arguments of the Greek Government. B - Corrections due to shortcomings in the administration and control of aid in the arable crops sector 1. Relevant legislation 21. Regulation (EEC) No 3508/92 (16) established an integrated system for the administration and control, by the competent authorities of the Member States, of certain Community aid schemes for agricultural producers (IACS). Pursuant to Article 1(1) of that regulation, the IACS applies, in particular, to the support system introduced, in the arable crops sector, by Regulation (EEC) No 1765/92 (17) and, in the beef and veal sector, to the premium arrangements established by Articles 4(a) to (h) of Regulation (EEC) No 805/68. (18) 22. Within the meaning of Article 2 of Regulation No 3508/92, the IACS comprises the following elements: (a) a computerised data base; (b) an alphanumeric identification system for agricultural parcels; (c) an alphanumeric system for the identification and registration of animals; (d) aid applications; (e) an integrated control system. 23. For the purpose of this case, it should be remembered that, under Article 3 of that regulation, the computerised data base must record, for each agricultural holding, the data obtained from the aid applications. The data base must, in particular, allow direct and immediate consultation, through the competent authorities of the Member State, of the data relating at least to the previous three consecutive calendar years and/or marketing years. Decentralised data bases may be set up on condition that these, and the administrative procedures for recording and accessing data are designed homogeneously throughout the territory of the Member State and are compatible with one another. 24. Within the meaning of Article 4 of Regulation No 3508/92, the alphanumeric identification system for agricultural parcels must be established on the basis of land registry maps and documents, other cartographic references or of aerial photographs or satellite pictures or other equivalent supporting references or on the basis of more than one of these elements. 25. The integrated control system referred to in Article 7 of the regulation covers all aid applications submitted and is based in particular on administrative checks, on-the-spot checks and, if appropriate, verification by aerial or satellite remote sensing. 26. In terms of checks, Article 8 of Regulation No 3508/92 lays down that: 1. Member States shall carry out administrative checks on aid applications. 2. Administrative checks shall be supplemented by on-the-spot checks covering a sample of agricultural holdings. For all these checks, Member States shall draw up a sampling plan. 3. Each Member State shall designate an authority responsible for coordinating the checks provided for in this regulation. 4. National authorities may, under conditions to be laid down, use remote sensing to determine the area of agricultural parcels, identify crops and verify their status. 5. Where the competent authorities of the Member State delegate some aspects of the work to be carried out pursuant to this regulation to specialised agencies or firms, they must retain control over and responsibility for that work. 27. Within the meaning of Article 13(1) of Regulation No 3508/92, aid applications, the alphanumeric system of identification and registration of bovine animals and the integrated control system were to apply from 1 February 1993, whereas the other elements of the IACS were due to be operational from 1 January 1996 at the latest. The latter date was later postponed to 1 January 1997 by Article 1(3) of Regulation (EC) No 2466/96. (19) 28. The criteria and technical procedures for the administrative and on-the-spot checks to be carried out by the Member States under the IACS are laid down in Article 6 of Regulation (EEC) No 3887/92, (20) which provides as follows: 1. Administrative and on-the-spot checks shall be made in such a way as to ensure effective verification of compliance with the terms under which aids and premiums are granted. 2. The administrative checks referred to in Article 8(1) of Regulation (EEC) No 3508/92 shall include cross-checks on parcels and animals declared, in order to ensure that aid is not granted twice in respect of the same calendar year ... . 3. On-the-spot checks shall cover at least a significant percentage of applications. The significant percentage shall represent at least: - 10% of livestock aid applications or participation declarations; - 5% of area aid applications ... . Should on-the-spot checks reveal significant irregularities in a region or part of a region the competent authority shall make additional checks during the current year in that area and shall increase the percentage of applications to be checked in the following year. 4. Applications subjected to on-the-spot checking shall be selected by the competent authority on the basis of a risk analysis and an element of representativeness of the aid applications submitted. The risk analysis shall take account of: - the amount of aid involved; - the number of parcels and the area or number of animals for which aid is requested; - changes from the previous year; - the findings of checks made in previous years; - other factors to be defined by the Member State. 5. On-the-spot checks shall be unannounced and cover all the agricultural parcels and animals covered by one or more applications. Advance warning limited to the strict minimum necessary may however be given, although as a general rule, this should not exceed 48 hours. At least 50% of the minimal checks on animals shall be made during the retention period. Checks may be made outside that period only if the register provided for in Article 4 of Council Directive 92/102/EEC ... is available. 29. Pursuant to Article 7(1) of Regulation No 3887/92: [s]hould a Member State decide to use remote sensing on all or part of the sample referred to in Article 6(3) it shall: - perform photo interpretation of satellite images or aerial photographs of all parcels to be checked with a view to recognising the ground cover and measuring the area, - check on the spot all applications for which photo interpretation does not verify the accuracy of the declaration to the satisfaction of the competent authority. 30. Pursuant to Article 12 of Regulation No 3887/92: [e]very inspection visit must be the subject of a report setting out, in particular, the reasons for the visit, the persons present, the number of parcels visited, those measured, the measuring methods used, the number of animals of each species found and where and, where applicable, their identity numbers .... 31. Article 17(1) of Regulation No 3887/92 provides that: [i]n cases where by virtue of Article 13 of Regulation (EEC) No 3508/92 certain features of the integrated system are not yet in application each Member State shall take whatever administrative and control measures are necessary to ensure compliance with the terms on which the aids concerned are granted. 2. Commission observations and procedure 32. Following inspections undertaken in Greece between 1996 and 1999, the Commission complained to the Greek authorities about a series of shortcomings in the administration and control of aid in the arable crops sector in respect of the 1995-1997 harvests (financial years 1996-1998), particularly with respect to the following: (21) (a) the failure to implement the IACS fully. By the prescribed date of 1 January 1997, the alphanumeric identification system for agricultural parcels had not been completed, nor had the data base been set up by establishing a computer link between the regional directorates of the Ministry of Agriculture and DIDAGEP, the paying agency; (c) the supervision, by those directorates, of the associations of agricultural cooperatives (ACA) which in Greece play a key role in the administration and control of Community aid. Contrary to the requirements of Regulation No 1663/95, the regional directorates were unable to exercise effective control over the activities of the ACA, due in particular to the lack of direct access, i.e. a computer link to the latter's data bases. (22) Nor did the procedures followed satisfy the minimum requirements laid down by Regulation No 1663/95: in particular, the Commission found that it was only since 1998 that payment claims had been accompanied by an attestation to the effect that the regional authorities had checked the activities of the ACA; (23) (c) the inaccuracies of the data on harvests, payments and checks, supplied by the Greek authorities to the Commission, which did not enable the latter to make the relevant inspections. In particular, the Commission found significant discrepancies between the data relating to payments and the information that could be inferred from examining applications; those discrepancies were attributable to deficiencies in the computer system which only allowed applications and payments to be handled separately; (d) the delays in making remote sensing checks which were, for the most part, carried out after the harvest, thus making it difficult to determine areas of land and crops grown. Furthermore, the on-the-spot checks required in dubious cases were carried out late, thereby reducing their effectiveness. 33. For each of the financial years in question, other specific points arose, including in particular: (a) in respect of the 1995 harvest (1996 financial year): (i) errors in preparing a risk analysis. The criteria used made it more likely that aid applications showing a decrease in surface area by comparison with the previous year were more likely to be inspected than those showing an increase; (ii) the advance warning to farmers in the case of on-the-spot checks. In the province of Salonica, it was found that farmers were warned of an imminent check, several days in advance, contrary to Article 6 of Regulation No 3887/92 which allows a maximum of 48 hours' advance notice. (b) in respect of the 1996 harvest (1997 financial year): (i) delays in conducting risk analysis. The lists of aid applications to be checked were forwarded very late to the local authorities, making it difficult to carry out the relevant checks; (ii) the crop statistics laid down by Regulation (EC) No 658/96 (24) were sent in late and were incomplete; (iii) failure to carry out cross-checks. (c) in respect of the 1997 harvest (1998 financial year): (i) the number of checks carried out. The statistics supplied by the Greek authorities did not satisfy the Commission as to compliance with the minimum number of checks, which in Greece was set at 20% of the declared land area. In particular, in the province of Arcadia, it was found that for both the 1996 and 1997 harvests, fewer on-the-spot checks had been carried out than required by the DIDAGEP following a risk analysis; (ii) failure, at local level, to comply with the instructions given by DIDAGEP regarding the checks to be carried out following the risk analysis. The Commission found, in fact, that the regional Directorate of Agriculture for Pyrgos had carried out checks on the basis of different criteria from those stipulated by the central authorities. 34. On the basis of these findings, the Commission proposed to apply two lump-sum corrections to the expenditure declared by Greece in the arable crops sector for the 1996-1998 financial years, one of 5% in respect of aid applications subject to normal on-the-spot checks and the other of 2% for applications checked by remote sensing, together totalling GRD 26 482 863 795. (25) 35. The Greek authorities therefore applied to the Conciliation Body, before which they maintained, in the first place, that they had identified nearly all agricultural parcels as prescribed by Regulation No 3508/92, albeit using non-orthophotographic methods; secondly that, despite the delays claimed by the Commission, Greece had none the less applied an effective control system in the years in question. In particular, the administrative checks had been carried out regularly as had the cross-checks and on-the-spot checks. The delays had not in fact undermined the efficacy of the checks: even after harvesting, fields contained traces of the crop grown and, in any case, farmers were required to maintain a sample of the crops grown precisely in order to allow inspections to be carried out. In the light of the arguments adduced by the Greek authorities, and unsure as to whether the 5% correction should be applied as proposed by the Commission, the Conciliation Body, in its final report of 16 March 2000, asked the Commission to reconsider its opinions regarding the control system applied in Greece and hence to review the amount of the proposed corrections. (26) 36. However, after examining the Conciliation Body's final report, the Commission maintained its position and in particular emphasised that, despite the assertions of the Greek authorities, the extent of the shortcomings in the administration and control of aid in the arable crops sector for the 1996-1998 financial years had led, just recently, to major accounting discrepancies which those authorities had been unable to explain. Furthermore, Greece had not even completed the IACS by the 1 January 1997 deadline. Therefore, according to the Commission, the proposed corrections are more than justified in view of the seriousness of the shortcomings found. 37. The disputed decision embodied that finding and applied the corrections at the proposed rates of 5% and 2%. 3. Summary of the arguments of the parties 38. According to the Greek Government, the corrections are based on a misinterpretation of Article 4 of Regulation No 3508/92 and an incorrect assessment of the facts. Furthermore, the corrections imposed infringe the principle of proportionality. 39. Firstly, as regards the failure to apply the IACS, the applicant admits that the alphanumeric identification of parcels using orthophotography has begun to be implemented partially, but only since 1998. However, it maintains that effective identification has been ensured in previous years by using other identification systems, such as aerial photographs and information supplied by the topographical service of the Ministry of Agriculture. Contrary to the Commission's assertions, this complies with Article 4 of Regulation No 3508/92, which in fact refers to the use of land registry maps and documents and other cartographic references or of aerial photographs or satellite pictures. As regards data bases, the Greek Government does not deny that it failed to create them by the prescribed deadline, its only justification being delays in the tendering procedure for the supply of the required computer programme. 40. Secondly, the Greek Government does not dispute the discrepancies found in the statistical data forwarded to the Commission, and merely invokes by way of justification the absence of a network connection to the local Ministry of Agriculture authorities. On the other hand, as regards the late communication of the crop statistics referred to in Article 8 of Regulation No 658/96, the Greek Government maintains that it is impossible to comply with the time-limit laid down in that provision due to the large number of checks to be made and the crop types involved. 41. Thirdly, the Greek Government claims that the delay in carrying out checks - both on the spot and using remote sensing - is justified by the time taken by the tendering procedures used to appoint the bodies to undertake those checks. It claims that the 2% correction with respect to the checks conducted by remote sensing is incorrect, on the one hand because the Greek authorities have observed the detailed rules for performing those checks as laid down by the Commission; on the other hand because, as the Commission itself says, in relation to the remote sensing checks, the requirements relating to on-the-spot checks - which are a key element - were generally respected. (27) According to the applicant, the 5% correction with respect to on-the-spot checks is therefore disproportionate. 42. Still on the subject of checks, the Greek Government disputes some of the conclusions reached by the Commission following its inspections in Greece. Most importantly, the situation found in the province of Salonica was a special case and not representative of the country as a whole, where producers were only given a 48-hour advance warning in the case of on-the-spot checks, as laid down in Article 6 of Regulation No 3887/92. Moreover, the improved statistics on checks, achieved by using a new computer programme, shows that the minimum percentage of checks was achieved for the 1997/1998 marketing year. Finally, the applicant stresses that cross-checks have always been carried out, albeit manually, and that, as from the 1998/1999 marketing year, they were carried out before aid was disbursed. 43. Fourthly, with respect to supervision of the ACA, the Greek Government claims that local Ministry of Agriculture directorates are cooperating with the ACA at all stages of the checks; those directorates have direct access to the ACA's data bases and supervise the activities of the latter on an ongoing basis. The same applies to the activities of PASEGES (union of agricultural cooperatives), a body responsible for the introduction of computerised structures. Furthermore, according to the applicant, it is the local authorities that undertake the checking and clearance of expenditure. As from the 1998/1999 harvesting year, the fact that the local authorities conducted checks was attested on the verification check-lists and payment orders were only issued after a further cross-check had been carried out by the data processing department of the Ministry of Agriculture. Contrary to the Commission's assertions, the conditions laid down in Regulation No 1663/95 have in fact been respected. 44. The Greek Government therefore contends that the significant progress that it claims to have made in implementing the IACS, and also the minor nature of the shortcomings in relation to the complexity of the system itself, do not justify the imposition of corrections in the amount disputed here, corrections which are not only based on an incorrect assessment of the facts but are also disproportionate in relation to the shortcomings identified. 45. The Commission defends the contested decision by pointing out that the very arguments on which the Greek Government relies show that the main IACS measures, such as the alphanumeric identification system for parcels and the networking of the computer systems of the regional authorities, had not yet been implemented in the financial years in question. Furthermore, with specific regard to the identification of parcels, it claims that Greece has not even supplied evidence that it used systems just as effective as the alphanumeric system during the period in question. According to the Commission, even though the Greek authorities tried to use methods such as aerial photography and military maps to identify agricultural parcels from 1997, those systems are not comparable to individual alphanumeric identification. 46. In the Commission's view, the fact remains that the inspections in Greece showed that, under the system of checks applied by the Greek authorities, parcels could not be located precisely nor was it possible to verify whether the terms for the grant of aid had been fulfilled. With regard to the supervision of the ACA by the regional agriculture directorates, the Commission still maintains that this is impeded by the lack of direct access to the latter's data bases and by the fact that the regional directorates themselves are under-staffed. 47. Thus, the inspection system is generally defective, entailing a high risk for the Community budget. Accordingly, a correction of 5% is very lenient. 48. Moreover, shortcomings were also noted in relation to the applications subjected to remote sensing checks, in terms of errors and delays in the on-the-spot checks which must be conducted where analysis of the pictures indicates possible irregularities in the aid application. Given the importance, when using remote sensing techniques, of conducting these checks properly, a correction of 2% was felt to be appropriate and in line with corrections applied to other Member States. 4. Assessment 49. For my part, I consider that the arguments of the Greek Government are unacceptable. According to the settled case-law cited above, (28) in order to rebut the Commission's findings regarding the existence of systemic shortcomings in the administration and control of Community aid in the arable crops sector for the 1996-1998 financial years, the Greek Government should have shown - in a detailed and comprehensive manner - that a reliable and operational system of controls had been applied in Greece in the period in question and, if appropriate, that the complaints made following inspections on the spot by Commission officials did not reflect the actual situation in that country. In my view, the Greek Government has not provided that evidence. Moreover, on certain specific points it has openly admitted the accuracy of the complaints brought by the Commission. 50. As regards the completion of the IACS, the Greek Government in fact admits that the data base referred to in Article 3 of Regulation No 3508/92 was not created by the specified time-limit and was not operational in any of the financial years in question. As we have seen, that government maintains that it nevertheless carried out the alphanumeric identification of parcels required by Article 4 of the regulation, not by orthophotographic means, but by using other available cartographic data. In this regard, without needing to determine whether or not such identification fulfilled the requirements of Community law, I consider it sufficient that the applicant has not shown that all the parcels were identified by 1 January 1997, the deadline for implementing the system. Indeed, it would appear from the documents in the file that it must be inferred that part of the agricultural area had not even been identified by March 1998 (29) and that the problem continued to exist until the end of 1999. (30) Accordingly, I consider that the argument adduced on this point by the Greek Government should be rejected. 51. As we have seen, the Greek Government does not even dispute the complaints made against it during the clearance of accounts procedure concerning the discrepancies found in the statistics forwarded to the Commission. Purely as regards the statistical information required by Article 8 of Regulation No 658/96, and without denying the delays and shortcomings complained of in this connection, the Greek Government invokes the impossibility of complying with the 15 September deadline laid down in that provision. It does not seem to me, however, that the grounds adduced in support of that argument - namely the quantity of checks to be carried out and the fact that checks on spring crops drag on until the autumn - prove that it is objectively impossible to communicate the required information within that deadline, especially since the information to be communicated by 15 September under Article 8 of the regulation is only provisional information which must be confirmed by the following 15 January. I therefore consider that this argument should be rejected. 52. With regard to delays in making checks using remote sensing techniques, I consider that the Greek Government has not only failed to produce any evidence to support its claim that the Commission's assessment is incorrect, but it has actually misinterpreted the thrust of the latter's conclusions and hence of the basis for the disputed correction. It is true that the justification for a more modest correction in respect of expenditure relating to applications checked by remote sensing lies in the fact that, despite the delays with on-the-spot checks, the earlier stages of checking, including examination of the pictures obtained, were carried out properly. However, this does not alter the fact that these very delays - which the applicant does not dispute - are the root cause of the problems with identifying the crops grown on the various parcels, and hence of the potential ineffectiveness of the checks, highlighted by the Commission. In my opinion, therefore, the arguments adduced in this regard should certainly be rejected. I would also underline the fact that the Greek Government has refrained from claiming before the Court, as it did during the conciliation procedure, that the effectiveness of the checks was not undermined by any delays, since producers were required to keep a sample of the crops grown even after harvesting. Nor indeed has it submitted any evidence in this regard. 53. I also note that the Greek Government does not even dispute the delays in carrying out on-the-spot checks. It merely maintains that the 5% correction in respect of expenditure relating to aid applications subject to such checks is excessive and disproportionate, without makings any further submissions on this matter. I should however point out that this complaint is reiterated and developed in relation to a different, specific ground of the application concerning the amount of the lump-sum corrections applied by the contested decision. I will therefore examine it when I consider that particular ground. 54. Still with regard to checks, I would point out that, although the Greek Government disputes the accuracy of certain specific findings of the Commission, it has not provided any evidence to the contrary. In particular, it has not shown that, contrary to what the Commission found in the province of Salonica, the maximum advance warning permitted for on-the-spot checks was actually observed at local level and country-wide. Nor has it provided any evidence to support the fact that, in the financial years concerned, the prescribed amount of checks were carried out within the time-limits laid down. I therefore consider that the relevant arguments should be rejected. 55. Likewise, with respect to the supervision of the ACA, I do not feel that the Greek Government has shown either that the Commission's findings were inaccurate or that, for each of the financial years in question, the competent authorities effectively supervised the activities of those associations. In particular, I would point out that, although the Greek Government claims that the regional directorates of the Ministry of Agriculture have direct access to the data bases of the ACA, it does not specifically state and does not prove that it is possible to access these data bases via a computerised link and not, as the Commission found, by going in person to the ACA and using their computerised information. As for the alleged improvements to procedures, introduced during the 1998 financial year, such as attestation that the regional directorates have checked the payment proposals prepared by the ACA, I can only endorse the position adopted by the Commission during the clearance of accounts procedure, namely that those improvements were introduced too late to be taken into account when assessing the effectiveness of the system applied in the financial years in question. 56. To conclude, since none of the arguments adduced by the Greek Government appear to me to be acceptable, I suggest that this ground should be rejected in its entirety. C - The correction due to shortcomings in the administration, control and supervision of aids for early retirement from farming 1. Relevant legislation 57. In the context of measures accompanying the reform of support mechanisms for agricultural markets undertaken in 1992, Regulation (EEC) No 2079/92 (31) allows Member States to institute an aid scheme for early retirement from farming, part-financed by the Guarantee Section of the EAGGF. As can be seen from Article 4 of the regulation, the Member States are responsible for implementing the scheme by means of multiannual programmes drawn up at national or regional level and subject to Commission approval. 58. As with any operation financed by the Guarantee Section of the EAGGF, the paying agencies of the Member States must, when granting the aid provided for under the scheme in question, check the admissibility of aid claims and the compliance with Community law of the relevant payments. The detailed administrative and accounting rules to be followed in that connection are laid down on the basis of guidelines established by the Commission in the Annex to Regulation No 1663/95, which provides, inter alia, as follows: 4. Part or all of the authorisation function and/or the technical service may be delegated to other bodies provided that the following conditions are fulfilled; ... (ii) The bodies dispose of effective systems for ensuring that they fulfil their responsibilities in a satisfactory manner. (iii) The bodies explicitly confirm to the agency that they in fact fulfil their responsibilities and describe the means employed. (iv) The agency is informed on a regular and timely basis of the results of controls effected, so that the sufficiency of these controls may always be taken into account before a claim is settled ... . If any physical or administrative checks ... are performed on a sample of claims, the claims selected shall be identified, the sampling method described, the results of all inspections and the measures taken in respect of discrepancies and irregularities reported upon. The supporting documents submitted to the agency shall be sufficient to provide assurance that all the required checks on the eligibility of the authorised claims have been performed. (v) Where documents relating to the claims authorised and controls effected are retained by the other bodies, both these bodies and the agency shall set up procedures to ensure that the location of all such documents that are relevant to specific payments made by the agency is recorded, and that these documents may be made available for inspection at the agency's office at the request of the persons and bodies who would normally have the right to inspect such documents, which include: - the agency's staff who deal with the claim; - the agency's internal audit service; - the body that attests the agency's annual declaration; - mandated officials of the European Union. ... 6. The agency shall adopt the following procedures or those offering equivalent guarantees: ... (ii) The division of duties shall be such that no official has responsibility for more than one of the responsibilities for authorising, paying or accounting for sums charged to EAGGF, and that no official performs one of those tasks without his work coming under the supervision of a second official. The responsibilities of each official shall be defined in writing, including the setting of financial limits to his authority. Staff training shall be appropriate, and there shall be a policy for rotating staff in sensitive positions, or alternatively for increased supervision. (iii) Each official responsible for authorisation shall have at his disposal a detailed check-list of the verifications he is required to undertake, and shall include in the supporting documents of the claim his attestation that these checks have been performed. ... There shall be evidence of review of the work by [a] more senior member of staff. (iv) A claim shall be authorised for payment only after sufficient checks have been made to certify that it complies with Community regulations. These checks shall include those required by the regulation governing the specific measures under which aid is claimed, and those required pursuant to Article 8 of Regulation (EEC) No 729/70 to prevent and detect fraud and irregularity with particular regard to the risks presented. The checks to be undertaken shall be specified in a check-list and their performance shall be attested for each claim, or for each batch of claims. .... 59. The detailed rules for implementing the early retirement aid scheme provided for in Regulation No 2079/92 were laid down in Greece by means of interministerial decree no 407756/6081 of 20 September 1994, (32) Article 6(a) of which provides for checks to be carried out annually on a sample of 5% of recipients by means of on-the-spot checks and accounting checks on transferors and transferees of farms. 2. Commission findings and procedure 60. During the course of a inspection carried out in Greece between 3 and 6 June 1997, EAGGF inspectors found a series of shortcomings concerning the administration and control of the early retirement aid scheme introduced in Greece pursuant to Regulation No 2079/92. As the relevant inspection report indicates, (33) the shortcomings found by the Fund inspectors relate, in particular, to the following: (a) The annual number of sample checks performed by the Agricultural Bank of Greece (ATE), the agency responsible for administering the scheme, which is lower than required by the interministerial decision of 20 September 1994. It was found, in fact, at the offices of the ATE in Edessa that certain checks apparently relating to the 1996 financial year were in fact carried out in 1997. (b) Failure to carry out on-the-spot checks between transferors and transferees of farms, which are essential in order to verify the area of the farms concerned and the number of livestock present, and to ascertain that the transferee is actually farming the area in question. (c) The incomplete nature and poor maintenance of aid application files. Also in Edessa, the EAGGF inspectors found, among other things, that there was a lack of supporting documents in some files, whereas others revealed errors in calculating the areas concerned or regarding the identity of the aid recipients. 61. As the Commission did not consider, on the basis of those findings, that the administration of early retirement aid or the control and supervision by the central authorities met the requirements laid down by Community regulations, they informed the Greek authorities accordingly and invited them to submit their observations on the matter. (34) A bilateral discussion ensued, at the end of which the Commission withdrew its complaint about the failure to carry out on-the-spot checks but maintained its position with respect to the other shortcomings identified. (35) The Commission therefore proposed a financial correction of GRD 134 771 782, being 2% of all expenditure declared by Greece in respect of early retirement aid for the 1997 financial year. (36) That correction was applied by means of the decision at issue. 3. Summary of the arguments of the parties 62. According to the Greek Government, the disputed correction is based on an incorrect assessment of the facts. The former admits that a number of checks, initially scheduled for 1996, were actually carried out in 1997, but justified this on the grounds that the early retirement aid scheme was introduced in Greece as from July 1995 and that, initially, the number of beneficiaries was fairly low. At any rate, the applicant maintains, the number of checks carried out in 1996 and 1997 was much higher than the minimum threshold of 5% laid down by the interministerial decree of 20 September 1994. The inspection reports, and indeed all the files relating to aid applications are kept at the branches of the ATE and are available for further inspection. The Commission was made suitably aware of this during the bilateral discussions that preceded the adoption of the contested decision. 63. The Greek Government does not dispute the other shortcomings found during the verification in June 1997; it merely maintains - as far as I can gather - that these shortcomings were not likely to compromise the reliability of the administration and control of the aid scheme in question, since the problems were purely administrative and not substantive lacunae. 64. The Commission objects that these assertions on the part of the Greek Government are not backed by any evidence. In particular, although that government states that the sample checks did actually take place in accordance with the detailed rules contained in Article 6 of the interministerial decree, it has provided no evidence of this, either during the verification by EAGGF inspectors nor later, during the course of the accounts clearance procedure. 4. Assessment 65. I personally do not consider that the Greek Government has adduced any grounds that cast doubt on the validity of the disputed correction. As I have already said, it is for the Greek Government to provide detailed and exhaustive evidence to show that the findings on which this correction is based are incorrect. 66. Now, as regards compliance with the minimum annual number of checks laid down in the interministerial decree of 20 September 1994, I have to agree with the Commission that, although the Greek Government claims that 8.6% of recipients were subjected to checks in 1996 and 6.6% in 1997, the latter has not supplied any evidence in this connection. In fact, nothing relevant in this regard can be found in the documents produced by the applicant in support of his claims, (37) nor can it be held to have discharged the onus of proof incumbent upon it by referring to the reports allegedly held at the branches of the ATE. Accordingly, it is still doubtful that the checks were carried out in the number and with the regularity required by the interministerial decree in question. 67. Regarding the argument that the incomplete nature and poor keeping of the files encountered by the Commission do not constitute substantive lacunae such as could compromise the reliability of the administration and control of the aid scheme, I would point out that the proper maintenance of documents relating to expenditure financed by the EAGGF is not only an essential part of the activities of the paying agencies or the bodies delegated by them, (38) but is also necessary for the supervision of those bodies by the competent authorities of the Member States, (39) and, in the last analysis, to allow Commission officials to carry out the appropriate checks if necessary. (40) This is particularly relevant in this case where the Commission has found, in a non-computerised system, not only a lack of certain documents in the files but even errors regarding the identity of the beneficiary or the area of the farm transferred. These findings, which are not disputed by the Greek Government, more than adequately confirm the doubts expressed by the Commission concerning the quality of the administration and control of early retirement aid. Nor, I would add, has the applicant adduced any evidence to demonstrate that the administration, control and supervision of such aid is in fact reliable and effective. 68. In the light of the foregoing, I consider that this ground should be rejected. D - The corrections due to failure to apply the IACS in the beef and veal sector 1. Relevant legislation 69. As I indicated earlier, pursuant to Article 1(1)(b), first indent, of Regulation No 3508/92, the IACS also applies to premiums in the beef and veal sector referred to in Articles 4(a) to 4(h) of Regulation No 805/68. The element of the IACS that is most relevant for the purpose of the administration and control of those premiums is the computerised data base referred to in Article 3 of Regulation No 3508/92 and the alphanumeric system for the registration and identification of animals provided for in Article 5 of the regulation. 70. I have just outlined the data base requirements prescribed by Article 3 of Regulation No 3508/92. With respect to the alphanumeric system for the identification and registration of animals, Article 5 of that regulation provides that it should be set up in accordance with the requirements of Directive 92/102/EEC. (41) In particular, the latter requires the keeping of up-to-date records of animals on fattening holdings to which the competent authorities must have access. Furthermore, each animal must bear an identification mark which, for bovine animals, consists of an eartag bearing an alphanumeric code which is to be worn during the lifetime of the animal. (42) As from 1 July 1997, those requirements were combined, for bovine animals, with those of Regulation (EC) No 820/97 of 21 April 1997 establishing a system for the identification and registration of bovine animals and regarding the labelling of beef and beef products, (43) which provides, inter alia, for the use of new eartags bearing a uniform code laid down by the Community and the introduction of a computerised data base to store data on animals, holdings and animal movements. (44) 71. As stated in Article 13 of Regulation No 3508/92, the system for the identification and registration of animals must be applied from 1 January 1993. 2. Commission findings and procedure 72. Following inspections, the Commission complained to the Greek authorities that neither of the two features on which the application of the IACS in the beef and veal sector depends, namely the system for individual identification of livestock and the computerised data base, had been completed by 1 January 1997 or was even operational halfway through 1998. Due to the seriousness of these deficiencies, and to the resultant threat to the Community budget, the Commission therefore proposed to apply a lump-sum correction of 10% to the expenditure declared by Greece in the sector concerned for the marketing year 1997 (1998 financial year). (45) 73. Greece brought the matter before the Conciliation Body, maintaining in the first place that it had compensated for the failure to set up a computerised data base by systematically subjecting all aid applications to on-the-spot checks. Secondly, it maintained that the control of livestock movements was made in the context of veterinary inspections. Thirdly, it stressed that cattle not bearing an identification tag had been excluded from the premium. The same penalty had been applied where animal records had not been properly kept or were absent altogether. Although the Conciliation Body found that the IACS had not been completed in Greece by the deadline imposed, it harboured doubts about the size of the proposed correction. In its view, the correction could be reduced to 5% if a further inspection showed that the controls applied by the Greek authorities had nevertheless been sufficiently effective to ensure that, in general terms, the premiums had been paid only in respect of properly identified animals. The Conciliation Body therefore asked the Commission department to give its opinion on this matter. (46) 74. After re-examining the question, the Commission saw no reason for altering its position and pointed out in fact that none of the checks required by Community law could be applied satisfactorily without adequate identification of animals. Moreover, despite explicit requests, the Greek authorities had not supplied statistics for the checks carried out in 1997 and had therefore failed to show that all the claims for premiums had actually been checked. Finally, those authorities had not even indicated the exact number of claims rejected due to failure to identify animals, which appeared to be very low. Given the likelihood that the payment of premiums in respect of unidentified or unrecorded animals was widespread, a 10% correction was appropriate. (47) 75. The contested decision therefore applied the corrections at the proposed rate. 3. Summary of the arguments of the parties 76. The Greek Government, in order to dispute these corrections, has not only reiterated the arguments already adduced during the course of the conciliation procedure but also points out, on the one hand, that implementation of the IACS has been made more difficult in Greece due to the particular nature of its relief and due to the fact that livestock producers are scattered throughout the territory, thus lengthening the process of training and instructing producers in how to implement the procedures required under the system. On the other hand, the identification of bovine animals with new eartags was almost complete and, even though the central system of on-line checks was not complete by 1 January 1997, computerised systems were nevertheless partially in place, thus allowing cross-checks to be made as required under the IACS. The Greek Government therefore considers that 10% corrections are mistaken and unjustified. 77. The Commission obviously takes the opposite view and regards these corrections as entirely justified, given the failure to apply the animal identification system, the failure to create the data base and the shortcomings of the national administration and control system. In this connection, it points out that it was not even possible to identify animals in Greece on the basis of existing records since the latter did not comply with the requirements of Directive 92/102. 78. The Commission also emphasises that there is no evidence to show that the Greek authorities had actually checked all aid applications. At any rate, even if they had, this would not constitute an effective and reliable system of controls. Unless all animals are identified and there is a central data base that holds identification particulars, it is not possible to carry out cross-checks by comparing that information with information given in the aid applications. 4. Assessment 79. I note that the Greek Government does not dispute either the failure to set up a data bank as required by Article 3 of Regulation No 3508/92 or the incomplete implementation of the system for identification and recording of animals, although on the latter point it is trying to limit the extent of this phenomenon by maintaining that all bovine animals have been equipped with eartags, but that in a number of cases these came off. The main focus of the Greek Government's defence is the application, in the 1997 marketing year, of a system of controls which, although differing from the system laid down by Community law, nevertheless made it possible to verify equally effectively that payments had been properly made. 80. I have to confess that, on this point, I share the doubts expressed by the Commission as to the possibility of exercising effective control over aid applications without being able to rely on comprehensive identification of livestock and without a computerised data base to enable animal identification data to be compared with the information declared on claims for premiums. (48) On another point, I have to say that the fact of rejecting premium claims for unidentified animals is certainly not an exceptional measure adopted by the Greek authorities to compensate for the shortcomings of the control system but, at any rate as far as the special premium for bovine animals referred to in Article 4b of Regulation No 805/68 is concerned, it is merely a prerequisite for payment of the premium. (49) 81. Apart from this, however, it seems indicative to me that the Greek Government has merely presented the Court with a series of general assertions about measures taken in order to ensure the application of effective controls, assertions which are not backed up by any hard and precise evidence. I would point out in particular that the applicant has not adduced any evidence whatever to support the mainstay of its defence, namely its claim that all aid applications in the marketing year in question were subjected to on-the-spot checks. Moreover, we have seen that, even during the clearance of accounts procedure, the Greek authorities were asked to forward to the Commission precise information on the number of on-the-spot checks carried out in the marketing year, and on the number of applications rejected on the grounds that the animals concerned were not identified, and that this request went unanswered. (50) 82. Accordingly, since the Greek Government has failed to fulfil the obligation incumbent upon it, under settled Community case-law, cited earlier, (51) to provide the most detailed and comprehensive evidence that the system of checks applied in Greece in the marketing year in question exists and is operational, I consider that the ground in question should be rejected. E - The amount of the lump-sum corrections imposed in the arable crop and beef and veal sectors, and in relation to aid for early retirement from farming 1. Summary of the arguments of the parties 83. As I mentioned earlier, the Greek Government goes on to dispute in a different ground the amount of the lump-sum corrections imposed by the disputed decision in the arable crops sector and the beef and veal sector, and also in relation to aid for early retirement from farming. It maintains that, by imposing these corrections, the Commission has infringed Article 5(2)(c) of Regulation No 729/70, exceeded the limits of its discretion under that provision and infringed the principle of proportionality. 84. According to the Greek Government, it follows from the Commission's guidelines concerning financial corrections (52) that a decision to apply a lump-sum correction due to shortcomings concerning the checks carried out by a Member State may only be made following a finding of significant shortcomings in applying Community regulations which expose the Community budget - in this case, the EAGGF - to a genuine risk of financial loss. This is confirmed moreover by Article 5(2)(c) of Regulation No 729/70. 85. Now, these conditions do not obtain in either of the sectors in question. In the arable crops sector, the Commission did not find any shortcomings that were sufficiently serious as to constitute clear infringements of Community provisions on the application and administration of the IACS; furthermore, the elements on which the Commission based the disputed corrections do not make it possible to quantify the risk of loss for the Community budget. Similarly, no infringement of Community law has been committed in relation to early retirement aid such as could expose the EAGGF to a genuine risk of financial loss. The corrections imposed in these two sectors should therefore be cancelled. Finally, a correction rate of 10% is unjustified in the beef and veal sector where, despite the failure to complete the IACS, the controls applied by the Greek authorities precluded any risk of loss for the Community budget. The relevant correction should therefore be cancelled or reduced to 2%. 86. The Commission counters this argument by invoking the Court's pertinent case-law, (53) maintaining that it is for the Greek Government to provide evidence of the alleged error committed by the Commission in calculating the financial consequences of the irregularities found. In this case, however, the applicant has merely complained about the arbitrary nature of the criteria adopted by the Commission, without providing evidence to support this assertion. 3. Assessment 87. For my part, I would point out that the Greek Government has not managed to demonstrate either the inaccuracy of the Commission's findings or the existence of a reliable and operational system of supervisory and control measures. The doubts in this connection expressed by the Commission therefore justify the application of lump-sum corrections to the expenditure declared in the sectors in question. (54) 88. Regarding the amount of those corrections, I have to support the Commission's contention. It was for the Greek Government to provide evidence that the irregularities found by the Commission did not affect the Community budget or that they did so to an appreciably lesser extent than was estimated by the Commission. (55) Moreover, as the Commission itself stressed, in cases where, instead of disallowing all expenditure affected by the infringement, it has endeavoured to establish rules for treating irregularities differently, depending on the extent of the shortcomings in the checks and the degree of risk to the EAGGF, it is for the Member State to show that those criteria are arbitrary and unfair. (56) 89. So, I have no problem in finding that the Greek Government has not provided that evidence. I thus propose that this ground should also be rejected. F - The corrections due to delay in executing the additional payments provided for in Regulation (EC) No 1357/96 1. Relevant legislation 90. In order to parry the serious disruptions to the market caused by bovine spongiform encephalopathy (BSE), Regulation (EC) No 1357/96 (57) provided, for the 1996 calendar year, for the payment of special aid to producers known as additional payments. 91. Articles 1(1) and (2) of Regulation No 1357/96 therefore provided that the special premium for bovine animals and the suckler cow premium paid, in respect of the 1995 calendar year, within the meaning of Articles 4(b) and 4(d) of Regulation No 805/68 (58) should be supplemented by additional payments of a specific amount. 92. Article 1(3) of the regulation provided in this regard that: [t]he extent to which a producer is entitled to each of the additional payments referred to in paragraphs 1 and 2 and received in respect of the 1995 calendar year shall depend upon the number of animals for which he establishes entitlement to a premium in the 1996 calendar year. 93. Within the meaning of Articles 2(1) and (2) of the regulation: 1. Where the number of animals for which entitlement to premiums is established in relation to the 1996 calendar year is less than that for which a producer received additional payments under Article 1, the part of the additional payment to which he was not entitled shall be set off against his entitlement to premiums under Regulation (EEC) No 805/68 for the 1996 calendar year. 2. Where a producer does not make an application for premiums under Regulation (EEC) No 805/68 in respect of the 1996 calendar year or where the premiums to which he is entitled are insufficient to make the set-off referred to in paragraph 1, he shall be required to repay the additional payments made under Article 1 to which he was not entitled. 94. Moreover, pursuant to Article 3 of the regulation: [p]roducers whose entitlement to premiums in respect of the calendar year 1996 relates to more animals than their entitlement in respect of the calendar year 1995 shall be eligible for further additional payments. Such payments shall only be made: - to the extent that additional payments made to producers who were not eligible for them are repaid or recovered in the Member State concerned; and - pro rata to the additional number of premiums received in respect of the 1996 calendar year. 95. Article 4(a) of Regulation No 1357/96 assigned aid to each Member State, in accordance with the Annex to that regulation, for the purpose of making further payments to producers for whom the additional payments referred to in Articles 1 and 4(a) were insufficient to resolve completely problems due to the market situation. 96. It should also be noted that Article 5 of Regulation No 1357/96 gave the Member States the power to replace the measures laid down in Articles 1 and 4(a) by a single payment, by granting to producers of bovine animals according to objective criteria the total amount of aid that would have resulted from the application of those measures. As is evident from the fifth recital of the regulation, the purpose of the measure in Article l5 was not only to answer the needs associated with the different structures of production in the various Member States but also to allow all payments to be completed by 15 October 1996. 97. Finally, pursuant to the second paragraph of Article 7: [t]he Community shall finance the expenditure incurred by Member States in relation to the payments referred to in Article 1 and Article 4(a) and Article 5 only where such payments are made by them by 15 October 1996 at the latest. 2. Commission findings and procedure 98. Following inspections, the Commission found that Greece had made additional payments within the meaning of Regulation No 1357/96 after the deadline of 15 October 1996. It appears from the relevant summary report (59) that the complaints against the Greek authorities related to: (a) on the one hand, payments made after 15 October 1996, amounting to GRD 311 006 387; (b) on the other hand, payments arranged by the Greek authorities in relation to the agricultural cooperative associations (ACA) prior to 15 October 1996 but only paid out to eligible producers after that date and amounting to GRD 350 000 000. 99. The Commission therefore proposed two corrections at the corresponding rate for the 1997 financial year. Greece brought the matter before the Conciliation Body claiming, in relation to the first proposed correction, that the payments made after 15 October 1996 were in fact equalisation payments to correct for payments already made in 1995 and, in relation to the second, that the amounts received by the ACA prior to 15 October 1996 should be regarded as having been properly paid within the meaning of Regulation No 1357/96, since they had been decided prior to that date. In its final report of 21 January 2000, the Conciliation Body asked the Commission to reconsider its position on this last point. (60) The Commission did not follow the ruling of the Conciliation Body and maintained the two proposed corrections but nevertheless reduced the amount of the first correction to GRD 237 098 402 in view of various accounting regularisations made in the meantime by the Greek authorities. (61) The corrections in question were later applied by means of the contested decision. 100. In its application, the Greek Government disputes those corrections on two different grounds which therefore need to be examined separately. 3. The correction of GRD 237 098 402 (a) Summary of the arguments of the parties 101. If I have understood the arguments properly, the Greek Government has two heads of complaint with respect to the correction in question. 102. It maintains, firstly, that, contrary to the Commission's finding, the disputed amount was not a late payment but merely the result of adjustments made pursuant to Articles 2 and 3 of Regulation No 1357/96. In other words, the amounts constituted payments to producers whose entitlement to the premium for bovine animals and/or the suckler cow premium in respect of 1996, as a result of the checks carried out, related to more animals than their entitlement in respect of 1995. By using numerical data in support of its argument, the applicant government is therefore trying to show that the sum of GRD 311 006 387, later reduced to GRD 237 098 402, exactly equals the algebraic sum of the increased amounts due to producers in respect of 1996 for the increased number of animals for which entitlement to premium was established and the amounts recovered from producers whose entitlement to premium in respect of 1996 related to fewer animals than in 1995. (62) 103. Secondly, the Greek Government maintains that it was impossible in any case to make the additional payments under Regulation No 1357/96 before 15 October 1996 because there was not enough time, prior to that date, to carry out all the checks required under Community law (pursuant to the IACS) (63) in order to check actual entitlement to receive, in respect of 1996, the special premium for bovine animals and/or the suckler cow premium, to which the additional payments in question relate. Those checks, the Greek Governments stresses, are usually carried out towards the end of the period during which animals are kept on the holding concerned, which, in this case, could be well after the deadline of 15 October 1996. This period thus clearly infringes the requirements of the IACS in terms of checks relating to premium schemes in the beef and veal sector. 104. The Greek Government therefore considers that the correction in question is not only based on a false legal premiss, but also infringes the principle of proportionality by disregarding the purpose of Regulation No 1357/96, which, in its view, is to compensate producers for losses suffered due to market crises caused by BSE and not just to ensure rapid disbursement of the additional payments. 105. The Commission, for its part, stresses the fact that Article 7 of Regulation No 1357/96 clearly states that only payments made by 15 October 1996 may be charged to the EAGGF. With regard to the alleged equalisation payments within the meaning of Articles 2 and 3 of that regulation, the Commission points out that, apart from the adjustments of GRD 65 530 701 and GRD 8 377 284, which led to the sum of GRD 311 006 387 being reduced to GRD 237 098 402, the Greek authorities had not at any stage prior to the adoption of the contested decision informed it about any other regularisation such as could justify charging the latter amount to equalisation payments. The Commission does not openly take up a position on the other points raised by the Greek Government in the second head of complaint. (c) Assessment 106. I should like to draw attention, firstly, to various aspects of the aid scheme introduced by Regulation No 1357/96 which appear to be important for an analysis of the complaints made by the Greek Government. I should point out, first and foremost, that, as the Commission rightly says, Article 7 of Regulation No 1357/96 explicitly places a limit to the time during which expenditure incurred by the Member States under Articles 1 and 4(a) of the regulation may be charged to the EAGGF. Such expenditure will only be financed by the Community if the relevant payments were made by 15 October 1996 at the latest. Within the meaning of Article 3(1) of Regulation No 729/70, the Commission is therefore entitled to refuse Community financing in respect of expenditure incurred subsequently. (64) 107. Furthermore, although the date of 15 October 1996 is dictated essentially by budget requirements, (65) the imposition of a short timescale for making the payments laid down in Regulation No 1357/96 should nevertheless be seen in the light of the regulation's objective, which is to mitigate, by rapid payment of additional aid, the effects on the income of beef and veal producers of the collapse in market prices due to the spread of BSE. (66) The mechanism for paying out that aid laid down in Articles 1 to 3 of the regulation answers the same need. Articles 1(1) and (2) in fact provided that the aid in question should generally be granted in the form of payments in addition to certain premiums per animal (the special premium for bovine animals and the suckler cow premium) in the context of the c.o.m. for beef and veal in the 1995 calendar year, precisely because, in July 1996, the data needed in order to pay the latter should already have been available, thereby also enabling the special aid to be paid. (67) 108. Article 1(3) of the regulation subjects entitlement to receive those additional payments to the condition that the producers concerned must, in the 1996 calendar year, establish entitlement to one or other of the said premiums, or to both, for at least as many animals as entitlement to those premiums was established for in the 1995 calendar year. If that condition was not met, within the meaning of Article 2 of the regulation, the over-payments were to be set off against the premiums to which producers were entitled for the 1996 calendar year or, failing that, be repaid to the competent authorities of the Member States. Pursuant to Article 3, sums recovered in this way could be redistributed to producers whose premiums in respect of 1996 were greater than those received in 1995, pro rata to the additional number of premiums received. 109. Having made this point, I shall now go on to examine in detail the two heads of complaint against the correction in question. (i) The allegedly incorrect assessment of the disputed amount as late payment 110. As has been seen, the Greek Government in its first head of complaint basically disputes the fact that the Commission assessed the contested amount as late payment and maintains that these were in fact sums paid to producers who, pursuant to Article 3 of Regulation No 1357/96, were entitled to receive additional payments because they kept more animals in 1996 than in 1995. However, I do not consider that suitable evidence has been produced in support of this argument. It is not evident from the documents before the Court that the Greek Government ever communicated to the Commission, during the clearance of accounts procedure, any supporting documents to show that the amount in question was paid in compliance with Article 3 of the regulation, nor have such documents been produced before the Court. 111. In fact, the only element adduced by the Greek Government in support of its argument, either before the Court or, as far as we know, during the clearance of accounts procedure, is the calculation allegedly showing that the amount of GRD 311 006 387 exactly equals the total of the additional payments that Greece could lawfully pay to producers under the provision cited above. (68) Now, it seems to me that the figures given by the Greek Government, which are not disputed by the Commission, actually demonstrate that this argument is without grounds. It seems to me, that is, that by producing this calculation, the Greek Government loses sight of the fact that Article 3 of Regulation No 1357/96 allows additional payments to be made for the 1996 calendar year, but only in so far as payments already made in respect of 1995 have been repaid by or recovered from producers who were not entitled to them. Thus, since the applicant claims that payments already made in the sum of GRD 299 240 392 have been repaid or recovered, the Greek authorities could only make additional payments for the 1996 calendar year up to that amount, and not in the sum of GRD 311 006 387. 112. The actual figures provided by the Greek Government seem to indicate, moreover, that the latter amount is merely the difference between the total amount paid out by the Greek authorities to producers who had kept more animals in 1996 than in 1995 (GRD 408 828 391 in respect of male bovine animals and GRD 201 418 388 in respect of suckler cows) and the ceiling for such payments pursuant to Article 3 (amounts recovered or repaid, in other words GRD 299 240 392). If this is the case, the Commission had no option but to refuse Community financing. 113. In the light of the above considerations, I consider that the head of complaint in question cannot be upheld. (ii) The alleged impossibility of complying with the time-limit of 15 October 1996 114. In the first place, I would point out that the Greek Government seems, by making this complaint, to be trying to claim that the second paragraph of Article 7 of Regulation No 1357/96 is unlawful, in order to dispute the contested financial correction which is based on infringement of that same provision. As we have seen, the applicant maintains that it was impossible to comply with the time-limit of 15 October 1996, since it could not complete the inspection procedures laid down by Community law in time to be able to assess entitlement to the payments provided for in the regulation in question. If this was in fact the Greek Government's intention, the objection is definitely inadmissible and should therefore be rejected since it is based on the alleged unlawfulness of an instrument which that government did not challenge within the time-limit laid down in Article 230 EC, despite having had the opportunity to do so. (69) 115. Even irrespective of the foregoing, I should stress that examination of this complaint does not lead me to any other conclusion, because the complaint is clearly without grounds. As I have already pointed out, the Member States were certainly not required, for the purpose of granting the aid provided for in Article 1 of Regulation No 1357/96, to complete the checks relating to entitlement to premiums per animal for the 1996 calendar year. Rather, they were required to pay aid in addition to the per animal premiums for 1995. Greece has never denied having the information available to pay those premiums, so I fail to see why it should not have to comply with the time-limit of 15 October 1996. The results of the checks carried out for 1996 were important, however, for determining any sums incorrectly paid, but clearly that has nothing to do with observing the time-limit imposed. 116. Finally, as regards the allegedly disproportionate nature of the correction in question, I really do not see how an analytical correction, in other words one which exactly equals the payments identified as not complying with Community law, can possibly infringe the principle of proportionality. When refusing to charge this expenditure to the Community budget, the Commission has no margin of discretion. Nor, indeed, has the Greek Government produced any detailed arguments in support of its claim. 117. Therefore, I consider that the arguments of the Greek Government cannot be upheld in respect of this complaint. 118. Thus, I propose that the ground concerning the financial correction of GRD 237 098 402 should be rejected in its entirety. 4. The correction of GRD 350 000 000 (a) Summary of the arguments of the parties 119. In order to dispute this correction, the Greek Government claims that Article 7 of Regulation No 1357/96 has been misinterpreted and that the Commission has wrongly assessed the facts. According to the applicant, that provision should be interpreted as meaning that payments arranged by the competent authorities before 15 October 1996 by means of payment orders addressed to the bodies responsible for actually paying the aid to recipients, such that the latter have acquired the right to the payment, also comply with that deadline. In this case, the contested sum of GRD 350 000 000 was in fact transferred to the bodies responsible for payment (the ACA) by 15 October 1996, with express instructions to make payment to beneficiaries. The fact that this only took place after the date in question is due, according to the applicant, to communication difficulties in the regions concerned. 120. Clearly, the Commission takes the opposite view, maintaining that the date of 15 October 1996 must be regarded as the date by which the aid must be paid to producers, that is to those claimants entitled to the additional payment within the meaning of Regulation No 1357/96. In support of its argument, the Commission refers to the annex to Regulation No 1663/95, which states that execution of a payment consists of instructing a bank or government payments office to pay the authorised amount to the claimant. (70) (b) Assessment 121. For my part, I endorse the Commission's argument. As I said earlier, the 15 October 1996 deadline is not dictated purely by budget requirements, in my view, but also by the need to make payment rapidly to those claiming the aid provided for in the regulation. To accept, as the Greek Government urges, that a payment should be regarded as having been executed when the relevant instruction has been given to the body responsible for making the payment, would be tantamount to circumventing the deadline in question, allowing payment to be made well after 15 October 1996. 122. Moreover, it also seems relevant to me, for the purpose of refuting the Greek Government's argument, to refer to paragraphs 2(ii) and 6(v) of the annex to Regulation No 1663/95, which sets out, inter alia, the procedures to be followed by the paying agencies of the Member States when making Community disbursements financed by the EAGGF. Those provisions also indicate that the execution of a payment consists in instructing a bank or a government payments office to pay the authorised amount to the claimant. Thus, to execute a payment means to pay the claimant. I see no reason to attribute a different meaning to the terms used in the second paragraph of Article 7 of Regulation No 1357/96, nor - and I would stress this fact - does the Greek Government explain why this should be done. 123. Nor is there any reason, finally, to accept the argument concerning the alleged communications difficulties which, according to the Greek Government, prevented the amounts in question being paid on time. Here too, the applicant has not proved that, despite employing all due diligence, it was impossible for it to pay the aid to claimants by 15 October 1996. 124. In the light of the foregoing, I also propose that the ground relating to the financial correction of GRD 350 000 000 should be rejected. G - The financial corrections due to the retentions made by the ACA 1. Legal and factual background 125. By means of the contested decision, the Commission imposed, inter alia, a series of financial corrections amounting to 2% of the expenditure declared by Greece in the arable crops sector (1996, 1997, 1998 financial years) and in the beef and veal sector (1996 and 1997 financial years) as a result of the retentions made by the ACA from the amount of aid paid to claimants. 126. As the documents before the Court show, these corrections followed the same rationale as the similar corrections applied to the previous financial years, 1994 and 1995. The Conciliation Body, to which the Greek Government referred the matter, found that it had already examined the subject, in the procedures relating to those financial years, and that the case did not introduce any new element. (71) 2. Analysis 127. The Greek Government maintains that the contested correction is based on an incorrect assessment of the nature of the retentions in question - which were allegedly voluntary and not compulsory - and invokes arguments which, in my view, are identical to those already rejected by the Court in its judgments of 11 January 2001, in connection with the clearance of accounts for the 1994 financial year, (72) and 6 December 2001, in connection with the following year 1995. (73) 128. Contrary to what the applicant seems to be saying, I do not in fact consider that any significant new elements are added to this case either by the amendment made to Article 2 of Greek Law No 1409/83 - authorising application of the retentions - by means of Article 37 of Law No 2538/97, (74) or by the circular sent out on 5 March 1997 by the Greek Ministry of Agriculture informing the competent local bodies that the Community funds should be paid in full to claimants. (75) 129. To start with the latter, I should point out that, whatever the value in law of sending out such information, it certainly does not show that the practice of making retentions ceased from March 1997 - especially as the amendment of Law No 1409/83, which authorised them, only entered into force on 1 December of that year - nor does it show that the retentions made prior to that date have been repaid to claimants. Nor, in my view, does the legislative amendment offer full proof of this. I note, in fact, that during the clearance of accounts procedure, the Commission informed the Greek authorities that, despite the amendment to Law No 1409/83, it appeared from the printouts relating to payments made by the ACA that the latter were still making retentions. Those authorities were therefore asked to produce documents to show, on the one hand, that retentions were no longer being made and, on the other hand, that the amounts unduly retained had been repaid to producers. (76) It does not appear, from the documents before the Court, that Greece has ever produced this evidence. 130. Therefore, it is my view that, as with the previous two financial years, the objections to the corrections at issue here should also be dismissed. H - The financial corrections due to failure to comply with payment deadlines 1. Applicable legislation 131. It is well-known that the system of financing introduced by Articles 4(5) and 5(2)(a) of Regulation No 729/70, in the version amended by Regulation No 1287/95, makes provision for the financial resources required to cover the expenditure of the EAGGF to be mobilised by the Member States in accordance with the needs of their respective paying agencies and later reimbursed by the Community by means of monthly advances, calculated on the basis of expenditure effected. It is for the Commission, having consulted the Fund Committee, to decide on the amount of the advances in question. 132. The detailed rules for calculating and paying the monthly advances are governed by Regulation (EC) No 296/96. (77) Within the meaning of Article 4(2) of that regulation, expenditure effected after the deadlines laid down by Community law give rise, precisely because of its ineligibility, to a reduction of the advances in question. (78) That reduction is limited to expenditure effected after the deadlines which is more than 4% of expenditure effected before the deadlines and is scaled according to the amount of delay, from a minimum of 10% for a delay of one month to 100% for a delay of five months or more. However, the second subparagraph of Article 4(2) stipulates that ... the Commission will apply a different timescale and/or lower reductions or none at all if exceptional management conditions are encountered for certain measures, or if well-founded justifications are introduced by the Member States. 133. For the purpose of this case, it should also be remembered that, within the meaning of the third subparagraph of Article 4(2) of Regulation No 296/96, which refers on this matter to Article 13 of Decision 94/729/EEC, (79) reductions in monthly advances due to late payments on the part of Member States are decided by the Commission following a consultation procedure with the Member State concerned and after consulting the EAGGF Committee. Article 4(4) of the regulation provides that [a]ny reductions ... and particularly those resulting from overruns of deadlines shall be made without prejudice to the subsequent accounts clearance decision. (80) 2. Facts and arguments of the parties 134. By means of the contested decision, the Commission confirmed certain reductions in the monthly advances against agricultural expenditure granted to Greece in connection with the 1998 financial year, totalling GRD 141 667 389. The reason for applying these corrections is that the Greek authorities allegedly effected the expenditure in question after the expiry of the deadlines laid down in the relevant Community regulations. 135. Of those corrections, the Greek Government disputes the one relating to budget heading 1055-004 (cereals) in the sum of GRD 5 326 625, which, it maintains, is based on a misinterpretation of the second subparagraph of Article 4(2) of Regulation No 296/96 and of Article 8 of Regulation No 729/70. 136. The applicant does not deny that the relevant expenditure was paid after the expiry of the deadlines; this should not however give rise to any reduction in advances because the Greek Government introduced well-founded justification, as stipulated by the second subparagraph of Article 4(2) of Regulation No 296/96. To be specific, says the Greek Government, it is a question of payments made in four individual cases. The delay identified by the Commission was due, in one case, to the existence of legal proceedings and, in the other three cases, to trying to protect the financial interests of the Community, because verifying the entitlement of beneficiaries to receive Community funds had necessitated special controls or administrative checks. Thus, the reason for the delay was the need to fulfil the obligation to prevent irregularities in connection with EAGGF operations, imposed on Greece by Article 8(1) of Regulation No 729/70. When deciding on the disputed financial correction, the Commission therefore misinterpreted and misapplied the two Community provisions in question. 137. The Commission replies that the circumstances invoked by Greece, namely administrative difficulties due to actions brought by the persons concerned or the need to carry out additional checks, are not valid justification for preventing the reductions in advances within the meaning of Article 4(2) of Regulation No 296/96. According to the Commission, this would only be possible if the Member State concerned showed that it was facing exceptional difficulties in a large number of cases, which is not true here. 3. Assessment 138. Although I do not share the Commission's view, I consider that the ground in question is not well-founded for the following reasons. 139. In the first place, I should point out that Article 4(2)(b) of Regulation No 296/96, which the Greek Government claims has been infringed, does not apply in the context of the accounts clearance procedure. 140. A combined reading of Article 4(2) of Regulation No 296/96 and Article 13 of Decision 94/729 indicates that the reduction in advances is an autonomous decision which is distinct from the later decision to refuse Community financing for the relevant expenditure. Although both decisions derive from the obligation on the Commission, in its management of the EAGGF, to commit funds only for expenditure effected in accordance with Community regulations, (81) their nature and legal effects are different. The former, which is adopted during the financial year on the basis of the only data available at that time, is merely interim and temporary in nature and only produces effects until the adoption of the latter, which determines conclusively the Member State's financial position in relation to the EAGGF. (82) As has been seen, the third paragraph of Article 13(2) of Decision 94/729 clearly states that the decision to reduce advances is to be taken without prejudice to the decision as to whether or not the relevant expenditure can be charged to the EAGGF. Moreover, even the legal basis for those decisions is different, because the Commission is empowered to reduce advances under Article 5(2)(a) of Regulation No 729/70 and the second paragraph of Article 13(2) of Decision 94/729, whereas the power to refuse Community financing for expenditure not effected in accordance with Community regulations derives from Article 5(2)(c) of that regulation. 141. The examination, in the light of Article 4(2)(b) of Regulation No 296/96, of justifications introduced by the Member States in order to prevent a reduction in advances or to obtain a more favourable rate is made in the context of the procedure that the Commission is required to follow, pursuant to Article 13 of Decision 94/729, in order to make that reduction. The outcome of that examination therefore informs its decision as to whether or not to reduce the advances under Article 4(2), but does not prejudice its decision on the possible refusal subsequently to charge that expenditure to the Community budget, on which the Commission must decide according to the different procedure laid down in Article 5(2)(c) of Regulation No 729/70. It is in the context of this latter procedure that the Member States concerned can and must introduce suitable justifications in order to prevent financing being refused. 142. It follows that the alleged infringement of Article 4(2)(b) of Regulation No 296/96, if proven, could potentially have invalidated the decision adopted at the time against Greece to reduce the advances, but could certainly not have undermined the validity of the decision contested here, which was adopted at the end of a different procedure, to which that article clearly does not apply 143. It should be remembered, however, that the Commission itself, in working document no VI/5330/97, (83) cited earlier, actually referred to the provision in question when setting out the criteria that it used for calculating the relevant financial correction in the case of payment overruns. However, it is not just a reference pure and simple: whilst the working document does refer directly to the rules established in Article 4(2) of Regulation No 296/96 in relation to the scaling of corrections in the light of the extent of the overrun, elsewhere it establishes similar, but not identical, criteria to those laid down in that provision. In particular, for the purposes of this case, the working document states that delays for acceptable reasons should be tolerated, within reasonable limits; delays due, for example, to the need to carry out additional checks on disputed aid claims. It states in fact that, in such cases, Article 4 of Regulation No 296/96 already provides a 4% tolerance for declared expenditure by stipulating that advances are only to be reduced where payment overruns are in excess of that ceiling, but that Member States must be allowed to prove that the disputed claims exceed that limit. 144. In my view, it is therefore necessary to verify whether, in such circumstances, the arguments adduced by the Greek Government could in fact be well founded. 145. In this regard, I should point out that the reasons advanced by the applicant could, in principle, be one of those cases where, according to the Commission's guidelines, late payment should be tolerated within reasonable limits. In order validly to contest the correction at issue, the Greek Government should, however, have provided evidence, on the one hand, that such reasons do exist and, on the other hand, that the payment overrun did not exceed reasonable limits. 146. I do not consider that the applicant has provided this evidence. With regard to the reasons for the delay, I do not consider that the two letters cited by the applicant are adequate (84) since they contain only scant mention of such reasons, without providing any supporting evidence. Nor would it appear that the Greek authorities communicated other data or supporting documents to the Commission in connection with these cases, by any other means, prior to the adoption of the contested decision. In particular, it would not appear that the documents, other than the letters, that were produced before the Court were brought to the attention of the Commission. (85) Whatever their evidential value, these documents cannot therefore be taken into consideration when assessing the lawfulness of the contested decision. The applicant says nothing at all regarding the extent of the overrun. 147. Accordingly, I consider that this ground should also be dismissed and with it the entire Greek application. IV - Costs 148. Within the meaning of Article 48(2) of the Rules of Procedure, the unsuccessful party must pay the costs if they have been applied for. Since I consider that the application should be dismissed in its entirety, I propose that the Greek Government should be ordered to pay the costs. V - Conclusion 149. In the light of all the above considerations, I suggest that the Court should reject the application and order the Hellenic Republic to pay the costs. 1: - Original language: Italian. 2: - OJ 2000 L 180, p. 49. 3: - Council Regulation (EC) No 1357/96 of 8 July 1996 providing for additional payments to be made in 1996 with the premiums referred to in Regulation (EEC) No 805/68 on the common organisation of the market in beef and veal and amending that Regulation (OJ 1996 L 175, p. 9). 4: - Council Regulation (EEC) No 729/70 of 21 April 1970 on the financing of the common agricultural policy (OJ, English Special Edition 1970 (I), p. 218). 5: - Council Regulation (EC) No 1287/95 of 22 May 1995 amending Regulation (EEC) No 729/70 on the financing of the common agricultural policy (OJ 1995 L 125, p. 1). 6: - Commission Regulation (EC) No 1663/95 of 7 July 1995 laying down detailed rules for the application of Council Regulation (EEC) No 729/70 regarding the procedure for the clearance of the accounts of the EAGGF Guarantee Section (OJ 1995 L 158, p. 6). 7: - Commission Decision 94/442/EC of 1 July 1994 setting up a conciliation procedure in the context of the clearance of the accounts of the European Agricultural Guidance and Guarantee Fund (EAGGF) Guarantee Section (OJ 1994 L 182, p. 45). 8: - See, inter alia, the judgments in Case C-373/99 Greece v Commission [2001] ECR I-9619, paragraph 8; Case C-118/99 France v Commission [2002] ECR I-747, paragraph 38. 9: - The judgment in Greece v Commission, cited above, paragraph 9, where there are further references. 10: - See, inter alia, the judgments in Case C-2/93 Epxortslachterijen van Oordegem [1994] ECR I-2283, paragraphs 17 and 18; Case C-209/96 United Kingdom v Commission [1998] ECR I-5655, paragraph 43; Case C-235/97 France v Commission [1998] ECR I-7555, paragraph 45. 11: - See, for example, the judgment in Case C-247/98 Greece v Commission [2001] ECR I-1, paragraph 7, where there are further references. 12: - Ibidem. 13: - See the judgments in Case C-54/95 Germany v Commission [1999] ECR I-35, paragraph 35; Case C-28/94 Netherlands v Commission [1999] ECR I-1973, paragraph 40. 14: - In this connection, see the judgments in Case C-54/95, above, paragraph 35; Case C-28/94, above, paragraph 41; Case C-278/98 Netherlands v Commission [1999] ECR I-1501, paragraph 93; Case C-377/99 Germany v Commission [2002] ECR I-7421, paragraph 95. 15: - See the judgment in Case C-253/97 Italy v Commission [1999] ECR I-7529, paragraph 7, containing further references; Case C-247/98, cited above, paragraph 70. 16: - Council Regulation (EEC) No 3508/92 of 27 November 1992 establishing an integrated administration and control system for certain Community aid schemes (OJ 1992 L 355, p. 1). 17: - Council Regulation (EEC) No 1765/92 of 30 June 1992 establishing a support system for producers of certain arable crops (OJ 1992 L 181, p. 12). 18: - Council Regulation (EEC) No 805/68 of 27 June 1968 on the common organisation of the markets in the beef and veal sector (OJ, English Special Edition 1968 (I), p. 187). The premium arrangements in question were introduced by the amendment to Regulation No 805/68 effected by means of Regulation (EEC) No 2066/92 (OJ 1992 L 215, p. 49). 19: - Council Regulation (EC) No 2466/96 of 17 December 1996 amending Regulation (EEC) No 3508/92 establishing an integrated administration and control system for certain Community aid schemes (OJ 1996 L 335, p. 1). 20: - Commission Regulation (EEC) No 3887/92 of 23 December 1992 laying down detailed rules for applying the integrated administration and control system for certain Community aid schemes. 21: - These shortcomings are set out in detail in the inspection reports sent to the Greek authorities by letters No 36811 of 27 September 1996 and No 32539 of 24 August 1998 (defence, annexes 1 and 2). The results of the bilateral discussion between the Commission and the Greek authorities are set out in letter No 43741 of 23 September 1999, whilst letter No 12764 of 17 May 2000 states the Commission's final position following the conciliation procedure (defence, annexes 6 and 7). 22: - It is worth noting that Regulation No 1663/95 allows the department or paying agencies of the Member State to delegate to other bodies the verification of aid applications and/or the authorisation of the relevant payments whilst requiring that the former exercise timely supervision of the latter [see in particular paragraph 4, subparagraphs (iv) and (v), of the Annex to the regulation, cited below in point 58]. 23: - See in this connection paragraph 6, subparagraphs (iii) and (iv) of the Annex to Regulation No 1663/97 (cited below, point 58). 24: - Commission Regulation (EC) No 658/96 of 9 April 1996 on certain conditions for granting compensatory payments under the support system for producers of certain arable crops (OJ 1996 L 91, p. 46), Article 8 of which provides that Member States must communicate to the Commission certain statistical information concerning acreage on a provisional basis by 15 September of the marketing year in progress and definitively by the following 15 January at the latest. 25: - As Commission letter No 12764 of 17 May 2000, cited above, indicates, the amount in question also includes a further correction of 2% due to the retentions effected by the ACA from aid paid in the arable crops sector for the three financial years in question. On the subject of retentions, both in the arable crops sector and in the beef and veal sector, see below, point 131 et seq. 26: - Final report of the Conciliation Body in Case 99/GR/151 (defence, Annex 8; see in particular paragraphs 9, 10, 12 and conclusions). 27: - The Greek Government refers here to letter No 43741 of 23 September 1999, cited above (point 5). 28: - Points 18-19. 29: - See the report on the inspection undertaken in Greece from 30 March to 3 April 1998 (paragraph 2.1.2, pp. 3-4) which was forwarded to the Greek authorities by letter No 32539 of 24 August 1998, cited above in footnote 21. 30: - If I have interpreted correctly the documents forwarded by the Greek authorities to the Commission on 13 December 1999 (see the communication at Annex 1 to the rejoinder), by that date - which is almost two years after the deadline for completing the IACS - 6.6% of existing parcels had not yet been identified, sometimes as many as 45%, depending on the regional offices concerned. 31: - Council Regulation (EEC) No 2079/92 of 30 June 1992 instituting a Community aid scheme for early retirement from farming (OJ 1992 L 215, p. 91). 32: - Application, Annex 8. 33: - See the annex to letter No 41854 of 5 November 1998 (defence, Annex 3). 34: - Letter No 41854 of 5 November 1998, cited in previous footnote. 35: - Letter No 43741 of 23 September 1999, cited in footnote 21 (point 6.2, pp. 8 and 9). 36: - Although the correction in question is charged to the 1996 financial year in the annex to the disputed decision, it can be inferred from the aforementioned letter No 43741 of 23 September 1999 (page 9) that the correction actually relates to the 1997 financial year. The parties appear to me to be agreed on this. 37: - I refer here to the letters from the Greek Ministry of Agriculture No 343910/2181 of 7 April 1999 (application, Annex 12) and No 179226 of 8 June 1999 (application, Annex 5), and to the letter from the ATE No 20317 of 1 June 1999 (application Annex 13). The latter would not appear to have been forwarded to the Commission prior to the adoption of the contested decision. 38: - See in this connection paragraph 6, subparagraphs (iii) and (iv) of the Annex to Regulation No 1663/95. 39: - See paragraph 4, subparagraph (v) of the Annex to Regulation No 1663/95. 40: - Ibidem, fourth indent. See also Article 6 of Regulation No 1663/95 which requires all the supporting documents regarding the expenditure financed and the amounts to be recovered by the EAGGF to be kept at the disposal of the Commission for a certain period. 41: - Council Directive 92/102/EEC of 27 November 1992 on the identification and registration of animals (OJ 1992 L 355, p. 32). 42: - See in particular Articles 4, 5, 6 and 8 of the directive. 43: - Council Regulation (EC) No 820/97 of 21 April 1997 establishing a system for the identification and registration of bovine animals and regarding the labelling of beef and beef products (OJ 1997 L 117, p. 1). 44: - See in particular, Articles 4 and 5 of the regulation. 45: - See Commission letter No 33219 of 18 June 1999 (rejoinder, Annex 9, especially p. 2 and annex). 46: - See the final report of the Conciliation Body in Case 99/GR/134 (defence, Annex 10, especially paragraph 14 and conclusions). 47: - See Commission letter No 11952 of 8 May 2000 (rejoinder, Annex 2, especially p. 2). 48: - Regarding the essential features of the system of controls, as borne out, as far as identification of livestock is concerned, by the eighth recital of Regulation No 3508/92, which expressly states that, in the livestock sector, effective control requires that animals be identified and recorded. 49: - See the second indent of Article 7(1) of Commission Regulation (EEC) No 3886/92 of 23 December 1992 laying down detailed rules for the application of the premium schemes provided for in Council Regulation (EEC) No 805/68 on the common organisation of the market in beef and repealing Regulations (EEC) No 1244/82 and (EEC) No 714/89 (OJ 1992 L 391, p. 20), which provides that for the grant of premium account shall be taken only of animals duly identified in accordance with the relevant national and Community provisions. 50: - See above, point 74. 51: - Points 18-19. 52: - Set out, as seen earlier, in working document VI/5330/97 (see above, points 10 et seq.). 53: - The Commission refers, in particular, to the judgment in Case C-50/94 Greece v Commission [1996] ECR I-3331, paragraphs 26 and 27. 54: - See the judgments in Case C-46/97 Greece v Commission [2000] ECR I-5719, paragraph 58; Case C-243/97 Greece v Commission [2000] ECR I-5813, paragraph 53; Case C-118/99 France v Commission [2002], cited in footnote 8, paragraph 49. 55: - In this regard, see most recently Case C-130/99 Spain v Commission [2002] ECR I-3005, paragraphs 42-43 and 90-91). 56: - See the judgments in France v Commission, cited above, paragraph 50, and Spain v Commission, above, paragraph 44. 57: - Cited in footnote 3. 58: - Which at the material time governed the common organisation of the markets in the beef and veal sector (see above, footnote 18). 59: - Document AGRI/117758/2000 of 15 May 2000 [application, Annex 14; see especially paragraph 4.3.2 sub (a), pp. 63-64]. 60: - Final report in Case 99/GR/134; see application, Annex 23 (point 13). 61: - It appears from the abovementioned summary report of 15 May 2000 [point 4.3.2., sub (a), (2), p. 64] that two regularisations of GRD 65 530 701 and GRD 8 377 284 were charged to the 1998 and 1999 financial years respectively (see also below, point 105). 62: - The calculation made by the Greek Government is set out in p. 32 of the application (p. 46 of the French translation). 63: - Applicable, as has been seen, to the premium schemes in question (see above, point 21). 64: - See above, point 16 and footnote 8. 65: - Because financial cover for Regulation No 1357/96 was guaranteed by the 1996 budget (see EU Bulletin 6-1996, paragraph 1.3.179) and the relevant EAGGF year ended on 15 October 1996. 66: - See the second recital in the preamble to Regulation No 1357/96. The general context of the 1996 BSE crisis, in which this regulation should be viewed, is well known to the Court owing to the case-law that has developed concerning the protection measures adopted at the time by the Commission (see, for example, Case C-157/96 National Farmers' Union and Others [1998] ECR I-2211, especially paragraphs 3-4). 67: - See, once more, the second recital in the preamble to the regulation. 68: - See p. 46 of the application and p. 25 of the reply, also letter No 203541 of 25 October 1999 from the Greek Ministry of Agriculture to the Conciliation Body (application, annex 26, p. 1, last paragraph). I refer to the sum of GRD 311 006 387, i.e. the financial correction originally proposed by the Commission since this is the amount on which the Greek calculation is based. 69: - See Case 92/78 Simmenthal [1979] ECR 777, paragraph 39, containing further references. 70: - The Commission refers in particular to paragraphs 2(ii) and 6(v) of the annex to that regulation. 71: - See the final reports of the Conciliation Body in Case 99/GR/134, cited in footnote 46 (point 11), and Case 99/GR/151, cited in footnote 26 (point 7). 72: - Judgment cited in footnote 11 (paragraphs 18-19 and 32). 73: - Judgment cited in footnote 9 (paragraphs 36-39). 74: - The text of which can be found at annex 38 to the application. 75: - Document No 144903 of 5 March 1997 (application, annex 35). 76: - See telex No 24087 of 8 April 1999 (defence, annex 5, pp. 5-6, paragraph 2.1.2) and letter No 43741 of 23 September 1999, cited above (page 2, point 1.2). 77: - Commission Regulation (EC) No 296/96 of 16 February 1996 on data to be forwarded by the Member States and the monthly booking of expenditure financed under the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF) and repealing Regulation (EEC) No 2776/88 (OJ 1996 L 39, p. 5). 78: - As the fourth recital in the preamble to the regulation clearly states, namely that the common agricultural regulations include deadlines for payment of aids to beneficiaries by Member States; ... all payments effected after those deadlines, and for which the delay in payment is unjustified, must be regarded as ineligible, and therefore cannot, in principle be the subject of an advance on the booking .... 79: - Council Decision 94/729/EC of 31 October 1994 on budgetary discipline (OJ 1994 L 293, p. 14). 80: - The third paragraph of Article 13(2) of Decision 94/729, cited above, makes similar provision. 81: - See above, point 16. 82: - See the judgments in Case C-342/89 Germany v Commission [1991] ECR I-5031, paragraphs 18 and 19; and Case C-346/89 Italy v Commission [1991] ECR I-5057, paragraphs 18 and 19. 83: - See above, point 10 et seq. 84: - I am referring to the letters from the Greek Ministry of Agriculture No 166600 of 2 April 1999 and No 158045 of 19 June 1998 (annexes 39 and 40 to the application). 85: - Application, annexes 41-44.