Judgment — ECLI:EU:C:2001:603
Date: 2001-11-13
Language of the case: French
Court formation: Sixth Chamber
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Agriculture and Fisheries;European Agricultural Guidance and Guarantee Fund (EAGGF);Milk products
Concepts: Co-responsibility levy and additional levy on milk;General
Procedure: Action for annulment - successful
Origin: France

summary 
of accounts relating to the expenditure 
referred to in paragraph 1.... 
4. ... 
Article 5 
1. ... 
2. The Commission, after consulting the 
Fund Committee referred to in Article 11, 
(a) shall decide:... 
(b) shall, before the end of the following 
year, on the basis of the documents 
referred to in paragraph 1(b), make up 
the accounts of the authorities and 
bodies. 
3. ... 
(Articles 6 and 7) 
I - 8462 
FRANCE v COMMISSION 
Article 8 
1. The 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 irregu­
larities or negligence. 
The Member States shall inform the Com­
mission 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 Commis­
sion, with the exception of the conse­
quences of irregularities or negligence attri­
butable to the administrative authorities or 
other bodies of the Member States. 
The sums recovered shall be paid to the 
paying authorities or bodies and deducted 
by them from the expenditure financed by 
the Fund. 
3. ...' 
11. Council Regulation (EC) No 1287/95 
of 22 May 1995 amending Regulation 
(EEC) No 729/70 on the financing of the 
common agricultural policy. 8 
The above regulation amended the second 
subparagraph of Article 8(2) of Regulation 
(EEC) No 729/70 to read as follows: 
'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.' 
8 —OJ 1995 L 125, p. 1. 
I - 8463 
OPINION OF MR ALBER — CASE C-277/98 
In addition, Article 5 was reworded, and 
Article 5(2)(c) inserted as follows: 
'Article 5 
1. ... 
2. The Commission, after consulting the 
Fund Committee: 
(a) ... 
(b) ... 
(c) shall decide on the expenditure to be 
excluded from the Community finan­
cing referred to in Articles 2 and 3 
where it finds that expenditure has not 
been effected in compliance with Com­
munity rules. 
5 
III — Submissions of the parties 
(1) The French Government 
12. Relying on Regulation No 729/70, as 
amended by Regulation No 1287/95, as 
well as the Court's case-law, the French 
Government contends that, in the process 
of clearing the accounts,9 the Commission 
can exclude only expenditure incurred as a 
result of the irregular or negligent applica­
tion of Community law. As regards Arti­
cle 8(2) of Regulation No 729/70, the 
French Government maintains that the 
amounts at issue in Decision 98/358 are 
the result neither of irregularities nor of 
negligence. 
13. The French Government points out 
that the additional milk levy was intro­
duced by Regulation No 856/84,10 which 
inserted an Article 5c into the basic Reg­
ulation No 804/68, as well as by Regula­
tions Nos 857/84,1371/84« and 1546/88. 
9 — See Case C-197/91 FAC v Aimer [1993] ECR 1-2639, 
paragraph 16, and the Opinion of Advocate General 
Fennelly of 14 March 1996 in Case C-50/94 Greece v 
Commission [1996] ECR 1-3331, 1-3354, point 51. 
10 — Council Regulation (EEC) No 804/68 of 27 June 1968 on 
the common organisation of the market in milk and milk 
products (OJ English Special Edition 1968(1), p. 176). 
11 — Commission Regulation (EEC) No 1371/84 of 16 May 
1984 laying down detailed rules for the application of the 
additional levy referred to in Article 5c of Regulation 
(EEC) No 804/68 (OJ 1984 L 132, p. 11). 
I - 8464 
FRANCE v COMMISSION 
The intention was to peg milk production 
at the level of the reference quantities 
assigned to the Member States. A Member 
State's reference quantity is the total of all 
the individual reference quantities, accord­
ing to Article 5c of Regulation No 804/68, 
as amended by Regulation No 856/84. 
14. In France, the way in which the system 
of reference quantities, commonly known 
as the quota system, operates is that a 
reference quantity is first assigned to the 
purchasers of milk. 12 The purchasers are 
then responsible for assigning individual 
reference quantities to the producers. For 
each milk year, which lasts from 1 April to 
31 March of the following year, a compar­
ison is drawn up between the reference 
quantity and the actual quantity of milk 
produced. At the end of each milk year, the 
Office national interprofessionnel du lait et 
des produits laitiers (ONILAIT) informs 
every purchaser both of the final quantity 
of milk available to it and the extent to 
which this tallies with the actual quantity 
produced, that is to say, where necessary, 
whether the total of the individual refer­
ence quantities has been exceeded. The 
amount of the supplementary levy is deter­
mined on the basis of any excess, and it is 
payable by the purchaser. ONILAIT noti­
fies the purchaser of the supplementary levy 
and issues a demand for payment, which 
the purchaser can challenge before the 
administrative courts. The sums charged 
to the French State as a result of Decision 
98/358 are the subject of administrative 
actions which are still pending. Final judg­
ment has yet to be delivered in all those 
cases. 
15. The sums at issue cannot, however, be 
treated as if they stemmed from irregula­
rities identified when checks were carried 
out. The supplementary levy is not part of 
the regular revenue of the Community 
budget. It has to be paid only where the 
Member State's total guaranteed quantity 
has been exceeded. Before the system of 
additional levies, applicable in the milk 
sector from 1992, 13 was introduced, only 
the sums collected by the Member States 
were taken into account. The Commission 
also makes a distinction between the situa­
tion before and after 1992. 
16. To avoid any misunderstanding, the 
French Government notes that it too con­
siders that the sums will be payable as soon 
as they are able to be collected on the basis 
of an enforceable judgment. But Regulation 
No 729/70 does not permit the Commis­
sion to charge to a Member State sums 
which that State is not in a position to 
collect. 
12 — The term 'purchaser' is defined as follows in Article 12(e) 
of Regulation No 857/84: 
'Purchaser: an undertaking or grouping which purchases 
milk or other milk products: 
— to treat or process them, or 
— to sell them to one or more undertakings treating or 
processing milk or other milk products.' 
13 — See Council Regulation (EEC) No 3950/92 of 28 Decem­
ber 1992 establishing an additional levy in the milk and 
milk products sector (OJ 1992 L 405, p. 1), which 
abolished the previously applicable milk quota system 
with effect from 1 April 1993. See Article 13 of the 
regulation. 
I - 8465 
OPINION OF MR ALBER — CASE C-277/98 
17. Citing Article 8(1) of Regulation 
No 729/70, the French Government takes 
the view that even if there are irregularities, 
the Member States are required only to 
inform the Commission of those irregula­
rities, where court proceedings are pending. 
In addition, the Commission's setting of a 
deadline for the collection of the sums in 
question is contrary to the principles of 
sound administration as reflected in Arti­
cle 8 of Regulation No 729/70. 
18. It is in any event a fact that the 
Commission has, on several occasions, 
amended the rules governing the recovery 
of sums which are the subject of legal 
proceedings. As of May 1993, the effect of 
the Commission's internal administrative 
procedures was artificially to freeze the 
sums: that was the result of the court 
proceedings and the setting of a time-limit 
for paying over the sums collected for the 
milk years 1988/89 to 1992/93 at 30 June 
of the next milk year. 
19. Paradoxically, the result of that prac­
tice was that the Commission refused later 
payments from ONILAIT, despite being 
entitled to them. In the light of the existing 
difficulties, the Commission created, in 
1994, an item in the accounts under the 
heading 'legal proceedings excluded from 
the clearance of accounts'. In the absence of 
explanatory documents, the French autho­
rities complied with the relevant instruc­
tions provided by word of mouth. Accord­
ing to the instructions given, only those 
sums for which a reservation had been 
entered in earlier clearances of accounts 
and those relating to milk years for which 
the accounts had not yet been cleared, 
needed to be entered under that heading. 
20. There was a lack of coherence and 
transparency in the administration of items 
in the accounts relating to legal proceed­
ings. That approach was not consistent 
with the principles of sound administra­
tion. 
21. The French Government goes on to 
explain the system for recovering claims 
arising out of a public-law obligation. On 
completion of the administrative proce­
dure, the director of ONILAIT is, for 
example, authorised to issue an enforceable 
order, which can be challenged in the 
administrative courts. Interfering with that 
procedure would be contrary to the princi­
ple of the separation of powers, which is a 
general principle of Community law, flow­
ing from the common constitutional tradi­
tions of the Member States. 
22. The French Government then cites the 
Court's judgment of 21 September 1983 in 
Cases 205/82 to 215/82, 14 paragraph 31 of 
which states: 
'Where the rules and procedures applied by 
the national authorities in the recovery of 
Community aids are the same as those 
14 — Deutsche MHchkontor v Federal Republic of Germany 
(hereinafter: 'Deutsche Milchkontor') [1983] ECR 2633. 
I - 8466 
FRANCE v COMMISSION 
which they apply in comparable cases 
concerning purely national financial bene­
fits, there is in principle no reason to 
assume that those rules and procedures 
are contrary to the national authorities' 
duty under Article 8 of Regulation 
No 729/70 to recover sums irregularly 
granted and that consequently they reduce 
the effectiveness of Community law...' 
23. In addition, the French Government 
again submits that the need for an efficient 
system, as emphasised by the Commission, 
is guaranteed in France. Of all the Member 
States with significant levels of milk pro­
duction, France has exceeded its quota on 
the fewest occasions. Moreover, the sums in 
question are not unusually high and are, 
after all, the subject of only 11 court 
actions. 
(2) The Commission 
24. The Commission first draws attention 
to the origin and method of operation of 
the milk quota system. In that context, 
France opted for formula B, in accordance 
with Article 5c of Regulation No 804/68, 
that is to say for the levy to be imposed on 
purchasers. 15 Pursuant to Article 15(4) of 
Regulation No 1546/88, purchasers have 
to pay the levy within three months of the 
end of every 12-month period. Pursuant to 
Article 19( 1 )(a) of that same regulation, the 
Member States must take the additional 
measures necessary 'to ensure collection of 
the levy'. According to the second subpara­
graph of Article 9(4) of Regulation 
No 857/84 as amended by Regulation 
No 1305/85 'the amount of the levy col­
lected corresponding to the amount of the 
excess recorded shall be paid over to the 
Community'. 
25. Collection of the levy plays a key role 
in the milk quota system. That it is 
collected promptly and in full is therefore 
crucial to the operation of the system. The 
levy is, for example, fundamentally differ­
ent from an aid scheme. 
26. The Commission further submits that 
the French Government relies incorrectly 
on Article 8(2) of Regulation No 729/70. 
These are not 'sums lost as a result of 
irregularities or negligence' within the 
meaning of Article 8(1). The legal basis 
for their payment is in fact to be found in 
Article 15(4) of Regulation No 1546/88. 
15 — For the definition or 'purchaser', see Article 12(e) of 
Regulation No 857/84 (cited in footnote 12 above). 
I - 8467 
OPINION OF MR ALBER — CASE C-277/98 
27. If the total guaranteed quantity has not 
been exceeded in a milk year, the Member 
States do not have to pay a levy to the 
Community. If, however, the total guaran­
teed quantity is exceeded, the additional 
levy has to be paid over to the Community. 
The amount of the levy is determined on 
the basis of the information provided by the 
Member States pursuant to Article 19(3) of 
Regulation No 1546/88. The Member 
State is required to ensure that all the levies 
due are collected. The Member States can 
be exempted only in cases in which it is 
established that the sums cannot be col­
lected, but there has been no negligence on 
the part of the Member State concerned. 
28. The fact that a purchaser challenges the 
amount of the levy imposed on him has no 
bearing on the obligation of the Member 
State, vis-à-vis the Community, to take 
responsibility for the whole amount of the 
levies due. The outcome of an individual 
legal action can affect the responsibility of 
the Member State only if, as a result, the 
figure for the total quantity delivered has to 
be amended. Until that happens, the Com­
mission can rely on the data provided by 
the national authorities. That in no way 
interferes with the separation of powers. 
The clearance of accounts affects only the 
relationship between the Community and 
the Member State; it has no impact on the 
relationship between the person liable for 
the levy and the Member State concerned. 
29. As regards its earlier practice on the 
clearance of accounts, the Commission 
concedes that it allowed a certain degree of 
flexibility in relation to pending legal 
proceedings. However, the Member States 
were aware of this approach, which was to 
their benefit. But a Member State cannot 
rely on the maintenance of a practice in 
order to challenge the sums being taken 
into account at a later juncture. That would 
be tantamount to the Member State no 
longer being required to collect the levies. It 
would also mean that the Commission was 
never entitled to impose a time-limit. 
30. The mere fact that certain sums have 
not been collected over a period of between 
6 and 12 years shows that the French 
authorities did not exercise the necessary 
diligence. 
31. Finally, the Commission's change in 
practice has not affected the financial 
situation of the Member States. The inclu­
sion of negative corrections in a clearance 
of accounts means that the sums subse­
quently collected are channelled to the 
national budget. But if they cannot be 
collected, they are borne by the Commu­
nity budget, provided they are not attribu­
table to negligence on the part of the 
Member State. The Member State is there­
fore treated in the same way as if Arti­
cle 8(2) of Regulation No 729/70 were 
being applied. 
32. The imposition of a time-limit, finally, 
is legally justified not on the basis of 
Regulation No 729/70, but by the obliga-
I - 8468 
FRANCE v COMMISSION 
tion to pay the total amount of the levies 
and not simply the amount collected. In the 
Commission's view, the French authorities 
failed to take all necessary measures to 
ensure collection of the levy. 
33. In the case of irregularities within the 
meaning of Article 8(2) of Regulation 
No 729/70, the Commission is authorised 
to assume, if certain levies are not collected, 
that they cannot be collected, and to decide 
whether they are to be borne by the 
Member State or the Community budget. 
There is all the more reason to take that 
approach in this case. 
(3) The Spanish Government 
34. The Spanish Government first draws 
attention to the legal basis of the additional 
milk levy.16 In the context of the EAGGF 17 
clearance of accounts, none of those provi­
sions permit charges to be imposed in 
respect of levies which it has not been 
possible to collect because of pending legal 
proceedings. It is the producers or purcha­
sers who are liable for the levy. The 
obligation of the Member States in relation 
to the Community consists in demanding 
payment with the requisite diligence in 
accordance with domestic law and paying 
it over to the Community. 
35. The Commission's approach is contra­
dictory: on the one hand, it includes the 
additional milk levy in the general frame­
work of EAGGF-funded expenditure and 
deducts from that the levies not yet paid by 
the Member States; on the other, it disputes 
the applicability of the second subpara­
graph of Article 8(1) and Article 8(2) of 
Regulation No 729/70 and refers merely to 
the Member States' obligation under Arti­
cle 15(4) of Regulation No 1546/88; 
equally, it contests the applicability of the 
principles of the Deutsche Milchkontor18 
judgment. 
36. The problem can be resolved only if the 
Member State's obligations in relation to 
the Community in the context of the 
imposition of the additional levy are 
defined. The Commission's approach can 
be endorsed only if the Member State has 
an obligation to pay in relation to the 
Community — independent of the obliga­
tion of the producer or purchaser to pay. 
Only subject to that condition, can the 
Commission offset its annual debt in rela­
tion to the Member State (reimbursement 
by the EAGGF of the payments disbursed 
by the Member State) with its claim against 
the Member States arising out of the 
supplementary milk levy. 
16 — See Regulation No 804/68 as amended by Regulation 
No 856/84 and Résiliation No 857/84. 
1 7 — European Agricultural Guidance and Guarantee Fund. 
18—Joined Cases 205/82 to 215/82 (cited in footnote 14 
above). 
I - 8469 
OPINION OF MR ALBER — CASE C-277/98 
37. In the view of the Spanish Government, 
the Member States are under no indepen­
dent obligation to pay; they are simply 
required to pay over to the Commission the 
sums collected or the equivalent of sums 
which have not been collected as a result of 
negligence. A Member State can only be 
under an obligation to pay in relation to the 
Community if it has actually collected the 
levy. 
38. The Commission's demand that levies, 
which have not been collected because legal 
proceedings remain pending, be paid over, 
implies that it interprets the obligation to 
pay as a specific obligation attaching to the 
Member States. That would be a third 
obligation, additional to the obligations of 
the Member States diligently to collect the 
levies and then pay over those monies to 
the Commission. But it has to be 
assumed — and the Commission acknowl­
edges this between the lines — that the 
Member State is not required to pay over to 
the Community sums other than those 
which it has collected from the persons 
liable for the levy. 
39. As it is not possible to identify an 
explicit legal basis establishing a specific 
obligation to pay incumbent on the Mem­
ber State, the question arises whether the 
Commission's approach may be justified 
for reasons inherent in the system. In that 
connection, however, the Spanish Govern­
ment contends that the Community's finan­
cial interests have not been damaged. The 
Community has not incurred any expendi­
ture. Nor is the Member State affording the 
individual an advantage not permitted 
under Community law. 
40. The need for the system to operate 
efficiently, cited by the Commission, is not 
furthered by the Commission's approach. 
Requiring the Member State to make a 
payment does not influence the progress of 
the court proceedings. 
41. The judgment in Deutsche Milch kon­
tor 19 is applicable to the obligations of the 
Member States. A Member State cannot be 
accused of negligence in connection with 
collecting levies, simply because legal pro­
ceedings are taking longer than would have 
been desirable. The bringing of legal pro­
ceedings cannot be equated with the failure 
to impose levies, at least where the aim of 
those proceedings is to collect the levies 
plus interest. 
42. In Spain, the person liable for the levy 
could challenge it before the courts in the 
same way as it could a tax demand under 
national law. 
19 — Joined Cases 205/82 to 215/82 (cited in footnote 14 
above). 
I - 8470 
FRANCE v COMMISSION 
IV — Analysis 
43. The additional milk levy was intro­
duced in the form applicable to this case, in 
1984, by Regulation No 856/84 (see 
point 7 above). As early as 1977, Regula­
tion (EEC) No 1079/77 20 introduced a co-
responsibility levy to correct, for the first 
time, an imbalance between supply and 
demand on the market in milk products. 
Even then, the market was in structural 
surplus. 21 Despite this Original' co-respon­
sibility levy, milk supplies continued to 
increase, 22 with the result that the Com­
munity legislature introduced the 'addi­
tional milk levy', which has given rise to 
this case, initially for a five year period, 
which was subsequently extended to nine 
years. When that special provision expired, 
a revised and tighter 23 model of an 'addi­
tional levy in the milk sector' was intro­
duced, with effect from 1 April 1993, by 
Regulation No 3950/92, 24 that is to say for 
the period after the years material to this 
dispute. 
44. The feature of the additional milk levy 
which has given rise to this dispute is that it 
is left to the Member States to select 
formula A or B to collect the levy. Under 
formula A, a milk producer who exceeds 
his reference quantity has to pay the levy, 
while, under formula B, the purchaser, that 
is in principle the dairy, pays a levy in 
respect of the quantities of milk delivered in 
excess of a reference quantity. But the 
purchaser passes the levy to be paid on to 
the producers who have increased their 
deliveries.25 The French Republic opted for 
formula B. 
45. The additional milk levy could there­
fore be described as a levy 'at the source' of 
milk production. Liability for the levy 
arises when the quantity of milk produced 
exceeds an established reference quantity. 
Given that, under the provision introducing 
the additional milk levy, Article 5c(1) of 
Regulation No 856/84, 'an additional levy 
payable by producers or purchasers of 
cows' milk shall be introduced', it is clear 
who is under an obligation to pay. That 
obligation to pay is also in principle an 
obligation under Community law, to be 
administered — like all of the Communi­
ty's agricultural legislation — by the Mem­
ber States. Determining the individual 
reference quantities, which, once they are 
exceeded, trigger liability for the levy, is, 
20 — Council Regulacion (KFC) No 1079/77 of 17 May 1977 
on a co-responsibility levy and on measures for expanding 
the markets in milk and milk products (OJ 1977 L 131, 
p. 6). 
21 — See the first and second recitals of Regulation No 856/84. 
22 — See the third recital of Regulation No 856/84. 
2.1 — See the second recital of Regulation No 3950/92 (cited in 
footnote 13 above). 
24 — See above, footnote 13. 
25 — See, in regard to the above. Article 5c of Regulation 
804/68 as amended by Regulation No 856/84 (see point 7 
above). 
I - 8471 
OPINION OF MR ALBER — CASE C-277/98 
consequently, also a matter for the Member 
States — in the light of the requirements of 
Community law. 
46. There is in any event an upper limit, set 
out in Article 5c(3) of Regulation 
No 804/68, as amended by Regulation 
No 856/84. According to that provision, 
the sum of the individual reference quan­
tities referred to in paragraph 1, that is to 
say the reference quantity of the producers 
or of the purchasers, depending on the 
formula selected, may not exceed a 'total 
guaranteed quantity' of the Member State. 
The 'total guaranteed quantity' is basically 
determined by reference to milk production 
in a reference year (1981 or 1983), 26 and, 
in that connection, the total guaranteed 
quantity of the Member States may not, in 
turn, exceed a total guaranteed quantity at 
Community level. In order to ensure this, it 
was necessary to lay down 'total guaran­
teed quantities' for each Member State, and 
that was done in the second subparagraph 
of Article 5c(3) of Regulation No 804/68, 
as amended by Regulation No 856/84. 
47. A degree of flexibility was provided for 
by establishing a 'Community reserve'; 27 
moreover, in the context of the 'additional 
levy in the milk sector' introduced in 
1992, 28 this was subsumed in the total 
guaranteed quantities of the Member 
States. 
48. Article 5c(5) of Regulation No 804/68, 
as amended by Regulation 856/84, contains 
a theoretical classification of the additional 
milk levy. According to that provision, the 
levies referred to in Article 5c are to be 
considered as 'intervention measures 
designed to regulate agricultural markets'. 
In addition, it stipulates the use to which 
the monies are to be put, stating that they 
are 'to be allocated to the financing of 
expenditure in the milk and milk products 
sector' . Article 9(4) of Regulation 
No 857/84, as amended by Regulation 
No 1305/85 (see point 8 above), contains 
further rules in this regard. 
49. The fact that the levy is classified as an 
intervention measure to regulate the agri­
cultural markets means that it can be 
included in the Commission's annual clear­
ance of accounts in relation to the Member 
States on the financing of the common 
agricultural policy. 
50. Article 1(1) of Regulation No 729/70, 
the basic regulation on the financing of the 
common agricultural policy, provides that 
the European Agricultural Guidance and 
Guarantee Fund forms part of the budget of 26 — See Article 5c(3) of Regulation No 804/68, as amended by 
Regulation No 856/84, and the fifth, eighth and ninth 
recitals of Regulation No 856/84. 
27 — See Article 5c(4) of Regulation No 804/68, as amended by 
Regulation No 856/84. 28 — See the fourth recital of Regulation No 3950/92. 
I - 8472 
FRANCE v COMMISSION 
the Communities. It basically divides the 
Fund into the Guarantee Section and the 
Guidance Section. In accordance with Arti­
cle 1(2), the Guarantee Section is to 
finance, inter alia, 'intervention intended 
to stabilise the agricultural markets'.29 
Article 3 of the regulation stipulates that 
intervention intended to stabilise the agri­
cultural markets, undertaken according to 
the Community rules within the framework 
of the common organisation of the agricul­
tural markets, is to be financed. By defining 
the additional milk levy in Article 5c(5) of 
Regulation No 804/68, as amended by 
Regulation No 856/84, in the context of 
the organisations of the market in milk and 
milk products, as an intervention measure 
intended to stabilise the agricultural mar­
kets, the Community legislature assigned it, 
for accounting purposes, to the European 
Agricultural Guidance and Guarantee 
Fund. 
51. The fact that the Fund usually takes 
responsibility for expenditure advanced by 
the Member States in the form of the 
intervention measures intended to stabilise 
the agricultural markets, whereas the addi­
tional milk levies constitutes revenue, is 
merely an accounting detail, given that the 
additional levy is treated as negative expen­
diture. Once the additional levy has been 
defined as an intervention measure inten­
ded to stabilise the agricultural markets 
and, consequently, assigned to the Eur­
opean Agricultural Guidance and Guaran­
tee Fund, its further administrative and 
budgetary treatment follows from that 
basic classification, which derives from 
the relevant provisions. 
52. It has also to be borne in mind that the 
additional milk levy falls within the context 
of the common organisation of the market 
in milk and milk products, with the con­
sequence that an intervention measure for 
milk basically applies, and the further 
consequence of guaranteed prices for milk 
and milk products. 30 Only the surplus milk 
produced in excess of the fixed reference 
quantity is subject to the additional levy. To 
an extent, then, it falls outside the frame­
work of the guaranteed prices. The addi­
tional milk levy can therefore also be 
construed as one less expense. 
53. Pursuant to Article 4(1) of Regulation 
No 729/70, the Member States are to 
designate the authorities and bodies which 
they shall empower to effect the payments 
in respect of the levy at issue. Pursuant to 
Article 4(2), the Commission is to make 
available to Member States the credits 
necessary to make the payments. Pursuant 
to Article 4(3), the bodies and authorities 
in the Member States are to draw up 
reports and a summary of accounts at least 
once a year. 
54. Pursuant to Article 5(2)(b) of Regula­
tion 729/70, the Commission is to make up 
the accounts of the authorities and bodies, 
on the basis of the documents referred to in 
paragraph 1, before the end of the follow­
ing year. Pursuant to Article 5(2)(c) of 
29 — Sec Article 1(2)(b) of Regulation No 729/70. 30 — Sec Articles 2 to 5 and 6 to 12 of Regulation No 804/68. 
I - 8473 
OPINION OF MR ALBER — CASE C-277/98 
Regulation No 729/70, as amended by 
Regulation No 1287/95, the Commission 
is to decide on the expenditure to be 
excluded from Community financing where 
it finds that expenditure has not been 
effected in compliance with Community 
rules. 
55. On the basis of the abovementioned 
provisions, the Commission adopted Deci­
sion 98/358 at issue, as is clear from the 
first, second and fifth recitals of the deci­
sion. According to the ninth recital: 
'Whereas corrections are necessary in 
respect of the supplementary levies for milk 
for the milk years 1985/1986 to 1992/1993 
which are still outstanding because of legal 
disputes between buyers/producers and the 
competent authorities of certain Member 
States; whereas these negative corrections 
for France, [Belgium, Luxembourg, United 
Kingdom and the Netherlands] amount to 
FRF 114 387 058; whereas the Commis­
sion nevertheless reserves the possibility to 
re-examine the corrections made under this 
clearance of accounts if, following the 
outcome of the legal proceedings, amounts 
are considered not to be due or to be non-
recoverable.' 
56. These are the grounds for the contested 
part of the Decision, the legality of which is 
the subject-matter of these proceedings. We 
have therefore to consider whether the 
Commission was entitled to apply the 
negative corrections in relation to the 
supplementary milk levy. 
57. Since the Decision at issue was specifi­
cally based on Regulation No 729/70, the 
first step is to seek to identify a legal basis 
for the negative corrections in that regula­
tion. The French Government rightly cites 
in this connection Article 8 of Regulation 
No 729/70. Article 8(1) sets out the obli­
gations of the Member States: they are, 
namely, to take, in accordance with 
national provisions laid down by law, 
regulation or administrative action, 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 irregu­
larities; and to recover sums lost as a result 
of irregularities or negligence. According to 
the second subparagraph of Article 8(1), 
the Member States are required to inform 
the Commission of the measures taken for 
those purposes, 'in particular of the state of 
the administrative and judicial procedures'. 
58. Article 8(2) then apportions the finan­
cial consequences if, as a result of the 
irregularities or negligence, total recovery 
has not been possible. In principle, the 
Community bears the financial conse­
quences unless the irregularities or negli-
I - 8474 
FRANCE v COMMISSION 
gence are attributable to administrative 
authorities or other bodies of the Member 
States. In that case, it is the Member State 
which must bear the financial conse­
quences. 
59. As regards the recovery procedures, the 
second subparagraph of Article 8(2), as 
amended by Regulation No 1287/95, pro­
vides that the sums recovered are to be paid 
to accredited paying agencies and deducted 
by them from the expenditure financed by 
the Fund. The interest on sums recovered or 
paid late is to be paid into the Fund. 
60. The French Government contends that, 
since neither irregularities nor negligence 
have been laid at the door of the French 
authorities, the supplementary levies as yet 
to be collected cannot be charged to the 
French Republic. As far as the legal pro­
ceedings which remain pending are con­
cerned, the abovementioned provision 
requires only that the French Republic 
provide information. 
61. Viewed in the light of Article 8 of 
Regulation No 729/70, that line of argu­
ment carries conviction. 
62. However, the Commission disputes the 
application of Article 8 to the facts of the 
case and points out that the Member States' 
obligation to pay the supplementary levies 
derives from Article 15(4) of Regulation 
No 1546/88. As set out in point 9 above, 
Article 15(4)(1) provides: 
'The purchasers referred to in paragraphs 
1, 2 and 3 shall pay any levy amount due to 
the competent agency within three months 
following the end of each 12-month per­
iod.' 
63. But Article 15(4)(1) makes specific pro­
vision only for the purchaser's duty to pay 
as the person liable for the supplementary 
levy. It says nothing about the way in which 
pending legal proceedings are to be handled 
in the context of the clearance of accounts. 
The Commission's argument could, how­
ever, be construed to the effect that — 
since the deadline by which the person 
liable for the levy is required to pay it is 
clearly stated — it has to be assumed that, 
as of that deadline, the Member State can 
be considered already to have collected the 
monies or, if it has not, it must bear the 
consequences. However, it remains unclear 
whether the Member State has to act as 
guarantor in this way because it is pre­
sumed that negligence or irregularities can 
be imputed to it or because, once the time-
limit for payment accorded to the person 
liable for that payment has expired, the 
Member State is deemed to have a specific 
obligation to pay in relation to the Com­
munity. 
I - 8475 
OPINION OF MR ALBER — CASE C-277/98 
64. The Commission's contention that, in 
its view, the criterion selected is compar­
able to that of Article 8 of Regulation 
No 729/70 supports the first of the two 
possibilities. The Commission may also be 
understood to be implying that, after 
proceedings lasting 12 years, it has to be 
assumed that the Member State has not 
exercised the necessary diligence. That 
argument suggests that, in the final analy­
sis, the Commission is accusing the Mem­
ber State of irregularities and is therefore 
entitled to apply the negative corrections. 
65. It is, however, hard to identify irregu­
larities, since the second subparagraph of 
Regulation No 729/70 specifically provides 
only for a duty to furnish information 
where proceedings are pending. The dura­
tion of just one set of proceedings would 
then have to be deemed to constitute 
negligence. That raises particular difficul­
ties if, in the context of national court 
proceedings, these cases are not unusually 
prolonged as compared with purely 
national litigation. Provided the proceed­
ings are being properly conducted, the time 
they take — however inconvenient in the 
individual case — cannot be held to con­
stitute negligence or irregularities on the 
part of the Member State. So long as, in 
accordance with the judgment in Deutsche 
Milchkontor, 31 the national courts and the 
national authorities apply the 'same rules 
and procedures' 32 when collecting levies as 
those which they apply in comparable cases 
concerning purely national financial bene­
fits, it cannot in principle be assumed that 
this is incompatible with the obligations 
incumbent on the authorities of the Mem­
ber State pursuant to Article 8 of Regula­
tion No 729/70. Apart from the fact that 
the proceedings have been inconveniently 
protracted, the Commission has adduced 
nothing to show that the national autho­
rities have been in breach of their obliga­
tion to the Community. 
66. Therefore, the only question is whether 
the obligation on the Member States to pay 
over to the Community budget the supple­
mentary milk levy that has been or is to be 
collected is an independent obligation, 
which stands alone from the obligation to 
pay attaching to the person liable for the 
payment. The Commission has not cited a 
legal basis for that. A legal basis is, 
however, discernible in the second subpara­
graph of Article 9(4) of Regulation 
No 857/84, as amended by Regulation 
No 1305/85. According to that provision, 
as referred to in point 8 above: 
'Where one or other of those quantities is 
exceeded,33 the amount of the levy col­
lected corresponding to the amount of the 
excess recorded shall be paid over to the 
Community.' 
31—Joined Cases 205/82 to 215/82 (cited in footnote 14 
above). 
32— Joined Cases 205/82 to 215/82 (cited in footnote 14 
above), paragraph 31. 
33 — That is to say the total guaranteed quantities referred to in 
Article 5c(3) of Regulation No 804/68 and the 'total' of 
the reference quantities for direct sales under Article 6(2) 
of Regulation No 857/84. 
I - 8476 
FRANCE v COMMISSION 
67. That form of words suggests that where 
a Member State's total guaranteed quan­
tity 34 is exceeded, the Member State is 
automatically under an obligation to pay 
over to the Community the levies in 
question. 
68. The very fact that a total guaranteed 
quantity was introduced could argue in 
favour of that approach. It is an indepen­
dent target, separate from the individual 
reference quantities. Although it represents 
the total of all the individual reference 
quantities and can therefore at the same 
time be considered to be the upper limit of 
these individual reference quantities, it has 
its own significance in relation to the 
Community. 
69. In the context of the rules on the 
common organisation of the market in 
milk and milk products, the total guaran­
teed quantity has yet another function, 
however. As I mentioned above, 35 it indi­
cates the total volume of milk production 
for which a Community price guarantee is 
assured. 
70. The dominant factors here are the 
regulatory function of the price guarantee, 
on the one hand, and the upper limit of the 
reference quantities to be allocated by the 
Member State, on the other. The mere fact 
that there is a total guaranteed quantity for 
each Member State does not therefore 
necessarily imply that, if it is exceeded, 
that Member State is under a specific 
obligation to pay. 
71. A number of factors also support that 
approach also. Firstly, neither Regulation 
No 856/84 nor Regulation No 857/84 in 
its original version mention an obligation 
incumbent upon the Member States to pay 
over levies if the total guaranteed quantity 
is exceeded. 
72. The abovementioned second subpara­
graph of Article 9(4) of Regulation 
No 857/84 was first introduced by Regula­
tion No 1305/85 for the purpose of deter­
mining the use to which the levy could be 
put for two years. The Member States were 
permitted to use the monies to finance the 
'milk annuity' within the meaning of Arti­
cle 4(1)(a) of Regulation No 857/84. 36 On 
the basis of that provision therefore, it can 
34 — For the sake of simplicity. I shall refer only to THE Total 
guaranteed quantity and not the total of the reference 
quantities for direct sales. 
3.5 — See point 52 above. 
36 — Article 4(1 Mal of Regulation No 857/S4 provides: 
'(1) in order to complete the restructuring of milk 
production at national or regional level or at tile level of 
the collecting areas, the Memher States may in connection 
with the application of formulas A and B: 
(a) grant to producers undertaking to guarantee to 
discontinue milk production definitively compensation 
paid in one or more annual payments.' 
I - 8477 
OPINION OF MR ALBER — CASE C-277/98 
certainly not be assumed that the amount 
of the levy to be paid to the Community, 
equivalent to the excess production that has 
been established, has obligatorily to be paid 
in all cases in which the total guaranteed 
quantity is exceeded. 
73. There is another rather pragmatic point 
to be made here, namely that the Commis­
sion's accounts are drawn up on the basis of 
the information provided by the Member 
States. 37 But so long as proceedings are 
pending before the courts, it is not possible 
to furnish definitive information on whe­
ther the total guaranteed quantity has been 
exhausted or exceeded. 
74. Consequently, there are many factors 
to indicate that the Member States' obliga­
tion to pay is an obligation that derives 
from the original obligation, under Com­
munity law, of the milk producers or 
purchasers towards the Community. 
75. Significantly, Article 15(4) of Regula­
tion No 1546/88, which the Commission 
cites as the legal basis for the Member 
States' obligation to pay, mentions only 
that the purchasers have to pay any levy 
due to the competent agency. Consequently, 
that provision makes no direct reference to 
the alleged obligation of the Member States 
to pay. Since that provision was not 
adopted until 1988, it does not regulate 
the period between the introduction of the 
additional milk levy in 1984 and the 
adoption of this provision, cited as the 
legal basis for the alleged obligation incum­
bent on the Member States. 
76. Furthermore, the Commission's own 
conduct argues against the Member States 
being under a specific obligation to pay. For 
several years, in the context of the clear­
ance of accounts, the Commission has 
entered reservations in relation to pending 
legal proceedings. As the Commission 
rightly points out — apart from possibly 
creating a situation of legitimate expecta­
tion — that approach does not in itself 
create rights. But it does suggest that the 
Commission did not act on the basis that 
the Member States are under a specific 
obligation to pay. Had that been its 
approach, there was no point in waiting. 
77. We have also to return to the grounds 
the Commission gives in the contested 
decision. The statement that: 'the Commis­
sion nevertheless reserves the possibility to 
re-examine the corrections made under this 
clearance of accounts if, following the 
outcome of the legal proceedings, amounts 
are considered not to be due or to be non-
recoverable', indicates that the Commission 
itself considers the outcome of the legal 
proceedings to be significant in relation to 
the Member States' obligation to pay. 37 — Article 5(2)(b) of Regulation No 729/70 (see point 10 
above). 
I - 8478 
FRANCE v COMMISSION 
78. That confirms, as is quite clear from 
the relevant Community provisions, that, 
under Community law, the producer or 
purchaser of the milk is obliged to pay the 
levy, and the Member States' obligation to 
pay derives from the obligation incumbent 
on the purchaser or producer. 
79. The obligation is provided for in the 
basic regulation 38 and confirmed in the 
subsequent regulations. 39 Even the system 
of additional levies in the milk sector, 
which has been in force since 1992 and is 
therefore not material to this case because 
of the period of time at issue, retained the 
basic principle that the producer or pur­
chaser is liable for the levy. 40 
80. The Commission's final argument con­
cerns the need for an efficient system, in the 
sense that the levies have immediately to be 
collected from the persons liable for them 
and responsible for the overproduction, but 
the system's efficiency is not necessarily 
enhanced by making the Member States 
liable for payment. This concerns the 
authorities' conduct in relation to the 
persons liable for the levy. In so far as legal 
proceedings remain pending, it is, however, 
clear that the national authorities — in 
France, ONILAIT — have already deman­
ded payment of the outstanding levies and 
are maintaining that position before the 
administrative court, as the proceedings 
would otherwise have been terminated. 
81. As it has also to be assumed that the 
existence of Member States' obligation to 
pay in relation to the Community depends 
on the original obligation to pay incumbent 
on the producers or purchasers, the Mem­
ber State cannot be charged sums on which 
an enforceable decision has yet to be taken. 
The complaint of the French Government 
must therefore be upheld. 
V — Costs 
82. Under Article 69(2) of the Rules of 
Procedure, the unsuccessful party is to be 
ordered to pay the costs if they have been 
applied for in the successful party's plead­
ings. Since the Commission has been 
unsuccessful, it must be ordered to pay 
the costs. In accordance with Article 69(4) 
of the Rules of Procedure, the Member 
States which intervene in the proceedings 
are to bear their own costs. The Kingdom 
of Spain must therefore bear its own costs. 
38 — See Article 5c of Regulation No 804/68 as amended bv 
Regulation No 856/84. 
39 —See Article 9( 11(a) of Regulation No 857/84 as well as 
Article 9(1) of that regulation as amended by Regulation 
No 1305/85 and the third recital of Regulation 
No 1546/88. 
40 — See the ninth recital of Regulation No 3950/92. 
I - 8479 
OPINION OF MR ALBER — CASE C-277/98 
VI — Conclusion 
83. In the light of the foregoing considerations, I propose that the Court should: 
(1) annul Commission Decision 98/358/EC of 6 May 1988 on the clearance of 
the accounts presented by the Member States in respect of the expenditure for 
1994 of the Guarantee Section of the European Agricultural Guidance and 
Guarantee Fund (EAGGF) in so far as it applies to the French Republic 
negative corrections in the amount of FRF 114 387 058 in respect of 
supplementary levies for milk for the 1985/86 to 1992/93 milk years; 
(2) order the Commission to bear its own costs and to pay those of the French 
Republic; 
(3) order the Kingdom of Spain to bear its own costs. 
I - 8480