61996CC0209_EN
Opinion of the Advocate-General
Opinion of the Advocate-General
A - Introduction
1 The present case concerns a flat-rate reduction in EAGGF (1) financing contested by the applicant.
The Commission justified that reduction by pointing to the fact that, in the context of intervention purchasing, the national authorities had accepted unlawful multiple tenders (group tenders or interconnected tenders). (2)
These may be of a speculative nature.
If, for example, very large quantities of beef are offered for sale into intervention, it becomes necessary to reduce these quantities by application of a coefficient. (3)
Since the tenderers endeavour to continue to sell the whole of their meat into intervention inflated tenders are lodged for speculative purposes.
If a tenderer speculates that a specific reduction coefficient will be laid down, he offers a correspondingly higher quantity for sale into intervention.
If it then turns out that the coefficient laid down is not as high as the tenderer assumed, the tenderer must deliver into intervention more meat than he actually has available.
If he is unable to perform his contract with the intervention agency as to 85% or 95%, he loses in whole or in part the security deposited in respect of the total amount. (4)
2 If, however, the tenderer splits his original tender into several smaller ones which are made in the name of nominees, the risk of losing the security payment is reduced.
If he is unable to deliver the full quantity tendered for, in the case of several smaller tenders he is at least in a position to honour certain of them in such a way that he does not lose the security payment.
It is true that in respect of the remaining tenders which he is then no longer in a position to honour the security payment will also be retained.
However, that security is not calculated on the total amount of all the tenders instigated by him but only on the smaller amount in each case.
The amount of the security lost is thus smaller and is often exceeded by the profit achieved.
3 A clear consequence of this, in the Commission's view, is that the lodging of multiple tenders favours speculation because the effect of the security deposit is lessened.
4 The Commission considers that misleadingly holding out that greater quantities exist, while at the same time engaging in speculation, runs counter to the spirit of intervention.
That mechanism is intended, for example by intervention buying-in, to stabilise the market and prevent or lessen any substantial price reduction, (5) where market prices fall below a certain level.
Regulation No 859/89 (6) introduced a tendering procedure. (7)
Under that tendering procedure purchase prices and quantities are established on the basis of tenders received. (8)
5 Speculative tenders which, as demonstrated, are favoured by the lodging of multiple tenders make it difficult, according to the Commission, to operate intervention successfully.
Since more meat is offered than is actually on the market, buying-in prices and quantities determined on the basis of tenders received can no longer be established in accordance with the actual market situation. Speculative tenders thus prevent the Commission from obtaining a precise overview of the market situation.
For that reason it may, the Commission maintains, almost certainly be presumed that, as a result of the speculative tenders and the multiple tenders favouring them, more meat is bought in by the intervention agencies at higher prices. In that connection, according to the Commission, it must also be borne in mind that the lodging of several tenders allows speculation as to price.
The buying-in of excessive quantities causes the EAGGF to incur higher costs than is necessary in order to support the market.
B - Facts and legal provisions
6 By this application the United Kingdom seeks the annulment of the Commission decision disallowing, in respect of the United Kingdom's expenditure for 1992 incurred in the buying-in of beef, the sum of UKL 3 356 000 (hereinafter `the Decision'). (9)
The disallowance of that expenditure is contained in Annex I of the Decision.
The amount disallowed corresponds to a flat-rate correction of 2% of 1992 expenditure.
7 In its Summary Report (10) the Commission justifies that reduction on the ground that the United Kingdom did not check whether multiple tenders had been submitted.
8 This would have been easy to ascertain, since the tenderers made no great efforts to conceal the connections between them.
As is apparent from the documents before the Court, tenders were made in certain cases by admittedly independent legal persons, yet were signed by the same person and sent from the same fax machine.
The tenders mentioned the same account number for transfer of the payment, and the securities were lodged by one and the same person in respect of all those tenders.
The United Kingdom authority must therefore have been aware of the conduct of the tenderers from the beginning.
9
The approach of the competent United Kingdom authority (Intervention Board) was therefore not compatible with the Community rules and discriminated against participants who had observed the rules.
10 In the applicant's view, however, all the rules concerning intervention were observed.
It accepted no tenders which were not lawful; it therefore contravened no requirement to carry out checks.
11 The provision which underlies this dispute is contained in Article 9 of Regulation No 859/89, paragraph 1 of which provides: `Tenderers may take part in the invitation to tender only if they undertake in writing to comply with all the provisions relating to the tender concerned.' (11)
12 Paragraph 2 provides: `Interested parties may participate in the invitation to tender issued by intervention agencies of the Member States in which this is opened either by lodging a written tender against a receipt or by any other written means of communication accepted by the intervention agency, with advice of receipt; they may submit one tender only per category in response to each invitation to tender.' (12)
13 The distinction between the concepts of `tenderer' and `interested party' is, in the Commission's view, of significance in this connection.
According to the Commission, it follows from the difference in wording that interested parties are not to be equated with tenderers. `Interested parties' are not only those persons who lodged tenders in the course of their economic activities.
That concept embraces a much wider circle of persons.
It is not therefore only the individual tenderer, that is to say the person who actually lodges the tender, who is prohibited from lodging more than one tender.
The prohibition covers all persons tendering in respect of the same quantity of meat.
14 On the other hand, the applicant is of the opinion that the concepts of `tenderer' and `interested party' are interchangeable.
The `tenderer', on the other hand, is the person who in fact submits the tender.
Accordingly, the prohibition in the second sentence of Article 9(2) merely precludes the person finally appearing as a tenderer from submitting more than one tender.
15 The fact that this provision covers other persons than the tenderer is, it is submitted, apparent only on a reading of Article 11(3) of Commission Regulation (EEC) No 2456/93 of 1 September 1993 laying down detailed rules for the application of Council Regulation (EEC) No 805/68 as regards the general and special intervention measures for beef (13) which was not yet in force at the material time. That provision is as follows:
`Interested parties may submit only one tender per category in response to each invitation to tender.
The Member States shall ensure that tenderers are independent of each other in the terms of their management, staffing and operations.
Where there are serious indications to the contrary or that tenders are not in line with economic facts, tenders shall be deemed admissible only where the tenderer presents suitable evidence of compliance with the second subparagraph.
Where it is established that a tenderer has submitted more than one tender, all the tenders from that tenderer shall be deemed inadmissible.'
16 The applicant, which in contrast to the Commission is of the opinion that the second sentence of Article 9(2) was fully complied with in the context of the tender procedure operated by it, in May 1995 referred a request for conciliation to the Conciliation Body. (14)
On the practice of multiple tenders which in fact, from an economic point of view, stem from the same operator, the Conciliation Body gave, according to the applicant, the following opinion: Although Member States took no initiative to counter this practice, the Commission services themselves could not have been unaware of it, but failed to react before 1993.
In the circumstances, the Conciliation Body went on, and because of the apparent absence of financial loss to the Fund resulting from this practice, the financial correction of 2% of total expenditure was difficult to justify.
17
The Commission points out in that connection that, in contrast to the national authorities, it did not at first have this information available to it.
Since the tenders were forwarded to it anonymously, it became aware of the irregularities only after checks carried out by it.
18 In its decision the Commission confirmed the 2% reduction proposed in the Summary Report, whereupon the applicant in June 1996 brought these proceedings before the Court in which it sought
- the annulment of the decision (15) to disallow the sum of UKL 3 356 000 in respect of the United Kingdom's expenditure for 1992 of the Guarantee Section of the European Agricultural Guidance and Guarantee Fund;
- an order that the Commission pay the applicant's costs of these proceedings.
The Commission contended that the Court should
- dismiss the application, and
- order the applicant to pay the costs.
C - Opinion
Meaning and purpose of the second sentence of Article 9(2)
19 First, the applicant claims that the Commission has misconstrued the second sentence of Article 9(2).
That provision, it is argued, merely requires every natural legal person applying to the intervention agency as a tenderer to submit one tender only.
Regulation No 859/89 is silent on any connections between individual tenderers which may need to be borne in mind.
The second sentence of Article 9(2) merely governs the number of tenders.
Nothing is said concerning the characteristics of the tenderers. The number of tenders was checked in the United Kingdom. The national authority verified whether each individual tenderer was a registered legal person.
Whether there were any connections between the individual undertakings which submitted tenders was not verified in the United Kingdom since there was no necessity to do so.
20 Even if such verification had been carried out, Regulation No 859/89 would have given the applicant no legal basis on which to reject such interconnected tenders.
21 According to the Court's case-law, it is for the Commission, it is submitted, in the context of the clearance of the accounts of the EAGGF, to show that a Member State has contravened Community rules.
The Commission, as has been demonstrated, was not able to adduce such proof.
Moreover, the applicant points out that rules which may have financial consequences for the Member States must be clearly and precisely formulated.
22 The applicant refers to the case-law of the Court. Thus, `as the Court has already observed, only refunds granted and intervention undertaken in accordance with the Community rules within the framework of the common organisation of agricultural markets are to be financed by the EAGGF ...'. (16)
In that connection it is for the Commission to prove an infringement of the rules governing the common organisation of the agricultural markets. (17)
23 Moreover, in regard to the requirements which the formulation of provisions must satisfy, the Court has held: `Since a rule whose breach inevitably entails financial consequences must be sufficiently clear and precise, the Commission was not entitled to rely on the terms of subheading ... as a basis for imposing, at the time of the clearance of EAGGF accounts, an interpretation which was not dictated by the normal meaning of the words used.' (18)
24 Accordingly, it must be examined whether the terms in which the second sentence of Article 9(2) of Regulation No 859/89 are couched satisfies these requirements and whether they allow of a construction of the kind placed on them by the Commission.
In that connection it would appear appropriate to examine first the manner in which the Commission seeks to interpret the second sentence of Article 9(2).
The pleadings mainly speak of multiple tenders.
Those cannot be tenders submitted by one and the same tenderer under one name, for such tenders are not lawful in the United Kingdom either.
As is also clear from the pleadings, the Commission is also not challenging every kind of connection between the individual tenders.
For example, it states that, where a person operates two independent slaughterhouses, both may submit a tender.
As the Commission explained in the hearing in its view only tenders relating to the same quantity of meat are unlawful under the second sentence of Article 9(2).
Where an interested party therefore offers his meat not only himself but through the intermediary of nominees, that is in breach of Community provisions and must be prohibited by the authorities of the Member States.
25 The Commission points out that, according to the Court's case-law, a provision is not merely to be construed literally but also in accordance with its meaning and purpose. (19)
Accordingly, the Commission contends that the provision at issue in these proceedings would be deprived of its purpose if it were possible to submit several tenders via nominees, thus circumventing the prohibitive provision.
26 The intervention scheme is jeopardised, as has been demonstrated, by the practice in regard to intervention buying-in in the United Kingdom.
By the buying-in of excessive quantities greater costs arise, it is submitted, than are necessary in order to support the market. Moreover, equality of access for all interested parties required under Article 6(6) of Regulation No 805/68, as amended by Regulation No 571/89, is not guaranteed.
27 Article 9(2) of Regulation No 859/89 must therefore, it is contended, be interpreted according to its meaning and purpose in such a way that intervention measures are not frustrated.
If tenders relate to the same quantity of meat they are in reality only from one single tenderer.
Such tenders are therefore unlawful.
28 In the Commission's view, this follows from the wording. In this connection it should be said that a difference in wording as between paragraphs 1 and 2 of Article 9 could certainly point to a difference in meaning.
It could be inferred therefrom that it is not sufficient to check whether the person who in actual fact submits the tender only submits a single one, that is to say whether in each case an independent (legal) person participates in the procedure.
Thus the term `interested party' could be understood as including a person interested in selling his meat into intervention.
As has been seen, that person must not necessarily be the same person as the tenderer, that is to say the person who actually submits the tender.
If, for example, the meat is offered via nominees, in that case there is only one interested party but several tenderers. But if one looks at the way in which those two concepts are used in other regulations dealing with intervention measures for beef, it may be seen that the abovementioned distinction is not always adhered to.
Thus, for example, the first recital in the preamble to Regulation No 2271/90, (20) provides that `... tenderers should only be allowed to submit a single tender ... for each category in response to each invitation to tender'.
Moreover, Article 11(3) of Regulation No 2456/93, which replaced Article 9 of Regulation 859/89, uses the terms `Interessent' (interested party) and `Bieter' (tenderer) in connection with the submission of tenders. (21)
29 Thus, no further conclusions may be drawn from the distinction between `tenderer' and `interested party' in Article 9.
30 However, it is more instructive to have regard to the provisions which preceded those at issue in the present proceedings.
Thus, in 1990 it was made possible to submit several tenders at different prices.
Under Regulation No 1282/90 (22) the last phrase of Article 9(2) received the following formulation:
`They may submit more than one tender, at different prices, for each category in response to each invitation to tender.'
31 That provision was, however, repealed shortly afterwards in August 1990.
Amending Regulation No 2271/90 stated in the first recital to the preamble thereof `Experience shows that tenderers should only be allowed to submit a single tender for each category in response to each invitation to tender.'
32 In the applicant's view that regulation only governs the number of tenders which the tenderer may submit.
However, it is clear that after repeal of the provision in Regulation No 1282/90 the tenderer may no longer submit several tenders in respect of the same quantity of meat. The meaning and purpose of the provision here at issue in the second sentence of Article 9(2) is thus that several tenders may not be submitted in respect of a specific quantity of meat.
That provision would become meaningless if it could readily be circumvented by recourse to nominees.
33 The applicant must also have been aware of that fact when it received the tenders.
On the one hand, it is true of any rule that it becomes meaningless if it is circumvented, for example, as is maintained, by virtue of the fact that the same meat is offered by several persons. Secondly, the applicant was aware of the meaning and purpose of intervention.
To that extent it must also have been aware of the fact that it runs counter to the purpose of intervention if multiple tenders are submitted in respect of the beef available on the market.
34 Moreover, the Court has held that even in cases where Community law is applied objectively but incorrectly as a result of an interpretation in good faith by national authorities, costs incurred in that connection must, under Articles 2 and 3 of Regulation No 729/70 (23) be borne by the Member States. (24)
This narrow interpretation of the criteria for allowing expenditure under the EAGGF is dictated by the objective pursued by Regulation No 729/70. Since implementation of a common agricultural policy must ensure equal treatment as between citizens of the Member States, national authorities of a Member State are not permitted, by means of a broad interpretation of a given provision, to favour citizens of that State as against those of other Member States in which a stricter interpretation is applied. (25)
35 Admittedly, the applicant rightly points out that the second sentence of Article 9(2) is silent on who the individual tenderers are and the manner in which individual tenderers are to structure their relationships one to another.
There is, however, no requirement to this effect. It follows from the meaning and purpose of the second sentence of Article 9(2) that it is prohibited to offer meat by way of nominees.
The applicant cannot rest content in the assertion that it is under no obligation under the terms of Article 9 to examine possible connections between individual tenderers.
That is merely a question as to the manner in which observance of a prohibitive provision such as that contained in the second sentence of Article 9(2) can be monitored.
36 Accordingly, it is right to uphold the Commission's submission that the second sentence of Article 9(2) also prohibits tenders which, whilst coming from different legal persons, are made in respect of the same beef, with the result that the tenders may be assumed to have been submitted by nominees.
37 In that way, contrary to the applicant's submission, a basis is provided for such tenders to be rejected, namely the second sentence of Article 9(2) aforesaid.
Monitoring obligation on the part of the Member State
38 In the Commission's view, the disallowance made in the context of the clearance of accounts is justified on the ground that the applicant did not ensure compliance with that provision.
39 It is clear that in the United Kingdom tenders are examined only to see whether they originate from different legal persons.
No further examination was undertaken.
In what follows it will be a matter of examining whether on that basis the applicant may be said to have failed to observe a provision of Community law.
40 For the applicant submits that the Commission has mentioned not one single example in which tenders were actually submitted by nominees.
41 However, the Commission is unable to adduce such proof because in this connection the applicant carried out no checks.
The only check made was whether the tenders were from independent (legal) persons.
Thus, the Commission has no information before it as to the further details of specific circumstances.
Admittedly, the Commission may also carry out its own checks.
However, under the Court's case-law on the implementation on EAGGF financing it is primarily for the national authorities to ensure precise compliance with Community provisions.
As the Court went on to point out, `that system, based on trust, does not involve any systematic supervision by the Commission, which moreover would in practice be impossible for it to carry out ...
Only the Member State is in a position to know and determine precisely the information necessary for drawing up EAGGF accounts since the Commission is not close enough to obtain the information it needs from the economic operators.' (26)
42 Thus, since in the context of the clearance of EAGGF accounts the Commission is dependent upon information provided by the Member States, it is not possible for it here to give a specific example of an infringement under the tendering procedures.
The Commission is able - and required - merely to show that the applicant failed to examine all the criteria necessary for the purposes of compliance with the relevant provision.
That the Commission did.
43 In connection with the question whether there is thus shown to be an infringement by the applicant, a matter also to be considered is whether the applicant was required to carry out any additional examination.
In that connection reference should be made to Regulation (EEC) No 729/70.
In the recitals in the preamble to that regulation it is stated, inter alia: `Measures must be taken to prevent ... irregularities.' (27)
The eighth recital states: `Community expenditure must be made subject to close supervision.
In addition to supervision carried out by the Member States on their own initiative, which remains essential, provision should be made for verification by officials of the Commission and for it to have the right to enlist the help of Member States.'
44 Article 8 of the regulation, which reflects these recitals, provides in paragraph 1 thereof:
`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 irregularities or negligence.
...'
45 Under the Court's case-law it is for the national authorities to monitor precise compliance with Community provisions. (28)
The extent of this obligation on the Member States in regard to the financing of the EAGGF was decided by the Court in its judgment in Exportslachterijen van Oordegem.
In that judgment it was held in regard to Article 8(1) of Regulation No 729/70:
`That provision, which expressly lays down in that specific area the obligations imposed on Member States by Article 5 of the Treaty defines, the Court has said, the principles according to which the Community and the Member States must ensure the implementation of Community decisions on agricultural intervention financed by the Fund and combat fraud and irregularities in relation to those operations (BayWa, cited above, paragraph 13).
That article thus imposes on the Member States the general obligation to take the measures necessary to satisfy themselves that the transactions financed by the Fund are actually carried out and are executed correctly, even if the specific Community act does not expressly provide for the adoption of particular supervisory measures (Case C-8/88 Germany v Commission [1990] ECR I-2321, paragraphs 16 and 17).' (29)
46 It follows therefrom that an obligation on the part of Member States to carry out checks may subsist even if such a requirement is not expressly provided for in the relevant provision.
47 Thus, the question arises whether in the specific case before the Court the applicant was required to carry out further checks, that is to say whether the Member State ought to have or could have done more and, if so, what?
48 In line with the Commission's submission, the disadvantage for the Fund arises out of the fact that the submission of several tenders by an interested party by means of nominees encourages the submission of speculative tenders.
Yet if one has regard to the Commission's procedure against speculative tenders, it might be queried whether the applicant was required to take any further steps.
49 In order to prevent speculative tenders whereby, in anticipation of a specific reduction coefficient, tenders are made in respect of a greater quantity of meat than is available, (30) a security payment was introduced under Article 10(1), in order to ensure that `tenders are bona fide and that the conditions laid down are complied with'. (31) That means that in that connection the Member States are merely obliged to ensure that the appropriate amount of security is deposited.
They do not have to check whether the individual tenderer has offered more beef than is in his possession.
50 In the present case, however, there was a further provision to be considered which could not be circumvented. An interested party desirous of selling his meat into intervention could not submit more than one tender.
That followed from the underlying rationale of intervention.
It is true that that idea was only subsequently given concrete shape in Regulation No 2456/93. (32)
However, that does not alter the fact that already prior thereto there must have been awareness of that idea.
51 Thus, it is clear that the applicant ought to have carried out further checks in order to establish whether the tenders submitted were in fact from the same tenderer. That is particularly the case in light of the clear indications already alluded to of interconnections between individual tenderers.
Even if it could not with certainty be concluded from those interconnections that there was an infringement of the second sentence of Article 9(2), the indications were however of such a nature as to necessitate more specific checks, and that was the sole decisive factor.
52 The applicant submitted that monitoring of that kind could not be carried out since slaughtering came after the submission of tenders.
Therefore, it is argued, it was not possible at the latter date to check whether the beef in respect of which tenders were made actually existed.
In that connection it should be stated that that was not the only way of checking whether the tender was submitted by a nominee.
For example, an examination could be carried out as to the interconnection between the individual tenderers and whether it was at all possible for the individual tenderer to offer its own beef.
Thus, Regulation No 2456/93 provides that the Member States are to ensure that tenderers are independent of each other in terms of management, staffing and operations. (33)
Even before the entry into force of the 1993 regulation such a check could have been carried out.
As has been shown a monitoring obligation on the part of the Member States may subsist even if it is not expressly provided for in the relevant regulation.
In the present case this duty arose out of the rationale underlying intervention long before the provision was enacted in Regulation No 2456/93.
The important factor in that connection is that the Member State should check whether in fact tenders are being made in respect of different quantities of beef.
The manner in which it carries out those checks is for it to decide.
This does not need to be expressly regulated by the Commission. Accordingly, the Commission cannot be said, contrary to the applicant's submission, to be seeking to apply Regulation No 2456/93 retroactively to the facts of the present case.
53 It must therefore be held that the applicant ought to have carried out further checks which it failed to do.
Proof of loss occasioned to the EAGGF - burden of proof
54 It now falls to examine whether a reduction in the context of the clearance of accounts, as applied by the Commission, was justified.
In the applicant's view that is not the case since the Fund suffered no loss.
55 In order to answer that question, regard must be had to the Court's case-law on proof of loss and the burden of proof in the context of the clearance of EAGGF accounts. Thus, the Court has stated that only refunds granted in accordance with Community provisions and interventions carried out in the context of the common organisation of agricultural markets are to be financed by the EAGGF. (34) It is, the Court went on, for the Member State to show that the conditions for obtaining the financing refused by the Commission are fulfilled, where the Commission refuses to charge certain expenditure to the EAGGF on the ground that such expenditure was incurred as a result of breaches of Community rules attributable to that Member State. (35)
56 In that connection, a further question is as to the requirements which the Commission's submission with regard to the occasioning of financial loss must satisfy.
Under the Court's case-law, in cases where it cannot be established to what extent a national measure incompatible with Community law has led to an increase in expenditure under a budgetary heading of the EAGGF, the Commission has `no choice' but to disallow the questionable expenditure altogether, and not merely a certain percentage of it. (36)
57 There may be a case of that kind here since, precisely because the necessary checks were not made, the Commission is unable to establish to what extent the applicant's conduct has occasioned loss to the EAGGF.
Hypothetically, it may only be speculated what costs would not have been incurred if the applicant had carried out the proper checks.
58 Conversely, in a case in which the Commission called in question the correctness of figures notified by a Member State, the Court held: `The Commission is required not to demonstrate exhaustively that there are irregularities in the data submitted by the Member States but to adduce evidence of serious and reasonable doubt on its part regarding the figures submitted by the national authorities.
The reason for this mitigation of the burden of proof on the Commission is that ... it is the State which is best placed to collect and verify the data required for the clearance of EAGGF accounts; consequently, it is for the State to adduce the most detailed and comprehensive evidence that its figures are accurate and, if appropriate, that the Commission's calculations are incorrect'. (37)
59 That case is not directly comparable with the present case since the Commission is not alleging that the figures communicated to it by the applicant are incorrect.
It is rather the case that the figures could have been different if the applicant had carried out adequate checks.
But, also in that connection, the Commission did not merely submit that the EAGGF suffered no loss.
Rather it showed that the applicant had infringed Community law and the manner in which it had done so.
It explained, furthermore, how that may have favoured speculative bids by tenderers. It explained, finally, that that may have led to an erroneous appraisal of the market and thus to excessive buying-in of beef, in some cases, at increased prices. Thus, in any event, it adduced credible evidence that it was possible for loss to have been incurred by the EAGGF.
60 A more extensive evidentiary obligation cannot be imposed on the Commission since the abovementioned grounds for easing the burden of proof also subsist in this case. Nor can it be ruled out beyond doubt that the applicant's conduct jeopardised the functioning of the common organisation of the market. (38)
61 It is therefore for the applicant - as is apparent from the judgment cited in paragraph 55 - to show that the conduct alleged against it did not lead to an increase in expenditure in the context of the EAGGF.
The applicant submits that the Commission is not dependent on tenders for sale into intervention forwarded by the Member States but has other possibilities available to it for obtaining information on the prevailing market situation.
62 In that connection it should be said that, under Regulation No 571/89, purchase prices and quantities are determined on the basis of tenders received. (39)
It is apparent therefrom that the numbers of tenders have at least a concomitant role to play in the appraisal of the market and the determination of prices and quantities which are bought in.
Thus, it cannot be precluded that excessive bids could have given rise to an erroneous assessment.
63 Since the Commission has thus at least adduced credible evidence that the applicant's conduct may have occasioned loss to the EAGGF, it is for the applicant to show that this was not the case.
64 To distribute the burden of proof in that manner in the present case also appears to be reasonable against the background of other judgments of the Court in regard to clearance of accounts.
Thus, in cases where Community rules authorise payment of aid only on condition that certain formalities relating to proof or supervision are observed, the Court has held that aid is not granted in conformity with Community law if those preconditions are not observed.
The expenditure incurred in connection therewith could not be charged to the EAGGF even if it was clear that there had been no substantive irregularity. (40)
65 Also in connection with the observance of formalities, the Court has held: `In view of the essential nature of the formalities which were not complied with and of the fact that it was not possible to check that the time-limit within which the products were to be exported was observed, and in view, therefore, of the possibility of losses, or even fraud, to the detriment of the Community budget, the amount disallowed by the Commission, which was limited to 2% of the expenditure involved, cannot be regarded as excessive and disproportionate.' (41)
Thus, even the mere likelihood of losses may be used as a criterion for the purposes of the assessment.
Such likelihood subsists in the present case in light of the abovementioned factors and the absence of checks.
66 The sole matter to be determined is therefore whether the applicant can successfully plead that no loss was incurred by the EAGGF.
The applicant submits, first, that it is for the Commission to show that a loss was incurred. That is, as demonstrated above,(42)
not correct.
In addition it claims that to its knowledge no higher expenditure was incurred.
That too cannot be regarded as sufficient.
67 Moreover, the applicant submits that during the relevant period only small amounts of security payments were forfeited.
Accordingly, there can have been no extensive speculation in regard to tenders.
The Commission's view is that this shows, precisely, how successful the practice of so-called multiple tenders is in reducing the risk to the individual tenderer.
68 As the Commission rightly argues, the practice of so-called multiple tenders enables the tenderer to speculate with several tenders whereby, in the event of an unsuccessful speculation, the loss is reduced because the security is smaller for the smaller quantity.
69 Accordingly, the practice of so-called multiple tenders need not necessarily lead to a reduction in cases in which the security is forfeited but rather to a reduction in amounts of security retained.
70 Moreover, the applicant gives examples where alleged multiple tenders were of no advantage to tenderers.
If in cases which according to the Commission are open to challenge multiple tenderers had submitted only one overall tender, smaller amounts in respect of security payments would have been forfeited; in some cases the security payment would not have been forfeited at all.
The applicant is assuming in that connection that tenders were submitted in respect of different quantities of beef which, if appropriate, could be exchanged.
In the Commission's example, however, tenders were made in respect of the same quantity of meat.
71 Finally, the applicant claims that the participants in tendering procedures under the so-called safety net procedure are scarcely different from the participants in normal tendering procedures. (43)
However, since under the safety net procedure all bids were accepted, there was in that case no need for speculative tenders.
Yet, if the participants under these intervention measures are the same as those participating in the normal intervention procedures, as the applicant asserts, it might indeed be open to question whether multiple tenders were lodged in the case of normal intervention procedures.
72 However, since, as the Commission contends, intervention measures under the safety net procedure were adopted only in very few cases, it cannot, in light of the other indications, be inferred solely from this assertion by the applicant that there were no multiple tenders and accordingly no loss was incurred by the EAGGF.
Nor is it thereby refuted that in a given case several tenders were submitted in respect of the same quantity of beef.
73 Thus, it is clear that the applicant has been unable to refute the Commission's argument concerning financial loss incurred by the EAGGF.
Possibility of a flat-rate calculation of the financial loss
74 The applicant also challenges the flat-rate calculation of the financial loss undertaken by the Commission.
Since there is no connection between that calculation and the loss, that is said to be a penalty for which there must be an express legal basis.
No such basis is, however, apparent.
75 In that connection it should be said that the applicant is incorrectly assuming that no connection with a loss can be established.
As demonstrated above, (44) a loss to the EAGGF cannot be precluded.
Moreover, it is sufficient to refer to the Court's case-law in regard to cases in which the Commission does not disallow the total expenditure affected by the infringement but endeavours to establish the financial consequences of the unlawful action by means of calculations.
These calculations are based on an assessment of the situation which would have prevailed on the market in question had it not been for the infringement.
In such cases, the Court has held, it is for the Member State to show that the conditions for obtaining the financing disallowed by the Commission are fulfilled. (45)
Thus, in this case too, it is for the applicant to show that the Commission's assessment is erroneous.
As demonstrated above, it has been unable to do so.
Commission's guidelines (Belle Group Report)
76 In that connection it should again be recalled that, under the Court's case-law, financing of expenditure can be disallowed even as to 100%, if the precise financial consequences of a measure contrary to Community law cannot be established. (46)
77 For the purposes of flat-rate corrections, the Commission adopted certain guidelines upon a proposal by an inter-service group (Belle Group Report).
The group proposed a reduction in flat-rate calculations by three possible percentages:
- 2%, where the deficiency is limited to parts of the control system of lesser importance, or to the operation of controls which are not essential to the assurance of the regularity of the expenditure, such that it can reasonably be concluded that the risk of loss to the EAGGF was minor;
- 5%, where the deficiency relates to important elements of the control system or to the operation of controls which play an important part in the assurance of the regularity of the expenditure, such that it can reasonably be concluded that the risk of loss to the EAGGF was significant;
- 10%, where the deficiency relates to the whole of or fundamental elements of the control system or to the operation of controls essential to assuring the regularity of the expenditure, such that it can reasonably be concluded that there was a high risk of widespread loss to the EAGGF.
78 Those guidelines also provide that no correction should be made in relation to cases of minor deficiencies in the controls where the risk of loss is assessed as minimal. That applies particularly to cases where the national authorities took effective steps to remedy the deficiencies as soon as they were brought to light, and where the deficiencies arose from difficulties in the interpretation of Community texts.
79 It is this provision which the applicant invokes.
Even if one could proceed on the basis that the deficiencies in the control system were attributable to the fact that the second sentence of Article 9(2) of Regulation No 859/89 was difficult to interpret, it must be pointed out that the criterion of (only) minor deficiencies mentioned in those guidelines is not satisfied in this case.
This is not a case of minor deficiencies in the control system.
Rather it is a case where no checks were carried out to ascertain whether multiple tenders were made in respect of the same quantity of meat or indeed whether they were made by nominees.
Accordingly, the 2% flat-rate correction chosen by the Commission appears to be proportionate and reasonable.
80 The applicant was thus unable to show that the Commission erred in its assessment of the financial correction to be applied in the clearance of accounts.
Infringement of Article 190?
81 Finally, the applicant additionally submits that the Commission's decision must be set aside because it contravenes Article 190 of the EC Treaty.
The Commission, it is submitted, failed adequately to demonstrate that the multiple tenders produced the effects alleged by it.
As already demonstrated above, the Commission, in any event, discharged the burden of proof imposed on it in the present case.
82 Moreover, reference should be made to the Court's case-law under which decisions concerning the clearance of accounts do not require detailed reasons if the government concerned was closely involved in the process by which the decision came about and is therefore aware of the reason for which the Commission considers that it must not charge the sums in dispute to the EAGGF. (47)
83 Accordingly, the objections made against the Commission's decision cannot avail the applicant.
Costs
84 Under the first subparagraph of Article 69(2) of the Rules of Procedure of the Court the unsuccessful party is to be ordered to pay the costs if they have been asked for in the successful party's pleadings.
D - Conclusion
85 I therefore propose that the Court should:
(1) dismiss the application;
(2) order the United Kingdom to pay the costs.
(1) - That is to say the European Agricultural Guidance and Guarantee Fund.
(2) - This problem is also at least partly in issue in Case C-236/96 France v Commission [1998] ECR I-5699, Case C-233/96 Denmark v Commission [1998] ECR I-5759, Case C-238/96 Ireland v Commission [1998] ECR I-5801 and Case C-246/96 Italy v Commission [1998] ECR I-5863.
(3) - The relevant provision is to be found in Article 11(3) of Commission Regulation (EEC) No 859/89 of 29 March 1989 laying down detailed rules for the application of intervention measures in the beef and veal sector (OJ 1989 L 91, p. 5).
(4) - Article 13(4) of Regulation No 859/89.
(5) - Fourth recital in the preamble to and Article 5 of Regulation (EEC) No 805/68 of the Council of 27 June 1968 on the common organisation of the markets for beef and veal (OJ English Special Edition 1968(I), p. 187).
(6) - Cited in footnote 3.
(7) - Third recital and Article 7 et seq. of Regulation No 859/89.
(8) - Second recital in the preamble to Council Regulation (EEC) No 571/89 of 2 March 1989 amending Regulation (EEC) No 805/68 on the common organisation of the markets in beef and veal, repealing Regulation (EEC) No 1302/73 and renewing Regulation (EEC) No 4132/88 (OJ 1989 L 61, p. 43).
(9) - Commission Decision 96/311/EC of 10 April 1996 on the clearance of the accounts presented by the Member States in respect of the expenditure for 1992 of the Guarantee Section of the European Agricultural Guidance and Guarantee Fund and in respect of certain expenditure for 1993 (OJ 1996 L 117, p. 19).
(10) - Document VI/6355/95.
(11) - Emphasis added.
(12) - Emphasis added.
(13) - OJ 1993 L 225, p. 4.
(14) - Established by 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 EAGGF, Guarantee Section (OJ 1994 L 182, p. 45).
(15) - See footnote 9.
(16) - Case C-48/91 Netherlands v Commission [1993] I-5611, paragraphs 13 and 14, with further references.
(17) - Netherlands v Commission (cited in footnote 16, paragraph 18, with further references); Case C-281/89 Italy v Commission [1991] ECR I-347, paragraph 19, with further references; Case 347/85 United Kingdom v Commission [1988] ECR 1749, paragraph 16; and Case C-55/91 Italy v Commission [1993] ECR I-4813, paragraph 13, with further references.
(18) - Case 349/85 Denmark v Commission [1988] ECR 169, paragraph 16.
(19) - Case C-283/91 Contarini [1992] ECR I-6359, paragraph 14 and Joined Cases C-296/93 and C-307/93 France and Ireland v Commission [1996] ECR I-795, paragraph 21.
(20) - Commission Regulation (EEC) No 2271/90 of 1 August 1990 amending Regulation (EEC) No 859/89 laying down detailed rules for the application of intervention measures in the beef and veal sector (OJ 1990 L 204, p. 45).
(21) - This distinction is also reflected in the English version which speaks of `interested parties' and `tenderer'.
(22) - Commission Regulation (EEC) No 1282/90 of 15 May 1990 amending Regulation (EEC) No 859/89 and laying down detailed rules for the application of intervention measures for beef (OJ 1990 L 126, p. 31).
(23) - Regulation (EEC) No 729/70 of the Council of 21 April 1970 on the financing of the common agricultural policy (OJ, English Special Edition 1970 (I), p. 218).
(24) - Article 3(1) of Regulation No 729/70 provides: `Intervention intended to stabilise the agricultural markets, undertaken according to Community rules within the framework of the common organisation of the markets, shall be financed under Article 1(2)(b).'
(25) - Case 11/76 Netherlands v Commission [1979] ECR 245, paragraphs 8 and 9.
(26) - Netherlands v Commission (cited in footnote 16, paragraph 11).
(27) - Seventh recital.
(28) - Netherlands v Commission (cited at footnote 16, paragraph 11, Case C-366/88 France v Commission [1990] ECR I-3571, paragraph 20, Case C-8/88 Germany v Commission [1990] ECR I-2321, paragraph 17 and Joined Cases 146/81, 192/81 and 193/81 BayWa [1982] ECR 1503, paragraph 26.
(29) - Case C-2/93 Exportslachterijen van Oordegem [1994] ECR I-2283, paragraphs 17 and 18.
(30) - Article 10 of Regulation No 859/89.
(31) - Third recital in the preamble to Regulation No 859/89.
(32) - Third recital in the preamble to Regulation No 2456/93.
(33) - Second subparagraph of Article 11(3).
(34) - Netherlands v Commission (cited in footnote 16, paragraph 14) with further references.
(35) - Netherlands v Commission (cited in footnote 16, paragraph 16) and United Kingdom v Commission (cited in footnote 17, paragraph 13).
(36) - Case C-50/94 Greece v Commission [1996] ECR I-3331, paragraph 26, Joined Cases 15/76 and 16/76 France v Commission [1979] ECR 321, paragraphs 32 et seq. and United Kingdom v Commission (cited in footnote 17, paragraph 13).
(37) - Judgment in Netherlands v Commission (cited in footnote 16, paragraph 17).
(38) - Case 55/83 Italy v Commission [1985] ECR 683, paragraph 16.
(39) - Second recital in the preamble to Regulation No 571/89 (cited in footnote 8).
(40) - Case 327/85 Netherlands v Commission [1988] ECR 1065, paragraph 25.
(41) - Case C-49/94 Ireland v Commission [1995] ECR I-2683, paragraph 22.
(42) - Cf. paragraph 54 et seq.
(43) - Safety-net measures are adopted if the market price falls particularly sharply.
Under those measures all bids at or under 80% of the intervention price are accepted (Article 6(5) of Regulation No 805/68 as amended by Regulation No 571/89).
(44) - See paragraph 54 et seq., in particular paragraph 63.
(45) - United Kingdom v Commission (cited in footnote 17, paragraphs 14 and 15).
(46) - See footnote 36.
(47) - United Kingdom v Commission (cited in footnote 17, paragraph 60).