ORDER OF THE GENERAL COURT (Third Chamber)
14 September 2022 (*)
(Actions for annulment – European Structural and Investment Funds – ERDF – Cohesion Fund – ESF – Regulation (EU) No 1303/2013 – Letter concerning the follow-up of recommendations set out by the Commission in its audit of alleged conflicts of interest – Act not amenable to review – Preparatory act – Inadmissibility)
In Joined Cases T‑101/21 and T‑213/21,
Primagra a.s., established in Milín (Czech Republic),
Mlékárna Hlinsko a.s., established in Hlinsko (Czech Republic),
represented by S. Sobolová and O. Billard, lawyers,
applicants,
v
European Commission, represented by J. Hradil and M. Salyková, acting as Agents,
defendant,
THE GENERAL COURT (Third Chamber),
composed of G. De Baere, President, V. Kreuschitz and G. Steinfatt (Rapporteur), Judges,
Registrar: E. Coulon,
having regard to the written part of the procedure,
makes the following
Order
1        By their actions based on Article 263 TFEU, the applicants, Primagra a.s., in Case T‑101/21, and Mlékárna Hlinsko a.s., in Case T‑213/21, seek annulment of the letter of the European Commission of 22 October 2020 addressed to the Czech Republic, entitled ‘Follow up of audit No REGC414CZ0133’ and bearing the reference Ares(2020) 5759350 (‘the contested letter’).
Background to the dispute
2        The applicants, companies incorporated under Czech law, are part of the holding group Agrofert, a.s. (‘the Agrofert group’), which the Commission considers to be indirectly owned by the former Minister for Finance and Deputy Minister for Economic Affairs, then Prime Minister of the Czech Republic, Mr Andrej Babiš. Companies of the Agrofert group received grants from the EU budget during the period of financial frameworks 2007-2013 and 2014-2020, inter alia from the European Structural and Investment Funds (‘the ESI Funds’) and from the European Agricultural Guarantee Fund (EAGF).
3        The applicants complain, in essence, that the Commission, by the contested letter, prohibited the Czech Republic from awarding grants to subsidiaries of the Agrofert group.
4        That letter forms part of the inquiry with reference REGC414CZ0133 (‘the audit procedure’) initiated by the Commission at the beginning of 2019 while carrying out on-the-spot audits in the Czech Republic relating to the use of the European Regional Development Fund (ERDF), the Cohesion Fund and the European Social Fund (ESF), which fall within the ESI Funds. The purpose of that audit procedure was, inter alia, to determine whether the receipt of grants by the companies in the Agrofert group constituted an infringement of the provisions relating to conflicts of interest in Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012 (OJ 2018 L 193, p. 1; ‘the 2018 Financial Regulation’) and the zákon o střetu zájmů (Law on conflicts of interest) of 16 March 2006 (Zákon č. 159/2006 Sb.).
5        On 24 April 2018, Primagra submitted to the Czech Ministry of Industry and Trade (‘the Ministry’) an application for a grant aimed at increasing the energy efficiency of its operations in Trpísty (Czech Republic). That request was made under the operational programme ‘Enterprise and Innovation for Competitiveness’, which is co-financed by the ERDF. Although the Ministry initially confirmed that the project was admissible, and even sent Primagra a draft decision awarding a grant, it then remained idle. Primagra then brought an action before the Městský soud v Praze (Prague City Court, Czech Republic) challenging the Ministry’s failure to act. That national court delivered a judgment ordering the Ministry to decide on the grant application within 60 days.
6        Following receipt of that judgment and before the Ministry had taken a decision on its implementation, Primagra requested permission to inspect the evidence that the Ministry had collected for the purpose of its decision on the grant application. On 30 November 2020, the Ministry acceded to that request and allowed Primagra to inspect the files relating to the grant application. On the same day, Primagra became aware of the contested letter, which was in the Ministry’s files.
7        On 10 September 2018, Mlékárna Hlinsko submitted to the Ministry an application for a grant for the refurbishment of a gas boiler. That request was also made under the operational programme ‘Enterprise and Innovation for Competitiveness’. In order to challenge the Ministry’s failure to take a decision, Mlékárna Hlinsko also brought an action before the Městský soud v Praze (Prague City Court).
8        In response to a question from the Městský soud v Praze (Prague City Court), the Commission’s services stated, by letter of 4 February 2021, that the audit documents could be made available to Mlékárna Hlinsko for the purposes of the judicial proceedings and also annexed to that letter the contested letter. On 1 March 2021, the Městský soud v Praze (Prague City Court) granted Mlékárna Hlinsko access to the court file.
9        In the contested letter, the objective of which was to ensure the monitoring of the audit on the basis of Articles 72 to 75 and 125 of Regulation (EU) No 1303/2013 of the European Parliament and of the Council of 17 December 2013 laying down common provisions on the [ERDF], the [ESF], the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund, and repealing Council Regulation (EC) No 1083/2006 (OJ 2013 L 347, p. 320), as amended, and of
Articles 60 and 72 of Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provisions on the [ERDF], the [ESF] and the Cohesion Fund and repealing Regulation (EC) No 1260/1999 (OJ 2006 L 210, p. 25), the Commission’s services concluded, in essence, in finding No 1, entitled ‘Assessment of the design and functioning of the management and control system in relation to conflict of interests’ (horizontal system finding), that there were serious deficiencies in the design and functioning of the system to avoid a conflict of interests in relation to Agrofert group operations as regards the ERDF, the Cohesion Fund and the ESF.
10      In essence, Article 4c of the Czech Law on conflicts of interest, as the applicable law pursuant to Article 6 of Regulation No 1303/2013, precludes, as from 1 September 2017, due to Mr Babiš’ status as a public official, the award of public grants to companies from the Agrofert group. Consequently, the Czech authorities were required, according to the Commission’s services, not to select and award such grants to undertakings in that group.
11      If they had been included in an application for payment of expenditure relating to the public award of grants to companies in the Agrofert group, they would have been considered irregular. The Czech authorities would, in particular, have been required to cancel such public contributions to those undertakings and withdraw them from the operational programme in question.
12      Furthermore, as from 2 August 2018, the date of application of the 2018 Financial Regulation, Mr Babiš’ situation also came within the notion of a conflict of interests under Article 61(1) of the 2018 Financial Regulation.
13      However, according to the Commission, that situation could be regarded as resolved if Article 4c of the Law on conflicts of interest were applied in relation to the companies in the Agrofert group.
14      Under that condition, the Commission’s services took the view that the recommendations set out in finding No 1 had been implemented during the audit procedure, with the exception of recommendation No l.a, which remained open until the Czech authorities informed the Commission of the results of their review of the management and control systems to avoid any conflict of interests.
15      Finally, the Commission’s services asked the Czech authorities to inform them of the implementation of the outstanding measures and recommendations described in the contested letter and in the attached documents.
16      The Commission also informed the Czech authorities that public access to the documents was not permitted either in respect of the findings and recommendations of the report, the procedure for which was still open, or in respect of finding No 1, because of the ongoing proceedings in the field of agriculture relating to the same issue of conflict of interests.
Forms of order sought
17      The applicants claim that the Court should:
–        declare the actions admissible and well founded;
–        annul the contested letter;
–        order the Commission to pay the costs;
–        order any other measure which it deems appropriate.
18      In its plea of inadmissibility, the Commission contends that the Court should:
–        dismiss the actions as inadmissible;
–        order the applicants to pay the costs.
19      In their observations, the applicants claim, in essence, that the Court should reject the objections of inadmissibility raised by the Commission.
20      In its observations on the new evidence produced by the applicants during the proceedings before the Court, the Commission contends that that new evidence and the applicants’ arguments based on that evidence do not call into question the inadmissibility of the actions and asks that the document contained in Annex C.2 to the observations of the applicant in Case T‑213/21 be removed from the file.
Law
21      Under Article 130(1) and (7) of the Rules of Procedure of the General Court, if the defendant so requests, the Court may give a ruling on inadmissibility or lack of competence without going to the substance of the case.
22      In the present case, since the Commission has requested the Court to give a ruling on inadmissibility, and the Court considers that it has sufficient information available to it from the material in the file, the Court has decided to give a ruling without taking further steps in the proceedings.
23      The Commission pleads that both actions are inadmissible on the ground, first, that the contested letter is merely a preparatory act and, as such, it is not amenable to review under Article 263 TFEU and, secondly, that the applicants do not have standing to bring proceedings.
24      It takes the view, in essence, that the contested letter does not produce binding legal effects capable of affecting the interests of the applicants and that its purpose is to set out the factual and legal circumstances on the basis of which the Commission is required to rule on whether it is necessary to adopt definitive measures.
25      According to the applicants, the facts at issue in the present cases differ from those at issue in the case which gave rise to the order of 16 September 2019, Poland v Commission (T‑703/18, not published, EU:T:2019:628), referred to by the Commission and by which the Court dismissed the action for annulment of a letter from the Commission communicating a final audit report to the national authorities on which the objections of inadmissibility were based. The outcome of the audits previously challenged before the Court did not impose an explicit ban on the provision of grants to individual beneficiaries comparable to what is imposed by the contested letter.
26      The applicants claim that the Commission instructed the Czech authorities that they ‘must not select and award public grants to companies from the Agrofert group’. Even when taken within a broader context, that statement is, they argue, clear: that the Commission prohibited the Czech authorities from selecting and awarding grants to Agrofert group companies. That the contested letter definitively laid down the Commission’s position is, in their submission, borne out by numerous statements contained in the letter, including the following:
–        ‘should the Czech authorities include expenditure regarding these grants in a payment application, it would be considered irregular’;
–        the Czech authorities ‘should cancel the public contribution to the three concerned operations and withdraw them from the operational programme. Until this has been done, the certifying authority should continue to confirm with each payment claim it submits to the Commission that the payment claim does not contain expenditure in relation to those operations’.
27      The wording of the contested letter shows that the Commission’s intention was not to present its ‘analysis of the consequences of the national law’ to the Czech authorities. It offered the Czech authorities only the possibility of abandoning the grant projects in question, funding them via the national budget, or declaring the expenditure relating to the project concerned in a payment application, which could, however, give rise to the initiation of a procedure to decide to suspend payments or to implement financial corrections.
28      In its objections of inadmissibility, the Commission states that it expects the Czech authorities to comply with the contested letter, as shown by the following passage:
‘If the national authorities fail to implement the recommendations or proposals for corrective actions indicated in the final audit report, or do not provide, as part of the follow-up stage new information that could alter the conclusions of the Commission services, the Commission
services may need to take measures ensuring the protection of the EU financial interests’.
29      The Commission’s position that only subsequent decisions to suspend payments or decisions on financial corrections constitute challengeable acts means that, if the Czech authorities complied with the contested letter, the applicants could not challenge it before the Czech courts after the Czech authorities had rejected their grant applications. Czech courts are in principle not allowed to review acts issued by EU bodies. The contested letter could thus evade judicial scrutiny, which constitutes an infringement of Article 47 of the Charter of Fundamental Rights of the European Union, which guarantees the right to an effective remedy and to a fair trial.
30      To the extent that the contested letter definitively determines the Commission’s position, in that it has already decided on the substance of all cases where Agrofert group companies request grants from the ESI Funds, the Commission’s argument that finding the application admissible would pre-empt the result of the analysis on the substance of the case cannot succeed.
31      The applicants share the Commission’s view that it does not have ‘any
… power under the shared management’ to issue such a prohibition. However, that does not mean that the Czech authorities have any option not to conform to it. It is precisely because the Commission does not have that power under the shared management framework that a declaration of admissibility is required to allow for remedial action against such an irregularity.
32      Mlékárna Hlinsko adds, first, that the Commission’s assertion that ‘the Czech Republic could at any time declare the expenditure relating to the project concerned in a payment application’ is illusory and contrary to the Commission’s actual conduct. Following the declaration by the Czech Republic of expenditure connected with a grant project for another company in the Agrofert group, namely Fatra a.s., the Commission, by letter of 9 August 2021, interrupted the payment deadline within the meaning of Article 83(1) of Regulation No 1303/2013. In that letter, the Commission relied on the contested letter. Consequently, instead of ruling on the merits of the Czech Republic’s payment application, the Commission, for the time being, refused to initiate the inter partes procedure in respect of that application. It attempted to implement the unlawful prohibition on the provision of grants to companies in the Agrofert group and to avoid the adoption of the decision on the payment application and, in so doing, to evade any possible judicial scrutiny.
33      Secondly, the Czech media disclosed a letter from the Commission of 23 August 2021 warning the Czech authorities that a declaration of expenditure relating to the Agrofert group companies’ grant projects could lead to the suspension of all payments to the Czech Republic from the operational programmes concerned (‘the warning letter’). Mlékárna Hlinsko considers that that letter constitutes an implementation of the contested letter. If, as the Commission states in its plea of inadmissibility, the contested letter did not definitively determine its position, that attempt to implement it would be unlawful.
34      It therefore follows, the applicants argue, that the contested letter is a challengeable act under Article 263 TFEU.
35      In its comments on the new evidence, the Commission considers that it has no effect on the inadmissibility of the applications in the present cases.
36      First, as regards the letter of 9 August 2021 deciding to suspend the payment deadline relating to a grant to Fatra, the Commission assumes, on the basis of its previous correspondence with the legal representatives of Agrofert, reproduced in Annexes D.1 and D.2 to its statement of position, that the applicants had access to that decision during the discussions which they or their parent company had with the national authorities. Moreover, the Commission does not derive any specific argument from those two annexes in support of its conclusions.
37      The Commission maintains that, by publishing the letter of 9 August 2021, it acted in full compliance with the text and its purpose. On 16 June 2021, the Czech Republic asked the Commission to reimburse to the operational programme in question the expenditure relating to
one of the projects relating to
the Agrofert subsidiary Fatra, even though, in the audit, the Commission’s services had concluded that expenditure relating to projects implemented by the companies in the Agrofert group should be regarded as irregular when the grant application and the decision awarding the grant under the programme in question were subsequent to 1 September 2017. Consequently, the Commission’s services took the view that the expenditure in the payment application could have been linked to an irregularity having serious financial consequences and, by the letter of 9 August 2021, interrupted the payment deadline in accordance with Article 83 of Regulation No 1303/2013. The Commission submits, moreover, that such an interruption is a challengeable act.
38      Furthermore, on 26 January 2022, it adopted a decision relating to the suspension of part of the interim payments to the operational programme in question under Article 142(1)(b) of Regulation No 1303/2013, on the basis of the same irregularity affecting expenditure in a payment application. Before delivering that decision, the Commission gave the Czech Republic the opportunity to present its observations on the proposed suspension under Article 142(2) of that regulation.
39      Secondly, as regards the warning letter, it has not yet been made public by the Commission, on the basis of Regulation (EC) No 1049/2001 of the European Parliament and of the Council of 30 May 2001 regarding public access to European Parliament, Council and Commission documents (OJ 2001 L 145, p. 43), nor did the Commission agree to disclose it for the sake of cooperation in good faith, for example for the purposes of national proceedings. The Commission therefore asks the Court to remove from the file in Case T‑213/21
Annex C.2 produced by Mlékárna Hlinsko in its observations on the plea of inadmissibility.
40      If the Court were to take account of that letter, the Commission would be required to adopt a position on its authenticity and accuracy. That would amount to allowing Mlékárna Hlinsko to circumvent the procedure for requesting access to such a document, as instituted by Regulation No 1049/2001, or, as the case may be, the confidentiality requirements specified by the Commission in the transmission of the documents in accordance with the principle of cooperation in good faith.
41      In any event, as the warning letter concerned a horizontal matter likely to affect projects beyond those presented by the Agrofert group, it related to several operational programmes covered by various funds under the cohesion policy, and not only to the operational programme in question in the present cases. Any statement made by the Commission’s services in their correspondence with the Czech authorities which indicates that the Commission may interrupt a payment deadline, suspend payments or decide on the financial correction in accordance with Articles 83, 142 and 144 of Regulation No 1303/2013, cannot be regarded as a measure implementing the contested letter, or as conferring on that letter the status of a definitive act, since the warning letter stated that it is possible to interrupt the payment deadline, that is to say, that it has not yet been decided upon. The warning letter therefore merely draws attention to one of the instruments available to the Commission when it is faced with an irregularity.
42      Furthermore, the adoption of a decision to suspend payments or of a decision on a financial correction would have to be preceded by an inter partes procedure in which the Member State could still present additional evidence.
43      In that regard, according to settled case-law, any provisions adopted by the institutions, whatever their form, which are intended to have binding legal effects are regarded as ‘challengeable acts’ for the purposes of Article 263 TFEU (see order of 16 September 2019, Poland v Commission, T‑703/18, not published, EU:T:2019:628, paragraph 34 and the case-law cited).
44      In the case of acts or decisions drawn up in several stages, in particular following an internal procedure, in principle only a measure definitively laying down the position of the institution concerned upon the conclusion of that procedure may be contested, and not provisional measures intended to pave the way for the final decision (see order of 16 September 2019, Poland v Commission, T‑703/18, not published, EU:T:2019:628, paragraph 35 and the case-law cited).
45      The position would be otherwise only if acts or decisions adopted in the course of the preparatory proceedings were themselves the culmination of a special procedure distinct from that intended to permit the author of the act to take a decision on the substance of the case (see order of 16 September 2019, Poland v Commission, T‑703/18, not published, EU:T:2019:628, paragraph 36 and the case-law cited).
46      Although measures of a purely preparatory character may not themselves be the subject of an application for a declaration that they are void, any legal defects therein may be relied upon in an action directed against the definitive act for which they represent a preparatory step (see order of 16 September 2019, Poland v Commission, T‑703/18, not published, EU:T:2019:628, paragraph 37 and the case-law cited).
47      In order to determine whether the act being contested produces binding legal effects, it is necessary to examine the substance of that act and to assess those effects on the basis of objective criteria, such as the content of that act, taking into account, where necessary, the context in which it was adopted and the powers of the institution which adopted the act (see order of 16 September 2019, Poland v Commission, T‑703/18, not published, EU:T:2019:628, paragraph 38 and the case-law cited). It is apparent from the case-law that, in the classification of a given act, it is also necessary to look to the intention of those who drafted it (judgment of 26 January 2010, Internationaler Hilfsfonds v Commission, C‑362/08 P, EU:C:2010:40, paragraph 52).
48      The case-law further shows that a Member State may admissibly bring an action for annulment of a measure producing binding legal effects without having to demonstrate that it has an interest in bringing proceedings (judgment of 13 October 2011, Deutsche Post and Germany v Commission, C‑463/10 P and C‑475/10 P, EU:C:2011:656, paragraph 36, and order of 15 April 2021, Validity and Center for Independent Living v Commission, C‑622/20 P, not published, EU:C:2021:310, paragraph 37).
49      Where the action for annulment is brought by a natural or legal person against an act adopted by an institution, the Court of Justice has repeatedly held that the action lies only if the binding legal effects of that act are capable of affecting the interests of the applicant by bringing about a distinct change in his or her legal position (judgment of 13 October 2011, Deutsche Post and Germany v Commission, C‑463/10 P and C‑475/10 P, EU:C:2011:656, paragraph 37, and order of 15 April 2021, Validity and Center for Independent Living v Commission, C‑622/20 P, not published, EU:C:2021:310, paragraph 38).
50      It must, however, be pointed out that the case-law cited in paragraph 49 above was developed in the context of actions brought before the EU Courts by natural or legal persons against measures of which they were the addressees. Where an action for annulment is brought by a non-privileged applicant against a measure that has not been addressed to that applicant, the requirement that the binding legal effects of the measure being challenged must be capable of affecting the interests of that applicant by bringing about a distinct change in his or her legal position overlaps with the conditions laid down in the fourth paragraph of Article 263 TFEU, to the effect that the act being challenged must be of direct and individual concern to the applicant (judgment of 13 October 2011, Deutsche Post and Germany v Commission, C‑463/10 P and C‑475/10 P, EU:C:2011:656, paragraph 38, and order of 15 April 2021, Validity and Center for Independent Living v Commission, C‑622/20 P, not published, EU:C:2021:310, paragraph 39).
51      In the first place, as regards the content of the contested letter, it contains the following passages, which were cited by the applicants:
–        ‘The Commission services therefore conclude that the managing authorities of EU co-funded programmes in the Czech Republic must not select and award public grants to companies from the AGROFERT group as from [1 September 2017].’
–        ‘The Commission audit also identified three ERDF grants awarded to AGROFERT group companies after 1 September 2017. [According to the Commission], these three grants breach Article 4c of the [Law on conflicts of interest] and are therefore in breach of applicable law pursuant to Article 6 of [Regulation No 1303/2013]. Should the Czech authorities include expenditure regarding these grants in a payment application, it would be considered irregular.’
–        ‘The managing authority/certifying authority of the Enterprise and Innovation for Competitiveness [operational programme] should cancel the public contribution to the three concerned operations and withdraw them from the operational programme. Until this has been done, the certifying authority should continue to confirm with each payment claim it submits to the Commission that the payment claim does not contain expenditure in relation to those operations.’
52      Those passages must not, however, be considered in isolation. The contested letter follows up on findings and recommendations of the audit sent to the Czech authorities in the final audit report and analyses their response.
53      It confirms, first, in its follow-up of finding No 1 of the audit report, the interpretation of the substantive provisions of the Law on conflicts of interest and accepts the Czech authorities’ position as to the date of application of Article 4c of that law, namely 1 September 2017.
54      Secondly, after recalling Article 74 of Regulation No 1303/2013 and the provisions of Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, Euratom) No 1605/2002 (OJ 2012 L 298, p. 1) (‘the 2012 Financial Regulation’) and of the 2018 Financial Regulation concerning conflicts of interest, it considers that the Czech Law on conflicts of interest, in particular Article 4c thereof, is capable of preventing a conflict of interests in the Czech public sector and that it applies to companies belonging to the Agrofert group for any grants received from that date and concludes that the managing authorities of EU co-funded programmes in the Czech Republic must not select and award public grants to companies from that group as from 1 September 2017.
55      Thirdly, the Commission’s services recall that it is apparent from the final audit report that three ERDF grants were awarded to Agrofert group companies other than the applicants after 1 September 2017, thus infringing Article 4c of the Law on conflicts of interest and
consequently
Article 6 of Regulation No 1303/2013. Accordingly, the contested letter informs the Czech authorities that the inclusion of expenditure regarding those grants in a payment application would be considered irregular, and therefore the Commission could, as is apparent from Annex I to the contested letter, adopt, in such a case, decisions to interrupt or suspend payments or to make financial corrections. Consequently, the Commission’s services consider that the Czech authorities should cancel those three grants and withdraw them from the operational programme. Until that has been done, the contested letter states that the certifying authority should continue to confirm with each payment application which it submits to the Commission that that application does not contain expenditure in relation to those operations.
56      Fourthly, the Commission’s services analyse the situation of the companies in the Agrofert group through the prism of Article 61 of the 2018 Financial Regulation and conclude, in essence, that compliance with it can be ensured if Article 4c of the Law on conflicts of interest is applied in relation to those companies. It is under that condition that the Commission’s services consider the recommendations set out in finding No 1 to have been implemented during the audit in question, except for recommendation No l.a, which remained open until the Czech authorities informed the Commission of the results of their review, in the second half of 2020, of the procedures in relation to the management and control systems to avoid conflicts of interest.
57      In conclusion, the Commission’s services requested the Czech authorities to inform them of the
implementation of the outstanding actions and recommendations described in the contested letter and in the attachments within three months of receipt of the Czech version by the Permanent Representation. The Commission also informed the Czech authorities that public access to the documents was not authorised for the findings and recommendations of the report which were still outstanding or for finding No 1 due to the ongoing proceedings in the area of agriculture on the same issue of conflict of interests and asked them to treat those documents as confidential until the conclusion of the follow-up procedure.
58      As the Commission submits, in essence, the first quotation in paragraph 26 above is a result of the analysis, carried out by the Commission’s services, of the Czech legislation as the applicable law under Article 6 of Regulation No 1303/2013.
59      The second and third quotations set out in paragraph 26 above are among the passages in the contested letter in which the Commission’s services, first, inform the Czech authorities that the three grants would be considered irregular if the related expenditure were to be included in a payment application, and set out the options available to the Commission to respond to that situation and, secondly, suggest to the Czech authorities how to ensure compliance with Article 6 of Regulation No 1303/2013 with regard to those grants and other payment requests which those authorities may send to the Commission under the operational programme in question.
60      It follows from the other passages in the contested letter that the Commission’s services did not, by that letter, complete the audit and follow-up procedure on the implementation by the Czech authorities of the findings and recommendations set out in the final audit report and that they asked those authorities to provide them with information. That is evidenced, in particular, by the passage which follows recommendation No l.a in Annex I to the contested letter, according to which, first, the Commission’s services welcomed the fact that the Czech authorities would, in the second half of 2020, review the procedures relating to management and control systems to avoid conflicts of interest and, secondly, they ask the Czech audit authority to confirm to the Commission, in the next annual control reports relating to the operational programmes concerned, entitled ‘Environment, Enterprise and Innovation for Competitiveness’ and ‘ESF’, that the amended procedures are sufficient and effective to ensure compliance with the provisions in the 2012 and 2018 Financial Regulations concerning conflicts of interest. That recommendation thus remains open until the Czech authorities provide the revised procedures.
61      It is, moreover, because recommendation No l.a has not been closed that the Commission’s services reminded the Czech authorities that the documents relating to it are confidential. They did not therefore take a decision to prohibit the Czech Republic from awarding grants to the subsidiaries of the Agrofert group.
62      It follows that the content of the contested letter contradicts the applicants’ claim that it produces binding legal effects.
63      In the second place, as regards the Commission’s powers in that area and the context in which the contested letter was sent, it should be borne in mind, first, that Article 75(1) of Regulation No 1303/2013 provides, in essence, that the Commission must satisfy itself, on the basis of available information, including audits carried out by national and EU bodies, that the Member States have set up management and control systems that comply with that regulation and the fund-specific rules and that those systems function effectively during the implementation of programmes. In addition, Article 75(2) of Regulation No 1303/2013 provides, inter alia, that Commission officials or their representatives may carry out audits. Furthermore, under Article 75(2a) of that regulation, the Commission is required to provide the competent national authority with the draft audit report from the on-the-spot audit or check within three months of the end of that audit, then the final audit report within three months of the receipt of a complete reply from the competent national authority to the draft audit report from the on-the-spot audit (order of 16 September 2019, Poland v Commission, T‑703/18, not published, EU:T:2019:628, paragraph 47).
64      In the present cases, the Commission auditors relied in essence on Article 75 of Regulation No 1303/2013 to carry out an audit and to send the final audit report and the contested letter to the Czech authorities. It cannot, however, be inferred from that provision that the contested letter produces binding legal effects in any way (see, by analogy, order of 16 September 2019, Poland v Commission, T‑703/18, not published, EU:T:2019:628, paragraph 48).
65      Secondly, it is apparent from Article 83(1)(a) of Regulation No 1303/2013 that the payment deadline for an interim payment claim may be interrupted by the authorising officer by delegation within the meaning of the Financial Regulation for a maximum period of six months if it is apparent from information provided by a national or EU
audit body that there is clear evidence to suggest a significant deficiency in the functioning of the management and control system.
66      It follows from the case-law that such a decision would be challengeable under Article 263 TFEU (see, to that effect, judgment of 21 June 2012, Spain v Commission, T‑178/10, T‑263/10 and T‑265/10, not published, EU:T:2012:314, paragraphs 18 and 27, and order of 16 September 2019, Poland v Commission, T‑703/18, not published, EU:T:2019:628, paragraph 45).
67      However, by the contested letter, the Commission’s services did not decide to bring such an interruption.
68      Thirdly, according to Article 85(1) of Regulation No 1303/2013, the Commission is to make financial corrections by cancelling all or part of the EU contribution to a programme and effecting recovery from the Member State, in order to exclude from EU financing expenditure which is in breach of the applicable law. Article 144 of that regulation sets out the criteria for financial corrections. Thus, Article 144(1) of that regulation provides that the Commission is to make financial corrections, by cancelling all or part of the EU contribution to an operational programme in accordance with Article 85 of that regulation, inter alia, where it concludes that there is a serious deficiency in the effective functioning of the management and control system of the operational programme which has put at risk the EU contribution already paid to that programme. That provision states that the Commission is to make financial corrections by means of implementing acts after carrying out the necessary examination.
69      Article 145 of Regulation No 1303/2013 governs the conduct of the procedure under which the Commission may apply a financial correction. According to Article 145(1) of that regulation, before taking a decision on a financial correction, the Commission is required to launch the procedure by informing the Member State of the provisional conclusions of its examination and requesting it to submit its comments within two months. Furthermore, it is apparent from Article 145(3) of Regulation No 1303/2013 that the Commission must take account of any evidence provided by the Member State within the time limit set out in Article 145(1) thereof. Moreover, Article 145(4) of that regulation provides that, where the Member State does not accept the provisional conclusions of the Commission, the Member State is to be invited to a hearing by the Commission, in order to ensure that all relevant information and observations are available as a basis for its conclusions on the application of the financial correction. In addition, Article 145(6) of that regulation states that, in order to apply financial corrections, the Commission is to take a decision, by means of implementing acts, within six months of the date of the hearing, or of the date of receipt of additional information where the Member State agrees to submit such additional information following the hearing. That provision also states that the Commission is to take account of all information and observations submitted during the course of the procedure. If no hearing takes place, the six-month period is to begin to run two months after the date of the letter of invitation to the hearing sent by the Commission. Lastly, under Article 145(7) of Regulation No 1303/2013, ‘where the Commission in carrying out its responsibilities under Article 75, or the European Court of Auditors, detects irregularities demonstrating a serious deficiency in the effective functioning of the management and control systems, the resulting financial correction shall reduce support from the [Structural or Cohesion] Funds … to the operational programme.’
70      In addition, it is apparent from Article 142(1) of Regulation No 1303/2013 that all or part of the interim payments at the level of the operational programmes concerned may be suspended by the Commission if one or more conditions are met and, in particular, if there is a serious deficiency in the effective functioning of the management and control system of the operational programme concerned, which has put at risk the EU contribution to that programme and for which corrective measures have not been taken. According to Article 142(2) of that regulation, the Commission may decide, by means of implementing acts, to suspend all or part of the interim payments, after having given the Member State the opportunity to present its observations.
71      Furthermore, it is apparent from Articles 142 and 145 of Regulation No 1303/2013 that the Member State concerned has the right to present its observations before the Commission suspends payments or applies a financial correction.
72      In the present case, the contested letter does not constitute a decision to suspend payments or a financial correction decision adopted on the basis of the relevant provisions of Regulation No 1303/2013 referred to in paragraphs 68 and 70 above, which, moreover, the applicants do not even claim.
73      Fourthly, it has already been held that it is apparent from the provisions referred to in paragraphs 63, 65, 68 and 70 above and from the general scheme of Regulation No 1303/2013 that, when a final audit report containing recommendations relating to actions to be taken is drafted and sent, that puts an end to one phase of the procedure, namely the audit stage, and opens an exchange stage with the Member State concerned in respect of the actions at issue (order of 16 September 2019, Poland v Commission, T‑703/18, not published, EU:T:2019:628, paragraph 53).
74      The purpose of that exchange stage, which the Commission refers to as a follow-up stage, is to allow the Member State concerned to provide additional information which could modify the assessments contained in the final audit report, to undertake, if necessary, the actions recommended by the Commission or to propose alternative actions (order of 16 September 2019, Poland v Commission, T‑703/18, not published, EU:T:2019:628, paragraph 54).
75      The contested letter specifically falls within that stage.
76      In that regard, as established in paragraphs 52 to 60 above, it is apparent from, inter alia, the contested letter that, after receiving the Czech authorities’ response to the final report, the Commission’s services informed them of their assessment of the situation of the companies in the Agrofert group in the light of the national legislation on conflicts of interest, as well as of their position in the event that those authorities were to include expenditure relating to three grants for subsidiaries of that group, considered unlawful by the Commission, in their payment applications and proposed the steps that needed to be followed to ensure compliance with Regulation No 1303/2013. In that letter, the Commission’s services asked the national authorities to provide them with further information concerning the findings and recommendations contained in the final audit report, in particular in Annex I to the contested letter, and to treat as confidential the documents which came within the scope of the findings and recommendations which had not yet been closed, including those relating to the application of Article 4c of the Law on conflicts of interest to the companies in the Agrofert group.
77      Therefore, the contested letter was not in any way intended to put an end to the exchanges between the Commission’s services and the national authorities.
78      It is therefore only at the end of the exchange stage, that is to say, the follow-up stage between the Member State concerned and the Commission, that the Commission is likely to adopt a definitive suspension decision, or even a financial correction (see, to that effect, order of 16 September 2019, Poland v Commission, T‑703/18, not published, EU:T:2019:628, paragraph 57).
79      That legal and factual context is, moreover, known to the applicants, who argue that the contested letter offers the Czech authorities only the possibility of abandoning the grant projects in question, of funding them via the national budget, or of declaring the expenditure relating to the project concerned in a payment application, which could, however, give rise to the initiation of a procedure to decide to suspend payments or to implement financial corrections. They thus accept that, at the time of the contested letter, the administrative procedure had not been concluded.
80      It follows that the Czech Republic was entitled to continue to challenge the interpretation set out in the final audit report and in the contested letter until such time as the Commission had adopted a definitive decision to suspend payments or apply a financial correction. In both of those situations, that Member State was asked to submit its observations before the Commission took a final position on the issue of eligible expenditure (see paragraph 71 above). Moreover, it has already been established (see paragraphs 65 and 66 above) that the contested letter did not constitute a decision to interrupt payment deadlines, which, although not an act definitively fixing the Commission’s position, is nevertheless an act which can be challenged on account of the legal consequences attached to it.
81      It should be added, as the Commission has done, that, if the applicants’ argument were to be followed and their actions declared admissible, such actions would have the consequence of anticipating the substance of the case, of causing confusion between the judicial and administrative proceedings and of depriving Articles 83, 142 and 144 of Regulation No 1303/2013 of practical effect in so far as those provisions make it possible to interrupt the payment deadlines, suspend payments or apply financial corrections (see, to that effect, order of 16 September 2019, Poland v Commission, T‑703/18, not published, EU:T:2019:628, paragraph 60).
82      It follows from the foregoing that, contrary to what the applicants claim, it is also apparent from the powers available to the Commission in this respect, and from the context in which the contested letter was adopted, that that letter forms part of the procedures provided for by Regulation No 1303/2013 and constitutes a preparatory measure for the possible adoption of a decision producing binding legal effects such as the interruption of the time limits for payment or of a final decision suspending payments or even a financial correction.
83      In the third place, as regards the intention of the author of the act, it is apparent from all of the evidence already mentioned that, by the contested letter, the Commission’s services pursued an objective of dialogue with the national authorities in order to convince them to adopt, on the basis of Article 74 of Regulation No 1303/2013, measures which, according to the Commission, were capable of satisfying the requirements of that regulation. There is nothing in the file to suggest that, by sending the contested letter to the Czech authorities, the intention of the Commission’s services was to adopt, with regard to the Czech Republic, a definitive measure with binding legal effects and one which thus excludes the companies in the Agrofert group from financial assistance under the ESI Funds.
84      Consequently, having regard to the content of the contested letter, to the powers available to the Commission in this matter, to the context in which that letter was sent to the Czech authorities and to the intention of the Commission, it must be held that it constitutes a preparatory measure which does not definitively determine the Commission’s position. That letter does not constitute a definitive decision on the part of the Commission, but merely a position adopted by its services (see, to that effect, order of 16 September 2019, Poland v Commission, T‑703/18, not published, EU:T:2019:628, paragraph 62 and the case-law cited).
85      The contested letter is therefore not, as such, capable of producing binding legal effects in any way and does not constitute an act against which an action for annulment may be brought.
86      That conclusion is not called into question by the other arguments put forward by the applicants.
87      In the first place, first, it should be emphasised that it is true that the requirement as to mandatory legal effects must be interpreted in the light of the right to effective judicial protection as guaranteed in the first paragraph of Article 47 of the Charter of Fundamental Rights. However, that right is not intended to change the system of judicial review laid down by the Treaties, and particularly the rules relating to the admissibility of direct actions brought before the Courts of the European Union, as is apparent also from the explanation relating to the abovementioned Article 47, which must, in accordance with the third subparagraph of Article 6(1) TEU and Article 52(7) of the Charter of Fundamental Rights, be taken into consideration for the interpretation of the Charter. Accordingly, the interpretation of the concept of ‘actionable measure’ in the light of Article 47 of the Charter of Fundamental Rights cannot have the effect of setting aside that condition without going beyond the jurisdiction conferred by the Treaty on the EU Courts (see order of 16 September 2019, Poland v Commission, T‑703/18, not published, EU:T:2019:628, paragraph 65 and the case-law cited; see also, to that effect, judgment of 4 May 2017, Green Source Poland v Commission, T‑512/14, EU:T:2017:299, paragraph 57).
88      Secondly, the legal defects vitiating the contested letter could be relied on in support of an action against a possible decision to interrupt payment deadlines, under Article 83 of Regulation No 1303/2013, or against a possible definitive act for which that letter represents a preparatory step, namely a suspension decision or a financial correction decision (see, to that effect, order of 16 September 2019, Poland v Commission, T‑703/18, not published, EU:T:2019:628, paragraph 66).
89      Finally, Ministry decisions refusing to award a grant to a company in the Agrofert group on the basis of the contested letter are, in principle, open to challenge before the national courts, which, under Article 267 TFEU, may refer questions to the Court of Justice for a preliminary ruling (see, to that effect, judgment of 4 May 2017, Green Source Poland v Commission, T‑512/14, EU:T:2017:299, paragraph 55).
90      In the second place, by the letter of 9 August 2021, set out in Annex C.1 to Mlékárna Hlinsko’s observations on the plea of inadmissibility, the Commission’s Director-General for Regional and Urban Policy interrupted, following the declaration by the Czech Republic of expenditure connected with a grant project from another company in the Agrofert group, namely Fatra, pursuant to Article 83(1)(b) of Regulation No 1303/2013, the interim payment deadline in relation to that expenditure.
91      First, since that letter is not the subject of the present actions, Mlékárna Hlinsko’s allegations that, by adopting it, the Commission sought to evade any possible judicial scrutiny must be rejected as ineffective, and it is not necessary to examine them on the merits.
92      Secondly, if anything, the letter of 9 August 2021 supports the conclusion that the contested letter is not an act against which an action may be brought. It is apparent from the letter of 9 August 2021 that the payment deadline had been interrupted in so far as the authorising officer by delegation had to carry out additional verifications following information that had come to that officer’s attention alerting him or her that expenditure in a payment application is linked to an irregularity having serious financial consequences, that is to say, that there was an infringement of Article 4c of the Law on conflicts of interest. As suggested, moreover, by Article 83(1)(b) of Regulation No 1303/2013, the Commission does not launch the verification procedure by taking the interruption decision, but as part of the audit and follow-up procedure. It is apparent from the letter of 9 August 2021 that it was sent to the Czech authorities following a dialogue which took place after they had received the final audit report. The Czech authorities replied to that report on 29 May 2020, following which the Commission’s services sent them the contested letter. The Czech authorities replied by letter of 9 March 2021 and provided further information on 25 March 2021. On 16 June 2021, they sent the Commission a request for interim payment (see paragraph 37
above) and a letter. The Commission responded with a second follow-up letter, the Czech version of which was dated 8 July 2021. Consequently, it was only after that exchange that the Commission’s services interrupted the payment deadline. It is therefore only the letter of 9 August 2021 which contains binding legal effects in that it suspends a payment.
93      Moreover, as regards the reference made by the Commission to the decision of 26 January 2022 relating to the suspension of part of the interim payments to the operational programme in question under Article 142(1)(b) of Regulation No 1303/2013, on the basis of the same irregularity affecting expenditure in a payment application, it adds nothing to the Commission’s arguments in its plea of inadmissibility or to the Court’s conclusions that, first, the Member State concerned is asked to submit its observations before the adoption of a definitive measure (see paragraph 71 above) and, secondly, the contested letter is a preparatory act and is not, as such, capable of producing binding legal effects (see paragraphs 84 and 85 above). That decision of 26 January 2022 is therefore not relevant to the outcome of the present dispute.
94      Thirdly, as regards the document set out in Annex C.2 to Mlékárna Hlinsko’s observations on the plea of inadmissibility, suffice it to state that it does not call into question the conclusion that the contested letter is not a challengeable act.
Therefore, it is not essential, for the purposes of the present disputes, to examine the Commission’s request that it be removed from the file. As the Commission notes, the extracts from that letter merely refer to the possibility of adopting a measure in accordance with Article 83(1)(b) of Regulation No 1303/2013 and state that the interruption of the payment deadline is possible, that is to say, that it has not yet been decided upon. The warning letter therefore merely draws attention to one of the instruments available to the Commission when it is faced with an irregularity. Therefore, a fortiori, the contested letter does not, as such, produce binding legal effects.
95      Since the contested letter does not produce legal effects of any kind, it cannot constitute an act against which an action may be brought.
Therefore, there is no need to examine whether the effects which it produces are such as to affect the interests of the applicants by bringing about a distinct change in their legal position.
96      It follows that the actions must be dismissed as inadmissible, and there is no need to examine the ground of inadmissibility raised by the Commission alleging that the applicants do not have standing to bring proceedings.
Costs
97      Under Article 134(1) 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 pleadings.
98      As the applicants have been unsuccessful, they must be ordered to pay the costs, in accordance with the form of order sought by the Commission.
On those grounds,
THE GENERAL COURT (Third Chamber)
hereby orders:
1.      The actions are dismissed.
2.      Primagra a.s. and Mlékárna Hlinsko a.s. shall pay the costs.
Luxembourg, 14 September 2022.
E. Coulon
G. De Baere
Registrar
President
*      Language of the case: English.