OPINION OF ADVOCATE GENERAL

DARMON

delivered on 25 February 1992 ( *1 )

Mr President,

Members of the Court,

1. Created in 1957 by the Treaty of Rome, the European Social Fund (hereinafter the ‘Fund’) is the oldest of the three Community structural funds. Its rules were adapted in response to the economic and social development of the Community in 1971, 1977, 1983 and 1988.

2. At the heart of the actions for annulment brought by the companies Infortec (C-157/90), Consorgan (C-181/90) and Cipeke (C-189/90) is the financing procedure applied by the Fund as provided for in Council Decision 83/516/EEC of 17 October 1983, ( 1 ) in Council Regulation (EEC) No 2950/83 of 17 October 1983 ( 2 ) and Commission Decision 87/673/EEC of 22 December 1983 ( 3 ) which established what has been termed the ‘third European Social Fund’. ( 4 )

3. The object of the Fund is to assist in the ‘implementation of policies designed to equip the work force with the skills required for stable employment and to generate employment opportunities’. ( 5 )

4. Accordingly, the Fund intervenes in policy actions to promote employment adopted by the Member States. Those policies are co-financed by them, the Fund and — peripherally — by private operators. ( 6 )

5. This partnership ( 7 ) between the Fund and the Member States accounts for the fact that the latter are closely associated with its functioning.

6. The Fund is administered by the Commission. ( 8 )

7. Applications for assistance are to be submitted to the Fund, by means of a standard form, ( 9 ) through the intermediary of the Member States which operate an initial filtering system. Following examination of the application, the Commission, if appropriate, approves it by means of a decision, ( 10 ) which automatically entails the payment of an advance. ( 11 )

8. Once the training or employment promotion operation has been concluded, the organization receiving assistance is to submit to the Fund, through the intermediary of its Member State, a final payment claim ( 12 ) which must contain a detailed report on the content, results and financial aspects of the relevant operation. ( 13 ) The Member State is to certify the accuracy of the facts and accounts in payment claims. ( 14 ) The Commission then pays the balance. In total, Fund assistance is granted at the rate of 50% of eligible expenditure without, however, exceeding the amount of the financial contribution of the public authorities. ( 15 )

9. The Commission makes checks on the use of the assistance with the help of the Member State concerned. ( 16 ) The Member State is to provide the Commission with information on current operations. ( 17 )

10. When Fund assistance is not used in conformity with the conditions set out in the decision of approval, the Commission may suspend, reduce or withdraw the aid after having given the relevant Member State an opportunity to comment. ( 18 )

11. The Commission is also authorized to verify the content of a final payment claim by ‘representative sampling’ which may result in a reduction of the assistance ‘applied proportionally to the whole of the amount claimed’. ( 19 )

12. Assistance not used in accordance with the conditions laid down in the decision of approval is to be refunded. ( 20 ) The Member State is to guarantee the successful completion of the operation. It has secondary liability for the repayment of sums in respect of which payment was unwarranted. ( 21 )

13. Logically, that power to reduce the amount of assistance initially granted belongs only to the Commission. The Member States submit to the Fund only final payment claims whose accuracy they certify. ( 22 ) Accordingly, such applications are approved by them.

14. That financing procedure has two characteristic features: the complex role of the intervening Member State and the importance of the decision of approval.

15. Whilst the Member State selects the proposed operations which it submits to the Commission and finances and supervises them together with the Commission, it is also, as has been shown, the guarantor of the bodies receiving assistance whose applications for payment it certifies. It is therefore in a situation where, as well as being a debtor with regard to the bodies receiving assistance, it may also become so with regard to the Commission.

16. It forms the obligatory route by which contact is established between the Commission and the organizations receiving assistance, and it ensures that the Fund's decisions are implemented; it notifies them to the undertakings concerned and, in programmes involving several undertakings, the Commission informs it of the detailed rules for allocating the assistance between them. Conversely, it submits to the Commission the initial applications and the final payment claims to the bodies receiving assistance.

17. As the Court held in its judgment in Eiss v Commission, ( 23 ) ‘... this procedure creates a. financial relationship between the Commission and the Member State on the one hand and between the Member State and the institution which is the recipient of the financial assistance on the other.’

18. The situations in which it is the Member State which implements the decisions of the Commission ( 24 ) must be carefully distinguished from those where it is, with regard to the Commission, in the position of an applicant. In the former case, Community rules give it no powers of its own: it acts solely on behalf of the Commission. In the second case, it acts independently of the Commission and may appeal against its decisions. ( 25 )

19. The second characteristic feature of the procedure is the decision of approval. Essentially it has two effects: — It triggers the payment of the advance ( 26 ) by the Commission and by the Member State. — It is the yardstick by which the operation is supervised: any use of the assistance in circumstances not in conformity with the decision of approval may result in the suspension, reduction or withdrawal of assistance ( 27 ) or repayment of sums in respect of which payment was unwarranted. ( 28 )

20. Accordingly, the decision of approval gives rise to a right to final payment in favour of the undertakings receiving assistance provided that that assistance is used in conformity with the conditions laid down in the decision and the undertakings provide supporting evidence. ( 29 ) The decision provides the undertakings with legal certainty because they may legitimately expect that the balance of the assistance approved will be paid to them by the Fund, which is bound by the decision of approval, once they have provided evidence of expenditure incurred in conformity with the decision.

21. Such foreseeability in the grant of assistance is essential in order to enable the undertakings receiving assistance to commit themselves to expenditure free of the risk of ultimately having themselves to bear the burden of it.

22. It may be seen, therefore, that the decision of approval plays a major role in that financing procedure. It is at the heart of the actions brought before the Court by Consorgan and Cipeke.

23. In the first place, however, I shall examine the action brought by Infortec which raises in plain terms the question of the application of Article 6(1) of Regulation No 2950/83, a matter which the Court had to determine in its Interhotel and Oliveira judgments of 5 March 1991. ( 30 )

24. The Portuguese company, Infortec, whose object is ‘the performance of services and technical support, projects and consultations’, submitted to the Fund, through the intermediary of the Portuguese State, an application for assistance giving a complete description of the costs, the number of trainees and the duration of the training operations (File No 870889 P3).

25. On 31 March 1987 the Commission approved that application subject to certain limits. ( 31 )

26. By Letter of 13 April 1987, ( 32 ) the Departemente para os Assuntos do Fundo Social Europeu (Department for European Social Fund Affairs, hereinafter ‘DESFA’) at the Ministry of Labour in Lisbon, notified to Infortec the decision of approval fixing the Fund's contribution at ESC 8373341 for 138 persons ( 33 )and that of the Member State — represented by the Instituto de Gestão Financeira de Segurança Social (Institute for Financial Management of the Social Security System, hereinafter ‘IGFSS’) at ESC 6850915.

27. On 26 June 1987 Infortec received an advance of ESC 4186670 from the Fund ( 34 ) and on 7 August 1987 an advance of ESC 3425457 from IGFSS/DESFA. ( 35 )

28. On 30 June 1988 it submitted a final payment claim, together with a qualitative and quantitative evaluation report. ( 36 )

29. On 9 March 1990, DESFA sent a letter ( 37 ) to Infortec mentioning a reduction of assistance in regard to two files: File No 870889 P3, the subject-matter of these proceedings, and File No 870965 PI which was the subject of a separate action before the Court (Case C-12/90), terminated by an order declaring it inadmissible for being brought out of time. ( 38 )

30. With regard to File No 870889 P3, Infortec brought an action on 21 May 1990 for annulment of the Commission's decision ‘adopted on an unknown date but communicated by the letter dated 9 March 1990 ordering the reduction in Fund assistance previously approved’. ( 39 )

31. According to the applicant, the Portuguese State was not consulted prior to the reduction decision as required by Article 6(1) of Regulation (EEC) No 2950/83 and the decision does not contain a statement of the reasons on which it is based.

32. The Commission raises an objection of inadmissibility. It submits that the particulars of the subject-matter of the dispute are not given in the application and that the contested decision is not clearly identifiable. As to the letter of 9 March 1990, that is a decision not of the Commission but of DESFA which, on its own initiative, undertook a regularization between two different files without instructions from the Commission to do so. In so far as the letter of 7 September 1989 is concerned, in which the Commission gave notification of a reduction of fund assistance in File No 870889 P3, the application is inadmissible: that letter is not mentioned in the application and the application is in any event made out of time. Moreover, the Commission points out that the amount of the contested reduction is not stated.

33. Following its final payment claim, Infortec received Letter No 3637 in relation to File No 8700889 P2 from DESFA dated 9 March 1990 ( 40 ) stating that: — a decision had been taken by the Commission on that file; — Infortec was to have the assistance originally granted reduced. The ‘balance approved’ by the Fund in fact amounted to ESC 2107105 whereas the expected balance was ESC 4186670. ( 41 ) The letter also informed Infortec that, in respect of two files, it owed ESC 16257800 to the Fund.

34. That letter gives neither the date nor the precise contents of the Commission decision reducing the assistance.

35. That decision — produced to the Court during the written procedure by the Commission — is dated 7 September 1989. ( 42 ) It states that the Fund's contribution cannot bè greater than ESC 6293775 and that, regard being had to the payment of the advance, the balance is ESC 2170105.

36. It is precisely that figure which appears in the letter of 9 March 1990 under the heading ‘Balance approved by the Fund’. Thus, in formulating the letter of 9 March 1990, DESFA necessarily referred to the decision of 7 September 1989.

37. It is therefore clear that the reduction in assistance in no way constitutes an initiative by DESFA and that the letter of 9 March 1990 is the document whereby the decision of the Fund was brought to the knowledge of the applicant company.

38. In its reply to the written question put by the Court, the Portuguese Government, moreover, removed any ambiguity in that connection: ‘DESFA communicated the content of the decision adopted by the Commission on the final payment claim in File No 870889 P3 to Infortec only on 9 March 1990 by letter no 3637’. ( 43 )

39. The fact that in the same letter DESFA, carrying out a setoff with regard to Infortec, deducted the amount due of ESC 2107105 from a debt owed by that company under another file does not deprive that letter its true nature as a document notifying the Community decision.

40. In its application for annulment the applicant company was unable to be more specific than the document notifying that decision. It is clear that, while the application mentions neither the date of the Commission decision adversely affecting the applicant nor the precise amount of the reductions made by that institution, that is because the applicant was not informed thereof.

41. Accordingly, the subject-matter of the application is clearly identified and the objection of inadmissibility must be rejected.

42. The Commission decision reducing the assistance granted to Infortec was brought to DESFA's knowledge in the letter addressed to it by the Fund on 7 September 1989 in the form of a debit note.

43. Was that decision adopted in compliance with the terms of Article 6(1) of Regulation (EEC) No 2950/83 which authorizes the Commission to reduce assistance not used in conformity with the conditions set out in the decision of approval only after giving the relevant Member State an opportunity to comment?

44. As Advocate General Tesauro pointed out in his Opinion in FUN OC v Commission, ( 44 ) that article ‘does not provide for a formal consultation procedure but merely requires that the authorities of the relevant Member State should have the possibility of presenting their observations prior to the adoption of a definitive decision.’

45. The letter of 7 September 1989 does not invite the Portuguese Government to submit its comments; it notifies a decision. That is borne out by the manner in which it is formulated: ‘The Fund has identified an amount of ... in respect of ineligible expenditure Consequently, the Fund's contribution cannot be greater than The difference amounting to ... is to be paid to our bank account’.

46. Moreover, the Commission acknowledges in its defence ( 45 ) that it afforded the Portuguese Government the opportunity to submit its comments once the decision had been taken.

47. In its reply to the written question put to it by the Court, the Commission maintained that the decision had been notified to the Portuguese State together with an express reference to Article 6(1), mentioned above ‘which means that the latter could have submitted its comments if it saw fit, which it did not do, accepting instead the reduction proposed’.

48. Thus an exchange of letters subsequent to the decision adopted by the Commission is said to be in conformity with the requirements of Article 6(1) and the absence of any reaction by the State concerned to the notification of the reduction decision is said to amount to acceptance of that decision. ( 46 )

49. I have already pointed to the drawbacks of that practice, ( 47 ) which is moreover contrary to the letter of Article 6(1) of Regulation (EEC) No 2950/83.

50. The Court itself formally condemned it in these terms in its judgment in Oliveira of 7 May 1991: ( 48 ) ‘The Commission's argument that it is open to the relevant Member State to enter into contact with the Fund once the reduction decisions have been notified cannot be accepted. It is sufficient to point out in that connection that both the recipient of the assistance who is informed that such contact has been established, and the relevant Member State would then be debarred from bringing an application for annulment against the reduction decisions where, notwithstanding the objections raised by that Member State, the Commission confirms its initial decisions after expiry of the two-month period allowed by the third paragraph of Article 173 of the Treaty. In such a situation, an application by the recipient of the assistance and the Member State for the annulment of the decisions confirming the reductions of assistance would also be inadmissible since an application for annulment brought against a decision which merely confirms a decision not challenged within the time allowed is inadmissible.’ ( 49 )

51. It is not disputed that in File No 870889 P3, the Member State was not able to submit its comments before the Commission adopted its decision reducing the assistance. Accordingly, that decision should be annulled without there being any need to examine the other pleas in law relied on by the applicant company.

52. The criteria for the application of Article 6(1) of Regulation (EEC) No 2950/83 must also be discussed in relation to the Consorgan and Cipeke cases, albeit in a different light. Those two cases essentially relate to the effects of the decision of approval. Let us now examine them.

53. The Consorgan company belonged to a group of 14 undertakings led by the Ceramic company which in 1987 submitted an application for Fund assistance ( 50 ) for ‘a vocational training measure for young persons under 25 years of age ...’ ( 51 ) which was to involve 1263 persons (File No 871106 PI).

54. To judge by the final payment claim made on 27 October 1988, ( 52 ) the Commission approved the entire project by a decision of 31 March 1987 for an amount of ESC 328148959, increased to ESC 337749326 by an amending decision of 30 April 1987. Those two decisions have not been produced to the Court. They were notified only to DESFA which, according to information given at the hearing by the representative of the Commission, subsequently itemized the advances as between the relevant undertakings.

55. According to the quantitative and qualitative evaluation report ( 53 ) drawn up by Consorgan, the Fund's contribution was approved, as far as it was concerned, in the sum of ESC 93552788 (IGFSS's contribution being approved in the sum of ESC 76518645).

56. The applicant company received an advance of ESC 85020716 of which ESC 46761394 came from the Fund ( 54 ) and ESC 38259322 from IGFSS. ( 55 )

57. According to the abovementioned evaluation report, the company finally spent ESC 177129810. The final payment claim submitted on behalf of all the undertakings in the group by Ceramic assessed the total amount of the Fund's contribution at ESC 263965133. It is dated 27 October 1988. ( 56 )

58. In a letter dated 30 March 1990, ( 57 ) DESFA informed Consorgan that the Fund had found the existence of ineligible expenditure amounting to ESC 30501190: the balances approved amounted to ESC 6472608 with regard to Fund assistance and to ESC 5295771 with regard to the national contribution.

59. Consorgan therefore received advances of ESC 85020716 and a final payment of ESC 11768379, ( 58 ) that is, to say, a total of ESC 96789095.

60. That sum must be compared with the approved total of ESC 188934925 and with the total amount of expenditure, namely ESC 177129810.

61. The subject-matter of the application is that decision by the Commission to reduce the amount of assistance initially granted, of which Consorgan was informed in the abovementioned letter from DESFA dated 30 March 1990.

62. Noncompliance with the formal requirement laid down in Article 6(1) of Regulation (EEC) No 2950/83 amounts to an infringement of an essential procedural requirement within the meaning of the first paragraph of Article 173 of the EEC Treaty, an infringement which the Court examined of its own motion ( 59 ) in the Interhotel judgment.

63. Following up the written question which the Court put to the Commission, let me, acting on my own initiative, verify whether the Member State concerned was consulted before the Commission adopted its decision to reduce Fund assistance, as required by Article 6(1), cited above.

64. At a time when the training operations had been concluded and after examination of the final payment claim, the Commission, in a first decision brought to the notice of DESFA by letter of 5 September 1989, ( 60 ) limited the Fund's contribution to the Ceramic file to ESC 201130494 ( 61 ) (that is to say, expenditure amounting to ESC 62834639 was deemed not to be eligible).

65. By letter of 27 September 1989, ( 62 ) DESFA requested the Fund to itemize, for each undertaking and for each heading, the sums deemed not to be eligible. Further particulars were supplied to DESFA by letter of 27 October 1989 ( 63 ) together with a statement showing the various items on the form affected by the reduction.

66. Finally, in a further letter, dated 19 February 1990, ( 64 ) DESFA requested additional information, since the total amount declared ineligible by the Commission amounted to ESC 130118760, whereas the letter dated 5 September 1989 gave notice of a significantly lower reduction. In a letter dated 2 March 1990, ( 65 ) the Commission confirmed that the amount of ineligible expenditure amounted to ESC 62834639 and concerned only the Fund's participation in that operation.

67. It was following that correspondence that DESFA, in the abovementioned letter of 30 March 1990, notified Consorgan of the reduction in the assistance.

68. Since that letter was preceded by an exchange of correspondence between the Commission and the Member State and the Member State was able, through DESFA, to submit its comments, it must be considered that the requirements laid down in Article 6(1) of Regulation (EEC) No 2950/83 were observed, as the Court has already held in its judgment in FUNOC v Commission. ( 66 )

69. Consorgan's application for annulment is based upon one matter alone: failure to state reasons as required under the terms of Article 190 of the Treaty.

70. Does the letter of 30 March 1990 notifying that company of a reduction in the assistance granted satisfy the requirement to state reasons which is laid down in that article? It fixes at ESC 30501190 Consorgan's ineligible expenditure attributable to the inclusion in the final payment claim, on the one hand, of an excessive number of practical hours, and, on the other, of a number of non-approved expenses.

71. According to the Court's settled case-law ‘the purpose of the obligation to state the reasons on which an individual decision is based is to enable the Court to review the legality of the decision and to provide the person concerned with sufficient information to make it possible to ascertain whether the decision is well-founded or whether it is vitiated by a defect which may permit its legality to be contested. The extent of that obligation depends on the nature of the measure in question and on the context in which it was adopted’. ( 67 )

72. Thus the reasons given for a decision adopted by the Commission following the opinion of the Committee on Duty-free Arrangements refusing to allow the importation of a scientific apparatus free of customs duty, appeared sufficient to the Court when it held that: ‘Although it is true that the Court has consistently held that the statement of grounds required by Article 190 of the Treaty must disclose in a clear and unequivocal fashion the reasoning followed by the Community authority which adopted the measure in question in such a way as to make the persons concerned aware of the reasons for the measure and thus enable them to defend their rights and to enable the Court to exercise its supervisory jurisdiction, the authority is not required to give details of all relevant factual and legal aspects. The question whether the statement of the grounds for a decision meets those requirements must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question’. ( 68 )

73. The statement of the reasons on which an individual decision is based must therefore be sufficient to enable the Court to exercise its power or review and for the person concerned to know the grounds on which that decision was adopted in order to be able to challenge it. The statement need not go beyond what is necessary, regard being had to the requirements and constraints inherent in the functioning of the Community institutions.

74. With regard to the European Social Fund, the Court held in its judgment in Gemeente Amsterdam and Via v Commission ( 69 ) that the summary nature of the statement of reasons accompanying the decision whereby the Commission refuses the assistance of the European Social Fund for an occupational training operation is ‘an inevitable consequence of the computerized handling of several thousands of applications for assistance on which the Commission is required to give a decision rapidly. In that situation a more detailed statement of reasons in support of each individual decision would be likely to jeopardize the rational and efficient allocation of the Fund's financial assistance’. ( 70 )

75. Such an abbreviated statement of reasons is permitted in the case of a decision refusing assistance in the context of the initial application, which the Commission must deal with within a very short period. ( 71 ) Can this be transposed to a Commission decision which, following a claim for final payment, reduces the amount of assistance initially approved?

76. Admittedly, in such a case, the Commission adopts its decision, as has been seen, after receiving an application accompanied by a quantitative and qualitative evaluation report in which the undertaking concerned has had an opportunity to explain itself. But the Commission is no longer bound by the same time constraints.

77. Moreover, the Court has held that, where the addressee of the decision whose statement of reasons is being challenged took part in the preparation of the decision, that statement satisfies the ‘minimum requirement’ of Article 190 of the Treaty since it contains the indispensable elements which permit the addressee to determine whether the decision is vitiated by a defect. ( 72 )

78. It has been seen that during the course of the Fund's financing procedure the Member States may submit their comments. On the other hand, the undertakings affected by reductions in assistance are not associated with the preparation of the Commission's decision.

79. Consequently, owing to the very specific situation of an undertaking awaiting payment of the balance, a summary statement of reasons cannot be deemed to be sufficient.

80. The rejection by the Commission of an initial application for assistance causes no damage to the company concerned other than the loss of financing: it has not yet committed itself to expenditure.

81. On the other hand, when the initial application has been approved, the undertaking has received an advance which does not cover more than 50% of the approved expenditure. ( 73 ) Only on completion of the training operation is the balance payable. In very general terms, the company will, then, have advanced funds pending payment of the balance which it may legitimately expect to receive, provides that the operation was conducted within the terms and in compliance with the conditions of the approval.

82. It may be seen therefore that a reduction in assistance notified to the undertakings concerned on the occasion of payment of the balance is, if it is not supported by a statement of reasons enabling its justification to be verified, of a nature such as to cause substantial harm ( 74 ) which may give rise to serious financial difficulties for those undertakings.

83. In the letter of 30 March 1990, the Commission mentions as a first ground the fact that the duration of practical instruction must be reduced by 17% in order to correspond to the total duration of theoretical instruction.

84. The applicant company does not dispute that it was informed by Circular No 10/DESFA/87 of 8 June 1987 ( 75 ) that the duration of occupational training periods was to be equal to the duration of theoretical instruction, and that any excess would be deemed to be non-priority and would not therefore be borne by DESFA.

85. Consorgan's explanations challenge the figures put forward by the Commission and in effect seek to demonstrate that it observed the requirements of the circular. ( 76 ) In any event, it was in a position to assess the Commission's allegations against it.

86. Accordingly, the contested decision cannot be regarded as inadequately reasoned in this respect.

87. Before analysing the second reason put forward in the letter of 30 March 1990, I would like to dwell for a moment on the procedure followed by the Fund and by DESFA in this case. It illustrates the practice adopted by the Commission where applications for assistance are submitted by groups of undertakings.

88. The application for assistance was a single one for all the undertakings concerned, including Consorgan, and, when submitted, was itemized heading by heading.

89. Approval was given for a global amount and was notified to DESFA ( 77 ) which broke that amount down as between the abovementioned undertakings in accordance with their degree of the involvement in the project.

90. Admittedly, it was open to the Commission to notify to DESFA an approval itemized heading by heading and for DESFA to allocate the amount approved between the undertakings.

91. But since the departments of DESFA — which was here acting as the Commission's agent — notified Consorgan only of a global approval, the Commission was bound by that decision so long as it had not been amended or replaced by a subsequent, possibly more specific, decision. ( 78 )

92. Consorgan had obtained approval for the sum of ESC 188934925. Since the applicable Community rules do not require the approval to be given in a detailed manner, heading by heading, Consorgan could legitmately take the view that its application had been accepted ( 79 ) within the context of a global budget which it was not to exceed: moreover, the total amount of its expenditure came to ESC 177129810.

93. It cannot therefore be held against Consorgan that it did not react to a decision of approval — which it was entitled to regard as final — and that it did not request DESFA to provide any explanations on the allocation of the sum approved.

94. The final payment claim was also submitted globally in respect of the whole project.

95. Similarly, the reduction in the assistance was decided on globally, ( 80 ) then subdivided according to headings, by a decision of the Commission. ( 81 ) The Commission also gave the following instruction to DESFA: ‘the reduction to be taken into account in respect of each undertaking is to be proportionate to the relative size of its share under each item on the form in respect of which certain expenditure has been regarded as ineligible’. ( 82 )

96. Therefore it seems that Article 7(2) of Regulation (EEC) No 2950/83 was applied which provides for a kind of accelerated examination of final payment claims and was the only provision permitting ‘proportional’ reductions. That provision states that: ‘Checks on the content of a payment claim may be made by representative sampling. Before making a check, the Commission shall determine the sample size in advance, in cooperation with the Member State concerned, with reference to the physical and technical aspects of the operation concerned. To the extent that the sample check leads to a reduction, this shall be applied proportionally to the whole of the amount claimed, once the Member State has had an opportunity to submit its comments’. ( 83 )

97. However, at no stage of the operation did the Commission rely on the application of that provision. Moreover, neither the Member State nor the undertakings nor, a fortiori, the Court have access in the current situation to information on the conditions under which a ‘sample size’ was determined and on the ‘representative’ nature of that sample.

98. The fact remains that the Commission allocated the reductions in assistance amongst the undertakings in proportion to the size of the share of each of them in the items under consideration and not in accordance with the precise amount of the irregular expenditure: an undertaking could be the subject of a reduction in respect of a specific item even though it would have been in a position to show that it used the assistance under that item in compliance with the decision of approval.

99. It is therefore clear that the Commission carried out reductions in assistance — which were calculated on the basis of abstract criteria: the ‘proportional’ reduction bears no relation to the amount of expenditure shown to have been actually incurred by the undertaking under the item in question, — in respect of which no explanation was given to the undertakings: they are unaware of the precise content of the decision of approval relied on by the Commission in order to justify such reductions: a decision of whose provisions concerning them they are unaware is used against them, and the sole decision notified to them does not make the distinctions according to heading which the Commission mentions.

100. That results in the paradox that a decision taken in order to ensure compliance with Articles 6(1) of Regulation (EEC) No 2950/83 (exclusion of expenditure not in conformity with the decision of approval) may have the opposite effect (expenditure in conformity with the decision of approval may in fact be excluded).

101. Thus, it appears that a procedure which, in providing for a decision of approval, determining the rights of the parties, is inspired by the principle of legal certainty may in practice be applied in such manner that it infringes that principle.

102. Under the rules applicable to the Fund prior to 1983, the Bundesanstalt für Arbeit submitted to the Commission four applications for assistance which were approved. The applications for final payment of assistance were rejected on the ground that they had been submitted after the expiry of the period of 18 months laid down in Article 4(1) of Commission Decision 78/706.

103. Granting the application for annulment of the Commission's decision refusing final payment in respect of the assistance, the Court held that ‘The principle of legal certainty ... requires that a provision laying down a preclusive period, particularly one which may have the effect of depriving a Member State of the payment of financial aid its application for which has been approved and on the basis of which it has already incurred considerable expenditure, should be clearly and precisely drafted so that the Member States may be made fully aware of the importance of their complying with the time limit. Neither the wording of Article 4(1) of Commission Decision 78/706 nor the context in which it appears justifies the interpretation that the period is a preclusive period.’ ( 84 )

104. Similarly, where the Commission makes a reduction in assistance, the absence of a detailed and accurate decision of approval notified to all the undertakings concerned and the proportional nature of the allocation amongst undertakings of the reductions decided under a specific item do not appear to comply with the principle of legal certainty whose importance has been stressed in proceedings concerning the European Social Fund.

105. The second reason given in the letter of 30 March 1990 specifically refers to the decision of approval. Furthermore, the total amount of the reduction notified to Consorgan is in part the result of a proportional allocation of the global reduction between the undertakings concerned. Let me therefore examine that reasoning in the light of the foregoing observations.

106. Attention should first of all be drawn to the imprecise manner in which that letter is formulated: ‘certain items of expenditure ... were not approved in the application for assistance {in particular under points 14.3.3, 4, 5, 7 and 8)’. ( 85 )

107. Thus, although Consorgan was aware of the total amount of the reduction, it did not know — the precise Ust of the items or headings in question, — the itemized breakdown of the reduction, — the manner in which that reduction was calculated.

108. It is entirely legitimate for the Commission to declare ineligible expenditure not authorized in the decision of approval. In that connection, it is sufficient to call to mind the rules laid down in Article 6 of Regulation (EEC) No 2950/83. The fact that an item of expenditure was not approved is, in my opinion, a relevant ground for treating it as ineligible. However, it is still necessary that the initial decision of approval should be brought to the notice of the company receiving the assistance in sufficient detail to enable it to identify the items approved, the items refused and the items affected by a reduction.

109. We know that that was not so in this case. Approval was given for a total amount less than the amount applied for. ( 86 ) Reductions in assistance were therefore made in respect of certain headings without Consorgan or the other undertakings concerned being in a position to identify them.

110. Finally, the Commission's decision fixes at ESC 30501190 the amount of ineligible expenditure in the Consorgan file.

111. That figure results, in particular, from the addition of reductions made heading by heading in proportion to the size of Consorgan's share under each such heading. ( 87 )

112. That method of‘proportional’ calculation, which the undertaking was unable to determine itself, was not brought to its knowledge.

113. The absence of reasoning on that point, which was essential in order to ascertain how the Commission had arrived at such a result, together with the reference made to a decision of approval notified to Consorgan in respect of a global amount, means that the contested decision lacks an adequate statement of reasons for the purposes of Article 190 of the Treaty.

114. I would emphasize, finally, that those requirements with regard to the statement of reasons are entirely compatible with the Fund's management constraints and concern for efficiency.

115. By (1) sending the decision of approval to the undertakings concerned and (2) limiting, without recourse to abstract criteria, ( 88 ) the reductions in assistance to expenditure not used in conformity with the conditions set out in the approval, efficiency could in my view be reconciled with the legality.

116. The difficulties brought about by the lack of transparency in the decision of approval did not pass unnoticed by the Community legislature: Article 10 of Council Regulation No 4523/88 of 19 December 1988 which currently governs the procedure for Fund financing provides that the Commission's decisions of approval are to be published in the Official Journal of the European Communities.

117. The application for annulment by Consorgan must accordingly, in my view, be granted.

118. The questions raised by this case arise in identical terms in the Cipeke case. It is only for reasons of clarity that I deal with the latter case separately.

119. Cipeke's object is to organize vocational training courses in the graphic arts.

120. On 17 August 1986, the company Partex submitted to the Fund an application for assistance on behalf of 11 undertakings including Cipeke.

121. The project was approved by the Commission in the amount of ESC 300665191 ( 89 ) by a decision of 31 March 1987, which was amended on 30 April 1987: those documents were not produced to the Court.

122. According to the quantitative and qualitative evaluative report drawn up by Cipeke, ( 90 ) the Fund's contribution was approved as far as it was concerned, in the amount of ESC 35298094 (IGFSS's contribution being approved in the sum of ESC 28880258).

123. Cipeke received an advance of ESC 32089174, including ESC 17649045 from the Fund.

124. At the end of the course, the applicant company drew up a quantitative and qualitative evaluation report and assessed the balance remaining due at ESC 9316486.

125. The final payment claim for all the undertakings led by Partex was submitted on 28 October 1988.

126. In a letter from DESFA sent on 15 March 1990 and received on 3 April 1990, Cipeke was told that it was required to reimburse ESC 2084518 owing to ‘an amount of ESC 11104748 of ineligible expenditure relating to points 14.2, 14.3 and 14.4 of the form.’

127. On 4 April 1990 Cipeke asked for the reasons for that decision. It received the reply by telefax of 20 April 1990 which merely stated that the expenditure was greater than that provided for, that certain headings were not approved and that others did not appear in the initial application. It was also stated that the reduction to be taken into account was proportional to the ‘relative size’ of the undertaking's share ‘under each point in the form’.

128. The applicant undertaking seeks the annulment of the decision received on 3 April 1990 on the ground of infringement of Article 190 of the Treaty.

129. As in the Consorgan case, let us first see whether the conditions laid down in Article 6(1) of Regulation (EEC) No 2950/83 were complied with.

130. In an initial decision notified to DESFA on 10 January 1990 the Commission limited the Fund's contribution to the Partex case, File No 871012 Pi, to ESC 175112651. ( 91 )

131. By letter of 5 February 1990, ( 92 ) DESFA requested the Fund to provide an itemized account, by undertaking and by heading, of the sums deemed to be ineligible.

132. Further information was supplied to DESFA by letter of 2 March 1990 ( 93 ) accompanied by a statement showing the various items in the form which were affected by a reduction. The letter ended by stating that ‘the reduction to be taken into account for each undertaking is proportional to the relative size of its share under each item in the form in respect of which certain items of expenditure were regarded as ineligible’.

133. Further to that letter, DESFA gave notification, on 15 March 1990, of the contested decision.

134. The Member State in question was therefore consulted under conditions such as to satisfy the requirements laid down in Article 6(1) of the abovementioned regulation.

135. What is the position with regard to the statement of the reasons for the contested decision?

136. It should be noted in the first place that the reasoning contained in the letter of 15 March 1990 — which required Cipeke to reimburse the amount due by banker's draft within a period of 15 days — ought to have been sufficient in itself.

137. The Commission cannot treat further particulars provided subsequently at the company's request, at a time when the period prescribed for bringing an action for annulment of the contested decision had already begun to run, as constituting additional reasoning, except by depriving the debtor company, in such a situation, of the benefit of the ordinary conditions for bringing an action for annulment and in particular of the limitation period of two months.

138. It can only be concluded that the letter of 15 March 1990 did not enable the applicant to become aware of the division of the reduction announced as between the three headings on the form mentioned. The applicant was also kept in ignorance of the reasons for that reduction: did they, for example — concern claims not provided for in the initial application, or headings included in the application but reduced on when the approval was given? If they concerned reductions decided upon at the time of approval, was this fact ever brought to the knowledge of Cipeke other than by notification of a global amount?

139. Moreover, the method of calculation of that reduction is unknown. Is the sum of the reduction in expenditure that was actually unjustified or is it proportional to the ‘size’ of the company's share under each item, without regard to its actual expenditure?

140. It follows the letter of 15 March 1990 does not contain any statement of reasons such as to satisfy Article 190 of the Treaty.

141. Nevertheless, should the Court consider it possible to take into account the explanations provided subsequently by the Commission, I would invite the Court, as in the Consorgan case, to declare that since no decision of approval itemized heading by heading was ever brought to the notice of Cipeke, the decision is null and void on the ground of inadequate reasoning.

142. I therefore conclude that the decisions reducing the assistance from the European Social Fund adopted by the Commission of the European Communities, 1. in File No 870889 P3, on 7 September 1989, notified to Infortec by letter dated 9 March 1990, 2. in so far as it concerns Consorgan, in File No 871106 PI, with notification to that company by letter dated 30 March 1990, 3. in so far as it concern Cipeke, in File No 871012 PI, with notification to that company by letter dated 15 March 1990, should be annulled, and that the costs of these proceedings should be borne by the defendant institution.

( *1 ) Original language: French.

( 1 ) Council Decision on the tasks of the European Social Fund, OJ 1983 L 289, p. 38.

( 2 ) Council Regulation on the implementation of Decision 83/516/EEC on the tasks of the European Social Fund, OJ1983 L 289, p. 1.

( 3 ) Commission Decision on the management of the European Social Fund, OJ 1983 L 377, p. 1.

( 4 ) Europe Sociale, 2/91, p. 87.

( 5 ) Article 1 of Decision 83/516/EEC.

( 6 ) See the Annex to Decision 83/516/EEC, statement ad Article 5(1).

( 7 ) See, for example, Article 6(2) of Decision 83/516/EEC.

( 8 ) Article 124 of the EEC Treaty.

( 9 ) Contained in Annex 1 to Decision 83/673/EEC

( 10 ) Article 5(1) and (2) of Regulation (EEC) No 2950/83.

( 11 ) Ibid.

( 12 ) Submitted on the form contained in Annex 2 to Decision 83/673/EEC.

( 13 ) Article 5(4) of Regulation (EEC) No 2950/83.

( 14 ) Ibid.

( 15 ) Except in specific cases: Article 5 of Decision 83/516/EEC.

( 16 ) Article 7 of Regulation (EEC) No 2950/83.

( 17 ) Ibid.

( 18 ) Article 6(1) of Regulation (EEC) No 2950/83.

( 19 ) In this case, too, the Member Sute concerned must be consulted: Article 7(2) of Regulation (EEC) No 2950/83.

( 20 ) Article 6(2) of Regulation (EEC) No 2950/83.

( 21 ) Ibid, and Article 2(2) of Decision 83/516/EEC.

( 22 ) Article 5(2) of Regulation No 2950/83.

( 23 ) Case 310/81 [1984] ECR 1341, paragraph 15, (emphasis added), judgment given under the currency of the 1977 Rules.

( 24 ) Whether this involves notification of the decision of approval or notification of the decision determining the amount of the balance remaining due from the Commission.

( 25 ) For an example, see the judgment in Case 84/85 United Kingdom v Commission [1987] ECR 3765.

( 26 ) Which enables the bodies concerned to enjoy cash flow faculties.

( 27 ) Article 6(1) of Regulation No 2950/83.

( 28 ) Article 6(2) of Regulation No 2950/83.

( 29 ) See paragraph 24 of my Opinion in Case C-291/89 Interhotel [1991] ECR I-2283.

( 30 ) Interhotel judgment, cited above; and judgment in Case C-304/89 Oliveira [1991] ECR I-2283.

( 31 ) Annex to the application, document 9.

( 32 ) Ibid, document 8.

( 33 ) Whereas the application was for an amount of ESC 66533519 for 380 persons.

( 34 ) Annex to the application, document 11.

( 35 ) ibid, document 10.

( 36 ) Annex to the application, document 12.

( 37 ) Ibid., document 5.

( 38 ) Order of 21 November, 1990 ECR I-4265.

( 39 ) Application, p. 2.

( 40 ) Annex to the application, document 5.

( 41 ) It should be borne in mind that approval had been given for the total amount of ESC 8373341 and that infortec had already received from the Fund an advance of ESC 4186670.

( 42 ) Annex 1 to the defence.

( 43 ) Emphasis added. See also p. 17 of the defence.

( 44 ) Judgment in Case C-200/89 FUNOC v Commission [1990] ECR I-3684.

( 45 ) Paragraphs 24 and 25.

( 46 ) At the hearing the representative of the Commission confirmed that that was the Commission's interpretation of the provision.

( 47 ) See Paragraph 12 of my Opinion in the Oliveira case, cited above.

( 48 ) Judgment cited above; see also the judgment in Interhotel, cited above, paragraph 15.

( 49 ) Paragraphs 22 to 24 of the Oliveira judgment, cited above.

( 50 ) In the amount of ESC 550668844.

( 51 ) Application for assistance, p. 2, Annex I to the Commission's defence.

( 52 ) Annex I to the Commission's defence.

( 53 ) Annex 2 to the application.

( 54 ) Contrary to the assertion made by Consorgan in its application, at paragraph 4 of the introduction, document 3 annexed to the application does not establish the existence or a payment by the Fund. But that point is not contested by the Commission.

( 55 ) See payment authorization no 1933/87 by DESFA, Annex 4 to the application.

( 56 ) Annex 1 to the Commission's defence.

( 57 ) Annex 1 of the application.

( 58 ) ESC 6472608 from the European Social Fund and ESC 5295771 from the national public contribution (see letter of 30 March 1990).

( 59 ) See paragraph 14 of the judgment in Interhotel, cited above; see also paragraphs 17 and 18 of the judgment in Oliveira, cited above.

( 60 ) Annex I to the Commission's reply to the written question by the Court.

( 61 ) It was that sum which appeared in the final payment claim.

( 62 ) Ibid. Annex II.

( 63 ) Ibid. Annex III.

( 64 ) Ibid. Annex IV.

( 65 ) Ibid. Annex V.

( 66 ) Paragraph 17 of the judgment in Case C-200/89, cited above.

( 67 ) Judgment in Case 32/86 SISMA v Commission [1987] ECR 1670, emphasis added.

( 68 ) Judgment in Case 185/83 Interfacultair Instituut Electronenmicroscopie der Rijksuniversiteit te Groningen v Inspecteur der Invoerrechten en Accijnzen [1984] ECR 3623, paragraph 38, emphasis added.

( 69 ) Case C-213/87 [1990] ECR I-221.

( 70 ) Paragraph 28 of the judgment cited above.

( 71 ) See Article 4(2) of Regulation (EEC) No 2950/83.

( 72 ) Case 185/83, cited above, paragraph 39.

( 73 ) Save in special cases. See Article 5 of Regulation (EEC) No 2950/83.

( 74 ) I would point out in this case the extent of the reduction: the Fund's contribution is reduced by ESC 30501190, whereas it was initially approved in the amount of ESC 93552788 (see evaluation report, document 2 of the Annex to the application).

( 75 ) Annex 1 to the Commission's rejoinder. It is worth noting that the circular is carefully reasoned.

( 76 ) Reply, point 11.

( 77 ) See paragraph 55, above.

( 78 ) See paragraph 20, above.

( 79 ) Especially since the advance had been paid.

( 80 ) Fixed at ESC 62834639 in the Fund's letter of 5 September 1989, Annex I to the Commission's reply to the Court's written question.

( 81 ) See Commission's lener of 27 October 1989, Annex III to the Commission's reply to the Court's written question.

( 82 ) Ibid.

( 83 ) Emphasis added.

( 84 ) Judgment in Case 44/81 Germany v Commission [1982] ECR 1855, paragraph 16.

( 85 ) Annex I to the application, my emphasis. It should be noted in passing that Consorgan applied for no sum under Item 14.7 (see final payment claim, Annex I to the defence). Moreover, the reduction necessarily affects items other than those cited. The total of the sums appearing under those headings is in fact less than the total amount of the reduction.

( 86 ) ESC 337749326 instead of ESC 550668844; see the application for final payment, p. 1, items 5 and 6.

( 87 ) See paragraph 95, above.

( 88 ) Such as the relative size of each undertaking's share under the various headings.

( 89 ) To judge by the application for final payment, boxes 5 and 6, Annex II to the defence.

( 90 ) Document 6, annexed to the application.

( 91 ) Annex I to the Commission's reply to the written question put by the Court.

( 92 ) Ibid. Annex II.

( 93 ) Ibid. Annex III.