The second subparagraph of Article 9(5) of Regulation No 1262/2001 laying down detailed rules for implementing Council Regulation (EC) No 1260/2001 as regards the buying in and sale of sugar by intervention agencies provides that, where sugar is stored in rented warehouses, the intervention agency may increase the storage costs by up to 35%, but does not specify either the procedures or the extent of the checks that Member States are obliged to carry out before applying that increase. However, it is clear from the case-law that Article 8(1) of Regulation No 1258/1999, drafted in terms similar to those of Article 9(1) of Regulation No 1290/2005, imposes on the Member States the obligation to take the measures necessary to satisfy themselves that the transactions financed by the European Agricultural Funds are actually carried out and are executed correctly, to prevent and deal with irregularities and to recover sums lost as a result of irregularities or negligence, even if the specific act of EU law does not expressly provide for the adoption of particular supervisory measures. It follows that Member States are required to set up comprehensive administrative checks and on-the-spot inspections thus guaranteeing the proper observance of the substantive and formal conditions for the grant of the premiums in question. If no comprehensive system of checks exists or if the system introduced by a Member State is defective to the point of giving rise to doubts as to compliance with those conditions, the Commission is entitled to disallow certain expenditure incurred by the Member State in question.

It implicitly, but necessarily, follows from the wording of the second subparagraph of Article 9(5) of Regulation No 1262/2001 that a less significant increase must be applied by the intervention agency if the costs actually incurred by the beneficiary in relation to the rental of warehouses are lower than that ceiling of 35%. Such a check that the expenditure which will be charged to the funds is lawful and correct can be carried out only in the context of individual checks on the basis of the supporting evidence adduced by the depositary concerning, first, the circumstances which compelled it to use an external warehouse and, secondly, the additional costs incurred through the use of that warehouse. The effectiveness of checks to ascertain whether the actual costs incurred by beneficiaries relating to the rental of warehouses are indeed consistent with the 35% increase would be seriously weakened, if not rendered impossible, if that increase were applied solely on the basis of general information concerning the situation on the market concerned, such as scales of the prices charged on the market for similar products or information concerning the shortage of appropriate warehouses.

It follows that the second subparagraph of Article 9(5) of Regulation No 1262/2001 must be interpreted requiring Member States to organise a system of supervision allowing verification, on a case-by-case basis, that expenditure for the storage of sugar in rented warehouses was actually incurred, so that only expenditure duly justified by the beneficiaries and expenditure actually incurred by the latter are charged to the funds.

(see paras 52-54, 57, 58)