Case C-153/01

Kingdom of Spain

v

Commission of the European Communities

(EAGGF – Clearance of accounts – Financial years 1996 to 1998 – Decision 2001/137/EC)

Summary of the Judgment

1. Agriculture – EAGGF – Clearance of accounts – Refusal to charge to the EAGGF expenditure arising from irregularities in the application of the Community rules – Assessment of the losses incurred by the EAGGF – Disputed by the Member State concerned – Burden of proof

(Council Regulation No 729/70)

2. Agriculture – EAGGF – Clearance of accounts – Communication to the Member States of the results of the investigations of the control services – Substantive conditions – No reference to Regulation No 1663/95 – Not a breach of an essential formal requirement – Conditions

(Council Regulation No 729/70, Art. 5(2)(c); Commission Regulation No 1663/95, Art. 8(1), first subpara.)

3. Agriculture – EAGGF – Clearance of accounts – Late payment of the additional levy on milk – Financial adjustment pursuant to Article 5(2) of Regulation No 536/93 on the ground that default interest was not collected by a Member State – Not permissible – Exception – National authorities’ negligence causing the EAGGF loss

(Council Regulation No 729/70, Art. 8(2), first subpara.; Commission Regulation No 536/93, Arts 3(4) and 5(2))

4. Agriculture – Common agricultural policy – EAGGF financing – Principles – Aid paid in breach of the Community rules – Charge to the Fund – Not permissible

(Council Regulations No 729/70, Arts 2 and 3, and No 1765/92, Art. 2(6), first subpara.)

1. The EAGGF finances only intervention undertaken in accordance with the Community rules within the framework of the common organisation of agricultural markets. The Commission is not required to prove that there has been a loss but may simply adduce sound evidence of such loss. For those difficult cases where the extent of the losses cannot be ascertained precisely, the losses to the Community funds must be determined by an evaluation of the risk to which they are exposed by the deficiency in the controls. Although it is for the Commission to prove that the rules of the common organisation of the agricultural markets have been infringed, once it has established such an infringement it is for the Member State to demonstrate, if appropriate, that the Commission made an error as to the financial consequences to be attached to that infringement. The Member State must then adduce the most detailed and comprehensive evidence possible that its figures are accurate and, if appropriate, that the Commission’s calculations are incorrect.

(see paras 66-67)

2. Under the procedure for the clearance of the EAGGF’s accounts, the Commission is bound, in its relations with the Member States, to respect the conditions it has imposed on itself by implementing regulations. However, the Member States cannot, in their relations with the Commission, adopt purely formalist positions, when it is clear from the circumstances that their rights were fully protected.

Where the document by which the Commission communicates to the Member State the results of the investigations carried out on site and the corrective measures to be taken informs the government concerned fully about the Commission’s reservations and the adjustments which will probably be made in relation to the sector in question, so that it can fulfil the warning function given to written communications by Article 5(2)(c) of Regulation No 729/70 on the financing of the common agricultural policy and the first subparagraph of Article 8(1) of Regulation No 1663/95 laying down detailed rules for the application of Regulation No 729/70 regarding the procedure for the clearance of the accounts of the EAGGF Guarantee Section, the mere omission, in that document, of a reference to Regulation No 1663/95 cannot be regarded as a breach of an essential formal requirement.

(see para. 93)

3. Notwithstanding that, first, Article 3(4) of Regulation No 536/93 laying down detailed rules on the application of the additional levy on milk and milk products makes purchasers and producers liable to pay interest, as from 1 September of each year, to the competent body in case of late payment of the additional levy and, second, Article 5(2) of that regulation makes Member States responsible for deducting interest paid from the applications for reimbursement of expenditure on milk and milk products submitted to the EAGGF, the Commission cannot use the latter provision as a basis for making a financial adjustment because of a Member State’s failure to collect such interest. The fact that certain sums due remain unpaid, or have been paid belatedly, does not of itself constitute failure to fulfil obligations placed on the Member States by Community law.

However, according to the first subparagraph of Article 8(2) of Regulation No 729/70 on the financing of the common agricultural policy, the Commission may apply an adjustment where it is able to show that the EAGGF suffered a loss as a result of a negligent failure, attributable to the national authorities, to recover the disputed sums.

(see paras 102, 104, 106)

4. Articles 2 and 3 of Regulation No 729/70 on the financing of the common agricultural policy allow the Commission to charge to the EAGGF only sums paid in accordance with the rules laid down in the different agricultural sectors. Therefore, the Commission cannot reimburse sums paid in breach of the second indent of the first subparagraph of Article 2(6) of Regulation No 1765/92 establishing a support system for producers of certain arable crops, as amended, and is, as a result, entitled to impose a financial adjustment equal to those sums.

(see paras 134, 137-138)