7

The relevant background to the dispute was described as follows in paragraphs 1 to 17 of the judgment under appeal: ‘1 On 9 July 2008 the Czech Republic submitted to the Commission of the European Communities a draft support programme for 2009 to 2014 pursuant to Article 5(1) of [Regulation No 479/2008]. 2 The measures in the draft programme included [the contested protection measure], which was to be implemented by mechanical means, namely fencing vineyards or using various devices for frightening animals and birds, or by active means involving human beings producing sounds … 3 By letter of 8 October 2008, the Commission raised objections to the draft programme pursuant to Article 5(2) of Regulation No 479/2008. However, the Commission’s objections did not relate to the contested protection measure. 4 The Czech Republic revised the draft programme in the light of the Commission’s objections and sent it a new draft on 12 February 2009. The second draft again contained the contested protection measure, unchanged in form from the original draft. The Commission no longer raised any objections to the second draft. 5 On the occasion of an audit investigation under reference VT/VI/2009/101/CZ, intended to ascertain the compatibility of the measures adopted by the Czech Republic in connection with the restructuring and conversion of vineyards with the conditions for granting support for restructuring and conversion, in relation to the 2007/2008 wine year, the Commission on 20 February 2009 sent the Czech Republic a communication under Article 11(1) of Commission Regulation (EC) No 885/2006 of 21 June 2006 laying down detailed rules for the application of Council Regulation (EC) No 1290/2005 as regards the accreditation of paying agencies and other bodies and the clearance of the accounts of the EAGF and of the EAFRD (OJ 2006 L 171, p. 90). That communication read, in part, as follows: “This result shows, however, that the restructuring work has essentially been limited to protecting existing vineyards against animals, with no other intervention. That approach raises a problem of conformity with respect to Article 11(2) of Regulation (EC) No 1493/1999, which provides that the objective of the system is the adaptation of production to market demand. In so far as restructuring in the Czech Republic was confined solely to protecting existing vineyards against animals, the expenditure is prima facie not eligible, as it is not related to the requirements of the legal provisions.” In that letter the Commission indicated that the Czech authorities should “take all measures necessary to remedy the defects and lack of conformity”. 6 By letter of 22 September 2009, the Commission stated that it intended to carry out another audit investigation, under reference VT/VI/2009/004/CZ. That investigation was to relate to the measures concerning the restructuring and conversion of vineyards in the Czech Republic in the wine year 2008/2009. 7 From 26 to 29 January 2010 the Commission carried out that investigation in the Czech Republic. 8 In a communication of 22 March 2010 pursuant to Article 11(1) of Regulation No 885/2006 … the Commission, in connection with the investigation under reference VT/VI/2009/004/CZ, stated inter alia: “During the on-the-spot check the audit team expressed doubts as to whether active and passive protection against birds and wild animals was an eligible activity in connection with restructuring and conversion.” 9 In that document, moreover, the Commission informed the Czech Republic that “active and passive protection against birds and wild animals cannot be regarded as a new measure by which vineyard management will be improved so as to adapt production to market demand”. The communication noted, finally, that “Regulation (EC) No 1493/1999 clearly states that the objective [of restructuring operations] is ‘the adaptation of production to market demand’”. 10 On 31 January 2011 the Commission sent the Czech Republic the minutes of a bilateral meeting that had been held, pursuant to the third subparagraph of Article 11(1) of Regulation No 885/2006, between representatives of the Czech Republic and of the Commission on 13 December 2010, concerning the above two investigations. From 31 January 2011 a reference to both investigations appeared at the head of all correspondence from the Commission in the present case. 11 In the minutes the Commission took the view that the expenditure in the Czech Republic on the basis of the contested protection measure constituted non-permitted operations, and required from the Czech Republic the exact amount of the expenditure declared for the financial years 2008 to 2010. 12 On 3 December 2012 the Commission sent the Czech Republic a communication under the third subparagraph of Article 11(2) of Regulation No 885/2006. In that communication it repeated and clarified its view that the forms of active and passive protection of vineyards applied by the Czech Republic were not covered by the concept of restructuring and conversion referred to in Article 11 of [Regulation No 1493/1999] and Article 11 of Regulation No 479/2008. In this respect, the Commission proposed a financial correction of CZK 52 347 157.43 (approximately EUR 2040737) and EUR 11 984 289.94 for the financial years 2007 to 2010, Regulation No 1493/1999 being applied to the years 2007 and 2008 and Regulation No 479/2008 to the other years. 13 Following a request made by the Czech Republic on 17 January 2013, the conciliation body arranged a meeting on 19 June 2013 and on 2 July 2013 drew up a final report on the conciliation procedure under reference 13/CZ/552. In the report the conciliation body invited the Commission not to propose any financial correction for the expenditure under the support programme as a whole for the period 2009 to 2014 and to reconsider its decision to impose the proposed financial correction of CZK 52 347 157.43 (approximately EUR 2040737) and EUR 11 984 289.94. 14 By letter of 22 April 2014, the Commission sent the Czech Republic a final opinion after the submission of the conciliation body’s report. In the opinion the Commission repeated that in its view the contested protection measure could not be regarded as permitted in connection with the programme for restructuring and conversion of vineyards. 15 With respect to the financial years 2007 to 2009, the Commission observed that the lack of objections on its part to the support programme as regards the contested protection measure had allowed the Czech Republic legitimately to believe that the support for that measure was permitted. In the Commission’s view, the Czech Republic could not, however, have any legitimate expectation in that respect after receiving its letter of 22 March 2010. For that reason the Commission considered that a financial correction was justified for all the expenditure for which a commitment was entered into after 22 March 2010. It further proposed a financial correction for the financial years 2010 to 2012 in a total amount of EUR 2 123 199.04. 16 Finally, the Commission adopted [the contested decision] on the basis of Article 52 of Regulation (EU) No 1306/2013 of the European Parliament and of the Council of 17 December 2013 on the financing, management and monitoring of the common agricultural policy and repealing Council Regulations (EEC) No 352/78, (EC) No 165/94, (EC) No 2799/98, (EC) No 814/2000, (EC) No 1290/2005 and (EC) No 485/2008 (OJ 2013 L 347, p. 549, corrigendum OJ 2016 L 130, p. 6). 17 In the contested decision the Commission excluded the expenditure of the Czech Republic under the [EAGF] on the contested protection measure in connection with the programme for restructuring and conversion of vineyards for 2010 to 2012 in the total amount of EUR 2 123 199.04.’