OPINION OF ADVOCATE GENERAL

PIKAMÄE

delivered on 9 September 2021 ( 1 )

Case C‑213/19

European Commission

v

United Kingdom of Great Britain and Northern Ireland

(Failure of a Member State to fulfil obligations – Article 4(3) TEU – Article 310(6) and Article 325 TFEU – Action to counter fraud – Requirement of effectiveness – Obligation to make own resources available to the EU budget – Financial liability of Member States – Customs union – Council Regulation (EEC) No 2913/92 – Community Customs Code – Regulation (EU) No 952/2013 – Union Customs Code – Customs duties – Imports of textiles and footwear from China – Widespread systemic fraud – Organised crime – Missing importers – Customs value – Undervaluation – Customs controls based on risk analysis – Pre-release controls – Lodging of security – Lack of controls – Articles 16 and 17 of the Charter of Fundamental Rights of the European Union – Own resources of the European Union – Council Decisions 2007/436/EC and 2014/335/EU – Council Regulations (EC, Euratom) No 1150/2000 and No 609/2014 – Establishment of a customs debt – Obligation to make own resources available to the European Union – Estimate of loss of traditional own resources – Statistical method based on the cleaned average price and the lowest acceptable price – Value added tax (VAT) – Council Directive 2006/112/EC – Taxable amount for VAT – Own resources accruing from VAT)

Table of contents

I. Introduction II. Legal context A. Law on traditional own resources 1. Decisions relating to the own resources system 2. Regulations on the methods and procedure for making available own resources 3. Council Regulation (EU, Euratom) No 608/2014 4. Regulation No 1553/89 B. Customs law 1. The Community Customs Code 2. The Union Customs Code 3. Implementing Regulation I 4. Implementing Regulation II C. VAT law III. Facts and pre-litigation procedure A. Background to the dispute B. Pre-litigation procedure IV. Procedure before the Court V. Forms of order sought VI. The action A. Admissibility 1. Objection of inadmissibility alleging infringement of the United Kingdom’s rights of the defence during the pre-litigation procedure and the procedure before the Court (a) Disclosure of data relating to calculations concerning the cleaned average price, the lowest acceptable price and the estimated losses of own resources (b) Information on calculations performed in respect of 2011 to 2014 on the basis of the Snake C18 payment notices (c) Knowledge of other Member States’ practices as regards use of the OLAF methodology (d) Request for evidence regarding the nature of the undervalued goods and their Member State of destination 2. Objection of inadmissibility alleging irregularity of the pre-litigation procedure and the application as regards customs procedure 42 in particular 3. Objection of inadmissibility alleging infringement by the Commission of the principles of the protection of legitimate expectations, legal certainty, estoppel and sincere cooperation 4. Objection of inadmissibility alleging that the making available of amounts cannot be ordered under Article 258 TFEU B. Failure to fulfil obligations to protect the financial interests of the European Union and to counter fraud and obligations under EU customs legislation 1. Obligations of Member States to counter illegal activities affecting the financial interests of the European Union 2. Measures to be taken under customs legislation to protect the financial interests of the European Union in the fraud scheme at issue (a) Characteristics of the fraud committed by the importers in question and the United Kingdom authorities’ knowledge of that fraud (b) The obligation to introduce risk analysis and to carry out pre-release controls and the need to lodge security (1) Preliminary observations (2) The obligation to have recourse to risk analysis (3) The obligation to carry out pre-release controls (4) The obligation to lodge security 3. Summary of the evidence adduced against the United Kingdom 4. The obligation of Member States to determine the amounts of customs duty and enter the corresponding amounts in the accounts C. Infringement of EU legislation on own resources and on the estimate of losses of traditional own resources constituted by customs duties 1. Legal rules governing the entry in the accounts of amounts due and the making available of traditional own resources 2. Breach of the United Kingdom’s obligation to make available to the Commission amounts corresponding to the customs duties established in Operation Snake 3. Assessment of losses of traditional own resources (a) Preliminary observations (1) The Commission’s competence to assess losses of traditional own resources and the Court’s jurisdiction to give a ruling thereon (2) The alleged obligation to demonstrate damage and a causal link, and the counterfactual scenario (b) The substance (1) Overview of the OLAF methodology and its application as a tool for calculating losses of traditional own resources (2) Application of the judgment in Commission v Portugal (3) Acceptance in principle of the approach proposed by the Commission to assess the losses of traditional own resources (4) Use of the methodology based on statistical data in the present case (i) Determination of the volume of undervalued imports – Period from November 2011 to November 2014 – Period from 1 January 2015 to 11 October 2017 (ii) Benchmark value for determining the amounts of own resources lost (5) Summary of the assessment of traditional own resources 4. Default interest D. Breach of the principle of sincere cooperation enshrined in Article 4(3) TEU E. Failure to fulfil obligations under the legislation on VAT and own resources accruing from VAT 1. Legal rules governing the making available to the EU budget of resources accruing from VAT 2. Complaint relating to the loss of own resources accruing from VAT under customs procedure 40 3. Complaint relating to the loss of own resources accruing from VAT under customs procedure 42 VII. Costs VIII. Conclusion

I. Introduction

1. In the present case, the European Commission has brought an action for failure to fulfil obligations under Article 258 TFEU against the United Kingdom of Great Britain and Northern Ireland alleging that, during the period between November 2011 and 11 October 2017 inclusive (‘the infringement period’), the United Kingdom did not, first, enter in the accounts the correct amounts of customs duty and make available the correct amount of traditional own resources and own resources based on value added tax (VAT) relating to certain imports of textiles and footwear from China, and, secondly, provide all the information required by the Commission for the purpose of establishing the amount of traditional own resources lost. ( 2 )

2. According to the Commission, the United Kingdom thus failed to fulfil its obligations under Article 4(3) TEU, which lays down the principle of sincere cooperation, under Article 310(6) and Article 325 TFEU, and under an entire set of provisions of secondary legislation relating to EU customs law, traditional own resources and VAT.

3. Consequently, the present case will require the Court to develop its case-law on the scope of the obligations to counter fraud and protect the financial interests of the European Union imposed by the provisions cited in the preceding point, in circumstances where the Commission claims that the Member State in question did not correctly determine the customs value of imported goods, those goods having been undervalued on importation because there were no effective control measures. This case raises fundamental questions, such as whether the Commission is able to determine the amount of its claim for loss of own resources using a statistical method, namely the cleaned average prices for goods imported at EU level, where the Member State in question has failed correctly to establish the value of the goods. Finally, the Court will have to decide whether the Member State of importation of the goods is liable for the loss of own resources accruing from VAT in the context of a customs procedure under which customs duties are paid on importation but VAT must be paid at a later stage in the Member State of destination.

II. Legal context

A. Law on traditional own resources

1. Decisions relating to the own resources system

4. Under Article 2(1)(a) and (b) of Council Decision 2014/335/EU, Euratom, ( 3 ) applicable from 1 January 2014, the wording of which is essentially identical to that of Article 2(1) of Council Decision 2007/436/EC, Euratom of 7 June 2007 on the system of the European Communities’ own resources, ( 4 ) revenue from the following is to constitute own resources entered in the EU budget: ‘traditional own resources consisting of … Common Customs Tariff duties and other duties established or to be established by the institutions of the Union in respect of trade with third countries’ and ‘the application of a uniform rate valid for all Member States to the harmonised VAT assessment bases determined in accordance with Union rules’.

5. The first subparagraph of Article 8(1) of those decisions states that Common Customs Tariff duties, as the European Union’s own resources, are to be collected by Member States in accordance with the national provisions imposed by law, regulation or administrative action, which are, where appropriate, to be adapted to meet the requirements of EU rules. The third subparagraph of Article 8(1) of Decision 2007/436 and Article 8(2) of Decision 2014/335 provide that Member States are to make the resources provided for in Article 2(1)(a) to (c) of those decisions available to the Commission.

2. Regulations on the methods and procedure for making available own resources

6. Council Regulation (EC, Euratom) No 1150/2000 of 22 May 2000 implementing Decision 94/728, ( 5 ) applicable to the first part of the infringement period, was replaced on 1 January 2014 by Council Regulation (EU, Euratom) No 609/2014 of 26 May 2014 on the methods and procedure for making available the traditional, VAT and GNI ( 6 )-based own resources and on the measures to meet cash requirements. ( 7 ) Article 2(1) of Council Regulation No 609/2014, the content of which corresponds, in essence, to that of Article 2(1) of Council Regulation No 1150/2000, provides: ‘For the purpose of applying this Regulation, the Union’s entitlement to the traditional own resources referred to in Article 2(1)(a) of Decision 2014/335 shall be established as soon as the conditions provided for by the customs regulations have been met concerning the entry of the entitlement in the accounts and the notification of the debtor.’

7. Article 6(1) and the first and second subparagraphs of Article 6(3) of Regulation No 609/2014, which reproduce, in essence, Article 6(1) and (3)(a) and (b) of Regulation No 1150/2000, are worded as follows: ‘1. Accounts for own resources shall be kept by the Treasury of each Member State or by the body appointed by each Member State and broken down by type of resources. … 3. Entitlements established in accordance with Article 2 shall, subject to the second subparagraph of this paragraph, be entered in the accounts [commonly known as “the A account”] at the latest on the first working day after the nineteenth day of the second month following the month during which the entitlement was established. Established entitlements not entered in the accounts referred to in the first subparagraph, because they have not yet been recovered and no security has been provided, shall be shown in separate accounts within the period laid down in the first subparagraph [commonly known as “the B account”]. Member States may adopt this procedure where established entitlements for which security has been provided have been challenged and might, upon settlement of the disputes which have arisen, be subject to change. …’

8. Under the first subparagraph of Article 9(1) of Regulation No 609/2014, the wording of which corresponds to the first subparagraph of Article 9(1) of Regulation No 1150/2000: ‘In accordance with the procedure laid down in Article 10, each Member State shall credit own resources to the account opened in the name of the Commission with its Treasury or the body it has appointed.’

9. With effect from 1 October 2016, that provision was amended by Article 9(1) of Council Regulation (EU, Euratom) 2016/804, ( 8 ) which now reads as follows: ‘In accordance with the procedure laid down in Articles 10, 10a and 10b, each Member State shall credit own resources to the account opened in the name of the Commission with its treasury or national central bank. Subject to the application of negative interest as referred to in the third subparagraph, that account may only be debited upon instruction by the Commission.’

10. Article 10(1) of Regulation No 609/2014, the content of which corresponds, in essence, to that of Article 10(1) of Regulation No 1150/2000, provides: ‘After deduction of collection costs in accordance with Articles 2(3) and 10(3) of Decision 2014/335 …, entry of the traditional own resources referred to in Article 2(1)(a) of that Decision shall be made at the latest on the first working day following the 19th day of the second month following the month during which the entitlement was established in accordance with Article 2 of this Regulation. However, for entitlements shown in separate accounts under the second subparagraph of Article 6(3), the entry must be made at the latest on the first working day following the 19th day of the second month following the month in which the entitlements were recovered.’

11. As originally worded, Article 12(1) and (3) of Regulation No 609/2014, the content of which was, in essence, identical to that of Article 11(1) and (3) of Regulation No 1150/2000, read as follows: ‘1. Any delay in making the entry in the account referred to in Article 9(1) shall give rise to the payment of interest by the Member State concerned. … 3. In the case of Member States not belonging to the Economic and Monetary Union, the rate shall be equal to the rate applied on the first day of the month in question by the Central Banks for their main refinancing operations, increased by two percentage points, or, for the Member States for which the Central Bank rate is not available, the most equivalent rate applied on the first day of the month in question on the Member State’s money market, increased by two percentage points. This rate shall be increased by 0.25 of a percentage point for each month of delay. The increased rate shall be applied to the entire period of delay.’

12. With effect from 1 October 2016, following the entry into force of Council Regulation 2016/804, Article 12(3) of Regulation No 609/2014 was replaced by Article 12(5), which is worded as follows: ‘In the case of Member States not belonging to the Economic and Monetary Union, the interest rate shall be equal to the rate applied on the first day of the month in question by the central banks for their main refinancing operations, or 0 per cent, whichever is higher, increased by 2.5 percentage points. For the Member States for which the central bank rate is not available, the interest rate shall be equal to the most equivalent rate applied on the first day of the month in question on the Member State’s money market, or 0 per cent, whichever is higher, increased by 2.5 percentage points. This rate shall be increased by 0.25 of a percentage point for each month of delay. The total increase pursuant to the first and the second subparagraphs shall not exceed 16 percentage points. The increased rate shall be applied to the entire period of delay.’

13. Article 13(1) and (2) of Regulation No 609/2014, which reproduces, in essence, Article 17(1) and (2) of Regulation No 1150/2000, provides: ‘1. Member States shall take all requisite measures to ensure that the amounts corresponding to the entitlements established under Article 2 are made available to the Commission as specified in this Regulation. 2. Member States shall be released from the obligation to place at the disposal of the Commission the amounts corresponding to entitlements established under Article 2 which prove irrecoverable for either of the following reasons: (a) for reasons of force majeure; (b) for other reasons which cannot be attributed to them. Amounts of established entitlements shall be declared irrecoverable by a decision of the competent administrative authority finding that they cannot be recovered. Amounts of established entitlements shall be deemed irrecoverable, at the latest, after a period of five years from the date on which the amount has been established in accordance with Article 2 or, in the event of an administrative or judicial appeal, the final decision has been given, notified or published. …’

3. Council Regulation (EU, Euratom) No 608/2014

14. Concerning the period after 1 January 2014, Article 2 of Council Regulation (EU, Euratom) No 608/2014 of 26 May 2014 laying down implementing measures for the system of own resources of the European Union, ( 9 ) headed ‘Control and supervision measures’, provides: ‘1. The own resources referred to in Article 2(1) of Decision 2014/335 … shall be inspected as specified in this Regulation, without prejudice to [Council Regulation No 1553/89 ( 10 )] … 2. Member States shall take all measures that are necessary to ensure that the own resources referred to in Article 2(1) of Decision 2014/335 … are made available to the Commission. 3. Where control and supervision measures concern the traditional own resources referred to in Article 2(1)(a) of Decision 2014/335 …: (a) Member States shall conduct the checks and enquiries concerning the establishment and the making available of those own resources. … (c) Member States shall, if the Commission so requests, associate it with the inspections which they carry out. Where the Commission is associated with an inspection, the Commission shall have access, in so far as the application of this Regulation so requires, to the supporting documents concerning establishing and making available own resources, and to any other appropriate document related to those supporting documents. (d) The Commission may itself carry out inspections on the spot. The agents authorised by the Commission for such inspections shall have access to documents as set out for the inspections referred to in point (c). Member States shall facilitate those inspections. …’

15. Article 5 of Regulation No 608/2014, headed ‘Reporting fraud and irregularities affecting entitlements to traditional own resources’, provides, in paragraph 1: ‘In the two months following the end of each quarter, Member States shall send the Commission a description of cases of fraud and irregularities detected involving entitlements of over EUR 10000 concerning the traditional own resources referred to Article 2(1)(a) of Decision 2014/335 … Within the period referred to in the first subparagraph, each Member State shall give details of the position concerning cases of fraud and irregularities already reported to the Commission whose recovery, cancellation or non-recovery was not indicated earlier.’

4. Regulation No 1553/89

16. Article 2(1) of Regulation No 1553/89 provides: ‘The VAT resources base shall be determined from the taxable transactions referred to in Article 2 of [Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1)] …’

17. Under Article 3(1) of that regulation: ‘For a given calendar year, and without prejudice to Articles 5 and 6, the VAT resources base shall be calculated by dividing the total net VAT revenue collected by a Member State during that year by the rate at which VAT is levied during that same year.’

B. Customs law

1. The Community Customs Code

18. Article 13 of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code, ( 11 ) as amended by Regulation (EC) No 648/2005 of the European Parliament and of the Council of 13 April 2005 ( 12 ) (‘the Community Customs Code’), provided: ‘1. Customs authorities may, in accordance with the conditions laid down by the provisions in force, carry out all the controls they deem necessary to ensure that customs rules and other legislation governing the entry, exit, transit, transfer and end-use of goods moved between the customs territory of the Community and third countries and the presence of goods that do not have Community status are correctly applied. Customs controls for the purpose of the correct application of Community legislation may be carried out in a third country where an international agreement provides for this. 2. Customs controls, other than spot-checks, shall be based on risk analysis using automated data processing techniques, with the purpose of identifying and quantifying the risks and developing the necessary measures to assess the risks, on the basis of criteria developed at national, Community and, where available, international level. The committee procedure shall be used for determining a common risk management framework, and for establishing common criteria and priority control areas. Member States, in cooperation with the Commission, shall establish a computer system for the implementation of risk management. 3. Where controls are performed by authorities other than the customs authorities, such controls shall be performed in close coordination with the customs authorities, wherever possible at the same time and place. …’

19. Title II of the Community Customs Code included a Chapter 3 headed ‘Value of goods for customs purposes’, comprising Articles 28 to 36.

20. Article 29 of that code provided: ‘1. The customs value of imported goods shall be the transaction value, that is, the price actually paid or payable for the goods when sold for export to the customs territory of the Community, adjusted, where necessary, in accordance with Articles 32 and 33 …: … 2. (a) In determining whether the transaction value is acceptable for the purposes of paragraph 1, the fact that the buyer and the seller are related shall not in itself be sufficient grounds for regarding the transaction value as unacceptable. Where necessary, the circumstances surrounding the sale shall be examined and the transaction value shall be accepted provided that the relationship did not influence the price. … … 3. (a) The price actually paid or payable is the total payment made or to be made by the buyer to or for the benefit of the seller for the imported goods and includes all payments made or to be made as a condition of sale of the imported goods by the buyer to the seller or by the buyer to a third party to satisfy an obligation of the seller. … …’

21. Under Article 30 of that code: ‘1. Where the customs value cannot be determined under Article 29, it is to be determined by proceeding sequentially through subparagraphs (a), (b), (c) and (d) of paragraph 2 to the first subparagraph under which it can be determined … 2. The customs value as determined under this Article shall be: (a) the transaction value of identical goods sold for export to the Community and exported at or about the same time as the goods being valued; (b) the transaction value of similar goods sold for export to the Community and exported at or about the same time as the goods being valued; (c) the value based on the unit price at which the imported goods for identical or similar imported goods are sold within the Community in the greatest aggregate quantity to persons not related to the sellers; (d) the computed value … …’

22. Article 31 of the Community Customs Code read as follows: ‘1. Where the customs value of imported goods cannot be determined under Articles 29 or 30, it shall be determined, on the basis of data available in the Community, using reasonable means consistent with the principles and general provisions of: – the agreement on implementation of Article VII of the General Agreement on Tariffs and Trade of 1994, – Article VII of the General Agreement on Tariffs and Trade of 1994, – the provisions of this chapter. 2. No customs value shall be determined under paragraph 1 on the basis of: (a) the selling price in the Community of goods produced in the Community; (b) a system which provides for the acceptance for customs purposes of the higher of two alternative values; (c) the price of goods on the domestic market of the country of exportation; (d) the cost of production, other than computed values which have been determined for identical or similar goods in accordance with Article 30(2)(d); (e) prices for export to a country not forming part of the customs territory of the Community; (f) minimum customs values; or (g) arbitrary or fictitious values.’

23. Article 68 of that code provided: ‘For the verification of declarations which they have accepted, the customs authorities may: (a) examine the documents covering the declaration and the documents accompanying it. The customs authorities may require the declarant to present other documents for the purpose of verifying the accuracy of the particulars contained in the declaration; (b) examine the goods and take samples for analysis or for detailed examination.’

24. Article 71 of that code was worded as follows: ‘1. The results of verifying the declaration shall be used for the purposes of applying the provisions governing the customs procedure under which the goods are placed. 2. Where the declaration is not verified, the provisions referred to in paragraph 1 shall be applied on the basis of the particulars contained in the declaration.’

25. Article 217 of the Community Customs Code stated: ‘1. Each and every amount of import duty or export duty resulting from a customs debt … shall be calculated by the customs authorities as soon as they have the necessary particulars, and entered by those authorities in the accounting records or on any other equivalent medium (entry in the accounts). … 2. The Member States shall determine the practical procedures for the entry in the accounts of the amounts of duty. Those procedures may differ according to whether or not, in view of the circumstances in which the customs debt was incurred, the customs authorities are satisfied that the said amounts will be paid.’

26. Under Article 218(1) of that code: ‘Where a customs debt is incurred as a result of the acceptance of the declaration of goods for a customs procedure other than temporary importation with partial relief from import duties or any other act having the same legal effect as such acceptance the amount corresponding to such customs debt shall be entered in the accounts as soon as it has been calculated and, at the latest, on the second day following that on which the goods were released.’

27. Article 220(1) of that code provided: ‘Where the amount of duty resulting from a customs debt has not been entered in the accounts in accordance with Articles 218 and 219 or has been entered in the accounts at a level lower than the amount legally owed, the amount of duty to be recovered or which remains to be recovered shall be entered in the accounts within two days of the date on which the customs authorities become aware of the situation and are in a position to calculate the amount legally owed and to determine the debtor (subsequent entry in the accounts). That time limit may be extended in accordance with Article 219.’

28. Article 221 of that code stated: ‘1. As soon as it has been entered in the accounts, the amount of duty shall be communicated to the debtor in accordance with appropriate procedures. … 3. Communication to the debtor shall not take place after the expiry of a period of three years from the date on which the customs debt was incurred. This period shall be suspended from the time an appeal within the meaning of Article 243 is lodged, for the duration of the appeal proceedings. 4. Where the customs debt is the result of an act which, at the time it was committed, was liable to give rise to criminal court proceedings, the amount may, under the conditions set out in the provisions in force, be communicated to the debtor after the expiry of the three-year period referred to in paragraph 3.’

2. The Union Customs Code

29. Article 3 of Regulation (EU) No 952/2013 of the European Parliament and of the Council of 9 October 2013 laying down the Union Customs Code ( 13 ) (‘the Union Customs Code’) provides: ‘Customs authorities shall be primarily responsible for the supervision of the Union’s international trade, thereby contributing to fair and open trade, to the implementation of the external aspects of the internal market, of the common trade policy and of the other common Union policies having a bearing on trade, and to overall supply chain security. Customs authorities shall put in place measures aimed, in particular, at the following: (a) protecting the financial interests of the Union and its Member States; (b) protecting the Union from unfair and illegal trade while supporting legitimate business activity; (c) ensuring the security and safety of the Union and its residents, and the protection of the environment, where appropriate in close cooperation with other authorities; and (d) maintaining a proper balance between customs controls and facilitation of legitimate trade.’

30. Under Article 46 of the Union Customs Code, headed ‘Risk management and customs controls’: ‘1. The customs authorities may carry out any customs controls they deem necessary. Customs controls may in particular consist of examining goods, taking samples, verifying the accuracy and completeness of the information given in a declaration or notification and the existence, authenticity, accuracy and validity of documents, examining the accounts of economic operators and other records, inspecting means of transport, inspecting luggage and other goods carried by or on persons and carrying out official enquiries and other similar acts. 2. Customs controls, other than random checks, shall primarily be based on risk analysis using electronic data-processing techniques, with the purpose of identifying and evaluating the risks and developing the necessary counter-measures, on the basis of criteria developed at national, Union and, where available, international level. 3. Customs controls shall be performed within a common risk management framework, based upon the exchange of risk information and risk analysis results between customs administrations and establishing common risk criteria and standards, control measures and priority control areas. Controls based upon such information and criteria shall be carried out without prejudice to other controls carried out in accordance with paragraph 1 or with other provisions in force. 4. Customs authorities shall undertake risk management to differentiate between the levels of risk associated with goods subject to customs control or supervision and to determine whether the goods will be subject to specific customs controls, and if so, where. The risk management shall include activities such as collecting data and information, analysing and assessing risk, prescribing and taking action and regularly monitoring and reviewing that process and its outcomes, based on international, Union and national sources and strategies. 5. Customs authorities shall exchange risk information and risk analysis results where: (a) the risks are assessed by a customs authority as being significant and requiring customs control and the results of the control establish that the event triggering the risks has occurred; or (b) the control results do not establish that the event triggering the risks has occurred, but the customs authority concerned considers the threat to present a high risk elsewhere in the Union. 6. For the establishment of the common risk criteria and standards, the control measures and the priority control areas referred to in paragraph 3, account shall be taken of all of the following: (a) the proportionality to the risk; (b) the urgency of the necessary application of the controls; (c) the probable impact on trade flow, on individual Member States and on control resources. 7. The common risk criteria and standards referred to in paragraph 3 shall include all of the following: (a) a description of the risks; (b) the factors or indicators of risk to be used to select goods or economic operators for customs control; (c) the nature of customs controls to be undertaken by the customs authorities; (d) the duration of the application of the customs controls referred to in point (c). 8. Priority control areas shall cover particular customs procedures, types of goods, traffic routes, modes of transport or economic operators which are subject to increased levels of risk analysis and customs controls during a certain period, without prejudice to other controls usually carried out by the customs authorities.’

31. Article 53 of the Union Customs Code, headed ‘Currency conversion’, provides, in paragraph 1: ‘The competent authorities shall publish and/or make available on the Internet the rate of exchange applicable where the conversion of currency is necessary for one of the following reasons: (a) because factors used to determine the customs value of goods are expressed in a currency other than that of the Member State where the customs value is determined; (b) because the value of the euro is required in national currencies for the purposes of determining the tariff classification of goods and the amount of import and export duty, including value thresholds in the Common Customs Tariff.’

32. Articles 70 and 74 of that code contain rules on the value of goods for customs purposes which correspond, in essence, to those contained in Articles 29 to 31 of the Community Customs Code.

33. Under Article 101(1) of the Union Customs Code, the amount of import or export duty payable is to be determined by the customs authorities responsible for the place where the customs debt is incurred, or is deemed to have been incurred in accordance with Article 87 of that code, as soon as they have the necessary information.

34. Article 103 of the code, headed ‘Limitation of the customs debt’, provides, in paragraphs 1 and 2: ‘1. No customs debt shall be notified to the debtor after the expiry of a period of three years from the date on which the customs debt was incurred. 2. Where the customs debt is incurred as the result of an act which, at the time it was committed, was liable to give rise to criminal court proceedings, the three-year period laid down in paragraph 1 shall be extended to a period of a minimum of five years and a maximum of 10 years in accordance with national law.’

35. Article 105 of the Union Customs Code, headed ‘Time of entry in the accounts’, states, in paragraph 3: ‘Where a customs debt is incurred in circumstances not covered by paragraph 1, the amount of import or export duty payable shall be entered in the accounts within 14 days of the date on which the customs authorities are in a position to determine the amount of import or export duty in question and take a decision.’

36. In accordance with Article 188 of that code, headed ‘Verification of a customs declaration’: ‘The customs authorities may, for the purpose of verifying the accuracy of the particulars contained in a customs declaration which has been accepted: (a) examine the declaration and the supporting documents; (b) require the declarant to provide other documents; (c) examine the goods; (d) take samples for analysis or for detailed examination of the goods.’

37. Article 191 of that code, headed ‘Results of the verification’, provides: ‘1. The results of verifying the customs declaration shall be used for the application of the provisions governing the customs procedure under which the goods are placed. 2. Where the customs declaration is not verified, paragraph 1 shall apply on the basis of the particulars contained in that declaration. 3. The results of the verification made by the customs authorities shall have the same conclusive force throughout the customs territory of the Union.’

3. Implementing Regulation I

38. Under Article 181a of Commission Regulation (EEC) No 2454/93 of 2 July 1993 laying down provisions for the implementation of Council Regulation No 2913/92, ( 14 ) as amended by Commission Regulation (EC) No 1335/2003 of 25 July 2003 ( 15 ) (‘Implementing Regulation I’): ‘1. The customs authorities need not determine the customs valuation of imported goods on the basis of the transaction value method if, in accordance with the procedure set out in paragraph 2, they are not satisfied, on the basis of reasonable doubts, that the declared value represents the total amount paid or payable as referred to in Article 29 of the Code. 2. Where the customs authorities have the doubts described in paragraph 1 they may ask for additional information in accordance with Article 178(4). If those doubts continue, the customs authorities must, before reaching a final decision, notify the person concerned, in writing if requested, of the grounds for those doubts and provide him with a reasonable opportunity to respond. A final decision and the grounds therefor shall be communicated in writing to the person concerned.’

39. Article 248(1) of Implementing Regulation I provides: ‘The granting of release shall give rise to the entry in the accounts of the import duties determined according to the particulars in the declaration. Where the customs authorities consider that the checks which they have undertaken may enable an amount of customs duties higher than that resulting from the particulars made in the declaration to be assessed, they shall further require the lodging of a security sufficient to cover the difference between the amount according to the particulars in the declaration and the amount which may finally be payable on the goods. However, the declarant may request the immediate entry in the accounts of the amount of duties to which the goods may ultimately be liable instead of lodging this security.’

4. Implementing Regulation II

40. Article 48 of Commission Implementing Regulation (EU) 2015/2447 of 24 November 2015 laying down detailed rules for implementing certain provisions of Regulation (EU) No 952/2013 of the European Parliament and of the Council laying down the Union Customs Code ( 16 ) (‘Implementing Regulation II’), headed ‘Provisions on tariff exchange rate’, provides, in paragraph 1: ‘The value of the euro, where required in accordance with Article 53(1)(b) of the Code, shall be fixed once a month. The exchange rate to be used shall be the most recent rate set by the European Central Bank prior to the penultimate day of the month and shall apply throughout the following month. However, where the rate applicable at the start of the month differs by more than 5% from the rate set by the European Central Bank prior to the 15th of that same month, the latter rate shall apply from the 15th until the end of the month in question.’

41. Article 140 of Implementing Regulation II, headed ‘Non-acceptance of declared transaction values’, which is intended to implement Article 70(1) of the Union Customs Code, provides: ‘1. Where the customs authorities have reasonable doubts that the declared transaction value represents the total amount paid or payable as referred to in Article 70(1) of the Code, they may ask the declarant to supply additional information. 2. If their doubts are not dispelled, the customs authorities may decide that the value of the goods cannot be determined in accordance with Article 70(1) of the Code.’

42. Under Article 144 of Implementing Regulation II, headed ‘Fall-back method’, which is intended to implement Article 74(3) of the Union Customs Code: ‘1. When determining the customs value under Article 74(3) of the Code, reasonable flexibility may be used in the application of the methods provided for in Articles 70 and 74(2) of the Code. The value so determined shall, to the greatest extent possible, be based on previously determined customs values. 2. Where no customs value can be determined under paragraph 1, other appropriate methods shall be used. In this case the customs value shall not be determined on the basis of any of the following: (a) the selling price within the customs territory of the Union of goods produced in the customs territory of the Union; (b) a system whereby the higher of two alternative values is used for customs valuation; (c) the price of goods on the domestic market of the country of exportation; (d) the cost of production, other than computed values which have been determined for identical or similar goods under Article 74(2)(d) of the Code; (e) prices for export to a third country; (f) minimum customs values; (g) arbitrary or fictitious values.’

43. Article 244 of Implementing Regulation II, headed ‘Provision of a guarantee’, which is intended to implement Article 191 of the Union Customs Code, provides: ‘Where the customs authorities consider that the verification of the customs declaration may result in a higher amount of import or export duty or other charges to become payable than that resulting from the particulars of the customs declaration, the release of the goods shall be conditional upon the provision of a guarantee sufficient to cover the difference between the amount according to the particulars of the customs declaration and the amount which may finally be payable. However, the declarant may request the immediate notification of the customs debt to which the goods may ultimately be liable instead of lodging this guarantee.’

C. VAT law

44. Under Article 2(1) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, ( 17 ) as amended by Council Directive 2009/69/EC of 25 June 2009 ( 18 ) (‘Directive 2006/112’): ‘The following transactions shall be subject to VAT: … (b) the intra-Community acquisition of goods for consideration within the territory of a Member State by: (i) a taxable person acting as such, or a non-taxable legal person, where the vendor is a taxable person acting as such … … (d) the importation of goods.’

45. Article 73 of that directive provides that ‘the taxable amount shall include everything which constitutes consideration obtained or to be obtained by the supplier, in return for the supply, from the customer or a third party’.

46. According to Article 83 of that directive: ‘In respect of the intra-Community acquisition of goods, the taxable amount shall be established on the basis of the same factors as are used in accordance with Chapter 2 to determine the taxable amount for the supply of the same goods within the territory of the Member State concerned. In the case of the transactions, to be treated as intra-Community acquisitions of goods, referred to in Articles 21 and 22, the taxable amount shall be the purchase price of the goods or of similar goods or, in the absence of a purchase price, the cost price, determined at the time of the supply.’

47. Article 85 of Directive 2006/112 reads as follows: ‘In respect of the importation of goods, the taxable amount shall be the value for customs purposes, determined in accordance with the Community provisions in force.’

48. Article 86(1) of that directive states: ‘The taxable amount shall include the following factors, in so far as they are not already included: (a) taxes, duties, levies and other charges due outside the Member State of importation, and those due by reason of importation, excluding the VAT to be levied; (b) incidental expenses, such as commission, packing, transport and insurance costs, incurred up to the first place of destination within the territory of the Member State of importation as well as those resulting from transport to another place of destination within the Community, if that other place is known when the chargeable event occurs.’

49. Article 87 of Directive 2006/112 provides: ‘The taxable amount shall not include the following factors: (a) price reductions by way of discount for early payment; (b) price discounts and rebates granted to the customer and obtained by him at the time of importation.’

50. In accordance with Article 138 of that directive: ‘1. Member States shall exempt the supply of goods dispatched or transported to a destination outside their respective territory but within the Community, by or on behalf of the vendor or the person acquiring the goods, for another taxable person, or for a non-taxable legal person acting as such in a Member State other than that in which dispatch or transport of the goods began. 2. In addition to the supply of goods referred to in paragraph 1, Member States shall exempt the following transactions: … (c) the supply of goods, consisting in a transfer to another Member State, which would have been entitled to exemption under paragraph 1 and points (a) and (b) if it had been made on behalf of another taxable person.’

51. Article 143 of that directive states: ‘1. Member States shall exempt the following transactions: … (d) the importation of goods dispatched or transported from a third territory or a third country into a Member State other than that in which the dispatch or transport of the goods ends, where the supply of such goods by the importer designated or recognised under Article 201 as liable for payment of VAT is exempt under Article 138; … 2. The exemption provided for in paragraph 1(d) shall apply in cases when the importation of goods is followed by the supply of goods exempted under Article 138(1) and (2)(c) only if at the time of importation the importer has provided to the competent authorities of the Member State of importation at least the following information: (a) his VAT identification number issued in the Member State of importation or the VAT identification number of his tax representative, liable for payment of the VAT, issued in the Member State of importation; (b) the VAT identification number of the customer, to whom the goods are supplied in accordance with Article 138(1), issued in another Member State, or his own VAT identification number issued in the Member State in which the dispatch or transport of the goods ends when the goods are subject to a transfer in accordance with Article 138(2)(c); (c) the evidence that the imported goods are intended to be transported or dispatched from the Member State of importation to another Member State. However, Member States may provide that the evidence referred to in point (c) be indicated to the competent authorities only upon request.’

III. Facts and pre-litigation procedure

A. Background to the dispute

52. With effect from 1 January 2005, the European Union abolished all quotas on imports of textiles and clothing from World Trade Organisation countries, including China.

53. On 20 April 2007, the European Anti-Fraud Office (OLAF) sent Member States a mutual assistance message (2007/015) to inform them of the risk of undervaluation of textiles and footwear imported from China.

54. In that message, OLAF requested all Member States, first, to analyse imports of textiles and footwear from, inter alia, China in order to identify possible evidence of undervalued imports and, secondly, to carry out appropriate checks at customs clearance for such imports.

55. Subsequently, to assist Member States in identifying undervalued consignments of textiles and footwear, OLAF, in cooperation with the Joint Research Centre of the Commission (‘the JRC’), developed a risk assessment tool based on EU-wide data (‘the OLAF methodology’). That tool consists, first of all, in calculating a cleaned average price for each textile and footwear product imported from China falling within Chapters 61 to 64 of the Combined Nomenclature of the Customs Tariff. ( 19 ) The cleaned average prices are calculated on the basis of the monthly import prices of the products concerned from China taken from the statistical database Comext, a reference database for international trade managed by Eurostat, over a period of 48 months. Those prices express a per kilogram value for each of the 495 eight-digit product codes of the combined nomenclature concerned, specifying the country of origin and the country of destination in the European Union. Next, an average is calculated for the entire European Union (the EU-28 cleaned average prices) based on the arithmetic average (non-weighted average) of the cleaned average prices of the 28 Member States. ( 20 ) In calculating those averages, outliers, namely values that are unusually high or low, are excluded, which is why the average price is described as ‘cleaned’. Lastly, a value corresponding to 50% of the cleaned average price is calculated and constitutes the ‘lowest acceptable price’, also expressed as a per kilogram price, which is used as a threshold enabling the customs authorities of Member States to detect particularly low values declared on importation and thus identify high-risk imports.

56. Mutual assistance message AM/2009/001, sent by OLAF on 23 January 2009, concerned Operation Argus, a six-month operation during which OLAF monitored the trade in textiles and footwear from a number of third countries but mainly from Asia and, each month, forwarded Member States a list of imports from the previous month identified as being at risk in terms of customs value. In that message, OLAF asked Member States to notify it, within four months, of the establishment of risk filters, to identify high-risk consignments and to carry out post-clearance checks on the basis of its communications.

57. In 2011, during the priority control action ‘Discount’ (‘PCA Discount’), coordinated by the Commission’s Directorate-General for Taxation and Customs Union and in which all Member States, including the United Kingdom, participated, the lowest acceptable prices were used to detect and check imports of textiles and footwear from China with a customs value so low as to be suspect.

58. In 2014, OLAF coordinated the joint customs operation ‘Snake’ (‘Operation Snake’), the operational phase of which took place between 17 February and 17 March 2014 and in which all Member States and the Chinese customs authorities participated. The purpose of those authorities’ involvement was to secure export declarations so that the declared value of the products concerned on importation into the European Union could be verified. In the final report on Operation Snake, Member States were asked to continue to use the risk profiles based on the lowest acceptable prices as applied during that operation.

59. Following checks carried out by the United Kingdom authorities as part of that operation on the basis of those risk profiles, those authorities established additional customs duties for 24 traders in respect of their imports over a three-year period between November 2011 and November 2014.

60. During inspection visit 14-11-1, carried out in the United Kingdom from 27 to 31 October 2014, the Commission examined risk information forms, mutual assistance notifications and 24 random import transactions, 23 of which were entered in the B account.

61. Between November 2014 and February 2015, the United Kingdom authorities sent payment notices for those amounts to the traders in question by issuing 24 post-clearance demands, known as ‘C18 payment notices’ (‘the Snake C18 payment notices’), which were subsequently cancelled.

62. On 16 January 2015, OLAF opened an investigation specifically targeting certain Member States, including the United Kingdom, covering a period beginning in 2013.

63. Between 2013 and 2016, Her Majesty’s Revenue and Customs (‘HMRC’) and the United Kingdom Border Force conducted Operation Badminton. That operation, which mainly concerned VAT fraud, laid the groundwork for an initial criminal investigation into four major traders importing the products concerned from China under ‘customs procedure 42’, namely the procedure under which customs duties are paid on importation but VAT must be paid at a later stage in the Member State of destination (‘customs procedure 42’). ( 21 )

64. Between February 2015 and July 2016, the United Kingdom attended 10 meetings organised by OLAF concerning the undervaluation of textiles and footwear from China.

65. On 19 and 20 February 2015, OLAF organised a first bilateral meeting with HMRC to discuss the follow-up to Operation Snake and the use of cleaned average prices as indicators of customs undervaluation risk. At that meeting, OLAF pointed out that the volume of imports likely to be fraudulently undervalued had not decreased and that statistics showed that the United Kingdom was attracting more fraudulent traffic on account of the measures taken by other Member States. HMRC stated that they intended to issue demands for evaded VAT and customs duties to the undertakings identified during Operation Snake and following their own analyses, demands totalling more than 800 million pounds sterling (GBP).

66. The United Kingdom reiterated its intention to proceed with those demands at an ad hoc meeting held on 25 and 26 February 2015 on ‘undervaluation fraud’, organised by OLAF and attended by Member States’ authorities. During that meeting, OLAF ‘strongly recommended’, inter alia, that Member States use appropriate risk filters to identify potentially undervalued consignments, that they require the lodging of security for consignments identified as suspicious and that they carry out investigations to establish the customs value. OLAF also outlined the loss of traditional own resources which could occur at EU level as a result of imports likely to be undervalued, particularly as regards imports into the United Kingdom. ( 22 )

67. On 16 June 2015, OLAF sent mutual assistance message 2015/013 in which it asked Member States to take all precautionary measures necessary to protect the financial interests of the European Union against the risk of undervalued imports of textiles and footwear from China.

68. In May 2015, the United Kingdom launched Operation Breach to combat undervaluation fraud. One of the aims of that operation was, according to the United Kingdom, to determine – following the cancellation of the 24 Snake C18 payment notices – the customs value of the undervalued goods detected during Operation Snake and to claim the amounts of traditional own resources evaded. That operation involved, among other things, pre-clearance controls and post-clearance visits relating to suspect consignments, documentary analyses, audits and inspections, reviewing the commercial nature of the relevant sales, examining the links between the importers, freight agents and other companies, and educational activities for importers on how to identify fraudulent activity. Approximately 30 pre-clearance inspections were also carried out and samples were taken. Several C18 payment notices were issued. At the hearing, the United Kingdom stated that the measures adopted within the framework of that operation were still ongoing.

69. On 28 July 2015, OLAF organised a second bilateral meeting with HMRC. HMRC reported, inter alia, that it was continuing to take steps in the recovery of more than GBP 800 million and would have recourse to the courts, if necessary. It also stated that it had set up a multi-disciplinary task force as part of Operation Breach with the aim of examining the background of the importers involved in fraudulent trade. However, according to HMRC, the use of risk indicators based on average prices would be counterproductive and disproportionate given the volume of imports into the United Kingdom.

70. On 3 February 2016, OLAF organised a third bilateral meeting with HMRC, which announced that the United Kingdom had audited the 16 undertakings concerned in Operation Snake. OLAF again recommended that HMRC use EU-wide risk indicators based on the lowest acceptable price. It drew attention to the high percentage of imports into the United Kingdom which were regarded as undervalued and were causing significant losses of customs duties.

71. On 22 and 23 March 2016, OLAF organised a fourth bilateral meeting with HMRC. OLAF reiterated the usefulness of implementing EU-wide risk indicators as a preventive measure on importation and proposed practical ways in which the United Kingdom authorities could progressively implement them. As before, OLAF gave an update of the prevailing situation, which showed that the loss of traditional own resources in the United Kingdom was worsening, mainly because of the misuse of customs procedure 42.

72. At a bilateral meeting held in July 2016, OLAF submitted a report demonstrating that the loss of traditional own resources was increasing in the United Kingdom.

73. On 18 and 19 September 2016, at a multilateral meeting, the French authorities presented the results of Operation Octopus, an operation led by them with the participation of 10 Member States (including the United Kingdom) and the support of OLAF. It is apparent from the final report on that operation that organised criminal networks were behind the undervaluation fraud. The consignee entered in the customs import declarations was almost always either a missing trader or a ‘phoenix’ undertaking. They also concluded that the vast majority of transported goods – checked in France on the basis of predefined criteria – bore understated values fraudulently declared to the United Kingdom under customs procedure 42.

74. In October 2016, the United Kingdom authorities conducted a test operation, known as Operation Samurai, targeting the imports of two traders who ceased business immediately after HMRC challenged their customs declarations.

75. On 1 March 2017, OLAF closed its investigation into the undervaluation of imports into the United Kingdom and delivered its report (‘the OLAF report’), which found that importers in the United Kingdom had evaded large amounts of customs duty by submitting false and fictitious invoices and incorrect customs value declarations. OLAF indicated that there had been a dramatic increase in the scale of the undervaluation fraud scheme routed through the United Kingdom between 2013 and 2016. That period coincided with the implementation by other Member States of risk profiles established using the risk assessment tool based on cleaned average prices, as recommended by OLAF.

76. According to that report, during that period, fraudulent imports routed through the United Kingdom had increased significantly on account of inadequate checks. In 2016, more than 50% of all textiles and footwear imported into the United Kingdom from China were declared below the lowest acceptable prices, while some 80% of the total losses of traditional own resources were attributable to the undervaluation of textiles and footwear imported into the United Kingdom.

77. The OLAF report further stated that organised criminal groups operating throughout the European Union were behind the fraud. Most of the imports into the United Kingdom were supplies intended for the black market in textiles and footwear in other Member States and were made through the improper use of customs procedure 42. ( 23 ) Accordingly, OLAF took the view that the evasion of VAT due in the Member States of final destination of the goods, in particular Germany, Spain, France and Italy, was also substantial. OLAF noted that the United Kingdom had not applied risk profiles based on the lowest acceptable prices, as it recommended, and had not carried out appropriate customs controls on importation, except during one month of Operation Snake. ( 24 )

78. Consequently, according to that report, the United Kingdom released undervalued textiles and footwear from China for free circulation, without conducting customs controls, with the result that a substantial proportion of customs duties were not collected or made available to the EU budget. Therefore, in its report, OLAF calculated the resulting loss of traditional own resources for the period between 2013 and 2016. ( 25 ) Specifically, for the combined nomenclature code for each product concerned, it determined the quantity (in kg) of the undervalued goods (taken to be the goods declared at a value below the lowest acceptable price concerned) and the difference between the declared value and the cleaned average price concerned (the EU-wide cleaned average price) of the product in question, and then applied the applicable rate of customs duty to that difference. Against that background, OLAF recommended that HMRC take all appropriate measures to recover that amount and to implement risk indicators.

79. Between November 2016 and October 2018, pursuant to the provisions of Regulation No 608/2014 on the control and supervision of traditional own resources, authorised agents of the Commission carried out five inspections concerning, inter alia, undervaluation.

80. During inspection 16-11-1, which took place between 14 and 18 November 2016, the Commission first of all found that the amounts of customs duty which had been cancelled in the B account corresponded to the additional debts initially claimed in the 24 Snake C18 payment notices concerning undervalued imports detected in the course of Operation Snake, debts which were subsequently withdrawn. It then requested the United Kingdom authorities to determine the customs value of all the relevant import declarations, to recalculate the additional duties due based on that value, to enter the corresponding debts in the B account and to recover the amounts concerned as soon as possible.

81. It also asked those authorities whether they applied the corrected average price tool developed by OLAF in order to detect undervalued imports, whether they carried out physical checks at customs clearance and whether they consistently requested the provision of security covering the duties likely to be payable in accordance with Article 248(1) of Implementing Regulation I.

82. During inspection 17-11-1, carried out from 8 to 12 May 2017, the Commission selected 12 import declarations submitted during the first quarter of 2017 containing particularly low values for the purposes of conducting an on-the-spot check. The examination confirmed that all 12 consignments covered by those declarations had been released for free circulation in the European Union without being checked and without any security being lodged. The United Kingdom authorities confirmed that they had not implemented the measures requested by OLAF following Operation Snake in 2014 and again in inspection report 16-11-1. They explained that this was mainly due to their legal advisers’ assessment that no acceptable valuation method was available. However, they stated that the imports in question would be examined by the task force as part of Operation Breach.

83. During inspection 17-11-2, which took place between 13 and 17 November 2017, five import declarations with particularly low values relating to importers already identified in Operation Snake as potential defrauders were examined by the Commission’s agents on the basis of one of the 24 Snake C18 payment notices arising from that operation totalling GBP 62 003 024.23. However, it proved impossible to trace the debts back to individual import declarations, which, according to HMRC, justified the cancellation of those debts.

84. During that inspection, the United Kingdom authorities informed the Commission’s agents that HMRC had launched Operation Swift Arrow on 12 October 2017. The United Kingdom explained that the risk profiles used in that operation were based not on the thresholds set by OLAF but on national thresholds or risk profiles established by HMRC on the basis of imports into the United Kingdom alone. However, those profiles were applied only to certain traders identified beforehand as being active in fraudulent trade. The containers detected by those risk profiles were subject to physical checks by the United Kingdom authorities at customs clearance. If those authorities took the view that the declared value was not justified, they would require a security payment before the goods were released.

85. During inspection 18-11-1, carried out between 16 and 20 April 2018, 25 import declarations concerning the period from 12 October 2017, when Operation Swift Arrow was launched, to 31 December 2017 were inspected by the Commission’s agents. It was found that only 7 of the 25 entries with an extremely low value had been detected by the risk profile developed by HMRC and that the other 18 containers had been released for free circulation without the customs value having been challenged. The United Kingdom authorities stated that, since the launch of Operation Swift Arrow, the risk profile had been adjusted in order to include more traders, combined nomenclature (CN) codes and points of entry, so that, if the imports in question had occurred in April 2018, the profile would have detected a further 11 entries.

86. Furthermore, according to those authorities, several of the selected traders stopped importing as soon as they were included in the risk profiles, were subjected to pre-release controls and were requested to provide security before the goods were released.

87. However, those authorities refused to disclose details of the calculation method used by HMRC to determine the security required within the framework of Operation Swift Arrow and to draw up the post-clearance demands, namely the Snake C18 payment notices.

88. In May 2018, as part of Operation Breach, the United Kingdom issued C18 payment notices (‘the Breach C18 payment notices’) totalling GBP 25 million covering a period dating back to 2015.

89. During inspection 18-11-2, which took place between 8 and 12 October 2018, the United Kingdom authorities maintained their refusal. By contrast, they confirmed that, in April 2018, they had established additional duties for seven traders – a number of which had already been targeted during Operation Snake – totalling GBP 19 434 197.73.

B. Pre-litigation procedure

90. By letters of 24 March 2017 and 28 July 2017, the Commission asked the United Kingdom about the action taken in response to the OLAF report. It noted that it had not received any specific additional information from the United Kingdom and that there was no reason to believe that that State had taken appropriate steps to prevent the undervaluation fraud identified in that report. In the absence of information to the contrary, the Commission stated that it was obliged to ask the United Kingdom to make available an amount of traditional own resources corresponding to the losses calculated by OLAF (less collection costs).

91. In one of the three letters of 28 July 2017, it also asked for information about the action taken by the United Kingdom authorities in response to the report on inspection 16-11-1, reiterating in this connection its request for sight of the legal assessment that resulted in cancellation of the 24 Snake C18 payment notices and for sight of the list of entries relating to each of the 24 cases, including the calculations performed to establish the customs debts.

92. By letters of 8 August 2017 and 12 October 2017, the United Kingdom replied to those requests. As regards, first of all, the OLAF report, the United Kingdom stated that measures had been taken to address the problem of undervaluation such as the launch of Operation Breach. It observed that, since EU law does not impose a specific control model, it is for each Member State to decide on the best way to enforce the law. In addition, pre-release controls, including the provision of security, are not inherently more effective than post-release measures such as those developed by the United Kingdom. The OLAF methodology, in so far as it is based on the application of EU-wide data, is neither a sound nor appropriate methodology for the United Kingdom. Since that model was a questionable one, the United Kingdom developed its own approach which is not affected by the shortcomings of the OLAF methodology. Next, as regards the action taken in response to the report on inspection 16-11-1, the United Kingdom stated that the 24 Snake C18 payment notices were cancelled and the corresponding amounts removed from the B account because it was unable to prove the actual value of the imported goods, but that a group of experts would address that issue as part of Operation Breach. Lastly, the United Kingdom reiterated that it was not in a position to accede to the request for sight of the legal assessment of HMRC that resulted in cancellation of the Snake C18 payment notices, citing in this connection confidentiality and legal professional privilege.

93. On 9 March 2018, the Commission sent the United Kingdom a letter of formal notice.

94. The United Kingdom replied to that letter on 22 June 2018. In an annex to that reply, the United Kingdom requested that a full version of the OLAF report be sent to it, since it had only an incomplete version, and asked the Commission to provide it with answers to detailed questions on the method used to calculate the amounts of traditional own resources claimed.

95. On 24 September 2018, the Commission sent a reasoned opinion to the United Kingdom in which, in particular, it responded to the requests made by that State in an annex to its letter of 22 June 2018 and set a time limit of two months for replying.

96. Having received no reply from the United Kingdom to the reasoned opinion within the prescribed time limit, on 19 December 2018, the Commission decided to bring the present action for failure to fulfil obligations before the Court, after informing the United Kingdom on 18 December 2018 that it would take that decision the following day.

97. On 9 January 2019, a technical meeting took place between the United Kingdom authorities and the Commission at which a consultancy firm presented the findings of a report that the United Kingdom had commissioned from it.

98. On 11 February 2019, the United Kingdom sent the Commission its reply to the reasoned opinion, consisting of a cover note and an annex containing a report from a consultancy firm.

IV. Procedure before the Court

99. On 7 March 2019, the Commission brought the present action, having taken the view that the arguments put forward by the United Kingdom were not capable of rebutting the complaints made in the reasoned opinion.

100. The Kingdom of Belgium, the Republic of Estonia, the Hellenic Republic, the Republic of Latvia, the Portuguese Republic and the Slovak Republic (together, ‘the interveners’) lodged statements in intervention in support of the United Kingdom in this case.

101. By letter of 6 June 2020, the United Kingdom applied for measures of inquiry or measures of organisation of procedure seeking an order from the Court requiring the Commission to answer a list of questions, some of which had already been submitted in the requests for information which the United Kingdom had sent to the Commission on 22 June 2018 and 22 March 2019. By letter of 11 April 2019, the United Kingdom asked the Court to order the Commission to answer the questions set out in the request of 22 March 2019 (‘the reframed request for information’). ( 26 )

102. By letter of 14 October 2020, the Court sent the Commission and the United Kingdom a number of questions with a request for a written reply. By documents of 16 November 2020, the parties replied to those questions.

103. A hearing was held on 8 December 2020 at which oral observations were submitted (i) by the United Kingdom, in support of which the Republic of Estonia, the Republic of Latvia and the Portuguese Republic intervened, and (ii) by the Commission. Those parties were requested to concentrate their oral pleadings on the content of the replies mentioned in the previous point of this Opinion.

V. Forms of order sought

104. By its application, the Commission seeks a declaration from the Court that: – by failing to enter in the accounts the correct amounts of customs duty and to make available the correct amount of traditional own resources and VAT-based own resources in respect of certain imports of textiles and footwear from China, the United Kingdom has failed to fulfil its obligations under Articles 2 and 8 of Decision 2014/335, Articles 2 and 8 of Council Decision 2007/436, Articles 2, 6, 9, 10, 12 and 13 of Regulation No 609/2014, Articles 2, 6, 9, 10, 11 and 17 of Regulation No 1150/2000, Article 2 of Regulation No 1553/89, Article 105(3) of the Union Customs Code and Article 220(1) of the Community Customs Code; – as a consequence of its failure to fulfil its obligations under Article 4(3) TEU, Article 325 and Article 310(6) TFEU, Articles 3 and 46 of the Union Customs Code, Article 13 of the Community Customs Code, Article 248(1) of Implementing Regulation I, Article 244 of Implementing Regulation II and Article 2(1)(b) and (d), Articles 83, 85, 86 and 87 and Article 143(1)(d) and (2) of Directive 2006/112; – [The corresponding losses of traditional own resources to be made available to the EU budget (less collection costs) amount to: – EUR 496 025 324.30 in 2017 (until 11 October 2017 inclusive); – EUR 646 809 443.80 in 2016; – EUR 535 290 329.16 in 2015; – EUR 480 098 912.45 in 2014; – EUR 325 230 822.55 in 2013; – EUR 173 404 943.81 in 2012; – EUR 22 777 312.79 in 2011.] ( 27 ) – by failing to provide all the information necessary to enable the Commission to determine the amount of traditional own resources lost and by failing to provide, as requested, the content of the legal assessment of HMRC’s legal department or the reasons for the decision that resulted in the cancellation of established customs debts, the United Kingdom has failed to fulfil its obligations under Article 4(3) TEU and Article 2(2) and (3)(d) of Regulation No 608/2014; and – order the United Kingdom of Great Britain and Northern Ireland to pay the costs.

105. The United Kingdom contends that the Court should: – declare the action inadmissible in whole or in part; – in the alternative, declare that: – the United Kingdom has not failed to fulfil its obligation to combat fraud in respect of either traditional own resources or sincere cooperation; – the measures taken by the United Kingdom did not cause any loss to the EU budget and therefore it cannot be required to compensate the European Union for any amount whatsoever; – in the alternative, if the Court finds that a specific failure caused the European Union to sustain a loss, allow the United Kingdom to assess and account for the additional traditional own resources arising from the finding of liability and not determine the amount of the losses of those resources itself; – in the further alternative, if the Court decides to rule on the claim relating to losses of traditional own resources, examine the United Kingdom’s assessment of those losses; – in the further alternative, if the Court fails to endorse the United Kingdom’s methodological choices, find that ‘the Commission must prove its assessment of [the losses of traditional own resources] to the standard of proof applicable to an action for damages against a Member State, which it has failed to do’; – dismiss the claim relating to own resources accruing from VAT on the ground that it has no legal basis and is unquantified; and – order the Commission to pay the costs.

106. All the intervening Member States contend, in essence, that the action should be dismissed. The Slovak Republic and the Portuguese Republic also contend that the Commission should be ordered to pay all the costs.

VI. The action

107. Before examining the pleas in law put forward by the Commission in support of its action, it is necessary to consider the objections of inadmissibility raised by the United Kingdom in the defence (part A). On the substance, the action essentially revolves around four pleas in law. In the first place, the Commission submits that, during the infringement period, the United Kingdom did not take any measures to protect the financial interests of the European Union, which constitutes a failure to fulfil both the general obligations to protect the European Union’s financial interests and to counter fraud and the obligation on customs authorities to take measures to protect the European Union’s financial interests, to carry out checks on the basis of risk analysis and to require the provision of security (part B). In the second place, the Commission maintains that the United Kingdom infringed the rules governing own resources, since the customs duties on imported goods were miscalculated and the amounts of own resources relating to those duties were not established or made available to the EU budget when they ought to have been (part C). In the third place, it is necessary to examine the argument alleging breach of the duty of sincere cooperation enshrined in Article 4(3) TEU (part D). In the fourth place, the Commission claims, in essence, that, since the United Kingdom did not correctly determine the customs value of the undervalued goods at the time of importation due to the lack of effective control measures, it infringed VAT legislation and did not make available to the EU budget the full amount of own resources accruing from VAT (part E).

A. Admissibility

108. In the defence, the United Kingdom raises five objections of inadmissibility, alleging (i) infringement of the rights of the defence during the pre-litigation procedure and the procedure before the Court; (ii) irregularity of the pre-litigation procedure and the application as regards the entry of VAT in the accounts under customs procedure 42; ( 28 ) (iii) infringement by the Commission of the principles of the protection of legitimate expectations, legal certainty, estoppel and sincere cooperation; (iv) that the making available of amounts cannot be ordered under Article 258 TFEU; and (v) that the action was brought prematurely as regards the period from 1 May 2015 to 11 October 2017.

109. The fifth objection of inadmissibility is intrinsically linked to the examination of the substantive arguments put forward in the second plea in law relating to the failure to establish and make available to the EU budget, within the prescribed time limit, the amounts of own resources corresponding to customs duties. Thus, the United Kingdom’s argument that the action was brought prematurely as regards the period from 1 May 2015 to 11 October 2017, submitted in the context of that objection of inadmissibility, actually seeks to challenge the infringement complained of in the second plea and to reduce the extent of the losses of traditional own resources which the Commission seeks to have established. I therefore propose that the fifth objection of inadmissibility be analysed in the context of the examination of the substance of that plea.

110. Accordingly, the first four objections of inadmissibility should be considered at the outset in order to determine whether the present action for failure to fulfil obligations brought by the Commission is admissible.

1. Objection of inadmissibility alleging infringement of the United Kingdom’s rights of the defence during the pre-litigation procedure and the procedure before the Court

111. The United Kingdom submits, in essence, that the present action is inadmissible because its rights of the defence were not respected in either the pre-litigation procedure or the procedure before the Court.

112. As a preliminary point, it should be recalled that the Court has consistently held that the purpose of the pre-litigation procedure is to give the Member State concerned an opportunity to comply with its obligations under EU law and to avail itself of its right to defend itself against the complaints made by the Commission. ( 29 ) The proper conduct of that procedure constitutes an essential guarantee required by the TFEU not only in order to protect the rights of the Member State concerned, but also so as to ensure that any contentious procedure will have a clearly defined dispute as its subject matter. ( 30 )

113. Moreover, while the reasoned opinion must contain a coherent and detailed statement of the reasons which led the Commission to conclude that the Member State in question has failed to fulfil one of its obligations under the Treaty, the letter of formal notice cannot be subject to such strict requirements of precision, since it cannot, of necessity, contain anything more than an initial brief summary of the complaints. There is therefore nothing to prevent the Commission from setting out in detail in the reasoned opinion the complaints which it has already made more generally in the letter of formal notice. ( 31 )

114. In addition, as regards the procedure before the Court, it is settled case-law that, where an action is brought under Article 258 TFEU, the application must set out the complaints coherently and precisely, so that the Member State and the Court can know exactly the scope of the alleged infringement of EU law, a condition that must be satisfied if the Member State is to be able to present an effective defence and the Court to determine whether there has been a breach of obligations, as alleged. ( 32 ) In particular, the Commission’s application must contain a coherent and detailed statement of the reasons which have led it to conclude that the Member State in question has failed to fulfil one of its obligations under the Treaties. ( 33 )

115. It is in the light of that case-law that it is necessary to determine whether the Commission has respected the rights of the defence with regard to the United Kingdom during the pre-litigation procedure and the procedure before the Court.

116. In the first place, the United Kingdom submits that its rights of the defence were infringed, since the Commission did not give an adequate reply to either its first request for information ( 34 ) or the reframed request for information, particularly as regards the information needed to enable that State to retrace the amount of traditional own resources claimed by the Commission in the application.

117. In the rejoinder, the United Kingdom submits that the detailed technical information provided by the Commission in the reply still does not enable it to retrace that amount. Significant uncertainty remains, particularly as to the data cleaning method used by the Commission and as to whether the non-aggregated data available to the United Kingdom correspond to the daily aggregated data used by the Commission to calculate the losses of traditional own resources, namely Surveillance 2 data.

118. The United Kingdom argues that the Commission infringed its rights of the defence and the principle of sincere cooperation by communicating to it belatedly, namely at the stage of the reply, some of the requested information. It also challenges the Commission’s refusal to provide it with information on the measures taken by other Member States to combat the undervaluation fraud at issue. The United Kingdom states that it needed that information to defend itself against the Commission’s claims that appropriate measures had been taken in other Member States which had produced results in preventing undervalued imports. Such information is also relevant for determining whether the measures taken by the United Kingdom fall within its discretion and are a reasonable way to combat the fraud concerned and for constructing arguments concerning the causal link between the wrongful conduct of the United Kingdom authorities and the failure to enter traditional own resources in the accounts.

119. In the second place, the United Kingdom complains that the Commission undermined its ability to access all the data necessary for its defence, since it did not provide that State with the required information on its calculations relating to traditional own resources for the period from 2011 to 2014.

120. In my view, those arguments must be rejected.

121. In that regard, concerning the objection of inadmissibility alleging failure to respond to the request for information attached to the reply to the letter of formal notice of 22 June 2018, it must be noted that, in its reasoned opinion of 23 September 2018, ( 35 ) the Commission expressly responded to that request.

122. Specifically, in its reply to the letter of formal notice, the United Kingdom had complained to the Commission that Annex 2 to the OLAF report of 1 March 2017 was incomplete and that several pages were missing. In the reasoned opinion, the Commission stated that that annex had been replaced by Annex 7 to the OLAF report of 1 March 2017, which contained full details of the methodology used by OLAF. It added that Annex 2 was based on the documents distributed to that State at the meeting of 28 July 2015 between OLAF and the United Kingdom. Thus, the Commission explained the OLAF methodology in its reasoned opinion in the form of two documents attached as Annex 7 to the OLAF report, ( 36 ) documents which were, moreover, attached to the application before the Court.

123. It follows that the reasoned opinion fully explains that replacement, which is not, in my view, capable of rendering the claims made against the United Kingdom in the reasoned opinion unintelligible. Accordingly, the exercise by that State of its rights of the defence cannot be regarded as having been interfered with.

124. In addition, the United Kingdom submits that its rights of the defence were infringed as the Commission did not respond to its reframed request for information, which was sent to the Commission after the lodging of the present action on 7 March 2019. That claim can essentially be broken down into four complaints.

(a) Disclosure of data relating to calculations concerning the cleaned average price, the lowest acceptable price and the estimated losses of own resources

125. By this first complaint, the United Kingdom contends that the Commission did not provide it with either the data used in the calculations concerning the cleaned average price, the lowest acceptable price and the estimated losses of own resources, or the tools to understand how it used those data.

126. In that regard, it should be noted that, in the reply, the Commission provides an answer to the questions set out in the reframed request for information concerning the calculation of the cleaned average price and the lowest acceptable prices as well as the estimated losses of traditional own resources. It explains, in particular, that the United Kingdom always had full access to the data used, including the ‘DL 53’ download, to arrive at the EU-28 cleaned average price and the estimated losses of traditional own resources through the JRC’s Theseus website, ( 37 ) having had full access to that site since 2010 and having performed simulations based on those data. ( 38 ) Specifically, the reports in Annex 7 to the OLAF report, ( 39 ) first, explained the methodology for calculating the cleaned average price and the lowest acceptable price and, in particular, for ‘cleaning’ the data, and also explained the methodology for calculating the estimated losses (namely the difference between the declared price and the cleaned average price), secondly, provided the list of cleaned average prices used for each product category, thirdly, gave an overview of how to access the EU-28 cleaned average price on the Theseus website and, fourthly, stated the reasons for the decision to set the lowest acceptable price at 50% of the cleaned average price. Annex 7 to the OLAF report was, moreover, attached to Annex 35 to the application ( 40 ) and the Commission referred to it in the reasoned opinion. Consequently, it appears that those data and documents were known to the United Kingdom and were capable of enabling it, if necessary, to reproduce the calculations performed by the Commission. Furthermore, as regards the volume of goods for the purpose of estimating the losses of traditional own resources, the United Kingdom asked for a copy of the entire Surveillance 2 database used so that it could calculate those losses itself. In that connection, as the Commission explained, the Surveillance 2 database was developed by that institution and combines the data on, inter alia, the volumes provided by Member States themselves. Thus, in the reply, the Commission explained that those data were based exclusively on the import data forwarded by the United Kingdom to the Commission’s services and were simply recorded in that database. ( 41 )

127. In the rejoinder, the United Kingdom acknowledges that the information provided by the Commission in the reply satisfied the two requests for information. However, it criticises the belated disclosure of that information. In that regard, in the light of the explanations set out in the preceding point, it must be found that the method used by the Commission to calculate the cleaned average price and the lowest acceptable price as well as that used to estimate the losses of traditional own resources were forwarded to the United Kingdom (and were therefore known to it), as is apparent from the explanations provided in Annex 7 to the OLAF report. Therefore, the information in the reply cannot be regarded as new information.

128. Consequently, since the data used by the Commission were comprised of documents to which the United Kingdom had access – the Commission having explained, both before and during the present case, how that Member State could access those data and replicate its calculations – it must be considered that all the information requested by the United Kingdom in its reframed request for information concerning the EU-28 cleaned average prices, the lowest acceptable prices and the losses of own resources was already available to the United Kingdom.

(b) Information on calculations performed in respect of 2011 to 2014 on the basis of the Snake C18 payment notices

129. By this second complaint, the United Kingdom takes issue with the Commission in the defence for being unable to access all the data needed to defend itself, inasmuch as the customs declarations prior to 2014 had been destroyed, having been stored for only four years. In addition, by its reframed request for information, the United Kingdom sought information on the calculations performed by the Commission in respect of 2011 to 2014.

130. It should be noted that, as an annex to the rejoinder, ( 42 ) the United Kingdom provided the Court with a table of the 23 Snake C18 payment notices which it had issued, copies of those notices and spreadsheets containing the calculations it had used. Therefore, the objection of inadmissibility raised concerning the information on the calculations performed in respect of 2011 to 2014 on the basis of the Snake C18 payment notices cannot succeed. In addition, in so far as the United Kingdom seeks to challenge the validity of the calculations performed by the Commission on the basis of those payment notices, it is actually attempting to question the Commission’s assessment of the losses of traditional own resources for that period. However, that challenge will be examined in the second plea in law in the present action, relating to infringement of the provisions governing traditional own resources and estimates thereof.

(c) Knowledge of other Member States’ practices as regards use of the OLAF methodology

131. By this third complaint, the United Kingdom enquires about the practices of other Member States as regards use of the OLAF methodology as a risk analysis tool, with a view to carrying out checks prior to customs clearance (or not).

132. In that regard, although a comparative analysis of the conduct of other Member States may be of interest for the purpose of establishing whether the choices made by the United Kingdom were reasonable, an analysis of the practices of other Member States in the field cannot affect the exercise by the United Kingdom of its rights of the defence or the outcome of the present action for failure to fulfil obligations. It is settled case-law that a Member State cannot justify its failure to fulfil obligations under the TFEU by pointing to the fact that other Member States have also failed, and continue to fail, to fulfil their own obligations. ( 43 ) The admissibility of the present action against the United Kingdom cannot be called in question even though the practices of other Member States as regards use of the OLAF methodology as a risk analysis tool, with a view to carrying out checks prior to customs clearance (or not), may be different.

(d) Request for evidence regarding the nature of the undervalued goods and their Member State of destination

133. By this fourth complaint, the United Kingdom seeks evidence of the nature of the undervalued goods and their Member State of destination.

134. It appears that, by this complaint, the United Kingdom actually seeks to challenge the merits of the second and third pleas in law relating, respectively, to the estimate of own resources and infringement of the provisions governing own resources accruing from VAT. The truth is that this complaint questions the Commission’s assessment of the nature of the goods taken into account for those estimates and the possible destination of the goods. I also consider it appropriate to uphold the argument put forward by the Commission which, in rejecting the complaint alleging lack of data as regards the nature and volume of the goods taken into account for the purposes of the present proceedings, maintains that the United Kingdom itself entered the information into the Surveillance 2 database on which the Commission relied in its reasoned opinion and in the application. ( 44 ) Accordingly, no infringement of the rights of the defence relating to the lack of information on the nature of the goods and their Member State of destination can be found.

135. Having regard to the foregoing, the first objection of inadmissibility raised by the United Kingdom, alleging infringement of the rights of the defence during the pre-litigation procedure and the procedure before the Court, must be rejected.

2. Objection of inadmissibility alleging irregularity of the pre-litigation procedure and the application as regards customs procedure 42 in particular

136. The United Kingdom submits that, by not disclosing to it – first during the pre-litigation stage and then in the application – detailed information on the factual basis of the alleged failures to fulfil obligations, particularly under customs procedure 42, the Commission did not put it in a position to understand those complaints, with the result that it was unable to comply with its obligations or prepare its defence. It states that no information is provided on the amount of losses of own resources accruing from VAT, on the identity of the traders concerned and the Member States of destination or on the measures taken by those States to recover the VAT owed by those traders. It infers from this that the complaint made on that head is inadmissible.

137. Nevertheless, I note, first of all, that this objection of inadmissibility concerns the content and sufficiency of the facts and evidence adduced by the Commission in support of its claim. It seems to me that such matters are more concerned with the examination of the merits of the alleged failure to fulfil obligations than with the validity of the pre-litigation procedure and the subsequent application. ( 45 ) Thus, the argument alleging that the information provided by the Commission was insufficient must, in my view, be examined in the Court’s analysis of the evidence submitted by the Commission.

138. Next, even if the Court were to uphold the classification of that argument as a plea of inadmissibility, it is apparent from the documents before the Court that the information disclosed during the pre-litigation exchanges and reproduced in the application was sufficient to enable the United Kingdom to defend itself. It follows from the OLAF report, on which the Commission relied, that the final destination of most of the undervalued imports, in so far as they were subject to customs procedure 42 and their destination could be determined, was not the United Kingdom but other Member States, which resulted in substantial VAT losses in the Member States of destination of the goods. ( 46 ) OLAF also observed that, in the fraud scheme at issue, a large proportion of the goods were diverted to the black market, with the consequence that no VAT was paid at all. Those claims were subsequently set out in the reasoned opinion and reproduced in the application. In the light of those considerations, I consider – as the Commission contends in the reply – that the information disclosed during the pre-litigation stage and thereafter expanded on in the application did not prevent the United Kingdom from defending itself against the claims relating to those losses.

139. Accordingly, I propose that the second objection of inadmissibility raised by the United Kingdom be rejected.

3. Objection of inadmissibility alleging infringement by the Commission of the principles of the protection of legitimate expectations, legal certainty, estoppel and sincere cooperation

140. The United Kingdom maintains that the present action, in so far as it covers the period to the end of February 2015, should be dismissed because it infringes the principles of the protection of legitimate expectations, legal certainty, estoppel and sincere cooperation. It submits that the numerous statements made by OLAF in 2014 and 2015 and in its report of March 2017 caused it to entertain legitimate expectations. ( 47 ) It is apparent in particular from the OLAF report that at no time before the end of the operational phase of Operation Snake in March 2014 ( 48 ) did OLAF find that the United Kingdom had failed to fulfil its obligations under EU law. In particular, the United Kingdom refers to three specific assurances allegedly given by the Commission and OLAF during the infringement period, showing that they considered, first, that the United Kingdom was not in breach of its obligations under EU law to protect the European Union’s financial interests and to counter fraud and, secondly, that that State would not be subject to infringement proceedings. Accordingly, the Commission should not be permitted to reverse its position as founded on those three assurances.

141. First of all, according to the United Kingdom, it follows from the record of a meeting held with OLAF on 13 June 2014 drawn up by representatives of the United Kingdom that OLAF was ‘pleased with the progress the UK have made and the actions that have been and are planned’. That was an unequivocal assurance that OLAF did not regard the United Kingdom as being in breach of its obligations to protect the financial interests of the European Union and to counter fraud. ( 49 )

142. Next, a second statement made in October 2014 by a Commission official, informing the United Kingdom that its participation in PCA Discount was ‘satisfactory’ and that the actions required to implement that operation ‘[had been] implemented in a timely and effective manner’, was a clear and unequivocal assurance that the United Kingdom had not failed to fulfil its obligations under EU law as regards its participation in that operation. ( 50 ) As regards the Commission’s counter-argument that that assurance concerned only one case arising from PCA Discount, the United Kingdom submits that the Commission cannot call that assurance into question because it now considers the review of a single case to be an insufficient gro