JUDGMENT OF THE GENERAL COURT (Fourth Chamber)

12 March 2019 ( *1 )

(EAGF – Expenditure excluded from financing – Expenditure incurred by Italy – Temporary scheme for the restructuring of the sugar industry – Regulation (EC) No 320/2006 – Regulation (EC) No 968/2006 – Regulation (EC) No 1290/2005 – Time limit of 24 months – Concept of ‘multiannual measure’ – Conditions for granting restructuring aid – Concept of ‘production facility’ – Classification of silos – Concept of ‘full dismantling’ – Annex 2 to Document VI/5330/97 – Problems in interpreting EU legislation – Sincere cooperation – Legitimate expectations – Ne bis in idem – Slaughter premiums – Information provision and promotion measures for agricultural products – Late payments – Evidence of the existence of exceptional management conditions – Equal treatment – Mistranslation in one of the language versions of an EU regulation – Whether the Member State is answerable for the financial correction)

In Case T‑135/15,

Italian Republic, represented by G. Palmieri, acting as Agent, assisted by C. Colelli, avvocato dello Stato,

applicant,

supported by

French Republic, represented by D. Colas and S. Horrenberger, acting as Agents,

and by

Hungary, represented by M.Z. Fehér and G. Koós, acting as Agents,

interveners,

v

European Commission, represented by D. Bianchi, P. Ondrůšek and I. Galindo Martín, acting as Agents,

defendant,

APPLICATION under Article 263 TFEU for the partial annulment of Commission Implementing Decision (EU) 2015/103 of 16 January 2015 excluding from European Union financing certain expenditure incurred by the Member States under the European Agricultural Guarantee Fund (EAGF) and under the European Agricultural Fund for Rural Development (EAFRD) (OJ 2015 L 16, p. 33), in so far as it relates to certain expenditure incurred by the Italian Republic,

THE GENERAL COURT (Fourth Chamber),

composed of H. Kanninen, President, J. Schwarcz and C. Iliopoulos (Rapporteur), Judges,

Registrar: J. Palacio González, Principal Administrator,

having regard to the written part of the procedure and further to the hearing on 12 September 2017,

gives the following

Judgment

Legal framework

Regulation (EC) No 320/2006

1 The Council of the European Union adopted Regulation (EC) No 320/2006 of 20 February 2006 establishing a temporary scheme for the restructuring of the sugar industry in the Community and amending Regulation (EC) No 1290/2005 on the financing of the common agricultural policy (OJ 2006 L 58, p. 42). Regulation No 320/2006 was amended several times, on the last occasion by Council Regulation (EC) No 72/2009 of 19 January 2009 on modifications to the Common Agricultural Policy by amending Regulations (EC) No 247/2006, (EC) No 320/2006, (EC) No 1405/2006, (EC) No 1234/2007, (EC) No 3/2008 and (EC) No 479/2008 and repealing Regulations (EEC) No 1883/78, (EEC) No 1254/89, (EEC) No 2247/89, (EEC) No 2055/93, (EC) No 1868/94, (EC) No 2596/97, (EC) No 1182/2005 and (EC) No 315/2007 (OJ 2009 L 30, p. 1). Regulation No 320/2006, as amended by Regulation No 72/2009, is applicable to the facts at issue in this case.

2 Recitals 1 and 5 of Regulation No 320/2006 state: ‘(1) … To bring the Community system of sugar production and trading in line with international requirements and ensure its competitiveness in the future it is necessary to launch a profound restructuring process leading to a significant reduction of unprofitable production capacity in the Community. To this end, as a precondition for the implementation of a functioning new common market organisation for sugar a separate and autonomous temporary scheme for the restructuring of the sugar industry in the Community should be established. … (5) An important economic incentive for sugar undertakings with the lowest productivity to give up their quota production in the form of an adequate restructuring aid should be introduced. To this effect, a restructuring aid should be set up that creates an incentive to abandon sugar quota production and renounce the quotas concerned, at the same time allowing to take into due account the respect of social and environmental commitments linked to the abandoning of production. The aid should be available during four marketing years with the aim to reduce production to the extent necessary to reach a balanced market situation in the Community.’

3 Article 1 of Regulation No 320/2006, entitled ‘Temporary restructuring fund’, provides: ‘1. The temporary fund for the restructuring of the sugar industry in the Community (hereinafter referred to as “restructuring fund”) is hereby established. … The restructuring fund shall form part of the Guarantee Section of the European Agricultural Guidance and Guarantee Fund. As from 1 January 2007 it shall form part of the European Agricultural Guarantee Fund (EAGF). 2. The restructuring fund shall finance the expenditure resulting from the measures provided for under Articles 3, 6, 7, 8 and 9. … 4. This Regulation shall not apply to the outermost regions referred to in Article 299(2) of the Treaty.’

4 Article 3 of Regulation No 320/2006, headed ‘Restructuring aid’, provides: ‘1. Any undertaking producing sugar, isoglucose or inulin syrup to which a quota has been allocated by 1 July 2006 … shall be entitled to a restructuring aid per tonne of quota renounced, provided that during one of the marketing years 2006/2007, 2007/2008, 2008/2009 and 2009/2010 it: (a) renounces the quota assigned by it to one or more of its factories and fully dismantles the production facilities of the factories concerned; or (b) renounces the quota assigned by it to one or more of its factories, partially dismantles the production facilities of the factories concerned and does not use the remaining production facilities of the factories concerned for the production of products covered by the common market organisation for sugar, … 3. Full dismantling of production facilities shall require: (a) the definitive and total cessation of the production of sugar, isoglucose and inulin syrup by the production facilities concerned; (b) the closure of the factory or the factories and the dismantling of the production facilities thereof within the period referred to in point (d) of Article 4(2), and (c) the restoring of the good environmental conditions of the factory site and the facilitation of redeployment of the workforce within the period referred to in point (f) of Article 4(2). … 4. Partial dismantling of production facilities shall require: (a) the definitive and total cessation of the production of sugar, isoglucose and inulin syrup by the production facilities concerned; (b) the dismantling of the production facilities that will not be used for the new production and were destined … for the production of the products mentioned under (a), …; (c) the restoring of the good environmental conditions of the factory site and the facilitation of redeployment of the workforce within the period referred to in point (f) of Article 4(2), … 5. The amount of restructuring aid per tonne of renounced quota shall be: (a) in the case referred to in point (a) of paragraph 1: – EUR 730,00 for the marketing year 2006/2007, – EUR 730,00 for the marketing year 2007/2008, – EUR 625,00 for the marketing year 2008/2009, – EUR 520,00 for the marketing year 2009/2010; (b) in the case referred to in point (b) of paragraph 1: – EUR 547,50 for the marketing year 2006/2007, – EUR 547,50 for the marketing year 2007/2008, – EUR 468,75 for the marketing year 2008/2009, – EUR 390,00 for the marketing year 2009/2010; …’

5 In addition, under Article 4 of Regulation No 320/2006, entitled ‘Application for restructuring aid’: ‘1. Applications for restructuring aid shall be submitted to the Member State concerned by 31 January preceding the marketing year during which the quota is to be renounced. … 2. Applications for restructuring aid shall include: (a) a restructuring plan; … (c) a commitment to renounce the relevant quota in the marketing year concerned; (d) in the case referred to in Article 3(1)(a), a commitment to fully dismantle the production facilities within the period to be determined by the Member State concerned; (e) in the case referred to in Article 3(1)(b), a commitment to partially dismantle the production facilities within the period to be determined by the Member State concerned and not to use the production site and the remaining production facilities for the production of products covered by the common market organisation for sugar; … 3. The restructuring plan referred to in paragraph 2(a) shall include at least the following elements: … (c) a complete technical description of the production facilities concerned; (d) a business plan detailing the modalities, timetable and costs for the closure of the factory or factories and the full or partial dismantling of the production facilities; … (h) a financial plan detailing all the costs in relation to the restructuring plan.’

6 Article 5 of Regulation No 320/2006, headed ‘Decision on the restructuring aid and controls’, provides: ‘1. By the end of February preceding the marketing year referred to in Article 3(2), Member States shall decide on the granting of the restructuring aid. However, the decision for the marketing year 2006/2007 shall be adopted by 30 September 2006. … 2. The restructuring aid shall be granted if the Member State has established after thorough verification that: – the application contains the elements referred to in Article 4(2), – the restructuring plan contains the elements referred to in Article 4(3), – the measures and actions described in the restructuring plan are in conformity with the relevant Community and national legislation; – … 3. If one or more of the conditions laid down in the first three indents of paragraph 2 are not respected, the application for the restructuring aid shall be returned to the applicant. The applicant shall be informed of the conditions that are not respected. The applicant may then either withdraw or complete his application. …’

7 Under Article 10(4) of Regulation No 320/2006: ‘The restructuring aid referred to in Article 3 shall be paid in two instalments: – 40% in June of the marketing year referred to in Article 3(2), – and – 60% in February of the following marketing year. However, the Commission may decide to split the instalment referred to in the second of the preceding indents into two payments, …’

8 Lastly, Article 14 of Regulation No 320/2006, entitled ‘Amendments to Regulation (EC) No 1290/2005’, provides: ‘Regulation (EC) No 1290/2005 is hereby amended as follows: 1. The following point shall be added to Article 3(1): “(e) restructuring aid, aid for diversification, additional aid for diversification and transitional aid provided for in Articles 3, 6, 7, 8 and 9 of … Regulation … No 320/2006 …” …’

Regulation (EC) No 968/2006

9 The European Commission adopted Regulation (EC) No 968/2006 of 27 June 2006 laying down detailed rules for the implementation of Regulation No 320/2006 (OJ 2006 L 176, p. 32). Regulation No 968/2006 was amended several times, on the last occasion by Commission Implementing Regulation (EU) No 672/2011 of 13 July 2011 amending Regulation No 968/2006 (OJ 2011 L 184, p. 1). Regulation No 968/2006, as amended by Regulation No 672/2011, is applicable to the facts at issue in this case.

10 Recital 4 of Regulation No 968/2006 provides: ‘In relation to the renunciation of quotas, Article 3 of Regulation … No 320/2006 sets out the options of full or partial dismantling of the production facilities, which give rise to different amounts of restructuring aid. While the conditions applicable to those two options should take into account that a higher amount of restructuring aid is granted to full dismantling, because of the higher costs involved, it is considered appropriate to allow for the possibility to keep parts of the factory which are not part of the production line, if they can be used for other purposes foreseen in the restructuring plan, especially when such use creates employment. On the other hand, installations not directly linked to sugar production should be dismantled if there is no alternative use for them within a reasonable period of time and maintaining them would be harmful to the environment.’

11 Article 4 of Regulation No 968/2006, entitled ‘Dismantling of production facilities’, provides: ‘1. In the case of full dismantling referred to in Article 3(1)(a) of Regulation … No 320/2006, the requirement to dismantle the production facilities shall concern: (a) all facilities which are necessary to produce sugar, isoglucose or inulin syrup, as for example: facilities to store, analyse, wash and cut sugar beet, cane, cereals or chicory; all facilities which are necessary to extract and process or concentrate sugar from sugar beet or cane, starch from cereals, glucose from starch or inulin from chicory; (b) the part of the facilities other than those referred to in point (a) which are directly related to the production of sugar, isoglucose or inulin syrup and necessary to deal with production under the quota renounced, even if it could be used in relation with the production of other products, such as: facilities for heating or processing water, or for producing energy; facilities to deal with sugar beet pulp or molasses; facilities for internal transport; (c) all other facilities, such as packaging facilities, left unused and to be dismantled and removed for environmental reasons. 2. In the case of partial dismantling referred to in Article 3(1)(b) of Regulation … No 320/2006, the requirement to dismantle the production facilities shall concern the facilities referred to in paragraph 1 of this Article that are not intended to be used for other production or other use of the factory site in accordance with the restructuring plan.’

12 Under Article 6 of Regulation No 968/2006, headed ‘Member States obligations’: ‘1. 20 days after it has received a copy of the invitation to the consultation referred to in Article 2(3) at the latest, the Member State shall inform the parties involved in the restructuring plan of its decision on: … (b) the period, expiring on 30 September 2010 at the latest, for dismantling production facilities and for complying with the social and environmental commitments referred to in Articles 3(3)(c) and 3(4)(c) of Regulation … No 320/2006; … By way of derogation from point (b) of [paragraph 1], upon a motivated request of the undertaking concerned, the Member States can grant an extension of the deadline fixed in that point until 31 March 2012 at the latest. In such case, the undertaking shall submit an amended restructuring plan according to Article 11. …’

13 Article 9 of Regulation No 968/2006, entitled ‘Eligibility for the restructuring aid’, provides: ‘… 2. For the application to be considered eligible, the restructuring plan shall: (a) include a summary of the main objectives, the measures and actions as well as the estimated costs of these measures and actions, the financial plan and the time schedules; (b) specify for each factory concerned the amount of quota to be renounced, which shall be lower than or equal to the production capacity to be fully or partially dismantled; (c) include an attestation that the production facilities will be fully or partially dismantled and removed from the production site; … (e) clearly determine all the actions and costs financed by the restructuring fund and, if appropriate, the other related elements intended to be financed by other Community funds. 3. If the conditions set out in paragraph 2 are not satisfied, the Member State shall inform the applicant of the reasons for this and fix a deadline within the time limit referred to in Article 4(1) of Regulation … No 320/2006, by which the restructuring plan may be adjusted accordingly. The Member State shall decide on the eligibility of the adjusted application within 15 working days after the deadline referred to in the first subparagraph, but at least 10 working days before the deadline provided for in Article 5(1) of Regulation … No 320/2006. If the adjusted application is not presented in due time or is considered ineligible, the application for restructuring aid shall be rejected and the Member State shall inform the applicant and the Commission thereof within five working days. The lodging of a new application from the same applicant shall be subject to the chronological order referred to in Article 8. …’

14 Under Article 10(4) of Regulation No 968/2006: ‘The Member States shall notify to the applicants the grant of the restructuring aid for their respective eligible restructuring plan by the deadline provided for in Article 5(1) of Regulation … No 320/2006. A full copy of the approved restructuring plan shall be sent by the competent authority of the Member State to the Commission.’

15 Article 11 of Regulation No 968/2006, headed ‘Amendments to the restructuring plan’, provides: ‘1. As soon as the restructuring aid is granted, the beneficiary shall carry out all measures detailed in the approved restructuring plan and respect the commitments included in its application for restructuring aid. 2. Any amendment to an approved restructuring plan shall be agreed by the Member State on the basis of a request from the undertaking concerned: (a) explaining the reasons and implementing problems encountered; (b) presenting the adjustments or new measures proposed and the expected effects; (c) detailing the financial and the timing implications. The amendments may not modify the total amount of the restructuring aid to be granted or the temporary restructuring amounts to be paid in accordance with Article 11 of Regulation … No 320/2006. The Member State shall notify the amended restructuring plan to the Commission.’

16 Article 16 of Regulation No 968/2006, entitled ‘Payment of the restructuring aid’, states: ‘1. The payment of … each instalment of the restructuring aid, as referred to in Article 10(4) of Regulation … No 320/2006, shall be subject to the lodging of a security of an amount equal to 120% of the amount of the instalment concerned. …’

17 Under Article 22 of Regulation No 968/2006, headed ‘Release of securities’: ‘1. The securities referred to in Articles 16(1), … and 18(2) shall be released provided that: (a) all of the measures and actions foreseen in the restructuring plan, the national restructuring programmes and the business plan, as appropriate, have been implemented; (b) the final report referred to in Article 23(2) has been submitted; (c) the Member States have carried out the controls referred to [in] Article 25; … 3. Except in the case of force majeure, the security shall be forfeited if the conditions set out in paragraph 1 have not been fulfilled on 30 September 2012 at the latest.’

18 Article 25 of Regulation No 968/2006, entitled ‘Controls’, provides as follows: ‘1. Each undertaking and production site in respect of which an aid is received under the restructuring fund shall be inspected by the competent authority of the Member State within three months after the deadline referred to in Article 23(2). The inspection shall check that the restructuring plan or business plan is being complied with and shall verify the accuracy and completeness of the information given by the undertaking in the progress report. The first inspection under a restructuring plan shall also verify any additional information given by the undertaking in its application for restructuring aid, in particular the confirmation referred to in Article 4(2)(b) of Regulation … No 320/2006. 2. The inspection shall in all cases cover the elements of the restructuring plan referred to in Article 4(3) of Regulation … No 320/2006 …’

19 In addition, Article 26 of Regulation No 968/2006, entitled ‘Recovery’, provides: ‘1. Without prejudice to paragraph 3, if a beneficiary does not comply with one or more of his commitments under the restructuring plan, the business plan or a national restructuring programme, as appropriate, the part of the aid granted in respect of the commitment(s) concerned shall be recovered except in the case of force majeure. …’

20 Finally, under Article 27 of Regulation No 968/2006, entitled ‘Penalties’: ‘1. If a beneficiary does not comply with one or more of his commitments under the restructuring plan, the business plan or the national restructuring programme, as appropriate, it shall be required to pay an amount equal to 10% of the amount to be recovered under Article 26. …’

Background to the dispute

Contested decision

21 By Implementing Decision (EU) 2015/103 of 16 January 2015 excluding from European Union financing certain expenditure incurred by the Member States under the European Agricultural Guarantee Fund (EAGF) and under the European Agricultural Fund for Rural Development (EAFRD) (OJ 2015 L 16, p. 33; ‘the contested decision’), the Commission, in particular, imposed the following corrections on the Italian Republic: – a correction of EUR 90498 735.16 concerning expenditure incurred by the Italian Republic in connection with the temporary scheme for the restructuring of the sugar industry, owing to the non-demolition of all sugar production facilities by the beneficiaries of restructuring aid (financial years 2007, 2008 and 2009); – a correction of EUR 1607 257.90 for late payment of the balance of slaughter premiums relating to claim year 2004 (financial year 2010); – a flat-rate correction of EUR 1198 831.03 for late payment of certain expenditure relating to information provision and promotion measures for agricultural products (financial years 2009 and 2010).

22 The three corrections referred to in paragraph 21 above are disputed by the Italian Republic in the present action.

The financial correction relating to expenditure incurred under the temporary scheme for the restructuring of the sugar industry

23 In September 2010, the Commission services conducted an audit in Italy concerning aid for the restructuring of the sugar industry granted to a number of Italian undertakings producing sugar during the financial years 2007, 2008 and 2009 (‘audit EX/2010/010/IT’).

24 By letter of 9 December 2010, sent pursuant to the first subparagraph of Article 11(1) of Commission Regulation (EC) No 885/2006 of 21 June 2006 laying down detailed rules for the application of Council Regulation (EC) No 1290/2005 as regards the accreditation of paying agencies and other bodies and the clearance of the accounts of the EAGF and of the EAFRD (OJ 2006 L 171, p. 90), the Commission notified the Italian authorities of the outcome of audit EX/2010/010/IT, which was annexed to the letter in question (‘the first communication of 9 December 2010’).

25 It is apparent from the first communication of 9 December 2010 that, in the Commission’s view, the Italian authorities had not complied in all respects with the requirements laid down in the EU rules governing the conditions for granting restructuring aid for the full dismantling of production facilities, in so far as it had found that silos had been kept at several sugar production sites belonging to the Italian undertakings which had applied for that aid (‘the silos at issue’). The Commission stated that those undertakings did not satisfy the conditions for the grant of restructuring aid for full dismantling if they failed to implement the restructuring plan in its entirety and if the buildings related to the production business, including the silos at issue, were not demolished. Lastly, the Commission asked the Italian authorities to indicate whether silos still existed at the sugar production sites which its officials had not visited.

26 The Italian authorities replied to the Commission’s objections contained in the first communication of 9 December 2010 by letter of 9 February 2011.

27 On 18 April 2011, the Commission invited the Italian authorities to a bilateral meeting, which was held in Brussels (Belgium) on 4 May 2011.

28 The Commission sent the minutes of that meeting to the Italian authorities by letter of 26 July 2011. They submitted their observations on the minutes on 2 November 2011.

29 By letter of 16 August 2012, sent on the basis of the third subparagraph of Article 11(2) of Regulation No 885/2006 (‘the formal communication of 16 August 2012’), the Commission informed the Italian authorities that it intended to exclude EUR 90498 735.15 from EU financing due to non-compliance with the conditions for the grant of restructuring aid for full dismantling, laid down in Article 3(3) of Regulation No 320/2006 and Article 4(2) of Regulation No 968/2006.

30 On 11 October 2012, the Italian authorities referred the matter to the conciliation body under Article 16 of Regulation No 885/2006, which issued its report on 10 February 2013.

31 By judgment of 14 November 2013, SFIR and Others (C‑187/12 to C‑189/12, EU:C:2013:737), the Court held, in essence, that the concept of ‘production facilities’ within the meaning of Articles 3 and 4 of Regulation No 320/2006 and Article 4(1)(b) of Regulation No 968/2006 covered silos intended to store the restructuring aid beneficiary’s sugar. However, the Court held that this was not the case in two situations: first, where it was shown that the silos were used only to store sugar, produced under quota, from other producers or bought from those producers, and, secondly, where those silos were used only for packaging or packing sugar produced elsewhere for the purposes of marketing it.

32 By letter of 28 March 2014, the Commission gave the Italian authorities a period of two months to submit additional observations, in particular, following the judgment of the Court mentioned in paragraph 31 above, and to submit evidence demonstrating that, before the applications for restructuring aid were made, the silos at issue were used solely for storing and packaging sugar produced under quota by other producers.

33 By letter of 30 May 2014, the Italian authorities challenged the Commission’s view that, in order to assess whether silos were covered by the concept of ‘production facilities’, it was necessary to consider how they were used at the time of the application for restructuring aid.

34 In the summary report adopted by the Commission on 12 December 2014, the Commission confirmed its proposal to exclude EUR 90498 735.16 from EU financing.

The financial correction for late payment of the balance of slaughter premiums relating to claim year 2004

35 The Commission services conducted an audit in Italy on slaughter premiums concerning the failure to comply with payment deadlines and the exceeding of financial ceilings during the financial year 2010.

36 By letter of 14 February 2011, sent pursuant to the first subparagraph of Article 11(1) of Regulation No 885/2006, the Commission notified the Italian authorities of the outcome of its enquiries. The Italian authorities replied to that notification by letter of 8 March 2011.

37 On 15 June 2011, a bilateral meeting was held between the Commission services and the Italian authorities in Brussels. The minutes of that meeting were sent to the Italian authorities on 3 August 2011. They submitted their observations on 5 October 2011.

38 The Commission restated its position in a letter of 18 January 2012, sent pursuant to the second subparagraph of Article 11(1) of Regulation No 885/2006, to which the Italian authorities replied by letter of 27 March 2012.

39 By letter of 30 October 2013, sent on the basis of the third subparagraph of Article 11(2) of Regulation No 885/2006, the Commission formally notified the Italian authorities of the estimated amount of the proposed correction, namely EUR 7643 605.11, due to, inter alia, failure to comply with the payment deadlines for the slaughter premiums relating to claim year 2004, the balance of which had been paid to the beneficiaries on 30 October and 3 November 2009.

40 On 10 December 2013, the Italian authorities referred the matter to the conciliation body. The conciliation body issued its report on 6 May 2014.

41 By letter of 2 July 2014, the Commission notified its final position to the Italian authorities: it maintained a flat-rate correction of EUR 7643 605.11, of which EUR 1607 275.90 corresponded to late payment of the balance of the slaughter premiums relating to claim year 2004, effected during the financial year 2010.

The financial correction for late payment of certain expenditure relating to information provision and promotion measures for agricultural products

42 Between 30 November and 4 December 2009, the Commission services conducted an audit in Italy concerning information provision and promotion measures for agricultural products on the internal market and in third countries, covering the financial years 2008 to 2010.

43 By letter of 27 April 2010, sent pursuant to the first subparagraph of Article 11(1) of Regulation No 885/2006, the Commission notified the Italian authorities of the outcome of its enquiries. The Italian authorities replied to that notification by letter of 5 July 2010.

44 On 18 November 2010, a bilateral meeting was held between the Italian authorities and the Commission in Brussels. The minutes of that meeting were sent to the Italian authorities on 31 January 2011. They submitted their observations on 30 March 2011.

45 By letter of 17 April 2013, sent pursuant to the third subparagraph of Article 11(2) of Regulation No 885/2006, the Commission formally notified the Italian authorities of the estimated amount of the proposed correction, namely EUR 2844 470.65, for the financial years 2008 (only as from 30 May 2008), 2009 and 2010.

46 On 3 June 2013, the Italian authorities referred the matter to the conciliation body. The conciliation body issued its report on 29 November 2013.

47 By letter of 27 May 2014, the Commission notified its final position to the Italian authorities, in which, among other things, it applied a flat-rate correction of EUR 1198 831.03 due to the belated nature of the payments relating to information provision and promotion measures for agricultural products on the internal market and in third countries during the financial years 2009 and 2010.

Procedure and forms of order sought by the parties

48 By application lodged at the Court Registry on 26 March 2015, the Italian Republic brought the present action.

49 By documents lodged at the Court Registry on 22 and 25 June 2015, respectively, the French Republic and Hungary sought leave to intervene in support of the form of order sought by the Italian Republic. By decisions of 22 July 2015, the President of the Second Chamber of the General Court granted leave to intervene.

50 The Italian Republic claims that the Court should: – annul the contested decision in so far as it relates to certain expenditure incurred by the Italian Republic; – order the Commission to pay the costs.

51 The Commission contends that the Court should: – dismiss the action; – order the Italian Republic to pay the costs.

52 The French Republic claims that the Court should: – annul the contested decision; – order the Commission to pay the costs.

53 Hungary claims that the Court should annul the contested decision in part.

54 By letter from the Court Registry of 14 June 2016, the parties were informed of the change in the composition of the Court and of the decision of the President of the General Court to reallocate the case to another Judge-Rapporteur, who was assigned to the Third Chamber.

55 By letter from the Court Registry of 3 October 2016, the parties were informed of the change in the composition of the Chambers of the Court, pursuant to Article 27(5) of the Rules of Procedure of the General Court, and of the assignment of the Judge-Rapporteur to the Fourth Chamber, to which the present case was accordingly allocated.

56 On a proposal from the Judge-Rapporteur, the General Court (Fourth Chamber) decided to open the oral part of the procedure and, by way of measures of organisation of procedure pursuant to Article 89 of the Rules of Procedure, put questions in writing to the parties and invited them to lodge certain documents. The parties complied with the measures of organisation of procedure within the prescribed period.

57 At the hearing on 12 September 2017, the parties presented oral argument and replied to the oral questions put by the Court.

Law

58 In support of its action, the Italian Republic puts forward six pleas in law.

59 The first four pleas are raised in support of the application for annulment of the correction concerning the expenditure incurred by the Italian Republic in connection with the temporary scheme for the restructuring of the sugar industry. The first plea alleges, in essence, infringement of Article 31(4) of Council Regulation (EC) No 1290/2005 of 21 June 2005 on the financing of the common agricultural policy (OJ 2005 L 209, p. 1), breach of the rights of the defence and of the principle that the parties should be heard, and an inadequate statement of reasons. The second plea alleges, in essence, infringement of Article 11(1) of Regulation No 885/2006, Regulation No 320/2006 and Regulation No 968/2006, and failure to comply with the judgment of 14 November 2013, SFIR and Others (C‑187/12 to C‑189/12, EU:C:2013:737). The third plea alleges, in essence, breach of the principles of the protection of legitimate expectations, of sincere cooperation, ne bis in idem and of sound administration, and breach of the duty of care. The fourth plea alleges infringement of the second subparagraph of Article 31(3) of Regulation No 1290/2005, of the second subparagraph of Article 11(3) of Chapter 3 of Regulation No 885/2006 and of the guidelines set out in Document VI/5330/97 of the Commission of 23 December 1997, entitled ‘Guidelines for the calculation of financial consequences when preparing the decision regarding the clearance of the accounts of the EAGGF Guarantee’ (‘Document VI/5330/97’), breach of the obligation to state reasons, and failure to consider the position of the conciliation body.

60 The fifth plea is put forward in support of the application for annulment of the correction applied for late payment of the balance of slaughter premiums relating to claim year 2004 and alleges infringement of Article 9(3) of Commission Regulation (EC) No 883/2006 of 21 June 2006 laying down detailed rules for the application of Regulation No 1290/2005 as regards the keeping of accounts by the paying agencies, declarations of expenditure and revenue and the conditions for reimbursing expenditure under the EAGF and the EAFRD (OJ 2006 L 171, p. 1), breach of the principle of equal treatment and distortion of the facts.

61 The sixth plea is put forward in support of the application for annulment of the correction applied for late payment of certain expenditure relating to information provision and promotion measures for agricultural products and alleges infringement of Article 20 of Commission Regulation (EC) No 501/2008 of 5 June 2008 laying down detailed rules for the application of Council Regulation (EC) No 3/2008 on information provision and promotion measures for agricultural products on the internal market and in third countries (OJ 2008 L 147, p. 3), breach of the principle of legitimate expectations and breach of the principle that Member States are answerable for financial corrections.

First plea in law: infringement of Article 31(4) of Regulation No 1290/2005, breach of the rights of the defence and of the principle that the parties should be heard, and inadequate statement of reasons

62 The first plea can essentially be divided into three parts. The first part alleges infringement of Article 31(4) of Regulation No 1290/2005. The second part alleges breach of the rights of the defence and of the principle that the parties should be heard. The third part alleges, in essence, that the statement of reasons for the contested decision is inadequate.

First part of the first plea in law alleging infringement of Article 31(4) of Regulation No 1290/2005

63 The Italian Republic criticises the Commission, in essence, for finding that the restructuring aid concerned a multiannual measure within the meaning of Article 31(4)(b) of Regulation No 1290/2005 and that the financial correction could therefore, in the present case, apply to all expenditure incurred in connection with the temporary scheme for the restructuring of the sugar industry. In so doing, the Commission is alleged to have infringed Article 31(4) of Regulation No 1290/2005.

64 The Commission disputes the arguments of the Italian Republic.

65 In the instant case, it is necessary to determine whether the Commission was fully entitled to include in the basis for calculating the contested financial correction all expenditure incurred by the Italian Republic in connection with the temporary scheme for the restructuring of the sugar industry, in accordance with Article 31(4)(b) of Regulation No 1290/2005, or whether it should have excluded from that basis expenditure incurred more than 24 months before the notification to the Italian authorities of the first communication of 9 December 2010, in accordance with Article 31(4)(a) of Regulation No 1290/2005. For the purposes of that examination, the Court must determine whether aid for the restructuring of the sugar industry finances a multiannual measure within the meaning of Article 31(4)(b) of Regulation No 1290/2005.

66 Article 31(4) of Regulation No 1290/2005 provides: ‘Financing may not be refused for: (a) expenditure as indicated in Article 3(1) [of this regulation] which is incurred more than 24 months before the Commission notifies the Member State in writing of its inspection findings; (b) expenditure on multiannual measures falling within the scope of Article 3(1) [of this regulation] or within the scope of the programmes as indicated in Article 4, where the final obligation on the recipient occurs more than 24 months before the Commission notifies the Member State in writing of its inspection findings; …’

67 The expenditure referred to in Article 3(1)(e) of Regulation No 1290/2005, as amended by Article 14 of Regulation No 320/2006, includes aid for the restructuring of the sugar industry.

68 Furthermore, under Article 3(1) of Regulation No 320/2006, the grant of restructuring aid is subject to the fulfilment of two conditions: renunciation of the production quota and the full or partial dismantling of the production facilities.

69 As regards renunciation of the production quota, the Italian Republic rightly argues that this is an immediate measure occurring in the course of a given marketing year.

70 However, contrary to what the Italian Republic maintains, renunciation of the production quota is not ‘the very essence of the scheme at issue’, since Article 3(1)(a) and (b) of Regulation No 320/2006 also requires the full or partial dismantling of the production facilities if restructuring aid for full or partial dismantling is to be granted (see paragraph 68 above).

71 The dismantling of production facilities entails the implementation over time of a number of complex operations and therefore cannot constitute a one-off measure.

72 Indeed, under Article 3(3) of Regulation No 320/2006, the full dismantling of production facilities requires (i) the definitive and total cessation of the production of sugar, isoglucose and inulin syrup by the production facilities concerned; (ii) the closure of the factory or factories and the dismantling of their production facilities; and (iii) the restoring of the good environmental conditions of the factory site and the facilitation of redeployment of the workforce.

73 As for partial dismantling, Article 3(4) of Regulation No 320/2006 lays down similar requirements to those described in paragraph 72 above.

74 Furthermore, the fact that restructuring operations are spread over several years is also evidenced by Article 6 of Regulation No 968/2006, which fixes a deadline for completing the dismantling of production facilities and for complying with the social and environmental commitments, the cut-off date for which, after several amendments, was ultimately set at 31 March 2012 by Implementing Regulation No 672/2011.

75 Lastly, in reply to a question put by the Court at the hearing, the Italian Republic stated that the operations to dismantle the production sites of two Italian undertakings which had applied for restructuring aid for full dismantling lasted approximately three or four years.

76 In the light of the foregoing, it must be held that aid for the restructuring of the sugar industry is designed not to finance a one-off measure, but rather a package of measures the actual implementation of which is spread over several years. Accordingly, the scheme for the restructuring of the sugar industry is a multiannual measure within the meaning of Article 31(4)(b) of Regulation No 1290/2005.

77 The arguments put forward by the Italian Republic cannot invalidate the foregoing conclusion.

78 First, the Italian Republic claims that the one-off nature of the measures financed by restructuring aid is evidenced by the fact that Article 10 of Regulation No 320/2006 provides for payment of a single amount of restructuring aid, albeit in the form of two instalments over a period not exceeding 12 months.

79 It is apparent from a combined reading of Article 10(4) of Regulation No 320/2006 and Articles 16, 22 and 25(1) of Regulation No 968/2006 that the payment of restructuring aid for full dismantling, in various instalments, entails the lodging of securities which will be released only if, after completion of the restructuring process, the inspections referred to in Article 25(1) of Regulation No 968/2006 confirm, among other things, that all the measures and actions set out in the restructuring plan have indeed been implemented.

80 It follows that the final amount of restructuring aid cannot be known before the release of the last securities held by the Member States and thus after the checks carried out once all restructuring operations have been completed.

81 Accordingly, even if all the restructuring aid had been paid to the Italian undertakings 24 months prior to the first communication of 9 December 2010 – as the Italian Republic argued, but did not prove, at the hearing – the amount of that aid was not final and could still be subject to change.

82 In addition, as the Commission pointed out at the hearing, even if the Italian undertakings received the restructuring aid in a single payment, that fact would not prevent the scheme for the restructuring of the sugar industry from being classified as a multiannual measure. The decisive factor is that the implementation of that scheme entails several obligations, the performance of which may not be immediate but is spread over a number of years.

83 Secondly, the Italian Republic essentially submits that, by applying Article 31(4)(b) of Regulation No 1290/2005, the Commission can legitimately challenge any expenditure incurred under the temporary scheme for the restructuring of the sugar industry provided that the communication under the first subparagraph of Article 11(1) of Regulation No 885/2006 is made within 24 months of the performance of the beneficiary’s final obligation. In this instance, it contends that the Commission could therefore have initiated a clearance of accounts procedure until March 2015, that is, during a period of 24 months from the deadline for dismantling the production facilities, namely 31 March 2012. In those circumstances, a communication from the Commission under the first subparagraph of Article 11(1) of Regulation No 885/2006, after expiry of the deadline for full dismantling, would prevent the Member State from correcting the irregularity identified by the Commission. According to the Italian Republic, this is at odds with the spirit of the clearance of accounts procedure, a key aspect of which is to permit the Member State to correct the irregularities identified by the Commission.

84 In reply to a question put by the Court at the hearing, the Italian Republic confirmed that by its line of argument, considered in paragraph 83 above, it did not seek to plead the unlawfulness of Article 31(4)(b) of Regulation No 1290/2005, but rather, in essence, to challenge the application of that provision in the present case.

85 It is sufficient to note that the communication under the first subparagraph of Article 11(1) of Regulation No 885/2006, in this instance the first communication of 9 December 2010 (see paragraph 24 above), was sent to the Italian Republic before the final obligation imposed on the beneficiaries of restructuring aid fell due, namely 31 March 2012 (see paragraph 74 above). Therefore, the Italian Republic could have corrected the irregularities identified in the first communication of 9 December 2010 or, at the very least, have taken measures to attempt to correct them.

86 In the light of the foregoing, the Commission did not err in considering that aid for the restructuring of the sugar industry was intended to finance a multiannual measure, nor, therefore, did it err in including in the disputed correction the full amount of restructuring aid granted to the Italian undertakings.

87 The first part of the first plea must therefore be rejected.

Second part of the first plea in law alleging breach of the rights of the defence and of the principle that both parties should be heard

88 The Italian Republic claims, in essence, that due to the lateness of the change in the Commission’s position on the legal basis for calculating the period of 24 months referred to in Article 31(4) of Regulation No 1290/2005, to which effect was given in its formal communication of 16 August 2012, it was unable to exercise its rights of the defence and the inter partes nature of the clearance of accounts procedure was undermined.

89 The Commission disputes the arguments of the Italian Republic.

90 It is settled case-law that the final and conclusive decision on the clearance of accounts must be taken at the conclusion of a specific procedure giving effect to the audi alteram partem rule, during which the Member States concerned are be provided with all the guarantees necessary for them to present their point of view (see judgment of 14 December 2000, Germany v Commission, C‑245/97, EU:C:2000:687, paragraph 47 and the case-law cited).

91 That procedure is governed by Article 11 of Regulation No 885/2006, headed ‘Conformity clearance’, which provides as follows: ‘1. When, as a result of any inquiry, the Commission considers that expenditure was not effected in compliance with Community rules, it shall communicate its findings to the Member State concerned and indicate the corrective measures needed to ensure future compliance with those rules. The communication shall make reference to this Article. The Member State shall reply within two months of receipt of the communication and the Commission may modify its position in consequence. In justified cases, the Commission may agree to extend the period for reply. After expiry of the period for reply, the Commission shall convene a bilateral meeting and both parties shall endeavour to come to an agreement as to the measures to be taken as well as to the evaluation of the gravity of the infringement and of the financial damage caused to the Community budget. 2. Within two months from the date of the reception of the minutes of the bilateral meeting referred to in the third subparagraph of paragraph 1, the Member State shall communicate any information requested during that meeting or any other information which it considers useful for the ongoing examination. … After the expiry of the period referred to in the first subparagraph, the Commission shall formally communicate its conclusions to the Member State on the basis of the information received in the framework of the conformity clearance procedure. The communication shall evaluate the expenditure which the Commission envisages to exclude from Community financing under Article 31 of Regulation … No 1290/2005 and shall make reference to Article 16(1) of this Regulation. 3. … The Commission, after having examined any report drawn up by the Conciliation Body in accordance with Chapter 3 of this Regulation, shall adopt, if necessary, one or more decisions under Article 31 of Regulation … No 1290/2005 in order to exclude from Community financing expenditure affected by the non-compliance with Community rules until the Member State has effectively implemented the corrective measures. …’

92 In accordance with settled case-law, the written communication provided for in the first subparagraph of Article 11(1) of Regulation No 885/2006must inform the Government concerned fully about the Commission’s reservations, so that it can fulfil the warning function given to it by that provision (see judgment of 3 May 2012, Spain v Commission, C‑24/11 P, EU:C:2012:266, paragraph 27 and the case-law cited).

93 It is also apparent from the case-law that the first subparagraph of Article 11(1) of Regulation No 885/2006 must be read in conjunction with Article 31(4) of Regulation No 1290/2005, pursuant to which the Commission may not exclude expenditure effected outside one of the periods referred to in the latter provision. It follows that the written communication provided for in the first subparagraph of Article 11(1) of Regulation No 885/2006 serves as a warning that expenditure effected during a given period preceding notification of that communication may be excluded from financing by the European Agricultural Guidance and Guarantee Fund (EAGGF) and, accordingly, that that communication constitutes the reference point from which that period is to be calculated (see, by analogy, judgment of 3 May 2012, Spain v Commission, C‑24/11 P, EU:C:2012:266, paragraph 30).

94 Lastly, the first subparagraph of Article 11(1) of Regulation No 885/2006 does not require that the written communication mention the expenditure to be excluded (see, to that effect and by analogy, judgment of 7 October 2004, Sweden v Commission, C‑312/02, EU:C:2004:594, paragraph 14). Nor is it required that the written communication expressly mention the period referred to in Article 31(4) of Regulation No 1290/2005 (see, to that effect and by analogy, judgment of 24 January 2002, Finland v Commission, C‑170/00, EU:C:2002:51, paragraph 32). As regards the formal requirements, Article 11(1) of Regulation No 885/2006 draws a distinction between the communication of findings, referred to in the first subparagraph of paragraph 1, which is at issue here, and the formal communication of conclusions, referred to in the third subparagraph of paragraph 2, which happens at a later stage. It follows that the first communication does not have to meet such strict formal conditions as the second (see, to that effect and by analogy, judgment of 24 January 2002, Finland v Commission, C‑170/00, EU:C:2002:51, paragraph 29).

95 As a preliminary point, it is apparent from paragraphs 68 to 76 above that aid for the restructuring of the sugar industry finances multiannual measures and, therefore, that the legal basis for calculating the period of 24 months is Article 31(4)(b) of Regulation No 1290/2005.

96 In the present case, in the letter accompanying the findings of audit EX/2010/010/IT, communicated to the Italian Republic by the first communication of 9 December 2010, it is stated that any ‘exclusion will apply only to expenditure incurred during the period of 24 months preceding the issue of th[at] communication’. The Commission therefore referred, implicitly but necessarily, to Article 31(4)(a) of Regulation No 1290/2005 as the legal basis for calculating the period of 24 months, not to Article 31(4)(b) of Regulation No 1290/2005.

97 However, it must be pointed out, as the Commission did, that despite the reference in the letter contained in the first communication of 9 December 2010, it was clear from the annex to that letter that the Commission disputed the eligibility of the Italian undertakings in question for the full amount of the restructuring aid they had received. It was stated, in particular, that ‘the services of [the Directorate-General for Agriculture and Rural Development of the Commission] consider … that none of the undertakings in question satisfies the conditions necessary in order to receive [restructuring aid for full dismantling]’ and that, ‘since most of the restructuring aid has already been paid and most of the securities have already been released to the undertakings in question, it is made clear that the authorities might ultimately bear the financial consequences of any failure to comply with the requirements laid down in the regulations’.

98 In the light of the foregoing, the first communication of 9 December 2010 endowed the Italian authorities with sufficient knowledge of the Commission’s reservations and the corrections that would in all likelihood be made in relation to the expenditure at issue, so that it fulfilled the warning function conferred on the written communication provided for in the first subparagraph of Article 11(1) of Regulation No 885/2006.

99 Even though, during the bilateral meeting of 4 May 2011, the Commission stated that audit EX/2010/010/IT covered the 24-month period preceding the issue of the communication referred to in the first subparagraph of Article 11(1) of Regulation No 885/2006 and, therefore, that only expenditure incurred between 10 December 2008 and 9 December 2010 was concerned by that audit, the fact remains that, in Annex 1 to the formal communication of 16 August 2012, the Commission confirmed the position taken in the first communication of 9 December 2010. It maintained, in essence, that the financial correction could be established on the basis of all expenditure incurred by the Italian Republic under the temporary scheme for the restructuring of the sugar industry, including before the period of 24 months preceding the issue of the first communication of 9 December 2010, and, therefore, that in the present case, the period of 24 months had to be calculated pursuant to Article 31(4)(b) of Regulation No 1290/2005.

100 In any event, it should be noted that following receipt of the formal communication of 16 August 2012, the Italian Republic referred the matter to the conciliation body under Article 16 of Regulation No 885/2006 and thus had the opportunity to challenge the applicability of Article 31(4)(b) of Regulation No 1290/2005 before that body (see, to that effect and by analogy, judgment of 26 September 2012, Italy v Commission, T‑84/09, not published, EU:T:2012:471, paragraph 35 and the case-law cited).

101 At the hearing, the Italian Republic admitted that it had not expressed any objections to the conciliation body regarding the applicability of Article 31(4)(b) of Regulation No 1290/2005 and that it had focused solely on the substantive question of whether it was possible to keep the silos at issue and qualify for restructuring aid for full dismantling.

102 Finally, it should be recalled that following the judgment of 14 November 2013, SFIR and Others (C‑187/12 to C‑189/12, EU:C:2013:737), the Commission, by letter of 28 March 2014, gave the Italian Republic the opportunity to submit additional observations (see paragraph 32 above). However, in their reply of 30 May 2014, the Italian authorities also failed to challenge the application of Article 31(4)(b) of Regulation No 1290/2005 in the present case (see paragraph 33 above).

103 Against that background, the Italian Republic cannot rely before the Court on a procedural safeguard which it itself waived during the clearance of accounts procedure (see, to that effect and by analogy, judgment of 9 September 1999, Petrides v Commission, C‑64/98 P, EU:C:1999:399, paragraph 32).

104 The second part of the first plea must therefore be rejected.

Third part of the first plea in law alleging, in essence, that the statement of reasons was inadequate

105 The Italian Republic essentially pleads that the statement of reasons for the contested decision was inadequate because the reasons for the sudden and unjustified change in the legal basis for calculating the 24-month period, which the Commission gave effect to in its formal communication of 16 August 2012, were mentioned only in passing in that communication.

106 The Commission expresses no view in that regard.

107 The Court has consistently held that, in the particular context of the preparation of decisions relating to the clearance of accounts, the statement of reasons for a decision must be regarded as sufficient if the Member State to which the decision was addressed was closely involved in the process by which the decision came about and was aware of the reasons for which the Commission took the view that it must not charge the sum in dispute to the EAGGF (judgments of 1 October 1998, Netherlands v Commission, C‑27/94, EU:C:1998:446, paragraph 36, and of 10 September 2008, Italy v Commission, T‑181/06, not published, EU:T:2008:331, paragraph 32).

108 In the present case, in Annex 1 to the formal communication of 16 August 2012, specifically point 12 of the ‘Arguments’ section, the Commission recalled that the temporary scheme for the restructuring of the sugar industry covered the period from 1 July 2006 to 31 March 2012, in other words a period of 69 months. In addition, in point 13 of the ‘Arguments’ section, the Commission explained that that scheme was a multiannual measure for the purpose of Article 3 of Regulation No 1290/2005, under which phased payments of the different instalments of restructuring aid for full dismantling had been made. Furthermore, the Commission stated that the payment of each instalment of restructuring aid for full dismantling was subject to the lodging of a security of an amount equal to 120% of the amount of the instalment concerned. The Commission also made clear that, under Article 31(4)(b) of Regulation No 1290/2005, the conformity of that expenditure with the objectives of the sugar industry restructuring fund and its related regulations could be assessed only at the date of the final obligation imposed on the recipient, namely 31 March 2012. In point 15 of the ‘Arguments’ section in Annex 1 to the formal communication of 16 August 2012, the Commission concluded, in essence, that since the silos at issue had not been dismantled as of 31 March 2012, the clearance of accounts procedure covered all expenditure relating to restructuring aid granted to the Italian undertakings.

109 It is therefore established that, in its formal communication of 16 August 2012, the Commission set out in sufficient detail the reasons why the financial correction had to include all expenditure incurred during the period calculated pursuant to Article 31(4)(b) of Regulation No 1290/2005. In addition, the reasons recalled in paragraph 108 above enabled the Italian Republic to understand the reasons why the Commission had changed its position regarding the legal basis for calculating the 24-month period referred to in Article 31(4) of Regulation No 1290/2005.

110 Accordingly, the third part of the first plea must be rejected, as must, in consequence, the first plea in its entirety.

Second plea in law: infringement of Article 11(1) of Regulation No 885/2006, breach of the rights of the defence, infringement of Regulations No 320/2006 and No 968/2006, and failure to comply with the judgment of 14 November 2013, SFIR and Others (C‑187/12 to C‑189/12)

111 This plea consists of two parts. The first part alleges, in essence, infringement of Article 11 of Regulation No 885/2006 and breach of the rights of the defence. The second part alleges infringement of Regulations No 320/2006 and No 968/2006 and failure to comply with the judgment of 14 November 2013, SFIR and Others (C‑187/12 to C‑189/12, EU:C:2013:737).

First part of the second plea in law alleging, in essence, infringement of Article 11 of Regulation No 885/2006 and breach of the rights of the defence

112 The Italian Republic essentially argues that the first communication of 9 December 2010 infringes the first subparagraph of Article 11(1) of Regulation No 885/2006 in so far as it did not inform the Italian Republic fully about the Commission’s reservations and impeded its enjoyment of the rights of the defence enshrined in that provision. It submits that in the first communication of 9 December 2010, the Commission claimed that silos were, in all circumstances, production facilities, while, in the letter of 28 March 2014, sent after the judgment of 14 November 2013, SFIR and Others (C‑187/12 to C‑189/12, EU:C:2013:737), it acknowledged that silos should not necessarily be considered to be production facilities. It also observes that the first communication of 9 December 2010 contained no reference to the fact that the use of the silos had to be assessed at the time of the application for restructuring aid for full dismantling (‘the criterion laid down by the Commission’). According to the Italian Republic, it was only by means of the Commission’s letter of 28 March 2014 that it was informed fully about the Commission’s reservations on the question of dismantling silos in the case of restructuring aid for full dismantling. However, on that date, it was no longer covered by all of the procedural safeguards enshrined in Article 11 of Regulation No 885/2006 or able to exercise its rights of the defence.

113 The Commission disputes the arguments of the Italian Republic.

114 It should be recalled that, according to settled case-law, the final and conclusive decision on the clearance of accounts must be taken at the conclusion of a specific procedure giving effect to the audi alteram partem rule, during which the Member States concerned are to be provided with all the guarantees necessary for them to present their point of view (judgments of 29 January 1998, Greece v Commission, C‑61/95, EU:C:1998:27, paragraph 39; of 14 December 2000, Germany v Commission, C‑245/97, EU:C:2000:687, paragraph 47; and of 3 July 2014, Netherlands v Commission, T‑16/11, not published, EU:T:2014:603, paragraph 69).

115 Furthermore, it is clear from the wording of the first subparagraph of Article 11(1) of Regulation No 885/2006 that the first communication must inform the Member State concerned of the outcome of the Commission’s enquiries and indicate the corrective measures to be taken to ensure future compliance with the EU rules at issue (see paragraph 91 above).

116 In the present case, as stated in paragraph 25 above, it follows from the first communication of 9 December 2010 that, from the Commission’s perspective, the conditions for granting restructuring aid for full dismantling were not met, as a number of production facilities, including the silos at issue, had been retained at the former sugar production sites visited by the Commission’s investigators. In that communication, the Commission also stated that the Italian undertakings were not eligible for restructuring aid for full dismantling if they failed to implement the restructuring plans in their entirety and if the other buildings related to the production business, including the silos at issue, were not demolished.

117 In its letter of 9 February 2011, the Italian Republic took issue with the Commission’s view that silos were, on any view, production facilities subject to the dismantling obligation, claiming, in essence, that the silos at issue were not production facilities inasmuch as they were exclusively intended to store the end product and that the Commission’s interpretation was contrary to Regulations No 320/2006 and No 968/2006. The Italian Republic restated its position at the bilateral meeting of 4 May 2011, in its observations of 2 November 2011 on the minutes of that meeting and during the conciliation procedure.

118 During the bilateral meeting of 4 May 2011, the Commission maintained its position that the silos at issue had to be regarded as forming an integral part of the production facilities and, as such, had to be dismantled.

119 By judgment of 14 November 2013, SFIR and Others (C‑187/12 to C‑189/12, EU:C:2013:737), the Court held, in essence, that the concept of ‘production facilities’ covered silos intended to store the restructuring aid beneficiary’s sugar. However, the Court held that this was not the case in two situations (‘the exceptions laid down by the Court’): first, where it was shown that the silos were used only to store sugar, produced under quota, from other producers or bought from those producers, and, secondly, where those silos were used only for packaging or packing sugar produced elsewhere for the purposes of marketing it (judgment of 14 November 2013, SFIR and Others, C‑187/12 to C‑189/12, EU:C:2013:737, paragraphs 32, 33 and 35).

120 In the light of the judgment of 14 November 2013, SFIR and Others (C‑187/12 to C‑189/12, EU:C:2013:737), the Commission shifted its position in relation to the classification of silos and, as pointed out in paragraphs 32 and 102 above, by letter of 28 March 2014, gave the Italian authorities a period of two months to put forward convincing evidence that, in the present case, the silos at issue were used, before the applications for the disputed aid were made, solely for the storage and packaging of sugar produced under quota by other producers.

121 The Italian Republic did not respond to that request. Indeed, in its letter of 30 May 2014, it simply questioned the criterion laid down by the Commission. It stated, in particular, that the Court had expressly acknowledged in its judgment of 14 November 2013, SFIR and Others (C‑187/12 to C‑189/12, EU:C:2013:737), that storage silos did not have to be dismantled if it could be shown that they were used to store sugar from other producers or bought from those producers, or that they were designed for packing sugar produced elsewhere. According to the Italian Republic, there was therefore no need to determine what the silos were used for before the application for restructuring aid. Finally, it stated that the Italian authorities had sent the Commission all the documents relating to the procedure governing eligibility for restructuring aid for full dismantling, including the approved restructuring plans and the annual reports of on-the-spot inspections identifying which facilities and equipment had been demolished and which retained, as well as the actual use made of each of them.

122 It follows from the foregoing that the Italian Republic waived the opportunity to adduce evidence proving that the silos at issue were not production facilities at the time of the aid application and thus waived its defence rights in connection with that issue.

123 In view of the above and having regard to the case-law cited in paragraph 103, the complaint alleging breach of the rights of the defence is unfounded and must be rejected.

124 The first part of the second plea must therefore be rejected.

Second part of the second plea in law alleging infringement of Regulations No 320/2006 and No 968/2006 and failure to comply with the judgment of 14 November 2013, SFIR and Others (C‑187/12 to C‑189/12)

125 The Italian Republic, supported by the French Republic and Hungary, essentially claims that by finding that the retention of the silos at issue prevented the grant of restructuring aid for full dismantling, the Commission infringed Regulations No 320/2006 and No 968/2006 and failed to comply with the judgment of 14 November 2013, SFIR and Others (C‑187/12 to C‑189/12, EU:C:2013:737).

126 The Commission disputes the arguments of the Italian Republic, the French Republic and Hungary.

127 As a preliminary point, it should be recalled that in its judgment of 14 November 2013, SFIR and Others (C‑187/12 to C‑189/12, EU:C:2013:737), after finding that the concept of ‘production facilities’ was not defined by Regulations No 320/2006 and No 968/2006, the Court, first of all, pointed out that the concept of ‘production’ could also encompass other steps in the production of a product upstream or downstream of the chemical or physical transformation process and could therefore include the storage of sugar which is not packed immediately after its extraction from the raw material. It thus concluded that storage could be ‘directly related to the production of sugar’ within the meaning of Article 4(1)(b) of Regulation No 968/2006 (judgment of 14 November 2013, SFIR and Others, C‑187/12 to C‑189/12, EU:C:2013:737, paragraph 26). Secondly, the Court found that silos were capable of having a direct impact on the quantities of sugar which may be produced and on the production process, which were dependent on the proximity of a storage facility, in so far as they enabled, in particular, the sale of what is produced in a given sugar marketing year to be partially or totally deferred and, accordingly, influenced the market situation within the meaning of recital 5 of Regulation No 320/2006 (judgment of 14 November 2013, SFIR and Others, C‑187/12 to C‑189/12,EU:C:2013:737, paragraphs 27 to 29). Thirdly, the Court took the view, in essence, that it followed from Article 3(3)(a) and (b) of Regulation No 320/2006 that, in principle, in order to be eligible for restructuring aid for full dismantling, the industrial complex concerned had to be put out of operation in its entirety and that the option to refrain from dismantling or to continue using in the future the facilities other than production facilities, while retaining the right to the full amount of aid, constituted an exception which had to be interpreted narrowly (judgment of 14 November 2013, SFIR and Others, C‑187/12 to C‑189/12, EU:C:2013:737, paragraph 30).

128 In the light of the above, in paragraph 31 of the judgment of 14 November 2013, SFIR and Others (C‑187/12 to C‑189/12, EU:C:2013:737), the Court ruled that silos intended to store the aid beneficiary’s sugar had to be classified as production facilities, irrespective of whether they were also used for other purposes. However, the Court laid down two exceptions to that principle (see paragraph 119 above).

129 In the instant case, the Italian Republic does not deny that, after completion of the restructuring process, the silos at issue were retained at several sugar production sites belonging to the Italian undertakings which had received restructuring aid for full dismantling. Nor does it deny having failed to adduce evidence showing that, when the applications for full restructuring aid were made, the silos at issue were covered by the exceptions laid down by the Court.

130 The Italian Republic, supported by the French Republic and Hungary, nonetheless argues that the circumstances mentioned in paragraph 129 above cannot justify the financial correction to which it was subject.

131 It is apparent from recitals 1 and 5 of Regulation No 320/2006 that the objective of the relevant legislation is to reduce unprofitable sugar production capacity in the European Union by encouraging undertakings with the lowest productivity to abandon sugar quota production and renounce the quotas concerned.

132 It is also apparent from recital 5 of Regulation No 320/2006 that the restructuring scheme is dependent on the voluntary participation of the sugar undertakings since it seeks to introduce an important economic incentive in the form of an adequate restructuring aid (see, to that effect, judgment of 14 November 2013, SFIR and Others, C‑187/12 to C‑189/12, EU:C:2013:737, paragraph 44).

133 In order to achieve the objective of reducing unprofitable sugar production capacity in the European Union, pursued by the relevant legislation, the EU legislature established two different restructuring schemes depending on the type of dismantling carried out, namely full dismantling or partial dismantling, giving rise to different amounts of restructuring aid, as is apparent from Article 3(5)(a) and (b) of Regulation No 320/2006, read in conjunction with recital 4 of Regulation No 968/2006.

134 First, as regards the conditions to be met for the grant of restructuring aid for full dismantling, Article 3(1)(a) and (3)(b) of Regulation No 320/2006 requires the applicant sugar undertaking to renounce the quota assigned by it to one or more of its factories, to close the factory and to dismantle in full the production facilities. However, for the grant of restructuring aid for partial dismantling, Article 3(1)(b) and (4)(b) of Regulation No 320/2006 requires the applicant sugar undertaking to renounce the quota assigned by it to one or more of its factories, to dismantle in part the production facilities of the factories concerned and to stop using the remaining production facilities for the production of products covered by the common market organisation for sugar (‘the CMO for sugar’).

135 Secondly, the scope of the obligation to dismantle production facilities was clarified by Article 4 of Regulation No 968/2006.

136 Under Article 4(1) of Regulation No 968/2006, the obligation of full dismantling, referred to in Article 3(1)(a) of Regulation No 320/2006, applies to facilities which are necessary for the production of sugar, isoglucose or inulin syrup (Article 4(1)(a) of Regulation No 968/2006), facilities which are directly related to the production of sugar, isoglucose or inulin syrup and necessary for production under the quota renounced, even if they could be used for the production of other products (Article 4(1)(b) of Regulation No 968/2006), and all other facilities, such as packaging facilities, left unused and to be dismantled and removed for environmental reasons (Article 4(1)(c) of Regulation No 968/2006).

137 In accordance with Article 4(1)(c) of Regulation No 968/2006, read in conjunction with Article 3(1)(a) of Regulation No 320/2006 and recital 4 of Regulation No 968/2006, all facilities other than those which are necessary for the production of sugar, isoglucose or inulin syrup or which are directly related to their production, such as packaging facilities, may therefore be exceptionally retained in the case of full dismantling provided that they are used and are not intended to be dismantled and removed for environmental reasons.

138 Furthermore, Article 4(2) of Regulation No 968/2006 provides that, in the case of partial dismantling, the dismantling obligation applies to the facilities referred to in paragraph 1 of that article (see paragraph 136 above) which are not intended to be used for other production or other use of the factory site in accordance with the restructuring plan. In addition, it is apparent from Article 3(1)(b) of Regulation No 320/2006 that the production facilities which may be retained must no longer be used for the production of products covered by the CMO for sugar. Accordingly, under Article 4(2) of Regulation No 968/2006, read in conjunction with Article 3(1)(b) of Regulation No 320/2006, facilities which are necessary for the production of sugar, isoglucose or inulin syrup or which are directly related to their production may be retained, provided that they are no longer used for the production of products covered by the CMO for sugar and are intended to be used for other production or other use of the factory site in accordance with the restructuring plan.

139 Thirdly, the choice between full and partial dismantling must be made by the sugar undertakings when applying for restructuring aid.

140 It follows from a combined reading of Article 4(2)(a), (c), (d) and (e) and Article 4(3)(c) and (h) of Regulation No 320/2006, and of Article 9(2)(a) and (c) of Regulation No 968/2006, that an application for restructuring aid must include, in particular, a commitment on the part of the aid applicant to renounce the relevant quota and to dismantle the production facilities in full or in part within a period to be determined by the Member State concerned, together with a restructuring plan containing, among other things, a complete technical description of the production facilities concerned, a summary of the measures and actions and their estimated cost, the financial plan, and the time schedules for carrying out the different measures planned.

141 Pursuant to the provisions mentioned in paragraph 140 above, the beneficiary of the aid must thus have identified all the production facilities that it undertakes to dismantle in accordance with the restructuring plan no later than the date of the application for restructuring aid for full or partial dismantling. As regards the silos at issue, this therefore requires a determination to be made, when the aid application is submitted, as to whether those silos constitute production facilities the dismantling of which must necessarily be prescribed by the restructuring plan where restructuring aid for full dismantling is applied for, or whether they fall within the exceptions laid down by the Court.

142 Any other interpretation would deprive the requirements laid down in Article 4 of Regulation No 320/2006 and Article 9 of Regulation No 968/2006 of their substance and, furthermore, would disregard the distinction drawn in the relevant legislation between partial and full dismantling (see paragraph 133 above).

143 In that connection, if, at the time of applying for restructuring aid, the sugar undertakings did not know whether or not the silos at their production sites constituted production facilities, those silos would not be mentioned in the restructuring plan as production facilities that required to be dismantled, in breach of Article 4(3)(c) of Regulation No 320/2006 (see paragraph 140 above).

144 In addition, the commitment to dismantle the production facilities in their entirety, which must be attached to the application for restructuring aid for full dismantling (see paragraph 140 above), would be invalidated because, by definition, it would not cover all production facilities existing on the date on which that commitment was made.

145 Moreover, if the classification of silos as production facilities was assessed at the end of the restructuring process, it would be possible, in the case of full and partial dismantling alike, to retain silos which, at the time the aid application was made, constituted production facilities because, after the restructuring, they would no longer be used as sugar production facilities. Therefore, the possibility of retaining part of the production facilities would no longer be characteristic of partial dismantling, but would also extend to full dismantling, even though, due to the high costs associated with full dismantling, operators receive 25% more restructuring aid than that granted in the case of partial dismantling, as is clear from Article 3(5)(a) and (b) of Regulation No 320/2006 and recital 4 of Regulation No 968/2006.

146 Therefore, contrary to the assertions made by the Italian Republic, the French Republic and Hungary, the Commission did not err in taking the view that the classification of the silos at issue was to be assessed at the time of the application for restructuring aid.

147 That conclusion cannot be called into question by the arguments put forward by the Italian Republic, the French Republic and Hungary.

148 In the first place, the Italian Republic claims that in the case of silos intended for packing and packaging, the criterion laid down by the Commission is not consistent with the objective pursued by the relevant legislation to preserve employment and the business of undertakings affected by the restructuring. It recalls that the relevant legislation expressly permits the continuance of packaging activities and the facilities necessary for that purpose. It is common ground, according to the Italian Republic, that silos are still necessary in order to ensure that packaging activities can continue. Therefore, the demolition of a silo used for packaging would result in the closure of the undertaking concerned and the loss of jobs, which would be at odds with the objective referred to above.

149 It should be noted that several provisions of Regulations No 320/2006 and No 968/2006 demonstrate the importance that the EU legislature has attached to the employment situation in the regions affected by the restructuring of the sugar industry. For example, it follows from Article 3(3)(c) and (4)(c) of Regulation No 320/2006 that the full and partial dismantling of production facilities requires the adoption of measures to facilitate the redeployment of the workforce. Furthermore, in cases of partial dismantling, Article 4(2) of Regulation No 968/2006, read in conjunction with Article 3(1)(b) of Regulation No 320/2006, allows production facilities to be retained for the purpose of reallocating them to the manufacture of products other than those covered by the CMO for sugar (see paragraph 138 above), thereby saving jobs at former sugar production sites. Similarly, Article 4(1)(c) of Regulation No 968/2006, read in the light of recital 4 of that regulation, permits the maintenance, in the case of full dismantling, of facilities other than those which are necessary for the production of sugar, isoglucose or inulin syrup or which are directly related to their production, such as packaging facilities, provided that they are used and are not intended to be dismantled and removed for environmental reasons (see paragraph 137 above).

150 That being so, the objective of protecting employment and the business of undertakings affected by the restructuring must be assessed alongside the main objective of the relevant legislation, namely to reduce unprofitable sugar production capacity in the European Union, in accordance with recitals 1 and 5 of Regulation No 320/2006 (see paragraph 131 above).

151 In addition, the considerations of a social nature invoked by the Italian Republic cannot justify its proposed interpretation of the relevant legislation, which undermines the fundamental distinction that the EU legislature sought to draw between full and partial dismantling (see paragraphs 133, 134 and 145 above) and, consequently, is contrary to that legislation.

152 Accordingly, the Italian Republic’s argument must be rejected.

153 In the second place, the Italian Republic, the French Republic and Hungary essentially argue that the obligation of full dismantling of the production facilities may be complied with even if silos intended for packaging or packing are not demolished, provided that there has been a renunciation of the production quota and, therefore, definitive termination of the production of sugar.

154 It is apparent from paragraphs 133, 134 and 145 above that, in order to achieve the objective of reducing unprofitable sugar production capacity in the European Union pursued by the relevant legislation, the EU legislature established two different restructuring schemes depending on the type of dismantling carried out, giving rise to different amounts of restructuring aid. Furthermore, as stated in paragraphs 139 to 141 above, the choice between partial and full dismantling requires the undertaking seeking restructuring aid to identify, when making the aid application, all of the production facilities at the site concerned which it undertakes to demolish in full or in part at the end of the restructuring process.

155 Accordingly, the logic of the system established by the EU legislature requires that the production facilities to be dismantled be identified when the application for restructuring aid is made. Therefore, contrary to Hungary’s claims, the criterion laid down by the Commission is not inconsistent with the overall structure of the scheme for the restructuring of the sugar industry.

156 In the light of the foregoing, the arguments put forward by the Italian Republic, the French Republic and Hungary must be rejected.

157 In the third place, the Italian Republic takes issue with the Commission for having required it, in the letter of 28 March 2014, to show that the packing silos at issue were used only to pack sugar produced by other producers. It claims that the retention of silos intended for packing was permitted by Article 4(1)(c) of Regulation No 968/2006 and, therefore, it made no difference whether the sugar to be packed came from other producers or the operator of the facility. Furthermore, the Italian Republic, like the French Republic, argues that it follows from paragraph 33 of the judgment of 14 November 2013, SFIR and Others (C‑187/12 to C‑189/12, EU:C:2013:737), that packing or packaging silos are not classified as production facilities if the sugar stored there is ‘produced elsewhere under quota’, whereas for storage silos, it is necessary, in accordance with paragraph 32 of the judgment of 14 November 2013, SFIR and Others (C‑187/12 to C‑189/12, EU:C:2013:737), that the sugar was bought from other producers.

158 First, as already stated in paragraphs 136 and 137 above, Article 4(1)(c) of Regulation No 968/2006 permits only the retention of facilities other than production facilities. Therefore, the Commission was fully entitled to ask the Italian Republic to demonstrate, in essence, that the packaging silos at issue, the existence of which at the dismantled production sites had been identified in audit EX/2010/010/IT, were covered by one of the exceptions laid down by the Court at the time of the application for restructuring aid and thus could not be classified as production facilities.

159 Secondly, in the judgment of 14 November 2013, SFIR and Others (C‑187/12 to C‑189/12, EU:C:2013:737, paragraphs 26 and 31), the Court held that a silo used to store the aid beneficiary’s sugar was a facility directly related to the production of sugar within the meaning of Article 4(1)(b) of Regulation No 968/2006. It thus did not come under the other facilities, such as packaging facilities, referred to in Article 4(1)(c) of Regulation No 968/2006, the retention of which may be permitted in the case of full dismantling provided that they are used and are not intended to be dismantled and removed for environmental reasons.

160 Accordingly, Article 4(1)(c) of Regulation No 968/2006 cannot permit the retention of silos that were used to store the aid beneficiary’s production, since such retention may occur only in the case of partial dismantling and provided that, after completion of the restructuring, those silos are no longer used for the production of products covered by the CMO for sugar.

161 In view of the above, it is also necessary to reject the argument invoked by Hungary in its reply to the written question put by the Court to the effect that recital 4 of Regulation No 968/2006 identifies, within production facilities as a whole, a subgroup of facilities ‘which are not part of the production line’, including sugar storage silos, the retention of which is permitted irrespective of whether full or partial dismantling takes place.

162 Thirdly, during the clearance procedure in question, the Italian Republic did not demonstrate or even claim that, at the time the application for restructuring aid was made, the silos at issue were used for packing and packaging sugar produced elsewhere by the aid beneficiary under another production quota. There is therefore no need to address the Italian Republic’s argument that, in essence, silos for the packing or packaging of sugar ‘produced elsewhere under quota’ fall under one of the exceptions laid down by the Court, since that argument does not cast doubt on the Commission’s finding that the silos at issue did not fall under one of the exceptions laid down by the Court at the time of the application for restructuring aid.

163 Accordingly, the Italian Republic’s argument must be rejected.

164 In the fourth place, the Italian Republic claims, in essence, that the consequences of the financial correction applied by the Commission and of dismantling the silos at issue are disproportionate to the aims pursued by the relevant legislation, aims which it considers to be fully achieved by renunciation of the quota and the subsequent definitive termination of sugar production.

165 First of all, it should be noted that the relevant legislation requires demolition of the production facilities, including silos used to store sugar produced by the aid beneficiary, only in the case of full dismantling. Such an obligation does not seem to be disproportionate in the light of the objective pursued by the relevant legislation to reduce unprofitable sugar production capacity in the European Union.

166 Next, the retention of silos, even if classified as production facilities at the time of the aid application, is permitted in the case of partial dismantling. In that case, the beneficiary of the aid will not have to dismantle the silos and may continue to conduct business at the partially dismantled production site. For those reasons, it will receive 25% less restructuring aid than it would have received in the case of full dismantling.

167 Moreover, it must be stated that the contested decision does not require the Italian Republic to demolish the silos at issue, but imposes a financial correction of 25% corresponding to the difference between the amount of restructuring aid for full dismantling and that for partial dismantling.

168 Finally, it should be recalled that as regards the proportionality of the relevant legislation, the Court held in its judgment of 14 November 2013, SFIR and Others (C‑187/12 to C‑189/12, EU:C:2013:737), that that legislation allowed the producer to decide freely whether it wanted to take advantage of the aid, choose the factory in relation to which it renounced the corresponding quota and, as the case may be, opt for either the full or partial dismantling of the production facilities. It also found that the advantage potentially accruing to that producer depended accordingly, for the most part, on the choices made by that producer. The Court therefore concluded that the relevant legislation was not disproportionate (judgment of 14 November 2013, SFIR and Others, C‑187/12 to C‑189/12, EU:C:2013:737, paragraphs 44 to 46).

169 The Italian Republic’s argument must therefore be rejected.

170 In the fifth place, the French Republic and Hungary contend that the criterion laid down by the Commission ignores the seasonal nature of sugar production and calls into question the practical applicability of the exceptions laid down by the Court. They recall that applications for restructuring aid had to be submitted to the Member State by 31 January preceding the marketing year during which the quota was to be renounced, in accordance with Article 4(1) of Regulation No 320/2006. Since that date fell within the seasonal cycle for the production of sugar, it was very likely that the silos were still being used to produce the sugar quota of the applicant for restructuring aid, given their operating and usage characteristics. Hungary argues that it is therefore not realistic that, at that time, the undertakings exclusively stored sugar produced by others in the silos. The French Republic adds that it is uncommon for an undertaking to have, in one place, a facility for the production of sugar under its quota and silos used to store, package or pack sugar produced under quota by other producers.

171 The fact that it may be difficult to satisfy the conditions set forth in the exceptions laid down by the Court at the time of the application for restructuring aid does not mean that those conditions cannot be satisfied. The Commission referred to judgment No 2966 of 15 June 2015 of the Consiglio di Stato (Council of State, Italy), which shows that, of the three silos in existence on the date of the application for restructuring aid for full dismantling in question, one was used to store sugar produced at the production site of the undertaking in receipt of the aid while the other two silos were used to store and pack sugar produced by other producers.

172 Furthermore, the retention of silos that do not constitute production facilities is an exception to the rule mentioned by the Court in paragraph 30 of its judgment of 14 November 2013, SFIR and Others (C‑187/12 to C‑189/12, EU:C:2013:737), under which the industrial complex concerned must be put out of service in its entirety if restructuring aid for full dismantling is to be granted. Thus, the fact that the assessment of the use of the silos when the application for restructuring aid is made rarely precludes them from being classified as production facilities is merely the consequence of the fact that the option not to dismantle or even to continue using in the future facilities other than production facilities, while retaining the right to restructuring aid for full dismantling, constitutes an exception to the rule referred to by the Court which must be interpreted narrowly (see, to that effect, judgment of 14 November 2013, SFIR and Others, C‑187/12 to C‑189/12, EU:C:2013:737, paragraph 30).

173 It is therefore necessary to reject the arguments of the French Republic and Hungary.

174 In the sixth place, the French Republic claims that the possibility of amending the restructuring plan provided for in Article 11 of Regulation No 968/2006 implies that the precise use made of the silos which are retained may change during the dismantling process. Thus, in its view, the changing nature of the dismantling process precludes an assessment of the use of the silos at the time of the aid application. Hungary claims, in essence, that the criterion laid down by the Commission is at variance with the leeway in the drawing up and implementation of restructuring plans enjoyed by sugar undertakings under the applicable legislation, in particular Article 4(1)(c) of Regulation No 968/2006.

175 First, the leeway in drawing up restructuring plans enjoyed by aid beneficiaries and the power to amend those plans in accordance with Article 11 of Regulation No 968/2006 cannot undermine the provisions of Regulations No 320/2006 and No 968/2006 and, in particular, the central obligation to dismantle production facilities laid down in Article 3(1)(a) and (b) of Regulation No 320/2006, which, in the case of full dismantling, entails the demolition of all production facilities existing on the date of the aid application.

176 Secondly, the arguments of the French Republic and Hungary do not take account of the distinction between full and partial dismantling, which is, however, an integral part of the relevant legislation (see paragraphs 133, 134 and 145 above). The possibility of retaining the production facilities, including silos, arises only in the case of partial dismantling and entails a lower amount of aid than that granted where all production facilities are dismantled.

177 The arguments of the French Republic and Hungary must therefore be rejected.

178 In the seventh and last place, the French Republic contends, in essence, that it follows from the use of the future indicative in the French version of the expression ‘production facilities that will not be used’ (‘installations de production qui ne seront pas utilisées’) in Article 3(4)(b) of Regulation No 320/2006 that the condition relating to the use of facilities retained at a production site cannot be assessed when the application for restructuring aid is made.

179 It should be recalled that, under Article 3(4)(b) of Regulation No 320/2006, in the case of partial dismantling, it is permissible to retain part of the production facilities and to dismantle those which, by definition, will no longer be used by the aid beneficiary after completion of the restructuring. In addition, Article 4(2) of Regulation No 968/2006 states that all facilities ‘that are not intended to be used for other production or other use of the factory site in accordance with the restructuring plan’ must be dismantled.

180 Thus, it follows from a combined reading of the provisions mentioned in paragraph 179 above that the beneficiary of restructuring aid for partial dismantling must know, when the application for restructuring aid is made, which production facilities it no longer intends to use after completion of the restructuring and must refer to them in the restructuring plan.

181 Against that background, the use of the future indicative in the French version of Article 3(4)(b) of Regulation No 320/2006 does not prevent the criterion laid down by the Commission from being applied.

182 Accordingly, the French Republic’s argument must be rejected.

183 Since none of the arguments put forward by the Italian Republic, the French Republic and Hungary is well founded, the second part of the second plea and, accordingly, the second plea in its entirety must be rejected.

Third plea in law: breach of the principles of the protection of legitimate expectations, of sincere cooperation, ne bis in idem and of sound administration, and breach of the duty of care

184 The third plea is essentially broken down into two parts. The first part alleges breach of the principles of the protection of legitimate expectations, of sincere cooperation and of sound administration, and breach of the duty of care. The second part alleges breach of the principle ne bis in idem.

185 The second part of the third plea should be considered first, followed by the first part.

Second part of the third plea in law alleging breach of the principle ne bis in idem

186 The Italian Republic pleads breach of the principle ne bis in idem on the ground, in essence, that the Commission’s previous audit EX/2008/008/IT dealt with issues identical to those covered by audit EX/2010/010/IT.

187 The Commission disputes the arguments of the Italian Republic.

188 Without there being any need to rule on whether the principle ne bis in idem applies in the context of the clearance of accounts procedure of the EAGGF, first, it must be pointed out, as the Commission did, that audits EX/2008/008/IT and EX/2010/10/IT served different purposes. It is apparent from the mission letter concerning audit EX/2008/008/IT, sent by the Commission to the Italian authorities by fax on 10 October 2008, that the Commission essentially wished to examine and discuss inspections relating to production and sugar movements from the marketing year 2006/2007 onwards as well as existing inspection reports. By contrast, the mission letter concerning audit EX/2010/10/IT, sent by the Commission to the Italian authorities by fax on 30 August 2010, shows that the Commission intended to visit the production sites of the Italian undertakings in receipt of restructuring aid, discuss inspections of measures relating to the restructuring of the sugar industry and examine selected payments.

189 Furthermore, as regards audit EX/2008/008/IT, it should be noted that on 8 April 2009, the Commission sent the Italian authorities a communication as provided for in the first subparagraph of Article 11(1) of Regulation No 885/2006, consisting of a letter and an annex, by which, pursuant to that provision, it informed the Italian authorities about the outcome of the audit, described in the relevant annex. The annex stated, among other things, that ‘overall, the Eridania [Sadam] production sites in question [had] already been demolished[, that] there were still some storage silos and packaging machines in operation on site’ and that ‘according to the inspectors, there had been no problems so far’. However, that extract from the communication of 8 April 2009, taken from the annex thereto, refers to the statements of the technical inspectors of the Agenzia per le Erogazioni in Agricoltura (AGEA) (Agricultural payments agency, Italy) m