Keywords

Summary



Keywords

1. Agriculture — Common agricultural policy — Structural reform — Common measures — Improvement of the conditions under which agricultural products are processed and marketed — Obligation on the beneficiary to carry out an EAGGF-financed operation correctly — Main line financed idle for over two years — Breach — Temporary constraints not relevant — (Council Regulation No 355/77, Arts 9(1) and 10(c))

2. Agriculture — Common agricultural policy — Structural reform — Common measures — Improvement of the conditions under which agricultural products are processed and marketed — Examination of projects for the improvement or rationalisation of the processing and marketing of those products — Exclusive competence of the Commission — (Council Regulations Nos 355/77, Arts 1(3), 3 and 9, and 4253/88, Art. 14(3))

3. Economic and social cohesion — Structural assistance — Community financing — Withdrawal of financial assistance from the EAGGF on account of irregularities — Whether permissible — (Council Regulation No 4253/88, Art. 24(2))

4. Agriculture — Common agricultural policy — Structural reform — Common measures — Improvement of the conditions under which agricultural products are processed and marketed — EAGGF financial assistance discontinued for breach of fundamental obligations — Proportionality — (Art. 5, third para., EC; Council Regulation No 355/77, Art. 10(c))

Summary

1. It follows from Article 10(c), Article 9(1) and the fourth recital in Regulation No 355/77 on common measures to improve the conditions under which agricultural products are processed and marketed that the implementation of a project for modernising an establishment processing products in the fruit and vegetable sector and its contribution to a lasting beneficial effect on the processing and marketing of juices and nectars from fruits constitute a fundamental obligation which is incumbent upon the beneficiary of EAGGF assistance as a result of its award.

When a trader applies for Community aid for a specific operation he assumes, under those provisions of Regulation No 355/77, and in particular under Article 10(c), the obligation to carry out correctly the operation being financed and to obtain the planned results. If the main line being financed under that project is idle for over two years this means in principle that the project will not have the lasting economic effect sought or obtain the anticipated results as provided for in that regulation. Such a suspension therefore constitutes a breach of Article 10(c).

Moreover, temporary constraints due to market trends and rationalisation of the undertaking which a beneficiary of EAGGF aid has to face are inherent in the normal commercial risks which any reasonably well-informed trader should be able to foresee. Hence, those factors cannot be relied upon in order to avoid the application of Regulation No 355/77.

see paras 77, 80-81

2. The Commission alone has the power to examine whether projects for the improvement or rationalisation of processing and marketing structures in respect of agricultural products meet the conditions of the operation and the Community regulations, under Article 1(3) of Regulation No 355/77 on common measures to improve the conditions under which agricultural products are processed and marketed and Article 14(3) of Regulation No 4253/88 laying down provisions for implementing Regulation No 2052/88 as regards coordination of the activities of the different Structural Funds between themselves and with the operations of the European Investment Bank and the other existing financial instruments. Therefore, a beneficiary of EAGGF aid cannot legitimately claim that suspension of a production line of agricultural products financed under such projects is in accordance with the criterion of the proper functioning of the market, referred to in Article 3 of Regulation No 355/77, and that to continue its activities would have been in breach of Article 9 of Regulation No 355/77, in the absence of any communication or confirmation on the part of the Commission.

see para. 83

3. The system of subsidies introduced under the Community rules relies on the performance by the beneficiary of a number of obligations which entitles him to receive the financial aid envisaged. If the beneficiary does not comply with all those obligations, Article 24(2) of Regulation No 4253/88 laying down provisions for implementing Regulation No 2052/88 as regards coordination of the activities of the different Structural Funds between themselves and with the operations of the European Investment Bank and the other existing financial instruments authorises the Commission to reconsider the extent of the obligations it assumes under the decision to grant that aid.

see para. 110

4. Discontinuance of EAGGF aid is not, in principle, disproportionate where it is established that the beneficiary of that aid has infringed an obligation that is fundamental for the proper operation of the EAGGF. On the one hand, the proportionality principle, as laid down in the third paragraph of Article 5 EC, requires that measures adopted by Community institutions must not exceed what is appropriate and necessary for attaining the objective pursued. On the other hand, infringement of obligations whose observance is of fundamental importance to the proper functioning of a Community system may be penalised by forfeiture of a right conferred by Community legislation, such as entitlement to aid.

The objective of contributing to the lasting economic effect of the structural improvement of processing of juices and nectars from fruits, as provided for in Article 10 of Regulation No 355/77 on common measures to improve the conditions under which agricultural products are processed and marketed, constitutes a fundamental obligation under the EAGGF rules. Likewise, use of another line forming part of a financed project for the only product in the fruit and vegetable sector whose processing is totally excluded from Community financing, an exclusion which applies to the beneficiary, also constitutes an infringement of the essential conditions for the aid granted.

Therefore, actions such as suspending for more than two years the activity of the line principally financed by Community aid, in breach of Article 10(c) of Regulation No 355/77, or the use of another line forming part of a financed project for processing the only product excluded from the aid infringe obligations compliance with which is of fundamental importance for the proper operation of the EAGGF system, and the Commission does not exceed the limits of what is appropriate and necessary in order to ensure the proper operation of the system in considering that such infringements justify discontinuance of the aid.

see paras 111-118