Keywords

Summary



Keywords

1. Economic and social cohesion – European Regional Development Fund – Decision to reduce financial assistance

(Council Regulation No 4253/88, Arts 24 to 26)

2. Economic and social cohesion – European Regional Development Fund – Decision to reduce financial assistance

(Council Regulation No 4253/88, Arts 24 to 26)

3. Appeals – Grounds – Evidence produced for the first time in the course of the appeal – Inadmissibility

(Rules of Procedure of the Court of Justice, Arts 42(2) and 118; Rules of Procedure of the General Court, Art. 66(1), first subpara.)

4. Economic and social cohesion – European Regional Development Fund – Decision to reduce financial assistance

(Council Regulation No 4253/88, Art. 24)

Summary

1. Article 24(1) 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 provides that, where the Commission considers that a measure does not justify either part or the whole of the assistance allocated, it is to conduct a suitable examination of the case and request that the Member State or authorities designated by it to implement the operation submit their comments. Articles 25 and 26 of the regulation lay down the rules for the monitoring and assessment of implementation of the assistance, which is to be carried out within the framework of the partnership between the Member States and the Commission. Those provisions, in particular Article 24, do not provide that the undertakings receiving financial assistance or the intermediaries responsible for managing the global grant must be consulted when the Commission is examining the manner in which the assistance measure has been implemented with a view to making any change in the amount of the assistance.

Accordingly, while it is true that, in any procedure brought against a person which may lead to an act adversely affecting that person, rules of procedure must be applied, even where the legislature has made no express provision for them, when they are essential for ensuring respect for fundamental principles, such as the protection of the rights of the defence, that principle cannot be relied on by an intermediary responsible for managing a global grant in order to infer from the applicable legislation, in particular Articles 25 and 26 of Regulation No 4253/88, a right to be consulted when the Commission examines the lawfulness of the Community assistance in question.

It follows that, in a procedure that could lead to the adoption of a decision reducing the financial assistance from the European Regional Development Fund in favour of an overall allocation for the purpose of implementing measures to support small and medium-sized enterprises (SMEs) operating in certain regions of a Member State which are subject to the provisions of Regulation No 4253/88 on the monitoring and assessment of the implementation of the assistance, the general principle that the rights of the defence must be respected does not impose any obligation on the Commission to consult the SMEs concerned or, a fortiori , the intermediary body which is responsible for managing the global grant.

(see paras 85-87, 89)

2. It follows that, under the system established by 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, the Commission is not under any obligation to present objections in the course of the monitoring procedure before taking a decision to reduce, suspend or cancel assistance.

The beneficiaries of the assistance and, in the case of a global grant, the intermediaries, are alone responsible for the measure in question. Therefore, the fact that, in some cases, the Commission has failed to point out irregularities during the implementation of such an operation cannot be regarded as excluding or limiting that responsibility. In those circumstances, even though the Commission is not required to confine itself, in exercising its monitoring responsibilities, to performing solely a support function for the implementation of Community assistance, but must also, having regard to the partnership arrangement underlying the system established by Regulation No 4253/88, bring the matter to the attention of the competent authorities when it becomes aware of irregularities on the part of the undertakings concerned, the fact that it failed to do so in a particular case has no bearing on the lawfulness of the contested decision.

(see paras 101-103)

3. There is distortion of the clear sense of the evidence where, without recourse to new evidence, the assessment of the existing evidence appears to be clearly incorrect. In an appeal, the Court’s jurisdiction is confined to review of the assessment by the General Court of the pleas argued before it. To allow a party to adduce for the first time before the Court of Justice evidence which it has not produced before the General Court would in effect allow that party to bring before the Court, whose jurisdiction in appeals is limited, a case wider in ambit than that heard by the General Court.

Moreover, the first subparagraph of Article 66(1) of the Rules of Procedure of the General Court provides that that court is to prescribe the measures of inquiry that it considers appropriate. Only the court adjudicating on the substance can determine whether it is necessary to supplement the information available to it in the case before it and assess the evidence, unless that evidence has clearly been distorted. Therefore, the fact that the General Court has not asked for a document to be placed on the file does not constitute, in the absence of a request for the production of documents by the party concerned, an infringement of the Rules of Procedure.

(see paras 114, 118-119)

4. Article 24 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 gives the Commission the power to reduce financial assistance where the measure in question has been implemented in an irregular fashion and payment of the whole amount of the assistance is not justified. When adopting a decision based on Article 24 of Regulation No 4253/88, the Commission is not required to request repayment of the financial assistance in full, but may decide to set the proportion to be repaid. However, the Commission must exercise this power in a manner that is consistent with the principle of proportionality, in such a way that repayments which it orders are not disproportionate to the irregularities committed.

The fact that a measure has not been properly implemented, due to failure to comply with the closure date for Community assistance, is the result of a misinterpretation of the rules applicable, and not fraud to the detriment of the Community, cannot in itself warrant a lesser reduction in the amount of assistance than that imposed by the Commission. Whilst fraud may justify an increase in the reduction to be made from the amount of assistance originally granted, the absence of fraud is not a valid reason for maintaining grants which are not used in a manner that is consistent with the applicable rules.

(see paras 128-129, 132-134)