Judgment of the General Court (Ninth Chamber) of 6 July 2015 — Italy v Commission

(Case T‑44/11)

‛EAGGF — Guarantee Section — EAGF and EAFRD — Expenditure excluded from financing — Aid for the production of skimmed-milk powder — Irregularities or negligence attributable to administrative authorities or bodies of the Member States — Proportionality — Obligation to state reasons — Principle of ne bis in idem — Reasonable period’

1. Agriculture — Common agricultural policy — EAGGF financing — Clearance of accounts — Disallowance of expenses arising from irregularities in applying EU rules — Challenge by the Member State concerned — Burden of proof — Shared by the Commission and the Member State (Council Regulation No 1258/1999, Arts 7(4), and 8(1); Commission Regulation No 1663/95, as amended by Regulation No 2245/1999, Art. 8) (see paras 25-29, 158)

2. Acts of the institutions — Statement of reasons — Obligation — Scope — Decision relating to the clearance of accounts in respect of expenditure financed by the EAGGF (Art. 296 TFEU) (see paras 78-80)

3. Agriculture — Common agricultural policy — EAGGF, EAGF and EAFRD financing — Clearance of accounts — Disallowance of expenses arising from irregularities in applying EU rules — Assessment of the losses incurred by the EAGGF — Irregular expenses not capable of being determined with sufficient precision — Assessment based on flat-rate corrections — Lawfulness — No breach of principle of proportionality (Art. 5(4) TEU; Council Regulation No 1258/1999; Commission Regulation No 1663/1995) (see paras 85-89, 94)

4. Agriculture — Common agricultural policy — EAGGF financing — Principles — Member States’ duty of diligence in recovering amounts irregularly paid — Failure to fulfil obligations — Justification based on the length of procedures brought before national courts by economic operators — Not permissible — Effective application by the Member State of national law on the matter of recovery — Fact not establishing diligence (Art. 4(3) TEU; Council Regulations No 729/70, Art. 8, No 1258/1999, Art. 8, and No 1290/2005, Arts 9(1), and 32(8)) (see paras 130-132, 142-145)

5. Agriculture — Common agricultural policy — EAGGF financing — Obligations of the Member States — Adoption of measures for ensuring the regularity of expenses — Scope (Council Regulations No 729/70, Arts 2, 3 and 8(1), No 1258/1999, Arts 2, 3 and 8(1), and No 1290/2005, Arts 3 and 9(1)) (see paras 139-141)

6. Agriculture — Common agricultural policy — EAGGF financing — Clearance of accounts — Disallowance of expenses arising from irregularities in applying EU rules — Finding of defects in the control system established by a Member State — Possibility of Commission disallowing all the expenses — Application of flat-rate correction — Lawfulness — Condition — Observance of the principle of proportionality (Council Regulations No 1258/1999, Art. 7(4), and No 1290/2005, Arts 31 and 32(8)) (see paras 162, 163)

7. Agriculture — Common agricultural policy — EAGGF financing — Clearance of accounts — Disallowance of expenses arising from irregularities in applying EU rules — Finding of defects in the control system established by a Member State — Flat-rate correction of 50% of expenses — Amount including sums relating to irregularities already subject to a financial correction but not yet entirely recovered — No breach of the principle of no double jeopardy (Council Regulations No 595/91, Art. 3, No 1258/1999, Art. 8(2), and No 1290/2005, Art. 32(5); Commission Decision 2007/327) (see paras 169, 171, 172)

8. Agriculture — Common agricultural policy — EAGGF financing — Clearance of accounts — Procedure — Obligations of the Commission — Duty to act within a reasonable time — Criteria for assessment — Infringement — Consequences — Infringement of the right to be heard not demonstrated — Irrelevant that reasonable period not complied with (Charter of Fundamental Rights of the European Union, Art. 41(1); Council Regulations No 1258/1999, fifth recital and Art. 7(4), and No 1290/2005, sixth recital and Art. 31(3)) (see paras 182-184, 188, 189, 191)

9. EU law — Principles — Protection of legitimate expectations — Conditions — Specific assurances given by the authorities (see para. 193)

Re:

APPLICATION for partial annulment of Commission Decision 2010/668/EU of 4 November 2010 on excluding from European Union financing certain expenditure incurred by the Member States under the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF), under the European Agricultural Guarantee Fund (EAGF) and under the European Agricultural Fund for Rural Development (EAFRD) (OJ L 288, p. 24), to the extent that it excludes certain expenditure incurred by the Italian Republic.

Operative part

The Court:

1. Dismisses the action;

2. Orders the Italian Republic to bear its own costs and to pay those incurred by the European Commission.

Judgment of the General Court (Ninth Chamber) of 6 July 2015 — Italy v Commission

(Case T‑44/11)

‛EAGGF — Guarantee Section — EAGF and EAFRD — Expenditure excluded from financing — Aid for the production of skimmed-milk powder — Irregularities or negligence attributable to administrative authorities or bodies of the Member States — Proportionality — Obligation to state reasons — Principle of ne bis in idem — Reasonable period’

1. Agriculture — Common agricultural policy — EAGGF financing — Clearance of accounts — Disallowance of expenses arising from irregularities in applying EU rules — Challenge by the Member State concerned — Burden of proof — Shared by the Commission and the Member State (Council Regulation No 1258/1999, Arts 7(4), and 8(1); Commission Regulation No 1663/95, as amended by Regulation No 2245/1999, Art. 8) (see paras 25-29, 158)

2. Acts of the institutions — Statement of reasons — Obligation — Scope — Decision relating to the clearance of accounts in respect of expenditure financed by the EAGGF (Art. 296 TFEU) (see paras 78-80)

3. Agriculture — Common agricultural policy — EAGGF, EAGF and EAFRD financing — Clearance of accounts — Disallowance of expenses arising from irregularities in applying EU rules — Assessment of the losses incurred by the EAGGF — Irregular expenses not capable of being determined with sufficient precision — Assessment based on flat-rate corrections — Lawfulness — No breach of principle of proportionality (Art. 5(4) TEU; Council Regulation No 1258/1999; Commission Regulation No 1663/1995) (see paras 85-89, 94)

4. Agriculture — Common agricultural policy — EAGGF financing — Principles — Member States’ duty of diligence in recovering amounts irregularly paid — Failure to fulfil obligations — Justification based on the length of procedures brought before national courts by economic operators — Not permissible — Effective application by the Member State of national law on the matter of recovery — Fact not establishing diligence (Art. 4(3) TEU; Council Regulations No 729/70, Art. 8, No 1258/1999, Art. 8, and No 1290/2005, Arts 9(1), and 32(8)) (see paras 130-132, 142-145)

5. Agriculture — Common agricultural policy — EAGGF financing — Obligations of the Member States — Adoption of measures for ensuring the regularity of expenses — Scope (Council Regulations No 729/70, Arts 2, 3 and 8(1), No 1258/1999, Arts 2, 3 and 8(1), and No 1290/2005, Arts 3 and 9(1)) (see paras 139-141)

6. Agriculture — Common agricultural policy — EAGGF financing — Clearance of accounts — Disallowance of expenses arising from irregularities in applying EU rules — Finding of defects in the control system established by a Member State — Possibility of Commission disallowing all the expenses — Application of flat-rate correction — Lawfulness — Condition — Observance of the principle of proportionality (Council Regulations No 1258/1999, Art. 7(4), and No 1290/2005, Arts 31 and 32(8)) (see paras 162, 163)

7. Agriculture — Common agricultural policy — EAGGF financing — Clearance of accounts — Disallowance of expenses arising from irregularities in applying EU rules — Finding of defects in the control system established by a Member State — Flat-rate correction of 50% of expenses — Amount including sums relating to irregularities already subject to a financial correction but not yet entirely recovered — No breach of the principle of no double jeopardy (Council Regulations No 595/91, Art. 3, No 1258/1999, Art. 8(2), and No 1290/2005, Art. 32(5); Commission Decision 2007/327) (see paras 169, 171, 172)

8. Agriculture — Common agricultural policy — EAGGF financing — Clearance of accounts — Procedure — Obligations of the Commission — Duty to act within a reasonable time — Criteria for assessment — Infringement — Consequences — Infringement of the right to be heard not demonstrated — Irrelevant that reasonable period not complied with (Charter of Fundamental Rights of the European Union, Art. 41(1); Council Regulations No 1258/1999, fifth recital and Art. 7(4), and No 1290/2005, sixth recital and Art. 31(3)) (see paras 182-184, 188, 189, 191)

9. EU law — Principles — Protection of legitimate expectations — Conditions — Specific assurances given by the authorities (see para. 193)

Re:

APPLICATION for partial annulment of Commission Decision 2010/668/EU of 4 November 2010 on excluding from European Union financing certain expenditure incurred by the Member States under the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF), under the European Agricultural Guarantee Fund (EAGF) and under the European Agricultural Fund for Rural Development (EAFRD) (OJ L 288, p. 24), to the extent that it excludes certain expenditure incurred by the Italian Republic.

Operative part

The Court:

1. Dismisses the action;