Report from the Commission to the Council assessing progress reported by Italy to the Commission and the Council on recovery of additional levy due by milk producers for the periods 1995/96 to 2001/02  (pursuant to Article 3 of Council Decision 2003/530/EC)
Date: 2007-01-30
Institutions: European Commission
Subjects: Italy, State aid, dairy production, production aid, redemption, report

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 30.01.2007 
COM(2007) 34 final 

REPORT FROM THE COMMISSION TO THE COUNCIL 

assessing progress reported by Italy to the Commission and the Council on recovery of 
additional levy due by milk producers for the periods 1995/96 to 2001/02 

(pursuant to Article 3 of Council Decision 2003/530/EC) 

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REPORT FROM THE COMMISSION TO THE COUNCIL 

assessing progress reported by Italy to the Commission and the Council on recovery of 
additional levy due by milk producers for the periods 1995/96 to 2001/02 

(pursuant to Article 3 of Council Decision 2003/530/EC) 

The  present  assessment  report  is  made  by  the  Commission  pursuant  to  Article  3  of  Council 
Decision 2003/530/EC of 16 July 2003 on the compatibility with the common market of an aid 
that the Italian Republic intends to grant to its milk producers1. 

Under  Article  1  of  that  Decision,  the  aid,  constituted  by  the  Italian  Republic  itself  making 
payment to the Community of the amount due by milk producers by virtue of the additional 
levy on milk for the period 1995/96 to 2001/02 and by allowing these producers to pay their 
debt  by  way  of  deferred  payment  over  a  number  of  years  without  interest,  is  exceptionally 
considered compatible with the common market on condition that: 

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repayment by producers be in full by yearly instalments of equal size, and 

the repayment period not exceed 14 years, starting from 1 January 2004. 

Under Article 2 of the Decision the grant of the aid is conditional on Italy declaring the total 
additional  levy  for  the  periods  concerned  to  the  EAGGF  and  upon  Italy  deducting  the 
outstanding debt in three yearly instalments of equal size from the expenditure financed by the 
EAGGF for November 2003, November 2004 and November 2005 respectively. 

The declaration by Italy of the total additional levy for the periods concerned was duly made 
under cover of a letter of 26 August 2003.  

Deductions of the remaining outstanding debt were duly made from expenditure financed by 
the EAGGF for November 2003, 2004 and 2005. 

Article  3  of  the  Decision  requires  the  competent  Italian  authorities  to  report  annually  to  the 
Council  and  the  Commission  on  the  progress  made  by  them  in  recovering  the  amount  due 
from producers by virtue of the additional levy for the period 1995/96 to 2001/02.  

The  Italian  authorities  presented  a  report  under  this  provision  to  the  Council  and  the 
Commission concerning the 2004 instalment payment under cover of a letter from the Minister 
for Agriculture dated 3 October 2005. That report did not contain sufficiently updated data to 
permit the Commission to come to an assessment with regard to control and in particular to the 
follow  up  given  in  cases  where  the  payment  deadline  had  not  been  met.  A  report  providing 
required  updated  data  on  the  2004  instalment  and  concerning  the  2005  instalment  was 
presented under cover of a letter from the Minister for Agriculture dated 5 October 2006. 

1 

OJ L 184, 23.7.2003, p. 15. 

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PAYMENT OF LEVY UNDER INSTALMENT FACILITY 

Of  the  25 000  producers  in  total  owing  levy  for  the  seven  periods  covered  by  the  Council 
Decision,  but  having  obtained  orders  suspending  payment  by  national  courts  pending  final 
rulings, approximately 15 200 opted to pay under the instalment scheme. Opting to pay under 
the instalment scheme implied withdrawal of all pending litigation. Furthermore the failure to 
make  any  one  annual  instalment  payment  results  in  exclusion  from  the  scheme  and 
consequently exposes producers to seizure of the entire amount due with accrued interest. 

The 15 200 participating producers owed some €345 million, representing about one third of 
the total outstanding amount of levy at producer level. It thus appears that the greater number 
of  producers  responsible  for  the  smaller  levels  of  individual  excess  deliveries  opted  to  enter 
the  scheme.  On  the  other  hand,  the  producers  with  more  significant  individual  excess 
deliveries (10 000 producers to whom some €695 million in levy due over the seven periods is 
billed) have instead preferred to pursue their litigation before the Italian courts.  

It emerges from the breakdown of payments due under the 14 annual instalments provided in 
Annex 3 to the report of the Italian authorities that of the producers participating, some 2 280 
opted to pay all of their outstanding levy debt in a single instalment, which accounts for the 
total due of the first instalment exceeding that of the second by some € 3 million. 

Timely payment of the first and second instalments was recorded to the extent of 99,6% and 
97,9%  of  the  due  amounts  respectively,  amounting  to  actual  collection  of  approximately 
€53,5 million. It may be expected, on the basis of experience with the first instalment, that the 
definitive payment percentage for the second instalment will be higher than currently indicated 
after verification controls have taken place.  

Whilst  these  levels  are  certainly  indicative  of  a  general  engagement  on  the  part  of  the 
participating producers to meet their obligations, the Commission considers that the follow-up 
given  to  cases  where  the  payment  has  not  been  recorded  within  the  time-limit  is  a  prime 
indicator of the level of commitment on the part of the authorities to ensure correct observance 
of the conditions of the regime and ultimately collection in full of the levy due. The relatively 
low  number  of  unrecorded  payments  should  moreover  contribute  to  a  rapid  conclusion  of 
controls and instigation where appropriate of seizure procedures.  

The Commission is not entirely satisfied in this regard with the indication that the results of 
inquiries pursued by the competent regional authorities with a view to verifying the payment 
status of the first instalment which was due by 31 December 2004, were not yet reported in 32 
of a total of 269 instances. Information does not appear to be available as to the precise stage 
of  completion  of  the  inquiries  to  verify  the  payment  status  in  the  outstanding  cases  of  the 
second instalment.  

LEVY DUE FOR PERIODS 1995/96 TO 2001/02 NOT ENTERED INTO THE INSTALMENT PAYMENT 
SCHEME AND STILL CONTESTED BEFORE THE ITALIAN COURTS  

Reference  has  been  made  to  the  relatively  low  uptake  of  the  instalment  payment  facility  in 
terms of the amount of levy entered. This implies that the impediment to immediate collection 
constituted  by  the  suspension  of  payment  orders  granted  by  Italian  courts  pending  final 
judgement persisted for some 10 000 producers to whom levy of the order of €695 million is 
billed and who chose to pursue their litigation. 

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As the producers who did opt for the instalment facility represented in excess of 37 000 levy 
bills2  litigated  over  the  different  periods,  the  volume  of  litigation  which  has  thus  been 
abandoned is however significant. This should be expected to contribute to a speedier passage 
of the remaining litigation through the courts. 

The abandonment of litigation as a precondition to enter the instalment scheme took place in 
2004.  Annex  18  to  the  second  report  indicates  that  in  the  course  of  2005,  judgements  were 
made  in  favour  of  the  administration  regarding  contested  levy  of  the  order  of  €191  million. 
This contrasts with judgements or provisional suspensions in favour of producers of the order 
of €37 million. These judgements largely concern levy periods later than the seven concerned 
by the Council Decision.  

The Commission would expect future reports to specifically address litigation pertaining to the 
seven  periods  concerned  and  to  provide  details  confirming  payment  by  producers  whose 
litigation  has  failed.  Without  such  indications  it  is  not  in  a  position  to  correctly  monitor 
progress  in  collection  of  that  part  of  the  levy  which  was  not  entered  into  the  instalment 
payment facility. 

MISCELLANEOUS 

Further  elements  are  raised  by  the  reports  which  do  not  as  such  concern  progress  in  the 
collection  of  the  levy  for  the  periods  covered  by  the  Council  Decision  but  are  advanced  as 
indications of a generally improved system. Reference is made notably to a drastic reduction 
in the number of producers registering excess production, falling from some 12 000 in 2002/03 
to 920 (of a total of some 48 000 producers) in 2005/06. This positive development is offset by 
the lack of any sustained decrease in production, which after a period of some decline is up by 
230 000 tonnes in 2005/06 compared with 2004/05. 

The  Commission  notes  the  importance  of  the  legislation  introduced  on  25  June  2005 
restricting from that date litigation concerning the additional levy to the sphere of competence 
of  the  administrative  courts.  According  to  information  provided  to  the  Commission  by  the 
Italian authorities, the bulk of the interim suspension orders granted in the past emanated from 
civil courts or Justices of the peace. Henceforth, a significantly reduced amount of litigation  
–  notably  a  consequence  of  the  drop  in  numbers  of  producers  owing  levy –  is  exclusively 
channelled through the administrative courts, thus ensuring that the administration is party to 
every case. 

CONCLUSION 

The Commission considers that the progress made by the Italian authorities in recovering the 
amount due from producers by virtue of the additional levy for the period 1995/96 to 2001/02 
demonstrates adequate management of the instalment payment scheme subject to ensuring that 
all verification controls of cases of non payment are completed by the regional authorities with 
the required diligence. The Commission recalls that the evolution of the litigation pursued for 
the periods 1995/96 to 2001/02 and execution of final judgements confirming levy due should 
be documented in future annual reports. 

2 

Information obtained independently from Italian authorities. 

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