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: 2008-02-22
Institutions: European Commission
Subjects: Italy, State aid, dairy production, production aid, redemption, report

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 22.2.2008 
COM(2008) 95 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 their third report under this provision to the Council and the 
Commission under cover of a letter from AGEA dated 31 October 2007; it concerns the 2006 
instalment payment. 

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 

1 

OJ L 184, 23.7.2003, p. 15. 

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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. 

The third instalment  was to  be paid by 12 426  producers  for  a  total  amount  of  €25 110 128 
before 31 December 2006. A slight increase in the figures for the third instalment compared 
to  those  forecast  in  previous  reports  is  due  to  some  increased  participation  in  the  regime  in 
2006 further to the reopening of time limits to apply on condition of immediate payment of 
the first three instalments and withdrawal of all litigation. 0n the other hand the reduction in 
the number of producers paying the third instalment compared to the 15 200 producers who 
originally participated in the regime is due to the decision of some 2 500 producers to pay all 
of their outstanding levy in the first and second instalment years. 

Timely payment was recorded for 99,5% of the amount due under the third instalment, on the 
part of 99,4% of the producers concerned. 

Timely payment of the first and second instalments had previously been recorded to the extent 
of 99,6% and 97,9% of the due amounts respectively. The total levy collected under the first 
three instalments amounts to some €78,6 million. 

Whilst these levels are certainly indicative of an 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. 

In this regard the Commission notes that the third report fails to provide any indication of the 
amounts of levy actually collected further to controls and enforcement procedures for the first 
two  instalment  years  in  respect  of  the  relatively  few  producers  who  had  failed  to  make 
payments.  Given  that  such  producers  are  thereby  excluded  from  further  participation  in  the 
14-year  scheme  and  that  all  of  their  outstanding  levy  for  the  seven  periods  covered  by  the 
Council  Decision  therefore  falls  due  for  immediate  collection  with  accrued  interest,  such 
information is to be considered necessary for the purposes of the annual reports. 

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. The relatively low uptake of the option to join 
the regime in 2006 did not significantly mitigate this situation. 

In its assessment report presented to Council in February 2006, the Commission expressed the 
view  that  future  annual  reports  presented  by  Italy  should  specifically  address  litigation 
pertaining  to  the  seven  periods  concerned  and  provide  details  confirming  payment  by 
producers  whose  litigation  had  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. 

In  response  to  this  request  the  Italian  report  provides  a  listing  of  litigated  amounts  of  levy 
pertaining to the seven periods concerned in respect of which Italian courts found in favour of 
the  administration  in  the  course  of  2005  and  2006,  for  a  total  of  €1 681 000,  of  which 
payment of just €231 700 would appear to have been recorded at the date of the report. It is 

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indicated that procedures for enforced recovery have been instigated for the greater part of the 
amounts pertaining to 2005 judgements. 

The  Commission  considers  the  information  thus  provided  to  be  too  limited  to  put  it  in  a 
position to assess whether progress in collection of that part of the levy which was not entered 
into the instalment payment facility and for which litigation has terminated is optimal. With 
regard to judgements handed down in the course of 2005, it would appear anomalous that the 
greater part of the confirmed debt had not been recovered in October 2007. In the light of this, 
the general reference to the instigation of enforced recovery proceedings should be expanded 
upon with details pertaining to the current status of the cases involved. 

CONCLUSION 

The Commission considers that the progress made by the Italian authorities in recovering the 
amount  due  from  producers  who  opted  to  enter  the  instalment  regime  for  payment  of  the 
additional  levy  for  the  periods  1995/96  to  2001/02  demonstrates  adequate  management 
thereof.  The  Commission  would  however  point  out  that  in  the  absence  of  any  indication  of 
amounts  actually  collected  from  the  few  participating  producers  who  failed  to  make 
instalment payments and who were thereby excluded from further participation, it is not in a 
position  to  assess  the  diligence  employed  or  the  progress  made  in  the  collection  of  the 
corresponding levy. 

As to the amounts of levy which were not entered into the instalment regime, and regarding 
which  litigation  has  culminated  in  final  judgements  favourable  to  the  administration,  the 
Commission  considers  the  information  provided  to  be  too  limited  to  put  it  in  a  position  to 
assess  whether  progress  with  recovery  is  optimal.  It  therefore  requests  that  future  annual 
reports provide the necessary detail on such cases. 

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