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: 2009-03-26
Institutions: European Commission
Subjects: Italy, State aid, dairy production, production aid, redemption, report

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 26.3.2009 
COM(2009) 137 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 N° 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 producers. 

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  fourth  report  under  this  provision  to  the  Commission 
under  cover  of  a  letter  from  AGEA  dated  3  October  2008  concerning  the  2007  instalment 
payment.  This  report  was  subsequently  updated  by  the  Italian  authorities,  which  led  to 
changes in a number of elements relevant to this report.  

Payment of levy under instalment facility. 

Of  the  23  460  producers  in  total  now  owing  levy  for  the  7  periods  covered  by  the  Council 
Decision,  but  having  obtained  orders  suspending  payment  by  national  courts  pending  final 
rulings, 15 355 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 

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producers to seizure of the entire amount due with accrued interest and consequently exposes 
producers to seizure of the entire amount due with accrued interest. 

The 15 355 participating producers owed in total some € 345 million in 2004 before the first 
instalment was paid, representing about one third of the total outstanding amount of levy at 
producer  level.It  therefore  appears  that  the  greater  number  of  producers  responsible  for  the 
smaller levels of individual excess deliveries opted to enter the scheme n the other hand, the 
producers with more significant individual excess deliveries (some 8000 producers to whom 
some  €  680  million  in  levy  due  over  the  seven  pe riods  is  billed)  have  instead  preferred  to 
pursue their litigation before the Italian courts. Please note however that 150 new applications 
for payment by instalments, corresponding to roughly € 3 million, have  been received by the 
Italian authorities during 2007. 

The  fourth  instalment  was  to  be  paid  by  12  426  producers  for  a  total  amount  of  €  25  074 
413,99 before 31 December 2007. The verifications carried out by the Italian authorities show 
that  12  183  producers  have  duly  paid  amounts  totalling  €  25  006  160,19  during  2007.  This 
means  that  98  %  of  the  producers  have  paid  99.7  %  of  the  levies  in  time  under  the  fourth 
instalment.  Timely  payment  of  the  first,  second  and  third  instalments  had  previously  been 
recorded to the extent of 99,6%, 97,9% and 99,5% of the due amounts respectively. The total 
levy collected under the first four instalments therefore amounts to some € 103 million (99.2 
% of total amount due). 

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. 

For the fourth instalment period 63 producers still had not paid instalments corresponding to € 
68  253.80  at  the  end  of  2007.  According  to  the  information  received  from  the  Italian 
authorities  all  these  cases  were  notified  by  the  central  authorities  to  the  relevant  regional 
authorities in order to enforce the payment of the entire amount due (including interest). 

However, in this regard the Commission notes that the fourth Italian report fails as last year to 
provide  any  indication  of  the  amounts  of  levy  actually  collected  further  to  the  controls  and 
enforcement efforts made by the Italian authorities. Nevertheless, some additional information 
received by the Italian authorities in December 2008 shows that € 1 204 511,18 (i.e. 15 % of 
the total outstanding  amount)  has  been collected so far in  regard to levies  of producers  that 
did not pay their instalments on time during one of the four first instalments. These producers 
therefore  had  to  pay  their  entire  outstanding  debt  with  accrued  interest  and  were  excluded 
from further participation in the 14-year scheme. This means that € 6 878 274,31 (i.e. 85 % of 
the total outstanding amount) still has to be collected in relation to producers that have been 
excluded from the instalment-scheme due to late payment. 

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 

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judgement persisted for some 8 000 producers to whom levy of the order of € 680 million is 
billed and who chose to pursue their litigation.  

In  its  assessment  reports  presented  to  the  Council  in  2006  and  2007,  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 the Commission was not 
previously  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  provided  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  533  584,36,  of  which 
payment of just € 346 833,70 would appear to have  been recorded at the date of the report. 
After  requesting  some  more 
the  Commission  received 
complementary  information  in  December  2008  corresponding  also  to  court  judgments 
delivered in 2007 and 2008. This later information shows that in total levies amounting to € 4 
108 523,39 (including the € 1 533 584,36 mentioned a bove) had been decided in favour of the 
administration during 2005-2008 (i.e 0,6 % of the total outstanding amount). However, only € 
314 960,15 seem to have been collected by the Italian authorities in December 2008 (i.e. 7,7 
% of the amount decided in favour of the administration). 

information  on 

topic 

this 

After  additional  explanations  from  the  Italian  authorities  it  has  also  been  clarified  that  the 
amount  of  levies  decided  in  favour  of  the  administration  mentioned  above  includes  cases 
where an appeal is possible. This can partly explain why the collected amounts are fairly low. 
The  Commission  expresses  the  view  that  future  annual  reports  presented  by  Italy  should 
specify the amount of levies that has ultimately been decided in favour of the administration 
in  order  to  give  a  clearer  picture  of  the  progress  made  in  this  regard.  In  the  view  of  the 
Commission it would also be welcomed to receive figures of the cases, if any, where the milk 
producers contesting the levies have been successful in front of the Italian courts. 

The Commission takes note of the slow progress in collection of the part of the levy which 
was not entered into the instalment payment facility. This relates both to the length of court 
proceedings  (only  some  €  4  million  out  of  €  680  million  have  been  decided  so  far)  and,  in 
turn, the length of the recovery of the sums where litigation has terminated (only some € 300 
000 of € 4 million). With regard to, above all,  judgements handed down in the course of 2005 
and 2006, it would appear anomalous that the greater part of the confirmed debt had not been 
recovered in December 2008.  

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  approved  by  the 
Council  in  2003  for  the  periods  1995-96  to  2001-02  demonstrates  adequate  management 
thereof.  The  Commission  would  however  point  out  that  the  indication  of  amounts  actually 
collected from the few participating producers who failed to make instalment payments and 
who  were  thereby  excluded  from  further  participation,  show  that  the  diligence  employed  or 
the progress made in the collection of the corresponding levy needs to be improved.  

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As to the amounts of levy which were not entered into the instalment regime, and regarding 
which litigation is being carried out in front of the Italian courts, the Commission regrets the 
slow progress and considers that the recovery of levies in this way is not satisfactory.  

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