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: 2010-03-26
Institutions: European Commission
Subjects: Italy, State aid, agricultural levy, dairy production, payment, production aid, redemption, report

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EUROPEAN COMMISSION 

Brussels, 26.3.2010 
COM(2010)114 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 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  fifth  report  under  this  provision  to  the  Commission 
under cover of a letter from AGEA dated 23 November 2009 concerning the 2008 instalment 
payment. 

Payment of levy under instalment facility 

Of the approximately 23 300 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, 15 403 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. 

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The 15 403 participating producers owed in total some € 345 million in 2004 before the first 
instalment was paid, representing about one fourth 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. On the other hand, the 
producers with more significant individual excess deliveries (some 8 000 producers to whom 
some  €  1  billion  in  levy  due  ove r  the  seven  periods  is  billed)  have  instead  preferred  not  to 
enter  the  instalment  scheme.  Please  note  however  that  around  95  new  applications  for 
payment  by  instalments,  corresponding  to  roughly  €  3  million,  have  been  received  by  the 
Italian authorities during 2008. 

The fifth instalment was to be paid by 12 038 producers for a total amount of € 25 125 386,94 
before  31  December  2008.  The  verifications  carried  out  by  the  Italian  authorities  show  that 
11 872 producers have duly paid amounts totalling € 24 217 314,32 during 2008. This means 
that 98,5 % of the producers have paid 96,4 % of the levies in time under the fifth instalment. 
Timely  payment  of  the  first,  second,  third  and  fourth  instalments  had  previously  been 
recorded to the extent of 99,6%, 97,9%, 99,5% and 99,7 % of the due amounts respectively. 
The  total  levy  collected  under  the  first  four  instalments  therefore  amounts  to  some  €  127 
million (98.6 % 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 fifth instalment period 166 producers still had not paid instalments corresponding to 
information  received  from  the  Italian 
€ 908 072,62  at  the  end  of  2008.  According  to  the 
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 fifth Italian report fails to provide any 
indication  of  the  amounts  of  levy  actually  collected  further  to  the  controls  and  enforcement 
efforts made by the Italian authorities 

Levy due for periods 1995-96 to 2001-02 not entered into the instalment payment scheme 

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 8 000 producers to whom levy of the order of around € 1 billion 
is billed and who chose not to enter the instalment scheme. 

In its previous assessment reports presented to the Council, the Commission has expressed the 
view that 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 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. 

However,  unlike  the  previous  report  from  Italy,  the  report  on  the  fifth  instalment  does  not 
contain any information on these court proceedings. 

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Nevertheless, some additional information received by the Italian authorities in August 2009 
shows  that  the  Italian  administration  has  been  successful  in  cases  corresponding  to  roughly 
€ 11  million.  The  Commission  has,  however,  not  received  information  about  the  actual 
collection of these amounts. The information received in August 2009 also reveals that around 
€ 529 million is still being contested  in front of the Italian courts. 

The Commission regrets the slow progress in collection of the part of the levy which was not 
entered  into  the  instalment  payment  facility  and  the  level  of  information  provided  by  the 
Italian authorities, which is not sufficient. The slow progress relates both to the length of court 
proceedings  (of  the  roughly  € 529  million  sti ll  pending,  some  € 527  million  relates  to  court 
cases  that  are  5  -  10  years  old)  and,  in  turn,  the  length  of  the  recovery  of  the  sums  where 
litigation has terminated (the Italian report on the fifth instalment contains no information on 
recovery, but previous information demonstrates that only some € 300 000 had been collected 
up till 2008 after successful court proceedings). 

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 deplores however that in the absence of any indication of amounts 
actually collected from 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.  The 
Commission considers it indispensible that future reports from the Italian authorities contain 
sufficiently detailed information on such collection. 

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 deplores the 
extremely  slow  progress  and  considers  that  the  recovery  of  levies  in  this  way  needs  to  be 
improved  significantly.  As  mentioned  above,  the  Commission  considers  that  it  is  necessary 
that future Italian reports contain sufficiently detailed information on the collection of the part 
of the outstanding levies not entered into the instalment scheme. 

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