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: 2011-06-10
Institutions: European Commission
Subjects: Italy, State aid, dairy production, production aid, redemption

EUROPEAN COMMISSION 

Brussels, 10.6.2011 
COM(2011) 342 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) 

 
 
 
 
  
 
 
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 Union 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: 

– 

– 

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  sixth  report  under  this  provision  to  the  Commission 
under cover of a letter from AGEA dated 15 November 2010 concerning the 2009 instalment 
payment.  

Payment of levy under instalment facility. 

Of the approximately 23 200 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, 15 384 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. 

EN 

1 

   EN 

 
 
The 15 384 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 8000 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  58  new  applications  for 
payment  by  instalments,  corresponding  to  roughly  €  1.7  million,  have  been  received  by  the 
Italian authorities during 2009. 

The  sixth  instalment  was  to  be  paid  by  11  502  producers  for  a  total  amount  of  €  24  501 
645.02  million  before  31  December  2009.  The  verifications  carried  out  by  the  Italian 
authorities  show  that  11  354  producers  have  duly  paid  amounts  totalling  €  23  580  227.82 
million during 2009. This means that 99 % of the producers have paid 96,2 % of the levies in 
time  under  the  sixth  instalment.  Timely  payment  of  the  first,  second,  third,  fourth  and  fifth 
instalments had previously been recorded to the extent of 99,6%, 97,9%, 99,5%, 99,7 % and 
96,4 of the due amounts respectively. The total levy collected under the first fifth instalments 
therefore amounts to some € 151 million (approxi mately 98 % of the 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.  

In respect of the sixth instalment, the payments have not been identified for the remaining 148 
producers for a value of € 921 417.20.  

For the fifth instalment period 166 producers failed to make payment corresponding to € 908 
072,62 at the end of 2008. According to the information received from the Italian authorities 
all these cases  were notified  by the central authorities  to the relevant regional authorities to 
enforce the payment of the entire amount due with interest rate outside the instalment facility 
scheme. 

Out of the 166 producers first though not to have paid it later showed that only 54 of them had 
actually not paid. This resulted in the revocation of the possibility to pay by instalments for 
these producers and the launching of the enforced recovery procedures.  

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. Approximately three-fourths of the overall outstanding 
amounts of unpaid levies for the concerned period have not been entered into the instalment 
facility scheme. The levy not covered by the 2003 scheme corresponds to € 767 million and 
about 91 % of this amount, roughly € 701 million, is  instead being contested before the Italian 
courts.  

In  its  previous  assessment  reports  presented  to  the  Council,  the  Commission  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 

EN 

2 

   EN 

 
monitor  progress  in  collection  of  that  part  of  the  levy  which  was  not  entered  into  the 
instalment payment facility.  

However, unlike the report from Italy on the fourth instalment, the reports on the fifth and the 
current sixth instalment do not contain any information on these court proceedings.  

Nevertheless, some additional information received by the Italian authorities in response to a 
Commission  request  shows  that  the  Italian  administration  has  been  successful  in  cases 
corresponding to roughly € 13 million. The actual  collection of these amounts corresponds to 
€ 6.8 million . The information received in May 2010 also reveals that around € 580 million is 
still being contested in front of the Italian courts. In April 2009, Italy adopted a law providing 
for a system of reimbursing levies due with an interest rate equal to a reference rate for the 
Union increased by several percentage points. In July 2010, the carrying forward of payments 
due  by  virtue  of  this  law  was  adopted.  It  was  envisaged  to  grant  this  carry-forward  in  the 
context of a 'de minimis' regime. 

The Commission strongly 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  and,  in  turn,  the  length  of  the  recovery  of  the  sums  where  litigation  has 
terminated (the Italian report on the sixth instalment contains no information on recovery, but 
previous information submitted in response to a Commission request demonstrates that only 
some  €  6.8  million  had  been  collected  up  t ill  2010  after  successful  court  proceedings). 
Moreover,  the  figures  representing  the  collection  of  levy  which  had  never  in  fact  been 
contested, and therefore immediately recoverable, reflect a deficiency in the actual collection 
process  (about  €  18  million  out  of  €  66  million  levy  never  contested  has  still  not  been 
collected).  

The  Commission  has  been  continuing  to  closely  follow  the  recovery  process  in  Italy, 
particularly  the  recovery  of  levy  not  covered  by  the  instalment  facility  scheme.  The 
Commission  services  have  on  several  occasions  brought  their  observations  (including 
negative remarks) to the attention of the Italian authorities and requested detailed information 
on different aspects concerning the recovery of milk levy. 

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 has already 
expressed,  in  its  assessment  report  presented to  the  Council  in  2010,  its  dissatisfaction  with 
the extremely slow progress in recovering milk quota levies and considered that the recovery 
of levies in this way needs to be improved significantly. However, the figures show that no 

EN 

3 

   EN 

 
major new developments are to be noticed and the effectiveness of EU law in this case is far 
from being achieved with such large amount of levies being unpaid over such a long period of 
time. 

The  Commission  expects  future  annual  reports  to  document  the  evolution  of  the  litigation 
pursued  for  the  periods  1995/96  to  2001/02  and  execution  of  final  judgements  confirming 
levy due. 

EN 

4 

   EN