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: 2012-04-27
Institutions: European Commission
Subjects: Italy, State aid, control of State aid, dairy production, production aid

EUROPEAN COMMISSION 

Brussels, 27.4.2012  
COM(2012) 191 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 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: 

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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 seventh report under this provision to the Commission 
under  cover  of  a  letter  from  AGEA  dated  31  October  2011  concerning  the  2010  instalment 
payment.  

Payment of levy under instalment facility. 

Of the approximately 23 140 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, 15 433 opted to pay under the instalment scheme. Opting to pay under 

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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 15 433 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  69  new  applications  for 
payment  by  instalments,  corresponding  to  roughly  €  1.2  million,  have  been  received  by  the 
Italian authorities during 2010. 

The  seventh  instalment  was  to  be  paid  by  11  406  producers  for  a  total  amount  of  €  24  331 
454.59 before 31 December 2010. The verifications carried out by the Italian authorities show 
that  10  802  producers  have  duly  paid  amounts  totalling  €  22  040  163.61  during  2010.  This 
means that 95 % of the producers have paid 90,5 % of the levies in time under the seventh 
instalment. Timely payment of the first, second, third, fourth, fifth and sixth instalments had 
previously been recorded to the extent of 99,6%, 97,9%, 99,5%, 99,7%, 96,4% and 96,2% of 
the  due  amounts  respectively.  The  total  levy  collected  under  the  first  seven  instalments 
therefore amounts to some € 175 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 seventh instalment, the payments have not been identified for the remaining 
604 producers for a value of € 2 291 279.38. 

For the sixth instalment period 148 producers failed to make payment corresponding to € 921 
417.20 at the end of 2009. 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 148 producers first though not to have paid it later showed that only 23 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.  

The Commission also started a State aid procedure against Italy1, in relation to decreto-legge 
No  225  of  29  December  2010,  approved  with  amendments  by  law  No  10  of  26  February 
2011,  which  postponed  the  deadline  for  the  payment  of  the  levies  for  the  1995-1996  and 

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2001-2002  campaigns  (due  in  principle  for  the  31st  December  2010  according  to  the  2003 
scheme  approved  by  Council  Decision  n°2003/530/EC)  until  the  30th  June  2011  (see  art.  2, 
paragraph 12-duodecies). Such postponement is indeed in conflict with article 1, first indent 
of Council Decision N° 2003/530/EC, according to which the instalments shall be paid on a 
yearly basis and therefore constitutes new and illegal State aid within the meaning of Article 
108 paragraph 3 TFEU.  

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 (according to the last 
available figures from April 2010) to € 767 m illion 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 
monitor  progress  in  collection  of  that  part  of  the  levy  which  was  not  entered  into  the 
instalment payment facility.  

However, the report on the seventh instalment does not contain any information on these court 
proceedings 

Nevertheless, some additional information received in April 2010 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, and around € 580 million 
is still being contested in front of the 
Italian courts. Regrettably, the Italian authorities failed to provide in their communication of 
02  February  2011  updated  figures  on  these  court  proceedings.  As  regards  to  the  system 
introduced in 2009 of reimbursing levies due with an interest rate equal to a reference rate for 
the Union increased by several percentage points, 332 debtors have opted for it (for a total of 
€ 90.5 million), while 1774 debtors have not opt ed for it (for a total of € 535 million).  

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 seventh 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 til l 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 up till 2010 not been 
collected).  

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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  and  the  behaviour  of  the  Italian 
authorities in front of the Italian courts.  

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  relatively  adequate 
management  thereof.  However,  the  Commission  services  have  also  noticed  that  timely 
payment  of  the  seventh  instalment  has  been  recorded  to  the  extent  of  90,5%,  which  is  the 
lowest  among  all  seven  instalments  (timely  payment  of  the  first,  second,  third,  fourth,  fifth 
and  sixth  instalments  had  previously  been  recorded  to  the  extent  of  99,6%,  97,9%,  99,5%, 
99,7%,  96,4%  and  96,2%  of  the  due  amounts  respectively).  Moreover,  the  Commission 
deplores 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  requests,  as  already 
expressed  in  its  previous  assessment  reports,  that  it  is  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 
stated, in its assessment reports presented to the Council in 2010 and 2011, 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.  

In  the  lack  of  sufficiently  detailed  information  provided  by  the  Italian  authorities,  as 
mentioned  above,  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,  some  limited  information  received  in  February  2012  from  the  Italian  authorities 
shows that – despite some improvements – no 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  -  as  already 
requested in its previous assessment reports - future annual reports to document the evolution 
of  the  litigation  pursued  for  the  periods  1995/96  to  2001/02  and  2003/04  -  2008/09,  and 
execution of final judgements confirming levy due. 

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