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
Date: 2013-06-24
Institutions: European Commission
Subjects: EAGGF, Italy, State aid, dairy production, debt, production aid

EUROPEAN 
COMMISSION 

Brussels, 24.6.2013  
COM(2013) 438 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 

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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  pursuant  to  Article  3  of  Council  Decision  No 
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,  according  to  which  the  competent 
Italian authorities report annually to the Council and the Commission on the progress made by 
them in recovering the amount due from the producers by virtue of the additional levy for the 
period 1995/96 to 2001/02. The present report provides the Commission's assessment of the 
progresses  reported  by  the  Italian  authorities,  for  2011,  for  both  the  recovery  of  the  claims 
covered by Council Decision No 2003/530/EC and the recovery of claims not covered by the 
said Decision. 

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 including the marketing years 
from 1995/96 to 2001/02. 

The  Italian  authorities  presented  their  eighth  report  under  this  provision  to  the  Commission 
under cover of a letter from AGEA dated 05 November 2012 concerning the 2011 instalment 
payment.  

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Payment of levy under the 2003 instalment facility 

Of the reported 22.893 producers in total now owing levy for the seven periods covered by the 
Council Decision, but having obtained orders suspending payment by national courts pending 
final  rulings,  15.431  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 15.431 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  53  new  applications  for 
payment  by  instalments,  corresponding  to  roughly  €  1,2  million,  have  been  received  by  the 
Italian authorities in 2011. 

The  eighth  instalment  was  to  be  paid  by  11.296  producers  for  a  total  amount  of  €  24.339 
082,69 before 31 December 2011. The verifications carried out by the Italian authorities show 
that  11  153  producers  have  duly  paid  amounts  totalling  €  23.919.444,43  during  2011.  This 
means  that  98  %  of  the  producers  have  paid  98,3  %  of  the  levies  in  time  under  the  eighth 
instalment.  Timely  payment  of  the  first,  second,  third,  fourth,  fifth,  sixth  and  seventh 
instalments  had  previously  been  recorded  to  the  extent  of  99,6%,  97,9%,  99,5%,  99,7%, 
96,4%,  96,2%  and  90,5  of  the  due  amounts  respectively.  The  total  levy  collected  under  the 
first eight instalments therefore amounts to some € 200 million (approximately 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 eighth instalment, the payments have not been identified for the remaining 
143 producers for a value of € 419.638,26. 

For the seventh instalment period 604 producers failed to make payment corresponding to € 
2.291.279,38  at  the  end  of  2010.  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 604 producers first though not to have paid it later showed that only 59 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.  

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Holdings for which the possibility of payment in instalments has been revoked 

Eight years on from the start of the 2003 scheme for payment in instalments, a total of 457 
holdings  have  had  the  right  to  pay  in  instalments  revoked,  for  a  total  debt  broken  into 
instalments of € 17.304.432,75, of which € 3.928.355,38 ha d been paid in instalments before 
the right was revoked. 

€ 1.936.037,85 was recovered after the revocation, mean ing that the total outstanding debt of 
the remaining 307 holdings is € 11.460.765,30. 

The figures show that the diligence employed by the Italian administration in the collection of 
the  corresponding  levy  is  far  from  being  satisfactory.  Moreover,  milk  producers  had  to 
renounce  their  legal  actions  in  front  of  the  Italian  courts  in  order  to  be  entitled  to  enter  the 
instalment scheme. Bearing in mind this fact, the lack of recovery seems not to be deriving 
from the eventual length of court proceedings, but rather it could be based on the incapacity of 
the Italian administration to effectively recover those amounts.  

State aid implication 

On 11 January 2012, the Commission decided to initiate the formal investigation procedure1, 
pursuant to Article 4(4) of Council Regulation (EC) No 659/1999 laying down detailed rules 
for the application of Article 93 of the EC treaty2, in relation to the Italian decreto-legge No 
225 of 29 December 2010, converted with amendments into law No 10 of 26 February 2011, 
which  postponed  the  deadline  for  the  payment  of  the  levies  for  the  1995/96  to  2001/02 
marketing years (due in principle for the 31st December 2010 according to the 2003 scheme 
approved  by  Council  Decision  No  2003/530/EC)  until  the  30th  June  2011  (see  art.  2, 
paragraph  12-duodecies).  Such  postponement  is  allegedly  a  misuse  of  the  aid  authorised  by 
Council  in  accordance  with  Article  1,  first  indent  of  Council  Decision  No  2003/530/EC, 
according  to  which  the  instalments  shall  be  paid  on  a  yearly  basis  and  therefore  constitutes 
new State aid, illegal within the meaning of Article 1(f) of Regulation (EC) No 659/1999. 

Levy  due  which  did  not  entered  into  the  2003  instalment  payment  scheme  or  the  2009 
system of reimbursing levies 

Reference has been made to the relatively low uptake of the 2003 instalment payment facilitiy 
and the 2009 system of reimbursing levies (with an interest rate equal to a reference rate for 
the Union increased by several percentage points) in terms of the amount of levy entered. The 
total  amount  of  levy  which  entered  into  the  2003  and  2009  schemes  accounts  for  €  432 
million,  while  approximately  three-fourths  of  the  overall  outstanding  amounts  of  unpaid 
levies  for  the  period  1995/96-2008/09  (corresponding  to  €  1,831  billion)  have  not  been 
entered into the instalment facilities schemes. The major part of the levy not covered by the 
2003  and  2009  schemes  is  instead  being  contested  before  the  Italian  courts.  The  total  levy 
collected outside the instalment schemes amounts so far to € 205 million (out of the € 1,831 
billion total levy due). 

In  its  previous  assessment  reports  presented  to  the  Council,  the  Commission  expressed  the 
view  that  annual  reports  presented  by  Italy  should  specifically  describe  the  situation  of  the 

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OJ C 37, 10.2.2012, p. 30. 
OJ L 83, 27.3.1999, p. 1. 

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pending litigations pertaining to the seven periods concerned and provide details confirming 
payment by producers whose oppositions to payment were rejected. 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.  

The Commission welcomed the information contained in the report of the Italian authorities 
on the eighth instalment as regards the current overall levy situation. 

The  figures  provided  by  the  Italian  administration  show  however  that  insignificant  progress 
was  made  in  collecting  the  levy  that  was  enforceable. In fact, the levy sums that have been 
challenged but confirmed by the court, or for which cases are ongoing but suspension orders 
have  not  been  issued  correspond  to  roughly  €  764  million.  The  actual  collection  of  these 
enforceable amounts corresponds to around € 81 m illion and the amount still outstanding is € 
683 million. For the period covered by the Council Decision, it can be seen that around 11% 
of  the  sums  demanded  and  currently  enforceable  have  actually  been  collected.  The  same 
percentage is also to be observed for the whole period 1995/96-2008/09.  

The Commission strongly regrets the slow progress in collection of the part of the levy which 
was not entered into the 2003 instalment payment facility and the 2009 system of reimbursing 
levy. 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 (only some € 34 million had been 
collected out of € 372 million su bject to 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  (for  the  milk 
quota period 1995/96-2001/02 about € 25 million out  of € 76 million levy never contested has 
still  to  be  collected,  thus  uncollected  levy  are  already  more  than  10  years  overdue).  In  the 
apparent absence of any significant evolution in this matter, the question of negligence in the 
performance of duty necessarily arises.  

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  attitude  of  the  Italian 
administraton relative to pending proceedings before 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  adequate  management 
thereof.  

As to the amounts of levy which were not entered into the instalment regimes, 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,  2011  and  2012,  its 
dissatisfaction with the extremely slow progress in recovering milk quota levies and considers 
that the recovery of levies needs to be improved significantly.  

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The  information  provided  by  the  Italian  authorities  in  their  report  on  the  eighth  instalment 
shows that – despite some improvements – no major new developments are to be noticed in 
the collection of the levy which was not entered into the instalment payment facilities 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.  

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