REPORT FROM THE COMMISSION TO THE COUNCIL assessing the progress reported by Italy to the Commission and the Council on the recovery of the amount due from milk producers by virtue of the additional levy for the periods 1995/96 to 2001/02 (pursuant to Article 3 of Council Decision 2003/530/EC)
Date: 2015-07-17
Institutions: Directorate-General for Agriculture and Rural Development, European Commission
Subjects: EAGF, Italy, State aid, control of State aid, dairy production, infringement of EU law, production aid, reimbursement of aid

EUROPEAN 
COMMISSION 

Brussels, 17.7.2015  
COM(2015) 349 final 

REPORT FROM THE COMMISSION TO THE COUNCIL 

assessing the progress reported by Italy to the Commission and the Council on the 
recovery of the amount due from milk producers by virtue of the additional levy for the 
periods 1995/96 to 2001/02 

(pursuant to Article 3 of Council Decision 2003/530/EC) 

EN 

   EN 

 
 
 
 
  
 
REPORT FROM THE COMMISSION TO THE COUNCIL 

assessing the progress reported by Italy to the Commission and the Council on the 
recovery of the amount due from milk producers by virtue of the additional levy for the 
periods 1995/96 to 2001/02 

(pursuant to Article 3 of Council Decision 2003/530/EC) 

report  has  been  produced  pursuant 

This  assessment 
to  Article 3  of  Council 
Decision 2003/530/EC of 16 July 2003 on the compatibility with the common market of aid 
that  the  Italian  Republic  intends  to  grant  to  its  milk  producers  (hereinafter:  ‘Council 
Decision’), in accordance with which the competent Italian authorities must 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 periods 1995/96 to 2001/02.  

Under Article 1 of the Council Decision, the aid the Italian Republic grants to milk producers, 
by itself making payment to the European Union budget of the amount due from them to the 
EU  by  virtue  of  the  additional  levy  on  milk  and  milk  products  for  the  periods  1995/96  to 
2001/02 and by allowing these producers to repay their debt by way of deferred payment over 
a  number  of  years  without  interest,  is  exceptionally  considered  to  be  compatible  with  the 
common market on condition that: 

– 

– 

repayment is in full by yearly instalments of equal size, and 

the repayment period does not exceed 14 years, starting from 1 January 2004. 

Under  Article 2  of  the  Council Decision,  the  granting  of  the  aid  is  conditional  upon  Italy 
declaring  the  total  additional  levy  for  the  periods  concerned  to  the  European  Agricultural 
Guidance  and  Guarantee  Fund  (EAGGF),  now  the  European  Agricultural  Guarantee  Fund 
(EAGF), and upon it 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 by letter of 26 August 2003. Deductions of the outstanding 
debt  were  duly  made  from  expenditure  financed  by  the  EAGGF  for  November  2003,  2004 
and 2005. 

Article 3 of the Council 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 periods 1995/96 to 2001/02. 

Under that provision, the Italian authorities presented their tenth report to the Commission by 
letter  from  the  AGEA  (Agenzia  per  le  Erogazioni  in  Agricoltura,  Italian  Agricultural 
Payments Agency) dated 13 November 2014 concerning payment of the 2013 instalment.  

The  report  provides  the  Commission’s  assessment  of  the  progress  reported  by  the  Italian 
authorities for 2013 in recovering  the additional levy both for  the seven periods covered by 
the Council Decision and for those not covered by it. 

Payment of the levy under the 2003 instalment scheme 

The Council Decision authorising Italy to itself make payment to the European Union budget 
of  the  additional  levy  due  from  its  milk  producers  related  to  25 123  producers  in  2005,  the 
date of the first report to the Council. This figure fell to 21 819 for 2013. 

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Of all the reported producers subject to the levy for the seven periods covered by the Council 
Decision,  15 431  opted  to  pay  under  the  2003  instalment  scheme.  In  2004,  before  the  first 
yearly instalment was paid, the 15 431 producers which had opted to pay under the instalment 
scheme  owed  EUR 345 million  in  total,  which  represented  about  one  quarter  of  the  total 
outstanding  amount  due  from  the  producers  which  had  refused  to  opt  into  the  instalment 
schemes.  The  producers  responsible  for  the  lowest  levels  of  excess  production  therefore 
mostly opted to pay under the instalment scheme. However, the producers with greater levels 
of excess production (some 8 000 producers to whom around EUR 1 billion in levy due over 
the  seven  periods  is  billed)  instead  preferred  not  to  pay  under  the  instalment  scheme. 
Nevertheless,  it  should  be  pointed  out  that,  every  year,  the  Italian  authorities  receive  new 
applications  to  pay  by  instalments.  In  2013,  160  new  applications  were  submitted, 
corresponding  to  EUR 8.7 million  in  total.  The  total  amount  covered  by  the  instalment 
scheme is EUR 362.17 million. 

The  tenth  yearly  instalment  totalling  EUR 26 165 096  was  to  be  paid  by  11 331  producers 
before  31  December  2013.  The  checks  carried  out  by  the  Italian  authorities  show  that 
11 132 producers duly paid amounts totalling EUR 25 664 142 during 2013, which means that 
98.24 % of the producers paid 98.2 % of the amounts due under the tenth instalment within 
the  time  limit.  As  regards  the  nine  previous  instalments,  timely  payment  had  been  recorded 
for 99.6 %, 97.9 %, 99.5 %, 99.7 %, 96.4 %, 96.2 %, 90.5 %, 98.3 % and 96.9 % of the due 
amounts  respectively.  The  total  levy  collected  under  the  first  ten  instalments  therefore 
amounts  to  roughly  EUR 270 739 640  (almost  97.3 %  of  the  total  amount  due  under  these 
yearly instalments).  

Whilst  these  levels  are  certainly  indicative  of  a  commitment  on  the  part  of  the  producers 
participating  in  the  instalment  scheme  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 Italian authorities to 
ensure correct observance of the conditions of the scheme and ultimately collection in full of 
the levy due.  

As  regards  the  tenth  instalment,  no  information  is  available  for  the  payments  for  the 
remaining 199 producers for a sum of EUR 500 948. 

With  regard  to  the  ninth  instalment  period,  285  producers  failed  to  make  payment 
corresponding to EUR 786 682.83 at the end of 2012. 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  payment  of  the  entire  amount  due  with  an 
interest  rate  outside  the  instalment  scheme.  Of  the  285  producers  first  thought  not  to  have 
paid, it later emerged that 191 of them had in fact paid. By contrast, the 94 producers which 
had  not  actually  paid  the  ninth  instalment  lost  their  entitlement  to  pay  by  instalments  and 
enforced recovery procedures were initiated against them.  

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

The  failure  to  pay  any  one  yearly  instalment  results  in  exclusion  from  the  scheme  and 
consequently  makes  producers  liable  to  seizure  of  the  entire  amount  still  outstanding  with 
accrued interest. 

Ten  years  on  from  the  start  of  the  2003  scheme  for  payment  by  instalments,  a  total  of 
613 holdings  have  had  the  right  to  pay  by  instalments  revoked  for  a  total  debt,  broken  into 
instalments, of EUR 22 817 190. 

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However, of this amount, EUR 7 128 700 had been paid by instalments before the right was 
revoked  and  EUR 4 297 074.81  was  recovered  after  the  revocation,  meaning  that  the  total 
outstanding remaining debt is EUR 11 391 415 and relates to 251 holdings. 

These  figures  show  that  the  diligence  shown  by  the  Italian  administration  in  collecting  the 
levy from the producers who were excluded from the scheme after failing to pay an instalment 
is  far  from  satisfactory.  Moreover,  milk  producers  have  had  to  renounce  their  legal  actions 
before the Italian courts in order to be entitled to pay under the instalment scheme. The lack 
of  recovery  therefore  seems  to  be  due  not  to  the  potential  length  of  court  proceedings,  but 
rather to the incapacity of the Italian administration to effectively recover those amounts.  

Six-month deferral of payment and its consequences for State aid 

Pursuant to Article 2(12)(k) of Italian Decree-Law No 225 of 29 December 2010, which, after 
amendments,  became  Law No 10  of  26 February 2011,  Italy  authorised  the  deferral,  until 
30 June 2011,  of  the  2010  instalment  due,  in  principle,  by  31 December 2010  under  the 
2003 instalment scheme approved by Council Decision 2003/530/EC. 

In  Commission Decision C(2013) 4046 final  of  17 July 2013,  the  Commission  declared  that 
the deferral of the payment of the milk levy instalment due by 31 December 2010 constituted 
aid incompatible with the internal market. Furthermore, it considered that this aid had entailed 
a breach of the conditions laid down in Council Decision No 2003/530/EC, and had created – 
for those who benefited from it and thus had gone beyond the framework established by the 
Council  –  new  state  aid  that  was  unlawful  within  the  meaning  of  Article 1(f)  of 
Council Regulation (EC) No 659/1999 and incompatible with the internal market as well.  

In  Commission Decision C(2013) 4046 final,  the  Commission  directed  Italy  to  arrange  to 
have the incompatible aid, together with interest, refunded by the beneficiaries of the deferral 
of payment.  

The  Italian  authorities  have  initiated  the  administrative  procedures  necessary  to  recover  the 
aid. However, on 8 November 2013, Italy brought an action against the Commission Decision 
before  the  General  Court  (Case T-527/13).  On  24 June 2015,  the  General  Court  delivered  a 
judgment  partially  annulling  the  Commission  Decision.  It  confirmed  the  Commission's 
approach  as  regards  the  aid  inherent  in  deferring  the  payment  of  the  instalment  due  by 
31 December 2010,  but  rejected  the  Commission's  conclusions  concerning  the  new  aid 
created for those who benefited from the deferral and thus had gone beyond the framework of 
the Council Decision. 

Additional levy due for the period 2002/2003 

For the periods 1995 to 2002, Italy itself made payment to the European Union budget of the 
additional levy due from the producers, pursuant to Council Decision No 2003/530/EC. 

Since 2004, Member States have paid the additional levy directly to the EU budget, pursuant 
to Council Regulation (EC) No 1788/2003 of 29 September 2003. 

However,  the  period  2002/2003  is  covered  neither  by  the  Council  Decision  nor  by  the  new 
scheme  established  in  2004.  Given  the  overrun  of  the  national  quota  allocated  to  Italy,  the 
Italian  milk  producers  responsible  for  that  overrun  owed  EUR 227.77 million  to  the  EU 
budget for the period 2002/2003. 

Of  this  amount,  EUR 56.58 million  has  been  recovered  and  paid  to  the  EU  budget,  while 
EUR 40.68 million has been cancelled by decision of a court of law. Thus, on 31 December 
2013,  the  milk  producers  still  owed  EUR 130.50 million  to  the  EU  budget  by  virtue  of  the 

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additional levy for the period 2002/2003. Of this amount, EUR 9.35 million is covered by the 
2009 instalment scheme. 

Levy  due  which  is  not  covered  by  the  2003  instalment  scheme  or  the  2009 
reimbursement system 

Reference has already been made in previous reports to the low uptake of the 2003 instalment 
scheme and the 2009 reimbursement system (with an interest rate equal to a reference rate for 
the European Union increased by several percentage points) in terms of the amount of levy to 
be recovered. 

In  fact,  the  total  amount  of  levy  charged  for  the  periods  1995/96  to  2008/09,  as  notified  by 
Italy,  is  EUR 2.305 billion.  Of  this  amount,  EUR 566.71  million  was  recovered  by  Italy 
between  2003  and  2013:  EUR 270.74 million  under 
the  2003 instalment  scheme, 
EUR 4.99 million under the 2009 reimbursement system and EUR 290.98 million outside the 
instalment schemes. 

Of the remaining amount, that is, EUR 1.738 billion: 

- a small part (EUR 199.88 million) is covered by the instalment schemes established by Italy 
in 2003 and 2009, which some milk producers liable for payment of the levy have opted into; 

- EUR 211.23 million has been declared irrecoverable following bankruptcy of the producer 
or cancellation of the levy by court; 

- there remains EUR 1.327 billion due from the producers who have refused to opt into the 
instalment  schemes,  most  of  whom  have  contested  the  additional  levy  before  the  Italian 
courts.  

Thus,  around  87 %  of  the  overall  amounts  still  due  by  virtue  of  the  levy  for  the  periods 
1995/96 to 2008/09 (EUR 1.527 billion) are not covered by either of the instalment schemes. 

The  total  amount  of  levy  collected  outside  the  instalment  schemes  amounts  so  far  to  just 
EUR 290.98 million.  According  to  the  report  submitted  by  the  Italian  authorities,  this 
extremely low rate could be due to the large number of court cases brought by the producers 
who are liable for payment of the levy and who had the recovery process suspended. 

In  its  previous  assessment  reports  presented  to  the  Council,  the  Commission  expressed  the 
view  that  annual  reports  submitted  by  Italy  should  specifically  describe  the  situation 
concerning  the  pending  court  cases  and  provide  details  confirming  payment  by  producers 
whose oppositions to payment were rejected in court. Without such details, the Commission 
was not previously in a position to correctly monitor progress in the collection of the part of 
the levy not included in the instalment scheme.  

The Commission welcomed the information contained in the Italian authorities’ report on the 
tenth instalment as regards the current overall situation concerning recovery of the levy under 
the instalment scheme established in 2003. 

However, the figures provided by the Italian administration show that insignificant progress 
has been made in collecting the amounts not included in that instalment scheme. In particular, 
insignificant progress has been made in recovering the enforceable amounts which were never 
contested or which were contested but confirmed by the relevant court, or for which cases are 
ongoing but suspension orders were not issued.  

On 31 December 2013, EUR 240.92 million of these enforceable amounts had actually been 
collected,  while  the  enforceable  amount  still  outstanding  was  EUR 827 million.  The 

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Commission  would  further  point  out  that,  of  the  EUR 1.527 billion  still  due  for  the  periods 
1995/96-2008/09, EUR 500 million is not yet enforceable as it is the subject of a legal dispute 
and a court order has been issued for recovery to be suspended. However, it will have to be 
recovered once judgments have been returned in favour of the administration. 

As  regards  the  currently  enforceable  amounts  due  for  the  periods  1995/96-2008/09,  only 
22.5 % of the amounts have actually been collected.  

As  regards  the  periods  covered  by  the  Council  Decision  (1995/96  to  2001/02),  the  amounts 
collected correspond to 26.6 % of the amounts currently enforceable. Within the enforceable 
amounts, a distinction should be made between  

-  the  amounts  which  were  not  contested:  of  the  enforceable  EUR  172.12  million, 
EUR 109.65 million has been recovered, which corresponds to a recovery rate of 63 %; 

- the amounts which were the subject of a legal dispute, but for which no order was issued to 
suspend  recovery:  of  the  enforceable  EUR  256.20  million,  only  EUR  28.38  million  (11 %) 
has been recovered; 

-  the  amounts  which  were  confirmed  by  court:  of  the  enforceable  EUR  639.97  million, 
EUR 102.89 million (16.5 %) has been recovered. 

The  Commission  underlines  the  extremely  poor  progress  made  in  recovering  the  last  two 
categories  of  amounts.  Likewise,  from  the  EUR 172.12 million  which  was  never  contested 
and  therefore  could  be  recovered  immediately,  there  is  still  EUR 62.48 million  to  be 
recovered.  With  regard  to  the  levy  due  for  the  periods  1995/96  to  2001/02,  this  means  that 
EUR 19.54 million has remained unrecovered for over ten years.  

The  Commission  greatly  regrets  the  slow  progress  made  in  recovering  the  part  of  the  levy 
which was not covered by the 2003 instalment scheme or the 2009 reimbursement system.  

The  Commission  has  been  continuing  to  closely  follow  the  recovery  process  in  Italy, 
particularly the recovery of the levy not covered by the instalment scheme. The Commission 
departments  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 the milk levy.  

Nevertheless, in spite of numerous repeated requests by the Commission, the majority of the 
amounts due have still not been recovered by the Italian authorities.  

On  20  June  2013,  the  European  Commission  ordered  Italy,  under  Article 258 TFEU,  to 
submit its observations on the insufficient action taken to address the shortcomings identified 
in the recovery of the additional levy for the periods 1995 to 2009. However, Italy's reply did 
not reveal that any significant progress had been made regarding recovery.  

On  10 July 2014,  the  Commission  sent  a  reasoned  opinion  to  Italy  for  not  taking  sufficient 
measures  to  guarantee  the  effective  and  efficient  recovery  of  surplus  levies  from  milk 
producers  that  exceeded  their  individual  quota  during  the  years  in  which  Italy  exceeded  its 
national milk quota.  

Conclusion 

The  Commission  considers  that,  insofar  as  the  conditions  for  the  implementation  of  the 
instalment scheme approved by the Council in 2003 are met, the progress made by the Italian 
authorities  in  recovering  the  amount  due  from  the  producers  who  opted  to  pay  under  the 

6 

 
 
 
instalment scheme for the periods 1995/96 to 2001/02 demonstrates that the scheme has been 
managed in a satisfactory manner.  

As  for  the  amounts  of  levy  not  covered  by  the  instalment  schemes,  the  Commission  has 
already expressed – in its successive assessment reports to the Council since 2010, and then in 
the letter of formal notice sent to Italy on 20 June 2013, and finally in the reasoned opinion 
issued on 10 July 2014 – its dissatisfaction with the lack of significant progress in recovering 
the milk quota levy.  

According  to  the  information  provided  by  the  Italian  authorities  in  their  report  on  the  tenth 
instalment, in this case, no major new developments can be reported in the actual collection of 
the  levy  not  covered  by  the  instalment  schemes.  In  view  of  the  large  amount  of  the  unpaid 
levy and the length of time it has gone unrecovered, it must be concluded that the efficiency 
and effectiveness of EU law is and has been far from ensured by the Italian authorities. This 
led the Commission to decide, on 26 February 2015, to bring an action for failure to fulfil an 
obligation  before  the  Court  of  Justice  of  the  European  Union,  as  provided  for  by 
Article 258 TFEU. 

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