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 period 1995/1996 to 2001/2002 (pursuant to Article 3 of Council Decision 2003/530/EC) (conformément à l'article 3 de la décision 2003/530/CE du Conseil)
Date: 2019-07-12
Institutions: Directorate-General for Agriculture and Rural Development, European Commission
Subjects: Italy, State aid, agricultural quota, control of State aid, dairy production, milk, production aid, reimbursement of aid

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 12.7.2019  COM(2019) 335 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 period 1995/1996 to 2001/2002 (pursuant to Article 3 of Council Decision 2003/530/EC)  
 
 
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 
period 1995/1996 to 2001/2002 

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

report  has  been  drawn  up  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:  ‘the  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 period 1995/1996 to 2001/2002.  

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  period 1995/1996  to 
2001/2002 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 made 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)1 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  period  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  marketing  years 1995/1996  to 
2001/2002. 

Under that provision, the Italian authorities presented their 13th report to the Commission by 
letter  from  the  AGEA  (Agenzia  per  le  Erogazioni  in  Agricoltura,  Italian  Agricultural 
Payments Agency) dated 9 November 2018 concerning payment of the 2017 instalment. Since 
report 
the 
(document COM(2007) 34 final of 30 January 2007), this report concerns the 14th instalment. 

(2004  and  2005)  were  covered  by  a  single 

instalments 

first 

two 

The  report  provides  the  Commission’s  assessment  of  the  progress  reported  by  the  Italian 
authorities for 2017 in recovering the additional levy both for the seven years covered by the 
Council Decision and for those not covered by it. 

Payment of the levy under the 2003 deferred payment scheme 

1 Replaced since 1 January 2007 by the European Agricultural Guarantee Fund (EAGF). 

2 

 
 
 
 
                                                 
The Council Decision authorising Italy to itself make payment to the European Union budget 
of  the  additional  levy  due  from  its  milk  producers  concerned  25 123 producers  in  2005,  the 
year of the first report to the Council. This figure fell to 20 647 for 2017. 

Of all the producers reported on who were subject to the levy for the seven marketing years 
covered  by  the  Council  Decision,  15 431  initially  opted  to  pay  under  the  2003 deferred 
payment  scheme.  In 2004, before the first  yearly instalment  was paid,  the 15 431 producers 
that  had  opted  to  pay  under  the  deferred  payment  scheme  owed  EUR 345 million  in  total, 
which represented about one quarter of the total outstanding amount due from the producers 
that  had  refused  to  opt  into  the  schemes  for  deferred  payment.  It  seems  that  the  producers 
opting to pay under the deferred payment scheme were mostly those with the lowest levels of 
excess  production.  On  the  other  hand,  producers  with  higher  levels  of  excess  production 
(some  8 000 producers  owing  around  EUR 1 billion  in  levies  for  the  seven  years)  preferred 
not to participate in the deferred payment scheme. Nevertheless, it should be pointed out that, 
every year, the Italian authorities received new applications to be included in the scheme. In 
2017,  36 new  applications  were  submitted,  corresponding  to  EUR 7 million  in  total.  The 
14th yearly  instalment,  totalling  EUR 24 655 057.20,  was  to  be  paid  by  10 137 producers 
before  31 December  2017.  The  checks  carried  out  by  the  Italian  authorities  show  that 
10 038 producers duly paid amounts totalling EUR 24 259 152.52 in 2017, which means that 
99% of the producers paid 98.40% of the amounts due under the 14th instalment within the 
time  limit.  That  rate  is  close  to  the  97%  average  recorded  for  the  previous  instalments. 
According to the Italian authorities, a total amount of EUR 375.94 million had been recovered 
by the end of the 14th instalment. 

Whilst the above levels are certainly indicative of a commitment on the part of the producers 
participating  in  the  deferred  payment  scheme  to  meet  their  obligations,  the  Commission 
considers that the follow-up given to cases where the payment has not been made within the 
time limit is a prime indicator of the level of commitment on the part of the Italian authorities 
to ensure full compliance with the conditions of the scheme and ultimately collection in full of 
the levy due.  

As  regards  the  14th instalment,  no  information  is  yet  available  regarding  payment  by  the 
remaining 99 producers for a sum of EUR 392 784.39.  

With regard to the 13th instalment, the previous report stated that payment had not been made 
by 31 December 2016 by 209 producers, corresponding to EUR 563 317.20. 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  interest,  outside  the  deferred  payment  scheme.  Of  the  209 producers  first 
thought not to have paid, it later emerged that 103 of them had in fact paid. By contrast, the 
106 producers who had not actually paid the 13th instalment lost their entitlement to deferred 
payment and enforced recovery procedures were initiated against them.  

Based  on  the  information  provided  by  the  Italian  authorities  for  2017,  the  conditions  for 
applying the deferred payment scheme approved by Council Decision 2003/530/EC appear to 
have been met, and the scheme appears to have been managed in a satisfactory manner given 
the  progress  made  in  recovering  the  amount  owed  by  the  producers  participating  in  the 
scheme for the period 1995/1996 to 2001/2002. 

Holdings for which the possibility of deferred payment has been revoked 

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

3 

 
 
14 years  on  from  the  start  of  the  2003 deferred  payment  scheme,  a  total  of  1 120 holdings 
have  had  their  right  to  make  deferred  payments  revoked  for  a  total  debt,  to  be  paid  by 
instalments, of EUR 37 510 005.97. 

However,  of  this  amount,  EUR 18 740 185  was  paid  before  the  right  was  revoked  and 
EUR 5 502 332.10 was recovered after the revocation (almost 30% of the outstanding amount 
due);  this  latter  amount  includes  EUR 2 920 990.46  paid  by  320 holdings  that  thereby 
managed  to  clear  their  debt.    The  total  outstanding  debt  is  therefore  EUR 13 279 597.39, 
relating to 800 holdings (almost 70% of the outstanding amount due). 

These  figures  show  that  the  diligence  shown  by  the  Italian  administration  in  collecting  the 
levy from producers who have been excluded from the deferred payment scheme after failing 
to pay an instalment is not satisfactory.  This situation must, however, be seen in the context 
of  the  general  problem  of  the  Italian  administration’s  incapacity  to  effectively  recover  the 
amounts due outside the deferred payment schemes referred to below.  

Six-month deferral of payment and its impact on State aid 

Pursuant to Article 2(12)(k) of Italian Decree-Law No 225 of 29 December 2010, which was 
converted,  with  amendments,  into  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 deferred payment scheme approved by Council Decision 2003/530/EC. 

In 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 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 Regulation 
(EC) No 659/1999 and also incompatible with the internal market.  

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

The Italian authorities had 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.  The  Commission  referred  the  judgment  of  the  General  Court  to  the 
Court  of  Justice  of  the  European  Union  (Case C-467/15 P).  In  its  judgment  in  this  case 
delivered  on  25 October  2017,  the  Court  of  Justice  confirmed  the  validity  of  Commission 
Decision C(2013) 4046 final, which the General Court had partially annulled in its judgment 
of 24 June 2015 (Case T-527/13). The Italian authorities have therefore been invited to adopt 
and  implement  the  national  measures  required  to  enforce  Decision C(2013) 4046 final,  until 
the aid  disbursed under  the scheme has been recovered in  full. So far the  Italian  authorities 
have provided data on the beneficiaries and the amounts to be recovered. This information has 
still to be completed and the evidence of recovery provided. 

4 

 
 
 
 
Additional levy due for 2002/2003 

For  the  periods 1995-2002,  Italy  itself  made  payment  to  the  European  Union  budget  of  the 
additional levy due from the producers pursuant to Council Decision 2003/530/EC. 

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

However, the marketing year 2002/2003 is not covered either by the Council Decision or by 
the new scheme set up in 2004. The Italian milk producers responsible for the overrun of the 
national quota allocated to Italy owed EUR 227.76 million to the EU budget for 2002/2003. 

Of that amount, the milk producers concerned still owe EUR 118.4 million to the EU budget 
owing to the additional levy.  

Levy  charged  for  the  period 1995/1996  to  2008/2009  and  not  covered  by  the 
2003 deferred payment scheme or the 2009 reimbursement scheme   

As has been pointed out in previous reports, only a small part of the levy to be recovered, i.e. 
EUR 410 million,  or  17.8%  of  the  recoverable  amount,  is  actually  covered  by  the 
2003 deferred payment scheme and by the scheme of reimbursement in instalments set up by 
Italy  in  2009  (with  an  interest  rate  equal  to  an  EU reference  rate  increased  by  several 
percentage points).  As at 31 December 2017, a total of EUR 385 million has been recovered 
under  the  2003 deferred  payment  scheme  and  the  2009 reimbursement  scheme.  This  means 
that  only  a  small  fraction  of  the  total  amount  to  be  reimbursed,  i.e.  EUR 25 million,  still 
pertains to the two mechanisms (under the 2009 reimbursement scheme). 

In truth, of the  EUR 2 303 billion corresponding to  the total  amount of the levy  charged, as 
notified by Italy, for the period 1995/1996 to 2008/2009, by far the largest part falls outside 
the two schemes.  

While  the  information  provided  in  the  report  from  the  Italian  authorities  on  the 
14th instalment  shows  that  the  current  situation  as  regards  recovery  of  the  levy  under  the 
deferred payment scheme set up in 2003 is satisfactory overall, the same cannot be said of the 
collection  of  recoverable  amounts  not  subject  to  the  schemes  of  deferred  payment  or 
reimbursement in  instalments  (EUR 1 283 billion), in  particular with  respect  to  the recovery 
of amounts subject to enforcement (EUR 888 million). 

In its successive assessment reports to the Council since 2010, the Commission has repeatedly 
expressed its dissatisfaction with the lack of significant progress in recovering the repayable 
additional  milk  levy  not  covered  by  the  schemes  of  deferred  payment  or  reimbursement  in 
instalments.  

According  to  the  information  provided  by  the  Italian  authorities  in  their  report  on  the 
14th instalment, there are no major new developments in the actual collection of the levy not 
covered  by  the  instalment-based  schemes.  The  Italian  authorities  point  out  that  the  total 
amounts recoverable have increased by EUR 112 million and that EUR 837.2 million will be 
recovered through legal action (enforced recovery proceedings) still pending, but this has not 
produced any significant, tangible results to date. 

In view of the large amount of the levy that has not been paid and the length of time it has 
gone  unrecovered,  it  must  be  concluded  that  the  Italian  authorities  did  not  ensure  the 
efficiency and effectiveness of EU law in 2017.  

5 

 
 
 
That  is  why  action  was  brought  by  the  Commission  before  the  Court  of  Justice  of  the 
European  Union  under  Article 258  of  the  TFEU  for  failure  to  fulfil  an  obligation  (Case C-
433/15).  

In  its  judgment  of  24 January  2018  the  Court  of  Justice  of  the  European  Union  upheld  the 
action  brought  by  the  Commission,  stating  that  the  Italian  Republic  had  failed  to  fulfil  the 
obligations  imposed  on  it  by  failing  to  ensure  that  the  additional  levy  payable  in  respect  of 
quantities produced in  Italy in excess of the national quota, from the first  year in which the 
additional levy was in fact applied in Italy (1995/1996) until the last year in which there was 
surplus production in Italy (2008/2009), 

–  was  in  fact  allocated  to  the  individual  producers  which  had  contributed  to  each  of  the 
production overruns and 

– was paid at the appropriate time, upon their being given notice of the amount payable, by 
the purchasers or the producers in the case of direct sales, or 

–  where  the  levy  was  not  paid  within  the  period  prescribed,  was  registered  and,  where 
possible, recovered by way of enforcement from those purchasers or producers. 

Conclusion 

At the end of the 14th year of application of the deferred payment scheme set up by Council 
Decision 2003/530/EC,  the  Commission  considers  that  the  deferred  payment  scheme 
approved  by  the  Council  in  2003  has  been  managed  in  a  satisfactory  manner  insofar  as  the 
conditions for applying the scheme have been met, as demonstrated by the progress made by 
the  Italian  authorities  in  recovering  the  amounts  due  from  the  producers  who  opted  to  pay 
under that scheme for the period 1995/1996 to 2001/2002.  

As  for  the  amounts  not  subject  to  the  schemes  of  deferred  payment  or  reimbursement  in 
instalments, the Commission underlines that the Court of Justice of the European Union, in its 
judgment of 24 January 2018, has confirmed the failings of the  Italian Republic pointed out 
by the Commission. The Italian authorities must now take the necessary measures to comply 
with the judgment of the Court of Justice, as required by Article 260 TFEU, in particular by 
promptly  putting  into  place  effective  arrangements  for  recovering  the  outstanding  amounts 
capable of producing  real  and measurable results in  terms  of reducing the amount due. The 
Commission  is  closely  monitoring  the  Italian  authorities’  implementation  of  the  Court’s 
judgment.  

6