CELEX: 62002CJ0312
Language: en
Date: 2004-10-07 00:00:00
Title: Judgment of the Court (Second Chamber) of 7  October  2004. # Kingdom of Sweden v Commission of the European Communities. # Action for annulment - EAGGF - Expenditure excluded from Community financing - Support for producers of certain arable crops - Common organisation of the market in beef and veal. # Case C-312/02.

Case C-312/02
      Kingdom of Sweden
      v
      Commission of the European Communities
      (Action for annulment – EAGGF – Expenditure excluded from Community financing – Support for producers of certain arable crops – Common organisation of the market in beef and veal)
      Summary of the Judgment
      1.        Agriculture – Common agricultural policy – Support system for producers of certain arable crops – Common organisation of the
            markets – Beef and veal – Payments to compensate for the loss of income attributable to the reform of the common agricultural
            policy – Requirement to pay the amounts in question in full to the beneficiaries – Scope – Collection by the national authorities
            of a fee in consideration for the issue to farmers of a map to be attached to their aid applications – Prohibited – Coexisting
            applications for arable or fodder area aid and applications for agro-environmental or regional aid – No bearing
      (Council Regulation No 805/68, Art. 30a; Council Regulation No 1765/92, Art. 15(3))
      2.        Agriculture – Common agricultural policy – EAGGF financing – Principles – Obligation on the Commission to disallow irregular
            expenditure – Irregularities tolerated in respect of a financial year on grounds of fairness – Strict application of the rules
            in respect of the following financial year – Breach of the principles of legal certainty and protection of legitimate expectations
            – None
      1.        Article 15(3) of Regulation No 1765/92 establishing a support system for producers of certain arable crops and Article 30a
         of Regulation No 805/68 on the common organisation of the market in beef and veal, which require the compensatory payments
         and premiums provided for under the regulations in question, the purpose of which is to grant compensation to the farmers
         affected by the consequences of the reform of the common agricultural policy, to be paid in full to the beneficiaries, prohibit
         national authorities from making a deduction from the payments made or from demanding the payment of administrative fees relating
         to applications and having the effect of reducing the amount of the aid.
      
      The system under which persons intending to apply for Community aid must pay a fee in order to obtain from the national authorities
         a map which has to be attached to their application falls within that prohibition. The prohibition on any deduction extends
         to all charges which are directly and inseparably linked to the amounts disbursed to farmers and not only to deductions which
         are actually made on the occasion of payments.
      
      If the provisions cited above are not to be rendered redundant, the fact that some farmers applied for both aid under Regulation
         No 1765/92 or Regulation No 805/68 and agro-environmental or regional aid for the same areas does not, moreover, have any
         bearing on the prohibition on the Member States from making deductions from the amounts received by the beneficiaries as aid
         for arable crops or fodder areas.
      
      (see paras 19, 22, 24, 38-39, 41)
      2.        The fact that the Commission did not carry out, in a check made in connection with the management of the accounts of the Guarantee
         Section of the EAGGF, the correction due in respect of a previous year, but tolerated the irregularities on grounds of fairness,
         does not in any way permit the Member State concerned to demand that the same position be taken with regard to the irregularities
         with respect to the following financial year by virtue of the principle of legal certainty or the principle of protection
         of legitimate expectations.
      
      (see para. 28)

      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
            
            JUDGMENT OF THE COURT (Second Chamber)7 October 2004(1)
         
         
            
         
               (Action for annulment  –  EAGGF  –  Expenditure excluded from Community financing  –  Support for producers of certain arable crops  –  Common organisation of the market in beef and veal)
               
             In Case C-312/02,ACTION for annulment under Article 230 EC,lodged at the Court on 4 September 2002,
            
            
            Kingdom of Sweden, represented by  K. Renman, acting as Agent, with an address for service in Luxembourg,
            
            
            applicant,
            
            v
            Commission of the European Communities, represented by K. Simonsson, acting as Agent, with an address for service in Luxembourg,
            
            defendant,
            
            
            THE COURT (Second Chamber),,
            
             composed of C.W.A. Timmermans, President of the Chamber, C. Gulmann, J.N. Cunha Rodrigues (Rapporteur), R. Schintgen and F. Macken,
            Judges,
            
             Advocate General: F.G. Jacobs, Registrar: R. Grass,
             having regard to the written procedure,after considering the observations submitted by the parties,
            
            after hearing the Opinion of the Advocate General at the sitting on 17 June 2004,
         gives the following
         
         
         Judgment
         1
            
          By its application, the Kingdom of Sweden seeks the partial annulment of Commission Decision 2002/524/EC of 26 June 2002 excluding
         from Community financing certain expenditure incurred by the Member States under the Guarantee Section of the European Agricultural
         Guidance and Guarantee Fund (EAGGF) (OJ 2002 L 170, p. 77) (‘the contested decision’) in so far as it excludes from Community
         financing expenditure of SEK 18 555 850 incurred by Sweden.
         
         
            
               Relevant provisions
            Community legislation
         
         2
            
          Article 5(2)(c) of Council Regulation (EEC) No 729/70 of 21 April 1970 on the financing of the common agricultural policy
         (OJ, English Special Edition 1970 (I), p. 218), as amended by Council Regulation (EC) No 1287/95 of 22 May 1995 (OJ 1995 L
         125, p. 1) (‘Regulation No 729/70’), provides:
         ‘[The Commission] shall decide on the expenditure to be excluded from the Community financing referred to in Articles 2 and
         3 where it finds that expenditure has not been effected in compliance with Community rules.
          Before a decision to refuse financing is taken, the results of the Commission’s checks and the replies of the Member State
         concerned shall be notified in writing, after which the two parties shall endeavour to reach agreement on the action to be
         taken.
          If no agreement is reached, the Member State may ask for a procedure to be initiated with a view to mediating between the
         respective positions within a period of four months, the results of which shall be set out in a report sent to and examined
         by the Commission, before a decision to refuse financing is taken.
          …’
         
         
         
         3
            
          As set out in Article 8(1) of Commission Regulation (EC) No 1663/95 of 7 July 1995 laying down detailed rules for the application
         of Council Regulation (EEC) No 729/70 regarding the procedure for the clearance of the accounts of the EAGGF Guarantee Section
         (OJ 1995 L 158, p. 6), as amended by Commission Regulation (EC) No 2245/1999 of 22 October 1999 (OJ 1999 L 273, p. 5) (‘Regulation
         No 1663/95’):
         ‘If, as a result of an enquiry, the Commission considers that expenditure has not been effected according to Community rules,
         it shall notify the Member State concerned of the results of its checks and indicate the corrective measures to be taken to
         ensure future compliance …’
         
         
         
         4
            
          Article 15(3) of Council Regulation (EEC) No 1765/92 of 30 June 1992 establishing a support system for producers of certain
         arable crops (OJ 1992 L 181, p. 12) provides:
         ‘The payments referred to in this Regulation are to be paid over to the beneficiaries in their entirety.’
         
         
         
         5
            
          Article 30a of Regulation (EEC) No 805/68 of the Council of 27 June 1968 on the common organisation of the market in beef
         and veal (OJ, English Special Edition 1968 (I), p. 187), which was inserted into that regulation by Article 1(5) of Council
         Regulation (EEC) No 2066/92 of 30 June 1992 (OJ 1992 L 215, p. 49) (‘Regulation No 805/68’), reads as follows:
         ‘The amounts to be paid pursuant to this Regulation shall be paid in full to the beneficiaries.’
         
         National legislation
         
         6
            
          Le Förordningen (1997:183) om kartavgift i ärenden om jordbruksstöd (Regulation of 17 April 1997 concerning fees for maps
         in the context of agricultural aid) required all applicants for Community aid for a given area to pay a fee in order to receive
         the map showing that area. That map had to be attached to the aid application.
         
         
         
         7
            
          That regulation was repealed on 1 July 2000 and was therefore applicable only in 1998 and 1999.
         
         Facts
         
         8
            
          On 24 October 2002, the Kingdom of Sweden received a written communication from the Commission under Article 8(1) of Regulation
         No 1663/95 informing it that the fees charged for maps were not authorised deductions in connection with aid for arable crops
         and that part of the expenditure declared had to be excluded from Community financing.
         
         
         
         9
            
          On 26 June 2002, following the mediation procedure provided for in Article 5(2)(c) of Regulation No 729/70, the Commission
         adopted the contested decision. In that decision it excluded from Community financing expenditure of SEK 18 555 850 declared
         by the Kingdom of Sweden on the ground of the latter’s non-compliance with Article 15(3) of Regulation No 1765/92 and Article
         30a of Regulation No 805/68.
         
         The action
         
         10
            
          In this action, the Kingdom of Sweden claims that the Court should:
         
         
         
          
         –
            first, declare Decision 2002/524/EC void in so far as it excludes from Community financing expenditure of SEK 18 555 850 incurred
               by Sweden;
            
         
         
         
         
          
         –
            in the alternative, reduce the amount to be excluded from Community financing to SEK 11 817 748;
         
         
         
         
          
         –
            in the further alternative, reduce the amount to be excluded from Community financing to SEK 12 436 091;
         
         
         
         
          
         –
            order the Commission to pay the costs.
         
         
         
         
         
         11
            
          The Commission claims that the Court should dismiss the action and order the applicant to pay the costs.
         
         The principal claim
         
         12
            
          The Swedish Government relies on two pleas in support of its principal claim, the first alleging infringement of Article 5(2)(c)
         of Regulation No 729/20 and Article 8(1) of Regulation No 1663/95, and the second wrongful application of Article 15(3) of
         Regulation No 1765/92 and Article 30a of Regulation No 805/68.
         
         The first plea
         
         13
            
          In its first plea, the Swedish Government maintains that the contested decision infringes Article 5(2)(c) of Regulation No
         729/70 and Article 8(1) of Regulation No 1663/95, in so far as the written communication referred to in Article 8(1) of Regulation
         No 1663/95, which was received by the Swedish authorities on 24 October 2000, did not contain an evaluation of the expenditure
         to be excluded from Community financing.
         
         
         
         14
            
          It suffices to state, as the Swedish Government itself conceded in its reply to the objection raised by the Commission in
         the defence, that the wording of Article 8(1) of Regulation No 1663/95 as amended by Regulation No 2245/1999, which entered
         into force on 30 October 1999 and therefore applied at the material time, no longer requires the Commission to include an
         evaluation of the expenditure to be excluded in its communication to the Member States.
         
         
         
         15
            
          The first plea must therefore be rejected as unfounded.
         
         The second plea
         
         16
            
          In its second plea, the Swedish Government claims that the charging of fees for the issue of maps is not an infringement of
         Article 15(3) of Regulation No 1765/92 or of Article 30a of Regulation No 805/68, since those fees cannot be regarded as administrative
         fees for the processing of aid applications.
         
         
         
         17
            
          Article 15(3) of Regulation No 1765/92 and Article 30a of Regulation No 805/68 provide that the amounts to be paid shall be
         paid ‘in their entirety’ and ‘in full’ to the beneficiaries.
         
         
         
         18
            
          It follows that those regulations do not authorise any deductions from the amounts to be paid to the farmers.
         
         
         
         19
            
          The Court has already held that Article 15(3) of Regulation No 1765/92 and Article 30a of Regulation No 805/68 prohibit national
         authorities from making a deduction from the payments made or from demanding the payment of administrative fees relating to
         applications and having the effect of reducing the amount of the aid (Joined Cases C-36/97 and C-37/97 Kellinghusen and Ketelsen [1998] ECR I-6337, paragraph 21).
         
         
         
         20
            
          The Swedish Government claims nevertheless that the fees charged for the issue of maps were not intended to cover the administrative
         costs borne by the authorities concerned. Unlike the case in KellinghusenandKetelsen, cited above, the processing of applications and the grant of aid were not dependent on the payment of those fees, since
         the latter were demanded separately.
         
         
         
         21
            
          Such an argument cannot be accepted.
         
         
         
         22
            
          As the Advocate General maintained with good reason in paragraph 17 of his Opinion, if the prohibition on deductions is not
         simply a standard clause, it cannot be interpreted in a purely formal manner as covering only deductions which are actually
         made on the occasion of payments. Thus the prohibition on any deduction must of necessity extend to all charges which are
         directly and inseparably linked to the amounts disbursed.
         
         
         
         23
            
          In a letter sent to the Commission on 2 February 1998, the Swedish Government conceded that it had considered various possibilities
         for financing the issue of maps and that it had opted for the levying of a fee on them.
         
         
         
         24
            
          Further, according to the national legislation, an aid application could not be submitted unless a map supplied by the national
         authorities was attached to the file.
         
         
         
         25
            
          In those circumstances, it must be stated that there was a direct relationship between the aid applications made by farmers
         and the charging of a fee for the maps, and that that had the effect of reducing the amount of the aid actually received by
         the beneficiaries.
         
         
         
         26
            
          The Swedish Government observes, in addition, that the Commission did not make any financial corrections so far as concerns
         1998, because it accepted that the farmers had been able to benefit from the maps for purposes other than aid applications.
         It pleads that that circumstance should have given the Commission a reason, in assessing the financial correction for 1999,
         to take account of the arrival of new applicants and the fact that the maps had to be updated every year.
         
         
         
         27
            
          The Commission replies that the fees for the maps collected in both 1998 and 1999 were administrative fees incompatible with
         Community legislation. However it acknowledged that the fees collected in 1998 could, although to a relatively slight extent,
         be regarded as consideration for a service rendered to the farmers by making available a map which could be of use in running
         their farms. That argument did not apply to the map fees collected in 1999.
         
         
         
         28
            
          According to settled case-law, if the Commission did not carry out the correction due in respect of a previous year, but tolerated
         the irregularities on grounds of fairness, the Member State concerned does not acquire any right to demand that the same position
         be taken with regard to the irregularities with respect to the following financial year by virtue of the principle of legal
         certainty or the principle of protection of legitimate expectations (see Case C-55/91 Italy  v Commission [1993] ECR I-4813, paragraph 67, and Case C-373/99 Greece  v Commission [2001] ECR I-9619, paragraph 56).
         
         
         
         29
            
          In the light of all of the foregoing considerations, the second plea must be rejected.
         
         The alternative claims
         
         30
            
          The Swedish Government relies on two pleas in support of its first alternative claim, alleging respectively infringement of
         Article 5(2)(c) of Regulation No 729/20 and Article 8(1) of Regulation No 1663/95, and wrongful application of Article 15(3)
         of Regulation No 1765/92 and Article 30a of Regulation No 805/68.
         
         The first plea
         
         31
            
          In its first plea, the Swedish Government maintains that the contested decision was adopted in infringement of Article 5(2)(c)
         of Regulation No 729/70 and Article 8(1) of Regulation No 1663/95, in so far as the written communication referred to in Article
         8(1) of Regulation No 1663/95 only concerns the financing of aid for arable crops.
         
         
         
         32
            
          According to the Swedish Government, no reference was made to the maps of fodder areas in that communication. However, pursuant
         to Article 8(1) of Regulation No 1663/95, the Commission should have indicated clearly the measures covered by its action
         in that document, which was received by the Swedish authorities on 24 October 2000.
         
         
         
         33
            
          As pointed out by the Advocate General in point 21 of his Opinion, first, it was only by a note of 18 May 2001 that the Swedish
         Government sent the Commission, at the latter’s request, detailed information on the fodder area aid paid. Following that
         note, on 1 August 2001 the Commission sent the Swedish Government a second formal communication in accordance with Article
         8(1) of Regulation No 1663/95. Secondly, the Swedish Government cannot use the fact that the Commission made no reference
         to the maps of arable areas in the communication of 24 October 2000 to maintain that it was unable to determine the corrective
         measures to take, since Sweden had abolished the map fees for both arable and fodder areas as from 1 July 2000.
         
         
         
         34
            
          It follows that the first plea must be rejected.
         
         The second plea
         
         35
            
          In its second plea, the Swedish Government claims that Article 15(3) of Regulation No 1765/92 and Article 30a of Regulation
         No 805/68 do not serve to justify the Commission’s decision to exclude from financing an amount corresponding to fees paid
         for the issue of maps relating to areas for which agro-environmental or regional aid was also sought.
         
         
         
         36
            
          In the view of the Swedish Government, the Commission allowed the map fees paid by the farmers who requested both types of
         aid but, in calculating the amount to be excluded from Community financing, it did not take into account the areas for which
         both arable or fodder area aid and agro-environmental or regional aid had been sought.
         
         
         
         37
            
          It should be remembered that, as the Court has held in paragraph 19 of this judgment, Article 15(3) of Regulation No 1765/92
         and Article 30a of Regulation No 805/68 prohibit national authorities from making a deduction from the payments made or from
         demanding the payment of administrative fees relating to applications and having the effect of reducing the amount of the
         aid.
         
         
         
         38
            
          The fact that some farmers applied for both aid under Regulation No 1765/92 or Regulation No 805/68 and agro-environmental
         or regional aid for the same areas does not have any bearing on the prohibition on the Member States from making deductions
         from the amounts received by the beneficiaries as aid for arable crops or fodder areas.
         
         
         
         39
            
          The second recital in the preamble to Regulation No 1765/92 expressly shows that the compensatory payments are to compensate
         the loss of income caused by the reduction of the institutional prices in the context of the new support system for producers
         of certain arable crops. Moreover, according to the third recital in the preamble to Regulation No 2066/92, which inserted
         Article 30a into Regulation No 805/68, the purpose of the premium referred to is to grant substantial compensation to the
         producers affected by the consequences of the reduction in the intervention price for beef.
         
         
         
         40
            
          It is common ground that those objectives can be achieved only if the compensatory aid is paid in full to the farmers affected
         by the consequences of the price reductions (see Kellinghusen and Ketelsen, cited above, paragraph 19).
         
         
         
         41
            
          The Swedish Government’s interpretation of Article 15(3) of Regulation No 1765/92 and Article 30a of Regulation No 805/68
         would render them redundant by giving the Member States the opportunity to avoid obligations which flow from those articles,
         and could therefore jeopardise the achievement of the aforementioned objectives.
         
         
         
         42
            
          The plea alleging wrongful application of Article 15(3) of Regulation No 1765/92 and Article 30a of Regulation No 805/68 must
         therefore be rejected.
         
         
         
         43
            
          In the further alternative, the Swedish Government claims that, if the Court decides that the fodder areas must be included
         in the calculation of the amount to be excluded from Community financing, it should exclude from that calculation the fees
         for maps relating to areas for which agro-environmental or regional aid was also sought.
         
         
         
         44
            
          In support of that claim, the Swedish Government repeats the arguments relied on in connection with the second plea of its
         first alternative claim. Those arguments cannot be accepted, on the grounds stated in paragraphs 39 to 41 of this judgment.
         
         
         
         45
            
          Since the Kingdom of Sweden has been unsuccessful in all of the pleas put forward, the action must be dismissed in its entirety.
         
         
         Costs
         46
            
          Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been
         applied for in the successful party’s pleadings. Since the Commission has applied for costs and the Kingdom of Sweden has
         been unsuccessful, the latter must be ordered to pay the costs.
         
         
         
         
         
         
            
            
         
         
          On those grounds, the Court (Second Chamber) hereby:
         
            
            
             
               1.
                  Dismisses the action;
               
            
            
            
             
               2.
                  Orders the Kingdom of Sweden to pay the costs.
               
            
             Signatures.
      
      
          1 –
            
            Language of the case: Swedish.