CELEX: 61999TJ0254
Language: en
Date: 2003-03-12 00:00:00
Title: Judgment of the Court of First Instance (Second Chamber) of 12 March 2003. # Maja Srl v Commission of the European Communities. # Regulation (EEC) No 4028/86 - Community aid - Sale of business - Implementation of project - Procedure for discontinuance of aid - Action for annulment. # Case T-254/99.

Case T-254/99 Maja SrlvCommission of the European Communities
            «(Regulation (EEC) No 4028/86 – Community aid – Sale of business – Implementation of project – Procedure for discontinuance of aid – Action for annulment)»
            
               
                  Judgment of the Court of First Instance (Second Chamber), 12 March 2003  
                     
                
               
            
                   
               
               
            
            Summary of the Judgment
         
         
                  1..
                  Fisheries – Common structural policy – Development of aquaculture and establishment of protected marine areas – Community financial assistance – Commission's power to review – Decision to discontinue assistance – Simple administrative and management decision – Adoption by way of delegated authority – Lawfulness – Seriousness of the consequences for the beneficiary of assistance – Irrelevant  (Council Regulation No 4028/86, Art. 44(1)) 
         
                  2..
                  Fisheries – Common structural policy – Commission decision ordering discontinuance of Community financial assistance – Procedural irregularity – Procedure which is not aimed at the protection of the rights and interests of the beneficiaries of assistance – Annulment of the decision – Not possible  
         
                  3..
                  Fisheries – Common structural policy – Community financial assistance – Sale within the Community of the undertaking benefiting from assistance – Need for prior approval of the Commission – Beneficiary of assistance required to provide information and to act in good faith  
         
         1.
          A decision to discontinue Community financial assistance adopted under Article 44 of Regulation No 4028/86 on Community measures
         to improve and adapt structures in the fisheries and aquaculture sector in the context of the supervision of the implementation
         of a project for which the beneficiary had obtained aid, subject to certain conditions, must be deemed a measure of management
         or administration of the aid scheme established by that regulation, and as such may be adopted under the system of delegated
         authority. The fact that the decision in question, which discontinues aid previously granted, may entail serious consequences
         for the beneficiary cannot cast doubt on this assessment. see para. 43
         
         2.
          A procedural irregularity will, as a rule, entail the annulment of a decision in whole or in part only if it is shown that,
         in the absence of such irregularity, the contested decision might have been substantively different. Any breach of the internal
         procedure to be followed by the Commission in connection with a decision to discontinue Community financial assistance, which
         does not aim to protect the rights and interests of beneficiaries of aid, cannot be pleaded as a formal defect which may entail
         the annulment of the contested decision. see para. 49
         
         3.
          A transfer of ownership of the investments which have received Community aid is a fundamental change in the aid conditions
         in so far as the person carrying out the project is replaced. The Commission is therefore entitled to complain that the vendor
         company which benefited from the aid did not inform it or the national authorities of a sale which took place on a given date
         until the time of a second inspection carried out two years later. The failure to do so constitutes a breach of the obligation
         to provide information and to act in good faith, which is inherent in aid schemes and is essential for their effective functioning.
         see paras 59-60
      

      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
            
            JUDGMENT OF THE COURT OF FIRST INSTANCE (Second Chamber)12 March 2003 (1)
         
         
               ((Regulation (EEC) No 4028/86 – Community aid – Sale of business – Implementation of project – Procedure for discontinuance of aid – Action for annulment))
               
             In Case T-254/99, 
            
            
            Maja Srl, formerly Ca'Pasta Srl, established in Padua (Italy), represented by P. Piva, R. Mastroianni and G. Arendt, lawyers, with
            an address for service in Luxembourg,
            
            
            applicant, 
            
            v
            Commission of the European Communities, represented by C. Cattabriga, acting as Agent, assisted by A. Dal Ferro, with an address for service in Luxembourg,
            
            defendant, 
            
             APPLICATION for the annulment of Commission decision C (1999) 2183 of 5 August 1999, first, discontinuing the financial aid
            granted to the applicant by Commission decision C (91) 654/87 of 29 April 1991 in the framework of project IT/0166/91/01,
            entitled  
            Modernisation of an aquaculture production unit at Contarina (Veneto) and for an order directing the applicant to repay to the Commission ITL 420 810 718 (EUR 217 330.59),
            
            
            THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Second Chamber),
            
             composed of: R.M. Moura Ramos, President, J. Pirrung and A.W.H. Meij, Judges, 
            
             Registrar: J. Palacio González, Principal Administrator, 
            
            
            having regard to the written procedure and further to the hearing on 10 July 2002,
         gives the following
         
         
         Judgment
            
               Legislative background
            
         
         1
            
          Article 1(1)(b) of Council Regulation (EEC) No 4028/86 of 18 December 1986 on Community measures to improve and adapt structures
         in the fisheries and aquaculture sector (OJ 1986 L 376, p. 7) provides that the Commission may grant Community financial aid
         for the development of aquaculture and the establishment of protected marine areas with a view to improved management of inshore
         fishing grounds. 
         
         
         2
            
          Under Article 12 of Regulation No 4028/86, which refers to Annex III to the same regulation, Community aid for aquaculture
         projects in the Italian region of the Veneto is to be 40% of the amount of the investment, and the contribution from the Italian
         Republic must be between 10% and 30%. 
         
         
         3
            
          In addition, Article 44 of Regulation No 4028/86 provides: 
         
         1.
          Throughout the period for which aid is granted by the Community, the authority or agency appointed for the purpose by the
         Member State shall send to the Commission on request all supporting documents and all documents showing that the financial
         or other conditions imposed for each project are satisfied. The Commission may decide to suspend, reduce or discontinue aid,
         in accordance with the procedure laid down in Article 47:
         
         
         
         ─
             if the project is not carried out as specified, or 
          if the project is not carried out as specified, or 
         
         
         
         ─
             if certain conditions imposed are not satisfied, or 
          if certain conditions imposed are not satisfied, or 
         
         
         
         ─
            ... 
         ... 
          Decisions shall be notified to the Member State concerned and to the beneficiary.The Commission shall take steps to recover any sums unduly paid.
         
         2.
          Detailed rules for applying this Article shall be adopted by the Commission in accordance with the procedure laid down in
         Article 47.
         
         
         
         4
            
          Under Article 47 of Regulation No 4028/86: 
         
         1.
          Where the procedure laid down in this Article is to be followed, matters shall be referred to the Standing Committee for the
         Fishing Industry, by its chairman, either on his own initiative or at the request of the representative of a Member State.
         
         
         2.
          The representative of the Commission shall submit a draft of the measures to be taken. The Committee shall deliver its opinion
         within a time-limit to be set by the chairman according to the urgency of the matter. ...
         
         
         3.
          The Commission shall adopt the measures which shall apply immediately. However, if these measures are not in accordance with
         the opinion of the Committee, the Commission shall forthwith communicate them to the Council. In that event the Commission
         may defer their application for not more than one month from the date of such communication. The Council, acting by a qualified
         majority, may adopt different measures within one month.
         
         
         
         5
            
          In order, amongst other things, to establish the detailed rules for applying Article 44(2) of Regulation No 4028/86, the Commission
         adopted Regulation (EEC) No 1116/88 of 20 April 1988 laying down detailed rules for the application of decisions granting
         aid for projects concerning Community measures to improve and adapt structures in the fisheries and aquaculture sector and
         in structural works in coastal waters (OJ 1988 L 112, p. 1). 
         
         
         6
            
          According to the sixth recital in the preamble to Regulation No 1116/88,  
         the procedure for suspending, reducing or terminating aid should not be initiated without the Member State concerned first
         having been asked for its views and the beneficiaries having been given the opportunity to submit their comments. 
         
         
         7
            
          In that connection, Article 7 of Regulation No 1116/88 provides: Before initiating a procedure for suspending, reducing or terminating aid in accordance with Article 44(1) of Regulation (EEC)
         No 4028/86, the Commission shall:
         
         
         ─
             inform the Member State on whose territory the project was to be carried out, so that it may express its views on the matter,
            
          inform the Member State on whose territory the project was to be carried out, so that it may express its views on the matter,
         
         
         
         
         ─
             consult the competent authority responsible for forwarding supporting documents, 
          consult the competent authority responsible for forwarding supporting documents, 
         
         
         
         ─
             ask the beneficiary to provide, through the authority or agency, an explanation for the failure to comply with the conditions
            laid down.
          ask the beneficiary to provide, through the authority or agency, an explanation for the failure to comply with the conditions
         laid down.
         
         The facts
         
         8
            
          By Decision C (91) 654/87 of 29 April 1991 (hereinafter  
         the approval decision), the Commission, acting in pursuance of Regulation No 4028/86, granted the applicant financial aid of a maximum of ITL 942 300 004
         (EUR 486 657.34) for a project for the modernisation of an aquaculture production unit in Contarina (Veneto).  The Commission
         undertook to finance 40% of the cost of the project and the Italian Republic undertook to finance 30% of the cost. 
         
         
         9
            
          It was specified in the conditions annexed to the approval decision that: ... the proposed works may not be changed or altered without the prior consent of the national authorities and, where appropriate,
         the Commission. If they are significantly altered without the Commission's agreement, and the national authorities or the
         Commission finds the alterations unacceptable, the subsidy may be reduced or discontinued.
         
         
         10
            
          The applicant presented an initial document reporting the state of progress of the works on 18 March 1992, after which the
         Commission paid it the first instalment of the Community aid, namely ITL 420 810 718 (EUR 217 330.59). The Italian State paid
         the first instalment of the State contribution. 
         
         
         11
            
          Following an inspection in 1995 (in October, according to the applicant, in February, according to the Commission), the competent
         national authorities drew up a report on the second state of progress and the final state of the works. In that report, dated
         27 October 1995, the national authorities stated,  
         inter alia: 
         
         
         ─
             that they did not agree to the payment of certain items of expenditure by the Commission, 
          that they did not agree to the payment of certain items of expenditure by the Commission, 
         
         
         
         ─
             that the planned caretaker's house appeared to have been replaced by a small villa; 
          that the planned caretaker's house appeared to have been replaced by a small villa; 
         
         
         
         ─
             that the facility did not appear to have the necessary authorisations; 
          that the facility did not appear to have the necessary authorisations; 
         
         
         
         ─
             that the facility was still not in operation at the time of the inspection; 
          that the facility was still not in operation at the time of the inspection; 
         
         
         
         ─
             that the facility had not been made the subject of a compliance declaration; 
          that the facility had not been made the subject of a compliance declaration; 
         
         
         
         ─
             that aid could not be granted in respect of various invoices submitted by Ca'Pasta. 
          that aid could not be granted in respect of various invoices submitted by Ca'Pasta. 
         
         
         
         
         12
            
          On the conclusion of the inspection the competent national authorities suspended the national aid. 
         
         
         13
            
          On 10 March 1997, during an inspection at the applicant's head office, the Italian State and the Commission learned that the
         business undertaking of Ca'Pasta had been sold during the spring of 1995 to Carpenfer Spa. 
         
         
         14
            
          Subsequently, by letter dated 24 June 1997, the Commission informed the applicant that because the sale of the business fell
         within the class of fundamental changes requiring the prior consent of the national and Community authorities, the applicant
         had breached the conditions laid down in the approval decision. Accordingly, referring to Regulation No 4028/86, the Commission
         notified the applicant of its intention to initiate the procedure for the discontinuance of the subsidy and the recovery of
         the sum already paid, and invited the applicant to state, within 30 days, the reasons for which it had failed to comply with
         the conditions laid down. 
         
         
         15
            
          By letter dated 21 July 1997 the applicant replied that neither Regulation No 4028/86 nor the approval decision required that
         the sale of a business which had obtained a subsidy under the said regulation should be made conditional upon obtaining the
         prior agreement of the national and Community authorities. 
         
         
         16
            
          By letter dated 4 August 1997 the Commission disputed the applicant's contentions and informed it that: ... the Commission confirms the continuation of the internal procedure with a view to discontinuing the contribution and recovering
         the amount already paid.
         
         
         17
            
          Taking the view that the last letter amounted to an act adversely affecting it, on 16 October 1997 Ca'Pasta brought before
         the Court of First Instance an action for its annulment, alleging  
         inter alia infringement of Article 44 of Regulation No 4028/86 and Article 7 of Regulation No 1116/88. 
         
         
         18
            
          By order of 16 July 1998 in Case T-274/97  
         Ca'Pasta   v  
         Commission [1998] ECR II-2925, the Court of First Instance dismissed the application as inadmissible, on the ground that the letter
         at issue was not a measure capable of forming the subject-matter of an action under Article 173 of the EC Treaty (now Article
         230 EC) and ordered Ca'Pasta to pay the costs. 
         
         
         19
            
          Ca'Pasta appealed against the order. By judgment of 25 May 2000 in Case C-359/98 P  
         Ca'Pasta   v  
         Commission [2000] ECR I-3984, the Court of Justice set aside the order of the Court of First Instance and annulled the implied decision
         to suspend aid contained in the Commission's letter of 4 August 1997 on the ground that the procedure laid down in Articles
         44(1) and 47 of Regulation No 4028/86 and Article 7 of Regulation No 1116/88 had not been followed. 
         
         
         20
            
          In the meantime, by letter of 30 September 1998, the Commission asked the applicant, essentially, to provide documents proving
         its activity. That letter reads as follows: We refer to letter no. 11423 of [4] August 1997 in which the Commission refuted the argument of Ca'Pasta's representatives,
         namely that the mere instrument of sale of the company's assets guarantees the purpose of the business in accordance with
         the objectives of the project and the more general objectives of the common fisheries policy.In order to enable your company to furnish proof in support of the foregoing assertion, we would ask you to forward all the
         accounting documentation relating to the commercial activity of the business from the date of completion of the works to today's
         date ....
         
         
         21
            
          Ca'Pasta wrote as follows in its reply of 24 November 1998: ... For whatever purpose it may serve, our company remains open to dialogue ─ and is prepared to send all the documentation
         requested as further proof of the continuing purpose of the investments made in the business itself ─ if the Commission declares
         formally and unambiguously that its position is no longer justified and that it will indemnify the company for the legal costs
         incurred up to the present.
         
         
         22
            
          On 5 August 1999 the Commission adopted decision C (1999) 2183 (
         the contested decision) discontinuing the financial aid to Ca'Pasta and ordering it to repay to the Commission ITL 420 810 718 (EUR 217 330.59).
         
         
         
         23
            
          The decision reads as follows: Having regard to the Treaty establishing the European Community,Having regard to Regulation (EEC) No 4028/86 ... , last amended by Regulation No 3946/92, and in particular Article 44(1);... ;
         
         [3]
            
          On the occasion of the inspections carried out in 1995 and 1997 it was not possible to establish whether the investments in
         question were made in compliance with the Community legislation;
         
         
         [4]
            
          It was only on the occasion of the inspection of 10 March 1997 at Ca'Pasta's head office that the Ministry for Agricultural
         Resources and the Commission were informed that the business had been sold in June 1995 without the production of the documentation
         relating to the activity pursued by means of the assets acquired with the public financial assistance;
         
         
         [5]
            
          The sale of facilities and equipment purchased with financial aid constitutes a significant alteration of the financing conditions
         laid down by the decision; therefore such alteration requires the prior consent of the Community and the national authorities
         to order to verify that the public financial assistance has been used in accordance with the purposes of the legislation on
         structural intervention; such consent was not requested by the company beforehand;
         
         
         [6]
            
          By letter of 28 March 1997 the Ministry for Agricultural Resources issued an opinion in favour of the discontinuance of the
         aid;
         
         
         [7]
            
          Pursuant to Article 7 of Regulation (EEC) No 1116/88 of 20 April 1988, the Commission informed the competent national authority
         and the beneficiary, by letter of 24 June 1997, of its intention to discontinue the Community aid and to recover the amount
         already paid, and requested the beneficiary to submit its defence;
         
         
         [8]
            
          In its letter of 24 July 1997 in reply to the Commission's letter, the beneficiary merely asserted that the assets transfer
         formed part of an agreement for the sale of a business and that, as such, it ought to have received consent;
         
         
         [9]
            
          Although the documents produced in no way proved that there had been a genuine sale of a business or that the activity which
         was the reason for the Community financing had been taken up and actually carried on, the Commission again requested the beneficiary,
         by letter of 30 September 1998, to produce any appropriate documents in support of its statements. In its reply of 24 November
         1998, Ca'Pasta produced no documentary evidence whatever;
         
         
         [10]
            
          The national authorities did not change their opinion in favour of the discontinuance of the public financial assistance;
         
         
         [11]
            
          Under Article 44(1) of Regulation (EEC) No 4028/86, Community aid may be suspended, reduced or discontinued aid if the project
         is not carried out as specified;
         
         
         [12]
            
          In view of the circumstances, the aid previously granted must be discontinued;
         
         
         [13]
            
          The measures provided for in this decision are in conformity with the opinion of the Standing Committee for the Fishing Industry;
          Has adopted this decision:Article 1The Community aid totalling ITL 942 200 004 granted by the Commission decision of 29 April 1991 within the framework of the
         project described below, is discontinued: ... .Article 2The beneficiary shall repay the Commission the sum of ITL 420 810 718 within three months of the date of this decision. ...Article 3This decision is addressed to the Italian Republic and the beneficiary referred to in Article 1.
         Procedure
         
         24
            
          The applicant brought this action by application lodged at the Registry of the Court of First Instance on 24 October 1999.
         In the application it states that its name and business name have been changed and that it is now called Maja Srl. 
         
         
         25
            
          By separate document, lodged at the Court Registry on the same date, the applicant made an application under Article 242 EC
         for suspension of the operation of the contested decision. That case was removed from the register by order of the President
         of the Court of First Instance of 5 June 2000, the costs being reserved. 
         
         
         26
            
          By way of measures of organisation of procedure, on 5 July 2000 and 11 July 2001 the Court asked the parties to reply to written
         questions and to produce certain documents. The parties complied with those requests.  
         
         
         27
            
          In addition, an informal meeting between the parties, their legal advisers and agents took place before the Judge-Rapporteur
         on 6 December 2001. 
         
         
         28
            
          Following the informal meeting, the proceedings were stayed by order of 14 January 2002 until 15 April 2002. 
         
         
         29
            
          On 15 April 2002 the parties submitted their observations on the further steps to be taken in the proceedings. 
         
         
         30
            
          Upon hearing the report of the Judge-Rapporteur, the Court of First Instance (Second Chamber) decided to open the oral procedure.
         
         
         
         31
            
          The parties presented oral argument and their replies to the Court's oral questions at the hearing on 10 July 2002. 
         Forms of order ought by the parties
         
         32
            
          The applicant claims that the Court should: 
         
         
         ─
             annul the contested decision; 
          annul the contested decision; 
         
         
         
         ─
             order the Commission to pay the costs. 
          order the Commission to pay the costs. 
         
         
         
         
         33
            
          The Commission contends that the Court should: 
         
         
         ─
             dismiss the application as unfounded; 
          dismiss the application as unfounded; 
         
         
         
         ─
             order the applicant to pay the costs. 
          order the applicant to pay the costs. 
         
         
         Law
         
         34
            
          The applicant raises four pleas in law to show that the contested decision is unlawful. The first part of the first plea alleges
         breach of the principle of collective responsibility; the second part relates to a breach of the internal procedure to be
         followed by the Commission in connection with a decision discontinuing aid, such as the contested decision. The second plea
         alleges, in substance, infringement of Article 44 of Regulation No 4028/86 and of the obligation to state reasons. The third
         plea alleges, in substance, misapplication of Articles 38 and 44 of the same regulation. Finally, the fourth plea alleges
         breach of the obligation to state reasons and of essential procedural requirements.  
          First plea in law: first part, breach of the principle of collective responsibility and, second part, breach of the internal
         procedure to be followed by the Commission in connection with a decision discontinuing aid  
          Arguments of the parties
         
         
         35
            
          The applicant submits that the contested decision, which was signed on behalf of the Commission by one of its Members, Ms
         Wulf-Mathies, infringed the principle of collective responsibility. In that connection, the applicant refers to the judgment
         in Case C-137/92  
         Commission v  
         BASF and Others [1994] ECR I-2555. The applicant also submits that the Commission cannot plead the existence of a delegated power as there
         can only be an ordinary delegated power of signature.  
         
         
         36
            
          In its reply, the applicant adds to that argument that, notwithstanding the alleged legality of the procedure for delegating
         a power, it does not appear that the internal procedure laid down by the provisions cited in this connection by the Commission
         was followed because neither the approval of the Directorate-General for Financial Control and of the Commission's Legal Service,
         nor the prior authorisation of the financial controller are mentioned in the contested decision. 
         
         
         37
            
          With regard to the first part of this plea, the Commission contends that Article 11 of its Rules of Procedure in force at
         that time, which is an expression of the principle of collective responsibility, provides for the system of delegated authority
         for specific categories of managerial decisions, particularly in the context of the common fisheries policy, and that, in
         its judgment in Case 5/85  
         AKZO Chemie v  
         Commission [1986] ECR 2585, paragraphs 35 to 37, the Court of Justice observed that this practice accorded with that principle. So far
         as the present case is concerned, the Commission notes that the Member of the Commission responsible for fisheries and, in
         the event of his being prevented from acting, any other Member of the Commission, was given authority, by Commission decision
         (COM (87) PV 899) of 9 December 1987, to adopt decisions relating to the discontinuance of aid granted under Article 44 of
         Regulation No 4028/86. 
         
         
         38
            
          With regard to the argument added in the reply, which constitutes the second part of the present plea, the Commission contends,
         firstly, that it is a new plea introduced in the course of the proceedings and that it cannot be admitted under Article 48(2)
         of the Rules of Procedure of the Court of First Instance. The Commission observes that in any case ─ without prejudice to
         the fact that it doubts whether the alleged failure to follow an internal organisational procedure can constitute a ground
         for annulment of a measure where the alleged failure does not affect the origin and existence of that measure ─ the competent
         directorates or services duly issued their opinion. The Commission adds that, in its judgment in Case T-338/94  
         Finnboard v  
         Commission [1998] ECR II-1617, paragraph 66, the Court of First Instance observed that it was for the applicant to plead any evidence
         or specific fact such as to displace the presumption of validity which applies to Community acts. In the present case, the
         applicant had not shown that the competent services had not been consulted. 
          Findings of the Court
         
         
         
         ─
          First part of the plea
         
         
         
         39
            
          Under Article 11 of the Commission's Rules of Procedure, in the version resulting from Commission Decision 93/492/ Euratom,
         ECSC, EEC of 17 February 1993 (OJ 1993 L 230, p. 15), in force at the time where the contested decision was adopted ─ the
         same provision appears in Article 13 of the Rules of Procedure at present in force, OJ 1999 L 252, p. 41 ─,  
         the Commission may, provided the principle of collective responsibility is fully respected, empower one or more of its Members
         to take, on its behalf and under its responsibility, clearly defined management or administrative measures. 
         
         
         40
            
          Under Articles 2.b and 5 of the Commission Decision of 9 December 1987 updating the delegated authority in the fisheries sector
         (COM(87) PV 899,  
         the delegated authority decision), the Commission empowered the Member responsible for the fisheries sector and, in the event of his being prevented from
         acting, any other Member of the Commission, to adopt decisions on the discontinuance of aid granted under, in particular,
         Article 44 of Regulation No 4028/86. 
         
         
         41
            
          It has been consistently held (see, for example,  
         AKZO Chemie, cited above, paragraphs 35 to 37) that the Commission may, within certain limits and subject to certain conditions, authorise
         its Members to adopt certain decisions in its name without the principle of collegiate responsibility which governs its functioning
         being impaired by such authorisation. According to that case-law, the system of delegated authority is limited to specific
         categories of measures of management or administration, which excludes by definition decisions of principle. 
         
         
         42
            
          The question which arises therefore is whether the contested decision must be regarded as a measure of management or administration
         or rather as a decision  
         of principle. 
         
         
         43
            
          In the present case, the contested decision, which was adopted in the context of the supervision of the implementation of
         a project for which the beneficiary had obtained aid, subject to certain conditions, must be deemed a measure of management
         or administration of the aid scheme established by Regulation No 4028/86. The fact that the decision in question, which discontinues
         aid previously granted, may entail serious consequences for the applicant (see Case C-10/98 P  
         Le Canne v  
         Commission [1999] ECR I-6831, paragraph 27) cannot cast doubt on this assessment.  
         
         
         44
            
          It follows that the contested decision, which was adopted by a single Member of the Commission, is within the limits of the
         power of delegation, as indicated in Article 11 of the Rules of Procedure referred to above, and does not infringe the principle
         of the Commission's collective responsibility. 
         
         
         45
            
          The first part of this plea must therefore be rejected. 
         
         
         ─
             Second part of the plea
          Second part of the plea
         
         
         
         
         46
            
          It must first be observed that the second part of the plea, which was introduced in the reply, is a new plea, but may be admitted
         pursuant to Article 48(2) of the Rules of Procedure because it is based on matters of law and fact which have come to light
         in the course of the procedure, namely the text of the Commission's delegated authority decision which was produced as an
         annex to the defence. 
         
         
         47
            
          Secondly, Article 3 of the said decision provides that the Directorate-General for Financial Control is designated as the
         associated department which has to give its prior consent to a draft decision such as the contested decision and, in the internal
         administrative rules, which form an integral part of the delegated authority decision, that draft decisions such as that in
         question are to be forwarded for consent to that Directorate-General and to the Legal Service of the Commission and that they
         require prior authorisation by the financial controller, in accordance with the financial regulation. 
         
         
         48
            
          In its rejoinder the Commission stated that the competent directorates and services involved in the adoption of the contested
         decision had duly delivered their opinion, but has not supported its contention with documentary evidence. 
         
         
         49
            
          However, a procedural irregularity will, as a rule, entail the annulment of a decision in whole or in part only if it is shown
         that, in the absence of such irregularity, the contested decision might have been substantively different (Case 150/84  
         Bernardi v  
         Parliament [1986] ECR 1375, paragraph 28, citingJoined Cases 209/78 to 215/78 and 218/78  
         Van Landewyck and Others v  
         Commission [1980] ECR 3125, paragraph 47). That does not appear to be the case here, nor has it even been alleged, and a breach, if
         any, of the rules in question, which in any case do not aim to protect the rights and interests of beneficiaries of aid such
         as the applicant, cannot be pleaded as a formal defect which may entail the annulment of the contested decision. 
         
         
         50
            
          It follows that the second part of the first plea must also be rejected. 
          The second and third pleas in law: infringement of Articles 38 and 44 of Regulation No 4028/86 and breach of the obligation
         to state reasons
         
         
         51
            
          The Court considers it expedient to examine the second and third pleas in law together. 
          Arguments of the parties
         
         
         52
            
          The applicant submits that the facts were manifestly misrepresented as a result of defective and inadequate investigation.
         The Commission in effect refused to undertake any serious inquiry into the permanence of the investments in asserting that
         the applicant had not been able to furnish proof. In that connection, the applicant criticises the reasoning of the contested
         decision as illogical and misleading. It contends that the Commission infringed Article 44 of Regulation No 4028/86. Referring
         to the judgment in  
         Le Canne v  
         Commission, cited above, the applicant submits that Article 44 applies only in cases where a project has not been carried out as specified.
         According to the applicant, that is not the case where the beneficiary sells a business after the proper completion of the
         works in good time. 
         
         
         53
            
          The applicant contends that the alleged breaches of the obligations laid down in Article 38 of Regulation No 4028/86 cannot
         be penalised by discontinuance of the aid on the basis of Article 44, but only by way of reversal, as provided for by Article
         39 of the same regulation (total or partial reversal of the decision for breach of obligations after completion of the works).
         
         
         
         54
            
          The Commission contends that the inquiry was coherent and that it confirmed that the applicant had failed to comply with the
         conditions for the grant of aid, in breach of Regulation No 4028/86. According to the Commission, during the inspection visits
         in 1995 and 1997 numerous irregularities were discovered and the third recital in the preamble to the decision expressly mentions
         the result of the inspections. Among the many irregularities found, particular importance attaches to the absence of anything
         to show clearly that the activity of aquaculture had actually begun, and anything relating to the transfer of the aquaculture
         unit. According to the Commission, it had tried for the last time, by letter of 30 September 1998, to obtain information on
         this point from the applicant, and had pointed out that, failing such information, it would discontinue the aid. 
         
         
         55
            
          The Commission contends that Article 44 of the regulation covers all cases of breach of the aid conditions. According to the
         Commission, in the present case it is clear that the applicant's behaviour in deliberately omitting to give notice of the
         then imminent sale of the aquaculture unit at the time of the first inspection and informing the Commission only when it was
         preparing for the second inspection is a breach of the obligation to provide information and to act in good faith incumbent
         upon beneficiaries of Community aid. In this connection, the Commission refers to Case T-216/96  
         Conserve Italia v  
         Commission [1999] ECR II-3139, paragraph 71. At the same time, the Commission also found compelling evidence of failure to comply with
         the aid conditions in the execution of the works. The 1995 inspection revealed irregularities sufficient to justify discontinuance
         of the aid.  
          Findings of the Court
         
         
         56
            
          As a preliminary point, it must be observed that, in view of the recitals in the preamble to the contested decision, that
         decision is based, essentially, on the argument that the applicant was unable to show, at the different stages of the inspection
         and the procedure for the discontinuance of the aid, that the project was carried out as specified. In that connection, the
         third recital in the preamble to the contested decision refers to the inspections of 1995 and 1997, the fourth and fifth recitals
         refer to the sale of the business and, finally, the ninth recital deals with the correspondence of 30 September and 24 November
         1998. 
         
         
         57
            
          With regard to the inspection visits, it must be observed that the first inspection, carried out by the Italian authorities
         in 1995, gave rise to a number of questions concerning the execution of the project, which were set out in the report of 27 October
         1995 and are mentioned in paragraph 11 above. The second inspection visit, carried out jointly by the Italian authorities
         and the Commission in March 1997, came up against the fact that the applicant's business had been sold in spring 1995 to Carpenfer
         Spa, of which the Commission and the Italian authorities were notified a few days before the inspection. 
         
         
         58
            
          The third recital of the decision therefore correctly states that on the occasion of the inspections it was not possible to
         establish whether the investments in question were made in compliance with the Community legislation. 
         
         
         59
            
          With regard to the sale of the business, it must be observed that, under Article 38 of Regulation No 4028/86,  
         investments which have received Community aid under this Regulation may not be sold outside the Community or assigned to purposes
         other than fishing for a period of ten years from the date of commissioning .... That provision does not imply, however, that a sale within the Community of investments which have received Community aid,
         as in the present case, does not require the prior consent of the Commission. 
         
         
         60
            
          A transfer of ownership is a fundamental change in the aid conditions in so far as the person carrying out the project is
         replaced. The Commission is therefore entitled to complain that the applicant did not inform it or the national authorities
         of the sale, which had taken place in spring 1995, until the time of the second inspection in March 1997. The failure to do
         so constitutes a breach of the obligation to provide information and to act in good faith, which is inherent in aid schemes
         and is essential for their effective functioning (see  
         Conserve Italia v  
         Commission, cited above, upheld by the judgment of the Court of Justice in Case C-500/99 P  
         Conserve Italia v  
         Commission [2002] ECR I-867). 
         
         
         61
            
          Finally, as regards the correspondence of 30 September and 24 November 1998, it must be observed that the behaviour of the
         applicant, which did not comply in good time and unconditionally with the Commission's request for all the accounting documentation
         relating to the commercial activity of the company and which made the production of the supporting documents conditional upon
         a  
         quid pro quo from the Commission, also constitutes a breach of the applicant's obligation to provide information and to act in good faith.
         
         
         
         62
            
          It must be therefore found that the applicant infringed its obligations to provide information and to act in good faith and
         that the Commission did not err in fact or in law in finding that the applicant was unable to prove that the project was carried
         out as specified.  
         
         
         63
            
          More specifically, it must be held that, in the light of the foregoing, the applicant's assertion that the inquiry to establish
         whether the project conformed with the legislation was defective is irrelevant. The same applies to the applicant's argument
         that the reasoning of the contested decision is illogical and misleading. The recitals in the preamble to the decision set
         out the essential elements of the reasoning underlying the discontinuance of the aid.  
         
         
         64
            
          It follows that the applicant's second plea cannot succeed.  
         
         
         65
            
          Finally, the applicant's arguments in relation to its third plea in law must also be rejected. The contested decision was
         ─ correctly ─ adopted on the basis of Article 44 of Regulation No 4028/86, which applies, pursuant to Article 44(1), throughout
         the period for which aid is granted by the Community in relation to all decisions to suspend, reduce or discontinue aid, in
         the event of one of the four conditions laid down in that article being met (see  
         Le Canne v  
         Commission, cited above, paragraph 25). On the other hand, Article 39 of the same regulation deals with the complete or partial reversal
         of a decision to grant aid where the beneficiary fails to fulfil his specific obligation under Article 39(1) to forward to
         the Commission a report on the results of the project, in particular on the financial results, within two years after the
         last payment of aid (in the case of projects such as the present). The decision in this case is a decision to discontinue
         the aid before payment of the second and third instalments.  
          Fourth plea in law: breach of obligation to state reasons and breach of essential procedural requirements
          Arguments of the parties
         
         
         66
            
          According to the applicant, the Commission's failure to send it the opinion of the Standing Committee for the Fishing Industry
         is a breach of the obligation to state reasons and also of essential procedural requirements.  
         
         
         67
            
          The Commission contends that the applicant's argument disregards the rules of  
         comitology laid down in Article 47 of Regulation No 4028/86. According to the Commission, the Committee's opinion does not consist in
         a text which can be reproduced word for word, but only in a vote for or against draft measures to be taken. Therefore the
         contested decision could give no indication of the substance of the opinion because the opinion consists merely in a  
         yes or  
         no. 
          Findings of the Court
         
         
         68
            
          Whilst the Commission is not bound to exercise the power conferred on it by Article 44(1) of Regulation No 4028/86, that article
         explicitly requires that, should it do so, it must do so in accordance with the procedure laid down in Article 47 of the regulation,
         and it is clear from Article 7 of Regulation No 1116/88 that the procedures it mentions must also be followed before aid under
         Article 44 can be suspended, reduced or discontinued. Furthermore, the serious consequences of a decision to discontinue aid,
         such as that in the present case, highlight the importance of applying a procedure such as that laid down in Articles 44 and
         47 of Regulation No 4028/86 and Article 7 of Regulation No 1116/88 (see  
         Le Canne v  
         Commission, cited above, paragraph 25 and 27, and  
         Ca'Pasta   v  
         Commission,   cited above, paragraphs 28 and 31). 
         
         
         69
            
          It is therefore necessary to ascertain whether the procedure for obtaining the opinion of the Standing Committee for the Fishing
         Industry, laid down in Article 47 of Regulation No 4028/86, was followed in this case. 
         
         
         70
            
          In reply to a written question from the Court, the Commission produced documents showing that on 17 May 1999 it requested
         the opinion of the Standing Committee, by way of written procedure in accordance with Article 6 of the Committee's Rules of
         Procedure, on the draft decision to discontinue the aid, by asking the national delegations on the Committee to state their
         position within a certain period, and that only the German and Flemish delegations submitted their opinion.  
         
         
         71
            
          In those circumstances, it must be accepted that the procedure laid down in Article 47 of Regulation No 4028/86 was followed
         and that the contested decision correctly states that the measures provided for in that decision are in conformity with the
         opinion of the Standing Committee for the Fishing Industry. The documents produced by the Commission also show that, in the
         present case, the Committee's opinion does not consist in a text which can be reproduced. 
         
         
         72
            
          It follows that the fourth plea in law must also be rejected. 
         
         Costs
         73
            
          Pursuant to Article 87(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 applicant has been unsuccessful, it must be ordered to pay
         the costs, including those of the proceedings for interim measures, as applied for by the Commission. 
         
         On those grounds, 
         
         
         
            
            THE COURT OF FIRST INSTANCE (Second Chamber)
         
         
          hereby:  
         
            
            1.
             Dismisses the application; 
            
            2.
             Orders the applicant to pay the costs, including those of the proceedings for interim measures.
            
                  Moura Ramos
               
               
                  Pirrung
               
               
                  Meij
               
            
                  
               
               
                  
               
               
                  
               
            
                  
               
               
                  
               
               
                  
               
            
                  
               
               
                  
               
               
                  
               
            
                  
               
               
                  
               
               
                  
               
            
            
            
            
            
            
            
            
         
         
          Delivered in open court in Luxembourg on 12 March 2003. 
         
         
         
         
                  H. Jung 
               
               
                  R.M. Moura Ramos  
               
            
         
         
         
                  Registrar
               
               
                  President
               
            
         
            
         
      
          1 –
            
             Language of the case: Italian.